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 29, 1998
STRUCTURED ASSET MORTGAGE INVESTMENTS INC.
(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 company and Norwest Bank
Minnesota, N.A., as trustee. Investors other than those specifically requesting
them.
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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.
---------------------------------
Name: Joseph T. Jurkowski, Jr.
Title: Vice President
Dated: June 10, 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
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STRUCTURED ASSET MORTGAGE INVESTMENTS INC.,
SELLER
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
TRUSTEE
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 1998
Structured Asset Mortgage Investments Inc.
Mortgage Pass-Through Certificates
Series 1998-7
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
<S> <C> <C>
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. ASSIGNMENT OF INTEREST IN THE MORTGAGE LOAN PURCHASE AGREEMENT......................II-4
Section 2.04. SUBSTITUTION OF MORTGAGE LOANS......................................................II-5
Section 2.05. ISSUANCE OF CERTIFICATES............................................................II-6
Section 2.06. REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLER................................II-6
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. MASTER SERVICER....................................................................III-1
Section 3.02. REMIC-RELATED COVENANTS............................................................III-1
Section 3.03. ADDITIONAL INFORMATION.............................................................III-1
Section 3.04. UCC................................................................................III-2
ARTICLE IV
ACCOUNTS
Section 4.01. CERTIFICATE ACCOUNT.................................................................IV-1
Section 4.02. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE CERTIFICATE ACCOUNT....................IV-2
ARTICLE V
CERTIFICATES
Section 5.01. CERTIFICATES.........................................................................V-1
Section 5.02. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES................................V-4
Section 5.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES....................................V-8
Section 5.04. PERSONS DEEMED OWNERS................................................................V-8
Section 5.05. TRANSFER RESTRICTIONS ON RESIDUAL CERTIFICATES.......................................V-8
Section 5.06. RESTRICTIONS ON TRANSFERABILITY OF PRIVATE CERTIFICATES.............................V-10
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Section 5.07. ERISA RESTRICTIONS..................................................................V-10
Section 5.08. RULE 144A INFORMATION...............................................................V-11
ARTICLE VI
PAYMENTS TO CERTIFICATEHOLDERS
Section 6.01. DISTRIBUTIONS ON THE CERTIFICATES...................................................VI-1
Section 6.02. ALLOCATION OF LOSSES................................................................VI-2
Section 6.03. PAYMENTS............................................................................VI-3
Section 6.04. STATEMENTS TO CERTIFICATEHOLDERS....................................................VI-4
Section 6.05. MONTHLY ADVANCES....................................................................VI-6
ARTICLE VII
INDEMNIFICATION
Section 7.01. INDEMNIFICATION OF THE TRUSTEE.....................................................VII-1
ARTICLE VIII
DEFAULT
Section 8.01. EVENTS OF DEFAULT.................................................................VIII-1
Section 8.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR..........................................VIII-1
Section 8.03. NOTIFICATION TO CERTIFICATEHOLDERS................................................VIII-2
Section 8.04. WAIVER OF DEFAULTS................................................................VIII-2
Section 8.05. LIST OF CERTIFICATEHOLDERS........................................................VIII-2
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. FEDERAL INFORMATION RETURNS AND REPORTS TO CERTIFICATEHOLDERS.......................IX-8
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ARTICLE X
TERMINATION
Section 10.01. TERMINATION UPON REPURCHASE BY THE SELLER OR ITS DESIGNEE OR LIQUIDATION OF
THE 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-2
Section 11.04. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS..........................................XI-2
Section 11.06. GOVERNING LAW.......................................................................XI-4
Section 11.07. NOTICES.............................................................................XI-4
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
EXHIBITS
Exhibit A - Form of Face of Certificates
Exhibit B - Mortgage Loan Schedule
Exhibit C - Representations and Warranties of BSMCC Concerning
the Mortgage Loans
Exhibit D - Request for Release of Documents
Exhibit E - Form of Affidavit pursuant to Section 860(e)(4)
Exhibit F-1 - Form of Investment Letter
Exhibit F-1 - Form of Rule 144A and Related Matters Certificate
Exhibit G - Form of Initial Certification
Exhibit H - Form of 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") and Norwest Bank Minnesota, National Association, a
national banking association, not in its individual capacity but solely 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.
The Trustee on behalf of the Trust shall make an election for the
assets in the Trust Fund to be treated for federal income tax purposes as a
REMIC. On the Startup Day, all the Classes of Regular Certificates will be
designated "regular interests" in such REMIC and the Class R Certificates will
be designated the "residual interests" in such REMIC.
The Mortgage Loans will have an Outstanding Principal Balance as of the
Cut-off Date, after deducting all Scheduled Principal due on or before the
Cut-off Date, of $97,377,980.52. The initial principal amount of the
Certificates will not exceed such Outstanding Principal Balance.
In consideration of the mutual agreements herein contained, the Seller
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 Certificate Account (including each subaccount thereof)
and the Protected 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,
after the applicable Cross-Over Date, the interest portion of any Realized
Losses and (ii) in the case of a Subordinate Certificate, such Certificate's
share of any Net Interest Shortfall and the interest portion of any Realized
Losses.
ADDITIONAL COLLATERAL: As defined in the Servicing Agreement.
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 applicable 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 clauses (ii), (iv) and (v) of the applicable Subordinate
Optimal Principal Amount, and as to each Class of Subordinate
Certificates (other than the Class of Subordinate Certificates having
the lowest numerical designation as to which the Class Prepayment
Distribution Trigger shall not be applicable) for which (x) the related
Class 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
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Current Principal Amount of all such Classes of Subordinate
Certificates and (y) the related Class Prepayment Distribution Trigger
has not been satisfied on such Distribution Date, 0%; provided that if
on a Distribution Date, the Current Principal Amount of any Class of
Subordinate Certificates for which the related Class 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 which satisfy the
related Class Prepayment Distribution Trigger and to the Subordinate
Class having the lowest numerical designation in reduction of their
respective Current Principal Amounts in the order of their numerical
Class designations.
APPLICABLE CREDIT RATING: A credit rating of AAA, in the case of S&P or
a rating of AAA, in the case of Fitch, for any long-term deposit or security or
a rating of A-l+, in the case of S&P, or F-1+ in the case of Fitch, for any
short-term deposit or security.
APPLICABLE STATE LAW: For purposes of Section 9.12(d), the Applicable
State Law shall be (a) the law of the State of New York and (b) such other state
law whose applicability shall have been brought to the attention of the Trustee
by either (i) an Opinion of Counsel reasonably acceptable to the Trustee
delivered to it by the Master Servicer or the Seller, or (ii) written notice
from the appropriate taxing authority as to the applicability of such state law
ASSUMED FINAL DISTRIBUTION DATE: June 25, 2028.
AVAILABLE FUNDS: With respect to any Distribution Date, an amount equal
to the aggregate of the following amounts with respect to the Mortgage Loans:
(a) all previously undistributed payments on account of principal (including the
principal portion of Scheduled Payments, Principal Prepayments and the principal
portion of Net Liquidation Proceeds) and all previously undistributed payments
on account of interest received after the Cut-off Date and on or prior to the
related Determination Date, (b) any Monthly Advances and Compensating Interest
Payments by the Master Servicer with respect to such Distribution Date and (c)
any reimbursed amount in connection with losses on investments of deposits in an
Account, except:
(i) all payments that were due on or before the Cut-off Date;
(ii) all Principal Prepayments and Liquidation Proceeds
received after the applicable Prepayment Period;
(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;
(v) amounts of Monthly Advances determined to be
Nonrecoverable Advances; and
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(vi) amounts of Trustee's Fees for such Distribution Date and
any expenses of the Trustee pursuant to Section 9.05.
BANKRUPTCY CODE: The United States Bankruptcy Code, as amended as
codified in 11 U.S.C. ss.ss. 101-1330.
BOOK-ENTRY CERTIFICATES: Initially, all Classes of Certificates other
than the Private Certificates and the Residual Certificates.
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, Maryland, Minnesota or Boston, Massachusetts or
the jurisdiction in which the Master Servicer is 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, with the blanks
therein appropriately completed.
CERTIFICATE ACCOUNT: The trust account or accounts created and
maintained pursuant to Section 4.01 shall be denominated "Norwest Bank
Minnesota, National Association, as Trustee f/b/o holders of Structured Asset
Mortgage Investments Inc. Mortgage Pass-Through Certificates, Series 1998-7 -
Certificate Account."
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, B-1, B-2, B-3, B-4, B-5,
B-6 and R.
CLASS PREPAYMENT DISTRIBUTION TRIGGER: For a Class of Subordinate
Certificates for any Distribution Date, the Class Prepayment Distribution
Trigger is satisfied if the fraction (expressed as a percentage), the numerator
of which is the aggregate Current Principal Amount of such Class and each Class
of Subordinate Certificates subordinate thereto, if any, and the denominator of
which is the Scheduled Principal Balance of all of the Mortgage Loans as of the
related Due Date, equals or exceeds such percentage calculated as of the Closing
Date.
CLOSING DATE: May 29, 1998.
CODE: The Internal Revenue Code of 1986, as amended.
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COMPENSATING INTEREST PAYMENTS: The amounts described in Section
4.04(viii) of the Servicing Agreement.
COOPERATIVE: A corporation that has been formed for the purpose of
cooperative apartment ownership.
COOPERATIVE ASSETS: Shares issued by Cooperatives, the related Lease
and any other collateral securing the Cooperative Loans.
COOPERATIVE BUILDING: The building and other property owned by a
Cooperative.
COOPERATIVE LOAN: The indebtedness of a Mortgagor evidenced by a
Mortgage Note which is secured by Cooperative Assets and which is being sold to
the Purchaser pursuant to this Agreement, the Mortgage Loans so sold being
identified in the Final Mortgage Loan Schedule.
COOPERATIVE UNIT: A specific dwelling unit in a Cooperative Building as
to which exclusive occupancy rights have been granted pursuant to a Lease.
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 Sixth Street and
Marquette Avenue, Minneapolis, Minnesota 55749.
CROSS-OVER DATE: The first Distribution Date on which the aggregate
Current Principal Amount of the Subordinate Certificates has been reduced to
zero (giving effect to all distributions on such Distribution Date).
CURRENT PRINCIPAL AMOUNT: With respect to any Certificate as of any
Distribution Date. the initial principal amount of such Certificate, as reduced
by (i) all amounts distributed on previous Distribution Dates on such
Certificate with respect to principal, (ii) the principal portion of all
Realized Losses allocated prior to such Distribution Date to such Certificate,
taking account of the Loss Allocation Limitation and (iii) in the case of a
Subordinate Certificate, such Certificate's pro rata share, if any, of the
applicable 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
Certificates after the Distribution Date on which they receive the distribution
of the last dollar of their original principal amount shall be deemed to have a
Current Principal Amount equal to their Current Principal Amount on the day
immediately preceding such Distribution Date.
CUT-OFF DATE: May 1, 1998.
CUT-OFF DATE BALANCE: $97,377,980.52.
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.
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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.
DEPOSITORY: The Depository Trust Company, the nominee of which is Cede
& Co., or any successor thereto.
DEPOSITORY AGREEMENT: The meaning specified in Subsection 5.01(a)
hereof.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DESIGNATED DEPOSITORY INSTITUTION: A depository institution (commercial
bank, federal savings 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 Determination Date as defined in the Servicing
Agreement.
DISTRIBUTION DATE: The 25th day of any month, beginning in the month
immediately following the month of the Closing Date, or, if such 25th day is not
a Business Day, the Business Day immediately following.
DTC CUSTODIAN: Norwest Bank Minnesota, National Association, 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.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
EVENT OF DEFAULT: An event of default described in the Servicing
Agreement.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
FITCH: Fitch IBCA, Inc. and its successors in interest.
FNMA: Federal National Mortgage Association or any successor thereto.
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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 (i) a Class R Certificate will be deemed to
equal 1% multiplied by a fraction the numerator of which is the Current
Principal Amount of such Certificate and the denominator of which is the
aggregate Current Principal Amount of such respective Class and (ii) a
Certificate of any other Class will be deemed to equal 99% 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.
FREDDIE MAC: Freddie Mac, formerly the Federal Home Loan Mortgage
Corporation, or any successor thereto.
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).
HOLDER: The Person in whose name a Certificate is registered in the
Certificate Register, except that, subject to Subsections 11.02(b) and 11.05(e),
solely for the purpose of giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Seller, the Master Servicer or the
Trustee or any Affiliate thereof shall be deemed not to be outstanding and the
Fractional Undivided Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of Fractional Undivided
Interests necessary to effect any such consent has been obtained.
INDEMNIFIED PERSONS: The Trustee, its officers, directors, agents and
employees and any separate co-trustee and its officers, directors, agents and
employees.
INDEPENDENT: When used with respect to any specified Person, this term
means that such Person (a) is in fact independent of the Seller or the Master
Servicer and of any Affiliate of the Seller or the Master Servicer, (b) does not
have any direct financial interest or any material indirect financial interest
in the Seller or the Master Servicer or any Affiliate of the Seller or the
Master Servicer and (c) is not connected with the Seller or the Master Servicer
or any Affiliate as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
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)(l), (2), (3) or (7) of Regulation D under the Securities Act or
any entity all of the equity holders in which come within such paragraphs.
INSURANCE POLICY: With respect to any Mortgage Loan, any standard
hazard insurance policy, flood insurance policy or title insurance policy.
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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.
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 SHORTFALL: With respect to any Distribution Date and each
Mortgage Loan that during the related Prepayment Period was the subject of a
Principal Prepayment, or constitutes a Relief Act Mortgage Loan, an amount
determined as follows:
(a) Partial principal prepayments: The difference between (i)
one month's interest at the applicable Net Rate on the amount of such
prepayment and (ii) the amount of interest for the calendar month of
such prepayment (adjusted to the applicable Net Rate) received at the
time of such prepayment;
(b) Principal prepayments in full received 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; and
(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 any 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, such expenses including (a)
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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-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 6.02
hereof.
MASTER SERVICER: As of the Closing Date, The Boston Safe Deposit and
Trust Company and, thereafter, its respective successors in interest who meet
the qualifications pursuant to the Servicing Agreement and this Agreement.
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: A per annum rate of either 0.25% or 0.375%
as set forth on the Mortgage Loan Schedule.
MONTHLY ADVANCE: An advance of principal or interest required to be
made by the Master Servicer pursuant to the Servicing Agreement or the Trustee
pursuant to Section 6.05.
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 (including Cooperative Loans)
transferred and assigned to the Trustee pursuant to Section 2.01 or Section 2.04
and held as a part of the Trust Fund, as identified in the Mortgage Loan
Schedule, including a mortgage loan the property securing which has
become an REO Property.
MORTGAGE LOAN PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement
dated as of May 29, 1998, between BSMCC, as seller, and Structured Asset
Mortgage Investments Inc., as purchaser, and all amendments thereof and
supplements thereto.
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MORTGAGE LOAN SCHEDULE: The schedule, attached hereto as Exhibit B with
respect to the Mortgage Loans and as amended from time to time to reflect the
repurchase or substitution of Mortgage Loans pursuant to this Agreement.
MORTGAGE NOTE: The originally executed note or other evidence of 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 the related Servicing Agreement or
this Agreement and (ii) unreimbursed advances by the Master Servicer and Monthly
Advances.
NET RATE: With respect to each Mortgage Loan, the Mortgage Interest
Rate in effect from time to time less the sum of the related Master Servicing
Fee and the Trustee's Fee (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 or the Trustee and (ii) which, in the
good faith judgment of the Master Servicer or the Trustee, will not or, in the
case of a proposed advance, would not, be ultimately recoverable by the Master
Servicer or the Trustee from Liquidation Proceeds, Insurance Proceeds or future
payments on the Mortgage Loan for which such advance was made.
OFFERED CERTIFICATE: Any Class A, Class B-l, Class B-2, Class B-3 and
Class R Certificate.
OFFERED SUBORDINATE CERTIFICATES: The Class B-l. Class B-2 and Class
B-3 Certificates.
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 or the Seller.
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 sales price of a Mortgaged Property at the time of
origination of a Mortgage Loan.
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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 or replaced.
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 determined as provided with respect thereto, in Section 5.01(d). Any
monthly calculation of interest at a stated rate shall be based upon annual
interest at such rate divided by twelve.
PERMITTED INVESTMENTS: Any one or more of the following obligations or
securities held in the name of the Trustee for the benefit of the
Certificateholders:
(i) direct obligations of, and obligations the timely payment
of which are fully guaranteed by the United States of America or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America;
(ii) (a) demand or time deposits, federal funds or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States of America or any
state thereof (including the Trustee acting in its commercial banking
capacity) and subject to supervision and examination by federal and/or
state banking authorities, provided that the commercial paper and/or
the short-term debt rating and/or the long-term unsecured debt
obligations 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
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amount of securities issued by such corporation and held as part of the
Trust to exceed 10% of the aggregate Outstanding Principal Balances and
amounts of all the Mortgage Loans and Permitted Investments held as
part of the Trust;
(v) commercial paper (including both noninterest-bearing
discount obligations and interest-bearing obligations payable on demand
or on a specified date not more than one year after the date of
issuance thereof) having the Applicable Credit Rating or better from
each Rating Agency at the time of such investment;
(vi) a Reinvestment Agreement issued by any bank, insurance
company or other corporation or entity;
(vii) any other demand, money market or time deposit,
obligation, security or investment as may be acceptable to each Rating
Agency as evidenced in writing by each Rating Agency to the Trustee;
and
(viii) any money market or common trust fund having the
Applicable Credit Rating or better from each Rating Agency, including
any such fund for which the Trustee or any affiliate of the Trustee
acts as a manager or an advisor;
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 or if such
instrument or security is purchased at a price greater than 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 Residual Certificates and the Private
Certificates.
PREPAYMENT PERIOD: With respect to any Mortgage Loan and any
Distribution Date, the calendar month preceding the month of such Distribution
Date.
PRINCIPAL PREPAYMENT: Any payment (whether partial or full) or other
recovery of principal on a Mortgage Loan which is received in advance of its
scheduled Due Date to the extent that it is not accompanied by an amount as to
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment, including Insurance Proceeds
and the purchase price in connection with any purchase of a Mortgage Loan, any
cash deposit in connection with the substitution of a Mortgage Loan, and the
principal portion of Net Liquidation Proceeds.
PRIVATE CERTIFICATES: Any Class B-4, Class B-5 and Class B-6
Certificates.
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PROTECTED ACCOUNT: An account established and maintained for the
benefit of Certificateholders by the Master Servicer with respect to the
Mortgage Loans and with respect to REO Property in accordance with the Servicing
Agreement.
QIB: A Qualified Institutional Buyer as defined in Rule 144A
promulgated under the Securities Act.
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.
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 with respect to such Mortgage Loan.
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: That group of assets contained in the Trust Fund designated as a
REMIC consisting of the (i) Mortgage Loans, (ii) any REO Property relating to
the Mortgage Loans and (iii) any proceeds of the foregoing.
REMIC CERTIFICATES: The REMIC Regular Certificates and the Class R
Certificates.
REMIC 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 with
respect to the REMIC or (iii) constitute a taxable contribution to the REMIC
after the Startup Day.
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REMIC PROVISIONS: The provisions of the federal income tax law relating
to the REMIC, 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 Article II
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
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 Certificates.
RESPONSIBLE OFFICER: Any officer assigned to the Corporate Trust Office
(or any successor thereto), including any Vice President, Assistant Vice
President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement.
RULE 144A CERTIFICATE: The certificate to be furnished by each
purchaser of a Private Certificate (which is also a Physical Certificate) which
is a Qualified Institutional Buyer as defined under Rule 144A promulgated under
the Securities Act, substantially in the form set forth as Exhibit
F-2 hereto.
S&P: Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors in interest.
SCHEDULED PAYMENT: With respect to any Mortgage Loan and any month, the
scheduled payment or payments of principal and interest due during such month on
such Mortgage Loan which either is payable by a Mortgagor in such month under
the related Mortgage Note or, in the case of REO Property, would otherwise have
been payable under the related Mortgage Note.
SCHEDULED PRINCIPAL: The principal portion of any Scheduled Payment.
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SCHEDULED PRINCIPAL BALANCE: With respect to any Mortgage Loan on any
Distribution Date, (i) 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) less (ii) 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 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 SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR A QIB PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3)
IN CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE ACT
OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS
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) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE
ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY
OTHER APPLICABLE JURISDICTION. 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,
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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,
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: Structured Asset Mortgage Investments Inc., a Delaware
corporation, or its successors in interest.
SENIOR CERTIFICATES: The Class A and R Certificates.
SENIOR OPTIMAL PRINCIPAL AMOUNT: As to any Distribution Date, an amount
equal to the sum, without duplication, of:
(i) the Senior Percentage of all scheduled payments of
principal allocated to the Scheduled Principal Balance due on each
Outstanding Mortgage Loan on the related Due Date as specified in the
amortization schedule at the time applicable thereto;
(ii) the Senior Prepayment Percentage of all Principal
Prepayments in part received during the related Prepayment Period with
respect to each Mortgage Loan, together with the Senior Prepayment
Percentage of the Scheduled Principal Balance of each Mortgage Loan
which was the subject of a Principal Prepayment in full during the
related Prepayment Period;
(iii) the lesser of (a) the Senior Prepayment Percentage of
all Net Liquidation Proceeds, allocable to principal received in
respect of each Mortgage Loan which became a Liquidated Mortgage Loan
during the related Prepayment Period; and (b) the Senior Percentage of
the Scheduled Principal Balance of each Mortgage Loan which became a
Liquidated Mortgage Loan during the related Prepayment Period; and
(iv) the Senior Prepayment Percentage of the sum of (a) the
Scheduled Principal Balance of each Mortgage Loan or REO Property which
was purchased by BSMCC on such Distribution Date and (b) the excess, if
any, of the Scheduled Principal Balance of a Mortgage Loan that has
been replaced by BSMCC with a Substitute Mortgage Loan pursuant to
Section 2.04 on such Distribution Date over the Scheduled Principal
Balance of such Substitute Mortgage Loan.
SENIOR PERCENTAGE: Initially 96.25%. 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 Senior
Certificates immediately preceding such Distribution Date by the
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aggregate Scheduled Principal Balance of the Mortgage Loans as of the beginning
of the related Due Period.
SENIOR PREPAYMENT PERCENTAGE: On any Distribution Date occurring during
the periods set forth below, as follows:
Period (dates inclusive) Senior Prepayment Percentage
June 25, 1998 - May 25, 2008 100%
June 25, 2008 - May 25, 2009 Senior Percentage plus 70% of the Subordinate
Percentage
June 25, 2009 - May 25, 2010 Senior Percentage plus 60% of the Subordinate
Percentage
June 25, 2010 - May 25, 2011 Senior Percentage plus 40% of the Subordinate
Percentage
June 25, 2011 - May 25, 2012 Senior Percentage plus 20% of the Subordinate
Percentage
June 25, 2012 and thereafter Senior Percentage
Notwithstanding the foregoing, if on any Distribution Date the Senior Percentage
exceeds the Senior Percentage as of the Cut-Off Date, the Senior Prepayment
Percentage for such Distribution Date will equal 100%. On the Distribution Date
on which the Current Principal Amounts of the Senior Certificates are reduced to
zero, the Senior Prepayment Percentage shall be the minimum percentage
sufficient to effect such reduction and thereafter shall be zero.
In addition, no reduction of the Senior Prepayment Percentage shall occur on any
Distribution Date unless, as of the last day of the month preceding such
Distribution Date, (i) the aggregate Scheduled Principal Balance of Mortgage
Loans delinquent 60 days or more (including for this purpose any such Mortgage
Loans in foreclosure and such Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust), averaged over the last six
months, as a percentage of the sum of the aggregate Current Principal Amount of
the Subordinate Certificates does not exceed 50% and (ii) cumulative Realized
Losses on the Mortgage Loans do not exceed (a) 30% of the applicable Original
Subordinate Principal Balance if such Distribution Date occurs between and
including June 2008 and May 2009, (b) 35% of the Original Subordinate Principal
Balance if such Distribution Date occurs between and including June 2009 and May
2010, (c) 40% of the applicable Original Subordinate Principal Balance if such
Distribution Date occurs between and including June 2010 and May 2011, (d) 45%
of the applicable Original Subordinate Principal Balance if such Distribution
Date occurs between and including June 2011 and May 2012, and (e) 50% of the
applicable Original Subordinate Principal Balance if such Distribution Date
occurs during or after June 2012.
SERVICER REMITTANCE DATE: With respect to the Mortgage Loans, the 18th
day of each month, or if such respective day is not a Business Day, the
following Business Day.
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SERVICING AGREEMENT: The mortgage loan sale, warranties and servicing
agreement, dated as of May 1, 1998, between the Master Servicer and BSMCC.
STARTUP DAY: May 29, 1998.
SUBORDINATE CERTIFICATES: The Class B-1, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6 Certificates.
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 applicable Realized Losses in reduction of the Current Principal
Amounts of such Certificates on such Distribution Date) exceeds (b) the
aggregate Scheduled Principal Balances of the Mortgage Loans on the Due Date
related to such Distribution Date less any Deficient Valuation occurring prior
to such Distribution Date.
SUBORDINATE OPTIMAL PRINCIPAL AMOUNT: As to any Distribution Date, an
amount equal to the sum, without duplication, of the following (but in no event
greater than the aggregate Current Principal Amounts of the Subordinate
Certificates immediately prior to such Distribution Date):
(i) the Subordinate Percentage of the principal portion of all
Monthly Payments due on each Outstanding Mortgage Loan on the related
Due Date as specified in the amortization schedule at the time
applicable thereto (after adjustment for previous Principal
Prepayments);
(ii) the Subordinate Prepayment Percentage of each Principal
Payment in part during the related Prepayment Period with respect to
each Mortgage Loan and the Subordinate Prepayment Percentage of the
Scheduled Principal Balance of each Mortgage Loan that was the subject
of a Principal Prepayment in full during the related Prepayment Period;
(iii) the excess, if any, of (A) all Net Liquidation Proceeds
allocable to principal received during the related Prepayment Period
over (B) the sum of the amounts distributable pursuant to clause (iii)
of the definition of Senior Optimal Principal Amount on such
Distribution Date;
(iv) the Subordinate Prepayment Percentage of the sum of (a)
the Scheduled Principal Balance of each Mortgage Loan or REO Property
which was purchased with respect to such Distribution Date and (b) the
difference, if any, between the Scheduled Principal Balance of a
Mortgage Loan that has been replaced with a Substitute Mortgage Loan on
such Distribution Date over the Scheduled Principal Balance of such
Substitute Mortgage Loan; and
(v) on the Distribution Date on which the Current Principal
Amounts of the Senior Certificates have all been reduced to zero, 100%
of any Senior Optimal Principal
Amount.
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After the aggregate current Principal Amounts of the Subordinate Certificates
have been reduced to zero, the Subordinate Optimal Principal Amount shall be
zero.
SUBORDINATE PERCENTAGE: On any Distribution Date, 100% minus the
applicable Senior Percentage.
SUBORDINATE PREPAYMENT PERCENTAGE: On any Distribution Date, 100% minus
the Senior Prepayment Percentage, except that on any Distribution Date after the
Current Principal Amounts of the Senior Certificates have each been reduced to
zero, the Subordinate Prepayment Percentage
will equal 100%.
SUBSTITUTE MORTGAGE LOAN: A mortgage loan tendered to the Trustee
pursuant to Section 2.04, in each case, (i) which has an Outstanding Principal
Balance not materially greater nor materially less than the Mortgage Loan for
which it is to be substituted; (ii) which has a Mortgage Interest Rate and Net
Rate not less than, and not materially greater than, such Mortgage Loan; (iii)
which has a maturity date not materially earlier or later than such Mortgage
Loan and not later than the latest maturity date of any Mortgage Loan; (iv)
which is of the same property type and occupancy type as such Mortgage Loan; (v)
which has a Loan-to-Value Ratio not greater than the Loan-to-Value Ratio of such
Mortgage Loan; (vi) which is current in payment of principal and interest as of
the date of substitution; and (vii) as to which the payment terms do not vary in
any material respect from the payment terms of the Mortgage Loan for which it is
to be substituted.
TAX ADMINISTRATION AND TAX MATTERS PERSON: The Trustee or any successor
thereto or assignee thereof shall serve as tax administrator hereunder and as
agent for the Tax Matters Person. The Holder of the Residual Certificates shall
be the Tax Matters Person for the REMIC, 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: Norwest Bank Minnesota, National Association, 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 the product of (x) the Scheduled Principal Balance of
such Mortgage Loan on the Due Date in the month prior to the month of such
Distribution Date and (y) one-twelfth of 0.015%.
UNINSURED CAUSE: Any cause of damage to a Mortgaged Property or REO
Property such that the complete restoration of such Mortgaged Property or REO
Property is not fully reimbursable by the hazard insurance policies required to
be maintained pursuant to Section 3.10, without regard to whether or not such
policy is maintained.
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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 Trust 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, (iii) such assets relating to the Mortgage Loans as from
time to time may be held by the Master Servicer in Protected Accounts for the
benefit of the holder of the Mortgage Loans, (iv) any REO Property, (v) 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), (vi) the
Mortgage Loan Purchase Agreement to the extent provided in Subsection 2.03(a),
(vii) any proceeds of, and any payments on, any Additional Collateral relating
to a Mortgage Loan upon the liquidation thereof, and (viii) 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 (A) each Mortgage Loan, other
than Cooperative Loans (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) a certified copy of 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 (or if (x) below applies, shall be in
recordable form), (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, (vi) the
original policy of title insurance or mortgagee's certificate of title insurance
or commitment or binder for title insurance and (vii) originals of all
modification agreements, if applicable and available and (B) each Cooperative
Loan (i) the original Mortgage Note, endorsed, without recourse to the order of
the Trustee, and showing, to the extent available, an unbroken chain of title
from the originator to the Trustee or, in the case of a Mortgage Loan that is
subject to the terms of a consolidation and modification agreement, an
assignment of such agreement to the Trustee; (ii) the original duly executed
assignment of security agreement to the Trustee; (iii) the original Mortgage;
(iv) the acknowledgment copy of the original executed Form UCC-I (or certified
copy thereof) with respect to the security agreement, and any
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required continuation statements, with evidence of filing indicated thereon; (v)
the acknowledgment copy of the original executed Form UCC-3 with respect to the
security agreement, indicating the Trustee as the assignee of the secured party,
with evidence of filing indicated thereon; (vi) the stock certificate
representing the stock allocated to the cooperative unit, with a stock power in
blank attached; (vii) the original collateral assignment of the lease by
Mortgagor to the originator and the assignment of the collateral assignment of
the lease to the Trustee (which may be in blanket form), accompanied by the
original lease; (viii) a copy of the recognition agreement; (ix) if applicable
and to the extent available, the original intervening assignments, including
warehousing assignments, if any, showing, to the extent available, an unbroken
chain of the related Mortgage Loan to the Trustee, together with a copy of the
related Form UCC-3 with evidence of filing thereon; (x) the originals of each
assumption, modification or substitution agreement, if any, relating to the
Mortgage Loan; and (xi) the certificate of primary mortgage insurance, if
applicable.
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, assignments to the Trustee or intervening
assignments thereof which have been delivered, are being delivered or will, upon
receipt of recording information relating to the Security Instrument required to
be included thereon, be delivered to recording offices for recording and have
not been returned to the Seller in time to permit their delivery as specified
above, the Seller may deliver a true copy thereof with a certification by BSMCC
or the Master Servicer, on the face of such copy, substantially as follows:
"Certified to be a true and correct copy of the original, which has been
transmitted for recording"; and (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 or the Master Servicer, to such effect) the Seller may
deliver photocopies of such documents containing an original certification by
the judicial or other governmental authority of the jurisdiction where such
documents were recorded; and PROVIDED, FURTHER, HOWEVER, that in the case of
Mortgage Loans which have been prepaid in full after the Cut-off Date and prior
to the Closing Date, the Seller, in lieu of delivering the above documents, may
deliver to the Trustee a certification 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 Seller shall cause, at its
expense, the assignment of the Security Instrument to the Trustee to be recorded
not later than 180 days after the Closing Date. With respect to the Cooperative
Loans, the Seller will, promptly after the Closing Date, cause the related
financing statements (if not yet filed) and an assignment thereof from the
Seller to the Trustee to be filed in the appropriate offices.
Section 2.02. ACCEPTANCE OF MORTGAGE LOANS BY TRUSTEE. (a) The Trustee
acknowledges receipt of, subject to further review and the exceptions which may
be noted pursuant to the procedures described below, and declares that it holds
the documents (or certified copies thereof) delivered to it pursuant to Section
2.01 and declares that it 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 five
Business 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
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execute and deliver, or cause to be executed and delivered, to the Seller 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
90 days from the date of notice from the Trustee of the defect and if BSMCC
fails to correct or cure the defect within such period, and such defect
materially and adversely affects the interests of the Certificateholders in the
related Mortgage Loan, BSMCC will, subject to Section 2.04, within 120 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. The foregoing repurchase obligation shall not
apply in the event that BSMCC cannot deliver such original or copy of any
document submitted for recording to the appropriate recording office in the
applicable jurisdiction because such document has not been returned by such
office; provided that BSMCC shall instead deliver a recording receipt of such
recording office or, if such receipt is not available, a certificate confirming
that such documents have been accepted for recording, and delivery to the
Trustee shall be effected by BSMCC within thirty days of its receipt of the
original recorded document.
(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 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 (PROVIDED, HOWEVER, that with respect to
those documents described in subsection (b)(iv), (b)(v) and (b)(vi) of Section
2.01, the Trustee's obligations shall extend only to the documents actually
delivered pursuant to such subsections). 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 90 days from the date of notice
from the Trustee of the defect and if BSMCC is unable to cure such defect within
such period, and if such defect materially and adversely affects the interests
of the Certificateholders in the related Mortgage Loan, BSMCC shall, subject to
Section 2.04, within 120
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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, BSMCC shall provide the
Repurchase Price to the Trustee for deposit in the Certificate Account and shall
provide to the Trustee written notification detailing the components of the
Repurchase Price. Upon deposit of the Repurchase Price in 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 the Repurchase Price in available funds is received by the
Trustee. The Trustee shall amend the Mortgage Loan Schedule, which was
previously delivered to it by Seller in a form agreed to between the Seller and
the Trustee, to reflect such repurchase and shall promptly notify the Rating
Agencies of such amendment. The obligation of BSMCC to repurchase any Mortgage
Loan as to which such a defect in a constituent document exists shall be the
sole remedy respecting such defect available to the Certificateholders or to the
Trustee on their behalf.
Section 2.03. 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, including but not limited to Seller's rights and obligations
pursuant to the Servicing Agreement, provided that the Seller retains a joint
and several right in the event of breach of the representations, warranties and
covenants of the Master Servicer under the Servicing Agreement to enforce the
provisions thereof and to seek all or any available remedies; and provided
further that this shall not be deemed an agreement or requirement on the part of
the Seller to pursue any such remedies; provided, further, that the obligations
of BSMCC to substitute or repurchase, as applicable, a Mortgage Loan shall be
the Trustee's and the Certificateholders' 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 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 90 days of its
discovery or receipt of notice that such breach has occurred (whichever occurs
earlier), shall cure the breach in all material respects or, subject to Section
2.04, shall purchase the Mortgage Loan or any property acquired with respect
thereto from the Trustee; PROVIDED, HOWEVER, that if there is a breach of any
representation set forth in Exhibit C and the Mortgage Loan or the related
property acquired with respect thereto has been sold, then BSMCC
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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 providing an amount equal to the Repurchase
Price to the Trustee for deposit in the Certificate Account and the Trustee,
upon deposit of the Repurchase Price in the Certificate Account and of written
notification detailing 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 the Repurchase Price in available funds is
received by the Trustee. The Trustee shall amend the Mortgage Loan Schedule to
reflect such repurchase and shall promptly notify the Master Servicer and the
Rating Agencies of such amendment. Enforcement of the obligation of BSMCC, to
purchase (or substitute a Substitute Mortgage Loan for) any Mortgage Loan or any
property acquired with respect thereto (or pay the Repurchase Price as set forth
in the above proviso) as to which a breach has occurred and is continuing shall
constitute the sole remedy respecting such breach available to the
Certificateholders or the Trustee on their behalf.
Section 2.04. SUBSTITUTION OF MORTGAGE LOANS. Notwithstanding anything
to the contrary in this Agreement, in lieu of purchasing a Mortgage Loan
pursuant to Sections 2.02 or 2.03, 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 a certificate of an authorized officer
of BSMCC that such Substitute Mortgage Loan conforms to the requirements set
forth in the definition of "Substitute Mortgage Loan"; PROVIDED, HOWEVER, that
substitution pursuant to this Section 2.04 in lieu of purchase shall not be
permitted after the termination of the two-year period beginning on the Startup
Day. The Trustee shall examine the Mortgage File for any Substitute Mortgage
Loan in the manner set forth in Section 2.02(a) and shall notify BSMCC 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 provide to the Trustee for deposit in the Certificate
Account the amount, if any, by which the Outstanding Principal Balance as of the
next preceding Due Date of the Mortgage Loan for which substitution is being
made, after giving effect to Scheduled Principal due on such date, exceeds the
Outstanding Principal Balance as of such date of the Substitute Mortgage Loan,
after giving effect to Scheduled Principal due on such date, which amount shall
be treated for the purposes of this Agreement as if it were the payment by 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, the Trustee shall accept such Substitute Mortgage Loan which shall
thereafter be deemed to be a Mortgage Loan hereunder. In the event of such a
substitution, accrued interest on the Substitute Mortgage Loan for the month in
which the substitution occurs and any Principal Prepayments made thereon during
such month shall be the property of the Trust Fund and accrued interest for such
month on the Mortgage Loan for which the substitution is made and any Principal
Prepayments made thereon during such month shall be the property of BSMCC or the
Master Servicer. 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
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related Mortgage File related to any Mortgage Loan released pursuant to this
Section 2.04 and shall execute and deliver all instruments of transfer or
assignment, without recourse, in form as provided to it as are necessary to vest
in BSMCC title to and rights under any Mortgage Loan released pursuant to this
Section 2.04. BSMCC shall deliver the documents related to the Substitute
Mortgage Loan in accordance with the provisions of Subsections 2.01(b) and
2.02(b), with the date of acceptance of the Substitute Mortgage Loan deemed to
be the Closing Date for purposes of the time periods set forth in those
Subsections. The representations and warranties set forth in the applicable
Servicing Agreement and Exhibit C shall be deemed to have been made by BSMCC
with respect to each Substitute Mortgage Loan as of the date of acceptance of
such Mortgage Loan by the Trustee. The Trustee shall amend the Mortgage Loan
Schedule to reflect such substitution and shall provide a copy of such amended
Mortgage Loan Schedule to the Master Servicer and the Rating Agencies.
Section 2.05. 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 as
may from time to time be delivered to it segregated on the books of the Trustee
in trust for the benefit of the Certificateholders.
Section 2.06. REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLER. The
Seller hereby represents and warrants to the Trustee 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
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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);
(vi) there are no actions, suits or proceedings pending or, to
the knowledge of the Seller, threatened against the Seller, before or
by any court, administrative agency, arbitrator or governmental body
(i) with respect to any of the transactions contemplated by this
Agreement or (ii) with respect to any other matter which in the
judgment of the Seller will be determined adversely to the Seller and
will if determined adversely to the Seller materially and adversely
affect the Seller's ability to enter into this Agreement or perform its
obligations under this Agreement; and the Seller is not in default with
respect to any order of any court, administrative agency, arbitrator or
governmental body so as to materially and adversely affect the
transactions contemplated by this Agreement; and
(vii) immediately prior to the transfer and assignment to the
Trustee, each Mortgage Note and each Mortgage were not subject to an
assignment or pledge, and the Seller had good and marketable title to
and was the sole owner thereof and had full right to transfer and sell
such Mortgage Loan to the Trustee free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest.
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ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. MASTER SERVICER. The Mortgage Loans shall be serviced
pursuant to the Servicing Agreement. 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.
The Trustee shall provide access to the records and documentation in
possession of the Trustee regarding the related Mortgage Loans and REO Property
and the servicing thereof to the Certificateholders, the FDIC, and the
supervisory agents and examiners of the FDIC, such access being afforded only
upon reasonable prior written request and during normal business hours at the
office of the Trustee; PROVIDED, HOWEVER, that, unless otherwise required by
law, the Trustee shall not be required to provide access to such records and
documentation if the provision thereof would violate the legal right to privacy
of any Mortgagor. The Trustee shall allow representatives of the above entities
to photocopy any of the records and documentation and shall provide equipment
for that purpose at a charge that covers the Trustee's actual costs.
Upon receipt of a request by the Master Servicer, the Trustee shall
release within five Business Days the related Mortgage File to the Master
Servicer and execute and deliver to the Master Servicer, without recourse, a
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.
The Trustee shall execute and deliver to the Master Servicer any court
pleadings, requests for trustee's sale or other documents necessary or desirable
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.
Section 3.02. REMIC-RELATED COVENANTS. For as long as the REMIC shall
exist, the Trustee shall act in accordance herewith to assure continuing
treatment of such REMIC as a REMIC, and the Trustee shall comply with any
directions of the Seller or 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 investment of deposits in an
Account unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received a REMIC Opinion prepared
at the expense of the Trust Fund; and (b) other than with respect to a
substitution pursuant to Section 2.04, accept any contribution to the REMIC
after the Startup Day without receipt of a REMIC Opinion.
Section 3.03. ADDITIONAL INFORMATION. The Trustee agrees to furnish the
Seller, at no expense to the Trustee, from time to time upon reasonable request,
such further information, reports and
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financial statements which the Seller deems appropriate and to prepare and file
all 8-K and 10-K reports with the Securities and Exchange Commission which the
Trustee has available pursuant to this Agreement and the Servicing Agreement.
Section 3.04. UCC. The Trustee agrees to file continuation statements
for any Uniform Commercial Code financing statements which the Seller has
informed the Trustee were filed in connection with the Trust.
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ARTICLE IV
Accounts
Section 4.01. CERTIFICATE ACCOUNT. (a) The Trustee shall establish and
maintain in the name of the Trustee, for the benefit of the Certificateholders,
the Certificate Account as a segregated non-interest bearing trust account or
accounts. The Trustee will deposit in the Certificate Account as identified by
the Master Servicer, as received the following amounts:
(i) Any amounts withdrawn from a Protected Account;
(ii) Any Monthly Advance and any Compensating Interest
Payments;
(iii) Any Insurance Proceeds or Liquidation Proceeds received
by or on behalf of the Trustee which were not deposited in a Protected
Account;
(iv) The Repurchase Price with respect to any Mortgage Loans
purchased by BSMCC pursuant to Sections 2.02 or 2.03, any amounts which
are to be treated pursuant to Section 2.04 as the payment of such a
Repurchase Price and all proceeds of any Mortgage Loans or property
acquired in connection with a purchase pursuant to any Servicing
Agreement or the optional termination of the Trust;
(v) Any amounts required to be deposited with respect to
losses on investments of deposits in an Account; and
(vi) Any other amounts received by or on behalf of the Master
Servicer or the Trustee and required to be deposited in the Certificate
Account pursuant to this Agreement.
(b) All amounts deposited to the Certificate Account shall be held by
the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement.
(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 in its Corporate Trust Office, 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 or (ii) invested in the name of the
Trustee, in such Permitted Investments selected by the Trustee or deposited in
demand deposits with such depository institutions as selected by the Trustee,
provided that time deposits of such depository institutions would be a Permitted
Investment. 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. All investment earnings on amounts on deposit in the
Certificate Account from time to time shall be for the account of the Trustee.
The
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Trustee shall be permitted to withdraw any and all investment earnings from the
Certificate Account at any time. If there is any loss on a Permitted Investment
or demand deposit, the Trustee shall deposit the amount of the loss in the
Certificate Account. 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.
Section 4.02. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE CERTIFICATE
ACCOUNT. (a) The Trustee will, from time to time on demand of the Master
Servicer, make or cause to be made such withdrawals or transfers from the
Certificate Account as the Master Servicer has designated for such transfer or
withdrawal pursuant to the Servicing Agreement. The Trustee may clear and
terminate the Certificate Account pursuant to Section 10.01 and remove amounts
from time to time deposited in error.
(b) On each Distribution Date, the Trustee shall pay the amount
distributable to the Holders of the Certificates in accordance with Section 6.01
from the funds in the Certificate Account. The Trustee shall direct any
investments of the Certificate Account and may retain for its own account the
amount of investment earnings, net of losses, from the Certificate Account.
(c) On an ongoing basis, the Trustee shall withdraw from the
Certificate Account any expenses recoverable by the Trustee pursuant to Section
9.05.
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ARTICLE V
Certificates
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 Residual Certificates, the Private
Certificates and the Individual Certificates and as provided in Subsection
5.01(b), the Certificates shall at all times remain registered in the name of
the Depository or its nominee and at all times: (i) registration of such
Certificates may not be transferred by the Trustee except to a successor to the
Depository; (ii) ownership and transfers of registration of such Certificates on
the books of the Depository shall be governed by applicable rules established by
the Depository; (iii) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (iv) the Trustee shall
deal with the Depository as representative of such Certificate Owners of the
respective Class of Certificates for purposes of exercising the rights of
Certificateholders under this Agreement, and requests and directions for and
votes of such representative shall not be deemed to be inconsistent if they are
made with respect to different Certificate Owners; and (v) the Trustee may rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants.
The Residual Certificates and the Private 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
Global 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 and any Global Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owners. Each Depository Participant shall only
transfer Book-Entry Certificates of Certificate Owners it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures.
(b) If (i)(A) the Seller advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Trustee or the Seller is unable to
locate a qualified successor within 30 days or (ii) the Seller at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository, the Trustee shall request that the Depository notify all
Certificate Owners of the occurrence of any such event and of the availability
of definitive, fully registered Certificates 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 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) The REMIC will be evidenced by the REMIC Regular Certificates which
are hereby designated as the "regular interests" in the REMIC and the Class R
Certificate which is hereby designated as the single "residual interest" in the
REMIC, respectively. Any amounts with respect to the Mortgage Loans payable to
the Certificates other than the Residual Certificates shall be payable to the
REMIC Regular Certificates.
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(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 $ 93,726,200.00 (1)
B-1 $ 1,460,600.00 (1)
B-2 $ 730,300.00 (1)
B-3 $ 486,800.00 (1)
B-4 $ 243,400.00 (1)
B-5 $ 243,400.00 (1)
B-6 $ 487,180.52 (1)
R $ 100.00 (1)
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(1) The Certificates will bear interest at a variable rate equal to the weighted
average of the Net Rates of the Mortgage Loans. The Pass-Through Rate with
respect to the first Interest Accrual Period is expected to be approximately
6.922% per annum.
(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
Exhibits A-1 and A-2. On original issuance, the Trustee shall sign, countersign
and shall deliver them at the direction of the Seller. Pending the preparation
of definitive Certificates of any Class, the Trustee may sign and countersign
temporary Certificates that are printed, lithographed or typewritten, in
authorized denominations for Certificates of such Class, substantially of the
tenor of the definitive Certificates in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers or authorized signatories executing such Certificates may
determine, as evidenced by their execution of such Certificates. If temporary
Certificates are issued, the Seller will cause definitive Certificates to be
prepared without unreasonable delay. After the preparation of definitive
Certificates, the temporary Certificates shall be exchangeable for definitive
Certificates upon surrender of the temporary Certificates at the office of the
Trustee, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Certificates, the Trustee shall sign and countersign and
deliver in exchange therefor a like aggregate principal amount, in authorized
denominations for such Class, of definitive Certificates of the same Class.
Until so exchanged, such temporary Certificates shall in all respects be
entitled to the same benefits as definitive Certificates.
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(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 (i) in the
case of the Senior Certificates (other than the Residual Certificates), $1,000
and in each case increments of $1.00 in excess thereof, and (ii) in the case of
the Offered Subordinate Certificates, $25,000 and increments of $1.00 in excess
thereof, except that one Certificate of each such Class may be issued in a
different amount so that the sum of the denominations of all outstanding
Certificates of such Class shall equal the Current Principal Amount of such
Class on the Closing Date. 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, Class B-6 Certificates will be issued in certificated
fully-registered form in minimum denominations of $50,000 and increments of
$1.00 in excess thereof, except that one Certificate of each such Class may be
issued in a different amount so that the sum of the denominations of all
outstanding Certificates of such Class shall equal the Current Principal Amount
of such Class on the Closing Date. The Class R Certificates shall be issued in
certificated fully-registered form in the denomination of $100. Each Class of
Global Certificates, if any, shall be issued in fully registered form in minimum
dollar denominations of $50,000 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 Offered Certificates, the
Certificate in the entire Current Principal Amount of the respective Class and
(ii) in the case of each Class of Private Certificates, Individual Certificates
all in an aggregate principal amount that shall equal the Current Principal
Amount of each such respective 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 Trustee shall sign the Certificates 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 the
REMIC within the meaning of Section 860G(a)(9) of the Code.
(j) For federal income tax purposes, the REMIC shall have a tax year
that is a calendar year and shall report income on an accrual basis.
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(k) The Trustee on behalf of the Trust shall cause the REMIC to elect
to be treated as a real estate mortgage investment conduit 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 distributions on the
Certificates is June 25, 2028. The Assumed Final Distribution Date in the case
of the Class A Certificates is the Distribution Date on which the Current
Principal Amount of Class A Certificates is reduced to zero, assuming a constant
percentage of 0% CPR and the assumptions set forth under "Yield and Prepayment
Considerations-Decrement Tables" in the Prospectus Supplement. The Assumed Final
Distribution Date in the case of all Classes of Certificates other than the
Class A Certificates is the Distribution Date in the month following the latest
scheduled maturity of all the Mortgage Loans.
Section 5.02. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall maintain at its Corporate Trust Office a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided.
(b) Subject to Subsection 5.01(a) and, in the case of any Global
Certificate or Physical Certificate upon the satisfaction of the conditions set
forth below, upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purpose, the Trustee
shall sign, countersign and shall deliver, in the name of the designated
transferee or transferees, a new Certificate of a like Class and aggregate
Fractional Undivided Interest, but bearing a different number.
(c) By acceptance of an Individual Certificate, whether upon original
issuance or subsequent transfer, each holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth in the Securities
Legend and agrees that it will transfer such a Certificate only as provided
herein. In addition to the provisions of Subsection 5.02(h), the following
restrictions shall apply with respect to the transfer and registration of
transfer of an Individual Certificate to a transferee that takes delivery in the
form of an Individual Certificate:
(i) The Trustee shall register the transfer of an Individual
Certificate if the requested transfer is being made to a transferee who
has provided the Trustee with a Rule 144A Certificate or comparable
evidence as to its QIB status.
(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
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or other information prior to registering the transfer of an Individual
Certificate as shall be set forth in such Opinion of Counsel.
(d) Subject to Subsection 5.02(h), so long as a Global Certificate of
such Class is outstanding and is held by or on behalf of the Depository,
transfers of beneficial interests in such Global Certificate, or transfers by
holders of Individual Certificates of such Class to transferees that take
delivery in the form of beneficial interests in the Global Certificate, may be
made only in accordance with this Subsection 5.02(d) and in accordance with the
rules of the Depository:
(i) In the case of a beneficial interest in the Global
Certificate being transferred to an Institutional Accredited Investor,
such transferee shall be required to take delivery in the form of an
Individual Certificate or Certificates and the Trustee shall register
such transfer only upon compliance with the provisions of Subsection
5.02(c)(ii).
(ii) In the case of a beneficial interest in a Class of Global
Certificates being transferred to a transferee that takes delivery in
the form of an Individual Certificate or Certificates of such Class,
except as set forth in clause (i) above, the Trustee shall register
such transfer only upon compliance with the provisions of Subsection
5.02(c)(i).
(iii) In the case of an Individual Certificate of a Class
being transferred to a transferee that takes delivery in the form of a
beneficial interest in a Global Certificate of such Class, the Trustee
shall register such transfer if the transferee has provided the Trustee
with a Rule 144A Certificate or comparable evidence as to its QIB
status.
(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;
provided that each such transferee shall be deemed to have made such
representations and warranties contained in the Rule 144A Certificate
as are sufficient to establish that it is a QIB.
(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
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if such holder furnishes to the Trustee a Rule 144A Certificate or
comparable evidence as to its QIB status.
(iii) A holder of an Individual Certificate of a Class may
exchange such Certificate for an equal aggregate principal amount of
Individual Certificates of such Class in different authorized
denominations without any certification.
(f) (i) Upon acceptance for exchange or transfer of an
Individual Certificate of a Class for a beneficial interest in a Global
Certificate of such Class as provided herein, the Trustee shall cancel
such Individual Certificate and shall (or shall request the Depository
to) endorse on the schedule affixed to the applicable Global
Certificate (or on a continuation of such schedule affixed to the
Global Certificate and made a part thereof) or otherwise make in its
books and records an appropriate notation evidencing the date of such
exchange or transfer and an increase in the certificate balance of the
Global Certificate equal to the certificate balance of such Individual
Certificate exchanged or transferred therefor.
(ii) Upon acceptance for exchange or transfer of a beneficial
interest in a Global Certificate of a Class for an Individual
Certificate of such Class as provided herein, the Trustee shall (or
shall request the Depository to) endorse on the schedule affixed to
such Global Certificate (or on a continuation of such schedule affixed
to such Global Certificate and made a part thereof) or otherwise make
in its books and records an appropriate notation evidencing the date of
such exchange or transfer and a decrease in the certificate balance of
such Global Certificate equal to the certificate balance of such
Individual Certificate issued in exchange therefor or upon transfer
thereof.
(g) The Securities Legend shall be placed on any Individual Certificate
issued in exchange for or upon transfer of another Individual Certificate or of
a beneficial interest in a Global
Certificate.
(h) Subject to the restrictions on transfer and exchange set forth in
this Section 5.02, the holder of any Individual Certificate may transfer or
exchange the same in whole or in part (in an initial certificate balance equal
to the minimum authorized denomination or any integral multiple of $1.00 in
excess thereof) by surrendering such Certificate at the Corporate Trust Office,
or at the office of any transfer agent, together with an executed instrument of
assignment and transfer satisfactory in form and substance to the Trustee in the
case of transfer and a written request for exchange in the case of exchange. The
holder of a beneficial interest in a Global Certificate may, subject to the
rules and procedures of the Depository, cause the Depository (or its nominee) to
notify the Trustee in writing of a request for transfer or exchange of such
beneficial interest for an Individual Certificate or Certificates. Following a
proper request for transfer or exchange, the Trustee shall, within five Business
Days of such request made at such Corporate Trust Office, sign, countersign and
deliver at such Corporate Trust Office, to the transferee (in the case of
transfer) or holder (in the case of exchange) or send by first class mail at the
risk of the transferee (in the case of transfer) or holder (in the case of
exchange) to such address as the transferee or holder, as applicable, may
request, an Individual Certificate or Certificates, as the case may require, for
a like aggregate Fractional Undivided Interest and in such authorized
denomination or denominations as may be requested. The presentation for transfer
or exchange of any Individual Certificate shall not be valid unless made at
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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
equal to the minimum authorized denomination or (ii) is acceptable to the Seller
as indicated to the Trustee in writing. Whenever any Certificates are so
surrendered for exchange, the Trustee shall sign and countersign and the Trustee
shall deliver the Certificates which the Certificateholder making the exchange
is entitled to receive.
(j) If the Trustee so requires, every Certificate presented or
surrendered for transfer or exchange shall be duly endorsed by, or be
accompanied by a written instrument of transfer, with a signature guarantee, in
form satisfactory to the Trustee, duly executed by the holder thereof or his or
her attorney duly authorized in writing.
(k) No service charge shall be made for any transfer or exchange of
Certificates, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.
(l) The Trustee shall cancel all Certificates surrendered for transfer
or exchange but shall retain such Certificates in accordance with its standard
retention policy or for such further time as is required by the record retention
requirements of the Securities Exchange Act of 1934, as amended, and thereafter
may destroy such Certificates.
(m) The following legend shall be placed on each Class of Subordinate
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 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, WHICH WILL BE DEEMED REPRESENTED BY AN OWNER OF A BOOK-ENTRY
CERTIFICATE OR A GLOBAL CERTIFICATE AND WILL BE EVIDENCED BY A
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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 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 Trustee and any agent
of the Seller 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 Trustee nor any agent of the Seller 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 and the Seller. As a
prerequisite to such consent, the proposed transferee must provide the Tax
Matters Person, the Seller 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 and the Seller consent 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, the Trustee and the Seller 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 Freddie Mac) a majority of whose board of directors is not selected
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by the United States, or any state or political subdivision thereof), (B) any
organization that is exempt from any tax imposed by Chapter l 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," (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), (D) an "electing large
partnership" (as defined in Section 775 of the Code) or (E) any other Person so
designated by the Trustee based upon an Opinion of Counsel that the holding of
an ownership interest in a Certificate by such Person may cause the Trust or any
Person having an ownership interest in the Certificate (other than such Person)
to incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the transfer of an ownership interest in a
Certificate to such Person(any Person described in (A), (B), (C), (D) or (E)
being referred to herein as a "Disqualified Organization") and that (ii) such
transferee is not acquiring such Residual Certificate for the account of a
Disqualified Organization. The terms "United States," "State" and "international
organization" shall have the meanings set forth in Section 7701 of the Code or
successor provisions. 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. None of the Trustee,
the Tax Matters Person or the Seller shall be under any 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, the Trustee and the Seller, as applicable,
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 the REMIC to fail to qualify as a real estate
mortgage investment conduit under Section 860D of the Code.
(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.
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(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-l hereto, or a Rule 144A Certificate, if the transferee is a QIB, in
the form set forth as Exhibit F-2 hereto. Notwithstanding the provisions of the
immediately preceding sentence, no restrictions shall apply with respect to the
transfer or registration of transfer of a beneficial interest in a Physical
Certificate that is a 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 provided that each such transferee shall be deemed to have made such
representations and warranties contained in the Rule 144A Certificate as are
sufficient to establish that it is a QIB. In the case of a proposed transfer of
a Private Certificate to a transferee other than a QIB, the Trustee may require
an Opinion of Counsel that such transaction is exempt from the registration
requirements of the Securities Act. The cost of such opinion shall not be an
expense of the Trustee or the Trust Fund.
(b) Each Private 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 or an opinion of
counsel 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); PTE 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
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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 Seller 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
Seller 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 monthly on each Distribution
Date, commencing in June 1998, in an aggregate amount equal to the Available
Funds for such Distribution Date.
(i) SENIOR CERTIFICATES. (A) On each Distribution Date, the
Available Funds will be distributed in the following order of
priority among the Senior Certificates:
FIRST, the Accrued Certificate Interest on each Class
of Senior Certificates for such Distribution Date;
SECOND, any Accrued Certificate Interest on each
Class of Senior Certificates remaining undistributed
from previous Distribution Dates, to the extent of
remaining Available Funds;
THIRD, to the Senior Certificates in reduction of the
Current Principal Amounts thereof:
Senior Optimal Principal Amount, in the
following order of priority:
first, to the Class R Certificates
until the Current Principal Amount
thereof has been reduced to zero;
and
second, to the Class A Certificates,
until the Current Principal Amount
thereof has been reduced to zero;
provided, however, that each Distribution
Date after the Cross-Over Date,
distributions of principal on the
outstanding Senior Certificates will be made
pro rata among all Senior Certificates,
regardless of the allocation, or sequential
nature, of principal payments described in
this priority THIRD, based upon the then
Current Principal Amounts of such Senior
Certificates.
(ii) SUBORDINATE CERTIFICATES. On each Distribution
Date, the Available Funds remaining after the
distributions described above under Section
6.01(a)(i) will be distributed among the Subordinate
Certificates sequentially, in the following order, to
the Class B-1, Class B-2, Class B-3, Class B-4, Class
B-5 and Class B-6 Certificates, in each case up to an
amount equal to and in the following order: (a) the
Accrued Certificate Interest thereon for such
Distribution Date, (b) any Accrued Certificate
Interest thereon remaining undistributed from
previous Distribution Dates and (c) such Class's
Allocable Share for such Distribution Date.
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(b) "Pro rata" distributions among Classes of Certificates will be made
in proportion to the then Current Principal Amount of such Classes.
(c) On each Distribution Date, any Available Funds remaining after
payment of interest and principal as described above will be distributed to the
Class R Certificates.
(d) No Accrued Certificate Interest will be payable with respect to any
Class of Certificates after the Distribution Date on which the Current Principal
Amount of such Certificate has been reduced to zero.
(e) If on any Distribution Date the Available Funds for the Senior
Certificates is less than the Accrued Certificate Interest on the Senior
Certificates for such Distribution Date prior to reduction for Net Interest
Shortfall and the interest portion of Realized Losses, the shortfall will be
allocated among the holders of each Class of Senior 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/or Realized
Losses for such Distribution Date. In addition, the amount of any interest
shortfalls 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 the applicable
Available Funds after current interest distributions as required herein. Any
such amounts so carried forward will not bear interest. Shortfalls in interest
payments will not be offset by a reduction in the servicing compensation of the
Master Servicer or otherwise, except to the extent of applicable Compensating
Interest Payments.
(f) The expenses and fees of the Trust shall be paid by the REMIC, to
the extent that such expenses relate to the assets of the REMIC.
Section 6.02. ALLOCATION OF LOSSES. (a) On or prior to each
Determination Date, the Master Servicer shall determine the amount of any
Realized Loss in respect of each Mortgage Loan that occurred during the
immediately preceding calendar month.
(b) (i) With respect to any Certificates on any Distribution
Date, the principal portion of each Realized Loss on a Mortgage Loan
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;
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fifth, to the Class B-2 Certificates until
the Current Principal Amount thereof has been reduced to zero;
sixth, to the Class B- 1 Certificates until
the Current Principal Amount thereof has been reduced to zero; and
seventh, to the Classes of Senior
Certificates, pro rata, in accordance with their Current Principal
Amounts.
(c) Notwithstanding the foregoing, no such allocation of any Realized
Loss shall be made on a Distribution Date to any 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 shall be
allocated among the Certificates of such Class in proportion to their respective
Current Principal Amounts. Any allocation of Realized Losses shall be
accomplished by reducing the Current Principal Amount of the related
Certificates on the related Distribution Date.
(e) Realized Losses 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. Any such Subordinate Certificate
Writedown Amount shall effect a corresponding reduction in the Current Principal
Amount of (i) if prior to the Cross-Over Date, the Current Principal Amounts of
the Subordinate Certificates, in the reverse order of their numerical Class
designations and (ii) from and after the Cross-Over Date, the 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) The interest portion of any Realized Losses occurring on or prior
to the Cross-Over Date will not be allocated among any Certificates, but will
reduce the amount of Available Funds on the related Distribution Date. As a
result of the subordination of the Subordinate Certificates, in right of
distribution, such Realized Losses will be borne first by the Subordinate
Certificates in inverse order of their numerical Class designations.
Section 6.03. PAYMENTS. (a) On each Distribution Date, other than the
final Distribution Date, the Trustee shall distribute to each Certificateholder
of record on the directly preceding Record Date the Certificateholder's PRO RATA
share of its Class (based on the aggregate Fractional Undivided Interest
represented by such Holder's Certificates) of all amounts required to be
distributed on such Distribution Date to such Class. The Trustee shall calculate
the amount to be distributed to each Class and, based on such amounts, the
Trustee shall determine the amount to be distributed to each
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<PAGE>
Certificateholder. All of the Trustee's calculations of payments shall be based
solely on information provided to the Trustee by the Master Servicer. The
Trustee shall not be required to confirm, verify or recompute any such
information but shall be entitled to rely conclusively on such information.
(b) 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 6.04. 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 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 Residual Certificates, an initial Current Principal Amount of
$100 for Class R:
(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 during the related
Interest Accrual Period;
(iv) the Net Interest Shortfall and any other adjustments to
interest at the related Pass-Through Rate necessary to account for any
difference between interest accrued and aggregate interest distributed
with respect to each Class of Certificates;
(v) the amount of the distribution allocable to interest on
each Class of Certificates;
(vi) the Pass-Through Rates for each Class of Certificates
with respect to such Distribution Date;
(vii) the Current Principal Amount of each Class of
Certificates after such Distribution Date;
(viii) the amount of any Monthly Advances, Compensating
Interest Payments and outstanding unreimbursed advances by the Master
Servicer or BSMCC included in such distribution;
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(ix) the amount of any Realized Losses during the related
Prepayment Period and cumulatively since the Cut-off Date 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) and the number and principal balance of Mortgage Loans
purchased or substituted for during the relevant period and
cumulatively since the Cut-off Date;
(xi) the number of Mortgage Loans (excluding REO Property)
remaining in the Trust Fund as of the end of the related Due Period;
(xii) information regarding any Mortgage Loan delinquencies as
of the end of the related Due Period, including the aggregate number,
aggregate Outstanding Principal Balance and aggregate Scheduled
Principal Balance of Mortgage Loans delinquent one month, two months
and three months or more;
(xiii) the number of Mortgage Loans in the foreclosure process
as of the end of the related Due Period and the aggregate Outstanding
Principal Balance of such Mortgage
Loans;
(xiv) the number and aggregate Outstanding Principal Balance
of all Mortgage Loans as to which the Mortgaged Property was REO
Property as of the end of the related Due Period;
(xv) the book value (the sum of (A) the Outstanding Principal
Balance of the Mortgage Loan, (B) accrued interest through the date of
foreclosure and (C) foreclosure expenses) of any REO Property; PROVIDED
THAT, in the event that such information is not available to the
Trustee on the Distribution Date, such information shall be furnished
promptly after it becomes available;
(xvi) the amount of Realized Losses allocated to each Class of
Certificates since the prior Distribution Date and in the aggregate for
all prior Distribution Dates; and
(xvii) the then applicable Senior Percentage, Senior
Prepayment Percentage, Subordinate Percentage and Subordinate
Prepayment Percentage.
The information set forth above shall be calculated or reported, as the
case may be, by the Trustee, based solely on information provided to the Trustee
by the Master Servicer. The Trustee may conclusively rely on such information
and shall not be required to confirm, verify or recalculate
any such information.
(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
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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 Trustee may determine
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. 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.
(c) The Trustee shall forward to the Seller the monthly report provided
by the Master Servicer which includes information with respect to the Mortgage
Loans.
Section 6.05. MONTHLY ADVANCES. The Master Servicer shall make Monthly
Advances pursuant to the Servicing Agreement. On the Business Day prior to each
Distribution Date, if a Mortgage Loan is more than 120 days delinquent, the
Master Servicer will be obligated to make a Monthly Advance by deposit into the
Certificate Account, except to the extent the Master Servicer determines any
such advance to be nonrecoverable from Liquidation Proceeds, Insurance Proceeds
or from future payments on the Mortgage Loan for which the advance was made. The
Trustee shall be obligated to make such Monthly Advance on the Distribution Date
if the Master Servicer fails to do so. The Trustee shall be reimbursed for any
Monthly Advance in the same manner that the Master Servicer would be reimbursed
for a Monthly Advance.
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ARTICLE VII
Indemnification
Section 7.01. INDEMNIFICATION OF THE TRUSTEE. The Trust shall 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 such Indemnified Person's
failure to perform such Indemnified Person's duties in strict 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 Indemnified Person's willful misfeasance, bad faith
or negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. This indemnity shall survive the
resignation or removal of the Trustee and the termination of this Agreement.
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ARTICLE VIII
Default
Section 8.01. EVENTS OF DEFAULT. In each and every case, so long as an
Event of Default with respect to the Master Servicer shall not have been
remedied, the Trustee may, and upon request of the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
principal of the Trust Fund, the Trustee shall by notice in writing to the
Master Servicer, with a copy to the Rating Agencies, terminate all of the rights
and obligations (but not the liabilities) of the Master Servicer under the
Servicing Agreement and in and to the Mortgage Loans and/or the REO Property
serviced by the Master Servicer and the proceeds thereof.
Section 8.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a) Upon the
termination of the Master Servicer under the Servicing Agreement, the Trustee
shall automatically become the successor in all respects to the Master Servicer
in its capacity under the Servicing Agreement and the transactions set forth or
provided for therein 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 thereof;
PROVIDED, HOWEVER, that the Trustee (i) shall be under no obligation to purchase
any Mortgage Loan; and (ii) shall have no obligation whatsoever with respect to
any liability (other than advances deemed recoverable and not previously made)
incurred by the Master Servicer at or prior to the time of termination,
including any liabilities associated with the Master Servicer's failure to
modify its computer and other systems in a manner such that the Master Servicer
can service the Mortgage Loans in accordance with the terms of the Servicing
Agreement on and after January 1, 2000. As compensation therefor, the Trustee
shall be entitled to all funds relating to the Mortgage Loans which the Master
Servicer would have been entitled to retain if the Master Servicer had continued
to act hereunder, except for those amounts due the Master Servicer as
reimbursement for advances previously made or expenses previously incurred.
Notwithstanding the above, the Trustee may, if it shall be unwilling so to act,
or shall, if it is legally unable so to act, appoint or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution which is a FNMA- or Freddie Mac-approved servicer having a net worth
of not less than $10,000,000. 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 servicing responsibilities
hereunder. The Trustee and such successor shall take such action, consistent
with this Agreement and the Servicing 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 servicer.
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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 Trustee 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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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 subject to Section 8.02(b) 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; PROVIDED, FURTHER, that the Trustee shall not be responsible
for the accuracy or verification of any calculation provided to it pursuant to
this Agreement.
(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 in its individual
capacity 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
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any proceeding for any remedy available to the Trustee, or exercising
any trust or other power conferred upon the Trustee, under this
Agreement;
(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 Office
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;
(v) The Trustee shall not in any way be liable by reason of
any insufficiency in any Account held by or in the name of Trustee
unless it is determined by a court of competent jurisdiction that the
Trustee's gross negligence or willful misconduct was the primary cause
of such insufficiency; and
(vi) Anything in this Agreement to the contrary
notwithstanding, in no event shall the Trustee be liable for special,
indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Trustee has
been advised of the likelihood of such loss or damage and regardless of
the form of action.
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 any Servicing 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 pursuant to this Agreement will be promptly so deposited
by the Trustee.
(f) Except for those actions that the Trustee is required to take
hereunder, the Trustee shall have no obligation or liability to take any action
or to refrain from taking any action hereunder
in the absence of written direction as provided hereunder.
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, certificate of a
Seller or Master Servicer, 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 advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection with respect to
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any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such advice or Opinion of Counsel:
(iii) The Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement, other than its
obligation to give notices pursuant to this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders pursuant
to the provisions of this Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred
therein or thereby. Nothing contained herein shall, however, relieve
the Trustee of the obligation, upon the occurrence of an Event of
Default of which a Responsible Officer of the Trustee's Corporate Trust
Office has actual knowledge (which has not been cured or waived), 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 in its individual
capacity 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) 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 functions with respect to
the Mortgage Files 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
4.01(b) or Section 4.02, to be unclear, the Trustee may require prior
to such action that it be provided by the Seller with reasonable
further instructions;
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(viii) The right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a duty, and
the Trustee shall not be accountable for other than its negligence or
willful misconduct in the performance of any such act;
(ix) The Trustee shall not be required to give any bond or
surety with respect to the execution of the trust created hereby or the
powers granted hereunder; and
(x) The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the
repurchase of any Mortgage Loan by BSMCC pursuant to this Agreement or
the Mortgage Loan Purchase Agreement or the eligibility of any Mortgage
Loan for purposes of this Agreement.
Section 9.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other than the signature
and countersignature of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee shall have no responsibility for their
correctness. The Trustee makes no representation as to the validity or
sufficiency of the Certificates (other than the signature and countersignature
of the Trustee on the Certificates) or of any Mortgage Loan except as expressly
provided in Sections 2.02 and 2.05 hereof; provided, however, that the foregoing
shall not relieve the Trustee of the obligation to review the Mortgage Files
pursuant to Sections 2.02 and 2.04. The Trustee's signature and countersignature
(or countersignature of its agent) on the Certificates shall be solely in its
capacity as Trustee and shall not constitute the Certificates an obligation of
the Trustee in any other capacity. The Trustee shall not be accountable for the
use or application by the Seller of any of the Certificates or of the proceeds
of such Certificates, or for the use or application of any funds paid to the
Seller with respect to the Mortgage Loans. Subject to the provisions of Section
2.05, the Trustee shall not be responsible for the legality or validity of this
Agreement or any document or instrument relating to this Agreement, the validity
of the execution of this Agreement or of any supplement hereto or instrument of
further assurance, or the validity, priority, perfection or sufficiency of the
security for the Certificates issued hereunder or intended to be issued
hereunder. The Trustee shall at no time have any responsibility or liability for
or with respect to the legality, validity and enforceability of any Mortgage or
any Mortgage Loan, or the perfection and priority of any Mortgage or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Trust Fund or its ability to generate the payments to be
distributed to Certificateholders, under this Agreement. The Trustee shall have
no responsibility for filing any financing or continuation statement in any
public office at any time or to otherwise perfect or maintain the perfection of
any security interest or lien granted to it hereunder or to record this
Agreement other than any continuation statements filed by the Trustee pursuant
to Section 3.04.
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 Seller covenants and
agrees to pay to the Trustee the Trustee's Fees as set forth in, and in
accordance with, such understanding as may be agreed to between such parties.
The Trustee will be entitled to recover from the Certificate Account pursuant to
Section 4.02(c) all reasonable out-of-pocket expenses, disbursements and
advances and
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the expenses of the Trustee in connection with any Event of Default, any breach
of this Agreement or any claim or legal action (including any pending or
threatened claim or legal action) incurred or made by the Trustee in the
administration of the trusts hereunder (including the reasonable compensation,
expenses and disbursements of its counsel) except any such expense, disbursement
or advance as may arise from its negligence or intentional misconduct or which
is the responsibility of the Certificateholders or the Trust Fund hereunder. If
funds in the Certificate Account are insufficient therefor, the Trustee shall
recover such expenses from the Seller. 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 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 Seller and the Master Servicer, with a copy to the
Rating Agencies. Upon receiving such notice of resignation, the Seller 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 Seller or if at any time the
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Trustee shall become incapable of acting, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Seller 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 quadruplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to the
Seller, 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 Seller
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 Seller 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. BSMCC 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.
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Such succession shall be valid without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 9.11. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust or property constituting the same may at the time be located, the Seller
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 Seller 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 Seller and the
Trustee may consider necessary or desirable.
(b) If the Seller shall not have joined in such appointment within 15
days after the receipt by it of a written request so to do, the Trustee shall
have the power to make such appointment
without the Seller.
(c) No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 9.06
hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.08
hereof.
(d) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.11, all rights, powers, duties and obligations
conferred or imposed upon the Trustee and required to be conferred on such
co-trustee shall be conferred or imposed upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
(e) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(f) To the extent not prohibited by law, any separate trustee or
co-trustee may, at any time, request the Trustee, its agent or attorney-in-fact,
with full power and authority, to do any lawful act under or with respect to
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties
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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
Seller and the Trustee acting jointly may at any time accept the resignation of
or remove any separate trustee or co-trustee.
Section 9.12. FEDERAL INFORMATION RETURNS AND REPORTS TO
CERTIFICATEHOLDERS. (a) For federal income tax purposes, the taxable year of the
REMIC shall be a calendar year and the Trustee shall maintain or cause the
maintenance of the books of the REMIC on the accrual method of accounting.
(b) The Trustee shall prepare and the Trustee will file or cause to be
filed with the Internal Revenue Service Federal tax information returns with
respect to the REMIC, 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, including, without limitation, reports
relating to interest, original issue discount and market discount or premium
(using a constant prepayment assumption of 12% CPR). 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 the REMIC (the "REMIC Reporting Agent") as required by IRS
Form 8811. The Trustee shall make the elections to treat the REMIC as a real
estate mortgage investment conduit under the Code (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
Holder of the Class R Certificate is hereby designated as the "Tax Matters
Person" (within the meaning of Treas. Reg. ss.ss.1.860F-4(d)) for the REMIC. 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 the REMIC during such time as the Trustee does not own any
such Residual Certificate. In the event that the Code or applicable Treasury
regulations prohibit the Trustee from signing tax or information returns or
other statements, or the Trustee from acting as Tax Matters Person (as an agent
or otherwise), the Trustee shall take whatever action that in its sole good
faith judgment is necessary for the proper filing of such information returns or
for the provision of a tax matters person, including designation of the Holder
of a Residual Certificate to sign such returns or act as tax matters person.
Each Holder of a Residual Certificate shall be bound by this Section.
(c) The Trustee shall provide upon request and receipt of reasonable
compensation, such information 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).
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(d) The Trustee shall prepare and the Trustee shall file or cause to be
filed any state income tax returns required under Applicable State Law with
respect to the REMIC or the Trust Fund.
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ARTICLE X
Termination
Section 10.01. TERMINATION UPON REPURCHASE BY THE SELLER OR ITS
DESIGNEE OR LIQUIDATION OF THE MORTGAGE LOANS. (a) Subject to Section 10.02, the
respective obligations and responsibilities of the Seller and the Trustee
created hereby, other than the obligation of the Trustee to make payments to
Certificateholders as hereinafter set forth shall terminate upon:
(1) (i) the repurchase by or at the direction of the Seller or its
designee of all Mortgage Loans and all REO 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, less the good faith estimate
of the Seller of liquidation expenses to be incurred in connection with
its disposal thereof (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), 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) (1) The right of the Seller or its designee to repurchase all
Mortgage Loans pursuant to Subsection 10.01(a)(2)(i) above shall be exercisable
only if (i) the aggregate unpaid principal balance of the Mortgage Loans at the
time of any such repurchase is less than 5% of the portion of the Cut-off Date
Balance or (ii) the Seller, based upon an Opinion of Counsel, has determined
that the REMIC status of the REMIC 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, in the case of (i) or (ii) above, the Seller may elect to
terminate the REMIC at any time, and upon such election, the Seller or its
designee, shall repurchase all the Mortgage Loans.
(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
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Trustee for payment of the final distribution and cancellation. Such notice
shall be given by letter, mailed not earlier than the l 5th 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) (1) If the option of the Seller to repurchase or cause the
repurchase of all Mortgage Loans under Subsection 10.01 (a)(2)(i) above is
exercised, the Seller and/or its designee 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 REMIC.
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 of Residual
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
Certificateholder. If the Available Funds are not sufficient to pay all of the
related Certificates in full, any such deficiency will be allocated to the
outstanding Class or Classes of Subordinate Certificates having the highest
numerical designation or if after the applicable Cross-Over Date to the Senior
Certificates pro rata. Upon deposit of the required repurchase price and
following such final Distribution Date, the Trustee shall release promptly to
the Seller and/or its designee, 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 Certificate
Account all distributable amounts remaining in their Protected Accounts. Upon
the presentation and surrender of the Certificates, the Trustee shall distribute
to the Certificateholders, in accordance with their respective interests, all
distributable amounts remaining in the Certificate Account. Upon deposit by the
Master Servicer of such distributable amounts, and following such final
Distribution Date, the Trustee shall release promptly to the Seller or its
designee the Mortgage Files for the remaining Mortgage Loans, and the
Certificate Account 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).
(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
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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)(1)(i) above is exercised, the REMIC 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 the REMIC or (ii) cause the REMIC 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 of the
REMIC, at the written direction of the Seller, the Trustee, as agent
for the respective Tax Matters Persons, shall adopt a plan of complete
liquidation of the REMIC provided to it by the Seller meeting the
requirements of a "Qualified Liquidation" under Section 860F of the
Code and any regulations thereunder.
(ii) at or after the time of adoption of such a plan of
complete liquidation of any of the REMIC and at or prior to the final
Distribution Date, the Trustee shall sell for cash all of the assets of
the REMIC or to or at the direction of the Seller; and
(iii) at the time of the making of the final payment on any
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 corresponding Residual
Certificates, the Current Principal Amount of the Certificates plus 30
days' interest thereon at the applicable Pass-Through Rate, and (ii) to
the corresponding Residual Certificateholder, all cash on hand from the
Certificate Account (other than cash retained to meet claims); and the
REMIC 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 of the
REMIC upon the written request of the Seller and to take such action in
connection therewith as may be reasonably requested by the Seller and (ii)
appoint the Seller 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 the REMIC.
(c) At such time as the REMIC is terminated either by a complete
liquidation or upon final distribution of all of the assets of the REMIC shall
terminate.
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<PAGE>
ARTICLE XI
Miscellaneous Provisions
Section 11.01. INTENT OF PARTIES. The parties intend that each of the
REMICs shall be treated as a real estate mortgage investment conduit under the
Code 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 and the Trustee, and any Servicing Agreement may be
amended from time to time by the Master Servicer and the Trustee, 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
and the Trustee, and any Servicing Agreement may also be amended 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% 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 the REMIC 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. Notwithstanding any other provision of this Agreement,
for purposes of the giving or withholding of consents pursuant to Section
11.02(b), Certificates registered in the name of or held for the benefit of the
Seller, the Master Servicer, or the Trustee or any Affiliate thereof shall be
entitled to vote their Undivided Fractional Interests with respect to matters
affecting such Certificates.
(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.
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(e) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement.
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 Seller shall
effect such recordation, at the expense of the Trust upon the request in writing
of a Certificateholder, but only if such direction is accompanied by an Opinion
of Counsel (provided at the expense of the Certificateholder requesting
recordation) to the effect that such recordation would materially and
beneficially affect the interests of the Certificateholders or is required by
law.
Section 11.04. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The
death or incapacity of any Certificateholder shall not terminate this Agreement
or the Trust, nor entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of the Trust, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
(b) Except as expressly provided in this Agreement, no
Certificateholders shall have any right to vote or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to establish the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholders be under any liability to any third Person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon, under or with respect to this Agreement against the
Seller, the Master Servicer or any successor to any such parties unless (i) such
Certificateholder previously shall have given to the Trustee a written notice of
a continuing default, as herein provided, (ii) the Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 51% of the
Trust Fund shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs and expenses and liabilities to be incurred therein or thereby, and (iii)
the Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding.
(d) No one or more Certificateholders shall have any right by virtue of
any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain priority or preference over
any other such Certificateholder, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 11.04,
XI-2
<PAGE>
each and every Certificateholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.
Section 11.05. ACTS OF CERTIFICATEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing.
Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is expressly required, to the Seller. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Seller,
if made in the manner provided in this Section 11.05.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority. The fact and date of the execution of any such
instrument or writing, or the authority of the individual executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Certificates (notwithstanding any notation of
ownership or other writing on such Certificates, except an endorsement in
accordance with Section 5.02 made on a Certificate presented in accordance with
Section 5.04) shall be proved by the Certificate Register, and neither the
Trustee, the Seller, the Master Servicer nor any successor to any such parties
shall be affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action of the holder of any Certificate shall bind every future
holder of the same Certificate and the holder of every Certificate issued upon
the registration of transfer or exchange thereof, if applicable, or in lieu
thereof with respect to anything done, omitted or suffered to be done by the
Trustee, the Seller, the Master Servicer or any successor to any such party in
reliance thereon, whether or not notation of such action is made upon such
Certificates.
(e) In determining whether the Holders of the requisite percentage of
Certificates evidencing Fractional Undivided Interests have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Trustee, the Seller, the Master Servicer or any
Affiliate thereof shall be disregarded, except as otherwise provided in Section
11.02(b) and 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 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, or the Master
Servicer, as the case may be.
XI-3
<PAGE>
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, New York, New York
10167, Attention: Vice President-Servicing (but with respect to monthly reports
sent pursuant to Section 6.07(b), Attention: Lynn Lin), or to such other address
as may hereafter be furnished to the other parties hereto in writing; (ii) in
the case of the Trustee, at its Corporate Trust Office with a copy to 11000
Broken Land Parkway, Columbia, Maryland 21044 (Attention: SAMI 98-7), or such
other address as may hereafter be furnished to the other parties hereto in
writing; or (iii) in the case of the Rating Agencies, Fitch IBCA, Inc., One
State Street Plaza, 32nd Floor, New York, New York 10004 and Standard & Poor's
Rating Services, a Division of the McGraw-Hill Companies, Inc., 26 Broadway, New
York, New York, 10004, Attention: Residential Mortgage Surveillance, Ernestine
Warner. 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:
XI-4
<PAGE>
1. Any material change or amendment to this Agreement or any
Servicing Agreement;
2. The occurrence of any Event of Default that has not been
cured;
3. The resignation or termination of the Master Servicer or the
Trustee;
4. The repurchase or substitution of Mortgage Loans;
5. The final payment to Certificateholders; and
6. Any change in the location of the Certificate Account.
In addition, in accordance with Section 6.04, the Trustee shall
promptly furnish to each Rating Agency copies of each report to
Certificateholders described in Section 6.04
XI-5
<PAGE>
IN WITNESS WHEREOF, the Seller 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:_______________________________________
Name: Joseph T. Jurkowski, Jr.
Title: Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:_______________________________________
Name: Amy Wahl
Title: Assistant Vice President
Accepted and Agreed as to
Sections 2.01, 2.02, 2.03, 2.04 and 9.09(c)
BEAR STEARNS MORTGAGE CAPITAL
CORPORATION
By:__________________________________________
Name: Jeffrey Mayer
Title: Director
<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, 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.
__________________________________
Notary Public
[Notarial Seal]
<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 Amy Wahl, known to me to be a Assistant Vice
President of Norwest Bank Minnesota, National Association, 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.
__________________________________
Notary Public
[Notarial Seal]
<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 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.
__________________________________
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT A
FORM OF FACE OF CERTIFICATES
CLASS [A] [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 HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES 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 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
A-1
<PAGE>
RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN
WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS 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) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE
THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE
JURISDICTION.]
[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 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, 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.]
A-2
<PAGE>
Certificate No. __ Variable Pass-Through Rate
Class [A] [B-__] Senior
Date of Pooling and Servicing
Agreement and Cut-off Date:
May 1, 1998
First Distribution Date: Current Principal Amount of this
June 25, 1998 Certificate as of the Cut-off
Date: $________________
Master Servicer: Aggregate Current Principal Amount of
Boston Safe Deposit and Trust Company this Certificate as of the Cut-off
Date: $_____________
Assumed Final CUSIP ______________
Distribution Date:
June 25, 2028
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-7
evidencing a percentage interest in the distributions allocable to the
Class [A] [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 certificates 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 and cooperative units (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.
Boston Safe Deposit and Trust Company ("The Boston Company") will act as master
servicer of the Mortgage Loans (the "Master Servicer," which term includes any
successors thereto under the Agreement referred to below). The Trust was created
pursuant to the
A-3
<PAGE>
Pooling and Servicing Agreement dated as of the Cut-off Date specified above
(the "Agreement"), between SAMI, as seller, and Norwest Bank Minnesota, N.A., as
trustee (the "Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, capitalized
terms used herein shall have the meaning ascribed to them in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of its acceptance hereof assents and by which such Holder is bound.
Interest on this Certificate will accrue during the month
prior to the month in which a Distribution Date (as hereinafter defined) occurs
on the Current Principal Amount hereof at a per annum rate equal to a variable
Pass-Through Rate equal to the weighted average of the Net Rates of the 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 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.]
A-4
<PAGE>
[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 eight 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 Seller and the rights of the Certificateholders under the
Agreement from time to time by the Seller 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 for such purposes, 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.
A-5
<PAGE>
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 Trust also may be terminated on
any Distribution Date upon the determination, based upon an opinion of counsel,
that the REMIC status of the Trust Fund 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.
A-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: May 29, 1998 NORWEST BANK MINNESOTA, N.A.,
Not in its individual capacity but
solely as Trustee
By:____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [A] [B-__] Certificates referred to
in the within-mentioned Agreement.
NORWEST BANK MINNESOTA, N.A.,
Authorized signatory of Norwest Bank
Minnesota, N.A., 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.
<PAGE>
EXHIBIT B
MORTGAGE LOAN SCHEDULE
MORTGAGE LOAN SCHEDULE
----------------------
The Preliminary and Final Mortgage Loan Schedules shall set
forth the following information with respect to each Mortgage Loan:
(1) the loan number;
(2) the Mortgagor's name;
(3) the street address (including city, state and zip code) of the
Mortgaged Property;
(4) the property type;
(5) the Mortgage Rate;
(6) the Master Servicing Rate;
(7) the Net Rate;
(8) the original term;
(9) the maturity date;
(10) the stated remaining term to maturity;
(11) the original principal balance;
(12) the first payment date;
(13) the principal and interest payment in effect as of the Cut-off Date;
(14) the unpaid principal balance as of the Cut-off Date;
(15) the Loan-to-Value Ratio at origination;
(16) paid-through date;
(17) the insurer of any Primary Mortgage Insurance Policy;
(18) the Mortgage Loan Group;
<PAGE>
(19) the Gross Margin, if applicable;
(20) the Maximum Lifetime Mortgage Rate, if applicable;
(21) the Minimum Lifetime Mortgage Rate, if applicable;
(22) the Periodic Rate Cap, if applicable; and
(23) the number of days delinquent, if any.
Such schedule also shall set forth for all of the Mortgage Loans, the total
number of Mortgage Loans, the total of each of the amounts described under (xi)
and (xiv) above, the weighted average by principal balance as of the Cut-off
Date of each of the rates described under (v), (vi) and (vii) above, and the
weighted average remaining term to maturity by unpaid principal balance as of
the Cut-off Date.
B-2
<PAGE>
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF BSMCC
CONCERNING THE MORTGAGE LOANS
[SEE SECTION 8 OF MORTGAGE LOAN PURCHASE AGREEMENT]
C-1
<PAGE>
EXHIBIT D
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minnesota, National Association
1015 10th Avenue S.E.
Minneapolis, MN 55414
RE: Pooling and Servicing Agreement dated as of
May 1, 1998, among SAMI
and Norwest Bank Minnesota,
National Association as Trustee
In connection with the administration of the Mortgage Loans held by you
pursuant to the above-captioned Pooling and Servicing Agreement, we request the
release, and hereby acknowledge receipt, of the Mortgage File for the Mortgage
Loan described below, for the reason indicated.
MORTGAGE LOAN NUMBER:
MORTGAGOR NAME, ADDRESS & ZIP CODE:
REASON FOR REQUESTING DOCUMENTS (CHECK ONE):
___________ 1. Mortgage Paid in Full and proceeds have been
deposited into the Custodial Account
2. Foreclosure
3. Substitution
4. Other Liquidation
5. Nonliquidation Reason:_____________________
By:_________________________
(authorized signer)
Issuer:_____________________
Address:____________________
Date:_______________________
D-1
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EXHIBIT E
Affidavit pursuant to Section 860E(e)(4) of
the Internal Revenue Code of 1986, as
amended, and for other purposes
STATE OF )
)ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of _________ ] [the United States], on behalf of
which he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" as
defined in Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended
(the "Code"), and will not be a disqualified organization as of [Closing Date]
[date of purchase]; (ii) it is not acquiring the Structured Asset Mortgage
Investments Inc. Mortgage Pass-Through Certificates, Series 1998-7, Class R
Certificates (the "Residual Certificates") for the account of a disqualified
organization; (iii) it consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by Structured Asset Mortgage
Investments Inc. (upon advice of counsel) to constitute a reasonable arrangement
to ensure that the Residual Certificates will not be owned directly or
indirectly by a disqualified organization; and (iv) it will not transfer such
Residual Certificates unless (a) it has received from the transferee an
affidavit in substantially the same form as this affidavit containing these same
four representations and (b) as of the time of the transfer, it does not have
actual knowledge that such affidavit is false.
3. That the Investor is one of the following: (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity taxable as
such created or organized in or under the laws of the United States or any
political subdivision thereof or (iii) an estate that is subject to U.S. federal
income tax regardless of the source of its income, or (iv) a trust other than a
"foreign trust," as defined in Section 7701 (a)(3 1 ) of the Code.
4. That the Investor's taxpayer identification number is .
5. That no purpose of the acquisition of the Residual Certificates is
to avoid or impede the assessment or collection of tax.
6. That the Investor understands that, as the holder of the Residual
Certificates, the Investor may incur tax liabilities in excess of any cash flows
generated by such Residual Certificates.
7. That the Investor intends to pay taxes associated with holding the
Residual Certificates as they become due.
E-1
<PAGE>
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] this ____ day of __________,19_.
[NAME OF INVESTOR]
By:_____________________________________
[Name of Officer]
[Title of Officer]
[Address of Investor for receipt of
distributions]
Address of Investor for receipt of tax
information:
E-2
<PAGE>
Personally appeared before me the above-named [Name of Officer], known
or proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Investor.
Subscribed and sworn before me this ___ day of _____________, 19__.
NOTARY PUBLIC
COUNTY OF
STATE OF
My commission expires the ___ day of _____________, 19__.
E-3
<PAGE>
EXHIBIT F-1
FORM OF INVESTMENT LETTER
[Date]
[SELLER]
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167
Re: SAMI Series 1998-7 Mortgage Pass-Through Certificates (the
"Certificates"), including the [Class B-4, Class B-5, Class B-6]
Certificates (the "Privately Offered Certificates")
----------------------------------------------------------------
Dear Ladies and Gentlemen:
In connection with our purchase of Privately Offered Certificates, we
confirm that:
(i) we understand that the Privately Offered Certificates
are not being registered under the Securities Act of
1933, as amended (the "Act") or any applicable state
securities or "Blue Sky" laws, and are being sold to
us in a transaction that is exempt from the
registration requirements of such laws;
(ii) any information we desired concerning the
Certificates, including the Privately Offered
Certificates, the trust in which the Certificates
represent the entire beneficial ownership interest
(the "Trust") or any other matter we deemed relevant
to our decision to purchase Privately Offered
Certificates has been made available to us;
(iii) we are able to bear the economic risk of investment
in Privately Offered Certificates; we are an
institutional "accredited investor" as defined in
Section 501(a) of Regulation D promulgated under the
Act and a sophisticated institutional investor;
(iv) we are acquiring Privately Offered Certificates for
our own account, not as nominee for any other person,
and not with a present view to any distribution or
other disposition of the Privately Offered
Certificates;
(v) we agree the Privately Offered Certificates must be
held indefinitely by us (and may not be sold,
pledged, hypothecated or in any way disposed of)
unless subsequently registered under the Act and any
applicable state securities or
F-1-1
<PAGE>
"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) if required by the Pooling
and Servicing Agreement (as defined below) 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) (or such other
documentation as may be acceptable to the Trustee) 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 Norwest Bank Minnesota, National Association (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, pursuant to which the Trust
was formed; we have reviewed carefully and understand
the terms of the Pooling and Servicing Agreement;
(viii) we either: (i) are not acquiring the Privately
Offered Certificate directly or indirectly by, or on
behalf of, an employee benefit plan or other
retirement arrangement which is subject to Title I of
the Employee Retirement Income Security Act of 1974,
as amended, and/or section 4975 of the Internal
Revenue Code of 1986, as amended, or (ii) are
providing a 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 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
F-1-2
<PAGE>
(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, Class
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
"SECURITIES 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 SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON
THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
(A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER
HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED
FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN
THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) or
(7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN
WHICH ALL OF THE EQUITY OWNERS COME WITHIN SUCH
PARAGRAPHS 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) THE
RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE
ACCEPTABLE TO THE TRUSTEE THAT SUCH REOFFER, RESALE,
PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH
CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE
JURISDICTION. 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
F-1-3
<PAGE>
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
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,
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."
"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 May 1, 1998 among
Structured Asset Mortgage Investments Inc., and Norwest Bank Minnesota, National
Association, 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):__________________________
F-1-4
<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]
F-1-5
<PAGE>
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom
the undersigned is acting as nominee.
[NAME OF NOMINEE]
By:___________________________________
(Authorized Officer)
[By:__________________________________
Attorney-in-fact]
F-1-6
<PAGE>
EXHIBIT F-2
FORM OF RULE 144A AND RELATED MATTERS CERTIFICATE
[Date]
[SELLER]
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167
Re: SAMI Series 1998-7 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>
(24) / / an insurance company as defined in Section
2(13) of the Act(1); or
(25) / / 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
(26) / / 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
(27) / / 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
(28) / / a business development company as defined in
Section 202(a)(22) of the Investment
Advisers Act of 1940; or
(29) / / 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
(30) / / 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
(31) / / an investment adviser registered under the
Investment Advisers Act; or
b. / / greater than $10 million, and the undersigned is a
broker-dealer registered with the SEC; or
c. / / less than $ 10 million, and the undersigned is a
broker-dealer registered with the SEC and will only
purchase Rule 144A securities in transactions in
which it acts as a riskless principal (as defined in
Rule 144A); or
d. / / less than $100 million, and the undersigned is an
investment company registered under the Investment
Company Act of 1940, which, together with one or more
registered investment companies having the same or an
affiliated investment adviser, owns at least $100
million of eligible securities; or
e. / / less than $100 million, and the undersigned is an
entity, all the equity owners of which are qualified
institutional buyers.
- -------
(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 l
940, 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>
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 May 1, 1998 among Structured Asset Mortgage
Investments Inc., and Norwest Bank Minnesota, National Association, as Trustee,
pursuant to 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.
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.
F-2-3
<PAGE>
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]
F-2-4
<PAGE>
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the
Certificates being registered in its name, the sole beneficial owner thereof is
and shall be the Purchaser identified above, for whom the undersigned is acting
as nominee.
[NAME OF NOMINEE]
By:_________________________________
(Authorized Officer)
[By:________________________________
Attorney-in-fact]
F-2-5
<PAGE>
EXHIBIT G
FORM OF INITIAL CERTIFICATION
Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167
Re: Pooling and Servicing Agreement dated as of May 1, 1998,
among Structured Asset Mortgage Investments Inc., as seller,
and Norwest Bank Minnesota, National Association, as
trustee, issuing Mortgage Pass-Through Certificates, Series
1998-7
------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, 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 undersigned 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 undersigned 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 undersigned makes
no representations as to: (i) the validity, legality, enforceability or
genuineness of any of the documents contained in each Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
[ ]
By:______________________________
Name:
Title:
G-1
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EXHIBIT H
FORM OF FINAL CERTIFICATION
Structured Asset Mortgage Investments Inc.
245 Park Avenue
New York, New York 10167
[Service]
Re: Pooling and Servicing Agreement dated as of May 1, 1998,
among Structured Asset Mortgage Investments Inc., as seller
and Norwest Bank Minnesota, National Association, as
trustee, issuing Mortgage Pass-Through Certificates, Series
1998-7
-----------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, 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 undersigned 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 undersigned 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 undersigned makes
no representations as to: (i) the validity, legality, enforceability or
genuineness of any of the documents contained in each Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
[ ]
By:_________________________________
Name:
Title:
H-1
