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 23, 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 the Mortgage Pass-Through
Certificates, Series 1996-9)
BEAR STEARNS MORTGAGE SECURITIES INC.
(Exact name of registrant as specified in charter)
Delaware 33-62710 and 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 20, 1996 among the
Registrant and Bear, Stearns & Co. Inc.
4.1 Pooling and Servicing Agreement dated as of December 1, 1996
among the Registrant, ICI Funding Corporation, and Bankers Trust
Company of California, N.A..
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BEAR STEARNS MORTGAGE SECURITIES INC.
-------------------------------------
(Registrant)
Date: January 3, 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 20, 1996 between the
Registrant and Bear, Stearns & Co.
Inc.
4.1 Pooling and Servicing Agreement
dated as of December 1, 1996 among
the Registrant, ICI Funding Corporation
and Bankers Trust Company of
California, N.A.
Exhibit 1.1
BEAR STEARNS MORTGAGE SECURITIES INC.
Mortgage Pass-Through Certificates
TERMS AGREEMENT
Dated: as of December 20, 1996
To: BEAR STEARNS MORTGAGE SECURITIES INC.
Re: Underwriting Agreement dated June 25, 1996
Underwriter: Bear, Stearns & Co. Inc.
Series Designation: Series 1996-9
Class Designation Schedule of the Certificates: Class A-I-1, A-I-2, A-I-3,
A-I-4, A-I-5, A-I-6, A-I-7, A-I-8, A-I-9, A-I-10, A-I-11, A-II, X, PO, B-1, B-2,
B-3, B-4, B-5, B-6, R-1 and R-2
Terms of the Certificates to be Purchased by the Underwriter:
Original
Class Principal Amount Interest Rate
- ----- ---------------- -------------
A-I-1 $20,638,000 6.550%
A-I-2 $ 3,685,000 11.000%
A-I-3 $ 5,459,000 6.800%
A-I-4 $13,885,000 7.000%
A-I-5 $ 8,309,000 7.100%
A-I-6 $ 6,317,000 7.100%
A-I-7 $57,741,000 (1)
A-I-8 (2) (2)
A-I-9 $9,600,000 7.450%
A-I-10 $7,664,000 8.000%
A-I-11 $25,000,000 8.000%
A-II $17,974,774 7.05%
X (4) (4)
B-1 $6,244,000 8.000%
B-2 $3,842,000 8.000%
B-3 $2,882,000 8.000%
R-1 $ 100 8.000%
R-2 $ 100 (5)
<PAGE>
(1) The Class A-I-7 Certificates will bear interest at 5.825%
per annum during the first Interest Accrual Period. During
each Interest Accrual Period thereafter, the Class A-I-7
Certificates will bear interest, subject to a maximum rate
of 9.00% per annum and a minimum rate of 0.45% per annum,
at a rate per annum equal to 0.45% in excess of the London
interbank offered rate for one-month U.S. dollar deposits
("LIBOR").
(2) The Class A-I-8 Certificates will have a notional principal
amount (the "Class A-I-8 Notional Amount") equal to the
Current Principal Amount of the Class A-I-7 Certificates.
The Class A-I-8 Certificates will bear interest at 3.175%
per annum during the first Interest Accrual Period. During
each Interest Accrual Period thereafter, the Class A-I-8
Certificates will bear interest, subject to a maximum rate
of 8.55% per annum and a minimum rate of 0% per annum, at a
rate per annum equal to 8.55% - LIBOR.
(3) The Class X Certificates will have a notional principal amount (the
"Class X Notional Amount") equal to the aggregate Scheduled Principal
Balances of all of the Mortgage Loans and will bear interest on the
Class X Notional Amount at a variable Pass-Through Rate equal to the
excess of (a) the weighted average of the Net Rates of all the
Mortgage Loans over (b) the weighted average of the Pass-Through Rates
of all the Certificates (other than the Class X Certificates). The
Pass-Through Rate for the Class X Certificates for the first Interest
Accrual Period is expected to be approximately 1.04% per annum.
(4) The Class R-2 Certificates will bear interest on their Current
Principal Amount at a variable Pass-Through Rate equal to the weighted
average of the Net Rates of the Group
I Mortgage Loans.
The Certificates purchased by the Underwriter will be offered from time to time
by the Underwriter in negotiated transactions at varying prices to be determined
at the time of sale.
Defined Terms: Terms not otherwise defined herein shall have the meanings given
to such terms in the Pooling and Servicing Agreement dated as of December 1,
1996, among Bear Stearns Mortgage Securities Inc., as Seller, ICI Funding
Corporation, as master servicer, and Bankers Trust Company of California, N.A.,
as trustee.
Form of Certificates Being Purchased by the Underwriters: Book Entry except for
the Class R-1 and Class R-2 Certificates which will be in certificated, fully
registered form.
Distribution Dates: The 25th day of each month or, if such 25th day is
not a business day, the next succeeding business day commencing in January,
1997.
Certificate Rating for the Certificates Being Purchased by the
Underwriters:
Class Rating
- ----- ------
S&P Fitch
--- -----
A-I-1................................. AAA AAA
A-I-2................................. AAA AAA
A-I-3................................. AAA AAA
A-I-4................................. AAA AAA
A-I-5................................. AAA AAA
A-I-6................................. AAA AAA
A-I-7................................. AAA AAA
A-I-8................................. AAAr AAA
A-I-9................................. AAA AAA
A-I-10................................ AAA AAA
A-I-11 ............................... AAA AAA
X..................................... AAA AAA
A-II.................................. AAA AAA
B-1................................... AA AA
B-2................................... A A
B-3................................... N/A BBB
R-1................................... AAA AAA
R-2................................... AAA AAA
Mortgage Assets: The Mortgage Loans to be included in the Trust
Fund are as described in Annex A hereto.
Purchase Price: The aggregate purchase price payable by the Underwriter for the
Certificates covered by this Agreement will be $196,855,992.37 (plus $689,906.23
in accrued interest).
Credit Enhancement: None other than the subordination described
in the related Prospectus Supplement.
Closing Date: December 23, 1996, 9:00 a.m., New York time.
[Remainder of Page Intentionally Left Blank]
<PAGE>
The undersigned, as the Underwriter, agrees, subject to the terms and provisions
of the above-referenced Underwriting Agreement, which is incorporated herein in
its entirety and made a part hereof, to purchase the respective principal
amounts of the Classes of the above-referenced Series of Certificates as set
forth herein.
BEAR, STEARNS & CO. INC.
By: /s/ Jeffrey Mayer
----------------------------
Name: Jeffrey Mayer
Title: Senior Managing Director
Accepted:
BEAR STEARNS MORTGAGE SECURITIES INC.
By: /s/ Joseph T. Jurkowski, Jr.
Name: Joseph T. Jurkowski, Jr.
Title: Vice President/Asst. Secretary
<PAGE>
Annex A
Mortgage Loan Schedule
SEE EXHIBIT B OF THE POOLING AND SERVICING AGREEMENT
Exhibit 4.1
-----------
EXECUTION COPY
BEAR STEARNS MORTGAGE SECURITIES INC.,
SELLER,
ICI FUNDING CORPORATION,
MASTER SERVICER,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
TRUSTEE
---------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1996
--------------------------------
Bear Stearns Mortgage Securities Inc.
Mortgage Pass-Through Certificates
Series 1996-9
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions
Page
Definitions....................................................I-1
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
2.01. Conveyance of Mortgage Loans to Trustee.......................II-1
2.02. Acceptance of Mortgage Loans by Trustee.......................II-3
2.03. Representations, Warranties and Covenants of the
Master Servicer..............................................II-5
2.04. Substitution of Mortgage Loans...............................II-7
2.05. Representations and Warranties of the Trustee................II-8
2.06. Issuance of Certificates.....................................II-9
2.07. Representations and Warranties Concerning the Seller.........II-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-4
3.07. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts...........................................III-5
3.08. Access to Certain Documentation and Information
Regarding the Mortgage Loans.................................III-6
3.09. Maintenance of Primary Insurance Policies; Collection
Thereunder...................................................III-6
3.10. Maintenance of Hazard Insurance and Fidelity Coverage........III-7
3.11. Due-on-Sale Clauses; Assumption Agreements...................III-9
3.12. Realization Upon Defaulted Mortgage Loans....................III-10
3.13. Trustee to Cooperate; Release of Mortgage Files..............III-11
3.14. Servicing and Master Servicing Compensation..................III-13
3.15. Annual Statement of Compliance...............................III-13
3.16 Annual Independent Public Accountants' Servicing
Report.......................................................III-14
3.17. REMIC-Related Covenants......................................III-14
3.18. Additional Information.......................................III-14
3.19. Optional Purchase of Defaulted Mortgage Loans................III-15
ARTICLE IV
Accounts
4.01. Protected Accounts...........................................IV-1
4.02. Certificate Account..........................................IV-2
4.03. Permitted Withdrawals and Transfers from the
Certificate Account..........................................IV-5
4.04. Custody Account..............................................IV-8
4.05. Buydown Accounts.............................................IV-10
ARTICLE V
Certificates
5.01. Certificates..................................................V-1
5.02. Registration of Transfer and Exchange of Certificates.........V-6
5.03. Mutilated, Destroyed, Lost or Stolen Certificates.............V-11
5.04. Persons Deemed Owners.........................................V-11
5.05. Transfer Restrictions on Residual Certificates................V-11
5.06. Restrictions on Transferability of Private
Certificates..................................................V-13
5.07. ERISA Restrictions............................................V-13
5.08. Rule 144A Information.........................................V-14
ARTICLE VI
Payments to Certificateholders
6.01. Distributions on the Certificates.............................VI-1
6.02. [Reserved]....................................................VI-5
6.03. Allocation of Losses..........................................VI-5
6.04. [Reserved]....................................................VI-8
6.05. Payments......................................................VI-8
6.06. Statements to Certificateholders..............................VI-8
6.07. Reports to the Trustee and the Master Servicer................VI-11
6.08. Monthly Advances..............................................VI-13
6.09. Compensating Interest Payments................................VI-14
6.10. Reports of Foreclosures and Abandonment of Mortgaged
Property......................................................VI-14
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-5
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-7
9.11. Appointment of Co-Trustee or Separate Trustee...................IX-8
9.12. Master Servicer Shall Provide Information as
Reasonably Required.............................................IX-9
9.13. Federal Information Returns and Reports to
Certificateholders..............................................IX-9
ARTICLE X
Termination
10.01. Termination Upon Repurchase by ICI Funding or its
Designee or Liquidation of All Mortgage Loans....................X-1
10.02. Additional Termination Requirements..............................X-3
ARTICLE XI
Miscellaneous Provisions
11.01. Intent of Parties................................................XI-1
11.02. Amendment........................................................XI-1
11.03. Recordation of Agreement.........................................XI-2
11.04. Limitation on Rights of Certificateholders.......................XI-2
11.05. Acts of Certificateholders.......................................XI-3
11.06. [Reserved].......................................................XI-4
11.07. Governing Law....................................................XI-4
11.08. Notices..........................................................XI-4
11.09. Severability of Provisions.......................................XI-5
11.10. Successors and Assigns...........................................XI-5
11.11. Article and Section Headings.....................................XI-5
11.12. Counterparts.....................................................XI-5
11.13. Notice to Rating Agencies .......................................XI-5
EXHIBITS
Exhibit A-1 - Form of Face of Certificates
Exhibit A-2 - Form of Reverse of Certificates
Exhibit B - Mortgage Loan Schedule
Exhibit C - Representations and Warranties of ICI Funding
Concerning the Mortgage Loans
Exhibit D - Form of Request for Release
Exhibit E - Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1 - Form of Investment Letter
Exhibit F-2 - Form of Rule 144A and Related Matters Certificate
Exhibit G - Form of Special Servicing and Collateral Fund
Agreement
Exhibit H - Form of Trustee's Initial Certification
Exhibit I - Form of Trustee's Final Certification
<PAGE>
POOLING AND SERVICING AGREEMENT
Pooling and Servicing Agreement dated as of December 1, 1996, among
Bear Stearns Mortgage Securities Inc., a Delaware corporation, as the seller
(the "Seller"), ICI Funding Corporation, a California corporation ("ICI
Funding"), as master servicer (the "Master Servicer"), and Bankers Trust Company
of California, N.A., a national banking association, as trustee (the "Trustee").
PRELIMINARY STATEMENT
On or prior to the Closing Date, the Seller has acquired the Mortgage
Loans from ICI Funding. On the Closing Date, the Seller will sell the Mortgage
Loans and certain other property to the Trust Fund and receive in consideration
therefor Certificates evidencing the entire beneficial ownership interest in the
Trust Fund. ICI Funding will be the Master Servicer for the Mortgage Loans.
The Trustee shall make an election for the assets constituting REMIC
II to be treated for federal income tax purposes as a REMIC. On December 23,
1996 (the "Startup Day"), all the Classes of REMIC II Regular Certificates will
be designated "regular interests" in such REMIC and the Class R-2 Certificates
will be designated the "residual interest" in such REMIC.
The Trustee shall make an election for the assets constituting REMIC I
to be treated for federal income tax purposes as a REMIC. On the Startup Day,
all the Classes of Certificates except for the Class R-1, Class R-2 and Class X
Certificates will be designated "regular interests" in such REMIC and the Class
R-1 Certificates will be designated the "residual interest" in such REMIC. Each
component of the Class X Certificates as described in Section 5.01 (each, a
"Separate Component") will be designated as a "regular interest" in REMIC I.
The Mortgage Loans will have an Outstanding Principal Balance as of
the Cut-Off Date, after deducting all Scheduled Principal due on or before the
Cut-Off Date, of $192,127,479.85. The initial principal amount of the
Certificates will not exceed such Outstanding Principal Balance.
In consideration of the mutual agreements herein contained, the
Seller, the Master Servicer and the Trustee agree as follows:
ARTICLE I
Definitions
Whenever used in this Agreement, the following words and phrases,
unless otherwise expressly provided or unless the context otherwise requires,
shall have the meanings specified in this Article.
Account: The Custody Account, the Certificate Account (including each
subaccount thereof), the Protected Accounts or the Servicing Accounts as the
context may require.
Accrued Certificate Interest: For any Certificate (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-I-8 Certificate, the
Class A-I-8 Notional Amount and, in the case of a Class X Certificate, the Class
X Notional Amount) of such Certificate immediately prior to such Distribution
Date, calculated on the basis of a 360-day year consisting of twelve 30-day
months, less (i) in the case of a Senior Certificate, such Certificate's share
of any Net Interest Shortfall and the interest portion of Excess Losses and,
after the Cross-Over Date, the interest portion of any Realized Losses and (ii)
in the case of a Subordinate Certificate, such Certificate's share of any Net
Interest Shortfall and the interest portion of any Realized Losses.
Advancing Date: The fourth Business Day preceding the related
Distribution Date.
Affiliate: As to any Person, any other Person controlling, controlled
by or under common control with such Person. "Control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" have meanings correlative to the foregoing. The Trustee may
conclusively presume that a Person is not an Affiliate of another Person unless
a Responsible Officer of the Trustee has actual knowledge to the contrary.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Allocable Share: With respect to each Class of Subordinate
Certificates:
(a) as to any Distribution Date and amounts
distributable pursuant to clauses (i) and (iii) of the
Subordinate Optimal Principal Amount, the fraction, expressed
as a percentage, the numerator of which is the Current
Principal Amount of such Class and the denominator of which is
the aggregate Current Principal Amount of all Classes of the
Subordinate Certificates; and
(b) as to any Distribution Date and amounts
distributable pursuant to clause (ii), (iv) and (v) of the
Subordinate Optimal Principal Amount, and as to each Class of
Subordinate Certificates for which (x) the
related Prepayment Distribution Trigger has been satisfied on
such Distribution Date, the fraction, expressed as a
percentage, the numerator of which is the Current Principal
Amount of such Class and the denominator of which is the
aggregate Current Principal Amount of all such Classes and (y)
the related Prepayment Distribution Trigger has not been
satisfied on such Distribution Date, 0%; provided that if on a
Distribution Date, the Current Principal Amount of any Class
of Subordinate Certificates for which the related Prepayment
Distribution Trigger was satisfied on such Distribution Date
is reduced to zero, any amounts distributed pursuant to this
clause (b), to the extent of such Class's remaining Allocable
Share, shall be distributed to the remaining Classes of
Subordinate Certificates in reduction of their respective
Current Principal Amounts in the order of their numerical
Class designations.
Anniversary Determination Date: The Determination Date occurring in
January of each year that the Certificates are outstanding, commencing in
January 1998.
Applicable Credit Rating: A rating of AAA, in the case of S&P or Fitch
for any long-term deposit or security or a rating of A-1+, in the case of S&P,
or F-1+ in the case of Fitch, for any short-term deposit or security (or AAAm or
AAAm-G, in the case of S&P, for any Permitted Investment listed in clause (viii)
of the definition thereof).
Appraised Value: For any Mortgaged Property, the amount set forth as
the appraised value of such Mortgaged Property in an appraisal made for the
mortgage originator in connection with its origination of the related Mortgage
Loan.
Assumed Final Distribution Date: With respect to each Class of
Certificates, December 25, 2027.
Available Funds: With respect to any Distribution Date, the sum of the
Group I Available Funds and the Group II Available Funds for such Distribution
Date.
Bankruptcy Code: The United States Bankruptcy Code, as amended, as
codified in 11 U.S.C. Section 101-1330.
Bankruptcy Coverage Termination Date: The Distribution Date upon which
the Bankruptcy Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction.
Bankruptcy Loss Amount: As of any Determination Date prior to the
first Anniversary Determination Date, the Bankruptcy Loss Amount shall equal
$100,000, as reduced by the aggregate amount of Bankruptcy Losses since the
Cut-off Date. As of any Determination Date after the first Anniversary
Determination Date, other than an Anniversary Determination Date, the Bankruptcy
Loss Amount shall equal the Bankruptcy Loss Amount on the immediately preceding
Anniversary Determination Date as reduced by the aggregate amount of Bankruptcy
Losses since such preceding Anniversary Determination Date. As of any
Anniversary Determination Date, the Bankruptcy Loss Amount shall equal the
lesser of (x) the Bankruptcy Loss Amount as of the preceding Determination Date
as reduced by any Bankruptcy Losses for the preceding Distribution Date, and (y)
the S&P Formula Amount for such Anniversary Determination Date.
The Bankruptcy Loss Amount may be further reduced by ICI Funding
(including accelerating the manner in which such coverage is reduced) provided
that prior to any such reduction, ICI Funding shall obtain written confirmation
from each Rating Agency that such reduction shall not adversely affect the
then-current rating assigned to the related Classes of Certificates by such
Rating Agency and shall provide a copy of such written confirmation to the
Trustee.
Benefit Plan Opinion: The meaning specified in Section 5.07(a) hereof.
Book-Entry Certificates: All Classes of Certificates other than the
Class R-1 and Class R-2 Certificates and, to the extent provided in Section
5.02, the Class B-4, Class B-5 and Class B-6 Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which the New York Stock Exchange is closed or on which banking
institutions in New York City or in California are authorized or obligated by
law or executive order to be closed.
Buydown Account: A custodial account established and maintained by a
Lender in a Designated Depository Institution, as described in Section 4.05 for
deposit of Buydown Funds.
Buydown Funds: Any amount contributed by the seller of any Mortgaged
Property, the Mortgagee, a Sub-Servicer, the Master Servicer or another party in
order to enable the Mortgagor to reduce the payments required to be made by the
Mortgagor in the early years of a Mortgage Loan.
Buydown Mortgage Loan: Any Mortgage Loan as to which a specified
amount of interest is paid out of related Buydown Funds.
Buydown Period: The period during which Buydown Funds are required to
be applied to a Buydown Mortgage Loan.
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 "Bankers Trust
Company of California, N.A., as Trustee f/b/o holders of Bear Stearns Mortgage
Securities Inc. Mortgage Pass-Through Certificates, Series 1996-9 - Certificate
Account" which shall have two subaccounts as provided in Section 4.02.
Certificate Account Advance: As of any Determination Date, the amount
on deposit in a Protected Account or Custody Account which is not required to be
transferred to the Certificate Account for distribution during the calendar
month in which such Determination Date occurs but which is deposited in a
subaccount of the Certificate Account and used to make a distribution to
Certificateholders during such calendar month on account of Scheduled Payments
on the Mortgage Loans due on the Due Date for such month not being paid on or
before such Determination Date except insofar as such unpaid amounts are the
result of application of the Relief Act.
Certificate Owner: Any Person who is the beneficial owner of a
Certificate registered in the name of the Depository or its nominee.
Certificate Register: The register maintained pursuant to Section
5.02.
Certificateholder: A Holder of a Certificate.
Class: With respect to the Certificates, A-I-1, A-I-2, A-I-3, A-I-4,
A-I-5, A-I-6, A-I-7, A-I-8, A-I-9, A-I-10, A-I-11, A- II, PO, X, B-1, B-2, B-3,
B-4, B-5, B-6, R-1 and R-2. With respect to the REMIC II Regular Certificates,
each such REMIC II Regular Certificate.
Class A Certificates: Class A-I-1, Class A-I-2, Class A- I-3, Class
A-I-4, Class A-I-5, Classes A-I-6, Class A-I-7, Class A- I-8, Class A-I-9, Class
A-I-10, Class A-I-11 and Class A-II Certificates.
Class A-I Certificates: Class A-I-1, Class A-I-2, Class A-I-3, Class
A-I-4, Class A-I-5, Classes A-I-6, Class A-I-7, Class A-I-8, Class A-I-9, Class
A-I-10, and Class A-I-11 Certificates.
Class A-I Senior Percentage: Initially 91.75%. On any Distribution
Date, the lesser of (i) 100% and (ii) the percentage (carried to six places
rounded up) obtained by dividing the aggregate Current Principal Amounts of all
the Class A-I Certificates (other than the Class A-1-8 Certificates) and the
Residual Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balances of all the Group I Mortgage Loans (other
than the PO Percentage of the Group I Discount Mortgage Loans) immediately
preceding such Distribution Date.
Class A-II Senior Percentage: Initially 91.75%. On any Distribution
Date, the lesser of (i) 100% and (ii) the percentage (carried to six places
rounded up) obtained by dividing the aggregate Current Principal Amount of the
Class A-II Certificates immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balances of all of the Group II Mortgage Loans
immediately preceding such Distribution Date.
Class A-I Senior Prepayment Percentage or Class A-II 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- 100%
December 25, 2001
January 25, 2002 - Class A-I Senior Percentage or
December 25, 2002 Class A-II Senior Percentage,
respectively, plus 70% of the
Group I Subordinate Percentage or
Group II Subordinate Percentage,
respectively
January 25, , 2003 - Class A-I Senior Percentage or
December 25, 2003 Class II Senior Percentage,
respectively, plus 60% of the
Group I Subordinate Percentage or
Group II Subordinate Percentage,
respectively
January 25, 2004 - Class A-I Senior Percentage or
December 25, 2004 Class A-II Senior Percentage,
respectively, plus 40% of the
Group I Subordinate Percentage or
Group II Subordinate Percentage,
respectively
January 25, 2005 - Class A-I Senior Percentage or
December 25, 2005 Class A-II Senior Percentage,
respectively, plus 20% of the
Group I Subordinate Percentage or
Group II Subordinate Percentage,
respectively
January 25, 2006 and Class A-I Senior Percentage or
thereafter Class A-II Senior Percentage
Notwithstanding the foregoing, if on any Distribution Date the Class
A-I Senior Percentage or the Class A-II Senior Percentage exceeds such
respective Senior Percentage as of the Cut-Off Date, the Class A-I Senior
Prepayment Percentage or the Class A-II Senior Prepayment Percentage,
respectively, for such Distribution Date will equal 100%. On the Distribution
Date on which the aggregate of the Current Principal Amounts of the Class A-1
Certificates and the Residual Certificates are reduced to zero, the Class A-I
Senior Prepayment Percentage shall be the minimum percentage sufficient to
effect such reduction and on the Distribution Date on which the Current
Principal Amount of the Class A-II Certificates is reduced to zero, the Class
A-II Senior Prepayment Percentage shall be the minimum percentage necessary to
effect such reduction; provided that in the circumstances described in paragraph
(D) in Section 6.01(a), prepayments resulting from Mortgage Loans in one
Mortgage Loan Group and otherwise distributable to the Subordinate Certificates
will be distributed to the Senior Certificates related to the other Mortgage
Loan Group (other than the Class PO and Class X Certificates in the case of the
Group I Mortgage Loans).
In addition, notwithstanding the foregoing, no reduction of a Senior
Prepayment Percentage shall occur on any Distribution Date unless, as of the
last day of the month preceding such Distribution Date either (a)(i)(X) the
aggregate Outstanding Principal Balance of Mortgage Loans in both Mortgage Loan
Groups delinquent 60 days or more (including for this purpose any Mortgage Loans
in foreclosure and Mortgage Loans with respect to which the related Mortgaged
Property has been acquired by the Trust Fund), averaged over the last six
months, as a percentage of the aggregate Current Principal Amount of the
Subordinate Certificates averaged over the last six months, does not exceed 50%
or (Y) the aggregate Outstanding Principal Balance of the Mortgage Loans in both
Mortgage Loan Groups delinquent 60 days or more averaged over the last six
months, as a percentage of the aggregate Outstanding Principal Balance of all
Mortgage Loans averaged over the last six months, does not exceed 2% and (ii)
cumulative Realized Losses on the Mortgage Loans in both Mortgage Loan Groups 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 or (b)(i) the outstanding
principal balance of the Mortgage Loans in both Mortgage Loan Groups delinquent
60 days or more averaged over the last six months, as a percentage of the
aggregate outstanding principal balance of all of the Mortgage Loans averaged
over the last six months, does not exceed 4% and (ii) Realized Losses on the
Mortgage Loans in both Mortgage Loan Groups to date for such Distribution date
are less than 10% of the Original Subordinate Principal Balance.
Class A-I-8 Notional Amount: With respect to the Class A-I-8
Certificates, an amount equal to the Current Principal Amount of the Class A-I-7
Certificates as of the Due Date in the month prior to the month of the
Distribution Date.
Class A-I-11 Optimal Principal Amount: With respect to any
Distribution Date occurring within the first five years after the Closing Date
(i.e., prior to the Distribution Date in January 2002) zero. The Class A-I-11
Optimal Principal Amount for any Distribution Date occurring thereafter will be
as follows: for any Distribution Date during the sixth year after the Closing
Date, 30% of the Class A-I-11 Pro Rata Optimal Principal Amount for such
Distribution Date; for any Distribution Date during the seventh year after the
Closing Date, 40% of the Class A-I-11 Pro Rata Optimal Principal Amount for such
Distribution Date; for any Distribution Date during the eighth year after the
Closing Date, 60% of the Class A-I-11 Pro Rata Optimal Principal Amount for such
Distribution Date; for any Distribution Date during the ninth year after the
Closing Date, 80% of the Class A-I-11 Pro Rata Optimal Principal Amount for such
Distribution Date; and, for any Distribution Date thereafter, 100% of the Class
A-I-11 Pro Rata Optimal Distribution Amount for such Distribution Date.
Notwithstanding the foregoing, if on any Distribution Date the Current Principal
Amount of each Class of Class A-I Certificates (other than the Class A-I-11
Certificates) has been reduced to zero, the Class A-I-11 Optimal Principal
Amount shall equal the Group I Senior Optimal Principal Amount to the extent not
distributed on such Distribution Date to the other Classes of Class A-I
Certificates or Residual Certificates.
Class A-I-11 Pro Rata Optimal Principal Amount: With respect to any
Distribution Date, an amount equal to the product of (x) the Group I Senior
Optimal Principal Amount for such Distribution Date multiplied by (y) a
fraction, the numerator of which is the sum of the Current Principal Amounts of
the Class A-I- 11 Certificates immediately prior to such Distribution Date and
the denominator of which is the aggregate Current Principal Amounts of all
Classes of Class A-I Certificates and Residual Certificates immediately prior to
such Distribution Date.
Class B Group I Current Principal Amount: For any Distribution Date,
the aggregate Current Principal Amounts of the Class B Certificates as of such
Distribution Date less the Class B Group II Current Principal Amount for such
Distribution Date.
Class B Group II Current Principal Amount: For any Distribution Date,
the sum of the Scheduled Principal Balances of the Group II Mortgage Loans as of
such Distribution Date less the Current Principal Amount of the Class A-II
Certificates as of such Distribution Date.
Class PO Cash Shortfall: The difference between the Class PO Principal
Distribution Amount for a Distribution Date and the actual amount distributed to
holders of the Class PO Certificates on such Distribution Date in the instance
where Group I Available Funds are insufficient to make the full amount of
distributions required to be made to holders of the Class PO Certificates.
Class PO Deferred Amount: With respect to each Distribution Date
through the Cross-Over Date, the aggregate of all amounts allocable on such
Distribution Date to the Class PO Certificates in respect of the principal
portion of Realized Losses (other than Excess Losses) and Class PO Cash
Shortfall and all amounts previously allocated in respect of such losses and
Class PO Cash Shortfall to the Class PO Certificates and not distributed on
prior Distributions Dates.
Class PO Deferred Payment Writedown Amount: With respect to any
Distribution Date, the amount if any, distributed on such date in respect of the
Class PO Deferred Amount.
Class PO Principal Distribution Amount: With respect to each
Distribution Date, an amount, without duplication, equal to the sum of:
(i) the applicable PO Percentage of all Scheduled Principal due on
each Group I Discount Mortgage Loan on the first day of the month
in which the Distribution Date occurs, as specified in the
amortization schedule at the time applicable thereto (after
adjustment for previous principal prepayments and the principal
portion of Debt Service Reductions after the Bankruptcy Coverage
Termination Date, but before any adjustment to such amortization
schedule by reason of any other bankruptcy or similar proceeding
or any moratorium or similar waiver or grace period);
(ii) the applicable PO Percentage of the Scheduled Principal Balance
of each Group I Discount Mortgage Loan which was the subject of a
Voluntary Principal Prepayment in full received by the Master
Servicer during the applicable Prepayment Period;
(iii) the applicable PO Percentage of all Voluntary Principal
Prepayments in part received on Group I Discount Mortgage Loans
during the applicable Prepayment Period;
(iv) the lesser of (a) the applicable PO Percentage of the sum of (w)
the Net Liquidation Proceeds allocable to principal on each Group
I Discount Mortgage Loan which became a Liquidated Mortgage Loan
during the related Prepayment Period (other than Group I Discount
Mortgage Loans described in clause (x)) and (x) the Scheduled
Principal Balance of each Group I Discount Mortgage Loan that was
purchased by a primary mortgage insurer during the related
Prepayment Period as an alternative to paying a claim under the
related insurance policy, and (b) the applicable PO Percentage of
the sum of (w) the Scheduled Principal Balance of each Group I
Discount Mortgage Loan which became a Liquidated Mortgage Loan
during the related Prepayment Period (other than Group I Discount
Mortgage Loans described in clause (x)) and (x) the Scheduled
Principal Balance of each Group I Discount Mortgage Loan that was
purchased by a primary mortgage insurer during the related
Prepayment Period as an alternative to paying a claim under the
related Insurance policy less (y) in the case of clause (b), the
applicable PO Percentage of the principal portion of Excess
Losses (other than Debt Service Reductions) with respect to Group
I Mortgage Loans incurred during the related Prepayment Period;
and
(v) the applicable PO Percentage of the sum of (a) the Scheduled
Principal Balance of each Group I Discount Mortgage Loan which
was repurchased by the Master Servicer in connection with such
Distribution Date and (b) the difference, if any, between the
Scheduled Principal Balance of a Group I Discount Mortgage Loan
that has been replaced by the Master Servicer with a substitute
Group I Discount Mortgage Loan pursuant to the Agreement in
connection with such Distribution Date and the Scheduled
Principal Balance of such substitute Group I Discount Mortgage
Loan.
Class X Component I Accrued Certificate Interest: For any Distribution
Date, the excess of all interest accrued on the aggregate Scheduled Principal
Balances of the Group I Mortgage Loans at the weighted average of the Net Rates
on such Mortgage Loans during the related Interest Accrual Period over the sum
of (x) all Accrued Certificate Interest on the Class A-I Certificates and the
Residual Certificates for such Distribution Date, (y) the portion of the Accrued
Certificate Interest on the Class B Certificates for such Distribution Date that
the Class B Group I Current Principal Amount as of such Distribution Date bears
to the aggregate Current Principal Amounts of the Class B Certificates as of
such Distribution Date, and (z) the portion of (i) any Net Interest Shortfall
and (ii) the interest portion of any Excess Losses, and after the applicable
Cross-Over Date, (iii) the interest portion of any Realized Losses, allocated to
the Class X Certificates that the Class X Component I Accrued Certificate
Interest (determined without regard to this clause (z)) bears to the total
Accrued Certificate Interest on the Class X Certificates (determined without
regard to such Net Interest Shortfall, or the interest portion of Excess Losses
or Realized Losses, as applicable). However, if on any Distribution Date, the
interest on the Group II Mortgage Loans at their Net Rates is less than the
Accrued Certificate Interest on the Class A-II Certificates, the Class X
Component I Accrued Certificate Interest for such Distribution Date shall equal
the Accrued Certificate Interest for the Class X Certificates.
Class X Component II Accrued Certificate Interest: For any
Distribution Date, the excess of all interest accrued on the aggregate Scheduled
Principal Balances of the Group II Mortgage Loans at the weighted average of the
Net Rates on such Mortgage Loans during the related Interest Accrual Period over
the sum of (x) all Accrued Certificate Interest on the Class A-II Certificates
for such Distribution Date, (y) the portion of the Accrued Certificate Interest
on the Class B Certificates for such Distribution Date that the Class B Group II
Current Principal Amount as of such Distribution Date bears to the aggregate
Current Principal Amounts of the Class B Certificates as of such Distribution
Date, and (z) the portion of (i) any Net Interest Shortfall and (ii) the
interest portion of any Excess Losses, and after the applicable Cross-Over Date,
(iii) the interest portion of any Realized Losses, allocated to the Class X
Certificates that the Class X Component II Accrued Certificate Interest
(determined without regard to this clause (z)) bears to the total Accrued
Certificate Interest on the Class X Certificates (determined without regard to
such Net Interest Shortfall, or the Interest portion of Excess Losses or
Realized Losses, as applicable). However, if on any Distribution Date, the
interest on the Group I Mortgage Loans at their Net Rates is less than the
Accrued Certificate Interest on the Class A-1 Certificates, the Class X
Component II Accrued Certificate Interest for such Distribution Date shall equal
the Accrued Certificate Interest for the Class X Certificates.
Class X Notional Amount: On any Distribution Date, with respect to the
Class X Certificates, an amount equal to the aggregate Scheduled Principal
Balances of all of the Mortgage Loans.
Closing Date: December 23, 1996.
Code: The Internal Revenue Code of 1986, as amended.
Compensating Interest Payments: As defined in Section 6.09.
Component I: The sum of the 12 Separate Components corresponding to
the Class A-I Certificates (treating the Class A- I-7 and Class A-I-8
Certificates as if they were a single Class of Certificates for this purpose),
the Class R-1 Certificates and the Current Principal Amount of the Class B
Certificates which derives its distributions from Group I Mortgage Loans.
Component II: The sum of the 2 Separate Components corresponding to
the Class A-II Certificates and to the Current Principal Amount of the Class B
Certificates which derives its distributions from Group II Mortgage Loans.
Corporate Trust Office: The office of the Trustee at which at any
particular time its corporate trust business is administered, which office, at
the date of the execution of this Agreement, is located at 3 Park Plaza, 16th
Floor, Irvine, California 92614, Attention: Bear Stearns/ICI 1996-9.
Corresponding Class: As indicated in Section 5.01(c).
Cross-Over Date: The first Distribution Date on which the aggregate
Current Principal Amount of the Subordinate Certificates has been reduced to
zero (giving effect to all distributions on such Distribution Date).
Current Principal Amount: With respect to any Certificate (other than
a Class A-I-8 Certificate or a Class X Certificate) as of any Distribution Date,
the initial principal amount of such Certificate reduced by (A) the sum of (i)
all amounts distributed on previous Distribution Dates on such Certificate with
respect to principal (and the Class PO Cash Shortfall with respect to a Class PO
Certificate), (ii) the principal portion of all Realized Losses allocated prior
to such Distribution Date to such Certificate, and (iii) in the case of a
Subordinate Certificate, such Certificate's pro rata share, if any, of the
Subordinate Certificate Writedown Amount and the Class PO Deferred Payment
Writedown Amount for previous Distribution Dates. With respect to any Class of
Certificates (other than the Class A- I-8 or the Class X Certificates), the
Current Principal Amount thereof will equal the sum of the Current Principal
Amounts of all Certificates in such Class. Notwithstanding the foregoing, solely
for purposes of giving consents, directions, waivers, approvals, requests and
notices, the Class R-1 and Class R-2 Certificates after the Distribution Date on
which they receive the distribution of the last dollar of their original
principal amount shall be deemed to have a Current Principal Amount equal to
their Current Principal Amount on the day immediately preceding such
Distribution Date.
Custody Account: A trust account created and maintained pursuant to
Section 4.04.
Cut-Off Date: December 1, 1996.
Cut-Off Date Balance: $192,127,479.85
Debt Service Reduction: Any reduction of the Scheduled Payments which
a Mortgagor is obligated to pay with respect to a Mortgage Loan as a result of
any proceeding under the Bankruptcy Code or any other similar state law or other
proceeding.
Debtor Relief Laws: Any applicable liquidation, conservatorship,
receivership, bankruptcy, insolvency, rearrangement, moratorium, reorganization,
or similar debtor relief laws affecting the rights of creditors generally from
time to time in effect.
Defaulted Mortgage Loan: Any Mortgage Loan as to which the Mortgagor
has failed to make unexcused payment in full of three or more consecutive
Scheduled Payments.
Deficient Valuation: With respect to any Mortgage Loan, a valuation of
the Mortgaged Property by a court of competent jurisdiction in an amount less
than the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the Bankruptcy Code or any other
similar state law or other proceeding.
Definitive Certificates: The meaning specified in Subsection 5.01(b)
hereof.
Depository: The Depository Trust Company, the nominee of which is Cede
& Co., or any successor thereto.
Depository Agreement: The meaning specified in Subsection 5.01(a)
hereof.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Designated Depository Institution: A depository institution
(commercial bank, mutual savings bank or savings and loan association) or trust
company (which may include the Trustee), the deposits of which are fully insured
by the FDIC to the extent provided by law.
Determination Date: The 18th day of the month of the Distribution
Date, or if such day is not a Business Day, the following Business Day.
Distribution Date: The 25th day of any month, beginning in the month
immediately following the month of the initial issuance of the Certificates, or,
if such 25th day is not a Business Day, the Business Day immediately following.
DTC Custodian: Bankers Trust Company of California, N.A., or its
successors in interest.
Due Date: With respect to each Mortgage Loan, the first day of each
month, on which its Scheduled Payment is due.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month in which the
Distribution Date occurs and ending at the close of business on the first day of
the month in which the Distribution Date occurs.
ERISA: Employee Retirement Income Security Act of 1974, as amended.
Event of Default: An event described in Section 8.01.
Excess Bankruptcy Loss: Any Bankruptcy Loss, or portion thereof, (i)
occurring after the Bankruptcy Coverage Termination Date or (ii) if on such
date, in excess of the then-applicable Bankruptcy Loss Amount.
Excess Fraud Loss: Any Fraud Loss, or portion thereof, (i) occurring
after the Fraud Coverage Termination Date or (ii) if on such date, in excess of
the then-applicable Fraud Loss Amount.
Excess Liquidation Proceeds: To the extent that such amount is not
required by law to be paid to the related Mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the
sum of (i) the Outstanding Principal Balance of such Mortgage Loan and accrued
but unpaid interest at the related Mortgage Interest Rate through the last day
of the month in which the related Liquidation Date occurs, plus (ii) related
Liquidation Expenses.
Excess Losses: The sum of any Excess Bankruptcy Losses, Excess Fraud
Losses and Excess Special Hazard Losses.
Excess Special Hazard Loss: Any Special Hazard Loss, or portion
thereof, (i) occurring after the Special Hazard Termination Date or (ii) if on
such date, in excess of the then-applicable Special Hazard Loss Amount.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
FHLMC: Federal Home Loan Mortgage Corporation or any successor
thereto.
Fitch: Fitch Investors Service, L.P. and its successors in interest.
Floating Rate Certificates: The Class A-I-7 Certificates and A-I-8
Certificates.
FNMA: Federal National Mortgage Association or any successor thereto.
Fractional Undivided Interest: With respect to any Class of
Certificates other than the Class A-I-8 Certificates and the Class X
Certificates, the fractional undivided interest evidenced by any Certificate of
such Class, the numerator of which is the Current Principal Amount of such
Certificate and the denominator of which is the Current Principal Amount of such
Class. With respect to the Class A-I-8 Certificates, the fractional undivided
interest evidenced by any Certificate of such Class, the numerator of which is
the Class A-I-8 Notional Amount of such Certificate and the denominator of which
is the Class A-I-8 Notional Amount of such Class. With respect to the Class X
Certificates, the fractional undivided interest evidenced by any Certificate of
such Class, the numerator of which is the Notional Amount of such Certificate
and the denominator of which is the Notional Amount of such Class. With respect
to the Certificates in the aggregate, the fractional undivided interest
evidenced by (i) a Class A-I-8 Certificate or a Class X Certificate will be
deemed to equal 1% multiplied by a fraction, the numerator of which is the Class
A-I-8 Notional Amount or the Class X Notional Amount, as the case may be, of
such Certificate and the denominator of which is the sum of the Class A- I-8
Notional Amount and the Class X Notional Amount, (ii) a Class R-1 or Class R-2
Certificate will be deemed to equal 1% multiplied by a fraction the numerator of
which is the Current Principal Amount of such Certificate and the denominator of
which is the aggregate Current Principal Amount of such Classes and (iii) a
Certificate of any other Class will be deemed to equal 97% (plus an additional
1% if and when the Class A-I-8 and Class X Certificates have been paid in full
prior to the date of determination) multiplied by a fraction, the numerator of
which is the Current Principal Amount of such Certificate and the denominator of
which is the Current Principal Amount of all the Certificates.
Fraud Coverage Termination Date: The Distribution Date upon which the
related Fraud Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
Fraud Loss: Any Realized Loss attributable to fraud in the origination
of the related Mortgage Loan.
Fraud Loss Amount: As of any Distribution Date after the Cut-Off Date,
(x) prior to the first anniversary of the Cut-Off Date, an amount equal to
$3,842,550 minus the aggregate amount of Fraud Losses that would have been
allocated to the Subordinate Certificates in accordance with Section 6.03 in the
absence of the Loss Allocation Limitation since the Cut-Off Date, and (y) from
the first through the fifth anniversary of the Cut-Off Date, an amount equal to
(1) the lesser of (a) the Fraud Loss Amount as of the most recent anniversary of
the Cut-Off Date and (b) 1.00% of the aggregate Outstanding Principal Balance of
all of the Mortgage Loans as of the most recent anniversary of the Cut-Off Date
minus (2) the Fraud Losses that would have been allocated to the Subordinate
Certificates in accordance with Section 6.03 in the absence of the Loss
Allocation Limitation since the most recent anniversary of the Cut-Off Date.
After the fifth anniversary of the Cut-Off Date the Fraud Loss Amount shall be
zero.
Funds Transfer Date: The 21st day of the month of the Distribution
Date, or if such day is not a Business Day, the preceding Business Day (but in
no event less than two Business Days prior to the related Distribution Date).
Global Certificate: Any Private Certificate registered in the name of
the Depository or its nominee, beneficial interests in which are reflected on
the books on the Depository or on the books of a Person maintaining an account
with such Depository (directly or as an indirect participant in accordance with
the rules of such Depository).
Group I Available Funds or Group II Available Funds: With respect to
any Distribution Date, an amount equal to the aggregate of the following with
respect to the Group I Mortgage Loans or Group II Mortgage Loans, respectively:
(a) all previously undistributed payments on account of principal (including the
principal portion of Scheduled Payments, Principal Prepayments and the principal
portion of Net Liquidation Proceeds) and all previously undistributed payments
on account of interest received after the Cut-Off Date and on or prior to the
related Determination Date, (b) any Monthly Advances (including Certificate
Account Advances) and Compensating Interest Payments by the Master Servicer with
respect to such Distribution Date and (c) any amount reimbursed by the Master
Servicer pursuant to Subsections 4.02(d) and 4.04(d) in connection with losses
on Permitted Investments, except:
(i) all payments that were due on or before the Cut-Off Date;
(ii) all Principal Prepayments and Liquidation Proceeds received after
the applicable Prepayment Period and all related payments of
interest;
(iii)all payments, other than Principal Prepayments, that represent
early receipt of Scheduled Payments due on a date or dates
subsequent to the Due Date in the month in which such
Distribution Date occurs;
(iv) amounts received on particular Mortgage Loans as late payments of
principal or interest and respecting which, and to the extent
that, there are any unreimbursed Monthly Advances (including
Certificate Account Advances);
(v) amounts of Monthly Advances (including Certificate Account
Advances) determined to be Nonrecoverable Advances;
(vi) amounts permitted to be withdrawn from the Certificate Account
pursuant to Subsection 4.03(a); and
(vii)amounts withdrawn by the Trustee pursuant to Subsection 4.03(b)
to pay the Trustee's Fee.
Group I Discount Mortgage Loan: Any Mortgage Loan with a Net Rate less
than 8.00% per annum.
Group I Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule, all of which shall have Net Rates lower than or equal to
9.50% per annum.
Group II Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule, all of which have Net Rates greater than 9.50% per
annum.
Group I Senior Optimal Principal Amount or Group II Senior Optimal
Principal Amount: As to any Distribution Date, an amount equal to the sum,
without duplication, of:
(i) the Class A-I Senior Percentage or the Class A- II Senior
Percentage, respectively, of the applicable Non-PO Percentage of
Scheduled Principal due on the related Due Date on each Outstanding
Mortgage Loan in the related Mortgage Loan Group as of such Due Date
as specified in the amortization schedule at the time applicable
thereto (after adjustments for previous Principal Prepayments and the
principal portion of Debt Service Reductions subsequent to the
Bankruptcy Coverage Termination Date but before any adjustment to such
amortization schedule by reason of any bankruptcy (except as
aforesaid) or similar proceeding or any moratorium or similar waiver
or grace period);
(ii) the Class A-I Senior Prepayment Percentage or Class A-II
Senior Prepayment Percentage, respectively, of the applicable Non-PO
Percentage of all Voluntary Principal Prepayments in part on Mortgage
Loans in the Mortgage Group received during the related Prepayment
Period, together with the Class A-I Senior Prepayment Percentage or
Class A-II Senior Prepayment Percentage, respectively, of the
applicable Non-PO Percentage of the Scheduled Principal Balance of
each Mortgage Loan in the related Mortgage Loan Group which was the
subject of a Voluntary Principal Prepayment in full during the related
Prepayment Period;
(iii) the lesser of (x) the Class A-I Senior Prepayment
Percentage or Class A-II Senior Prepayment Percentage, respectively,
of the applicable Non-PO Percentage of the sum of (A) all Net
Liquidation Proceeds allocable to principal received in respect of
each Mortgage Loan in the related Mortgage Loan Group that became a
Liquidated Mortgage Loan during the related Prepayment Period (other
than Mortgage Loans in the related Mortgage Loan Group described in
clause (B)) and (B) the Scheduled Principal Balance of each such
Mortgage Loan purchased by an Insurer from the Trustee during the
related Prepayment Period pursuant to the related Primary Insurance
Policy; and (y) the Class A-I Senior Percentage or Class A-II Senior
Percentage, respectively, of the applicable Non-PO Percentage of the
sum of (A) the Scheduled Principal Balance of each Mortgage Loan in
the related Mortgage Loan Group that became a Liquidated Mortgage Loan
during the related Prepayment Period (other than Mortgage Loans in the
related Mortgage Loan Group described in clause (B)) and (B) the
Scheduled Principal Balance of each such Mortgage Loan that was
purchased by an Insurer from the Trustee during the related Prepayment
Period pursuant to the related Primary Insurance Policy, as reduced in
each case by the Class A-I Senior Percentage or Class A-II Senior
Percentage, respectively, of the applicable Non-PO Percentage of the
principal portion of any Excess Bankruptcy Losses (other than those
attributable to Debt Service Reductions), Excess Fraud Losses and
Excess Special Hazard Losses on each Mortgage Loans in the Related
Mortgage Loan Group incurred during the related Prepayment Period;
(iv) the Class A-I Senior Prepayment Percentage or Class A-II
Senior Prepayment Percentage, respectively, of the applicable Non-PO
Percentage of the Scheduled Principal Balance of each Mortgage Loan in
the related Mortgage Loan Group which was purchased on such
Distribution Date pursuant to Section 2.02, 2.03(d) or 3.19; and
(v) the Class A-I Senior Prepayment Percentage or Class A-II
Senior Prepayment Percentage, respectively, of the applicable Non-PO
Percentage of the difference, if any, between the Scheduled Principal
Balance of a Mortgage Loan in the related Mortgage Loan Group that has
been replaced by the Master Servicer with a Substitute Mortgage Loan
pursuant to Section 2.04 during the month of such Distribution Date
and the Scheduled Principal Balance of such Substitute Mortgage Loan.
Group I Subordinate Percentage: On any Distribution Date, 100% minus
the applicable Class A-I Senior Percentage.
Group II Subordinate Percentage: On any Distribution Date, 100% minus
the applicable Class A-II Senior Percentage.
Group I Subordinate Prepayment Percentage or Group II Subordinate
Prepayment Percentage: On any Distribution Date, 100% minus the applicable Class
A-I Senior Prepayment Percentage or Class A-II Senior Prepayment Percentage,
respectively, except that on any Distribution Date after the Current Principal
Amounts of the Class A-I Certificates and Residual Certificates and Class A-II
Certificates, respectively, have each been reduced to zero, the Group I
Subordinate Prepayment Percentage or Group II Subordinate Prepayment Percentage,
respectively, will equal 100%.
Holder: The Person in whose name a Certificate is registered in the
Certificate Register, except that, subject to Subsection 11.05(e), solely for
the purpose of giving any consent pursuant to this Agreement, any Certificate
registered in the name of the Seller, the Master Servicer, a Sub-Servicer or the
Trustee or any Affiliate thereof shall be deemed not to be outstanding and the
Fractional Undivided Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Fractional Undivided
Interests necessary to effect any such consent has been obtained.
ICI Funding: ICI Funding Corporation, a California corporation, or its
successors in interest.
Indemnified Persons: The Trustee, its employees and any separate
co-trustee.
Independent: When used with respect to any specified Person, this term
means that such Person (a) is in fact independent of the Seller or the Master
Servicer and of any Affiliate of the Seller or the Master Servicer, (b) does not
have any direct financial interest or any material indirect financial interest
in the Seller or the Master Servicer, or any Affiliate of the Seller or the
Master Servicer, and (c) is not connected with the Seller or the Master
Servicer, or any Affiliate as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
Individual Certificate: Any Private Certificate registered in the name
of the Holder other than the Depository or its nominee.
Institutional Accredited Investor: Any Person meeting the requirements
of Rule 501 (a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
Insurance Policy: With respect to any Mortgage Loan, any Primary
Insurance Policy, standard hazard insurance policy, flood insurance policy or
title insurance policy.
Insurance Proceeds: Amounts paid by the insurer under any Insurance
Policy covering any Mortgage Loan or Mortgaged Property other than amounts
required to be paid over to the Mortgagor pursuant to law or the related
Mortgage Note or Security Instrument and other than amounts used to repair or
restore the Mortgaged Property or to reimburse Insured Expenses.
Insured Expenses: Expenses covered by any Insurance Policy.
Insurer: Any issuer of an Insurance Policy.
Interest Accrual Period: With respect to each Distribution Date, for
each Class of REMIC II Certificates and each Class of Certificates (other than
the Class A-I-7 and Class A-I-8 Certificates), the calendar month preceding the
month in which the Distribution Date occurs, commencing in December, 1996; with
respect to the Class A-1-7 and Class A-1-8 Certificates for each Distribution
Date will commence on the 25th day of the calendar month preceding the calendar
month in which such Distribution Date occurs and will end on the 24th day of the
calendar month in which such Distribution Date occurs.
Interest Shortfall: With respect to any Distribution Date and each
Mortgage Loan that during the related Prepayment Period was the subject of a
Voluntary Principal Prepayment, or constitutes a Relief Act Mortgage Loan, an
amount determined as follows:
(a) partial principal prepayments: The difference between (i) one
month's interest at the applicable Net Rate on the amount of such
prepayment and (ii) the amount of interest for the calendar month of
such prepayment (adjusted to the applicable Net Rate) received at the
time of such repayment;
(b) principal prepayments in full received during the relevant
Prepayment Period: The difference between (i) one month's interest at
the applicable Net Rate on the Scheduled Principal Balance of such
Mortgage Loan immediately prior to such prepayment and (ii) the amount
of interest for the calendar month of such prepayment (adjusted to the
applicable Net Rate) received at the time of such prepayment;
(c) Relief Act Mortgage Loans: As to any Relief Act Mortgage
Loan, the excess of (i) 30 days' interest (or, in the case of a
principal prepayment in full, interest to the date of prepayment) on
the Scheduled Principal Balance thereof (or, in the case of a
principal prepayment in part, on the amount so prepaid) at the related
Net Rate over (ii) 30 days' interest (or, in the case of a principal
prepayment in full, interest to the date of prepayment) on such
Scheduled Principal Balance (or, in the case of a Principal Prepayment
in part, on the amount so prepaid) at the Net Rate required to be paid
by the Mortgagor as limited by application of the Relief Act.
Investment Letter: The letter to be furnished by each Institutional
Accredited Investor which purchases Class B-4, Class B-5 and Class B-6
Certificates in connection with such purchase, substantially in the form set
forth as Exhibit F-1 hereto.
LIBOR: The London interbank offered rate for one-month United States
dollar deposits established on each LIBOR Determination Date pursuant to Section
5.09.
LIBOR Determination Date: January 23, 1997 and, with respect to each
month thereafter until the Current Principal Amount of the Class A-I-7
Certificates and the Class A-I-8 Notional Amount have been reduced to zero, the
second business day prior to the first day of the related Interest Accrual
Period for such Certificates. For purposes of this definition, "business day"
means a day on which banks are open for dealing in foreign currency and exchange
in London and New York City.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
Master Servicer has determined that all amounts it expects to recover from or on
account of such Mortgage Loan have been recovered.
Liquidation Date: With respect to any Liquidated Mortgage Loan, the
date on which the Master Servicer has certified that such Mortgage Loan has
become a Liquidated Mortgage Loan.
Liquidation Expenses: With respect to a Mortgage Loan in liquidation,
unreimbursed expenses paid or incurred by or for the account of the Master
Servicer and not recovered by the Master Servicer under any Primary Insurance
Policy for reasons other than the Master Servicer's failure to ensure the
maintenance of or compliance with a Primary Insurance Policy, such expenses
including (a) property protection expenses, (b) property sales expenses, (c)
foreclosure and sale costs, including court costs and reasonable attorneys'
fees, and (d) similar expenses reasonably paid or incurred in connection with
liquidation.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through trustee's sale, foreclosure sale,
Insurance Proceeds, condemnation proceeds or otherwise.
Loan Summary and Remittance Report: The report to be submitted by the
Master Servicer to the Trustee pursuant to Subsection 6.07(b).
Loan-to-Value Ratio: The fraction, expressed as a percentage, the
numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the Original Value of the related Mortgaged
Property.
Loss Allocation Limitation: The meaning specified in Section 6.03(d)
hereof.
Master Servicer: With respect to the Mortgage Loans, ICI Funding, or
its successor in interest, or any successor master servicer with respect to the
Mortgage Loans appointed as herein provided.
Master Servicing Fee: As to any Mortgage Loan and Distribution Date,
an amount equal to the product of (i) the Scheduled Principal Balance of such
Mortgage Loan as of the Due Date in the preceding calendar month and (ii) the
Master Servicing Fee Rate.
<PAGE>
Master Servicing Fee Rate: With respect to each Mortgage Loan, the per
annum rate of 0.25%.
Monthly Advance: The advance (including a Certificate Account Advance)
required to be made by the Master Servicer on the related Advancing Date
pursuant to Section 6.08.
Mortgage File: The mortgage documents listed in Section 2.01(b)
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: The annual rate at which interest accrues from
time to time on any Mortgage Loan pursuant to the related Mortgage Note, which
rate is equal to the "Mortgage Interest Rate" set forth with respect thereto on
the Mortgage Loan Schedule.
Mortgage Loan: A mortgage loan transferred and assigned to the Trustee
pursuant to Section 2.01 or Section 2.04 and held as a part of the Trust Fund,
as identified in the Mortgage Loan Schedule, including a mortgage loan the
property securing which has become an REO Property.
Mortgage Loan Group: Mortgage Loan Group I or Mortgage Loan Group II.
Mortgage Loan Group I: The group of Mortgage Loans which is composed
of the Group I Mortgage Loans.
Mortgage Loan Group II: The group of Mortgage Loans which is composed
of the Group II Mortgage Loans.
Mortgage Loan Schedule: The schedule, attached hereto as Exhibit B
with respect to the Mortgage Loans and as amended from time to time to reflect
the repurchase or substitution of Mortgage Loans pursuant to this Agreement,
which shall separately identify the Group I Mortgage Loans and the Group II
Mortgage Loans.
Mortgage Note: The originally executed note or other evidence of the
indebtedness of a Mortgagor under the related Mortgage Loan.
Mortgaged Property: Land and improvements securing the indebtedness of
a Mortgagor under the related Mortgage Loan or, in the case of REO Property,
such REO Property.
Mortgagor: The obligor on a Mortgage Note.
Net Interest Shortfall: With respect to any Distribution Date, the
Interest Shortfall, if any, for such Distribution Date net of Compensating
Interest Payments made with respect to such Distribution Date.
Net Liquidation Proceeds: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of (i) Liquidation Expenses which are payable therefrom
to the Master Servicer in accordance with this Agreement and (ii) unreimbursed
advances by the related Sub- Servicer and Monthly Advances including Certificate
Account Advances.
Net Rate: With respect to each Mortgage Loan, the Mortgage Interest
Rate in effect from time to time less the sum of the Master Servicing Fee 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 Group I Discount Mortgage
Loan, the Net Rate thereof divided by 8.00%, and (ii) with respect to any
Non-Discount Mortgage Loan, 100%.
Nonrecoverable Advance: Any advance (i) which was previously made or
is proposed to be made by the Master Servicer and (ii) which, in the good faith
judgment of the Master Servicer, will not or, in the case of a proposed advance,
would not, be ultimately recoverable by the Master Servicer from Liquidation
Proceeds, Insurance Proceeds or future payments on the Mortgage Loan for which
such advance was made.
Officer's Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice President or
Assistant Vice President of the Master Servicer and delivered to the Trustee, as
required by this Agreement.
Opinion of Counsel: A written opinion of counsel who is or are
acceptable to the Trustee and who, unless required to be Independent (an
"Opinion of Independent Counsel"), may be internal counsel for the Master
Servicer.
Original Subordinate Principal Balance: The sum of the aggregate
Current Principal Amounts of each Class of Subordinate Certificates as of the
Cut-Off Date.
Original Value: Except in the case of a refinance Mortgage Loan, the
lesser of the Appraised Value or sales price of a Mortgaged Property at the time
a Mortgage Loan is closed, and for a refinance Mortgage Loan, the Original Value
is the value of such property set forth in an appraisal acceptable to the Master
Servicer.
Outstanding Mortgage Loan: With respect to any Due Date, a Mortgage
Loan which, prior to such Due Date, was not the subject of a Principal
Prepayment in full, did not become a Liquidated Mortgage Loan and was not
purchased pursuant to Sections 2.02, 2.03 or 3.19 or replaced pursuant to
Section 2.04.
Outstanding Principal Balance: As of the time of any determination,
the principal balance of a Mortgage Loan remaining to be paid by the Mortgagor,
or, in the case of an REO Property, the principal balance of the related
Mortgage Loan remaining to be paid by the Mortgagor at the time such property
was acquired by the Trust Fund less any Net Insurance Proceeds with respect
thereto to the extent applied to principal.
Pass-Through Rate: As to each Class of Certificates, the rate of
interest set forth, or determined as provided with respect thereto, in Section
5.01. Any monthly calculation of interest at a stated rate shall be based upon
annual interest at such rate divided by twelve.
Permitted Investments: Any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully guaranteed by
the United States of America or any agency or instrumentality of the
United States of America the obligations of which are backed by the
full faith and credit of the United States of America;
(ii) (a) demand or time deposits, federal funds or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States of America or any
state thereof (including the Trustee acting in its commercial banking
capacity) and subject to supervision and examination by federal and/or
state banking authorities, provided that the commercial paper and/or
the short-term deposit rating and/or the long-term unsecured debt
obligations or deposits of such depository institution or trust
company at the time of such investment or contractual commitment
providing for such investment have the Applicable Credit Rating or
better from each Rating Agency and (b) any other demand or time
deposit or certificate of deposit that is fully insured by the Federal
Deposit Insurance Corporation;
(iii) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, the obligations of which are backed by the full faith and
credit of the United States of America, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (ii)(a) above where the Trustee holds the security
therefor;
(iv) securities bearing interest or sold at a discount issued by
any corporation (including the Trustee) incorporated under the laws of
the United States of America or any state thereof that have the
Applicable Credit Rating or better from each Rating Agency at the time
of such investment or contractual commitment providing for such
investment; provided, however, that securities issued by any
particular corporation will not be Permitted Investments to the extent
that investments therein will cause the then outstanding principal
amount of securities issued by such corporation and held as part of
the Trust to exceed 10% of the aggregate Outstanding Principal
Balances and amounts of all the Mortgage Loans and Permitted
Investments held as part of the Trust;
(v) commercial paper (including both noninterest- bearing
discount obligations and interest-bearing obligations payable on
demand or on a specified date not more than one year after the date of
issuance thereof) having the Applicable Credit Rating or better from
each Rating Agency at the time of such investment;
(vi) a Reinvestment Agreement issued by any bank, insurance
company or other corporation or entity;
(vii) any other demand, money market or time deposit, obligation,
security or investment as may be acceptable to each Rating Agency; and
(viii) any money market funds the collateral of which consists of
obligations fully guaranteed by the United States of America or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America (which may include repurchase obligations
secured by collateral described in clause (i)) and having the
Applicable Credit Rating or better from each Rating Agency;
provided, however, that no instrument or security shall be a Permitted
Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par.
Person: Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Physical Certificates: The Class R-1 and Class R-2 Certificates and,
to the extent provided in Section 5.02, the Class B-4, Class B-5 and Class B-6
Certificates.
PO Percentage: (i) With respect to any Group I Discount Mortgage Loan,
the fraction, expressed as a percentage, equal to 8.00% minus the Net Rate
thereof divided by 8.00%, and (ii) with respect to any Non-Discount Mortgage
Loan, 0%.
Prepayment Distribution Trigger: For a Class of Subordinate
Certificates for any Distribution Date, the Class Prepayment Distribution
Trigger is satisfied if the fraction (expressed as a percentage), the numerator
of which is the aggregate Current Principal Amount of such Class and each Class
of Subordinate Certificates subordinate thereto, if any, and the denominator of
which is the Scheduled Principal Balances of all of the Mortgage Loans as of the
Due Date in the month next preceding such Distribution Date, equals or exceeds
such percentage calculated as of the Closing Date.
Prepayment Period: With respect to any Mortgage Loan and any
Distribution Date, the calendar month preceding the month of such Distribution
Date.
Primary Insurance Policy: Any primary mortgage guaranty insurance
policy issued in connection with a Mortgage Loan which provides compensation to
a Mortgage Note holder in the event of default by the obligor under such
Mortgage Note or the related Security Instrument, or any replacement policy
therefor.
Principal Prepayment: Any payment (whether partial or full) or other
recovery of principal on a Mortgage Loan which is received in advance of its
scheduled Due Date to the extent that it is not accompanied by an amount as to
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment, including Insurance Proceeds
and the purchase price in connection with any purchase of a Mortgage Loan, any
cash deposit in connection with the substitution of a Mortgage Loan, and the
principal portion of Net Liquidation Proceeds.
Private Certificate: Any Class B-4, Class B-5 or Class B-6
Certificate.
Protected Account: A trust account established and maintained by the
Master Servicer or any Sub-Servicer with respect to the Mortgage Loans and with
respect to REO Property in a Designated Depository Institution for receipt of
principal and interest and other amounts as described in Section 4.01.
Qualified Insurer: Any insurance company duly qualified as such under
the laws of the state or states in which the related Mortgaged Property or
Mortgaged Properties is or are located, duly authorized and licensed in such
state or states to transact the type of insurance business in which it is
engaged and approved as an insurer by the Master Servicer, so long as the claims
paying ability of which is acceptable to the Rating Agencies for pass- through
certificates having the same rating as the Certificates rated by the Rating
Agencies as of the Closing Date.
Rating Agencies: S&P and Fitch.
Rating Agency Eligible Account: An account, including one maintained
with the Trustee, which either (i) is a trust account maintained with the trust
department of a depository institution or trust company organized under the laws
of the United States of America or any one of the states thereof or the District
of Columbia or (ii) is maintained with an entity which is an institution whose
deposits are insured by the FDIC, the unsecured and uncollateralized long-term
debt obligations of which shall be rated "A" or better by S&P and Fitch, or one
of the two highest short-term ratings by S&P and Fitch, and which is either (a)
a federal savings association duly organized, validly existing and in good
standing under the federal banking laws, (b) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (c) a national banking association under the federal banking laws, or (d)
a principal subsidiary of a bank holding company.
Realized Loss: Any (i) Deficient Valuation or (ii) as to any
Liquidated Mortgage Loan, (x) the Outstanding Principal Balance of such
Liquidated Mortgage Loan plus accrued and unpaid interest thereon at the
Mortgage Interest Rate through the last day of the month of such liquidation
less (y) the related Net Liquidation Proceeds.
Record Date: With respect to any Distribution Date, the close of
business on the last Business Day of the month immediately preceding the month
of such Distribution Date.
Reinvestment Agreements: One or more reinvestment agreements,
acceptable to the Rating Agencies, from a bank, insurance company or other
corporation or entity (including the Trustee).
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Relief Act Mortgage Loan: Any Mortgage Loan as to which the Scheduled
Payment thereof has been reduced due to the application of the Relief Act.
REMIC: A real estate mortgage investment conduit, as defined in the
Code.
REMIC I: That group of assets contained in the Trust Fund designated
as a REMIC consisting of the REMIC II Regular Certificates.
REMIC II: That group of assets contained in the Trust Fund designated
as a REMIC consisting of (i) the Mortgage Loans, (ii) the Certificate Account,
(iii) any REO Property and (iv) any proceeds of the foregoing. Expenses and fees
of the Trust shall be paid by REMIC II.
REMIC II Certificates: The REMIC II Regular Certificates and the Class
R-2 Certificates.
REMIC II Regular Certificates: As defined in Section 5.01.
REMIC Opinion: An Opinion of Independent Counsel, to the effect that
the proposed action described therein would not, under the REMIC Provisions, (i)
cause either REMIC I or REMIC II to fail to qualify as a REMIC while any regular
interest in either REMIC I or REMIC II is outstanding, (ii) result in a tax on
prohibited transactions or (iii) constitute a taxable contribution after the
Startup Day.
REMIC Provisions: The provisions of the federal income tax law
relating to REMICs, which appear at Sections 860A through 860G of the Code, and
related provisions and regulations promulgated thereunder, as the foregoing may
be in effect from time to time.
REO Property: A Mortgaged Property acquired in the name of the
Trustee, for the benefit of Certificateholders, by foreclosure or deed-in-lieu
of foreclosure in connection with a defaulted Mortgage Loan.
Repurchase Price: With respect to any Mortgage Loan (or any property
acquired with respect thereto) required to be repurchased pursuant to Section
2.02 or 2.03 an amount equal to the sum of (i) 100% of the Outstanding Principal
Balance of such Mortgage Loan as of the date of repurchase (or if the related
Mortgaged Property was acquired with respect thereto, 100% of the Outstanding
Principal Balance at the date of the acquisition) plus (ii) accrued but unpaid
interest on the Outstanding Principal Balance at the related Mortgage Interest
Rate, through and including the last day of the month of repurchase reduced by
(ii) any portion of the Master Servicing Fee or advances payable to the
purchaser of the Mortgage Loan.
Request for Release: A request for release in the form attached hereto
as Exhibit D.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement with respect to such Mortgage Loan.
Residual Certificates: The Class R-1 and Class R-2 Certificates.
Responsible Officer: Any officer assigned to the corporate trust
department or similar department of the Trustee (or any successor division or
department thereto), and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
Rule 144A Certificate: The certificate to be furnished by each
purchaser of a Private Certificate which is a Qualified Institutional Buyer as
defined under Rule 144A promulgated under the Securities Act, substantially in
the form set forth as Exhibit F-2 hereto.
Scheduled Payment: With respect to any Mortgage Loan and any month,
the scheduled payment or payments of principal and interest due during such
month on such Mortgage Loan which either is payable by a Mortgagor in such month
under the related Mortgage Note or, in the case of REO Property, would otherwise
have been payable under the related Mortgage Note.
Scheduled Principal: The principal portion of any Scheduled Payment.
Scheduled Principal Balance: With respect to any Mortgage Loan on any
Distribution Date, (A) the unpaid principal balance of such Mortgage Loan as of
the close of business on the Due Date in the month preceding the month of such
Distribution Date (i.e., taking account of the principal payment to be made on
such Due Date and irrespective of any delinquency in its payment), as specified
in the amortization schedule at the time relating thereto (before any adjustment
to such amortization schedule by reason of any bankruptcy or similar proceeding
occurring after the Cut-Off Date (other than a Deficient Valuation) or any
moratorium or similar waiver or grace period) less (B) any Principal Prepayments
(including the principal portion of Net Liquidation Proceeds) received during or
prior to the related Prepayment Period; provided that the Scheduled Principal
Balance of a Liquidated Mortgage Loan is zero.
Securities Act: The Securities Act of 1933, as amended.
Securities Legend: "THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE. THE HOLDER HEREOF,
BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES
ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"),
PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB,
WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR"
WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) or (7) (OR ANY ENTITY IN
WHICH ALL OF THE EQUITY HOLDERS COME WITHIN SUCH PARAGRAPHS) OF REGULATION D
UNDER THE SECURITIES ACT PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER
SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B) AN OPINION OF
COUNSEL AS TO COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED
STATES. THIS CERTIFICATE MAY NOT BE TRANSFERRED TO "BENEFIT PLAN INVESTORS," AS
SUCH TERM IS DEFINED IN 29 C.F.R. SECTION 2510.3-101., UNLESS THE PROPOSED
TRANSFEREE PROVIDES A BENEFIT PLAN OPINION TO THE TRUSTEE."
Security Instrument: A written instrument creating a valid first lien
on a Mortgaged Property securing a Mortgage Note, which may be any applicable
form of mortgage, deed of trust, deed to secure debt or security deed, including
any riders or addenda thereto.
Seller: Bear Stearns Mortgage Securities Inc., a Delaware corporation,
or its successors in interest.
Seller Contract: The Mortgage Loan Purchase Agreement dated as of
December 20, 1996, among ICI Funding, as seller, Imperial Credit Mortgage
Holdings, Inc., as guarantor, and Bear Stearns Mortgage Securities Inc., as
purchaser, and all amendments thereof and supplements thereto.
Senior Certificates: The Class A-I-1, Class A-I-2, Class A-I-3, Class
A-I-4, Class A-I-5, Class A-I-6, Class A-I-7, Class A- I-8, Class A-I-9, Class
A-I-10, Class A-I-11, Class A-II, Class PO, Class X, Class R-1 and Class R-2
Certificates.
Senior Percentage: The Class A-I Senior Percentage or the Class A-II
Senior Percentage.
Senior Prepayment Percentage: The Class A-I Senior Prepayment
Percentage or the Class A-II Senior Prepayment Percentage.
Separate Component: As defined in footnote (3) to the table in Section
5.01(c) and which compose Component I and Component II.
Servicing Account: The separate trust account created and maintained
by the Master Servicer or each Sub-Servicer with respect to the Mortgage Loans
or with respect to REO Property in a Designated Depository Institution for
collection of taxes, assessments, insurance premiums and comparable items as
described in Section 3.07.
Servicing Officer: Any officer of the Master Servicer or of an agent
or independent contractor through which all or part of the Master Servicer's
master servicing responsibilities are carried out, involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
specimen signature appear on a list of servicing officers furnished to the
Trustee by the Master Servicer as such list may from time to time be amended in
accordance with the foregoing.
S&P: Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors in interest.
S&P Formula Amount: As to each Anniversary Determination Date, the
greater of (i) $100,000 and (ii) the product of (x) 0.06% and (y) the Scheduled
Principal Balance of each Mortgage Loan remaining in the Trust whose original
principal balance was 75% or greater of the Original Value thereof.
Special Hazard Loss: (i) A Realized Loss suffered by a Mortgaged
Property on account of direct physical loss, exclusive of (a) any loss covered
by a hazard policy or a flood insurance policy required to be maintained in
respect of such Mortgaged Property under Section 3.10 and (b) any loss caused by
or resulting from:
(1) normal wear and tear;
(2) conversion or other dishonest act on the part of the Trustee, the
Master Servicer or any of their agents or employees; or
(3) errors in design, faulty workmanship or faulty materials, unless
the collapse of the property or a part thereof ensues;
or (ii) any Realized Loss suffered by the Trust Fund arising from or related to
the presence or suspected presence of hazardous wastes or hazardous substances
on a Mortgaged Property unless such loss to a Mortgaged Property is covered by a
hazard policy or a flood insurance policy required to be maintained in respect
of such Mortgaged Property under Section 3.10.
Special Hazard Loss Amount: As of any Distribution Date, an amount
equal to $1,921,275 minus the sum of (i) the aggregate amount of Special Hazard
Losses that would have been allocated to the Subordinate Certificates in
accordance with Section 6.03 in the absence of the Loss Allocation Limitation
and (ii) the Adjustment Amount (as defined below) as most recently calculated.
On each anniversary of the Cut-Off Date, the "Adjustment Amount" shall be equal
to the amount, if any, by which the amount calculated in accordance with the
preceding sentence (without giving effect to the deduction of the Adjustment
Amount for such anniversary) exceeds the lesser of (x) the greater of (A) the
product of the Special Hazard Percentage for such anniversary multiplied by the
Outstanding Principal Balance of all the Mortgage Loans on the Distribution Date
immediately preceding such anniversary and (B) twice the Outstanding Principal
Balance of the Mortgage Loan which has the largest Outstanding Principal Balance
on the Distribution Date immediately preceding such anniversary, and (y) an
amount calculated by the Master Servicer and approved by each Rating Agency,
which amount shall not be less than $500,000.
Special Hazard Percentage: As of each anniversary of the Cut-Off Date,
the greater of (i) 1.00% and (ii) the largest percentage obtained by dividing
(x) the aggregate Outstanding Principal Balance (as of the immediately preceding
Distribution Date) of the Mortgage Loans secured by Mortgaged Properties located
in a single, five-digit zip code area in the State of California by (y) the
Outstanding Principal Balance of all the Mortgage Loans as of the immediately
preceding Distribution Date.
Special Hazard Termination Date: The Distribution Date upon which the
Special Hazard Loss Amount has been reduced to zero or a negative number (or the
Cross-Over Date, if earlier).
Startup Day: December 23, 1996.
Subordinate Certificate Writedown Amount: As to any Distribution Date,
the amount by which (a) the sum of the Current Principal Amounts of all the
Certificates (after giving effect to the distribution of principal and the
allocation of Realized Losses and the Class PO Deferred Payment Writedown Amount
in reduction of the Current Principal Amounts of the Certificates on such
Distribution Date) exceeds (b) the aggregate Scheduled Principal Balances of the
Mortgage Loans on the first day of the month of such Distribution Date, less any
Deficient Valuation occurring on or prior to the Bankruptcy Coverage Termination
Date.
Subordinate Certificates: Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 and Class B-6 Certificates.
Subordinate Optimal Principal Amount: As to any Distribution Date, an
amount equal to the sum, without duplication, of the following (but in no event
greater than the aggregate Current Principal Amounts of the Subordinate
Certificates immediately prior to such Distribution Date):
(i) the Group I Subordinate Percentage or Group II Subordinate
Percentage, as applicable, of the applicable Non-PO Percentage of
Scheduled Principal due on the related Due Date on each Outstanding
Mortgage Loan in the related Mortgage Loan Group as of such Due Date
as specified in the amortization schedule at the time applicable
thereto (after adjustment for previous Principal Prepayments and the
principal portion of Debt Service Reductions subsequent to the
Bankruptcy Coverage Termination Date but before any adjustment to such
amortization schedule by reason of any bankruptcy (other than as
aforesaid) or similar proceeding or any moratorium or similar waiver
or grace period);
(ii) the Group I Subordinate Prepayment Percentage or Group II
Subordinate Prepayment Percentage, as applicable, of the applicable
Non-PO Percentage of all Voluntary Principal Prepayments in part on
Mortgage Loans in the related Mortgage Group received during the
related Prepayment Period, and 100% of any Group I Senior Optimal
Principal Amount or Group II Senior Optimal Principal Amount, as
applicable, not distributed to the related Senior Certificates on such
Distribution Date, together with the Group I Subordinate Prepayment
Percentage or Group II Subordinate Prepayment Percentage, as
applicable, of the Scheduled Principal Balance of each Mortgage Loan
in the related Mortgage Loan Group which was the subject of a
Voluntary Principal Prepayment in full during the related Prepayment
Period;
(iii) the excess, if any, of the applicable Non-PO Percentage of (x)
the sum of (A) all Net Liquidation Proceeds allocable to principal on
Mortgage Loans in the related Mortgage Loan Group received during the
related Prepayment Period (other than in respect of Mortgage Loans
described in clause (B)) and (B) the Scheduled Principal Balance of
each Mortgage Loan in the related Mortgage Loan Group that was
purchased by an Insurer from the Trustee during the related Prepayment
Period pursuant to the related Primary Insurance Policy, over (y) the
sum of the amounts distributable pursuant to clause (iii) of the
definitions of Group I Senior Optimal Principal Amount or Group II
Senior Optimal Principal Amount, respectively, on such Distribution
Date;
(iv) the Group I Subordinate Prepayment Percentage or Group II
Subordinate Prepayment Percentage of the applicable Non-PO Percentage
of the Scheduled Principal Balance of each Mortgage Loan in the
related Mortgage Loan Group which was purchased on such Distribution
Date pursuant to Section 2.02, 2.03(d) or 3.19; and
(v) the Group I Subordinate Prepayment Percentage or Group II
Subordinate Prepayment Percentage of the applicable Non-PO Percentage
of the difference, if any, between the Scheduled Principal Balance of
a Mortgage Loan in the related Mortgage Loan Group that has been
replaced by the Master Servicer with a Substitute Mortgage Loan
pursuant to Section 2.04 during the month of such Distribution Date
and the Scheduled Principal Balance of such Substitute Mortgage Loan.
After the aggregate current Principal Amounts of the Subordinate Certificates
have been reduced to zero, the Group I Subordinate Optimal Principal Amount and
Group II Subordinate Optimal Principal
Amount shall each be zero.
Subordinate Percentage: A Group I Subordinate Percentage or Group II
Subordinate Percentage.
Subordinate Prepayment Percentage: a Group I Subordinate Prepayment
Percentage or a Group II Subordinate Prepayment Percentage.
Sub-Servicer: Any Person with which the Master Servicer has entered
into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
Sub-Servicing Agreement: The written contract between the Master
Servicer and a Sub-Servicer and any successor Sub- Servicer relating to
servicing and administration of certain Mortgage Loans as provided in Section
3.02.
Substitute Mortgage Loan: A mortgage loan tendered to the Trustee
pursuant to Section 2.04, in each case, in the opinion of the Master Servicer,
(i) which has an Outstanding Principal Balance not materially greater nor
materially less than the Mortgage Loan for which it is to be substituted; (ii)
which has a Mortgage Interest Rate and Net Rate not less than, and not
materially greater than, such Mortgage Loan; (iii) which has a maturity date not
materially earlier or later than such Mortgage Loan and not later than the
latest maturity date of any Mortgage Loan; (iv) which is of the same property
type and occupancy type as such Mortgage Loan; (v) which has a Loan-to-Value
Ratio not greater than the Loan-to-Value Ratio of such Mortgage Loan; (vi) which
is current in payment of principal and interest as of the date of substitution;
and (vii) as to which the payment terms do not vary in any material respect from
the payment terms of the Mortgage Loan for which it is to be substituted. The
opinion of the Master Servicer shall be evidenced by an Officer's Certificate
delivered to the Trustee.
Tax Matters Person: Bankers Trust Company of California, N.A., or any
successor thereto or assignee thereof.
Trust Fund or Trust: The corpus of the trust created by this
Agreement, consisting of the Mortgage Loans and the other assets described in
Section 2.01(a).
Trustee: Bankers Trust Company of California, N.A., or its successor
in interest, or any successor trustee appointed as herein provided.
Trustee's Fees: With respect to each Distribution Date, the amount to
be paid to the Trustee calculated monthly on a Mortgage Loan by Mortgage Loan
basis, equal to the sum of (i) with respect to each Mortgage Loan which has been
prepaid in full during the related Prepayment Period, the product of (a) the
amount of the Principal Prepayment, (b) 0.015% per annum and (c) a fraction, the
numerator of which is the number of days elapsed from the Due Date in the month
prior to the month of such Distribution Date to the date of Principal Prepayment
and the denominator of which is 365, and (ii) with respect to all other Mortgage
Loans, the product of (x) the Scheduled Principal Balance of such Mortgage Loan
on the Due Date in the month prior to the month of such Distribution Date and
(y) one-twelfth of 0.015%.
Uninsured Cause: Any cause of damage to a Mortgaged Property or REO
Property such that the complete restoration of such Mortgaged Property or REO
Property is not fully reimbursable by the hazard insurance policies required to
be maintained pursuant to Section 3.10, without regard to whether or not such
policy is maintained.
Voluntary Principal Prepayment: With respect to any Distribution Date,
any Principal Prepayment received from the related Mortgagor on a Mortgage Loan.
<PAGE>
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans to Trustee. (a) The Seller
concurrently with the execution and delivery of this Agreement, sells, transfers
and assigns to the Trustee without recourse all its right, title and interest in
and to (i) the Mortgage Loans identified in the Mortgage Loan Schedule,
including all interest and principal due with respect to the Mortgage Loans
after the Cut-Off Date, but excluding any payments of principal and interest due
on or prior to the Cut-Off Date; (ii) such assets as shall from time to time be
credited or are required by the terms of this Agreement to be credited to the
Certificate Account (excluding any income to the Master Servicer from Permitted
Investments under Subsection 4.02(d)), (iii) such assets relating to the
Mortgage Loans as from time to time may be held by the Master Servicer or a
Sub-Servicer in Protected Accounts (excluding any income to the Master Servicer
or any Sub-Servicer from Permitted Investments under Subsection 4.01(a)), (iv)
such assets relating to the Mortgage Loans as from time to time may be held by
the Trustee in the Custody Account (excluding any income to the Master Servicer
from Permitted Investments under Section 4.04(d)), (v) any Servicing Accounts
(to the extent the mortgagee has a claim thereto and excluding any income to the
Master Servicer or Sub-Servicer or interest payable to Mortgagors pursuant to
applicable law), (vi) any REO Property, (vii) the Required Insurance Policies
and any amounts paid or payable by the insurer under any Insurance Policy (to
the extent the mortgagee has a claim thereto), (viii) the Seller Contract to the
extent provided in Subsection 2.03(b), and (ix) any proceeds of the foregoing.
Although it is the intent of the parties to this Agreement that the conveyance
of the Seller's right, title and interest in and to the Mortgage Loans and other
assets in the Trust Fund pursuant to this Agreement shall constitute a purchase
and sale and not a loan, in the event that such conveyance is deemed to be a
loan, it is the intent of the parties to this Agreement that the Seller shall be
deemed to have granted to the Trustee a first priority perfected security
interest in all of the Seller's right, title and interest in, to and under the
Mortgage Loans and other assets in the Trust Fund, and that this Agreement shall
constitute a security agreement under applicable law.
(b) In connection with the above transfer and assignment, the Seller
hereby deposits with the Trustee, with respect to each Mortgage Loan, (i) the
original Mortgage Note, endorsed without recourse to the order of the Trustee
and showing an unbroken chain of endorsements from the original payee thereof to
the Person endorsing it to the Trustee, or if the original has been lost or
misplaced a lost note affidavit, (ii) the original Security Instrument, which
shall have been recorded, with evidence of such recording indicated thereon,
(iii) the assignment (which may be in the form of a blanket assignment if
permitted in the jurisdiction in which the Mortgaged Property is located) to the
Trustee of the Security Instrument, with evidence of recording with respect to
each Mortgage Loan in the name of the Trustee thereon, (iv) all intervening
assignments of the Security Instrument, if any, to the extent available to the
Seller with evidence of recording thereon, (v) the original or a copy of the
policy or certificate of primary mortgage guaranty insurance, to the extent
available, if any, (vi) the original policy of title insurance or mortgagee's
certificate of title insurance or commitment or binder for title insurance and
(vii) originals of all assumption and modification agreements, if any; provided,
however, that in lieu of the foregoing, the Seller may deliver the following
documents, under the circumstances set forth below: (w) in lieu of the original
policy of title insurance, the Seller may deliver a binder or commitment
therefor, or, in California, a preliminary title report, or, in Iowa, an
attorney's certificate; (x) in lieu of the original Security Instrument or
intervening assignments thereof which have been delivered or are being delivered
to recording offices for recording and have not been returned to the Seller in
time to permit their delivery as specified above, the Seller may deliver a true
copy thereof with a certification by ICI Funding or the title company issuing
the commitment for title insurance, on the face of such copy, substantially as
follows: "Certified to be a true and correct copy of the original, which has
been transmitted for recording"; (y) in lieu of the Security Instrument,
assignment to the Trustee or intervening assignments thereof, if the applicable
jurisdiction retains the originals of such documents (as evidenced by a
certification from ICI Funding to such effect) the Seller may deliver
photocopies of such documents containing an original certification by the
judicial or other governmental authority of the jurisdiction where such
documents were recorded; and (z) in lieu of the Mortgage Notes relating to the
two Group I Mortgage Loans identified in the list delivered by the Master
Servicer to the Trustee on the Closing Date, the Seller may deliver a lost note
affidavit; and provided, further, however, that in the case of Mortgage Loans
which have been prepaid in full after the Cut-Off Date and prior to the Closing
Date, the Seller, in lieu of delivering the above documents, may deliver to the
Trustee a certification of a Servicing Officer to such effect and shall deposit
all amounts paid in respect of such Mortgage Loans in the Certificate Account on
the Closing Date. The Seller shall deliver such original documents (including
any original documents as to which certified copies had previously been
delivered) or such certified copies together with the original title insurance
policy (or, if a master title policy has been issued by the title insurer, a
mortgagee's certificate of title insurance) if a title insurance binder or
commitment or other assurance of title was originally deposited, to the Trustee
promptly after they are received. The Master Servicer shall cause, at its
expense, the Security Instrument and intervening assignments, if any, and the
assignment of the Security Instrument to the Trustee to be recorded not later
than 180 days after the Closing Date.
Section 2.02. Acceptance of Mortgage Loans by Trustee. (a) The Trustee
acknowledges receipt of, subject to the exceptions it notes pursuant to the
procedures described below, the documents (or certified copies thereof)
delivered to it pursuant to Section 2.01 and declares that it holds and will
continue to hold those documents and any amendments, replacements or supplements
thereto and all other assets of the Trust Fund delivered to it as Trustee in
trust for the use and benefit of all present and future Holders of the
Certificates. No later than 45 days after the Closing Date (or, with respect to
any Substitute Mortgage Loan, within 5 days after the receipt by the Trustee
thereof), the Trustee agrees, for the benefit of the Certificateholders, to
review each Mortgage File delivered to it and to execute and deliver, or cause
to be executed and delivered, to the Seller and the Master Servicer an Initial
Certification in the form annexed hereto as Exhibit H. In conducting such
review, the Trustee will ascertain whether all required documents have been
executed and received and whether those documents relate, determined on the
basis of the Mortgagor name, original principal balance and loan number, to the
Mortgage Loans it has received, as identified in Exhibit B to this Agreement, as
supplemented (provided, however, that with respect to those documents described
in subclauses (b)(iv), (b)(v) and (b)(vii) of Section 2.01, the Trustee's
obligations shall extend only to documents actually delivered pursuant to such
subsections). In performing any such review, the Trustee may conclusively rely
on the purported due execution and genuineness of any such document and on the
purported genuineness of any signature thereon. If the Trustee finds any
document constituting part of the Mortgage File not to have been executed or
received, or to be unrelated to the Mortgage Loans identified in Exhibit B or to
appear to be defective on its face, the Trustee shall promptly notify ICI
Funding. ICI Funding shall correct or cure any such defect within 60 days from
the date of notice from the Trustee of the defect and if ICI Funding fails to
correct or cure the defect within such period, and such defect materially and
adversely affects the interests of the Certificateholders in the related
Mortgage Loan, ICI Funding, will, subject to Section 2.04, within 90 days from
the Trustee's notification purchase such Mortgage Loan at the Repurchase Price;
provided, however, that if such defect relates solely to the inability of ICI
Funding to deliver the original Security Instrument or intervening assignments
thereof, or a certified copy because the originals of such documents, or a
certified copy have not been returned by the applicable jurisdiction, ICI
Funding shall not be required to purchase such Mortgage Loan if ICI Funding
delivers such original documents or certified copy promptly upon receipt, but in
no event later than 360 days after the Closing Date.
(b) No later than 180 days after the Closing Date, the Trustee will
review, for the benefit of the Certificateholders, the Mortgage Files delivered
to it and will execute and deliver or cause to be executed and delivered to the
Seller and the Master Servicer, a Final Certification in the form annexed hereto
as Exhibit I. In conducting such review, the Trustee will ascertain whether (i)
an original of each document required to be recorded has been returned from the
recording office with evidence of recording thereon or a certified copy has been
obtained from the recording office; and (ii) an original title insurance policy
(or if a master title policy has been issued by the title insurer, a mortgagee's
certificate of title insurance) has been delivered whenever a title insurance
binder or commitment or other assurance of title was originally deposited. If
the Trustee finds any document constituting part of the Mortgage File has not
been received, or to be unrelated, determined on the basis of the Mortgagor
name, original principal balance and loan number, to the Mortgage Loans
identified in Exhibit B or to appear defective on its face, the Trustee shall
promptly notify ICI Funding. ICI Funding shall correct or cure any such defect
within 60 days from the date of notice from the Trustee of the defect and if ICI
Funding is unable to cure such defect within such period, and if such defect
materially and adversely affects the interests of the Certificateholders in the
related Mortgage Loan, ICI Funding shall, subject to Section 2.04, within 90
days from the Trustee's notification purchase such Mortgage Loan at the
Repurchase Price; provided, however, that if such defect relates solely to the
inability of ICI Funding to deliver the original Security Instrument or
intervening assignments thereof, or a certified copy, because the originals of
such documents, or a certified copy, have not been returned by the applicable
jurisdiction, ICI Funding shall not be required to purchase such Mortgage Loan,
if ICI Funding delivers such original documents or certified copy promptly upon
receipt, but in no event later than 360 days after the Closing Date.
(c) In the event that a Mortgage Loan is purchased by ICI Funding in
accordance with Subsections 2.02(a) or (b) above or Section 3.19, ICI Funding
shall cause the Repurchase Price to be deposited in the appropriate subaccount
of the Certificate Account and shall provide written notification of such
deposit (which notification shall detail the components of the Repurchase
Price), signed by a Servicing Officer, to the Trustee. Upon deposit of the
Repurchase Price in the appropriate subaccount of the Certificate Account, the
Trustee shall release to ICI Funding the related Mortgage File and shall execute
and deliver all instruments of transfer or assignment, without recourse,
furnished to it by ICI Funding as are necessary to vest in ICI Funding title to
and rights under the Mortgage Loan. Such purchase shall be deemed to have
occurred on the date on which certification of the deposit of the Repurchase
Price in the Certificate Account was received by the Trustee. The Trustee shall
amend the Mortgage Loan Schedule to reflect such repurchase and shall promptly
notify the Master Servicer and the Rating Agencies of such amendment. The
obligation of ICI Funding to repurchase any Mortgage Loan as to which such a
defect in a constituent document exists shall be the sole remedy respecting such
defect available to the Certificateholders or to the Trustee on their behalf.
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer. (a) ICI Funding hereby represents and warrants to the Trustee as of
the Closing Date that:
(i) It is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation and is
in good standing as a foreign corporation in each jurisdiction where
such qualification is necessary and throughout the term of this
Agreement will remain a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation
or any state of reincorporation and in good standing as a foreign
corporation in each jurisdiction where such qualification is necessary
(except, in the case of foreign corporation qualification both on the
date hereof and in the future, where the failure so to qualify would
not reasonably be expected to have a material adverse effect on the
Master Servicer's ability to enter into this Agreement or to perform
its obligations hereunder), and has the corporate power and authority
to perform its obligations under this Agreement;
(ii) The execution and delivery of this Agreement have been duly
authorized by all requisite corporate action;
(iii) This Agreement, assuming due authorization, execution, and
delivery by the other parties hereto, will constitute its legal, valid
and binding obligation, enforceable in accordance with its terms,
except only as such enforcement may be limited by applicable Debtor
Relief Laws and that certain equitable remedies may not be available
regardless of whether enforcement is sought in equity or at law;
(iv) Its execution and delivery of this Agreement and its
performance and compliance with the terms of this Agreement will not
(A) violate its certificate of incorporation or bylaws (B) to its
knowledge, violate any law or regulation, or any administrative or
judicial decree or order to which it is subject or (C) constitute a
default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any
material contract, agreement or other instrument to which it is a
party or which may be applicable to it or any of its assets;
(v) To its best knowledge, after reasonable investigation, it is
not in default with respect to any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or
governmental agency, which default would reasonably be expected to
have consequences that would materially and adversely affect its
financial condition or operations or its performance hereunder;
(vi) It does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in
this Agreement to be performed by it;
(vii) The consummation of the transactions 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 ICI
Funding and the guaranty thereof of Imperial Credit Mortgage Holdings, Inc.);
provided that the obligations of ICI Funding and Imperial Credit Mortgage
Holdings, Inc. to substitute or repurchase a Mortgage Loan shall be the
Trustee's and the Certificateholder's sole remedy for any breach thereof. At the
request of the Trustee, the Seller shall take such actions as may be necessary
to enforce the above right, title and interest on behalf of the Trustee and the
Certificateholders or shall execute such further documents as the Trustee may
reasonably require in order to enable the Trustee to carry out such enforcement.
(c) [Intentionally omitted.]
(d) If the Seller, ICI Funding, the Master Servicer or the Trustee
discovers a breach of any of the representations and warranties set forth in
Exhibit C or Section 7 of the Seller Contract, and such breach existed on the
date the representation and warranty was made, which breach materially and
adversely affects the value of the interests of Certificateholders or the
Trustee in the related Mortgage Loan, the party discovering the breach shall
give prompt written notice of the breach to the other parties. ICI Funding
within 60 days of its discovery or receipt of notice that such breach has
occurred (whichever occurs earlier), shall cure the breach in all material
respects or, subject to Section 2.04, shall purchase the Mortgage Loan or any
property acquired with respect thereto from the Trustee; provided, however, that
if there is a breach of any representation set forth in Exhibit C and the
Mortgage Loan or the related property acquired with respect thereto has been
sold, then ICI Funding shall pay, in lieu of the Repurchase Price, any excess of
the Repurchase Price over the Net Liquidation Proceeds received upon such sale.
(If the Net Liquidation Proceeds exceed the Repurchase Price, any excess shall
be paid to ICI Funding to the extent not required by law to be paid to the
borrower.) Any such purchase by ICI Funding shall be made by depositing an
amount equal to the Repurchase Price in the appropriate subaccount of the
Certificate Account and the Trustee, upon receipt of the Repurchase Price and of
written notification of such deposit by a Servicing Officer (which notification
shall detail the components of such Repurchase Price), shall release to ICI
Funding the related Mortgage File and shall execute and deliver all instruments
of transfer or assignment furnished to it by ICI Funding, without recourse, as
are necessary to vest in ICI Funding title to and rights under the Mortgage Loan
or any property acquired with respect thereto. Such purchase shall be deemed to
have occurred on the date on which certification of the deposit of the
Repurchase Price in the appropriate subaccount of the Certificate Account was
received by the Trustee. The Trustee shall amend the Mortgage Loan Schedule to
reflect such repurchase and shall promptly notify the Master Servicer and the
Rating Agencies of such amendment. Enforcement of the obligation of ICI Funding
to purchase (or substitute a Substitute Mortgage Loan for) any Mortgage Loan or
any property acquired with respect thereto (or pay the Repurchase Price as set
forth in the above proviso) as to which a breach has occurred and is continuing
shall constitute the sole remedy respecting such breach available to the
Certificateholders or the Trustee on their behalf.
Section 2.04. Substitution of Mortgage Loans. Notwithstanding anything
to the contrary in this Agreement, in lieu of purchasing a Mortgage Loan
pursuant to Sections 2.02 or 2.03, ICI Funding may, no later than the date by
which such purchase by ICI Funding would otherwise be required, tender to the
Trustee a Substitute Mortgage Loan accompanied by an Officer's Certificate of
ICI Funding that such Substitute Mortgage Loan conforms to the requirements set
forth in the definition of "Substitute Mortgage Loan"; provided, however, that
substitution pursuant to this Section 2.04 in lieu of purchase shall not be
permitted after the termination of the two-year period beginning on the Startup
Day. The Trustee shall examine the Mortgage File for any Substitute Mortgage
Loan in the manner set forth in Section 2.02(a) and shall notify the Master
Servicer in writing, within five Business Days after receipt, whether or not the
documents relating to the Substitute Mortgage Loan satisfy the requirements of
the third sentence of Subsection 2.02(a). Within two Business Days after such
notification, ICI Funding shall deposit in the appropriate subaccount of the
Certificate Account the amount, if any, by which the Outstanding Principal
Balance as of the next preceding Due Date of the Mortgage Loan for which
substitution is being made, after giving effect to Scheduled Principal due on
such date, exceeds the Outstanding Principal Balance as of such date of the
Substitute Mortgage Loan, after giving effect to Scheduled Principal due on such
date, which amount shall be treated for the purposes of this Agreement as if it
were the payment by ICI Funding of the Repurchase Price for the purchase of a
Mortgage Loan by ICI Funding. After such notification to ICI Funding, and, if
any such excess exists, upon receipt of such deposit and of written notification
thereof signed by a Servicing Officer, the Trustee shall accept such Substitute
Mortgage Loan, which shall thereafter be deemed to be a Group I Mortgage Loan or
Group II Mortgage Loan, as applicable, hereunder. In the event of such a
substitution, accrued interest on the Substitute Mortgage Loan for the month in
which the substitution occurs and any Principal Prepayments made thereon during
such month shall be the property of the Trust Fund and accrued interest for such
month on the Mortgage Loan for which the substitution is made and any Principal
Prepayments made thereon during such month shall be the property of ICI Funding.
The Scheduled Principal on a Substitute Mortgage Loan due on the Due Date in the
month of substitution shall be the property of ICI Funding and the Scheduled
Principal on the Mortgage Loan for which the substitution is made due on such
Due Date shall be the property of the Trust Fund. Upon acceptance of the
Substitute Mortgage Loan, the Trustee shall release to ICI Funding the related
Mortgage File related to any Mortgage Loan released pursuant to this Section
2.04 and shall execute and deliver all instruments of transfer or assignment,
without recourse, in form as provided to it as are necessary to vest in ICI
Funding title to and rights under any Mortgage Loan released pursuant to this
Section 2.04. ICI Funding shall deliver the documents related to the Substitute
Mortgage Loan in accordance with the provisions of Subsections 2.01(b) and
2.02(b), with the date of acceptance of the Substitute Mortgage Loan deemed to
be the Closing Date for purposes of the time periods set forth in those
Subsections. The representations and warranties set forth in Exhibit C shall be
deemed to have been made by ICI Funding with respect to each Substitute Mortgage
Loan as of the date of acceptance of such Mortgage Loan by the Trustee. The
Trustee shall amend the Mortgage Loan Schedule to reflect such substitution and
shall provide a copy of such amended Mortgage Loan Schedule to the Master
Servicer and the Rating Agencies.
Section 2.05. Representations and Warranties of the Trustee. The
Trustee hereby represents and warrants to the Seller and the Master Servicer, as
of the Closing Date (and in the case of paragraphs (v) and (vi) below throughout
the term of the Agreement), that:
(i) The Trustee is a banking association duly organized, validly
existing and in good standing under the laws of the United States of
America with a principal place of business in Irvine, California;
(ii) Subject to the right of the Trustee to appoint a co-trustee
or separate trustee under Section 9.11 hereof in order to meet the
legal requirements of a particular jurisdiction, the Trustee has full
power, authority and legal right to execute and deliver this Agreement
and to perform its obligations under this Agreement and has taken all
necessary action to authorize the execution, delivery and performance
by it of this Agreement and the Certificates;
(iii) To the best of the Trustee's knowledge, after reasonable
investigation, the execution and delivery by the Trustee of this
Agreement and the Certificates and the performance by the Trustee of
its obligations under this Agreement and the Certificates will not
violate any provision of the Trustee's Articles of Association or
ByLaws or any law or regulation governing the Trustee or any order,
writ, judgment or decree of any court, arbitrator or governmental
authority or agency applicable to the Trustee or any of its assets. To
the best of the Trustee's knowledge, after reasonable investigation,
such execution, delivery and performance will not require the
authorization, consent or approval of, the giving of notice to, the
filing or registration with, or the taking of any other action with
respect to, any governmental authority or agency regulating the
activities of national banking associations. To the best of the
Trustee's knowledge, after reasonable investigation, such execution,
delivery and performance will not conflict with, or result in a breach
or violation of, any material indenture, mortgage, deed of trust,
lease or other agreement or instrument to which the Trustee is a party
or by which it or its properties is bound;
(iv) This Agreement has been duly executed and delivered by the
Trustee. This Agreement and the Certificates, when executed and
delivered, will constitute the valid, legal and binding obligations of
the Trustee, enforceable against the Trustee in accordance with their
terms, except as the enforcement thereof may be limited by applicable
Debtor Relief Laws and that certain equitable remedies may not be
available regardless of whether enforcement is sought in equity or at
law; and
(v) All funds received by the Trustee and required to be
deposited in the Certificate Account and the Custody Account pursuant
to this Agreement will be promptly so deposited.
Section 2.06. Issuance of Certificates. The Trustee acknowledges the
assignment to it of the Mortgage Loans and the other assets comprising the Trust
Fund and, concurrently therewith, has signed, and countersigned and delivered to
the Seller, in exchange therefor, Certificates in such authorized denominations
representing such Fractional Undivided Interests as the Seller has requested.
The Trustee agrees that it will hold the Mortgage Loans and such other assets
segregated on the books of the Trustee in trust for the benefit of the
Certificateholders.
Section 2.07. Representations and Warranties Concerning the Seller.
The Seller hereby represents and warrants to the Trustee and the Master Servicer
as follows:
(i) the Seller (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and (b) is qualified and in good standing as a foreign corporation to
do business in each jurisdiction where such qualification is
necessary, except where the failure so to qualify would not reasonably
be expected to have a material adverse effect on the Seller's business
as presently conducted or on the Purchaser's ability to enter into
this Agreement and to consummate the transactions contemplated hereby;
(ii)the Seller has full corporate power to own its property, to
carry on its business as presently conducted and to enter into and
perform its obligations under this Agreement;
(iii)the execution and delivery by the Seller of this Agreement
have been duly authorized by all necessary corporate action on the
part of the Seller; and neither the execution and delivery of this
Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict
with or result in a breach of, or constitute a default under, any of
the provisions of any law, governmental rule, regulation, judgment,
decree or order binding on the Seller or its properties or the
articles of incorporation or by-laws of the Seller, except those
conflicts, breaches or defaults which would not reasonably be expected
to have a material adverse effect on the Seller's ability to enter
into this Agreement and to consummate the transactions contemplated
hereby;
(iv) the execution, delivery and performance by the Seller of
this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in
respect of, any state, federal or other governmental authority or
agency, except those consents, approvals, notices, registrations or
other actions as have already been obtained, given or made;
(v) this Agreement has been duly executed and delivered by the
Seller and, assuming due authorization, execution and delivery by the
other parties hereto, constitutes a valid and binding obligation of
the Seller enforceable against it in accordance with its terms
(subject to applicable bankruptcy and insolvency laws and other
similar laws affecting the enforcement of the rights of creditors
generally); and
(vi) there are no actions, suits or proceedings pending or, to
the knowledge of the Seller, threatened against the Seller, before or
by any court, administrative agency, arbitrator or governmental body
(i) with respect to any of the transactions contemplated by this
Agreement or (ii) with respect to any other matter which in the
judgment of the Seller will be determined adversely to the Seller and
will if determined adversely to the Seller materially and adversely
affect the Seller's ability to enter into this Agreement or perform
its obligations under this Agreement; and the Seller is not in default
with respect to any order of any court, administrative agency,
arbitrator or governmental body so as to materially and adversely
affect the transactions contemplated by this Agreement.
<PAGE>
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. Master Servicer to Assure Servicing. (a) The Master
Servicer shall supervise, or take such actions as are necessary to ensure, the
servicing and administration of the Mortgage Loans and any REO Property in
accordance with this Agreement and its normal servicing practices, which
generally conform to the standards of an institution prudently servicing
mortgage loans for its own account and shall have full authority to do anything
it reasonably deems appropriate or desirable in connection with such servicing
and administration. The Master Servicer may perform its responsibilities
relating to servicing through other agents or independent contractors, but shall
not thereby be released from any of its responsibilities as hereinafter set
forth. The authority of the Master Servicer, in its capacity as master servicer,
shall include, without limitation, the power to (i) consult with and advise any
Sub-Servicer regarding administration of a related Mortgage Loan, (ii) approve
any recommendation by a Sub-Servicer to foreclose on a related Mortgage Loan,
(iii) supervise the filing and collection of insurance claims and take or cause
to be taken such actions on behalf of the insured person thereunder as shall be
reasonably necessary to prevent the denial of coverage thereunder, and (iv)
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing a related Mortgage Loan, including the employment of
attorneys, the institution of legal proceedings, the collection of deficiency
judgments, the acceptance of compromise proposals, the filing of claims under
any Primary Insurance Policy and any other matter pertaining to a delinquent
Mortgage Loan. The authority of the Master Servicer shall include, in addition,
the power on behalf of the Certificateholders, the Trustee or any of them to (i)
execute and deliver customary consents or waivers and other instruments and
documents, (ii) consent to transfers of any related Mortgaged Property and
assumptions of the related Mortgage Notes and Security Instruments (in the
manner provided in this Agreement) and (iii) collect any Insurance Proceeds and
Liquidation Proceeds. Without limiting the generality of the foregoing, the
Master Servicer may, and is hereby authorized, and empowered by the Trustee to,
execute and deliver, on behalf of itself, the Certificateholders, the Trustee,
or any of them, any instruments of satisfaction, cancellation, partial or full
release, discharge and all other comparable instruments, with respect to the
related Mortgage Loans, the Insurance Policies and the accounts related thereto,
and the Mortgaged Properties. The Master Servicer may exercise this power in its
own name or in the name of a Sub-Servicer.
(b) Notwithstanding the provisions of Subsection 3.01(a), the Master
Servicer shall not take any action inconsistent with the interest of the Trustee
or the Certificateholders in the Mortgage Loans or with the rights and interests
of the Trustee or the Certificateholders under this Agreement.
(c) The Trustee shall furnish the Master Servicer with any powers of
attorney and other documents in form as provided to it necessary or appropriate
to enable the Master Servicer to service and administer the related Mortgage
Loans and REO Property.
Section 3.02. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers. (a) The Master Servicer may enter into Sub-Servicing Agreements
with Sub-Servicers for the servicing and administration of the Mortgage Loans
and for the performance of any and all other activities of the Master Service
hereunder. Each Sub-Servicer shall be either (i) an institution the accounts of
which are insured by the FDIC or (ii) another entity that engages in the
business of originating or servicing mortgage loans, and in either case shall be
authorized to transact business in the state or states in which the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Sub-Servicer to perform its obligations
hereunder and under the Sub-Servicing Agreement, and in either case shall be a
FHLMC or FNMA approved mortgage servicer. Any Sub-Servicing Agreement entered
into by the Master Servicer shall include the provision that such Agreement may
be immediately terminated (x) with cause and without any termination fee by any
Master Servicer hereunder other than ICI Funding or (y) without cause in which
case the Master Servicer shall be responsible for any termination fee or penalty
resulting therefrom. In addition, each Sub-Servicing Agreement shall provide for
servicing of the Mortgage Loans consistent with the terms of this Agreement.
With the consent of the Trustee, which consent shall not be unreasonably
withheld, the Master Servicer and the Sub-Servicers may enter into Sub-Servicing
Agreements and make amendments to the Sub-Servicing Agreements or enter into
different forms of Sub-Servicing Agreements; provided, however, that any such
amendments or different forms shall be consistent with and not violate the
provisions of this Agreement, and that no such amendment or different form shall
be made or entered into which could be reasonably expected to be materially
adverse to the interests of the Certificateholders, without the consent of the
Holders of Certificates entitled to at least 51% of the Fractional Undivided
Interests. The parties hereto acknowledge that the initial Sub-Servicer shall be
Wendover Funding Inc.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related Sub-Servicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-Servicing Agreements and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master Servicer shall pay the costs of such enforcement at its own expense, but
shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loans or (ii) from a specific
recovery of costs, expenses or attorneys' fees against the party against whom
such enforcement is directed.
Section 3.03. Successor Sub-Servicers. The Master Servicer shall be
entitled to terminate any Sub-Servicing Agreement that may exist in accordance
with the terms and conditions of such Sub-Servicing Agreement and without any
limitation by virtue of this Agreement; provided, however, that upon
termination, the Master Servicer shall either act as servicer of the related
Mortgage Loan or enter into an appropriate contract with a successor
Sub-Servicer pursuant to which such successor Sub- Servicer will be bound by all
relevant terms of the related Sub- Servicing Agreement pertaining to the
servicing of such Mortgage Loan.
Section 3.04. Liability of the Master Servicer. (a) Notwithstanding
any Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Master Servicer and a Sub-Servicer or
reference to actions taken through a Sub-Servicer or otherwise, the Master
Servicer shall under all circumstances remain obligated and primarily liable to
the Trustee and the Certificateholders for the servicing and administering of
the Mortgage Loans and any REO Property in accordance with this Agreement. The
obligations and liability of the Master Servicer shall not be diminished by
virtue of Sub- Servicing Agreements or by virtue of indemnification of the
Master Servicer by any Sub-Servicer, or any other Person. The obligations and
liability of the Master Servicer shall remain of the same nature and under the
same terms and conditions as if the Master Servicer alone were servicing and
administering the related Mortgage Loans. The Master Servicer shall, however, be
entitled to enter into indemnification agreements with any Sub-Servicer or other
Person and nothing in this Agreement shall be deemed to limit or modify such
indemnification. For the purposes of this Agreement, the Master Servicer shall
be deemed to have received any payment on a Mortgage Loan on the date the
Sub-Servicer received such payment; provided, however, that this sentence shall
not apply to the Trustee acting as the Master Servicer; provided, further,
however, that the foregoing provision shall not affect the obligation of the
Master Servicer if it is also the Trustee to advance amounts which are not
Nonrecoverable Advances.
(b) Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such and not as an originator shall be deemed to be between
the Sub-Servicer and the Master Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Sub-Servicer
except as set forth in Section 3.05.
Section 3.05. Assumption or Termination of Sub-Servicing Agreements by
Trustee. (a) If the Trustee or its designee shall assume the master servicing
obligations of the Master Servicer in accordance with Section 8.02, the Trustee,
to the extent necessary to permit the Trustee to carry out the provisions of
Section 8.02 with respect to the Mortgage Loans, shall succeed to all of the
rights and obligations of the Master Servicer under each of the Sub-Servicing
Agreements. In such event, the Trustee or its designee as the successor master
servicer shall be deemed to have assumed all of the Master Servicer's rights and
obligations therein and to have replaced the Master Servicer as a party to such
Sub- Servicing Agreements to the same extent as if such Sub-Servicing Agreements
had been assigned to the Trustee or its designee as a successor master servicer,
except that the Trustee or its designee as a successor master servicer shall not
be deemed to have assumed any obligations or liabilities of the Master Servicer
arising prior to such assumption and the Master Servicer shall not thereby be
relieved of any liability or obligations under such Sub-Servicing Agreements.
(b) In the event that the Trustee or its designee as successor master
servicer for the Trustee assumes the servicing obligations of the Master
Servicer under Section 8.02, upon the reasonable request of the Trustee or such
designee as successor master servicer, the Master Servicer shall at its own
expense deliver to the Trustee, or at its written request to such designee,
photocopies of all documents and records, electronic or otherwise, relating to
the Sub-Servicing Agreements and the related Mortgage Loans or REO Property then
being serviced and an accounting of amounts collected and held by it, if any,
and will otherwise cooperate and use its reasonable best efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements, or
responsibilities hereunder to the Trustee, or at its written request to such
designee as successor master servicer.
Section 3.06. Collection of Mortgage Loan Payments. (a) The Master
Servicer will coordinate and monitor remittances by Sub- Servicers to the
Trustee with respect to the Mortgage Loans in accordance with this Agreement.
(b) The Master Servicer shall make its reasonable best efforts to
collect or cause to be collected all payments required under the terms and
provisions of the Mortgage Loans and shall follow, and use its best efforts to
cause Sub-Servicers to follow, collection procedures comparable to the
collection procedures of prudent mortgage lenders servicing mortgage loans for
their own account to the extent such procedures shall be consistent with this
Agreement. Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive or permit to be waived any late payment charge, prepayment
charge, assumption fee, or any penalty interest in connection with the
prepayment of a Mortgage Loan and (ii) suspend or reduce or permit to be
suspended or reduced regular monthly payments for a period of up to six months,
or arrange or permit an arrangement with a Mortgagor for a scheduled liquidation
of delinquencies. In the event the Master Servicer shall consent to the
deferment of the due dates for payments due on a Mortgage Note, the Master
Servicer shall nonetheless make a Monthly Advance or shall cause the related
Sub-Servicer to make an advance to the same extent as if such installment were
due, owing and delinquent and had not been deferred through liquidation of the
Mortgaged Property; provided, however, that the obligation of the Master
Servicer to make a Monthly Advance shall apply only to the extent that the
Master Servicer believes, in good faith, that such advances are not
Nonrecoverable Advances.
(c) Within five Business Days after the Master Servicer has determined
that all amounts which it expects to recover from or on account of a Mortgage
Loan have been recovered and that no further Liquidation Proceeds will be
received in connection therewith, the Master Servicer shall provide to the
Trustee a certificate of a Servicing Officer that such Mortgage Loan became a
Liquidated Mortgage Loan as of the date of such determination.
Section 3.07. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts. (a) The Master Servicer shall establish and maintain or
cause the Sub-Servicers to establish and maintain, in addition to the Protected
Accounts, one or more Servicing Accounts. The Master Servicer or a Sub-Servicer
will deposit and retain therein all collections from the Mortgagors for the
payment of taxes, assessments, insurance premiums, or comparable items as agent
of the Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in a
Designated Depository Institution in an account designated as a "Mortgage Loan
Servicing Account," held in trust by the Master Servicer or a Sub-Servicer as
Trustee of Taxes and Insurance Custodial Account for borrowers and for ICI
Funding (and its successors and assigns) acting on its own behalf and for ICI
Funding as agent for holders of various pass-through securities and other
interests in mortgage loans sold by it; and agent for various mortgagors, as
their interests may appear or under such other designation as may be permitted
by a Sub-Servicing Agreement. The amount at any time credited to a Servicing
Account must be fully insured by the FDIC, or, to the extent that such deposits
exceed the limits of such insurance, such excess must be (i) transferred to
another fully insured account in another Designated Depository Institution or
(ii) if permitted by applicable law, invested in Permitted Investments held in
trust by the Master Servicer or a Sub-Servicer as described above and maturing,
or be subject to redemption or withdrawal, no later than the date on which such
funds are required to be withdrawn, and in no event later than 45 days after the
date of investment. The Master Servicer may, or may permit a Sub-Servicer to,
establish Servicing Accounts not conforming to the foregoing requirements to the
extent that such Servicing Accounts are Rating Agency Eligible Accounts.
Withdrawals of amounts from the Servicing Accounts may be made only to effect
timely payment of taxes, assessments, insurance premiums, or comparable items,
to reimburse the Master Servicer or a Sub- Servicer for any advances made with
respect to such items, to refund to any Mortgagors any sums as may be determined
to be overages, to pay interest, if required, to Mortgagors on balances in the
Servicing Accounts or to clear and terminate the Servicing Accounts at or any
time after the termination of this Agreement in accordance with Section 10.01.
Section 3.08. Access to Certain Documentation and Information
Regarding the Mortgage Loans. The Master Servicer shall provide, and shall cause
any Sub-Servicer to provide, to the Trustee and the Seller access to the
documentation regarding the related Mortgage Loans and REO Property and to the
Certificateholders, the FDIC, and the supervisory agents and examiners of the
FDIC (to which the Trustee shall also provide) access to the documentation
regarding the related Mortgage Loans required by applicable regulations, such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Master Servicer, the Sub- Servicers
or the Trustee that are designated by these entities; provided, however, that,
unless otherwise required by law, the Trustee, the Master Servicer or the
Sub-Servicer shall not be required to provide access to such documentation if
the provision thereof would violate the legal right to privacy of any Mortgagor
provided, further, however, that the Trustee and the Seller shall coordinate
their requests for such access so as not to impose an unreasonable burden on, or
cause an interruption of, the business of the Master Servicer or any
Sub-Servicer. The Master Servicer, the Sub-Servicers and the Trustee shall allow
representatives of the above entities to photocopy any of the documentation and
shall provide equipment for that purpose at a charge that covers their own
actual out-of-pocket costs.
Section 3.09. Maintenance of Primary Insurance Policies; Collection
Thereunder. The Master Servicer shall, or shall cause the related Sub-Servicer
to, exercise its best reasonable efforts to maintain and keep in full force and
effect each Primary Insurance Policy by a Qualified Insurer, or other insurer
satisfactory to the Rating Agencies, with respect to each conventional Mortgage
Loan as to which as of the Cut-Off Date such a Primary Insurance Policy was in
effect (or, in the case of a Substitute Mortgage Loan, the date of substitution)
and the original principal amount of the related Mortgage Note exceeded 80% of
the Original Value in an amount at least equal to the excess of such original
principal amount over 75% of such Original Value until the principal amount of
any such Mortgage Loan is reduced below 80% of the Original Value or, based upon
a new appraisal, the principal amount of such Mortgage Loan represents less than
80% of the new appraised value. The Master Servicer shall, or shall cause the
related Sub-Servicer to, effect the timely payment of the premium on each
Primary Insurance Policy. The Master Servicer and the related Sub-Servicer shall
have the power to substitute for any Primary Insurance Policy another
substantially equivalent policy issued by another Qualified Insurer; provided
that such substitution is subject to the condition, to be evidenced by a writing
from each Rating Agency, that it would not cause the ratings on the Certificates
to be downgraded or withdrawn.
Section 3.10. Maintenance of Hazard Insurance and Fidelity Coverage.
(a) The Master Servicer shall maintain and keep, or cause each Sub-Servicer to
maintain and keep, with respect to each Mortgage Loan and each REO Property, in
full force and effect hazard insurance (fire insurance with extended coverage)
equal to at least the lesser of the Outstanding Principal Balance of the
Mortgage Loan or the current replacement cost of the Mortgaged Property, and
containing a standard mortgagee clause; provided, however, that the amount of
hazard insurance may not be less than the amount necessary to prevent loss due
to the application of any co-insurance provision of the related policy. Unless
applicable state law requires a higher deductible, the deductible on such hazard
insurance policy may be no more than $1000 or 1% of the applicable amount of
coverage, whichever is less. In the case of a condominium unit or a unit in a
planned unit development, the required hazard insurance shall take the form of a
multiperil policy covering the entire condominium project or planned unit
development, in an amount equal to at least 100% of the insurable value based on
replacement cost.
(b) Any amounts collected by the Master Servicer or a Sub-Servicer
under any such hazard insurance policy (other than amounts to be applied to the
restoration or repair of the Mortgaged Property or amounts released to the
Mortgagor in accordance with the Master Servicer's or a Sub-Servicer's normal
servicing procedures, the terms of the Mortgage Note, the Security Instrument or
applicable law) shall be deposited initially in a Protected Account, for
transmittal to the appropriate subaccount of the Certificate Account or Custody
Account, subject to withdrawal pursuant to Section 4.03.
(c) Any cost incurred by a Master Servicer or a Sub- Servicer in
maintaining any such hazard insurance policy shall not be added to the amount
owing under the Mortgage Loan for the purpose of calculating monthly
distributions to Certificateholders, notwithstanding that the terms of the
Mortgage Loan so permit. Such costs shall be recoverable by the Master Servicer
or a Sub- Servicer out of related late payments by the Mortgagor or out of
Insurance Proceeds or Liquidation Proceeds or by the Master Servicer from the
Repurchase Price, to the extent permitted by Section 4.03.
(d) No earthquake or other additional insurance is to be required of
any Mortgagor or maintained on property acquired with respect to a Security
Instrument other than pursuant to such applicable laws and regulations as shall
at any time be in force and shall require such additional insurance. When, at
the time of origination of the Mortgage Loan, the Mortgaged Property is located
in a federally designated special flood hazard area, the Master Servicer shall
use its best reasonable efforts to cause with respect to the Mortgage Loans and
each REO Property, flood insurance (to the extent available and in accordance
with mortgage servicing industry practice) to be maintained. Such flood
insurance shall cover the Mortgaged Property, including all items taken into
account in arriving at the Appraised Value on which the Mortgage Loan was based,
and shall be in an amount equal to the lesser of (i) the Outstanding Principal
Balance of the related Mortgage Loan and (ii) the minimum amount required under
the terms of coverage to compensate for any damage or loss on a replacement cost
basis, but not more than the maximum amount of such insurance available for the
related Mortgaged Property under either the regular or emergency programs of the
National Flood Insurance Program (assuming that the area in which such Mortgaged
Property is located is participating in such program). Unless applicable state
law requires a higher deductible, the deductible on such flood insurance may not
exceed $1,000 or 1% of the applicable amount of coverage, whichever is less.
(e) If insurance has not been maintained complying with Subsections
3.10(a) and (d) and there shall have been a loss which would have been covered
by such insurance had it been maintained, the Master Servicer shall pay, or
cause the related Sub-Servicer to pay, for any necessary repairs.
(f) The Master Servicer shall present, or cause the related
Sub-Servicer to present, claims under the related hazard insurance or flood
insurance policy.
(g) The Master Servicer shall obtain and maintain at its own expense
and for the duration of this Agreement a blanket fidelity bond and shall cause
each Sub-Servicer to obtain and maintain an errors and omissions insurance
policy covering such Sub-Servicer's officers, employees and other persons acting
on its behalf in connection with its activities under this Agreement. The amount
of coverage shall be at least equal to the coverage maintained by the Master
Servicer acceptable to FNMA or FHLMC to service loans for it or otherwise in an
amount as is commercially available at a cost that is generally not regarded as
excessive by industry standards. The Master Servicer shall promptly notify the
Trustee of any material change in the terms of such bond or policy. The Master
Servicer shall provide annually to the Trustee a certificate of insurance that
such bond and policy are in effect. If any such bond or policy ceases to be in
effect, the Master Servicer shall, to the extent possible, give the Trustee ten
days' notice prior to any such cessation and shall use its best efforts to
obtain a comparable replacement bond or policy, as the case may be. Any amounts
relating to the Mortgage Loans collected under such bond or policy shall be
remitted to the appropriate subaccount of the Certificate Account to the extent
that such amounts have not previously been paid to such account.
Section 3.11. Due-on-Sale Clauses; Assumption Agreements. (a) In any
case in which the Master Servicer is notified by any Mortgagor or Sub-Servicer
that a Mortgaged Property relating to a Mortgage Loan has been or is about to be
conveyed by the Mortgagor, the Master Servicer shall enforce, or shall instruct
such Sub-Servicer to enforce, any due-on-sale clause contained in the related
Security Instrument to the extent permitted under the terms of the related
Mortgage Note and by applicable law unless the Master Servicer reasonably
believes such enforcement is likely to result in legal action by the Mortgagor.
The Master Servicer or the related Sub-Servicer may repurchase a Mortgage Loan
at the Repurchase Price when the Master Servicer requires acceleration of the
Mortgage Loan, but only if the Master Servicer is satisfied, as evidenced by an
Officer's Certificate delivered to the Trustee, that either (i) such Mortgage
Loan is in default or default is reasonably foreseeable or (ii) if such Mortgage
Loan is not in default or default is not reasonably foreseeable, such repurchase
will have no adverse tax consequences for the Trust Fund or any
Certificateholder. If the Master Servicer reasonably believes that such
due-on-sale clause cannot be enforced under applicable law or if the Mortgage
Loan does not contain a due-on-sale clause, the Master Servicer is authorized,
and may authorize any Sub-Servicer, to consent to a conveyance subject to the
lien of the Mortgage, and to take or enter into an assumption agreement from or
with the Person to whom such property has been or is about to be conveyed,
pursuant to which such Person becomes liable under the related Mortgage Note and
unless prohibited by applicable state law, such Mortgagor remains liable
thereon, on condition, however, that the related Mortgage Loan shall continue to
be covered (if so covered before the Master Servicer or the related Sub-Servicer
enters into such agreement) by any Primary Insurance Policy. The Master Servicer
shall notify the Trustee, whenever possible, before the completion of such
assumption agreement, and shall forward to the Trustee the original copy of such
assumption agreement, which copy shall be added by the Trustee to the related
Mortgage File and which shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. In connection with any such assumption agreement,
the interest rate on the related Mortgage Loan shall not be changed and no other
material alterations in the Mortgage Loan shall be made unless such material
alteration would not cause each of REMIC I and REMIC II to fail to qualify as a
REMIC for federal income tax purposes, as evidenced by a REMIC Opinion. Any fee
or additional interest collected by the Master Servicer or Sub-Servicer for
consenting to any such conveyance or entering into any such assumption agreement
may be retained by the Master Servicer or the related Sub-Servicer as additional
servicing compensation.
(b) Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in default, breach
or any other violation of its obligations hereunder by reason of any assumption
of a Mortgage Loan by operation of law or any conveyance by the Mortgagor of the
related Mortgaged Property or assumption of a Mortgage Loan which the Master
Servicer reasonably believes it may be restricted by law from preventing, for
any reason whatsoever or if the exercise of such right would impair or threaten
to impair any recovery under any applicable Insurance Policy, or, in the Master
Servicer's judgment, be reasonably, likely to result in legal action by the
Mortgagor.
Section 3.12. Realization Upon Defaulted Mortgage Loans. (a) The
Master Servicer shall, or shall direct the related Sub- Servicer to, foreclose
upon or otherwise comparably convert the ownership of properties securing any
Mortgage Loans that come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.06 except that the Master Servicer shall not, and shall
not direct the related Sub-Servicer to, foreclose upon or otherwise comparably
convert a Mortgaged Property if there is evidence of toxic waste thereon and the
Master Servicer determines it would be imprudent to do so or not in accordance
with appropriate servicing standards. The Master Servicer can conclusively rely
on results of third party inspections from parties it reasonably believes are
qualified to conduct such inspections. In connection with such foreclosure or
other conversion, the Master Servicer in conjunction with the related
Sub-Servicer, if any, shall use its best reasonable efforts to preserve REO
Property and to realize upon defaulted Mortgage Loans in such manner as to
maximize the receipt of principal and interest by the Certificateholders, taking
into account, among other things, the timing of foreclosure and the
considerations set forth in Subsection 3.12(b). The foregoing is subject to the
proviso that the Master Servicer shall not be required to expend its own funds
in connection with any foreclosure or towards the restoration of any property
unless it determines in good faith (i) that such restoration or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan to Certificateholders
after reimbursement to itself for such expenses and (ii) that such expenses will
be recoverable to it either through Liquidation Proceeds (respecting which it
shall have priority for purposes of reimbursements from the Certificate Account
pursuant to Section 4.03) or through Insurance Proceeds (respecting which it
shall have similar priority). The Master Servicer shall be responsible for all
other costs and expenses incurred by it in any such proceedings; provided,
however, that it shall be entitled to reimbursement thereof (as well as its
normal servicing compensation), and in respect of the Master Servicer only, to
receive Excess Liquidation Proceeds as additional servicing compensation to the
extent that transfers or withdrawals from the Certificate Account with respect
thereto are permitted under Section 4.03. Any income from or other funds (net of
any income taxes) generated by REO Property shall be deemed for purposes of this
Agreement to be Insurance Proceeds.
(b) The Trust Fund shall not acquire any real property (or any
personal property incident to such real property) except in connection with a
default or imminent default of a Mortgage Loan. In the event that the Trust Fund
acquires any real property (or personal property incident to such real property)
in connection with a default or imminent default of a Mortgage Loan, such
property shall be disposed of by the Trust Fund within two years after its
acquisition by the Trust Fund unless the Trustee shall have received a REMIC
Opinion with respect to such longer retention or the Master Servicer applies for
and receives an extension of the two-year period under Section 856(e)(3) of the
Code, in which case such two year period will be extended by the period set
forth in such REMIC Opinion or approved application, as the case may be. The
Trustee shall have no obligation to pay for such REMIC Opinion.
(c) Notwithstanding anything to the contrary contained herein, the
Master Servicer shall have the right, at its sole option, to enter into an
agreement substantially in the form of Exhibit G hereto with a Holder of the
Class B-6 Certificates (provided that such form may be revised to incorporate an
option on the part of such Person to purchase a defaulted Mortgage Loan at the
end of the six-month period referred to in Subsection 2.02(b) thereof). It is
understood that the right of the Master Servicer to be reimbursed for Monthly
Advances and Nonrecoverable Advances under this Agreement shall not be affected
in any way by the provisions of any such agreement. The Trustee hereby agrees to
perform such obligations as may be required of it pursuant to the provisions of
such agreement. The Master Servicer agrees to provide the Trustee with such
information as may be necessary, or as the Trustee may reasonably request, for
the Trustee to perform such obligations.
Section 3.13. Trustee to Cooperate; Release of Mortgage Files. (a)
Upon payment in full of any Mortgage Loan or the receipt by the Master Servicer
of a notification that payment in full will be escrowed in a manner customary
for such purposes, the Master Servicer will immediately notify the Trustee by a
certification signed by a Servicing Officer in the Form of Exhibit D (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Certificate Account have been or will be so deposited in the
appropriate subaccount thereof) and shall request delivery to the Master
Servicer or Sub-Servicer, as the case may be, of the Mortgage File. Upon receipt
of such certification and request, the Trustee shall promptly release the
related Mortgage File to the Master Servicer or Sub-Servicer and execute and
deliver to the Master Servicer, without recourse, the request for reconveyance,
deed of reconveyance or release or satisfaction of mortgage or such instrument
releasing the lien of the Security Instrument (furnished by the Master
Servicer), together with the Mortgage Note with written evidence of cancellation
thereon. No expenses incurred in connection with any instrument of satisfaction
or deed of reconveyance shall be chargeable to the Certificate Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan or collection under a Required Insurance
Policy, the Master Servicer shall deliver to the Trustee a Request for Release
signed by a Servicing Officer on behalf of the Master Servicer in substantially
the form attached as Exhibit D hereto. Upon receipt of the Request for Release,
the Trustee shall deliver the Mortgage File or any document therein to the
Master Servicer or Sub-Servicer, as the case may be.
(c) The Master Servicer shall cause each Mortgage File or any document
therein released pursuant to Subsection 3.13(b) to be returned to the Trustee
when the need therefor no longer exists, and in any event within 21 days of the
Master Servicer's receipt thereof, unless the Mortgage Loan has become a
Liquidated Mortgage Loan and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the appropriate subaccount of the Certificate
Account or such Mortgage File is being used to pursue foreclosure or other legal
proceedings. Prior to return of a Mortgage File or any document to the Trustee,
the Master Servicer, the related Insurer or Sub-Servicer to whom such file or
document was delivered shall retain such file or document in its respective
control unless the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law, to
initiate or pursue legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non-judicially, and the Master Servicer
has delivered to the Trustee a certificate of a Servicing Officer certifying as
to the name and address of the Person to which such Mortgage File or such
document was delivered and the purpose or purposes of such delivery. If a
Mortgage Loan becomes a Liquidated Mortgage Loan, the Trustee shall deliver the
Request for Release with respect thereto to the Master Servicer upon deposit of
the related Liquidation Proceeds in the appropriate subaccount of the
Certificate Account.
(d) The Trustee shall execute and deliver to the Master Servicer any
court pleadings, requests for trustee's sale or other documents necessary to (i)
the foreclosure or trustee's sale with respect to a Mortgaged Property; (ii) any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or Security Instrument; (iii) obtain a deficiency judgment against the
Mortgagor; or (iv) enforce any other rights or remedies provided by the Mortgage
Note or Security Instrument or otherwise available at law or equity. Together
with such documents or pleadings the Master Servicer shall deliver to the
Trustee a certificate of a Servicing Officer in which it requests the Trustee to
execute the pleadings or documents. The certificate shall certify and explain
the reasons for which the pleadings or documents are required. It shall further
certify that the Trustee's execution and delivery of the pleadings or documents
will not invalidate any insurance coverage under the Required Insurance Policies
or invalidate or otherwise affect the lien of the Security Instrument, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
Section 3.14. Servicing and Master Servicing Compensation. (a) As
compensation for its activities hereunder, the Master Servicer shall be entitled
to receive the Master Servicing Fee from full payments of accrued interest on
each Mortgage Loan.
(b) The Master Servicer may retain additional servicing compensation
in the form of prepayment charges, if any, assumption fees, tax service fees,
fees for statement of account or payoff, late payment charges, interest on
amounts deposited in any Accounts or Permitted Investments of such amounts, or
otherwise. The Master Servicer is also entitled to receive Excess Liquidation
Proceeds as additional servicing compensation to the extent that transfers or
withdrawals from the appropriate subaccount of the Certificate Account with
respect thereto are permitted under Subsection 4.03(a)(xii). The Master Servicer
shall be required to pay all expenses it incurs in connection with servicing
activities under this Agreement, including fees and expenses to Sub-Servicers,
and shall not be entitled to reimbursement except as provided in this Agreement.
Expenses to be paid by the Master Servicer under this Subsection 3.14(b) shall
include payment of the expenses of the accountants retained pursuant to Section
3.16.
Section 3.15. Annual Statement of Compliance. Within 120 days after
December 31 of each year, commencing December 1996, the Master Servicer at its
own expense, shall deliver to the Trustee, with a copy to the Rating Agencies,
an Officer's Certificate stating, as to the signer thereof, that (i) a review of
the activities of the Master Servicer during the preceding fiscal year and of
performance under this Agreement has been made under such officer's supervision,
(ii) to the best of such officer's knowledge, based on such review, the Master
Servicer has fulfilled all its obligations under this Agreement for such year,
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof including the steps being taken by the Master Servicer to remedy such
default; (iii) a review of the activities of each Sub-Servicer during the
Sub-Servicer's most recently ended fiscal year on or prior to such December 31
and its performance under its Sub-Servicing Agreement has been made under such
Officer's supervision; and (iv) to the best of the Servicing Officer's
knowledge, based on his review and the certification of an officer of the
Sub-Servicer (unless the Servicing Officer has reason to believe that reliance
on such certification is not justified), either each Sub-Servicer has performed
and fulfilled its duties, responsibilities and obligations under this Agreement
and its Sub-Servicing Agreement in all material respects throughout the year,
or, if there has been a default in performance or fulfillment of any such
duties, responsibilities or obligations, specifying the nature and status of
each such default known to the Servicing Officer. Copies of such statements
shall be provided by the Master Servicer to the Certificateholders upon request
or by the Trustee at the expense of the Master Servicer should the Master
Servicer fail to provide such copies.
Section 3.16. Annual Independent Public Accountants Servicing Report.
(a) Within 120 days after December 31 of each year, commencing December, 1996,
the Master Servicer, at its expense, shall cause a firm of Independent public
accountants who are members of the American Institute of Certified Public
Accountants to furnish a statement to the Master Servicer, which will be
provided to the Trustee and the Rating Agencies to the effect that, in
connection with the firm's examination of the Master Servicer's financial
statements as of the end of such fiscal year, nothing came to their attention
that indicated that the Master Servicer was not in compliance with Sections
3.07, 3.15, 4.01, 4.02, 4.03 and 4.04 except for (i) such exceptions as such
firm believes to be immaterial and (ii) such other exceptions as are set forth
in such statement.
(b) Within 120 days after December 31 of each year, commencing
December 1996, the Master Servicer, at its expense, shall furnish to the Trustee
the most recently available letter or letters from one or more firms of
Independent certified public accountants who are members of the American
Institute of Certified Public Accountants reporting the results of such firm's
examination of the servicing procedures of any Sub-Servicer and any Master
Servicer (other than ICI Funding or the Trustee) in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers.
Section 3.17. REMIC-Related Covenants. For as long as REMIC I and
REMIC II shall exist, the Master Servicer and the Trustee shall act in
accordance herewith to assure continuing treatment of REMIC I and REMIC II as
REMICs, and the Trustee shall comply with any directions of the Master Servicer
to assure such continuing treatment. In particular, the Trustee shall not (a)
sell or permit the sale of all or any portion of the Mortgage Loans or of any
Permitted Investment unless such sale is as a result of a repurchase of the
Mortgage Loans pursuant to this Agreement or the Trustee has received a REMIC
Opinion prepared at the expense of the Trust Fund; and (b) other than with
respect to a substitution pursuant to Section 2.04, accept any contribution to
REMIC I or REMIC II after the Startup Day without receipt of a REMIC Opinion.
Section 3.18. Additional Information. The Master Servicer agrees to
furnish the Seller from time to time upon reasonable request, such further
information, reports and financial statements as the Seller deems appropriate to
prepare and file all necessary reports with the Securities and Exchange
Commission.
Section 3.19. Optional Purchase of Defaulted Mortgage Loans. The
Master Servicer shall have the right, but not the obligation, to purchase any
Defaulted Mortgage Loan for a price equal to the Repurchase Price therefor. Any
such purchase shall be accomplished as provided in Subsection 2.02(c) hereof.
<PAGE>
ARTICLE IV
Accounts
Section 4.01. Protected Accounts. (a) The Master Servicer shall
require each Sub-Servicer to establish and maintain a Protected Account
complying with the requirements set forth in this Section 4.01, with records to
be kept with respect thereto on a Mortgage Loan by Mortgage Loan basis, into
which accounts shall be deposited within 24 hours of receipt all collections of
principal and interest on any Mortgage Loan and with respect to any REO Property
received by the Master Servicer, or a Sub-Servicer, including Principal
Prepayments, Insurance Proceeds, Liquidation Proceeds, and advances made from
the Sub-Servicer's own funds (less servicing compensation as permitted by
Subsection 3.14(a)) and all other amounts to be deposited in the Protected
Accounts. The Master Servicer is hereby authorized to make withdrawals from and
deposits to the related Protected Accounts for purposes required or permitted by
this Agreement. All Protected Accounts shall be held in a Designated Depository
Institution and segregated on the books of such institution. The amount at any
time credited to a Protected Account shall be fully insured by the FDIC or, to
the extent that such balance exceeds the lesser of $100,000 or the limits of
such insurance, such excess must be transferred to the appropriate subaccount of
the Certificate Account or the related Custody Account or invested in Permitted
Investments.
Amounts on deposit in a Protected Account may be invested in Permitted
Investments, such Permitted Investments to mature, or to be subject to
redemption or withdrawal, no later than the date on which such funds are
required to be withdrawn for deposit in the Custody Account or Certificate
Account, and shall be held until required for such deposit. The income earned
from Permitted Investments made pursuant to this Section 4.01 shall be paid to
the Master Servicer or the related Sub-Servicer as additional compensation for
its obligations under this Agreement, and the risk of loss of moneys required to
be distributed to the Certificateholders resulting from such investments shall
be borne by and be the risk of the Master Servicer or the related Sub- Servicer.
The Master Servicer shall cause the related Sub-Servicer to deposit the amount
of any such loss in the related Protected Account within two Business Days of
receipt of notification of such loss but not later than the second Business Day
prior to the Distribution Date on which the moneys so invested are required to
be distributed to the Certificateholders. The Master Servicer may, and the
Master Servicer may permit the related Sub-Servicer to, transfer funds to other
accounts (which shall for purposes hereof be deemed to be Protected Accounts) or
to establish Protected Accounts not conforming to the foregoing requirements, to
the extent that such other accounts or Protected Accounts are Rating Agency
Eligible Accounts.
(b) On or before each Funds Transfer Date, the Master Servicer shall
withdraw or shall cause (by written direction to the Trustee if such withdrawal
is from a Custody Account) to be withdrawn from the Protected Accounts or the
Custody Account and shall immediately deposit or cause to be deposited in the
appropriate subaccount of the Certificate Account amounts representing the
following collections and payments (other than with respect to principal of or
interest on the Mortgage Loans due on or before the Cut-Off Date):
(i) Scheduled Payments on the related Mortgage Loans received or
advanced by the Master Servicer or Sub- Servicers which were due on or
before the related Due Date, net of the amount thereof comprising the
Master Servicing Fee due the Master Servicer;
(ii) Full Principal Prepayments and any Liquidation Proceeds
received by the Master Servicer or Sub-Servicers with respect to such
Mortgage Loans in the related Prepayment Period, with interest to the
date of prepayment or liquidation, net of the amount thereof
comprising the Master Servicing Fee due the Master Servicer;
(iii) Partial prepayments of principal received by the Master
Servicer or Sub-Servicers for such Mortgage Loans in the related
Prepayment Period; and
(iv) Any amount to be used as a Certificate Account Advance.
(c) Withdrawals may be made from a Protected Account only to make
remittances as provided in Subsections 4.01(b) or 4.03(c), or Section 4.04; to
reimburse the Master Servicer or a Sub-Servicer for advances of principal and
interest which have been recovered by subsequent collection from the related
Mortgagor; to remove amounts deposited in error; to remove fees, charges or
other such amounts deposited on a temporary basis; or to clear and terminate the
account at the termination of this Agreement in accordance with Section 10.01.
(d) The Master Servicer shall deliver to the Trustee on or prior to
the Determination Date in each month a statement from the institution at which
each Protected Account is maintained showing deposits and withdrawals during the
prior month.
Section 4.02. Certificate Account. (a) The Trustee shall establish and
maintain in the name of the Trustee, for the benefit of the Certificateholders,
the Certificate Account as a segregated non-interest bearing trust account or
accounts. The Certificate Account shall have two separate subaccounts, one each
for all funds with respect to each Mortgage Loan Group. The Trustee will deposit
in the appropriate subaccount as identified by the Master Servicer, of the
Certificate Account as received the following amounts:
(i) Any amounts withdrawn from a Protected Account pursuant to
Subsection 4.01(b) or the Custody Account pursuant to Section 4.04;
(ii) Any Monthly Advance and any Compensating Interest Payments;
(iii) Any Insurance Proceeds or Liquidation Proceeds received by
the Master Servicer which were not deposited in a Protected Account or
the Custody Account;
(iv) The Repurchase Price with respect to any Mortgage Loans
purchased by ICI Funding pursuant to Sections 2.02 or 2.03 or by the
Master Servicer pursuant to Section 3.19, any amounts which are to be
treated pursuant to Section 2.04 as the payment of such a Repurchase
Price, and all proceeds of any Mortgage Loans or property acquired
with respect thereto repurchased by the Master Servicer or its
designee pursuant to Section 10.01;
(v) Any amounts required to be deposited with respect to losses
on Permitted Investments pursuant to Subsection 4.02(d) or Section
4.04(d) below; and
(vi) Any other amounts received by the Master Servicer or the
Trustee and required to be deposited in such subaccount of the
Certificate Account pursuant to this Agreement.
(b) All amounts deposited to the Certificate Account shall be held by
the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement, subject to the right of the Master Servicer to require the Trustee to
make withdrawals therefrom as provided herein. The foregoing requirements for
crediting the Certificate Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing, payments in the
nature of prepayment or late payment charges or assumption, tax service,
statement account or payoff, substitution, satisfaction, release and other like
fees and charges need not be credited by the Master Servicer or the related Sub-
Servicer to the Certificate Account and may be retained by the Master Servicer
or the related Sub-Servicer as servicing compensation. In the event that the
Master Servicer shall deposit or cause to be deposited to the Certificate
Account any amount not required to be credited thereto, or shall deposit or
cause to be deposited to a subaccount of the Certificate Account any amount
which should appropriately be credited to the other subaccount of the
Certificate Account, the Trustee, upon receipt of a written request therefor
signed by a Servicing Officer of the Master Servicer, shall promptly transfer
such amount to the Master Servicer or to the other subaccount of the Certificate
Account, as applicable, any provision herein to the contrary notwithstanding.
(c) The Certificate Account shall constitute a trust account of the
Trust Fund segregated on the books of the Trustee and held by the Trustee in
trust, and the Certificate Account and the funds deposited therein shall not be
subject to, and shall be protected from, all claims, liens, and encumbrances of
any creditors or depositors of the Trustee or the Master Servicer (whether made
directly, or indirectly through a liquidator or receiver of the Trustee or the
Master Servicer). The amount at any time credited to the Certificate Account
shall be (i) fully insured by the FDIC to the maximum coverage provided thereby,
(ii) at the written direction of the Master Servicer invested, in the name of
the Trustee, or its nominee, for the benefit of the Certificateholders, in such
Permitted Investments to be held by the Trustee as the Master Servicer may
direct (such direction to be confirmed in writing) and in the absence of such
direction, the Trustee shall invest funds in the Certificate Account in
Permitted Investments described in clause (viii) of the definition thereof, or
(iii) from the maturity of any Permitted Investment on the Business Day prior to
a Distribution Date through the distribution of such funds on such Distribution
Date or at such other time and in such amount as, in the judgment of the Master
Servicer, cannot reasonably be invested in accordance with items (i) or (ii) of
this sentence, held by the Trustee in such Certificate Account. All Permitted
Investments shall mature or be subject to redemption or withdrawal on or before,
and shall be held until, the next succeeding Distribution Date if the obligor
for such Permitted Investment is the Trustee or, if such obligor is any other
Person, the Business Day preceding such Distribution Date. With respect to the
Certificate Account and the funds deposited therein, the Trustee shall take such
action as may be necessary to ensure that the Certificateholders shall be
entitled to the priorities afforded to such a trust account (in addition to a
claim against the estate of the Trustee) as provided by 12 U.S.C. 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
appropriate subaccount of the Certificate Account as the Master Servicer has
designated for such transfer or withdrawal as specified in a certificate signed
by a Servicing Officer (upon which the Trustee may conclusively rely) for the
following purposes:
(i) [intentionally omitted];
(ii) to reimburse the Master Servicer or any Sub- Servicer for
any Monthly Advance of its own funds or any advance of such
Sub-Servicer's own funds, the right of the Master Servicer or a
Sub-Servicer to reimbursement pursuant to this subclause (ii) being
limited to amounts received on a particular Mortgage Loan (including,
for this purpose, the Repurchase Price therefor, Insurance Proceeds
and Liquidation Proceeds) which represent late payments or recoveries
of the principal of or interest on such Mortgage Loan respecting which
such Monthly Advance or advance was made;
(iii) to reimburse the Master Servicer or any Sub- Servicer from
Insurance Proceeds or Liquidation Proceeds relating to a particular
Mortgage Loan for amounts expended by the Master Servicer or such
Sub-Servicer pursuant to Section 3.12 in good faith in connection with
the restoration of the related Mortgaged Property which was damaged by
an Uninsured Cause or in connection with the liquidation of such
Mortgage Loan;
(iv) to reimburse the Master Servicer or any Sub- Servicer from
Insurance Proceeds relating to a particular Mortgage Loan for Insured
Expenses incurred with respect to such Mortgage Loan and to reimburse
the Master Servicer or such Sub-Servicer from Liquidation Proceeds
from a particular Mortgage Loan for Liquidation Expenses incurred with
respect to such Mortgage Loan; provided that the Master Servicer shall
not be entitled to reimbursement for Liquidation Expenses with respect
to a Mortgage Loan to the extent that (i) any amounts with respect to
such Mortgage Loan were paid as Excess Liquidation Proceeds pursuant
to clause (xii) of this Subsection 4.03(a) to the Master Servicer; and
(ii) such Liquidation Expenses were not included in the computation of
such Excess Liquidation Proceeds;
(v) to pay the Master Servicer or any Sub-Servicer (payment to
any Sub-Servicer to be subject to prior payment to the Master Servicer
of an amount equal to the Master Servicing Fee), as appropriate, from
Liquidation Proceeds or Insurance Proceeds received in connection with
the liquidation of any Mortgage Loan, the amount which it or such
Sub-Servicer would have been entitled to receive under subclause (x)
of this Subsection 4.03(a) as servicing compensation on account of
each defaulted scheduled payment on such Mortgage Loan if paid in a
timely manner by the related Mortgagor, but only to the extent that
the aggregate of Liquidation Proceeds and Insurance Proceeds with
respect to such Mortgage Loan, after any reimbursement to the Master
Servicer or any Sub-Servicer, pursuant to subclauses (ii), (iii), (iv)
and (vii) of this Subsection 4.03(a), exceeds the Outstanding
Principal Balance of such Mortgage Loan plus accrued and unpaid
interest thereon at the related Mortgage Interest Rate less the Master
Servicing Fee Rate to but not including the date of payment;
(vi) to pay the Master Servicer or any Sub-Servicer (payment to
any Sub-Servicer to be subject to prior payment to the Master Servicer
of the portion of the Master Servicing Fee which the Master Servicer
is entitled to retain as evidenced in writing to the Trustee by the
Master Servicer, as appropriate, from the Repurchase Price for any
Mortgage Loan, the amount which it or such Sub-Servicer would have
been entitled to receive under subclause (x) of this Subsection
4.03(a) as servicing compensation, but only to the extent that the
Repurchase Price with respect to such Mortgage Loan after any
reimbursement to the related Master Servicer and Sub-Servicer pursuant
to subclauses (ii) and (vii) of this Subsection 4.03(a) exceeds the
Outstanding Principal Balance of such Mortgage Loan plus accrued and
unpaid interest thereon at the related Mortgage Interest Rate less the
Master Servicing Fee Rate through the last day of the month of
repurchase;
(vii) to reimburse the Master Servicer or any Sub- Servicer for
advances of funds pursuant to Sections 3.07, 3.09 and 3.10, the right
to reimbursement pursuant to this subclause being limited to amounts
received on the related Mortgage Loan (including, for this purpose,
the Repurchase Price therefor, Insurance Proceeds and Liquidation
Proceeds) which represent late recoveries of the payments for which
such advances were made;
(viii) to pay the Master Servicer or any Sub-Servicer, as the
case may be, with respect to each Mortgage Loan that has been
purchased pursuant to Section 2.02, 2.03, 2.04, 3.19 or 10.01, all
amounts received thereon, representing recoveries of principal that
reduce the Outstanding Principal Balance of the related Mortgage Loan
below the Outstanding Principal Balance used in calculating the
Repurchase Price or representing interest included in the calculation
of the Repurchase Price or accrued after the end of the month during
which such repurchase occurs;
(ix) to reimburse the Master Servicer or any Sub- Servicer for
any Monthly Advance or advance, after a Realized Loss has been
allocated with respect to the related Mortgage Loan if the Monthly
Advance or advance has not been reimbursed pursuant to clauses (ii)
and (vii), such reimbursement to come from the subaccount relating to
the Mortgage Loan Group of which the related Mortgage Loan is a part;
(x) to pay the Master Servicer and any Sub-Servicer servicing
compensation as set forth in Section 3.14;
(xi) to reimburse the Master Servicer for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Subsection
7.04(d), which, if not specifically allocable to a Mortgage Loan
Group, shall be allocated between the subaccounts, pro rata, based on
the Scheduled Principal Balances of the Group I Mortgage Loans and the
Group II Mortgage Loans, respectively;
(xii) to pay to the Master Servicer, as additional servicing
compensation, any Excess Liquidation Proceeds;
(xiii) to clear and terminate the Certificate Account pursuant to
Section 10.01; and
(xiv) to remove amounts deposited in error.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Certificate Account pursuant to subclauses (i) through
(vii), inclusive, and (ix).
(b) On each Distribution Date, the Trustee shall make the following
payments in the priority set forth from the funds in the Certificate Account:
(i) First, the Trustee's Fees shall be paid to the Trustee; and
(ii) Second, the amount distributable to the Holders of the
Certificates shall be payable in accordance with Section 6.01.
(c) Notwithstanding the provisions of this Section 4.03, the Master
Servicer may, but is not required to, allow the Sub- Servicers to deduct from
amounts received by them or from the related Protected Account, prior to deposit
in the Certificate Account or the Custody Account, any portion to which such
Sub- Servicers are entitled as servicing compensation (including income on
Permitted Investments) or reimbursement of any reimbursable advances made by
such Sub-Servicers.
Section 4.04 Custody Account. (a) The Trustee shall establish and
maintain for the benefit of the Certificateholders the Custody Account as a
segregated non-interest bearing trust account in the corporate trust department
of a Designated Depository Institution. The Custody Account shall constitute a
trust account of the Trust Fund segregated on the books of the Designated
Depository Institution and held by the Designated Depository Institution in
trust, and such Account and the funds deposited therein shall not be subject to,
and shall be protected from, all claims, liens, and encumbrances of any
creditors or depositors of the Designated Depository Institution, the Trustee,
the Master Servicer, any Sub-Servicer (whether made directly, or indirectly
through a liquidator or receiver of the Designated Depository Institution, the
Trustee, any Master Servicer, or any Sub-Servicer). With respect to the Custody
Account maintained with the Trustee and the funds deposited therein, the Trustee
shall take such action as may be necessary to ensure that the 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 II and shall not constitute a part of REMIC II
(or REMIC I). The Trustee shall be the legal owner of the portion of the Funds
held in the Custody Account for the benefit of the Certificateholders and for
all Federal income tax purposes, ICI Funding shall be the owner of the Custody
Account. For all Federal tax purposes, amounts, if any, transferred by REMIC II
to the Custody Account shall be treated as amounts distributed by REMIC II to
ICI Funding.
(b) Within one Business Day after receipt, the Master Servicer shall
withdraw or shall cause to be withdrawn from each Protected Account and shall
immediately deposit or cause to be deposited in the Custody Account all amounts
in the Protected Account not otherwise invested in Permitted Investments
pursuant to Section 4.01 and exceeding the lesser of $100,000 or the FDIC
insurance limit (other than with respect to principal of or interest on the
Mortgage Loans due on or before the Cut-Off Date).
(c) Withdrawals may be made from the Custody Account only to make
remittances as provided in Sections 4.01(b) or 4.04(d); to reimburse the Master
Servicer or any Sub-Servicer for advances of principal and interest which have
been recovered by subsequent collection from the related Mortgagor; to remove
amounts deposited in error; to remove fees, charges or other such amounts
deposited on a temporary basis; or to clear and terminate the account at the
termination of this Agreement in accordance with Section 10.01.
(d) Funds in the Custody Account may be invested at the direction of
the Master Servicer (such direction to be confirmed promptly in writing) in
Permitted Investments held in trust for the benefit of the Certificateholders
and in the absence of such directions, funds in the Custody Account shall be
invested in Permitted Investments described in clause (viii) of the definition
thereof. Such Permitted Investments must mature, or be subject to redemption or
withdrawal, no later than the date on which such funds are required to be
withdrawn for deposit in the Certificate Account pursuant to Section 4.01(b) and
shall be held in such Account until required for such deposit. The income earned
from Permitted Investments made pursuant to this Section 4.04 shall be paid to
the Master Servicer as additional compensation for its obligations under this
Agreement, and the risk of loss of moneys required to be distributed to the
Certificateholders resulting from such investments shall be borne by and be the
risk of the Master Servicer. The amount of any such loss shall be deposited by
the Master Servicer in the Custody Account within two Business Days of receipt
of notification of such loss but not later than the second Business Day prior to
the Distribution Date on which the moneys so invested are required to be
distributed to the Certificateholders.
Section 4.05 Buydown Accounts. (a) With respect to each Group I
Mortgage Loan that is a Buydown Mortgage Loan, the Master Servicer shall require
each Sub-Servicer to establish and maintain a Buydown Account for the deposit of
the Buydown Funds provided to it. Each such Buydown Account shall be held in a
Designated Depository Institution segregated on the books of such institution
and designated as held in trust by each Sub-Servicer for the benefit of the
Mortgagor to secure the Mortgagor's obligations under the Mortgage Note, and,
except to the extent the mortgagee has a claim thereto, shall not be deemed a
part of the Trust Fund or subject to the Trust created by this Agreement nor
shall any income to the Master Servicer be deemed part of the Trust Fund. The
owner of each such Buydown Account shall be the related Sub-Servicer and the
related Sub-Servicer shall report for income tax purposes any income as loss in
such Buydown Account on its tax returns. The amount at any time credited to the
Buydown Account shall be fully insured by the FDIC or, to the extent that such
balance exceeds the limits of such insurance, such excess must be (i)
transferred to another fully insured account in another Designated Depository
Institution or (ii) invested in Permitted Investments held in trust by each
Sub-Servicer as described above. If such excess is invested in Permitted
Investments, such Permitted Investments must mature no later than the date on
which such funds are required to be withdrawn for deposit in the Certificate
Account. The Master Servicer may permit the related Sub-Servicer to establish
Buydown Accounts not conforming to the foregoing requirements to the extent that
such Buydown Accounts meet the requirements of each Rating Agency for the
maintenance of a rating on the Certificates in the highest category of each such
Rating Agency.
(b) Each Mortgagor under a Buydown Mortgage Loan shall be obligated
for the full amount due under the related Mortgage Note.
(c) The Buydown Funds shall equal a sum of payments which, when added
to the payment required of the related Mortgagor on each Due Date, is equal to
the full monthly payment due on that Due Date.
(d) On or before each day on which remittances are due to the
Certificate Account in accordance with Section 4.01, the related Sub-Servicer
shall withdraw from each Buydown Account relating to the Mortgage Loans and
deposit in the Protected Account, an amount of Buydown Funds for each respective
Buydown Mortgage Loan which, when added to the amount due on such date from the
Mortgagor on such Buydown Mortgage Loan, shall equal the full monthly payment
due on such Buydown Mortgage Loan. Such amount deposited by the related
Sub-Servicers shall be remitted to the Certificate Account.
(e) If the Mortgagor on a Buydown Mortgage Loan prepays such loan in
its entirety, during the Buydown Period, the Master Servicer shall cause the
related Sub-Servicer to withdraw from the Buydown Account and deposit or cause
to be deposited in its Protected Account such portion of the Buydown Funds for
such Buydown Mortgage Loan that is necessary to fully prepay the related
Mortgage Loan. Any funds remaining in the related Buydown Account shall be
returned to the original source of such Buydown Funds.
(f) If the Mortgagor on a Buydown Mortgage Loan defaults on such loan
during the Buydown Period and the property securing such Buydown Mortgage Loan
is sold in the liquidation thereof (either by the related Sub-Servicer or the
insurer under any related Primary Insurance Policy), the Master Servicer shall
cause the related Sub-Servicer to withdraw from the Buydown Account and deposit
in its Protected Account or pay to the insurer under any related Primary
Insurance Policy if the Mortgaged Property is transferred to such insurer and
such insurer pays all of the loss incurred in respect of such default, the
Buydown Funds for such Buydown Mortgage Loan still held in the Buydown Account
necessary to fully repay such Buydown Mortgage Loan. Any funds remaining in the
related Buydown Account shall be returned to the original source of such Buydown
Funds.
<PAGE>
ARTICLE V
Section 5.01. Certificates. (a) The Depository, the Seller and the
Trustee have entered into a Depository Agreement dated as of December 20, 1996
(the "Depository Agreement"). Except for the Physical Certificates, the
Individual Certificates and as provided in Subsection 5.01(b), the Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of such Certificates may not be
transferred by the Trustee except to a successor to the Depository; (ii)
ownership and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iii) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (iv) the Trustee shall deal with the
Depository as representative of such Certificate Owners of the respective Class
of Certificates for purposes of exercising the rights of Certificateholders
under this Agreement, and requests and directions for and votes of such
representative shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; and (v) the Trustee may rely and shall
be fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants.
All transfers by Certificate Owners of such respective Classes of
Book-Entry Certificates and Global Certificates shall be made in accordance with
the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owners. Each Depository Participant shall only
transfer Book-Entry Certificates of Certificate Owners it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures.
(b) If (i)(A) the Seller advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Trustee or the Seller is unable to
locate a qualified successor within 30 days or (ii) the Seller at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository, the Trustee shall request that the Depository notify all
Certificate Owners of the occurrence of any such event and of the availability
of definitive, fully registered Certificates (the "Definitive Certificates") to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Seller, the Master Servicer nor the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions.
(c) REMIC II will be evidenced by (x) the REMIC II Regular
Certificates, which will be uncertificated and non-transferable and are hereby
designated as the "regular interests" in REMIC II and (y) the Class R-2
Certificates, which are hereby designated as the single "residual interest" in
REMIC II. Except as discussed below, principal and interest shall be paid on the
REMIC II Regular Certificates in the same order and priority as payments are to
be made on the Corresponding Classes of Certificates (disregarding the Class X
Certificates). The REMIC II Regular Certificates and the Class R-2 Certificates
will have the following designations and pass-through rates, and distributions
of principal and interest thereon shall be allocated to the Corresponding Class
of Certificates in the following manner:
<TABLE>
<CAPTION>
Corresponding Class
of Certificates (1)
-------------------
Allocation Allocation
REMIC II Initial Pass-Through of of
Certificates Balance Rate (2) Principal Interest
- ------------ ------- ------------ ---------- --------
<S> <C> <C> <C> <C>
II-A-1 $20,638,000 W1-1.45% A-I-1 A-I-1 (3)
II-A-2 $ 3,685,000 W1+3.00% A-I-2 A-I-2 (3)
II-A-3 $ 5,459,000 W1-1.20% A-I-3 A-I-3 (3)
II-A-4 $13,885,000 W1-1.00% A-I-4 A-I-4 (3)
II-A-5 $ 8,309,000 W1-0.90% A-I-5 A-I-5 (3)
II-A-6 $ 6,317,000 W1-0.90% A-I-6 A-I-6 (3)
II-A-7-8 $57,741,000 W1+1.00% A-I-7, & A-I-7, &
A-I-8 (4) A-I-8
(3),(4)
II-A-9 $ 9,600,000 W1-0.55% A-I-9 A-I-9 (3)
II-A-10 $ 7,644,000 W1 A-I-10 A-I-10(3)
II-A-11 $25,000,000 W1 A-I-11 A-I-11(3)
II-A-II $17,974,774 W2 A-II A-II (3)
II-PO $ 3,933 (5) PO N/A
II-B-1 $14,234,312.46 (7) W1 All Class All Class
B Certi- B Certi-
ficates(6) ficates
(3),(6)
II-B-2 $ 1,616,260.39 (8) W2 All Class All Class
B Certi- B Certi-
ficates(6) ficates
(3),(6)
II-R-1 $ 100 W1 R-1 R-1
(3),(9)
R-2 $ 100 W1 N/A N/A (9)
- -----------------
(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%.
(2) For purposes of computing the Pass-Through Rates, W1 is the rate
computed by dividing (i) the sum of the amounts computed for
each Group I Mortgage Loan determined by multiplying the
principal balance of each Group I Mortgage Loan by the Net Rate
of the Group I Mortgage Loan, by (ii) the sum of the amounts
computed for each Group I Mortgage Loan by multiplying the Non-
PO Percentage with respect to each Group I Mortgage Loan by the
principal balance of the Group I Mortgage Loan; and W2 is the
weighted average of the Net Rates of the Group II Mortgage
Loans.
(3) Interest in excess of the Pass-Through Rate for this Class shall
be allocated to the Class X Certificates as a Separate
Component. However, if the sum of the interest allocated to the
various Separate Components exceeds the Accrued Certificate
Interest on the Class X Certificates, the interest allocated to
each Separate Component shall be reduced proportionally by such
excess.
(4) Interest and/or principal allocable to the Class A-I-7 and Class A-I-8
Certificates shall be apportioned among such Certificates in the same
order and priority as payments are to be made on such Certificates
(5) The Class II-PO Certificate will be a principal only Certificate
and will not bear interest.
(6) Principal and interest attributable to the Group I Mortgage
Loans and allocable to the Class B Certificates shall be
apportioned among such Certificates in the same order and
priority as payments are to be made on such Certificates.
Principal and interest attributable to the Group II Mortgage
Loans and allocable to the Class B Certificates shall be
apportioned among such Certificates in the same order and
priority as payments are to be made on such Certificates.
(7) This Initial Balance is equal to the sum of the initial
principal balances of the Group I Mortgage Loans less the sum of
the initial principal balances of the Class A-I, Class PO, Class R-1
and Class R-2 Certificates (excluding the notional principal balance of
the Class A-I-8 Certificates).
(8) This Initial Balance is equal to the sum of the initial principal
balances of the Group II Mortgage Loans less the initial principal
balance of the Class A-II Certificates.
(9) On each Distribution Date, Available Funds, if any, remaining in REMIC
II after payment of interest and principal, as designated above, will
be distributed to the Class R-2 Certificate. The first $200.00 of
principal payments on the Group I Mortgage Loans shall be distributed
pro-rata between the Class II-R-1 and Class R-2 Certificates.
</TABLE>
(d) The Classes of the Certificates shall have the following
designations, initial principal amounts and Pass- Through Rates:
Designation Initial Principal Amount Pass-Through Rate
- ----------- ------------------------ -----------------
A-I-1 $ 20,638,000 6.55%
A-I-2 $ 3,685,000 11.00%
A-I-3 $ 5,459,000 6.80%
A-I-4 $ 13,885,000 7.00
A-I-5 $ 8,309,000 7.10%
A-I-6 $ 6,317,000 7.10%
A-I-7 $ 57,741,000 (1)
A-I-8 $ 57,741,000* (2)
A-I-9 $ 9,600,000 7.45%
A-I-10 $ 7,664,000 8.00%
A-I-11 $ 25,000,000 8.00%
A-II $ 17,974,774 7.05%
PO $ 3,933 (3)
X $192,127,479.85* (4)
B-1 $ 6,244,000 8.00%
B-2 $ 3,842,000 8.00%
B-3 $ 2,882,000 8.00%
B-4 $ 1,152,000 8.00%
B-5 $ 384,000 8.00%
B-6 $ 1,346,572.85 8.00%
R-1 $ 100 8.00%
R-2 $ 100 (5)
- --------------------
* Original Notional Amount
(1) The Class A-I-7 Certificates will bear interest at 5.825% per annum during
the first Interest Accrual Period. During each Interest Accrual Period
thereafter, the Class A-I-7 Certificates will bear interest, subject to a
maximum rate of 9.00% per annum and a minimum rate of 0.45% per annum, at a
rate per annum equal to 0.45%, in excess of LIBOR.
(2) The Class A-I-8 Certificates will bear interest at a rate per annum of
3.175% per annum during the first Interest Accrual Period. During each
Interest Accrual Period thereafter, the Class A-I-8 Certificates will bear
interest, subject to a maximum rate of 8.55% per annum and a minimum rate
of 0% per annum, at a rate per annum equal to 8.55% minus LIBOR.
(3) The Class PO Certificates are principal only Certificates and will not bear
interest.
(4) The Class X Certificates will bear interest on their Class X Notional
Amount at a variable Pass-Through Rate equal to the excess of (a) the
weighted average of the Net Rates of all of the Mortgage Loans (weighted on
the basis of the Scheduled Principal Balances thereof) over (b) the
weighted average of the Pass-Through Rates of all the Certificates (other
than the Class X Certificates).
(5) The Class R-2 Certificates will bear interest at a variable Pass-Through
Rate equal to the weighted average of the Net Rates of the Group I Mortgage
Loans.
(e) With respect to each Distribution Date, each Class of Certificates
(other than the Class PO Certificates) shall accrue interest during the related
Interest Accrual Period. With respect to each Distribution Date and each such
Class of Certificates, interest shall be calculated based upon the respective
Pass-Through Rate set forth, or determined as provided, above and the Current
Principal Amount or Class A-I-8 Notional Amount or Class X Notional Amount, as
the case may be, of such Class applicable to such Distribution Date.
(f) The Certificates shall be substantially in the forms set forth in
Exhibit A-1 and A-2. On original issuance, the Trustee shall sign, countersign
and shall deliver them at the direction of the Seller. Pending the preparation
of definitive Certificates of any Class, the Trustee may sign and countersign
temporary Certificates that are printed, lithographed or typewritten, in
authorized denominations for Certificates of such Class, substantially of the
tenor of the definitive Certificates in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers or authorized signatories executing such Certificates may
determine, as evidenced by their execution of such Certificates. If temporary
Certificates are issued, the Seller will cause Definitive Certificates to be
prepared without unreasonable delay. After the preparation of Definitive
Certificates, the temporary Certificates shall be exchangeable for Definitive
Certificates upon surrender of the temporary Certificates at the office of the
Trustee, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Certificates, the Trustee shall sign and countersign and
deliver in exchange therefor a like aggregate principal amount, in authorized
denominations for such Class, of definitive Certificates of the same Class.
Until so exchanged, such temporary Certificates shall in all respects be
entitled to the same benefits as Definitive Certificates.
(g) Each Class of Book-Entry Certificates will be registered as a
single Certificate of such Class held by a nominee of the Depository or the DTC
Custodian, and beneficial interests will be held by investors through the
book-entry facilities of the Depository in minimum denominations of $25,000
(except $500,000 in the case of Class A-I-8 Certificates and $1,000,000 in the
case of the Class X Certificates) and in each case increments of $1 in excess
thereof, except that one Certificate of each such Class may be issued in a
different amount so that the sum of the denominations of all outstanding
Certificates of such Class shall equal the Current Principal Amount of such
Class on the Closing Date. Each Class of Global Certificates shall be issued in
fully registered form in minimum dollar denominations of $500,000 in the case of
class A-I-8 Certificates and $1,000,000 in the case of the Class X Certificates
and $25,000 and integral multiples of $1 in excess thereof, except that one
Certificate of each Class may be in a different denomination so that the sum of
the denominations of all outstanding Certificates of such Class shall equal the
Current Principal Amount of such Class on the Closing Date. On the Closing Date,
the Trustee shall execute and countersign (i) one or more Global Certificates of
each Class and/or (ii) Individual Certificates all in an aggregate principal
amount that shall equal the Current Principal Amount of such Class on the
Closing Date. The Global Certificates shall be delivered by the Seller to the
Depository or pursuant to the Depository's instructions, shall be delivered by
the Seller on behalf of the Depository to and deposited with the DTC Custodian.
The Class B-4, Class B-5 and Class B-6 Certificates will be issued in
certificated fully-registered form in minimum denominations of $25,000 and
increments of $1 in excess thereof, except that one Certificate of each such
Class may be issued in a different amount so that the sum of the denominations
of all outstanding Certificates of such Class shall equal the Current Principal
Amount (or Notional Amount in the case of the Class X Certificates) of such
Class on the Closing Date. The Class R-1 and Class R-2 Certificates shall be
issued in certificated fully-registered form in the denomination of $100 each.
The Trustee shall sign them by facsimile or manual signature and countersign
them by manual signature on behalf of the Trustee by authorized signatories, who
shall be Responsible Officers of the Trustee or its agent. A Certificate bearing
the manual and facsimile signatures of individuals who were the authorized
signatories of the Trustee or its agent at the time of issuance shall bind the
Trustee, notwithstanding that such individuals or any of them have ceased to
hold such positions prior to the delivery of such Certificate.
(h) No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
the countersignature of the Trustee or its agent, and such countersignature upon
any Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly executed and delivered hereunder. All Certificates
issued on the Closing Date shall be dated the Closing Date. All Certificates
issued thereafter shall be dated the date of their countersignature.
(i) The Closing Date is hereby designated as the "startup" day of each
REMIC within the meaning of Section 860G(a)(9) of the Code.
(j) For federal income tax purposes, each REMIC shall have a tax year
that is a calendar year and shall report income on an accrual basis.
(k) The Trustee shall cause each REMIC to elect to be treated as a
REMIC under Section 860D of the Code. Any inconsistencies or ambiguities in this
Agreement or in the administration of any Trust established hereby shall be
resolved in a manner that preserves the validity of such elections.
(l) The Assumed Final Distribution Date for each Class of Certificates
and REMIC II Certificates is December 25, 2027.
Section 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall maintain at an office or agency a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided.
(b) Subject to Subsection 5.01(a) and, in the case of each Class of
Global Certificates or Physical Certificates upon the satisfaction of the
conditions set forth below, upon surrender for registration of transfer of any
Certificate at any office or agency of the Trustee maintained for such purpose,
the Trustee shall sign, countersign and shall deliver, in the name of the
designated transferee or transferees, a new Certificate of a like Class and
aggregate Fractional Undivided Interest, but bearing a different number.
(c) By acceptance of an Individual Certificate, whether upon original
issuance or subsequent transfer, each holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth in the Securities
Legend and agrees that it will transfer such a Certificate only as provided
herein. In addition to the provisions of Subsection 5.02(h), the following
restrictions shall apply with respect to the transfer and registration of
transfer of an Individual Certificate to a transferee that takes delivery in the
form of an Individual Certificate:
(i) The Trustee shall register the transfer of an Individual
Certificate if the requested transfer is being made to a transferee
who has provided the Trustee with a Rule 144A Certificate.
(ii) The Trustee shall register the transfer of any Individual
Certificate if (x) the transferor has advised the Trustee in writing
that the Certificate is being transferred to an Institutional
Accredited Investor; and (y) prior to the transfer the transferee
furnishes to the Trustee an Investment Letter, provided that, if based
upon an Opinion of Counsel to the effect that the delivery of (x) and
(y) above are not sufficient to confirm that the proposed transfer is
being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and
other applicable laws, the Trustee shall as a condition of the
registration of any such transfer require the transferor to furnish
such other certifications, legal opinions or other information prior
to registering the transfer of an Individual Certificate as shall be
set forth in such Opinion of Counsel.
(d) Subject to Subsection 5.02(h), so long as the Global
Certificate of such Class remains outstanding and is held by or on behalf of the
Depository, transfers of beneficial interests in such Class of Global
Certificates, or transfers by holders of Individual Certificates of such Class
to transferees that take delivery in the form of beneficial interests in the
Global Certificate, may be made only in accordance with this Subsection 5.02(d)
and in accordance with the rules of the Depository:
(i) In the case of a beneficial interest in the Global Certificate
being transferred to an Institutional Accredited Investor, such
transferee shall be required to take delivery in the form of an
Individual Certificate or Certificates and the Trustee shall register
such transfer only upon compliance with the provisions of Subsection
5.02(c)(ii).
(ii) In the case of a beneficial interest in a Class of Global
Certificates being transferred to a transferee that takes delivery in
the form of an Individual Certificate or Certificates of such Class,
except as set forth in clause (i) above, the Trustee shall register
such transfer only upon compliance with the provisions of Subsection
5.02(c)(i).
(iii) In the case of an Individual Certificate of a Class being
transferred to a transferee that takes delivery in the form of a
beneficial interest in a Global Certificate of such Class, the Trustee
shall register such transfer if the transferee has provided the
Trustee with a Rule 144A Certificate.
(iv) No restrictions shall apply with respect to the transfer or
registration of transfer of a beneficial interest in the Global
Certificate of a Class to a transferee that takes delivery in the form
of a beneficial interest in the Global Certificate of such Class.
(e) Subject to Subsection 5.02(h), an exchange of a beneficial
interest in a Global Certificate of a Class for an Individual Certificate or
Certificates of such Class, an exchange of an Individual Certificate or
Certificates of a Class for a beneficial interest in the Global Certificate of
such Class and an exchange of an Individual Certificate or Certificates of a
Class for another Individual Certificate or Certificates of such Class (in each
case, whether or not such exchange is made in anticipation of subsequent
transfer, and, in the case of the Global Certificate of such Class, so long as
such Certificate remains outstanding and is held by or on behalf of the
Depository) may be made only in accordance with this Subsection 5.02(e) and in
accordance with the rules of the Depository:
(i) A holder of a beneficial interest in a Global Certificate of a
Class may at any time exchange such beneficial interest for an
Individual Certificate or Certificates of such Class.
(ii) A holder of an Individual Certificate or Certificates of a Class
may exchange such Certificate or Certificates for a beneficial
interest in the Global Certificate of such Class if such holder
furnishes to the Trustee a Rule 144A Certificate.
(iii) A holder of an Individual Certificate of a Class may exchange
such Certificate for an equal aggregate principal amount of Individual
Certificates of such Class in different authorized denominations
without any certification.
(f)(i) Upon acceptance for exchange or transfer of an Individual
Certificate of a Class for a beneficial interest in a Global
Certificate of such Class as provided herein, the Trustee shall cancel
such Individual Certificate and shall (or shall request the Depository
to) endorse on the schedule affixed to the applicable Global
Certificate (or on a continuation of such schedule affixed to the
Global Certificate and made a part thereof) an appropriate notation
evidencing the date of such exchange or transfer and an increase in
the certificate balance of the Global Certificate equal to the
certificate balance of such Individual Certificate exchanged or
transferred therefor.
(ii) Upon acceptance for exchange or transfer of a beneficial interest
in a Global Certificate of a Class for an Individual Certificate of
such Class as provided herein, the Trustee shall (or shall request the
Depository to) endorse on the schedule affixed to such Global
Certificate (or on a continuation of such schedule affixed to such
Global Certificate and made a part thereof) an appropriate notation
evidencing the date of such exchange or transfer and a decrease in the
certificate balance of such Global Certificate equal to the
certificate balance of such Individual Certificate issued in exchange
therefor or upon transfer thereof.
(g) The Securities Legend shall be placed on any Individual
Certificate issued in exchange for or upon transfer of another Individual
Certificate or of a beneficial interest in a Global Certificate.
(h) Subject to the restrictions on transfer and exchange set forth in
this Section 5.02, the holder of any Individual Certificate may transfer or
exchange the same in whole or in part (in an initial certificate balance equal
to the minimum authorized denomination or any integral multiple of $1 in excess
thereof) by surrendering such Certificate at the Corporate Trust Office, or at
the office of any transfer agent, together with an executed instrument of
assignment and transfer satisfactory in form and substance to the Trustee in the
case of transfer and a written request for exchange in the case of exchange. The
holder of a beneficial interest in a Global Certificate may, subject to the
rules and procedures of the Depository, cause the Depository (or its nominee) to
notify the Trustee in writing of a request for transfer or exchange of such
beneficial interest for an Individual Certificate or Certificates. Following a
proper request for transfer or exchange, the Trustee shall, within five Business
Days of such request made at such Corporate Trust Office, sign, countersign and
deliver at such Corporate Trust Office, to the transferee (in the case of
transfer) or holder (in the case of exchange) or send by first class mail at the
risk of the transferee (in the case of transfer) or holder (in the case of
exchange) to such address as the transferee or holder, as applicable, may
request, an Individual Certificate or Certificates, as the case may require, for
a like aggregate Fractional Undivided Interest and in such authorized
denomination or denominations as may be requested. The presentation for transfer
or exchange of any Individual Certificate shall not be valid unless made at the
Corporate Trust Office by the registered holder in person, or by a duly
authorized attorney-in-fact.
(i) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class and
aggregate Fractional Undivided Interest, upon surrender of the Certificates to
be exchanged at any such office or agency; provided, however, that no
Certificate may be exchanged for new Certificates unless the original Fractional
Undivided Interest represented by each such new Certificate (i) is at least
$25,000 with respect to the Certificates other than Class A-I-8 Certificates,
Class X Certificates and the Residual Certificates, at least $500,000 with
respect to the Class A-I-8 Certificates, at least $1,000,000 with respect to the
Class X Certificates and at least $100 with respect to each Residual Certificate
or (ii) is acceptable to the Seller as indicated to the Trustee in writing.
Whenever any Certificates are so surrendered for exchange, the Trustee shall
sign and countersign and the Trustee shall deliver the Certificates which the
Certificateholder making the exchange is entitled to receive.
(j) If the Trustee so requires, every Certificate presented or
surrendered for transfer or exchange shall be duly endorsed by, or be
accompanied by a written instrument of transfer, with a signature guarantee, in
form satisfactory to the Trustee, duly executed by the holder thereof or his or
her attorney duly authorized in writing.
(k) No service charge shall be made for any transfer or exchange of
Certificates, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.
(l) The Trustee shall cancel all Certificates surrendered for transfer
or exchange but shall retain such Certificates in accordance with its standard
retention policy or for such further time as is required by the record retention
requirements of the Securities Exchange Act of 1934, as amended, and thereafter
may destroy such Certificates.
(m) The following legend shall be placed on each Class PO Certificate,
whether upon original issuance or upon issuance of any other Class PO
Certificate, in exchange therefor or upon transfer thereof:
This Certificate may not be transferred to "benefit plan
investors" as such term is defined in 29 C.F.R. Section 2510.3-101
(other than benefit plan investors which are not subject to Title I of
ERISA) ("Benefit Plan Investors") unless the transferee provides a
Benefit Plan Opinion to the Trustee; provided that this Certificate
may be transferred to a Benefit Plan Investor without delivery of a
Benefit Plan Opinion if this Certificate is made available for
purchase in the secondary market through an underwriting or sale or
placement by an entity which has been granted an underwriter's
prohibited transaction exemption similar to PTE 90-30 or PTE 90-24.
(n) The following legend shall be placed on each Class B-1, Class B-2,
Class B-3, Class B-4, Class B-5 and Class B-6 Certificates, whether upon
original issuance or upon issuance of any other Certificate of any such Class in
exchange therefor or upon transfer thereof:
This Certificate may not be transferred to "benefit plan
investors" as such term is defined in 29 C.F.R. Section 2510.3-101
(other than benefit plan investors which are not subject to Title I of
ERISA)unless the transferee provides a Benefit Plan Opinion to the
Trustee.
(o) Subject to the matters set forth in Section 5.02, (j) and (k), the
Class X Certificates and subject to the matters set forth in Section 5.02(k) and
(m), the Class PO Certificates may be transferred without provision of any
additional documents to the Trustee.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates. (a)
If (i) any mutilated Certificate is surrendered to the Trustee, or the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee such security or
indemnity as it may require to save it harmless, and (iii) the Trustee has not
received notice that such Certificate has been acquired by a third Person, the
Trustee shall sign, countersign and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Fractional Undivided Interest but in each case bearing a different
number. The mutilated, destroyed, lost or stolen Certificate shall thereupon be
canceled of record by the Trustee and shall be of no further effect and evidence
no rights.
(b) Upon the issuance of any new Certificate under this Section 5.03,
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Any duplicate Certificate issued pursuant to this Section 5.03 shall constitute
complete and indefeasible evidence of ownership in the Trust Fund, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Seller, the Master Servicer, the
Trustee and any agent of the Seller, the Master Servicer or the Trustee may
treat the Person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
6.01 and for all other purposes whatsoever. Neither the Seller, the Master
Servicer, the Trustee nor any agent of the Seller, the Master Servicer or the
Trustee shall be affected by notice to the contrary. No Certificate shall be
deemed duly presented for a transfer effective on any Record Date unless the
Certificate to be transferred is presented no later than the close of business
on the third Business Day preceding such Record Date.
Section 5.05. Transfer Restrictions on Residual Certificates. (a)
Residual Certificates, or interests therein, may not be transferred without the
prior express written consent of the Tax Matters Person. As a prerequisite to
such consent, the proposed transferee must provide the Tax Matters Person and
the Trustee with an affidavit that the proposed transferee is not a Disqualified
Organization (as defined in Subsection 5.05(b)) (and, unless the Tax Matters
Person consents to the transfer to a person who is not a U.S. Person, an
affidavit that it is a U.S. Person) as provided in Subsection 5.05(b).
(b) No transfer, sale or other disposition of a Residual Certificate
(including a beneficial interest therein) may be made unless, prior to the
transfer, sale or other disposition of the Residual Certificate, the proposed
transferee (including the initial purchasers thereof) delivers to the Tax
Matters Person and the Trustee an affidavit in the form attached hereto as
Exhibit E stating, among other things, that as of the date of such transfer (i)
such transferee is not any of (A) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing (other than an
instrumentality that is a corporation all of whose activities are subject to tax
under Chapter 1 of Subtitle A of the Code and (except in the case of FHLMC) a
majority of whose board of directors is not selected by the United States, or
any state or political subdivision thereof), (B) any organization that is exempt
from any tax imposed by Chapter 1 of Subtitle A of the Code, other than (x) a
tax-exempt farmers' cooperative within the meaning of Section 521 of the Code or
(y) an organization that is subject to the tax imposed by section 511 of the
Code on "unrelated business taxable income" or (C) a corporation operating on a
cooperative basis that is engaged in furnishing electric energy or providing
telephone service to persons in rural areas (within the meaning of Section
1381(a)(2)(C) of the Code) (any Person described in (A), (B), or (C) being
referred to herein as a "Disqualified Organization") and that (ii) such
transferee is not acquiring such Residual Certificate for the account of a
Disqualified Organization. The Tax Matters Person shall not consent to a
transfer of a Residual Certificate if it has actual knowledge that any statement
made in the affidavit issued pursuant to the preceding sentence is not true.
Notwithstanding any transfer, sale or other disposition of a Residual
Certificate to a Disqualified Organization, such transfer, sale or other
disposition shall be deemed to be of no legal force or effect whatsoever and
such Disqualified Organization shall not be deemed to be a Holder of a Residual
Certificate for any purpose hereunder, including, but not limited to, the
receipt of distributions thereon. If any purported transfer shall be in
violation of the provisions of this Subsection 5.05(b), then the prior Holder
thereof shall, upon discovery that the transfer of such Residual Certificate was
not in fact permitted by this Subsection 5.05(b), be restored to all rights as a
Holder thereof retroactive to the date of the purported transfer. The Trustee
and the Tax Matters Person shall be under no liability to any Person for any
registration or transfer of a Residual Certificate that is not permitted by this
Subsection 5.05(b) or for making payments due on such Residual Certificate to
the purported Holder thereof or taking any other action with respect to such
purported Holder under the provisions of this Agreement so long as the written
affidavit referred to above was received with respect to such transfer, and the
Tax Matters Person and the Trustee had no knowledge that it was untrue. The
prior Holder shall be entitled to recover from any purported Holder of a
Residual Certificate that was in fact not a permitted transferee under this
Subsection 5.05(b) at the time it became a Holder all payments made on such
Residual Certificate. Each Holder of a Residual Certificate, by acceptance
thereof, shall be deemed for all purposes to have consented to the provisions of
this Subsection 5.05(b) and to any amendment of this Agreement deemed necessary
(whether as a result of new legislation or otherwise) by counsel of the Tax
Matters Person or the Seller to ensure that the Residual Certificates are not
transferred to a Disqualified Organization and that any transfer of such
Residual Certificates will not cause the imposition of a tax upon the Trust or
cause REMIC I or REMIC II to fail to qualify as a REMIC.
(c) Unless the Tax Matters Person shall have consented in writing
(which consent may be withheld in the Tax Matters Person's sole discretion), the
Residual Certificates (including a beneficial interest therein) may not be
purchased by or transferred to any person who is not a "United States person,"
as such term is defined in Section 7701(a)(30) of the Code.
Section 5.06. Restrictions on Transferability of Private Certificates.
(a) No offer, sale, transfer or other disposition (including pledge) of a
Private Certificate shall be made by any Holder thereof unless registered under
the Securities Act, or an exemption from the registration requirements of the
Securities Act and any applicable state securities or "Blue Sky" laws is
available and the prospective transferee (other than the Seller) of such
Certificate signs and delivers to the Trustee an Investment Letter, if the
transferee is an Institutional Accredited Investor, in the form set forth as
Exhibit F-1 hereto, or a Rule 144A Certificate, if the transferee is a Qualified
Institutional Buyer, in the form set forth as Exhibit F-2 hereto. In the case of
a proposed transfer of a Private Certificate to a transferee other than a
Qualified Institutional Buyer, the Trustee shall require an Opinion of Counsel
that such transaction is exempt from the registration requirements of the
Securities Act. The cost of such opinion shall not be an expense of the Trustee
or the Trust Fund.
(b) Each Class B-4, Class B-5 and Class B-6 Certificate shall bear a
Securities Legend.
Section 5.07. ERISA Restrictions. (a) Subject to the provisions of
subsection (b), No Class PO or Class B Certificates may be acquired by, or
transferred to, an entity which is acquiring such Certificates directly or
indirectly for or on behalf of, a "benefit plan investor" described in or
subject to 29 C.F.R. Section 2510.3-101 (other than a benefit plan investor
which is not subject to Title I of ERISA)("Benefit Plan Investor") unless the
proposed transferee provides a Benefit Plan Opinion to the Trustee. A "Benefit
Plan Opinion" is an Opinion of Counsel (upon which the Trustee is authorized to
rely) to the effect that neither the proposed transfer and/or holding of a
Certificate nor the servicing, management and operation of the Trust: (i) will
result in a prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code or will be covered under an individual or class prohibited transaction
exemption including but not limited to Department of Labor Prohibited
Transaction Exemption ("PTE") 84-14 (Class Exemption for Plan Asset Transactions
Determined by Independent Qualified Professional Asset Managers); PTE 91-38
(Class Exemption for Certain Transactions Involving Bank Collective Investment
Funds); PTE 90-1 (Class Exemption for Certain Transactions Involving Insurance
Company Pooled Separate Accounts), PTE 95-60 (Class Exemption for Certain
Transactions Involving Insurance Company General Accounts), and PTCE 96-23
(Class Exemption for Plan Asset Transactions Determined by In- House Asset
Managers or (ii) will give rise to any additional fiduciary duties under ERISA
on the part of the Master Servicer or the Trustee. A Benefit Plan Opinion shall
not be an expense of the Trustee or the Master Servicer.
(b) In the event that the Class PO Certificates are made available for
purchase in the secondary market through an underwriting or sale or placement by
an entity which has been granted an underwriter's prohibited transaction
exemption similar to PTE 90-30, no Benefit Plan Opinion shall be required for
the Class PO Certificates to be acquired by, or transferred to, an entity which
is acquiring such Certificates directly or indirectly for or on behalf of, a
Benefit Plan Investor.
(c) Any Person acquiring a Book-Entry Certificate or a Global
Certificate which represents one of the Classes referred to in Section 5.07(a),
by acquisition of such Certificate, shall be deemed to have represented to the
Trustee that such Person is not a Benefit Plan Investor nor a trustee, fiduciary
or other party acting on behalf of any Benefit Plan Investor.
Section 5.08. Rule 144A Information. For so long as any Subordinate
Certificates are outstanding and are "restricted securities" within the meaning
of Rule 144(a)(3) of the Securities Act, (1) the Master Servicer will provide or
cause to be provided to any holder of such Certificates and any prospective
purchaser thereof designated by such a holder, upon the request of such holder
or prospective purchaser, the information required to be provided to such holder
or prospective purchaser by Rule 144A(d)(4) under the Securities Act; and (2)
the Master Servicer shall update such information from time to time in order to
prevent such information from becoming false and misleading and will take such
other actions as are necessary to ensure that the safe harbor exemption from the
registration requirements of the Securities Act under Rule 144A is and will be
available for resales of such Certificates conducted in accordance with Rule
144A.
Section 5.09. Calculation of LIBOR. On each LIBOR Determination Date,
until the Current Principal Amount of the Class A-I-7 Certificates and the Class
A-I-8 Notional Amount have been reduced to zero, the Trustee will either (i)
request each Reference Bank to inform the Trustee of the quotation offered by
its principal London office for making one-month United States dollar deposits
in leading banks in the London interbank market as of 11:00 a.m. (London time)
on such LIBOR Determination Date, or (ii) in lieu of making a request of the
Reference Banks, the Trustee may rely on the quotations for those Reference
Banks that appear at such time on the page (the "Relevant Screen Page") whatever
its designation on which LIBOR is for the time being displayed on the Reuters
Monitor Money Rate Service on the appropriate Association Press-Dow Jones
Telerate Service, to the extent available.
LIBOR for the next Interest Accrual Period will be established by the
Trustee on each LIBOR Determination Date as follows:
(a) If on any LIBOR Determination Date two or more Reference Banks
provide such offered quotations, LIBOR for the next Interest Accrual Period
shall be the arithmetic mean of such offered quotations (rounded upwards if
necessary to the nearest whole multiple of 1/32%).
(b) If on any LIBOR Determination Date only one or more of the
Reference Banks provides such offered quotations, LIBOR for the next Interest
Accrual Period shall be whichever is the higher of (i) LIBOR as determined on
the previous LIBOR Determination Date or (ii) the Reserve Interest Rate. The
"Reserve Interest Rate" shall be the rate per annum which the Trustee determines
to be either (i) the arithmetic mean (rounded upwards if necessary to the
nearest whole multiple of 1/32%) of the one-month United States dollar lending
rates that New York City banks selected by BSMSI are quoting, on the relevant
LIBOR Determination Date, to the principal London offices of at least two of the
Reference Banks to which such quotations are, in the opinion of the Trustee,
being so made, or (ii) in the event that the Trustee can determine no such
arithmetic mean, the lowest one-month United States dollar lending rate which
New York City banks selected by BSMSI are quoting on such LIBOR Determination
Date to leading European banks.
(c) If on any LIBOR Determination Date, the Trustee is required but is
unable to determine the Reserve Interest Rate in the manner provided in
paragraph (b) above, LIBOR shall be 5.375%.
Until all of the Floating Rate Certificates are paid in full, BSMSI
will at all times retain at least four Reference Banks for the purpose of
determining LIBOR with respect to each LIBOR Determination Date and shall inform
the Trustee of which Reference Banks they have retained. Each Reference Bank
shall (i) be a leading bank engaged in transactions in Eurodollar deposits in
the international Eurocurrency market, (ii) not control, be controlled by, or be
under common control with BSMSI, and (iii) have an established place of business
in London. If any such Reference Bank should be unwilling or unable to act as
such or if BSMSI should terminate the appointment of any such Reference Bank,
BSMSI will promptly appoint another leading bank meeting the criteria specified
above. Neither BSMSI nor the Trustee shall have any liability or responsibility
to any Person for (i) the selection of any Reference Bank for purposes of
determining LIBOR or (ii) any liability for a failure to retain at least four
Reference Banks which is caused by circumstances beyond their reasonable
control.
The Pass-Through Rates on the Floating Rate Certificates for each
Interest Accrual Period shall be determined by the Trustee on each LIBOR
Determination Date so long as such Floating Rate Certificates are outstanding on
the basis of LIBOR and the respective formulae appearing in footnotes (1) and
(2) to the tables in Section 5.01(d).
In determining LIBOR and any Pass-Through Rate for the Floating Rate
Certificates, the Trustee may conclusively rely, and shall be protected in
relying, upon the offered quotations (whether written, oral or on the Relevant
Screen Page) from the Reference Banks or the New York City banks as to LIBOR or
the Reserve Interest Rate, as appropriate, in effect from time to time. Neither
BSMSI nor the Trustee shall have any liability or responsibility to any Person
for (i) BSMSI's selection of New York City banks for purposes of determining any
Reserve Interest Rate or (ii) the Trustee's liability, following a good-faith
reasonable effort, to obtain such quotations from the Reference Banks or the New
York City banks or to determine such arithmetic mean, all as provided for in
this Section 5.09.
The establishment of LIBOR and each Pass-through Rate for the Floating
Rate Certificates by the Trustee shall (in the absence of manifest error) be
final, conclusive and binding upon such Holder of a Certificate and BSMSI and
their successors and assigns.
ARTICLE VI
Payments to Certificateholders
Section 6.01. Distributions on the Certificates. (a) Interest and
principal on the Certificates will be distributed by the Trustee monthly on each
Distribution Date, commencing in January 1997, in an aggregate amount equal to
the Available Funds for such Distribution Date as follows:
(i) On each Distribution Date on or prior to the Cross-Over Date, an
amount equal to the Group I Available Funds will be distributed in the
following order of priority among the Certificates:
first, to the interest-bearing Class A-I Certificates, the Residual
Certificates and Component I of the Class X Certificates, the Accrued
Certificate Interest on each such Class and the Class X Component I Accrued
Certificate Interest on such Component for such Distribution Date;
second, to the interest-bearing Class A-I Certificates, the Residual
Certificates and Component I of the Class X Certificates, any Accrued
Certificate Interest and Class X Component I Accrued Certificate Interest
thereon remaining undistributed from previous Distribution Dates, to the
extent of remaining Group I Available Funds, any shortfall in available
amounts being allocated among such Classes and Component in proportion to
the amount of such Accrued Certificate Interest and Class X Component I
Accrued Certificate Interest remaining undistributed for each such Class or
Component for such Distribution Date;
third, to the Class A-I Certificates (other than the Class A-I-8
Certificates), the Residual Certificates and the Class PO Certificates in
reduction of the Current Principal Amounts thereof:
(A) the Group I Senior Optimal Principal Amount, in the following
order of priority:
(1) to the Class A-I-11 Certificates, up to the Class A-I- 11 Optimal
Principal Amount for such Distribution Date, until the Current Principal
Amount thereof has been reduced to zero;
(2) concurrently, to the Class R-1 and Class R-2 Certificates, pro
rata, based upon their Current Principal Amounts, until the respective
Current Principal Amounts thereof have been reduced to zero;
(3) 46.12874385%, 47.36700939% and 6.50424676% concurrently to the
Class A-I-1 Certificates, the Class A-I-7 Certificates and Class A-I-2
Certificates, until the Current Principal Amount of the Class A-I-1
Certificates has been reduced to zero;
(4) 48.88073066%, 47.36747851% and 3.75179083% concurrently to the
Class A-I-3 Certificates, the Class A-I-7 Certificates and Class A-I-2
Certificates, until the Current Principal Amount of the Class A-I-3
Certificates has been reduced to zero;
(5) 51.31758879%, 47.36667036% and 1.31574085% concurrently to the
Class A-I-4 Certificates, the Class A-I-7 Certificates and the Class A-I-2
Certificates until the respective Current Principal Amounts of the Class
A-I-4 Certificates and the Class A-I-2 Certificates have been reduced to
zero;
(6) 52.63191233% and 47.36808767% concurrently to the Class A-I-5
Certificates and the Class A-I-7 Certificates until the Current Principal
Amount of the Class A-I-5 Certificates has been reduced to zero;
(7) 52.63289452% and 47.36710548% concurrently to the Class A-I-6
Certificates and Class A-I-7 Certificates, until the Current Principal
Amount of the Class A-I-6 Certificates has been reduced to zero;
(8) concurrently to the Class A-I-9 Certificates and the Class A-I-7
Certificates, pro rata, based on their Current Principal Amounts, until the
Current Principal Amounts thereof have been reduced to zero;
(9) to the Class A-I-10 Certificates, until the Current Principal
Amount thereof has been reduced to zero; and
(B) the Class PO Principal Distribution Amount for such Distribution
Date, to the Class PO Certificates, until the Current Principal Amount
thereof has been reduced to zero; and
fourth, 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 (A) fourth, shall not exceed the
excess, if any, of (x) the Available Funds remaining after giving effect to
distributions pursuant to priorities (A) first through third above and (B)
first through third below over (y) the amount of Accrued Certificate
Interest for such Distribution Date and Accrued Certificate Interest
remaining undistributed from previous Distribution Dates on all Classes of
Subordinate Certificates then outstanding, (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.
If, after distributions have been made pursuant to priorities (A) first and
second above on any Distribution Date, remaining Group I Available Funds are
less than the sum of the Group I Senior Optimal Principal Amount and the Class
PO Principal Distribution Amount for such Distribution Date, such amounts shall
be proportionately reduced, and such remaining Group I Available Funds will be
distributed on the Class A-I Certificates (other than Class A-I-8 Certificates),
Residual Certificates and Class PO Certificates in accordance with clauses (a)
and (b) of priority (A) third 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 Cash Shortfall for such Distribution Date. The Class PO Cash
Shortfall with respect to any Distribution Date will be added to the Class PO
Deferred Amount.
(ii) On each Distribution Date on or prior to the Cross-Over
Date, an amount equal to the Group II Available Funds will be
distributed in the following order of priority among the Certificates:
first, to the Class A-II Certificates and Component II of the Class X
Certificates, the Accrued Certificate Interest on such Class and Class X
Component II Accrued Certificate Interest on such Component for such
Distribution Date;
second, to the Class A-II Certificates and Component II of the
Class X Certificates, any Accrued Certificate Interest and Class X
Component II Accrued Certificate Interest thereon remaining undistributed
from previous Distribution Dates, to the extent of the remaining Group II
Available Funds, any shortfall in available amounts being allocated between
such Class and Component in proportion to the amount of such Accrued
Certificate Interest and Class X Component II Accrued Certificate Interest
remaining undistributed for such Class or Component for such Distribution
Date; and
third, the Group II Senior Optimal Principal Amount to the Class
A-II Certificates until their Current Principal Amount has been reduced to
zero.
(iii) On each Distribution Date on or prior to the Cross-Over Date, an
amount equal to any remaining Group I Available Funds and Group II
Available Funds following the distributions in (A) and (B) above will
be distributed sequentially, in the following order, to the Class B-1,
Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates,
in each case up to an amount equal to and 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.
(iv) On each Distribution Date prior to the occurrence of the
Cross-Over Date but after the reduction of the Current Principal
Amounts of the Class A-I Certificates (other than the Class A-I-8
Certificates) or Class A-II Certificates to zero, the remaining Class
or Classes of Class A Certificates (other than the Class A-I-8
Certificates) will be entitled to receive, in addition to any
Principal Prepayments related to such Class A Certificates' respective
Mortgage Loan Group, 100% of the Principal Prepayments on the Mortgage
Loans in the other Mortgage Loan Group (in the case of Mortgage Loan
Group I in accordance with the priorities set forth in priority (A)
third above, and in reduction of the Current Principal Amounts
thereof). In addition, if on any Distribution Date on which the
aggregate Current Principal Amount of the Class A-I Certificates
(other than the Class A-I-8 Certificates) or Class A-II Certificates
would be greater than the aggregate Scheduled Principal Balance of the
Mortgage Loans in the related Mortgage Loan Group (other than the
related PO Percentage of the Group I Discount Mortgage Loans in
Mortgage Loan Group I) and Class B Certificates are still outstanding,
in each case after giving effect to distributions to be made on such
Distribution Date, 100% of the Principal Prepayments otherwise
allocable to the Class B Certificates on the Mortgage Loans in the
other Mortgage Loan Group will be distributed to such Class or Classes
of Class A Certificates (other than the Class A-I-8 Certificates) (in
the case of the Class A-I Certificates, in accordance with the
priorities set forth in priority (A) third above) in reduction of the
Current Principal Amounts thereof, until the aggregate Current
Principal Amount of the Class A-I Certificates (other than the Class
A-I-8 Certificates) or Class A-II Certificates, as applicable, is an
amount equal to the aggregate Scheduled Principal Balance of the
Mortgage Loans in the related Mortgage Loan Group (other than the
related PO Percentage of the Group I Discount Mortgage Loans in
Mortgage Loan Group I).
(v) On each Distribution Date after the Cross-Over Date, distributions
of principal on the outstanding Class A-I Certificates (other than the
Class A-I-8 Certificates) and Residual Certificates will be made pro
rata among all such Certificates, regardless of the allocation, or
sequential nature, of principal payments described in priority (A)
third above, based upon the then Current Principal Amounts of such
Certificates, and interest will be distributed as described above with
respect to Distribution Dates on or prior to the Cross-Over Date.
(vi) On each Distribution Date, any Group I Available Funds and Group
II Available Funds remaining in REMIC I after payment of interest and
principal as described above will be distributed to the Class R-1
Certificates; provided that if on any Distribution Date there are any
Group I Available Funds remaining after payment of interest and
principal as described in the preceding paragraphs, such Group I
Available Funds will be distributed to the Class A-II Certificates in
accordance with the priorities in paragraph (B) above until all
amounts due to such Certificates have been paid in full before any
amounts are distributed to the Residual Certificates. Similarly, if on
any Distribution Date there are any Group II Available Funds remaining
after payment of interest and principal as described in the preceding
paragraphs, such Group II Available Funds will be distributed to the
Senior Certificates (other than the Class A-II Certificates and
Component II of the Class X Certificates) in accordance with the
priorities in paragraph (E) above until all amounts due to such Senior
Certificates have been paid in full before any amounts are distributed
to the Residual Certificates.
(b) 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.
(c) No Accrued Certificate Interest or Class X Component I Accrued
Certificate Interest or Class X Component II Accrued Certificate Interest will
be payable with respect to any class of Certificates after the Distribution Date
on which the outstanding principal balance or Notional Amount of such
Certificate has been reduced to zero.
Section 6.02. [Reserved]
Section 6.03. Allocation of Losses. (a) On or prior to each
Determination Date, the Master Servicer shall determine the amount of any
Realized Loss in respect of each Mortgage Loan that occurred during the
immediately preceding calendar month.
(b) With respect to any Distribution Date, the principal portion of
each Realized Loss (other than any Excess Special Hazard Loss, Excess Fraud Loss
and Excess Bankruptcy Loss) shall be allocated as follows:
(i) the applicable PO Percentage of any such Realized Loss shall be
allocated to the Class PO Certificates; and
(ii) the applicable Non-PO Percentage of any such Realized Loss shall
be allocated as follows:
first, to the Class B-6 Certificates until the Current Principal
Amount thereof has been reduced to zero;
second, to the Class B-5 Certificates until the Current Principal
Amount thereof has been reduced to zero;
third, to the Class B-4 Certificates until the Current Principal
Amount thereof has been reduced to zero;
fourth, to the Class B-3 Certificates until the Current Principal
Amount thereof has been reduced to zero;
fifth, to the Class B-2 Certificates until the Current Principal
Amount thereof has been reduced to zero;
sixth, to the Class B-1 Certificates until the Current Principal
Amount thereof has been reduced to zero; and
seventh, to the Classes of Senior Certificates (other then the
Class A-I-8, Class PO and Class X Certificates), pro rata, in
accordance with their Current Principal Amounts.
(c) With respect to any Distribution Date, the principal portion of
any Excess Loss (other than those attributable to Debt Service Reductions) shall
be allocated as follows:
(i) the applicable PO Percentage of any such Excess Loss shall be
allocated to the Class PO Certificates; and
(ii) the applicable Non-PO Percentage of any such Excess Loss
shall be allocated among all Classes of Certificates (other than the
Class A-I-8, Class PO and Class X Certificates), pro rata, based on
the respective Current Principal Amounts thereof.
(d) Notwithstanding the foregoing, no such allocation of any Realized
Loss shall be made on a Distribution Date to a Class of Certificates to the
extent that such allocation would result in the reduction of the aggregate
Current Principal Amounts of all the Certificates as of such Distribution Date,
after giving effect to all distributions and prior allocations of Realized
Losses on such date, to an amount less than the aggregate Scheduled Principal
Balance of all of the Mortgage Loans as of the first day of the month of such
Distribution Date, less any Deficient Valuations occurring on or prior to the
Bankruptcy Coverage Termination Date (such limitation, the "Loss Allocation
Limitation").
(e) Any Realized Losses allocated to a Class of Certificates pursuant
to Subsections 6.03(b) or (c) shall be allocated among the Certificates of such
Class in proportion to their respective Current Principal Amounts. Any
allocation of Realized Losses pursuant to this Subsection 6.03(e) shall be
accomplished by reducing the Current Principal Amount of the related
Certificates on the related Distribution Date in accordance with Subsection
6.03(f).
(f) Realized Losses allocated in accordance with this Section 6.03
shall be allocated on the Distribution Date in the month following the month in
which such loss was incurred and, in the case of the principal portion thereof,
after giving effect to distributions made on such Distribution Date, except that
the aggregate amount of Realized Losses to be allocated to the Class PO
Certificates on such Distribution Date will be taken into account in determining
distributions in respect of the Class PO Deferred Amount.
(g) On each Distribution Date, the Master Servicer shall determine the
Subordinate Certificate Writedown Amount, if any. Any such Certificate Writedown
Amount shall effect a corresponding reduction in the Current Principal Amount of
(i) if prior to the Cross-Over Date, the Subordinate Certificates in the reverse
order of their numerical Class designations and (ii) after the Cross-Over Date,
the Senior Certificates (other than the Class PO and Class X Certificates) pro
rata based in their respective Current Principal Amounts, which reduction shall
occur on such Distribution Date after giving effect to distributions made on
such Distribution Date.
(h) On each Distribution Date, on or prior to the Cross-Over Date, the
Master Servicer shall determine the Class PO Deferred Payment Amount Writedown
Amount, if any. Any such Class PO Deferred Payment Writedown Amount shall effect
a corresponding reduction in the Current Principal Amount of the Subordinate
Certificates in the reverse order of their numerical Class designations.
(i) If on any Distribution Date the Group I Available Funds are less
than the Accrued Certificate Interest on the Class A-I and Residual Certificates
and the Class X Component I Accrued Certificate Interest on Component I of the
Class X Certificates or if the Group II Available Funds are less than the
Accrued Certificate Interest on the Class A-II Certificates and the Class X
Component II Accrued Certificate Interest on Component II of the Class X
Certificates, in each case for such Distribution Date and prior to reduction for
Net Interest Shortfall and the interest portion of Realized Losses, the
shortfall will be allocated among the holders of each such respective Class or
Component in proportion to the respective amounts of Accrued Certificate
Interest and Class X Component I Accrued Certificate Interest or Class X
Component II Accrued Certificate Interest, as applicable, that would have been
allocated thereto in the absence of such Net Interest Shortfall and/or Realized
Losses for such Distribution Date on each such Class or Component. In addition,
the amount of any interest shortfalls with respect to the related Mortgage Loan
Group that are covered by subordination will constitute unpaid Accrued
Certificate Interest or unpaid Class X Component I Accrued Certificate Interest
or unpaid Class X Component II Accrued Certificate Interest and will be
distributable to holders of the Certificates of the related Classes or Component
entitled to such amounts on subsequent Distribution Dates, to the extent of
Group I Available Funds or Group II Available Funds, as applicable, after
interest distributions as required herein. Any such amount so carried forward
will not bear interest.
(j) With respect to any Distribution Date prior to the Cross-Over
Date, Realized Losses shall be allocated to the REMIC II Regular Certificates in
a manner similar to the allocation of Realized Losses to the REMIC I Regular
Certificates under this Section 6.03, except that any losses allocated to a
Class B Certificate shall be allocated to the REMIC II Class II-B-1 Certificate
if the loss is attributable to a Group I Mortgage Loan and shall be allocated to
the REMIC II Class II-B-2 Certificate if the loss is attributable to a Group II
Mortgage Loan. With respect to any Distribution Date after the Cross-Over Date,
Realized Losses shall be allocated to the REMIC II Regular Certificates in an
amount such that distributions on the REMIC II Regular Certificates are an
amount sufficient to make the distributions on the respective Corresponding
Classes of Certificates on such Distribution Date in accordance with the
provisions of subsection (a) of Section 6.01.
Section 6.04. [Reserved]
Section 6.05. Payments. (a) No later than the Determination Date, the
Master Servicer shall provide to the Trustee 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 Class A-I-8 Notional Amount or
Class X Notional Amount of not less than $1,000,000 by wire transfer to a United
States dollar account maintained by the payee at any United States depository
institution with appropriate facilities for receiving such a wire transfer;
provided, however, that the final payment in respect of each Class of
Certificates will be made only upon presentation and surrender of such
respective Certificates at the office or agency of the Trustee specified in the
notice to Certificateholders of such final payment.
Section 6.06. Statements to Certificateholders. (a) Concurrently with
each distribution to Certificateholders, the Trustee shall forward by
first-class mail to each Certificateholder, with a copy to the Seller, the
Master Servicer and the Rating Agencies, a statement setting forth the following
information, expressed with respect to clauses (i) through (vi) in the aggregate
and as a Fractional Undivided Interest representing an initial Current Principal
Amount of $1,000, or, in the case of a Class A-I-8 Certificate, a Class A-I-8
Notional Amount of $1,000, or, in the case of Class X Certificates, a Class X
Notional Amount of $1,000, or in the case of the Class R- 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 X Certificates) of each Class of Certificates immediately
prior to such Distribution Date;
(ii) the amount of the distribution allocable to principal on
each applicable Class of Certificates;
(iii) the aggregate amount of interest accrued at the related
Pass-Through Rate with respect to each Class of Certificates (other
than the Class PO Certificates) during the related Interest Accrual
Period;
(iv) the Net Interest Shortfall and any other adjustments to
interest at the related Pass-Through Rate necessary to account for any
difference between interest accrued and aggregate interest distributed
with respect to each Class of Certificates (other than the Class PO
Certificates);
(v) the amount of the distribution allocable to interest on each
Class of Certificates (other than the Class PO Certificates);
(vi) the Pass-Through Rates for the Class A-I-7, Class A-I-8,
Class X and Class R-2 Certificates with respect to such Distribution
Date;
(vii) the Current Principal Amount and/or Class A- I-8 Notional
Amount or Class X Notional Amount of each applicable Class of
Certificates after such Distribution Date and the Class PO Deferred
Amount;
(viii) the amount of any Monthly Advances and Compensating
Interest Payments by the Master Servicer included in such distribution
separately stated for each Mortgage Loan Group;
(ix) the amount of any Realized Losses (listed separately for
each category of Realized Loss and for each Mortgage Loan Group)
during the related Prepayment Period and the amount and source
(separately identified) of any distribution in respect thereof
included in such distribution;
(x) the amount of Scheduled Principal and Principal Prepayments,
(including but separately identifying the principal amount of
principal prepayments, Insurance Proceeds, the purchase price in
connection with the purchase of Mortgage Loans, cash deposits in
connection with substitutions of Mortgage Loans and Net Liquidation
Proceeds) with respect to each Mortgage Loan Group;
(xi) the number of Mortgage Loans (excluding REO Property) in
each Mortgage Loan Group remaining in the Trust Fund as of the end of
the related Due Period;
(xii) information for each Mortgage Group regarding any Mortgage
Loan delinquencies as of the end of the related Due Period, including
the aggregate number, aggregate Outstanding Principal Balance and
aggregate Scheduled Principal Balance of Mortgage Loans delinquent one
month, two months and three months or more;
(xiii) for each Mortgage Loan Group, the number of Mortgage Loans
in the foreclosure process as of the end of the related Due Period and
the aggregate Outstanding Principal Balance of such Mortgage Loans;
(xiv) for each Mortgage Loan Group, the number and aggregate
Outstanding Principal Balance of all Mortgage Loans which were REO
Property as of the end of the related Due Period;
(xv) the book value (the sum of (A) the Outstanding Principal
Balance of the Mortgage Loan, (B) accrued interest through the date of
foreclosure and (C) foreclosure expenses) of any REO Property in each
Mortgage Loan Group; provided that, in the event that such information
is not available to the Master Servicer and the Trustee on the
Distribution Date, such information shall be furnished promptly after
it becomes available;
(xvi) the amount of Realized Losses allocated to each Class of
Certificates since the prior Distribution Date and in the aggregate
for all prior Distribution Dates; and
(xvii) the then applicable Senior Percentage, Senior Prepayment
Percentage, Subordinate Percentage and Subordinate Prepayment
Percentage.
The information set forth above shall be calculated, or reported, as
the case may be, by the Trustee based on data provided by the Master Servicer
pursuant to Subsection 6.05(a) and, with respect to prior periods, Section 6.06,
upon which the Trustee may conclusively rely. The information furnished by the
Master Servicer shall be sufficient for the Trustee to calculate any statements
it is required to make.
(b) By April 30 of each year beginning in 1997, the Trustee will
furnish a report to each Holder of the Certificates of record at any time during
such calendar year as to the aggregate of amounts reported pursuant to
subclauses (a)(ii) and (a)(v) above with respect to the Certificates, plus
information with respect to the amount of servicing compensation and such other
customary information as the Master Servicer determines and advises the Trustee
to be necessary and/or to be required by the Internal Revenue Service or by a
federal or state law or rules or regulations to enable such Holders to prepare
their tax returns for such calendar year. Copies of such report shall also be
furnished to the Master Servicer. Such obligations shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to the requirements of the Code.
The Master Servicer shall supply to the Trustee in a timely manner the
information required for the statements described above which, where
appropriate, shall be the information from which the Trustee can calculate the
statements it is required to make.
Section 6.07. Reports to the Trustee and the Master Servicer. (a) Not
later than 15 days after each Distribution Date, the Trustee shall forward to
the Master Servicer a statement setting forth the status of the Certificate
Account and the Custody Account as of the close of business on the last day of
the month of the Distribution Date and showing, for the month covered by such
statement, deposits in or withdrawals from the Certificate Account and the
Custody Account.
(b) On or before the Determination Date, the Master Servicer shall
provide to the Trustee, with respect to the Mortgage Loans and the REO Property,
respectively, a Loan Summary and Remittance Report which shall be based upon
reports from Sub- Servicers, if any, received by the Master Servicer on or
before the 7th Business Day of such month with respect to the Mortgage Loans and
REO Property and containing the following information (in respect of the REO
Property, only such information which is applicable):
(i) Aggregate deposits to and withdrawals from each subaccount of
the Certificate Account since the date of the prior statement, stated
separately for each category of deposit specified in Section 4.02 and
each category of withdrawal specified in Section 4.03, indicating
separately the aggregate of amounts withdrawn which are not applicable
to a particular Mortgage Loan;
(ii) Amount of Group I Available Funds and Group II Available
Funds expected for the related Distribution Date and attributable to
each of the following categories:
(A) regularly scheduled principal;
(B) Principal Prepayments (stated separately for (v) partial
prepayments, (v) full prepayments, (w) Net Liquidation
Proceeds, stating Liquidation Proceeds and Liquidation
Expenses separately) (x) Insurance Proceeds (y) the purchase
price in connection with the purchase of a Mortgage Loan of
the applicable Mortgage Loan Group and (z) any cash deposit
in connection with the substitution of a Mortgage Loan of the
applicable Mortgage Loan Group;
(C) interest on the Mortgage Loans in the applicable Mortgage
Loan Group;
(D) Monthly Advances made by the Master Servicer;
(E) Certificate Account Advances;
(F) Compensating Interest Payments; and
(G) reimbursements in connection with losses on Permitted
Investments.
(iii) Aggregate Outstanding Principal Balances of the Mortgage
Loans of each Mortgage Loan Group as of the related Due Date, without
giving effect to payments due on such date;
(iv) Realized Losses for the prior month and, in the aggregate,
from the Closing Date, separately stated for Group I Mortgage Loans
and Group II Mortgage Loans;
(v) [intentionally omitted];
(vi) [intentionally omitted];
(vii) Aggregate Scheduled Principal Balance of the Mortgage Loans
of each Mortgage Loan Group 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, separately stated for Group I Mortgage
Loans and Group II Mortgage Loans;
(ix) Number and aggregate principal balance of Mortgage Loans
which are 30, 60, 90 and 120 days delinquent, those which are in
foreclosure and those which are REO Property, separately stated for
Group I Mortgage Loans and Group II Mortgage Loans;
(x) Interest Shortfall for each Mortgage Loan Group with respect
to the related Distribution Date and portion thereof resulting from
Voluntary Principal Prepayments in full;
(xi) [intentionally omitted]
(xii) Amount, if any, by which the aggregate of payments of
scheduled principal and interest on the Mortgage Loans of each
Mortgage Loan Group that were due on the related Due Date and
delinquent, other than as a result of the Relief Act, as of the 18th
day of such month exceeds the sum of the Monthly Advances to be made
by the Master Servicer and Certificate Account Advances for such
Distribution Date;
(xiii) Aggregate Master Servicing Fee for the related Due Period;
and
(xiv) Such other information regarding each Mortgage Loan,
including an updated Mortgage Loan Schedule in magnetic tape format,
as may be reasonably requested by the Trustee.
(c) [Intentionally omitted.]
(d) Not less than three Business Days prior to any Distribution Date
for which the Current Principal Amount of a Class of Certificates will be
reduced to zero, the Master Servicer shall provide the Trustee with notice
thereof.
Section 6.08. Monthly Advances. If the Scheduled Payment (together
with any advances from the Sub-Servicers) on a Mortgage Loan that was due on the
Due Date in the month of a Distribution Date and is delinquent other than as a
result of application of the Relief Act exceeds the amount deposited in the
Custody Account or the Certificate Account which will be used for a Certificate
Account Advance with respect to such Mortgage Loan, the Master Servicer will
deposit in the appropriate subaccount of 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 appropriate subaccount of the Certificate Account on or before
any future date to the extent that funds in the appropriate subaccount of the
Certificate Account on such date are less than the amount required to be
transferred by the Master Servicer to such subaccount of the Certificate
Account. If applicable, on the fifth Business Day preceding each Distribution
Date, the Master Servicer shall present an Officer's Certificate to the Trustee
(i) stating that the Master Servicer elects not to make a Monthly Advance in a
stated amount and (ii) detailing the reason it deems the advance to be
nonrecoverable.
Section 6.09. Compensating Interest Payments. The Master Servicer
shall deposit in the Certificate Account not later than the Advancing Date
immediately preceding the related Distribution Date an amount equal to the
lesser of (i) the Interest Shortfall resulting from Voluntary Principal
Prepayments in full for the related Distribution Date and (ii) the lesser of (A)
the Master Servicing Fee for such Distribution Date or (B) 1/12 of [0.125%] of
the Scheduled Principal Balances of the Mortgage Loans with respect to such
Distribution Date (such amount, the "Compensating Interest Payment"). The Master
Servicer shall not be entitled to any reimbursement of any Compensating Interest
Payment.
Section 6.10. Reports of Foreclosures and Abandonment of Mortgaged
Property. Each year the Master Servicer shall report or cause to be reported to
the Internal Revenue Service foreclosures and abandonments of any Mortgaged
Property as required by Section 6050J of the Code.
<PAGE>
ARTICLE VII
The Master Servicer
Section 7.01. Liabilities of the Master Servicer. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by it herein. Only the Master Servicer,
any successor Master Servicer or the Trustee acting as Master Servicer shall be
liable with respect to the servicing of the Mortgage Loans and the REO Property
for actions taken by any such person in contravention of the Master Servicer's
duties hereunder.
Section 7.02. Merger or Consolidation of the Master Servicer. (a) The
Master Servicer will keep in full effect its existence, rights and franchises as
a corporation under the laws of the state of its incorporation, and will obtain
and preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, the Certificates or any of the
Mortgage Loans and to perform its duties under this Agreement.
(b) Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 7.03. Indemnification of the Trustee. The Master Servicer
agrees to indemnify the Indemnified Persons for, and to hold them harmless
against, any loss, liability or expense incurred on their part, arising out of,
or in connection with, this Agreement, including the costs and expenses
(including reasonable legal fees and expenses) of defending themselves against
any such claim other than (i) any loss, liability or expense related to its
failure to perform its duties in compliance with this Agreement (except as any
such loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement and (ii) any loss, liability or expense incurred by reason of such
Person's willful misfeasance, bad faith or gross negligence in the performance
of duties hereunder or by reason of reckless disregard of obligations and duties
hereunder, provided that with respect to any such claim, the Trustee shall have
given the Master Servicer written notice thereof promptly after the Trustee
shall have with respect to such claim knowledge thereof. The Master Servicer
shall assume the defense of any claim for which an Indemnified Person is
entitled to indemnification pursuant to this Section 7.03, and the Master
Servicer shall pay all expenses in connection therewith, including reasonable
legal fees, and shall promptly pay, discharge and satisfy any judgment or decree
which may be rendered against an Indemnified Person in respect of such claim.
Section 7.04. Limitation on Liability of the Master Servicer and
Others. Subject to the obligation of the Master Servicer to indemnify the
Indemnified Persons pursuant to Section 7.03:
(a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Indemnified Persons, the Seller, the Trust Fund or the Certificateholders for
taking any action or for refraining from taking any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Master Servicer or any such Person against
any breach of warranties or representations made herein or any liability which
would otherwise be imposed by reason of such Person's willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.
(b) The Master Servicer and any director, officer, employee or agent
of the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder.
(c) The Master Servicer and any director, officer, employee or agent
of the Master Servicer shall be indemnified by the Trust and held harmless
thereby against any loss, liability or expense incurred in connection with any
legal proceedings relating to this Agreement or the Certificates (including
reasonable legal fees and disbursements of counsel), other than (i) any loss,
liability or expense related to its failure to perform its duties in compliance
with this Agreement (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) and (ii) any loss, liability
or expense incurred by reason of such Person's willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder.
(d) The Master Servicer shall not be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its duties
under this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, the Master Servicer may in its discretion
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Master Servicer shall
be entitled to be reimbursed therefor out of the Certificate Account as provided
by Subsection 4.03(a). Nothing in this Subsection 7.04(d) shall affect the
Master Servicer's obligation to supervise, or to take such actions as are
necessary to ensure, the servicing and administration of the Mortgage Loans
pursuant to Subsection 3.01(a).
(e) In taking or recommending any course of action pursuant to this
Agreement, unless specifically required to do so pursuant to this Agreement, the
Master Servicer shall not be required to investigate or make recommendations
concerning potential liabilities which the Trust might incur as a result of such
course of action by reason of the condition of the Mortgaged Properties but
shall give notice to the Trustee if it has notice of such potential liabilities.
Section 7.05. Master Servicer Not to Resign. Except as provided in
Section 7.07, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon a determination that any such duties
hereunder are no longer permissible under applicable law. Any such determination
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Independent Counsel to such effect delivered to the Trustee. No such
resignation by the Master Servicer shall become effective until the Trustee or a
successor to the Master Servicer shall have assumed the responsibilities and
obligations of the Master Servicer in accordance with Section 8.02 hereof. The
Trustee shall notify the Rating Agencies of the resignation of the Master
Servicer.
Section 7.06. [Reserved]
Section 7.07. Sale and Assignment of Master Servicing. The Master
Servicer may sell and assign its rights and delegate its duties and obligations
in their entirety as Master Servicer under this Agreement; provided, however,
that: (i) the purchaser or transferee accepting such assignment and delegation
(a) shall be a Person which shall be qualified to service mortgage loans for
FNMA or FHLMC; (b) shall, in the case of successor master servicers only, have a
net worth of not less than $10,000,000 (unless otherwise approved by each Rating
Agency pursuant to clause (ii) below); (c) shall be reasonably satisfactory to
the Trustee (as evidenced in a writing signed by the Trustee) as having a
comparable servicing ability to that of the Master Servicer on the Closing Date;
(d) shall execute and deliver to the Trustee an agreement, in form and substance
reasonably satisfactory to the Trustee, which contains an assumption by such
Person of the due and punctual performance and observance of each covenant and
condition to be performed or observed by it as master servicer under this
Agreement, any custodial agreement and any agreement substantially in the form
of Exhibit G hereto from and after the effective date of such agreement; (ii)
each Rating Agency shall be given prior written notice of the identity of the
proposed successor to the Master Servicer and each Rating Agency's rating of the
Certificates in effect immediately prior to such assignment, sale and delegation
will not be downgraded or withdrawn as a result of such assignment, sale and
delegation, as evidenced by a letter to such effect delivered to the Master
Servicer and the Trustee; and (iii) the Master Servicer assigning and selling
the master servicing shall deliver to the Trustee an Officer's Certificate and
an Opinion of Independent Counsel, each stating that all conditions precedent to
such action under this Agreement have been completed and such action is
permitted by and complies with the terms of this Agreement. No such assignment
or delegation shall affect any liability of the Master Servicer arising prior to
the effective date thereof.
<PAGE>
ARTICLE VIII
Default
Section 8.01. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) The Master Servicer fails to cause to be deposited in the
Certificate Account any amount so required to be deposited pursuant to
this Agreement, and such failure continues unremedied for a period of
two Business Days after the date such deposit was required to be made;
or
(ii) The Master Servicer fails to observe or perform in any
material respect any other covenants and agreements set forth in the
Certificates or this Agreement to be performed by it, which covenants
and agreements materially affect the rights of Certificateholders, and
such failure continues unremedied for a period of 60 days after the
date on which written notice of such failure, properly requiring the
same to be remedied, shall have been given to the Master Servicer by
the Trustee or to the Master Servicer and the Trustee by the Holders
of Certificates evidencing Fractional Undivided Interests aggregating
not less than [25%] of the Trust Fund; or
(iii) There is entered against the Master Servicer a decree or
order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding up or liquidation of its affairs, and the continuance of
any such decree or order is unstayed and in effect for a period of 60
consecutive days, or an involuntary case is commenced against the
Master Servicer under any applicable insolvency or reorganization
statute and the petition is not dismissed within 60 days after the
commencement of the case; or
(iv) The Master Servicer consents to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Master Servicer or substantially all of its
property; or the Master Servicer admits in writing its inability to
pay its debts generally as they become due, files a petition to take
advantage of any applicable insolvency or reorganization statute,
makes an assignment for the benefit of its creditors, or voluntarily
suspends payment of its obligations; or
(v) The Master Servicer assigns or delegates its duties or rights
under this Agreement in contravention of the provisions permitting
such assignment or delegation under Sections 7.05 or 7.07.
In each and every such case, so long as such Event of Default with respect to
the Master Servicer shall not have been remedied, either the Trustee or the
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the principal of the Trust Fund, by notice in writing to
the Master Servicer (and to the Trustee if given by such Certificateholders),
with a copy to the Rating Agencies, may terminate all of the rights and
obligations (but not the liabilities) of the Master Servicer under this
Agreement and in and to the Mortgage Loans and/or the REO Property serviced by
the Master Servicer and the proceeds thereof. Upon the receipt by the Master
Servicer of the written notice, all authority and power of the Master Servicer
under this Agreement, whether with respect to the Certificates, the Mortgage
Loans, REO Property or under any other related agreements, including the
Sub-Servicing Agreements (but only to the extent that such other agreements
relate to the Mortgage Loans or REO Property) shall, subject to Section 8.02,
automatically and without further action pass to and be vested in the Trustee
pursuant to this Section 8.01; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's rights and
obligations hereunder, including, without limitation, the transfer to the
Trustee of (i) the property and amounts which are then or should be part of the
Trust or which thereafter become part of the Trust; (ii) originals or copies of
all documents of the Master Servicer reasonably requested by the Trustee to
enable it to assume the Master Servicer's duties thereunder; and (iii) the
rights and obligations of the Master Servicer under the Sub-Servicing Agreements
with respect to the Mortgage Loans. In addition to any other amounts which are
then, or, notwithstanding the termination of its activities under this
Agreement, may become payable to the Master Servicer under this Agreement, the
Master Servicer shall be entitled to receive, out of any amount received on
account of a Mortgage Loan or REO Property, that portion of such payments which
it would have received as reimbursement pursuant to Section 3.14 if notice of
termination had not been given. The termination of the rights and obligations of
the Master Servicer shall not affect any obligations incurred by the Master
Servicer prior to such termination.
Section 8.02. Trustee to Act; Appointment of Successor. (a) Upon
the receipt by the Master Servicer of a notice of termination pursuant to
Section 8.01 or an Opinion of Independent Counsel pursuant to Section 7.05 to
the effect that the Master Servicer is legally unable to act or to delegate its
duties to a Person which is legally able to act, the Trustee shall automatically
become the successor in all respects to the Master Servicer in its capacity
under this Agreement and the transactions set forth or provided for herein and
shall thereafter be subject to all the responsibilities, duties, liabilities and
limitations on liabilities relating thereto placed on the Master Servicer by the
terms and provisions hereof; provided, however, that the Trustee (i) shall be
under no obligation to purchase any Mortgage Loan pursuant to Section 10.01; and
(ii) shall have no obligation whatsoever with respect to any liability incurred
by the Master Servicer at or prior to the time of receipt by the Master Servicer
of such notice or by the Trustee of such Opinion of Independent Counsel. As
compensation therefor, the Trustee shall be entitled to all funds relating to
the Mortgage Loans which the Master Servicer would have been entitled to retain
if the Master Servicer had continued to act hereunder, except for those amounts
due the Master Servicer as reimbursement for advances previously made or
expenses previously incurred. Notwithstanding the above, the Trustee may, if it
shall be unwilling so to act, or shall, if it is legally unable so to act,
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution which is a FNMA- or
FHLMC-approved servicer, and with respect to a successor to the Master Servicer
only, having a net worth of not less than $10,000,000, as the successor to the
Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder.
Pending appointment of a successor to the Master Servicer hereunder, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on the Mortgage Loans as it and
such successor shall agree; provided, however, that no such compensation shall
be in excess of that permitted the Trustee under this Subsection 8.02(a), and
that such successor shall undertake and assume the obligations of the Trustee to
pay compensation to any third Person acting as an agent or independent
contractor in the performance of master servicing responsibilities hereunder.
The Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
(b) If the Trustee shall succeed to any duties of the Master
Servicer respecting the Mortgage Loans as provided herein, it shall do so in a
separate capacity and not in its capacity as Trustee and, accordingly, the
provisions of Article IX shall be inapplicable to the Trustee in its duties as
the successor to the Master Servicer in the servicing of the Mortgage Loans
(although such provisions shall continue to apply to the Trustee in its capacity
as Trustee); the provisions of Article VII, however, shall apply to it in its
capacity as successor master servicer.
Section 8.03. Notification to Certificateholders. Upon any
termination or appointment of a successor to the Master Servicer, the Trustee
shall give prompt written notice thereof to Certificateholders at their
respective addresses appearing in the Certificate Register and to the Rating
Agencies.
Section 8.04. Waiver of Defaults. The Trustee shall transmit by
mail to all Certificateholders, within 60 days after the occurrence of any Event
of Default known to the Trustee, unless such Event of Default shall have been
cured, notice of each such Event of Default hereunder known to the Trustee. The
Holders of Certificates evidencing Fractional Undivided Interests aggregating
not less than 51% of the Trust Fund may, on behalf of all Certificateholders,
waive any default by the Master Servicer in the performance of its obligations
hereunder and the consequences thereof, except a default in the making of or the
causing to be made any required distribution on the Certificates. Upon any such
waiver of a past default, such default shall be deemed to cease to exist, and
any Event of Default arising therefrom shall be deemed to have been timely
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived. The Master Servicer shall give notice of any such
waiver to the Rating Agencies.
Section 8.05. List of Certificateholders. Upon written request of
three or more Certificateholders of record, for purposes of communicating with
other Certificateholders with respect to their rights under this Agreement, the
Trustee will afford such Certificateholders access during business hours to the
most recent list of Certificateholders held by the Trustee.
<PAGE>
ARTICLE IX
Concerning the Trustee
Section 9.01. Duties of Trustee. (a) The Trustee, prior to the
occurrence of an Event of Default and after the curing or waiver of all Events
of Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement as duties of the
Trustee. If an Event of Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent person would exercise under the circumstances in the conduct of his own
affairs.
(b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments which are specifically
required to be furnished to the Trustee pursuant to any provision of this
Agreement, the Trustee shall examine them to determine whether they are in the
form required by this Agreement; provided, however, that the Trustee shall not
be responsible for the accuracy or content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by the
Master Servicer hereunder.
(c) The Trustee shall make monthly distributions and the final
distribution to the Certificateholders as provided in Sections 6.01 and 10.01
herein.
(d) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing or waiver of all such Events of Default which may have
occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Trustee and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;
(iii) The Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in
accordance with the directions of the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than
25% of the Trust Fund, if such action or non-action relates to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or other power
conferred upon the Trustee, under this Agreement; and
(iv) The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default or Event of Default
unless a Responsible Officer of the Trustee's corporate trust
department shall have actual knowledge thereof. In the absence of such
notice, the Trustee may conclusively assume there is no such default
or Event of Default.
The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Master Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.
(e) All funds received by the Trustee and required to be
deposited in the Certificate Account and the Custody Account pursuant to this
Agreement will be promptly so deposited by the Trustee.
Section 9.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 9.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting in reliance on any resolution, Officer's
Certificate, certificate of a Servicing Officer, certificate of
auditors or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection with
respect to any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement, other than its
obligation to give notices pursuant to this Agreement, or to
institute, conduct or defend any litigation hereunder or in relation
hereto at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby. Nothing
contained herein shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default of which a
Responsible Officer of the Trustee's corporate trust department has
actual knowledge (which has not been cured), to exercise such of the
rights and powers vested in it by this Agreement, and to use the same
degree of care and skill in their exercise, as a prudent person would
exercise under the circumstances in the conduct of his own affairs;
(iv) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder and
after the curing or waiver of all Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in
writing to do so by Holders of Certificates evidencing Fractional
Undivided Interests aggregating not less than [25%] of the Trust Fund
and provided that the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the Trustee,
reasonably assured to the Trustee by the security afforded to it by
the terms of this Agreement. The Trustee may require reasonable
indemnity against such expense or liability as a condition to taking
any such action. The reasonable expense of every such examination
shall be paid by the Certificateholders requesting the investigation;
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or through
agents or attorneys; provided, however, that the Trustee may not
appoint any agent to perform its custodial or paying agent functions
under this Agreement without the express written consent of the Master
Servicer, which consent will not be unreasonably withheld. The Trustee
shall not be liable or responsible for the misconduct or negligence of
any of the Trustee's agents or attorneys or a custodian or paying
agent appointed hereunder by the Trustee with due care and, when
required, with the consent of the Master Servicer;
(vii) Should the Trustee deem the nature of any action required
on its part, other than a payment or transfer under Subsection 4.02(b)
or Section 4.03, to be unclear, the Trustee may require prior to such
action that it be provided by the Master Servicer with reasonable
further instructions;
(viii) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be accountable for other than its negligence or
willful misconduct in the performance of any such act;
(ix) The Trustee shall not be required to give any bond or surety
with respect to the execution of the trust created hereby or the
powers granted hereunder; and
(x) The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the
repurchase of any Mortgage Loan by ICI Funding pursuant to this
Agreement or the eligibility of any Mortgage Loan for purposes of this
Agreement.
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the signature
and countersignature of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee shall have no responsibility for their
correctness. The Trustee makes no representation as to the validity or
sufficiency of the Certificates (other than the signature and countersignature
of the Trustee on the Certificates) or of any Mortgage Loan except as expressly
provided in Sections 2.02 and 2.05 hereof. The Trustee's signature and
countersignature (or countersignature of its agent) on the Certificates shall be
solely in its capacity as Trustee and shall not constitute the Certificates an
obligation of the Trustee in any other capacity. The Trustee shall not be
accountable for the use or application by the Seller of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Seller with respect to the Mortgage Loans. Subject to the
provisions of Section 2.05, the Trustee shall not be responsible for the
legality or validity of this Agreement or any document or instrument relating to
this Agreement, the validity of the execution of this Agreement or of any
supplement hereto or instrument of further assurance, or the validity, priority,
perfection or sufficiency of the security for the Certificates issued hereunder
or intended to be issued hereunder. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Fund or its ability to
generate the payments to be distributed to Certificateholders, under this
Agreement. The Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 9.04. Trustee May Own Certificates. The Trustee in its
individual capacity or in any capacity other than as Trustee hereunder may
become the owner or pledgee of any Certificates with the same rights it would
have if it were not Trustee, and may otherwise deal with the parties hereto.
Section 9.05. Trustee's Fees and Expenses. The Master Servicer
covenants and agrees to pay to the Trustee the Trustee's Fee with respect to the
calendar month in which the Closing Date occurs. With respect to the calendar
month following the month in which the Closing Date occurs and all subsequent
calendar months, the Trustee's Fee shall be paid from the Certificate Account,
pursuant to Subsection 4.03(b). If the funds in the Certificate Account are not
sufficient to pay the Trustee's Fees, the Master Servicer will be liable for
payment of the Trustee's Fees. The Master Servicer further covenants and agrees
to pay or reimburse the Trustee from time to time upon request for all
reasonable out-of-pocket expenses, disbursements and advances incurred or made
by the Trustee in the administration of the trusts hereunder as set forth in a
fee letter sent by the Trustee to the Master Servicer (including the reasonable
compensation, expenses and disbursements of its counsel) except any such
expense, disbursement or advance as may arise from its negligence or intentional
misconduct or which is the responsibility of the Certificateholders or the Trust
Fund hereunder. Such compensation and reimbursement obligation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust.
Section 9.06. Eligibility Requirements for Trustee. The Trustee and
any successor Trustee shall during the entire duration of this Agreement be a
state bank or trust company or a national banking association with its principal
office in Orange County, California or such other state and city reasonably
acceptable to the Master Servicer and organized and doing business under the
laws of such state or the United States of America, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus and
undivided profits of at least $40,000,000 or, in the case of a successor
Trustee, $50,000,000, subject to supervision or examination by federal or state
authority and, in the case of a successor Trustee other than pursuant to Section
9.10, rated in one of the two highest long-term debt categories of, or otherwise
acceptable to, each of the Rating Agencies. The Trustee shall not be an
Affiliate of the Master Servicer, unless the Trustee acts as successor Master
Servicer hereunder. If the Trustee publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 9.06 the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 9.06, the Trustee shall resign
immediately in the manner and with the effect specified in Section 9.08.
Section 9.07. Insurance. The Trustee, at its own expense, shall at all
times maintain and keep in full force and effect: (i) fidelity insurance, (ii)
theft of documents insurance and (iii) forgery insurance. All such insurance
shall be in amounts, with standard coverage and subject to deductibles, as are
customary for insurance typically maintained by banks which act as custodians
for investor-owned mortgage pools. A certificate of an officer of the Trustee as
to the Trustee's compliance with this Section 9.07 shall be furnished to the
Master Servicer or any Certificateholder upon request.
Section 9.08. Resignation and Removal of the Trustee. (a) The Trustee
may at any time resign and be discharged from the Trust hereby created by giving
written notice thereof to the Master Servicer, with a copy to the Rating
Agencies. Upon receiving such notice of resignation, the Master Servicer shall
promptly appoint a successor Trustee by written instrument, in triplicate, one
copy of which instrument shall be delivered to each of the resigning Trustee and
the successor Trustee. If no successor Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.06 and shall fail to resign after
written request therefor by the Master Servicer or if at any time the Trustee
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Master Servicer shall be entitled to remove the Trustee and appoint a successor
Trustee by written instrument, in triplicate, one copy of which instrument shall
be delivered to each of the Trustee so removed and the successor Trustee.
(c) The Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 51% of the Trust Fund may at any time remove
the Trustee and appoint a successor Trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to
each of the Master Servicer, the Trustee so removed and the successor so
appointed.
(d) No resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.08 shall
become effective except upon appointment of and acceptance of such appointment
by the successor Trustee as provided in Section 9.09.
Section 9.09. Successor Trustee. (a) Any successor Trustee appointed
as provided in Section 9.08 shall execute, acknowledge and deliver to the Master
Servicer and to its 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 and REMIC II shall be a calendar year and the Trustee shall
maintain or cause the maintenance of the books of each of REMIC I and REMIC II
Assets on the accrual method of accounting.
(b) The Trustee shall prepare and file or cause to be filed with the
Internal Revenue Service Federal tax information returns with respect to each of
REMIC I and REMIC II, the Trust Fund, if applicable, and the Certificates
containing such information and at the times and in the manner as may be
required by the Code or applicable Treasury regulations, and shall furnish to
each Holder of Certificates at any time during the calendar year for which such
returns or reports are made such statements or information at the times and in
the manner as may be required thereby. In connection with the foregoing, the
Trustee shall provide the name and address of the person who can be contacted to
obtain information required to be reported to the holders of regular interests
in each of REMIC I and REMIC II (the "REMIC Reporting Agent") as required by IRS
Form 8811. The Trustee shall make the elections to treat each of REMIC I and
REMIC II as a REMIC (which election shall apply to the taxable period ending
December 31, 1996 and each calendar year thereafter) in such manner as the Code
or applicable Treasury regulations may prescribe. The Trustee shall sign all tax
information returns filed pursuant to this Section and any other returns as may
be required by the Code, and in doing so shall rely entirely upon, and shall
have no liability for information provided by, or calculations provided by, the
Seller or the Master Servicer. The Trustee is hereby designated as the "Tax
Matters Person" (within the meaning of Treas. Reg. Section 1.860F-4(d)) for each
of REMIC I and REMIC II Any Holder of a Residual Certificate will by acceptance
thereof appoint the Trustee as agent and attorney-in-fact for the purpose of
acting as Tax Matters Person for each of REMIC I and REMIC II during such time
as the Trustee does not own any such Residual Certificate. In the event that the
Code or applicable Treasury regulations prohibit the Trustee from signing tax or
information returns or other statements, or the Trustee from acting as Tax
Matters Person (as an agent or otherwise), the Trustee shall take whatever
action that in its sole good faith judgment is necessary for the proper filing
of such information returns or for the provision of a tax matters person,
including designation of the Holder of a Residual Certificate to sign such
returns or act as tax matters person. Each Holder of a Residual Certificate
shall be bound by this Section.
(c) The Trustee shall provide upon request such information (which
shall be provided by the Master Servicer) as required in Section 860D(a)(6)(B)
of the Code to the Internal Revenue Service, to any Person purporting to
transfer a Residual Certificate to a Person other than a transferee permitted by
Section 5.05(b), and to any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate, organization described in
Section 1381 of the Code, or nominee holding an interest in a pass-through
entity described in Section 860E(e)(6) of the Code, any record holder of which
is not a transferee permitted by Section 5.05(b) (or which is deemed by statute
to be an entity with a disqualified member).
(d) The Trustee shall prepare and file or cause to be filed any state
income tax returns required with respect to each of REMIC I and REMIC II or the
Trust Fund.
<PAGE>
ARTICLE X
Termination
Section 10.01. Termination Upon Repurchase by ICI Funding or its
Designee or Liquidation of All Mortgage Loans. (a) Subject to Section 10.02, the
respective obligations and responsibilities of the Seller, the Master Servicer
and the Trustee created hereby, other than the obligation of the Trustee or the
Master Servicer to make payments to Certificateholders as hereinafter set forth
and to the Trustee, shall terminate upon:
(i) the repurchase by or at the direction of the Master Servicer
or its designee of all Mortgage Loans and all property remaining in
the Trust at a price equal to (a) 100% of the Outstanding Principal
Balance of each Mortgage Loan (other than a Mortgage Loan related to
REO Property) as of the date of repurchase, net of the principal
portion of any unreimbursed Monthly Advances made by the purchaser,
together with interest at the applicable Mortgage Interest Rate
accrued but unpaid through and including the last day of the month of
repurchase, plus (b) the appraised value of any REO Property (but not
more than the Outstanding Principal Balance of the related Mortgage
Loan, together with interest at the applicable Mortgage Interest Rate
accrued on that balance but unpaid through and including the last day
of the month of repurchase), less the good faith estimate of the
Master Servicer of liquidation expenses to be incurred in connection
with its disposal thereof, such appraisal to be calculated by an
appraiser mutually agreed upon by the Master Servicer and the Trustee
at the expense of the Master Servicer; or
(ii) the later of the making of the final payment or other
liquidation, or any advance with respect thereto, of the last Mortgage
Loan remaining in the Trust Fund or the disposition of all property
acquired with respect to any Mortgage Loan; provided, however, that in
the event that an advance has been made, but not yet recovered, at the
time of such termination, the Person having made such advance shall be
entitled to receive, notwithstanding such termination, any payments
received subsequent thereto with respect to which such advance was
made.
(b) In no event, however, shall the Trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date of this Agreement.
(c) [Intentionally omitted.]
(d) The right of the Master Servicer or its designee to repurchase all
Mortgage Loans pursuant to Subsection 10.01(a)(i) above shall be exercisable
only if (i) the aggregate unpaid principal balance of such Mortgage Loans at the
time of any such repurchase is less than 10% of the Cut-Off Date Balance or (ii)
the Master Servicer based upon an Opinion of Counsel, has determined that the
REMIC status of either REMIC I or REMIC II has been lost or that a substantial
risk exists that such REMIC status will be lost for the then-current taxable
year. At any time thereafter, the Master Servicer may elect to terminate the
Trust at any time, and upon such election, the Master Servicer or its designee
shall repurchase all the Mortgage Loans.
(e) [Intentionally omitted].
(f) The Trustee shall give notice of any termination to the
Certificateholders, with a copy to the Rating Agencies, upon which the
Certificateholders shall surrender their Certificates to the Trustee for payment
of the final distribution and cancellation. Such notice shall be given by
letter, mailed not earlier than the 15th day and not later than the 25th day of
the month next preceding the month of such final distribution, and shall specify
(i) the Distribution Date upon which final payment of the Certificates will be
made upon presentation and surrender of the Certificates at the office of the
Trustee therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee therein specified.
(g) If the option of the Master Servicer to repurchase or cause the
repurchase of all Mortgage Loans under Subsection 10.01(a)(i) above is
exercised, the Master Servicer and/or its designee, as the case may be, shall
deliver to the Trustee for deposit in the Certificate Account, by the Business
Day prior to the applicable Distribution Date, an amount equal to the repurchase
price for the Mortgage Loans being purchased by it and all property acquired
with respect to such Mortgage Loans remaining in the Trust. Upon the
presentation and surrender of the Certificates, the Trustee shall distribute an
amount equal to (i) the amount otherwise distributable to the Certificateholders
(other than the holders of the Class R-2 Certificates) on such Distribution Date
but for such repurchase, (ii) the Current Principal Amount and any accrued but
unpaid interest at the Pass- Through Rate to the Certificateholders of each
Class, and (iii) the remainder to the Class R-2 Certificateholders. Upon deposit
of the required repurchase price and delivery to the Trustee of an Officer's
Certificate from the Master Servicer certifying that such deposit in the
Certificate Account has been made, and following such final Distribution Date,
the Trustee shall promptly release to the Master Servicer and/or its designee,
as the case may be, the Mortgage Files for the remaining Mortgage Loans, and the
Accounts shall terminate, subject to the Trustee's obligation to hold any
amounts payable to Certificateholders in trust without interest pending final
distributions pursuant to Subsection 10.01(i).
(h) In the event that this Agreement is terminated by reason of the
payment or liquidation of all Mortgage Loans or the disposition of all property
acquired with respect to all Mortgage Loans under Subsection 10.01(a)(ii) above,
the Master Servicer shall deliver to the Trustee for deposit in the appropriate
subaccount of the Certificate Account all distributable amounts remaining in the
Custody Account and shall cause the Sub- Servicers to deliver to the Trustee for
deposit in the appropriate subaccount of the Certificate Account all
distributable amounts remaining in their Protected Accounts. Upon the
presentation and surrender of the Certificates, the Trustee shall distribute to
the Certificateholders, in accordance with their respective interests, all
distributable amounts remaining in the Certificate Account. Upon deposit by the
Sub- Servicers of such distributable amounts and delivery to the Trustee of an
Officer's Certificate from the Master Servicer certifying that such deposit has
been made, and following such final Distribution Date, the Trustee shall
promptly release to the Master Servicer the Mortgage Files for the remaining
Mortgage Loans, and the Accounts shall terminate, subject to the Trustee's
obligation to hold any amounts payable to the Certificateholders in trust
without interest pending final distributions pursuant to Subsection 10.01(i).
(i) If not all of the Certificateholders shall surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, not all the Certificates shall have been
surrendered for cancellation, the Trustee may take appropriate steps, or appoint
any agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets which remain subject to this Agreement.
Section 10.02 Additional Termination Requirements. (a) If the option
of the Master Servicer to repurchase all the Mortgage Loans under Subsection
10.01(a)(i) above is exercised, the Trust and each of REMIC I and REMIC II shall
be terminated in accordance with the following additional requirements, unless
the Trustee has been furnished with an Opinion of Counsel to the effect that the
failure of the Trust to comply with the requirements of this Section 10.02 will
not (i) result in the imposition of taxes on "prohibited transactions" as
defined in Section 860F of the Code on each of REMIC I and REMIC II or (ii)
cause each of REMIC I and REMIC II to fail to qualify as a REMIC at any time
that any Regular Certificates are outstanding:
(i) within 90 days prior to the final Distribution Date, at the
written direction of the Master Servicer, the Trustee shall adopt a
plan of complete liquidation of the Trust Fund and each of REMIC I and
REMIC II provided to it by the Master Servicer meeting the
requirements of a "Qualified Liquidation" under Section 860F of the
Code and any regulations thereunder as prepared by ICI Funding;
(ii) at or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the
Trustee shall sell for cash all of the assets of the Trust to or at
the direction of the Master Servicer; and
(iii) at the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit from the
Certificate Account (or cause to be distributed or credited) (i) to
the Certificateholders other than the Holders of the Class X
Certificates and the Class R-2 Certificates, the Current Principal
Amount of the Certificates plus (except with respect to the Class PO
Certificates) 30 days' interest thereon at the applicable Pass-Through
Rate, (ii) to the Holders of the Class X Certificates, 30 days'
interest on the Notional Amount thereof at the applicable Pass-Through
Rate, and (iii) to the Class R- 2 Certificateholders, all cash on hand
from the Certificate Account (other than cash retained to meet
claims); and the Trust and each of REMIC I and REMIC II shall
terminate at such time.
(b) By their acceptance of the Residual Certificates, the Holders
thereof hereby (i) agree to adopt such a plan of complete liquidation upon the
written request of the Master Servicer and to take such action in connection
therewith as may be reasonably requested by the Master Servicer and (ii) appoint
the Master Servicer as their attorney-in-fact, with full power of substitution,
for purposes of adopting such a plan of complete liquidation. The Trustee shall
adopt such plan of liquidation by filing the appropriate statement on the final
tax return of REMIC I and REMIC II.
<PAGE>
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Intent of Parties. The parties intend that each of
REMIC I and REMIC II shall be treated as a REMIC for federal income tax purposes
and that the provisions of this Agreement should be construed in furtherance of
this intent.
Section 11.02. Amendment. (a) This Agreement may be amended from time
to time by the Seller, the Trustee and the Master Servicer, without notice to or
the consent of any of the Certificateholders, to cure any ambiguity, to correct
or supplement any provisions herein that may be defective or inconsistent with
any other provisions herein, to comply with any changes in the Code or to make
any other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement;
provided, however, that such action shall not, as evidenced by an Opinion of
Independent Counsel, adversely affect in any material respect the interests of
any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Seller, the Trustee and the Master Servicer, with the consent of the holders of
Certificates evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust Fund for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Certificateholders; provided, however,
that no such amendment shall (i) reduce in any manner the amount of, or delay
the timing of, payments received on Mortgage Loans which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) reduce the aforesaid percentage of Certificates the Holders of
which are required to consent to any such amendment, without the consent of the
Holders of all Certificates then outstanding, or (iii) cause either REMIC I or
REMIC II to fail to qualify as a REMIC for federal income tax purposes, as
evidenced by an Opinion of Independent Counsel which shall be provided to the
Trustee other than at the Trustee's expense.
(c) Promptly after the execution of any such amendment, the Trustee
shall furnish a copy of such amendment or written notification of the substance
of such amendment to each Certificateholder, with a copy to the Rating Agencies.
(d) In the case of an amendment under Subsection 11.02(b) above, it
shall not be necessary for the Certificateholders to approve the particular form
of such an amendment. Rather, it shall be sufficient if the Certificateholders
approve the substance of the amendment. The manner of obtaining such consents
and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable regulations as the
Trustee may prescribe.
Section 11.03. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the Mortgaged Properties are situated, and
in any other appropriate public recording office or elsewhere. The Master
Servicer shall effect such recordation, at its expense upon the request in
writing of a Certificateholder, but only if such direction is accompanied by an
Opinion of Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.
Section 11.04. Limitation on Rights of Certificateholders. (a) The
death or incapacity of any Certificateholder shall not terminate this Agreement
or the Trust, nor entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
(b) Except as expressly provided in this Agreement, no
Certificateholders shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to establish the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholders be under any liability to any third Person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon, under or with respect to this Agreement against the
Seller, the Master Servicer or any successor to any such parties unless (i) such
Certificateholder previously shall have given to the Trustee a written notice of
a continuing default, as herein provided, (ii) the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Trust Fund shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs and expenses and liabilities to be incurred therein or thereby, and (iii)
the Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding.
(d) No one or more Certificateholders shall have any right by virtue
of any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain priority or preference over
any other such Certificateholder, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 11.04, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.05. Acts of Certificateholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is expressly required, to the Seller. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Seller,
if made in the manner provided in this Section 11.05.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the individual executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Certificate presented in accordance with
Section 5.04) shall be proved by the Certificate Register, and neither the
Trustee, the Seller, the Master Servicer nor any successor to any such parties
shall be affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action of the holder of any Certificate shall bind every future
holder of the same Certificate and the holder of every Certificate issued upon
the registration of transfer or exchange thereof, if applicable, or in lieu
thereof with respect to anything done, omitted or suffered to be done by the
Trustee, the Seller, the Master Servicer or any successor to any such party in
reliance thereon, whether or not notation of such action is made upon such
Certificates.
(e) In determining whether the Holders of the requisite percentage of
Certificates evidencing Fractional Undivided Interests have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Trustee, the Seller, the Master Servicer or any
Sub-Servicer or any Affiliate thereof shall be disregarded, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Certificates which the Trustee knows to be so owned shall be so disregarded.
Certificates which have been pledged in good faith to the Trustee, the Seller,
the Master Servicer or any Sub- Servicer or any Affiliate thereof may be
regarded as outstanding if the pledgor establishes to the satisfaction of the
Trustee the pledgor's right to act with respect to such Certificates and that
the pledgor is not an Affiliate of the Trustee, the Seller, the Master Servicer
or any Sub-Servicer, as the case may be.
Section 11.06. [Reserved]
Section 11.07. Governing Law. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS RULES AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.08. Notices. All demands and notices hereunder shall be in
writing and shall be deemed given when delivered at or mailed by registered
mail, return receipt requested, postage prepaid, or by recognized overnight
courier, to (i) in the case of the Seller, 245 Park Avenue, New York, New York
10167, Attention: Vice President-Servicing, or such other address as may
hereafter be furnished to the other parties hereto in writing; (ii) in the case
of ICI Funding, 20371 Irvine Avenue, Santa Ana Heights, California 92707,
Attention: Richard Johnson or such other address as may hereafter be furnished
to the other parties hereto in writing; (iii) in the case of the Trustee, at its
Corporate Trust Office, or such other address as may hereafter be furnished to
the other parties hereto in writing; or (iv) in the case of the Rating Agencies,
S&P, 25 Broadway, New York, New York 10004 Attention: Residential Mortgage
Surveillance Group and Fitch, One State Street Plaza, New York, New York 10004,
Attention: Mortgage-Backed Surveillance. Any notice delivered to the Seller, the
Master Servicer or the Trustee under this Agreement shall be effective only upon
receipt. Any notice required or permitted to be mailed to a Certificateholder,
unless otherwise provided herein, shall be given by first-class mail, postage
prepaid, at the address of such Certificateholder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
Section 11.09. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severed from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.
Section 11.10. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto.
Section 11.11. Article and Section Headings. The article and section
headings herein are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof.
Section 11.12. Counterparts. This Agreement may be executed in two or
more counterparts each of which when so executed and delivered shall be an
original but all of which together shall constitute one and the same instrument.
Section 11.13 Notice to Rating Agencies. The article and section
headings herein are for convenience of reference only, and shall not limited or
otherwise affect the meaning hereof. The Trustee shall use its best efforts to
promptly provide notice to each Rating Agency with respect to each of the
following of which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Master Servicer or the
Trustee;
4. The repurchase or substitution of Mortgage Loans;
5. The final payment to Certificateholders; and
6. Any change in the location of the Custody Account or the
Certificate Account.
In addition, in accordance with Section 6.06 and Section 3.16, the
Trustee and the Master Servicer, respectively, shall promptly furnish to each
Rating Agency copies of the following:
1. Each report to Certificateholders described in Section 6.06; and
2. Each annual independent public accountants' servicing report
received as described in Section 3.16.
<PAGE>
IN WITNESS WHEREOF, the Seller, ICI Funding and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.
BEAR STEARNS MORTGAGE SECURITIES INC.,
as Seller
By: /s/ Joseph T. Jurkowski, Jr.
Name: Joseph T. Jurkowski, Jr.
Title: Vice President
ICI FUNDING CORPORATION,
as Master Servicer
By: /s/ Mary Glass
Name: Mary Glass
Title: Senior Vice President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A
as Trustee
By: /s/ Holly Holland
Name: Holly Holland
Title: Vice President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 23rd day of December, 1996 before me, a notary public in and
for said State, personally appeared Joseph T. Jurkowski, Jr., known to me to be
a Vice President of Bear Stearns Mortgage Securities Inc., the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Maria K. Montgomery
Notary Public
[Notarial Seal]
<PAGE>
STATE OF CALIFORNIA )
) ss.:
COUNTY OF ORANGE )
On the 23rd day of December, 1996 before me, a notary public in and
for said State, personally appeared Mary Glass, known to me to be a Senior Vice
President of ICI Funding Corporation, the corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Xinya Yuan
Notary Public
[Notarial Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 23rd day of December, 1996 before me, a notary public in and
for said State, personally appeared Holly Holland, known to me to be a Vice
President of Bankers Trust Company of California, N.A., the national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of said bank and acknowledged to me that such
bank executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Maria K. Montgomery
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT A-1
FORM OF FACE OF CERTIFICATES
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF, OR AN INTEREST IN, BEAR
STEARNS MORTGAGE SECURITIES INC., ICI FUNDING CORPORATION OR THE TRUSTEE
REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE AFFILIATES AND IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" (A "REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DECREASED BY THE
PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE
CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE DIFFERENT
FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY
ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE NAMED HEREIN.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
MORTGAGE PASS-THROUGH CERTIFICATE,
NO. SERIES 1996-9
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 :
FIRST DISTRIBUTION DATE : JANUARY 27, 1997 INITIAL PRINCIPAL AMOUNT
ASSUMED FINAL DISTRIBUTION : DECEMBER 25, 2027 OF THIS CERTIFICATE
DATE ("DENOMINATION") :
MASTER SERVICER : ICI FUNDING CORPORATION APPROXIMATE ORIGINAL
PASS-THROUGH RATE : CLASS PRINCIPAL AMOUNT :
THIS CERTIFIES THAT CEDE & CO.
is the registered owner of the Fractional Undivided Interest evidenced hereby in
the beneficial ownership interest of Certificates of the same Class as this
Certificate in a trust (the "Trust") consisting primarily of conventional one-
to four- family, fully amortizing, first lien mortgage loans (collectively, the
"Mortgage Loans") sold by Bear Stearns Mortgage Securities Inc. ("BSMSI"). The
Mortgage Loans were sold by ICI Funding Corporation to BSMSI. ICI will act as
master servicer of the Mortgage Loans (the "Master Servicer," which term
includes any successors thereto under the Agreement referred to below). The
Trust was created pursuant to the Pooling and Servicing Agreement dated as of
the Cut-off Date specified above (the "Agreement"), by and among BSMSI, as
seller, ICI, as Master Servicer, and Bankers Trust Company of California, N.A.,
as trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, capitalized
terms used herein shall have the meaning ascribed to them in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of its acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to the Pass-Through
Rate. The Trustee will distribute on the 25th day of each month, or, if such
25th day is not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the same Class as this Certificate.
The Assumed Final Distribution Date is the first anniversary of the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan and is not likely to be the date on which the Current Principal Amount of
this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount
and/or initial aggregate notional amount of not less than $1,000,000, in
immediately available funds (by wire transfer or otherwise) to the account
specified in writing by such Person to the Trustee. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose and designated in such notice.
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 23, 1996
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
Countersigned: Not in its individual capacity but solely
as Trustee
By_______________________________
Authorized signatory of Bankers By___________________________
Trust Company of California, AUTHORIZED OFFICER
N.A., not in its individual
capacity but solely as Trustee
<PAGE>
EXHIBIT A-2
FORM OF REVERSE OF CERTIFICATES
<PAGE>
BEAR STEARNS MORTGAGE SECURITIES INC.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1996-9
This Certificate is one of a duly authorized issue of Certificates
designated as set forth on the face hereof (the "Certificates"), issued in
twenty-two 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 Irvine, State of California,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations representing a like aggregate Fractional Undivided
Interest will be issued to the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in the Classes and denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Certificate is exchangeable for one or more new Certificates evidencing the same
Class and in the same aggregate Fractional Undivided Interest, as requested by
the Holder surrendering the same.
No service charge will be made to the Certificateholders for any such
registration of transfer, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. The Master Servicer, the Trustee and any agent of any of them may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Master Servicer, the Trustee nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust created thereby
(other than the obligations to make payments to Certificateholders with respect
to the termination of the Agreement) shall terminate upon the earlier of (i) the
later of the (A) final payment or other liquidation (or Monthly Advance with
respect thereto) of the last Mortgage Loan remaining in the Trust and (B)
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due under the
Agreement, or (ii) the optional repurchase by the party named in the Agreement
of all the Mortgage Loans and other assets of the Trust in accordance with the
terms of the Agreement. Such optional repurchase may be made only on or after
the Distribution Date on which the aggregate unpaid principal balance of the
Mortgage Loans is less than 10% of the aggregate Scheduled Principal Balance of
the Mortgage Loans at the Cut-Off Date. The exercise of such right will effect
the early retirement of the Certificates. The Trust also may be terminated on
any Distribution Date upon the determination, based upon an opinion of counsel,
that REMIC status of REMIC I or REMIC II has been lost or that a substantial
risk exists that such status will be lost for the then current year. In no
event, however, will the Trust created by the Agreement continue beyond the
expiration of 21 years after the death of certain persons identified in the
Agreement.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name and address
including postal zip code assignee)
the within Certificate and hereby authorizes the transfer of registration of
such interest to the assignee on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
Dated:
___________________________________________________
Signature by or on behalf of assignor
___________________________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to ____________________________________________________________
_______________________________________________________________________________
for the account of ____________________________________________________________
account number _________________, or, if mailed by check to____________________
_______________________________________________________________________________
Applicable statements should be mailed to _____________________________________,
_______________________________________________________________________________
_______________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
<PAGE>
EXHIBIT B
MORTGAGE LOAN SCHEDULE
(Available Upon Request)
<PAGE>
EXHIBIT C
Representations and Warranties of ICI Funding
Concerning the Mortgage Loans
Capitalized terms used herein shall have the meanings set forth in the
Seller Contract and not in the Pooling and Servicing Agreement.
(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 (provided, however, that no
representation or warranty is made with respect to the portion of the
Seller's Information included in the Prospectus Supplement under the
headings "ICI Funding -- General" and "ICI Funding -- The Master
Servicer; the Sub-Servicer");
(b) the terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by
written instruments, if required by law in the jurisdiction where the
Mortgaged Property is located;
(c) except as otherwise set forth in the Preliminary Mortgage
Loan Schedule or the Final Mortgage Loan Schedule, the Mortgage File
for each Mortgage Loan contains a true, accurate and complete copy of
each of the documents contained in such Mortgage File, including all
amendments, modifications and, if applicable, waivers and assumptions
that have been executed in connection with such Mortgage Loan;
(d) 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;
(e) 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;
(f) as of the Cut-Off Date, no payment of principal of
or interest on or in respect of any Mortgage Loan is 30 or
more days past due;
(g) 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 (l) below;
(h) as of the Cut-Off Date, (i) no Mortgage Loan had been 30
days or more delinquent more than once during the preceding 12 months,
(ii) no Mortgage Loan had been delinquent for 60 days or more during
the preceding 12 months and (iii) there was no delinquent tax or
assessment lien against the property subject to any Mortgage, except
where such lien was being contested in good faith and a stay had been
granted against levying on the property;
(i) 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;
(j) 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;
(k) 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;
(l) a lender's title insurance policy (on an ALTA or CLTA
form) or binder, or other assurance of title customary in the relevant
jurisdiction therefor in a form acceptable to FNMA or FHLMC, was issued
on the date of the origination of each related Mortgage Loan by a title
insurance company qualified to do business in the jurisdiction where
the related Mortgaged Property is located, insuring the Seller and its
successors and assigns that the Mortgage is a first priority lien on
the related Mortgaged Property in the original principal amount of the
Mortgage Loan. Seller is the sole insured under such lender's title
insurance policy, and such policy, binder or assurance is valid and
remains in full force and effect, and each such policy, binder or
assurance shall contain all applicable endorsements including a
negative amortization endorsement, if applicable;
(m) in the event the Mortgage constitutes a deed of trust,
either a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in
the Mortgage or if no duly qualified trustee has been properly
designated and so serves, the Mortgage contains satisfactory provisions
for the appointment of such trustee by the holder of the Mortgage at no
cost or expense to such holder, and no fees or expenses are or will
become payable by Purchaser to the trustee under the deed of trust,
except in connection with a trustee's sale after default by the
mortgagor;
(n) the original principal amount of each Mortgage Loan is not
more than 95% of the Original Value; with the exception of two Group I
Mortgage Loans with a Cut-Off Date Scheduled Principal Balance of
approximately $487,968 and seven Group II Mortgage Loans with a Cut-Off
Date Scheduled Principal Balance of approximately $163,623, each
Mortgage Loan for which the outstanding principal as of the Cut-Off
Date of the related Mortgage Note exceeded 80% of the Original Value is
covered by a Primary Mortgage Insurance Policy issued by a private
mortgage insurer insuring against default under the Mortgage Note in an
amount at least equal to the excess of such outstanding principal
amount over 75% of such Original Value until the principal balance of
such Mortgage Loan is reduced below 80% of the Original Value or, based
upon a new appraisal, the principal balance of such Mortgage Loan
represents less than 80% of the new appraised value; all of the
insurers which have Primary Mortgage Insurance Policies with respect to
the Mortgage Loans meet FNMA's, FHLMC's and the Rating Agencies'
standards. The weighted average Loan-to-Value Ratio of the Group I
Mortgage Loans and Group II Mortgage Loans does not exceed 74.41% and
76.20%, respectively, and the percentage (by aggregate principal
balance) of Group I Mortgage Loans and Group II Mortgage Loans having
Loan-to-Value Ratios in excess of 80% does not exceed 11.91% and
26.74%, respectively;
(o) [Omitted]
(p) at the time of origination, each Mortgaged Property was
the subject of an appraisal which conforms to the Seller's underwriting
requirements, and a true, accurate and complete copy of such appraisal
is contained in the Mortgage File;
(q) on the basis of a representation by the borrower at the
time of origination of the Mortgage Loans, at least 93.75% of the Group
I Mortgage Loans and 69.78% of the Group II Mortgage Loans (by
aggregate principal balance) will be secured by Mortgages on
owner-occupied primary residence properties;
(r) neither the Seller nor any servicer of the related
Mortgage Loans has advanced funds or knowingly received any advance of
funds by a party other than the Mortgagor, directly or indirectly, for
the payment of any amount required by the Mortgage, except for (i)
interest accruing from the date of the related Mortgage Note or date of
disbursement of the Mortgage Loan proceeds, whichever is later, to the
date which precedes by 30 days the first Due Date under the related
Mortgage Note, and (ii) customary advances for insurance and taxes;
(s) each Mortgage Note, the related Mortgage and other
agreements executed in connection therewith are genuine, and each is
the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms except as such enforcement may
be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by
general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law); and all parties to
each Mortgage Note and the Mortgage had legal capacity to execute the
Mortgage Note and the Mortgage and each Mortgage Note and Mortgage has
been duly and properly executed by the Mortgagor;
(t) to the extent required under applicable law, each
originator and subsequent mortgagee or servicer of the Mortgage Loans
was authorized to transact and do business in the jurisdiction in which
the related Mortgaged Property is located at all times when it held or
serviced the Mortgage Loan; and any obligations of the holder of the
related Mortgage Note, Mortgage and other loan documents have been
complied with in all material respects; servicing of each Mortgage Loan
has been in accordance with Seller's servicing requirements and the
terms of the Mortgage Notes, the Mortgage and other loan documents,
whether such origination and servicing was done by the Seller, its
affiliates, or any third party which originated the Mortgage Loan on
behalf of, or sold the Mortgage Loan to, any of them, or any servicing
agent of any of the foregoing;
(u) 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;
(v) 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;
(w) as of the Closing Date, the improvements on each Mortgaged
Property securing a Mortgage Loan is insured (by an insurer which is
acceptable to the Seller) against loss by fire and such hazards as are
covered under a standard extended coverage endorsement in the locale in
which the Mortgaged Property is located, in an amount which is not less
than the lesser of the maximum insurable value of the improvements
securing such Mortgage Loan and the outstanding principal balance of
the Mortgage Loan, but in no event in an amount less than an amount
that is required to prevent the Mortgagor from being deemed to be a
co-insurer thereunder; if the improvement on the Mortgaged Property is
a condominium unit, it is included under the coverage afforded by a
blanket policy for the condominium project; if upon origination of the
related Mortgage Loan, the improvements on the Mortgaged Property were
in an area identified as a federally designated flood area, a flood
insurance policy is in effect in an amount representing coverage not
less than the lesser of (i) the outstanding principal balance of the
Mortgage Loan, (ii) the restorable cost of improvements located on such
Mortgaged Property and (iii) the maximum coverage available under
federal law; and each Mortgage obligates the Mortgagor thereunder to
maintain the insurance referred to in the Mortgage at the Mortgagor's
cost and expense;
(x) there is no material monetary default existing under any
Mortgage or the related Mortgage Note and there is no material event
which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a default, breach or event
of acceleration; and neither the Seller, any of its affiliates nor any
servicer of any related Mortgage Loan has taken any action to waive any
default, breach or event of acceleration; no foreclosure action is
threatened or has been commenced with respect to the Mortgage Loan;
(y) no Mortgagor, at the time of origination of the applicable
Mortgage, was a debtor in any state or federal bankruptcy or insolvency
proceeding;
(z) each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance
company or similar institution which is supervised and examined by a
federal or State authority, or by a mortgagee approved by the Secretary
of Housing and Urban Development pursuant to Sections 203 and 211 of
the National Housing Act;
(aa) 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;
(bb) the Mortgaged Property and all improvements thereon
comply with all requirements of any applicable zoning and subdivision
laws and ordinances;
(cc) no instrument of release or waiver has been executed in
connection with the Mortgage Loans, and no Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement
which has been approved by the primary mortgage guaranty insurer, if
any, and which has been delivered to the Trustee;
(dd) except as otherwise provided in the Preliminary Mortgage
Loan Schedule or the Final Mortgage Loan Schedule, no Mortgage Loan
provides for a balloon payment and each Mortgage Note contains
provisions providing for its full amortization by the end of its
original term and is payable on the first day of each month in monthly
installments of principal and interest, with interest payable in
arrears, over an original term of not more than 15 years in the case of
the 15-Year Mortgage Loans or 30 years in the case of the 30-Year
Mortgage Loans;
(ee) no Mortgage Loan was originated based on an appraisal of
the related Mortgaged Property made prior to completion of construction
of the improvements thereon unless a certificate of completion was
obtained prior to closing of the Mortgage Loan;
(ff) each of the Mortgaged Properties consists of a single
parcel of real property with a detached single-family residence erected
thereon, or a two- to four-family dwelling, or a townhouse, or an
individual condominium unit in a condominium project or an individual
unit in a planned unit development. No Mortgaged Property consists of a
single parcel of real property with a cooperative housing development
erected thereon. Any condominium unit or planned unit development
conforms with applicable lending guidelines established by the
Seller regarding such dwellings. Measured by principal balance, no more
than 6.16% and 5.73% of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, are secured by an individual unit in a
low-rise or high-rise condominium project, none are secured by real
property with a townhouse erected thereon, and at least 74.50% and
63.41% of the Group I Mortgage Loans and the Group II Mortgage Loans,
respectively, are secured by real property with a detached
single-family residence erected thereon. None of the Mortgage Loans is
a mobile home or manufactured dwelling;
(gg) with the exception of two Group I Mortgage Loans, none of
the Mortgage Loans is a buydown Mortgage Loan;
(hh) as of the Cut-Off Date, (A) the Net Rate of each Group I
Mortgage Loan was not more than 9.485% per annum and not less than
7.985% per annum, and the weighted average Net Rate of the Group I
Mortgage Loans was approximately 8.811% per annum and (B) the Net Rate
of each Group II Mortgage Loan was not more than 5.725% per annum and
not less than 9.610% per annum, and the weighted average Net Rate of
the Group II Mortgage Loans was approximately 10.145% per annum;
(ii) 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;
(jj) as of the Cut-Off Date, (A) the remaining term of each
30-Year Mortgage Loan is not more than 360 months and not less than 282
months in the case of the Group I Mortgage Loans or 318 months in the
case of the Group II Mortgage Loans and (B) the remaining term of each
15-Year Mortgage Loan is not more than 180 months and not less than 162
months in the case of the Group I Mortgage Loans or 168 months in the
case of the Group II Mortgage Loans;
(kk) as of the Cut-Off Date, no more than 23.57% and 33.93%
(by principal balance) of the Group I Mortgage Loans and the Group II
Mortgage Loans, respectively, are cash-out refinances;
(ll) as of the Cut-Off Date, no more than 15.46% and 13.80%
(by principal balance) of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, are rate and term refinances;
(mm) as of the Cut-Off Date, no fewer than 60.97% and 52.27%
(by principal balance) of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, are purchase money loans;
(nn) as of the Cut-Off Date, no more than 45.62%, 16.33%,
10.97% and 5.67% of the Group I Mortgage Loans (by principal balance)
and no more than 25.29%, 20.38%,22.50% and 5.95% of the Group II
Mortgage Loans (by principal balance) are secured by properties located
in the states of California, Florida, New Jersey and New York
respectively, and no more than 5% of the Group I Mortgage Loans or
Group II Mortgage Loans (by principal balance) are located in any other
state;
(oo) the original principal balances of the Group I Mortgage
Loans and the Group II Mortgage Loans ranged from approximately $22,000
to approximately $735,000 and approximately $26,550 to approximately
$514,300, respectively. The maximum outstanding principal balance of
any Group I Mortgage Loan and Group II Mortgage Loan as of the Cut-off
Date was approximately $734,173 and $513,843, respectively, and the
average outstanding principal balance was approximately $158,290 and
$105,897, respectively;
(pp) with respect to Mortgaged Properties at the time of
origination of the related Group I Mortgage Loans and Group II Mortgage
Loans, measured by aggregate unpaid principal balance as of the Cut-off
Date, at least 93.75% and 69.78%, respectively, of the Mortgaged
Properties are owner occupied primary residences, no more than 3.82%
and 5.80%, respectively, of the Mortgaged Properties are second homes
and approximately 2.43% and 24.42%, respectively, of the Mortgaged
Properties are investor owned properties. Each Mortgaged Property is
lawfully occupied under applicable law;
(qq) as of the Cut-off Date, (A) approximately 93.94% and
97.07% (by principal balance) of the Group I Mortgage Loans and Group
II Mortgage Loans, respectively, are 30-Year Mortgage Loans and (B)
approximately 6.06% and 2.93% (by principal balance) of the Group I
Mortgage Loans and Group II Mortgage Loans, respectively, are 15-Year
Mortgage Loans;
(rr) as of the Cut-off Date, approximately 81.52% and 36.69%
(by principal balance) of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, were originated under, or in accordance
with the standards of, Series I of the Progressive Loan Series Program;
(ss) as of the Cut-off Date, approximately 4.22% and 8.95% (by
principal balance) of the Group I Mortgage Loans and Group II Mortgage
Loans, respectively, were originated under, or in accordance with the
standards of, Series II of the Progressive Loan Series Program; and
(tt) as of the Cut-off Date, approximately 1.36% and 26.96%
(by principal balance) of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, were originated under, or in accordance
with the standards of, Series III of the Progressive Loan Series
Program.
(uu) as of the Cut-off Date, approximately 0.39% and 16.68%
(by principal balance) of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, were originated under, or in accordance
with the standards of, Series III+ of the Progressive Loan Series
Program.
(vv) as of the Cut-off Date, approximately 0.00% and 3.15% (by
principal balance) of the Group I Mortgage Loans and Group II Mortgage
Loans, respectively, were originated under, or in accordance with the
standards of, Series IV of the Progressive Loan Series Program.
(ww) as of the Cut-off Date, approximately 0.00% and 2.40% (by
principal balance) of the Group I Mortgage Loans and Group II Mortgage
Loans, respectively, were originated under, or in accordance with the
standards of, Series V of the Progressive Loan Series Program.
(xx) as of the Cut-off Date, approximately 5.02% and 0.00% (by
principal balance) of the Group I Mortgage Loans and Group II Mortgage
Loans, respectively, were originated under, or in accordance with the
standards of, Series I of the Progressive Loan Express Program.
(yy) as of the Cut-off Date, approximately 5.84% and 0.00% (by
principal balance) of the Group I Mortgage Loans and Group II Mortgage
Loans, respectively, were originated under, or in accordance with the
standards of, Series II of the Progressive Loan Express Program.
(zz) as of the Cut-off Date, approximately 0.64% and 2.73% (by
principal balance) of the Group I Mortgage Loans and Group II Mortgage
Loans, respectively, were originated under, or in accordance with the
standards of, Series III of the Progressive Loan Express Program.
(aaa) as of the Cut-off Date, approximately 0.00% and 1.90%
(by principal balance) of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, were originated under, or in accordance
with the standards of, Series IV of the Progressive Loan Express
Program.
(bbb) as of the Cut-off Date, approximately 0.12% and 0.00%
(by principal balance) of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, were originated under, or in accordance
with the standards of, Series V of the Progressive Loan Express
Program.
(ccc) as of the Cut-off Date, approximately 0.00% and 0.41%
(by principal balance) of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, were originated under, or in accordance
with the standards of, Series VI of the Progressive Loan Express
Program.
(ddd) as of the Cut-off Date, approximately 0.89 % and 0.13%
(by principal balance) of the Group I Mortgage Loans and Group II
Mortgage Loans, respectively, were originated under, or in accordance
with the standards of, Other Underwriting Programs.
<PAGE>
EXHIBIT D
REQUEST FOR RELEASE
(for Trustee)
Loan Information
- ----------------
Name of Mortgagor: _____________________________
Loan No.: ____________________________
Trustee
- -------
Name: ____________________________
Address: ____________________________
Trustee Mortgage
File No.: _____________________________
Master Servicer
- ---------------
Name: _____________________________
Address: _____________________________
Certificates: Mortgage Pass-Through Certificates,
Series 1996-9
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 1996-9, 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, ICI Funding and Bear Stearns Mortgage Securities
Inc.
( ) Mortgage Note dated ________, 19__, in the original
principal sum of $____________, made by _____________,
payable to, or endorsed to the order of, the Trustee.
( ) Mortgage recorded on _____________ as instrument
no. _____________ in the County Recorder's Office of the
County of _______________, State of ____________ in book/reel/docket
_______________ of official records at page/image ________.
( ) Deed of Trust recorded on _______________ as instrument
no. _________ in the County Recorder's Office of the
County of _______________, State of _______________ in
book/reel/docket __________ of official records at page/image
____________________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee,
recorded on ______________ as instrument no. ______ in
the County Recorder's Office of the County of
_______________, State of _______________ in
book/reel/docket __________ of official records at
page/image ________________.
( ) Other documents, including any amendments, assignments
or other assumptions of the Mortgage Note or Mortgage:
( )
( )
( )
( )
The undersigned hereby acknowledges and agrees as follows:
(1) The Master Servicer shall, and if the Master Servicer
releases the Documents to a Sub-Servicer or related Insurer the Master
Servicer shall cause such Sub-Servicer or related Insurer to, hold and
retain possession of the Documents in trust for the benefit of the
Trustee, solely for the purposes provided in the Agreement.
(2) The Master Servicer shall not cause or permit the Documents
to become subject to, or encumbered by, any claim, liens, security
interest, charges, writs of attachment or other impositions nor shall
the Master Servicer assert or seek to assert any claims or rights of
setoff to or against the Documents or any proceeds thereof.
(3) The Master Servicer shall return the Documents to the
Trustee when the need therefor no longer exists, and in any event within
21 days of the Master Servicer's receipt thereof, unless the Mortgage
Loan relating to the Documents has been liquidated and the proceeds
thereof have been remitted to the Certificate Account or the Documents
are being used to pursue foreclosure or other legal proceedings and
except as expressly provided in the Agreement.
(4) Prior to the return of the Documents to the Trustee, the
Master Servicer shall, and if the Master Servicer releases such
Documents to a Sub-Servicer or related Insurer, the Master Servicer
shall cause such Sub-Servicer or related Insurer to, retain the
Documents in its control unless the Documents have been delivered to an
attorney, or to a public trustee or other public official as required by
law, to initiate or pursue legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or
nonjudicially, and the Master Servicer has delivered to the Trustee a
certificate of a Servicing Officer certifying as to the name and address
of the Person to which the Documents were delivered and the purpose or
purposes of such delivery.
(5) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the
Master Servicer shall at all times be earmarked for the account of the
Trustee, and the Master Servicer shall keep the Documents and any
proceeds separate and distinct from all other property in the
possession, custody or control of the Master Servicer.
Date: ______________________, 19__
[Name of Master Servicer]
By: _______________________________________
Its: ______________________________________
<PAGE>
EXHIBIT E
Affidavit pursuant to
Section 860E(e)(4) of the
Internal Revenue Code of
1986, as amended, and for
other purposes
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of ] [the United States], on behalf of which he
makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" as
defined in Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended,
and will not be a disqualified organization as of [Closing Date] [date of
purchase]; (ii) it is not acquiring the Bear Stearns Mortgage Securities Inc.
Mortgage Pass-Through Certificates, Series 1996-9, Class R-1 or Class R-2
Certificates (the "Residual Certificates") for the account of a disqualified
organization; (iii) it consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by Bear Stearns Mortgage Securities
Inc. (upon advice of counsel) to constitute a reasonable arrangement to ensure
that the Residual Certificates will not be owned directly or indirectly by a
disqualified organization; and (iv) it will not transfer such Residual
Certificates unless (a) it has received from the transferee an affidavit in
substantially the same form as this affidavit containing these same four
representations and (b) as of the time of the transfer, it does not have actual
knowledge that such affidavit is false.
3. That the Investor is one of the following: (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof or (iii) an estate or trust that is subject to U.S. federal
income tax regardless of the source of its income.
4. That the Investor's taxpayer identification number is ___________.
5. That no purpose of the acquisition of the Residual Certificates is
to avoid or impede the assessment or collection of tax.
6. That the Investor understands that, as the holder of the Residual
Certificates, the Investor may incur tax liabilities in excess of any cash flows
generated by such Residual Certificates.
7. That the Investor intends to pay taxes associated with holding the
Residual Certificates as they become due.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] this day of , 199_.
[NAME OF INVESTOR]
By:
[Name of Officer]
[Title of Officer]
[Address of Investor for
receipt of distributions]
Address of Investor
for receipt of tax
information:
<PAGE>
Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this day of , 199_.
NOTARY PUBLIC
COUNTY OF
STATE OF
My commission expires the _____ day of _____________, 19___.
<PAGE>
EXHIBIT F-1
FORM OF INVESTMENT LETTER
[Date]
[SELLER]
Bankers Trust Company of
California, N.A. as Trustee
3 Park Plaza, 16th Floor
Irvine, California 92714
Attention: Bear Stearns/ICI 1996-9
Re: BSMSI Series 1996-9 Mortgage Pass-Through
Certificates (the "Certificates"), including the Class B-4,
Class B-5 and Class B-6 Certificates (the "Privately Offered
Certificates")
-------------------------------------------------------------
Dear Sirs:
In connection with our purchase of Privately Offered Certificates, we
confirm that:
(i) we understand that the Privately Offered Certificates are
not being registered under the Securities Act of 1933, as
amended (the "Act") or any applicable state securities or
"Blue Sky" laws, and are being sold to us in a transaction
that is exempt from the registration requirements of such
laws;
(ii) any information we desired concerning the Certificates,
including the Privately Offered Certificates, the trust in
which the Certificates represent the entire beneficial
ownership interest (the "Trust") or any other matter we
deemed relevant to our decision to purchase Privately
Offered Certificates has been made available to us;
(iii) we are able to bear the economic risk of investment in
Privately Offered Certificates; we are an institutional
"accredited investor" as defined in Section 501(a) of
Regulation D promulgated under the Act and a sophisticated
institutional investor;
(iv) we are acquiring Privately Offered Certificates for our own
account, not as nominee for any other person, and not with a
present view to any distribution or other disposition of the
Privately Offered Certificates;
(v) we agree the Privately Offered Certificates must be held
indefinitely by us (and may not be sold, pledged,
hypothecated or in any way disposed of) unless subsequently
registered under the Act and any applicable state securities
or "Blue Sky" laws or an exemption from the registration
requirements of the Act and any applicable state securities
or "Blue Sky" laws is available;
(vi) we agree that in the event that at some future time we wish
to dispose of or exchange any of the Privately Offered
Certificates (such disposition or exchange not being
currently foreseen or contemplated), we will not transfer or
exchange any of the Privately Offered Certificates unless:
(A) (1) the sale is to an Eligible Purchaser (as
defined below), (2) a letter to substantially the same
effect as either this letter or, if the Eligible Purchaser
is a Qualified Institutional Buyer as defined under Rule
144A of the Act, the Rule 144A and Related Matters
Certificate in the form attached to the Pooling and
Servicing Agreement (as defined below) is executed promptly
by the purchaser and delivered to the addressees hereof and
(3) all offers or solicitations in connection with the sale,
whether directly or through any agent acting on our behalf,
are limited only to Eligible Purchasers and are not made by
means of any form of general solicitation or general
advertising whatsoever; and
(B) if the Privately Offered Certificate is not
registered under the Act (as to which we acknowledge you
have no obligation), the Privately Offered Certificate is
sold in a transaction that does not require registration
under the Act and any applicable state securities or "blue
sky" laws and, if State Street Bank and Trust Company (the
"Trustee") so requests, a satisfactory Opinion of Counsel is
furnished to such effect, which Opinion of Counsel shall be
an expense of the transferor or the transferee;
(vii) we agree to be bound by all of the terms (including those
relating to restrictions on transfer) of the Pooling and
Servicing (as defined below), pursuant to which the Trust
was formed; we have reviewed carefully and understand the
terms of the Pooling and Servicing Agreement;
(viii) we are not "benefit plan investors," as such term is defined
in 29 C.F.R. Section 2510.3-101 (other than benefit plan
investors which are not subject to Title I of ERISA), nor a
trustee, fiduciary or other party acting on behalf of any
such "benefit plan investors;"
(ix) We understand that each of the Class B-4, B-5 and B-6
Certificates bears, and will continue to bear, a legend to
substantiate the following effect: "THIS CERTIFICATE HAS NOT
BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES
LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE,
AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE
ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE
144A UNDER THE ACT ("RULE 144A") TO A PERSON THAT THE HOLDER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE
REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF
AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL
ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT
PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE ACT,
SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER
SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B)
THE RECEIPT BY THE TRUSTEE OF AN OPINION OF COUNSEL AS TO
COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED
STATES. THIS CERTIFICATE MAY NOT BE TRANSFERRED TO "BENEFIT
PLAN INVESTORS," AS SUCH TERM IS DEFINED IN 29 C.F.R.
SECTION 2510.3-101 (OTHER THAN BENEFIT PLAN INVESTORS WHICH
ARE NOT SUBJECT TO TITLE I OF ERISA), UNLESS THE PROPOSED
TRANSFEREE PROVIDES A BENEFIT PLAN OPINION TO THE TRUSTEE."
"Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.
Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement dated as of December 1, 1996 among
Bear Stearns Mortgage Securities Inc., ICI Funding Corporation and Bankers Trust
Company of California, N.A.(the "Pooling and Servicing Agreement").
<PAGE>
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Eligible Purchaser
on the ____ day of ________, 19__.
Very truly yours,
[PURCHASER]
By:__________________________
(Authorized Officer)
By:__________________________
Attorney-in-fact
<PAGE>
EXHIBIT F-2
FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE
[Date]
[SELLER]
Bankers Trust Company of
California, N.A., as Trustee
3 Park Plaza, 16th Floor
Irvine, California 92714
Attention: Corporate Trust Office
Re: BSMSI Series 1996-9 Mortgage Pass-Through
Certificates, Class B-4, Class B-5,
and Class B-6 Certificates (the "Privately
Offered Certificates")
Dear Sirs:
In connection with our purchase of Privately Offered Certificates, the
undersigned certifies to each of the parties to whom this letter is addressed
that it is a qualified institutional buyer (as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Act")) as follows:
1. It owned and/or invested on a discretionary basis eligible securities
(excluding affiliate's securities, bank deposit notes and CD's, loan
participations, repurchase agreements, securities owned but subject to a
repurchase agreement and swaps), as described below:
Date: _____________, 19__ (must be on or after the close of its most recent
fiscal year)
Amount: $_________________; and
2. The dollar amount set forth above is:
a. greater than $100 million and the undersigned is one of the following
entities:
(1) |_| an insurance company as defined in
Section 2(13) of the Act; or[FN1]
(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 main-
tained 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.
- -----------------
[FN] [A purchase by an insurance company for one or more of its separate
accounts, as defined by Section 2(a)(37) of the Investment Company Act of
1940, which are neither registered nor required to be registered
thereunder, shall be deemed to be a purchase for the account of such
insurance company.]
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, ICI Funding Corporation as Master Servicer, and
Bankers Trust Company of California, N.A., as Trustee, pursuant to which the
Certificates were issued.
The undersigned certifies that it is not a "benefit plan investor," as
such term is defined in 29 C.F.R. Section 2510.3-101 (other than a benefit plan
investor which is not subject to Title I of ERISA) ("Benefit Plan Investor"),
nor a trustee, fiduciary or other party who is acquiring a Privately Offered
Certificate directly or indirectly for or on behalf of "Benefit Plan Investors."
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Qualified
Institutional Buyer on the ____ day of _______, 19__.
Name of Institution
Signature
Name
Title[FN2}
- --------
[FN2] Must be President, Chief Financial Officer, or other
executive officer.
<PAGE>
EXHIBIT G
FORM OF SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
This SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT (the "Agreement")
is made and entered into as of __________________, 1996, between ICI Funding
Corporation (the "Company") and [ ] (the "Purchaser").
PRELIMINARY STATEMENT
_______________________________ is the holder of the entire interest
in The Mortgage Pass-Through Certificates, Series 1996-9, Class B-6 Certificates
(the "Class B-6 Certificates"). The Class B-6 Certificates were issued pursuant
to a Pooling and Servicing Agreement (the "Pooling and Servicing Agreement")
dated as of December 1, 1996 between the Company (in its capacity as master
servicer thereunder, the "Master Servicer"), Bear Stearns Mortgage Securities
Inc. and Bankers Trust Company of California, N.A., as Trustee.
[ ] intends to resell all of the Class B-6 Certificates directly to
the Purchaser on or promptly after the date hereof.
In connection with such sale, the parties hereto have agreed that the
Company, as Master Servicer, will engage in certain special servicing procedures
relating to foreclosures for the benefit of the Purchaser, and that the
Purchaser will deposit funds in a collateral fund to cover any losses
attributable to such procedures as well as all advances and costs in connection
therewith, as set forth herein.
In consideration of the mutual agreements herein contained, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser agree that the following provisions shall become effective and shall
be binding on and enforceable by the Company and the Purchaser upon the
acquisition by the Purchaser of the Class B-6 Certificates.
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in New York City or Irvine, California are
required or authorized by law or executive order to be closed.
Collateral Fund: The fund established and maintained pursuant to
Section 3.01 hereof.
Collateral Fund Permitted Investments: Either (i) obligations of, or
obligations fully guaranteed as to principal and interest by, the United States,
or any agency or instrumentality thereof, provided such obligations are backed
by the full faith and credit of the United States, (ii) repurchase agreements on
obligations specified in clause (i) provided that the unsecured obligations of
the party agreeing to repurchase such obligations are at the time rated by each
Rating Agency in the highest long-term rating category, (iii) federal funds,
certificates of deposit, time deposits and banker's acceptances of any U.S.
depository institution or trust company incorporated under the laws of the
United States or any state provided that the debt obligations of such depository
institution or trust company at the date of acquisition thereof have been rated
by each Rating Agency in the highest short-term rating category, (iv) commercial
paper of any corporation incorporated under the laws of the United States or any
state thereof which on the date of acquisition has the highest short term rating
of each Rating Agency, and (v) other obligations or securities that are
acceptable to each Rating Agency as a Collateral Fund Permitted Investment
hereunder and will not, as evidenced in writing, result in a reduction or
withdrawal in the then current rating of the Certificates and, for each of the
preceding clauses, the maturity thereof shall be not later than the earlier to
occur of (A) 30 days from the date of the related investment and (B) the
Business Day preceding the next succeeding Distribution Date.
Commencement of Foreclosure: The first official action required under
local law in order to commence foreclosure proceedings or to schedule a
trustee's sale under a deed of trust, including (i) in the case of a mortgage,
any filing or service of process necessary to commence an action to foreclose or
(ii) in the case of a deed of trust, the posting, publishing, filing or delivery
of a notice of sale, but not including in either case (x) any notice of default,
notice of intent to foreclose or sell or any other action prerequisite to the
actions specified in (i) or (ii) above and, upon the consent of the Purchaser
which will be deemed given unless expressly withheld within two Business Days of
notification, (y) the acceptance of a deed-in-lieu of foreclosure (whether in
connection with a sale of the related property or otherwise) or (z) initiation
and completion of a short pay-off.
Current Appraisal: With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, an appraisal of the related
Mortgaged Property obtained by the Purchaser as nearly contemporaneously as
practicable to the time of the Purchaser's election, prepared based on the
Company's customary requirements for such appraisals.
Election to Delay Foreclosure: Any election by the Purchaser to delay
the Commencement of Foreclosure, made in accordance with Section 2.02(b).
Election to Foreclosure: Any election by the Purchaser to proceed with
the Commencement of Foreclosure, made in accordance with Section 2.03(a).
Required Collateral Fund Balance: As of any date of determination, an
amount equal to the aggregate of all amounts previously required to be deposited
in the Collateral Fund pursuant to Section 2.02(d) (after adjustments for all
withdrawals and deposits prior to such date pursuant to Section 2.02(e)) and
Section 2.03(b) (after adjustment for all withdrawals and deposits prior to such
date pursuant to Section 2.03(c)) and Section 3.02, reduced by all withdrawals
therefrom prior to such date pursuant to Section 2.02(g) and Section 2.03(d).
Section 1.02. Definitions Incorporated by Reference.
All capitalized terms not otherwise defined in this Agreement shall
have the meanings assigned in the Pooling and Servicing Agreement.
ARTICLE II
SPECIAL SERVICING PROCEDURES
Section 2.01. Reports and Notices.
(a) In connection with the performance of its duties under the Pooling
and Servicing Agreement relating to the realization upon defaulted Mortgage
Loans, the Company as Master Servicer shall provide to the Purchaser the
following notices and reports:
i) Within five Business Days after each Distribution Date (or
included in or with the monthly statements to Certificateholders
pursuant to the Pooling and Servicing Agreement), the Company, as
Master Servicer, shall provide to the Purchaser a report, using the
same methodology and calculations in its standard servicing reports,
indicating for the Trust Fund the number of Mortgage Loans that are (A)
thirty days, (B) sixty days, (C) ninety days or more delinquent or (D)
in foreclosure, and indicating for each such Mortgage Loan the loan
number and outstanding principal balance.
ii) Prior to the Commencement of Foreclosure in connection
with any Mortgage Loan, the Company shall provide the Purchaser with a
notice (sent by facsimile transmission) of such proposed and imminent
foreclosure, stating the loan number and the aggregate amount owing
under the Mortgage Loan. Such notice may be provided to the Purchaser
in the form of a copy of a referral letter from the Company to an
attorney requesting the institution of foreclosure or a copy of a
request to foreclose received by the Company from the related primary
servicer which has been approved by the Company.
(b) If requested by the Purchaser, the Company shall make its
servicing personnel available (during their normal business hours) to respond to
reasonable inquiries, in writing by facsimile transmission, by the Purchaser in
connection with any Mortgage Loan identified in a report under subsection (a)(i)
or (a)(ii) which has been given to the Purchaser, provided, that (1) the Company
shall only be required to provide information that is readily accessible to its
servicing personnel and is non- confidential and (2) the Company shall respond
within five Business Days orally or in writing by facsimile transmission.
(c) In addition to the foregoing, the Company shall provide to the
Purchaser such information as the Purchaser may reasonably request concerning
each Mortgage Loan that is at least sixty days delinquent and each Mortgage Loan
which has become real estate owned, through the final liquidation thereof,
provided, that the Company shall only be required to provide information that is
readily accessible to its servicing personnel and is non-confidential.
Section 2.02. Purchaser's Election to Delay Foreclosure Proceedings.
(a) The Purchaser shall be deemed to direct the Company that in the
event that the Company does not receive written notice of the Purchaser's
election pursuant to subsection (b) below within 24 hours (exclusive of any
intervening non-Business Days) of transmission of the notice provided by the
Company under Section 2.01(a)(ii) subject to extension as set forth in Section
2.02(b), the Company may proceed with the Commencement of Foreclosure in respect
of such Mortgage Loan in accordance with its normal foreclosure policies without
further notice to the Purchaser. Any foreclosure that has been initiated may be
discontinued (i) without notice to the Purchaser if the Mortgage Loan has been
brought current or if a refinancing or prepayment occurs with respect to the
Mortgage Loan (including by means of a short payoff approved by the Company) or
(ii) with notice to the Purchaser if the Company has reached the terms of a
forbearance agreement with the borrower. In such latter case the Company may
complete such forbearance agreement unless instructed otherwise by the Purchaser
within two Business Days of notification.
(b) In connection with any Mortgage Loan with respect to which a
notice under Section 2.01(a)(ii) has been given to the Purchaser, the Purchaser
may elect to request that the Company delay the Commencement of Foreclosure
until such time as the Purchaser determines that the Company may proceed with
the Commencement of Foreclosure. Such election must be evidenced by written
notice received within 24 hours (exclusive of any intervening non-Business Days)
of transmission of the notice provided by the Company under Section 2.01(a)(ii).
The Purchaser shall send a copy of such notice of election to each Rating Agency
as soon as practicable thereafter. Such 24 hour period shall be extended for no
longer than an additional four Business Days after the receipt of the
information if the Purchaser requests additional information related to such
foreclosure within such 24 hour period; provided, however, that the Purchaser
will have at least one Business Day to make such election following its receipt
of any requested additional information. Any such additional information shall
(i) not be confidential in nature and (ii) be obtainable by the Company from
existing reports, certificates or statements or otherwise be readily accessible
to its servicing personnel. The Purchaser agrees that it has no right to deal
with the mortgagor. However, if the Company's normal foreclosure policies
include acceptance of a deed-in-lieu of foreclosure or short payoff, the
Purchaser will be notified and given two Business Days to respond. The Company
shall have the right to reject the notice of election by written notice to the
Purchaser within 24 hours of receipt of such notice of election, in which event
the Company may proceed with the Commencement of Foreclosure.
(c) With respect to any Mortgage Loan as to which the Purchaser has
made an Election to Delay Foreclosure which has not been rejected, the Purchaser
shall obtain a Current Appraisal as soon as practicable, and shall provide the
Company with a copy of such Current Appraisal.
(d) Within two Business Days of making any Election to Delay
Foreclosure which has not been rejected, the Purchaser shall remit by wire
transfer to the Trustee, for deposit in the Collateral Fund, an amount, as
calculated by the Company, equal to the sum of (i) 125% of the greater of the
Scheduled Principal Balance of the Mortgage Loan and the value shown in the
Current Appraisal referred to in subsection (c) above (or, if such Current
Appraisal has not yet been obtained, the Company's estimate thereof, in which
case the required deposit under this subsection shall be adjusted upon obtaining
such Current Appraisal), and (ii) three months' interest on the Mortgage Loan at
the applicable Mortgage Interest Rate. If any Election to Delay Foreclosure
which has not been rejected extends for a period in excess of three months (such
excess period being referred to herein as the "Excess Period"), the Purchaser
shall remit by wire transfer in advance to the Trustee for deposit in the
Collateral Fund the amount of each additional month's interest, as calculated by
the Company, equal to interest on the Mortgage Loan at the applicable Mortgage
Interest Rate for the Excess Period. The terms of this Agreement will no longer
apply to the servicing of any Mortgage Loan upon the failure of the Purchaser to
deposit the above amounts relating to the Mortgage Loan within two Business Days
of (i) the Election to Delay Foreclosure which has not been rejected or (ii) the
beginning of the related Excess Period, as the case may be.
(e) With respect to any Mortgage Loan as to which the Purchaser has
made an Election to Delay Foreclosure which has not been rejected, the Company
or the Trustee may withdraw from the Collateral Fund from time to time amounts
necessary to reimburse the Company for all related Monthly Advances and
Liquidation Expenses thereafter made by the Company as Master Servicer in
accordance with the Pooling and Servicing Agreement. To the extent that the
amount of any such Liquidation Expense is determined by the Company based on
estimated costs, and the actual costs are subsequently determined to be higher,
the Company may, or the Trustee shall at the Company's direction, withdraw the
additional amount from the Collateral Fund to reimburse the Company. In the
event that the Mortgage Loan is brought current by the mortgagor, the amounts so
withdrawn from the Collateral Fund shall be redeposited therein as and to the
extent that reimbursement therefor from amounts paid by the mortgagor is not
prohibited pursuant to the Pooling and Servicing Agreement as of the date
hereof. Except as provided in the preceding sentence, amounts withdrawn from the
Collateral Fund to cover Monthly Advances and Liquidation Expenses shall not be
redeposited therein or otherwise reimbursed to the Purchaser. If and when any
such Mortgage Loan is brought current by the mortgagor, all amounts remaining in
the Collateral Fund in respect of such Mortgage Loan (after adjustment for all
previous withdrawals and deposits pursuant to this subsection and after
reimbursement to the Master Servicer for all related Monthly Advances) shall be
released to the Purchaser.
(f) With respect to any Mortgage Loan as to which the Purchaser has
made an Election to Delay Foreclosure which has not been rejected, the Company
shall continue to service the Mortgage Loan in accordance with its customary
procedures (other than the delay in Commencement of Foreclosure as provided
herein). If and when, following such election, the Purchaser shall notify the
Company that it believes that it is appropriate to do so, the Company shall
proceed with the Commencement of Foreclosure; provided that, in any event, if
the Mortgage Loan is not brought current by the Mortgagor by the time the
Mortgage Loan becomes 6 months delinquent, the Purchaser's election shall no
longer be effective and the Company shall be entitled to proceed with the
Commencement of Foreclosure.
(g) Upon the occurrence of a liquidation with respect to any Mortgage
Loan as to which the Purchaser made an Election to Delay Foreclosure which has
not been rejected and as to which the Company proceeded with the Commencement of
Foreclosure in accordance with subsection (f) above, the Company shall calculate
the amount, if any, by which the value shown on the Current Appraisal obtained
under subsection (c) exceeds the actual sales price obtained for the related
Mortgaged Property (net of Liquidation Expenses and unreimbursed Monthly
Advances related to the extended foreclosure period), and the Company shall, or
the Trustee shall at the direction of the Company, withdraw the amount of such
excess from the Collateral Fund and shall remit the same to the Trust Fund for
application as additional Liquidation Proceeds pursuant to the Pooling and
Servicing Agreement. After making such withdrawal, all amounts remaining in the
Collateral Fund in respect of such Mortgage Loan (after adjustment for all
withdrawals and deposits pursuant to subsection (e) and after reimbursement to
the Master Servicer for all related Monthly Advances) shall be released to the
Purchaser.
Section 2.03. Purchaser's Election to Commence Foreclosure
Proceedings.
(a) In connection with any Mortgage Loan identified in a report under
Section 2.01(a)(i)(B), the Purchaser may elect to instruct the Company to
proceed with the Commencement of Foreclosure as soon as practicable. Such
election must be evidenced by written notice received by the Company by 5:00
p.m., New York City time, on the third Business Day following the delivery of
such report under Section 2.01(a)(i). The Company shall have the right to reject
the notice of election by written notice to the Purchaser within 24 hours of
receipt of such notice of election, in which event, the Company may delay the
Commencement of Foreclosure.
(b) Within two Business Days of making any Election to Foreclose which
has not been rejected, the Purchaser shall remit to the Trustee, for deposit in
the Collateral Fund, an amount, as calculated by the Company, equal to 125% of
the current Scheduled Principal Balance of the Mortgage Loan and three months'
interest on the Mortgage Loan at the applicable Mortgage Rate. If and when any
such Mortgage Loan is brought current by the mortgagor, all amounts in the
Collateral Fund in respect of such Mortgage Loan (after adjustment for all
withdrawals and deposits pursuant to subsection (c) below) shall be released to
the Purchaser. The terms of this Agreement will no longer apply to the servicing
of any Mortgage Loan upon the failure of the Purchaser to deposit the above
amounts relating to the Mortgage Loan within two Business Days of the Election
to Foreclose.
(c) With respect to any Mortgage Loan as to which the Purchaser has
made an Election to Foreclose which has not been rejected, the Company shall
continue to service the Mortgage Loan in accordance with its customary
procedures. In connection therewith, the Company shall have the same rights to
make withdrawals for Monthly Advances and Liquidations Expenses from the
Collateral Fund as are provided under Section 2.02(e), and the Company shall
make reimbursements thereto to the limited extent provided under such
subsection. The Company shall not be required to proceed with the Commencement
of Foreclosure which has not been rejected if (i) the same is stayed as a result
of the mortgagor's bankruptcy or is otherwise barred by applicable law, or to
the extent that all legal conditions precedent thereto have not yet been
complied with, or (ii) the Company believes there is a breach of representations
or warranties by the Company, which may result in a repurchase or substitution
of such Mortgage Loan, or (iii) the Company has or expects to have the right
under the Pooling and Servicing Agreement to purchase the defaulted Mortgage
Loan and intends to exercise such right or (iv) the Company reasonably believes
the Mortgaged Property may be contaminated with or affected by hazardous wastes
or hazardous substances (and the Company supplies the Purchaser with information
supporting such belief) or (v) the same is prohibited by or is otherwise
inconsistent with the provisions of the Pooling and Servicing Agreement. Any
foreclosure that has been initiated may be discontinued (i) without notice to
the Purchaser if the Mortgage Loan has been brought current or if a refinancing
or prepayment occurs with respect to the Mortgage Loan (including by means of a
short payoff approved by the Purchaser) or (ii) with notice to the Purchaser if
the Company has reached the terms of a forbearance agreement unless instructed
otherwise by the Purchaser within two Business Days of notification.
(d) Upon the occurrence of a liquidation with respect to any Mortgage
Loan as to which the Purchaser made an Election to Foreclose which has not been
rejected and as to which the Company proceeded with the Commencement of
Foreclosure in accordance with subsection (c) above, the Company shall calculate
the amount, if any, by which the Scheduled Principal Balance of the Mortgage
Loan at the time of liquidation (plus all unreimbursed Monthly Advances and
Liquidation Expenses in connection therewith other than those previously paid
from the Collateral Fund) exceeds the actual sales price obtained for the
related Mortgaged Property, and the Company shall, or the Trustee shall at the
direction of the Company, withdraw the amount of such excess from the Collateral
Fund and shall remit the same to the Trust Fund for application as additional
Liquidation Proceeds pursuant to the Pooling and Servicing Agreement. After
making such withdrawal, all amounts remaining in the Collateral Fund (after
adjustment for all withdrawals and deposits pursuant to subsection (c) above and
after reimbursement to the Master Servicer for all related Monthly Advances) in
respect of such Mortgage Loan shall be released to the Purchaser.
Section 2.04. Termination.
(a) With respect to all Mortgage Loans included in the Trust Fund, the
Purchaser's right to make any Election to Delay Foreclosure or any Election to
Foreclose and the Company's obligations under Section 2.01 shall terminate on
the earliest to occur of the following: (i) at such time as the Current
Principal Amount of the Class B-6 Certificates has been reduced to zero, (ii) if
the greater of (x) [43%] (or such lower or higher percentage that represents the
Company's actual loss experience with respect to the Mortgage Loans) of the
aggregate principal balance of all Mortgage Loans that are in foreclosure or are
more than 90 days delinquent on a contractual basis and the aggregate book value
of REO Properties or (y) the aggregate amount that the Company estimates through
its normal servicing practices will be required to be withdrawn from the
Collateral Fund with respect to Mortgage Loans as to which the Purchaser has
made an Election to Delay Foreclosure or an Election to Foreclose which has not
been rejected exceeds (z) the then-current Current Principal Amount of the Class
B-6 Certificates, or (iii) upon any transfer by the Purchaser of any interest
(other than a minority interest therein, but only if the transferee provides
written acknowledgment to the Company of the Purchaser's right hereunder and
that such transferee will have no rights hereunder) in the Class B-6
Certificates (whether or not such transfer is registered under the Pooling and
Servicing Agreement), including any such transfer in connection with a
termination of the Trust Fund. Unless earlier terminated as set forth herein,
this Agreement and the respective rights, obligations and responsibilities of
the Purchaser and the Company hereunder shall terminate upon the later to occur
of (i) the final liquidation of the last Mortgage Loan as to which the Purchaser
made any Election to Delay Foreclosure or any Election to Foreclose and the
withdrawal of all remaining amounts in the Collateral Fund as provided herein
and (ii) ten (10) Business Days' notice.
(b) The Purchaser's rights pursuant to Section 2.02 or 2.03 of this
Agreement shall terminate with respect to a Mortgage Loan as to which the
Purchaser has exercised its rights under Section 2.02 or 2.03 hereof (so long as
such exercise has not been rejected), upon Purchaser's failure to deposit any
amounts required pursuant to Section 2.02(d) or 2.03(b) after one Business Day's
notice of such failure.
ARTICLE III
COLLATERAL FUND; SECURITY INTEREST
Section 3.01. Collateral Fund.
Upon payment by the Purchaser of the initial amount required to be
deposited in the Collateral Fund pursuant to Article II, the Company shall
request the Trustee to establish and maintain with the Trustee a segregated
account entitled "Bear Stearns Mortgage Securities Inc. Mortgage Pass-Through
Certificates, Series 1996-9 Collateral Fund, for the benefit of ICI Funding
Corporation and Bankers Trust Company of California, N.A. on behalf of
Certificateholders, as secured parties" (the "Collateral Fund"). Amounts held in
the Collateral Fund shall continue to be the property of the Purchaser, subject
to the first priority security interest granted hereunder for the benefit of
such secured parties, until withdrawn from the Collateral Fund pursuant to the
Section 2.02 or 2.03 hereof.
Upon the termination of this Agreement and the liquidation of all
Mortgage Loans as to which the Purchaser has made any Election to Delay
Foreclosure or any Election to Foreclose pursuant to Section 2.04 hereof, the
Company shall distribute to the Purchaser all amounts remaining in the
Collateral Fund together with any investment earnings thereon (after giving
effect to all withdrawals therefrom permitted under this Agreement).
The Purchaser shall not take or direct the Company or the Trustee to
take any action contrary to any provision of the Pooling and Servicing
Agreement. In no event shall the Purchaser (i) take or cause the Trustee or the
Company to take any action that could cause the Trust Fund to fail to qualify as
a REMIC or cause the imposition on the Trust Fund of any "prohibited
transaction" or "prohibited contribution" taxes or (ii) cause the Trustee or the
Company to fail to take any action necessary to maintain the status of the Trust
Fund as a REMIC.
Section 3.02. Collateral Fund Permitted Investments.
The Company shall, at the written direction of the Purchaser, direct
the Trustee to invest the funds in the Collateral Fund in the name of the
Trustee in Collateral Fund Permitted Investments. Such direction shall not be
changed more frequently then quarterly. In the absence of any direction, the
Trustee shall invest such funds in investments permitted pursuant to clause
(iii) of the definition of Collateral Fund Permitted Investments herein.
All income and gain realized from any investment as well as any
interest earned on deposits in the Collateral Fund (net of any losses on such
investments) and any payments of principal made in respect of any Collateral
Fund Permitted Investment shall be deposited in the Collateral Fund upon
receipt. All costs and realized losses associated with the purchase and sale of
Collateral Fund Permitted Investments shall be borne by the Purchaser and the
amount of net realized losses shall be promptly deposited by the Purchaser in
the Collateral Fund. The Company shall periodically (but not more frequently
than monthly) direct the Trustee to distribute to the Purchaser upon request an
amount of cash, to the extent cash is available therefor in the Collateral Fund,
equal to the amount by which the balance of the Collateral Fund, after giving
effect to all other distributions to be made from the Collateral Fund on such
date, exceeds the Required Collateral Fund Balance. Any amounts so distributed
shall be released from the lien and security interest of this Agreement.
Section 3.03. Grant of Security Interest.
In order to secure the obligations of the Purchaser hereunder to the
Company and the Trustee for the benefit of Certificateholders (other than its
obligations under Section 4.10), the Purchaser hereby grants to the Company and
to the Trustee for the benefit of the Certificateholders a security interest in
and lien on all of the Purchaser's right, title and interest, whether now owned
or hereafter acquired, in and to: (1) the Collateral Fund, (2) all amounts
deposited in the Collateral Fund and Collateral Fund Permitted Investments in
which such amounts are invested (and the distributions and proceeds of such
investments) and (3) all cash and non-cash proceeds of any of the foregoing,
including proceeds of the voluntary or involuntary conversion thereof (all of
the foregoing collectively, the "Collateral").
The Purchaser acknowledges the lien on and security interest in the
Collateral for the benefit of the Company and the Trustee on behalf of the
Certificateholders. The Purchaser shall take all actions requested by the
Company as may be reasonably necessary to perfect the security interest created
under this Agreement in the Collateral and cause it to be prior to all other
security interests and liens, including the execution and delivery to the
Company or at its direction the Trustee for filing of appropriate financing
statements in accordance with applicable law.
Section 3.04. Collateral Shortfalls.
In the event that amounts on deposit in the Collateral Fund at any
time are insufficient to cover any withdrawals therefrom that the Company or the
Trustee is then entitled to make hereunder, the Purchaser shall be obligated to
pay such amounts to the Company or the Trustee immediately upon demand. Such
obligation shall constitute a general corporate obligation of the Purchaser. The
failure to pay such amounts within two Business Days of such demand (except for
amounts to cover interest on a Mortgage Loan pursuant to Sections 2.02(d) and
2.03(b)), shall cause an immediate termination of the Purchaser's right to make
any Election to Delay Foreclosure or Election to Foreclose and the Company's
obligations under this Agreement with respect to all Mortgage Loans to which
such insufficiencies relate, without the necessity of any further notice or
demand on the part of the Company.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. Amendment.
This Agreement may be amended from time to time by the Company and the
Purchaser by written agreement signed by the Company and the Purchaser provided
that no such amendment shall have a material adverse effect on the holders of
other Classes of Certificates.
Section 4.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
Section 4.03. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 4.04. Notices.
All demands, notices and direction hereunder shall be in writing or by
telecopy and shall be deemed effective upon receipt to:
(a) in the case of the Company,
--------------------------------
--------------------------------
--------------------------------
or such other address as may hereafter be furnished in writing by
the Company, or
(a) in the case of the Purchaser,
--------------------------------
--------------------------------
--------------------------------
Attention: ____________________
Phone: ________________________
Fax: __________________________.
Section 4.05. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever, including regulatory, held
invalid, then such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
Section 4.06. Successor and Assigns.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and the respective successors and assigns of
the parties hereto; provided, however, that the rights under this Agreement
cannot be assigned by the Purchaser without the consent of the Company.
Section 4.07. Article and Section Headings.
The article and section headings herein are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
Section 4.08. Third Party Beneficiaries.
The Trustee on behalf of Certificateholders is the intended third
party beneficiary of this Agreement.
Section 4.09. Confidentiality.
The Purchaser agrees that all information supplied by or on behalf of
the Company pursuant to Sections 2.01 or 2.02, including individual account
information, is the property of the Company and the Purchaser agrees to use such
information solely for the purposes set forth in this Agreement and to hold such
information confidential and not to disclose such information.
Section 4.10. Indemnification.
The Purchaser agrees to indemnify and hold harmless the Company and
the Trustee against any and all losses, claims, damages or liabilities to which
it may be subject, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon actions taken by the
Company in accordance with the provisions of this Agreement and which actions
conflict or are alleged to conflict with the Company's or the Trustee's
obligations under the Pooling and Servicing Agreement. The Purchaser hereby
agrees to reimburse the Company and the Trustee on demand for the reasonable
legal or other expenses incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action.
Section 4.11. Representations and Warranty
The Purchaser represents and warrants that it is not an "affiliate"
(as defined in the Securities Act of 1933, as amended) of ICI Funding
Corporation.
Section 4.12. Expenses of Trustee. The Purchaser shall pay the
reasonable fees and expenses of the Trustee in connection with the Trustee's
duties under this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
ICI FUNDING CORPORATION
By:________________________
Name:
Title:
[PURCHASER]
By:_______________________
Name:
Title:
<PAGE>
EXHIBIT H
FORM OF INITIAL CERTIFICATION
[Seller]
[Master Servicer]
Re: Pooling and Servicing Agreement dated as of December 1, 1996,
among Bear Stearns Mortgage Securities Inc., as seller, ICI
Funding Corporation, as master servicer, and Bankers Trust
Company of California, N.A., as trustee Mortgage Pass-Through
Certificates, Series 1996-9
--------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as otherwise noted on the attached exception report, that as to each Mortgage
Loan listed on the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that: (i) all documents required
to be included in the Mortgage File pursuant to the Pooling and Servicing
Agreement are in its possession; (ii) such documents have been reviewed by it
and appear regular on their face, have, where applicable, been executed and
relate to such Mortgage Loan; and (iii) based on examination by it, and only as
to such documents, the information set forth in the Mortgage Loan Schedule as to
Mortgagor Name, original principal balance and loan number respecting such
Mortgage Loan is correct and accurately reflects the information in the Mortgage
Loan File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representation that any documents specified in subclauses (iv), (v) and (vii) of
Section 2.01(b) should be included in any Mortgage File. The Trustee makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By:_______________________
Name:
Title:
<PAGE>
EXHIBIT I
FORM OF FINAL CERTIFICATION
[Seller]
[Master Servicer]
Re: Pooling and Servicing Agreement dated as of December 1, 1996,
among Bear Stearns Mortgage Securities Inc., as seller, ICI
Funding Corporation, as master servicer, and Bankers Trust
Company of California, N.A., as trustee Mortgage Pass-Through
Certificates, Series 1996-9
-------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as otherwise noted on the attached exception report, that as to each Mortgage
Loan listed on the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has received the documents set forth
in Section 2.01 and has determined that (i) all documents required to be
included in the Mortgage File pursuant to the Pooling and Servicing Agreement
are in its possession; (ii) such documents have been reviewed by it and appear
regular on their face, have, where applicable, been executed and relate to such
Mortgage Loan; and (iii) based on examination by it, and only as to such
documents, the information set forth in the Mortgage Loan Schedule as to
Mortgagor name, original principal balance and loan number respecting such
Mortgage Loan is correct and accurately reflects the information in the Mortgage
Loan File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representation that any documents specified in subclauses (iv), (v) and (vii) of
Section 2.01(b) should be included in any Mortgage File. The Trustee makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By:_______________________
Name:
Title:
