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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) May 21, 1998
STRUCTURED ASSET MORTGAGE INVESTMENTS INC.
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(Exact name of registrant as specified in its charter)
Delaware 333-13617 13-3633241
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
245 Park Avenue
New York, New York 10167
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code, is (212) 272-2000
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Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1. Pooling and Servicing Agreement, dated as of May 1, 1998
among Structured Asset Mortgage Investments Inc. as Seller, EMC Mortgage
Corporation as master servicer, and State Street Bank & Trust Company, as
trustee.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on behalf of the
Registrant by the undersigned thereunto duly
authorized.
STRUCTURED ASSET MORTGAGE
INVESTMENTS INC.
By: /s/ Joseph T. Jurkowski, Jr.
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Name: Joseph T. Jurkowski, Jr.
Title: Vice President
Dated: June 12, 1998
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EXHIBIT INDEX
Item 601 (a) of Sequentially
Exhibit Regulation S-K Numbered
Number Exhibit No. Description Page
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1 4 Pooling and Servicing 5
Agreement
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EXHIBIT 1
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STRUCTURED ASSET MORTGAGE INVESTMENTS INC.,
SELLER,
EMC MORTGAGE CORPORATION,
MASTER SERVICER,
and
STATE STREET BANK AND TRUST COMPANY,
TRUSTEE
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POOLING AND SERVICING AGREEMENT
Dated as of May 1, 1998
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Structured Asset Mortgage Investments Inc.
Mortgage Pass-Through Certificates
Series 1998-6
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TABLE OF CONTENTS
ARTICLE I
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Definitions
Page
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ARTICLE I
Definitions
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
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Section 2.01. CONVEYANCE OF MORTGAGE LOANS TO TRUSTEE....................................II-1
Section 2.02. ACCEPTANCE OF MORTGAGE LOANS BY TRUSTEE....................................II-2
Section 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER SERVICER...........II-4
Section 2.04. ASSIGNMENT OF INTEREST IN THE MORTGAGE LOAN PURCHASE AGREEMENT.............II-5
Section 2.05. SUBSTITUTION OF MORTGAGE LOANS.............................................II-6
Section 2.06. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE..............................II-6
Section 2.07. ISSUANCE OF CERTIFICATES...................................................II-7
Section 2.08. REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLER.......................II-8
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ARTICLE III
Administration and Servicing of Mortgage Loans
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Section 3.01. MASTER SERVICER TO ASSURE SERVICING.......................................III-1
Section 3.02. SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER AND SUB-SERVICERS........III-1
Section 3.04. LIABILITY OF THE MASTER SERVICER..........................................III-2
Section 3.05. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENTS BY TRUSTEE..........III-3
Section 3.06. COLLECTION OF MORTGAGE LOAN PAYMENTS......................................III-4
Section 3.07. COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR ITEMS; SERVICING ACCOUNTS....III-4
Section 3.08. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE MORTGAGE LOANS
..........................................................................III-5
Section 3.09. MAINTENANCE OF PRIMARY MORTGAGE INSURANCE POLICIES; COLLECTION THEREUNDER
.........................................................................III-5
Section 3.10. MAINTENANCE OF HAZARD INSURANCE AND FIDELITY COVERAGE.....................III-6
Section 3.11. DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS................................III-7
Section 3.12. REALIZATION UPON DEFAULTED MORTGAGE LOANS.................................III-9
Section 3.13. TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES...........................III-9
Section 3.14. SERVICING AND MASTER SERVICING COMPENSATION..............................III-11
Section 3.15. ANNUAL STATEMENT OF COMPLIANCE...........................................III-11
Section 3.16. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT..................III-11
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Section 3.17. REMIC-RELATED COVENANTS..................................................III-12
Section 3.18. ADDITIONAL INFORMATION...................................................III-12
Section 3.19. OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS............................III-12
ARTICLE IV
Accounts
Section 4.01. PROTECTED ACCOUNTS.........................................................IV-1
Section 4.02. CERTIFICATE ACCOUNT........................................................IV-2
Section 4.03. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE CERTIFICATE ACCOUNT...........IV-4
Section 4.04. CUSTODY ACCOUNT............................................................IV-7
ARTICLE V
Section 5.01. CERTIFICATES................................................................V-1
Section 5.02. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.......................V-5
Section 5.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES...........................V-9
Section 5.04. PERSONS DEEMED OWNERS......................................................V-10
Section 5.05. TRANSFER RESTRICTIONS ON RESIDUAL CERTIFICATES.............................V-10
Section 5.06. RESTRICTIONS ON TRANSFERABILITY OF PRIVATE CERTIFICATES....................V-11
Section 5.07. ERISA RESTRICTIONS.........................................................V-12
Section 5.08. RULE 144A INFORMATION......................................................V-12
ARTICLE VI
Payments to Certificateholders
Section 6.01. DISTRIBUTIONS ON THE CERTIFICATES..........................................VI-1
Section 6.02. ALLOCATION OF DEFERRED INTEREST............................................VI-5
Section 6.03. ALLOCATION OF LOSSES.......................................................VI-5
Section 6.04. PAYMENTS...................................................................VI-7
Section 6.05. STATEMENTS TO CERTIFICATEHOLDERS...........................................VI-8
Section 6.06. REPORTS TO THE TRUSTEE AND THE MASTER SERVICER............................VI-10
Section 6.07. MONTHLY ADVANCES..........................................................VI-12
Section 6.08. COMPENSATING INTEREST PAYMENTS............................................VI-12
Section 6.09. REPORTS OF FORECLOSURES AND ABANDONMENT OF MORTGAGED PROPERTY.............VI-13
ARTICLE VII
The Master Servicer
Section 7.01. LIABILITIES OF THE MASTER SERVICER........................................VII-1
Section 7.02. MERGER OR CONSOLIDATION OF THE MASTER SERVICER............................VII-1
Section 7.03. INDEMNIFICATION OF THE TRUSTEE............................................VII-1
Section 7.04. LIMITATION ON LIABILITY OF THE MASTER SERVICER AND OTHERS.................VII-1
Section 7.05. MASTER SERVICER NOT TO RESIGN.............................................VII-2
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Section 7.06. SALE AND ASSIGNMENT OF MASTER SERVICING...................................VII-3
ARTICLE VIII
Default
Section 8.01. EVENTS OF DEFAULT........................................................VIII-1
Section 8.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.................................VIII-2
Section 8.03. NOTIFICATION TO CERTIFICATEHOLDERS.......................................VIII-3
Section 8.04. WAIVER OF DEFAULTS.......................................................VIII-3
Section 8.05. LIST OF CERTIFICATEHOLDERS...............................................VIII-3
ARTICLE IX
Concerning the Trustee
Section 9.01. DUTIES OF TRUSTEE..........................................................IX-1
Section 9.02. CERTAIN MATTERS AFFECTING THE TRUSTEE......................................IX-2
Section 9.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS......................IX-4
Section 9.04. TRUSTEE MAY OWN CERTIFICATES...............................................IX-4
Section 9.05. TRUSTEE'S FEES AND EXPENSES................................................IX-4
Section 9.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.......................................IX-5
Section 9.07. INSURANCE..................................................................IX-5
Section 9.08. RESIGNATION AND REMOVAL OF THE TRUSTEE.....................................IX-5
Section 9.09. SUCCESSOR TRUSTEE..........................................................IX-6
Section 9.10. MERGER OR CONSOLIDATION OF TRUSTEE.........................................IX-6
Section 9.11. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE..............................IX-7
Section 9.12. MASTER SERVICER SHALL PROVIDE INFORMATION AS REASONABLY REQUIRED...........IX-8
Section 9.13. FEDERAL INFORMATION RETURNS AND REPORTS TO CERTIFICATEHOLDERS..............IX-8
ARTICLE X
Termination
Section 10.01. TERMINATION UPON REPURCHASE BY THE SELLER OR ITS DESIGNEE OR LIQUIDATION OF
ALL MORTGAGE LOANS..........................................................X-1
Section 10.02. ADDITIONAL TERMINATION REQUIREMENTS.........................................X-3
ARTICLE XI
Miscellaneous Provisions
Section 11.01. INTENT OF PARTIES..........................................................XI-1
Section 11.02. AMENDMENT..................................................................XI-1
Section 11.03. RECORDATION OF AGREEMENT...................................................XI-1
Section 11.04. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.................................XI-2
Section 11.05. ACTS OF CERTIFICATEHOLDERS.................................................XI-2
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Section 11.06. GOVERNING LAW..............................................................XI-3
Section 11.07. NOTICES....................................................................XI-3
Section 11.08. SEVERABILITY OF PROVISIONS.................................................XI-4
Section 11.09. SUCCESSORS AND ASSIGNS.....................................................XI-4
Section 11.10. ARTICLE AND SECTION HEADINGS...............................................XI-4
Section 11.11. COUNTERPARTS...............................................................XI-4
Section 11.12. NOTICE TO RATING AGENCIES..................................................XI-4
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EXHIBITS
Exhibit A-1 - Form of Class A Certificates
Exhibit A-2 - Form of Class B Certificates
Exhibit A-3 - Form of Class R Certificates
Exhibit B - Mortgage Loan Schedule
Exhibit C - Representations and Warranties of BSMCC
Concerning the Mortgage Loans
Exhibit D - Form of Request for Release
Exhibit E - Form of Affidavit pursuant to Section 860E(e)(4)
Exhibit F-1 - Form of Investment Letter
Exhibit F-2 - Form of Rule 144A and Related Matters Certificate
Exhibit G - Form of Trustee's Initial Certification
Exhibit H - Form of Trustee's Final Certification
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POOLING AND SERVICING AGREEMENT
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Pooling and Servicing Agreement dated as of May 1, 1998, among
Structured Asset Mortgage Investments Inc., a Delaware corporation, as the
seller (the "Seller"), EMC Mortgage Corporation, a Delaware corporation ("EMC"),
as master servicer (the "Master Servicer"), and State Street Bank and Trust
Company, a Massachusetts trust company, as trustee (the "Trustee").
PRELIMINARY STATEMENT
On or prior to the Closing Date, the Seller has acquired the
Mortgage Loans from Bear Stearns Mortgage Capital Corporation ("BSMCC"). On the
Closing Date, the Seller will sell the Mortgage Loans and certain other property
to the Trust Fund and receive in consideration therefor Certificates evidencing
the entire beneficial ownership interest in the Trust Fund. EMC will be the
Master Servicer for the Mortgage Loans.
The Trustee shall make an election for the assets constituting
REMIC II to be treated for federal income tax purposes as a REMIC. On May 29,
1998 (the "Startup Day"), all the Classes of Regular Certificates will be
designated "regular interests" in such REMIC and the Class R-2 Certificate will
be designated the sole "residual interest" in such REMIC.
The Trustee shall make an election for the assets constituting
REMIC I to be treated for federal income tax purposes as a REMIC. On the Startup
Day, all the Classes of Certificates except for the Class R-1 and Class R-2
Certificates will be designated "regular interests" in such REMIC and the Class
R-1 Certificates will be designated the sole "residual interest" in such
REMIC.
The Mortgage Loans will have an Outstanding Principal Balance
as of the Cut-off Date, after deducting all Scheduled Principal due on or before
the Cut-off Date, of $283,575,286.60. 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:
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ARTICLE I
Definitions
Whenever used in this Agreement, the following words and
phrases, unless otherwise expressly provided or unless the context otherwise
requires, shall have the meanings specified in this
Article.
ACCOUNT: The Custody Account, the Certificate Account
(including each subaccount thereof), the Protected Accounts or the Servicing
Accounts as the context may require.
ACCRUED CERTIFICATE INTEREST: For any Certificate for any
Distribution Date, the interest accrued during the related Interest Accrual
Period at the applicable Pass-Through Rate on the Current Principal Amount of
such Certificate immediately prior to such Distribution Date, calculated on the
basis of a 360-day year consisting of twelve 30-day months, less (i) in the case
of a Senior Certificate, such Certificate's share of any Net Interest Shortfall
and Deferred Interest and, after the Cross-Over Date, the interest portion of
any Realized Losses and (ii) in the case of a Subordinate Certificate, such
Certificate's share of any Deferred Interest, Net Interest Shortfall and the
interest portion of any Realized Losses.
ADVANCING DATE: The Business Day preceding the related
Distribution Date.
AFFILIATE: As to any Person, any other Person controlling,
controlled by or under common control with such Person. "Control" means the
power to direct the management and policies of a Person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise.
"Controlled" and "Controlling" have meanings correlative to the foregoing. The
Trustee may conclusively presume that a Person is not an Affiliate of another
Person unless a Responsible Officer of the Trustee has actual knowledge to the
contrary.
AGREEMENT: This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
ALLOCABLE SHARE: With respect to each Class of Subordinate
Certificates:
(a) as to any Distribution Date and amounts distributable
pursuant to clauses (i) and (iii) of the Subordinate Optimal Principal
Amount, the fraction, expressed as a percentage, the numerator of which
is the Current Principal Amount of such Class and the denominator of
which is the aggregate Current Principal Amount of all Classes of the
Subordinate Certificates; and
(b) as to any Distribution Date and amounts distributable
pursuant to clause (ii), (iv) and (v) of the Subordinate Optimal
Principal Amount, and as to each Class of Subordinate Certificates for
which (x) the related Prepayment Distribution Trigger has been
satisfied on such Distribution Date, the fraction, expressed as a
percentage, the numerator of which is the Current Principal Amount of
such Class and the denominator of which is the aggregate Current
Principal Amount of all such Classes and (y) the related Prepayment
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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 June of each year that the Certificates are outstanding, commencing
in June 1998.
APPLICABLE CREDIT RATING: A rating of AAA in the case of S&P
and Fitch for any long-term deposit or security or a rating of A-1+, in the case
of S&P, or F-1+ in the case of Fitch, for any short-term deposit or security (or
AAAm or AAAm-G, in the case of S&P, for any Permitted Investment listed in
clause (viii) of the definition thereof).
APPLICABLE STATE LAW: For purposes of Section 9.13(d), the
Applicable State Law shall be (a) the law of the State of New York; and (b) the
law of the Commonwealth of Massachusetts, and (c) such other state law whose
applicability shall have been brought to the attention of the Trustee by either
(i) an Opinion of Counsel delivered to it, or (ii) written notice from the
appropriate taxing authority as to the applicability of such state law.
APPRAISED VALUE: For any Mortgaged Property, the amount set
forth as the appraised value of such Mortgaged Property in an appraisal made for
the mortgage originator in connection with its origination of the related
Mortgage Loan.
ASSUMED FINAL DISTRIBUTION DATE: With respect to each Class
of Certificates, May 25, 2022.
AVAILABLE FUNDS: With respect to any Distribution Date, the
sum of the Group I Available Funds, the Group II Available Funds the Group III
Available Funds, the Group IV Available Funds and the Group V Available Funds
for such Distribution Date.
BANKRUPTCY CODE: The United States Bankruptcy Code, as
amended as codified in 11 U.S.C. ss.ss.101-1330.
BANKRUPTCY LOSS: With respect to any Mortgage Loan, a
Deficient Valuation or Debt Service Reduction.
BENEFIT PLAN OPINION: The meaning specified in Section
5.07(a) hereof.
BOOK-ENTRY CERTIFICATES: Initially, all Classes of
Certificates other than the Class R-1, Class R-2, Class B-4, Class B-5 and Class
B-6 Certificates and if it is subsequently determined in accordance with Section
5.01(a) hereof to cause one or more Classes of the Class B-4, Class B-5 or Class
B-6 Certificates to be deposited with the Depository to provide for book entry
transfers, such Class or Classes to the extent provided in Section 5.02.
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BSMCC: Bear Stearns Mortgage Capital Corporation.
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday,
or (ii) a day on which the New York Stock Exchange is closed or on which banking
institutions in New York City or in Massachusetts are authorized or obligated by
law or executive order to be closed.
CERTIFICATE: Any mortgage pass-through certificate evidencing
a beneficial ownership interest in the Trust Fund signed and countersigned by
the Trustee in substantially the forms annexed hereto as Exhibit A-1, Exhibit
A-2 and Exhibit A-3, with the blanks therein appropriately
completed.
CERTIFICATE ACCOUNT: The trust account or accounts created and
maintained pursuant to Section 4.02, which shall be denominated "State Street
Bank and Trust Company, as Trustee f/b/o holders of Structured Asset Mortgage
Investments Inc. Mortgage Pass-Through Certificates, Series 1998-6 - Certificate
Account" which shall have five subaccounts as provided in Section 4.02.
CERTIFICATE ACCOUNT ADVANCE: As of any Determination Date, the
amount on deposit in a Protected Account or Custody Account which is not
required to be transferred to the Certificate Account for distribution during
the calendar month in which such Determination Date occurs but which is
deposited in a subaccount of the Certificate Account and used to make a
distribution to Certificateholders during such calendar month on account of
Scheduled Payments on the Mortgage Loans due on the Due Date for such month not
being paid on or before such Determination Date except insofar as such unpaid
amounts are the result of application of the Relief Act.
CERTIFICATE OWNER: Any Person who is the beneficial owner of
a Certificate registered in the name of the Depository or its nominee.
CERTIFICATE REGISTER: The register maintained pursuant to
Section 5.02.
CERTIFICATEHOLDER: A Holder of a Certificate.
CLASS: With respect to the Certificates, A-I, A-II, A-III,
A-IV, A-V, B-1, B-2, B-3, B-4, B-5, B-6, R-1 and R-2.
CLASS A CERTIFICATES: Class A-I, Class A-II, Class A-III,
Class A-IV and Class A-V Certificates.
CLASS A-I SENIOR PERCENTAGE: Initially 93.25%. 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, the Class R-1 Certificate and the
Class R-2 Certificate immediately preceding such Distribution Date by the
aggregate Scheduled Principal Balances of all the Group I Mortgage Loans
immediately preceding such Distribution Date.
CLASS A-II SENIOR PERCENTAGE: Initially 93.25%. 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
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Distribution Date by the aggregate Scheduled Principal Balances of all of the
Group II Mortgage Loans immediately preceding such Distribution Date.
CLASS A-III SENIOR PERCENTAGE: Initially 93.25%. On any
Distribution Date, the lesser of (i) 100% and (ii) the percentage (carried to
six places rounded up) obtained by dividing the aggregate Current Principal
Amount of the Class A-III Certificates immediately preceding such Distribution
Date by the aggregate Scheduled Principal Balances of all of the Group III
Mortgage Loans immediately preceding such Distribution Date.
CLASS A-IV SENIOR PERCENTAGE: Initially 93.25%. On any
Distribution Date, the lesser of (i) 100% and (ii) the percentage (carried to
six places rounded up) obtained by dividing the aggregate Current Principal
Amount of the Class A-IV Certificates immediately preceding such Distribution
Date by the aggregate Scheduled Principal Balances of all of the Group IV
Mortgage Loans immediately preceding such Distribution Date.
CLASS A-V SENIOR PERCENTAGE: Initially 93.25%. 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-V Certificates immediately preceding such Distribution
Date by the aggregate Scheduled Principal Balances of all of the Group V
Mortgage
Loans immediately preceding such Distribution Date.
CLASS A-I SENIOR PREPAYMENT PERCENTAGE, CLASS A-II SENIOR
PREPAYMENT PERCENTAGE, CLASS A-III SENIOR PREPAYMENT PERCENTAGE, CLASS A-IV
SENIOR PREPAYMENT PERCENTAGE or CLASS A-V SENIOR PREPAYMENT PERCENTAGE. On any
Distribution Date occurring during the periods for each Class of Class A
Certificates as follows:
PERIOD (DATES INCLUSIVE) SENIOR PREPAYMENT PERCENTAGE
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June 25, 1998 100%
May 25, 2001
June 25, 2001 applicable Senior Percentage, plus 75% of the
May 25, 2002 applicable Subordinate Percentage
June 25, 2002 applicable Senior Percentage, plus 50% of the
May 25, 2003 applicable Subordinate Percentage
June 25, 2003 applicable Senior Percentage, plus 25% of the
May 25, 2004 applicable Subordinate Percentage
June 25, 2004 and thereafter applicable Senior Percentage
Notwithstanding the foregoing, if on any Distribution Date the Class A-I Senior
Percentage, the Class A-II Senior Percentage, the Class A-III Senior Percentage,
the Class A-IV Senior Percentage or the Class A-V Senior Percentage exceeds such
respective Senior Percentage as of the Cut-off Date, the Class A-I Senior
Prepayment Percentage, the Class A-II Senior Prepayment Percentage, the Class
A-III Senior Prepayment Percentage, the Class A-IV Senior Prepayment Percentage
or the Class A-V Senior Prepayment Percentage, respectively, for such
Distribution Date will equal 100%.
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On the Distribution Date on which the aggregate of the Current Principal Amounts
of a Class of Class A Certificates (and any related Residual Certificates) are
reduced to zero, such Class A Certificates' (and any related Residual
Certificate's) Senior Prepayment Percentage shall be the minimum percentage
sufficient to effect such reduction; provided that in the circumstances
described in paragraph (vi) in Section 6.01(a), prepayments resulting from
Mortgage Loans in one Mortgage Loan Group and otherwise distributable to the
Subordinate Certificates will be distributed to the Senior Certificates related
to the other Mortgage Loan Groups.
In addition, notwithstanding the foregoing, no reduction of a Senior Prepayment
Percentage shall occur on any Distribution Date unless, as of the last day of
the month preceding such Distribution Date either (a)(i) the aggregate
Outstanding Principal Balance of Mortgage Loans in all Mortgage Loan Group
delinquent 60 days or more (including for this purpose any Mortgage Loans in
foreclosure and Mortgage Loans with respect to which the related Mortgaged
Property has been acquired by the Trust Fund), averaged over the last six
months, as a percentage of the aggregate Current Principal Amount of the
Subordinate Certificates as of such Distribution Date does not exceed 50% and
(ii) cumulative Realized Losses on the Mortgage Loans in all Mortgage Loan
Groups do not exceed (x) 40% of the Original Subordinate Principal Balance if
such Distribution Date occurs between and including June 2001 and May 2002, (y)
45% of the related Original Subordinate Principal Balance if such Distribution
Date occurs between and including June 2002 and May 2003 and (z) 50% of the
related Original Subordinate Principal Balance if such Distribution Date occurs
during or after June 2003 or (b)(i) the outstanding principal balance of the
Mortgage Loans in all Mortgage Loan Groups delinquent 60 days or more averaged
over the last six months, as a percentage of the aggregate outstanding principal
balance of all of the Mortgage Loans with respect to such Distribution Date does
not exceed 4% and (ii) Realized Losses on the Mortgage Loans in both Mortgage
Loan Groups to date for such Distribution Date are less than 10% of the Original
Subordinate Principal Balance.
CLASS B CURRENT PRINCIPAL AMOUNT: For any Distribution Date,
the aggregate Current Principal Amounts of the Class B Certificates as of such
Distribution Date.
CLOSING DATE: May 29, 1998.
CODE: The Internal Revenue Code of 1986, as amended.
COMPENSATING INTEREST PAYMENTS: As defined in Section 6.08.
CORPORATE TRUST OFFICE: The office of the Trustee at which at
any particular time its corporate trust business is administered, which office,
at the date of the execution of this Agreement, is located at Two International
Place, Boston, Massachusetts 02110, Attention: Corporate Trust Department, ref:
SAMI 1998-6.
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).
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CURRENT PRINCIPAL AMOUNT: With respect to any Certificate as
of any Distribution Date, the initial principal amount of such Certificate
increased by any Deferred Interest previously allocated to such Certificate and
reduced by (A) the sum of (i) all amounts distributed on previous Distribution
Dates on such Certificate with respect to principal, (ii) the principal portion
of all Realized Losses allocated prior to such Distribution Date to such
Certificate, and (iii) in the case of a Subordinate Certificate, such
Certificate's PRO RATA share, if any, of the Subordinate Certificate Writedown
Amount for previous Distribution Dates. With respect to any Class of
Certificates, the Current Principal Amount thereof will equal the sum of the
Current Principal Amounts of all Certificates in such Class. Notwithstanding the
foregoing, solely for purposes of giving consents, directions, waivers,
approvals, requests and notices, the Class R-1 and Class R-2 Certificates after
the Distribution Date on which they each receive the distribution of the last
dollar of their respective original principal amounts shall be deemed to have
Current Principal Amounts equal to their respective Current Principal Amounts on
the day immediately preceding such Distribution Date.
CUSTODY ACCOUNT: A trust account created and maintained
pursuant to Section 4.04.
CUT-OFF DATE: May 1, 1998.
CUT-OFF DATE BALANCE: $283,575,286.60.
DEBT SERVICE REDUCTION: Any reduction of the Scheduled
Payments which a Mortgagor is obligated to pay with respect to a Mortgage Loan
as a result of any proceeding under the Bankruptcy Code or any other similar
state law or other proceeding.
DEBTOR RELIEF LAWS: Any applicable liquidation,
conservatorship, receivership, bankruptcy, insolvency, rearrangement,
moratorium, reorganization, or similar debtor relief laws affecting the rights
of creditors generally from time to time in effect.
DEFAULTED MORTGAGE LOAN: Any Mortgage Loan as to which the
Mortgagor has failed to make unexcused payment in full of three or more
consecutive Scheduled Payments.
DEFERRED INTEREST: The excess of the amount of interest due on
a negatively amortizing Mortgage Loan over the Scheduled Payment due thereon
which is permitted under the terms of the related Mortgage Note to be added to
the principal of the Mortgage Note.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a
valuation of the Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding indebtedness under the Mortgage Loan,
which valuation results from a proceeding initiated under the Bankruptcy Code or
any other similar state law or other proceeding.
DEFINITIVE CERTIFICATES: The meaning specified in Subsection
5.01(b) hereof.
DEPOSITORY: The Depository Trust Company, the nominee of which
is Cede & Co., or any successor thereto.
DEPOSITORY AGREEMENT: The meaning specified in Subsection
5.01(a) hereof.
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DEPOSITORY PARTICIPANT: A broker, dealer, bank or other
financial institution or other Person for whom from time to time the Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
DESIGNATED DEPOSITORY INSTITUTION: A depository institution
(commercial bank, mutual savings bank or savings and loan association) or trust
company (which may include the Trustee), the deposits of which are fully insured
by the FDIC to the extent provided by law.
DETERMINATION DATE: The 18th day of the month of the
Distribution Date, or if such day is not a Business Day, the preceding Business
Day.
DISTRIBUTION DATE: The 25th day of any month, beginning in the
month immediately following the month of the initial issuance of the
Certificates, or, if such 25th day is not a Business Day, the Business Day
immediately following.
DTC CUSTODIAN: State Street Bank and Trust Company, or its
successors in interest as custodian for the Depository.
DUE DATE: With respect to each Mortgage Loan, the date in each
month on which its Scheduled Payment is due if such due date is the first day of
a month and otherwise is deemed to be the first day of the following month.
DUE PERIOD: With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month in which the
Distribution Date occurs and ending at the close of business on the first day of
the month in which the Distribution Date occurs.
EMC: EMC Mortgage Corporation, a Delaware corporation, or its
successors in interest.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
EVENT OF DEFAULT: An event described in Section 8.01.
EXCESS LIQUIDATION PROCEEDS: To the extent that such amount is
not required by law to be paid to the related Mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the
sum of (i) the Outstanding Principal Balance of such Mortgage Loan and accrued
but unpaid interest at the related Mortgage Interest Rate through the last day
of the month in which the related Liquidation Date occurs, plus (ii) related
Liquidation Expenses.
FDIC: Federal Deposit Insurance Corporation or any successor
thereto.
FHA: Federal Housing Authority or any successor thereto.
FHLMC: Federal Home Loan Mortgage Corporation or any successor
thereto.
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FITCH: Fitch IBCA, Inc. and its successors in interest.
FNMA: Federal National Mortgage Association or any successor
thereto.
FRACTIONAL UNDIVIDED INTEREST: With respect to any Class of
Certificates, the fractional undivided interest evidenced by any Certificate of
such Class, the numerator of which is the Current Principal Amount of such
Certificate and the denominator of which is the Current Principal Amount of such
Class. With respect to the Certificates in the aggregate, the fractional
undivided interest evidenced by each of the Class R-1 and R-2 Certificates will
be deemed to equal 1% multiplied by a fraction the numerator of which is the
Current Principal Amount of each such Certificate and the denominator of which
is the aggregate Current Principal Amount of each such Class and (ii) a
Certificate of any other Class will be deemed to equal 98% multiplied by a
fraction, the numerator of which is the Current Principal Amount of such
Certificate and the denominator of which is the Current Principal Amount of all
the Certificates.
FRAUD LOSS: Any Realized Loss attributable to fraud in the
origination of the related Mortgage Loan.
FUNDS TRANSFER DATE: The Business Day prior to the related
Distribution Date in any month or if such day is not a Business Day, the
preceding Business Day.
GLOBAL CERTIFICATE: Any Private Certificate registered in the
name of the Depository or its nominee, beneficial interests in which are
reflected on the books of the Depository or on the books of a Person maintaining
an account with such Depository (directly or as an indirect participant in
accordance with the rules of such Depository). As of the Closing Date there will
be no Global Certificates.
GROSS MARGIN: The amount for each Mortgage Loan which is added
to the applicable Index to determine the Mortgage Interest Rate (subject to the
applicable, Periodic Rate Cap, Maximum Lifetime Mortgage Rate and Minimum
Lifetime Mortgage Rate) as of each Interest Adjustment Date.
GROUP AVAILABLE FUNDS: Reference to any one of the Group I
Available Funds, Group II Available Funds, Group III Available Funds, Group IV
Available Funds or Group V Available Funds.
GROUP I AVAILABLE FUNDS, GROUP II AVAILABLE FUNDS, GROUP III
AVAILABLE FUNDS, GROUP IV AVAILABLE FUNDS or GROUP V AVAILABLE FUNDS: With
respect to any Distribution Date, an amount equal to the aggregate of the
following with respect to each Group Available Funds, respectively: (a) all
previously undistributed payments on account of principal (including the
principal portion of Scheduled Payments, Principal Prepayments and the principal
portion of Net Liquidation Proceeds) and all previously undistributed payments
on account of interest received after the Cut-off Date and on or prior to the
related Determination Date (including any amount required to be paid by the
Master Servicer in respect of interest on Simple Interest Loans), (b) any
Monthly Advances (including Certificate Account Advances) and Compensating
Interest Payments by the Master Servicer with respect to such Distribution Date
and (c) any amount reimbursed by the Master
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Servicer pursuant to Subsections 4.02(d) and 4.04(d) in connection with losses
on Permitted Investments, except:
(i) all payments that were due on or before the
Cut-off Date, except for the principal portion of payments on
Simple Interest Loans due before the Cut-off
Date and received after the Cut-off Date;
(ii) all Principal Prepayments and Liquidation
Proceeds received after the applicable Prepayment Period and
all related payments of interest and any scheduled principal
payments due in the related Due Period on Simple Interest
Loans but
received after the related Prepayment Period;
(iii) all payments, other than Principal Prepayments,
that represent early receipt of Scheduled Payments due on a
date or dates subsequent to the related Due
Date;
(iv) amounts received on particular Mortgage Loans as
late payments of principal or interest and respecting which,
and to the extent that, there are any unreimbursed Monthly
Advances (including Certificate Account Advances);
(v) amounts of Monthly Advances (including
Certificate Account Advances) determined to be Nonrecoverable
Advances;
(vi) amounts permitted to be withdrawn from the
Certificate Account pursuant to Subsection 4.03(a); and
(vii) amounts withdrawn by the Trustee pursuant to
Subsection 4.03(b) to pay the Trustee's Fee and expenses
pursuant to Section 9.05.
GROUP I MORTGAGE LOANS: The Mortgage Loans identified as such
on the Mortgage Loan Schedule.
GROUP II MORTGAGE LOANS: The Mortgage Loans identified as such
on the Mortgage Loan Schedule.
GROUP III MORTGAGE LOANS: The Mortgage Loans identified as
such on the Mortgage Loan Schedule.
GROUP IV MORTGAGE LOANS: The Mortgage Loans identified as such
on the Mortgage Loan Schedule.
GROUP V MORTGAGE LOANS: The Mortgage Loans identified as such
on the Mortgage Loan Schedule.
GROUP I SENIOR OPTIMAL PRINCIPAL AMOUNT, GROUP II SENIOR
OPTIMAL PRINCIPAL AMOUNT, GROUP III SENIOR OPTIMAL PRINCIPAL AMOUNT, GROUP IV
SENIOR OPTIMAL PRINCIPAL AMOUNT
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or GROUP V SENIOR OPTIMAL PRINCIPAL AMOUNT: As to any Distribution Date, an
amount equal to the sum, without duplication, of:
(i) the Class A-I Senior Percentage, the Class A-II Senior
Percentage, the Class A-III Senior Percentage, the Class A-IV Senior
Percentage or the Class A-V Senior Percentage, respectively, of the sum
of (a) Scheduled Principal due on the related Due Date on each
Outstanding Mortgage Loan (other than a Simple Interest Loan) in the
related Mortgage Loan Group as of such Due Date as specified in the
amortization schedule at the time applicable thereto (after adjustments
for previous Principal Prepayments and the principal portion of Debt
Service Reductions but before any adjustment to such amortization
schedule by reason of any bankruptcy (except as aforesaid) or similar
proceeding or any moratorium or similar waiver or grace period) and (b)
actual payments of principal received on each Simple Interest Loan in
the related Mortgage Loan Group during the related Prepayment Period;
(ii) the Class A-I Senior Prepayment Percentage, the Class
A-II Senior Prepayment Percentage, the Class A-III Senior Prepayment
Percentage, the Class A-IV Senior Prepayment Percentage or the Class
A-V Senior Prepayment Percentage, respectively, of all Voluntary
Principal Prepayments in part on Mortgage Loans in the Mortgage Group
received during the related Prepayment Period, together with the Class
A-I Senior Prepayment Percentage, the Class A-II Senior Prepayment
Percentage, the Class A-III Senior Prepayment Percentage, the Class
A-IV Senior Prepayment Percentage or the Class A-V Senior Prepayment
Percentage, respectively, of the Scheduled Principal Balance of each
Mortgage Loan in the related Mortgage Loan Group which was the subject
of a Voluntary Principal Prepayment in full during the related
Prepayment Period;
(iii) the lesser of (x) the Class A-I Senior Prepayment
Percentage, the Class A-II Senior Prepayment Percentage, the Class
A-III Senior Prepayment Percentage, the Class A- IV Senior Prepayment
Percentage or the Class A-V Senior Prepayment Percentage, respectively,
of the sum of (A) all Net Liquidation Proceeds allocable to principal
received in respect of each Mortgage Loan in the related Mortgage Loan
Group that became a Liquidated Mortgage Loan during the related
Prepayment Period (other than Mortgage Loans in the related Mortgage
Loan Group described in clause (B)) and (B) the Scheduled Principal
Balance of each such Mortgage Loan purchased by an Insurer from the
Trustee during the related Prepayment Period pursuant to the related
Primary Mortgage Insurance Policy; and (y) the Class A-I Senior
Prepayment Percentage, the Class A-II Senior Prepayment Percentage, the
Class A-III Senior Prepayment Percentage, the Class A-IV Senior
Prepayment Percentage or the Class A-V Senior Prepayment Percentage,
respectively, of the sum of (A) the Scheduled Principal Balance of each
Mortgage Loan in the related Mortgage Loan Group that became a
Liquidated Mortgage Loan during the related Prepayment Period (other
than Mortgage Loans in the related Mortgage Loan Group described in
clause (B)) and (B) the Scheduled Principal Balance of each such
Mortgage Loan that was purchased by an Insurer from the Trustee during
the related Prepayment Period pursuant to the related Primary Mortgage
Insurance Policy;
(iv) the Class A-I Senior Prepayment Percentage, the Class
A-II Senior Prepayment Percentage, the Class A-III Senior Prepayment
Percentage, the Class A-IV Senior
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Prepayment Percentage or the Class A-V Senior Prepayment Percentage,
respectively, of the Scheduled Principal Balance of each Mortgage Loan
in the related Mortgage Loan Group which was purchased on such
Distribution Date pursuant to Section 2.02, 2.04A(b) or
3.19;
and
(v) the Class A-I Senior Prepayment Percentage, the Class A-II
Senior Prepayment Percentage, the Class A-III Senior Prepayment
Percentage, the Class A-IV Senior Prepayment Percentage or the Class
A-V Senior Prepayment Percentage, respectively, of the difference, if
any, between the Scheduled Principal Balance of a Mortgage Loan in the
related Mortgage Loan Group that has been replaced by the Master
Servicer with a Substitute Mortgage Loan pursuant to Section 2.05
during the month of such Distribution Date and the Scheduled Principal
Balance of such Substitute Mortgage Loan.
GROUP I SUBORDINATE PERCENTAGE: On any Distribution Date, 100%
minus the applicable Class A-I Senior Percentage.
GROUP II SUBORDINATE PERCENTAGE: On any Distribution Date,
100% minus the applicable Class A-II Senior Percentage.
GROUP III SUBORDINATE PERCENTAGE: On any Distribution Date,
100% minus the applicable Class A-III Senior Percentage.
GROUP IV SUBORDINATE PERCENTAGE: On any Distribution Date,
100% minus the applicable Class A-IV Senior Percentage.
GROUP V SUBORDINATE PERCENTAGE: On any Distribution Date, 100%
minus the applicable Class A-V Senior Percentage.
GROUP I SUBORDINATE PREPAYMENT PERCENTAGE, GROUP II
SUBORDINATE PREPAYMENT PERCENTAGE, GROUP III SUBORDINATE PREPAYMENT PERCENTAGE,
GROUP IV SUBORDINATE PREPAYMENT PERCENTAGE or GROUP V SUBORDINATE PREPAYMENT
PERCENTAGE: On any Distribution Date, 100% minus the applicable Class A-I Senior
Prepayment Percentage, Class A-II Senior Prepayment
Percentage,
Class A-III Senior Prepayment Percentage, Class A-IV Senior Prepayment
Percentage or the Class A-V Senior Prepayment Percentage, respectively, except
that on any Distribution Date after the Current Principal Amounts of the Class
A-I Certificates and Residual Certificates, Class A-II Certificates, Class A-III
Certificates, Class A-IV Certificates and Class A-V Certificates, respectively,
have each been reduced to zero, the Group I Subordinate Prepayment Percentage,
Group II Subordinate Prepayment Percentage, Group III Subordinate Prepayment
Percentage, Group IV Subordinate Prepayment Percentage or Group V 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
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whether the requisite percentage of Fractional Undivided Interests necessary to
effect any such consent has been obtained.
INDEMNIFIED PERSONS: The Trustee, its officers, directors,
agents and employees and any separate co-trustee.
INDEPENDENT: When used with respect to any specified Person,
this term means that such Person (a) is in fact independent of the Seller or the
Master Servicer and of any Affiliate of the Seller or the Master Servicer, (b)
does not have any direct financial interest or any material indirect financial
interest in the Seller or the Master Servicer, or any Affiliate of the Seller or
the Master Servicer, and (c) is not connected with the Seller or the Master
Servicer, or any Affiliate as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
INDEX: The index, if any, specified in a Mortgage Note by
reference to which the related Mortgage Interest Rate will be adjusted from time
to time.
INDIVIDUAL CERTIFICATE: Any Private Certificate registered in
the name of the Holder other than the Depository or its nominee.
INSTITUTIONAL ACCREDITED INVESTOR: Any Person meeting the
requirements of Rule 501 (a)(1), (2), (3) or (7) of Regulation D under the
Securities Act.
INSURANCE POLICY: With respect to any Mortgage Loan, any
Primary Mortgage Insurance Policy, standard hazard insurance policy, flood
insurance policy or title insurance policy.
INSURANCE PROCEEDS: Amounts paid by the insurer under any
Insurance Policy covering any Mortgage Loan or Mortgaged Property other than
amounts required to be paid over to the Mortgagor pursuant to law or the related
Mortgage Note or Security Instrument and other than amounts used to repair or
restore the Mortgaged Property or to reimburse Insured Expenses.
INSURED EXPENSES: Expenses covered by any Insurance Policy.
INSURER: Any issuer of an Insurance Policy.
INTEREST ACCRUAL PERIOD: With respect to each Distribution
Date, for each Class of Certificates, the calendar month preceding the month in
which the Distribution Date occurs, commencing in May 1998.
INTEREST ADJUSTMENT DATE: With respect to a Mortgage Loan, the
date, if any, specified in the related Mortgage Note on which the Mortgage
Interest Rate is subject to adjustment.
INTEREST SHORTFALL: With respect to any Distribution Date and
each Mortgage Loan that during the related Prepayment Period was the subject of
a Voluntary Principal Prepayment, or constitutes a Relief Act Mortgage Loan, an
amount determined as follows:
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(a) partial principal prepayments: The difference between (i)
one month's interest at the applicable Net Rate on the amount of such prepayment
and (ii) the amount of interest for the calendar month of such prepayment
(adjusted to the applicable Net Rate) received at the time of such repayment;
(b) principal prepayments in full received during the relevant
Prepayment Period: The difference between (i) one month's interest at the
applicable Net Rate on the Scheduled Principal Balance of such Mortgage Loan
immediately prior to such prepayment and (ii) the amount of interest for the
calendar month of such prepayment (adjusted to the applicable Net Rate) received
at the time of such prepayment;
(c) Relief Act Mortgage Loans: As to any Relief Act Mortgage
Loan, the excess of (i) 30 days' interest (or, in the case of a principal
prepayment in full, interest to the date of prepayment) on the Scheduled
Principal Balance thereof (or, in the case of a principal prepayment in part, on
the amount so prepaid) at the related Net Rate over (ii) 30 days' interest (or,
in the case of a principal prepayment in full, interest to the date of
prepayment) on such Scheduled Principal Balance (or, in the case of a Principal
Prepayment in part, on the amount so prepaid) at the Net Rate required to be
paid by the Mortgagor as limited by application of the Relief Act.
INVESTMENT LETTER: The letter to be furnished by each
Institutional Accredited Investor which purchases Class B-4, Class B-5 and Class
B-6 Certificates in connection with such purchase, substantially in the form set
forth as Exhibit F-1 hereto.
LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan as to
which the Master Servicer has determined that all amounts it expects to recover
from or on account of such Mortgage Loan have been recovered.
LIQUIDATION DATE: With respect to any Liquidated Mortgage
Loan, the date on which the Master Servicer has certified that such Mortgage
Loan has become a Liquidated Mortgage Loan.
LIQUIDATION EXPENSES: With respect to a Mortgage Loan in
liquidation, unreimbursed expenses paid or incurred by or for the account of the
Master Servicer and not recovered by the Master Servicer under any Primary
Mortgage Insurance Policy for reasons other than the Master Servicer's failure
to ensure the maintenance of or compliance with a Primary Mortgage Insurance
Policy, such expenses including (a) property protection expenses, (b) property
sales expenses, (c) foreclosure and sale costs, including court costs and
reasonable attorneys' fees, and (d) similar expenses reasonably paid or incurred
in connection with liquidation.
LIQUIDATION PROCEEDS: Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through trustee's sale,
foreclosure sale, Insurance Proceeds, condemnation proceeds or otherwise.
LOAN SUMMARY AND REMITTANCE REPORT: The report to be submitted
by the Master Servicer to the Trustee pursuant to Subsection 6.06(b).
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LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage,
the numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the Original Value of the related Mortgaged
Property.
LOSS ALLOCATION LIMITATION: The meaning specified in Section
6.03(c) hereof.
MASTER SERVICER: With respect to the Mortgage Loans, EMC, or
its successor in interest, or any successor master servicer with respect to the
Mortgage Loans appointed as herein provided.
MASTER SERVICING FEE: As to any Mortgage Loan and Distribution
Date, an amount equal to the product of (i) the Scheduled Principal Balance of
such Mortgage Loan as of the Due Date in the preceding calendar month and (ii)
the Master Servicing Fee Rate.
MASTER SERVICING FEE RATE: With respect to each Mortgage Loan,
the per annum rate of 0.375%.
MAXIMUM LIFETIME MORTGAGE RATE: The maximum level to which a
Mortgage Interest Rate can adjust in accordance with its terms, regardless of
changes in the applicable Index.
MINIMUM LIFETIME MORTGAGE RATE: The minimum level to which a
Mortgage Interest Rate can adjust in accordance with its terms, regardless of
changes in the applicable Index.
MONTHLY ADVANCE: The advance (including a Certificate Account
Advance) required to be made by the Master Servicer on the related Advancing
Date pursuant to Section 6.07.
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 2.05 and held as a part of the Trust
Fund, as identified in the Mortgage Loan Schedule, including a mortgage loan the
property securing which has become an REO
Property.
MORTGAGE LOAN GROUP: Any one of Mortgage Loan Group I,
Mortgage Loan Group II, Mortgage Loan Group III, Mortgage Loan Group IV or
Mortgage Loan Group V.
MORTGAGE LOAN GROUP I: The group of Mortgage Loans which is
composed of the Group I Mortgage Loans.
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MORTGAGE LOAN GROUP II: The group of Mortgage Loans which is
composed of the Group II Mortgage Loans.
MORTGAGE LOAN GROUP III: The group of Mortgage Loans which is
composed of the Group III Mortgage Loans.
MORTGAGE LOAN GROUP IV: The group of Mortgage Loans which is
composed of the Group IV Mortgage Loans.
MORTGAGE LOAN GROUP V: The group of Mortgage Loans which is
composed of the Group V Mortgage Loans.
MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase
Agreement dated as of May 29, 1998, among BSMCC, as seller and Structured Asset
Mortgage Investments Inc., as purchaser, and all amendments thereof and
supplements thereto.
MORTGAGE LOAN SCHEDULE: The schedule, attached hereto as
Exhibit B with respect to the Mortgage Loans and as amended from time to time to
reflect the repurchase or substitution of Mortgage Loans pursuant to this
Agreement, which shall separately identify the Group I Mortgage Loans, the Group
II Mortgage Loans, the Group III Mortgage Loans, the Group IV Mortgage Loans and
the Group V Mortgage Loans.
MORTGAGE NOTE: The originally executed note or other evidence
of the indebtedness of a Mortgagor under the related Mortgage Loan.
MORTGAGED PROPERTY: Land and improvements securing the
indebtedness of a Mortgagor under the related Mortgage Loan or, in the case of
REO Property, such REO Property.
MORTGAGOR: The obligor on a Mortgage Note.
NET INTEREST SHORTFALL: With respect to any Distribution Date,
the Interest Shortfall, if any, for such Distribution Date net of Compensating
Interest Payments made with respect to such Distribution Date.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of (i) Liquidation Expenses which are payable therefrom
to the Master Servicer in accordance with this Agreement and (ii) unreimbursed
advances by the related Sub-Servicer and Monthly Advances including Certificate
Account Advances.
NET RATE: With respect to each Mortgage Loan, the Mortgage
Interest Rate in effect from time to time less the sum of the Master Servicing
Fee and the Trustee's Fees (expressed as a per annum rate).
NONRECOVERABLE ADVANCE: Any advance (i) which was previously
made or is proposed to be made by the Master Servicer and (ii) which, in the
good faith judgment of the Master Servicer, as evidenced by an Officer's
Certificate, will not or, in the case of a proposed advance,
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would not, be ultimately recoverable by the Master Servicer from Liquidation
Proceeds, Insurance Proceeds or future payments on the Mortgage Loan for which
such advance was made.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of
the Board, the Vice Chairman of the Board, the President or a Vice President or
Assistant Vice President of the Master
Servicer and delivered to the Trustee, as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel who is or are
acceptable to the Trustee and who, unless required to be Independent (an
"Opinion of Independent Counsel"), may be internal counsel for the Master
Servicer.
ORIGINAL SUBORDINATE PRINCIPAL BALANCE: The sum of the
aggregate Current Principal Amounts of each Class of Subordinate Certificates as
of the Cut-off Date.
ORIGINAL VALUE: The lesser of (i) the Appraised Value or (ii)
sales price of a Mortgaged Property at the time of origination of a Mortgage
Loan, except that in instances where either (i) or (ii) is unavailable, the
other may be used to determine Original Value, or if both (i) and (ii) are
unavailable, Original Value may be determined from other sources reasonably
acceptable to the Trustee.
OUTSTANDING MORTGAGE LOAN: With respect to any Due Date, a
Mortgage Loan which, prior to such Due Date, was not the subject of a Principal
Prepayment in full, did not become a Liquidated Mortgage Loan and was not
purchased pursuant to Sections 2.02, 2.03 or 3.19 or replaced
pursuant to Section 2.05.
OUTSTANDING PRINCIPAL BALANCE: As of the time of any
determination, the principal balance of a Mortgage Loan remaining to be paid by
the Mortgagor, or, in the case of an REO Property, the principal balance of the
related Mortgage Loan remaining to be paid by the Mortgagor at the time such
property was acquired by the Trust Fund less any Net Insurance Proceeds with
respect thereto to the extent applied to principal.
PASS-THROUGH RATE: As to each Class of Certificates, the rate
of interest set forth, or determined as provided with respect thereto, in
Section 5.01. Any monthly calculation of interest at a stated rate shall be
based upon annual interest at such rate divided by twelve.
PERIODIC RATE CAP: With respect to each Mortgage Loan, the
maximum adjustment that can be made to the Mortgage Interest Rate on each
Interest Adjustment Date in accordance with its terms, regardless of changes in
the applicable Index.
PERMITTED INVESTMENTS: Any one or more of the following
obligations or securities:
(i) direct obligations of, and obligations fully
guaranteed by the United States of America or any agency or
instrumentality of the United States of America the
obligations of which are backed by the full faith and credit
of the United States of America;
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(ii) demand or time deposits, federal funds or
bankers' acceptances issued by any depository institution or
trust company incorporated under the laws of the United States
of America or any state thereof (including the Trustee acting
in its commercial banking capacity) and subject to supervision
and examination by federal and/or state banking authorities,
provided that the commercial paper and/or the short-term
deposit rating and/or the long-term unsecured debt obligations
or deposits of such depository institution or trust company at
the time of such investment or contractual commitment
providing for such investment have the Applicable Credit
Rating or better from each Rating Agency and (b) any other
demand or time deposit or certificate of deposit that is fully
insured by the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with respect to (a) any
security described in clause (i) above or (b) any other
security issued or guaranteed by an agency or instrumentality
of the United States of America, the obligations of which are
backed by the full faith and credit of the United States of
America, in either case entered into with a depository
institution or trust company (acting as principal) described
in clause (ii)(a) above where the Trustee holds the security
therefor;
(iv) securities bearing interest or sold at a
discount issued by any corporation (including the Trustee)
incorporated under the laws of the United States of America or
any state thereof that have the Applicable Credit Rating or
better from each Rating Agency at the time of such investment
or contractual commitment providing for such investment;
PROVIDED, HOWEVER, that securities issued by any particular
corporation will not be Permitted Investments to the extent
that investments therein will cause the then outstanding
principal amount of securities issued by such corporation and
held as part of the Trust to exceed 10% of the aggregate
Outstanding Principal Balances and amounts of all the Mortgage
Loans and Permitted Investments held as part of the Trust;
(v) commercial paper (including both
noninterest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more
than one year after the date of issuance thereof) having the
Applicable Credit Rating or better from each Rating Agency at
the time of such investment;
(vi) a Reinvestment Agreement issued by any bank,
insurance company or other corporation or entity;
(vii) any other demand, money market or time deposit,
obligation, security or investment as may be acceptable to
each Rating Agency; and
(viii) any money market funds (including, without
limitation, State Street's "Federated Money Market Account")
the collateral of which consists of obligations fully
guaranteed by the United States of America or any agency or
instrumentality of the United States of America the
obligations of which are backed by the full faith and credit
of the United States of America (which may include repurchase
obligations
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secured by collateral described in clause (i)) and having
the Applicable Credit Rating or better from each Rating
Agency;
PROVIDED, HOWEVER, that no instrument or security shall be a Permitted
Investment if such instrument or security evidences a right to receive only
interest payments with respect to the obligations underlying such instrument or
if such security provides for payment of both principal and interest with a
yield to maturity in excess of 120% of the yield to maturity at par.
PERSON: Any individual, corporation, partnership, joint
venture, association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
PHYSICAL CERTIFICATES: The Class R-1, Class R-2, Class B-4,
Class B-5 and Class B-6 Certificates; provided that as set forth in Section
5.01(a), if one or more Classes of Class B-4, Class B-5 and/or Class B-6
Certificates have become Book-Entry Certificates, then with respect to such
Class or Classes, only to the extent provided in Section 5.02.
PREPAYMENT DISTRIBUTION TRIGGER: For a Class of Subordinate
Certificates for any Distribution Date, the related Prepayment Distribution
Trigger is satisfied if the fraction (expressed as a percentage), the numerator
of which is the aggregate Current Principal Amount of such Class and each Class
of Subordinate Certificates subordinate thereto, if any, and the denominator of
which is the Scheduled Principal Balances of all of the Mortgage Loans as of the
related Due Date, equals or exceeds such percentage calculated as of the Closing
Date.
PREPAYMENT PERIOD: With respect to any Mortgage Loan and any
Distribution Date, the calendar month preceding the month of such Distribution
Date.
PRIMARY MORTGAGE INSURANCE POLICY: Any primary mortgage
guaranty insurance policy issued in connection with a Mortgage Loan which
provides compensation to a Mortgage Note holder in the event of default by the
obligor under such Mortgage Note or the related Security Instrument, or any
replacement policy therefor.
PRINCIPAL PREPAYMENT: Any payment (whether partial or full) or
other recovery of principal on a Mortgage Loan which is received in advance of
its scheduled Due Date to the extent that it is not accompanied by an amount as
to interest representing scheduled interest due on any date or dates in any
month or months subsequent to the month of prepayment, including Insurance
Proceeds and the purchase price in connection with any purchase of a Mortgage
Loan, any cash deposit in connection with the substitution of a Mortgage Loan,
and the principal portion of Net Liquidation Proceeds.
PRIVATE CERTIFICATE: Any Class B-4, Class B-5 or Class B-6
Certificate.
PROTECTED ACCOUNT: A trust account established and maintained
by the Master Servicer or any Sub-Servicer with respect to the Mortgage Loans
and with respect to REO Property in a Designated Depository Institution for
receipt of principal and interest and other amounts as
described in Section 4.01.
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QUALIFIED INSURER: Any insurance company duly qualified as
such under the laws of the state or states in which the related Mortgaged
Property or Mortgaged Properties is or are located, duly authorized and licensed
in such state or states to transact the type of insurance business in which it
is engaged and approved as an insurer by the Master Servicer, so long as the
claims paying ability of which is acceptable to the Rating Agencies for
pass-through certificates having the same rating as the Certificates rated by
the Rating Agencies as of the Closing Date.
RATING AGENCIES: S&P and Fitch.
RATING AGENCY ELIGIBLE ACCOUNT: An account, including one
maintained with the Trustee, which either (i) is a trust account maintained with
the trust department of a depository institution or trust company (including the
Trustee) organized under the laws of the United States of America or any one of
the states thereof or the District of Columbia or (ii) is maintained with an
entity which is an institution whose deposits are insured by the FDIC, the
unsecured and uncollateralized long-term debt obligations of which shall be
rated "A" or better by S&P and Fitch, or one of the two highest short-term
ratings by S&P and Fitch, and which is either (a) a federal savings association
duly organized, validly existing and in good standing under the federal banking
laws, (b) an institution duly organized, validly existing and in good standing
under the applicable banking laws of any state, (c) a national banking
association under the federal banking laws, or (d) a principal subsidiary of a
bank holding company.
REALIZED LOSS: Any (i) Deficient Valuation or (ii) as to any
Liquidated Mortgage Loan, (x) the Outstanding Principal Balance of such
Liquidated Mortgage Loan plus accrued and unpaid interest thereon at the
Mortgage Interest Rate through the last day of the month of such liquidation
LESS (y) the related Net Liquidation Proceeds.
RECORD DATE: With respect to any Distribution Date, the close
of business on the last Business Day of the month immediately preceding the
month of such Distribution Date.
REINVESTMENT AGREEMENTS: One or more reinvestment agreements,
acceptable to the Rating Agencies, from a bank, insurance company or other
corporation or entity (including the Trustee).
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
RELIEF ACT MORTGAGE LOAN: Any Mortgage Loan as to which the
Scheduled Payment thereof has been reduced due to the application of the Relief
Act.
REMIC: A real estate mortgage investment conduit, as defined
in the Code.
REMIC I: That group of assets contained in the Trust Fund
designated as a REMIC consisting of the REMIC II Regular Certificates.
REMIC II: That group of assets contained in the Trust Fund
designated as a REMIC consisting of (i) the Mortgage Loans, (ii) the Certificate
Account, (iii) any REO Property and (iv) any proceeds of the foregoing. Expenses
and fees of the Trust shall be paid by REMIC II.
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REMIC II CERTIFICATES: The REMIC II Regular Certificates and
the Class R-2 Certificates.
REMIC II REGULAR CERTIFICATES: As defined in Section 5.01.
REMIC OPINION: An Opinion of Independent Counsel, to the
effect that the proposed action described therein would not, under the REMIC
Provisions, (i) cause the REMIC to fail to qualify as a REMIC while any regular
interest in the REMIC is outstanding, (ii) result in a tax on prohibited
transactions or (iii) constitute a taxable contribution after the Startup Day.
REMIC PROVISIONS: The provisions of the federal income tax law
relating to REMICs, which appear at Sections 860A through 860G of the Code, and
related provisions and regulations promulgated thereunder, as the foregoing may
be in effect from time to time.
REO PROPERTY: A Mortgaged Property acquired in the name of the
Trustee, for the benefit of Certificateholders, by foreclosure or deed-in-lieu
of foreclosure in connection with a defaulted Mortgage Loan.
REPURCHASE PRICE: With respect to any Mortgage Loan (or any
property acquired with respect thereto) required to be repurchased pursuant to
Section 2.02 or 2.03 an amount equal to the sum of (i) 100% of the Outstanding
Principal Balance of such Mortgage Loan as of the date of repurchase (or if the
related Mortgaged Property was acquired with respect thereto, 100% of the
Outstanding Principal Balance at the date of the acquisition) plus (ii) accrued
but unpaid interest on the Outstanding Principal Balance at the related Mortgage
Interest Rate, through and including the last day of the month of repurchase
reduced by (ii) any portion of the Master Servicing Fee or advances payable to
the purchaser of the Mortgage Loan.
REQUEST FOR RELEASE: A request for release in the form
attached hereto as Exhibit D.
REQUIRED INSURANCE POLICY: With respect to any Mortgage Loan,
any insurance policy which is required to be maintained from time to time under
this Agreement with respect to such Mortgage Loan.
RESIDUAL CERTIFICATES: The Class R-1 and Class R-2
Certificates.
RESPONSIBLE OFFICER: Any officer assigned to the corporate
trust department or similar department of the Trustee (or any successor division
or department thereto), and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
RULE 144A CERTIFICATE: The certificate to be furnished by each
purchaser of a Private Certificate which is a Qualified Institutional Buyer as
defined under Rule 144A promulgated under the Securities Act, substantially in
the form set forth as Exhibit F-2 hereto.
S&P: Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors in interest.
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SCHEDULED PAYMENT: With respect to any Mortgage Loan and any
month, the scheduled payment or payments of principal and interest due during
such month on such Mortgage Loan which either is payable by a Mortgagor in such
month under the related Mortgage Note or, in the case of REO Property, would
otherwise have been payable under the related Mortgage Note.
SCHEDULED PRINCIPAL: The principal portion of any Scheduled
Payment.
SCHEDULED PRINCIPAL BALANCE: With respect to any Mortgage Loan
on any Distribution Date, (i) (a) in the case of each Mortgage Loan other than a
Mortgage Loan that is a Simple Interest Loan, the unpaid principal balance of
such Mortgage Loan as of the close of business on the related Due Date (i.e.,
taking account of the principal payment to be made on such Due Date and
irrespective of any delinquency in its payment), as specified in the
amortization schedule at the time relating thereto (before any adjustment to
such amortization schedule by reason of any bankruptcy or similar proceeding
occurring after the Cut-off Date (other than a Deficient Valuation) or any
moratorium or similar waiver or grace period) or (b) in the case of a Simple
Interest Loan, the actual principal balance of such Mortgage Loan as of the
Cut-off Date less the principal portion of all scheduled payments made thereon
during the related Prepayment Period plus (ii) in the case of each Mortgage Loan
which negatively amortizes, any Deferred Interest added to principal through
such Due Date and less (iii) any Principal Prepayments (including the principal
portion of Net Liquidation Proceeds) received during or prior to the related
Prepayment Period; provided that the Scheduled Principal Balance of a Liquidated
Mortgage Loan is zero.
SECURITIES ACT: The Securities Act of 1933, as amended.
SECURITIES LEGEND: THIS CERTIFICATE HAS NOT BEEN AND WILL NOT
BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE.
THE
HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY
BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH
THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A
"QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR"
WITHIN THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) or (7) (OR ANY ENTITY IN
WHICH ALL OF THE EQUITY HOLDERS COME WITHIN SUCH PARAGRAPHS) OF REGULATION D
UNDER THE SECURITIES ACT PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUSTEE OF A LETTER
SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND (B) AN OPINION OF
COUNSEL AS TO COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED
STATES. THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON
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BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING,
MANAGEMENT AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN
ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED
TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60, PTE 96-23
OR SECTION 401(C) OF ERISA AND THE REGULATIONS PROMULGATED THEREUNDER AND (II)
WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF THE SELLER,
THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER
OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A
REPRESENTATION OR AN OPINION OF COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF A
HOLDER OF A PRIVATE CERTIFICATE.
SECURITY INSTRUMENT: A written instrument creating a valid
first lien on a Mortgaged Property securing a Mortgage Note, which may be any
applicable form of mortgage, deed of trust, deed to secure debt or security
deed, including any riders or addenda thereto.
SELLER: Bear Stearns Mortgage Securities Inc., a Delaware
corporation, or its successors in interest.
SENIOR CERTIFICATES: The Class A-I, Class A-II, Class A-III,
Class A-IV, Class A-V, Class R-1 and Class R-2 Certificates.
SENIOR PERCENTAGE: The Class A-I Senior Percentage, the Class
A-II Senior Percentage, the Class A-III Senior Percentage, the Class A-IV Senior
Percentage or the Class A-V Senior Percentage.
SENIOR PREPAYMENT PERCENTAGE: The Class A-I Senior Prepayment
Percentage, the Class A-II Senior Prepayment Percentage, the Class A-III Senior
Prepayment Percentage, the Class A-IV Senior Prepayment Percentage or the Class
A-V Senior Prepayment Percentage.
SERVICING ACCOUNT: The separate trust account(s) created and
maintained by the Master Servicer or each Sub-Servicer with respect to the
Mortgage Loans or with respect to REO Property in a Designated Depository
Institution for collection of taxes, assessments, insurance premiums and
comparable items as described in Section 3.07.
SERVICING ADVANCES: All reasonable and customary "out of
pocket" costs and expenses incurred in the performance by the Master Servicer of
its servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property, including reasonable fees paid
to any independent contractor in connection therewith, (iv) compliance with the
obligations under Section 3.07 or 3.10, and (v) in
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connection with the liquidation of a Mortgage Loan, expenditures relating to the
purchase or maintenance of the first lien on the Mortgaged Property pursuant to
Section 3.12, all of which reasonable and customary out-of-pocket costs and
expenses are reimbursable to the Servicer to the
extent provided in Sections 4.02(b) and 4.03(b).
SERVICING OFFICER: Any officer of the Master Servicer or of an
agent or independent contractor through which all or part of the Master
Servicer's master servicing responsibilities are carried out, involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee by the Master Servicer as such list may from time to time be amended
in accordance with the foregoing.
SIMPLE INTEREST LOAN: A Mortgage Loan that provides for a
daily accrual of interest.
SPECIAL HAZARD LOSS: (i) A Realized Loss suffered by a
Mortgaged Property on account of direct physical loss, exclusive of (a) any loss
covered by a hazard policy or a flood insurance policy required to be maintained
in respect of such Mortgaged Property under Section 3.10 and (b) any loss caused
by or resulting from:
(1) normal wear and tear;
(2) conversion or other dishonest act on the part of the
Trustee, the Master Servicer or any of their agents or employees; or
(3) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a part thereof ensues;
or (ii) any Realized Loss suffered by the Trust Fund arising from or related to
the presence or suspected presence of hazardous wastes or hazardous substances
on a Mortgaged Property unless such loss to a Mortgaged Property is covered by a
hazard policy or a flood insurance policy required to be maintained in respect
of such Mortgaged Property under Section 3.10.
STARTUP DAY: May 29, 1998.
SUBORDINATE CERTIFICATE WRITEDOWN AMOUNT: As to any
Distribution Date, the amount by which (a) the sum of the Current Principal
Amounts of all the Certificates (after giving effect to the distribution of
principal and the allocation of Realized Losses in reduction of the Current
Principal Amounts of the Certificates on such Distribution Date) exceeds (b) the
aggregate Scheduled Principal Balances of the Mortgage Loans on the first day of
the month of such Distribution Date.
SUBORDINATE CERTIFICATES: Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5 and Class B-6 Certificates.
SUBORDINATE OPTIMAL PRINCIPAL AMOUNT: As to any Distribution
Date, an amount equal to the sum, without duplication, of the following (but in
no event greater than the aggregate
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Current Principal Amounts of the Subordinate Certificates immediately prior to
such Distribution Date):
(i) the Group I Subordinate Percentage, the Group II
Subordinate Percentage, the Group III Subordinate Percentage, the Group
IV Subordinate Percentage or the Group V Subordinate Percentage, as
applicable, of the sum of (a) Scheduled Principal due on the related
Due Date on each Outstanding Mortgage Loan (other than Simple Interest
Loans) in the related Mortgage Loan Group as of such Due Date as
specified in the amortization schedule at the time applicable thereto
(after adjustment for previous Principal Prepayments, but before any
adjustment to such amortization schedule by reason of any bankruptcy
(other than as aforesaid) or similar proceeding or any moratorium or
similar waiver or grace period) and (b) actual payments of principal
received on each Simple Interest Loan in the related Mortgage Loan
Group during the related Prepayment Period;
(ii) the Group I Subordinate Prepayment Percentage,
the Group II Subordinate Prepayment Percentage, the Group III
Subordinate Prepayment Percentage, the Group IV Subordinate Prepayment
Percentage or the Group V Subordinate Prepayment Percentage, as
applicable, of all Voluntary Principal Prepayments in part on Mortgage
Loans in the related Mortgage Group received during the related
Prepayment Period, together with the Group I Subordinate Prepayment
Percentage, Group II Subordinate Prepayment Percentage, Group III
Subordinate Prepayment Percentage or Group IV Subordinate Prepayment
Percentage, as applicable, of the Scheduled Principal Balance of each
Mortgage Loan in the related Mortgage Loan Group which was the subject
of a Voluntary Principal Prepayment in full during the related
Prepayment Period;
(iii) the excess, if any, of (x) the sum of (A) all
Net Liquidation Proceeds allocable to principal on Mortgage Loans in
the related Mortgage Loan Group received during the related Prepayment
Period (other than in respect of Mortgage Loans described in clause
(B)) and (B) the Scheduled Principal Balance of each Mortgage Loan in
the related Mortgage Loan Group that was purchased by an Insurer from
the Trustee during the related Prepayment Period pursuant to the
related Primary Mortgage Insurance Policy, over (y) the sum of the
amounts distributable pursuant to clause (iii) of the definitions of
Group I Senior Optimal Principal Amount, Group II Senior Optimal
Principal Amount, Group III Senior Optimal Principal Amount, Group IV
Senior Optimal Principal or Group V Senior Optimal Principal,
respectively, on such Distribution Date;
(iv) the Group I Subordinate Prepayment Percentage,
Group II Subordinate Prepayment Percentage, Group III Subordinate
Prepayment Percentage, Group IV Subordinate Prepayment Percentage or
Group V Subordinate Prepayment Percentage, respectively, of the
Scheduled Principal Balance of each Mortgage Loan in the related
Mortgage Loan Group which was purchased on such Distribution Date
pursuant to Section 2.02, 2.04(b) or 3.19;
(v) the Group I Subordinate Prepayment Percentage,
Group II Subordinate Prepayment Percentage, Group III Subordinate
Prepayment Percentage, Group IV Subordinate Prepayment Percentage or
Group V Subordinate Prepayment Percentage,
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respectively, of the difference, if any, between the Scheduled
Principal Balance of a Mortgage Loan in the related Mortgage Loan Group
that has been replaced by the Master Servicer with a Substitute
Mortgage Loan pursuant to Section 2.05 during the month of such
Distribution Date and the Scheduled Principal Balance of such
Substitute Mortgage
Loan;
and
(vi) 100% of any Group I Senior Optimal Principal Amount,
Group II Senior Optimal Principal Amount, Group III Senior Optimal
Principal Amount or Group IV Senior Optimal Principal Amount, as
applicable, not distributed to the related Senior Certificates on such
Distribution Date.
After the aggregate Current Principal Amounts of the Subordinate Certificates
have been reduced to zero, the Group I Subordinate Optimal Principal Amount,
Group II Subordinate Optimal Principal Amount, Group III Subordinate Optimal
Principal Amount, Group IV Subordinate Optimal Principal Amount and Group V
Subordinate Optimal Principal Amount, shall each be zero.
SUBORDINATE PERCENTAGE: A Group I Subordinate Percentage,
Group II Subordinate Percentage, Group III Subordinate Percentage, Group IV
Subordinate Percentage or Group V Subordinate Percentage.
SUBORDINATE PREPAYMENT PERCENTAGE: A Group I Subordinate
Prepayment Percentage, Group II Subordinate Prepayment Percentage, Group III
Subordinate Prepayment Percentage, Group IV Subordinate Prepayment Percentage or
Group V 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 2.05, in each case, in the opinion of the Master
Servicer, (i) which has an Outstanding Principal Balance not materially greater
nor materially less than the Mortgage Loan for which it is to be substituted;
(ii) which has a Mortgage Interest Rate and Net Rate not less than, and not
materially greater than, such Mortgage Loan; (iii) which has a maturity date not
materially earlier or later than such Mortgage Loan and not later than the
latest maturity date of any Mortgage Loan; (iv) which is of the same property
type and occupancy type as such Mortgage Loan; (v) which has a Loan-to-Value
Ratio not greater than the Loan-to-Value Ratio of such Mortgage Loan; (vi) which
is current in payment of principal and interest as of the date of substitution;
(vii) as to which the payment terms do not vary in any material respect from the
payment terms of the Mortgage Loan for which it is to be substituted; and (viii)
which has a Gross Margin, Periodic Rate Cap and Maximum Lifetime Mortgage Rate
no less than those of such Mortgage Loan, has the same Index and interval
between Interest Adjustment Dates as such Mortgage Loan, and a Minimum Lifetime
Mortgage Rate no lower than that of such Mortgage Loan. The opinion of the
Master Servicer shall be evidenced by an Officer's Certificate delivered to the
Trustee.
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TAX MATTERS PERSON: For each of REMIC I and REMIC II, the
Holder of the greatest Fractional Undivided Interest in the related Class R-1
and Class R-2 Certificates, respectively, as more particularly set forth in
Section 9.13 hereof.
TRUST FUND or TRUST: The corpus of the trust created by this
Agreement, consisting of the Mortgage Loans and the other assets described in
Section 2.01(a).
TRUSTEE: State Street Bank and Trust Company, or its successor
in interest, or any successor trustee appointed as herein provided.
TRUSTEE'S FEES: With respect to each Distribution Date, the
amount to be paid to the Trustee calculated monthly on a Mortgage Loan by
Mortgage Loan basis, equal to the sum of (i) with respect to each Mortgage Loan
which has been prepaid in full during the related Prepayment Period, the product
of (a) the amount of the Principal Prepayment, (b) 0.01125% 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 0.01125%.
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.
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ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. CONVEYANCE OF MORTGAGE LOANS TO TRUSTEE. (a) The
Seller concurrently with the execution and delivery of this Agreement, sells,
transfers and assigns to the Trustee without recourse all its right, title and
interest in and to (i) the Mortgage Loans identified in the Mortgage Loan
Schedule, including all interest and principal due with respect to the Mortgage
Loans after the Cut-off Date, but excluding any payments of principal and
interest due on or prior to the Cut-off Date; (ii) such assets as shall from
time to time be credited or are required by the terms of this Agreement to be
credited to the Certificate Account (excluding any income to the Master Servicer
from Permitted Investments under Subsection 4.02(d)), (iii) such assets relating
to the Mortgage Loans as from time to time may be held by the Master Servicer or
a Sub-Servicer in Protected Accounts (excluding any income to the Master
Servicer or any Sub-Servicer from Permitted Investments under Subsection
4.01(a)), (iv) such assets relating to the Mortgage Loans as from time to time
may be held by the Trustee in the Custody Account (excluding any income to the
Master Servicer from Permitted Investments under Section 4.04(d)), (v) any
Servicing Accounts (to the extent the mortgagee has a claim thereto and
excluding any income to the Master Servicer or Sub-Servicer or interest payable
to Mortgagors pursuant to applicable law), (vi) any REO Property, (vii) the
Required Insurance Policies and any amounts paid or payable by the insurer under
any Insurance Policy (to the extent the mortgagee has a claim thereto), (viii)
the Mortgage Loan Purchase Agreement to the extent provided in Subsection
2.04(a), and (ix) any proceeds of the foregoing. Although it is the intent of
the parties to this Agreement that the conveyance of the Seller's right, title
and interest in and to the Mortgage Loans and other assets in the Trust Fund
pursuant to this Agreement shall constitute a purchase and sale and not a loan,
in the event that such conveyance is deemed to be a loan, it is the intent of
the parties to this Agreement that the Seller shall be deemed to have granted to
the Trustee a first priority perfected security interest in all of the Seller's
right, title and interest in, to and under the Mortgage Loans and other assets
in the Trust Fund, and that this Agreement shall constitute a security agreement
under applicable law.
(b) In connection with the above transfer and assignment, the
Seller hereby deposits with the Trustee, with respect to each Mortgage Loan, (i)
the original Mortgage Note, endorsed without recourse to the order of the
Trustee and showing an unbroken chain of endorsements from the original payee
thereof to the Person endorsing it to the Trustee, (ii) the original Security
Instrument, which shall have been recorded, with evidence of such recording
indicated thereon, (iii) the assignment (which may be in the form of a blanket
assignment if permitted in the jurisdiction in which the Mortgaged Property is
located) to the Trustee of the Security Instrument, with evidence of recording
with respect to each Mortgage Loan in the name of the Trustee thereon, (iv) all
intervening assignments of the Security Instrument, if applicable and only to
the extent available to the Seller with evidence of recording thereon, (v) the
original or a copy of the policy or certificate of primary mortgage guaranty
insurance, to the extent available, if any, and (vi) originals of all
modification agreements, if applicable and available; PROVIDED, HOWEVER, that in
lieu of the foregoing, the Seller may deliver the following documents, under the
circumstances set forth below: (x) in lieu of the original Security Instrument
or intervening assignments thereof which have been delivered or are being
delivered to recording offices for recording and have not
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been returned to the Seller in time to permit their delivery as specified above,
the Seller may deliver a true copy thereof with a certification by BSMCC, on the
face of such copy, substantially as follows: "Certified to be a true and correct
copy of the original, which has been transmitted for recording"; (y) in lieu of
the Security Instrument, assignment to the Trustee or intervening assignments
thereof, if the applicable jurisdiction retains the originals of such documents
(as evidenced by a certification from BSMCC to such effect) the Seller may
deliver photocopies of such documents containing an original certification by
the judicial or other governmental authority of the jurisdiction where such
documents were recorded; and (z) in lieu of the Mortgage Notes relating to the
22 Mortgage Loans, with an aggregate Scheduled Principal Balance as of the
Cut-off Date of approximately $1,247,757, each as identified in the list
delivered by the Seller to the Trustee on the Closing Date, the Seller may
deliver a lost note affidavit and, if available, a copy of the original Mortgage
Note; and PROVIDED, FURTHER, HOWEVER, that in the case of Mortgage Loans which
have been prepaid in full after the Cutoff Date and prior to the Closing Date,
the Seller, in lieu of delivering the above documents, may deliver to the
Trustee a certification of a Servicing Officer to such effect and shall deposit
all amounts paid in respect of such Mortgage Loans in the Certificate Account on
the Closing Date. The Seller shall deliver such original documents (including
any original documents as to which certified copies had previously been
delivered) to the Trustee promptly after they are received. The Master Servicer
shall cause, at its expense, the Security Instrument and intervening
assignments, if any, and the assignment of the Security Instrument to the
Trustee to be recorded not later than 180 days after the Closing Date.
Section 2.02. ACCEPTANCE OF MORTGAGE LOANS BY TRUSTEE. (a) The
Trustee acknowledges receipt of, subject to its further review and the
exceptions it notes pursuant to the procedures described below, the documents
(or certified copies thereof) delivered to it pursuant to Section 2.01 and
declares that it holds and will continue to hold those documents and any
amendments, replacements or supplements thereto and all other assets of the
Trust Fund delivered to it as Trustee in trust for the use and benefit of all
present and future Holders of the Certificates. No later than 45 days after the
Closing Date (or, with respect to any Substitute Mortgage Loan, within 5 days
after the receipt by the Trustee thereof), the Trustee agrees, for the benefit
of the Certificateholders, to review each Mortgage File delivered to it and to
execute and deliver, or cause to be executed and delivered, to the Seller and
the Master Servicer an Initial Certification substantially in the form annexed
hereto as Exhibit G. In conducting such review, the Trustee will ascertain
whether all required documents have been executed and received and whether those
documents relate, determined on the basis of the Mortgagor name, original
principal balance and loan number, to the Mortgage Loans it has received, as
identified in Exhibit B to this Agreement, as supplemented (PROVIDED, HOWEVER,
that with respect to those documents described in subclauses (b)(iv), (b)(v) and
(b)(vi) of Section 2.01, the Trustee's obligations shall extend only to
documents actually delivered pursuant to such subsections). In performing any
such review, the Trustee may conclusively rely on the purported due execution
and genuineness of any such document and on the purported genuineness of any
signature thereon. If the Trustee finds any document constituting part of the
Mortgage File not to have been executed or received, or to be unrelated to the
Mortgage Loans identified in Exhibit B or to appear to be defective on its face,
the Trustee shall promptly notify BSMCC. BSMCC shall correct or cure any such
defect within 60 days from the date of notice from the Trustee of the defect and
if BSMCC fails to correct or cure the defect within such period, and such defect
materially and adversely affects the interests of the Certificateholders in the
related Mortgage Loan, BSMCC, will, subject to Section 2.05, within 90 days from
the Trustee's
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notification purchase such Mortgage Loan at the Repurchase Price; PROVIDED,
HOWEVER, that if such defect relates solely to the inability of BSMCC to deliver
the original Security Instrument or intervening assignments thereof, or a
certified copy because the originals of such documents, or a certified copy have
not been returned by the applicable jurisdiction, BSMCC shall not be required to
purchase such Mortgage Loan if BSMCC delivers such original documents or
certified copy promptly upon receipt, but in no event later than 360 days after
the Closing Date.
(b) No later than 180 days after the Closing Date, the Trustee
will review, for the benefit of the Certificateholders, the Mortgage Files
delivered to it and will execute and deliver or cause to be executed and
delivered to the Seller and the Master Servicer, a Final Certification
substantially in the form annexed hereto as Exhibit H. In conducting such
review, the Trustee will ascertain whether an original of each document required
to be recorded has been returned from the recording office with evidence of
recording thereon or a certified copy has been obtained from the recording
office. If the Trustee finds any document constituting part of the Mortgage File
has not been received, or to be unrelated, determined on the basis of the
Mortgagor name, original principal balance and loan number, to the Mortgage
Loans identified in Exhibit B or to appear defective on its face, the Trustee
shall promptly notify BSMCC. BSMCC shall correct or cure any such defect or
shall deliver to the Trustee an Opinion of Counsel to the effect that such
defect does not materially or adversely affect the interests of
Certificateholders in such Mortgage Loan within 60 days from the date of notice
from the Trustee of the defect and if BSMCC is unable to cure such defect within
such period, and if such defect materially and adversely affects the interests
of the Certificateholders in the related Mortgage Loan, BSMCC shall, subject to
Section 2.05, within 90 days from the Trustee's notification purchase such
Mortgage Loan at the Repurchase Price; PROVIDED, HOWEVER, that if such defect
relates solely to the inability of BSMCC to deliver the original Security
Instrument or intervening assignments thereof, or a certified copy, because the
originals of such documents, or a certified copy, have not been returned by the
applicable jurisdiction, BSMCC shall not be required to purchase such Mortgage
Loan, if BSMCC delivers such original documents or certified copy promptly upon
receipt, but in no event later than 360 days after the Closing Date.
(c) In the event that a Mortgage Loan is purchased by BSMCC in
accordance with Subsections 2.02(a) or (b) above or Section 3.19, BSMCC shall
cause the Repurchase Price to be deposited in the appropriate subaccount of the
Certificate Account and shall provide written notification of such deposit
(which notification shall detail the components of the Repurchase Price), signed
by a Servicing Officer, to the Trustee. Upon deposit of the Repurchase Price in
the appropriate subaccount of the Certificate Account, the Trustee shall release
to BSMCC the related Mortgage File and shall execute and deliver all instruments
of transfer or assignment, without recourse, furnished to it by BSMCC as are
necessary to vest in BSMCC title to and rights under the Mortgage Loan. Such
purchase shall be deemed to have occurred on the date on which certification of
the deposit of the Repurchase Price in the Certificate Account was received by
the Trustee. The Trustee shall amend the Mortgage Loan Schedule to reflect such
repurchase and shall promptly notify the Master Servicer and the Rating Agencies
of such amendment. The obligation of BSMCC to repurchase any Mortgage Loan as to
which such a defect in a constituent document exists shall be the sole remedy
respecting such defect available to the Certificateholders or to the Trustee on
their behalf.
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Section 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
MASTER Servicer. (a) EMC hereby represents and warrants to the Trustee as of the
Closing Date that:
(i) It is a corporation duly organized, validly
existing and in good standing under the laws of the state of
its incorporation and is in good standing as a foreign
corporation in each jurisdiction where such qualification is
necessary and throughout the term of this Agreement will
remain a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation
or any state of reincorporation and in good standing as a
foreign corporation in each jurisdiction where such
qualification is necessary (except, in the case of foreign
corporation qualification both on the date hereof and in the
future, where the failure so to qualify would not reasonably
be expected to have a material adverse effect on the Master
Servicer's ability to enter into this Agreement or to perform
its obligations hereunder), and has the corporate power and
authority to perform its obligations under this Agreement;
(ii) The execution and delivery of this Agreement
have been duly authorized by all requisite corporate action;
(iii) This Agreement, assuming due authorization,
execution, and delivery by the other parties hereto, will
constitute its legal, valid and binding obligation,
enforceable in accordance with its terms, except only as such
enforcement may be limited by applicable Debtor Relief Laws
and that certain equitable remedies may not be available
regardless of whether enforcement is sought in equity or at
law;
(iv) Its execution and delivery of this Agreement and
its performance and compliance with the terms of this
Agreement will not (A) violate its certificate of
incorporation or bylaws (B) to its knowledge, violate any law
or regulation, or any administrative or judicial decree or
order to which it is subject or (C) constitute a default (or
an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any
material contract, agreement or other instrument to which it
is a party or which may be applicable to it or any of its
assets;
(v) To its best knowledge, after reasonable
investigation, it is not in default with respect to any order
or decree of any court or any order, regulation or demand of
any federal, state, municipal or governmental agency, which
default would reasonably be expected to have consequences that
would materially and adversely affect its financial condition
or operations or its performance hereunder;
(vi) It does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every
covenant contained in this Agreement to be performed by it;
(vii) The consummation of the transactions
contemplated by this Agreement are in the ordinary course of
its business; and
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(viii) No litigation is pending or, to its best
knowledge, threatened against it, which could be reasonably
expected to materially and adversely affect its entering into
this Agreement or performing its obligations under this
Agreement or which would have a material adverse effect on its
financial condition.
Section 2.04. ASSIGNMENT OF INTEREST IN THE MORTGAGE LOAN
PURCHASE Agreement. (a) The Seller hereby assigns to the Trustee, on behalf of
the Certificateholders, all of its right, title and interest in the Mortgage
Loan Purchase Agreement (but none of its obligations) insofar as such contract
relates to the representations and warranties set forth in Exhibit C hereto
regarding the Mortgage Loans (including the substitution and repurchase
obligations of BSMCC; provided that the obligations of BSMCC to substitute or
repurchase a Mortgage Loan shall be the Trustee's and the Certificateholder's
sole remedy for any breach thereof. At the request of the Trustee, the Seller
shall take such actions as may be necessary to enforce the above right, title
and interest on behalf of the Trustee and the Certificateholders or shall
execute such further documents as the Trustee may reasonably require in order to
enable the Trustee to carry out such enforcement.
(b) If the Seller, BSMCC, the Master Servicer or the Trustee
discovers a breach of any of the representations and warranties set forth in
Exhibit C or Section 7 of the Mortgage Loan Purchase Agreement, and such breach
existed on the date the representation and warranty was made, which breach
materially and adversely affects the value of the interests of
Certificateholders or the Trustee in the related Mortgage Loan, the party
discovering the breach shall give prompt written notice of the breach to the
other parties. BSMCC within 60 days of its discovery or receipt of notice that
such breach has occurred (whichever occurs earlier), shall cure the breach in
all material respects or, subject to Section 2.05, shall purchase the Mortgage
Loan or any property acquired with respect thereto from the Trustee; PROVIDED,
HOWEVER, that if there is a breach of any representation set forth in Exhibit C
and the Mortgage Loan or the related property acquired with respect thereto has
been sold, then BSMCC shall pay, in lieu of the Repurchase Price, any excess of
the Repurchase Price over the Net Liquidation Proceeds received upon such sale.
(If the Net Liquidation Proceeds exceed the Repurchase Price, any excess shall
be paid to BSMCC to the extent not required by law to be paid to the borrower.)
Any such purchase by BSMCC shall be made by depositing an amount equal to the
Repurchase Price in the appropriate subaccount of the Certificate Account and
the Trustee, upon receipt of the Repurchase Price and of written notification of
such deposit by a Servicing Officer (which notification shall detail the
components of such Repurchase Price), shall release to BSMCC the related
Mortgage File and shall execute and deliver all instruments of transfer or
assignment furnished to it by BSMCC, without recourse, as are necessary to vest
in BSMCC title to and rights under the Mortgage Loan or any property acquired
with respect thereto. Such purchase shall be deemed to have occurred on the date
on which certification of the deposit of the Repurchase Price in the appropriate
subaccount of the Certificate Account was received by the Trustee. The Trustee
shall amend the Mortgage Loan Schedule to reflect such repurchase and shall
promptly notify the Master Servicer and the Rating Agencies of such amendment.
Enforcement of the obligation of BSMCC to purchase (or substitute a Substitute
Mortgage Loan for) any Mortgage Loan or any property acquired with respect
thereto (or pay the Repurchase Price as set forth in the above proviso) as to
which a breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to the Certificateholders or the Trustee on
their behalf.
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Section 2.05. 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 2.04, BSMCC may, no later than the date by
which such purchase by BSMCC would otherwise be required, tender to the Trustee
a Substitute Mortgage Loan accompanied by an Officer's Certificate of BSMCC that
such Substitute Mortgage Loan conforms to the requirements set forth in the
definition of "Substitute Mortgage Loan"; PROVIDED, HOWEVER, that substitution
pursuant to this Section 2.05 in lieu of purchase shall not be permitted after
the termination of the two-year period beginning on the Startup Day. The Trustee
shall examine the Mortgage File for any Substitute Mortgage Loan in the manner
set forth in Section 2.02(a) and shall notify the Master Servicer in writing,
within five Business Days after receipt, whether or not the documents relating
to the Substitute Mortgage Loan satisfy the requirements of the third sentence
of Subsection 2.02(a). Within two Business Days after such notification, BSMCC
shall deposit in the appropriate subaccount of the Certificate Account the
amount, if any, by which the Outstanding Principal Balance as of the next
preceding Due Date of the Mortgage Loan for which substitution is being made,
after giving effect to Scheduled Principal due on such date, exceeds the
Outstanding Principal Balance as of such date of the Substitute Mortgage Loan,
after giving effect to Scheduled Principal due on such date, which amount shall
be treated for the purposes of this Agreement as if it were the payment by BSMCC
of the Repurchase Price for the purchase of a Mortgage Loan by BSMCC. After such
notification to BSMCC, and, if any such excess exists, upon receipt of such
deposit and of written notification thereof signed by a Servicing Officer, the
Trustee shall accept such Substitute Mortgage Loan, which shall thereafter be
deemed to be a Group I Mortgage Loan, Group II Mortgage Loan, Group III Mortgage
Loan, Group IV Mortgage Loan or Group V Mortgage Loan, as applicable, hereunder.
In the event of such a substitution, accrued interest on the Substitute Mortgage
Loan for the month in which the substitution occurs and any Principal
Prepayments made thereon during such month shall be the property of the Trust
Fund and accrued interest for such month on the Mortgage Loan for which the
substitution is made and any Principal Prepayments made thereon during such
month shall be the property of BSMCC. The Scheduled Principal on a Substitute
Mortgage Loan due on the Due Date in the month of substitution shall be the
property of BSMCC and the Scheduled Principal on the Mortgage Loan for which the
substitution is made due on such Due Date shall be the property of the Trust
Fund. Upon acceptance of the Substitute Mortgage Loan, the Trustee shall release
to BSMCC the related Mortgage File related to any Mortgage Loan released
pursuant to this Section 2.05 and shall execute and deliver all instruments of
transfer or assignment, without recourse, in form as provided to it as are
necessary to vest in BSMCC title to and rights under any Mortgage Loan released
pursuant to this Section 2.05. BSMCC shall deliver the documents related to the
Substitute Mortgage Loan in accordance with the provisions of Subsections
2.01(b) and 2.02(b), with the date of acceptance of the Substitute Mortgage Loan
deemed to be the Closing Date for purposes of the time periods set forth in
those Subsections. The representations and warranties set forth in Exhibit C
shall be deemed to have been made by BSMCC with respect to each Substitute
Mortgage Loan as of the date of acceptance of such Mortgage Loan by the Trustee.
The Trustee shall amend the Mortgage Loan Schedule to reflect such substitution
and shall provide a copy of such amended Mortgage Loan Schedule to the Master
Servicer and the Rating Agencies.
Section 2.06. 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:
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(i) The Trustee is a trust company duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Massachusetts with a principal place of
business in Boston, Massachusetts;
(ii) Subject to the right of the Trustee to appoint a
co-trustee or separate trustee under Section 9.11 hereof in
order to meet the legal requirements of a particular
jurisdiction, the Trustee has full power, authority and legal
right to execute and deliver this Agreement and to perform its
obligations under this Agreement and has taken all necessary
action to authorize the execution, delivery and performance by
it of this Agreement and the Certificates;
(iii) To the best of the Trustee's knowledge, after
reasonable investigation, the execution and delivery by the
Trustee of this Agreement and the Certificates and the
performance by the Trustee of its obligations under this
Agreement and the Certificates will not violate any provision
of the Trustee's Articles of Incorporation or By-Laws or any
law or regulation governing the Trustee or any order, writ,
judgment or decree of any court, arbitrator or governmental
authority or agency applicable to the Trustee or any of its
assets. To the best of the Trustee's knowledge, after
reasonable investigation, such execution, delivery and
performance will not require the authorization, consent or
approval of, the giving of notice to, the filing or
registration with, or the taking of any other action with
respect to, any governmental authority or agency regulating
the activities of a Massachusetts trust company. To the best
of the Trustee's knowledge, after reasonable investigation,
such execution, delivery and performance will not conflict
with, or result in a breach or violation of, any material
indenture, mortgage, deed of trust, lease or other agreement
or instrument to which the Trustee is a party or by which it
or its properties is bound;
(iv) This Agreement has been duly executed and
delivered by the Trustee. This Agreement, when executed and
delivered, will constitute the valid, legal and binding
obligation of the Trustee, enforceable against the Trustee in
accordance with its terms, except as the enforcement thereof
may be limited by applicable Debtor Relief Laws and that
certain equitable remedies may not be available regardless of
whether enforcement is sought in equity or at law; and
(v) All funds received by the Trustee and required to
be deposited in the Certificate Account and the Custody
Account pursuant to this Agreement will be
promptly so deposited.
Section 2.07. 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.
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Section 2.08. 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
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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.
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ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. MASTER SERVICER TO ASSURE SERVICING. (a) The
Master Servicer shall supervise, or take such actions as are necessary to
ensure, the servicing and administration of the Mortgage Loans and any REO
Property in accordance with this Agreement and its normal servicing practices
(including making any Servicing Advances), which generally conform to the
standards of an institution prudently servicing mortgage loans for its own
account and shall have full authority to do anything it reasonably deems
appropriate or desirable in connection with such servicing and administration.
The Master Servicer may perform its responsibilities relating to servicing
through other agents or independent contractors, but shall not thereby be
released from any of its responsibilities as hereinafter set forth. The
authority of the Master Servicer, in its capacity as master servicer, shall
include, without limitation, the power to (i) consult with and advise any Sub-
Servicer regarding administration of a related Mortgage Loan, (ii) approve any
recommendation by a Sub-Servicer to foreclose on a related Mortgage Loan, (iii)
supervise the filing and collection of insurance claims and take or cause to be
taken such actions on behalf of the insured person thereunder as shall be
reasonably necessary to prevent the denial of coverage thereunder, and (iv)
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing a related Mortgage Loan, including the employment of
attorneys, the institution of legal proceedings, the collection of deficiency
judgments, the acceptance of compromise proposals, the filing of claims under
any Primary Mortgage Insurance Policy and any other matter pertaining to a
delinquent Mortgage Loan. The authority of the Master Servicer shall include, in
addition, the power on behalf of the Certificateholders, the Trustee or any of
them to (i) execute and deliver customary consents or waivers and other
instruments and documents, (ii) consent to transfers of any related Mortgaged
Property and assumptions of the related Mortgage Notes and Security Instruments
(in the manner provided in this Agreement) and (iii) collect any Insurance
Proceeds and Liquidation Proceeds. Without limiting the generality of the
foregoing, the Master Servicer may, and is hereby authorized, and empowered by
the Trustee to, execute and deliver, on behalf of itself, the
Certificateholders, the Trustee, or any of them, any instruments of
satisfaction, cancellation, partial or full release, discharge and all other
comparable instruments, with respect to the related Mortgage Loans, the
Insurance Policies and the accounts related thereto, and the Mortgaged
Properties. The Master Servicer may exercise this power in its own name or in
the name of a Sub-Servicer.
(b) Notwithstanding the provisions of Subsection 3.01(a), the
Master Servicer shall not take any action inconsistent with the interest of the
Trustee or the Certificateholders in the Mortgage Loans or with the rights and
interests of the Trustee or the Certificateholders under this
Agreement.
(c) The Trustee shall furnish the Master Servicer with any
powers of attorney and other documents in form as provided to it necessary or
appropriate to enable the Master Servicer to
service and administer the related Mortgage Loans and REO Property.
Section 3.02. SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER
AND SUB- SERVICERS. (a) The Master Servicer may enter into Sub-Servicing
Agreements with Sub-Servicers for the servicing and administration of the
Mortgage Loans and for the performance of any and all
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other activities of the Master Service hereunder. Each Sub-Servicer shall be
either (i) an institution the accounts of which are insured by the FDIC or (ii)
another entity that engages in the business of originating or servicing mortgage
loans, and in either case shall be authorized to transact business in the state
or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the Sub-Servicing
Agreement, and in either case shall be a FHLMC or FNMA approved mortgage
servicer. Any Sub-Servicing Agreement entered into by the Master Servicer shall
include the provision that such Agreement may be immediately terminated (x) with
cause and without any termination fee by any Master Servicer hereunder other
than EMC or (y) without cause in which case the Master Servicer shall be
responsible for any termination fee or penalty resulting therefrom. In addition,
any Sub-Servicing Agreement shall provide for servicing of the Mortgage Loans
consistent with the terms of this Agreement. With the consent of the Trustee,
which consent shall not be unreasonably withheld, the Master Servicer and the
Sub-Servicers may enter into Sub-Servicing Agreements and make amendments to the
Sub-Servicing Agreements or enter into different forms of Sub-Servicing
Agreements; provided, however, that any such amendments or different forms shall
be consistent with and not violate the provisions of this Agreement, and that no
such amendment or different form shall be made or entered into which could be
reasonably expected to be materially adverse to the interests of the
Certificateholders, without the consent of the Holders of Certificates entitled
to at least 51% of the Fractional Undivided Interests of all the Certificates in
the aggregate.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related Sub-Servicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-Servicing Agreements and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good faith business
judgment, would require were it the owner of the related Mortgage Loans. The
Master Servicer shall pay the costs of such enforcement at its own expense, but
shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loans or (ii) from a specific
recovery of costs, expenses or attorneys' fees against the party against whom
such enforcement is directed.
Section 3.03. SUCCESSOR SUB-SERVICERS. The Master Servicer
shall be entitled to terminate any Sub-Servicing Agreement that may exist in
accordance with the terms and conditions of such Sub-Servicing Agreement and
without any limitation by virtue of this Agreement; PROVIDED, HOWEVER, that upon
termination, the Master Servicer shall either act as servicer of the related
Mortgage Loan or enter into an appropriate contract with a successor
Sub-Servicer pursuant to which such successor Sub-Servicer will be bound by all
relevant terms of the related Sub-Servicing Agreement pertaining to the
servicing of such Mortgage Loan.
Section 3.04. LIABILITY OF THE MASTER SERVICER. (a)
Notwithstanding any Sub- Servicing Agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer and
a Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Master Servicer shall under all circumstances remain obligated
and primarily liable to the Trustee and the Certificateholders for the servicing
and administering of the Mortgage Loans and any REO Property in accordance with
this Agreement. The obligations and
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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.
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Section 3.06. COLLECTION OF MORTGAGE LOAN PAYMENTS. (a) The
Master Servicer will coordinate and monitor remittances by Sub-Servicers to the
Trustee with respect to the Mortgage Loans in accordance with this Agreement.
(b) The Master Servicer shall make its reasonable best efforts
to collect or cause to be collected all payments required under the terms and
provisions of the Mortgage Loans and shall follow, and use its best efforts to
cause Sub-Servicers to follow, collection procedures comparable to the
collection procedures of prudent mortgage lenders servicing mortgage loans for
their own account to the extent such procedures shall be consistent with this
Agreement. Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive or permit to be waived any late payment charge, prepayment
charge, assumption fee, or any penalty interest in connection with the
prepayment of a Mortgage Loan and (ii) suspend or reduce or permit to be
suspended or reduced regular monthly payments for a period of up to six months,
or arrange or permit an arrangement with a Mortgagor for a scheduled liquidation
of delinquencies. In the event the Master Servicer shall consent to the
deferment of the due dates for payments due on a Mortgage Note, the Master
Servicer shall nonetheless make a Monthly Advance or shall cause the related
Sub-Servicer to make an advance to the same extent as if such installment were
due, owing and delinquent and had not been deferred through liquidation of the
Mortgaged Property; PROVIDED, HOWEVER, that the obligation of the Master
Servicer to make a Monthly Advance shall apply only to the extent that the
Master Servicer believes, in good faith, that such advances are not
Nonrecoverable Advances.
(c) Notwithstanding anything in this Agreement to the
contrary, the Master Servicer may not make any future advances with respect to a
Mortgage Loan and the Master Servicer shall not (unless the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably foreseeable) permit (i) any modification with
respect to any Mortgage Loan that would change the Mortgage Interest Rate,
reduce or increase the principal balance (except for reductions resulting from
actual payments of principal) or change the final maturity date on such Mortgage
Loan or (ii) any modification, waiver or amendment of any term of any Mortgage
Loan that would both (A) effect an exchange or reissuance of such Mortgage Loan
under Section 1001 of the Code (or final, temporary or proposed Treasury
regulations promulgated thereunder) and (B) cause the Trust Fund to fail to
qualify as a REMIC under the Code or the imposition of any tax on "prohibited
transactions" or "contributions after the startup date" under the REMIC
Provisions. Any extension of the final maturity date of any Mortgage Loan shall
be calculated such that the Mortgage Loan will be paid in full on the reset
final maturity date if the related Mortgagor continues to make its then-current
Monthly Scheduled Payments on a timely basis.
(d) Within five Business Days after the Master Servicer has
determined that all amounts which it expects to recover from or on account of a
Mortgage Loan have been recovered and that no further Liquidation Proceeds will
be received in connection therewith, the Master Servicer shall provide to the
Trustee a certificate of a Servicing Officer that such Mortgage Loan became a
Liquidated Mortgage Loan as of the date of such determination.
Section 3.07. COLLECTION OF TAXES, ASSESSMENTS AND SIMILAR
ITEMS; SERVICING ACCOUNTS. (a) The Master Servicer shall establish and maintain
or cause the Sub-Servicers to establish and maintain, in addition to the
Protected Accounts, one or more Servicing Accounts. The Master Servicer or a
Sub-Servicer will deposit and retain therein all otherwise unapplied collections
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from the Mortgagors, including amounts collected for the payment of taxes,
assessments, insurance premiums, or comparable items as agent of the Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in a
Designated Depository Institution in an account designated as a "Mortgage Loan
Servicing Account," held in trust by the Master Servicer or a Sub-Servicer as
Trustee of Taxes and Insurance Custodial Account for borrowers and for EMC (and
its successors and assigns) acting on its own behalf and for EMC as agent for
holders of various pass-through securities and other interests in mortgage loans
sold by it; and agent for various mortgagors, as their interests may appear or
under such other designation as may be permitted by a Sub-Servicing Agreement.
The amount at any time credited to a Servicing Account must be fully insured by
the FDIC, or, to the extent that such deposits exceed the limits of such
insurance, such excess must be (i) transferred to another fully insured account
in another Designated Depository Institution or (ii) if permitted by applicable
law, invested in Permitted Investments held in trust by the Master Servicer or a
Sub-Servicer as described above and maturing, or be subject to redemption or
withdrawal, no later than the date on which such funds are required to be
withdrawn, and in no event later than 45 days after the date of investment. The
Master Servicer may, or may permit a Sub-Servicer to, establish Servicing
Accounts not conforming to the foregoing requirements to the extent that such
Servicing Accounts are Rating Agency Eligible Accounts. Withdrawals of amounts
from the Servicing Accounts may be made only to effect timely payment of taxes,
assessments, insurance premiums, or comparable items, to transfer previously
unapplied collections to a Protected Account, to reimburse the Master Servicer
or a Sub-Servicer for any advances made with respect to such items, to refund to
any Mortgagors any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Servicing Accounts or to clear and
terminate the Servicing Accounts at or any time after the termination of this
Agreement in accordance with Section 10.01.
Section 3.08. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE MORTGAGE LOANS. The Master Servicer shall provide, and shall cause
any Sub-Servicer to provide, to the Trustee and the Seller access to the
documentation regarding the related Mortgage Loans and REO Property and to the
Certificateholders, the FDIC, and the supervisory agents and examiners of the
FDIC (to which the Trustee shall also provide) access to the documentation
regarding the related Mortgage Loans required by applicable regulations, such
access being afforded without charge but only upon reasonable prior written
request and during normal business hours at the offices of the Master Servicer,
the Sub-Servicers or the Trustee that are designated by these entities;
PROVIDED, HOWEVER, that, unless otherwise required by law, the Trustee, the
Master Servicer or the Sub-Servicer shall not be required to provide access to
such documentation if the provision thereof would violate the legal right to
privacy of any Mortgagor PROVIDED, FURTHER, HOWEVER, that the Trustee and the
Seller shall coordinate their requests for such access so as not to impose an
unreasonable burden on, or cause an interruption of, the business of the Master
Servicer or any Sub-Servicer. The Master Servicer, the Sub-Servicers and the
Trustee shall allow representatives of the above entities to photocopy any of
the documentation and shall provide equipment for that purpose at a charge that
covers their own actual out-of-pocket costs.
Section 3.09. MAINTENANCE OF PRIMARY MORTGAGE INSURANCE
POLICIES; COLLECTION THEREUNDER. The Master Servicer shall, or shall cause the
related Sub-Servicer to, exercise its best reasonable efforts to maintain and
keep in full force and effect each Primary Mortgage Insurance
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Policy by a Qualified Insurer, or other insurer satisfactory to the Rating
Agencies, with respect to each conventional Mortgage Loan as to which as of the
Cut-off Date such a Primary Mortgage Insurance Policy was in effect (or, in the
case of a Substitute Mortgage Loan, the date of substitution) and the original
principal amount of the related Mortgage Note exceeded 80% of the Original Value
in an amount at least equal to the excess of such original principal amount over
75% of such Original Value until the principal amount of any such Mortgage Loan
is reduced below 80% of the Original Value or, based upon a new appraisal, the
principal amount of such Mortgage Loan represents less than 80% of the new
appraised value. The Master Servicer shall, or shall cause the related Sub-
Servicer to, effect the timely payment of the premium on each Primary Mortgage
Insurance Policy. The Master Servicer and the related Sub-Servicer shall have
the power to substitute for any Primary Mortgage Insurance Policy another
substantially equivalent policy issued by another Qualified Insurer; PROVIDED
THAT such substitution is subject to the condition, to be evidenced by a writing
from each Rating Agency, that it would not cause the ratings on the Certificates
to be downgraded or withdrawn.
Section 3.10. MAINTENANCE OF HAZARD INSURANCE AND FIDELITY
COVERAGE. (a) The Master Servicer shall maintain and keep, or cause each
Sub-Servicer to maintain and keep, with respect to each Mortgage Loan and each
REO Property, in full force and effect hazard insurance (fire insurance with
extended coverage) equal to at least the lesser of the Outstanding Principal
Balance of the Mortgage Loan or the current replacement cost of the Mortgaged
Property, and containing a standard mortgagee clause; PROVIDED, HOWEVER, that
the amount of hazard insurance may not be less than the amount necessary to
prevent loss due to the application of any co-insurance provision of the related
policy. Unless applicable state law requires a higher deductible, the deductible
on such hazard insurance policy may be no more than $1000 or 1% of the
applicable amount of coverage, whichever is less. In the case of a condominium
unit or a unit in a planned unit development, the required hazard insurance
shall take the form of a multiperil policy covering the entire condominium
project or planned unit development, in an amount equal to at least 100% of the
insurable value based on replacement cost.
(b) Any amounts collected by the Master Servicer or a
Sub-Servicer under any such hazard insurance policy (other than amounts to be
applied to the restoration or repair of the Mortgaged Property or amounts
released to the Mortgagor in accordance with the Master Servicer's or a
Sub-Servicer's normal servicing procedures, the terms of the Mortgage Note, the
Security Instrument or applicable law) shall be deposited initially in a
Protected Account, for transmittal to the appropriate subaccount of the
Certificate Account or Custody Account, subject to withdrawal pursuant to
Section 4.03.
(c) Any cost incurred by a Master Servicer or a Sub-Servicer
in maintaining any such hazard insurance policy shall not be added to the amount
owing under the Mortgage Loan for the purpose of calculating monthly
distributions to Certificateholders, notwithstanding that the terms of the
Mortgage Loan so permit. Such costs shall be recoverable by the Master Servicer
or a Sub- Servicer out of related late payments by the Mortgagor or out of
Insurance Proceeds or Liquidation Proceeds or by the Master Servicer from the
Repurchase Price, to the extent permitted by Section 4.03.
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(d) No earthquake or other additional insurance is to be
required of any Mortgagor or maintained on property acquired with respect to a
Security Instrument other than pursuant to such applicable laws and regulations
as shall at any time be in force and shall require such additional insurance.
Each year, in accordance with standards and procedures required by FHLMC, the
Master Servicer shall perform a review of the Mortgage Loans to determine which,
if any, of the Mortgaged Properties are located in a federally designated
special flood hazard area and for each Mortgaged Property found to be located in
a federally designated special flood hazard area, the Master Servicer shall use
its best reasonable efforts to cause with respect to the Mortgage Loans and each
REO Property, flood insurance (to the extent available and in accordance with
mortgage servicing industry practice) to be maintained. Such flood insurance
shall cover the Mortgaged Property, including all items taken into account in
arriving at the Appraised Value on which the Mortgage Loan was based, and shall
be in an amount equal to the lesser of (i) the Outstanding Principal Balance of
the related Mortgage Loan and (ii) the minimum amount required under the terms
of coverage to compensate for any damage or loss on a replacement cost basis,
but not more than the maximum amount of such insurance available for the related
Mortgaged Property under either the regular or emergency programs of the
National Flood Insurance Program (assuming that the area in which such Mortgaged
Property is located is participating in such program). Unless applicable state
law requires a higher deductible, the deductible on such flood insurance may not
exceed $1,000 or 1% of the applicable amount of coverage, whichever is less.
(e) If insurance has not been maintained complying with
Subsections 3.10(a) and (d) and there shall have been a loss which would have
been covered by such insurance had it been maintained, the Master Servicer shall
pay, or cause the related Sub-Servicer to pay, for any necessary repairs.
(f) The Master Servicer shall present, or cause the related
Sub-Servicer to present, if it is a permitted claimant, claims under the related
hazard insurance or flood insurance policy.
(g) The Master Servicer shall obtain and maintain at its own
expense and for the duration of this Agreement a blanket fidelity bond and shall
cause each Sub-Servicer to obtain and maintain an errors and omissions insurance
policy covering such Sub-Servicer's officers, employees and other persons acting
on its behalf in connection with its activities under this Agreement. The amount
of coverage shall be at least equal to the coverage maintained by the Master
Servicer acceptable to FNMA or FHLMC to service loans for it or otherwise in an
amount as is commercially available at a cost that is generally not regarded as
excessive by industry standards. The Master Servicer shall promptly notify the
Trustee of any material change in the terms of such bond or policy. The Master
Servicer shall provide annually to the Trustee a certificate of insurance that
such bond and policy are in effect. If any such bond or policy ceases to be in
effect, the Master Servicer shall, to the extent possible, give the Trustee ten
days' notice prior to any such cessation and shall use its best efforts to
obtain a comparable replacement bond or policy, as the case may be. Any amounts
relating to the Mortgage Loans collected under such bond or policy shall be
remitted to the appropriate subaccount of the Certificate Account to the extent
that such amounts have not previously been paid to such account.
Section 3.11. DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. (a)
In any case in which the Master Servicer is notified by any Mortgagor or
Sub-Servicer that a Mortgaged Property
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relating to a Mortgage Loan has been or is about to be conveyed by the
Mortgagor, the Master Servicer shall enforce, or shall instruct such
Sub-Servicer to enforce, any due-on-sale clause contained in the related
Security Instrument to the extent permitted under the terms of the related
Mortgage Note and by applicable law unless the Master Servicer reasonably
believes such enforcement is likely to result in legal action by the Mortgagor.
The Master Servicer or the related Sub-Servicer may purchase a Mortgage Loan at
the Repurchase Price when the Master Servicer requires acceleration of the
Mortgage Loan, but only if the Master Servicer is satisfied, as evidenced by an
Officer's Certificate delivered to the Trustee, that either (i) such Mortgage
Loan is in default or default is reasonably foreseeable or (ii) if such Mortgage
Loan is not in default or default is not reasonably foreseeable, such repurchase
will have no adverse tax consequences for the Trust Fund or any
Certificateholder. If the Master Servicer reasonably believes that such
due-on-sale clause cannot be enforced under applicable law or if the Mortgage
Loan does not contain a due-on-sale clause, the Master Servicer is authorized,
and may authorize any Sub-Servicer, to consent to a conveyance subject to the
lien of the Mortgage, and to take or enter into an assumption agreement from or
with the Person to whom such property has been or is about to be conveyed,
pursuant to which such Person becomes liable under the related Mortgage Note and
unless prohibited by applicable state law, such Mortgagor remains liable
thereon, on condition, however, that the related Mortgage Loan shall continue to
be covered (if so covered before the Master Servicer or the related Sub-Servicer
enters into such agreement) by any Primary Mortgage Insurance Policy. The Master
Servicer shall notify the Trustee, whenever possible, before the completion of
such assumption agreement, and shall forward to the Trustee the original copy of
such assumption agreement, which copy shall be added by the Trustee to the
related Mortgage File and which shall, for all purposes, be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. In connection with any such assumption agreement,
the interest rate on the related Mortgage Loan shall not be changed and no other
material alterations in the Mortgage Loan shall be made unless such material
alteration would not cause the REMIC to fail to qualify as a REMIC for federal
income tax purposes, as evidenced by a REMIC Opinion. If the interest rate on an
assumed Mortgage Loan is increased due to both (i) permitted increases upon
assumption under the terms of such Mortgage Loan and (ii) all applicable
restrictions hereunder being satisfied, the Master Servicer shall, as part of
the report to the Trustee and the Seller pursuant to Section 6.06(b) hereof,
provide therefor on a revised Mortgage Loan Schedule. Any fee or additional
interest collected by the Master Servicer or Sub-Servicer for consenting to any
such conveyance or entering into any such assumption agreement may be retained
by the Master Servicer or the related Sub- Servicer as additional servicing
compensation.
(b) Notwithstanding the foregoing paragraph or any other
provision of this Agreement, the Master Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason of
any assumption of a Mortgage Loan by operation of law or any conveyance by the
Mortgagor of the related Mortgaged Property or assumption of a Mortgage Loan
which the Master Servicer reasonably believes, based on prudent servicing
standards, it may be restricted by law from preventing, for any reason
whatsoever or if the exercise of such right would impair or threaten to impair
any recovery under any applicable Insurance Policy, or, in the Master Servicer's
judgment, be reasonably, likely to result in legal action by the Mortgagor or
would adversely affect the Certificateholders.
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Section 3.12. REALIZATION UPON DEFAULTED MORTGAGE LOANS. (a)
The Master Servicer shall, or shall direct the related Sub-Servicer to,
foreclose upon or otherwise comparably convert the ownership of properties
securing any Mortgage Loans that come into and continue in default and as to
which no satisfactory arrangements can be made for collection of delinquent
payments pursuant to Section 3.06 except that the Master Servicer shall not, and
shall not direct the related Sub- Servicer, if any, to, foreclose upon or
otherwise comparably convert a Mortgaged Property if there is evidence of
environmental hazards or toxic waste thereon and the Master Servicer determines
it would be imprudent to do so or not in accordance with appropriate servicing
standards. The Master Servicer can conclusively rely on results of third party
inspections from parties it reasonably believes are qualified to conduct such
inspections. In connection with such foreclosure or other conversion, the Master
Servicer in conjunction with the related Sub-Servicer, if any, shall use its
best reasonable efforts to preserve REO Property and to realize upon defaulted
Mortgage Loans in such manner as to maximize the receipt of principal and
interest by the Certificateholders, taking into account, among other things, the
timing of foreclosure and the considerations set forth in Subsection 3.12(b).
The foregoing is subject to the proviso that the Master Servicer shall not be
required to expend its own funds in connection with any foreclosure or towards
the restoration of any property unless it determines in good faith (i) that such
restoration or foreclosure will increase the proceeds of liquidation of the
Mortgage Loan to Certificateholders after reimbursement to itself for such
expenses and (ii) that such expenses will be recoverable to it either through
Liquidation Proceeds (respecting which it shall have priority for purposes of
reimbursements from the Certificate Account pursuant to Section 4.03) or through
Insurance Proceeds (respecting which it shall have similar priority). The Master
Servicer shall be responsible for all other costs and expenses incurred by it in
any such proceedings; PROVIDED, HOWEVER, that it shall be entitled to
reimbursement thereof (as well as its normal servicing compensation), and in
respect of the Master Servicer only, to receive Excess Liquidation Proceeds (to
the extent not otherwise payable to the holders of the Subordinate Certificates
pursuant to Section 6.03(i)) 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 before the close of the
third taxable year following the year of 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 three-year period under Section 856(e)(3) of the Code, in which case such
three 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.
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
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connection with such payment which are required to be deposited in the
Certificate Account have been or will be so deposited in the appropriate
subaccount thereof) and shall request delivery to the Master Servicer or a
Sub-Servicer, as the case may be, of the Mortgage File. Upon receipt of such
certification and request, the Trustee shall promptly release the related
Mortgage File to the Master Servicer or a Sub-Servicer and execute and deliver
to the Master Servicer, without recourse, the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument releasing
the lien of the Security Instrument (furnished by the Master Servicer), together
with the Mortgage Note with written evidence of cancellation thereon. No
expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Certificate Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan or collection under a Required Insurance
Policy, the Master Servicer shall deliver to the Trustee a Request for Release
signed by a Servicing Officer on behalf of the Master Servicer in substantially
the form attached as Exhibit D hereto. Upon receipt of the Request for Release,
the Trustee shall deliver the Mortgage File or any document therein to the
Master Servicer or Sub- Servicer, as the case may be.
(c) The Master Servicer shall cause each Mortgage File or any
document therein released pursuant to Subsection 3.13(b) to be returned to the
Trustee when the need therefor no longer exists, and in any event within 21 days
of the Master Servicer's receipt thereof, unless the Mortgage Loan has become a
Liquidated Mortgage Loan and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the appropriate subaccount of the Certificate
Account or such Mortgage File is being used to pursue foreclosure or other legal
proceedings. Prior to return of a Mortgage File or any document to the Trustee,
the Master Servicer, the related Insurer or Sub- Servicer to whom such file or
document was delivered shall retain such file or document in its respective
control unless the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law, to
initiate or pursue legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non-judicially, and the Master Servicer
has delivered to the Trustee a certificate of a Servicing Officer certifying as
to the name and address of the Person to which such Mortgage File or such
document was delivered and the purpose or purposes of such delivery. If a
Mortgage Loan becomes a Liquidated Mortgage Loan, the Master Servicer shall
deliver the Request for Release with respect thereto to the Trustee upon deposit
of the related Liquidation Proceeds in the appropriate subaccount of the
Certificate Account.
(d) The Trustee shall execute and deliver to the Master
Servicer any court pleadings, requests for trustee's sale or other documents
necessary to (i) the foreclosure or trustee's sale with respect to a Mortgaged
Property; (ii) any legal action brought to obtain judgment against any Mortgagor
on the Mortgage Note or Security Instrument; (iii) obtain a deficiency judgment
against the Mortgagor; or (iv) enforce any other rights or remedies provided by
the Mortgage Note or Security Instrument or otherwise available at law or
equity. Together with such documents or pleadings the Master Servicer shall
deliver to the Trustee a certificate of a Servicing Officer in which it requests
the Trustee to execute the pleadings or documents. The certificate shall certify
and explain the reasons for which the pleadings or documents are required. It
shall further certify that the Trustee's execution and delivery of the pleadings
or documents will not invalidate any insurance coverage under the Required
Insurance Policies or invalidate or otherwise affect the lien of the
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Security Instrument, except for the termination of such a lien upon completion
of the foreclosure or trustee's sale.
Section 3.14. SERVICING AND MASTER SERVICING COMPENSATION. (a)
As compensation for its activities hereunder, the Master Servicer shall be
entitled to receive the Master Servicing Fee from full payments of accrued
interest on each Mortgage Loan.
(b) The Master Servicer may retain additional servicing
compensation in the form of prepayment charges, if any, assumption fees, tax
service fees, fees for statement of account or payoff, late payment charges,
interest on amounts deposited in any Accounts or Permitted Investments of such
amounts, or otherwise, and with respect to any Due Date, any interest paid on
Simple Interest Loans in excess of 30 days of interest. The Master Servicer is
also entitled to receive Excess Liquidation Proceeds as additional servicing
compensation to the extent that transfers or withdrawals from the appropriate
subaccount of the Certificate Account with respect thereto are permitted under
Subsection 4.03(a)(xi) and are not otherwise payable to the holders of the
Subordinate Certificates pursuant to Section 6.03(i). The Master Servicer shall
be required to pay all expenses it incurs in connection with servicing
activities under this Agreement, including fees and expenses to Sub-Servicers,
and shall not be entitled to reimbursement except as provided in this Agreement.
Expenses to be paid by the Master Servicer under this Subsection 3.14(b) shall
include payment of the expenses of the accountants retained pursuant to Section
3.16.
Section 3.15. ANNUAL STATEMENT OF COMPLIANCE. Within 120 days
after June 30th of each year, commencing June 1999, the Master Servicer at its
own expense, shall deliver to the Trustee, with a copy to the Rating Agencies,
an Officer's Certificate stating, as to the signer thereof, that (i) a review of
the activities of the Master Servicer during the preceding fiscal year or
applicable portion thereof and of performance under this Agreement has been made
under such officer's supervision, (ii) to the best of such officer's knowledge,
based on such review, the Master Servicer has fulfilled all its obligations
under this Agreement for such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof including the steps being taken by the
Master Servicer to remedy such default; (iii) a review of the activities of each
Sub-Servicer, if any, during the Sub-Servicer's most recently ended fiscal year
on or prior to such June 30th and its performance under its Sub-Servicing
Agreement has been made under such Officer's supervision; and (iv) to the best
of the Servicing Officer's knowledge, based on his review and the certification
of an officer of the Sub-Servicer (unless the Servicing Officer has reason to
believe that reliance on such certification is not justified), either each
Sub-Servicer has performed and fulfilled its duties, responsibilities and
obligations under this Agreement and its Sub-Servicing Agreement in all material
respects throughout the year, or, if there has been a default in performance or
fulfillment of any such duties, responsibilities or obligations, specifying the
nature and status of each such default known to the Servicing Officer. Copies of
such statements shall be provided by the Master Servicer to the
Certificateholders upon request or by the Trustee at the expense of the Master
Servicer should the Master Servicer fail to provide such copies.
Section 3.16. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
REPORT. (a) Within 120 days after June 30th of each year, commencing June, 1999,
the Master Servicer, at its expense, shall cause a firm of Independent public
accountants who are members of the American
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Institute of Certified Public Accountants to furnish a statement to the Master
Servicer, which will be provided to the Trustee and the Rating Agencies to the
effect that, in connection with the firm's examination of the Master Servicer's
financial statements as of the end of such fiscal year, nothing came to their
attention that indicated that the Master Servicer was not in compliance with
Sections 3.07, 3.15, 4.01, 4.02, 4.03 and 4.04 except for (i) such exceptions as
such firm believes to be immaterial and (ii) such other exceptions as are set
forth in such statement. In connection with the engagement to deliver any such
report (or other accountants' report or certificate hereunder) the Trustee is
authorized and directed to enter into such agreed-upon-procedures or engagement
letter as such accountants may request and shall be indemnified hereunder in so
doing.
(b) Within 120 days after the last day of the fiscal year of
each Sub-Servicer or a Master Servicer other than EMC or the Trustee, commencing
in 1998, the Master Servicer, at its expense, shall furnish to the Trustee the
most recently available letter or letters from one or more firms of Independent
certified public accountants who are members of the American Institute of
Certified Public Accountants reporting the results of such firm's examination of
the servicing procedures of any Sub-Servicer and any Master Servicer (other than
EMC or the Trustee) in accordance with the requirements of the Uniform Single
Attestation Program for Mortgage Bankers.
Section 3.17. REMIC-RELATED COVENANTS. For as long as the
REMIC shall exist, the Master Servicer and the Trustee shall act in accordance
herewith to assure continuing treatment of the REMIC as a REMIC, and the Trustee
shall comply with any directions of the Master Servicer to assure such
continuing treatment. In particular, the Trustee shall not (a) sell or permit
the sale of all or any portion of the Mortgage Loans or of any Permitted
Investment unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received a REMIC Opinion prepared
at the expense of the Trust Fund; and (b) other than with respect to a
substitution pursuant to Section 2.05, accept any contribution to the REMIC
after the Startup Day without receipt of a REMIC Opinion.
Section 3.18. ADDITIONAL INFORMATION. The Master Servicer
agrees to furnish the Seller from time to time upon reasonable request, such
further information, reports and financial statements as the Seller deems
appropriate to prepare and file all necessary reports with the Securities and
Exchange Commission.
Section 3.19. OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS.
The Master Servicer shall have the right, but not the obligation, to purchase
any Defaulted Mortgage Loan for a price equal to the Repurchase Price therefor.
Any such purchase shall be accomplished as provided in Subsection 2.02(c)
hereof.
III-12
<PAGE>
ARTICLE IV
Accounts
Section 4.01. PROTECTED ACCOUNTS. (a) The Master Servicer
shall establish and maintain if it is servicing the Mortgage Loans and shall
require each Sub-Servicer to establish and maintain a Protected Account
complying with the requirements set forth in this Section 4.01, with records to
be kept with respect thereto on a Mortgage Loan by Mortgage Loan basis, into
which accounts shall be deposited within 24 hours of receipt all collections of
principal and interest on any Mortgage Loan and with respect to any REO Property
received by the Master Servicer, or a Sub- Servicer, including Principal
Prepayments, Insurance Proceeds, Liquidation Proceeds, and advances made from
the Sub-Servicer's own funds (less servicing compensation as permitted by
Subsection 3.14(a)) and all other amounts to be deposited in the Protected
Accounts. The Master Servicer is hereby authorized to make withdrawals from and
deposits to the related Protected Accounts for purposes required or permitted by
this Agreement. All Protected Accounts shall be held in a Designated Depository
Institution and segregated on the books of such institution. The amount at any
time credited to a Protected Account shall be fully insured by the FDIC or, to
the extent that such balance exceeds the lesser of $100,000 or the limits of
such insurance, such excess must be transferred to the appropriate subaccount of
the Certificate Account or the related Custody Account or invested in Permitted
Investments.
Amounts on deposit in a Protected Account may be invested in
Permitted Investments, such Permitted Investments to mature, or to be subject to
redemption or withdrawal, no later than the date on which such funds are
required to be withdrawn for deposit in the Custody Account or Certificate
Account, and shall be held until required for such deposit. The income earned
from Permitted Investments made pursuant to this Section 4.01 shall be paid to
the Master Servicer or the related Sub-Servicer as additional compensation for
its obligations under this Agreement, and the risk of loss of moneys required to
be distributed to the Certificateholders resulting from such investments shall
be borne by and be the risk of the Master Servicer or the related Sub-Servicer.
The Master Servicer shall, itself, or cause the related Sub-Servicer to, deposit
the amount of any such loss in the related Protected Account within two Business
Days of receipt of notification of such loss but not later than the second
Business Day prior to the Distribution Date on which the moneys so invested are
required to be distributed to the Certificateholders. The Master Servicer may,
and the Master Servicer may permit a Sub-Servicer to, transfer funds to other
accounts (which shall for purposes hereof be deemed to be Protected Accounts) or
to establish Protected Accounts not conforming to the foregoing requirements, to
the extent that such other accounts or Protected Accounts are Rating Agency
Eligible Accounts.
(b) On or before each Funds Transfer Date, the Master Servicer
shall withdraw or shall cause (by written direction to the Trustee if such
withdrawal is from a Custody Account) to be withdrawn from the Protected
Accounts or the Custody Account and shall immediately deposit or cause to be
deposited in the appropriate subaccount of the Certificate Account amounts
representing the following collections and payments (other than with respect to
principal of or interest on the Mortgage Loans due on or before the Cut-off
Date):
IV-1
<PAGE>
(i) Scheduled Payments on the related Mortgage Loans
(other than Simple Interest Loans) received or any portion
thereof advanced by the Master Servicer or Sub-Servicers which
were due on or before the related Due Date (including any
amount required to be paid by the Master Servicer in respect
of interest on Simple Interest Loans) and actual payments on
Simple Interest Loans received during the related Prepayment
Period, net of the amount thereof comprising the Master
Servicing Fee due the Master Servicer;
(ii) Full Principal Prepayments and any Liquidation
Proceeds received by the Master Servicer or Sub-Servicers with
respect to such Mortgage Loans in the related Prepayment
Period, with interest to the date of prepayment or
liquidation, net of the amount thereof comprising the Master
Servicing Fee due the Master Servicer;
(iii) Partial prepayments of principal received by
the Master Servicer or Sub-Servicers for such Mortgage Loans
in the related Prepayment Period; and
(iv) Any amount to be used as a Certificate Account
Advance.
(c) Withdrawals may be made from a Protected Account only to
make remittances as provided in Subsections 4.01(b) or 4.03(c), or Section 4.04;
to reimburse the Master Servicer or a Sub-Servicer for advances of principal and
interest which have been recovered by subsequent collection from the related
Mortgagor; to remove amounts deposited in error; to remove fees, charges or
other such amounts deposited on a temporary basis; or to clear and terminate the
account at the termination of this Agreement in accordance with Section 10.01.
(d) The Master Servicer shall deliver to the Trustee on or
prior to the Determination Date in each month a statement from the institution
at which each Protected Account is maintained showing deposits and withdrawals
during the prior month.
Section 4.02. CERTIFICATE ACCOUNT. (a) The Trustee shall
establish and maintain in the name of the Trustee, for the benefit of the
Certificateholders, the Certificate Account as a segregated non-interest bearing
trust account or accounts. The Certificate Account shall have five separate
subaccounts, one each for all funds with respect to each Mortgage Loan Group.
The Trustee will deposit in the appropriate subaccount as identified by the
Master Servicer, of the Certificate Account as received the following amounts:
(i) Any amounts withdrawn from a Protected Account
pursuant to Subsection 4.01(b) or the Custody Account pursuant
to Section 4.04;
(ii) Any Monthly Advance and any Compensating
Interest Payments and any payments required to be made by the
Master Servicer with respect to Simple Interest Loans which
were not deposited in the Protected Account;
(iii) Any Insurance Proceeds or Liquidation Proceeds
received by the Master Servicer which were not deposited in a
Protected Account or the Custody Account;
IV-2
<PAGE>
(iv) The Repurchase Price with respect to any
Mortgage Loans purchased by BSMCC pursuant to Sections 2.02 or
2.03 or by the Master Servicer pursuant to Section 3.19, any
amounts which are to be treated pursuant to Section 2.05 as
the payment of such a Repurchase Price, and all proceeds of
any Mortgage Loans or property acquired with respect thereto
repurchased by the Seller or its designee pursuant to Section
10.01;
(v) Any amounts required to be deposited with respect
to losses on Permitted Investments pursuant to Subsection
4.02(d) or Section 4.04(d) below; and
(vi) Any other amounts received by the Master
Servicer or the Trustee and required to be deposited in such
subaccount of the Certificate Account pursuant to
this Agreement.
(b) All amounts deposited to the Certificate Account shall be
held by the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement, subject to the right of the Master Servicer to require the Trustee to
make withdrawals therefrom as provided herein. The foregoing requirements for
crediting the Certificate Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing, payments in the
nature of (i) prepayment or late payment charges or assumption, tax service,
statement account or payoff, substitution, satisfaction, release and other like
fees and charges and (ii) the items enumerated in subsections 4.03(a)(i), (ii),
(iii), (iv), (vi), (vii), (ix) and (xi) 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 additional
servicing compensation. In the event that the Master Servicer shall deposit or
cause to be deposited to the Certificate Account any amount not required to be
credited thereto, or shall deposit or cause to be deposited to a subaccount of
the Certificate Account any amount which should appropriately be credited to
another subaccount of the Certificate Account, the Trustee, upon receipt of a
written request therefor signed by a Servicing Officer of the Master Servicer,
shall promptly transfer such amount to the Master Servicer or to the appropriate
other subaccount of the Certificate Account, as applicable, any provision herein
to the contrary notwithstanding.
(c) The Certificate Account shall constitute a trust account
of the Trust Fund segregated on the books of the Trustee and held by the Trustee
in trust, and the Certificate Account and the funds deposited therein shall not
be subject to, and shall be protected from, all claims, liens, and encumbrances
of any creditors or depositors of the Trustee or the Master Servicer (whether
made directly, or indirectly through a liquidator or receiver of the Trustee or
the Master Servicer). The amount at any time credited to the Certificate Account
shall be (i) fully insured by the FDIC to the maximum coverage provided thereby,
(ii) at the written direction of the Master Servicer invested, in the name of
the Trustee, or its nominee, for the benefit of the Certificateholders, in such
Permitted Investments to be held by the Trustee as the Master Servicer may
direct (such direction to be confirmed in writing) and in the absence of such
direction, the Trustee shall invest funds in the Certificate Account in
Permitted Investments described in clause (viii) of the definition thereof, or
(iii) from the maturity of any Permitted Investment on the Business Day prior to
a Distribution Date through the distribution of such funds on such Distribution
Date or at such other time and in such
IV-3
<PAGE>
amount as, in the judgment of the Master Servicer, cannot reasonably be invested
in accordance with items (i) or (ii) of this sentence, held by the Trustee in
such Certificate Account. All Permitted Investments shall mature or be subject
to redemption or withdrawal on or before, and shall be held until, the next
succeeding Distribution Date if the obligor for such Permitted Investment is the
Trustee or, if such obligor is any other Person, the Business Day preceding such
Distribution Date. With respect to the Certificate Account and the funds
deposited therein, the Trustee shall take such action as may be necessary to
ensure that the Certificateholders shall be entitled to the priorities afforded
to such a trust account (in addition to a claim against the estate of the
Trustee) as provided by 12 U.S.C. ss. 92a(e), if applicable, or any applicable
comparable state statute applicable to state chartered banking corporations.
(d) The income earned from Permitted Investments made pursuant
to this Section 4.02 shall be paid to the Master Servicer, as additional
compensation for its obligations under this Agreement, and the risk of loss of
moneys required to be distributed to the Certificateholders resulting from such
investments shall be borne by and be the risk of the Master Servicer. The amount
of any such loss shall be remitted by the Master Servicer to the Trustee for
deposit in the Certificate Account within two Business Days of receipt of
notification of such loss but not later than the second Business Day prior to
the Distribution Date on which the moneys so invested are required to be
distributed to the Certificateholders.
Section 4.03. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE
CERTIFICATE Account. (a) The Trustee will, from time to time on demand of the
Master Servicer, make or cause to be made such withdrawals or transfers from the
appropriate subaccount of the Certificate Account as the Master Servicer has
designated for such transfer or withdrawal as specified in a certificate signed
by a Servicing Officer (upon which the Trustee may conclusively rely) for the
following purposes:
(i) 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 (i) 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;
(ii) 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;
(iii) 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
IV-4
<PAGE>
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 (x) any amounts with respect
to such Mortgage Loan were paid as Excess Liquidation Proceeds
pursuant to clause (xi) of this Subsection 4.03(a) to the
Master Servicer; and (y) such Liquidation Expenses were not
included in the computation of such Excess Liquidation
Proceeds;
(iv) 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 (ix) 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 (i), (ii), (iii) and (vi) 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;
(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 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 (ix) 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 (i) and (vi) 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;
(vi) 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;
(vii) 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, 2.05, 3.19
or 10.01, all amounts received thereon, representing
recoveries of principal that reduce the Outstanding Principal
Balance of the related Mortgage
IV-5
<PAGE>
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;
(viii) 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 (i) and (vi), such
reimbursement to come from the subaccount relating to the
Mortgage Loan Group of which the related Mortgage Loan is a
part;
(ix) to pay the Master Servicer and any Sub-Servicer
servicing compensation as set forth in Section 3.14, including
amounts due to it with respect to excess interest received on
Simple Interest Loans;
(x) to reimburse the Master Servicer for expenses,
costs and liabilities incurred by and reimbursable to it
pursuant to Subsection 7.04(d), which, if not specifically
allocable to a Mortgage Loan Group, shall be allocated between
the subaccounts, PRO RATA, based on the Scheduled Principal
Balances of the Group I Mortgage Loans, the Group II Mortgage
Loans, the Group III Mortgage Loans, the Group IV Mortgage
Loans and the Group V Mortgage Loans, respectively;
(xi) to pay to the Master Servicer, as additional
servicing compensation, any Excess Liquidation Proceeds not
paid to the holders of the Subordinate Certificates pursuant
to Section 6.01(i);
(xii) to pay to the holders of the Subordinate
Certificates any Excess Liquidation Proceeds as provided in
Section 6.01(i);
(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 (vi), inclusive, and (viii) or with respect to any such
amounts which would have been covered by such subclauses had the amounts not
been retained by the Master Servicer without being deposited in the Certificate
Account under Section 4.02(b).
(b) On each Distribution Date, the Trustee shall make the
following payments in the priority set forth from the funds in the Certificate
Account:
(i) First, the Trustee's Fees and expenses pursuant
to Section 9.05 shall be paid to the Trustee; and
IV-6
<PAGE>
(ii) Second, the amount distributable to the Holders
of the Certificates shall be payable in accordance with
Section 6.01.
(c) Notwithstanding the provisions of this Section 4.03, the
Master Servicer may, but is not required to, allow the Sub-Servicers to deduct
from amounts received by them or from the related Protected Account, prior to
deposit in the Certificate Account or the Custody Account, any portion to which
such Sub-Servicers are entitled as servicing compensation (including income on
Permitted Investments) or reimbursement of any reimbursable advances made by
such Sub-Servicers.
Section 4.04. CUSTODY ACCOUNT. (a) The Trustee shall establish
and maintain for the benefit of the Certificateholders the Custody Account as a
segregated non-interest bearing trust account in the corporate trust department
of a Designated Depository Institution. The Custody Account shall constitute a
trust account of the Trust Fund segregated on the books of the Designated
Depository Institution and held by the Designated Depository Institution in
trust, and such Account and the funds deposited therein shall not be subject to,
and shall be protected from, all claims, liens, and encumbrances of any
creditors or depositors of the Designated Depository Institution, the Trustee,
the Master Servicer, any Sub-Servicer (whether made directly, or indirectly
through a liquidator or receiver of the Designated Depository Institution, the
Trustee, any Master Servicer, or any Sub-Servicer). With respect to the Custody
Account maintained with the Trustee and the funds deposited therein, the Trustee
shall take such action as may be necessary to ensure that the Certificateholders
shall be entitled to the priorities afforded to such a trust account (in
addition to a claim against the estate of the Trustee) as provided by 12 U.S.C.
ss. 92a(e), if applicable, or any applicable comparable state statute applicable
to state chartered banking corporations. The Custody Account shall be an outside
reserve fund of REMIC II and shall not constitute a part of REMIC II (or REMIC
I). The Trustee shall be the legal owner of the portion of the Funds held in the
Custody Account for the benefit of the Certificateholders and for all Federal
income tax purposes, the Master Servicer shall be the owner of the Custody
Account. For all Federal tax purposes, amounts, if any, transferred by REMIC II
to the Custody Account shall be treated as amounts distributed by REMIC II to
the Master Servicer.
(b) Within one Business Day after receipt, the Master Servicer
shall withdraw or shall cause to be withdrawn from each Protected Account and
shall immediately deposit or cause to be deposited in the Custody Account all
amounts in the Protected Account not otherwise invested in Permitted Investments
pursuant to Section 4.01 and exceeding the lesser of $100,000 or the FDIC
insurance limit (other than with respect to principal of or interest on the
Mortgage Loans due on or before the Cut-off Date).
(c) Withdrawals may be made from the Custody Account only to
make remittances as provided in Sections 4.01(b) or 4.04(d); to reimburse the
Master Servicer or any Sub- Servicer for advances of principal and interest
which have been recovered by subsequent collection from the related Mortgagor;
to remove amounts deposited in error; to remove fees, charges or other such
amounts deposited on a temporary basis; or to clear and terminate the account at
the termination of this Agreement in accordance with Section 10.01.
(d) Funds in the Custody Account may be invested at the
written direction of the Master Servicer (such direction to be confirmed
promptly in writing) in Permitted Investments held
IV-7
<PAGE>
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.
IV-8
<PAGE>
ARTICLE V
Section 5.01. CERTIFICATES. (a) The Depository, the Seller and
the Trustee have entered into a Depository Agreement dated as of May 29, 1998
(the "Depository Agreement"). Except for the Physical Certificates and as
provided in Subsection 5.01(b), the Certificates shall at all times remain
registered in the name of the Depository or its nominee and at all times: (i)
registration of such Certificates may not be transferred by the Trustee except
to a successor to the Depository; (ii) ownership and transfers of registration
of such Certificates on the books of the Depository shall be governed by
applicable rules established by the Depository; (iii) the Depository may collect
its usual and customary fees, charges and expenses from its Depository
Participants; (iv) the Trustee shall deal with the Depository as representative
of such Certificate Owners of the respective Class of Certificates for purposes
of exercising the rights of Certificateholders under this Agreement, and
requests and directions for and votes of such representative shall not be deemed
to be inconsistent if they are made with respect to different Certificate
Owners; and (v) the Trustee may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its Depository
Participants.
The Class B-4, Class B-5 and Class B-6 Certificates are
initially Physical Certificates. If at any time the Holders of all of the
Certificates of one or more such Classes request that the Trustee cause such
Class to become Book-Entry Certificates, the Trustee and the Seller will take
such action as may be reasonably required to cause the Depository to accept such
Class or Classes for trading.
All transfers by Certificate Owners of such respective Classes
of Book-Entry Certificates shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm representing such
Certificate Owners. Each Depository Participant shall only transfer Book-Entry
Certificates of Certificate Owners it represents or of brokerage firms for which
it acts as agent in accordance with the Depository's normal procedures.
(b) If (i)(A) the Seller advises the Trustee in writing that
the Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Trustee or the Seller is unable to
locate a qualified successor within 30 days or (ii) the Seller at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository, the Trustee shall request that the Depository notify all
Certificate Owners of the occurrence of any such event and of the availability
of definitive, fully registered Certificates (the "Definitive Certificates") to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Seller, the Master Servicer nor the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions.
(c) REMIC II will be evidenced by (x) the REMIC II Regular
Certificates, which will be uncertificated and non-transferable and are hereby
designated as the "regular interests" in REMIC II and (y) the Class R-2
Certificate, which is hereby designated as the single "residual interest" in
REMIC II. Except as discussed below, principal and interest shall be payable to,
and shortfalls, losses and prepayments are allocable to, the REMIC II Regular
Certificates in the same
V-1
<PAGE>
order and priority as payments are to be made on, and shortfalls, losses and
prepayments are allocable to, the Corresponding Classes of Certificates. To the
extent principal and interest payments are to be made on, and shortfalls, losses
and prepayments are allocable to, the Class B
Certificates,
such principal, interest, shortfalls, losses and prepayments shall be payable or
allocable to the Class IIB-1, Class IIB-2, Class IIB-3, Class IIB-4 and Class
IIB-5 REMIC II Certificates, in the same proportion that such principal,
interest, shortfalls, losses and prepayments are attributable to the Group I
Mortgage Loans, Group II Mortgage Loans, Group III Mortgage Loans, Group IV
Mortgage Loans and Group V Mortgage Loans, respectively. The REMIC II Regular
Certificates and the Class R-2 Certificate will have the following designations
and pass-through rates, and distributions of principal and interest thereon
shall be allocated to the Corresponding Class of Certificates in the following
manner:
<TABLE>
<CAPTION>
Corresponding Classes
of Certificates
---------------
Pass- Allocation Allocation
REMIC II Initial Through of of
Certificates Balance ($) Rate Principal Interest
- ------------ ----------- ------- --------- ---------
<S> <C> <C> <C> <C>
IIA-1 104,590,000.00 (1) A-I A-I
IIA-2 55,407,900.00 (2) A-II A-II
IIA-3 47,237,500.00 (3) A-III A-III
IIA-4 28,018,400.00 (4) A-IV A-IV
IIA-5 29,173,900.00 (5) A-V A-V
IIB-1 7,571,349.00 (1) (6) (6)
IIB-2 4,010,792.00 (2) (6) (6)
IIB-3 3,419,379.00 (3) (6) (6)
IIB-4 2,028,144.00 (4) (6) (6)
IIB-5 2,111,823.00 (5) (6) (6)
IIR-1 50.00 (1) R-1 R-1
R-2 50.00 (1) N/A N/A
</TABLE>
- ---------------
(1) During each Interest Accrual Period the Class IIA-1, Class IIB-1, Class
IIR-1 and Class R-1 Certificates will bear interest at a variable Pass-Through
Rate equal to the weighted average of the Net Rates of the Group I Mortgage
Loans.
(2) During each Interest Accrual Period, the Class IIA-2 and Class IIB-2
Certificates will bear interest at a variable Pass-Through Rate equal to the
weighted average of the Net Rates of the Group II Mortgage Loans.
(3) During each Interest Accrual Period, the Class IIA-3 and Class IIB-3
Certificates will bear interest at a variable Pass-Through Rate equal to the
weighted average of the Net Rates of the Group III Mortgage Loans.
V-2
<PAGE>
(4) During each Interest Accrual Period, the Class IIA-4 and Class IIB-4
Certificates will bear interest at a variable Pass-Through Rate equal to the
weighted average of the Net Rates of the Group
IV Mortgage Loans.
(5) During each Interest Accrual Period, the Class IIA-5 and Class IIB-5
Certificates will bear interest at a variable Pass-Through Rate equal to the
weighted average of the Net Rates of the Group
V Mortgage Loans.
(6) The corresponding Classes of Certificates for these REMIC II Certificates
are all the Class B Certificates. Principal and interest shall be allocable to
the Class B Certificates and shall be apportioned among such Certificates in the
same order and priority as payments are to be made on
such Certificates.
(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 $ 104,596,000.00 (1)
A-II $ 55,407,900.00 (2)
A-III $ 47,237,500.00 (3)
A-IV $ 28,018,400.00 (4)
A-V $ 29,173,900.00 (5)
B-1 $ 7,089,300.00 (6)
B-2 $ 3,544,600.00 (6)
B-3 $ 2,126,800.00 (6)
B-4 $ 2,552,100.00 (6)
B-5 $ 1,559,600.00 (6)
B-6 $ 2,269,086.60 (6)
R-1 $ 50.00 (1)
R-2 $ 50.00 (1)
- --------------------
(1) During each Interest Accrual Period the Class A-I, Class R-1 and Class R-2
Certificates will bear interest at a variable Pass-Through Rate equal to the
weighted average of the Net Rates of the
Group I Mortgage Loans.
(2) During each Interest Accrual Period, the Class A-II Certificates will bear
interest at a variable Pass-Through Rate equal to the weighted average of the
Net Rates of the Group II Mortgage
Loans.
(3) During each Interest Accrual Period, the Class A-III Certificates will bear
interest at a variable Pass-Through Rate equal to the weighted average of the
Net Rates of the Group III Mortgage Loans.
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(4) During each Interest Accrual Period, the Class A-IV Certificates will bear
interest at a variable Pass-Through Rate equal to the weighted average of the
Net Rates of the Group IV Mortgage Loans.
(5) During each Interest Accrual Period, the Class A-V Certificates will bear
interest at a variable Pass-Through Rate equal to the weighted average of the
Net Rates of the Group V Mortgage
Loans.
(6) The Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
Certificates will each bear interest at a variable Pass-Through Rate equal to
the weighted average of the Pass-Through Rates of the Class IIB-1, Class IIB-2,
Class IIB-3, Class IIB-4 and Class IIB-5 Certificates.
(e) With respect to each Distribution Date, each Class of
Certificates shall accrue interest during the related Interest Accrual Period.
With respect to each Distribution Date and each such Class of Certificates,
interest shall be calculated, on the basis of a 360-day year comprised of twelve
30-day months, based upon the respective Pass-Through Rate set forth, or
determined as provided, above and the Current Principal Amount of such Class
applicable to such Distribution Date.
(f) The Certificates shall be substantially in the forms set
forth in Exhibit A-1, Exhibit A-2 and Exhibit A-3. On original issuance, the
Trustee shall sign, countersign and shall deliver them at the direction of the
Seller. Pending the preparation of definitive Certificates of any Class, the
Trustee may sign and countersign temporary Certificates that are printed,
lithographed or typewritten, in authorized denominations for Certificates of
such Class, substantially of the tenor of the definitive Certificates in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers or authorized signatories
executing such Certificates may determine, as evidenced by their execution of
such Certificates. If temporary Certificates are issued, the Seller will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of Definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office of the Trustee, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Certificates, the
Trustee shall sign and countersign and deliver in exchange therefor a like
aggregate principal amount, in authorized denominations for such Class, of
definitive Certificates of the same Class. Until so exchanged, such temporary
Certificates shall in all respects be entitled to the same benefits as
definitive Certificates.
(g) Each Class of Book-Entry Certificates will be registered
as a single Certificate of such Class held by a nominee of the Depository or the
DTC Custodian, and beneficial interests will be held by investors through the
book-entry facilities of the Depository in minimum denominations of $25,000 and
in each case increments of $1.00 in excess thereof, except that one Certificate
of each such Class may be issued in a different amount so that the sum of the
denominations of all outstanding Certificates of such Class shall equal the
Current Principal Amount of such Class on the Closing Date. On the Closing Date,
the Trustee shall execute and countersign Physical Certificates all in an
aggregate principal amount that shall equal the Current Principal Amount of such
Class on the Closing Date. The Class B-4, Class B-5 and Class B-6 Certificates
will be issued in certificated fully-registered form in minimum denominations of
$25,000 and increments
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of $1.00 in excess thereof, except that one Certificate of each such Class may
be issued in a different amount so that the sum of the denominations of all
outstanding Certificates of such Class shall equal the Current Principal Amount
of such Class on the Closing Date. Each Class of Global Certificates, if any,
shall be issued in fully registered form in minimum dollar denominations of
$25,000 and integral multiples of $1.00 in excess thereof, except that one
Certificate of each Class may be in a different denomination so that the sum of
the denominations of all outstanding Certificates of such Class shall equal the
Current Principal Amount of such Class on the Closing Date. On the Closing Date,
the Trustee shall execute and countersign (i) in the case of each Class of Class
A Certificates and the Class B-1, Class B-2 and Class B-3 Certificates, the
Certificate in the entire principal amount of the Class and (ii) in the case of
the Class B-4, Class B-5 and Class B-6 Certificates, Individual Certificates all
in an aggregate principal amount that shall equal the Current Principal Amount
of each such Class on the Closing Date. The Certificates referred to in clause
(i) and if at any time there are to be Global Certificates, the Global
Certificates shall be delivered by the Seller to the Depository or pursuant to
the Depository's instructions, shall be delivered by the Seller on behalf of the
Depository to and deposited with the DTC Custodian. The Class R-1 and Class R-2
Certificates shall be issued in certificated fully-registered form in the
denomination of $50 each. The Trustee shall sign them by facsimile or manual
signature and countersign them by manual signature on behalf of the Trustee by
one or more authorized signatories, each of whom shall be Responsible Officers
of the Trustee or its agent. A Certificate bearing the manual and facsimile
signatures of individuals who were the authorized signatories of the Trustee or
its agent at the time of issuance shall bind the Trustee, notwithstanding that
such individuals or any of them have ceased to hold such positions prior to the
delivery of such Certificate.
(h) No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
the manually executed countersignature of the Trustee or its agent, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates issued on the Closing Date shall be dated the Closing Date. All
Certificates issued thereafter shall be dated the date of their
countersignature.
(i) The Closing Date is hereby designated as the "startup" day
of each REMIC within the meaning of Section 860G(a)(9) of the Code.
(j) For federal income tax purposes, each REMIC shall have a
tax year that is a calendar year and shall report income on an accrual basis.
(k) The Trustee shall cause each REMIC to elect to be treated
as a REMIC under Section 860D of the Code. Any inconsistencies or ambiguities in
this Agreement or in the administration of any Trust established hereby shall be
resolved in a manner that preserves the validity of such elections.
(l) The Assumed Final Distribution Date for each Class of
Certificates is -------------------.
Section 5.02. REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES. (a) The Trustee shall maintain at its Corporate Trust Office a
Certificate Register in which, subject to such
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reasonable regulations as it may prescribe, the Trustee shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided.
(b) Subject to Subsection 5.01(a) and, in the case of any
Global Certificate or Physical Certificate upon the satisfaction of the
conditions set forth below, upon surrender for registration of transfer of any
Certificate at any office or agency of the Trustee maintained for such purpose,
the Trustee shall sign, countersign and shall deliver, in the name of the
designated transferee or transferees, a new Certificate of a like Class and
aggregate Fractional Undivided Interest, but bearing a different number.
(c) By acceptance of an Individual Certificate, whether upon
original issuance or subsequent transfer, each holder of such a Certificate
acknowledges the restrictions on the transfer of such Certificate set forth in
the Securities Legend and agrees that it will transfer such a Certificate only
as provided herein. In addition to the provisions of Subsection 5.02(h), the
following restrictions shall apply with respect to the transfer and registration
of transfer of an Individual Certificate to a transferee that takes delivery in
the form of an Individual Certificate:
(i) The Trustee shall register the transfer of an
Individual Certificate if the requested transfer is being made
to a transferee who has provided the Trustee with a Rule 144A
Certificate.
(ii) The Trustee shall register the transfer of any
Individual Certificate if (x) the transferor has advised the
Trustee in writing that the Certificate is being transferred
to an Institutional Accredited Investor; and (y) prior to the
transfer the transferee furnishes to the Trustee an Investment
Letter (and the Trustee shall be fully protected in so doing),
provided that, if based upon an Opinion of Counsel to the
effect that the delivery of (x) and (y) above are not
sufficient to confirm that the proposed transfer is being made
pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act and
other applicable laws, the Trustee shall as a condition of the
registration of any such transfer require the transferor to
furnish such other certifications, legal opinions or other
information prior to registering the transfer of an Individual
Certificate as shall be set forth in such Opinion of Counsel.
(d) Subject to Subsection 5.02(h), so long as a Global
Certificate of such Class is outstanding and is held by or on behalf of the
Depository, transfers of beneficial interests in such Global Certificate, or
transfers by holders of Individual Certificates of such Class to transferees
that take delivery in the form of beneficial interests in the Global
Certificate, may be made only in accordance with this Subsection 5.02(d) and in
accordance with the rules of the Depository:
(i) In the case of a beneficial interest in the
Global Certificate being transferred to an Institutional
Accredited Investor, such transferee shall be required to take
delivery in the form of an Individual Certificate or
Certificates and the Trustee shall register such transfer only
upon compliance with the provisions of Subsection 5.02(c)(ii).
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(ii) In the case of a beneficial interest in a Class
of Global Certificates being transferred to a transferee that
takes delivery in the form of an Individual Certificate or
Certificates of such Class, except as set forth in clause (i)
above, the Trustee shall register such transfer only upon
compliance with the provisions of Subsection 5.02(c)(i).
(iii) In the case of an Individual Certificate of a
Class being transferred to a transferee that takes delivery in
the form of a beneficial interest in a Global Certificate of
such Class, the Trustee shall register such transfer if the
transferee has
provided the Trustee with a Rule 144A Certificate.
(iv) No restrictions shall apply with respect to the
transfer or registration of transfer of a beneficial interest
in the Global Certificate of a Class to a transferee that
takes delivery in the form of a beneficial interest in the
Global Certificate of such Class.
(e) Subject to Subsection 5.02(h), an exchange of a beneficial
interest in a Global Certificate of a Class for an Individual Certificate or
Certificates of such Class, an exchange of an Individual Certificate or
Certificates of a Class for a beneficial interest in the Global Certificate of
such Class and an exchange of an Individual Certificate or Certificates of a
Class for another Individual Certificate or Certificates of such Class (in each
case, whether or not such exchange is made in anticipation of subsequent
transfer, and, in the case of the Global Certificate of such Class, so long as
such Certificate is outstanding and is held by or on behalf of the Depository)
may be made only in accordance with this Subsection 5.02(e) and in accordance
with the rules of the Depository:
(i) A holder of a beneficial interest in a Global
Certificate of a Class may at any time exchange such
beneficial interest for an Individual Certificate or
Certificates of such Class.
(ii) A holder of an Individual Certificate or
Certificates of a Class may exchange such Certificate or
Certificates for a beneficial interest in the Global
Certificate of such Class if such holder furnishes to the
Trustee a Rule 144A Certificate.
(iii) A holder of an Individual Certificate of a
Class may exchange such Certificate for an equal aggregate
principal amount of Individual Certificates of such Class in
different authorized denominations without any certification.
(f) (i) Upon acceptance for exchange or transfer of an
Individual Certificate of a Class for a beneficial interest in
a Global Certificate of such Class as provided herein, the
Trustee shall cancel such Individual Certificate and shall (or
shall request the Depository to) endorse on the schedule
affixed to the applicable Global Certificate (or on a
continuation of such schedule affixed to the Global
Certificate and made a part thereof) or otherwise make in its
books and records an appropriate notation evidencing the date
of such exchange or transfer and an increase in the
certificate
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balance of the Global Certificate equal to the certificate
balance of such Individual Certificate exchanged or
transferred therefor.
(ii) Upon acceptance for exchange or transfer of a beneficial
interest in a Global Certificate of a Class for an Individual
Certificate of such Class as provided herein, the Trustee
shall (or shall request the Depository to) endorse on the
schedule affixed to such Global Certificate (or on a
continuation of such schedule affixed to such Global
Certificate and made a part thereof) or otherwise make in its
books and records an appropriate notation evidencing the date
of such exchange or transfer and a decrease in the certificate
balance of such Global Certificate equal to the certificate
balance of such Individual Certificate issued in exchange
therefor or upon transfer thereof.
(g) The Securities Legend shall be placed on any Individual
Certificate issued in exchange for or upon transfer of another Individual
Certificate or of a beneficial interest in a Global
Certificate.
(h) Subject to the restrictions on transfer and exchange set
forth in this Section 5.02, the holder of any Individual Certificate may
transfer or exchange the same in whole or in part (in an initial certificate
balance equal to the minimum authorized denomination or any integral multiple of
$1.00 in excess thereof) by surrendering such Certificate at the Corporate Trust
Office, or at the office of any transfer agent, together with an executed
instrument of assignment and transfer satisfactory in form and substance to the
Trustee in the case of transfer and a written request for exchange in the case
of exchange. The holder of a beneficial interest in a Global Certificate may,
subject to the rules and procedures of the Depository, cause the Depository (or
its nominee) to notify the Trustee in writing of a request for transfer or
exchange of such beneficial interest for an Individual Certificate or
Certificates. Following a proper request for transfer or exchange, the Trustee
shall, within five Business Days of such request made at such Corporate Trust
Office, sign, countersign and deliver at such Corporate Trust Office, to the
transferee (in the case of transfer) or holder (in the case of exchange) or send
by first class mail at the risk of the transferee (in the case of transfer) or
holder (in the case of exchange) to such address as the transferee or holder, as
applicable, may request, an Individual Certificate or Certificates, as the case
may require, for a like aggregate Fractional Undivided Interest and in such
authorized denomination or denominations as may be requested. The presentation
for transfer or exchange of any Individual Certificate shall not be valid unless
made at the Corporate Trust Office by the registered holder in person, or by a
duly authorized attorney-in-fact.
(i) At the option of the Certificateholders, Certificates may
be exchanged for other Certificates of authorized denominations of a like Class
and aggregate Fractional Undivided Interest, upon surrender of the Certificates
to be exchanged at any such office or agency; PROVIDED, HOWEVER, that no
Certificate may be exchanged for new Certificates unless the original Fractional
Undivided Interest represented by each such new Certificate (i) is at least
$25,000 with respect to the Certificates other than the Class R-1 and R-2
Certificates, which in each case shall be $50, or (ii) is acceptable to the
Seller as indicated to the Trustee in writing. Whenever any Certificates are so
surrendered for exchange, the Trustee shall sign and countersign and the Trustee
shall deliver the Certificates which the Certificateholder making the exchange
is entitled to receive.
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(j) If the Trustee so requires, every Certificate presented or
surrendered for transfer or exchange shall be duly endorsed by, or be
accompanied by a written instrument of transfer, with a signature guarantee, in
form satisfactory to the Trustee, duly executed by the holder
thereof or his or her attorney duly authorized in writing.
(k) No service charge shall be made for any transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(l) The Trustee shall cancel all Certificates surrendered for
transfer or exchange but shall retain such Certificates in accordance with its
standard retention policy or for such further time as is required by the record
retention requirements of the Securities Exchange Act of 1934, as amended, and
thereafter may destroy such Certificates.
(m) The following legend shall be placed on each Class B-1,
Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Certificates, whether
upon original issuance or upon issuance of any other Certificate of any such
Class in exchange therefor or upon transfer thereof:
THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY
BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED,
AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A
CERTIFICATE AND THE SERVICING, MANAGEMENT AND/OR OPERATION OF
THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY
PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN
INDIVIDUAL OR CLASS PROHIBITED TRANSACTION EXEMPTION,
INCLUDING, BUT NOT LIMITED TO, PROHIBITED TRANSACTION
EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60, PTE
96-23 OR SECTION 401(C) OF ERISA AND THE REGULATIONS
PROMULGATED THEREUNDER AND (II) WILL NOT GIVE RISE TO ANY
ADDITIONAL FIDUCIARY DUTIES ON THE PART OF THE SELLER, THE
MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED
REPRESENTED BY AN OWNER OF A BOOK-ENTRY CERTIFICATE OR A
GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A REPRESENTATION
OR AN OPINION OF COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF A
HOLDER OF A PRIVATE CERTIFICATE.
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
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new Certificate of like tenor and Fractional Undivided Interest but in each case
bearing a different number. The mutilated, destroyed, lost or stolen Certificate
shall thereupon be canceled of record by the Trustee and shall be of no further
effect and evidence no rights.
(b) Upon the issuance of any new Certificate under this
Section 5.03, the Trustee may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee) connected
therewith. Any duplicate Certificate issued pursuant to this Section 5.03 shall
constitute complete and indefeasible evidence of ownership in the Trust Fund, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.04. PERSONS DEEMED OWNERS. Prior to due presentation
of a Certificate for registration of transfer, the Seller, the Master Servicer,
the Trustee and any agent of the Seller, the Master Servicer or the Trustee may
treat the Person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
6.01 and for all other purposes whatsoever. Neither the Seller, the Master
Servicer, the Trustee nor any agent of the Seller, the Master Servicer or the
Trustee shall be affected by notice to the contrary. No Certificate shall be
deemed duly presented for a transfer effective on any Record Date unless the
Certificate to be transferred is presented no later than the close of business
on the third Business Day preceding such Record Date.
Section 5.05. TRANSFER RESTRICTIONS ON RESIDUAL CERTIFICATES.
(a) Residual Certificates, or interests therein, may not be transferred without
the prior express written consent of the Tax Matters Person. As a prerequisite
to such consent, the proposed transferee must provide the Tax Matters Person and
the Trustee with an affidavit that the proposed transferee is not a Disqualified
Organization (as defined in Subsection 5.05(b)) (and, unless the Tax Matters
Person consents to the transfer to a person who is not a U.S. Person, an
affidavit that it is a U.S. Person) as provided in Subsection 5.05(b).
(b) No transfer, sale or other disposition of a Residual
Certificate (including a beneficial interest therein) may be made unless, prior
to the transfer, sale or other disposition of a Residual Certificate, the
proposed transferee (including the initial purchasers thereof) delivers to the
Tax Matters Person and the Trustee an affidavit in the form attached hereto as
Exhibit E stating, among other things, that as of the date of such transfer (i)
such transferee is not any of (A) the United States, any state or political
subdivision thereof, any foreign government, any international organization, or
any agency or instrumentality of any of the foregoing (other than an
instrumentality that is a corporation all of whose activities are subject to tax
under Chapter 1 of Subtitle A of the Code and (except in the case of FHLMC) a
majority of whose board of directors is not selected by the United States, or
any state or political subdivision thereof), (B) any organization that is exempt
from any tax imposed by Chapter 1 of Subtitle A of the Code, other than (x) a
tax-exempt farmers' cooperative within the meaning of Section 521 of the Code or
(y) an organization that is subject to the tax imposed by section 511 of the
Code on "unrelated business taxable income" or (C) a corporation operating on a
cooperative basis that is engaged in furnishing electric energy or providing
telephone service to persons in rural areas (within the meaning of Section
1381(a)(2)(C) of the Code) (any Person described in (A), (B), or (C) being
referred to herein as a "Disqualified Organization") and that (ii) such
transferee is not acquiring such Residual Certificate for the account
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of a Disqualified Organization. The Tax Matters Person shall not consent to a
transfer of a Residual Certificate if it has actual knowledge that any statement
made in the affidavit issued pursuant to the preceding sentence is not true.
Notwithstanding any transfer, sale or other disposition of a Residual
Certificate to a Disqualified Organization, such transfer, sale or other
disposition shall be deemed to be of no legal force or effect whatsoever and
such Disqualified Organization shall not be deemed to be a Holder of a Residual
Certificate for any purpose hereunder, including, but not limited to, the
receipt of distributions thereon. If any purported transfer shall be in
violation of the provisions of this Subsection 5.05(b), then the prior Holder
thereof shall, upon discovery that the transfer of such Residual Certificate was
not in fact permitted by this Subsection 5.05(b), be restored to all rights as a
Holder thereof retroactive to the date of the purported transfer. The Trustee
and the Tax Matters Person shall be under no liability to any Person for any
registration or transfer of a Residual Certificate that is not permitted by this
Subsection 5.05(b) or for making payments due on such Residual Certificate to
the purported Holder thereof or taking any other action with respect to such
purported Holder under the provisions of this Agreement so long as the written
affidavit referred to above was received with respect to such transfer, and the
Tax Matters Person and the Trustee had no knowledge that it was untrue. The
prior Holder shall be entitled to recover from any purported Holder of a
Residual Certificate that was in fact not a permitted transferee under this
Subsection 5.05(b) at the time it became a Holder all payments made on such
Residual Certificate. Each Holder of a Residual Certificate, by acceptance
thereof, shall be deemed for all purposes to have consented to the provisions of
this Subsection 5.05(b) and to any amendment of this Agreement deemed necessary
(whether as a result of new legislation or otherwise) by counsel of the Tax
Matters Person or the Seller to ensure that the Residual Certificates are not
transferred to a Disqualified Organization and that any transfer of such
Residual Certificates will not cause the imposition of a tax upon the Trust or
cause REMIC I or REMIC II to fail to qualify as a REMIC.
(c) Unless the Tax Matters Person shall have consented in
writing (which consent may be withheld in the Tax Matters Person's sole
discretion), the Residual Certificates (including a beneficial interest therein)
may not be purchased by or transferred to any person who is not a "United States
person," as such term is defined in Section 7701(a)(30) of the Code.
(d) By accepting a Residual Certificate, the purchaser thereof
agrees to be a Tax Matters Person, and appoints the Trustee to act as its agent
with respect to all matters concerning the
tax obligations of the Trust.
Section 5.06. RESTRICTIONS ON TRANSFERABILITY OF PRIVATE
CERTIFICATES. (a) No offer, sale, transfer or other disposition (including
pledge) of a Private Certificate shall be made by any Holder thereof unless
registered under the Securities Act, or an exemption from the registration
requirements of the Securities Act and any applicable state securities or "Blue
Sky" laws is available and the prospective transferee (other than the Seller) of
such Certificate signs and delivers to the Trustee an Investment Letter, if the
transferee is an Institutional Accredited Investor, in the form set forth as
Exhibit F-1 hereto, or a Rule 144A Certificate, if the transferee is a Qualified
Institutional Buyer, in the form set forth as Exhibit F-2 hereto. In the case of
a proposed transfer of a Private Certificate to a transferee other than a
Qualified Institutional Buyer, the Trustee may require an Opinion of Counsel
that such transaction is exempt from the registration requirements of the
Securities Act. The cost of such opinion shall not be an expense of the Trustee
or the Trust Fund.
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(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 of Private Certificates may be acquired
directly or indirectly by, or on behalf of, an employee benefit plan or other
retirement arrangement which is subject to Title I of ERISA and/or Section 4975
of the Code, unless the proposed transferee provides a representation to the
Trustee (upon which the Trustee is authorized to rely) to the effect that the
proposed transfer and/or holding of a Certificate and the servicing, management
and operation of the Trust: (i) will not result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code which is not covered
under an individual or class prohibited transaction exemption including but not
limited to Department of Labor Prohibited Transaction Exemption ("PTE") 84-14
(Class Exemption for Plan Asset Transactions Determined by Independent Qualified
Professional Asset Managers); PTE 91-38 (Class Exemption for Certain
Transactions Involving Bank Collective Investment Funds); PTE 90-1 (Class
Exemption for Certain Transactions Involving Insurance Company Pooled Separate
Accounts), PTE 95-60 (Class Exemption for Certain Transactions Involving
Insurance Company General Accounts), and PTCE 96-23 (Class Exemption for Plan
Asset Transactions Determined by In-House Asset Managers); and Section 401(c) of
ERISA and the regulations to be promulgated thereunder (relating to insurance
company general accounts) and (ii) will not give rise to any additional
fiduciary duties under ERISA on the part of either the Seller, the Master
Servicer or the Trustee.
(b) Any Person acquiring an interest in a Book-Entry
Certificate or a Global Certificate which is a Subordinate Certificate, by
acquisition of such Certificate, shall be deemed to have represented to the
Trustee that it is either: (i) not acquiring an interest in such Certificate
directly or indirectly by, or on behalf of, an employee benefit plan or other
retirement arrangement which is subject to Title I of ERISA and/or Section 4975
of the Code, or (ii) such Person provides a representation, certification or an
opinion of counsel to the Trustee to the effect that the transfer and/or holding
of an interest in such Certificate and the servicing, management and/or
operation of the Trust and its assets: (I) will not result in any prohibited
transaction which is not covered under an individual or class prohibited
transaction exemption, including, but not limited to, PTE 84-14, PTE 91-38, PTE
90-1, PTE 95-60, PTE 96-23 or Section 401(c) of ERISA and the regulations to be
promulgated thereunder and (II) will not give rise to any additional fiduciary
duties on the part of either the Seller, the Master Servicer or the Trustee.
Section 5.08. RULE 144A INFORMATION. For so long as any
Private Certificates are outstanding and are "restricted securities" within the
meaning of Rule 144(a)(3) of the Securities Act, (1) the Master Servicer will
provide or cause to be provided to any holder of such Certificates and any
prospective purchaser thereof designated by such a holder, upon the request of
such holder or prospective purchaser, the information required to be provided to
such holder or prospective purchaser by Rule 144A(d)(4) under the Securities
Act; and (2) the Master Servicer shall update such information from time to time
in order to prevent such information from becoming false and misleading and will
take such other actions as are necessary to ensure that the safe harbor
exemption from the registration requirements of the Securities Act under Rule
144A is and will be available for resales of such Certificates conducted in
accordance with Rule 144A.
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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 June 1998, 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:
first, to the Class A-I, Class R-1 and Class
R-2 Certificates, the Accrued Certificate Interest on
such Class for such Distribution Date;
second, to the Class A-I, Class R-1 and
Class R-2 Certificates, any Accrued Certificate
Interest thereon remaining undistributed from
previous Distribution Dates, to the extent of
remaining Group I Available Funds;
third, to the Class A-I, Class R-1 and Class
R-2 Certificates in reduction of the Current
Principal Amounts thereof, the Group I Senior Optimal
Principal Amount for such Distribution Date, to the
extent of remaining Group I Available Funds, in the
following order of priority:
(1) to the Class R-1 and R-2
Certificates, PRO RATA, until the Current
Principal Amount of each such Class has been
reduced to zero; and
(2) to the Class A-I Certificates,
until the Current Principal Amount of such
Class has been reduced to zero;
(ii) On each Distribution Date on or prior to the
Cross-Over Date, an amount equal to the Group II Available
Funds will be distributed in the following order of priority:
first, to the Class A-II Certificates, the
Accrued Certificate Interest on each such Class for
such Distribution Date, any shortfall in available
amounts being allocated between such Classes in
proportion to the amount of Accrued Certificate
Interest otherwise distributable thereon;
second, to the Class A-II Certificates, any
Accrued Certificate Interest thereon remaining
undistributed from previous Distribution Dates, to
the extent of remaining Group II Available Funds, any
shortfall in available amounts being allocated among
such Classes in proportion to the amount of
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such Accrued Certificate Interest remaining
undistributed for each such Class for such
Distribution Date;
third, to the Class A-II Certificates in
reduction of the Current Principal Amounts thereof,
the Group I Senior Optimal Principal Amount for such
Distribution Date to the extent of remaining Group I
Available Funds, until the Current Principal Amount
of such Class has been reduced to zero;
(iii) On each Distribution Date on or prior to the
Cross-Over Date, an amount equal to the Group III Available
Funds will be distributed in the following order of priority:
first, to the Class A-III Certificates, the
Accrued Certificate Interest on such Class for such
Distribution Date;
second, to the Class A-III Certificates, any
Accrued Certificate Interest thereon remaining
undistributed from previous Distribution Dates, to
the extent of remaining Group III Available Funds;
third, to the Class A-III Certificates in
reduction of the Current Principal Amounts thereof,
the Group III Senior Optimal Principal Amount for
such Distribution Date to the extent of remaining
Group III Available Funds, until the Current
Principal Amount of such Class has been reduced to
zero;
(iv) On each Distribution Date on or prior to the
Cross-Over Date, an amount equal to the Group IV Available
Funds will be distributed in the following
order of priority:
first, to the Class A-IV Certificates, the
Accrued Certificate Interest on such Class for such
Distribution Date;
second, to the Class A-IV Certificates, any
Accrued Certificate Interest thereon remaining
undistributed from previous Distribution Dates, to
the extent of remaining Group IV Available Funds;
third, to the Class A-IV Certificates in
reduction of the Current Principal Amounts thereof,
the Group IV Senior Optimal Principal Amount for such
Distribution Date to the extent of remaining Group IV
Available Funds, until the Current Principal Amount
of such Class has been reduced to zero;
(v) On each Distribution Date on or prior to the
Cross-Over Date, an amount equal to the Group V Available
Funds will be distributed in the following order of priority:
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first, to the Class A-V Certificates, the
Accrued Certificate Interest on such Class for such
Distribution Date;
second, to the Class A-V Certificates, any
Accrued Certificate Interest thereon remaining
undistributed from previous Distribution Dates, to
the extent of remaining Group V Available Funds;
third, to the Class A-V Certificates in
reduction of the Current Principal Amounts thereof,
the Group V Senior Optimal Principal Amount for such
Distribution Date to the extent of remaining Group V
Available Funds, until the Current Principal Amount
of such Class has been reduced to zero;
(vi) On each Distribution Date on or prior to the
Cross-Over Date, an amount equal to any remaining Available
Funds following the distributions in (i) through (v) above
will be distributed sequentially, in the following order:
(1) to the Class B-1 Certificates to the
extent of remaining Available Funds, in the following
order: (a) the Accrued Certificate Interest thereon
for such Distribution Date, (b) any Accrued
Certificate Interest thereon remaining undistributed
from previous Distribution Dates and (c) such Class's
Allocable Share for such Distribution Date, until the
Current Principal Amount of such Class has been
reduced to zero;
(2) to the Class B-2 Certificates to the
extent of remaining Available Funds, in the following
order: (a) the Accrued Certificate Interest thereon
for such Distribution Date, (b) any Accrued
Certificate Interest thereon remaining undistributed
from previous Distribution Dates and (c) such Class's
Allocable Share for such Distribution Date, until the
Current Principal Amount of such Class has been
reduced to zero;
(3) to the Class B-3 Certificates to the
extent of remaining Available Funds, in the following
order: (a) the Accrued Certificate Interest thereon
for such Distribution Date, (b) any Accrued
Certificate Interest thereon remaining undistributed
from previous Distribution Dates and (c) such Class's
Allocable Share for such Distribution Date, until the
Current Principal Amount of such Class has been
reduced to zero;
(4) to the Class B-4 Certificates to the
extent of remaining Available Funds, in the following
order: (a) the Accrued Certificate Interest thereon
for such Distribution Date, (b) any Accrued
Certificate Interest thereon remaining undistributed
from previous Distribution Dates and (c) such Class's
Allocable Share for such Distribution Date, until the
Current Principal Amount of such Class has been
reduced to zero;
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(5) to the Class B-5 Certificates to the
extent of remaining Available Funds, in the following
order: (a) the Accrued Certificate Interest thereon
for such Distribution Date, (b) any Accrued
Certificate Interest thereon remaining undistributed
from previous Distribution Dates and (c) such Class's
Allocable Share for such Distribution Date, until the
Current Principal Amount of such Class has been
reduced to zero; and
(6) to the Class B-6 Certificates to the
extent of remaining Available Funds, in the following
order: (a) the Accrued Certificate Interest thereon
for such Distribution Date, (b) any Accrued
Certificate Interest thereon remaining undistributed
from previous Distribution Dates and (c) such Class's
Allocable Share for such Distribution Date, until the
Current Principal Amount of such Class has been
reduced to zero.
(vii) On each Distribution Date prior to the
occurrence of the Cross-Over Date but after the reduction of
the Current Principal Amount of any Class of Class A
Certificates to zero, the remaining Class or Classes of Class
A Certificates will be entitled to receive in reduction of
their Current Principal Amounts, PRO RATA based upon their
Current Principal Amounts immediately prior to such
Distribution Date, in addition to any Principal Prepayments
related to such remaining Class A Certificates' respective
Mortgage Loan Group allocated to such Class A Certificates,
100% of the Principal Prepayments on any Mortgage Loan in the
Mortgage Loan Group relating to the fully repaid Class A
Certificates; provided, however, (a) if the Distribution Date
is prior to the Distribution Date occurring in June 2004 and
the aggregate Current Principal Amount of the Subordinate
Certificates is more than 50% of the initial aggregate
principal amount of the Subordinate Certificates, or (b) if
the Distribution Date is on or after the Distribution Date
occurring in June 2004 and the aggregate Current Principal
Amount of the Subordinate Certificates is more than 25% of the
initial aggregate principal amount of the Subordinate
Certificates, no such diversion of amounts of Principal
Prepayments otherwise due to the Subordinate Certificates in
accordance with (vi) above will be required to be made. In
addition, if on any Distribution Date on which the aggregate
Current Principal Amount of any Class or Classes of Class A
Certificates would be greater than the aggregate Scheduled
Principal Balance of the Mortgage Loans in its related
Mortgage Loan Group and any Class B Certificates are still
outstanding, in each case after giving effect to distributions
to be made on such Distribution Date, 100% of the Principal
Prepayments otherwise allocable to the Class B Certificates on
the Mortgage Loans in the other Mortgage Loan Groups will be
distributed to such Class or Classes of Class A Certificates
in reduction of the Current Principal Amounts thereof, until
the aggregate Current Principal Amount of such Class or
Classes of Class A Certificates is an amount equal to the
aggregate Scheduled Principal Balance of the Mortgage Loans in
its related Mortgage Loan Group.
(viii) On each Distribution Date, any Group Available
Funds remaining after payment of interest and principal to the
Classes of Certificates entitled thereto, as described above,
will be distributed to the Class R-2 Certificates; provided
that if
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on any Distribution Date there are any Group Available Funds
remaining after payment of interest and principal to a Class
or Classes of Certificates entitled thereto, such Group
Available Funds will be distributed to the other Classes of
Class A Certificates, PRO RATA, based upon their Current
Principal Amounts, until all amounts due to all Classes of
Class A Certificates have been paid in full, before any such
remaining Group Available Funds are distributed to the Class
R-2 Certificates.
(b) On each Distribution Date, the funds available
for distribution shall be allocated to distributions on the REMIC II
Regular Interests in an amount sufficient to make the distributions on
the respective Corresponding Classes of Certificates on such Payment
Date in accordance with the provisions of subsection (a) of this
Section 6.01.
(c) No Accrued Certificate Interest will be payable with
respect to any Class of Certificates after the Distribution Date on which the
outstanding principal balance of such Certificate
has been reduced to zero.
Section 6.02. ALLOCATION OF DEFERRED INTEREST. (a) On or
prior to each Determination Date, the Trustee shall determine the amount of any
Deferred Interest in respect of each Mortgage Loan that occurred during the
immediately preceding calendar month.
(b) With respect to any Distribution Date, any Deferred
Interest with respect to a Mortgage Loan will be allocated to increase the
Current Principal Amount of each related Class
of Certificates in the following manner:
first, to the Class or Classes of Senior Certificates related to the
Mortgage Loan Group containing such Mortgage Loan (PRO RATA based on
Current Principal Amount in the case of the Class A-I, Class R-1 and
Class R-2 Certificates) in an amount equal to the amount of Deferred
Interest with respect thereto times (x) the aggregate Current Principal
Amount of such Class or Classes of Senior Certificates over (y) the
aggregate principal balance of all Mortgage Loans in the related
Mortgage Loan Group; and
second, all remaining amounts of Deferred Interest, not allocated to
the related Class or Classes of Senior Certificates pursuant to
priority "first" above, to the Classes of Subordinate Certificates, PRO
RATA, based upon the Current Principal Amount of each such Class, and
if after the Cross-Over Date, to the Class or Classes of Senior
Certificates related to the Mortgage Loan Group containing such
Mortgage Loan (PRO RATA based on Current Principal Amount in the case
of the Class A-I, Class R-1 and Class R-2 Certificates).
(c) On each Distribution Date on which the Current Principal
Amount of a Class of Certificates is increased by Deferred Interest in
accordance with Section 6.02(b) above, the interest payable on such Class shall
be decreased by an equivalent amount.
Section 6.03. ALLOCATION OF LOSSES. (a) On or prior to each
Determination Date, the Master Servicer shall determine the amount of any
Realized Loss in respect of each Mortgage Loan that occurred during the
immediately preceding calendar month.
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(b) With respect to any Distribution Date, the principal
portion of each Realized Loss shall be allocated as follows:
first, to the Class B-6 Certificates until the
Current Principal Amount thereof has been reduced to zero;
second, to the Class B-5 Certificates until the
Current Principal Amount thereof has been reduced to zero;
third, to the Class B-4 Certificates until the
Current Principal Amount thereof has been reduced to zero;
fourth, to the Class B-3 Certificates until the
Current Principal Amount thereof has been reduced to zero;
fifth, to the Class B-2 Certificates until the
Current Principal Amount thereof has been reduced to zero;
sixth, to the Class B-1 Certificates until the
Current Principal Amount thereof has been reduced to zero; and
seventh, to the Classes of Senior Certificates, PRO
RATA, based upon the respective Current Principal Amounts
thereof.
(c) Notwithstanding the foregoing, no such allocation of any
Realized Loss shall be made on a Distribution Date to a Class of Certificates to
the extent that such allocation would result in the reduction of the aggregate
Current Principal Amounts of all the Certificates as of such Distribution Date,
after giving effect to all distributions and prior allocations of Realized
Losses on such date, to an amount less than the aggregate Scheduled Principal
Balance of all of the Mortgage Loans as of the first day of the month of such
Distribution Date (such limitation, the "Loss Allocation Limitation").
(d) Any Realized Losses allocated to a Class of Certificates
pursuant to Subsection 6.03(b) shall be allocated among the Certificates of such
Class in proportion to their respective Current Principal Amounts. Any
allocation of Realized Losses pursuant to this Subsection 6.03(d) shall be
accomplished by reducing the Current Principal Amount of the related
Certificates on the related Distribution Date in accordance with Subsection
6.03(e).
(e) Realized Losses allocated in accordance with this Section
6.03 shall be allocated on the Distribution Date in the month following the
month in which such loss was incurred and, in the case of the principal portion
thereof, after giving effect to distributions made on such
Distribution Date.
(f) On each Distribution Date, the Trustee shall determine the
Subordinate Certificate Writedown Amount, if any. Any such Subordinate
Certificate Writedown Amount shall be allocated in reduction of the Current
Principal Amounts of the Classes of the Subordinate
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Certificates in the reverse order of their numerical Class designations and from
and after the CrossOver Date, shall be allocated in reduction of the Current
Principal Amounts of the Classes of Senior Certificates, PRO RATA based on their
respective Current Principal Amounts, which reduction shall occur on such
Distribution Date after giving effect to distributions made on such Distribution
Date.
(g) Any Net Interest Shortfall will be allocated among the
Classes of Certificates in proportion to the respective amounts of Accrued
Certificate Interest that would have been allocated thereto in the absence of
such Net Interest Shortfall, and any Deferred Interest or the interest portion
of any Realized Loss, for such Distribution Date. The interest portion of
Realized Losses with respect to all Mortgage Loans will be allocated first to
the Subordinate Certificates in reverse order of their numerical designations
commencing with the Class B-6 Certificates and following the Cross-Over Date,
the interest portion of Realized Losses will be allocated PRO RATA to the
Classes of Senior Certificates based on the respective amounts of Accrued
Certificate Interest that would have been allocated thereto in the absence of
any Net Interest Shortfall, Deferred Interest and the interest portion of
Realized Losses. The amount of any interest shortfalls with respect to the
related Mortgage Loan Group that are covered by subordination will constitute
unpaid Accrued Certificate Interest and will be distributable to holders of the
Certificates of the related Classes entitled to such amounts on subsequent
Distribution Dates, to the extent of applicable Group Available Funds after
interest distributions as required herein. Any such amount so carried forward
will not bear interest.
(h) With respect to any Distribution Date prior to the
Cross-Over Date, Realized Losses shall be allocated to the REMIC II Regular
Certificates in a manner similar to the allocation of Realized Losses to the
REMIC I Regular Certificates under this Section 6.03, except that any losses
allocated to a Class B Certificate shall be allocated to the REMIC II Class
IIB-1, Class IIB-2, Class IIB-3, Class IIB-4 or Class IIB-5 Certificates if the
loss is attributable to a Group I Mortgage Loan, Group II Mortgage Loan, Group
III Mortgage Loan, Group IV Mortgage Loan or Group V Mortgage Loan,
respectively. With respect to any Distribution Date after the Cross-Over Date,
Realized Losses shall be allocated to the REMIC II Regular Certificates in an
amount such that distributions on the REMIC II Regular Certificates are an
amount sufficient to make the distributions on the respective Corresponding
Classes of Certificates on such Distribution Date in accordance with the
provisions of subsection (a) of Section 6.01.
(i) On each Distribution Date, the Trustee shall withdraw from
the Certificate Account any Excess Liquidation Proceeds on deposit therein and
distribute such amounts to the holders of the Subordinate Certificates in the
order of payment priority, to the extent of any Realized Losses allocated
thereto, until such Realized Losses have been fully reimbursed.
Section 6.04. PAYMENTS. (a) No later than the Determination
Date, the Master Servicer shall provide to the Trustee and in such electronic
format as the Trustee may reasonably request any information with respect to the
Mortgage Loans required to enable the Trustee to make, or cause its agent to
make, distributions on the Certificates and prepare reports to
Certificateholders.
(b) On each Distribution Date, other than the final
Distribution Date, the Trustee shall distribute to each Certificateholder of
record on the directly preceding Record Date the Certificateholder's PRO RATA
share of its Class (based on the aggregate Fractional Undivided Interest
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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 6.04(a).
(c) Payment of the above amounts to each Certificateholder
shall be made (i) by check mailed to each Certificateholder entitled thereto at
the address appearing in the Certificate Register or (ii) upon receipt by the
Trustee on or before the fifth Business Day preceding the Record Date of written
instructions from a Certificateholder holding Certificates representing an
initial aggregate Current Principal Amount of not less than $1,000,000 by wire
transfer to a United States dollar account maintained by the payee at any United
States depository institution with appropriate facilities for receiving such a
wire transfer; PROVIDED, HOWEVER, that the final payment in respect of each
Class of Certificates will be made only upon presentation and surrender of such
respective Certificates at the office or agency of the Trustee specified in the
notice to Certificateholders of such final payment.
Section 6.05. STATEMENTS TO CERTIFICATEHOLDERS. (a)
Concurrently with each distribution to Certificateholders, the Trustee shall
forward by first-class mail to each Certificateholder, with a copy to the
Seller, the Master Servicer and the Rating Agencies, a statement setting forth
the following information, expressed with respect to clauses (i) through (vi) in
the aggregate and as a Fractional Undivided Interest representing an initial
Current Principal Amount of $1,000 or in the case of the Class R-1 or R-2
Certificates, an initial Current Principal Amount of $50:
(i) the Current Principal Amount of each Class of
Certificates immediately prior to such Distribution Date;
(ii) the amount of the distribution allocable to
principal on each applicable Class of Certificates;
(iii) the aggregate amount of interest accrued at the
related Pass-Through Rate with respect to each Class of
Certificates during the related Interest Accrual
Period;
(iv) the Net Interest Shortfall, Deferred Interest
and any other adjustments to interest at the related
Pass-Through Rate necessary to account for any difference
between interest accrued and aggregate interest distributed
with respect to each Class of Certificates;
(v) the amount of the distribution allocable to
interest on each Class of Certificates;
(vi) the Pass-Through Rates for each Class of
Certificates with respect to such Distribution Date;
(vii) the Current Principal Amount of each Class of
Certificates after such
Distribution Date;
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(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 the amount
of any Excess Liquidation Proceeds paid thereon as a
reimbursement); and
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(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 6.04(a) and, with respect to prior
periods, Section 6.05, 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 1999, the Trustee
will furnish a report to each Holder of the Certificates of record at any time
during the prior calendar year as to the aggregate of amounts reported pursuant
to subclauses (a)(ii) and (a)(v) above with respect to the Certificates, plus
information with respect to the amount of servicing compensation and such other
customary information as the Master Servicer determines and advises the Trustee
to be necessary and/or to be required by the Internal Revenue Service or by a
federal or state law or rules or regulations to enable such Holders to prepare
their tax returns for such calendar year. Copies of such report shall also be
furnished to the Master Servicer. Such obligations shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to the requirements of the Code.
The Master Servicer shall supply to the Trustee in a timely
manner the information required for the statements described above which, where
appropriate, shall be the information from which the Trustee can calculate the
statements it is required to make.
Section 6.06. 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. After the receipt by the Master Servicer of
such statement, the Master Servicer will notify the Trustee of any discrepancies
in such statement from the records of the Master Servicer. The Trustee and the
Master Servicer shall resolve such discrepancies within thirty days of
notification or other period of time mutually agreeable to the parties.
(b) On or before the Determination Date, the Master Servicer
shall provide to the Trustee (and with respect to the information contained in
subclause (xiv) hereof, the Seller), with respect to the Mortgage Loans and the
REO Property, respectively, a Loan Summary and Remittance Report in such
electronic format as the Trustee may reasonably request and in such hardcopy
format as the Master Servicer and the Trustee shall agree which, if there are
Sub-Servicers, shall be based upon reports from Sub-Servicers, if any, received
by the Master Servicer on or before the seventh Business Day of such month with
respect to the Mortgage Loans and REO Property and containing the following
information (in respect of the REO Property, only such information which is
applicable):
(i) Aggregate deposits to and withdrawals from each
subaccount of the Certificate Account since the date of the
prior statement, stated separately for each
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category of deposit specified in Section 4.02 and each
category of withdrawal specified in Section 4.03, indicating
separately the aggregate of amounts withdrawn which are not
applicable to a particular Mortgage Loan;
(ii) Amount of Group Available Funds expected for the
related Distribution Date and attributable to each of the
following categories:
(A) regularly scheduled principal;
(B) Principal Prepayments (stated separately for (v)
partial prepayments, (v) full prepayments, (w) Net
Liquidation Proceeds, stating Liquidation Proceeds
and Liquidation Expenses separately), (x) Insurance
Proceeds, (y) the purchase price in connection with
the purchase of a Mortgage Loan, and (z) any cash
deposit in connection with the substitution of a
Mortgage Loan;
(C) interest on the Mortgage Loans;
(D) Monthly Advances made by the Master Servicer;
(E) Certificate Account Advances;
(F) Compensating Interest Payments; and
(G) reimbursements in connection with losses on Permitted
Investments.
(iii) Aggregate Outstanding Principal Balances of the
Mortgage Loans as of the related Due Date, without giving
effect to payments due on such date;
(iv) Realized Losses for the prior month;
(v) Aggregate Scheduled Principal Balance of the
Mortgage Loans as of the related Due Date;
(vi) Book value of any collateral acquired by means
of foreclosure, grant of deed in lieu of foreclosure or
otherwise in respect of any Mortgage Loan;
(vii) Number and aggregate principal balance of
Mortgage Loans which are 30, 60, 90 and 120 days delinquent as
calculated by the Master Servicer, those which are in
foreclosure, those with respect to which the related Mortgagor
is bankrupt, and those which are REO Property;
(viii) Interest Shortfall with respect to the related
Distribution Date and portion thereof resulting from Voluntary
Principal Prepayments in full or the provisions of the Relief
Act;
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(ix) Amount, if any, by which the aggregate of
payments of scheduled principal and interest on the Mortgage
Loans that were due on the related Due Date and delinquent,
other than as a result of the Relief Act, as of the 18th day
of such month exceeds the sum of the Monthly Advances to be
made by the Master Servicer and Certificate Account Advances
for such Distribution Date;
(x) Aggregate Master Servicing Fee for the related
Due Period; and
(xi) Such other information regarding each Mortgage
Loan, including, but not limited to, an updated schedule of
the Scheduled Principal Balances of the Mortgage Loans as of
the related Due Date, in such electronic format, as may be
reasonably requested by the Trustee and, if requested, in such
hardcopy format as the Master Servicer and the Trustee shall
agree.
(c) Not later than three Business Days after each Distribution
Date, the Trustee shall provide written confirmation to the Master Servicer that
the Trustee's books and records are in accordance with the updated schedule of
the Scheduled Principal Balances of the Mortgage Loans provided that month by
the Master Servicer, and if discrepancies exist, the Trustee shall list such
discrepancies on a schedule thereto with a copy to the Seller.
Section 6.07. MONTHLY ADVANCES. If the Scheduled Payment
(together with any advances from any Sub-Servicers) on a Mortgage Loan that was
due on a related Due Date and is delinquent other than as a result of
application of the Relief Act exceeds the amount deposited in the Custody
Account or the Certificate Account which will be used for a Certificate Account
Advance with respect to such Mortgage Loan, the Master Servicer will deposit in
the appropriate subaccount of the Certificate Account not later than the
Advancing Date immediately preceding the related Distribution Date an amount
equal to such deficiency or in the case of a Simple Interest Loan, such
deficiency up to 30-days interest on the Outstanding Principal Balance thereof
as of the beginning of the related Prepayment Period, in each case net of the
related Master Servicing Fee for such Mortgage Loan except to the extent the
Master Servicer determines any such advance to be nonrecoverable from
Liquidation Proceeds, Insurance Proceeds or future payments on the Mortgage Loan
for which such Monthly Advance was made. Subject to the foregoing, the Master
Servicer shall continue to make such advances through the date that the related
Mortgaged Property has, in the judgment of the Master Servicer, been completely
liquidated. Any amount used as a Certificate Account Advance shall be replaced
by the Master Servicer by deposit in the appropriate subaccount of the
Certificate Account on or before any future date on which and to the extent that
funds in the appropriate subaccount of the Certificate Account on such date are
less than the amount required to be transferred by the Master Servicer to such
subaccount of the Certificate Account. If applicable, on the fifth Business Day
preceding each Distribution Date, the Master Servicer shall present an Officer's
Certificate to the Trustee (i) stating that the Master Servicer elects not to
make a Monthly Advance in a stated amount and (ii) detailing the reason it deems
the advance to be nonrecoverable.
Section 6.08. COMPENSATING INTEREST PAYMENTS. The Master
Servicer shall deposit in the Certificate Account not later than the Advancing
Date immediately preceding the related Distribution Date an amount equal to the
lesser of (i) the aggregate amounts determined pursuant to subclauses (a) and
(b) of the definition of Interest Shortfall for the related Distribution Date
and (ii)
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the Master Servicing Fee for such Distribution Date (such amount, the
"Compensating Interest Payment"). The Master Servicer shall not be entitled to
any reimbursement of any Compensating Interest Payment.
Section 6.09. 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.
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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
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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 7.06, the Master Servicer shall not resign from the
obligations and duties hereby imposed on it except upon a determination that any
such duties hereunder are no longer permissible under applicable law.
Any such determination permitting the resignation of the Master Servicer shall
be evidenced by an Opinion of Independent Counsel to such effect delivered to
the Trustee. No such resignation by the Master Servicer shall become effective
until the Trustee or a successor to the Master Servicer reasonably satisfactory
to the Trustee shall have assumed the responsibilities and obligations of the
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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. SALE AND ASSIGNMENT OF MASTER SERVICING. The
Master Servicer may sell and assign its rights and delegate its duties and
obligations in their entirety as Master Servicer under this Agreement; PROVIDED,
HOWEVER, that: (i) the purchaser or transferee accepting such assignment and
delegation (a) shall be a Person which shall be qualified to service mortgage
loans for FNMA or FHLMC; (b) shall have a net worth of not less than $10,000,000
(unless otherwise approved by each Rating Agency pursuant to clause (ii) below);
(c) shall be reasonably satisfactory to the Trustee (as evidenced in a writing
signed by the Trustee) as having a comparable servicing ability to that of the
Master Servicer on the Closing Date; (d) shall execute and deliver to the
Trustee an agreement, in form and substance reasonably satisfactory to the
Trustee, which contains an assumption by such Person of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by it as master servicer under this Agreement, any custodial agreement
and any agreement substantially in the form of Exhibit G hereto from and after
the effective date of such agreement; (ii) each Rating Agency shall be given
prior written notice of the identity of the proposed successor to the Master
Servicer and each Rating Agency's rating of the Certificates in effect
immediately prior to such assignment, sale and delegation will not be downgraded
or withdrawn as a result of such assignment, sale and delegation, as evidenced
by a letter to such effect delivered to the Master Servicer and the Trustee; and
(iii) the Master Servicer assigning and selling the master servicing shall
deliver to the Trustee an Officer's Certificate and an Opinion of Independent
Counsel, each stating that all conditions precedent to such action under this
Agreement have been completed and such action is permitted by and complies with
the terms of this Agreement. No such assignment or delegation shall affect any
liability of the Master Servicer arising prior to the effective date thereof.
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ARTICLE VIII
Default
Section 8.01. EVENTS OF DEFAULT. "Event of Default," wherever
used herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) The Master Servicer fails to cause to be
deposited in the Certificate Account any amount so required
to be deposited pursuant to this Agreement, and such failure
continues unremedied for a period of two Business Days after
the date such deposit was required to be made; or
(ii) The Master Servicer fails to observe or perform
in any material respect any other covenants and agreements set
forth in the Certificates or this Agreement to be performed by
it, which covenants and agreements materially affect the
rights of Certificateholders, and such failure continues
unremedied for a period of 60 days after the date on which
written notice of such failure, properly requiring the same to
be remedied, shall have been given to the Master Servicer by
the Trustee or to the Master Servicer and the Trustee by the
Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 25% of the Trust Fund; or
(iii) There is entered against the Master Servicer a
decree or order by a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a
conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding up or liquidation of
its affairs, and the continuance of any such decree or order
is unstayed and in effect for a period of 60 consecutive days,
or an involuntary case is commenced against the Master
Servicer under any applicable insolvency or reorganization
statute and the petition is not dismissed within 60 days after
the commencement of the case; or
(iv) The Master Servicer consents to the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to the Master Servicer or
substantially all of its property; or the Master Servicer
admits in writing its inability to pay its debts generally as
they become due, files a petition to take advantage of any
applicable insolvency or reorganization statute, makes an
assignment for the benefit of its creditors, or voluntarily
suspends payment of its obligations; or
(v) The Master Servicer assigns or delegates its
duties or rights under this Agreement in contravention of the
provisions permitting such assignment or delegation under
Sections 7.05 or 7.06.
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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
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<PAGE>
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.
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<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
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<PAGE>
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
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<PAGE>
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;
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<PAGE>
(ix) The Trustee shall not be required to give any
bond or surety with respect to the execution of the trust
created hereby or the powers granted hereunder; and
(x) The Trustee shall have no duty to conduct any
affirmative investigation as to the occurrence of any
condition requiring the repurchase of any Mortgage Loan by
BSMCC pursuant to this Agreement or the eligibility of any
Mortgage Loan for purposes of this Agreement.
Section 9.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE
LOANS. The recitals contained herein and in the Certificates (other than the
signature and countersignature of the Trustee on the Certificates) shall be
taken as the statements of the Seller, and the Trustee shall have no
responsibility for their correctness. The Trustee makes no representation as to
the validity or sufficiency of the Certificates (other than the signature and
countersignature of the Trustee on the Certificates) or of any Mortgage Loan
except as expressly provided in Sections 2.02 and 2.06 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 2.06, the Trustee shall not be responsible
for the legality or validity of this Agreement or any document or instrument
relating to this Agreement, the validity of the execution of this Agreement or
of any supplement hereto or instrument of further assurance, or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
hereunder or intended to be issued hereunder. The Trustee shall at no time have
any responsibility or liability for or with respect to the legality, validity
and enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Fund or its ability to
generate the payments to be distributed to Certificateholders, under this
Agreement. The Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 9.04. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual capacity or in any capacity other than as Trustee hereunder may
become the owner or pledgee of any Certificates with the same rights it would
have if it were not Trustee, and may otherwise deal with the parties hereto.
Section 9.05. TRUSTEE'S FEES AND EXPENSES. The Master Servicer
covenants and agrees to pay to the Trustee the Trustee's Fees with respect to
the calendar month in which the Closing Date occurs. With respect to the
calendar month following the month in which the Closing Date occurs and all
subsequent calendar months, the Trustee's Fees shall be paid from the
Certificate Account, pursuant to Subsection 4.03(b). The Trustee will be
entitled to recover from the Certificate Account pursuant to Subsection 4.03(b)
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 Bear, Stearns & Co. (including the
reasonable compensation,
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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. To
the extent funds in the Certificate Account are insufficient to cover such
expenses, the Trustee may recover such expenses from the Master Servicer. Such
compensation and reimbursement obligation shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust.
Section 9.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The
Trustee and any successor Trustee shall during the entire duration of this
Agreement be a state bank or trust company or a national banking association
organized and doing business under the laws of such state or the United States
of America, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus and undivided profits of at least
$40,000,000 or, in the case of a successor Trustee, $50,000,000, subject to
supervision or examination by federal or state authority and, in the case of a
successor Trustee other than pursuant to Section 9.10, rated in one of the two
highest long-term debt categories of, or otherwise acceptable to, each of the
Rating Agencies. The Trustee shall not be an Affiliate of the Master Servicer,
unless the Trustee acts as successor Master Servicer hereunder. If the Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 9.06 the combined capital and surplus of such
corporation shall be deemed to be its total equity capital (combined capital and
surplus) as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 9.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.08.
Section 9.07. INSURANCE. The Trustee, at its own expense,
shall at all times maintain and keep in full force and effect: (i) fidelity
insurance, (ii) theft of documents insurance and (iii) forgery insurance (which
may be collectively satisfied by a "Financial Institution Bond" and/or a
"Bankers' Blanket Bond"). All such insurance shall be in amounts, with standard
coverage and subject to deductibles, as are customary for insurance typically
maintained by banks which act as custodians for investor-owned mortgage pools. A
certificate of an officer of the Trustee as to the Trustee's compliance with
this Section 9.07 shall be furnished to the Master Servicer or any
Certificateholder upon reasonable written request.
Section 9.08. RESIGNATION AND REMOVAL OF THE TRUSTEE. (a) The
Trustee may at any time resign and be discharged from the Trust hereby created
by giving written notice thereof to the Master Servicer, with a copy to the
Rating Agencies. Upon receiving such notice of resignation, the Master Servicer
shall promptly appoint a successor Trustee by written instrument, in triplicate,
one copy of which instrument shall be delivered to each of the resigning Trustee
and the successor Trustee. If no successor Trustee shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.06 and shall fail to resign after
written request therefor by the Master Servicer or if at any time the Trustee
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or a receiver of the Trustee or of its property shall be appointed, or any
public
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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.
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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,
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properties rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
(g) No trustee under this Agreement shall be personally liable
by reason of any act or omission of another trustee under this Agreement. The
Master Servicer and the Trustee acting jointly may at any time accept the
resignation of or remove any separate trustee or co-trustee, except that
following the occurrence of any Event of Default which has not been cured, the
Trustee acting alone may accept the resignation of or remove any separate
trustee or co-trustee.
Section 9.12. MASTER SERVICER SHALL PROVIDE INFORMATION AS
REASONABLY Required. The Master Servicer shall furnish to the Trustee, during
the term of this Agreement, such periodic, special, or other reports or
information (and in such electronic format) as may reasonably be requested by
the Trustee in order to fulfill its duties and obligations under this Agreement.
Section 9.13. FEDERAL INFORMATION RETURNS AND REPORTS TO
CERTIFICATEHOLDERS. (a) For Federal income tax purposes, the taxable year of
each of REMIC I and REMIC II shall be a calendar year and the Trustee shall
maintain or cause the maintenance of the books of each of REMIC I and REMIC II
Assets on the accrual method of accounting.
(b) The Trustee shall prepare and file or cause to be filed
with the Internal Revenue Service Federal tax information returns with respect
to each of REMIC I and REMIC II, the Trust Fund, if applicable, and the
Certificates containing such information and at the times and in the manner as
may be required by the Code or applicable Treasury regulations, and shall
furnish to each Holder of Certificates at any time during the calendar year for
which such returns or reports are made such statements or information at the
times and in the manner as may be required thereby. In connection with the
foregoing, the Trustee shall provide the name and address of the person who can
be contacted to obtain information required to be reported to the holders of
regular interests in each of REMIC I and REMIC II (the "REMIC Reporting Agent")
as required by IRS Form 8811. The Trustee shall make the elections to treat each
of REMIC I and REMIC II as a REMIC (which election shall apply to the taxable
period ending December 31, 1998 and each calendar year thereafter) in such
manner as the Code or applicable Treasury regulations may prescribe. The Trustee
shall sign all tax information returns filed pursuant to this Section and any
other returns as may be required by the Code, and in doing so shall rely
entirely upon, and shall have no liability for information provided by, or
calculations provided by, the Seller or the Master Servicer. The Holder of the
Class R-1 Certificate is hereby designated as the "Tax Matters Person" (within
the meaning of Treas. Reg. ss.ss. 1.860F-4(d)) for REMIC I, and the Holder of
the Class R-2 Certificate is hereby designated as "Tax Matters Person" for REMIC
II. The Trustee is hereby designated and appointed as the agent of each such Tax
Matters Person. Any Holder of a Residual Certificate will by acceptance thereof
appoint the Trustee as agent and attorney-in-fact for the purpose of acting as
Tax Matters Person for each of REMIC I and REMIC II during such time as the
Trustee does not own any such Residual Certificate. In the event that the Code
or applicable Treasury regulations prohibit the Trustee from signing tax or
information returns or other statements, or the Trustee from acting as Tax
Matters Person (as an agent or otherwise), the Trustee shall take whatever
action that in its sole good faith judgment is necessary for the proper filing
of such information returns or for the provision of a tax matters person,
including designation of the Holder of a Residual Certificate to
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sign such returns or act as tax matters person. Each Holder of a Residual
Certificate shall be bound by this Section.
(c) The Trustee shall provide upon request such information
(which shall be provided by the Master Servicer) as required in Section
860D(a)(6)(B) of the Code to the Internal Revenue Service, to any Person
purporting to transfer a Residual Certificate to a Person other than a
transferee permitted by Section 5.05(b), and to any regulated investment
company, real estate investment trust, common trust fund, partnership, trust,
estate, organization described in Section 1381 of the Code, or nominee holding
an interest in a pass-through entity described in Section 860E(e)(6) of the
Code, any record holder of which is not a transferee permitted by Section
5.05(b) (or which is deemed by statute to be an entity with a disqualified
member).
(d) The Trustee shall prepare and file or cause to be filed
any state income tax returns required under Applicable State Law with respect to
each of REMIC I and REMIC II or the
Trust Fund.
IX-9
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ARTICLE X
Termination
Section 10.01. TERMINATION UPON REPURCHASE BY THE SELLER OR
ITS DESIGNEE OR LIQUIDATION OF ALL MORTGAGE LOANS. (a) Subject to Section 10.02,
the respective obligations and responsibilities of the Seller, the Master
Servicer and the Trustee created hereby, other than the obligation of the
Trustee or the Master Servicer to make payments to Certificateholders as
hereinafter set forth and to the Trustee, shall terminate upon:
(i) the repurchase by or at the direction of the
Seller or its designee of all Mortgage Loans and all property
remaining in the Trust at a price equal to (a) 100%
of the Outstanding Principal Balance of each Mortgage Loan
(other than a Mortgage Loan related to REO Property) as of the
date of repurchase, net of the principal portion of any
unreimbursed Monthly Advances made by the purchaser, together
with interest at the applicable Mortgage Interest Rate accrued
but unpaid through and including the last day of the month of
repurchase, plus (b) the appraised value of any REO Property
(but not more than the Outstanding Principal Balance of the
related Mortgage Loan, together with interest at the
applicable Mortgage Interest Rate accrued on that balance but
unpaid through and including the last day of the month of
repurchase), less the good faith estimate of the Seller of
liquidation expenses to be incurred in connection with its
disposal thereof, such appraisal to be calculated by an
appraiser mutually agreed upon by the Seller and the Trustee
at the expense of the Seller; or
(ii) the later of the making of the final payment or
other liquidation, or any advance with respect thereto, of the
last Mortgage Loan remaining in the Trust Fund or the
disposition of all property acquired with respect to any
Mortgage Loan; PROVIDED, HOWEVER, that in the event that an
advance has been made, but not yet recovered, at the time of
such termination, the Person having made such advance shall be
entitled to receive, notwithstanding such termination, any
payments received subsequent thereto with respect to which
such advance was made.
(b) In no event, however, shall the Trust created hereby
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late Ambassador of the United
States to the Court of St. James, living on the date of this Agreement.
(c) The right of the Seller or its designee to repurchase all
Mortgage Loans pursuant to Subsection 10.01(a)(i) above shall be exercisable
only if (i) the aggregate unpaid principal balance of such Mortgage Loans at the
time of any such repurchase is less than 5% of the Cut-off Date Balance or (ii)
the Seller based upon an Opinion of Counsel, has determined that the REMIC
status of either REMIC I or REMIC II has been lost or that a substantial risk
exists that such REMIC status will be lost for the then-current taxable year. At
any time thereafter, the Master Servicer may elect to terminate the Trust at any
time, and upon such election, the Master Servicer or its designee shall
repurchase all the Mortgage Loans.
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(d) 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.
(e) If the option of the Seller to repurchase or cause the
repurchase of all Mortgage Loans under Subsection 10.01(a)(i) above is
exercised, the Seller and/or its designee, as the case may be, shall deliver to
the Trustee for deposit in the Certificate Account, by the Business Day prior to
the applicable Distribution Date, an amount equal to the repurchase price for
the Mortgage Loans being purchased by it and all property acquired with respect
to such Mortgage Loans remaining in the Trust. Upon the presentation and
surrender of the Certificates, the Trustee shall distribute an amount equal to
(i) the amount otherwise distributable to the Certificateholders (other than the
holder of the Class R-2 Certificate) on such Distribution Date but for such
repurchase, (ii) the Current Principal Amount and any accrued but unpaid
interest at the Pass-Through Rate to the Certificateholders of each Class, and
(iii) the remainder to the Class R-2 Certificateholder. Upon deposit of the
required repurchase price and delivery to the Trustee of an Officer's
Certificate from the Master Servicer certifying that such deposit in the
Certificate Account has been made, and following such final Distribution Date,
the Trustee shall promptly release to the Master Servicer and/or its designee,
as the case may be, the Mortgage Files for the remaining Mortgage Loans, and the
Accounts shall terminate, subject to the Trustee's obligation to hold any
amounts payable to Certificateholders in trust without interest pending final
distributions pursuant to Subsection 10.01(g).
(f) In the event that this Agreement is terminated by reason
of the payment or liquidation of all Mortgage Loans or the disposition of all
property acquired with respect to all Mortgage Loans under Subsection
10.01(a)(ii) above, the Master Servicer shall deliver to the Trustee for deposit
in the appropriate subaccount of the Certificate Account all distributable
amounts remaining in the Custody Account and shall cause any Sub-Servicers to
deliver to the Trustee for deposit in the appropriate subaccount of the
Certificate Account all distributable amounts remaining in their Protected
Accounts. Upon the presentation and surrender of the Certificates, the Trustee
shall distribute to the Certificateholders, in accordance with their respective
interests, all distributable amounts remaining in the Certificate Account. Upon
deposit by any Sub-Servicers of such distributable amounts and delivery to the
Trustee of an Officer's Certificate from the Master Servicer certifying that
such deposit has been made, and following such final Distribution Date, the
Trustee shall promptly release to the Master Servicer the Mortgage Files for the
remaining Mortgage Loans, and the Accounts shall terminate, subject to the
Trustee's obligation to hold any amounts payable to the Certificateholders in
trust without interest pending final distributions pursuant to Subsection
10.01(g).
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<PAGE>
(g) If not all of the Certificateholders shall surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, not all the Certificates shall have been
surrendered for cancellation, the Trustee may take appropriate steps, or appoint
any agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets which remain subject to this Agreement.
Section 10.02. ADDITIONAL TERMINATION REQUIREMENTS. (a) If the
option of the Seller to repurchase all the Mortgage Loans under Subsection
10.01(a)(i) above is exercised, the Trust and each of REMIC I and REMIC II shall
be terminated in accordance with the following additional requirements, unless
the Trustee has been furnished with an Opinion of Counsel to the effect that the
failure of the Trust to comply with the requirements of this Section 10.02 will
not (i) result in the imposition of taxes on "prohibited transactions" as
defined in Section 860F of the Code on each of REMIC I and REMIC II or (ii)
cause each of REMIC I and REMIC II to fail to qualify as a REMIC at any time
that any Regular Certificates are outstanding:
(i) within 90 days prior to the final Distribution
Date, at the written direction of the Master Servicer, the
Trustee, as agent for the respective Tax Matters Persons,
shall adopt a plan of complete liquidation of the Trust Fund
and each of REMIC I and II provided to it by the Master
Servicer meeting the requirements of a "Qualified Liquidation"
under Section 860F of the Code and any regulations thereunder
as prepared by EMC;
(ii) at or after the time of adoption of such a plan
of complete liquidation and at or prior to the final
Distribution Date, the Trustee shall sell for cash all of the
assets of the Trust to or at the direction of the Master
Servicer; and
(iii) at the time of the making of the final payment
on the Certificates, the Trustee shall distribute or credit
from the Certificate Account (or cause to be distributed or
credited) (i) to the Certificateholders, other than the Holder
of the Class R-2 Certificate, the Current Principal Amount of
the Certificates plus 30 days' interest thereon at the
applicable Pass-Through Rate, and (ii) to the Class R-2
Certificateholder, all cash on hand from the Certificate
Account (other than cash retained to meet claims); and the
Trust and each of REMIC I and REMIC II shall terminate at such
time.
(b) By their acceptance of the Residual Certificates, the
Holders thereof hereby (i) agree to adopt such a plan of complete liquidation
upon the written request of the Master Servicer and to take such action in
connection therewith as may be reasonably requested by the Master Servicer and
(ii) appoint the Master Servicer as their attorney-in-fact, with full power of
substitution, for purposes of adopting such a plan of complete liquidation. The
Trustee shall adopt such plan of liquidation by filing the appropriate statement
on the final tax return of REMIC I and REMIC II.
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<PAGE>
ARTICLE XI
Miscellaneous Provisions
Section 11.01. INTENT OF PARTIES. The parties intend that each
of REMIC I and REMIC II shall be treated as a REMIC for federal income tax
purposes and that the provisions of this Agreement should be construed in
furtherance of this intent.
Section 11.02. AMENDMENT. (a) This Agreement may be amended
from time to time by the Seller, the Trustee and the Master Servicer, without
notice to or the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein that may be defective
or inconsistent with any other provisions herein, to comply with any changes in
the Code or to make any other provisions with respect to matters or questions
arising under this Agreement which shall not be inconsistent with the provisions
of this Agreement; PROVIDED, HOWEVER, that such action shall not, as evidenced
by an Opinion of Independent Counsel, adversely affect in any material respect
the interests of any Certificateholder.
(b) This Agreement may also be amended from time to time by
the Seller, the Trustee and the Master Servicer, with the consent of the Holders
of Certificates evidencing Fractional Undivided Interests aggregating not less
than 51% of the Trust Fund or of the applicable Class or Classes if such
amendment affects only such Class or Classes for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the
Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) reduce the aforesaid
percentage of Certificates the Holders of which are required to consent to any
such amendment, without the consent of the Holders of all Certificates then
outstanding, or (iii) cause either REMIC I or REMIC II to fail to qualify as a
REMIC for federal income tax purposes, as evidenced by an Opinion of Independent
Counsel which shall be provided to the Trustee other than at the Trustee's
expense.
(c) Promptly after the execution of any such amendment, the
Trustee shall furnish a copy of such amendment or written notification of the
substance of such amendment to each Certificateholder, with a copy to the Rating
Agencies.
(d) In the case of an amendment under Subsection 11.02(b)
above, it shall not be necessary for the Certificateholders to approve the
particular form of such an amendment. Rather, it shall be sufficient if the
Certificateholders approve the substance of the amendment. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations as
the Trustee may prescribe.
Section 11.03. RECORDATION OF AGREEMENT. To the extent
permitted by applicable law, this Agreement is subject to recordation in all
appropriate public offices for real property records in all the counties or
other comparable jurisdictions in which any or all of the Mortgaged Properties
are situated, and in any other appropriate public recording office or elsewhere.
The Master Servicer shall effect such recordation, at its expense upon the
request in writing of a Certificateholder, but
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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
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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. 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 11.07. 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,
XI-3
<PAGE>
New York, New York 10167, Attention: Vice President-Servicing (but with respect
to monthly reports sent pursuant to Section 6.06(b), Attention: Lynn Lin), or to
such other address as may hereafter be furnished to the other parties hereto in
writing; in the case of EMC Mortgage Corporation, 222 West Las Colinas Blvd.,
Suite 600, Irving, Texas 75039 Attention: Raleyne Ruyle or such other address as
may hereafter be furnished to the other parties hereto in writing; (iii) in the
case of the Trustee, at its Corporate Trust Office, or such other address as may
hereafter be furnished to the other parties hereto in writing; or (iv) in the
case of the Rating Agencies, S&P, 25 Broadway, New York, New York 10004,
Attention: Residential Mortgage Surveillance Group and Fitch IBCA, Inc., 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 11.08. 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 11.09. 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 11.10. 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 11.11. 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 11.12. 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;
XI-4
<PAGE>
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 6.05 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 6.05; and
2. Each annual independent public accountants' servicing
report received as described in Section 3.16.
XI-1
<PAGE>
IN WITNESS WHEREOF, the Seller, EMC and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first
above written.
STRUCTURED ASSET MORTGAGE INVESTMENTS INC.,
as Seller
By: /s/ Joseph T. Jurkowski, Jr.
--------------------------------
Name: Joseph T. Jurkowski, Jr.
Title: Vice President
EMC MORTGAGE CORPORATION,
as Master Servicer
By: /s/ Ralene Ruyle
--------------------------------
Name: Ralene Ruyle
Title: Executive Vice President
STATE STREET BANK AND TRUST COMPANY
as Trustee
By: /s/ Susan M. Gauthier
--------------------------------
Name: Susan M. Gauthier
Title: Assistant Vice President
Accepted and Agreed as
to Sections 2.02, 2.04 and 2.05
BEAR STEARNS MORTGAGE CAPITAL
CORPORATION
By: /s/ Jeffrey Mayer
--------------------------------
Name: Jeffrey Mayer
Title: Authorized Officer
XI-1
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 29th day of May, 1998 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 Structured Asset Mortgage Investments 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/ Megan E. Walsh
--------------------------------
Notary Public
- --------------
[Notarial Seal]
XI-1
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 29th day of May, 1998 before me, a notary public in and
for said State, personally appeared Jeffrey Mayer, known to me to be a Director
and Authorized Officer of Bear Stearns Mortgage Capital Corporation, the
corporation that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Megan E. Walsh
--------------------------------
Notary Public
- --------------
[Notarial Seal]
XI-2
<PAGE>
STATE OF TEXAS )
) ss.:
COUNTY OF Dallas )
On the 29th day of May, 1998 before me, a notary public in and
for said State, personally appeared Ralene Ruyle, known to me to be an Executive
Vice President of EMC Mortgage Corporation, the corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Deborah M. Cox
--------------------------------
Notary Public
- --------------
[Notarial Seal]
XI-3
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 29th day of May, 1998 before me, a notary public in and
for said State, personally appeared Susan M. Gauthier, known to me to be an
Assistant Vice President of State Street Bank and Trust Company, the
Massachusetts trust company that executed the within instrument, and also known
to me to be the person who executed it on behalf of said trust company and
acknowledged to me that such trust company executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Daniel Scully
--------------------------------
Notary Public
- --------------
[Notarial Seal]
XI-4
<PAGE>
EXHIBIT A-1
FORM OF CLASS A CERTIFICATES
CLASS [A-___] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (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.
<PAGE>
Certificate No. 1 Variable Pass-Through Rate
Class [A-___] Senior
Date of Pooling and Servicing
Agreement and Cut-off Date:
May 1, 1998
First Distribution Date: Current Principal Amount of this Certificate
June 25, 1998 as of the Cut-off Date: $_______________
Master Servicer: Aggregate Current Principal Amount of this
EMC Mortgage Corporation Certificate as of the Cut-off Date: $_________
Assumed Final CUSIP 86358H ____
Distribution Date:
May 25, 2022
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-6
evidencing a percentage interest in the distributions allocable to the
Class [A-___] Certificates with respect to a Trust Fund consisting
primarily of a pool of conventional one- to four-family adjustable
interest rate mortgage loans sold by STRUCTURED ASSET MORTGAGE
INVESTMENTS INC.
This Certificate is payable solely from the assets of the
Trust, and does not represent an obligation of or interest in Structured Asset
Mortgage Investments Inc., the Master Servicer, the Trustee referred to below or
Bear Stearns Mortgage Capital Corporation or any of their affiliates or any
other person. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental entity or by Structured Asset Mortgage
Investments Inc., the Master Servicer, the Trustee or Bear Stearns Mortgage
Capital Corporation or any of their affiliates or any other person. None of the
Company, the Master Servicer, Bear Stearns Mortgage Capital Corporation or any
of their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
This certifies that Cede & Co. is the registered owner of the
Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust") generally consisting of thirty year, first lien, adjustable rate
mortgages secured by one- to four- family residences, individual condominium
units, individual cooperative apartments and town houses located primarily in
California, Arizona and Florida (collectively, the "Mortgage Loans") sold by
Structured Asset Mortgage Investments Inc.
("SAMI").
The Mortgage Loans were sold by Bear Stearns Mortgage Capital Corporation to
SAMI. EMC Mortgage Corporation ("EMC") will act as master servicer of the
Mortgage Loans (the "Master
2
<PAGE>
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 SAMI, as seller, EMC, as Master Servicer, and State Street Bank and Trust
Company, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Current Principal Amount hereof at a per annum rate equal to a variable
Pass-Through Rate equal to the weighted average of the Net Rates of the Group I
Mortgage Loans. The Trustee will distribute on the 25th day of each month, or,
if such 25th day is not a Business Day, the immediately following Business Day
(each, a "Distribution Date"), commencing on the First Distribution Date
specified above, to the Person in whose name this Certificate is registered at
the close of business on the last Business Day of the calendar month preceding
the month of such Distribution Date, an amount equal to the product of the
Fractional Undivided Interest evidenced by this Certificate and the amount
required to be distributed to the Holders of Certificates of the same Class as
this Certificate. The Assumed Final Distribution Date is the first anniversary
of the Distribution Date immediately following the latest scheduled maturity
date of any Mortgage Loan and is not likely to be the date on which the Current
Principal Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee
by check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount of
not less than $1,000,000, in immediately available funds (by wire transfer or
otherwise) to the account specified in writing by such Person to the Trustee.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in thirteen 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.
3
<PAGE>
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Master Servicer and the rights of the Certificateholders
under the Agreement from time to time by the Master Servicer and the Trustee
with the consent of the Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 51% (or in certain cases, Holders of
Certificates of affected Classes evidencing such percentage of the Fractional
Undivided Interests thereof). Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
with the Trustee upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee in the City of Boston,
Commonwealth of Massachusetts, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Certificates in authorized denominations representing
a like aggregate Fractional Undivided Interest will be issued to the designated
transferee.
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
4
<PAGE>
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 5% 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 the 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.
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.
5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: May 29, 1998 STATE STREET BANK AND TRUST COMPANY,
Not in its individual capacity but solely as Trustee
By:____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [A-___] Certificates referred to in
the within-mentioned Agreement.
STATE STREET BANK AND TRUST COMPANY,
Authorized signatory of State Street
Bank and Trust Company, not
in its individual capacity
but solely as Trustee
By:____________________________________
Authorized Signatory
<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 of assignee) a Percentage
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:
-----------------------------------------------
Signature by or on behalf of assignor
----------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of _______________________________ account number __________,
or, if mailed by check, to _________________________________________. Applicable
statements should be mailed to ________________________________________________.
This information is provided by ______________________, the
assignee named above, or ____________________________, as its agent.
7
<PAGE>
EXHIBIT A-2
FORM OF CLASS B CERTIFICATES
CLASS [B-___] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE WILL BE
DECREASED BY THE PRINCIPAL PAYMENTS HEREON. ACCORDINGLY, FOLLOWING THE INITIAL
ISSUANCE OF THE CERTIFICATES, THE CURRENT PRINCIPAL AMOUNT OF THIS CERTIFICATE
WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS
CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE
NAMED HEREIN.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.]
[THIS CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY
BY, OR ON BEHALF OF, AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT
WHICH IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, AND/OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, UNLESS THE PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE
SERVICING, MANAGEMENT AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT
RESULT IN ANY PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR
CLASS PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO,
PROHIBITED TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60,
PTE 96-23 OR SECTION 401(C) OF ERISA AND THE REGULATIONS PROMULGATED THEREUNDER
AND (II) WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF
THE SELLER, THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED
BY AN OWNER OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE
EVIDENCED BY A REPRESENTATION OR AN OPINION OF COUNSEL TO SUCH EFFECT BY OR ON
BEHALF OF A HOLDER OF A PRIVATE CERTIFICATE.]
1
<PAGE>
[THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO
RULE 144A UNDER THE ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A
"QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE)
OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT
PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE ACT, SUBJECT TO (A) THE
RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE
AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF AN OPINION OF COUNSEL AS TO
COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES. THIS
CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE
I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, AND/OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, UNLESS THE
PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT
AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY
PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED
TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60, PTE 96-23
OR SECTION 401(C) OF ERISA AND THE REGULATIONS PROMULGATED THEREUNDER AND (II)
WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF THE SELLER,
THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER
OF A BOOK-ENTRY CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A
REPRESENTATION OR AN OPINION OF COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF A
HOLDER OF A PRIVATE CERTIFICATE.]
2
<PAGE>
Certificate No. 1 Variable Pass-Through Rate
Class [B-___] Subordinate
Date of Pooling and Servicing
Agreement and Cut-off Date:
May 1, 1998
First Distribution Date: Current Principal Amount of this Certificate
June 25, 1998 as of the Cut-off Date: $______________
Master Servicer: Aggregate Current Principal Amount of this
EMC Mortgage Corporation Certificate as of the Cut-off Date:$_______
Assumed Final CUSIP 86358H _____
Distribution Date:
May 25, 2022
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-6
evidencing a percentage interest in the distributions allocable to the
Class [B-___] Certificates with respect to a Trust Fund consisting
primarily of a pool of conventional one- to four-family adjustable
interest rate mortgage loans sold by STRUCTURED ASSET MORTGAGE
INVESTMENTS INC.
This Certificate is payable solely from the assets of the
Trust, and does not represent an obligation of or interest in Structured Asset
Mortgage Investments Inc., the Master Servicer, the Trustee referred to below or
Bear Stearns Mortgage Capital Corporation or any of their affiliates or any
other person. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental entity or by Structured Asset Mortgage
Investments Inc., the Master Servicer, the Trustee or Bear Stearns Mortgage
Capital Corporation or any of their affiliates or any other person. None of the
Company, the Master Servicer, Bear Stearns Mortgage Capital Corporation or any
of their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
This certifies that Cede & Co. is the registered owner of the
Fractional Undivided Interest evidenced hereby in the beneficial ownership
interest of Certificates of the same Class as this Certificate in a trust (the
"Trust") generally consisting of thirty year, first lien, adjustable rate
mortgages secured by one- to four- family residences, individual condominium
units, individual cooperative apartments and town houses located primarily in
California, Arizona and Florida (collectively, the "Mortgage Loans") sold by
Structured Asset Mortgage Investments Inc.
("SAMI").
The Mortgage Loans were sold by Bear Stearns Mortgage Capital Corporation to
SAMI. EMC Mortgage Corporation ("EMC") will act as master servicer of the
Mortgage Loans (the "Master
3
<PAGE>
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 SAMI, as seller, EMC, as Master Servicer, and State Street Bank and Trust
Company, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue during the month prior to the
month in which a Distribution Date (as hereinafter defined) occurs on the
Current Principal Amount hereof at a per annum rate equal to a variable
Pass-Through Rate equal to the weighted average of the Pass Through Rates of all
Classes of Senior Certificates weighted in proportion to the results of
subtracting from the principal balance of each Mortgage Loan Group, the Current
Principal Amount of the related Class or Classes of Senior Certificates. The
Trustee will distribute on the 25th day of each month, or, if such 25th day is
not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Certificates of the same Class as this
Certificate. The Assumed Final Distribution Date is the first anniversary of the
Distribution Date immediately following the latest scheduled maturity date of
any Mortgage Loan and is not likely to be the date on which the Current
Principal Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Person entitled thereto as such name and address
shall appear on the Certificate Register or, if such Person so requests by
notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount of
not less than $1,000,000, in immediately available funds (by wire transfer or
otherwise) to the account specified in writing by such Person to the Trustee.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice.
[This Class [B-___] Certificate may not be acquired directly or
indirectly by, or on behalf of, an employee benefit plan or other retirement
arrangement which is subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended, and/or section 4975 of the Internal Revenue
Code of 1986, as amended, unless the proposed transfer and/or holding of a
Certificate and the servicing, management and/or operation of the trust and its
assets: (i) will not result in any prohibited transaction which is not covered
under an individual or class prohibited transaction exemption, including, but
not limited to, Prohibited Transaction Exemption ("PTE") 84-14, PTE 91-38, PTE
90-1, PTE 95-60, PTE 96-23 or Section 401(c) of ERISA and the regulations
promulgated thereunder and (ii) will not give rise to any additional fiduciary
duties on the part of
4
<PAGE>
the Seller, the Master Servicer or the Trustee, which will be deemed represented
by an owner of a Book-Entry Certificate or a Global Certificate and will be
evidenced by a representation or an Opinion of Counsel to such effect by or on
behalf of a Holder of a Private Certificate.]
[This Class [B-___] 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. In
addition, this Class [B-___] Certificate may not be acquired directly or
indirectly by, or on behalf of, an employee benefit plan or other retirement
arrangement which is subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended, and/or section 4975 of the Internal Revenue
Code of 1986, as amended, unless the proposed transfer and/or holding of a
Certificate and the servicing, management and/or operation of the trust and its
assets: (i) will not result in any prohibited transaction which is not covered
under an individual or class prohibited transaction exemption, including, but
not limited to, Prohibited Transaction Exemption ("PTE") 84-14, PTE 91-38, PTE
90-1, PTE 95-60, PTE 96-23 or Section 401(c) of ERISA and the regulations
promulgated thereunder and (ii) will not give rise to any additional fiduciary
duties on the part of the Seller, the Master Servicer or the Trustee, which will
be deemed represented by an owner of a Book-Entry Certificate or a Global
Certificate and will be evidenced by a representation or an Opinion of Counsel
to such effect by or on behalf of a Holder of a Private Certificate.]
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in thirteen 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.
5
<PAGE>
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Master Servicer and the rights of the Certificateholders
under the Agreement from time to time by the Master Servicer and the Trustee
with the consent of the Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 51% (or in certain cases, Holders of
Certificates of affected Classes evidencing such percentage of the Fractional
Undivided Interests thereof). Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
with the Trustee upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee in the City of Boston,
Commonwealth of Massachusetts, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Certificates in authorized denominations representing
a like aggregate Fractional Undivided Interest will be issued to the designated
transferee.
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 5% 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
6
<PAGE>
Trust also may be terminated on any Distribution Date upon the determination,
based upon an opinion of counsel, that the 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.
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.
7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: May 29, 1998 STATE STREET BANK AND TRUST COMPANY,
Not in its individual capacity but solely as Trustee
By:____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class [B-___] Certificates referred to in
the within-mentioned Agreement.
STATE STREET BANK AND TRUST COMPANY,
Authorized signatory of State Street
Bank and Trust Company, not
in its individual capacity
but solely as Trustee
By:____________________________________
Authorized Signatory
8
<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 of assignee) a Percentage
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:
-----------------------------------------------
Signature by or on behalf of assignor
----------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of _______________________________ account number __________,
or, if mailed by check, to _________________________________________. Applicable
statements should be mailed to ________________________________________________.
This information is provided by ______________________, the
assignee named above, or ____________________________, as its agent.
9
<PAGE>
EXHIBIT A-3
FORM OF CLASS R CERTIFICATES
CLASS [R-___] CERTIFICATE
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A
NON-UNITED STATES PERSON OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER
SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (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, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE, (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING HEREIN
REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OR ANY TRANSFER,
SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE
OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE
A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO,
THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED
TO THE PROVISIONS OF THIS PARAGRAPH.
1
<PAGE>
Certificate No. 1 Variable Pass-Through Rate
Class [R-__] Senior
Date of Pooling and Servicing
Agreement and Cut-off Date:
May 1, 1998
First Distribution Date: Current Principal Amount of this Certificate
June 25, 1998 as of the Cut-off Date: $50.00
Master Servicer: Aggregate Current Principal Amount of this
EMC Mortgage Corporation Certificate as of the Cut-off Date: $50.00
Assumed Final CUSIP 86358H ________
Distribution Date:
May 25, 2022
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-6
evidencing a percentage interest in the distributions allocable to the
Class [R-___] Certificates with respect to a Trust Fund consisting
primarily of a pool of conventional one- to four-family adjustable
interest rate mortgage loans sold by STRUCTURED ASSET MORTGAGE
INVESTMENTS INC.
This Certificate is payable solely from the assets of the
Trust, and does not represent an obligation of or interest in Structured Asset
Mortgage Investments Inc., the Master Servicer, the Trustee referred to below or
Bear Stearns Mortgage Capital Corporation or any of their affiliates or any
other person. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental entity or by Structured Asset Mortgage
Investments Inc., the Master Servicer, the Trustee or Bear Stearns Mortgage
Capital Corporation or any of their affiliates or any other person. None of the
Company, the Master Servicer, Bear Stearns Mortgage Capital Corporation or any
of their affiliates will have any obligation with respect to any certificate or
other obligation secured by or payable from payments on the Certificates.
This certifies that Bear, Stearns Securities Corp. is the registered
owner of the Fractional Undivided Interest evidenced hereby in the beneficial
ownership interest of Certificates of the same Class as this Certificate in a
trust (the "Trust") generally consisting of thirty year, first lien, adjustable
rate mortgages secured by one- to four- family residences, individual
condominium units, individual cooperative apartments and town houses located
primarily in California, Arizona and Florida (collectively, the "Mortgage
Loans") sold by Structured Asset Mortgage Investments Inc. ("SAMI"). The
Mortgage Loans were sold by Bear Stearns Mortgage Capital Corporation to SAMI.
EMC Mortgage Corporation ("EMC") will act as master servicer of the Mortgage
Loans (the "Master
2
<PAGE>
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 SAMI, as seller, EMC, as Master Servicer, and State Street Bank and Trust
Company, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein shall have the meaning ascribed to them in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Current Principal Amount hereof at a per annum rate equal to a variable
Pass-Through Rate equal to the weighted average of the Pass Through Rates of all
Classes of Senior Certificates weighted in proportion to the results of
subtracting from the principal balance of each Mortgage Loan Group, the Current
Principal Amount of the related Class or Classes of Senior Certificates. The
Trustee will distribute on the 25th day of each month, or, if such 25th day is
not a Business Day, the immediately following Business Day (each, a
"Distribution Date"), commencing on the First Distribution Date specified above,
to the Person in whose name this Certificate is registered at the close of
business on the last Business Day of the calendar month preceding the month of
such Distribution Date, an amount equal to the product of the Fractional
Undivided Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Certificates of the same Class as this
Certificate. The Assumed Final Distribution Date is the first anniversary of the
Distribution Date immediately following the latest scheduled maturity date of
any Mortgage Loan and is not likely to be the date on which the Current
Principal Amount of this Class of Certificates will be reduced to zero.
Distributions on this Certificate will be made by the Trustee
by check mailed to the address of the Person entitled thereto as such name and
address shall appear on the Certificate Register or, if such Person so requests
by notifying the Trustee in writing as specified in the Agreement and if such
Person holds Certificates with an initial aggregate Current Principal Amount of
not less than $1,000,000, in immediately available funds (by wire transfer or
otherwise) to the account specified in writing by such Person to the Trustee.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and designated in such notice.
Each Holder of this Certificate will be deemed to have agreed
to be bound by the restrictions set forth in the Agreement to the effect that
(i) each person holding or acquiring any Ownership Interest in this Certificate
must be a United States Person and a Permitted Transferee, (ii) the transfer of
any Ownership Interest in this Certificate will be conditioned upon the delivery
to the Trustee of, among other things, an affidavit to the effect that it is a
United States Person and Permitted Transferee, (iii) any attempted or purported
transfer of any Ownership Interest in this Certificate in violation of such
restrictions will be absolutely null and void and will vest no rights in the
purported transferee, and (iv) if any person other than a United States Person
and a Permitted Transferee acquires any Ownership Interest in this Certificate
in violation of such
3
<PAGE>
restrictions, then the Company will have the right, in its sole discretion and
without notice to the Holder of this Certificate, to sell this Certificate to a
purchaser selected by the Company, which purchaser may be the Company, or any
affiliate of the Company, on such terms and conditions
as the Company may choose.
This Certificate is one of a duly authorized issue of
Certificates designated as set forth on the face hereof (the "Certificates"),
issued in thirteen Classes. The Certificates, in the aggregate, evidence the
entire beneficial ownership interest in the Trust formed pursuant to the
Agreement.
The Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the Trust for payment hereunder and that the
Trustee is not liable to the Certificateholders for any amount payable under
this Certificate or the Agreement or, except as expressly provided in
the Agreement, subject to any liability under the Agreement.
This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Master Servicer and the rights of the Certificateholders
under the Agreement from time to time by the Master Servicer and the Trustee
with the consent of the Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 51% (or in certain cases, Holders of
Certificates of affected Classes evidencing such percentage of the Fractional
Undivided Interests thereof). Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
with the Trustee upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee in the City of Boston,
Commonwealth of Massachusetts, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Certificates in authorized denominations representing
a like aggregate Fractional Undivided Interest will be issued to the designated
transferee.
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.
4
<PAGE>
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 5% 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 the 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.
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.
5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: May 29, 1998 STATE STREET BANK AND TRUST COMPANY,
Not in its individual capacity but solely as Trustee
By:____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [R-___] Certificates referred to in
the within-mentioned Agreement.
STATE STREET BANK AND TRUST COMPANY,
Authorized signatory of State Street
Bank and Trust Company, not
in its individual capacity
but solely as Trustee
By:____________________________________
Authorized Signatory
6
<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 of assignee) a Percentage
Interest evidenced by the within Mortgage Pass-Through Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:
-----------------------------------------------
Signature by or on behalf of assignor
----------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of _______________________________ account number __________,
or, if mailed by check, to _________________________________________. Applicable
statements should be mailed to ________________________________________________.
This information is provided by ______________________, the
assignee named above, or ____________________________, as its agent.
7
<PAGE>
EXHIBIT B
MORTGAGE LOAN SCHEDULE
(provided upon request)
B-1
<PAGE>
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF BEAR STEARNS MORTGAGE CAPITAL CORPORATION
CONCERNING THE MORTGAGE LOANS
Capitalized terms used herein shall have the meanings set forth in the
Mortgage Loan Purchase Agreement and not in the Pooling and Servicing Agreement.
(a) the information set forth and to be set forth in the Final
Mortgage Loan Schedules hereto was and will be true and correct in all material
respects at the date or dates respecting which such information is furnished;
(b) immediately prior to the transfer to the Purchaser, the
Seller was the sole owner of beneficial title and holder of each Mortgage and
Mortgage Note relating to the Mortgage Loans and is conveying the same free and
clear of any and all liens, claims, encumbrances, participation interests,
equities, pledges, charges or security interests of any nature and the Seller
has full right and authority to sell or assign the same pursuant to this
Agreement;
(c) each Mortgage is a valid and enforceable first lien on the
property securing the related Mortgage Note and each Mortgaged Property is owned
by the Mortgagor in fee simple (except with respect to common areas in the case
of condominiums, PUDs and DE MINIMIS
PUDs)
or by leasehold for a term longer than the term of the related Mortgage, subject
only to (i) the lien of current real property taxes and assessments, (ii)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording of such Mortgage, such
exceptions being acceptable to mortgage lending institutions generally or
specifically reflected in the appraisal obtained in connection with the
origination of the related Mortgage Loan or referred to in the lender's title
insurance policy delivered to the originator of the related Mortgage Loan and
(iii) other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by such Mortgage;
(d) as of the Cut-off Date, no payment of principal of or
interest on or in respect of any Mortgage Loan is 60 or more days past due;
(e) there is no mechanics' lien or claim for work, labor or
material affecting the premises subject to any Mortgage which is or may be a
lien prior to, or equal with, the lien of such
Mortgage except those which are insured against by title insurance;
(f) there is no valid offset, defense or counterclaim to any
Mortgage Note or Mortgage, including the obligation of the Mortgagor to pay the
unpaid principal and interest on such
Mortgage Note;
(g) except to the extent insurance is in place which will
cover such damage, the physical property subject to any Mortgage is free of
material damage and is in good repair and there
C-1
<PAGE>
is no proceeding pending or threatened for the total or partial condemnation of
any Mortgaged Property;
(h) each Mortgage Loan at the time it was made complied in all
material respects with applicable state and federal laws, including, without
limitation, usury, equal credit opportunity and disclosure laws;
(i) neither the Seller nor any servicer of the related
Mortgage Loans has advanced funds or knowingly received any advance of funds by
a party other than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage, except for interest accruing from the date of
the related Mortgage Note or date of disbursement of the Mortgage Loan proceeds,
whichever is later, to the date which precedes by 30 days the first Due Date
under the related Mortgage Note;
(j) each Mortgage Note, the related Mortgage and other
agreements executed in connection therewith are genuine, and each is the legal,
valid and binding obligation of the maker thereof, enforceable in accordance
with its terms except as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);
and, to the best of Seller's knowledge, all parties to each Mortgage Note and
the Mortgage had legal capacity to execute the Mortgage Note and the Mortgage
and each Mortgage Note and Mortgage has been duly and properly executed by the
Mortgagor;
(k) the related Mortgage Note and Mortgage contain customary
and enforceable provisions such as to render the rights and remedies of the
holder adequate for the realization against the Mortgaged Property of the
benefits of the security, including realization by judicial, or, if applicable,
non-judicial foreclosure, and there is no homestead or other exemption available
to the Mortgagor which would interfere with such right to foreclosure;
(l) the proceeds of the Mortgage Loans have been fully
disbursed, there is no requirement for future advances thereunder and any and
all requirements as to completion of any on-site or off-site improvements and as
to disbursements of any escrow funds therefor have been complied with; and all
costs, fees and expenses incurred in making, closing or recording the Mortgage
Loan have been paid, except recording fees with respect to Mortgages not
recorded as of the Closing Date;
(m) either (i) each Mortgage Loan obligates the Mortgagor
thereunder to maintain a hazard insurance policy with a standard mortgagee
clause in an amount not less than the outstanding principal balance of the
Mortgage Loan and, if it was in place at origination of the Mortgage Loan, flood
insurance in an amount not less than the outstanding principal balance of the
Mortgage Loan, at the borrower's cost and expense and such insurance is in place
or (ii) with respect to any Mortgage Loan for which such insurance is not in
place, the Master Servicer has in place a blanket insurance policy covering
hazards and floods in an amount not less than the outstanding principal balance
of the Mortgage Loan;
C-2
<PAGE>
(n) except for 67 Mortgage Loans with, as of the Cut-off Date,
an aggregate unpaid principal balance of $7,110,210 which are between 30 and 59
days delinquent, 5 Mortgage Loans with, as of the Cut-off Date, an aggregate
unpaid principal balance of $653,226 which are between 60 and 89 days
delinquent, and 6 Mortgage Loans with, as of the Cut-off Date, an aggregate
unpaid principal balance of $1,247,977 which are between 90 or more days
delinquent, there is no material monetary default existing under any Mortgage or
the related Mortgage Note and there is no material event which, with the passage
of time or with notice and the expiration of any grace or cure period, would
constitute a default, breach or event of acceleration; and neither the Seller
nor any of its affiliates has taken any action to waive any default, breach or
event of acceleration; no foreclosure action is threatened or has been commenced
with respect to the Mortgage Loan;
(o) except for 12 Mortgage Loans with an aggregate unpaid
principal balance of $2,373,525, no Mortgagor was a debtor in any state or
federal bankruptcy or insolvency proceeding;
(p) each Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance company or
similar institution which is supervised and examined by a federal or State
authority, or by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act;
(q) each of the Mortgaged Properties consists of a single
parcel of real property with a detached single-family residence erected thereon,
or a two- to four-family dwelling, or a townhouse, or an individual condominium
unit in a condominium project or an individual unit in a planned unit
development;
(r) as of the Cut-off Date, (A) the Net Rate of each Mortgage
Loan was not more than 12.114% per annum and not less than 3.239% per annum, and
the weighted average Net Rate of the Mortgage Loans was approximately 7.227% per
annum;
(s) as of the Cut-off Date, (A) the remaining term of each
Mortgage Loan is not more than 275 months and not less than 3 months, and the
weighted average remaining term of each Mortgage Loan is 237 months, weighted by
unpaid principal balance;
(t) as of the Cut-off Date, no more than 76.02%, 12.00% and
5.29% of the Mortgage Loans (by unpaid principal balance) secured by properties
located in the states of California, Arizona and Florida, respectively, and no
more than 5% of the Mortgage Loans (by unpaid principal balance) are located in
any other state;
(u) as of the Cut-off Date, the maximum unpaid principal
balance of the Mortgage Loans is $1,324,379, the minimum unpaid principal
balance is $2,267 and the average unpaid principal balance is $107,090;
(v) to the best of Seller's knowledge, there is no delinquent
tax, government assessment, insurance premium, municipal charge or assessment
lien which may be due and owing against any Property and all such charges have
been paid when due.
C-3
<PAGE>
EXHIBIT D
REQUEST FOR RELEASE
(for Trustee)
LOAN INFORMATION
Name of Mortgagor: _____________________________
Loan No.: ____________________________
TRUSTEE
Name: State Street Bank and Trust Company
Address: Two International Place,
Boston, MA 02110
Attention: Corporate Trust Department,
ref: SAMI 1998-6
Trustee Mortgage
File No.: _____________________________
MASTER SERVICER
Name: EMC Mortgage Corporation
Address: 222 West Las Colinas Blvd.; Suite 600
Irving, TX 75039
Certificates: Mortgage Pass-Through Certificates,
Series 1998-6
The undersigned hereby acknowledges that it has received from
State Street Bank and Trust Company, as Trustee for the holders of Structured
Asset Mortgage Investments Inc. Mortgage Pass-Through Certificates, Series
1998-6, the documents referred to below (the "Documents"). All capitalized terms
not otherwise defined in this Request for Release shall have the meanings given
them in the Pooling and Servicing Agreement dated as of May 1, 1998 (the
"Pooling and Servicing Agreement") among the Trustee, EMC and Structured Asset
Mortgage Investments Inc.
( ) Mortgage Note dated ________, 19__, in the original principal sum of
$____________, made by _____________, payable to, or endorsed to the
order of, the Trustee.
D-1
<PAGE>
( ) 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
D-2
<PAGE>
Insurer to, retain the Documents in its control unless the
Documents have been delivered to an attorney, or to a public
trustee or other public official as required by law, to
initiate or pursue legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or
nonjudicially, and the Master Servicer has delivered to the
Trustee a certificate of a Servicing Officer certifying as to
the name and address of the Person to which the Documents were
delivered and the purpose or purposes of such delivery.
(5) The Documents and any proceeds thereof, including
any proceeds of proceeds, coming into the possession or
control of the Master Servicer shall at all times be earmarked
for the account of the Trustee, and the Master Servicer shall
keep the Documents and any proceeds separate and distinct from
all other property in the possession, custody or control of
the Master Servicer.
Date: ______________________, 19__
EMC MORTGAGE CORPORATION
By: _______________________________________
Name:
Title:
D-3
<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:
ARTICLE I That he/she is a [Title of Officer] of [Name of
Investor] (record or beneficial owner of the Mortgage Pass-Through Certificates,
Series 1998-6, Class R-1 and Class R-2 Certificates (the "Class R
Certificates")) (the "Owner"), a corporation duly organized and existing under
the laws of the State of Delaware, on behalf of which he makes this affidavit.
2. That the Owner (i) is not and will not be a "disqualified
organization" as of May 29, 1998 within the meaning of Section 860E(e)(5) of the
Internal Revenue Code of 1986, as amended (the "Code"), (ii) will endeavor to
remain other than a disqualified organization for so long as it retains its
ownership in the Class R Certificates, and (iii) is acquiring the Class R
Certificates for its own account or for the account of another Owner from which
it has received an affidavit and agreement in substantially the same form as
this affidavit and agreement. (For this purpose, a "disqualified organization"
means the United States, any state or political subdivision thereof, any agency
or instrumentality of any of the foregoing (other than an instrumentality all of
the activities of which are subject to tax and, except for the Federal Home Loan
Mortgage Corporation, a majority of whose board of directors is not selected by
any such governmental entity) or any foreign government, international
organization or any agency or instrumentality of such foreign government or
organization, any rural electric or telephone cooperative, or any organization
(other than certain farmers' cooperatives) that is generally exempt from federal
income tax unless such organization is subject to the tax on unrelated business
taxable income).
3. That the Owner is aware (i) of the tax that would be
imposed on transfers of Class R Certificates to disqualified organizations under
the Code, that applies to all transfers of Class R Certificates after March 31,
1988; (ii) that such tax would be on the transferor, or, if such transfer is
through an agent (which person includes a broker, nominee or middleman) for a
disqualified organization, on the agent; (iii) that the person otherwise liable
for the tax shall be relieved of liability for the tax if the transferee
furnishes to such person an affidavit that the transferee is not a disqualified
organization and, at the time of transfer, such person does not have actual
knowledge that the affidavit is false; and (iv) that the Class R Certificates
may be "noneconomic residual interests" within the meaning of Treasury
regulations promulgated pursuant
E-1
<PAGE>
to the Code and that the transferor of a noneconomic residual interest will
remain liable for any taxes due with respect to the income on such residual
interest, unless no significant purpose of the transfer was to impede the
assessment or collection of tax.
4. That the Owner is aware of the tax imposed on a
"pass-through entity" holding Class R Certificates if at any time during the
taxable year of the pass-through entity a disqualified organization is the
record holder of an interest in such entity. (For this purpose, a "pass through
entity" includes a regulated investment company, a real estate investment trust
or common trust fund, a partnership, trust or estate, and certain cooperatives.)
5. That the Owner is aware that the Trustee will not register
the transfer of any Class R Certificates unless the transferee, or the
transferee's agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Owner expressly agrees that it will not consummate any such transfer if it knows
or believes that any of the representations contained in such affidavit and
agreement are false.
6. That the Owner has reviewed the restrictions set forth on
the face of the Class R Certificates and the provisions of Section 5.02(e) of
the Pooling and Servicing Agreement under which the Class R Certificates were
issued (in particular, clause (iii)(A) and (iii)(B) of Section 5.02(e) which
authorize the Trustee to deliver payments to a person other than the Owner and
negotiate a mandatory sale by the Trustee in the event the Owner holds such
Certificates in violation of Section 5.02(e)). The Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.
7. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is not a
disqualified organization.
8. The Owner's Taxpayer Identification Number is # ___
- -________.
9. This affidavit and agreement relates only to the Class R
Certificates held by the Owner and not to any other holder of the Class R
Certificates. The Owner understands that the liabilities described herein relate
only to the Class R Certificates.
10. That no purpose of the Owner relating to the transfer of
any of the Class R Certificates by the Owner is or will be to impede the
assessment or collection of any tax.
11. That the Owner has no present knowledge or expectation
that it will be unable to pay any United States taxes owed by it so long as any
of the Certificates remain outstanding. In this regard, the Owner hereby
represents to and for the benefit of the person from whom it acquired the Class
R Certificates that the Owner intends to pay taxes associated with holding such
Class R Certificates as they become due, fully understanding that it may incur
tax liabilities in excess of any cash flows generated by the Class R
Certificates.
E-2
<PAGE>
12. That the Owner has no present knowledge or expectation
that it will become insolvent or subject to a bankruptcy proceeding for so long
as any of the Class R Certificates remain outstanding.
13. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includable in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
14. The Purchaser hereby certifies, represents and warrants
to, and covenants with the Company, the Trustee and the Master Servicer that the
following statements in (a) or (b) are accurate: (a) The Certificates (i) are
not being acquired by, and will not be transferred to, any employee benefit plan
within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or other retirement arrangement, including
individual retirement accounts and annuities, Keogh plans and bank collective
investment funds and insurance company general or separate accounts in which
such plans, accounts or arrangements are invested, that is subject to Section
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986 (the "Code")
(any of the foregoing, a "Plan"), (ii) are not being acquired with "plan assets"
of a Plan within the meaning of the Department of Labor ("DOL") regulation, 29
C.F.R. ss. 2510.3-101 or otherwise under ERISA, and (iii) will not be
transferred to any entity that is deemed to be investing in plan assets within
the meaning of the DOL regulation, 29 C.F.R. ss. 2510.3-101 or otherwise under
ERISA.
(b) The purchase of Certificates is permissible under
applicable law, will not constitute or result in any prohibited transaction
under ERISA or Section 4975 of the Code, will not subject the Company, the
Trustee or the Master Servicer to any obligation in addition to those undertaken
in the Pooling and Servicing Agreement and, with respect to each source of funds
("Source") being used by the Purchaser to acquire the Certificates, each of the
following statements are accurate: (a) the Purchaser is an insurance company;
(b) the Source is assets of the Purchaser's "general account;" (c) the
conditions set forth in Prohibited Transaction Class Exemption ("PTCE") 95-60
issued by the DOL have been satisfied and the purchase, holding and transfer of
Certificates by or on behalf of the Purchaser are exempt under PTCE 95-60; and
(d) the amount of reserves and liabilities for such general account contracts
held by or on behalf of any Plan do not exceed 10% of the total reserves and
liabilities of such general account plus surplus as of the date hereof (for
purposes of this clause, all Plans maintained by the same employer (or affiliate
thereof) or employee organization are deemed to be a single Plan) in connection
with its purchase and holding of such Certificates; or
(c) The Owner will provide the Trustee, the Company and the
Master Servicer with an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee, the Company and the Master Servicer to
the effect that the purchase of Certificates is permissible under applicable
law, will not constitute or result in any non-exempt prohibited transaction
under ERISA or Section 4975 of the Code and will not subject the Trustee, the
Company or the Master
E-3
<PAGE>
Servicer to any obligation or liability (including obligations or liabilities
under ERISA or Section 4975 of the Code) in addition to those undertaken in the
Pooling and Servicing Agreement.
In addition, the Owner hereby certifies, represents and
warrants to, and covenants with, the Company, the Trustee and the Master
Servicer that the Owner will not transfer such Certificates to any Plan or
person unless either such Plan or person meets the requirements set
forth in either (a), (b) or (c) above.
Capitalized terms used but not defined herein shall have the
meanings assigned in the Pooling and Servicing Agreement.
E-4
<PAGE>
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its ______________________, as of the ____ day of ______________.
[Name of Investor]
By:
--------------------------------------------------
Name:
Title:
[Address of Investor:]
[Address of Owner for receipt of tax information:]
Personally appeared before me the above-named ______________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the____________________________________________ of the
Owner, and acknowledged to me that he/she executed the same as his/her free act
and deed and the free act and deed of the Investor.
Subscribed and sworn before me this _____ day of ________,
1998.
- ---------------------------------
NOTARY PUBLIC
COUNTY OF NEW YORK
STATE OF NEW YORK
My commission expires the _____ day of ______________________, 19_ .
[ SEAL ]
E-5
<PAGE>
EXHIBIT F-1
FORM OF INVESTMENT LETTER
[Date]
[SELLER]
State Street Bank and Trust Company,
as Trustee
Two International Place
Boston, Massachusetts 02110
Attention: Attention: Corporate Trust Department,
ref: SAMI 1998-6
Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167
Re: SAMII Series 1998-6 Mortgage Pass-Through
Certificates (the "Certificates"), including the Class B-4,
Class B-5 and Class B-6 Certificates (the "Privately Offered
Certificates")
--------------
Dear Ladies and Gentlemen:
In connection with our purchase of Privately Offered Certificates, we
confirm that:
(i) we understand that the Privately Offered Certificates
are not being registered under the Securities Act of
1933, as amended (the "Act") or any applicable state
securities or "Blue Sky" laws, and are being sold to
us in a transaction that is exempt from the
registration requirements of such laws;
(ii) any information we desired concerning the
Certificates, including the Privately Offered
Certificates, the trust in which the Certificates
represent the entire beneficial ownership interest
(the "Trust") or any other matter we deemed relevant
to our decision to purchase Privately Offered
Certificates has been made available to us;
(iii) we are able to bear the economic risk of investment
in Privately Offered Certificates; we are an
institutional "accredited investor" as defined in
F-1-1
<PAGE>
Section 501(a) of Regulation D promulgated under the
Act and a sophisticated institutional investor;
(iv) we are acquiring Privately Offered Certificates for
our own account, not as nominee for any other person,
and not with a present view to any distribution or
other disposition of the Privately Offered
Certificates;
(v) we agree the Privately Offered Certificates must be
held indefinitely by us (and may not be sold,
pledged, hypothecated or in any way disposed of)
unless subsequently registered under the Act and any
applicable state securities or "Blue Sky" laws or an
exemption from the registration requirements of the
Act and any applicable state securities or "Blue Sky"
laws is available;
(vi) we agree that in the event that at some future time
we wish to dispose of or exchange any of the
Privately Offered Certificates (such disposition or
exchange not being currently foreseen or
contemplated), we will not transfer or exchange any
of the Privately Offered Certificates unless:
(A) (1) the sale is to an Eligible Purchaser (as
defined below), (2) a letter to substantially the
same effect as either this letter or, if the Eligible
Purchaser is a Qualified Institutional Buyer as
defined under Rule 144A of the Act, the Rule 144A and
Related Matters Certificate in the form attached to
the Pooling and Servicing Agreement (as defined
below) is executed promptly by the purchaser and
delivered to the addressees hereof and (3) all offers
or solicitations in connection with the sale, whether
directly or through any agent acting on our behalf,
are limited only to Eligible Purchasers and are not
made by means of any form of general solicitation or
general advertising whatsoever; and
(B) if the Privately Offered Certificate is not
registered under the Act (as to which we acknowledge
you have no obligation), the Privately Offered
Certificate is sold in a transaction that does not
require registration under the Act and any applicable
state securities or "blue sky" laws and, if State
Street Bank and Trust Company (the "Trustee") so
requests, a satisfactory Opinion of Counsel is
furnished to such effect, which Opinion of Counsel
shall be an expense of the transferor or the
transferee;
(vii) we agree to be bound by all of the terms (including
those relating to restrictions on transfer) of the
Pooling and Servicing (as defined below), pursuant to
which the Trust was formed; we have reviewed
carefully and understand the terms of the Pooling and
Servicing Agreement;
(viii) we either: (i) are not acquiring the Privately
Offered Certificate directly or indirectly by, or on
behalf of, an employee benefit plan or other
retirement arrangement which is subject to Title I of
the Employee Retirement Income
F-1-2
<PAGE>
Security Act of 1974, as amended, and/or section 4975
of the Internal Revenue Code of 1986, as amended, or
(ii) are providing a representation to the effect
that the proposed transfer and/or holding of a
Privately Offered Certificate and the servicing,
management and/or operation of the Trust and its
assets: (I) will not result in any prohibited
transaction which is not covered under an individual
or class prohibited transaction exemption, including,
but not limited to, Prohibited Transaction Exemption
("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60, PTE
96-23 or Section 401(c) of ERISA and the regulations
promulgated thereunder and (II) will not give rise to
any additional fiduciary duties on the part of the
Seller, the Master Servicer or the Trustee.
(ix) We understand that each of the Class B-4, B-5 and B-6
Certificates bears, and will continue to bear, a legend to substantiate the
following effect: THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE ACT AND OTHER APPLICABLE LAWS AND ONLY (1) PURSUANT TO
RULE 144A UNDER THE ACT ("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A
"QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A
QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO
AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE)
OR (3) IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT
PURCHASING NOT FOR DISTRIBUTION IN VIOLATION OF THE ACT, SUBJECT TO (A) THE
RECEIPT BY THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE
AGREEMENT AND (B) THE RECEIPT BY THE TRUSTEE OF AN OPINION OF COUNSEL AS TO
COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES. THIS
CERTIFICATE MAY NOT BE ACQUIRED DIRECTLY OR INDIRECTLY BY, OR ON BEHALF OF, AN
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT WHICH IS SUBJECT TO TITLE
I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, AND/OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, UNLESS THE
PROPOSED TRANSFER AND/OR HOLDING OF A CERTIFICATE AND THE SERVICING, MANAGEMENT
AND/OR OPERATION OF THE TRUST AND ITS ASSETS: (I) WILL NOT RESULT IN ANY
PROHIBITED TRANSACTION WHICH IS NOT COVERED UNDER AN INDIVIDUAL OR CLASS
PROHIBITED TRANSACTION EXEMPTION, INCLUDING, BUT NOT LIMITED TO, PROHIBITED
TRANSACTION EXEMPTION ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60, PTE 96-23
OR SECTION 401(C) OF ERISA AND THE REGULATIONS PROMULGATED THEREUNDER AND (II)
WILL NOT GIVE RISE TO ANY ADDITIONAL FIDUCIARY DUTIES ON THE PART OF THE SELLER,
THE MASTER SERVICER OR THE TRUSTEE, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER
OF A BOOK-ENTRY CERTIFICATE OR A
F-1-3
<PAGE>
GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A REPRESENTATION OR AN OPINION OF
COUNSEL TO SUCH EFFECT BY OR ON BEHALF OF A HOLDER OF A PRIVATE CERTIFICATE.
"ELIGIBLE PURCHASER" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe (i) can make
representations with respect to itself to substantially the same effect as the
representations set forth herein, and (ii) is either a Qualified Institutional
Buyer as defined under Rule 144A of the Act or an institutional "Accredited
Investor" as defined under Rule 501 of the Act.
Terms not otherwise defined herein shall have the meanings assigned to
them in the Pooling and Servicing Agreement dated as of June 1, 1997 among Bear
Stearns Mortgage Securities Inc., EMC Mortgage Corporation and State Street Bank
and Trust Company, as Trustee (the "Pooling and
Servicing Agreement").
If the Purchaser proposes that its Certificates be registered in the
name of a nominee on its behalf, the Purchaser has identified such nominee
below, and has caused such nominee to complete
the Nominee Acknowledgment at the end of this letter.
Name of Nominee (if any):___________________
IN WITNESS WHEREOF, this document has been executed by the undersigned
who is duly authorized to do so on behalf of the undersigned Eligible Purchaser
on the ____ day of _________________, 19__.
Very truly yours,
[PURCHASER]
By:
----------------------------------------
(Authorized Officer)
[By:
----------------------------------------
Attorney-in-fact]
................................................................................
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the Certificates being
registered in its name, the sole beneficial owner thereof is and shall be the
Purchaser identified above, for whom the
undersigned is acting as nominee.
[NAME OF NOMINEE]
By:
----------------------------------------
(Authorized Officer)
[By:
----------------------------------------
Attorney-in-fact]
F-1-4
<PAGE>
EXHIBIT F-2
FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE
-------------------------------------------------
[Date]
[SELLER]
State Street Bank and Trust Company,
as Trustee
Two International Place
Boston, Massachusetts 02110
Attention: Attention: Corporate Trust Department,
ref: SAMI 1998-6
Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167
Re: SAMII Series 1998-6 Mortgage Pass-Through
Certificates, Class B-4, Class B-5,
and Class B-6 Certificates (the "Privately
Offered Certificates")
------------------------------------------
Dear Ladies and Gentlemen:
In connection with our purchase of Privately Offered
Certificates, the undersigned certifies to each of the parties to whom this
letter is addressed that it is a qualified institutional buyer (as defined in
Rule 144A under the Securities Act of 1933, as amended (the "Act")) as follows:
1. It owned and/or invested on a discretionary basis eligible securities
(excluding affiliate's securities, bank deposit notes and CD's, loan
participations, repurchase agreements, securities owned but subject to
a repurchase agreement and swaps), as described below:
Date: _____________, 19__ (must be on or after the close of its most
recent fiscal year)
Amount: $_________________; and
2. The dollar amount set forth above is:
a. greater than $100 million and the undersigned is one of the
following entities:
F-2-1
<PAGE>
(1) / / an insurance company as defined in Section
2(13) of the Act; or1
(2) / / an investment company registered under the
Investment Company Act or any business
development company as defined in Section
2(a)(48) of the Investment Company Act of
1940; or
(3) / / a Small Business Investment Company
licensed by the U.S. Small Business
Administration under Section 301(c) or (d)
of the Small Business Investment Act of
1958; or
(4) / / a plan (i) established and maintained by a
state, its political subdivisions, or any
agency or instrumentality of a state or its
political subdivisions, the laws of which
permit the purchase of securities of this
type, for the benefit of its employees and
(ii) the governing investment guidelines of
which permit the purchase of securities of
this type; or
(5) / / a business development company as defined in
Section 202(a)(22) of the Investment
Advisers Act of 1940; or
(6) / / a corporation (other than a U.S. bank,
savings and loan association or equivalent
foreign institution), partnership,
Massachusetts or similar business trust, or
an organization described in Section
501(c)(3) of the Internal Revenue Code; or
(7) / / a U.S. bank, savings and loan association
or equivalent foreign institution, which has
an audited net worth of at least $25 million
as demonstrated in its latest annual
financial statements; or
(8) / / an investment adviser registered under the
Investment Advisers Act; or
b. / / greater than $10 million, and the undersigned is a
broker-dealer registered with the SEC; or
c. / / less than $10 million, and the undersigned is a
broker-dealer registered with the SEC and will only purchase Rule 144A
securities in transactions in which it acts as a riskless principal (as defined
in Rule 144A); or
- --------
(1) A purchase by an insurance company for one or more of its separate
accounts, as defined by Section 2(a)(37) of the Investment Company Act of 1940,
which are neither registered nor required to be registered thereunder, shall be
deemed to be a purchase for the account of such insurance company.
F-2-2
<PAGE>
d. / / less than $100 million, and the undersigned is an investment
company registered under the Investment Company Act of 1940, which, together
with one or more registered investment companies having the same or an
affiliated investment adviser, owns at least $100 million of eligible
securities; or
e. / / less than $100 million, and the undersigned is an entity,
all the equity owners of which are qualified institutional buyers.
The undersigned further certifies that it is purchasing a
Privately Offered Certificate for its own account or for the account of others
that independently qualify as "Qualified Institutional Buyers" as defined in
Rule 144A. It is aware that the sale of the Privately Offered Certificates is
being made in reliance on its continued compliance with Rule 144A. It is aware
that the transferor may rely on the exemption from the provisions of Section 5
of the Act provided by Rule 144A. The undersigned understands that the Privately
Offered Certificates may be resold, pledged or transferred only to (i) a person
reasonably believed to be a Qualified Institutional Buyer that purchases for its
own account or for the account of a Qualified Institutional Buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance in Rule
144A, or (ii) an institutional "accredited investor," as such term is defined
under Rule 501 of the Act in a transaction that otherwise does not constitute a
public offering.
The undersigned agrees that if at some future time it wishes
to dispose of or exchange any of the Privately Offered Certificates, it will not
transfer or exchange any of the Privately Offered Certificates to a Qualified
Institutional Buyer without first obtaining a Rule 144A and Related Matters
Certificate in the form hereof from the transferee and delivering such
certificate to the addressees hereof. Prior to making any transfer of Privately
Offered Certificates, if the proposed Transferee is an institutional "accredited
investor," the transferor shall obtain from the transferee and deliver to the
addressees hereof an Investment Letter in the form attached to the Pooling and
Servicing Agreement dated as of June 1, 1997 among Bear Stearns Mortgage
Securities Inc., as Seller, EMC Mortgage Corporation as Master Servicer, and
State Street Bank and Trust Company, as Trustee, pursuant to which the
Certificates were issued.
The undersigned certifies that it either: (i) is not acquiring
the Privately Offered Certificate directly or indirectly by, or on behalf of, an
employee benefit plan or other retirement arrangement which is subject to Title
I of the Employee Retirement Income Security Act of 1974, as amended, and/or
section 4975 of the Internal Revenue Code of 1986, as amended, or (ii) is
providing a representation or an opinion of counsel to the effect that the
proposed transfer and/or holding of a Privately Offered Certificate and the
servicing, management and/or operation of the Trust and its assets: (I) will not
result in any prohibited transaction which is not covered under a prohibited
transaction exemption, including, but not limited to, Prohibited Transaction
Exemption ("PTE") 84-14, PTE 91-38, PTE 90-1, PTE 95-60, PTE 96-23 or Section
401(c) of ERISA and the regulations to be promulgated thereunder and (II) will
not give rise to any additional fiduciary duties on the part of the Seller, the
Master Servicer or the Trustee.
F-2-3
<PAGE>
If the Purchaser proposes that its Certificates be registered
in the name of a nominee on its behalf, the Purchaser has identified such
nominee below, and has caused such nominee to complete the Nominee
Acknowledgment at the end of this letter.
Name of Nominee (if any):___________________
F-2-4
<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]
...............................................................................
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.
[NAME OF NOMINEE]
By:__________________________
(Authorized Officer)
[By:__________________________
Attorney-in-fact]
F-2-5
<PAGE>
EXHIBIT G
FORM OF INITIAL CERTIFICATION
[Seller]
[Master Servicer]
Re: Pooling and Servicing Agreement dated as of May 1,
1998, among Structured Asset Mortgage Investments Inc., as
seller, EMC Mortgage Corporation, as master servicer, and
State Street Bank and Trust Company, as trustee Mortgage
Pass-Through Certificates, SerieS 1998-6
----------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, and subject to the further review provided for therein, 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.
G-1
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
STATE STREET BANK AND
TRUST COMPANY, as Trustee
By:_______________________
Name:
Title:
G-2
<PAGE>
EXHIBIT H
FORM OF FINAL CERTIFICATION
Bear Stearns Mortgage Securities Inc.
245 Park Avenue
New York, New York 10167
EMC Mortgage Corporation
222 West Las Colinas Blvd.; Suite 600
Irving, TX 75039
Re: Pooling and Servicing Agreement dated as of May 1, 1998, among
Structured Asset Mortgage Investments Inc., as seller, EMC
Mortgage Corporation, as master servicer, and State Street
Bank and Trust Company, as trustee Mortgage Pass-Through
Certificates, Series 1998-6
--------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as otherwise noted on the attached exception report, that as to each Mortgage
Loan listed on the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has received the documents set forth
in Section 2.01 and has determined that (i) all documents required to be
included in the Mortgage File pursuant to the Pooling and Servicing Agreement
are in its possession; (ii) such documents have been reviewed by it and appear
regular on their face, have, where applicable, been executed and relate to such
Mortgage Loan; and (iii) based on examination by it, and only as to such
documents, the information set forth in the Mortgage Loan Schedule as to
Mortgagor name, original principal balance and loan number respecting such
Mortgage Loan is correct and accurately reflects the information in the Mortgage
Loan File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representation that any documents specified in subclauses (iv), (v) and (vii) of
Section 2.01(b) should be included in any Mortgage File. The Trustee makes no
representations as to: (i) the validity, legality, enforceability or genuineness
of any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
H-1
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
------------------------------------
Name:
Title:
H-2
