<PAGE> 1
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: October 14, 1998
(Date of earliest event reported)
CMC SECURITIES CORPORATION III
(Exact name of Registrant as specified in its charter)
Delaware 33-47913 75-2431913
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
2711 N. Haskell Avenue
Suite 900
Dallas, Texas 75204
(Address of Principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (214) 874-2323
<PAGE> 2
Item 5. Other Events.
Reference is hereby made to the Registrant's Registration Statement on
Form S-3 (File No. 33-47913) filed with the Securities and Exchange Commission
(the "Commission") on May 14, 1992, as amended by Amendment No. 1 thereto filed
with the Commission on August 7, 1992, as further amended by Post Effective
Amendment No. 1 thereto filed with the Commission on September 16, 1993, as
further amended by Post Effective Amendment No. 2 thereto filed with the
Commission on December 13, 1993, and as further amended by Post Effective
Amendment No. 3 thereto filed with the Commission on February 14, 1994
(collectively, the "Registration Statement"), pursuant to which the Registrant
registered $4,000,000,000 aggregate principal amount of its collateralized
mortgage obligations, issuable in various series, for sale in accordance with
the provisions of the Securities Act of 1933, as amended (the "Act"). Reference
is also hereby made to the Prospectus dated September 25, 1998 and the related
Prospectus Supplement, dated September 25, 1998 (collectively, the
"Prospectus"), which have been filed with the Commission pursuant to Rule
424(b)(5), with respect to the Registrant's Collateralized Mortgage Obligations,
Series 1998-2 (the "Bonds").
On September 30, 1998, the Registrant caused the issuance and sale of
approximately $538,716,245 aggregate initial principal amount of Bonds. The
Bonds are collateralized by mortgage pass-through certificates (the
"Conventional Certificates") evidencing the beneficial ownership interest in
entire pools of certain conventional, fixed-rate, fully-amortizing, one- to
four-family, first lien mortgage loans (the "Mortgage Loans") originated or
acquired by (i) Cendant Mortgage Corporation ("Cendant"), Cendant Residential
Mortgage Trust ("CRMT"), National City Mortgage Co. ("NCM") and (iv) Washington
Mutual Bank, F.A. ("WMBFA"). Cendant, CRMT, NCM and WMBFA are referred to herein
collectively as the "Loan Sellers". The Conventional Certificates were created
pursuant to a Pooling and Servicing Agreement dated as of September 1, 1998 (the
"Pooling and Servicing Agreement") by and among the Registrant, as Seller,
Norwest Bank Minnesota, National Association ("NBMNA"), as Master Servicer and
Custodian, and The First National Bank of Chicago ("FNBC"), as Certificate
Trustee. A copy of the Pooling and Servicing Agreement is filed herewith as
Exhibit 10.1. The Bonds were issued pursuant to an Indenture dated as of March
1, 1998 (the "Indenture"), by and between the Registrant and FNBC, as Indenture
Trustee (the "Indenture Trustee"), as supplemented by the Series 1998-2
Supplement thereto dated as of September 30, 1998 (the "Series Supplement"), by
and among the Registrant, the Indenture Trustee and NBMNA, as Bond
Administrator. A copy of the Indenture was filed as Exhibit 4.1 to the
Registrant's Current Report on Form 8-K dated April 7, 1998, as filed with the
Commission on April 7, 1998. A copy of the Series Supplement is filed herewith
as Exhibit 4.2.
The Offered Bonds (as defined in the Prospectus), having an aggregate
principal balance of $534,277,116, have been sold by the Registrant to Bear,
Stearns & Co. Inc. ("Bear, Stearns") pursuant to an Underwriting Agreement dated
as of March 27, 1998 (the "Underwriting Agreement"), as supplemented by a Terms
Agreement dated as of September 25, 1998, each among Bear, Stearns, the
Registrant and Capstead Mortgage Corporation ("CMC"). A copy of the Underwriting
Agreement was filed as Exhibit 1.1 to the Registrant's Current Report on Form
8-K dated April 7, 1998, as filed with the Commission on April 7, 1998.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
1.1 Underwriting Agreement dated as of March 27,
1998 by and among Bear, Stearns, the
Registrant and CMC(1)
4.1 Indenture dated as of March 1, 1998 by and
between the Registrant, as Issuer and FNBC,
as Indenture Trustee(1)
4.2 Series 1998-2 Supplement dated as of
September 30, 1998 by and among the
Registrant, as Issuer, FNBC, as Indenture
Trustee, and NBMNA, as Bond
Administrator(2)
10.1 Pooling and Servicing Agreement dated as of
September 1, 1998 by and among the
Registrant, as Seller, NBMNA, as Master
Servicer and Custodian, and FNBC, as
Certificate Trustee(2)
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(1) Previously filed as an Exhibit to the Registrant's Current Report on
Form 8-K, filed with the Commission on April 7, 1998, and incorporated
by reference therein.
(2) Filed herewith.
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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
CMC SECURITIES CORPORATION III
October 14, 1998 By:/s/ WADE WALKER
------------------------------------
Wade Walker,
Vice President - Asset and Liability
Management
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No.
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1.1 Underwriting Agreement dated as of March 27, 1998 by and among Bear,
Stearns, the Registrant and CMC(1)
4.1 Indenture dated as of March 1, 1998 by and between the Registrant, as
Issuer, and FNBC, as Indenture Trustee(1)
4.2 Series 1998-2 Supplement dated as of September 30, 1998 by and among
the Registrant, as Issuer, FNBC, as Indenture Trustee and NBMNA, as
Bond Administrator(2)
10.1 Pooling and Servicing Agreement dated as of September 1, 1998 by and
among the Registrant, as Seller, NBMNA, as Master Servicer and
Custodian, and FNBC, as Certificate Trustee(2)
</TABLE>
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(1) Previously filed as an Exhibit to the Registrant's Current Report on
Form 8-K, filed with the Commission on April 7, 1998, and incorporated
by reference therein.
(2) Filed herewith.
<PAGE> 1
EXHIBIT 4.2
CMC SECURITIES CORPORATION III,
Issuer,
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Bond Administrator
Series 1998-2 Supplement
Dated as of September 30, 1998
to
INDENTURE
Dated as of March 1, 1998
$538,759,376
COLLATERALIZED MORTGAGE OBLIGATIONS
Series 1998-2
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TABLE OF CONTENTS
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PAGE
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SECTION 1. Certain Defined Terms................................................................... 2
SECTION 2. Designation............................................................................. 24
SECTION 3. Dating of Series 1998-2 Bonds; Certain other Matters.................................... 24
SECTION 4. Transfer of ERISA Restricted and ERISA Prohibited Bonds................................. 24
SECTION 5. Aggregate Principal Amount; Classes..................................................... 24
SECTION 6. Denominations of Series 1998-2 Bonds.................................................... 27
SECTION 7. Authentication of Series 1998-2 Bonds................................................... 27
SECTION 8. [RESERVED].............................................................................. 28
SECTION 9. Places for Payment of Principal of Series 1998-2 Bonds; Payments on
Book Entry Bonds................................................................... 28
SECTION 10. Payment on the Bonds Before Acceleration; Reports to Bondholders........................ 28
SECTION 11. Payment on the Bonds on and after Acceleration.......................................... 35
SECTION 12. Allocation of Realized Losses, Net Interest Shortfalls, Subordinate Bond
Writedown Amounts; PO Deferred Payment Writedown Amounts........................... 36
SECTION 13. Transfer of Certificates to Trustee; Deposits to Collection Account;
Pledged Accounts................................................................... 39
SECTION 14. Requirements for Issuance of Series 1998-2 Bonds........................................ 39
SECTION 15. Reports to Bondholders.................................................................. 40
SECTION 16. Redemption.............................................................................. 41
SECTION 17. Actions by Trustee as Holder of Conventional Certificates............................... 41
SECTION 18. REMIC Administration; Certain Tax Matters Relating to Bond
Pool Grantor Trust................................................................. 43
SECTION 19. Form of Series 1998-2 Bonds; Matters Relating to Book Entry Bonds....................... 50
SECTION 20. Supplements, Modifications and Ratifications of Indenture............................... 51
SECTION 21. Certain Matters Regarding Registration of Transfer and Exchange of Bonds................ 52
SECTION 22. Rule 144A Information................................................................... 54
SECTION 23. Counterparts............................................................................ 54
SECTION 24. Governing Law........................................................................... 54
SECTION 25. Notices................................................................................. 54
SECTION 26. Certain Matters Relating to Retail Bonds................................................ 55
SECTION 27. Indenture Trustee Same Person as Certificate Trustee.................................... 59
</TABLE>
Schedule A - Schedule of Certificates
Appendix A-1 - Planned Balances
Appendix A-2 - Targeted Balances
Appendix B - 250% SPA Balance
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TABLE OF CONTENTS
<TABLE>
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EXHIBITS
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Exhibit A-1 - Form of Bond (Class A-1, A-2, A-3, A-4, A-6, A-7, A-8, A-9, A-11, A-12, A-13,
A-14, A-15, A-16, A-17, A-18, A-19, A-21, A-22, A-23 and II-A-1)
Exhibit A-1-A-20 - Form of Bond (Class A-20)
Exhibit A-2-P - Form of Bond (Class P)
Exhibit A-2-II-P - Form of Bond (Class II-P)
Exhibit A-3 - Form of Bond (Class A-5, A-10, X, and II-X-1)
Exhibit A-3-X-2 - Form of Bond (Class II-X-2)
Exhibit A-4 - Form of Bond (Class B-1, B-2, II-B-1 and II-B-2)
Exhibit A-5 - Form of Bond (Class B-3 and II-B-3)
Exhibit A-6 - Form of Bond (Class B-4, B-5, B-6, II-B-4, II-B-5 and II-B-6)
Exhibit A-7 - Form of Bond (Residual Bonds)
Exhibit B - Form of Transferee Affidavit and Agreement (Residual Bonds)
Exhibit C-1 - Form of Transferee Representation Letter (Private Bonds)
Exhibit C-2 - Form of Transferor Representation Letter (Private Bonds)
Exhibit C-3 - Form of Rule 144A Transferee Representation (Private Bonds)
Exhibit C-4 - Form of Transferee Representation Letter (Class II-X-2 Bonds)
Exhibit D-1 - Letter of Representations (Book Entry Bonds Other than Retail Bonds and Other
Subordinate Bonds)
Exhibit D-2 - Letter of Representations (Retail Bonds)
Exhibit E - Form of Transferor Certificate (Residual Bonds)
</TABLE>
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Series 1998-2 Supplement dated as of September 30, 1998, between CMC
SECURITIES CORPORATION III, a Delaware corporation (together with its successors
and assigns as provided in the Indenture referred to below, the "Issuer"), THE
FIRST NATIONAL BANK OF CHICAGO, a national bank (together with its successors in
trust thereunder as provided in the Indenture, the "Trustee"), as trustee under
an Indenture dated as of March 1, 1998 (such Indenture, as thereafter amended
and supplemented, is referred to herein as the "Indenture"), and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association (together with
its successors, the "Bond Administrator").
PRELIMINARY STATEMENT
Section 2.3 of the Indenture provides, among other things, that the
Issuer, when authorized by its Board of Directors, and the Trustee may enter
into an indenture supplemental to the Indenture for the purpose of authorizing a
Series of Bonds and to specify certain terms of such Series of Bonds. The Board
of Directors of the Issuer has duly authorized the creation of a Series of Bonds
in an aggregate principal amount of $538,759,376 to be known as its
Collateralized Mortgage Obligations, Series 1998-2 (the "Series 1998-2 Bonds",
with references herein to "Bonds" being references solely to the Series 1998-2
Bonds), and the Issuer and the Trustee are executing and delivering this Series
1998-2 Supplement in order to provide for the Series 1998-2 Bonds. All terms
used in this Series 1998-2 Supplement that are defined in the Indenture, either
directly or by reference therein, have the meanings assigned to them therein as
supplemented by Section 1 hereof, if applicable, except to the extent the
context clearly requires otherwise. Any such defined term that is defined in the
Indenture as relating to a particular Series rather than to all Bonds generally
shall, when used in this Series 1998-2 Supplement, relate to the Series 1998-2
Bonds, whether or not expressly so stated herein.
GRANTING CLAUSES
The Issuer hereby Grants to the Trustee, for the exclusive benefit of
the Holders of the Series 1998-2 Bonds, all of the Issuer's right, title and
interest in and to (a) the mortgage pass-through certificates listed in Schedule
A to this Series 1998-2 Supplement, which the Issuer has caused to be delivered
to the Trustee herewith and which Conventional Certificates evidence interests
in pools of mortgage loans on one- to four-family residential properties and
individual condominium units, and all Distributions with respect thereto payable
at any time on or after the first Distribution Date, (b) each Pledged Account
for the Series 1998-2 Bonds, including all income from the investment of funds
in each such Pledged Account, (c) the Initial Deposit and (d) all proceeds of
the conversion, voluntary or involuntary, of any of the foregoing into cash or
other liquid property. Such Grants are made, however, in trust, to secure the
Series 1998-2 Bonds, equally and ratably, without prejudice or distinction
between any Series 1998-2 Bond and any other Series 1998-2 Bond by reason of
difference in time of issuance or otherwise, and to secure (i) the payment of
all amounts due on the Series 1998-2 Bonds as such amounts become due in
accordance with their terms, (ii) the payment of all other sums payable under
the Indenture or this Series 1998-2 Supplement with respect to the Series 1998-2
Bonds, and (iii) compliance with the provisions of the Indenture and this Series
1998-2 Supplement with respect to the Series 1998-2 Bonds, all as provided in
the Indenture and this Series 1998-2 Supplement.
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The Trustee acknowledges such Grants, accepts the trusts hereunder in
accordance with the provisions hereof and of the Indenture, and agrees to
perform the duties herein or therein required in accordance with Article VI of
the Indenture.
Section 1. Certain Defined Terms.
Sections 1.1 and 2.3 of the Indenture provide that the meaning of
certain defined terms used in the Indenture shall, when applied to the Bonds of
a particular Series, be as defined in said Section 1.1 but with such additional
provisions as are specified in the related Series Supplement. With respect to
the Series 1998-2 Bonds, the following provisions shall govern the defined terms
set forth below:
"Accrual Date": With respect to all Classes of Bonds which pay
interest, other than the LIBOR Bonds, September 1, 1998, and with respect to
each Class of LIBOR Bonds, September 25, 1998.
"Accrued Bond Interest": For any interest-bearing Class of Bonds for
any Payment Date, the interest accrued during the related Interest Accrual
Period at the applicable Bond Interest Rate on the Class Current Principal
Balance (or in the case of a Class of Interest Only Bonds, the Class Notional
Balance) of such Class immediately prior to such Payment Date, calculated on the
basis of a 360-day year consisting of twelve 30-day months, less (i) in the case
of an interest-bearing Class of Senior Bonds, such Class's share of any Net
Interest Shortfall and the interest portion of any Excess Special Hazard Losses
and, after the applicable Cross-Over Date, the interest portion of any Realized
Losses applicable to its related Mortgage Loan Group and (ii) in the case of a
Class of Subordinate Bonds, such Class's share of any Net Interest Shortfall and
the interest portion of any Realized Losses applicable to its related Mortgage
Loan Group.
"Adjusted Group 1 Non-PO Mortgage Pool Balance": The sum for each Group
1 Mortgage Loan of the product of (i) the Scheduled Principal Balance as of such
Payment Date and (ii) the Non-PO Percentage for such Mortgage Loan.
"Adjustment Amount": For each anniversary of the Cut-off Date, for each
Mortgage Loan Group, the amount, if any, by which the applicable Special Hazard
Loss Amount (without giving effect to the deduction of the Adjustment Amount for
such anniversary) exceeds the lesser of (A) an amount calculated by the Bond
Administrator and approved by each of the Rating Agencies, which amount shall
not be less than $500,000, and (B) the greater of (x) 1.0% (or if greater than
1.0%, the highest percentage of Mortgage Loans of the applicable Mortgage Loan
Group by principal balance secured by Mortgaged Properties in any five-digit
California ZIP code area) of the Outstanding Principal Balance of all the
Mortgage Loans of the applicable Mortgage Loan Group on the Distribution Date
immediately preceding such anniversary and (y) twice the Outstanding Principal
Balance of the Mortgage Loan of the applicable Mortgage Loan Group which has the
largest Outstanding Principal Balance on the Distribution Date immediately
preceding such anniversary.
"Allocable Share": With respect to any Class of Subordinate Bonds of
any Bond Group:
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(a) as to any Payment Date and amounts payable pursuant to
clauses (i), (iv) and (vi) of the applicable Subordinate Optimal
Principal Amount for such Bond Group, the fraction, expressed as a
percentage, the numerator of which is the Class Current Principal
Balance of such Class and the denominator of which is the aggregate of
the Class Current Principal Balances of all Classes of the Subordinate
Bonds of such Bond Group; and
(b) as to any Payment Date and amounts distributable pursuant
to clauses (ii), (iii) and (v) of the applicable Subordinate Optimal
Principal Amount for such Bond Group, and as to each Class of
Subordinate Bonds of such Bond Group (other than the Class of
Subordinate Bonds of such Bond Group having the lowest numerical Class
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
Class Current Principal Balance of such Class and the denominator of
which is the aggregate of the Class Current Principal Balances of all
Classes of Subordinate Bonds of such Bond Group and (y) the related
Class Prepayment Distribution Trigger has not been satisfied on such
Payment Date, 0%; provided that if on a Payment Date, the Class Current
Principal Balance of any Class of Subordinate Bonds of such Bond Group
for which the related Class Prepayment Distribution Trigger was
satisfied on such Payment Date is reduced to zero, any amounts paid
pursuant to this clause (b), to the extent of such Class's remaining
Allocable Share, shall be paid to the remaining Classes of Subordinate
Bonds of such Bond Group which satisfy the related Class Prepayment
Distribution Trigger and to the Class of Subordinate Bonds of such Bond
Group having the lowest numerical Class designation in reduction of
their respective Current Principal Balances in the order of their
numerical Class designations.
"Applicable State Law": For purposes of Section 18(d), the Applicable
State Law shall be (a) the law of the State of New York, (b) the law of the
State of Illinois and (c) such other state law whose applicability shall have
been brought to the attention of the Trustee or the Bond Administrator by either
(i) an Opinion of Counsel delivered to it, or (ii) written notice from the
appropriate taxing authority as to the applicability of such state law.
"Available Funds": As to any Payment Date, the aggregate of the Group 1
Available Funds and Group 2 Available Funds.
"Benefit Plan Opinion": An opinion of counsel in form and substance
satisfactory to the Trustee and the Issuer to the effect that the purchase and
holding of the applicable Bonds will not constitute or result in a prohibited
transaction under ERISA or the Code and will not (a) cause the assets of the
Trust Estate to be treated as "plan assets" within the meaning of Department of
Labor regulations set forth in 29 C.F.R. ss. 2510.3-101, (b) give rise to any
fiduciary duty under ERISA on the part of the Issuer, the Master Servicer, anY
Sub-Servicer, the Certificate Trustee, the Trustee or their respective
affiliates or (c) be treated as, or result in, a prohibited transaction under
Sections 406 or 407 of ERISA or Section 4975 of the Code.
"Bond Group": Each of the Group 1 Bonds and the Group 2 Bonds. The
Group 1 Bonds are related to Mortgage Loan Group 1 which is represented by
Conventional Certificate 1998-2A. The
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Group 2 Bonds are related to Mortgage Loan Group 2 which is represented by
Conventional Certificate 1998-2B.
"Bond Interest Rate": With respect to any Class of Bonds (other than
the Principal Only Bonds), the annual interest rate thereon set forth, or
determined as provided with respect thereto, in Section 5. Any monthly
calculation of interest at a stated rate shall be based upon annual interest at
such rate divided by twelve.
"Bond Pool Grantor Trust": As defined in the Trust Agreement.
"Bond Pool Trustee": As defined in the Trust Agreement.
"Bond Redemption Date": With respect to a Bond Group, the Distribution
Date on which BSMCC, its designee or the Master Servicer exercises its option to
purchase the Mortgage Loans in the related Mortgage Loan Group pursuant to
Section 10.01 of the Pooling and Servicing Agreement.
"Book Entry Bonds": The Bonds specified as Book-Entry Bonds in Section
3(b) hereof.
"BSMCC": As defined in the Pooling and Servicing Agreement.
"Business Day": As defined in the Pooling and Servicing Agreement.
"Cendant": As defined in the Pooling and Servicing Agreement.
"Certificate Trustee": As defined in the Pooling and Servicing
Agreement.
"Class": Each class subdivision of the Bonds created hereunder pursuant
to Section 5.
"Class Current Principal Balance": With respect to any Class of Bonds
(other than a Class of Interest Only Bonds), the sum of the Current Principal
Balances of all Bonds in such Class. The Class Current Principal Balance of the
Class A-6 Bonds shall equal the sum of the Component Current Principal Balances
of Component A-6-1 and Component A-6-2. The Class Current Principal Balance of
the Class P Bonds shall equal the sum of the Component P Principal Balances. The
Class Current Principal Balance of each Class of Interest Only Bonds shall be
zero.
"Class Current Principal Amount", "Class Current Principal Balance" and
"Class Imputed Principal Balance": As used in the Indenture, "Class Current
Principal Amount", "Class Current Principal Balance" and "Class Imputed
Principal Balance" shall have the same meaning as "Class Current Principal
Balance" as defined herein.
"Class A-5 Notional Balance": On any date, an amount equal to the sum
of (i) the product of (A) 14.8148148148% and (B) the Class Current Principal
Balance of the Class A-1 Bonds, (ii) the product of (A) 14.0740740741% and (B)
the Class Current Principal Balance of the Class A-2 Bonds, (iii) the product of
(A) 7.4074074074% and (B) the Class Current Principal Balance of the
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Class A-3 Bonds and (iv) the product of (A) 13.3333333333% and (B) the Class
Current Principal Balance of the Class A-4 Bonds.
"Class A-8 Accretion Termination Date": The earlier to occur of (i) the
Payment Date on which the Component Current Principal Balance and Class Current
Principal Balance, respectively, of Component A-6-1 and of the Class A-7 Bonds
have been reduced to zero and (ii) the Group 1 Cross-Over Date.
"Class A-8 Accrual Amount": With respect to a Payment Date, an amount
equal to the Accrued Bond Interest with respect to the Class A-8 Bonds for such
Payment Date.
"Class A-10 Notional Balance": On any date, an amount equal to the
Class Current Principal Balance of the Class A-9 Bonds.
"Class A-12 Accretion Termination Date": The earlier to occur of (i)
the Payment Date on which the Component Current Principal Balance and Class
Current Principal Balance, respectively, of Component A-6-2 and the Class A-11
Bonds have been reduced to zero and (ii) the Group 1 Cross-Over Date.
"Class A-12 Accrual Amount": With respect to a Payment Date, an amount
equal to the Accrued Bond Interest with respect to the Class A-12 Bonds for such
Payment Date.
"Class A-20 Incremental Interest Amount": With respect to each of the
first 12 Payment Dates, an amount equal to the excess of the Accrued Bond
Interest on the Class A-20 Bonds for each such Payment Date over the amount of
such Accrued Bond Interest calculated as if such Class A-20 Bonds had a Bond
Interest Rate of 6.75% per annum.
"Class A-23 Optimal Principal Amount": For any Payment Date occurring
(a) prior to the Payment Date in October 2003, zero and (b) for any Payment Date
occurring after the first five years following the Closing Date, will be as
follows: for any Payment Date during the sixth, seventh, eighth and ninth years
after the Closing Date, 30%, 40%, 60% and 80%, respectively, of the Class A-23
Pro Rata Optimal Principal Amount for such Payment Date; and, for any Payment
Date thereafter, 100% of the Class A-23 Pro Rata Optimal Principal Amount for
such Payment Date. Notwithstanding the foregoing, if on any Payment Date the
Class Current Principal Balance of each Class of Group 1 Senior Bonds (other
than the Class A-23 Bonds and Component P-1) has been reduced to zero, the Class
A-23 Optimal Principal Amount shall equal the Group 1 Senior P&I Optimal
Principal Amount to the extent not paid on such Payment Date to other Classes of
Group 1 Senior Bonds.
"Class A-23 Pro Rata Optimal Principal Amount": For any Payment Date,
an amount equal to the product of (x) the sum of the Group 1 Senior P&I Optimal
Principal Amount and the Group 1 Subordinate Optimal Principal Amount for such
Payment Date multiplied by (y) a fraction, the numerator of which is the Class
Current Principal Balance of the Class A-23 Bonds immediately prior to such
Payment Date and the denominator of which is the aggregate of the Class Current
Principal Balances of all Classes of Group 1 Bonds (other than Component P-1)
immediately prior to such Payment Date.
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"Class X Notional Balance": Immediately prior to a given Payment Date,
the aggregate of the Scheduled Principal Balances of the Non-Discount Mortgage
Loans in Mortgage Loan Group 1 on the second preceding Due Date.
"Class II-P Cash Shortfall": As defined in Section 10(a)(iii)(B).
"Class II-X-I Notional Balance": Immediately prior to a given Payment
Date, the aggregate of the Scheduled Principal Balances of the Non-Discount
Mortgage Loans in Sub-Group 2A on the second preceding Due Date.
"Class II-X-2 Notional Balance": Immediately prior to a given Payment
Date, the aggregate of the Scheduled Principal Balances of the Non-Discount
Mortgage Loans in Sub-Group 2B on the second preceding Due Date.
"Class Notional Balance": The Class A-5 Notional Balance, the Class
A-10 Notional Balance, the Class X Notional Balance, the Class II-X-1 Notional
Balance or the Class II-X-2 Notional Balance, as applicable.
"Class Prepayment Payment Trigger": For a Class of Subordinate Bonds in
any Bond Group for any Payment Date, the Class Prepayment Payment Trigger is
satisfied if the fraction (expressed as a percentage), the numerator of which is
the aggregate of the Class Current Principal Balances of such Class and each
Class subordinate thereto, if any, and the denominator of which is the aggregate
of the Scheduled Principal Balances of all of the Mortgage Loans in the related
Mortgage Loan Group as of the related Due Date, equals or exceeds such
percentage calculated as of the Closing Date.
"Clearing Agency": The registered Holder of the single Bond evidencing
each Class of the Book Entry Bonds. The initial Clearing Agency with respect to
each Class of Book Entry Bonds shall be The Depository Trust Company of New
York, the nominee for which is Cede & Co. The Clearing Agency shall at all times
be a "clearing corporation" as defined in Article 8 of the Uniform Commercial
Code of the State of New York.
"Closing Date": As defined in the Pooling and Servicing Agreement.
"Component": Component A-6-1, Component A-6-2, Component P-1 or
Component P-2, as applicable.
"Component A-6-1": A component of the Class A-6 Bonds identified and
having the characteristics described in Section 5.
"Component A-6-2": A Component of the Class A-6 Bonds identified and
having the characteristics described in Section 5.
"Component Current Principal Balance": With respect to any Component as
of any Payment Date, the initial principal amount of such Component as of the
Closing Date (as set forth in Section 5) as reduced by (i) all amounts paid on
previous Payment Dates on such P Component
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(other than with respect to PO Deferred Amounts, in the case of a P Component),
(ii) the principal portion of all Realized Losses allocated prior to such
Payment Date to such Component (taking account of the Loss Allocation Limitation
applicable to the Bond Group of such Component) and (iii) in the case of a P
Component, any applicable PO Cash Shortfalls, in each case for previous Payment
Dates.
"Component P-1": A component of the Class P Bonds identified and having
the characteristics described in Section 5.
"Component P-1 Cash Shortfall": As defined in Section 10(a)(i)(C).
"Component P-2": A component of the Class P Bonds identified and having
the characteristics described in Section 5.
"Component P-2 Cash Shortfall": As defined in Section 10(a)(iii)(B).
"Conventional Certificates": The certificates pledged to secure the
Series 1998-2 Bonds, as set forth on Schedule A hereto.
"Corporate Trust Office": As defined in the Pooling and Servicing
Agreement.
"Corresponding Class": With respect to any REMIC 1 Interest or the
REMIC 2 Interest, the Class, Classes or Component appearing opposite such REMIC
1 Interest or REMIC 2 Interest in the table in Section 18(p).
"Current Principal Balance": With respect to any Bond (other than a
Bond of a Class of Interest Only Bonds) as of any Payment Date, the initial
principal amount of such Bond as of the Closing Date, as reduced by (i) all
amounts paid on previous Payment Dates on such Bond with respect to principal,
(ii) the principal portion of all Realized Losses allocated prior to such
Payment Date to such Bond (taking account of the Loss Allocation Limitation
applicable to the Bond Group of such Bond) and (iii) in the case of a
Subordinate Bond of a Bond Group, such Bond's pro rata share, if any, of the
applicable Subordinate Bond Writedown Amount for such Bond Group and/or any
applicable PO Deferred Payment Writedown Amount, in each case for previous
Payment Dates, and as increased by, in the case of a Class A-8 Bond or a Class
A-12 Bond, amounts added to the principal balance thereof as provided in clauses
first and second of Section 10(a)(i)(A). Notwithstanding the foregoing, solely
for purposes of giving consents, directions, waivers, approvals, requests and
notices, the Class R-1, Class R-2 and Class R-3 Bonds after the Payment Date on
which they receive the payment of the last dollar of their original principal
amount shall be deemed to have a Current Principal Balance equal to their
Current Principal Balance on the day immediately preceding such Payment Date.
"Cut-off Date": As defined in the Pooling and Servicing Agreement.
"Deceased Owner": The estate of an individual who beneficially owned
one or more Retail Bond Units of the applicable Class of Retail Bonds at the
time of death, provided the executor or
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<PAGE> 11
other authorized representative of the estate furnishes to the Clearing Agency
evidence of death satisfactory to the Trustee and any tax waivers requested by
the Trustee. "Depositor": As defined in the Trust Agreement.
"Determination Date": As defined in the Pooling and Servicing
Agreement.
"Discount Mortgage Loan": Any Mortgage Loan in Mortgage Loan Group 1,
Sub-Group 2A or Sub-Group 2B with a Net Rate less than 6.75%, 6.25% or 6.25%,
respectively, per annum.
"Distribution Date": As defined in the Pooling and Servicing Agreement.
"Due Date": As defined in the Pooling and Servicing Agreement.
"Due Period": As defined in the Pooling and Servicing Agreement.
"ERISA Prohibited Bonds": The Class R-1, Class R-2 and Class R-3 Bonds.
"ERISA Restricted Bonds": The Class A-5, Class A-10, Class X, Class
II-X-1, Class II-X-2, Class B-3, Class B-4, Class B-5, Class B-6, Class-II-B-3,
Class II-B-4, Class II-B-5 and Class II-B-6 Bonds.
"Excess Special Hazard Losses": Any Special Hazard Losses occurring
after the Special Hazard Termination Date.
"Fitch": As defined in the Pooling and Servicing Agreement.
"Global Bond Certificate": Any Other Subordinate Bond registered in the
name of the Clearing Agency or its nominee, beneficial interests in which are
reflected on the books of the Person maintaining an account with such Clearing
Agency (directly or as an indirect participant in accordance with rules of such
Clearing Agency).
"Group Available Funds": As defined in the Pooling and Servicing
Agreement.
"Group 1 Available Funds" or "Group 2 Available Funds": As defined in
the Pooling and Servicing Agreement; provided, however, that for purposes of
this Series 1998-2 Supplement, on each Payment Date the Group 1 Available Funds
shall include the Class A-20 Incremental Interest Amount with respect to such
Payment Date.
"Group 1 Bonds": The Group 1 Senior Bonds and the Group 1 Subordinate
Bonds.
"Group 2 Bonds": The Group 2 Senior Bonds and the Group 2 Subordinate
Bonds.
"Group 1 Cross-Over Date": The first Payment Date on which the
aggregate of the Class Current Principal Balances of the Group 1 Subordinate
Bonds has been reduced to zero (giving effect to all payments on such Payment
Date).
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<PAGE> 12
"Group 2 Cross-Over Date": The first Payment Date on which the
aggregate of the Class Current Principal Balances of the Group 2 Subordinate
Bonds has been reduced to zero (giving effect to all payments on such Payment
Date).
"Group 1 Loss Allocation Limitation": The meaning specified in Section
12(a)(D) hereof.
"Group 2 Loss Allocation Limitation": The meaning specified in Section
12(a)(D) hereof.
"Group 1 Mortgage Loans": As defined in the Pooling and Servicing
Agreement.
"Group 2 Mortgage Loans": As defined in the Pooling and Servicing
Agreement.
"Group 1 Original Subordinate Principal Balance": The sum of the Class
Current Principal Balances of each Class of Group 1 Subordinate Bonds as of the
Closing Date.
"Group 2 Original Subordinate Principal Balance": The sum of the Class
Current Principal Balances of each Class of Group 2 Subordinate Bonds as of the
Closing Date.
"Group 1 Senior Bonds": The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11,
Class A-12, Class A-13, Class A-14, Class A-15, Class A-16, Class A-17, Class
A-18, Class A-19, Class A-20, Class A-21, Class A-22, Class A-23, Class X, Class
R-1 and Class R-3 Bonds and Component P-1.
"Group 2 Senior Bonds": The Class II-A-1, Class II-P, Class II-X-1,
Class II-X-2 and Class R-2 Bonds and Component P-2.
"Group 1 Senior P&I Bonds": All Group 1 Senior Bonds other than the
Class A-5, Class A-10 and Class X Bonds and Component P-1.
"Group 2 Senior P&I Bonds": All Group 2 Senior Bonds other than the
Class II-X-1, Class II-X-2 and Class II-P Bonds and Component P-2.
"Group 1 Senior P&I Optimal Principal Amount" or "Group 2 Senior P&I
Optimal Principal Amount": As to any Payment Date, with respect to the Senior
P&I Bonds of the applicable Bond Group, an amount equal to the sum, without
duplication, of the following (but in no event greater than the aggregate of the
Class Current Principal Balances of each Class of Bonds of the Senior P&I Bonds
of such Bond Group immediately prior to such Payment Date):
(i) the applicable Senior Percentage of the applicable Non-PO
Percentage of the principal portion of all Scheduled Payments due on
each Outstanding Mortgage Loan in the related Mortgage Loan Group on
the related Due Date as specified in the amortization schedule at the
time applicable thereto (after adjustments for previous Principal
Prepayments but before any adjustment to such amortization schedule by
reason of any bankruptcy or similar proceeding or any moratorium or
similar waiver or grace period);
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<PAGE> 13
(ii) the applicable Senior Prepayment Percentage of the
applicable Non-PO Percentage of the Scheduled Principal Balance of each
Mortgage Loan in the related Mortgage Loan Group which was the subject
of a Voluntary Principal Prepayment in full received by the related
Sub-Servicer during the related Prepayment Period;
(iii) the applicable Senior Prepayment Percentage of the
applicable Non-PO Percentage of all Voluntary Principal Prepayments in
part received by the related Sub-Servicer during the applicable
Prepayment Period with respect to each Mortgage Loan in the related
Mortgage Loan Group;
(iv) the lesser of (a) the applicable Senior Prepayment
Percentage of the applicable Non-PO Percentage of the sum of (A) all
Net Liquidation Proceeds allocable to principal received in respect of
each Mortgage Loan of the related Mortgage Loan Group which became a
Liquidated Mortgage Loan during the immediately preceding calendar
month (other than Mortgage Loans described in the immediately following
clause (B)) and (B) the Scheduled Principal Balance of each such
Mortgage Loan purchased by an Insurer from the Certificate Trustee
during the immediately preceding calendar month, pursuant to the
related Primary Mortgage Insurance Policy, if any, or otherwise; and
(b) the applicable Senior Percentage of the applicable Non-PO
Percentage for such Bond Group of the sum of (A) the Scheduled
Principal Balance of each Mortgage Loan of the related Mortgage Loan
Group which became a Liquidated Mortgage Loan during the immediately
preceding calendar month (other than the Mortgage Loans described in
the immediately following clause (B)) and (B) the Scheduled Principal
Balance of each such Mortgage Loan that was purchased by an Insurer
from the Certificate Trustee during the related Prepayment Period
pursuant to the related Primary Mortgage Insurance Policy, if any, or
otherwise less (C) in the case of clause (b), the then applicable
Senior Percentage of the Non-PO Percentage for such Bond Group of the
principal portion of Excess Special Hazard Losses on each Mortgage Loan
in the related Mortgage Loan Group incurred during the related
Prepayment Period; and
(v) the applicable Senior Prepayment Percentage of the
applicable Non-PO Percentage of the sum of (a) the Scheduled Principal
Balance of each Mortgage Loan or REO Property of the related Mortgage
Loan Group which was purchased by BSMCC in connection with such Payment
Date pursuant to Section 2.02 or 2.03 of the Pooling and Servicing
Agreement and (b) the excess, if any, of the Scheduled Principal
Balance of a Mortgage Loan in the related Mortgage Loan Group that has
been replaced by BSMCC with a Substitute Mortgage Loan pursuant to
Section 2.04 of the Pooling and Servicing Agreement in connection with
such Payment Date over the Scheduled Principal Balance of such
Substitute Mortgage Loan.
"Group 1 Senior Percentage": On any Payment Date, the lesser of (i)
100% and (ii) the percentage (carried to six places rounded up) obtained by
dividing the aggregate of the Class Current Principal Balances of all the Group
1 Senior P&I Bonds immediately preceding such Payment Date by the aggregate
Scheduled Principal Balance of the Mortgage Loans (other than the PO Percentage
of each Discount Mortgage Loan) in the related Mortgage Loan Group as of the
beginning of the related Due Period.
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<PAGE> 14
"Group 2 Senior Percentage": On any Payment Date, the lesser of (i)
100% and (ii) the percentage (carried to six places rounded up) obtained by
dividing the aggregate of the Class Current Principal Balances of all the Group
2 Senior P&I Bonds immediately preceding such Payment Date by the aggregate
Scheduled Principal Balance of the Mortgage Loans (other than the PO Percentage
of each Discount Mortgage Loan) in the related Mortgage Loan Group as of the
beginning of the related Due Period.
"Group 1 Senior Prepayment Percentage" or "Group 2 Senior Prepayment
Percentage": On any Payment Date occurring during the periods set forth below,
as follows:
<TABLE>
<CAPTION>
Period (months inclusive) Senior Prepayment Percentage
- -------------------------------------------------------- ------------------------------------------------------------
<S> <C>
October 1998 - September 2003 100%
October 2003 - September 2004 Senior Percentage for the related Bond Group plus 70% of
the applicable Subordinate Percentage for such Bond Group
October 2004 - September 2005 Senior Percentage for the related Bond Group plus 60% of
the applicable Subordinate Percentage for such Bond Group
October 2005 - September 2006 Senior Percentage for the related Bond Group plus 40% of
the applicable Subordinate Percentage for such Bond Group
October 2006 - September 2007 Senior Percentage for the related Bond Group plus 20% of
the applicable Subordinate Percentage for such Bond Group
October 2007 and thereafter Senior Percentage for the related Bond Group
</TABLE>
Notwithstanding the foregoing, if on any Payment Date the applicable Senior
Percentage for a Bond Group exceeds the Senior Percentage for such Bond Group as
of the Closing Date, the Senior Prepayment Percentage for such Bond Group for
such Payment Date will equal 100%. On the Payment Date on which the Class
Current Principal Balances of the Senior Bonds of a Bond Group are reduced to
zero, the Senior Prepayment Percentage for such Bond Group shall be the minimum
percentage sufficient to effect such reduction and thereafter shall be zero.
In addition, no reduction of the applicable Senior Prepayment Percentage for a
Bond Group shall occur on any Payment Date unless, as of the last day of the
month preceding such Payment Date, (i) the aggregate Scheduled Principal Balance
of Mortgage Loans in the related Mortgage Loan Group 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 related Trust), averaged over the last six months, as a
percentage of the sum of the aggregate of the Class Current Principal Balances
of the Subordinate Bonds of such Bond Group does not exceed
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<PAGE> 15
50% and (ii) cumulative Realized Losses on such Mortgage Loans do not exceed (a)
30% of the applicable Original Subordinate Principal Balance of such Bond Group
if such Payment Date occurs between and including October 2003 and September
2004, (b) 35% of the Original Subordinate Principal Balance of such Bond Group
if such Payment Date occurs between and including October 2004 and September
2005, (c) 40% of the applicable Original Subordinate Principal Balance if such
Payment Date occurs between and including October 2005 and September 2006, (d)
45% of the applicable Original Subordinate Principal Balance for such Bond Group
if such Payment Date occurs between and including October 2006 and September
2007, and (e) 50% of the applicable Original Subordinate Principal Balance for
such Bond Group if such Payment Date occurs during or after October 2007.
"Group 1 Subordinate Bond Writedown Amount": As to any Payment Date,
the amount by which (a) the sum of the Class Current Principal Balances of all
the Group 1 Bonds and the Component Current Principal Balance of Component P-1
(after giving effect to the payment of principal and the allocation of
applicable Realized Losses and any applicable PO Deferred Payment Writedown
Amount and PO Cash Shortfall in reduction of the Class Current Principal
Balances of such Bonds and the Component Current Principal Balance of Component
P-1 on such Payment Date) exceeds (b) the aggregate Scheduled Principal Balances
of the Group 1 Mortgage Loans on the Due Date related to such Payment Date.
"Group 2 Subordinate Bond Writedown Amount": As to any Payment Date,
the amount by which (a) the sum of the Class Current Principal Balances of all
the Group 2 Bonds and the Component Current Principal Balance of Component P-2
(after giving effect to the payment of principal and the allocation of
applicable Realized Losses and any applicable PO Deferred Payment Writedown
Amount and PO Cash Shortfall in reduction of the Class Current Principal
Balances of such Bonds and the Component Current Principal Balance of Component
P-2 on such Payment Date) exceeds (b) the aggregate Scheduled Principal Balances
of the Group 2 Mortgage Loans on the Due Date related to such Payment Date.
"Group 1 Subordinate Bonds": The Class B-1, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6 Bonds.
"Group 2 Subordinate Bonds": The Class II-B-1, Class II-B-2, Class
II-B-3, Class II-B-4, Class II-B-5 and Class II-B-6 Bonds.
"Group 1 Subordinate Optimal Principal Amount" or "Group 2 Subordinate
Optimal Principal Amount": As to any Payment Date, an amount, in no event
greater than the aggregate of the Class Current Principal Balances of the
Subordinate Bonds of the relevant Bond Group immediately prior to such Payment
Date, equal to the excess, if any, of (a) the sum of (without duplication):
(i) the applicable Subordinate Percentage of the applicable
Non-PO Percentage of the principal portion of all Scheduled Payments
due on each Outstanding Mortgage Loan in the related Mortgage Loan
Group on the related Due Date as specified in the amortization schedule
at the time applicable thereto (after adjustment for previous Principal
Prepayments
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<PAGE> 16
but before any adjustment to such amortization schedule by reason of
any bankruptcy or similar proceeding or any moratorium or similar
waiver or grace period);
(ii) the applicable Subordinate Prepayment Percentage of the
applicable Non-PO Percentage of the Scheduled Principal Balance of each
Mortgage Loan in the related Mortgage Loan Group that was the subject
of a Voluntary Principal Prepayment in full received by the related
Sub-Servicer during the related Prepayment Period;
(iii) the applicable Subordinate Prepayment Percentage of the
applicable Non-PO Percentage of each Voluntary Principal Prepayment in
part received by the related Sub-Servicer during the immediately
preceding Prepayment Period with respect to each Mortgage Loan in the
related Mortgage Loan Group;
(iv) the excess, if any, of (A) the applicable Non-PO
Percentage of all Net Liquidation Proceeds allocable to principal
received on each Mortgage Loan in the related Mortgage Loan Group which
became a Liquidated Mortgage Loan during the related Prepayment Period
over (B) the amount payable pursuant to clause (iv) of the definition
of "Group 1 Senior P&I Optimal Principal Amount" or "Group 2 Senior P&I
Optimal Principal Amount" for the applicable Bond Group;
(v) the applicable Subordinate Prepayment Percentage of the
applicable Non-PO Percentage of the sum of (a) the Scheduled Principal
Balance of each Mortgage Loan or REO Property in the related Mortgage
Loan Group which was purchased by BSMCC in connection with such Payment
Date pursuant to Section 2.02 or 2.03 of the Pooling and Servicing
Agreement and (b) the excess, if any, of the Scheduled Principal
Balance of a Mortgage Loan in the related Mortgage Loan Group that has
been replaced by BSMCC with a Substitute Mortgage Loan pursuant to
Section 2.04 of the Pooling and Servicing Agreement in connection with
such Payment Date over the Scheduled Principal Balance of such
substitute Mortgage Loan; and
(vi) on the Payment Date on which the Class Current Principal
Balances of the Senior P&I Bonds of the relevant Bond Group have all
been reduced to zero, 100% of any applicable Senior P&I Optimal
Principal Amount
over (b) the PO Deferred Payment Writedown Amount payable on such Payment Date
with respect to (x) in the case of the Group 1 Subordinate Bonds, Component P-1
or (y) in the case of the Group 2 Subordinate Bonds, Component P-2 and the Class
II-P Bonds.
After the aggregate of the Class Current Principal Balances of the Subordinate
Bonds of a Bond Group have been reduced to zero, the Subordinate Optimal
Principal Amount for such Bond Group shall be zero.
"Group 1 Subordinate Percentage" or "Group 2 Subordinate Percentage":
On any Payment Date, 100% minus the applicable Senior Percentage of the relevant
Bond Group.
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<PAGE> 17
"Group 1 Subordinate Prepayment Percentage" or "Group 2 Subordinate
Prepayment Percentage": On any Payment Date, 100% minus the applicable Senior
Prepayment Percentage for the relevant Bond Group, except that on any Payment
Date after the aggregate of the Class Current Principal Balances of the Senior
Bonds of such Bond Group have each been reduced to zero, the Subordinate
Prepayment Percentage for such Bond Group will equal 100%.
"Imputed Principal Balance": As used in the Indenture, "Imputed
Principal Balance" shall have the same meaning as "Current Principal Balance"
herein.
"Individual Bond": As defined in Section 10(f).
"Initial Deposit": $2,500.00, which is equal to twelve months' interest
on the initial Class Current Principal Balance of the Class A-20 Bonds at the
rate of 0.50% per annum (which is the amount by which the Bond Interest Rate for
the Class A-20 Bonds for the first twelve Interest Accrual Periods exceeds 6.75%
per annum).
"Initial Purchaser": Bear, Stearns & Co. Inc.
"Institutional Accredited Investor": Any Person meeting the
requirements of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act or any entity all of the equity holders in which come within such
paragraphs.
"Insurance Proceeds": As defined in the Pooling and Servicing
Agreement.
"Insurer": As defined in the Pooling and Servicing Agreement.
"Interest Accrual Period": With respect to each Payment Date (i) for
each interest-bearing Class of Bonds other than the LIBOR Bonds, the calendar
month preceding the month in which such Payment Date occurs and (ii) with
respect to each Class of LIBOR Bonds, the period beginning on the 25th day of
the month preceding the month in which such Payment Date occurs and ending on
the 24th day of the month in which such Payment Date occurs, in the case of each
of clauses (i) and (ii) commencing in September 1998.
"Interest Only Bonds": The Class A-5, Class A-10, Class X, Class II-X-1
and Class II-X-2 Bonds.
"Interest Payment Date": For purposes of the Indenture, "Interest
Payment Date" for the Series 1998-2 Bonds shall have the same meaning as
"Payment Date" as defined herein.
"Interest Shortfall": As defined in the Pooling and Servicing
Agreement.
"Junior Bonds": Any of the Subordinate Bonds.
"Junior Bond Writedown Amount": Zero.
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<PAGE> 18
"Letter Agreements": The Letter of Representations to The Depository
Trust Company from the Trustee and the Issuer dated September 30, 1998, with
respect to the Book Entry Bonds other than the Retail Bonds, a copy of which is
attached hereto as Exhibit D-1, and with respect to the Retail Bonds, the Letter
of Representations to The Depository Trust Company from the Trustee and the
Issuer dated September 30, 1998, a copy of which is attached hereto as Exhibit
D-2.
"LIBOR": With respect to each Interest Accrual Period for the LIBOR
Bonds, the London Interbank Offered Rate for one-month United States
dollar-denominated deposits determined in accordance with the following
provisions:
(i) On each LIBOR Determination Date, until the Class Current
Principal Balances of the LIBOR Bonds have been reduced to zero, the
Bond Administrator will request each Reference Bank to inform the Bond
Administrator of the quotation offered by its principal London office
for making one-month United States dollar deposits in leading banks in
the London interbank market, as of 11:00 a.m. (London time) on such
LIBOR Determination Date. In lieu of making a request of the Reference
Banks, the Bond Administrator may rely on the quotations for those
Reference Banks that appear at such time on the Reuters Screen LIBO
Page (as defined in the International Swap Dealers Association Inc.
Code of Standard Wording, Assumptions and Provisions for Swaps, 1986
Edition), to the extent available.
(ii) LIBOR will be established by the Bond Administrator on
each LIBOR Determination Date as follows:
(a) If on any LIBOR Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the
next Interest Accrual Period shall be the arithmetic mean of
such offered quotations (rounded upwards if necessary to the
nearest whole multiple of 1/32%).
(b) If on any LIBOR Determination Date only one or
none of the Reference Banks provides such offered quotations,
LIBOR for the next Interest Accrual Period shall be whichever
is the higher of (i) LIBOR as determined on the previous LIBOR
Determination Date or (ii) the Reserve Interest Rate. The
"RESERVE INTEREST RATE" shall be the rate per annum which the
Bond Administrator determines to be either (i) the arithmetic
mean (rounded upwards if necessary to the nearest whole
multiple of 1/32%) of the one-month United States dollar
lending rates that New York City banks selected by the Bond
Administrator are quoting, on the relevant LIBOR Determination
Date, to the principal London offices of at least two of the
Reference Banks to which such quotations are, in the opinion
of the Bond Administrator, being so made, or (ii) in the event
that the Bond Administrator can determine no such arithmetic
mean, the lowest one-month United States dollar lending rate
which New York City banks selected by the Bond Administrator
are quoting on such LIBOR Determination Date to leading
European banks.
(c) If on the first LIBOR Determination Date, the
Bond Administrator is required but is unable to determine the
Reserve Interest Rate in the manner provided
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<PAGE> 19
in paragraph (b) above, LIBOR shall be 5.65625%. If on any
subsequent LIBOR Determination Date, the Bond Administrator is
required but is unable to determine the Reserve Interest Rate
in the manner provided in paragraph (b) above, LIBOR shall be
LIBOR for the immediately preceding LIBOR Determination Date.
(iii) The establishment of LIBOR on each LIBOR Determination
Date by the Bond Administrator and the Bond Administrator's calculation
of the rate of interest applicable to the LIBOR Bonds for the related
Interest Accrual Period shall (in the absence of manifest error) be
final and binding.
"LIBOR Bonds": The Class A-6, Class A-7, Class A-11, Class A-21 and
Class A-22 Bonds.
"LIBOR Determination Date": October 22, 1998 and monthly thereafter on
the second business day prior to the first day of the related Interest Accrual
Period for the LIBOR Bonds. (For purposes of calculating LIBOR, "business day"
means a day on which banks are open for dealing in foreign currency and exchange
in London and New York City.)
"Liquidated Mortgage Loan": As defined in the Pooling and Servicing
Agreement.
"Living Owner": Any Beneficial Owner of one or more Retail Bond Units,
other than a Deceased Owner.
"Loss Allocation Limitation": The Group 1 Loss Allocation Limitation or
the Group 2 Loss Allocation Limitation, as applicable.
"Master Servicer": As defined in the Pooling and Servicing Agreement.
"Moody's": As defined in the Pooling and Servicing Agreement.
"Mortgage Loan": As defined in the Pooling and Servicing Agreement.
"Mortgage Loan Group": As defined in the Pooling and Servicing
Agreement.
"Mortgage Loan Group 1": As defined in the Pooling and Servicing
Agreement.
"Mortgage Loan Group 2": As defined in the Pooling and Servicing
Agreement.
"Mortgage Loan Purchase Agreement": As defined in the Pooling and
Servicing Agreement.
"Net Interest Shortfall": As defined in the Pooling and Servicing
Agreement.
"Net Liquidation Proceeds": As defined in the Pooling and Servicing
Agreement.
"Net Rate": As defined in the Pooling and Servicing Agreement.
"New York Agent": The Trustee, at the New York Office.
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<PAGE> 20
"New York Office": The office designated as such in Section 7.
"Non-Discount Mortgage Loan": Any Group 1 Mortgage Loan, Sub-Group 2A
Mortgage Loan or Sub-Group 2B Mortgage Loan with a Net Rate equal to or greater
than 6.75%, 6.25% or 6.25%, respectively, per annum.
"Non-PO Percentage": With respect to any Discount Mortgage Loan in
Mortgage Loan Group 1, Sub-Group 2A or Sub-Group 2B, the Net Rate thereof
divided by 6.75%, 6.25% or 6.25%, respectively. With respect to any Non-Discount
Mortgage Loan in Mortgage Loan Group 1, Sub-Group 2A or Sub-Group 2B, 100%.
"Non-U.S. Person": A Person other than a United States Person.
"Offered Bonds": The Class P, Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class
A-11, Class A-12, Class A-13, Class A-14, Class A-15, Class A-16, Class A-17,
Class A-18, Class A-19, Class A-20, Class A-21, Class A-22, Class A-23, Class X,
Class B-1, Class B-2, Class B-3, Class II-A-1, Class II-P, Class II-X-1, Class
II-X-2, Class II-B-1, Class II-B-2, Class II-B-3, Class R-1, Class R-2 and Class
R-3 Bonds.
"Offered Subordinate Bonds": The Class B-1, Class B-2, Class B-3, Class
II-B-1, Class II-B-2 and Class II-B-3 Bonds.
"Original Subordinate Principal Balance": Each of the Group 1 Original
Subordinate Principal Balance and Group 2 Original Subordinate Principal
Balance.
"Other Subordinate Bonds": The Class B-4, Class B-5, Class B-6, Class
II-B-4, Class II-B-5 and Class II-B-6 Bonds.
"Outstanding Mortgage Loan": As defined in the Pooling and Servicing
Agreement.
"Outstanding Principal Balance": As defined in the Pooling and
Servicing Agreement.
"P Component": Component P-1 or Component P-2, as applicable.
"PAC Bonds": The PAC I Bonds and the PAC II Bonds.
"PAC I Bonds": The Class A-1, Class A-2, Class A-3, and Class A-4
Bonds.
"PAC II Bonds": The Class A-9 Bonds.
"Payment Date": The twenty-fifth day of each month, or if such day is
not a Business Day, the next succeeding Business Day, commencing in October
1998.
"Permitted Transferee": As to a Residual Bond, a transferee of such
Residual Bond that is not a Disqualified Organization and not a Non-U.S. Person
and satisfies the requirements for a transferee of a Residual Bond under Section
2.15 of the Indenture.
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<PAGE> 21
"Plan Investor": As defined in Section 21(d).
"Planned Balance": With respect to each Class of PAC Bonds and a given
Payment Date, the amount set forth as the "Planned Balance" with respect thereto
on Appendix A-1.
"PO Cash Shortfall": With respect to Component P-1, Component P-2 and
the Class II-P Bonds, the Component P-1 Cash Shortfall, the Component P-2 Cash
Shortfall and the Class II-P Cash Shortfall, respectively.
"PO Deferred Amount": With respect to Component P-1, Component P-2 and
the Class II-P Bonds, respectively, and each Payment Date through the Cross-Over
Date for the related Bond Group, the aggregate of all amounts allocable on such
Payment Date to Component P-1, Component P-2 or the Class II-P Bonds, as
applicable, in respect of the principal portion of Realized Losses (other than
Excess Special Hazard Losses) on Mortgage Loans in Mortgage Loan Group 1,
Sub-Group 2A or Sub-Group 2B, respectively, and any related PO Cash Shortfalls
and all amounts previously allocated in respect of such Realized Losses or
related PO Cash Shortfalls to such Component or Class of Bonds and not paid on
prior Payment Dates. No interest shall accrue on any PO Deferred Amount.
"PO Deferred Payment Writedown Amount": With respect to (i) Component
P-1 and any Payment Date, the amount, if any, paid on such date in respect of
the related PO Deferred Amount pursuant to Section 10(a)(i)(A) fourth and (ii)
with respect to Component P-2 and the Class II-P Bonds, the amount, if any, paid
in respect of the related PO Deferred Amount pursuant to Section 10(a)(iii)(A)
fourth.
"PO Percentage": With respect to any Discount Mortgage Loan in Mortgage
Loan Group 1, Sub-Group 2A or Sub-Group 2B, the fraction, expressed as a
percentage, equal to 6.75%, 6.25% or 6.25%, respectively, minus the Net Rate
thereof divided by 6.75%, 6.25% or 6.25%, respectively. With respect to any
Non-Discount Mortgage Loan in Mortgage Loan Group 1, Sub-Group 2A or Sub-Group
2B, 0%.
"PO Principal Payment Amount": With respect to each of Component P-1,
Component P-2 and the Class II-P Bonds, on each Payment Date, an amount, without
duplication, equal to the sum of:
(i) the applicable PO Percentage of the principal portion of
all Scheduled Payments due on each Outstanding Mortgage Loan that is a
Discount Mortgage Loan in the related Loan Group on the related Due
Date as specified in the amortization schedule at the time applicable
thereto (after adjustments for previous Principal Prepayments, but
before any adjustment to such amortization schedule by reason of any
other bankruptcy or similar proceeding or any moratorium or similar
waiver or grace period);
(ii) the applicable PO Percentage of the Scheduled Principal
Balance of each Discount Mortgage Loan in the related Loan Group which
was the subject of a Voluntary Principal Prepayment in full received by
the related Sub-Servicer during the preceding Prepayment Period;
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<PAGE> 22
(iii) the applicable PO Percentage of all Voluntary Principal
Prepayments in part for each Discount Mortgage Loan in the related Loan
Group received by the related Sub-Servicer during the applicable
Prepayment Period;
(iv) the lesser of (a) the applicable PO Percentage of the sum
of (A) all Net Liquidation Proceeds allocable to principal received
with respect to each Discount Mortgage Loan in the related Loan Group
which became a Liquidated Mortgage Loan during the immediately
preceding calendar month (other than a Discount Mortgage Loan described
in the immediately following clause (B)) and (B) the Scheduled
Principal Balance of each such Discount Mortgage Loan purchased by an
Insurer from the Certificate Trustee during the immediately preceding
calendar month pursuant to the related Primary Mortgage Insurance
Policy, if any, or otherwise; and (b) the applicable PO Percentage of
the sum of (A) the Scheduled Principal Balance of each Discount
Mortgage Loan in the related Loan Group which became a Liquidated
Mortgage Loan during the immediately preceding calendar month (other
than a Discount Mortgage Loan described in the immediately following
clause (B)) and (B) the Scheduled Principal Balance of each such
Discount Mortgage Loan in the related Loan Group that was purchased by
an Insurer from the Trustee during the related Prepayment Period
pursuant to the related Primary Mortgage Insurance Policy, if any, or
otherwise, less (C) in the case of clause (b), the applicable PO
Percentage of the principal portion of Excess Special Hazard Losses
with respect to Discount Mortgage Loans in the related Loan Group
incurred during the related Prepayment Period; and
(v) the applicable PO Percentage of the sum of (a) the
Scheduled Principal Balance of each Discount Mortgage Loan or REO
Property (which previously secured a Discount Mortgage Loan) in the
related Loan Group which was repurchased by BSMCC in connection with
such Payment Date pursuant to Section 2.02 or 2.03 of the Pooling and
Servicing Agreement and (b) the excess, if any, of the Scheduled
Principal Balance of a Discount Mortgage Loan in the related Loan Group
that has been replaced by BSMCC with a Discount Mortgage Loan that is a
Substitute Mortgage Loan pursuant to Section 2.05 of the Pooling and
Servicing Agreement in connection with such Payment Date over the
Scheduled Principal Balance of such Substitute Mortgage Loan.
For purposes of the foregoing definition, the "related Loan Group" with respect
to the Class P-1 Component, the Class P-2 Component and the Class II-P Bonds is
Mortgage Loan Group 1, Sub-Group 2A and Sub-Group 2B, respectively.
"Pooling and Servicing Agreement": The Pooling and Servicing Agreement
dated as of September 1, 1998, among the Issuer, Norwest Bank Minnesota,
National Association, as Master Servicer and Custodian, and The First National
Bank of Chicago, as Certificate Trustee.
"Prepayment Assumption": 275% SPA with respect to the Group 1 Mortgage
Loans and 250% SPA with respect to the Group 2 Mortgage Loans.
"Prepayment Period": As defined in the Pooling and Servicing Agreement.
"Primary Mortgage Insurance Policy": As defined in the Pooling and
Servicing Agreement.
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<PAGE> 23
"Principal Payment Date": For purposes of the Indenture, "Principal
Payment Date" for the Series 1998-2 Bonds shall have the same meaning as
"Payment Date" as defined herein.
"Principal Prepayment": As defined in the Pooling and Servicing
Agreement.
"Principal Only Bonds": The Class P and Class II-P Bonds.
"pro rata": Unless otherwise specified, with respect to payments or
allocations among Classes of Bonds and, if applicable, a Component, payments or
allocations pro rata based on Class Current Principal Balances and, if
applicable, Component Current Principal Balances.
"Protected Account": As defined in the Pooling and Servicing Agreement.
"QIB": A "qualified institutional buyer" as defined in Rule 144A
promulgated under the Securities Act.
"Rating Agencies": As defined in the Pooling and Servicing Agreement.
"Realized Loss": As defined in the Pooling and Servicing Agreement.
"Record Date": With respect to any Payment Date, the close of business
on the last Business Day of the month immediately preceding the month of such
Payment Date.
"Reference Bank": Barclays Bank PLC, Bankers Trust Company and The Bank
of Tokyo, Ltd. or, if any such bank shall cease to provide quotations for the
London Interbank Offered Rate for one-month dollar-denominated deposits, any
other bank that (i) is a leading bank engaged in transactions in Eurodollar
deposits in the international Eurocurrency market, (ii) does not control, is not
controlled by or under common control with the Issuer, and (iii) having an
established place of business in London. If any such bank should be unwilling or
unable to act as such or if the Bond Administrator should terminate the
appointment of any such Reference Bank, the Bond Administrator shall promptly
appoint another leading bank meeting the criteria specified above.
"REMIC 1": One of three separate REMICs comprising the Trust Estate,
the assets of which consist of Conventional Certificate 1998-2A and the Retail
Rounding Accounts.
"REMIC 2": One of three separate REMICs comprising the Trust Estate,
the assets of which consist of Conventional Certificate 1998-2B.
"REMIC 3": One of three separate REMICs comprising the Trust Estate,
the assets of which consist of the REMIC 1 Interests, the REMIC 2 Interests and
the Initial Deposit.
"REMIC 1 Interest": Any of the classes of regular interests in REMIC 1
described as such in Section 18(n).
"REMIC 2 Interest": Any of the classes of regular interests in REMIC 2
described as such in Section 18(o).
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<PAGE> 24
"REMIC 1 Interest Balance": As to each class of REMIC 1 Interest and
any Payment Date, the initial REMIC 1 Interest Balance thereof set forth in
Section 18(p) less the sum of (i) the aggregate amount of principal allocable
thereto on previous Payment Dates pursuant to Section 18; and (ii) any Realized
Losses allocable thereto on previous Payment Dates pursuant to Section 12.
"REMIC 2 Interest Balance": As to each class of REMIC 2 Interest and
any Payment Date, the initial REMIC 2 Interest Balance thereof set forth in
Section 18(p) less the sum of (i) the aggregate amount of principal allocable
thereto on previous Payment Dates pursuant to Section 18; and (ii) any Realized
Losses allocable thereto on previous Payment Dates pursuant to Section 12.
"REMIC 1 Interest Rate": As to each REMIC 1 Interest, the applicable
"REMIC 1 Interest Rate," if any, set forth in Section 18(p).
"REMIC 2 Interest Rate": As to each REMIC 2 Interest, the applicable
"REMIC 2 Interest Rate," if any, set forth in Section 18(p).
"REMIC Opinion": An Opinion of Independent Counsel, to the effect that
the proposed action described therein would not, under the REMIC Provisions, (i)
cause any Series REMIC to fail to qualify as a REMIC while any regular interest
in any Series REMIC is outstanding, (ii) result in a tax on prohibited
transactions with respect to any Series REMIC or (iii) constitute a taxable
contribution to any Series REMIC after the Startup Day.
"REO Property": As defined in the Pooling and Servicing Agreement.
"Repurchase Price": As defined in the Pooling and Servicing Agreement.
"Residual Bonds": Any of the Class R-1, Class R-2 and Class R-3 Bonds.
"Residual Interest": As to REMIC 1, the Class R-1 Bonds; as to REMIC 2,
the Class R-2 Bonds; and as to REMIC 3, the Class R-3 Bonds.
"Restricted Bonds": The Other Subordinate Bonds.
"Retail Bonds": The Class A-14, Class A-15, Class A-16, Class A-17,
Class A-18, Class A-19 and Class A-20 Bonds.
"Retail Bond Unit": With respect to each Class of Retail Bonds, an
individual Bond of such Class representing an initial Current Principal Balance
of $1,000.00.
"Retail Rounding Account": As defined in Section 27(a).
"Rule 144A Certificate": A certificate in the form attached hereto as
Exhibit C-3.
"Scheduled Payment": As defined in the Pooling and Servicing Agreement.
"Scheduled Principal": As defined in the Pooling and Servicing
Agreement.
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<PAGE> 25
"Scheduled Principal Balance": As defined in the Pooling and Servicing
Agreement.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Bonds": The Group 1 Senior Bonds and/or Group 2 Senior Bonds,
as the context requires.
"Senior P&I Bonds": The Group 1 Senior P&I Bonds and/or Group 2 Senior
P&I Bonds, as the context requires.
"Series 1998-2 Bonds": Each Class of Bonds set forth in Section 5
hereof.
"Series REMIC": Any of REMIC 1, REMIC 2 or REMIC 3.
"SPA": The assumed fixed schedule of prepayments on a pool of new
mortgage loans with such schedule given as a monthly sequence of prepayment
rates, expressed as annualized percent values. These values start at 0.2% per
year in the first month and increase by 0.2% per year in each succeeding month
until month 30, ending at 6.0% per year. At such time, the rate remains constant
at 6.0% per year for the balance of the remaining term.
Multiples of SPA are calculated from this prepayment rate series.
"Special Hazard Loss": As defined in the Pooling and Servicing
Agreement.
"Special Hazard Loss Amount": Upon the initial issuance of the Bonds,
the "Special Hazard Loss Amount" for the Group 1 Mortgage Loans will equal
$4,452,996 and the "Special Hazard Loss Amount" for the Group 2 Mortgage Loans
will equal $2,243,054. As of any Payment Date, the Special Hazard Loss Amount
for each Mortgage Loan Group will equal the initial Special Hazard Loss Amount
for such Mortgage Loan Group minus the sum of (i) the aggregate amount of
Special Hazard Losses that would have been previously allocated to the
Subordinate Bonds of the related Bond Group in the absence of the Loss
Allocation Limitation and (ii) the Adjustment Amount for such Mortgage Loan
Group.
"Special Hazard Termination Date": For any Mortgage Loan Group, the
Payment Date upon which the applicable Special Hazard Loss Amount has been
reduced to zero or a negative number (or the applicable Group 1 or Group 2
Cross-Over Date, if earlier).
"Special Payment Date": For purposes of the Indenture, "Special Payment
Date" for the Series 1998-2 Bonds shall be the 25th day of any calendar month in
which any Outstanding Series 1998-2 Bonds are Overdue Bonds.
"Startup Day": As defined in Section 18.
"Stated Maturity": With respect to a Class of Bonds, as specified in
Section 5.
"Sub-Group": As defined in the Pooling and Servicing Agreement.
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<PAGE> 26
"Sub-Group 2A": As defined in the Pooling and Servicing Agreement.
"Sub-Group 2A Mortgage Loans:" As defined in the Pooling and Servicing
Agreement.
"Sub-Group 2B": As defined in the Pooling and Servicing Agreement.
"Sub-Group 2B Mortgage Loans:" As defined in the Pooling and Servicing
Agreement.
"Sub-Servicer": As defined in the Pooling and Servicing Agreement.
"Subordinate Bonds": The Group 1 Subordinate Bonds and Group 2
Subordinate Bonds.
"Subordinate Optimal Principal Amount": Either of the Group 1
Subordinate Optimal Principal Amount or the Group 2 Subordinate Optimal
Principal Amount.
"Substitute Mortgage Loan": As defined in the Pooling and Servicing
Agreement.
"Targeted Balances": With respect to Component A-6-2 and the Class A-11
Bonds, the amount set forth as the "Targeted Balance" with respect thereto on
Appendix A-2.
"Tax Matters Person": As designated in Section 18(b).
"Transferor": A transferor of a Residual Bond.
"Trust": As defined in the Pooling and Servicing Agreement.
"Trust Agreement": That certain Trust Agreement dated as of September
30, 1998 by and between CMC Securities Corporation III and The First National
Bank of Chicago, as Bond Pool Trustee.
"Trust Fund": As defined in the Pooling and Servicing Agreement.
"250% SPA Balance": With respect to any Payment Date, the amount for
such Payment Date shown in the table of the 250% SPA Adjusted Group Non-PO
Mortgage Pool Balance as of the Cut-off Date set forth in Appendix B.
"United States Person": A Person who is (a) a citizen or resident of
the United States, (b) a corporation or partnership, including an entity treated
as a corporation or partnership for U.S. federal income tax purposes created in
the United States or organized under the laws of the United States or any state
thereof or the District of Columbia (except, in the case of a partnership, as
otherwise provided by Treasury regulations), (c) an estate the income of which
is includible in gross income for United States federal income tax purposes
regardless of its source, or (d) a trust whose administration is subject to the
primary supervision of a United States court and which has one or more United
States Persons who have the authority to control all substantial decisions of
the trust.
"Voluntary Principal Prepayment": As defined in the Pooling and
Servicing Agreement.
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<PAGE> 27
SECTION 2. Designation.
The Series 1998-2 Bonds shall be designated generally as the Issuer's
Collateralized Mortgage Obligations, Series 1998-2.
3.AB SECTION Dating of Series 1998-2 Bonds; Certain other Matters.
(a) The Series 1998-2 Bonds that are authenticated and delivered by
the Trustee to or upon the order of the Issuer on the Closing Date for the
Series 1998-2 Bonds shall be dated September 30, 1998. All other Series 1998-2
Bonds that are authenticated after the Closing Date for the Series 1998-2 Bonds
for any other purpose under the Indenture shall be dated the date of their
authentication. Interest accruing on each Class of Bonds during each Interest
Accrual Period will be calculated on the assumption that principal payments on,
and allocations of losses to, such Bonds are made (or, if applicable, the
related Class Notional Balance is reduced) on the last day of the preceding
Interest Accrual Period, and not on the following Payment Date when actually
made (or reduced).
(b) Each Class of Bonds, other than the Class II-P and Class II-X-2
Bonds and the Residual Bonds shall constitute Classes of Book Entry Bonds.
(c) For purposes of the Indenture, the Senior Bonds shall constitute
Classes of "Senior Bonds," and the Subordinate Bonds shall constitute Classes of
"Junior Bonds."
SECTION 4. Transfer of ERISA Restricted and ERISA Prohibited Bonds.
No transfer of an ERISA Restricted Bond or an ERISA Prohibited Bond may
be made except as provided in Section 2.15 of the Indenture.
SECTION 5. Aggregate Principal Amount; Classes.
The aggregate principal amount of Series 1998-2 Bonds that may be
authenticated and delivered under this Series 1998-2 Supplement shall be
$538,759,376 except for Series 1998-2 Bonds authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Series
1998-2 Bonds pursuant to Sections 2.6, 2.7, 2.8 or 9.6 of the Indenture. Such
aggregate principal amount shall be divided among the forty-four Classes having
designations, initial Class Current Principal Balances, Bond Interest Rates and
Stated Maturities of their final installment of principal as follows:
<TABLE>
<CAPTION>
Initial Class Stated Maturity
Class Bond Current (Payment Date
Designation Interest Rate Principal Balance Occurring In)
----------- ------------- ----------------- -------------
<S> <C> <C> <C>
Class P Bonds (1) $804,927 November 2028
Class A-1 Bonds 5.75% $9,976,000 November 2028
Class A-2 Bonds 5.80% $17,799,000 November 2028
Class A-3 Bonds 6.25% $26,250,000 November 2028
</TABLE>
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<PAGE> 28
<TABLE>
<CAPTION>
Initial Class Stated Maturity
Class Bond Current (Payment Date
Designation Interest Rate Principal Balance Occurring In)
----------- ------------- ----------------- -------------
<S> <C> <C> <C>
Class A-4 Bonds 5.85% $22,346,000 November 2028
Class A-5 Bonds 6.75% (2) November 2028
Class A-6 Bonds (3) $80,137,588(4) November 2028
Class A-7 Bonds (5) $13,145,485 November 2028
Class A-8 Bonds 6.75%(6) $2,965,000 November 2028
Class A-9 Bonds 6.20% $25,000,000 November 2028
Class A-10 Bonds 0.55% (7) November 2028
Class A-11 Bonds (8) $7,630,927 November 2028
Class A-12 Bonds 6.75%(9) $4,750,000 November 2028
Class A-13 Bonds 6.75% $134,571,000 November 2028
Class A-14 Bonds 6.50% $1,801,000 November 2028
Class A-15 Bonds 6.75% $3,612,000 November 2028
Class A-16 Bonds 7.00% $1,801,000 November 2028
Class A-17 Bonds 6.50% $1,565,000 November 2028
Class A-18 Bonds 6.75% $9,148,000 November 2028
Class A-19 Bonds 7.00% $1,565,000 November 2028
Class A-20 Bonds (9) $500,000 November 2028
Class A-21 Bonds (10) $11,551,603 November 2028
Class A-22 Bonds (11) $3,850,535 November 2028
Class A-23 Bonds 6.75% $44,529,962 November 2028
Class X Bonds (12) (12) November 2028
Class B-1 Bonds 6.75% $9,796,600 November 2028
Class B-2 Bonds 6.75% $4,453,000 November 2028
Class B-3 Bonds 6.75% $2,003,800 November 2028
Class B-4 Bonds 6.75% $1,335,900 November 2028
Class B-5 Bonds 6.75% $1,113,300 November 2028
Class B-6 Bonds 6.75% $1,335,924 November 2028
Class II-A-1 Bonds 6.25% $90,563,200 November 2013
Class II-P Bonds (13) $53,589(13) November 2013
Class II-X-1 Bonds (12) (12) November 2013
Class II-X-2 Bonds (12) (12) November 2013
Class II-B-1 Bonds 6.25% $1,588,800 November 2013
Class II-B-2 Bonds 6.25% $373,800 November 2013
Class II-B-3 Bonds 6.25% $187,000 November 2013
</TABLE>
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<PAGE> 29
<TABLE>
<CAPTION>
Initial Class Stated Maturity
Class Bond Current (Payment Date
Designation Interest Rate Principal Balance Occurring In)
----------- ------------- ----------------- -------------
<S> <C> <C> <C>
Class II-B-4 Bonds 6.25% $327,100 November 2013
Class II-B-5 Bonds 6.25% $140,200 November 2013
Class II-B-6 Bonds 6.25% $186,936 November 2013
Class R-1 Bonds 6.75% $50 November 2028
Class R-2 Bonds 6.75% $100 November 2028
Class R-3 Bonds 6.75% $50 November 2028
</TABLE>
- ---------------------------
(1) The Class P Bonds are principal only Bonds and will not bear interest.
The Class Current Principal Balance of the Class P Bonds initially will
be the amount shown above and is composed of Component P-1 and
Component P-2 having initial principal balances as of the Closing Date
equal to the PO Percentage (as defined herein) of each Discount
Mortgage Loan in Mortgage Loan Group 1 and Sub-Group 2A, respectively,
or $765,900 and $39,027, respectively.
(2) The Class A-5 bonds are interest only Bonds.
(3) The Current Principal Balance of the Class A-6 Bonds initially will be
the amount shown above and is composed of Component A-6-1 and Component
A-6-2 having initial principal balances as of the Closing Date equal to
$50,704,015 and $29,433,573, respectively.
(4) During the initial Interest Accrual Period, interest will accrue on the
Class A-6 Bonds at the rate of 6.156250% per annum. During each
Interest Accrual Period thereafter, interest will accrue on the Class
A-6 Bonds at a per annum rate of LIBOR plus 0.50%, determined monthly
as described herein, subject to a maximum rate of 8.50% per annum and a
minimum rate of 0.50% per annum.
(5) During the initial Interest Accrual Period, interest will accrue on the
Class A-7 and Class A-11 Bonds at the rate of 9.040179% per annum.
During each Interest Accrual Period thereafter, interest will accrue on
the Class A-7 and Class A-11 Bonds at a per annum rate equal to
30.85714% - (3.857143 x LIBOR), determined monthly as described herein,
subject to a maximum rate of 30.85714% per annum and a minimum rate of
0.00% per annum.
(6) On each Payment Date on or before the Class A-8 Accretion Termination
Date, an amount equal to the Class A-8 Accrual Amount will be added to
the Class A-8 Principal Balance, and such amount will be paid as
principal to Component A-6-1 and the Class A-7 Bonds as provided herein
and will not be paid as interest to the Class A-8 Bonds.
(7) The Class A-10 Bonds are interest only Bonds. During each Interest
Accrual Period, interest will accrue at the Bond Interest Rate for the
Class A-10 Bonds on the Class A-10 Notional Balance immediately
preceding the applicable Payment Date.
(8) On each Payment Date on or before the Class A-12 Accretion Termination
Date, an amount equal to the Class A-12 Accrual Amount will be added to
the Class A-12 Principal Balance, and such amount will be paid as
principal to Component A-6-2 and the Class A-11 Bonds as provided
herein and will not be paid as interest to the Class A-12 Bonds.
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<PAGE> 30
(9) During the initial twelve Interest Accrual Periods, interest will
accrue on the Class A-20 Bonds at the rate of 7.25% per annum. During
each Interest Accrual Period thereafter, interest will accrue on the
Class A-15 Bonds at a per annum rate of 6.75%.
(10) During the initial Interest Accrual Period, interest will accrue on the
Class A-21 bonds at the rate of 6.456250% per annum. During each
Interest Accrual Period thereafter, interest will accrue on the Class
A-21 Bonds at a per annum rate of LIBOR plus 0.80%, determined monthly
as described herein, subject to a maximum rate of 9.00% per annum and a
minimum rate of 0.80% per annum.
(11) During the initial Interest Accrual Period, interest will accrue on the
Class A-22 Bonds at the rate of 7.631250% per annum. During each
Interest Accrual Period thereafter, interest will accrue on the Class
A-22 Bonds at a per annum rate equal to 24.6% - (3 x LIBOR), determined
monthly as described herein, subject to a maximum rate of 24.6% per
annum and a minimum rate of 0.00% per annum.
(12) The Class X Bonds, Class II-X-1 Bonds and Class II-X-2 Bonds are
interest only Bonds. The Class X, Class II-X-1 and Class II-X-2 Bonds
will bear interest on their respective Class Notional Balances at
variable Bond Interest Rates equal, in the case of the Class X Bonds,
to the weighted average of the excess, if any, of (a) the Net Rates on
each Non-Discount Mortgage Loan in Mortgage Loan Group 1 over (b) 6.75%
per annum; in the case of the Class II-X-1 Bonds, to the weighted
average of the excess, if any, of (a) the Net Rates on each
Non-Discount Mortgage Loan in Sub-Group 2A over (b) 6.25% per annum;
and in the case of the Class II-X-2 Bonds, to the weighted average of
the excess, if any, of (a) the Net Rates on each Non-Discount Mortgage
Loan in Sub-Group 2B over (b) 6.25% per annum.
(13) The Class II-P Bonds are principal only Bonds and will not bear
interest. The Class Current Principal Balance of the Class II-P Bonds
initially will be the amount shown above and is equal to the PO
Percentage of each Discount Mortgage Loan in Sub-Group 2B.
SECTION 6. Denominations of Series 1998-2 Bonds.
Each Class of Book Entry Bonds shall initially be evidenced by a single
Bond representing the initial Class Current Principal Balance or initial Class
Notional Balance, as applicable, of such Class of Bonds as of the Closing Date.
The Senior Bonds (other than the Retail Bonds and the Residual Bonds) shall be
issued in minimum denominations of $1,000 and integral multiples of $1.00 in
excess thereof and the Subordinate Bonds shall be issued in minimum
denominations of $25,000 and integral multiples of $1.00 in excess thereof. Each
Class of Retail Bonds shall be issued in minimum denominations of $1,000 and
increments of $1,000 in excess thereof. Each of the Class R-1, Class R-2 and
Class R-3 Bonds shall be issued in certificated fully-registered form in a
single Bond of $50, $100 and $50, respectively. Notwithstanding the foregoing,
one Bond of each Class of Bonds, other than the Retail Bonds and the Residual
Bonds, may be issued in a different principal or notional balance. All of the
Book Entry Bonds shall initially be registered on the Bond Register in the name
of Cede & Co., the nominee of the Clearing Agency, and no Beneficial Owner
thereof will receive a Definitive Bond representing such Beneficial Owner's
interest in the Book Entry Bonds, except in the event of Book Entry Termination.
SECTION 7. Authentication of Series 1998-2 Bonds.
The Series 1998-2 Bonds may be authenticated by the Trustee at the
Trustee's office in the Borough of Manhattan, City and State of New York
currently located at 14 Wall Street, 8th Floor, New York, New York 10005,
Attention: Corporate Trust (the "New York Office"). There shall be
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<PAGE> 31
no Authenticating Agent for the Series 1998-2 Bonds unless the appointment of an
Authenticating Agent is required as a condition to the listing of the Series
1998-2 Bonds on any stock exchange.
SECTION 8. [RESERVED].
SECTION 9. Places for Payment of Principal of Series 1998-2 Bonds; Payments on
Book Entry Bonds.
(a) The final payment of principal in retirement of each Series
1998-2 Bond, other than a Bond of a Class of Interest Only Bonds, or the final
payment of interest in respect of a Class of Interest Only Bonds, or the final
payment of contingent interest in respect of a Residual Bond (or the Redemption
Price of any such Series 1998-2 Bond called for redemption in full), shall be
payable upon presentation and surrender thereof only at the office of the
Trustee in the Borough of Manhattan, City and State of New York.
(b) Each payment of principal of and interest on a Book Entry Bond
shall be paid to the Clearing Agency, which shall credit the amount of such
payments to the accounts of its Clearing Agency Participants in accordance with
its normal procedures. Each Clearing Agency Participant shall be responsible for
disbursing such payments to the Beneficial Owners of the Book Entry Bonds that
it represents and to each indirect participating brokerage firm (a "brokerage
firm" or "indirect participating firm") for which it acts as agent. Each
brokerage firm shall be responsible for disbursing funds to the Beneficial
Owners of the Book Entry Bonds that it represents. All such credits and
disbursements are to be made by the Clearing Agency and the Clearing Agency
Participants in accordance with the provisions of the Bonds. Neither the
Trustee, the Bond Registrar nor the Issuer shall have any responsibility
therefor except as otherwise provided by applicable law.
SECTION 10. Payment on the Bonds Before Acceleration; Reports to Bondholders.
(a) Before acceleration, if any, of the Bonds pursuant to Section 5.2
of the Indenture, the Trustee shall, on each Payment Date commencing in October
1998, pay interest and principal on the Bonds in the following priority and
amounts:
(i) Group 1 Senior Bonds. (A) On each Payment Date prior to the
acceleration, if any, of the Bonds, the amount received by the Trustee in
respect of distributions on Conventional Certificate 1998-2A on such Payment
Date (which amount will be equal to the Group 1 Available Funds for the
Distribution Date occurring on such Payment Date) shall be paid in the following
order of priority among the Group 1 Senior Bonds except as otherwise noted;
provided that on each of the first 12 Payment Dates the Class A-20 Incremental
Interest Amount with respect to such Payment Date shall be applied solely to
make payments of Accrued Bond Interest on the Class A-20 Bonds for each such
Payment Date:
first, (x) to the interest-bearing Classes of Group 1 Senior Bonds, the
Accrued Bond Interest on each such Class for such Payment Date (subject
to reduction as provided in Section 12(f)); provided, however, that no
such payments shall be made to the Class A-8 Bonds on or before the
Class A-8 Accretion Termination Date or to the Class A-12 Bonds on or
before the Class A-12 Accretion Termination Date; (y) on
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or before the Class A-8 Accretion Termination Date, to Component A-6-1,
the Class A-7 and Class A-8 Bonds, as provided in paragraph (g) below,
as principal, the Class A-8 Accrual Amount for such Payment Date; and
(z) on or before the Class A-12 Accretion Termination Date, to
Component A-6-2, the Class A-11 and Class A-12 Bonds, as provided in
paragraph (g) below, as principal, the Class A-12 Accrual Amount for
such Payment Date;
second, to the interest-bearing Classes of Group 1 Senior Bonds, any
Accrued Bond Interest thereon remaining unpaid from previous Payment
Dates to the extent of remaining Group 1 Available Funds, with any
shortfall in available amounts to pay such unpaid Accrued Bond Interest
being allocated among such Classes in proportion to the amount of such
Accrued Bond Interest remaining unpaid for each such Class for such
Payment Date, subject to the proviso in subclause (a) of clause first,
subclause (b) of clause first and subclause (c) of clause first;;
third, on and before the Group 1 Cross-Over Date, to the Group 1 Senior
Bonds (other than the Class A-5, Class A-10 and Class X Bonds) in
reduction of the Class Current Principal Balances or Component Current
Principal Balances thereof, as applicable:
(a) the Group 1 Senior P&I Optimal Principal Amount for such Payment
Date, in the following order of priority:
(i) to the Class R-1 and Class R-3 Bonds, pro rata, until their
respective Class Current Principal Balances have been reduced to
zero;
(ii) to the Class A-23 Bonds up to the Class A-23 Optimal
Principal Amount for such Payment Date, until the Class Current
Principal Balance thereof has been reduced to zero;
(iii) the portion of the Group 1 Senior P&I Optimal Principal
Amount remaining after payments as described above, concurrently,
as follows:
(A) 44.7317716816% sequentially as follows:
(1) to the Class A-13 Bonds until the Class Current
Principal Balance of the Class A-13 Bonds has been
reduced to zero;
(2) concurrently to the Class A-14, Class A-15 and A-16
Bonds, pro rata, based upon their respective Class
Current Principal Balances, until their respective
Class Current Principal Balances have been reduced to
zero, allocated among the Retail Bond Units of each
such Class as provided in Section 27;
(3) concurrently to the Class A-17, Class A-18, Class
A-19 and Class A-20 Bonds, pro rata, based upon their
respective Class Current
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Principal Balances, until their respective Class
Current Principal Balances have been reduced to zero,
allocated among the Retail Bond Units of each such
Class as provided in Section 27;
(4) concurrently to the Class A-21 and Class A-22 bonds,
pro rata, based upon their respective Class Current
Principal Balances, until their respective Class
Current Principal Balances have been reduced to zero;
(B) 55.2682283184% sequentially as follows:
(1) sequentially, to the Class A-1 and Class A-2 Bonds,
in that order, until their respective Class Current
Principal Balances have been reduced to their
respective Planned Balances for such Payment Date;
(2) concurrently to the Class A-3 and Class A-4 Bonds,
pro rata, based on their respective Class Current
Principal Balances, until their respective Class
Current Principal Balances have been reduced to their
respective Planned Balances for such Payment Date;
(3) concurrently,
(x) 50% of the amount remaining after the payments
referred to in sub-clauses (1) and (2) of this
clause (B), sequentially, as follows:
(I) to the Class A-9 Bonds until the Class
Current Principal Balance thereof has been
reduced to its Planned Balance for such
Payment Date;
(II) concurrently to Component A-6-2 and
the Class A-11 Bonds, pro rata, based on
their respective Component Current
Principal Balance and Class Current
Principal Balance, until their respective
Component Current Principal Balance and
Class Current Principal Balance have been
reduced to their respective Targeted
Balances for such Payment Date;
(III) to the Class A-12 Bonds until the
Class Current Principal Balance thereof has
been reduced to zero;
(IV) concurrently to Component A-6-2 and
the Class A-11 Bonds, pro rata, based on
their respective Component Current
Principal Balance and Class Current
Principal Balance, without regard to their
respective Targeted Balances for such
Payment Date, until their respective
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Component Current Principal Balance and
Class Current Principal Balance have been
reduced to zero;
(V) to the Class A-9 Bonds, without regard
to their Planned Balance for such Payment
Date, until the Class Current Principal
Balance thereof has been reduced to zero;
and
(y) 50% of the amount remaining after the payments
referred to in sub-clauses (1) and (2) of this
clause (B), sequentially, as follows:
(I) if on any Payment Date, the Adjusted
Group 1 Non-PO Mortgage Pool Balance is
less than the 250% SPA Balance for such
Payment Date, then on such Payment Date,
and on each Payment Date thereafter, to the
Class A-8 Bonds until the Class Current
Principal Balance thereof has been reduced
to zero;
(II) concurrently to Component A-6-1 and
the Class A-7 Bonds, pro rata, based on
their respective Component Current
Principal Balance and Class Current
Principal Balance, until their respective
Component Current Principal Balance and
Class Current Principal Balance have been
reduced to zero;
(III) to the Class A-8 Bonds until the
Class Current Principal Balance thereof has
been reduced to zero;
(4) sequentially to the Class A-1 and Class A-2 Bonds,
in that order, without regard to their respective
Planned Balances for such Payment Date, until their
respective Class Current Principal Balances have been
reduced to zero;
(5) concurrently to the Class A-3 and Class A-4 Bonds,
pro rata, based on their respective Class Current
Principal Balances, without regard to their respective
Planned Balances for such Payment Date, until their
respective Class Current Principal Balances have been
reduced to zero;
(b) the PO Principal Payment Amount for Component P-1 and such Payment
Date, to the Class P Bonds, until the Component Current Principal Balance of
Component P-1 has been reduced to zero; and
fourth, the PO Deferred Amount for Component P-1 for such Payment Date,
to the Class P Bonds; provided, that (i) on any Payment Date, payments
pursuant to this
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priority fourth shall not exceed the excess, if any, of (x) the Group 1
Available Funds remaining after giving effect to payments pursuant to
clauses first through third above over (y) the sum of the amount of
Accrued Bond Interest for such Payment Date and Accrued Bond Interest
remaining unpaid from previous Payment Dates on all Classes of Group 1
Subordinate Bonds then outstanding, (ii) such payments shall not reduce
the Component Current Principal Balance of Component P-1, and (iii) no
payment shall be made in respect of the PO Deferred Amount for
Component P-1 after the Group 1 Cross-Over Date.
(B) On each Payment Date prior to the acceleration, if any, of the
Bonds and after the Group 1 Cross-Over Date, payments of principal on the
outstanding Group 1 Senior Bonds (other than the Class A-5, Class A-10 and Class
X Bonds and Component P-1) shall be made pro rata among all such Group 1 Senior
Bonds, regardless of the allocation, or sequential nature, of principal payments
described in priority third (a) above, and the PO Principal Payment for
Component P-1 shall be paid to the Class P Bonds until the Component Current
Principal Balance of Component P-1 has been reduced to zero.
(C) If, after payments have been made pursuant to priorities first and
second of this Section 10(a)(i) on any Payment Date, the remaining Group 1
Available Funds, are less than the sum of the Group 1 Senior P&I Optimal
Principal Amount and the PO Principal Payment Amount for Component P-1 for such
Payment Date, such amounts shall be proportionately reduced, and such remaining
Group 1 Available Funds shall be paid on the Group 1 Senior Bonds (other than
the Class A-5, Class A-10 and Class X Bonds) on the basis of such reduced
amounts. Notwithstanding any reduction in principal payable to Component P-1
pursuant to this paragraph, the Component Current Principal Balance of Component
P-1 shall be reduced not only by principal so paid but also by the difference
between (i) principal payable to the Class P Bonds with respect to Component P-1
in accordance with clause (b) of priority third above and (ii) principal
actually paid to the Class P Bonds with respect to Component P-1 after giving
effect to this paragraph (such difference, the "COMPONENT P-1 CASH SHORTFALL"
with respect to such Payment Date). The Component P-1 Cash Shortfall with
respect to any Payment Date shall be added to the PO Deferred Amount applicable
to Component P-1.
(ii) Group 1 Subordinate Bonds. On each Payment Date prior to the
acceleration, if any, of the Bonds, the Group 1 Available Funds remaining after
the payments made pursuant to Section 10(a)(i) shall be paid to the Group 1
Subordinate Bonds 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 Bonds, in each case up to an
amount equal to and in the following order: (a) the Accrued Bond Interest
thereon for such Payment Date, (b) any Accrued Bond Interest thereon remaining
undistributed from previous Payment Dates and (c) such Class's Allocable Share
for such Payment Date.
(iii) Group 2 Senior Bonds. (A) On each Payment Date prior to the
acceleration, if any, of the Bonds, the amount received by the Trustee in
respect of distributions on Conventional Certificate 1998-2B on such Payment
Date (which amount will be equal to the Group 2 Available Funds for the
Distribution Date occurring on such Payment Date) shall be paid in the following
order of priority among the Group 2 Senior Bonds except as otherwise noted:
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first, to the interest-bearing Classes of Group 2 Senior Bonds, the
Accrued Bond Interest on each such Class for such Payment Date, any
shortfall in available amounts to pay such Accrued Bond Interest being
allocated among such Classes in proportion to the amount of Accrued
Bond Interest otherwise payable thereon;
second, to the interest-bearing Classes of Group 2 Senior Bonds, any
Accrued Bond Interest thereon remaining undistributed from previous
Payment Dates to the extent of remaining Group 2 Available Funds, with
any shortfall in available amounts to pay such unpaid Accrued Bond
Interest being allocated among such Classes in proportion to the amount
of such Accrued Bond Interest remaining undistributed for each such
Class for such Payment Date;
third, to the Group 2 Senior Bonds (other than the Class II-X-1 and
Class II-X-2 Bonds) in reduction of the Class Current Principal
Balances or Component Current Principal Balance thereof, as applicable:
(a) the Group 2 Senior P&I Optimal Principal Amount for
such Payment Date, in the following order of
priority:
(i) to the Class R-2 Bonds until the Class
Current Principal Balance thereof has been
reduced to zero;
(ii) to the Class II-A-1 Bonds until the Class
Current Principal Balance of the Class
II-A-1 Bonds has been reduced to zero;
(b) the PO Principal Payment Amount for Component P-2 for
such Payment Date, to the Class P Bonds, until the
Component Current Principal Balance of Component P-2
has been reduced to zero;
(c) the PO Principal Payment Amount for the Class II-P
Bonds for such Payment Date, to the Class II-P Bonds,
until the Class Current Principal Balance thereof has
been reduced to zero; and
fourth, concurrently to Component P-2 and the Class II-P Bonds, the PO
Deferred Amounts for such Payment Date for Component P-2 and the Class
II-P Bonds, respectively, such amounts to be paid, pro rata, based on
such amounts; provided that (i) on any Payment Date, payments pursuant
to this priority fourth shall not exceed the excess, if any, of (x) the
Group 2 Available Funds remaining after giving effect to payments
pursuant to clauses first through third above over (y) the sum of the
amount of Accrued Bond Interest for such Payment Date and Accrued Bond
Interest remaining unpaid from previous Payment Dates on all Classes of
Group 2 Subordinate Bonds then outstanding; (ii) such payments shall
not reduce the Component Current Principal Balance of Component P-2 or
the Class Current Principal Balance of the Class II-P Bonds; and (iii)
no payment shall be made in respect of the PO Deferred Amounts for
Component P-2 or the Class II-P Bonds after the Group 2 Cross-Over
Date.
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(B) If, after payments have been made pursuant to priorities first and
second of this Section 10(a)(iii) on any Payment Date, the remaining Group 2
Available Funds are less than the sum of the Group 2 Senior P&I Optimal
Principal Amount, the PO Principal Payment Amount for Component P-2 and the PO
Principal Payment Amount for the Class II-P Bonds for such Payment Date, such
amounts shall be proportionately reduced, and such remaining Group 2 Available
Funds shall be paid on the Group 2 Senior Bonds (other than the Class II-X-1 and
Class II-X-2 Bonds) on the basis of such reduced amounts. Notwithstanding any
reduction in principal payable to Component P-2 or the Class II-P Bonds pursuant
to this paragraph: (i) the Component Current Principal Balance of Component P-2
shall be reduced not only by principal so paid but also by the difference
between (x) principal payable to the Class P Bonds with respect to Component P-2
in accordance with clause (b) of priority third above and (y) principal actually
paid to the Class P Bonds with respect to Component P-2 after giving effect to
this paragraph (such difference, the "COMPONENT P-2 CASH SHORTFALL" with respect
to such Payment Date) and (ii) the Class Current Principal Balance of the Class
II-P Bonds shall be reduced not only by principal so paid but also by the
difference between (x) principal payable to the Class II-P Bonds in accordance
with clause (c) of priority third above and (y) principal actually paid to the
Class II-P Bonds after giving effect to this paragraph (such difference, the
"CLASS II-P CASH SHORTFALL" with respect to such Payment Date, and the Component
P-1 Cash Shortfall, the Component P-2 Cash Shortfall and the Class II-P Cash
Shortfall, each a "PO CASH SHORTFALL"). The Component P-2 Cash Shortfall with
respect to any Payment Date shall be added to the Component P Deferred Amount
applicable to Component P-2, and the Class II-P Cash Shortfall with respect to
any Payment Date will be added to the PO Deferred Amount applicable to the Class
II-P Bonds.
(iv) Group 2 Subordinate Bonds. On each Payment Date prior to the
acceleration, if any, of the Bonds, the Group 2 Available Funds remaining after
the payments made pursuant to Section 10(a)(iii) shall be paid to the Group 2
Subordinate Bonds sequentially, in the following order, to the Class II-B-1,
Class II-B-2, Class II-B-3, Class II-B-4, Class II-B-5 and Class II-B-6 Bonds,
in each case up to an amount equal to and in the following order: (a) the
Accrued Bond Interest thereon for such Payment Date, (b) any Accrued Bond
Interest thereon remaining unpaid from previous Payment Dates and (c) such
Class's Allocable Share for such Payment Date.
(b) On each Payment Date, any Available Funds remaining in the
Collection Account after payment of interest and principal as provided above or
as provided in Section 11 shall be paid to the Class R-1 Bonds, if such funds
were a part of Group 1 Available Funds, and to the Class R-2 Bonds if such funds
were a part of Group 2 Available Funds.
(c) No Accrued Bond Interest shall be payable with respect to any Class
of Bonds after the Payment Date on which the Current Class Principal Balance or
Class Notional Balance of such Class has been reduced to zero.
(d) On each Payment Date, the Trustee shall pay to the Holders of the
Class R-3 Bonds as contingent interest any remaining amounts in REMIC 3, after
all amounts otherwise required to be paid have been so paid, which remaining
amounts shall not reduce the Class Current Principal Balance of the Class R-3
Bonds.
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(e) Payment of the above amounts to each Bondholder shall be made (i)
by check mailed to each Bondholder entitled thereto at the address appearing in
the Bond Register or (ii) upon receipt by the Trustee on or before the fifth
Business Day preceding the Record Date of written instructions from a Bondholder
holding Bonds representing an initial aggregate Current Principal Balance or
Class Notional Balance 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 Bonds
shall be made as provided in Section 9(a).
(f) Any Class A-8 Accrual Amount payable pursuant to priorities first
or second of Section 10(a)(i)(A) shall be paid, as principal, as follows:
first, concurrently to Component A-6-1 and the Class A-7 Bonds, pro
rata, based on their respective Component Current Principal Balance and
Class Current Principal Balance, until their respective Component
Current Principal Balance and Class Current Principal Balance have been
reduced to zero; and
second, to the Class A-8 Bonds, until the Class Current Principal
Balance thereof has been reduced to zero.
(g) Any Class A-12 Accrual Amount payable pursuant to priorities first
or second of Section 10(a)(i)(A) shall be paid, as principal, as follows:
first, concurrently to Component A-6-2 and the Class A-11 Bonds, pro
rata, based on their respective Component Current Principal Balance and
Class Current Principal Balance, until their respective Component
Current Principal Balance and Class Current Principal Balance have been
reduced to zero; and
second, to the Class A-12 Bonds, until the Class Current Principal
Balance thereof has been reduced to zero.
SECTION 11. Payment on the Bonds on and after Acceleration.
On each Payment Date, if the Bonds are declared due and payable
pursuant to Section 5.2 of the Indenture, (i) Accrued Bond Interest on each
Class of interest-bearing Bonds shall be paid pro rata in accordance with the
amount of unpaid Accrued Bond Interest on each such Class of Bonds from
Available Funds, (ii) payments of principal on each outstanding Class of the
Bonds (other than each Class of Interest Only Bonds) shall be paid pro rata out
of remaining Available Funds until the Class Current Principal Balance of each
such outstanding Class has been reduced to zero and (iii) any remaining
Available Funds shall be used to repay any previously unpaid Realized Losses
(including interest and principal) allocated to the Bonds, pro rata in
accordance with such unpaid Realized Losses.
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SECTION 12. Allocation of Realized Losses, Net Interest Shortfalls, Subordinate
Bond Writedown Amounts; PO Deferred Payment Writedown Amounts.
(a) (A) On each Payment Date, with respect to the Group 1 Bonds, the
principal portion of each Realized Loss on a Group 1 Mortgage Loan (other than
any Excess Special Hazard Loss) shall be allocated as follows:
(i) The applicable PO Percentage of the principal portion of
any such Realized Loss on a Discount Mortgage Loan in Mortgage Loan
Group 1 and any PO Cash Shortfall relating to Component P-1 shall be
allocated to Component P-1 until the Component Current Principal
Balance thereof is reduced to zero; and
(ii) The applicable Non-PO Percentage of the principal portion
of any such Realized Loss shall be allocated as follows:
first, to the Class B-6 Bonds until the Class Current
Principal Balance thereof has been reduced to zero;
second, to the Class B-5 Bonds until the Class Current
Principal Balance thereof has been reduced to zero;
third, to the Class B-4 Bonds until the Class Current
Principal Balance thereof has been reduced to zero;
fourth, to the Class B-3 Bonds until the Class Current
Principal Balance thereof has been reduced to zero;
fifth, to the Class B-2 Bonds until the Class Current
Principal Balance thereof has been reduced to zero;
sixth, to the Class B-1 Bonds until the Class Current
Principal Balance thereof has been reduced to zero;
seventh, to the Classes of Group 1 Senior P&I Bonds, pro
rata.
(B) On each Payment Date, with respect to the Group 2 Bonds,
the principal portion of each Realized Loss on a Group 2 Mortgage Loan shall be
allocated as follows:
(i) The applicable PO Percentage of the principal portion of
any such Realized Loss on a Discount Mortgage Loan in Sub-Group 2A and
any PO Cash Shortfall relating to Component P-2 shall be allocated to
Component P-2 until the Component Current Principal Balance thereof is
reduced to zero, and the applicable PO Percentage of the principal
portion of any such Realized Loss on a Discount Mortgage Loan in
Sub-Group 2B and any PO Cash Shortfall relating to the Class II-P Bonds
shall be allocated to the Class II-P Bonds until the Class Current
Principal Balance thereof is reduced to zero; and
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(ii) The applicable Non-PO Percentage of the principal portion
of such Realized Loss (other than any Excess Special Hazard Loss) shall
be allocated as follows:
first, to the Class II-B-6 Bonds until the Class Current
Principal Balance thereof has been reduced to zero;
second, to the Class II-B-5 Bonds until the Class Current
Principal Balance thereof has been reduced to zero;
third, to the Class II-B-4 Bonds until the Class Current
Principal Balance thereof has been reduced to zero;
fourth, to the Class II-B-3 Bonds until the Class Current
Principal Balance thereof has been reduced to zero;
fifth, to the Class II-B-2 Bonds until the Class Current
Principal Balance thereof has been reduced to zero;
sixth, to the Class II-B-1 Bonds until the Class Current
Principal Balance thereof has been reduced to zero;
seventh, to the Class II-A-1 Bonds.
(C) With respect to any Payment Date, the principal portion
of any Excess Special Hazard Loss with respect to a Mortgage Loan in a Mortgage
Loan Group or Sub-Group shall be allocated as follows:
(i) with respect to any Discount Mortgage Loan in Mortgage
Loan Group 1, Sub-Group 2A or Sub-Group 2B, the applicable PO
Percentage of any such Excess Special Hazard Loss and any PO Cash
Shortfall relating to Component P-1, Component P-2 or the Class II-P
Bonds shall be allocated to Component P-1, Component P-2 and the Class
II-P Bonds, respectively; and
(ii) with respect to any Mortgage Loan, the applicable Non-PO
Percentage of any such Excess Special Hazard Loss shall be allocated
pro rata among all Classes of Bonds of the related Bond Group (other
than the P Components, the Class II-P Bonds and the Interest Only
Bonds).
(D) Notwithstanding the foregoing, no such allocation of the
principal portion of any Realized Loss shall be made on any Payment Date to (A)
any Class of Group 1 Bonds or Component P-1 to the extent that such allocation
would result in the reduction of the aggregate of the Class Current Principal
Balances of all the Group 1 Bonds and the Component Current Principal Balance of
Component P-1 as of such Payment Date, after giving effect to all payments and
prior allocations of the principal portion of Realized Losses on such date, to
an amount less than the aggregate of the Scheduled Principal Balances of all of
the Group 1 Mortgage Loans as of the preceding Due Date (such limitation, the
"Group 1 Loss Allocation Limitation") and (B) any Class
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of Group 2 Bonds or Component P-2 to the extent that such allocation would
result in the reduction of the aggregate of the Class Current Principal Balances
of all the Group 2 Bonds and the Component Current Principal Balance of
Component P-2 as of such Payment Date, after giving effect to all payments and
prior allocations of the principal portion of Realized Losses on such date, to
an amount less than the aggregate of the Scheduled Principal Balances of the
Group 2 Mortgage Loans as of the preceding Due Date (such limitation, the "Group
2 Loss Allocation Limitation").
(b) Any Realized Losses allocated to a Class of Bonds pursuant to
subsection 12(a) shall be allocated among the Bonds of such Class in proportion
to their respective Current Principal Balances. Any allocation of Realized
Losses pursuant to this subsection 12(b) shall be accomplished by reducing the
Class Current Principal Balance of the applicable Class of Bonds or the
Component Current Principal Balance of the applicable P Component on the related
Payment Date in accordance with subsection 12(c).
(c) All allocations of the principal portion of Realized Losses in
accordance with this Section 12 shall be accomplished on a Payment Date by
reducing the Class Current Principal Balances of the applicable Classes and the
Component Current Principal Balances of the applicable P Components by their
appropriate shares of any such losses occurring during the month preceding the
month of such Payment Date, after giving effect to payments made on such Payment
Date, except that the aggregate amount of the principal portion of Realized
Losses to be allocated to Component P-1, Component P-2 or the Class II-P Bonds
on any Payment Date through the Group 1 Cross-Over Date or the Group 2
Cross-Over Date, as applicable, will be taken into account in determining
payments in respect of the applicable PO Deferred Amount for such Payment Date.
(d) On each Payment Date, the Bond Administrator shall determine the
Group 1 Subordinate Bond Writedown Amount and Group 2 Subordinate Bond Writedown
Amount, respectively, if any. Any such Group 1 Subordinate Bond Writedown Amount
or Group 2 Subordinate Bond Writedown Amount, respectively, shall effect a
corresponding reduction in the Class Current Principal Balance of (i) if prior
to the Group 1 Cross-Over Date or the Group 2 Cross-Over Date, as applicable,
the Current Principal Balances of the Group 1 Subordinate Bonds and the Group 2
Subordinate Bonds, respectively, in the reverse order of their numerical Class
designations and (ii) from and after the Group 1 Cross-Over Date or the Group 2
Cross-Over Date, as applicable, the Group 1 Senior Bonds (excluding Component
P-1) and the Group 2 Senior Bonds (excluding Component P-2 and the Class II-P
Bonds), respectively, pro rata, which reduction shall occur on such Payment Date
after giving effect to payments made on such Payment Date.
(e) On each Payment Date, on or prior to the Group 1 Cross-Over Date,
the Bond Administrator shall determine the PO Deferred Payment Writedown Amount,
if any, for Component P-1 for such Payment Date. On each Payment Date, on or
prior to the Group 2 Cross-Over Date, the Bond Administrator shall determine the
PO Deferred Payment Writedown Amount, if any, for each of Component P-2 and the
Class II-P Bonds for such Payment Date. Any such PO Deferred Payment Writedown
Amount shall effect a corresponding reduction in the Class Current Principal
Balance of the Subordinate Bonds of the applicable Bond Group, in the reverse
order of their numerical Class designations.
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(f) Net Interest Shortfalls shall be allocated among the Classes of
Bonds in a Bond Group in proportion to the amount of Accrued Bond Interest that
would have been allocated thereto in the absence of such shortfalls. The
interest portion of Realized Losses in a Mortgage Loan Group shall be allocated
first to the Classes of Subordinate Bonds in the related Bond Group in reverse
order of their numerical Class designations and, following the applicable
Cross-Over Date, such Realized Losses will be allocated to the Classes of
interest-bearing Senior Bonds in the related Bond Group in proportion to the
amount of Accrued Bond Interest that would have been allocated thereto in the
absence of such Realized Losses.
(g) Any Realized Loss allocated to a Class of Bonds or a P Component
shall be allocated to the Corresponding Class of REMIC 1 Interest and the
Corresponding Class of REMIC 2 Interest.
SECTION 13. Transfer of Certificates to Trustee; Deposits to Collection Account;
Pledged Accounts.
(a) The Conventional Certificates shall have been registered in the
name of the Trustee or its Qualified Nominee by no later than the Closing Date
pursuant to Section 2.12(f)(iii) of the Indenture. The Trustee shall have
confirmed in writing on or prior to the Closing Date that it is holding such
Conventional Certificates as Trustee.
(b) On the Closing Date, the Issuer shall deposit or cause to be
deposited in the Collection Account the Initial Deposit. The Issuer shall not be
required to make or cause to be made any other deposit of funds in the
Collection Account on the Closing Date. The Initial Deposit shall be held in a
separate sub-account of the Collection Account and shall not be invested. On
each Payment Date, the Class A-20 Incremental Interest Amount shall be paid as
provided in Section 10(a)(i)(A); provided, however, that (i) if on any Payment
Date (A) the remaining amount of the Initial Deposit, after payments on the
Bonds otherwise to be made on such Payment Date, exceeds (B) an amount equal to
1% of the aggregate of the Scheduled Principal Balances of the Mortgage Loans in
all of the Mortgage Loan Groups, the amount by which the amount referred to in
clause (A) exceeds the amount referred to in clause (B) shall be deducted from
the remaining amount of the Initial Deposit and paid to the Holder of the Class
R-3 Bonds and (ii) on the twelfth Payment Date, after payments on the Bonds
otherwise to be made on such Payment Date, any remaining amount of the Initial
Deposit shall be paid to the Holder of the Class R-3 Bonds.
(c) A Qualified GIC shall not be granted to the Trustee with respect
to the investment of funds in any Pledged Account for the Series 1998-2 Bonds.
SECTION 14. Requirements for Issuance of Series 1998-2 Bonds.
Except as otherwise expressly provided immediately below and elsewhere
herein, no additional items shall be required to be delivered to the Trustee
pursuant to Sections 2.12(k) and 2.12(n) of the Indenture in connection with the
issuance of the Series 1998-2 Bonds:
(a) An executed counterpart of the Pooling and Servicing Agreement.
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(b) A certificate of a vice president of BSMCC, dated as of the
Closing Date, certifying that the representations and warranties made by BSMCC
in the Mortgage Loan Purchase Agreement are true and correct as of the Closing
Date.
SECTION 15. Reports to Bondholders.
(a) Concurrently with each payment to Bondholders, the Trustee shall
forward by first-class mail to each Bondholder, with a copy to the Issuer and
the Rating Agencies, a statement, prepared by the Bond Administrator, setting
forth the following information, expressed with respect to clauses (i) through
(iv) of Section 10(a) in the aggregate and with respect to an individual Bond
representing an initial Current Principal Balance of $1,000, or in the case of a
Class of Interest Only Bonds, a Class Notional Balance of $1,000, or in the case
of the Class R-1, Class R-2 or Class R-3 Bonds, an initial Current Principal
Balance of $50, $100 and $50, respectively (in each case, an "Individual Bond"
with respect to the applicable Class):
(i) the Class Current Principal Balance (or Class Notional Balance
in the case of a Class of Interest Only Bonds) of each Class of Bonds
immediately prior to such Payment Date;
(ii) the amount of the payment allocable to principal on each
applicable Class of Bonds;
(iii) the aggregate amount of interest accrued at the related Bond
Interest Rate with respect to each Class of interest-bearing Bonds
during the related Interest Accrual Period;
(iv) the Net Interest Shortfall and any other adjustments to
interest at the related Bond Interest Rate necessary to account for any
difference between interest accrued and aggregate interest paid with
respect to each Class of interest-bearing Bonds;
(v) the amount of the payment allocable to interest on each Class of
interest-bearing Bonds;
(vi) the Bond Interest Rates for each Class of interest-bearing
Bonds with respect to such Payment Date;
(vii) the Class Current Principal Balance (or Class Notional Balance
in the case of a Class of Interest Only Bonds) of each Class of Bonds
after such Payment Date; and
(viii) the information provided to the Certificate Trustee by the
Master Servicer pursuant to Section 6.02(i) through (xi) of the Pooling
and Servicing Agreement.
The foregoing information shall be calculated, or reported, as the case may be,
by the Bond Administrator based on data provided by the Master Servicer pursuant
to Section 3.16 of the Pooling and Servicing Agreement, upon which the Bond
Administrator may conclusively rely. The Bond Administrator shall not be
required to recompute, verify or recalculate the information supplied to it by
the Master Servicer and may conclusively rely and shall be protected in relying
on the accuracy
-40-
<PAGE> 44
of all such information performing its duties and responsibilities hereunder.
The information furnished by the Master Servicer pursuant to the Pooling and
Servicing Agreement shall be sufficient for the Bond Administrator to calculate
any statement it is required to make.
(b) By April 30 of each year beginning in 1999, the Trustee will
furnish a report, prepared by the Bond Administrator, to each Holder of the
Bonds of record at any time during the prior calendar year as to the aggregate
of amounts reported pursuant to subclauses (e)(ii) and (e)(v) above with respect
to the Bonds, plus information with respect to the amount of servicing
compensation and such other customary information as the Master Servicer 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.
Section 16. Redemption.
If on a Bond Redemption Date, BSMCC, its designee or the Master
Servicer, as applicable, exercises its rights to purchase the Mortgage Loans in
a Mortgage Loan Group pursuant to Section 10.01 of the Pooling and Servicing
Agreement, on such Bond Redemption Date the Trustee shall apply the related
Group Available Funds for the Payment Date that is such Bond Redemption Date to
effect a full redemption of the Bonds of the related Bond Group.
SECTION 17. Actions by Trustee as Holder of Conventional Certificates.
(a) With the consent of the Holders of Series 1998-2 Bonds
representing not less than 66-2/3% of the aggregate Principal Balance of all
Outstanding Series 1998-2 Bonds, by Act of said Holders delivered to the Issuer
and the Trustee, the Issuer, when authorized by an Issuer Resolution, and the
Trustee may take any action that by the terms of the Pooling and Servicing
Agreement requires the consent of the holder of the Conventional Certificates,
including but not limited to: (1) entering into any amendments to the Pooling
and Servicing Agreement; (2) removing the Certificate Trustee or the Master
Servicer or and appointing a successor Certificate Trustee or Master Servicer as
provided in Section 8.01 or Section 9.08(c) of the Pooling and Servicing
Agreement; and (3) removing or consenting to the removal of, and appointing or
consenting to the appointment of, the Person acting as trustee under the Pooling
and Servicing Agreement; provided, however, that no such action shall, without
the consent of the Holder of each Outstanding Bond affected thereby:
(1) reduce the amount of, or delay the timing of, payments received
on its related Trust Fund that are required to be distributed
on any Conventional Certificate or change the repurchase price
with respect thereto, change any place of payment where, or the
coin or currency in which, any Conventional Certificate or any
interest thereon is payable, or impair the right to institute
suit for the enforcement of the payment of any installment of
interest or principal due on any Conventional Certificate or
adversely affect the tax consequences to any holder of a
Conventional Certificate;
-41-
<PAGE> 45
(2) change the requirement of the consent of the holders of the
Conventional Certificate for any such action pursuant to the
Pooling and Servicing Agreement;
(3) modify any of the provisions of this Section, except to
increase any percentage specified herein; or
(4) permit the creation of any lien ranking prior to or on a parity
with the related Trust created by the Pooling and Servicing
Agreement with respect to any part of its related Trust Fund or
terminate the related Trust created by the Pooling and
Servicing Agreement on any property at any time subject thereto
or deprive the Holder of any Bond of the security afforded by
the Conventional Certificate;
provided, however, that notwithstanding the foregoing provisions of this
Section, Issuer and the Trustee may, without the consent of any Holder of any
Series 1998-2 Bonds, consent to the release from or termination of a Trust
created by the Pooling and Servicing Agreement with respect to any Mortgage Loan
when such action by the Issuer and the Trustee is specifically authorized by any
other provision of the Indenture, this Series 1998-2 Supplement or the Pooling
and Servicing Agreement.
The Trustee may in its discretion determine whether or not any Series
1998-2 Bonds would be affected by any proposed action and any such determination
shall be conclusive upon the Holders of all Series 1998-2 Bonds, whether
theretofore or thereafter authenticated and delivered hereunder. The Trustee
shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Bondholders under this Section
to approve the particular form of any written instrument proposed to effect such
action, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer and the Trustee of any
written instrument proposed to effect such action pursuant to this Section, the
Issuer shall mail to the Holders of the Series 1998-2 Bonds to which such action
relates a notice setting forth in general terms the substance of such action.
Any failure of the Issuer to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such action.
(b) The Issuer hereby acknowledges and agrees that should the Person
acting as trustee under the Pooling and Servicing Agreement demand indemnity
satisfactory to it as a condition precedent to taking any action requested by
the Trustee, as holder of the Conventional Certificates, the Trustee hereunder
shall have no duty or obligation to advance its own funds in fulfillment of such
indemnity, but rather may request such indemnity from the Issuer or from the
Holders of the Series 1998-2 Bonds.
-42-
<PAGE> 46
SECTION 18. REMIC Administration; Certain Tax Matters Relating to Bond Pool
Grantor Trust.
(a) For federal income tax purposes, the taxable year of each Series
REMIC shall be a calendar year and the Bond Administrator shall maintain or
cause the maintenance of the books of each Series REMIC on the accrual method of
accounting.
(b) The Bond Administrator shall prepare and timely deliver to the
Trustee, and the Trustee will file or cause to be filed with the Internal
Revenue Service federal tax information returns or elections required to be made
by the Trustee hereunder, with respect to each Series REMIC, the Trust Fund, if
applicable, and the Bonds 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 Bonds at any time during the calendar year
for which such returns or reports are made such statements or information at the
times and in the manner as may be required thereby. In connection with the
foregoing, the Bond Administrator shall provide the name and address of the
person who can be contacted to obtain information required to be reported to the
holders of regular interests in each Series REMIC (the "REMIC Reporting Agent")
as required by IRS Form 8811. The Trustee shall make the elections to treat each
Series REMIC as a REMIC (which election shall apply to the taxable period ending
December 31, 1998 and each calendar year thereafter) in such manner as the Code
or applicable Treasury regulations may prescribe and the Bond Administrator
agrees to prepare and timely deliver to the Trustee any forms required to be
executed in order to make any such election. The Trustee shall sign all tax
information returns filed pursuant to this Section and any other returns as may
be required by the Code, and in doing so shall rely entirely upon, and shall
have no liability for information provided by, forms prepared by, or
calculations provided by the Bond Administrator. To the extent authorized under
the Code and the regulations promulgated thereunder, the Issuer hereby
irrevocably appoints and authorizes the Trustee to be its attorney-in-fact for
purposes of signing any tax returns required to be filed on behalf of the Series
REMICs. The Prepayment Assumption for the purposes of determining the taxable
income of each Series REMIC is the Prepayment Assumption as defined in Section 1
hereof. The Holder of the Class R-1 Bond is hereby designated as the "Tax
Matters Person" (within the meaning of Treas. Reg. Section 1.860F-4(d)) for
REMIC 1, the Holder of the Class R-2 Bond is hereby designated as "Tax Matters
Person" for REMIC 2, and the Holder of the Class R-3 Bond is hereby designated
as "Tax Matters Person" for REMIC 3. The Bond Administrator is hereby designated
and appointed as the agent of each such Tax Matters Person. Any Holder of a
Residual Bond will by acceptance thereof appoint the Bond Administrator as agent
and attorney-in-fact for the purpose of acting as Tax Matters Person for each
Series REMIC during such time as the Bond Administrator 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 Bond Administrator from acting as Tax Matters Person
(as an agent or otherwise), the Trustee and the Bond Administrator shall take
whatever action that in their 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 Bond to sign such returns or
act as tax matters person. Each Holder of a Residual bond shall be bound by this
Section.
(c) The Bond Administrator 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
-43-
<PAGE> 47
a transferee permitted by Section 2.15 of the Indenture, 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 2.15 of the Indenture (or which is deemed by statute to be an entity
with a disqualified member).
(d) The Bond Administrator shall prepare and timely deliver to the
Trustee, and the Trustee shall file or cause to be filed any state income tax
returns required under Applicable State Law with respect to each Series REMIC or
the Trust Estate.
(e) The Bond Administrator, as agent for each Tax Matters Person,
shall represent the Trust Estate and each Series REMIC in any administrative or
judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto. The expenses of any such contest, audit,
controversy or proceeding, including but not limited to the fees and expenses of
the Bond Administrator, its attorneys, its accountants, and its financial
advisors, except any such expenses caused by the Bond Administrator's negligence
or willful misconduct, shall be the obligations of the Trust Estate created
hereunder and reimbursed pursuant to the Pooling and Servicing Agreement.
(f) For the purposes of the REMIC elections in respect of the Trust
Estate, each Class of Bonds having no Components (other than the Class R-1,
Class R-2 and Class R-3 Bonds), and each Component shall be designated as the
"regular interests" and the Class R-3 Bonds shall be designated as the sole
class of "residual interest" in REMIC 3. The REMIC 1 Interests shall be
designated as "regular interests" and the Class R-1 Bonds shall be designated as
the sole class of "residual interest" in REMIC 1. The REMIC 2 Interests shall be
designated as "regular interests" and the Class R-2 Bonds shall be designated as
the sole class of "residual interest" in REMIC 2.
(g) The Closing Date is hereby designated as the "startup day" of
each of REMIC 1, REMIC 2 and REMIC 3 within the meaning of Section 860G(a)(9) of
the Code.
(h) The Issuer shall not be required to perform any duties of the
Issuer under Section 4.3 of the Indenture, and the Bond Administrator shall not
be required to perform any such duties except to the extent specifically
provided in this Section 18.
(i) Solely for purposes of satisfying Section 1.860G-1(a)(4)(iii) of
the Treasury Regulations, the "latest possible maturity date" of each regular
interest in REMIC 1, REMIC 2 and REMIC 3 would be reduced to zero is the Payment
Date occurring in November 2028 in the case of REMIC 1, November 2013 in the
case of REMIC 2, and as set forth in the third table below in the case of REMIC
3.
(j) For as long as the Series REMICs shall exist the Bond
Administrator and the Trustee shall act in accordance herewith to assure
continuing treatment of REMIC 1, REMIC 2 and REMIC 3 as a REMIC, and the Trustee
shall comply with any directions of the Bond Administrator to assure such
continuing treatment. In particular, the Trustee shall not (a) sell or permit
the sale of all or any portion of the Mortgage Loans or of any Permitted
Investment unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Pooling and Servicing
-44-
<PAGE> 48
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 of the Pooling and Servicing Agreement, accept any contribution to
any Series REMIC after the Startup Day without receipt of a REMIC Opinion.
(k) The Bond Administrator shall prepare or shall cause to be
prepared any tax returns required to be filed by the Bond Pool Grantor Trust and
furnish to Certificateholders (as defined in the Trust Agreement) all
information required by the Code or the regulations thereunder and shall remit
such returns to the Bond Pool Trustee for signature before such returns are due
to be filed. In no event shall the Bond Administrator in its individual capacity
be liable for any liabilities, costs or expenses of the Bond Pool Grantor Trust,
the Certificateholders (as defined in the Trust Agreement) or the Depositor
arising under any tax law or regulation, including, without limitation, federal,
state or local income or excise taxes or any other tax imposed on or measured by
income (or any interest or penalty with respect thereto or arising from any
failure to comply therewith).
(l) The Bond Administrator shall at all times be the same Person as
the Master Servicer. If the Master Servicer resigns or is terminated as Master
Servicer under the Pooling and Administration Agreement, the successor Master
Servicer shall, upon becoming successor Master Servicer, also assume the duties
and obligations of the Bond Administrator hereunder.
(m) The Bond Administrator agrees to indemnify the Trustee, the Trust
Estate and the Master Servicer from any and all costs, claims and liabilities
arising from its acts or omissions pursuant to this Section 18, including but
not limited to any taxes and legal fees and expenses. The Trustee shall not be
required to recompute, verify or recalculate the information provided to it by
the Master Servicer or the Bond Administrator and may conclusively rely and
shall be protected in relying on the accuracy of all such information in
performing its duties and responsibilities hereunder.
(n) The REMIC 1 Interests are identified in the following table shall
be issued as non-certificated interests. The Trustee shall be the sole holder of
the REMIC 1 Interests, which shall not be transferable under any circumstances.
The Class R-1 Bonds shall be issued in fully registered certificated form and
shall be executed and authenticated as provided herein. Principal of and
interest on the REMIC 1 Interests and Class R-1 Bonds shall derive from receipts
on the Conventional Certificates and be allocated to the Corresponding Classes
of REMIC 3 Interests in the manner set forth in the following tables.
-45-
<PAGE> 49
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
CONVENTIONAL CORRESPONDING CLASS OF REMIC 1 INTEREST INITIAL REMIC 1 INTEREST
CERTIFICATE OR BOND REMIC 1 RATE
BALANCE
- ----------------------------------------------------------------------------------------------------
INTEREST PRINCIPAL
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998-2A 1-A-1, 1-A-2, 1-A-3, 1-A-1, 1-A-2, 1-A-3, Set forth in Set forth in clause
1-A-4, 1-A-6, 1-A-7, 1-A-4, 1-A-6, 1-A-7, clause (p) (p)
1-A-8, 1-A-9, 1-A-11, 1-A-8, 1-A-9, 1-A-11,
1-A-12, 1-A-13, 1-A-12, 1-A-13,
1-A-14, 1-A-15, 1-A-14, 1-A-15,
1-A-16, 1-A-17, 1-A-16, 1-A-17,
1-A-18, 1-A-19, 1-A-18, 1-A-19,
1-A-20, 1-A-21, 1-A-20, 1-A-21,
1-A-22, 1-A-23, 1-X, 1-A-22, 1-A-23,
1-B-1, 1-B-2, 1-B-3, 1-B-1, 1-B-2, 1-B-3,
1-B-4, 1-B-5, 1-B-6, 1-B-4, 1-B-5, 1-B-6,
1-R-3 1-P-1, 1-R-3
6.75%
R-1 R-1 $50
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
CONVENTIONAL CORRESPONDING CLASS OF REMIC 1 INTEREST CORRESPONDING CLASS OF REMIC 3 INTEREST OR BOND
CERTIFICATE OR BOND
- --------------------------------------------------------------------------------------------------------------------------
INTEREST PRINCIPAL INTEREST PRINCIPAL
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998-2A 1-A-1, 1-A-2, 1-A-3, 1-A-1, 1-A-2, 1-A-3, Set forth in clause (p) Set forth in clause (p)
1-A-4, 1-A-6, 1-A-7, 1-A-4, 1-A-6, 1-A-7,
1-A-8, 1-A-9, 1-A-11, 1-A-8, 1-A-9, 1-A-11,
1-A-12, 1-A-13, 1-A-12, 1-A-13,
1-A-14, 1-A-15, 1-A-14, 1-A-15,
1-A-16, 1-A-17, 1-A-16, 1-A-17,
1-A-18, 1-A-19, 1-A-18, 1-A-19,
1-A-20, 1-A-21, 1-A-20, 1-A-21,
1-A-22, 1-A-23, 1-X, 1-A-22, 1-A-23,
1-B-1, 1-B-2, 1-B-3, 1-B-1, 1-B-2, 1-B-3,
1-B-4, 1-B-5, 1-B-6, 1-B-4, 1-B-5, 1-B-6,
1-R-3 1-P-1, 1-R-3
N/A N/A
R-1 R-1
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
-46-
<PAGE> 50
(o) The REMIC 2 Interests are identified in the following table shall
be issued as non-certificated interests. The Trustee shall be the sole holder of
the REMIC 2 Interests, which shall not be transferable under any circumstances.
The Class R-2 Bonds shall be issued in fully registered certificated form and
shall be executed and authenticated as provided herein. Principal of and
interest on the REMIC 2 Interests and Class R-2 Bonds shall derive from receipts
on the Conventional Certificates and be allocated to the Corresponding Classes
of REMIC 3 Interests in the manner set forth in the following tables.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
CONVENTIONAL CORRESPONDING CLASS OF REMIC 2 INTEREST INITIAL REMIC 2 INTEREST
CERTIFICATE OR BOND REMIC 2 RATE
BALANCE
- -------------------------------------------------------------------------------------------------------
INTEREST PRINCIPAL
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998-2B 2-A-1, 2-B-1, 2-B-2, 2-A-1, 2-B-1, 2-B-2, Set forth in Set forth in clause
2-B-3, 2-B-4, 2-B-5, 2-B-3, 2-B-4, 2-B-5, clause (p) (p)
2-B-6, 2-X-1, 2-X-2 2-B-6, 2-P, 2-P-2
R-2 R-2 $100 6.25%
- -------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
CONVENTIONAL CORRESPONDING CLASS OF REMIC 2 INTEREST CORRESPONDING CLASS OF REMIC 3 INTEREST OR BOND
CERTIFICATE OR BOND
- --------------------------------------------------------------------------------------------------------------------------
INTEREST PRINCIPAL INTEREST PRINCIPAL
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998-2B 2-A-1, 2-B-1, 2-B-2, 2-A-1, 2-B-1, 2-B-2, Set forth in clause (p) Set forth in clause (p)
2-B-3, 2-B-4, 2-B-5, 2-B-3, 2-B-4, 2-B-5,
2-B-6, 2-X-1, 2-X-2 2-B-6, 2-P, 2-P-2
R-2 R-2
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
-47-
<PAGE> 51
(p)ab Principal of and interest on the REMIC 1 Interests and REMIC 2
Interests shall be allocated to the Corresponding Classes of Bonds in the manner
set forth in the following table.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
REMIC 1 INITIAL REMIC 1 REMIC 1 LATEST POSSIBLE
INTEREST OR INTEREST OR INTEREST OR MATURITY DATE
REMIC 2 REMIC 2 REMIC 2 CORRESPONDING CLASS OF (PAYMENT DATE IN)
INTEREST INTEREST BALANCE INTEREST RATE BONDS OR COMPONENTS
- --------------------------------------------------------------------------------------------------------------------
Interest Principal
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1-A-1 $ 9,976,000 6.75% A-1, A-5 A-1 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-2 $ 17,799,000 6.75% A-2, A-5 A-2 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-3 $ 26,250,000 6.75% A-3, A-5 A-3 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-4 $ 22,346,000 6.75% A-4, A-5 A-4 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-6 $ 80,137,588 6.75% A-6 A-6 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-7 $ 13,145,485 6.75% A-7 A-7 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-8 $ 2,965,000 6.75% A-8 A-8 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-9 $ 25,000,000 6.75% A-9, A-10 A-9 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-11 $ 7,630,927 6.75% A-11 A-11 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-12 $ 4,750,000 6.75% A-12 A-12 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-13 $ 134,571,000 6.75% A-13 A-13 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-14 $ 1,801,000 6.50% A-14 A-14 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-15 $ 3,612,000 6.75% A-15 A-15 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-16 $ 1,801,000 7.00% A-16 A-16 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-17 $ 1,565,000 6.50% A-17 A-17 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-18 $ 9,148,000 6.75% A-18 A-18 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-19 $ 1,565,000 7.00% A-19 A-19 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-20 $ 500,000 6.75% A-20 A-20 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-21 $ 11,551,603 6.75% A-21 A-21 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-22 $ 3,850,535 6.75% A-22 A-22 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-A-23 $ 44,529,962 6.75% A-23 A-23 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-X $ 0 (1) X N/A November 2028
- --------------------------------------------------------------------------------------------------------------------
1-B-1 $ 9,796,600 6.75% B-1 B-1 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-B-2 $ 4,453,000 6.75% B-2 B-2 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-B-3 $ 2,003,800 6.75% B-3 B-3 November 2028
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
-48-
<PAGE> 52
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
REMIC 1 INITIAL REMIC 1 REMIC 1 LATEST POSSIBLE
INTEREST OR INTEREST OR INTEREST OR MATURITY DATE
REMIC 2 REMIC 2 REMIC 2 CORRESPONDING CLASS OF (PAYMENT DATE IN)
INTEREST INTEREST BALANCE INTEREST RATE BONDS OR COMPONENTS
- --------------------------------------------------------------------------------------------------------------------
Interest Principal
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1-B-4 $ 1,335,900 6.75% B-4 B-4 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-B-5 $ 1,113,300 6.75% B-5 B-5 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-B-6 $ 1,335,924 6.75% B-6 B-6 November 2028
- --------------------------------------------------------------------------------------------------------------------
1-P-1 $ 765,900 N/A N/A P November 2028
- --------------------------------------------------------------------------------------------------------------------
1-R-3 $ 50 6.75% R-3 R-3 November 2028
- --------------------------------------------------------------------------------------------------------------------
2-A-1 $ 90,563,200 6.25% II-A-1 II-A-1 November 2013
- --------------------------------------------------------------------------------------------------------------------
2-P $ 53,589 N/A N/A II-P November 2013
- --------------------------------------------------------------------------------------------------------------------
2-B-1 $ 1,588,800 6.25% II-B-1 II-B-1 November 2013
- --------------------------------------------------------------------------------------------------------------------
2-B-2 $ 373,800 6.25% II-B-2 II-B-2 November 2013
- --------------------------------------------------------------------------------------------------------------------
2-B-3 $ 187,000 6.25% II-B-3 II-B-3 November 2013
- --------------------------------------------------------------------------------------------------------------------
2-B-4 $ 327,100 6.25% II-B-4 II-B-4 November 2013
- --------------------------------------------------------------------------------------------------------------------
2-B-5 $ 140,200 6.25% II-B-5 II-B-5 November 2013
- --------------------------------------------------------------------------------------------------------------------
2-B-6 $ 186,936 6.25% II-B-6 II-B-6 November 2013
- --------------------------------------------------------------------------------------------------------------------
2-X-1 $ 0 (1) II-X-1 N/A November 2013
- --------------------------------------------------------------------------------------------------------------------
2-X-2 $ 0 (1) II-X-2 N/A November 2013
- --------------------------------------------------------------------------------------------------------------------
2-P-2 $ 39,027 N/A N/A P November 2013
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The 1-X REMIC 2, 2-X-1 REMIC 2 and 2-X-2 REMIC 2 Interests will bear
interest on their respective notional balances at variable rates equal,
in the case of the Class 1-X REMIC 2 Interests, to the weighted average
of the excess, if any, of (a) the Net Rates on each Group 1
Non-Discount Mortgage Loan over (b) 6.75% per annum; in the case of the
Class 2-X-1 REMIC 2 Interests, to the weighted average of the excess,
if any, of (a) the Net Rates on each Sub-Group 2A Non-Discount Mortgage
Loan over (b) 6.25% per annum; and in the case of the Class 2-X-2 REMIC
2 Interests, to the weighted average of the excess, if any, of the (a)
the Net Rates on each Sub-Group 2B Non-Discount Mortgage Loan over (b)
6.25% per annum. The notional balances of 1-X REMIC 2, 2-X-1 REMIC 2
and 2-X-2 REMIC 2 Interests shall equal to the aggregate Scheduled
Principal Balances of the Non-Discount Mortgage Loans in Mortgage Loan
Group 1, the aggregate Scheduled Principal Balances of the Non-Discount
Mortgage Loans in Sub-Group 2A and the aggregate Scheduled Principal
Balances of the Non-Discount Mortgage Loans in Sub-Group 2B,
respectively.
-49-
<PAGE> 53
SECTION 19. Form of Series 1998-2 Bonds; Matters Relating to Book Entry Bonds.
(a) The Series 1998-2 Bonds shall be in the respective forms attached
as Exhibits hereto. If the Series 1998-2 Bonds are listed on any stock exchange
at any time after the Closing Date, then the Issuer shall, if required as a
condition to such listing, prepare and deliver to the Trustee Series 1998-2
Bonds in substantially the same form as the Series 1998-2 Bonds issued on the
Closing Date, but with such other additional features and such modifications, if
any, as shall be deemed by the Issuer to be necessary or appropriate in order to
comply with the requirements of such stock exchange for the listing of the
Series 1998-2 Bonds on such exchange. Series 1998-2 Bonds in the form issued on
the Closing Date shall thereafter be exchangeable for Series 1998-2 Bonds in
such revised form to the same extent as temporary Bonds are exchangeable for
definitive Bonds pursuant to Section 2.6 of the Indenture. The Issuer shall also
include in the Series 1998-2 Bonds of any Class any information required to be
set forth therein pursuant to the Code and applicable regulations thereunder.
(b) The Clearing Agency, the Issuer and the Trustee have entered or
will enter into the Letter Agreements. Each Class of Book Entry Bonds will be
issued and registered in the form of a single typewritten bond certificate to be
delivered to the Clearing Agency by the Issuer substantially in the respective
forms for each such Class of Bonds attached as exhibits hereto. Such Bond
certificates for each such Class of Bonds shall be initially registered on the
Bond Register in the name of the nominee of such Clearing Agency and no
Beneficial Owner will receive a certificate representing its interests in any
Class of Book Entry Bonds except in the event that the Trustee issues Definitive
Bonds, as provided in Section 2.14 of the Indenture.
(c) Prior to Book Entry Termination, each Book-Entry Bond will remain
registered in the name of the Clearing Agency or its nominee and at all times:
(i) registration of such Bonds may not be transferred by the Trustee or the Bond
Registrar except to another Clearing Agency; (ii) ownership and transfers of
registration of such Bonds on the books of the Clearing Agency shall be governed
by applicable rules established by the Clearing Agency; (iii) the Clearing
Agency may collect its usual and customary fees, charges and expenses from its
Clearing Agency Participants; (iv) the Trustee shall deal with the Clearing
Agency, Clearing Agency Participants and indirect participating firms as
representatives of the Beneficial Owners of the Book Entry Bonds for purposes of
exercising the rights of Holders under the Indenture, and requests and
directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Beneficial Owners; and
(v) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Clearing Agency with respect to its Clearing Agency
Participants and furnished by the Clearing Agency Participants with respect to
indirect participating firms and their direct or indirect Beneficial Owners.
(d) After Book Entry Termination, Definitive Bonds shall, after
execution and delivery of a supplemental indenture containing any provisions,
which in the opinion of the Issuer are necessary for such purpose, be issued to
the Beneficial Owners of Book Entry Bonds outstanding at the time of such Book
Entry Termination and such Bonds shall no longer be "Book Entry Bonds."
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SECTION 20. Supplements, Modifications and Ratifications of Indenture.
(a) Any references in the Indenture to "the Trust Estate securing a
Series as a REMIC" are hereby deemed to refer to "each Series REMIC as REMIC".
(b) References to "Residual Interest Holders" in the Indenture are
hereby deemed to refer to the Holders of the Class R-1, Class R-2 and Class R-3
Bonds with respect to the related Series REMIC.
(c) For purposes of clause (y) of the first paragraph of Section 4.1
of the Indenture, the final distribution of assets in each Series REMIC after
all Bonds have received all required principal and interest payments shall be
made as follows: (i) in the case of an optional redemption pursuant to Section
16 of this Series 1998-2 Supplement with respect to the REMIC 1 or REMIC 2, to
the purchaser of the Mortgage Loans of the related Mortgage Loan Group, and with
respect to REMIC 3, to the Class R-3 Bonds and (ii) in all other cases to the
Class R-1, Class R-2 and Class R-3 Bonds pursuant to this Series 1998-2
Supplement.
(d) For purposes of Section 5. 8 of the Indenture, Clause Second (b),
interest shall be paid to the twenty-fifth day before the date fixed for payment
in Section 5.8 in the case of all Classes of Bonds other than the LIBOR Bonds
and the Class P and Class II-P Bonds, and to the date fixed for payment in
Section 5.8 in the case of the LIBOR Bonds.
(e) For purposes of Section 5.8 of the Indenture, Clause Fifth,
subclause (ii), the remaining assets included in each Series REMIC shall be paid
to the Class R-1, Class R-2 and Class R-3 Bonds to the extent such assets remain
in the REMIC 1, REMIC 2 or REMIC 3, respectively.
(f) For purposes of Section 8.2(d) of the Indenture, assets released
from the Indenture pursuant to such Section and payable to the Residual Interest
shall be paid to the Class R-1, Class R-2 and Class R-3 Bonds to the extent such
assets remain in the REMIC 1, REMIC 2 or REMIC 3, respectively.
(g) Section 1.1 of the Indenture is hereby amended to restate
subsection (x) of the definition of "Eligible Investments" as follows:
(x) any other demand, money market or time deposit obligation,
security or investment which is acceptable to each of the Rating
Agencies as confirmed in writing by each such Rating Agency.
(h) The Indenture as modified and supplemented by this Series 1998-2
Supplement with respect to the Series 1998-2 Bonds (but which modification and
supplement shall not apply to any other Series of Bonds unless otherwise
specified in the related Series Supplement) is in all respects ratified and
confirmed, and the Indenture as so modified and supplemented by this Series
1998-2 Supplement shall be read, taken and construed as one and the same
instrument.
(i) Any references in the Indenture to "Administrator" are hereby
deemed to refer to the Master Servicer under the Pooling and Servicing
Agreement. Any references to the "Pooling and
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Administration Agreement" in the Indenture are hereby deemed to refer to the
"Pooling and Servicing Agreement." The following definitions in Section 1.1 of
the Indenture shall not be applicable to the Series 1998-2 Bonds: "Bankruptcy
Coverage Termination Date", "Bankruptcy Loss", "Bankruptcy Loss Amount",
"Business Day", "Conventional Certificate Prepayment Reserve Amount",
"Cross-over Date", "Debt Service Reduction", "Deficient Valuation", "Excess
Bankruptcy Loss", "Excess Fraud Loss", "Excess Special Hazard Loss", "Expense
Reserve Amount", "Fraud Loss", "Fraud Loss Amount", "Fraud Loss Coverage
Termination Date", "Manager", "Net Interest Shortfall", "Net Liquidation
Proceeds", "Realized Losses", "Reinvestment Income", "Remittance Date", "Reserve
Interest Rate", "Special Hazard Loss", "Special Hazard Loss Amount", "Special
Hazard Coverage Termination Date", and "Variable Rate Bond Redemption Price".
Under Section 2.3 of the Indenture, the Bond Administrator shall determine the
interest applicable to each Class of Variable Rate Bonds instead of the Trustee.
In Section 3.3 of the Indenture the last sentence shall be amended to read as
follows "The Trustee may adopt and employ any reasonable means of notification
of such repayment (including but not limited to, mailing notice of such
repayment to Holders whose Bonds have been called but have not been surrendered
for redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Trustee or any Agent, at the
last address of record for each such holder)." Section 6.7 of the Indenture
shall be completely restated as follows "The Trustee shall be compensated and
reimbursed for its expenses pursuant to the provisions of the Pooling and
Servicing Agreement." Section 8.9 of the Indenture shall not apply.
(j) For purposes of determining whether an "Event of Default" under
the Indenture has occurred, the Stated Maturity Date of each Class of Bonds
shall be deemed to be the Payment Date occurring in November 2028.
(k) In lieu of delivering reports to Bondholders pursuant to Section
8.7 of the Indenture, the Trustee shall deliver the reports pursuant to Section
10(f) hereof.
SECTION 21. Certain Matters Regarding Registration of Transfer and Exchange of
Bonds.
(a) Subject to Section 19(b) and upon the satisfaction of the
applicable conditions set forth below, upon surrender for registration of
transfer of any Bond 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 Bond of a like Class and
aggregate Current Principal Balance or Class Notional Balance, as applicable,
but bearing a different number.
(b) By acceptance of a Restricted Bond, the Holder of such Restricted
Bond acknowledges the restrictions on the transfer of such Bond set forth in the
applicable legends on the face thereof and agrees that it will transfer such
Bond only as provided herein. Section 2.15(b) of the Indenture shall not apply
with respect to transfers of Restricted Bonds. The following restrictions shall
apply with respect to the transfer and registration of transfer of each
Restricted Bond:
(i) In the event that a transfer of a Restricted Bond is to be made
to an Institutional Accredited Investor under this Section 22(b)(i),
(A) the Issuer may direct the Trustee to require an Opinion of Counsel
acceptable to and in form and substance
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satisfactory to the Trustee and the Issuer that such transfer shall be
made pursuant to an exemption, describing the applicable exemption and
the basis therefor, from the Securities Act and applicable state
securities laws or is being made pursuant to such Securities Act and
applicable state securities laws, which Opinion of Counsel shall not be
an expense of the Trustee or the Issuer and (B) the Trustee shall
require the transferee to execute a representation letter,
substantially in the form of Exhibit C-1 hereto, and the Trustee shall
require the transferor to execute a representation letter,
substantially in the form of Exhibit C-2 hereto, each acceptable to and
in form and substance satisfactory to the Issuer and the Trustee
certifying to the Issuer and the Trustee the facts surrounding such
transfer, which representation letters shall not be an expense of the
Trustee or the Issuer. Any Holder of a Restricted Bond desiring to
effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Issuer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such
applicable federal and state laws.
(ii) Transfers of Restricted Bonds may be made to a QIB in
accordance with this Section 22(b)(ii) if the prospective transferee of
such Restricted Bond provides the Trustee and the Issuer with a Rule
144A Certificate, which certificate shall not be an expense of the
Trustee or the Issuer. No transfer of any Restricted Bonds may be made
pursuant to this Section 22(b)(ii) by the Issuer. Any Holder of a
Restricted Bond desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee and the Issuer against any liability
that may result if the transfer is not so exempt or is not made in
accordance with such applicable federal and state laws.
(c) For purposes of this Series Supplement (i) the references in the
Indenture to Exhibit D of this Series 1998-2 Supplement shall, for purposes of
this Series Supplement, instead be to Exhibit C-1 in the case of a transfer of
an ERISA Restricted Bond that is a Restricted Bond to an Institutional
Accredited Investor, Exhibit C-3 in the case of a transfer of an ERISA
Restricted Bond that is a Restricted Bond to a QIB, or Exhibit C-4 in the case
of a transfer of a Class II-X-2 Bond and (ii) the opinion referred to in clause
(B) of the first sentence of Section 2.15(c) shall be deemed to be a reference
to a Benefit Plan Opinion.
(d) Section 2.15(c) of the Indenture shall not apply with respect to
any transfer of an ERISA Restricted Bond to the Clearing Agency or its nominee.
Any Person acquiring a beneficial interest in a Book Entry Bond which is an
ERISA Restricted Bond, by acquisition of such beneficial interest, unless such
Person provides to the Trustee a Benefit Plan Opinion, shall be deemed to have
represented to the Issuer, the Master Servicer, each Sub-Servicer, the
Certificate Trustee, the Trustee and the Initial Purchaser that such Person is
not a Plan, a Person acting on behalf of a Plan or a Person using the assets of
a Plan (each, a "PLAN INVESTOR") and shall be deemed to have agreed to indemnify
and hold the Issuer, the Master Servicer, each Sub-Servicer, the Certificate
Trustee, the Trustee and the Initial Purchaser harmless against any losses,
liabilities or expenses resulting from the breach of such representation.
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SECTION 22. Rule 144A Information.
For so long as any Other Subordinate Bonds Certificates are outstanding
and are "restricted securities" within the meaning of Rule 144(a)(3) of the
Securities Act, (1) the Issuer will provide or cause to be provided to any
holder of such Bonds 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 Issuer 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
Bonds conducted in accordance with Rule 144A.
SECTION 23. Counterparts.
This Series 1998-2 Supplement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all of such counterparts shall together constitute but one and the same
instrument.
SECTION 24. GOVERNING LAW.
AS PROVIDED IN SECTION 11.13 OF THE INDENTURE, THIS SERIES SUPPLEMENT
AND EACH SERIES 1998-2 BOND ISSUED HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED THEREIN.
SECTION 25. Notices.
(a) All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
by telecopy or mailed by registered mail, postage prepaid, to (a) in the case of
the Issuer, 2711 North Haskell Avenue, Suite 1000, Dallas, Texas 75204,
Attention: Mr. Andy Jacobs, Telecopy No. (214) 874-2599, Confirmation No. (214)
874-2501, (b) in the case of the Trustee, at the Corporate Trust Office, and (c)
in the case of the Bond Administrator, 11000 Broken Land Parkway, Columbia,
Maryland 21044, Attention: CMC Securities Corporation III 1998-2, Telecopy No.
(410) 884-2363, Confirmation No. (410) 884-2360, or such other address or
telecopy number as may hereafter be furnished by any of the parties hereto, in
writing, to the other parties hereto. Unless otherwise specified herein, any
notice required or permitted to be mailed to a Bondholder shall be given by
registered mail, postage prepaid, at the address of such Holder as shown. Any
notice so mailed within the time prescribed herein shall be conclusively
presumed to have been duly given, whether or not the Bondholder receives such
notice.
(b) The Trustee shall as soon as practicable notify the Rating
Agencies in writing of the following circumstances:
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(i) any amendment to the Indenture or this supplement pursuant to
Section 9.1 or 9.2 of the Indenture, in which case the
Trustee shall accompany such notice with a copy of the
executed supplemental indenture effecting such amendment;
(ii) the occurrence of an Event of Default and the action, if any,
taken as a consequence thereof;
(iii) the resignation or removal of the Trustee and the appointment
of any successor Trustee;
(iv) the final Payment Date on the Bonds; and
(v) each Payment Date Statement.
The Issuer shall, as soon as practicable, notify the Rating Agencies of the
appointment of any successor Trustee pursuant to Section 6.10 of the Indenture
in the event that the resigning or removed Trustee is unable so to do. All
notices to the Rating Agencies under this Section 24 shall be deemed to have
been duly given if mailed by registered mail, postage prepaid, or express
courier service, to (a) in the case of Moody's, Moody's Investors Service, Inc.,
99 Church Street, New York, New York 10007, Attention: MBS Monitoring Department
and (b) in the case of Fitch, Fitch IBCA, Inc., One State Street Plaza, New
York, New York 10004, Attention: Structured Finance - Residential Mortgage.
Failure to give any notice as required by this clause (b) of Section 24 shall
not constitute a breach hereof by any party hereto.
SECTION 26. Certain Matters Relating to Retail Bonds.
(a) On or before the Closing Date, the Issuer shall (i) establish
with the Trustee a non-interest bearing trust account with respect to each Class
of Retail Bonds (each, a "RETAIL ROUNDING ACCOUNT") and (ii) deposit or cause to
be deposited in each Retail Rounding Account the amount of $1,000.00. Amounts
held in the Retail Rounding Accounts shall not be invested in any investment
which produces income. On the first Payment Date when principal payments are to
be made on a Class of Retail Bonds, the Indenture Trustee shall withdraw from
the Retail Rounding Account for such Class any funds needed to round the
principal payment for such Class upward to the next multiple of $1,000 and shall
pay the rounded amount on such Class. On the next Payment Date when principal
payments will be made on such Class of Retail Bonds, the Indenture Trustee shall
apply the principal payment for such class first to repay any amount withdrawn
for that Class from the applicable Retail Rounding Account on the previous
Payment Date; then the Indenture Trustee shall round the remainder of such
principal payment for such class upward to the next multiple of $1,000, by
making another withdrawal from the applicable Retail Rounding Account, and the
Indenture Trustee shall pay this amount to such Class. This process shall
continue on subsequent Payment Dates until such Class of Retail Bonds has been
retired.
(b) Any Beneficial Owner of Retail Bond Units may request that any or
all of such Retail Bond Units be paid in full on the earliest possible Payment
Date (any such request a "REQUEST FOR PAYMENT"). The Beneficial Owner must
submit any Request for Payment to his or her broker or
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other financial intermediary, which must in turn make the request in writing to
the Clearing Agency. The Clearing Agency shall date and time stamp all such
Requests for Payment in accordance with its established procedures and forward
such Requests for Payment to the Trustee. The Trustee shall maintain a list of
those Clearing Agency Participants representing Beneficial Owners that have
furnished Requests for Payment, together with the order of receipt of such
Requests for Payment and the amounts of such Requests for Payment. The Trustee
shall also maintain a list of Deceased Owners of which the Trustee has received
notice and shall require a death certificate as evidence of the holding of
Retail Bond Units by a Deceased Holder (it being understood that all death
certificates received by the Trustee with respect to requests for redemption
shall be presumed to be legally valid and further that the Trustee not be under
any duty, express or implied, to determine independently the occurrence of the
death of Deceased Owners but may rely conclusively upon documentation delivered
to it pursuant to this paragraph). Beneficial Owners of each Class of Retail
Bonds may obtain information regarding the number of Retail Bond Units of the
applicable Class of which Requests for Payment have been made and the status of
their own Requests for Payment by writing the Trustee at the Corporate Trust
Office.
(c) A Beneficial Owner may withdraw a Request for Payment by
notifying his or her broker or other financial intermediary, which must in turn
forward the notice of withdrawal (any such notice, a "NOTICE OF WITHDRAWAL") in
writing to the Trustee. Any Request for Payment shall be deemed withdrawn when
the Trustee receives notice of the Beneficial Owner's transfer of the related
Retail Bond Units.
(d) In determining the Requests for Payment to be honored on any
Payment Date, the Trustee shall follow the order of the time-stamped Requests
for Payment received by the Trustee from the Clearing Agency, subject to the
priorities set forth below (it being understood that the Trustee may rely
conclusively and be fully protected in relying upon the authenticity of such
Requests for Payment and that the Trustee shall not be liable for any delay n
delivery of Requests for Payment by the Clearing Agency or any Clearing Agency
Participant). In order for a Request for Payment or a Notice of Withdrawal to be
effective for any Payment Date, it must be received by the Clearing Agency (in
the case of a Request for Payment) or the Trustee (in the case of a Notice of
Withdrawal) by the last business day of the preceding calendar month. Once
effective, a Request for Payment shall remain effective for all Payment Dates
unless it is withdrawn by an effective Notice of Withdrawal.
(e) The Trustee shall honor Requests for Payment on each Payment Date
in accordance with the procedures set forth below. The Trustee shall notify the
Clearing Agency and the appropriate Clearing Agency Participants which of the
Requests for Payment should be honored on each Payment Date. The decisions of
the Trustee and Persons concerning such matters, and any related rules and
procedures they establish, shall be binding on all affected Persons.
(i) For each Payment Date, priority of payment on each Class of
Retail Bonds shall be given to Beneficial Owners of that Class
for whom Requests for Payment are in effect. The Clearing Agency
shall honor Requests for Payment for each Class of Retail Bonds
in the following order of priority:
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First, the Clearing Agency shall
honor requests submitted on behalf of
Deceased Owners of such Class of Retail
Bonds in the order of their receipt by the
Clearing Agency, until such requests have
been honored in an amount up to $100,000 for
each requesting Deceased Owner of such
Class; and
Second, the Clearing Agency will
honor Requests for Payment submitted on
behalf of Living Owners of such Class of
Retail Bonds in the order of priority
established by the random lot procedures of
the Trustee, until such Requests for Payment
have been honored in an amount up to $10,000
for each requesting Living Owner of that
Class.
Thereafter, the Clearing Agency shall honor Requests
for Payment submitted on behalf of each Deceased
Owner as provided in step First up to a second
$100,000, and Requests for Payment submitted on
behalf of each Living Owner as provided in step
Second up to a second $10,000. Such sequences of
priorities shall be repeated until all Requests for
Payment have been honored.
(ii) If the amount of principal available for payment on a
Class of Retail Bonds on a given Payment Date is
insufficient to honor all Requests for Payment for
such Class, such Requests for Payment shall be
honored on succeeding Payment Dates as principal
becomes payable with respect to such Class. In the
case of Requests for Payment on behalf of Living
Owners, the Trustee shall establish a new order of
priority for each Payment Date by random lot. Such
order of priority shall apply both to previously
unsatisfied Requests for Payment and to newly
submitted Requests for Payment. A Request for Payment
submitted on behalf of a Living Owner who later dies
shall become entitled to the priority of a newly
submitted Request for Payment on behalf of a Deceased
Owner. Such priority will be effective for each
subsequent Payment Date, if the Clearing Agency has
received appropriate evidence of death and any
requested tax waivers by the last business day of the
preceding calendar month.
(iii) If the amount of principal payable with respect to a
Class of Retail Bonds on a given Payment Date exceeds
the amount needed to honor all Requests for Payment
with respect to such Class (A) the Trustee shall
notify the Clearing Agency of the amount of such
excess prior to the third Business Day preceding such
Payment Date to the extent possible, but in no event
later than the 23rd calendar day of the month of such
Payment Date and (B) the Clearing Agency shall
determine which Retail Bond Units of such Class shall
be paid, using its established random lot procedures.
Each Clearing Agency Participant receiving such
payments, and each financial intermediary in the
chain to the Beneficial Owners, shall remit payments
to their customers according to their own procedures,
which may or may not be by random lot. A Clearing
Agency Participant or financial intermediary may
decide to allot
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Retail Bond principal payments to certain customers
(which could include such Clearing Agency Participant
or intermediary) without allotting payments to
others.
(iv) After the Group I Cross-Over Date, if any, payments
on each Class of Retail Bonds will be made pro rata,
without regard to the priorities described above.
(f) The following rules shall apply to determine beneficial ownership
in the case of Deceased Owners:
(i) Retail Bond Units beneficially owned by tenants by
the entirety, joint tenants or tenants in common
shall be regarded as beneficially owned by a single
owner. The death of a tenant by the entirety, joint
tenant or tenant in common will be deemed the death
of the Beneficial Owner, and the Retail Bond Units
beneficially owned shall become eligible for the
principal payment priority set forth above.
(ii) Retail Bond Units beneficially owned by a trust shall
be regarded as beneficially owned by each beneficiary
of the trust to the extent of that beneficiary's
interest in the trust (however, a trust's
beneficiaries collectively cannot be Beneficial
Owners of more Retail Bond Units than are owned by
the Trust). The death of a beneficiary of a trust
shall be deemed the death of a Beneficial Owner of
the Retail Bond Units beneficially owned by the trust
to the extent of that beneficiary's interest in the
trust.
(iii) The death of an individual who was a tenant by the
entirety, joint tenant or tenant in common in a
tenancy which is the beneficiary of a trust shall be
deemed the death of the beneficiary of the trust.
(iv) The death of a person who, during his or her
lifetime, was entitled to substantially all of the
beneficial interest in a Retail Bond Unit shall be
deemed the death of the Beneficial Owner of that
Retail Bond Unit, regardless of the registration of
ownership, if such beneficial interest can be
established to the satisfaction of the Trustee. Such
beneficial interest will be deemed exist in many
cases of street name or nominee ownership, ownership
by a trustee, ownership under the Uniform Gifts to
Minors Act and community property or other joint
ownership arrangements between spouses. Beneficial
interest will be evidenced by such factors as the
power to sell or otherwise dispose of a Retail Bond
Unit, the right to receive the proceeds of sale or
disposition and the right to receive interest and
principal payments on a Retail Bond Unit.
(g) To the extent that the Letter of Representations with respect to
the Retail Bonds provides that the Issuer or the "Agent" shall provide certain
information to or comply with certain
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procedures required by the Clearing Agency under said Letter, the Trustee (as
"Agent") shall provide such information or perform such functions unless the
Issuer and Trustee shall agree otherwise.
SECTION 27. Indenture Trustee Same Person as Certificate Trustee.
Notwithstanding anything herein to the contrary, the Indenture Trustee
shall at all times be the same Person as the Certificate Trustee.
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IN WITNESS WHEREOF, the Issuer, the Trustee and the Bond Administrator
have caused this Series 1998-2 Supplement to be duly executed by their
respective officers thereunto duly authorized and duly attested in the case of
the Issuer to be hereunto affixed all as of the day and year first above
written.
CMC SECURITIES CORPORATION III
By: /s/ WADE WALKER
-----------------------------------
Name: Wade Walker
Title: Vice President - Asset and
Liability Management
Attest: /s/ DAVID BARBOUR
--------------------------
Name: David Barbour
Title: Assistant Secretary
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By: /s/ RICK TARNAS
-----------------------------------
Name: Rick Tarnas
Title: Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Bond Administrator
By: /s/ PETER J. MASTERMAN
-----------------------------------
Name: Peter J. Masterman
Title: Vice President
<PAGE> 64
STATE OF TEXAS )
) :ss.:
COUNTY OF DALLAS )
On the 30th day of September, 1998, before me personally came WADE
WALKER, to me known, who, being by me duly sworn, did depose and say that he
resides in Dallas, Texas; that he is the Vice President--Asset and Liability
Management of CMC SECURITIES CORPORATION III, the corporation that executed the
above instrument as Issuer; and that he signed his name thereto by order of the
Board of Directors of said corporation.
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 SEAL]
/s/ CHRIS T. KRECEK
--------------------------------------
Notary Public
Series Supplement - Notary Page
<PAGE> 65
STATE OF TEXAS )
) :ss.:
COUNTY OF DALLAS )
On the 30th day of September, 1998, before me personally came Rick
Tarnas, to me known, who, being by me duly sworn did depose and say that he
resides in Highland Park, Illinois; that he is Vice President of THE FIRST
NATIONAL BANK OF CHICAGO, the national bank described in and that executed the
above instrument as Trustee; and that he/she signed his/her name thereto by
order of the Board of Directors of said national bank.
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 SEAL]
/s/ CHRIS T. KRECEK
--------------------------------------
Notary Public
Series Supplement - Notary Page
<PAGE> 66
STATE OF TEXAS )
) :ss.:
COUNTY OF DALLAS )
On the 30th day of September, 1998, before me personally came Peter J.
Masterman, to me known, who, being by me duly sworn did depose and say that he
resides in Baltimore, Maryland; that he is Vice President of NORWEST BANK,
MINNESOTA, NATIONAL ASSOCIATION, the national association described in and that
executed the above instrument as Bond Administrator; and that he signed his name
thereto by order of the Board of Directors of said national association.
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 SEAL]
/s/ CHRIS T. KRECEK
--------------------------------------
Notary Public
Series Supplement - Notary Page
<PAGE> 67
SCHEDULE A
SCHEDULE OF CERTIFICATES
1. CMC Securities Corporation III Mortgage Pass-Through
Certificates Series 1998-2A
2. CMC Securities Corporation III Mortgage Pass-Through
Certificates Series 1998-2B
1
<PAGE> 68
APPENDIX A-1
PLANNED BALANCES
<TABLE>
<CAPTION>
Class A-1 Class A-2 Class A-3 Class A-4 Class A-9
PAYMENT DATE Planned Balance Planned Balance Planned Balance Planned Balance Planned Balance
------------ --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Sep 1998 $ 9,976,000.00 $ 17,799,000.00 $ 26,250,000.00 $ 22,346,000.00 $ 25,000,000.00
Oct 1998 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 24,887,471.18
Nov 1998 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 24,749,680.53
Dec 1998 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 24,586,681.66
Jan 1999 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 24,398,531.51
Feb 1999 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 24,185,309.62
Mar 1999 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 23,947,118.11
Apr 1999 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 23,684,081.63
May 1999 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 23,396,347.37
Jun 1999 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 23,084,084.94
Jul 1999 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 22,747,486.29
Aug 1999 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 22,386,765.50
Sep 1999 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 22,002,158.65
Oct 1999 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 21,593,923.58
Nov 1999 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 21,162,339.65
Dec 1999 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 20,707,707.43
Jan 2000 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 20,230,348.42
Feb 2000 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 19,730,604.66
Mar 2000 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 19,208,838.40
Apr 2000 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 18,665,431.62
May 2000 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 18,100,785.64
Jun 2000 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 17,515,320.62
Jul 2000 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 16,909,475.07
Aug 2000 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 16,283,705.30
Sep 2000 9,976,000.00 17,799,000.00 26,250,000.00 22,346,000.00 15,638,484.86
Oct 2000 8,531,917.97 17,799,000.00 26,250,000.00 22,346,000.00 15,474,373.93
Nov 2000 7,040,983.01 17,799,000.00 26,250,000.00 22,346,000.00 15,308,033.47
Dec 2000 5,509,483.18 17,799,000.00 26,250,000.00 22,346,000.00 15,137,807.65
Jan 2001 3,938,265.41 17,799,000.00 26,250,000.00 22,346,000.00 14,963,939.60
Feb 2001 2,328,200.37 17,799,000.00 26,250,000.00 22,346,000.00 14,786,678.28
Mar 2001 728,761.08 17,799,000.00 26,250,000.00 22,346,000.00 14,612,762.71
Apr 2001 0.00 16,938,879.49 26,250,000.00 22,346,000.00 14,442,151.51
May 2001 0.00 15,360,488.01 26,250,000.00 22,346,000.00 14,274,803.72
Jun 2001 0.00 13,792,519.48 26,250,000.00 22,346,000.00 14,110,678.84
Jul 2001 0.00 12,234,907.19 26,250,000.00 22,346,000.00 13,949,736.80
Aug 2001 0.00 10,687,584.85 26,250,000.00 22,346,000.00 13,791,937.97
Sep 2001 0.00 9,150,486.62 26,250,000.00 22,346,000.00 13,637,243.14
Oct 2001 0.00 7,623,547.09 26,250,000.00 22,346,000.00 13,485,613.53
</TABLE>
1
<PAGE> 69
<TABLE>
<CAPTION>
Class A-1 Class A-2 Class A-3 Class A-4 Class A-9
PAYMENT DATE Planned Balance Planned Balance Planned Balance Planned Balance Planned Balance
- ------------ --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Nov 2001 $ 0.00 $ 6,106,701.27 $ 26,250,000.00 $ 22,346,000.00 $ 13,337,010.78
Dec 2001 0.00 4,599,884.60 26,250,000.00 22,346,000.00 13,191,396.95
Jan 2002 0.00 3,103,032.95 26,250,000.00 22,346,000.00 13,048,734.51
Feb 2002 0.00 1,616,082.60 26,250,000.00 22,346,000.00 12,908,986.35
Mar 2002 0.00 138,970.25 26,250,000.00 22,346,000.00 12,772,115.74
Apr 2002 0.00 0.00 25,532,458.78 21,735,174.24 12,638,086.36
May 2002 0.00 0.00 24,745,096.75 21,064,911.69 12,506,862.31
Jun 2002 0.00 0.00 23,962,947.67 20,399,086.80 12,378,408.03
Jul 2002 0.00 0.00 23,185,978.22 19,737,671.21 12,252,688.41
Aug 2002 0.00 0.00 22,414,155.32 19,080,636.75 12,129,668.67
Sep 2002 0.00 0.00 21,647,446.12 18,427,955.46 12,009,314.44
Oct 2002 0.00 0.00 20,885,817.94 17,779,599.52 11,891,591.72
Nov 2002 0.00 0.00 20,129,238.36 17,135,541.34 11,776,466.87
Dec 2002 0.00 0.00 19,377,675.16 16,495,753.48 11,663,906.65
Jan 2003 0.00 0.00 18,631,096.33 15,860,208.70 11,553,878.14
Feb 2003 0.00 0.00 17,889,470.05 15,228,879.91 11,446,348.82
Mar 2003 0.00 0.00 17,152,764.74 14,601,740.22 11,341,286.51
Apr 2003 0.00 0.00 16,420,949.01 13,978,762.91 11,238,659.38
May 2003 0.00 0.00 15,693,991.69 13,359,921.45 11,138,435.96
Jun 2003 0.00 0.00 14,971,861.79 12,745,189.46 11,040,585.13
Jul 2003 0.00 0.00 14,254,528.55 12,134,540.75 10,945,076.09
Aug 2003 0.00 0.00 13,541,961.41 11,527,949.31 10,851,878.40
Sep 2003 0.00 0.00 12,834,129.99 10,925,389.28 10,760,961.94
Oct 2003 0.00 0.00 12,172,481.86 10,362,143.98 10,682,215.74
Nov 2003 0.00 0.00 11,515,426.30 9,802,808.23 10,605,632.88
Dec 2003 0.00 0.00 10,862,933.66 9,247,356.78 10,531,184.36
Jan 2004 0.00 0.00 10,214,974.44 8,695,764.52 10,458,841.52
Feb 2004 0.00 0.00 9,571,519.36 8,148,006.53 10,388,576.01
Mar 2004 0.00 0.00 8,932,539.33 7,604,058.04 10,320,359.79
Apr 2004 0.00 0.00 8,298,005.43 7,063,894.44 10,254,165.16
May 2004 0.00 0.00 7,671,024.88 6,530,160.83 10,187,954.32
Jun 2004 0.00 0.00 7,066,533.84 6,015,572.00 10,112,106.64
Jul 2004 0.00 0.00 6,483,826.14 5,519,526.81 10,027,029.88
Aug 2004 0.00 0.00 5,922,216.94 5,041,442.27 9,933,118.49
Sep 2004 0.00 0.00 5,381,042.09 4,580,753.01 9,830,754.13
Oct 2004 0.00 0.00 4,910,661.63 4,180,329.32 9,699,384.97
Nov 2004 0.00 0.00 4,458,342.58 3,795,280.88 9,560,913.01
Dec 2004 0.00 0.00 4,023,496.70 3,425,106.94 9,415,672.77
Jan 2005 0.00 0.00 3,605,553.90 3,069,322.19 9,263,987.58
Feb 2005 0.00 0.00 3,203,961.59 2,727,456.22 9,106,169.90
Mar 2005 0.00 0.00 2,818,184.27 2,399,053.17 8,942,521.64
Apr 2005 0.00 0.00 2,447,702.93 2,083,671.23 8,773,334.53
May 2005 0.00 0.00 2,092,014.60 1,780,882.22 8,598,890.40
Jun 2005 0.00 0.00 1,750,631,81 1,490,271.18 8,419,461.53
Jul 2005 0.00 0.00 1,423,082.22 1,211,436.01 8,237,106.83
</TABLE>
2
<PAGE> 70
<TABLE>
<CAPTION>
Class A-1 Class A-2 Class A-3 Class A-4 Class A-9
PAYMENT DATE Planned Balance Planned Balance Planned Balance Planned Balance Planned Balance
- -------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Aug 2005 $ 0.00 $ 0.00 $ 1,108,908.06 $ 943,987.03 $ 8,053,027.82
Sep 2005 0.00 0.00 807,665.76 687,546.63 7,867,399.85
Oct 2005 0.00 0.00 606,914.27 516,651.67 7,657,458.73
Nov 2005 0.00 0.00 415,535.45 353,735.44 7,447,493.63
Dec 2005 0.00 0.00 233,187.74 198,507.17 7,237,625.63
Jan 2006 0.00 0.00 59,540.86 50,685.72 7,027,970.14
Feb 2006 0.00 0.00 0.00 0.00 6,750,859.48
Mar 2006 0.00 0.00 0.00 0.00 6,441,180.78
Apr 2006 0.00 0.00 0.00 0.00 6,137,012.45
May 2006 0.00 0.00 0.00 0.00 5,838,264.07
Jun 2006 0.00 0.00 0.00 0.00 5,544,846.64
Jul 2006 0.00 0.00 0.00 0.00 5,256,672.56
Aug 2006 0.00 0.00 0.00 0.00 4,973,655.62
Sep 2006 0.00 0.00 0.00 0.00 4,695,710.95
Oct 2006 0.00 0.00 0.00 0.00 4,452,608.22
Nov 2006 0.00 0.00 0.00 0.00 4,213,732.32
Dec 2006 0.00 0.00 0.00 0.00 3,979,013.33
Jan 2007 0.00 0.00 0.00 0.00 3,748,382.47
Feb 2007 0.00 0.00 0.00 0.00 3,521,772.07
Mar 2007 0.00 0.00 0.00 0.00 3,299,115.52
Apr 2007 0.00 0.00 0.00 0.00 3,080,347.31
May 2007 0.00 0.00 0.00 0.00 2,865,402.96
Jun 2007 0.00 0.00 0.00 0.00 2,654,219.03
Jul 2007 0.00 0.00 0.00 0.00 2,446,733.09
Aug 2007 0.00 0.00 0.00 0.00 2,242,883.72
Sep 2007 0.00 0.00 0.00 0.00 2,042,610.50
Oct 2007 0.00 0.00 0.00 0.00 1,871,444.52
Nov 2007 0.00 0.00 0.00 0.00 1,702,984.34
Dec 2007 0.00 0.00 0.00 0.00 1,537,188.26
Jan 2008 0.00 0.00 0.00 0.00 1,374,015.21
Feb 2008 0.00 0.00 0.00 0.00 1,213,424.72
Mar 2008 0.00 0.00 0.00 0.00 1,055,376.98
Apr 2008 0.00 0.00 0.00 0.00 899,832.76
May 2008 0.00 0.00 0.00 0.00 746,753.41
Jun 2008 0.00 0.00 0.00 0.00 596,100.89
Jul 2008 0.00 0.00 0.00 0.00 447,837.75
Aug 2008 0.00 0.00 0.00 0.00 301,927.08
Sep 2008 0.00 0.00 0.00 0.00 158,332.56
Oct 2008 0.00 0.00 0.00 0.00 17,018.39
Nov 2008
and thereafter 0.00 0.00 0.00 0.00 0.00
</TABLE>
3
<PAGE> 71
APPENDIX A-2
TARGETED BALANCES
<TABLE>
<CAPTION>
COMPONENT A-6-2 CLASS A-11
PAYMENT DATE TARGETED BALANCE TARGETED BALANCE
------------ ------------------ ------------------
<S> <C> <C>
Sep 1998 $ 29,433,573.00 $ 7,630,927.00
Oct 1998 29,348,129.01 7,608,774.85
Nov 1998 29,241,335.83 7,581,087.73
Dec 1998 29,113,213.39 7,547,870.80
Jan 1999 28,963,809.27 7,509,136.40
Feb 1999 28,793,205.65 7,464,905.82
Mar 1999 28,601,519.37 7,415,209.37
Apr 1999 28,388,902.06 7,360,086.36
May 1999 28,155,540.05 7,299,585.09
Jun 1999 27,901,654.23 7,233,762.83
Jul 1999 27,627,499.85 7,162,685.76
Aug 1999 27,333,366.25 7,086,428.89
Sep 1999 27,019,576.42 7,005,075.96
Oct 1999 26,686,486.59 6,918,719.33
Nov 1999 26,334,485.61 6,827,459.81
Dec 1999 25,963,994.35 6,731,406.51
Jan 2000 25,575,464.97 6,630,676.66
Feb 2000 25,169,380.11 6,525,395.39
Mar 2000 24,746,251.98 6,415,695.49
Apr 2000 24,306,621.44 6,301,717.20
May 2000 23,851,056.93 6,183,607.88
Jun 2000 23,380,153.33 6,061,521.75
Jul 2000 22,894,530.80 5,935,619.60
Aug 2000 22,394,833.52 5,806,068.44
Sep 2000 21,881,728.34 5,673,041.16
Oct 2000 21,532,174.57 5,582,416.10
Nov 2000 21,176,328.17 5,490,159.61
Dec 2000 20,814,147.96 5,396,261.02
Jan 2001 20,446,273.73 5,300,886.21
Feb 2001 20,073,357.57 5,204,204.24
Mar 2001 19,709,218.82 5,109,797.89
Apr 2001 19,353,700.63 5,017,626.50
May 2001 19,006,648.61 4,927,650.04
Jun 2001 18,667,910.69 4,839,829.09
Jul 2001 18,337,337.16 4,754,124.84
</TABLE>
1
<PAGE> 72
<TABLE>
<CAPTION>
COMPONENT A-6-2 CLASS A-11
PAYMENT DATE TARGETED BALANCE TARGETED BALANCE
------------ ------------------- -------------------
<S> <C> <C>
Aug 2001 $ 18,014,780.60 $ 4,670,499.05
Sep 2001 17,700,095.84 4,588,914.11
Oct 2001 17,393,139.95 4,509,332.94
Nov 2001 17,093,772.20 4,431,719.08
Dec 2001 16,801,854.04 4,356,036.59
Jan 2002 16,517,249.01 4,282,250.09
Feb 2002 16,239,822.78 4,210,324.77
Mar 2002 15,969,443.10 4,140,226.33
Apr 2002 15,705,979.75 4,071,921.02
May 2002 15,449,304.52 4,005,375.58
Jun 2002 15,199,291.19 3,940,557.30
Jul 2002 14,955,815.48 3,877,433.97
Aug 2002 14,718,755.05 3,815,973.85
Sep 2002 14,487,989.43 3,756,145.72
Oct 2002 14,263,400.06 3,697,918.84
Nov 2002 14,044,870.18 3,641,262.94
Dec 2002 13,832,284.84 3,586,148.22
Jan 2003 13,625,530.93 3,532,545.35
Feb 2003 13,424,497.05 3,480,425.45
Mar 2003 13,229,073.55 3,429,760.09
Apr 2003 13,039,152.50 3,380,521.29
May 2003 12,854,627.61 3,332,681.50
Jun 2003 12,675,394.31 3,286,213.60
Jul 2003 12,501,349.63 3,241,090.90
Aug 2003 12,332,392.21 3,197,287.12
Sep 2003 12,168,422.30 3,154,776.40
Oct 2003 12,030,570.43 3,119,037.02
Nov 2003 11,897,348.54 3,084,498.01
Dec 2003 11,768,662.15 3,051,134.87
Jan 2004 11,644,418.29 3,018,923.50
Feb 2004 11,524,525.44 2,987,840.17
Mar 2004 11,408,893.54 2,957,861.52
Apr 2004 11,297,433.94 2,928,964.59
May 2004 11,189,350.76 2,900,943.02
Jun 2004 11,081,176.52 2,872,897.84
Jul 2004 10,972,979.88 2,844,846.85
Aug 2004 10,864,826.11 2,816,806.99
Sep 2004 10,756,777.11 2,788,794.28
Oct 2004 10,646,899.73 2,760,307.55
Nov 2004 10,537,362.92 2,731,909.12
Dec 2004 10,428,216.50 2,703,611.90
Jan 2005 10,319,507.41 2,675,428.06
Feb 2005 10,211,279.93 2,647,369.08
</TABLE>
2
<PAGE> 73
<TABLE>
<CAPTION>
COMPONENT A-6-2 CLASS A-11
PAYMENT DATE TARGETED BALANCE TARGETED BALANCE
------------ ------------------- -------------------
<S> <C> <C>
Mar 2005 $ 10,103,575.72 $ 2,619,445.76
Apr 2005 9,996,433.92 2,591,668.25
May 2005 9,889,891.26 2,564,046.08
June 2005 9,783,982.14 2,536,588.16
Jul 2005 9,677,312.52 2,508,933.08
Aug 2005 9,569,159.95 2,480,893.53
Sep 2005 9,459,607.89 2,452,491.14
Oct 2005 9,337,558.64 2,420,848.73
Nov 2005 9,214,792.80 2,389,020.55
Dec 2005 9,091,371.38 2,357,022.40
Jan 2006 8,967,352.91 2,324,869.46
Feb 2006 8,818,902.44 2,286,382.30
Mar 2006 8,658,334.39 2,244,753.55
Apr 2006 8,499,087.66 2,203,467.35
May 2006 8,341,146.47 2,162,519.63
Jun 2006 8,184,495.13 2,121,906.32
Jul 2006 8,029,118.04 2,081,623.37
Aug 2006 7,874,999.68 2,041,666.75
Sep 2006 7,722,124.63 2,002,032.48
Oct 2006 7,578,596.47 1,964,821.47
Nov 2006 7,436,162.96 1,927,894.26
Dec 2006 7,294,809.75 1,891,247.13
Jan 2007 7,154,522.58 1,854,876.38
Feb 2007 7,015,287.26 1,818,778.33
Mar 2007 6,877,089.71 1,782,949.33
Apr 2007 6,739,915.90 1,747,385.74
May 2007 6,603,751.94 1,712,083.97
Jun 2007 6,468,583.98 1,677,040.42
Jul 2007 6,334,398.31 1,642,251.54
Aug 2007 6,201,181.27 1,607,713.79
Sep 2007 6,068,919.29 1,573,423.64
Oct 2007 5,944,967.52 1,541,287.99
Nov 2007 5,821,801.77 1,509,356.12
Dec 2007 5,699,410.16 1,477,624.96
Jan 2008 5,577,780.93 1,446,091.45
Feb 2008 5,456,902.40 1,414,752.57
Mar 2008 5,336,762.95 1,383,605.31
Apr 2008 5,217,351.08 1,352,646.67
May 2008 5,098,655.36 1,321,873.70
Jun 2008 4,980,664.46 1,291,283.46
Jul 2008 4,863,367.11 1,260,873.03
Aug 2008 4,746,752.13 1,230,639.52
Sep 2008 4,630,808.44 1,200,580.05
</TABLE>
3
<PAGE> 74
<TABLE>
<CAPTION>
COMPONENT A-6-2 CLASS A-11
PAYMENT DATE TARGETED BALANCE TARGETED BALANCE
------------ ------------------- -------------------
<S> <C> <C>
Oct 2008 $ 4,515,525.03 $ 1,170,691.76
Nov 2008 4,303,968.40 1,115,843.74
Dec 2008 4,081,291.02 1,058,112.56
Jan 2009 3,860,969.58 1,000,992.18
Feb 2009 3,642,966.69 944,472.91
Mar 2009 3,427,245.41 888,545.17
Apr 2009 3,213,769.32 833,199.52
May 2009 3,002,502.45 778,426.62
June 2009 2,793,409.30 724,217.28
Jul 2009 2,586,454.82 670,562.41
Aug 2009 2,381,604.43 617,453.05
Sep 2009 2,178,823.99 564,880.34
Oct 2009 1,978,079.82 512,835.55
Nov 2009 1,779,338.63 461,310.05
Dec 2009 1,582,567.61 410,295.33
Jan 2010 1,387,734.34 359,783.00
Feb 2010 1,194,806.83 309,764.76
Mar 2010 1,003,753.49 260,232.41
Apr 2010 814,543.16 211,177.88
May 2010 627,145.06 162,593.18
Jun 2010 441,528.79 114,470.44
Jul 2010 257,664.38 66,801.89
Aug 2010 75,522.21 19,579.84
Sep 2010
and thereafter 0.00 0.00
</TABLE>
4
<PAGE> 75
APPENDIX B
250% SPA ADJUSTED GROUP 1 NON-PO MORTGAGE POOL BALANCES
<TABLE>
<CAPTION>
PAYMENT DATE 250% SPA Balance PAYMENT DATE 250% SPA Balance PAYMENT DATE 250% SPA Balance
------------ ---------------- ------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Oct 1998 $ 443,818,253.13 Sep 2001 $ 319,472,389.71 Aug 2004 $ 191,164,067.84
Nov 1998 442,914,628.95 Oct 2001 314,861,133.22 Sep 2004 188,350,332.12
Dec 1998 441,823,038.83 Nov 2001 310,314,217.96 Oct 2004 185,576,230.50
Jan 1999 440,543,908.20 Dec 2001 305,830,761.39 Nov 2004 182,841,216.67
Feb 1999 439,077,901.74 Jan 2002 301,409,892.96 Dec 2004 180,144,751.79
Mar 1999 437,425,924.04 Feb 2002 297,050,753.98 Jan 2005 177,486,304.35
Apr 1999 435,589,119.66 Mar 2002 292,752,497.39 Feb 2005 174,865,350.09
May 1999 433,568,872.79 Apr 2002 288,514,287.69 Mar 2005 172,281,371.88
Jun 1999 431,366,806.41 May 2002 284,335,300.72 Apr 2005 169,733,859.67
Jul 1999 428,984,780.81 Jun 2002 280,214,723.53 May 2005 167,222,310.35
Aug 1999 426,424,891.75 Jul 2002 276,151,754.23 Jun 2005 164,746,227.65
Sep 1999 423,689,468.02 Aug 2002 272,145,601.83 Jul 2005 162,305,122.11
Oct 1999 420,781,068.48 Sep 2002 268,195,486.11 Aug 2005 159,898,510.91
Nov 1999 417,702,478.68 Oct 2002 264,300,637.44 Sep 2005 157,525,917.83
Dec 1999 414,456,706.82 Nov 2002 260,460,296.68 Oct 2005 155,186,873.15
Jan 2000 411,046,979.39 Dec 2002 256,673,715.02 Nov 2005 152,880,913.54
Feb 2000 407,476,736.16 Jan 2003 252,940,153.83 Dec 2005 150,607,582.02
Mar 2000 403,749,624.78 Feb 2003 249,258,884.52 Jan 2006 148,366,427.82
Apr 2000 399,869,494.90 Mar 2003 245,629,188.43 Feb 2006 146,157,006.33
May 2000 395,840,391.73 Apr 2003 242,050,356.67 Mar 2006 143,978,879.01
Jun 2000 391,666,549.32 May 2003 238,521,690.00 Apr 2006 141,831,613.30
Jul 2000 387,352,383.24 Jun 2003 235,042,498.71 May 2006 139,714,782.55
Aug 2000 382,902,482.94 Jul 2003 231,612,102.45 Jun 2006 137,627,965.93
Sep 2000 378,321,603.69 Aug 2003 228,229,830.16 Jul 2006 135,570,748.36
Oct 2000 373,614,658.10 Sep 2003 224,895,019.89 Aug 2006 133,542,720.41
Nov 2000 368,786,707.34 Oct 2003 221,607,018.72 Sep 2006 131,543,478.27
Dec 2000 363,842,951.99 Nov 2003 218,365,182.62 Oct 2006 129,572,623.62
Jan 2001 358,788,722.55 Dec 2003 215,168,876.31 Nov 2006 127,629,763.58
Feb 2001 353,629,469.66 Jan 2004 212,017,473.19 Dec 2006 125,714,510.67
Mar 2001 348,542,070.47 Feb 2004 208,910,355.16 Jan 2007 123,826,482.65
Apr 2001 343,525,540.34 Mar 2004 205,846,912.57 Feb 2007 121,965,302.54
May 2001 338,578,908.01 Apr 2004 202,826,544.04 Mar 2007 120,130,598.50
Jun 2001 333,701,215.43 May 2004 199,848,656.42 Apr 2007 118,322,003.77
Jul 2001 328,891,517.53 Jun 2004 196,912,664.62 May 2007 116,539,156.60
Aug 2001 324,148,882.14 Jul 2004 194,017,991.51 Jun 2007 114,781,700.19
</TABLE>
1
<PAGE> 76
<TABLE>
<CAPTION>
PAYMENT DATE 250% SPA Balance PAYMENT DATE 250% SPA Balance PAYMENT DATE 250% SPA Balance
------------ ---------------- ------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Jul 2007 $ 113,049,282.61 May 2011 $ 55,244,259.34 Mar 2015 $ 25,794,225.29
Aug 2007 111,341,556.74 Jun 2011 54,368,020.56 Apr 2015 25,352,505.56
Sep 2007 109,658,180.21 Jul 2011 53,504,548.96 May 2015 24,917,425.37
Oct 2007 107,998,815.33 Aug 2011 52,653,665.60 Jun 2015 24,488,890.25
Nov 2007 106,363,129.02 Sep 2011 51,815,193.96 Jul 2015 24,066,807.07
Dec 2007 104,750,792.77 Oct 2011 50,988,959.97 Aug 2015 23,651,083.96
Jan 2008 103,161,482.55 Nov 2011 50,174,791.95 Sep 2015 23,241,630.36
Feb 2008 101,594,878.77 Dec 2011 49,372,520.58 Oct 2015 22,838,356.93
Mar 2008 100,050,666.20 Jan 2012 48,581,978.87 Nov 2015 22,441,175.58
Apr 2008 98,528,533.94 Feb 2012 47,803,002.13 Dec 2015 22,049,999.46
May 2008 97,028,175.32 Mar 2012 47,035,427.93 Jan 2016 21,664,742.91
Jun 2008 95,549,287.89 Apr 2012 46,279,096.08 Feb 2016 21,285,321.44
Jul 2008 94,091,573.33 May 2012 45,533,848.59 Mar 2016 20,911,651.77
Aug 2008 92,654,737.40 Jun 2012 44,799,529.66 Apr 2016 20,543,651.74
Sep 2008 91,238,489.89 Jul 2012 44,075,985.62 May 2016 20,181,240.35
Oct 2008 89,842,544.56 Aug 2012 43,363,064.91 Jun 2016 19,824,337.73
Nov 2008 88,466,619.10 Sep 2012 42,660,618.08 Jul 2016 19,472,865.10
Dec 2008 87,110,435.04 Oct 2012 41,968,497.72 Aug 2016 19,126,744.79
Jan 2009 85,773,717.75 Nov 2012 41,286,558.47 Sep 2016 18,785,900.20
Feb 2009 84,456,196.36 Dec 2012 40,614,656.95 Oct 2016 18,450,255.80
Mar 2009 83,157,603.69 Jan 2013 39,952,651.76 Nov 2016 18,119,737.10
Apr 2009 81,877,676.23 Feb 2013 39,300,403.47 Dec 2016 17,794,270.66
May 2009 80,616,154.09 Mar 2013 38,657,774.55 Jan 2017 17,473,784.04
Jun 2009 79,372,780.93 Apr 2013 38,024,629.38 Feb 2017 17,158,205.84
Jul 2009 78,147,303.92 May 2013 37,400,834.20 Mar 2017 16,847,465.62
Aug 2009 76,939,473.70 Jun 2013 36,786,257.10 Apr 2017 16,541,493.93
Sep 2009 75,749,044.34 Jul 2013 36,180,767.98 May 2017 16,240,222.30
Oct 2009 74,575,773.27 Aug 2013 35,584,238.56 Jun 2017 15,943,583.21
Nov 2009 73,419,421.23 Sep 2013 34,996,542.31 Jul 2017 15,651,510.05
Dec 2009 72,279,752.27 Oct 2013 34,417,554.44 Aug 2017 15,363,937.18
Jan 2010 71,156,533.65 Nov 2013 33,847,151.90 Sep 2017 15,080,799.85
Feb 2010 70,049,535.84 Dec 2013 33,285,213.34 Oct 2017 14,802,034.21
Mar 2010 68,958,532.46 Jan 2014 32,731,619.06 Nov 2017 14,527,577.32
Apr 2010 67,883,300.21 Feb 2014 32,186,251.04 Dec 2017 14,257,367.08
May 2010 66,823,618.89 Mar 2014 31,648,992.88 Jan 2018 13,991,342.31
Jun 2010 65,779,271.29 Apr 2014 31,119,729.79 Feb 2018 13,729,442.63
Jul 2010 64,750,043.20 May 2014 30,598,348.57 Mar 2018 13,471,608.53
Aug 2010 63,735,723.34 Jun 2014 30,084,737.56 Apr 2018 13,217,781.32
Sep 2010 62,736,103.33 Jul 2014 29,578,786.68 May 2018 12,967,903.15
Oct 2010 61,750,977.67 Aug 2014 29,080,387.36 Jun 2018 12,721,916.94
Nov 2010 60,780,143.65 Sep 2014 28,589,432.50 Jul 2018 12,479,766.44
Dec 2010 59,823,401.38 Oct 2014 28,105,816.53 Aug 2018 12,241,396.18
Jan 2011 58,880,553.67 Nov 2014 27,629,435.31 Sep 2018 12,006,751.44
Feb 2011 57,951,406.09 Dec 2014 27,160,186.15 Oct 2018 11,775,778.29
Mar 2011 57,035,766.84 Jan 2015 26,697,967.77 Nov 2018 11,548,423.56
Apr 2011 56,133,446.77 Feb 2015 26,242,680.31 Dec 2018 11,324,634.78
</TABLE>
2
<PAGE> 77
<TABLE>
<CAPTION>
PAYMENT DATE 250% SPA Balance PAYMENT DATE 250% SPA Balance PAYMENT DATE 250% SPA Balance
------------ ---------------- ------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Jan 2019 $ 11,104,360.27 Oct 2022 $ 4,116,060.68 Jul 2026 $ 860,192.89
Feb 2019 10,887,549.04 Nov 2022 4,012,331.58 Aug 2026 813,940.25
Mar 2019 10,674,150.80 Dec 2022 3,910,353.84 Sep 2026 768,565.07
Apr 2019 10,464,116.01 Jan 2023 3,810,101.28 Oct 2026 724,053.67
May 2019 10,257,395.78 Feb 2023 3,711,548.08 Nov 2026 680,392.57
Jun 2019 10,053,941.92 Mar 2023 3,614,668.81 Dec 2026 637,568.48
Jul 2019 9,853,706.91 Apr 2023 3,519,438.37 Jan 2027 595,568.29
Aug 2019 9,656,643.92 May 2023 3,425,832.05 Feb 2027 554,379.11
Sep 2019 9,462,706.74 Jun 2023 3,333,825.48 Mar 2027 513,988.21
Oct 2019 9,271,849.83 Jul 2023 3,243,394.62 Apr 2027 474,383.06
Nov 2019 9,084,028.28 Aug 2023 3,154,515.78 May 2027 435,551.29
Dec 2019 8,899,197.82 Sep 2023 3,067,165.63 Jun 2027 397,480.74
Jan 2020 8,717,314.78 Oct 2023 2,981,321.15 Jul 2027 360,159.41
Feb 2020 8,538,336.13 Nov 2023 2,896,959.64 Aug 2027 323,575.47
Mar 2020 8,362,219.42 Dec 2023 2,814,058.74 Sep 2027 287,717.27
Apr 2020 8,188,922.80 Jan 2024 2,732,596.40 Oct 2027 252,573.32
May 2020 8,018,405.03 Feb 2024 2,652,550.89 Nov 2027 218,132.32
Jun 2020 7,850,625.43 Mar 2024 2,573,900.79 Dec 2027 184,383.11
Jul 2020 7,685,543.88 Apr 2024 2,496,624.99 Jan 2028 151,314.71
Aug 2020 7,523,120.85 May 2024 2,420,702.65 Feb 2028 118,916.27
Sep 2020 7,363,317.34 Jun 2024 2,346,113.28 Mar 2028 87,177.15
Oct 2020 7,206,094.93 Jul 2024 2,272,836.63 Apr 2028 57,513.39
Nov 2020 7,051,415.71 Aug 2024 2,200,852.78 May 2028 28,457.57
Dec 2020 6,899,242.32 Sep 2024 2,130,142.07 Jun 2028
Jan 2021 6,749,537.92 Oct 2024 2,060,685.13 and thereafter 0.00
Feb 2021 6,602,266.19 Nov 2024 1,992,462.87
Mar 2021 6,457,391.32 Dec 2024 1,925,456.46
Apr 2021 6,314,878.01 Jan 2025 1,859,647.37
May 2021 6,174,691.45 Feb 2025 1,795,017.29
Jun 2021 6,036,797.32 Mar 2025 1,731,548.21
Jul 2021 5,901,161.80 Apr 2025 1,669,222.37
Aug 2021 5,767,751.52 May 2025 1,608,022.25
Sep 2021 5,636,533.61 Jun 2025 1,547,930.60
Oct 2021 5,507,475.64 Jul 2025 1,488,930.40
Nov 2021 5,380,545.65 Aug 2025 1,431,004.88
Dec 2021 5,255,712.12 Sep 2025 1,374,137.53
Jan 2022 5,132,944.00 Oct 2025 1,318,312.05
Feb 2022 5,012,210.66 Nov 2025 1,263,512.39
Mar 2022 4,893,481.89 Dec 2025 1,209,722.73
Apr 2022 4,776,727.94 Jan 2026 1,156,927.47
May 2022 4,661,919.46 Feb 2026 1,105,111.24
Jun 2022 4,549,027.51 Mar 2026 1,054,258.89
Jul 2022 4,438,023.58 Apr 2026 1,004,355.49
Aug 2022 4,328,879.54 May 2026 955,386.32
Sep 2022 4,221,567.68 Jun 2026 907,336.89
</TABLE>
3
<PAGE> 78
EXHIBIT A-1
Form of Bond
(Class A-1, A-2, A-3, A-4, A-6, A-7, A-8, A-9, A-11, A-12, A-13, A-14, A-15,
A-16, A-17, A-18, A-19, A-21, A-22, A-23 and II-A-1)
(Begins on next page)
<PAGE> 79
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUIRED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THIS BOND IS A REGULAR INTEREST IN A REMIC. PRINCIPAL OF THIS BOND IS PAYABLE
IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF
THIS BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT
OF PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE
INDENTURE REFERRED TO HEREIN, AND THE ISSUER IS NOT OTHERWISE LIABLE FOR
PAYMENTS ON THIS BOND.
CMC SECURITIES CORPORATION III
COLLATERALIZED MORTGAGE OBLIGATIONS, SERIES 1998-2
CLASS ____
DUE:____
ACCRUAL DATE: ____
ISSUE DATE: September 30, 1998
$____ CUSIP NO.____
____ BOND INTEREST RATE CERTIFICATE NUMBER 0001
CMC SECURITIES CORPORATION III, a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of ____ DOLLARS ($____) in monthly
payments of principal and interest on the twenty-fifth day of each month or, if
such day is not a Business Day, then the next succeeding Business Day (each a
"Payment Date"), commencing in October 1998 and ending on or before the Payment
Date occurring in ____. This Bond is one of a duly authorized issue of
non-recourse Bonds of the Issuer, designated as its Collateralized Mortgage
Obligations, Series 1998-2. The Bonds are issued in multiple classes under the
Issuer's Indenture dated as of March 1, 1998, as amended (herein called the
"Indenture"), to which Indenture and all indentures supplemental thereto,
including the Series 1998-2 Supplement dated as of September 30, 1998 (the
"Series 1998-2 Supplement"), among the Issuer, The First National Bank of
Chicago, as indenture trustee (the "Indenture Trustee", which term includes any
successor Trustee under the Indenture), and Norwest Bank Minnesota, National
Association, as Bond Administrator, which authorized the Bonds, reference is
hereby made for a statement of the respective rights thereunder of the Issuer,
the Indenture Trustee and the holders of the Bonds and the terms upon which the
Bonds are, and are to be, authenticated and delivered.
<PAGE> 80
The Bonds are collateralized by two separate series of mortgage
pass-through certificates (the "Conventional Certificates"), each of which
series evidences the entire beneficial ownership interest in one of two pools
of Mortgage Loans. Each pool of Mortgage Loans has been deposited into a
separate trust (each, a "Trust") pursuant to the terms of the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") dated as of
September 1, 1998 among the Issuer, as seller, Norwest Bank Minnesota, National
Association, as master servicer (the "Master Servicer"), and The First National
Bank of Chicago, as certificate trustee (the "Certificate Trustee"). Each Trust
has created a series of Conventional Certificates for the benefit of the Issuer
in exchange for the related pool of Mortgage Loans. The Conventional
Certificates were pledged to the Indenture Trustee under the terms of the
Indenture.
All capitalized terms used without definition in this Bond shall have
the meanings assigned to such terms in the Indenture or the Series 1998-2
Supplement, as applicable.
This Bond does not purport to summarize the Indenture or the Series
1998-2 Supplement and reference should be made to the Indenture and the Series
1998-2 Supplement for the interests, rights and limitations of rights,
benefits, obligations and duties of the holders of the Bond thereunder, and the
rights, duties and immunities of the Indenture Trustee.
Payments of principal of and interest on this Bond will be paid in
accordance with the terms of the Series 1998-2 Supplement and will be made out
of the Available Funds for such Payment Date, to the extent and subject to the
limitations set forth in the Series 1998-2 Supplement, on each Payment Date to
the Person in whose name this Bond is registered at the close of business on
the last Business Day of the month immediately preceding the month of such
distribution (the "Record Date"). All sums payable on this Bond are payable in
the coin or currency of the United States of America as at the time of payment
is legal tender for the payment of public and private debts.
Realized Losses, Net Interest Shortfalls and certain writedown amounts
shall be allocated among the Classes of Bonds on the applicable Payment Date in
the manner set forth in the Series 1998-2 Supplement. To the extent provided in
the Series 1998-2 Supplement, the Subordinate Bonds will be subordinated in
right of payment to the other Classes of Bonds and each Class of the
Subordinate Bonds will be subordinated in right of payment to each of the other
Classes of Subordinate Bonds with a lower numerical Class designation, if any.
All Realized Losses, Net Interest Shortfalls and writedown amounts allocated to
any Class of Bonds will be allocated pro rata among the outstanding Bonds of
such Class, as described in the Series 1998-2 Supplement.
The Bonds are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and certain other assets, all as more
specifically set forth in the Series 1998-2 Supplement.
So long as this Bond is registered in the name of a Depository or its
nominee, the Indenture Trustee will make payments of principal of and interest
on this Bond by wire transfers of immediately available funds to the Depository
or its nominee. Otherwise, all payments on this Bond under the Series 1998-2
Supplement will be made by or on behalf of the Indenture Trustee as provided in
the Indenture. Notwithstanding the above, the final payment on this Bond will
be made after due notice by the Indenture Trustee of the pendency of such
payment and only upon presentation and surrender of this Bond at its principal
Corporate Trust Office or such other offices
-2-
<PAGE> 81
or agencies appointed by the Indenture Trustee for that purpose and such other
locations provided in the Series 1998-2 Supplement.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Holders of Bonds representing
two-thirds of the Aggregate Current Principal Amount of all Bonds at the time
Outstanding, in case Outstanding Bonds of all Series are to be affected, or
with the consent of the Holders of two-thirds of the Aggregate Current
Principal Amount of all the Bonds at the time Outstanding of each Series to be
affected, in case one or more, but less than all, of the Series of Bonds then
Outstanding are to be affected; provided however, that prior to the date on
which the Class Imputed Principal Balance of each Class of Senior Bonds of a
Series has been reduced to zero, no amendment, variation or modification shall
be made to Article V of the Indenture in respect of any Series of Bonds without
the consent of the Holders representing not less than 100% of the Aggregate
Current Principal Amount of all Outstanding Senior Bonds of such Series. The
consent of the Holders of any Junior Bonds of such Series shall not be required
to be obtained prior to making any amendment for such series to Article V of
the Indenture for so long as any Senior Bond of such Series is Outstanding.
Upon reduction to zero of the Class Imputed Principal Balance of each Class of
Senior Bonds of a Series, no amendment, variation or modification to Article V
of the Indenture shall be made in respect of such Series of Bonds without the
consent of the Holders representing not less than two-thirds of the Aggregate
Current Principal Amount of the Highest Priority Junior Class of such Series.
The Indenture also contains provisions permitting the Holders of Bonds
representing specified percentages of the Aggregate Current Principal Amount of
the Bonds of a Series at the time Outstanding on behalf of the Holders of all
the Bonds of such Series, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder, at the time of
the giving thereof, of this Bond (or any one or more Predecessor Bonds) shall
be conclusive and binding upon such Holder and upon all future holders of this
Bond and of any Bond issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Bond. The Indenture also permits the Indenture Trustee
to amend or waive certain terms and conditions set forth in the Indenture
without the consent of the Holders of the Bonds of any Series issued
thereunder.
The Bonds are issuable in fully-registered form only, without coupons,
in denominations as specified in the Series 1998-2 Supplement. As provided in
the Series 1998-2 Supplement and subject to any limitations on transfer of this
Bond by a Depository or its nominee and certain limitations set forth in the
Series 1998-2 Supplement, the transfer of this Bond is registrable in the Bond
Register upon surrender of this Bond for registration or transfer at the
principal Corporate Trust Office of the Indenture Trustee or such other offices
or agencies appointed by the Indenture Trustee for that purpose and such other
locations provided in the Series 1998-2 Supplement, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Indenture Trustee and the Bond Registrar
duly executed by, the Holder hereof or such Holder's attorney duly authorized
in writing, and thereupon one or more new Bonds of the same Class in the same
aggregate Principal Balance will be issued to the designated transferee or
transferees.
-3-
<PAGE> 82
As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for a new Bond of the same Class
in the same denomination. No service charge will be made for any such
registration of transfer or exchange, but the Indenture Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Bonds.
At its option, Bear Stearns Mortgage Capital Corporation ("BSMCC") or
its designee may, upon giving written notice to the Issuer, the Master
Servicer, the Certificate Trustee and the Indenture Trustee, repurchase from
the related Trust all of the remaining Mortgage Loans of any Mortgage Loan
Group, and thereby effect an early termination of the related Certificates and
redemption of the Bonds of the related Bond Group, on any Payment Date when the
aggregate outstanding principal balance of the Mortgage Loans in such Mortgage
Loan Groups is equal to or less than 5% of the aggregate outstanding principal
balance of the Mortgage Loans in such Mortgage Loan Group as of the Cut-off
Date. If on any Payment Date BSMCC or its designee has not exercised such
option and the aggregate outstanding principal balance of the Mortgage Loans in
any Mortgage Loan Group is equal to or less than 2.5% of the aggregate
outstanding principal balance of the Mortgage Loans in such Mortgage Loan Group
as of the Cut-off Date, the Master Servicer shall also have such option. Upon
any such optional repurchase, the Trust Estate will terminate and any remaining
assets in the Trust Estate shall be released to the repurchasing party.
The Issuer, the Indenture Trustee and the Bond Registrar and any agent
of the Issuer, the Indenture Trustee or the Bond Registrar may treat the Person
in whose name this Bond is registered as the owner hereof for all purposes, and
none of the Issuer, the Master Servicer, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Series 1998-2 Supplement or be valid for any purpose.
-4-
<PAGE> 83
THIS BOND AND THE SERIES 1998-2 SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used herein and not defined herein shall have the
meaning given them in the Series 1998-2 Supplement.
IN WITNESS WHEREOF, CMC Securities Corporation III has caused this
Bond to be duly executed.
Dated: September 30, 1998 CMC SECURITIES CORPORATION III
By:
---------------------------------
Wade Walker
Vice President - Asset and Liability
Management
CERTIFICATION OF AUTHENTICATION
THIS IS A CLASS ____ BOND REFERRED TO IN THE WITHINMENTIONED
INDENTURE.
THE FIRST NATIONAL BANK OF CHICAGO,
AS INDENTURE TRUSTEE
BY:
---------------------------------
AUTHORIZED SIGNATORY
<PAGE> 84
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Bond shall be construed as though they were written out in full according to
applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT--......Custodian . . . .
TEN ENT--as tenants by the (Cus) (Minor)
entireties Under Uniform Gifts to Minors
JT TEN--as joint tenants with
rights of survivor- Act . . . . . . . . . . . . . . . . . . .
ship and not as Tenants (State)
in Common
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED
THOUGH NOT IN THE ABOVE LIST.
<PAGE> 85
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
- -------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
----------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Bond and does hereby irrevocably constitute and appoint
______________________ (Attorney) to transfer the said Bond in the Bond
Register, with full power of substitution in the premises.
Dated:
-------------------------- ----------------------------------
NOTICE: The signature to this
assignment must correspond
with the name as written upon
the face of this Bond in
every particular without
alteration or enlargement or
any change whatever.
- ------------------------------------
SIGNATURE GUARANTEED: The signature
must be guaranteed by a commercial
bank or trust company or by a member
firm of the New York Stock Exchange
or another national securities
exchange. Notarized or witnessed
signatures are not acceptable.
<PAGE> 86
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of payment:
Payment 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 reports and statements should be
mailed to ______________________________. This information is provided by
_________________________________, the assignee named above, or
____________________________________, as its agent.
<PAGE> 87
EXHIBIT A-1-A-20
Form of Bond
(Class A-20)
(Begins on next page)
<PAGE> 88
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUIRED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS BOND IS A REGULAR INTEREST IN A REMIC. PRINCIPAL OF THIS BOND IS
PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL OF THIS BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
THIS BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE INDENTURE
REFERRED TO HEREIN, AND THE ISSUER IS NOT OTHERWISE LIABLE FOR PAYMENTS ON THIS
BOND.
CMC SECURITIES CORPORATION III
COLLATERALIZED MORTGAGE OBLIGATIONS, SERIES 1998-2
CLASS ____
DUE:____
ACCRUAL DATE: September 1, 1998
ISSUE DATE: September 30, 1998
$____ CUSIP NO.____
____ BOND INTEREST RATE CERTIFICATE NUMBER 0001
CMC SECURITIES CORPORATION III, a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received hereby promises to pay to CEDE & CO. or registered
assigns, the principal sum of ____ DOLLARS (____) in monthly payments of
principal and interest on the twenty-fifth day of each month or, if such day is
not a Business Day, then the next succeeding Business Day (each a "Payment
Date"), commencing in October 1998 and ending on or before the Payment Date
occurring in ____. This Bond is one of a duly authorized issue of non-recourse
Bonds of the Issuer, designated as its Collateralized Mortgage Obligations,
Series 1998-2. The Bonds are issued in multiple classes under the Issuer's
Indenture dated as of March 1, 1998, as amended (herein called the "Indenture"),
to which Indenture and all indentures supplemental thereto, including the Series
1998-2 Supplement dated as of September 30, 1998 (the "Series 1998-2
Supplement"), among the Issuer, The First National Bank
<PAGE> 89
of Chicago, as indenture trustee (the "Indenture Trustee", which term includes
any successor Trustee under the Indenture), and Norwest Bank Minnesota, National
Association, as Bond Administrator, which authorized the Bonds. Reference is
hereby made to the Indenture and the Series 1998-2 Supplement for a statement of
the respective rights thereunder of the Issuer, the Indenture Trustee and the
holders of the Bonds and the terms upon which the Bonds are, and are to be,
authenticated and delivered.
The Bonds are collateralized by two separate series of mortgage
pass-through certificates (the "Conventional Certificates"), each of which
series evidences the entire beneficial ownership interest in one of two pools of
Mortgage Loans. Each pool of Mortgage Loans has been deposited into a separate
trust (each, a "Trust") pursuant to the terms of the Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") dated as of September 1, 1998
among the Issuer, as seller, Norwest Bank Minnesota, National Association, as
master servicer (the "Master Servicer"), and The First National Bank of Chicago,
as certificate trustee (the "Certificate Trustee"). Each Trust has created a
series of Conventional Certificates for the benefit of the Issuer in exchange
for the related pool of Mortgage Loans. The Conventional Certificates were
pledged to the Indenture Trustee under the terms of the Indenture.
All capitalized terms used without definition in this Bond shall have
the meanings assigned to such terms in the Indenture or the Series 1998-2
Supplement, as applicable.
This Bond does not purport to summarize the Indenture or the Series
1998-2 Supplement and reference should be made to the Indenture and the Series
1998-2 Supplement for the interests, rights and limitations of rights, benefits,
obligations and duties of the holders of the Bond thereunder, and the rights,
duties and immunities of the Indenture Trustee.
This Bond is a "Retail Bond" as defined in the Series Supplement.
Subject to the provisions set forth below, and in the Series Supplement
regarding payments of principal, payments of principal of and interest on this
Bond will be paid in accordance with the terms of the Series 1998-2 Supplement
and will be made out of the Available Funds for such Payment Date, to the extent
and subject to the limitations set forth in the Series 1998-2 Supplement, on
each Payment Date to the Person in whose name this Bond is registered at the
close of business on the last Business Day of the month immediately preceding
the month of such distribution (the "Record Date"). All sums payable on this
Bond are payable in the coin or currency of the United States of America as at
the time of payment is legal tender for the payment of public and private debts.
Realized Losses, Net Interest Shortfalls and certain writedown amounts
shall be allocated among the Classes of Bonds on the applicable Payment Date in
the manner set forth in the Series 1998-2 Supplement. To the extent provided in
the Series 1998-2 Supplement, the Subordinate Bonds will be subordinated in
right of payment to the other Classes of Bonds and each Class of the Subordinate
Bonds will be subordinated in right of payment to each of the other Classes of
Subordinate Bonds with a lower numerical Class designation, if any. All Realized
Losses, Net
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<PAGE> 90
Interest Shortfalls and writedown amounts allocated to any Class of Bonds will
be allocated pro rata among the outstanding Bonds of such Class, as described in
the Series 1998-2 Supplement.
The Bonds are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and certain other assets, all as more
specifically set forth in the Series 1998-2 Supplement.
So long as this Bond is registered in the name of a Depository or its
nominee, the Indenture Trustee will make payments of principal of and interest
on this Bond by wire transfers of immediately available funds to the Depository
or its nominee. Otherwise, all payments on this Bond under the Series 1998-2
Supplement will be made by or on behalf of the Indenture Trustee as provided in
the Indenture. Notwithstanding the above, the final payment on this Bond will be
made after due notice by the Indenture Trustee of the pendency of such payment
and only upon presentation and surrender of this Bond at its principal Corporate
Trust Office or such other offices or agencies appointed by the Indenture
Trustee for that purpose and such other locations provided in the Series 1998-2
Supplement.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Holders of Bonds representing
two-thirds of the Aggregate Current Principal Amount of all Bonds at the time
Outstanding, in case Outstanding Bonds of all Series are to be affected, or with
the consent of the Holders of two-thirds of the Aggregate Current Principal
Amount of all the Bonds at the time Outstanding of each Series to be affected,
in case one or more, but less than all, of the Series of Bonds then Outstanding
are to be affected; provided however, that prior to the date on which the Class
Imputed Principal Balance of each Class of Senior Bonds of a Series has been
reduced to zero, no amendment, variation or modification shall be made to
Article V of the Indenture in respect of any Series of Bonds without the consent
of the Holders representing not less than 100% of the Aggregate Current
Principal Amount of all Outstanding Senior Bonds of such Series. The consent of
the Holders of any Junior Bonds of such Series shall not be required to be
obtained prior to making any amendment for such series to Article V of the
Indenture for so long as any Senior Bond of such Series is Outstanding. Upon
reduction to zero of the Class Imputed Principal Balance of each Class of Senior
Bonds of a Series, no amendment, variation or modification to Article V of the
Indenture shall be made in respect of such Series of Bonds without the consent
of the Holders representing not less than two-thirds of the Aggregate Current
Principal Amount of the Highest Priority Junior Class of such Series.
The Indenture also contains provisions permitting the Holders of Bonds
representing specified percentages of the Aggregate Current Principal Amount of
the Bonds of a Series at the time Outstanding on behalf of the Holders of all
the Bonds of such Series, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder, at the time of the
giving thereof, of this Bond (or any one or more Predecessor Bonds) shall be
conclusive and binding upon such Holder and
-3-
<PAGE> 91
upon all future holders of this Bond and of any Bond issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent or waiver is made upon this Bond. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of the Holders of the
Bonds of any Series issued thereunder.
The Bonds are issuable in fully-registered form only, without coupons,
in denominations as specified in the Series 1998-2 Supplement. As provided in
the Series 1998-2 Supplement and subject to any limitations on transfer of this
Bond by a Depository or its nominee and certain limitations set forth in the
Series 1998-2 Supplement, the transfer of this Bond is registrable in the Bond
Register upon surrender of this Bond for registration or transfer at the
principal Corporate Trust Office of the Indenture Trustee or such other offices
or agencies appointed by the Indenture Trustee for that purpose and such other
locations provided in the Series 1998-2 Supplement, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Indenture Trustee and the Bond Registrar
duly executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Bonds of the same Class in the same
aggregate Principal Balance will be issued to the designated transferee or
transferees.
As provided in the Indenture and subject to certain limitations therein
set forth, this Bond is exchangeable for a new Bond of the same Class in the
same denomination. No service charge will be made for any such registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Bonds.
At its option, Bear Stearns Mortgage Capital Corporation ("BSMCC") or
its designee may, upon giving written notice to the Issuer, the Master Servicer,
the Certificate Trustee and the Indenture Trustee, repurchase from the related
Trust all of the remaining Mortgage Loans of any Mortgage Loan Group, and
thereby effect an early termination of the related Certificates and redemption
of the Bonds of the related Bond Group, on any Payment Date when the aggregate
outstanding principal balance of the Mortgage Loans in such Mortgage Loan Groups
is equal to or less than 5% of the aggregate outstanding principal balance of
the Mortgage Loans in such Mortgage Loan Group as of the Cut-off Date. If on any
Payment Date BSMCC or its designee has not exercised such option and the
aggregate outstanding principal balance of the Mortgage Loans in any Mortgage
Loan Group is equal to or less than 2.5% of the aggregate outstanding principal
balance of the Mortgage Loans in such Mortgage Loan Group as of the Cut-off
Date, the Master Servicer shall also have such option. Upon any such optional
repurchase, the Trust Estate will terminate and any remaining assets in the
Trust Estate shall be released to the repurchasing party.
The Issuer, the Indenture Trustee and the Bond Registrar and any agent
of the Issuer, the Indenture Trustee or the Bond Registrar may treat the Person
in whose name this Bond is registered as the owner hereof for all purposes, and
none of the Issuer, the Master Servicer, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
-4-
<PAGE> 92
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Series 1998-2 Supplement or be valid for any purpose.
Any Beneficial Owner of Retail Bond Units with respect to the Class of
Bonds of which this Bond is a part (referred to below as "this Class") may
request that any or all of such Units be paid in full on the earliest possible
Payment Date. Beneficial Owners of each Class of Retail Bonds may obtain
information regarding the number of Retail Bond Units of the applicable Class of
which Requests for Payment have been made and the status of their own Requests
for Payment by writing the Trustee at the Corporate Trust Office. A Beneficial
Owner may withdraw a Request for Payment by notifying his or her broker or other
financial intermediary, which must in turn forward the notice of withdrawal (any
such notice, a "NOTICE OF WITHDRAWAL") in writing to the Trustee. Any Request
for Payment shall be deemed withdrawn when the Trustee receives notice of the
Beneficial Owner's transfer of the related Retail Bond Units. In order for a
Request for Payment or a Notice of Withdrawal to be effective for any Payment
Date, it must be received by the Clearing Agency (in the case of a Request for
Payment) or the Trustee (in the case of a Notice of Withdrawal) by the last
business day of the preceding calendar month. Once effective, a Request for
Payment shall remain effective for all Payment Dates unless it is withdrawn by
an effective Notice of Withdrawal.
As more fully provided for in the Series Supplement, the Trustee shall
honor Requests for Payment on each Payment Date in accordance with the
procedures set forth below. The Trustee shall notify the Clearing Agency and the
appropriate Clearing Agency Participants which of the Requests for Payment
should be honored on each Payment Date. The decisions of the Trustee and Persons
concerning such matters, and any related rules and procedures they establish,
shall be binding on all affected Persons.
(i) For each Payment Date, priority of payment on this Class shall
be given to Beneficial Owners of this Class for whom Requests
for Payment are in effect. The Clearing Agency shall honor
Requests for Payment for each Class of Retail Bonds in the
following order of priority:
First, the Clearing Agency shall honor requests
submitted on behalf of Deceased Owners of this Class in the
order of their receipt by the Clearing Agency, until such
requests have been honored in an amount up to $100,000 for
each requesting Deceased Owner of this Class; and
Second, the Clearing Agency will honor Requests for
Payment submitted on behalf of Living Owners of this Class in
the order of priority established by the random lot procedures
of the Trustee, until such Requests for Payment have been
honored in an amount up to $10,000 for each requesting Living
Owner of this Class.
Thereafter, the Clearing Agency shall honor Requests for
Payment submitted on behalf of each Deceased Owner as provided
in step First up to a second $100,000,
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<PAGE> 93
and Requests for Payment submitted on behalf of each Living
Owner as provided in step Second up to a second $10,000. Such
sequences of priorities shall be repeated until all Requests
for Payment have been honored.
(ii) If the amount of principal available for payment on this Class
on a given Payment Date is insufficient to honor all Requests
for Payment for this Class, such Requests for Payment shall be
honored on succeeding Payment Dates as principal becomes
payable with respect to this Class. In the case of Requests
for Payment on behalf of Living Owners, the Trustee shall
establish a new order of priority for each Payment Date by
random lot. Such order of priority shall apply both to
previously unsatisfied Requests for Payment and to newly
submitted Requests for Payment. A Request for Payment
submitted on behalf of a Living Owner who later dies shall
become entitled to the priority of a newly submitted Request
for Payment on behalf of a Deceased Owner. Such priority will
be effective for each subsequent Payment Date, if the Clearing
Agency has received appropriate evidence of death and any
requested tax waivers by the last business day of the
preceding calendar month.
(iii) If the amount of principal payable with respect to this Class
on a given Payment Date exceeds the amount needed to honor all
Requests for Payment with respect to such Class, the Clearing
Agency shall determine which Retail Bond Units of this Class
shall be paid, using its established random lot procedures.
EACH CLEARING AGENCY PARTICIPANT RECEIVING SUCH PAYMENTS, AND
EACH FINANCIAL INTERMEDIARY IN THE CHAIN TO THE BENEFICIAL
OWNERS, SHALL REMIT PAYMENTS TO THEIR CUSTOMERS ACCORDING TO
THEIR OWN PROCEDURES, WHICH MAY OR MAY NOT BE BY RANDOM LOT. A
CLEARING AGENCY PARTICIPANT OR FINANCIAL INTERMEDIARY MAY
DECIDE TO ALLOT RETAIL BOND PRINCIPAL PAYMENTS TO CERTAIN
CUSTOMERS (WHICH COULD INCLUDE SUCH CLEARING AGENCY
PARTICIPANT OR INTERMEDIARY) WITHOUT ALLOTTING PAYMENTS TO
OTHERS.
(iv) After the Group I Cross-Over Date, if any, payments on each
Class of Retail Bonds will be made pro rata, without regard to
the priorities described above.
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<PAGE> 94
Certain rules specified in the Series Supplement shall apply to
determine beneficial ownership in the case of Deceased Owners.
THIS BOND AND THE SERIES 1998-2 SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used herein and not defined herein shall have the
meaning given them in the Series 1998-2 Supplement.
IN WITNESS WHEREOF, CMC Securities Corporation III has caused this Bond
to be duly executed.
Dated: September 30, 1998 CMC SECURITIES CORPORATION III
By:
--------------------------------------
Wade Walker
Vice President - Asset and Liability
Management
CERTIFICATION OF AUTHENTICATION
THIS IS A CLASS ____ BOND REFERRED TO IN THE WITHIN MENTIONED
INDENTURE.
THE FIRST NATIONAL BANK OF CHICAGO,
AS INDENTURE TRUSTEE
BY:
--------------------------------------
AUTHORIZED SIGNATORY
<PAGE> 95
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Bond shall be construed as though they were written out in full according to
applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM--as tenants in common UNIF GIFT MIN ACT--...Custodian .......
TEN ENT--as tenants by the (Cus) (Minor)
entireties Under Uniform Gifts to Minors
JT TEN--as joint tenants with
rights of survivor- Act ....................
ship and not as Tenants (State)
in Common
</TABLE>
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED
THOUGH NOT IN THE ABOVE LIST.
<PAGE> 96
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
- --------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Bond and does hereby irrevocably constitute and appoint
______________________ (Attorney) to transfer the said Bond in the Bond
Register, with full power of substitution in the premises.
Dated:
----------------------- ------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of this Bond in every
particular without alteration or
enlargement or any change whatever.
- ----------------------------
SIGNATURE GUARANTEED: The
signature must be guaranteed
by a commercial bank or trust
company or by a member firm of
the New York Stock Exchange or
another national securities exchange.
Notarized or witnessed signatures
are not acceptable.
<PAGE> 97
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of payment:
Payment 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 reports and statements should be
mailed to ______________________________. This information is provided by
_________________________________, the assignee named above, or
____________________________________, as its agent.
<PAGE> 98
EXHIBIT A-2-P
Form of Bond
(Class P)
(Begins on next page)
<PAGE> 99
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THIS CLASS P BOND REPRESENTS A REMIC REGULAR INTEREST FOR FEDERAL INCOME TAX
PURPOSES. PRINCIPAL OF THIS BOND IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF THIS BOND AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT
OF PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE
INDENTURE REFERRED TO HEREIN, AND THE ISSUER IS NOT OTHERWISE LIABLE FOR
PAYMENTS ON THIS BOND.
THIS CLASS P BOND SHALL NOT BE ENTITLED TO ANY PAYMENTS WITH RESPECT TO
INTEREST.
CMC SECURITIES CORPORATION III
COLLATERALIZED MORTGAGE OBLIGATIONS, SERIES 1998-2
CLASS ____
DUE:____
ACCRUAL DATE: ____
ISSUE DATE: September 30, 1998
$____ CUSIP NO.____
CERTIFICATE NUMBER 0001
CMC SECURITIES CORPORATION III, a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of ____ DOLLARS ($____) in monthly
payments of principal on the twenty-fifth day of each month or, if such day is
not a Business Day, then the next succeeding Business Day (each a "Payment
Date"), commencing in October 1998 and ending on or before the Payment Date
occurring in ____. This Bond is one of a duly authorized issue of non-recourse
Bonds of the Issuer, designated as its Collateralized Mortgage Obligations,
Series 1998-2. The Bonds are issued in multiple classes under the Issuer's
Indenture dated as of March 1, 1998, as amended (herein called the
"Indenture"), to which Indenture and all indentures supplemental thereto,
including the Series 1998-2 Supplement dated as of September 30, 1998 (the
"Series 1998-2 Supplement"), among the Issuer, The First National Bank of
Chicago, as indenture trustee (the "Indenture Trustee", which term includes any
successor Trustee under the Indenture) and Norwest Bank Minnesota, National
Association, as Bond Administrator,
<PAGE> 100
which authorized the Bonds, reference is hereby made for a statement of the
respective rights thereunder of the Issuer, the Indenture Trustee and the
holders of the Bonds and the terms upon which the Bonds are, and are to be,
authenticated and delivered.
The Bonds are collateralized by two separate series of mortgage
pass-through certificates (the "Conventional Certificates"), each of which
series evidences the entire beneficial ownership interest in one of three pools
of Mortgage Loans. Each pool of Mortgage Loans has been deposited into a
separate trust (each, a "Trust") pursuant to the terms of the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") dated as of
September 1, 1998 among the Issuer, as seller, Norwest Bank Minnesota, National
Association, as master servicer (the "Master Servicer"), and The First National
Bank of Chicago, as certificate trustee (the "Certificate Trustee"). Each Trust
has created a series of Conventional Certificates for the benefit of the Issuer
in exchange for the related pool of Mortgage Loans. The Conventional
Certificates were pledged to the Indenture Trustee under the terms of the
Indenture.
All capitalized terms used without definition in this Bond shall have
the meanings assigned to such terms in the Indenture or the Series 1998-2
Supplement, as applicable.
This Bond does not purport to summarize the Indenture or the Series
1998-2 Supplement and reference should be made to the Indenture and the Series
1998-2 Supplement for the interests, rights and limitations of rights,
benefits, obligations and duties of the holders of the Bond thereunder, and the
rights, duties and immunities of the Indenture Trustee.
This Bond shall not be entitled to any payments in respect of
interest. Payments of principal on this Bond will be paid in accordance with
the terms of the Series 1998-2 Supplement out of Available Funds for such
Payment Date, to the extent and subject to the limitations set forth in the
Series 1998-2 Supplement, on each Payment Date to the Person in whose name this
Bond is registered at the close of business on the last Business Day of the
month immediately preceding the month of such Payment Date (the "Record Date").
All sums payable on this Bond are payable in the coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.
Realized Losses, Net Interest Shortfalls and certain writedown amounts
shall be allocated among the Classes of Bonds on the applicable Payment Date in
the manner set forth in the Series 1998-2 Supplement. To the extent provided in
the Series 1998-2 Supplement, the Subordinate Bonds will be subordinated in
right of payment to the other Classes of Bonds and each Class of the
Subordinate Bonds will be subordinated in right of payment to each of the other
Classes of Subordinate Bonds with a lower numerical Class designation, if any.
All Realized Losses , Net Interest Shortfalls and writedown amounts allocated
to any Class of Bonds will be allocated pro rata among the outstanding Bonds of
such Class, as described in the Series 1998-2 Supplement.
The Bonds are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and certain other assets, all as more
specifically set forth in the Series 1998-2 Supplement.
So long as this Bond is registered in the name of a Depository or its
nominee, the Indenture Trustee will make payments of principal on this Bond by
wire transfers of immediately available funds to the Depository or its nominee.
Otherwise, all payments on this Bond under the Series 1998-2
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<PAGE> 101
Supplement will be made by or on behalf of the Indenture Trustee as provided in
the Indenture. Notwithstanding the above, the final payment on this Bond will
be made after due notice by the Indenture Trustee of the pendency of such
payment and only upon presentation and surrender of this Bond at its principal
Corporate Trust Office or such other offices or agencies appointed by the
Indenture Trustee for that purpose and such other locations provided in the
Series 1998-2 Supplement.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Holders of Bonds representing
two-thirds of the Aggregate Current Principal Amount of all Bonds at the time
Outstanding, in case Outstanding Bonds of all Series are to be affected, or
with the consent of the Holders of two-thirds of the Aggregate Current
Principal Amount of all the Bonds at the time Outstanding of each Series to be
affected, in case one or more, but less than all, of the Series of Bonds then
Outstanding are to be affected; provided however, that prior to the date on
which the Class Imputed Principal Balance of each Class of Senior Bonds of a
Series has been reduced to zero, no amendment, variation or modification shall
be made to Article V of the Indenture in respect of any Series of Bonds without
the consent of the Holders representing not less than 100% of the Aggregate
Current Principal Amount of all Outstanding Senior Bonds of such Series. The
consent of the Holders of any Junior Bonds of such Series shall not be required
to be obtained prior to making any amendment for such series to Article V of
the Indenture for so long as any Senior Bond of such Series is Outstanding.
Upon reduction to zero of the Class Imputed Principal Balance of each Class of
Senior Bonds of a Series, no amendment, variation or modification to Article V
of the Indenture shall be made in respect of such Series of Bonds without the
consent of the Holders representing not less than two-thirds of the Aggregate
Current Principal Amount of the Highest Priority Junior Class of such Series.
The Indenture also contains provisions permitting the Holders of Bonds
representing specified percentages of the Aggregate Current Principal Amount of
the Bonds of a Series at the time Outstanding on behalf of the Holders of all
the Bonds of such Series, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder, at the time of
the giving thereof, of this Bond (or any one or more Predecessor Bonds) shall
be conclusive and binding upon such Holder and upon all future holders of this
Bond and of any Bond issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Bond. The Indenture also permits the Indenture Trustee
to amend or waive certain terms and conditions set forth in the Indenture
without the consent of the Holders of the Bonds of any Series issued
thereunder.
The Bonds are issuable in fully-registered form only, without coupons,
in denominations as specified in the Series 1998-2 Supplement. As provided in
the Series 1998-2 Supplement and subject to any limitations on transfer of this
Bond by a Depository or its nominee and certain limitations set forth in the
Series 1998-2 Supplement, the transfer of this Bond is registrable in the Bond
Register upon surrender of this Bond for registration or transfer at the
principal Corporate Trust Office of the Indenture Trustee or such other offices
or agencies appointed by the Indenture Trustee for that purpose and such other
locations provided in the Series 1998-2 Supplement, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Indenture Trustee and the Bond Registrar
duly executed by, the
-3-
<PAGE> 102
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Bonds of the same Class in the same aggregate
Principal Balance will be issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for a new Bond of the same Class
in the same denomination. No service charge will be made for any such
registration of transfer or exchange, but the Indenture Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Bonds.
At its option, Bear Stearns Mortgage Capital Corporation ("BSMCC") or
its designee may, upon giving written notice to the Issuer, the Master
Servicer, the Certificate Trustee and the Indenture Trustee, repurchase from
the related Trust all of the remaining Mortgage Loans of any Mortgage Loan
Group, and thereby effect an early termination of the related Certificates and
redemption of the Bonds of the related Bond Group, on any Payment Date when the
aggregate outstanding principal balance of the Mortgage Loans in such Mortgage
Loan Groups is equal to or less than 5% of the aggregate outstanding principal
balance of the Mortgage Loans in such Mortgage Loan Group as of the Cut-off
Date. If on any Payment Date BSMCC or its designee has not exercised such
option and the aggregate outstanding principal balance of the Mortgage Loans in
any Mortgage Loan Group is equal to or less than 2.5% of the aggregate
outstanding principal balance of the Mortgage Loans in such Mortgage Loan Group
as of the Cut-off Date, the Master Servicer shall also have such option. Upon
any such optional repurchase, the Trust Estate will terminate and any remaining
assets in the Trust Estate shall be released to the repurchasing party.
The Issuer, the Indenture Trustee and the Bond Registrar and any agent
of the Issuer, the Indenture Trustee or the Bond Registrar may treat the Person
in whose name this Bond is registered as the owner hereof for all purposes, and
none of the Issuer, the Master Servicer, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Series 1998-2 Supplement or be valid for any purpose.
-4-
<PAGE> 103
THIS BOND AND THE SERIES 1998-2 SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used herein and not defined herein shall have the
meaning given them in the Series 1998-2 Supplement.
IN WITNESS WHEREOF, CMC Securities Corporation III has caused this
Bond to be duly executed.
Dated: September 30, 1998 CMC SECURITIES CORPORATION III
BY:
-----------------------------------------
Wade Walker
Vice President - Asset and Liability
Management
CERTIFICATION OF AUTHENTICATION
THIS IS A CLASS ____ BOND REFERRED TO IN THE WITHIN MENTIONED
INDENTURE.
THE FIRST NATIONAL BANK OF CHICAGO,
AS INDENTURE TRUSTEE
BY:
-----------------------------------------
AUTHORIZED SIGNATORY
<PAGE> 104
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Bond shall be construed as though they were written out in full according to
applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT--....Custodian . . . . . .
TEN ENT--as tenants by the (Cus) (Minor)
entireties Under Uniform Gifts to Minors
JT TEN--as joint tenants with
rights of survivor- Act . . . . . . . . . . . . . . . . . . .
ship and not as Tenants (State)
in Common
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED
THOUGH NOT IN THE ABOVE LIST.
<PAGE> 105
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
- -------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Bond and does hereby irrevocably constitute and appoint
______________________ (Attorney) to transfer the said Bond in the Bond
Register, with full power of substitution in the premises.
Dated:
---------------------------- ---------------------------------------
NOTICE: The signature to this
assignment must correspond with
the name as written upon the face
of this Bond in every particular
without alteration or enlargement
or any change whatever.
- ------------------------------------
SIGNATURE GUARANTEED: The signature
must be guaranteed by a commercial
bank or trust company or by a member
firm of the New York Stock Exchange
or another national securities
exchange. Notarized or witnessed
signatures are not acceptable.
<PAGE> 106
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of payment:
Payment 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 reports and statements should be
mailed to ______________________________. This information is provided by
_________________________________, the assignee named above, or
____________________________________, as its agent.
<PAGE> 107
EXHIBIT A-2-II-P
Form of Bond
(Class II-P)
(Begins on next page)
<PAGE> 108
THIS CLASS II-P BOND REPRESENTS A REMIC REGULAR INTEREST FOR FEDERAL INCOME TAX
PURPOSES. PRINCIPAL OF THIS BOND IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF THIS BOND AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT
OF PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE
INDENTURE REFERRED TO HEREIN, AND THE ISSUER IS NOT OTHERWISE LIABLE FOR
PAYMENTS ON THIS BOND.
THIS CLASS II-P BOND SHALL NOT BE ENTITLED TO ANY PAYMENTS WITH RESPECT TO
INTEREST.
CMC SECURITIES CORPORATION III
COLLATERALIZED MORTGAGE OBLIGATIONS, SERIES 1998-2
CLASS ____
DUE:____
ACCRUAL DATE: ____
ISSUE DATE: September 30, 1998
$____ CUSIP NO.____
CERTIFICATE NUMBER 0001
CMC SECURITIES CORPORATION III, a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received hereby promises to pay to CENDANT MORTGAGE
CORPORATION or registered assigns, the principal sum of ____ DOLLARS ($____) in
monthly payments of principal on the twenty-fifth day of each month or, if such
day is not a Business Day, then the next succeeding Business Day (each a
"Payment Date"), commencing in October 1998 and ending on or before the Payment
Date occurring in ____. This Bond is one of a duly authorized issue of
non-recourse Bonds of the Issuer, designated as its Collateralized Mortgage
Obligations, Series 1998-2. The Bonds are issued in multiple classes under the
Issuer's Indenture dated as of March 1, 1998, as amended (herein called the
"Indenture"), to which Indenture and all indentures supplemental thereto,
including the Series 1998-2 Supplement dated as of September 30, 1998 (the
"Series 1998-2 Supplement"), among the Issuer, The First National Bank of
Chicago, as indenture trustee (the "Indenture Trustee", which term includes any
successor Trustee under the Indenture) and Norwest Bank Minnesota, National
Association, as Bond Administrator, which authorized the Bonds, reference is
hereby made for a statement of the respective rights thereunder of the Issuer,
the Indenture Trustee and the holders of the Bonds and the terms upon which the
Bonds are, and are to be, authenticated and delivered.
The Bonds are collateralized by two separate series of mortgage
pass-through certificates (the "Conventional Certificates"), each of which
series evidences the entire beneficial ownership interest in one of three pools
of Mortgage Loans. Each pool of Mortgage Loans has been deposited into a
separate trust (each, a "Trust") pursuant to the terms of the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") dated as of
September 1, 1998 among the Issuer, as seller, Norwest Bank Minnesota, National
Association, as master servicer (the "Master Servicer"), and The First National
Bank of Chicago, as certificate trustee (the "Certificate Trustee"). Each Trust
has
<PAGE> 109
created a series of Conventional Certificates for the benefit of the Issuer in
exchange for the related pool of Mortgage Loans. The Conventional Certificates
were pledged to the Indenture Trustee under the terms of the Indenture.
All capitalized terms used without definition in this Bond shall have
the meanings assigned to such terms in the Indenture or the Series 1998-2
Supplement, as applicable.
This Bond does not purport to summarize the Indenture or the Series
1998-2 Supplement and reference should be made to the Indenture and the Series
1998-2 Supplement for the interests, rights and limitations of rights,
benefits, obligations and duties of the holders of the Bond thereunder, and the
rights, duties and immunities of the Indenture Trustee.
This Bond shall not be entitled to any payments in respect of
interest. Payments of principal on this Bond will be paid in accordance with
the terms of the Series 1998-2 Supplement out of Available Funds for such
Payment Date, to the extent and subject to the limitations set forth in the
Series 1998-2 Supplement, on each Payment Date to the Person in whose name this
Bond is registered at the close of business on the last Business Day of the
month immediately preceding the month of such Payment Date (the "Record Date").
All sums payable on this Bond are payable in the coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.
Realized Losses, Net Interest Shortfalls and certain writedown amounts
shall be allocated among the Classes of Bonds on the applicable Payment Date in
the manner set forth in the Series 1998-2 Supplement. To the extent provided in
the Series 1998-2 Supplement, the Subordinate Bonds will be subordinated in
right of payment to the other Classes of Bonds and each Class of the
Subordinate Bonds will be subordinated in right of payment to each of the other
Classes of Subordinate Bonds with a lower numerical Class designation, if any.
All Realized Losses , Net Interest Shortfalls and writedown amounts allocated
to any Class of Bonds will be allocated pro rata among the outstanding Bonds of
such Class, as described in the Series 1998-2 Supplement.
The Bonds are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and certain other assets, all as more
specifically set forth in the Series 1998-2 Supplement.
So long as this Bond is registered in the name of a Depository or its
nominee, the Indenture Trustee will make payments of principal on this Bond by
wire transfers of immediately available funds to the Depository or its nominee.
Otherwise, all payments on this Bond under the Series 1998- 2 Supplement will
be made by or on behalf of the Indenture Trustee as provided in the Indenture.
Notwithstanding the above, the final payment on this Bond will be made after
due notice by the Indenture Trustee of the pendency of such payment and only
upon presentation and surrender of this Bond at its principal Corporate Trust
Office or such other offices or agencies appointed by the Indenture Trustee for
that purpose and such other locations provided in the Series 1998-2 Supplement.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Holders of Bonds representing
two-thirds of the Aggregate Current Principal Amount of all Bonds at the time
-2-
<PAGE> 110
Outstanding, in case Outstanding Bonds of all Series are to be affected, or
with the consent of the Holders of two-thirds of the Aggregate Current
Principal Amount of all the Bonds at the time Outstanding of each Series to be
affected, in case one or more, but less than all, of the Series of Bonds then
Outstanding are to be affected; provided however, that prior to the date on
which the Class Imputed Principal Balance of each Class of Senior Bonds of a
Series has been reduced to zero, no amendment, variation or modification shall
be made to Article V of the Indenture in respect of any Series of Bonds without
the consent of the Holders representing not less than 100% of the Aggregate
Current Principal Amount of all Outstanding Senior Bonds of such Series. The
consent of the Holders of any Junior Bonds of such Series shall not be required
to be obtained prior to making any amendment for such series to Article V of
the Indenture for so long as any Senior Bond of such Series is Outstanding.
Upon reduction to zero of the Class Imputed Principal Balance of each Class of
Senior Bonds of a Series, no amendment, variation or modification to Article V
of the Indenture shall be made in respect of such Series of Bonds without the
consent of the Holders representing not less than two-thirds of the Aggregate
Current Principal Amount of the Highest Priority Junior Class of such Series.
The Indenture also contains provisions permitting the Holders of Bonds
representing specified percentages of the Aggregate Current Principal Amount of
the Bonds of a Series at the time Outstanding on behalf of the Holders of all
the Bonds of such Series, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder, at the time of
the giving thereof, of this Bond (or any one or more Predecessor Bonds) shall
be conclusive and binding upon such Holder and upon all future holders of this
Bond and of any Bond issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Bond. The Indenture also permits the Indenture Trustee
to amend or waive certain terms and conditions set forth in the Indenture
without the consent of the Holders of the Bonds of any Series issued
thereunder.
The Bonds are issuable in fully-registered form only, without coupons,
in denominations as specified in the Series 1998-2 Supplement. As provided in
the Series 1998-2 Supplement and subject to any limitations on transfer of this
Bond by a Depository or its nominee and certain limitations set forth in the
Series 1998-2 Supplement, the transfer of this Bond is registrable in the Bond
Register upon surrender of this Bond for registration or transfer at the
principal Corporate Trust Office of the Indenture Trustee or such other offices
or agencies appointed by the Indenture Trustee for that purpose and such other
locations provided in the Series 1998-2 Supplement, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Indenture Trustee and the Bond Registrar
duly executed by, the Holder hereof or such Holder's attorney duly authorized
in writing, and thereupon one or more new Bonds of the same Class in the same
aggregate Principal Balance will be issued to the designated transferee or
transferees.
As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for a new Bond of the same Class
in the same denomination. No service charge will be made for any such
registration of transfer or exchange, but the Indenture Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Bonds.
-3-
<PAGE> 111
At its option, Bear Stearns Mortgage Capital Corporation ("BSMCC") or
its designee may, upon giving written notice to the Issuer, the Master
Servicer, the Certificate Trustee and the Indenture Trustee, repurchase from
the related Trust all of the remaining Mortgage Loans of any Mortgage Loan
Group, and thereby effect an early termination of the related Certificates and
redemption of the Bonds of the related Bond Group, on any Payment Date when the
aggregate outstanding principal balance of the Mortgage Loans in such Mortgage
Loan Groups is equal to or less than 5% of the aggregate outstanding principal
balance of the Mortgage Loans in such Mortgage Loan Group as of the Cut-off
Date. If on any Payment Date BSMCC or its designee has not exercised such
option and the aggregate outstanding principal balance of the Mortgage Loans in
any Mortgage Loan Group is equal to or less than 2.5% of the aggregate
outstanding principal balance of the Mortgage Loans in such Mortgage Loan Group
as of the Cut-off Date, the Master Servicer shall also have such option. Upon
any such optional repurchase, the Trust Estate will terminate and any remaining
assets in the Trust Estate shall be released to the repurchasing party.
The Issuer, the Indenture Trustee and the Bond Registrar and any agent
of the Issuer, the Indenture Trustee or the Bond Registrar may treat the Person
in whose name this Bond is registered as the owner hereof for all purposes, and
none of the Issuer, the Master Servicer, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Series 1998-2 Supplement or be valid for any purpose.
-4-
<PAGE> 112
THIS BOND AND THE SERIES 1998-2 SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used herein and not defined herein shall have the
meaning given them in the Series 1998-2 Supplement.
IN WITNESS WHEREOF, CMC Securities Corporation III has caused this
Bond to be duly executed.
Dated: September 30, 1998 CMC SECURITIES CORPORATION III
BY:
-----------------------------------------
Wade Walker
Vice President - Asset and Liability
Management
CERTIFICATION OF AUTHENTICATION
THIS IS A CLASS ____ BOND REFERRED TO IN THE WITHIN MENTIONED
INDENTURE.
THE FIRST NATIONAL BANK OF CHICAGO,
AS INDENTURE TRUSTEE
BY:
-----------------------------------------
AUTHORIZED SIGNATORY
-5-
<PAGE> 113
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Bond shall be construed as though they were written out in full according to
applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT--....Custodian . . . .
TEN ENT--as tenants by the (Cus) (Minor)
entireties Under Uniform Gifts to Minors
JT TEN--as joint tenants with
rights of survivor- Act . . . . . . . . . . . . . . . . . .
ship and not as Tenants (State)
in Common
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED
THOUGH NOT IN THE ABOVE LIST.
<PAGE> 114
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
- -------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Bond and does hereby irrevocably constitute and appoint
______________________ (Attorney) to transfer the said Bond in the Bond
Register, with full power of substitution in the premises.
Dated:
--------------------------- ---------------------------------------
NOTICE: The signature to this
assignment must correspond with
the name as written upon the face
of this Bond in every particular
without alteration or enlargement
or any change whatever.
- ------------------------------------
SIGNATURE GUARANTEED: The signature
must be guaranteed by a commercial
bank or trust company or by a member
firm of the New York Stock Exchange
or another national securities
exchange. Notarized or witnessed
signatures are not acceptable.
<PAGE> 115
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of payment:
Payment 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 reports and statements should be
mailed to ______________________________. This information is provided by
_________________________________, the assignee named above, or
____________________________________, as its agent.
<PAGE> 116
EXHIBIT A-3
Form of Bond
(Class A-5, A-10, X, and II-X-1)
(Begins on next page)
<PAGE> 117
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THIS CLASS ____ BOND REPRESENTS A REMIC REGULAR INTEREST FOR FEDERAL INCOME TAX
PURPOSES.
THIS BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT
OF PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE
INDENTURE REFERRED TO HEREIN, AND THE ISSUER IS NOT OTHERWISE LIABLE FOR
PAYMENTS ON THIS BOND.
THE CLASS ____ BOND SHALL NOT BE ENTITLED TO ANY PAYMENTS WITH RESPECT TO
PRINCIPAL.
NEITHER THIS BOND NOR ANY BENEFICIAL INTEREST HEREIN MAY BE TRANSFERRED UNLESS
THE INDENTURE TRUSTEE HAS RECEIVED EITHER (A) A CERTIFICATE FROM SUCH
TRANSFEREE TO THE EFFECT THAT (i) SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT
PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SUBJECT TO SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN
DEFINED IN SECTION 3(32) OF ERISA SUBJECT TO ANY FEDERAL STATE OR LOCAL LAW
WHICH IS, TO MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR
THE CODE ("SIMILAR LAW") (EACH, A "BENEFIT PLAN") AND IS NOT AN ENTITY,
INCLUDING AN INSURANCE COMPANY SEPARATE ACCOUNT OR INSURANCE COMPANY GENERAL
ACCOUNT, WHOSE UNDERLYING ASSETS INCLUDE BENEFIT PLAN ASSETS BY REASON OF A
BENEFIT PLAN'S INVESTMENT IN THE ENTITY (SUCH BENEFIT PLAN OR ENTITY, A
"BENEFIT PLAN INVESTOR") OR (ii) IF SUCH TRANSFEREE IS AN INSURANCE COMPANY, TO
THE EFFECT THAT SUCH COMPANY IS NOT A BENEFIT PLAN INVESTOR, IS ELIGIBLE FOR AN
EXEMPTION TO THE APPLICABLE PROHIBITED TRANSACTION PROVISIONS OF ERISA, THE
CODE AND SIMILAR LAW OR IS USING THE ASSETS OF ITS GENERAL ACCOUNT TO PURCHASE
THE SECURITIES AT A TIME IN WHICH THE AMOUNT OF THE RESERVES FOR CONTRACTS
ISSUED TO BENEFIT PLANS THAT VARY WITH THE INVESTMENT EXPERIENCE OF THE
INSURANCE COMPANY'S GENERAL ACCOUNT DOES NOT EXCEED 10% OF THE TOTAL
LIABILITIES OF SUCH GENERAL ACCOUNT OR (iii) IN SUCH OTHER FORM AND SUBSTANCE
AS SHALL BE SATISFACTORY TO THE INDENTURE TRUSTEE AND THE ISSUER, OR (B) AN
OPINION OF COUNSEL SATISFACTORY TO THE INDENTURE TRUSTEE AND THE ISSUER TO THE
EFFECT THAT THE PURCHASE AND HOLDING OF SUCH BOND (i) WILL NOT CONSTITUTE OR
RESULT IN THE
<PAGE> 118
ASSETS OF THE TRUST ESTATE BEING DEEMED TO BE "PLAN ASSETS" SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR PROHIBITED TRANSACTIONS
PROVISIONS OF SECTION 4975 OF THE CODE OR SIMILAR LAW OR (ii) WILL NOT
CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION
406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE OR SIMILAR LAW, AND
WILL NOT SUBJECT THE INDENTURE TRUSTEE, THE CERTIFICATE TRUSTEE, THE ISSUER,
THE BOND ADMINISTRATOR OR ANY SERVICER TO ANY OBLIGATION OR LIABILITY
(INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA, SECTION 4975 OF THE CODE OR
SIMILAR LAW) IN ADDITION TO THOSE UNDERTAKEN IN THE INDENTURE AND THE POOLING
AND SERVICING AGREEMENT.
CMC SECURITIES CORPORATION III
COLLATERALIZED MORTGAGE OBLIGATIONS, SERIES 1998-2
CLASS ____
DUE:____
ACCRUAL DATE: September 1, 1998
ISSUE DATE: September 30, 1998
$____ CUSIP NO.____
____ BOND INTEREST RATE CERTIFICATE NUMBER ____
CMC SECURITIES CORPORATION III, a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received hereby promises to pay to CEDE & CO. or
registered assigns, interest on the Class ____ Notional Amount of the Class
____ Bonds in monthly payments on the twenty-fifth day of each month or, if
such day is not a Business Day, then the next succeeding Business Day (each a
"Payment Date"), commencing in October 1998 and ending on or before the Payment
Date occurring in ____. This Bond is one of a duly authorized issue of
non-recourse Bonds of the Issuer, designated as its Collateralized Mortgage
Obligations, Series 1998-2. The Bonds are issued in multiple classes under the
Issuer's Indenture dated as of March 1, 1998, as amended (herein called the
"Indenture"), to which Indenture and all indentures supplemental thereto,
including the Series 1998-2 Supplement dated as of September 30, 1998 (the
"Series 1998-2 Supplement"), among the Issuer, The First National Bank of
Chicago, as indenture trustee (the "Indenture Trustee", which term includes any
successor Trustee under the Indenture), and Norwest Bank Minnesota, National
Association, as Bond Administrator, which authorized the Bonds. Reference is
hereby made to the Indenture and the Series 1998-2 Supplement for a statement
of the respective rights thereunder of the Issuer, the Indenture Trustee and
the holders of the Bonds and the terms upon which the Bonds are, and are to be,
authenticated and delivered.
The Bonds are collateralized by two separate series of mortgage
pass-through certificates (the "Conventional Certificates"), each of which
series evidences the entire beneficial ownership interest in one of two pools
of Mortgage Loans. Each pool of Mortgage Loans has been deposited into a
separate trust (each, a "Trust") pursuant to the terms of the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") dated as of
September 1, 1998 among the Issuer, as seller, Norwest Bank Minnesota, National
Association, as master servicer (the "Master Servicer"), and The First National
Bank of Chicago, as certificate trustee (the "Certificate Trustee"). Each
Trust has
-2-
<PAGE> 119
created a series of Conventional Certificates for the benefit of the Issuer in
exchange for the related pool of Mortgage Loans. The Conventional Certificates
were pledged to the Indenture Trustee under the terms of the Indenture.
All capitalized terms used without definition in this Bond shall have
the meanings assigned to such terms in the Indenture or the Series 1998-2
Supplement, as applicable.
This Bond does not purport to summarize the Indenture or the Series
1998-2 Supplement and reference should be made to the Indenture and the Series
1998-2 Supplement for the interests, rights and limitations of rights,
benefits, obligations and duties of the holders of the Bond thereunder, and the
rights, duties and immunities of the Indenture Trustee.
This Bond shall not be entitled to payments of principal. Payments of
interest on this Bond will be paid in accordance with the terms of the Series
1998-2 Supplement and will be made out of the Available Funds for such Payment
Date, to the extent and subject to the limitations set forth in the Series
1998-2 Supplement, on each Payment Date to the Person in whose name this Bond
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"). All
sums payable on this Bond are payable in the coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.
Realized Losses, Net Interest Shortfalls and certain writedown amounts
shall be allocated among the Classes of Bonds on the applicable Payment Date in
the manner set forth in the Series 1998-2 Supplement. To the extent provided
in the Series 1998-2 Supplement, the Subordinate Bonds will be subordinated in
right of payment to the other Classes of Bonds and each Class of the
Subordinate Bonds will be subordinated in right of payment to each of the other
Classes of Subordinate Bonds with a lower numerical Class designation, if any.
All Realized Losses, Net Interest Shortfalls and writedown amounts allocated to
any Class of Bonds will be allocated pro rata among the outstanding Bonds of
such Class, as described in the Series 1998-2 Supplement.
The Bonds are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and certain other assets, all as more
specifically set forth in the Series 1998-2 Supplement.
So long as this Bond is registered in the name of a Depository or its
nominee, the Indenture Trustee will make payments of principal of and interest
on this Bond by wire transfers of immediately available funds to the Depository
or its nominee. Otherwise, all payments on this Bond under the Series 1998-2
Supplement will be made by or on behalf of the Indenture Trustee as provided in
the Indenture. Notwithstanding the above, the final payment on this Bond will
be made after due notice by the Indenture Trustee of the pendency of such
payment and only upon presentation and surrender of this Bond at its principal
Corporate Trust Office or such other offices or agencies appointed by the
Indenture Trustee for that purpose and such other locations provided in the
Series 1998-2 Supplement.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Holders of Bonds representing
two-thirds of the Aggregate Current Principal Amount of all Bonds at the time
Outstanding, in case Outstanding Bonds of all Series are to be affected, or
with the consent of the Holders of two-thirds of the Aggregate Current
Principal Amount of all the Bonds at the time
-3-
<PAGE> 120
Outstanding of each Series to be affected, in case one or more, but less than
all, of the Series of Bonds then Outstanding are to be affected; provided
however, that prior to the date on which the Class Imputed Principal Balance of
each Class of Senior Bonds of a Series has been reduced to zero, no amendment,
variation or modification shall be made to Article V of the Indenture in
respect of any Series of Bonds without the consent of the Holders representing
not less than 100% of the Aggregate Current Principal Amount of all Outstanding
Senior Bonds of such Series. The consent of the Holders of any Junior Bonds of
such Series shall not be required to be obtained prior to making any amendment
for such series to Article V of the Indenture for so long as any Senior Bond of
such Series is Outstanding. Upon reduction to zero of the Class Imputed
Principal Balance of each Class of Senior Bonds of a Series, no amendment,
variation or modification to Article V of the Indenture shall be made in
respect of such Series of Bonds without the consent of the Holders representing
not less than two-thirds of the Aggregate Current Principal Amount of the
Highest Priority Junior Class of such Series.
The Indenture also contains provisions permitting the Holders of Bonds
representing specified percentages of the Aggregate Current Principal Amount of
the Bonds of a Series at the time Outstanding on behalf of the Holders of all
the Bonds of such Series, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder, at the time of
the giving thereof, of this Bond (or any one or more Predecessor Bonds) shall
be conclusive and binding upon such Holder and upon all future holders of this
Bond and of any Bond issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Bond. The Indenture also permits the Indenture
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of the Holders of the Bonds of any Series issued
thereunder.
The Bonds are issuable in fully-registered form only, without coupons,
in denominations as specified in the Series 1998-2 Supplement. As provided in
the Series 1998-2 Supplement and subject to any limitations on transfer of this
Bond by a Depository or its nominee and certain limitations set forth in the
Series 1998-2 Supplement, the transfer of this Bond is registrable in the Bond
Register upon surrender of this Bond for registration or transfer at the
principal Corporate Trust Office of the Indenture Trustee or such other offices
or agencies appointed by the Indenture Trustee for that purpose and such other
locations provided in the Series 1998-2 Supplement, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Indenture Trustee and the Bond Registrar
duly executed by, the Holder hereof or such Holder's attorney duly authorized
in writing, and thereupon one or more new Bonds of the same Class in the same
aggregate Principal Balance will be issued to the designated transferee or
transferees.
As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for a new Bond of the same Class
in the same denomination. No service charge will be made for any such
registration of transfer or exchange, but the Indenture Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Bonds.
-4-
<PAGE> 121
At its option, Bear Stearns Mortgage Capital Corporation ("BSMCC") or
its designee may, upon giving written notice to the Issuer, the Master
Servicer, the Certificate Trustee and the Indenture Trustee, repurchase from
the related Trust all of the remaining Mortgage Loans of any Mortgage Loan
Group, and thereby effect an early termination of the related Certificates and
redemption of the Bonds of the related Bond Group, on any Payment Date when the
aggregate outstanding principal balance of the Mortgage Loans in such Mortgage
Loan Groups is equal to or less than 5% of the aggregate outstanding principal
balance of the Mortgage Loans in such Mortgage Loan Group as of the Cut-off
Date. If on any Payment Date BSMCC or its designee has not exercised such
option and the aggregate outstanding principal balance of the Mortgage Loans in
any Mortgage Loan Group is equal to or less than 2.5% of the aggregate
outstanding principal balance of the Mortgage Loans in such Mortgage Loan Group
as of the Cut-off Date, the Master Servicer shall also have such option. Upon
any such optional repurchase, the Trust Estate will terminate and any remaining
assets in the Trust Estate shall be released to the repurchasing party.
The Issuer, the Master Servicer, the Indenture Trustee and the Bond
Registrar and any agent of the Issuer, the Master Servicer, the Indenture
Trustee or the Bond Registrar may treat the Person in whose name this Bond is
registered as the owner hereof for all purposes, and none of the Issuer, the
Master Servicer, the Indenture Trustee, the Bond Registrar or any such agent
shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Series 1998-2 Supplement or be valid for any purpose.
-5-
<PAGE> 122
THIS BOND AND THE SERIES 1998-2 SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used herein and not defined herein shall have the
meaning given them in the Series 1998-2 Supplement.
IN WITNESS WHEREOF, CMC Securities Corporation III has caused this
Bond to be duly executed.
Dated: September 30, 1998 CMC SECURITIES CORPORATION III
BY:
------------------------------------
Wade Walker
Vice President - Asset and Liability
Management
CERTIFICATION OF AUTHENTICATION
THIS IS A CLASS ____ BOND REFERRED TO IN THE WITHINMENTIONED
INDENTURE.
THE FIRST NATIONAL BANK OF CHICAGO,
AS INDENTURE TRUSTEE
BY:
------------------------------------
AUTHORIZED SIGNATORY
<PAGE> 123
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Bond shall be construed as though they were written out in full according to
applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT--... Custodian ....
TEN ENT--as tenants by the (Cus) (Minor)
entireties Under Uniform Gifts to Minors
JT TEN--as joint tenants with
rights of survivor- Act.........................
ship and not as Tenants (State)
in Common
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED
THOUGH NOT IN THE ABOVE LIST.
<PAGE> 124
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address of assignee)
the within Bond and does hereby irrevocably constitute and appoint
______________________ (Attorney) to transfer the said Bond in the Bond
Register, with full power of substitution in the premises.
Dated:
------------------- ---------------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of this Bond in every
particular without alteration or
enlargement or any change whatever.
- ---------------------------------
SIGNATURE GUARANTEED: The
signature must be guaranteed by a
commercial bank or trust company
or by a member firm of the New
York Stock Exchange or another
national securities exchange.
Notarized or witnessed signatures
are not acceptable.
<PAGE> 125
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of payment:
Payment 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 reports and statements should
be mailed to ______________________________. This information is provided by
_________________________________, the assignee named above, or
____________________________________, as its agent.
<PAGE> 126
EXHIBIT A-3-X-2
Form of Bond
(Class II-X-2)
(Begins on next page)
<PAGE> 127
THIS CLASS ____ BOND REPRESENTS A REMIC REGULAR INTEREST FOR FEDERAL INCOME TAX
PURPOSES.
THIS BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE INDENTURE
REFERRED TO HEREIN, AND THE ISSUER IS NOT OTHERWISE LIABLE FOR PAYMENTS ON THIS
BOND.
THE CLASS ____ BOND SHALL NOT BE ENTITLED TO ANY PAYMENTS WITH RESPECT TO
PRINCIPAL.
NEITHER THIS BOND NOR ANY BENEFICIAL INTEREST HEREIN MAY BE TRANSFERRED UNLESS
THE INDENTURE TRUSTEE HAS RECEIVED EITHER (A) A CERTIFICATE FROM SUCH TRANSFEREE
TO THE EFFECT THAT (i) SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN, TRUST OR
ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN DEFINED IN SECTION
3(32) OF ERISA SUBJECT TO ANY FEDERAL STATE OR LOCAL LAW WHICH IS, TO MATERIAL
EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW")
(EACH, A "BENEFIT PLAN") AND IS NOT AN ENTITY, INCLUDING AN INSURANCE COMPANY
SEPARATE ACCOUNT OR INSURANCE COMPANY GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS
INCLUDE BENEFIT PLAN ASSETS BY REASON OF A BENEFIT PLAN'S INVESTMENT IN THE
ENTITY (SUCH BENEFIT PLAN OR ENTITY, A "BENEFIT PLAN INVESTOR") OR (ii) IF SUCH
TRANSFEREE IS AN INSURANCE COMPANY, TO THE EFFECT THAT SUCH COMPANY IS NOT A
BENEFIT PLAN INVESTOR, IS ELIGIBLE FOR AN EXEMPTION TO THE APPLICABLE PROHIBITED
TRANSACTION PROVISIONS OF ERISA, THE CODE AND SIMILAR LAW OR IS USING THE ASSETS
OF ITS GENERAL ACCOUNT TO PURCHASE THE SECURITIES AT A TIME IN WHICH THE AMOUNT
OF THE RESERVES FOR CONTRACTS ISSUED TO BENEFIT PLANS THAT VARY WITH THE
INVESTMENT EXPERIENCE OF THE INSURANCE COMPANY'S GENERAL ACCOUNT DOES NOT EXCEED
10% OF THE TOTAL LIABILITIES OF SUCH GENERAL ACCOUNT OR (iii) IN SUCH OTHER FORM
AND SUBSTANCE AS SHALL BE SATISFACTORY TO THE INDENTURE TRUSTEE AND THE ISSUER,
OR (B) AN OPINION OF COUNSEL SATISFACTORY TO THE INDENTURE TRUSTEE AND THE
ISSUER TO THE EFFECT THAT THE PURCHASE AND HOLDING OF SUCH BOND (i) WILL NOT
CONSTITUTE OR RESULT IN THE ASSETS OF THE TRUST ESTATE BEING DEEMED TO BE "PLAN
ASSETS" SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR
PROHIBITED TRANSACTIONS PROVISIONS OF SECTION 4975 OF THE CODE OR SIMILAR LAW OR
(ii) WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE
MEANING OF SECTION 406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE OR
SIMILAR LAW, AND WILL NOT SUBJECT THE INDENTURE TRUSTEE, THE CERTIFICATE
TRUSTEE, THE ISSUER, THE BOND ADMINISTRATOR OR ANY SERVICER TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA, SECTION 4975 OF THE
CODE OR SIMILAR LAW) IN ADDITION TO THOSE UNDERTAKEN IN THE INDENTURE AND THE
POOLING AND SERVICING AGREEMENT.
-1-
<PAGE> 128
CMC SECURITIES CORPORATION III
COLLATERALIZED MORTGAGE OBLIGATIONS, SERIES 1998-2
CLASS ____
DUE:____
ACCRUAL DATE: September 1, 1998
ISSUE DATE: September 30, 1998
$____ CUSIP NO.____
VARIABLE BOND INTEREST RATE CERTIFICATE NUMBER 0001
CMC SECURITIES CORPORATION III, a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received hereby promises to pay to CENDANT MORTGAGE
CORPORATION or registered assigns, interest on the Class ____ Notional Amount of
the Class ____ Bonds in monthly payments on the twenty-fifth day of each month
or, if such day is not a Business Day, then the next succeeding Business Day
(each a "Payment Date"), commencing in October 1998 and ending on or before the
Payment Date occurring in ____. This Bond is one of a duly authorized issue of
non-recourse Bonds of the Issuer, designated as its Collateralized Mortgage
Obligations, Series 1998-2. The Bonds are issued in multiple classes under the
Issuer's Indenture dated as of March 1, 1998, as amended (herein called the
"Indenture"), to which Indenture and all indentures supplemental thereto,
including the Series 1998-2 Supplement dated as of September 30, 1998 (the
"Series 1998-2 Supplement"), among the Issuer, The First National Bank of
Chicago, as indenture trustee (the "Indenture Trustee", which term includes any
successor Trustee under the Indenture), and Norwest Bank Minnesota, National
Association, as Bond Administrator, which authorized the Bonds, reference is
hereby made for a statement of the respective rights thereunder of the Issuer,
the Indenture Trustee and the holders of the Bonds and the terms upon which the
Bonds are, and are to be, authenticated and delivered.
The Bonds are collateralized by two separate series of mortgage
pass-through certificates (the "Conventional Certificates"), each of which
series evidences the entire beneficial ownership interest in one of two pools of
Mortgage Loans. Each pool of Mortgage Loans has been deposited into a separate
trust (each, a "Trust") pursuant to the terms of the Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") dated as of September 1, 1998
among the Issuer, as seller, Norwest Bank Minnesota, National Association, as
master servicer (the "Master Servicer"), and The First National Bank of Chicago,
as certificate trustee (the "Certificate Trustee"). Each Trust has created a
series of Conventional Certificates for the benefit of the Issuer in exchange
for the related pool of Mortgage Loans. The Conventional Certificates were
pledged to the Indenture Trustee under the terms of the Indenture.
All capitalized terms used without definition in this Bond shall have
the meanings assigned to such terms in the Indenture or the Series 1998-2
Supplement, as applicable.
This Bond does not purport to summarize the Indenture or the Series
1998-2 Supplement and reference should be made to the Indenture and the Series
1998-2 Supplement for the interests, rights and limitations of rights, benefits,
obligations and duties of the holders of the Bond thereunder, and the rights,
duties and immunities of the Indenture Trustee.
-2-
<PAGE> 129
This Bond shall not be entitled to payments of principal. Payments of
interest on this Bond will be paid in accordance with the terms of the Series
1998-2 Supplement and will be made out of the Available Funds for such Payment
Date, to the extent and subject to the limitations set forth in the Series
1998-2 Supplement, on each Payment Date to the Person in whose name this Bond is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"). All
sums payable on this Bond are payable in the coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.
Realized Losses, Net Interest Shortfalls and certain writedown amounts
shall be allocated among the Classes of Bonds on the applicable Payment Date in
the manner set forth in the Series 1998-2 Supplement. To the extent provided in
the Series 1998-2 Supplement, the Subordinate Bonds will be subordinated in
right of payment to the other Classes of Bonds and each Class of the Subordinate
Bonds will be subordinated in right of payment to each of the other Classes of
Subordinate Bonds with a lower numerical Class designation, if any. All Realized
Losses, Net Interest Shortfalls and writedown amounts allocated to any Class of
Bonds will be allocated pro rata among the outstanding Bonds of such Class, as
described in the Series 1998-2 Supplement.
The Bonds are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and certain other assets, all as more
specifically set forth in the Series 1998-2 Supplement.
So long as this Bond is registered in the name of a Depository or its
nominee, the Indenture Trustee will make payments of principal of and interest
on this Bond by wire transfers of immediately available funds to the Depository
or its nominee. Otherwise, all payments on this Bond under the Series 1998-2
Supplement will be made by or on behalf of the Indenture Trustee as provided in
the Indenture. Notwithstanding the above, the final payment on this Bond will be
made after due notice by the Indenture Trustee of the pendency of such payment
and only upon presentation and surrender of this Bond at its principal Corporate
Trust Office or such other offices or agencies appointed by the Indenture
Trustee for that purpose and such other locations provided in the Series 1998-2
Supplement.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Holders of Bonds representing
two-thirds of the Aggregate Current Principal Amount of all Bonds at the time
Outstanding, in case Outstanding Bonds of all Series are to be affected, or with
the consent of the Holders of two-thirds of the Aggregate Current Principal
Amount of all the Bonds at the time Outstanding of each Series to be affected,
in case one or more, but less than all, of the Series of Bonds then Outstanding
are to be affected; provided however, that prior to the date on which the Class
Imputed Principal Balance of each Class of Senior Bonds of a Series has been
reduced to zero, no amendment, variation or modification shall be made to
Article V of the Indenture in respect of any Series of Bonds without the consent
of the Holders representing not less than 100% of the Aggregate Current
Principal Amount of all Outstanding Senior Bonds of such Series. The consent of
the Holders of any Junior Bonds of such Series shall not be required to be
obtained prior to making any amendment for such series to Article V of the
Indenture for so long as any Senior Bond of such Series is Outstanding. Upon
reduction to zero of the Class Imputed Principal Balance of each Class of Senior
Bonds of a Series, no amendment, variation or modification to Article V of the
-3-
<PAGE> 130
Indenture shall be made in respect of such Series of Bonds without the consent
of the Holders representing not less than two-thirds of the Aggregate Current
Principal Amount of the Highest Priority Junior Class of such Series.
The Indenture also contains provisions permitting the Holders of Bonds
representing specified percentages of the Aggregate Current Principal Amount of
the Bonds of a Series at the time Outstanding on behalf of the Holders of all
the Bonds of such Series, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder, at the time of the
giving thereof, of this Bond (or any one or more Predecessor Bonds) shall be
conclusive and binding upon such Holder and upon all future holders of this Bond
and of any Bond issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent or waiver is
made upon this Bond. The Indenture also permits the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of the Holders of the Bonds of any Series issued thereunder.
The Bonds are issuable in fully-registered form only, without coupons,
in denominations as specified in the Series 1998-2 Supplement. As provided in
the Series 1998-2 Supplement and subject to any limitations on transfer of this
Bond by a Depository or its nominee and certain limitations set forth in the
Series 1998-2 Supplement, the transfer of this Bond is registrable in the Bond
Register upon surrender of this Bond for registration or transfer at the
principal Corporate Trust Office of the Indenture Trustee or such other offices
or agencies appointed by the Indenture Trustee for that purpose and such other
locations provided in the Series 1998-2 Supplement, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Indenture Trustee and the Bond Registrar
duly executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Bonds of the same Class in the same
aggregate Principal Balance will be issued to the designated transferee or
transferees.
As provided in the Indenture and subject to certain limitations therein
set forth, this Bond is exchangeable for a new Bond of the same Class in the
same denomination. No service charge will be made for any such registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Bonds.
At its option, Bear Stearns Mortgage Capital Corporation ("BSMCC") or
its designee may, upon giving written notice to the Issuer, the Master Servicer,
the Certificate Trustee and the Indenture Trustee, repurchase from the related
Trust all of the remaining Mortgage Loans of any Mortgage Loan Group, and
thereby effect an early termination of the related Certificates and redemption
of the Bonds of the related Bond Group, on any Payment Date when the aggregate
outstanding principal balance of the Mortgage Loans in such Mortgage Loan Groups
is equal to or less than 5% of the aggregate outstanding principal balance of
the Mortgage Loans in such Mortgage Loan Group as of the Cut-off Date. If on any
Payment Date BSMCC or its designee has not exercised such option and the
aggregate outstanding principal balance of the Mortgage Loans in any Mortgage
Loan Group is equal to or less than 2.5% of the aggregate outstanding principal
balance of the Mortgage Loans in such Mortgage Loan Group as of the Cut-off
Date, the Master Servicer shall also have such option. Upon any such optional
repurchase, the Trust Estate will terminate and any remaining assets in the
Trust Estate shall be released to the repurchasing party.
-4-
<PAGE> 131
The Issuer, the Master Servicer, the Indenture Trustee and the Bond
Registrar and any agent of the Issuer, the Master Servicer, the Indenture
Trustee or the Bond Registrar may treat the Person in whose name this Bond is
registered as the owner hereof for all purposes, and none of the Issuer, the
Master Servicer, the Indenture Trustee, the Bond Registrar or any such agent
shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Series 1998-2 Supplement or be valid for any purpose.
-5-
<PAGE> 132
THIS BOND AND THE SERIES 1998-2 SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used herein and not defined herein shall have the
meaning given them in the Series 1998-2 Supplement.
IN WITNESS WHEREOF, CMC Securities Corporation III has caused this Bond
to be duly executed.
Dated: September 30, 1998 CMC SECURITIES CORPORATION III
BY:
------------------------------------
Wade Walker
Vice President - Asset and
Liability Management
CERTIFICATION OF AUTHENTICATION
THIS IS A CLASS ____ BOND REFERRED TO IN THE WITHINMENTIONED
INDENTURE.
THE FIRST NATIONAL BANK OF CHICAGO,
AS INDENTURE TRUSTEE
BY:
------------------------------------
AUTHORIZED SIGNATORY
<PAGE> 133
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Bond shall be construed as though they were written out in full according to
applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM--as tenants in common UNIF GIFT MIN ACT--. . . Custodian . . . . . . .
TEN ENT--as tenants by the (Cus) (Minor)
entireties Under Uniform Gifts to Minors
JT TEN--as joint tenants with
rights of survivor- Act . . . . . . . . . . . .
ship and not as Tenants (State)
in Common
</TABLE>
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED
THOUGH NOT IN THE ABOVE LIST.
<PAGE> 134
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
--------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Bond and does hereby irrevocably constitute and appoint _____________
(Attorney) to transfer the said Bond in the Bond Register, with full power of
substitution in the premises.
Dated:
------------------------ ---------------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of this Bond in every
particular without alteration or
enlargement or any change whatever.
- --------------------------------
SIGNATURE GUARANTEED: The
signature must be guaranteed by a
commercial bank or trust company
or by a member firm of the New
York Stock Exchange or another
national securities exchange.
Notarized or witnessed signatures
are not acceptable.
<PAGE> 135
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of payment:
Payment 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 reports and statements should be
mailed to ______________________________. This information is provided by
_________________________________, the assignee named above, or
____________________________________, as its agent.
<PAGE> 136
EXHIBIT A-4
Form of Bond
(Class B-1, B-2, II-B-1, and II-B-2)
(Begins on next page)
<PAGE> 137
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUIRED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS BOND IS A REGULAR INTEREST IN A REMIC. PRINCIPAL OF THIS BOND IS
PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL OF THIS BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
THIS CLASS ____ BOND IS SUBORDINATED TO THE EXTENT DESCRIBED IN THE SERIES
1998-2 SUPPLEMENT REFERENCED HEREIN.
THIS BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE INDENTURE
REFERRED TO HEREIN, AND THE ISSUER IS NOT OTHERWISE LIABLE FOR PAYMENTS ON THIS
BOND.
CMC SECURITIES CORPORATION III
COLLATERALIZED MORTGAGE OBLIGATIONS, SERIES 1998-2
CLASS ____
DUE:____
ACCRUAL DATE: September 1, 1998
ISSUE DATE: September 30, 1998
$____ CUSIP NO.____
____ BOND INTEREST RATE CERTIFICATE NUMBER ____
CMC SECURITIES CORPORATION III, a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received hereby promises to pay to CEDE & CO. or registered
assigns, the principal sum of ____ DOLLARS (____) in monthly payments of
principal and interest on the twenty-fifth day of each month or, if such day is
not a Business Day, then the next succeeding Business Day (each a "Payment
Date"), commencing in October 1998 and ending on or before the Payment Date
occurring in ____. This Bond is one of a duly authorized issue of non-recourse
Bonds of the Issuer, designated as its Collateralized Mortgage Obligations,
Series 1998-2. The Bonds are issued in multiple classes under the Issuer's
Indenture dated as of March 1, 1998, as amended (herein called the "Indenture"),
to which Indenture and all indentures supplemental thereto, including the Series
1998-2 Supplement dated as of September 30, 1998 (the "Series 1998-2
Supplement"), among the Issuer, The First National Bank of Chicago, as indenture
trustee (the "Indenture Trustee", which term includes any successor Trustee
<PAGE> 138
under the Indenture) and Norwest Bank Minnesota, National Association, as Bond
Administrator, which authorized the Bonds, reference is hereby made for a
statement of the respective rights thereunder of the Issuer, the Indenture
Trustee and the holders of the Bonds and the terms upon which the Bonds are, and
are to be, authenticated and delivered.
The Bonds are collateralized by two separate series of mortgage
pass-through certificates (the "Conventional Certificates"), each of which
series evidences the entire beneficial ownership interest in one of two pools of
Mortgage Loans. Each pool of Mortgage Loans has been deposited into a separate
trust (each, a "Trust") pursuant to the terms of the Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") dated as of September 1, 1998
among the Issuer, as seller, Norwest Bank Minnesota, National Association, as
master servicer (the "Master Servicer"), and The First National Bank of Chicago,
as certificate trustee (the "Certificate Trustee"). Each Trust has created a
series of Conventional Certificates for the benefit of the Issuer in exchange
for the related pool of Mortgage Loans. The Conventional Certificates were
pledged to the Indenture Trustee under the terms of the Indenture.
All capitalized terms used without definition in this Bond shall have
the meanings assigned to such terms in the Indenture or the Series 1998-2
Supplement, as applicable.
This Bond does not purport to summarize the Indenture or the Series
1998-2 Supplement and reference should be made to the Indenture and the Series
1998-2 Supplement for the interests, rights and limitations of rights, benefits,
obligations and duties of the holders of the Bond thereunder, and the rights,
duties and immunities of the Indenture Trustee.
Payments of principal of and interest on this Bond will be paid in
accordance with the terms of the Series 1998-2 Supplement out of the Available
Funds for such Payment Date, to the extent and subject to the limitations set
forth in the Series 1998-2 Supplement, on each Payment Date to the Person in
whose name this Bond is registered at the close of business on the last Business
Day of the month immediately preceding the month of such distribution (the
"Record Date"). All sums payable on this Bond are payable in the coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts.
Realized Losses, Net Interest Shortfalls and certain writedown amounts
shall be allocated among the Classes of Bonds on the applicable Payment Date in
the manner set forth in the Series 1998-2 Supplement. To the extent provided in
the Series 1998-2 Supplement, the Subordinate Bonds will be subordinated in
right of payment to the other Classes of Bonds and each Class of the Subordinate
Bonds will be subordinated in right of payment to each of the other Classes of
Subordinate Bonds with a lower numerical Class designation, if any. All Realized
Losses, Net Interest Shortfalls and writedown amounts allocated to any Class of
Bonds will be allocated pro rata among the outstanding Bonds of such Class, as
described in the Series 1998-2 Supplement.
The Bonds are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and certain other assets, all as more
specifically set forth in the Series 1998-2 Supplement.
So long as this Bond is registered in the name of a Depository or its
nominee, the Indenture Trustee will make payments of principal of and interest
on this Bond by wire transfers of
-2-
<PAGE> 139
immediately available funds to the Depository or its nominee. Otherwise, all
payments on this Bond under the Series 1998-2 Supplement will be made by or on
behalf of the Indenture Trustee as provided in the Indenture. Notwithstanding
the above, the final payment on this Bond will be made after due notice by the
Indenture Trustee of the pendency of such payment and only upon presentation and
surrender of this Bond at its principal Corporate Trust Office or such other
offices or agencies appointed by the Indenture Trustee for that purpose and such
other locations provided in the Series 1998-2 Supplement.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Holders of Bonds representing
two-thirds of the Aggregate Current Principal Amount of all Bonds at the time
Outstanding, in case Outstanding Bonds of all Series are to be affected, or with
the consent of the Holders of two-thirds of the Aggregate Current Principal
Amount of all the Bonds at the time Outstanding of each Series to be affected,
in case one or more, but less than all, of the Series of Bonds then Outstanding
are to be affected; provided however, that prior to the date on which the Class
Imputed Principal Balance of each Class of Senior Bonds of a Series has been
reduced to zero, no amendment, variation or modification shall be made to
Article V of the Indenture in respect of any Series of Bonds without the consent
of the Holders representing not less than 100% of the Aggregate Current
Principal Amount of all Outstanding Senior Bonds of such Series. The consent of
the Holders of any Junior Bonds of such Series shall not be required to be
obtained prior to making any amendment for such series to Article V of the
Indenture for so long as any Senior Bond of such Series is Outstanding. Upon
reduction to zero of the Class Imputed Principal Balance of each Class of Senior
Bonds of a Series, no amendment, variation or modification to Article V of the
Indenture shall be made in respect of such Series of Bonds without the consent
of the Holders representing not less than two-thirds of the Aggregate Current
Principal Amount of the Highest Priority Junior Class of such Series.
The Indenture also contains provisions permitting the Holders of Bonds
representing specified percentages of the Aggregate Current Principal Amount of
the Bonds of a Series at the time Outstanding on behalf of the Holders of all
the Bonds of such Series, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder, at the time of the
giving thereof, of this Bond (or any one or more Predecessor Bonds) shall be
conclusive and binding upon such Holder and upon all future holders of this Bond
and of any Bond issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent or waiver is
made upon this Bond. The Indenture also permits the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of the Holders of the Bonds of any Series issued thereunder.
The Bonds are issuable in fully-registered form only, without coupons,
in denominations as specified in the Series 1998-2 Supplement. As provided in
the Series 1998-2 Supplement and subject to any limitations on transfer of this
Bond by a Depository or its nominee and certain limitations set forth in the
Series 1998-2 Supplement, the transfer of this Bond is registrable in the Bond
Register upon surrender of this Bond for registration or transfer at the
principal Corporate Trust Office of the Indenture Trustee or such other offices
or agencies appointed by the Indenture Trustee for that purpose and such other
locations provided in the Series 1998-2 Supplement, duly
-3-
<PAGE> 140
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Indenture Trustee and the
Bond Registrar duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new Bonds of the same
Class in the same aggregate Principal Balance will be issued to the designated
transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
set forth, this Bond is exchangeable for a new Bond of the same Class in the
same denomination. No service charge will be made for any such registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Bonds.
At its option, Bear Stearns Mortgage Capital Corporation ("BSMCC") or
its designee may, upon giving written notice to the Issuer, the Master Servicer,
the Certificate Trustee and the Indenture Trustee, repurchase from the related
Trust all of the remaining Mortgage Loans of any Mortgage Loan Group, and
thereby effect an early termination of the related Certificates and redemption
of the Bonds of the related Bond Group, on any Payment Date when the aggregate
outstanding principal balance of the Mortgage Loans in such Mortgage Loan Groups
is equal to or less than 5% of the aggregate outstanding principal balance of
the Mortgage Loans in such Mortgage Loan Group as of the Cut-off Date. If on any
Payment Date BSMCC or its designee has not exercised such option and the
aggregate outstanding principal balance of the Mortgage Loans in any Mortgage
Loan Group is equal to or less than 2.5% of the aggregate outstanding principal
balance of the Mortgage Loans in such Mortgage Loan Group as of the Cut-off
Date, the Master Servicer shall also have such option. Upon any such optional
repurchase, the Trust Estate will terminate and any remaining assets in the
Trust Estate shall be released to the repurchasing party.
The Issuer, the Indenture Trustee and the Bond Registrar and any agent
of the Issuer, the Indenture Trustee or the Bond Registrar may treat the Person
in whose name this Bond is registered as the owner hereof for all purposes, and
none of the Issuer, the Master Servicer, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Series 1998-2 Supplement or be valid for any purpose.
-4-
<PAGE> 141
THIS BOND AND THE SERIES 1998-2 SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used herein and not defined herein shall have the
meaning given them in the Series 1998-2 Supplement.
IN WITNESS WHEREOF, CMC Securities Corporation III has caused this Bond
to be duly executed.
Dated: September 30, 1998 CMC SECURITIES CORPORATION III
BY:
------------------------------------------
Wade Walker
Vice President - Asset and Liability
Management
CERTIFICATION OF AUTHENTICATION
THIS IS A CLASS ____ BOND REFERRED TO IN THE WITHINMENTIONED
INDENTURE.
THE FIRST NATIONAL BANK OF CHICAGO,
AS INDENTURE TRUSTEE
BY:
------------------------------------------
AUTHORIZED SIGNATORY
-5-
<PAGE> 142
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Bond shall be construed as though they were written out in full according to
applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM--as tenants in common UNIF GIFT MIN ACT--.................Custodian . . . . . . .
TEN ENT--as tenants by the (Cus) (Minor)
entireties Under Uniform Gifts to Minors
JT TEN--as joint tenants with
rights of survivor- Act . . . . . . . . . . . . . . . . . . .
ship and not as Tenants (State)
in Common
</TABLE>
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED
THOUGH NOT IN THE ABOVE LIST.
<PAGE> 143
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
- --------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Bond and does hereby irrevocably constitute and appoint
______________________ (Attorney) to transfer the said Bond in the Bond
Register, with full power of substitution in the premises.
Dated:
----------------------- ----------------------------------------
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of
this Bond in every particular
without alteration or enlargement
or any change whatever.
- ---------------------------
SIGNATURE GUARANTEED: The
signature must be guaranteed by
a commercial bank or trust company
or by a member firm of the New York
Stock Exchange or another national
securities exchange. Notarized or
witnessed signatures are not acceptable.
<PAGE> 144
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of payment:
Payment 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 reports and statements should be
mailed to ______________________________. This information is provided by
_________________________________, the assignee named above, or
____________________________________, as its agent.
<PAGE> 145
EXHIBIT A-5
Form of Bond
(Class B-3 and II-B-3)
(Begins on next page)
<PAGE> 146
THIS BOND IS A REGULAR INTEREST IN A REMIC. PRINCIPAL OF THIS BOND IS PAYABLE
IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF
THIS BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEITHER THIS BOND NOR ANY BENEFICIAL INTEREST HEREIN MAY BE TRANSFERRED UNLESS
THE INDENTURE TRUSTEE HAS RECEIVED EITHER (A) A CERTIFICATE FROM SUCH TRANSFEREE
TO THE EFFECT THAT (i) SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN, TRUST OR
ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN DEFINED IN SECTION
3(32) OF ERISA SUBJECT TO ANY FEDERAL STATE OR LOCAL LAW WHICH IS, TO MATERIAL
EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW")
(EACH, A "BENEFIT PLAN") AND IS NOT AN ENTITY, INCLUDING AN INSURANCE COMPANY
SEPARATE ACCOUNT OR INSURANCE COMPANY GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS
INCLUDE BENEFIT PLAN ASSETS BY REASON OF A BENEFIT PLAN'S INVESTMENT IN THE
ENTITY (SUCH BENEFIT PLAN OR ENTITY, A "BENEFIT PLAN INVESTOR") OR (ii) IF SUCH
TRANSFEREE IS AN INSURANCE COMPANY, TO THE EFFECT THAT SUCH COMPANY IS NOT A
BENEFIT PLAN INVESTOR IS ELIGIBLE FOR AN EXEMPTION TO THE APPLICABLE PROHIBITED
TRANSACTION PROVISIONS OF ERISA, THE CODE AND SIMILAR LAW OR (iii) IN SUCH OTHER
FORM AND SUBSTANCE AS SHALL BE SATISFACTORY TO THE INDENTURE TRUSTEE AND THE
ISSUER, OR (B) AN OPINION OF COUNSEL SATISFACTORY TO THE INDENTURE TRUSTEE AND
THE ISSUER TO THE EFFECT THAT THE PURCHASE AND HOLDING OF THIS BOND (i) WILL NOT
CONSTITUTE OR RESULT IN THE ASSETS OF THE TRUST ESTATE BEING DEEMED TO BE "PLAN
ASSETS" SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR
PROHIBITED TRANSACTIONS PROVISIONS OF SECTION 4975 OF THE CODE OR SIMILAR LAW OR
(ii) WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE
MEANING OF SECTION 406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE OR
SIMILAR LAW, AND WILL NOT SUBJECT THE INDENTURE TRUSTEE, THE CERTIFICATE
TRUSTEE, THE ISSUER, THE MASTER SERVICER, ANY SUB-SERVICER, THE CERTIFICATE
TRUSTEE, THE INDENTURE TRUSTEE OR THEIR RESPECTIVE AFFILIATES TO ANY OBLIGATION
OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA, SECTION 4975 OF
THE CODE OR SIMILAR LAW) IN ADDITION TO THOSE UNDERTAKEN IN THE INDENTURE.
THIS CLASS ____ BOND IS SUBORDINATED TO THE EXTENT DESCRIBED IN THE SERIES
1998-2 SUPPLEMENT REFERENCED HEREIN.
THIS BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE INDENTURE
REFERRED TO HEREIN, AND THE ISSUER IS NOT OTHERWISE LIABLE FOR PAYMENTS ON THIS
BOND.
<PAGE> 147
CMC SECURITIES CORPORATION III
COLLATERALIZED MORTGAGE OBLIGATIONS, SERIES 1998-2
CLASS ____
DUE:____
ACCRUAL DATE: September 1, 1998
ISSUE DATE: September 30, 1998
$____ CUSIP NO.____
____% BOND INTEREST RATE CERTIFICATE NUMBER ____
CMC SECURITIES CORPORATION III, a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received hereby promises to pay to CEDE & CO. or registered
assigns, the principal sum of ____ DOLLARS ($____) in monthly payments of
principal and interest on the twenty-fifth day of each month or, if such day is
not a Business Day, then the next succeeding Business Day (each a "Payment
Date"), commencing in October 1998 and ending on or before the Payment Date
occurring in ____. This Bond is one of a duly authorized issue of non-recourse
Bonds of the Issuer, designated as its Collateralized Mortgage Obligations,
Series 1998-2. The Bonds are issued in multiple classes under the Issuer's
Indenture dated as of March 1, 1998, as amended (herein called the "Indenture"),
to which Indenture and all indentures supplemental thereto, including the Series
1998-2 Supplement dated as of September 30, 1998 (the "Series 1998-2
Supplement"), among the Issuer, The First National Bank of Chicago, as indenture
trustee (the "Indenture Trustee", which term includes any successor Trustee
under the Indenture) and Norwest Bank Minnesota, National Association, as Bond
Administrator, which authorized the Bonds, reference is hereby made for a
statement of the respective rights thereunder of the Issuer, the Indenture
Trustee and the holders of the Bonds and the terms upon which the Bonds are, and
are to be, authenticated and delivered.
The Bonds are collateralized by two separate series of mortgage
pass-through certificates (the "Conventional Certificates"), each of which
series evidences the entire beneficial ownership interest in one of two pools of
Mortgage Loans. Each pool of Mortgage Loans has been deposited into a separate
trust (each, a "Trust") pursuant to the terms of the Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") dated as of September 1, 1998
among the Issuer, as seller, Norwest Bank Minnesota, National Association, as
master servicer (the "Master Servicer"), and The First National Bank of Chicago,
as certificate trustee (the "Certificate Trustee"). Each Trust has created a
series of Conventional Certificates for the benefit of the Issuer in exchange
for the related pool of Mortgage Loans. The Conventional Certificates were
pledged to the Indenture Trustee under the terms of the Indenture.
All capitalized terms used without definition in this Bond shall have
the meanings assigned to such terms in the Indenture or the Series 1998-2
Supplement, as applicable.
This Bond does not purport to summarize the Indenture or the Series
1998-2 Supplement and reference should be made to the Indenture and the Series
1998-2 Supplement for the interests, rights and limitations of rights, benefits,
obligations and duties of the holders of the Bond thereunder, and the rights,
duties and immunities of the Indenture Trustee.
-2-
<PAGE> 148
Payments of principal of and interest on this Bond will be paid in
accordance with the terms of the Series 1998-2 Supplement out of the Available
Funds for such Payment Date, to the extent and subject to the limitations set
forth in the Series 1998-2 Supplement, on each Payment Date to the Person in
whose name this Bond is registered at the close of business on the last Business
Day of the month immediately preceding the month of such distribution (the
"Record Date"). All sums payable on this Bond are payable in the coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts.
Realized Losses, Net Interest Shortfalls and certain writedown amounts
shall be allocated among the Classes of Bonds on the applicable Payment Date in
the manner set forth in the Series 1998-2 Supplement. To the extent provided in
the Series 1998-2 Supplement, the Subordinate Bonds will be subordinated in
right of payment to the other Classes of Bonds and each Class of the Subordinate
Bonds will be subordinated in right of payment to each of the other Classes of
Subordinate Bonds with a lower numerical Class designation, if any. All Realized
Losses, Net Interest Shortfalls and writedown amounts allocated to any Class of
Bonds will be allocated pro rata among the outstanding Bonds of such Class, as
described in the Series 1998-2 Supplement.
The Bonds are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and certain other assets, all as more
specifically set forth in the Series 1998-2 Supplement.
So long as this Bond is registered in the name of a Depository or its
nominee, the Indenture Trustee will make payments of principal of and interest
on this Bond by wire transfers of immediately available funds to the Depository
or its nominee. Otherwise, all payments on this Bond under the Series 1998-2
Supplement will be made by or on behalf of the Indenture Trustee as provided in
the Indenture. Notwithstanding the above, the final payment on this Bond will be
made after due notice by the Indenture Trustee of the pendency of such payment
and only upon presentation and surrender of this Bond at its principal Corporate
Trust Office or such other offices or agencies appointed by the Indenture
Trustee for that purpose and such other locations provided in the Series 1998-2
Supplement.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Holders of Bonds representing
two-thirds of the Aggregate Current Principal Amount of all Bonds at the time
Outstanding, in case Outstanding Bonds of all Series are to be affected, or with
the consent of the Holders of two-thirds of the Aggregate Current Principal
Amount of all the Bonds at the time Outstanding of each Series to be affected,
in case one or more, but less than all, of the Series of Bonds then Outstanding
are to be affected; provided however, that prior to the date on which the Class
Imputed Principal Balance of each Class of Senior Bonds of a Series has been
reduced to zero, no amendment, variation or modification shall be made to
Article V of the Indenture in respect of any Series of Bonds without the consent
of the Holders representing not less than 100% of the Aggregate Current
Principal Amount of all Outstanding Senior Bonds of such Series. The consent of
the Holders of any Junior Bonds of such Series shall not be required to be
obtained prior to making any amendment for such series to Article V of the
Indenture for so long as any Senior Bond of such Series is Outstanding. Upon
reduction to zero of the Class Imputed Principal Balance of each Class of Senior
Bonds of a Series, no amendment, variation or modification to Article V of the
-3-
<PAGE> 149
Indenture shall be made in respect of such Series of Bonds without the consent
of the Holders representing not less than two-thirds of the Aggregate Current
Principal Amount of the Highest Priority Junior Class of such Series.
The Indenture also contains provisions permitting the Holders of Bonds
representing specified percentages of the Aggregate Current Principal Amount of
the Bonds of a Series at the time Outstanding on behalf of the Holders of all
the Bonds of such Series, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder, at the time of the
giving thereof, of this Bond (or any one or more Predecessor Bonds) shall be
conclusive and binding upon such Holder and upon all future holders of this Bond
and of any Bond issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent or waiver is
made upon this Bond. The Indenture also permits the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of the Holders of the Bonds of any Series issued thereunder.
The Bonds are issuable in fully-registered form only, without coupons,
in denominations as specified in the Series 1998-2 Supplement. As provided in
the Series 1998-2 Supplement and subject to any limitations on transfer of this
Bond by a Depository or its nominee and certain limitations set forth in the
Series 1998-2 Supplement, the transfer of this Bond is registrable in the Bond
Register upon surrender of this Bond for registration or transfer at the
principal Corporate Trust Office of the Indenture Trustee or such other offices
or agencies appointed by the Indenture Trustee for that purpose and such other
locations provided in the Series 1998-2 Supplement, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Indenture Trustee and the Bond Registrar
duly executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Bonds of the same Class in the same
aggregate Principal Balance will be issued to the designated transferee or
transferees.
As provided in the Indenture and subject to certain limitations therein
set forth, this Bond is exchangeable for a new Bond of the same Class in the
same denomination. No service charge will be made for any such registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Bonds.
At its option, Bear Stearns Mortgage Capital Corporation ("BSMCC") or
its designee (or if BSMCC or its designee does not exercise such option, the
Master Servicer) may, upon giving written notice to the Issuer, Master Servicer,
the Certificate Trustee and the Indenture Trustee, repurchase from the Issuer
all of the remaining Mortgage Loans of any Mortgage Loan Group, and thereby
effect an early termination of the related Certificates and redemption of the
Bonds of the related Bond Group, on any Payment Date when the aggregate
outstanding principal balance of the Mortgage Loans in such Mortgage Loan Groups
is equal to or less than 5% of the aggregate outstanding principal balance of
the Mortgage Loans in such Mortgage Loan Group as of the Cut-off Date. Upon any
such optional repurchase, the Trust Estate will terminate and any remaining
assets in the Trust Estate shall be released to the repurchasing party.
-4-
<PAGE> 150
The Issuer, the Indenture Trustee and the Bond Registrar and any agent
of the Issuer, the Indenture Trustee or the Bond Registrar may treat the Person
in whose name this Bond is registered as the owner hereof for all purposes, and
none of the Issuer, the Master Servicer, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Series 1998-2 Supplement or be valid for any purpose.
-5-
<PAGE> 151
THIS BOND AND THE SERIES 1998-2 SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used herein and not defined herein shall have the
meaning given them in the Series 1998-2 Supplement.
IN WITNESS WHEREOF, CMC Securities Corporation III has caused this Bond
to be duly executed.
Dated: September 30, 1998 CMC SECURITIES CORPORATION III
BY:
----------------------------------------
Wade Walker
Vice President - Asset and Liability
Management
CERTIFICATION OF AUTHENTICATION
THIS IS A CLASS ____ BOND REFERRED TO IN THE WITHINMENTIONED
INDENTURE.
THE FIRST NATIONAL BANK OF CHICAGO,
AS INDENTURE TRUSTEE
BY:
----------------------------------------
AUTHORIZED SIGNATORY
<PAGE> 152
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Bond shall be construed as though they were written out in full according to
applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT--....Custodian .....
TEN ENT--as tenants by the (Cus) (Minor)
entireties Under Uniform Gifts to Minors
JT TEN-- as joint tenants with
rights of survivor- Act . . . . . . . . . . . . . . . . . .
ship and not as Tenants (State)
in Common
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED
THOUGH NOT IN THE ABOVE LIST.
<PAGE> 153
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE_______________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address of assignee)
the within Bond and does hereby irrevocably constitute and appoint _____________
(Attorney) to transfer the said Bond in the Bond Register, with full power of
substitution in the premises.
Dated:
---------------------- ---------------------------------------------
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Bond in every particular without
alteration or enlargement or any
change whatever.
- ------------------------------
SIGNATURE GUARANTEED: The
signature must be guaranteed
by a commercial bank or trust
company or by a member firm of
the New York Stock Exchange or
another national securities
exchange. Notarized or
witnessed signatures are not
acceptable.
<PAGE> 154
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of payment:
Payment 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 reports and statements should be
mailed to ______________________________. This information is provided by
_________________________________, the assignee named above, or
____________________________________, as its agent.
<PAGE> 155
EXHIBIT A-6
Form of Bond
(Class B-4, B-5, B-6, II-B-4, II-B-5 and II-B-6)
(Begins on next page)
<PAGE> 156
THIS CLASS ____ BOND HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS OR
"BLUE SKY" LAWS, AND MAY NOT DIRECTLY OR INDIRECTLY BE OFFERED OR SOLD OR
OTHERWISE DISPOSED OF WITHOUT COMPLIANCE WITH SUCH LAWS. IN CONNECTION WITH ANY
TRANSFER OF THIS BOND, THE INDENTURE TRUSTEE SHALL REQUIRE EITHER (A) A
REPRESENTATION LETTER FROM THE TRANSFEROR AND TRANSFEREE DEMONSTRATING
COMPLIANCE WITH APPLICABLE SECURITIES LAWS (AND THE INDENTURE TRUSTEE MAY
REQUIRE AN OPINION OF COUNSEL WITH RESPECT TO SUCH TRANSFER) OR (B) A RULE 144A
INVESTMENT LETTER FROM THE TRANSFEREE STATING, AMONG OTHER THINGS, THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER."
NEITHER THIS BOND NOR ANY BENEFICIAL INTEREST HEREIN MAY BE TRANSFERRED UNLESS
THE INDENTURE TRUSTEE HAS RECEIVED EITHER (A) A CERTIFICATE FROM SUCH TRANSFEREE
TO THE EFFECT THAT (i) SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN, TRUST OR
ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN DEFINED IN SECTION
3(32) OF ERISA SUBJECT TO ANY FEDERAL STATE OR LOCAL LAW WHICH IS, TO MATERIAL
EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW")
(EACH, A "BENEFIT PLAN") AND IS NOT AN ENTITY, INCLUDING AN INSURANCE COMPANY
SEPARATE ACCOUNT OR INSURANCE COMPANY GENERAL ACCOUNT, WHOSE UNDERLYING ASSETS
INCLUDE BENEFIT PLAN ASSETS BY REASON OF A BENEFIT PLAN'S INVESTMENT IN THE
ENTITY (SUCH BENEFIT PLAN OR ENTITY, A "BENEFIT PLAN INVESTOR") OR (ii) IF SUCH
TRANSFEREE IS AN INSURANCE COMPANY, TO THE EFFECT THAT SUCH COMPANY IS NOT A
BENEFIT PLAN INVESTOR IS ELIGIBLE FOR AN EXEMPTION TO THE APPLICABLE PROHIBITED
TRANSACTION PROVISIONS OF ERISA, THE CODE AND SIMILAR LAW OR (iii) IN SUCH OTHER
FORM AND SUBSTANCE AS SHALL BE SATISFACTORY TO THE INDENTURE TRUSTEE AND THE
ISSUER, OR (B) AN OPINION OF COUNSEL SATISFACTORY TO THE INDENTURE TRUSTEE AND
THE ISSUER TO THE EFFECT THAT THE PURCHASE AND HOLDING OF THIS BOND (i) WILL NOT
CONSTITUTE OR RESULT IN THE ASSETS OF THE TRUST ESTATE BEING DEEMED TO BE "PLAN
ASSETS" SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR
PROHIBITED TRANSACTIONS PROVISIONS OF SECTION 4975 OF THE CODE OR SIMILAR LAW OR
(ii) WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE
MEANING OF SECTION 406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE OR
SIMILAR LAW, AND WILL NOT SUBJECT THE INDENTURE TRUSTEE, THE CERTIFICATE
TRUSTEE, THE ISSUER, THE MASTER SERVICER, ANY SUB-SERVICER, THE CERTIFICATE
TRUSTEE, THE INDENTURE TRUSTEE OR THEIR RESPECTIVE AFFILIATES TO ANY OBLIGATION
OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA, SECTION 4975 OF
THE CODE OR SIMILAR LAW) IN ADDITION TO THOSE UNDERTAKEN IN THE INDENTURE.
<PAGE> 157
THIS CLASS ____ BOND IS SUBORDINATED TO THE EXTENT DESCRIBED HEREIN AND IN THE
SERIES 1998-2 SUPPLEMENT REFERENCED HEREIN.
THIS BOND IS A REGULAR INTEREST IN A REMIC. PRINCIPAL OF THIS BOND IS
PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL OF THIS BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
THIS BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE INDENTURE
REFERRED TO HEREIN, AND THE ISSUER IS NOT OTHERWISE LIABLE FOR PAYMENTS ON THIS
BOND.
CMC SECURITIES CORPORATION III
COLLATERALIZED MORTGAGE OBLIGATIONS, SERIES 1998-2
CLASS ____
DUE:____
ACCRUAL DATE: September 1, 1998
ISSUE DATE: September 30, 1998
$____ CUSIP NO.____
____% BOND INTEREST RATE CERTIFICATE NUMBER ____
CMC SECURITIES CORPORATION III, a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received hereby promises to pay to THE FIRST NATIONAL BANK
OF CHICAGO or registered assigns, the principal sum of ____ DOLLARS ($____) in
monthly payments of principal and interest on the twenty-fifth day of each month
or, if such day is not a Business Day, then the next succeeding Business Day
(each a "Payment Date"), commencing in October 1998 and ending on or before the
Payment Date occurring in ____. This Bond is one of a duly authorized issue of
non-recourse Bonds of the Issuer, designated as its Collateralized Mortgage
Obligations, Series 1998-2. The Bonds are issued in multiple classes under the
Issuer's Indenture dated as of March 1, 1998, as amended (herein called the
"Indenture"), to which Indenture and all indentures supplemental thereto,
including the Series 1998-2 Supplement dated as of September 30, 1998 (the
"Series 1998-2 Supplement"), among the Issuer, The First National Bank of
Chicago, as indenture trustee (the "Indenture Trustee", which term includes any
successor Trustee under the Indenture) and Norwest Bank Minnesota, National
Association, as Bond Administrator, which authorized the Bonds. Reference is
hereby made to the Indenture and the Series 1998-2 Supplement for a statement of
the respective rights thereunder of the Issuer, the Indenture Trustee and the
holders of the Bonds and the terms upon which the Bonds are, and are to be,
authenticated and delivered.
The Bonds are collateralized by two separate series of mortgage
pass-through certificates (the "Conventional Certificates"), each of which
series evidences the entire beneficial ownership interest in one of two pools of
Mortgage Loans. Each pool of Mortgage Loans has been deposited into a separate
trust (each, a "Trust") pursuant to the terms of the Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") dated as of September 1, 1998
among the Issuer, as seller, Norwest Bank Minnesota, National Association, as
master servicer (the "Master Servicer"), and The First National Bank of Chicago,
as certificate trustee (the "Certificate Trustee"). Each Trust has
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created a series of Conventional Certificates for the benefit of the Issuer in
exchange for the related pool of Mortgage Loans. The Conventional Certificates
were pledged to the Indenture Trustee under the terms of the Indenture.
All capitalized terms used without definition in this Bond shall have
the meanings assigned to such terms in the Indenture or the Series 1998-2
Supplement, as applicable.
This Bond does not purport to summarize the Indenture or the Series
1998-2 Supplement and reference should be made to the Indenture and the Series
1998-2 Supplement for the interests, rights and limitations of rights, benefits,
obligations and duties of the holders of the Bond thereunder, and the rights,
duties and immunities of the Indenture Trustee.
Payments of principal of and interest on this Bond will be paid in
accordance with the terms of the Series 1998-2 Supplement and will be made out
of the Available Funds for such Payment Date, to the extent and subject to the
limitations set forth in the Series 1998-2 Supplement, on each Payment Date to
the Person in whose name this Bond is registered at the close of business on the
last Business Day of the month immediately preceding the month of such
distribution (the "Record Date"). All sums payable on this Bond are payable in
the coin or currency of the United States of America as at the time of payment
is legal tender for the payment of public and private debts.
Realized Losses, Net Interest Shortfalls and certain writedown amounts
shall be allocated among the Classes of Bonds on the applicable Payment Date in
the manner set forth in the Series 1998-2 Supplement. To the extent provided in
the Series 1998-2 Supplement, the Subordinate Bonds will be subordinated in
right of payment to the other Classes of Bonds and each Class of the Subordinate
Bonds will be subordinated in right of payment to each of the other Classes of
Subordinate Bonds with a lower numerical Class designation, if any. All Realized
Losses, Net Interest Shortfalls and writedown amounts allocated to any Class of
Bonds will be allocated pro rata among the outstanding Bonds of such Class, as
described in the Series 1998-2 Supplement.
The Bonds are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans, all as more specifically set forth in
the Series 1998-2 Supplement.
All payments on this Bond under the Series 1998-2 Supplement will be
made by or on behalf of the Indenture Trustee as provided in the Indenture. The
final payment on this Bond will be made after due notice by the Indenture
Trustee of the pendency of such payment and only upon presentation and surrender
of this Bond at its principal Corporate Trust Office or such other offices or
agencies appointed by the Indenture Trustee for that purpose and such other
locations provided in the Series 1998-2 Supplement.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Holders of Bonds representing
two-thirds of the Aggregate Current Principal Amount of all Bonds at the time
Outstanding, in case Outstanding Bonds of all Series are to be affected, or with
the consent of the Holders of two-thirds of the Aggregate Current Principal
Amount of all the Bonds at the time Outstanding of each Series to be affected,
in case one or more, but less than all, of the Series of Bonds then Outstanding
are to be affected; provided however, that prior to the date on which the Class
Imputed Principal Balance of each Class of Senior Bonds of a Series has been
reduced to zero, no amendment, variation or modification shall be made to
Article V of the Indenture in respect of
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<PAGE> 159
any Series of Bonds without the consent of the Holders representing not less
than 100% of the Aggregate Current Principal Amount of all Outstanding Senior
Bonds of such Series. The consent of the Holders of any Junior Bonds of such
Series shall not be required to be obtained prior to making any amendment for
such series to Article V of the Indenture for so long as any Senior Bond of such
Series is Outstanding. Upon reduction to zero of the Class Imputed Principal
Balance of each Class of Senior Bonds of a Series, no amendment, variation or
modification to Article V of the Indenture shall be made in respect of such
Series of Bonds without the consent of the Holders representing not less than
two-thirds of the Aggregate Current Principal Amount of the Highest Priority
Junior Class of such Series.
The Indenture also contains provisions permitting the Holders of Bonds
representing specified percentages of the Aggregate Current Principal Amount of
the Bonds of a Series at the time Outstanding on behalf of the Holders of all
the Bonds of such Series, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder, at the time of the
giving thereof, of this Bond (or any one or more Predecessor Bonds) shall be
conclusive and binding upon such Holder and upon all future holders of this Bond
and of any Bond issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent or waiver is
made upon this Bond. The Indenture also permits the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of the Holders of the Bonds of any Series issued thereunder.
The Bonds are issuable in fully-registered form only, without coupons,
in denominations as specified in the Series 1998-2 Supplement. As provided in
the Series 1998-2 Supplement and subject to certain limitations set forth in the
Series 1998-2 Supplement, the transfer of this Bond is registrable in the Bond
Register upon surrender of this Bond for registration or transfer at the
principal Corporate Trust Office of the Indenture Trustee or such other offices
or agencies appointed by the Indenture Trustee for that purpose and such other
locations provided in the Series 1998-2 Supplement, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Indenture Trustee and the Bond Registrar
duly executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Bonds of the same Class in the same
aggregate Principal Balance will be issued to the designated transferee or
transferees.
As provided in the Indenture and subject to certain limitations therein
set forth, this Bond is exchangeable for a new Bond of the same Class in the
same denomination. No service charge will be made for any such registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Bonds.
At its option, Bear Stearns Mortgage Capital Corporation ("BSMCC") or
its designee may, upon giving written notice to the Issuer, the Master Servicer,
the Certificate Trustee and the Indenture Trustee, repurchase from the related
Trust all of the remaining Mortgage Loans of any Mortgage Loan Group, and
thereby effect an early termination of the related Certificates and redemption
of the Bonds of the related Bond Group, on any Payment Date when the aggregate
outstanding principal balance of the Mortgage Loans in such Mortgage Loan Groups
is equal to or less than 5% of the aggregate outstanding principal balance of
the Mortgage Loans in such Mortgage Loan Group as of the Cut-off Date. If on any
Payment Date BSMCC or its designee has not exercised such option and the
aggregate outstanding principal balance of the Mortgage Loans in any
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Mortgage Loan Group is equal to or less than 2.5% of the aggregate outstanding
principal balance of the Mortgage Loans in such Mortgage Loan Group as of the
Cut-off Date, the Master Servicer shall also have such option. Upon any such
optional repurchase, the Trust Estate will terminate and any remaining assets in
the Trust Estate shall be released to the repurchasing party.
The Issuer, the Indenture Trustee and the Bond Registrar and any agent
of the Issuer, the Indenture Trustee or the Bond Registrar may treat the Person
in whose name this Bond is registered as the owner hereof for all purposes, and
none of the Issuer, the Master Servicer, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Series 1998-2 Supplement or be valid for any purpose.
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THIS BOND AND THE SERIES 1998-2 SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used herein and not defined herein shall have the
meaning given them in the Series 1998-2 Supplement.
IN WITNESS WHEREOF, CMC Securities Corporation III has caused this Bond
to be duly executed.
Dated: September 30, 1998 CMC SECURITIES CORPORATION III
BY:
--------------------------------------
Wade Walker
Vice President - Asset and
Liability Management
CERTIFICATION OF AUTHENTICATION
THIS IS A CLASS ____ BOND REFERRED TO IN THE WITHINMENTIONED
INDENTURE.
THE FIRST NATIONAL BANK OF CHICAGO,
AS INDENTURE TRUSTEE
BY:
--------------------------------------
AUTHORIZED SIGNATORY
<PAGE> 162
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Bond shall be construed as though they were written out in full according to
applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM--as tenants in common UNIF GIFT MIN ACT--. . . Custodian . . . . . . .
TEN ENT--as tenants by the (Cus) (Minor)
entireties Under Uniform Gifts to Minors
JT TEN--as joint tenants with
rights of survivor- Act . . . . . . . . . . .
ship and not as Tenants (State)
in Common
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED
THOUGH NOT IN THE ABOVE LIST.
</TABLE>
<PAGE> 163
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
----------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Bond and does hereby irrevocably constitute and appoint
______________________ (Attorney) to transfer the said Bond in the Bond
Register, with full power of substitution in the premises.
Dated:
---------------------- ---------------------------------------------
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Bond in every particular without
alteration or enlargement or any
change whatever.
- ----------------------------------
SIGNATURE GUARANTEED: The
signature must be guaranteed by a
commercial bank or trust company
or by a member firm of the New
York Stock Exchange or another
national securities exchange.
Notarized or witnessed signatures
are not acceptable.
<PAGE> 164
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of payment:
Payment 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 reports and statements should be
mailed to ______________________________. This information is provided by
_________________________________, the assignee named above, or
____________________________________, as its agent.
<PAGE> 165
EXHIBIT A-7
Form of Bond
(Residual Bonds)
(Begins on next page)
<PAGE> 166
THIS BOND HAS BEEN DESIGNATED AS A "RESIDUAL INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" CREATED BY THE SERIES 1998-2 SUPPLEMENT REFERRED TO
BELOW PURSUANT TO THE RELATED PROVISIONS OF THE INTERNAL REVENUE CODE OF 1986
(THE "CODE" ) .
NO TRANSFER OF THIS BOND MAY BE MADE TO AN EMPLOYEE BENEFIT PLAN, OR PERSON
USING "PLAN ASSETS" OF ANY PLAN TO EFFECT SUCH ACQUISITION (INCLUDING ANY
INSURANCE COMPANY UNDER THE CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND THE
SERIES 1998-2 SUPPLEMENT), SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE.
THIS BOND, THE INDENTURE AND THE SERIES 1998-2 SUPPLEMENT MAY BE AMENDED WITHOUT
THE CONSENT OF THE HOLDER HEREOF, AND IN A MANNER THAT MAY ADVERSELY AFFECT THE
INTERESTS OF THE HOLDER HEREOF, IF NECESSARY TO PREVENT THE DISQUALIFICATION OF
THE TRUST ESTATE AS A REMIC.
ANY RESALE, TRANSFER, OR OTHER DISPOSITION OF THIS BOND MAY BE MADE ONLY IF THE
PROPOSED TRANSFEREE PROVIDES AN AFFIDAVIT TO THE INDENTURE TRUSTEE THAT (1) SUCH
TRANSFEREE IS NOT (A) THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION
THEREOF, ANY POSSESSION OF THE UNITED STATES, OR ANY AGENCY OR INSTRUMENTALITY
OF ANY OF THE FOREGOING (OTHER THAN AN INSTRUMENTALITY WHICH IS A CORPORATION IF
ALL OF ITS ACTIVITIES ARE SUBJECT TO TAX AND, EXCEPT FOR THE FEDERAL HOME LOAN
MORTGAGE CORPORATION, A MAJORITY OF ITS BOARD OF DIRECTORS IS NOT SELECTED BY
SUCH GOVERNMENTAL UNIT), (B) ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (C) ANY
ORGANIZATION (OTHER THAN CERTAIN FARMERS' COOPERATIVES DESCRIBED IN SECTION 521
OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
(UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE ON UNRELATED BUSINESS TAXABLE INCOME), (D) A RURAL ELECTRIC AND TELEPHONE
COOPERATIVE DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE, AND (E) ANY OTHER
PERSON SO DESIGNATED BY THE INDENTURE TRUSTEE BASED ON AN OPINION OF COUNSEL
(ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B), (C), (D), OR (E)
BEING HEREINAFTER REFERRED TO AS A "DISQUALIFIED ORGANIZATION"), OR (2) AN AGENT
OF A DISQUALIFIED ORGANIZATION. NOTWITHSTANDING THE REGISTRATION IN THE BOND
REGISTER OR ANY TRANSFER, SALE, OR OTHER DISPOSITION OF THIS BOND TO A
DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH
REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT
<PAGE> 167
WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A SECURITYHOLDER FOR ANY
PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS
ON THIS BOND. EACH HOLDER OF THIS BOND, BY ACCEPTANCE OF THIS BOND, SHALL BE
DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
IF ANY RESALE, TRANSFER, OR OTHER DISPOSITION OF THIS BOND IS MADE TO ANY OF
CERTAIN "PASS-THROUGH ENTITIES" DESCRIBED IN SECTION 860E(E)(6) OF THE CODE, AND
A DISQUALIFIED ORGANIZATION IS THE RECORD HOLDER OF AN INTEREST IN SUCH ENTITY,
THEN A TAX MAY BE IMPOSED ON SUCH ENTITY.
NO TRANSFER OF THIS BOND MAY BE MADE TO A PERSON THAT IS NOT A UNITED STATES
PERSON, AS DEFINED IN THE SERIES 1998-2 SUPPLEMENT REFERRED TO BELOW.
THIS BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE INDENTURE
REFERRED TO HEREIN, AND THE ISSUER IS NOT OTHERWISE LIABLE FOR PAYMENTS ON THIS
BOND.
CMC SECURITIES CORPORATION III
COLLATERALIZED MORTGAGE OBLIGATIONS, SERIES 1998-2
CLASS ____ BOND
DUE:____
ACCRUAL DATE: September 1, 1998
ISSUE DATE: September 30, 1998
$____ CUSIP NO.____
____% BOND INTEREST RATE CERTIFICATE NUMBER 0001
CMC SECURITIES CORPORATION III, a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received hereby promises to pay to BEAR STEARNS SECURITIES
CORP. or registered assigns, the principal sum of ____ AND NO/100 DOLLARS
($____) in monthly payments of principal and interest on the twenty-fifth day of
each month or, if such day is not a Business Day, then the next succeeding
business day (each a "Payment Date"), commencing in April 1998 and ending on or
before the Payment Date occurring in ____. This Bond is one of a duly authorized
issue of non-recourse Bonds of the Issuer, designated as its Collateralized
Mortgage Obligations, Series 1998-2. The Bonds are issued in multiple classes
under the Issuer's Indenture dated as of March 1, 1998, as amended (herein
called the "Indenture"), to which Indenture and all indentures supplemental
thereto, including the Series 1998-2 Supplement dated as of September 30, 1998
(the "Series 1998-2 Supplement"), among the Issuer, The First
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<PAGE> 168
National Bank of Chicago, as indenture trustee (the "Indenture Trustee", which
term includes any successor Trustee under the Indenture) and Norwest Bank
Minnesota, National Association, as Bond Administrator, which authorized the
Bonds, reference is hereby made for a statement of the respective rights
thereunder of the Issuer, the Indenture Trustee and the holders of the Bonds and
the terms upon which the Bonds are, and are to be, authenticated and delivered.
The Bonds are collateralized by two separate series of mortgage
pass-through certificates (the "Conventional Certificates"), each of which
series evidences the entire beneficial ownership interest in one of two pools of
Mortgage Loans. Each pool of Mortgage Loans has been deposited into a separate
trust (each, a "Trust") pursuant to the terms of the Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") dated as of September 1, 1998
among the Issuer, as seller, Norwest Bank Minnesota, National Association, as
master servicer (the "Master Servicer"), and The First National Bank of Chicago,
as certificate trustee (the "Certificate Trustee"). Each Trust has created a
series of Conventional Certificates for the benefit of the Issuer in exchange
for the related pool of Mortgage Loans. The Conventional Certificates were
pledged to the Indenture Trustee under the terms of the Indenture.
All capitalized terms used without definition in this Bond shall have
the meanings assigned to such terms in the Indenture or the Series 1998-2
Supplement, as applicable.
This Bond does not purport to summarize the Indenture or the Series
1998-2 Supplement and reference should be made to the Indenture and the Series
1998-2 Supplement for the interests, rights and limitations of rights, benefits,
obligations and duties of the holders of the Bond thereunder, and the rights,
duties and immunities of the Indenture Trustee.
Payments of principal of and interest on this Bond will be paid in
accordance with the terms of the Series 1998-2 Supplement and will be made out
of the Available Funds for such Payment Date, to the extent and subject to the
limitations set forth in the Series 1998-2 Supplement, on each Payment Date to
the Person in whose name this Bond is registered at the close of business on the
last Business Day of the month immediately preceding the month of such
distribution (the "Record Date"). All sums payable on this Bond are payable in
the coin or currency of the United States of America as at the time of payment
is legal tender for the payment of public and private debts.
Realized Losses, Net Interest Shortfalls and certain writedown amounts
shall be allocated among the Classes of Bonds on the applicable Payment Date in
the manner set forth in the Series 1998-2 Supplement. To the extent provided in
the Series 1998-2 Supplement, the Subordinate Bonds will be subordinated in
right of payment to the other Classes of Bonds and each Class of the Subordinate
Bonds will be subordinated in right of payment to each of the other Classes of
Subordinate Bonds with a lower numerical Class designation, if any. All Realized
Losses, Net Interest Shortfalls and writedown amounts allocated to any Class of
Bonds will be allocated pro rata among the outstanding Bonds of such Class, as
described in the Series 1998-2 Supplement.
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<PAGE> 169
The Bonds are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans and certain other assets, all as more
specifically set forth in the Series 1998-2 Supplement.
So long as this Bond is registered in the name of a Depository or its
nominee, the Indenture Trustee will make payments of principal of and interest
on this Bond by wire transfers of immediately available funds to the Depository
or its nominee. Otherwise, all payments on this Bond under the Series 1998-2
Supplement will be made by or on behalf of the Indenture Trustee as provided in
the Indenture. Notwithstanding the above, the final payment on this Bond will be
made after due notice by the Indenture Trustee of the pendency of such payment
and only upon presentation and surrender of this Bond at its principal Corporate
Trust Office or such other offices or agencies appointed by the Indenture
Trustee for that purpose and such other locations provided in the Series 1998-2
Supplement.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Bonds under the Indenture at any
time by the Issuer with the consent of the Holders of Bonds representing
two-thirds of the Aggregate Current Principal Amount of all Bonds at the time
Outstanding, in case Outstanding Bonds of all Series are to be affected, or with
the consent of the Holders of two-thirds of the Aggregate Current Principal
Amount of all the Bonds at the time Outstanding of each Series to be affected,
in case one or more, but less than all, of the Series of Bonds then Outstanding
are to be affected; provided however, that prior to the date on which the Class
Imputed Principal Balance of each Class of Senior Bonds of a Series has been
reduced to zero, no amendment, variation or modification shall be made to
Article V of the Indenture in respect of any Series of Bonds without the consent
of the Holders representing not less than 100% of the Aggregate Current
Principal Amount of all Outstanding Senior Bonds of such Series. The consent of
the Holders of any Junior Bonds of such Series shall not be required to be
obtained prior to making any amendment for such series to Article V of the
Indenture for so long as any Senior Bond of such Series is Outstanding. Upon
reduction to zero of the Class Imputed Principal Balance of each Class of Senior
Bonds of a Series, no amendment, variation or modification to Article V of the
Indenture shall be made in respect of such Series of Bonds without the consent
of the Holders representing not less than two-thirds of the Aggregate Current
Principal Amount of the Highest Priority Junior Class of such Series.
The Indenture also contains provisions permitting the Holders of Bonds
representing specified percentages of the Aggregate Current Principal Amount of
the Bonds of a Series at the time Outstanding on behalf of the Holders of all
the Bonds of such Series, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder, at the time of the
giving thereof, of this Bond (or any one or more Predecessor Bonds) shall be
conclusive and binding upon such Holder and upon all future holders of this Bond
and of any Bond issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent or waiver is
made upon this Bond. The Indenture also permits the Indenture Trustee to amend
or waive certain terms
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<PAGE> 170
and conditions set forth in the Indenture without the consent of the Holders of
the Bonds of any Series issued thereunder.
The Bonds are issuable in fully-registered form only, without coupons,
in denominations as specified in the Series 1998-2 Supplement. As provided in
the Series 1998-2 Supplement and subject to any limitations on transfer of this
Bond by a Depository or its nominee and certain limitations set forth in the
Series 1998-2 Supplement, the transfer of this Bond is registrable in the Bond
Register upon surrender of this Bond for registration or transfer at the
principal Corporate Trust Office of the Indenture Trustee or such other offices
or agencies appointed by the Indenture Trustee for that purpose and such other
locations provided in the Series 1998-2 Supplement, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Indenture Trustee and the Bond Registrar
duly executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Bonds of the same Class in the same
aggregate Principal Balance will be issued to the designated transferee or
transferees.
As provided in the Indenture and subject to certain limitations therein
set forth, this Bond is exchangeable for a new Bond of the same Class in the
same denomination. No service charge will be made for any such registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Bonds.
At its option, Bear Stearns Mortgage Capital Corporation ("BSMCC") or
its designee may, upon giving written notice to the Issuer, the Master Servicer,
the Certificate Trustee and the Indenture Trustee, repurchase from the related
Trust all of the remaining Mortgage Loans of any Mortgage Loan Group, and
thereby effect an early termination of the related Certificates and redemption
of the Bonds of the related Bond Group, on any Payment Date when the aggregate
outstanding principal balance of the Mortgage Loans in such Mortgage Loan Groups
is equal to or less than 5% of the aggregate outstanding principal balance of
the Mortgage Loans in such Mortgage Loan Group as of the Cut-off Date. If on any
Payment Date BSMCC or its designee has not exercised such option and the
aggregate outstanding principal balance of the Mortgage Loans in any Mortgage
Loan Group is equal to or less than 2.5% of the aggregate outstanding principal
balance of the Mortgage Loans in such Mortgage Loan Group as of the Cut-off
Date, the Master Servicer shall also have such option. Upon any such optional
repurchase, the Trust Estate will terminate and any remaining assets in the
Trust Estate shall be released to the repurchasing party.
The Issuer, the Indenture Trustee and the Bond Registrar and any agent
of the Issuer, the Indenture Trustee or the Bond Registrar may treat the Person
in whose name this Bond is registered as the owner hereof for all purposes, and
none of the Issuer, the Master Servicer, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
-5-
<PAGE> 171
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Series 1998-2 Supplement or be valid for any purpose.
-6-
<PAGE> 172
THIS BOND AND THE SERIES 1998-2 SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used herein and not defined herein shall have the
meaning given them in the Series 1998-2 Supplement.
IN WITNESS WHEREOF, CMC Securities Corporation III has caused this Bond
to be duly executed.
Dated: September 30, 1998 CMC SECURITIES CORPORATION III
BY:
-------------------------------------------
Wade Walker
Vice President - Asset and Liability
Management
CERTIFICATION OF AUTHENTICATION
THIS IS A CLASS ____ BOND REFERRED TO IN THE WITHIN MENTIONED
INDENTURE.
THE FIRST NATIONAL BANK OF CHICAGO,
AS INDENTURE TRUSTEE
BY:
--------------------------------------------
AUTHORIZED SIGNATORY
<PAGE> 173
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Bond shall be construed as though they were written out in full according to
applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT--...Custodian ......
TEN ENT--as tenants by the (Cus) (Minor)
entireties Under Uniform Gifts to Minors
JT TEN--as joint tenants with
rights of survivor- Act . . . . . . . . . . . . .
ship and not as Tenants (State)
in Common
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED
THOUGH NOT IN THE ABOVE LIST.
<PAGE> 174
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE_______________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address of assignee)
the within Bond and does hereby irrevocably constitute and appoint _____________
(Attorney) to transfer the said Bond in the Bond Register, with full power of
substitution in the premises.
Dated:
------------------- ------------------------------------------------
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Bond in every particular without
alteration or enlargement or any
change whatever.
- -------------------------------
SIGNATURE GUARANTEED: The
signature must be guaranteed
by a commercial bank or trust
company or by a member firm of
the New York Stock Exchange or
another national securities
exchange. Notarized or
witnessed signatures are not
acceptable.
<PAGE> 175
PAYMENT INSTRUCTIONS
The assignee should include the following for purposes of payment:
Payment 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 reports and statements should be
mailed to ______________________________. This information is provided by
_________________________________, the assignee named above, or
____________________________________, as its agent.
<PAGE> 176
EXHIBIT B
FORM OF TRANSFEREE AFFIDAVIT AND AGREEMENT
(RESIDUAL BONDS)
[DATE]
STATE OF_____________)
) ss.:
COUNTY OF____________)
The undersigned, _______________________, being first duly sworn,
deposes, represents and warrants:
1. That he is a [Title of Officer] of [Name of Owner], a [savings
institution][corporation] duly organized and existing under the laws of the
State of _______________ (the "Owner"), record or beneficial owner of CMC
Securities Corporation III Collateralized Mortgage Obligations, Series 1998-2,
[Class R-1][Class R-2][Class R-3] Bonds (the "Residual Bonds") having an initial
Class Current Principal Balance of $_______________, on behalf of which he makes
this affidavit and agreement. The Residual Bonds were issued pursuant to the
Indenture (the "Indenture") dated as of March 1, 1998, between CMC Securities
Corporation III, as Issuer (the "Issuer"), and The First National Bank of
Chicago, as Indenture Trustee (the "Indenture Trustee"), and the Series 1998-2
Supplement thereto (the "Series Supplement") dated as of September 30, 1998,
among the Issuer, the Indenture Trustee and Norwest Bank Minnesota, N.A., as
Bond Administrator. Capitalized terms used but not defined herein have the
meanings assigned to them in the Indenture as supplemented by the Series
Supplement.
2. That the Owner (i) is and will be a "Permitted Transferee" as of
______________, ______ and (ii) is acquiring the Residual Bonds for its own
account or for the account of another Owner from which it has received an
affidavit in substantially the same form as this affidavit. A "Permitted
Transferee" is any person other than a "disqualified organization" or a Non-U.S.
Person. For this purpose, a "disqualified organization" means any of the
following: (i) 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, (ii) any organization (other than a
farmers' cooperative described in Section 521 of the Internal Revenue Code of
1986 (the "Code)) that is exempt from the tax imposed by Chapter 1 of the Code
and not subject to the tax imposed by Section 511 of the Code, (iii) rural
electric or telephone cooperatives described in Section 1381(a)(2)(C) of the
Code or (iv) any other Person whose holding of an ownership interest in a
Residual Bond may cause the related REMIC to incur a liability for any tax
imposed under the Code that would not otherwise be imposed but for the transfer
of an ownership interest in a Residual Bond to such Person. For purposes of
clause (i) of the previous sentence, a corporation shall not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof, if (i) all of the activities of such corporation are subject to the tax
imposed by Chapter 1 of the Code, and (ii) a majority of the board of directors
of such corporation is not selected by the United States or any
<PAGE> 177
State or political subdivision thereof (except that this clause (ii) shall not
apply to the Federal Home Loan Mortgage Corporation). The terms "United States,"
"State" and "international organization" shall have the meanings set forth in
Section 7701 of the Code or successor provisions.
3. That the Owner is aware (i) of the tax that would be imposed on the
Trust Estate if a Residual Bond is transferred to a disqualified organization
under Section 860E(e) of the Code and that any Owner that is a disqualified
organization will be obligated to reimburse the Trust Estate for any such tax;
(ii) that such tax would be on the transferor, or, if such transfer is through
an agent (which person includes a broker, nominee or middleman) for a
disqualified organization, on the agent; (iii) that the person otherwise liable
for the tax shall be relieved of liability for the tax if the transferee
furnishes to such person an affidavit that the transferee is not a disqualified
organization and, at the time of transfer, such person does not have actual
knowledge that the affidavit is false; and (iv) that the Residual Bonds may be
"noneconomic residual interests" within the meaning of Treasury regulation
section 1.860E-1(c)(2) and that the transferor of an ownership interest in a
"noneconomic residual interest" will remain liable for any taxes due with
respect to the income on such residual interest, unless no significant purpose
of the transfer is to enable the transferor to impede the assessment or
collection of tax.
4. That the Owner is aware of the tax imposed on a "pass-through
entity" holding the Residual Bonds if at any time during the taxable year of the
pass-through entity a disqualified organization is the record holder of an
interest in such entity. For this purpose, a "pass-through entity" includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.
5. That the Owner is aware that the Indenture Trustee will not register
the transfer of any Residual Bonds unless the transferee, or the transferee's
agent, delivers to the Indenture Trustee, among other things, an affidavit in
substantially the same form as this affidavit. The Owner expressly agrees that
it will not consummate any such transfer if it knows or believes that any of the
representations contained in such affidavit and agreement are false.
6. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Residual Bonds will only be owned,
directly or indirectly, by Owners that are Permitted Transferees.
7. That the Owner's taxpayer identification number is _______________.
8. That the Owner has reviewed the restrictions set forth on the face
of the Residual Bonds and the provisions of Section 2.15 of the Indenture under
which the Residual Bonds were issued (and, in particular, the Owner is aware
that such Section authorizes the Indenture Trustee to deliver payments to a
person other than the Owner and negotiate a mandatory sale by the Indenture
Trustee in the event that the Owner holds such Residual Bonds in violation of
Section 3); and that the Owner expressly agrees to be bound by and to comply
with such restrictions and provisions.
9. That the Owner is not acquiring and will not transfer the Residual
Bonds in order to impede the assessment or collection of any tax.
-2-
<PAGE> 178
10. That the Owner anticipates that it will, so long as it holds the
Residual Bonds, have sufficient assets to pay any taxes owed by the holder of
such Residual Bonds.
11. That the Owner has no present knowledge that it may become
insolvent or subject to a bankruptcy proceeding for so long as it holds the
Residual Bonds.
12. That the Owner has no present knowledge or expectation that it will
be unable to pay any United States taxes owed by it so long as any of the
Residual Bonds remain outstanding. In this regard, the Owner hereby represents
to and for the benefit of the Person from whom it acquired the Residual Bonds
that the Owner intends to pay taxes associated with holding the Residual Bonds
as they become due, fully understanding that it may incur tax liabilities in
excess of any cash flows generated by the Residual Bonds.
13. That the Owner is not acquiring the Residual Bonds with the intent
to transfer such Bonds to any person or entity that will not have sufficient
assets to pay any taxes owed by the holder of such Bonds, or that may become
insolvent or subject to a bankruptcy proceeding, for so long as such Residual
Bonds remain outstanding.
14. That Owner will, in connection with any transfer that it makes of
any of the Residual Bonds, obtain from its transferee the representations
required by Section 2.15 of the Indenture under which the Residual Bonds were
issued and will not consummate any such transfer if it knows, or knows facts
that should lead it to believe, that any such representations are false.
15. That Owner will, in connection with any transfer that it makes of
any of the Residual Bonds, represent and warrant that it is not transferring the
Residual Bonds to impede the assessment or collection of any tax and that it has
no actual knowledge that the proposed transferee: (i) has insufficient assets to
pay any taxes owed by such transferee as holder of the Residual Bonds; (ii) may
become insolvent or subject to a bankruptcy proceeding, for so long as the
Residual Bonds remain outstanding; and (iii) is not a "Permitted Transferee."
16. That the Owner is a United States Person.
17. That the Owner is not an employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
Code, nor a Person acting, directly or indirectly, on behalf of any such plan,
and understands that registration of transfer of any Residual Bond to any such
employee benefit plan, or to any person acting on behalf of such plan, will not
be made unless such employee benefit plan delivers a certification of facts and
an opinion of its counsel, addressed and satisfactory to the Indenture Trustee
and the Issuer to the effect that such transfer will not constitute or result in
a prohibited transaction under ERISA or the Code and will not (a) cause the
assets of the Trust Estate to be treated as "plan assets" within the meaning of
Department of Labor regulations set forth in 29 C.F.R. ss. 2510.3-101, (b) give
rise to any fiduciary duty under ERISA on the part of the Issuer, the Master
Servicer, any Sub-Servicer, the Certificate Trustee, the Indenture Trustee or
their respective Affiliates, or (c) be treated as, or result in, a prohibited
transaction under Section 406 or 407 of ERISA or Section 4975 of the Code.
-3-
<PAGE> 179
IN WITNESS WHEREOF, [Name of Owner] has caused this instrument to be
executed on its behalf, by the undersigned officer this _____ day of
____________________, _____.
[NAME OF OWNER]
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Personally appeared before me the above-named [Name of Owner], known or
proved to me to be the same person who executed the foregoing instrument and to
be a [Title of Office] of the Owner, and acknowledged to me that he executed the
same as his free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of ______________, _____.
------------------------------------------
NOTARY PUBLIC
COUNTY OF
---------------------------------
STATE OF
----------------------------------
My Commission expires:
--------------------
<PAGE> 180
EXHIBIT C-1
FORM OF TRANSFEREE REPRESENTATION LETTER
(PRIVATE BONDS)
[DATE]
CMC Securities Corporation III
2711 N. Haskell Ave.
Suite 900
Dallas, Texas 75204
The First National Bank of Chicago
1 National Plaza, Suite 0126
Chicago, Illinois 60670
CMC Securities Corporation III
Collateralized Mortgage Obligations, Series 1998-2
Ladies and Gentlemen:
In connection with the sale by ____________________ (the "Transferor")
to ____________________ (the "Transferee") of $_____________ initial Class
Current Principal Balance of Collateralized Mortgage Obligations, Series
1998-2, Class __________, (the "Private Bonds"), issued pursuant to the
Indenture (the "Indenture") dated March 1, 1998 between CMC Securities
Corporation III, as Issuer (the "Issuer") and The First National Bank of
Chicago, as Trustee (the "Indenture Trustee") and the Series 1998-2 Supplement
(the "Series Supplement") thereto dated September 30, 1998, between the Issuer,
the Indenture Trustee and Norwest Bank Minnesota, N.A., as Bond Administrator.
Capitalized terms used but not defined herein have the meanings assigned them
in the Indenture as supplemented by the Series Supplement.
In connection with such acquisition, the Transferee hereby certifies
and agrees:
1. The Transferee is acquiring the Private Bonds either (a)
for its own account or for accounts for which it exercises sole
investment discretion and not with a view to or for sale in connection
with any distribution thereof, subject nevertheless to any requirement
of law that the disposition of the Transferee's property shall at all
times be and remain within its control, or (b) for resale to
"Qualified Institutional Buyers" within the meaning of Rule 144A under
the 1933 Act or an "accredited investor" of the type specified in Rule
3a-7(a)(2)(i) of the Investment Company Act of 1940, as amended (the
"1940 Act") and in accordance with the provisions of the Indenture and
the Series Supplement.
<PAGE> 181
2. The Transferee has received, and has had an opportunity to
review, (a) a copy of the Indenture and the Series Supplement and (b)
such other information concerning the Private Bonds, the Trust and the
Issuer as has been requested by the Transferee and is relevant to the
Transferee's decision to purchase the Private Bonds. The Transferee
has had any questions arising from such review answered by the Issuer
to the satisfaction of the Transferee.
3. The Transferee is an "accredited investor" of the type
specified in Rule 3a-7(a)(2)(i) under the 1940 Act, and has such
expertise, knowledge and sophistication in financial and business
matters generally, and in financial and business matters related to
securities similar to the Private Bonds in particular, as to be
capable of evaluating the merits and risks of an investment in the
Private Bonds. The Transferee (or any account referred to above) is
able to bear the economic risks of such an investment.
4. The Transferee will comply with all applicable federal and
state securities laws in connection with any subsequent resale of the
Private Bonds by the Transferee.
5. The Transferee understands that (a) the Private Bonds have
not been and will not be registered under the Securities Act of 1933,
as amended (the "1933 Act"), (b) the Issuer is not required to so
register the Private Bonds, (c) the Private Bonds may be resold only
if registered pursuant to the provisions of the 1933 Act, or if an
exemption from such registration is available, (d) the Private Bonds
may not be resold if such transfer would result in the registration of
the Issuer as an "investment company" under the 1940 Act, (e) the
Agreement contains restrictions regarding the transfer of the Private
Bonds, (f) the Private Bonds will bear a legend to the foregoing
effect and (g) a stop order may be placed in the Bond Register
relating to the Private Bonds against the transfer of any Bond subject
to compliance with the 1933 Act, the rules and regulation thereunder
and state securities laws.
6. The Transferee is not an employee benefit plan subject to
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the Internal Revenue Code of 1986, as amended (the
"Code") (a "Plan") a Person acting on behalf of a Plan or a Person
using the assets of a Plan (each, a "Plan Investor"), or, in the case
of an insurance company, is either not a Plan Investor or is eligible
for an exemption from the applicable prohibited transaction provisions
of ERISA and the Code, or (ii) has attached hereto or delivered to the
Trustee an opinion of counsel satisfactory to the Trustee and the
Issuer to the effect that the purchase and holding of such Private
Bonds will not constitute or result in a prohibited transaction under
ERISA or the Code and will not (a) cause the assets of the Trust
Estate to be treated as "plan assets" within the meaning of Department
of Labor regulations set forth in 29 C.F.R. ss. 2510.3-101, (b) give
rise to any fiduciary duty under ERISA on the part of the Issuer, the
Master Servicer, any Sub-Servicer, the Certificate Trustee, the
Indenture Trustee or their respective affiliates or (c) be treated as,
or result in, a prohibited transaction under Sections 406 or 407 of
ERISA or Section 4975 of the Code.
-2-
<PAGE> 182
7. The Transferee will not nor has it authorized or will it
authorize any person to (a) offer, pledge, sell, dispose of or
otherwise transfer any Private Bond, any interest in any Private Bond
or any other similar security to any person in any manner, (b) solicit
any offer to buy or to accept a pledge, disposition or other transfer
of any Private Bond, any interest in any Private Bond or any other
similar security from any person in any manner, (c) otherwise approach
or negotiate with respect to any Private Bond, any interest in any
Private Bond or any other similar security with any person in any
manner, (d) make any general solicitation by means of general
advertising or in any other manner, or (e) take any other action, that
(as to any of (a) through (e) above) would constitute a distribution
of any Private Bond under the 1933 Act, that would render the
disposition of any Private Bond a violation of Section 5 of the 1933
Act or any state securities laws, that would result in the
registration of the Issuer as an "investment company" under the 1940
Act, or that would require registration or qualification pursuant
thereto. The Transferee will not sell or otherwise transfer any of the
Private Bonds, except in compliance with the applicable provisions of
the Indenture and the Series Supplement. Without limiting the
generality of the foregoing sentence, if the Transferee sells any of
the Private Bonds, the Transferee will comply with any applicable
requirements set forth in, and will obtain from any purchaser any
representations required pursuant to, the applicable provisions of the
Indenture and the Series Supplement.
-3-
<PAGE> 183
Very truly yours,
---------------------------------------
(Transferee)
By:
------------------------------------
Name:
-----------------------------
Title:
----------------------------
-4-
<PAGE> 184
EXHIBIT C-2
FORM OF TRANSFEROR REPRESENTATION LETTER
(PRIVATE BONDS)
[DATE]
CMC Securities Corporation III
2711 N. Haskell, Suite 900
Dallas, Texas 75204
First National Bank of Chicago
1 National Plaza
Chicago, Illinois 60670
CMC Securities Corporation III
Collateralized Mortgage Obligations, Series 1998-2
Ladies and Gentlemen:
In connection with the sale by _______________________ (the
"Transferor") to _______________________ of $_______________ initial Class
Current Principal Balance of Collateralized Mortgage Obligations, Series
1998-2, Class __, (the "Private Bonds"), issued pursuant to the Indenture (the
"Indenture") dated March 1, 1998, between CMC Securities Corporation III, as
Issuer and The First National Bank of Chicago, as Trustee (the "Indenture
Trustee") and the Series 1998-2 Supplement thereto (the "Series Supplement")
dated September 30, 1998, between the Issuer, the Indenture Trustee and Norwest
Bank Minnesota, N.A., as Bond Administrator. The Transferor hereby certifies,
represents and warrants to, and covenants with, the Issuer and the Indenture
Trustee that:
Neither the Transferor nor anyone acting on its behalf has
(a) offered, pledged, sold, disposed of or otherwise transferred any Private
Bond, any interest in any Private Bond or any other similar security to any
person in any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Private Bond, any interest in any Private
Bond or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Private Bond, any
interest in any Private Bond or any other similar security with any person in
any manner, (d) has made any general solicitation by means of general
advertising or in any other manner, or (e) has taken any other action, that (as
to any of (a) through (d) above) would constitute a distribution of the Private
Bond under the Securities Act of 1933 (the "Act"), that would render the
disposition of any Private Bond a violation of Section 5 of the Act or any
state securities law, or that would require registration or qualification
pursuant thereto. The Transferor will not act
<PAGE> 185
in any manner set forth in the foregoing sentence with respect to any Private
Bond. The Transferor has not and will not sell or otherwise transfer any of the
Private Bonds, except in compliance with the applicable provisions of the
Indenture and the Series Supplement.
[Remainder of Page Intentionally Left Blank]
-2-
<PAGE> 186
Very truly yours,
---------------------------------------
(Transferor)
By:
------------------------------------
Name:
-----------------------------
Title:
----------------------------
-3-
<PAGE> 187
EXHIBIT C-3
FORM OF RULE 144A TRANSFEREE REPRESENTATION
(PRIVATE BONDS)
[DATE]
CMC Securities Corporation III
Collateralized Mortgage Obligations, Series 1998-2
In connection with the sale by ____________________ (the "Transferor")
to ____________________ (the "Transferee") of $__________ initial Class Current
Principal Balance of Collateralized Mortgage Obligations, Series 1998-2, Class
__________ (the "Rule 144A Bonds"), issued pursuant to an Indenture (the
"Indenture") dated March 1, 1998 between CMC Securities Corporation III, as
Issuer (the "Issuer") and The First National Bank of Chicago, as Trustee (the
"Indenture Trustee") and the Series 1998-2 Supplement (the "Series Supplement")
thereto dated September 30, 1998, between the Issuer, the Indenture Trustee and
Norwest Bank Minnesota, N.A., as Bond Administrator. Initially capitalized
terms used but not defined herein have the meanings assigned to them in the
Indenture as supplemented by the Series Supplement.
1. The Transferee warrants and represents to, and covenants with, the
Transferor, the Indenture Trustee and the Issuer as follows:
a. The Transferee understands that the Rule 144A Bonds have
not been registered under the Securities Act of 1933, as amended (the
"1933 Act") or the securities laws of any state.
b. The Transferee considers itself a substantial,
sophisticated institutional investor having such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of investment in the Rule 144A Bonds.
c. The Transferee has been furnished with all information
regarding the Rule 144A Bonds that it has requested from the
Transferor and the Indenture Trustee.
d. Neither the Transferee nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Rule
144A Bonds, any interest in the Rule 144A Bonds or any other similar
security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of the Rule 144A Bonds, any interest in
the Rule 144A Bonds or any other similar security from, or otherwise
approached or negotiated with respect to the Rule 144A Bonds, any
interest in the Rule 144A Bonds or any other similar security with,
any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action.
that would constitute a distribution of the Rule 144A Bonds under the
1933 Act or that would render the disposition of the Rule 144A Bonds a
violation of Section 5 of the 1933 Act or require registration
pursuant thereto, nor
C-1
<PAGE> 188
will it act, nor has it authorized or will it authorize any person to
act, in such manner with respect to the Rule 144A Bonds.
e. The Transferee is a "qualified institutional buyer" as
that term is defined in Rule 144A under the 1933 Act and has completed
either of the forms of certification to that effect attached hereto as
Annex 1 or Annex 2. The Transferee is aware that the sale to it is
being made in reliance on Rule 144A. The Transferee is acquiring the
Rule 144A Bonds for its own account or the account of other qualified
institutional buyers and understands that such Rule 144A Bonds may be
resold, pledged or transferred only (i) to 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 on Rule 144A, or (ii) pursuant to another exemption from
registration under the 1933 Act.
[3]. The Transferee is not an employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
Internal Revenue Code of 1986, as amended (the "Code") (a "Plan"), a Person
acting on behalf of a Plan or a Person using the assets of a Plan (each, a
"Plan Investor"), or, in the case of an insurance company, is either not a Plan
Investor or is eligible for an exemption from the applicable prohibited
transaction provisions of ERISA and the Code, or (ii) has attached hereto or
delivered to the Indenture Trustee an opinion of counsel satisfactory to the
Indenture Trustee and the Issuer to the effect that the purchase and holding of
such Rule 144A Bonds will not constitute or result in a prohibited transaction
under ERISA or the Code and will not (a) cause the assets of the Trust Estate
to be treated as "plan assets" within the meaning of Department of Labor
regulations set forth in 29 C.F.R. ss. 2510.3-101, (b) give rise to any
fiduciary duty under ERISA on the part of the Issuer, the Master Servicer, any
Sub-Servicer, the Certificate Trustee, the Indenture Trustee or their
respective affiliates or (c) be treated as, or result in, a prohibited
transaction under Sections 406 or 407 of ERISA or Section 4975 of the Code.
Very truly yours,
---------------------------------------
Print Name of Transferee
By:
------------------------------------
Name:
-----------------------------
Title:
-----------------------------
Taxpayer Identification:
No.
------------------------------------
Date:
----------------------------------
C-2
<PAGE> 189
ANNEX 1 TO EXHIBIT C-3
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Transferee.
2. In connection with purchases by the Transferee, the Transferee is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Transferee owned and/or
invested on a discretionary basis $__________2 in securities (except for the
excluded securities referred to below) as of the end of the Transferee's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Transferee satisfies the criteria in the category marked below.
------ Corporation, etc. The Transferee is a corporation
(other than a bank, savings and loan association or
similar institution), Massachusetts or similar
business trust, partnership, or charitable
organization described in Section 501(c)(3) of the
Internal Revenue Code.
------ Bank. The Transferee (a) is a national bank or
banking institution organized under the laws of any
State, territory or the District of Columbia, the
business of which is substantially confined to
banking and is supervised by the State or
territorial banking commission or similar official
or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000
as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
------ Savings and Loan. The Transferee (a) is a savings
and loan association, building and loan association,
cooperative bank, homestead association or similar
institution, which is supervised and examined by a
State or Federal authority having supervision over
any such institutions or is a foreign savings and
loan association or equivalent institution and (b)
has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial
statements.
- ---------------------
2 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities.
ANNEX 1 to EXHIBIT C-3-1
<PAGE> 190
------ Broker-dealer. The Transferee is a dealer
registered pursuant to Section 15 of the Securities
Exchange Act of 1934.
------ Insurance Company. The Transferee is an insurance
company whose primary and predominant business
activity is the writing of insurance or the
reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the
insurance commissioner or a similar official or
agency of a State, territory or the District of
Columbia.
------ State or Local Plan. The Transferee is a plan
established and maintained by a State. its political
subdivisions, or any agency or instrumentality of
the State or its political subdivisions, for the
benefit of its employees.
------ ERISA Plan. The Transferee is an employee benefit
plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
------ Investment Adviser. The Transferee is an investment
adviser registered under the Investment Advisers Act
of 1940.
------ SBIC. The Transferee is 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.
------ Business Development Company. The Transferee is a
business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
------ Trust Fund. The Transferee is a trust fund whose
trustee is a bank or trust company and whose
participants are exclusively (a) plans established
and maintained by a State, its political
subdivisions, or any agency or instrumentality of
the State or its political subdivisions, for the
benefit of its employees, or (b) employee benefit
plans within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, but is not a
trust fund that includes as participants individual
retirement accounts or H.R. 10 plans.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) bank deposit notes and certificates of
deposit, (iv) loan participations, (v) repurchase agreements, (vi) securities
owned but subject to a repurchase agreement and (vii) currency, interest rate
and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned
ANNEX 1 to EXHIBIT C-3-2
<PAGE> 191
by subsidiaries of the Transferee, but only if such subsidiaries are
consolidated with the Transferee in its financial statements prepared in
accordance with generally accepted accounting principles and if the investments
of such subsidiaries are managed under the Transferee's direction. However,
such securities were not included if the Transferee is a majority-owned,
consolidated subsidiary of another enterprise and the Transferee is not itself
a reporting company under the Securities Exchange Act of 1934.
5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Bonds are
relying and will continue to rely on the statements made herein because one or
more sales to the Transferee may be in reliance on Rule 144A.
6. Will the Transferee be purchasing the Rule 144A Bonds only for the
Transferee's own account?
Yes _____ No _____.
If the answer to the foregoing question is "no", the Transferee agrees
that, in connection with any purchase of securities sold to the Transferee for
the account of a third party (including any separate account) in reliance on
Rule 144A, the Transferee will only purchase for the account of a third party
that at the time is a "qualified institutional buyer" within the meaning of
Rule 144A. In addition, the Transferee agrees that the Transferee will not
purchase securities for a third party unless the Transferee has obtained a
current representation letter from such third party or taken other appropriate
steps contemplated by Rule 144A to conclude that such third party independently
meets the definition of "qualified institutional buyer" set forth in Rule 144A.
23. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein
during the period between the date of this certification and the date the
Transferee purchases the Rule 144A Bonds. Unless such notice is given, the
Transferee's purchase of the Rule 144A Bonds will constitute a reaffirmation of
this certification as of the date of such purchase.
--------------------------------------------
Print Name of Transferee
By:
-----------------------------------------
Name:
Title:
Date:
---------------------------------------
ANNEX 1 to EXHIBIT C-3-3
<PAGE> 192
ANNEX 2 TO EXHIBIT C-3
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Transferee or, if the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because Transferee is part
of a Family of Investment Companies (as defined below), is such an officer of
the Adviser.
2. In connection with purchases by Transferee, the Transferee is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Transferee is an investment company registered under the Investment Company Act
of 1940, and (ii) as marked below, the Transferee alone, or the Transferee's
Family of Investment Companies, owned at least $100,000,000 in securities
(other than the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year. For purposes of determining the amount of
securities owned by the Transferee or the Transferee's Family of Investment
Companies, the cost of such securities was used.
----- The Transferee owned $___________ in securities
(other than the excluded securities referred to
below) as of the end of the Transferee's most recent
fiscal year (such amount being calculated in
accordance with Rule 144A).
----- The Transferee is part of a Family of Investment
Companies which owned in the of aggregate
$_______________ in securities (other than the
excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year (such
amount being calculated in accordance with Rule
144A).
3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of
the Transferee's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase agreements,
(v) securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
ANNEX 2 to EXHIBIT C-3-1
<PAGE> 193
5. The Transferee is familiar with Rule 144A and understands that each
of the parties to which this certification is made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.
6. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein
during the period between the date of this certification and the date the
Transferee purchases the Rule 144A Bonds. Unless such notice is given, the
Transferee's purchase of the Rule 144A Bonds will constitute a reaffirmation of
this certification as of the date of such purchase.
---------------------------------------
Print Name of Transferee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
IF AN ADVISER:
---------------------------------------
Print Name of Transferee
Date:
----------------------------------
ANNEX 2 to EXHIBIT C-3-2
<PAGE> 194
EXHIBIT C-4
FORM OF ERISA TRANSFEREE REPRESENTATION
(CLASS II-X-2)
[DATE]
CMC Securities Corporation III
Collateralized Mortgage Obligations, Series 1998-2
In connection with the sale by ____________________ (the "Transferor")
to ___________________________________ (the "Transferee") of $__________ initial
Class Current Notional Balance of Collateralized Mortgage Obligations, Series
1998-2, Class II-X-2, issued pursuant to an Indenture (the "Indenture") dated
March 1, 1998 between CMC Securities Corporation III, as Issuer (the "Issuer")
and The First National Bank of Chicago, as Trustee (the "Indenture Trustee") and
the Series 1998-2 Supplement (the "Series Supplement") thereto dated September
30, 1998, between the Issuer, the Indenture Trustee and Norwest Bank Minnesota,
N.A., as Bond Administrator. Capitalized terms used but not defined herein have
the meanings assigned to them in the Indenture as supplemented by the Series
Supplement.
The Transferee warrants and represents to, and covenants with, the
Transferor, the Indenture Trustee and the Issuer that the Transferee is not an
employee benefit plan subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the Internal Revenue Code of 1986, as amended
(the "Code") (a "Plan"), a Person acting on behalf of a Plan or a Person using
the assets of a Plan (each, a "Plan Investor"), or, in the case of an insurance
company, is either not a Plan Investor or is eligible for an exemption from the
applicable prohibited transaction provisions of ERISA and the Code.
Very truly yours,
-------------------------------------------
Print Name of Transferee
By:
----------------------------------------
Name:
Title:
Taxpayer Identification:
No.
----------------------------------------
Date:
--------------------------------------
C-1
<PAGE> 195
EXHIBIT D-1
Letter of Representations
(Book Entry Bonds Other than Retail Bonds and Other Subordinate Bonds)
(Begins on next page)
(Intentionally Omitted)
<PAGE> 196
EXHIBIT D-2
Letter of Representations
(Retail Bonds)
(Begins on next page)
(Intentionally Omitted)
<PAGE> 197
EXHIBIT E
FORM OF TRANSFEROR CERTIFICATE
(RESIDUAL BONDS)
[DATE]
CMC Securities Corporation III
2711 N. Haskell, Suite 900
Dallas, Texas 75204
The First National Bank of Chicago
1 National Plaza, Suite 0126
Chicago, Illinois 60670
CMC Securities Corporation III
Collateralized Mortgage Obligations, Series 1998-1
Dear Sirs:
This letter is delivered to you in connection with the sale by
_____________________ (the "Transferor") to __________________________________
(the "Purchaser") of the Collateralized Mortgage Obligations, Series 1998-1,
Class [R-1][Class R-2][Class R-3] (the "Residual Bonds"), issued pursuant to the
Indenture (the "Indenture") dated as of March 1, 1998, between CMC Securities
Corporation III, as Issuer (the "Issuer"), and the First National Bank of
Chicago, as Trustee (the "Indenture Trustee") and the Series 1998-2 Supplement,
dated as of September 30, 1998, among the Issuer, the Indenture Trustee and
Norwest Bank Minnesota, N.A., as Bond Administrator. All terms used herein and
not otherwise defined shall have the meaning set forth in the Indenture or the
Series Supplement, as applicable.
The Transferor hereby certifies, represents and warrants to, and
covenants with, the Issuer and the Indenture Trustee that:
1. No purpose of the Transferor relating to the sale of the Residual
Bonds by the Transferor to the Purchaser is or will be to impede the assessment
or collection of any tax.
2. The Transferor understands that the Purchaser has delivered to the
Indenture Trustee a transferee affidavit and agreement in the form attached to
the Series Supplement as Exhibit B. The Transferor does not know or believe that
any representation contained therein is false.
3. The Transferor has at the time of the transfer conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Transferor has determined that the
<PAGE> 198
Purchaser has historically paid its debts as they have
become due and has found no significant evidence to indicate that the Purchaser
will not continue to pay its debts as they become due in the future. The
Transferor understands that the transfer of the Residual Bonds may not be
respected for United States income tax purposes (and the Transferor may continue
to be liable for United States income taxes associated therewith) unless the
Transferor has conducted such an investigation.
4. The Transferor has no actual knowledge that the proposed Transferee
is a Disqualified Organization, an agent of a Disqualified Organization or a
Non-U.S. Person.
Very truly yours,
----------------------------------------
(Transferor)
<PAGE> 1
EXHIBIT 10.1
CMC SECURITIES CORPORATION III,
SELLER,
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
MASTER SERVICER AND CUSTODIAN,
and
THE FIRST NATIONAL BANK OF CHICAGO,
CERTIFICATE TRUSTEE
---------------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1998
---------------------------------------------
CMC Securities Corporation III
Mortgage Pass-Through Certificates
Series 1998-2
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
ARTICLE II
Conveyance of Mortgage Loans; Original Issuance of Certificates
2.01. Conveyance of Mortgage Loans to Certificate Trustee . . . . . . . . . . . . . . . . . . . . II-1
2.02. Acceptance of Mortgage Loans by Certificate Trustee . . . . . . . . . . . . . . . . . . . . II-3
2.03. Representations, Warranties and Covenants of the Master Servicer . . . . . . . . . . . . . . II-5
2.03A. Assignment of Interest in the Mortgage Loan Purchase Agreement . . . . . . . . . . . . . . II-6
2.04. Substitution of Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-7
2.05. Representations and Warranties of the Certificate Trustee . . . . . . . . . . . . . . . . . II-8
2.06. Issuance of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-9
2.07. Representations and Warranties Concerning the Seller . . . . . . . . . . . . . . . . . . . . II-9
2.08. The Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-10
ARTICLE III
Administration and Servicing of Mortgage Loans
3.01. Master Servicer to Master Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1
3.02. Sub-Servicing Agreement Between the Master Servicer and Sub-Servicers . . . . . . . . . . . III-2
3.03. Successor Sub-Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-2
3.04. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-2
3.05. Assumption of Master Servicing by Certificate Trustee. . . . . . . . . . . . . . . . . . . . III-2
3.06. Collection of Mortgage Loan Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-3
3.07. Collection of Taxes, Assessments and Similar Items; Servicing Accounts . . . . . . . . . . . III-3
3.08. Access to Certain Documentation and Information Regarding the Mortgage Loans . . . . . . . . III-4
3.09. Maintenance of Primary Mortgage Insurance Policies; Collection Thereunder . . . . . . . . . III-5
3.10. Maintenance of Hazard Insurance and Fidelity Coverage . . . . . . . . . . . . . . . . . . . III-5
3.11. Due-on-Sale Clauses; Assumption Agreements . . . . . . . . . . . . . . . . . . . . . . . . . III-6
3.12. Realization Upon Defaulted Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . III-7
3.13. Certificate Trustee to Cooperate; Release of Mortgage Files . . . . . . . . . . . . . . . . III-8
3.14. Master Servicing and Sub-Servicing Compensation. . . . . . . . . . . . . . . . . . . . . . . III-9
3.15. Annual Statement of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-10
3.16. Annual Independent Public Accountants' Servicing Report . . . . . . . . . . . . . . . . . . III-10
3.17. REMIC-Related Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-11
3.18. Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-11
ARTICLE IV
Accounts
4.01. Protected Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
</TABLE>
-ii-
<PAGE> 3
<TABLE>
<S> <C>
4.02. Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3
4.03. Permitted Withdrawals and Transfers from the Certificate Account . . . . . . . . . . . . . . IV-4
4.04 Custody Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-7
4.05 Interest Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-8
ARTICLE V
Certificates
5.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
5.02. Certificates Issuable in Series; Authorized Denominations . . . . . . . . . . . . . . . . . V-1
5.03. Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . . . . . . V-2
5.04. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . V-2
5.05. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3
5.06. Office for Transfer of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3
ARTICLE VI
Payments to Certificateholders
6.01. Distributions to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
6.02. Statements to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
6.03. Monthly Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3
6.04. Compensating Interest Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3
6.05. Reports of Foreclosures and Abandonment of Mortgaged Property . . . . . . . . . . . . . . . VI-4
ARTICLE VII
The Master Servicer
7.01. Liabilities of the Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
7.02. Merger or Consolidation of the Master Servicer . . . . . . . . . . . . . . . . . . . . . . . VII-1
7.03. Indemnification of the Certificate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
7.04. Limitation on Liability of the Master Servicer and Others . . . . . . . . . . . . . . . . . VII-2
7.05. Master Servicer Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-3
7.06. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-3
7.07. Sale and Assignment of Master Servicing . . . . . . . . . . . . . . . . . . . . . . . . . . VII-3
ARTICLE VIII
Default
8.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
8.02. Certificate Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . . VIII-2
8.03. Notification to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-3
8.04. Waiver of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-3
8.05. List of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-4
ARTICLE IX
Concerning the Certificate Trustee
9.01. Duties of Certificate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
9.02. Certain Matters Affecting the Certificate Trustee . . . . . . . . . . . . . . . . . . . . . IX-2
9.03. Certificate Trustee Not Liable for Certificates or Mortgage Loans . . . . . . . . . . . . . IX-4
9.04. Certificate Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . IX-4
9.05. Certificate Trustee's Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . IX-4
</TABLE>
-iii-
<PAGE> 4
<TABLE>
<S> <C> <C>
9.06. Eligibility Requirements for Certificate Trustee . . . . . . . . . . . . . . . . . . . . . . IX-5
9.07. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-5
9.08. Resignation and Removal of the Certificate Trustee . . . . . . . . . . . . . . . . . . . . . IX-5
9.09. Successor Certificate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-6
9.10. Merger or Consolidation of Certificate Trustee . . . . . . . . . . . . . . . . . . . . . . . IX-6
9.11. Appointment of Co-Certificate Trustee or Separate Certificate Trustee . . . . . . . . . . . IX-7
9.12. Master Servicer Shall Provide Information as Reasonably Required . . . . . . . . . . . . . . IX-8
ARTICLE X
Termination
10.01. Termination Upon Repurchase by BSMCC or its Designee or Liquidation of the Mortgage Loans . X-1
ARTICLE XI
Miscellaneous Provisions
11.01. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
11.02. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
11.03. Recordation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-2
11.04. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . XI-2
11.05. Acts of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-3
11.06. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-4
11.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-4
11.08. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-4
11.09. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-4
11.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-4
11.11. Article and Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-4
11.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-5
11.13 Notice to Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI-5
</TABLE>
-iv-
<PAGE> 5
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit A-1 - Form of Series 1998-2A Certificates
Exhibit A-2 - Form of Series 1998-2B Certificates
Exhibit B-1 - Group 1 Mortgage Loan Schedule
Exhibit B-2 - Group 2 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 Purchaser Representation Letter
Exhibit F - Reserved
Exhibit G - Form of Initial Certification
Exhibit H - Form of Final Certification
Exhibit I - Reserved
Exhibit J - List of Mortgage Loans for which Mortgage Notes are Lost
</TABLE>
-v-
<PAGE> 6
POOLING AND SERVICING AGREEMENT
This Pooling and Servicing Agreement dated as of September 1, 1998,
among CMC Securities Corporation III, a Delaware corporation, as the seller
(the "Seller"), Norwest Bank Minnesota, National Association, a national
banking association ("Norwest"), as master servicer (in such capacity, the
"Master Servicer") and as custodian (in such capacity the "Custodian"), and The
First National Bank of Chicago, a national banking association, not in its
individual capacity but solely as trustee (the "Certificate Trustee").
PRELIMINARY STATEMENT
On or prior to the Closing Date, the Seller has acquired the Mortgage
Loans from Capstead Capital Corporation ("CCC") which, in turn, has acquired
the Mortgage Loans from Bear Stearns Mortgage Capital Corporation ("BSMCC").
On the Closing Date, the Seller will sell the Group 1 Mortgage Loans and
certain other property to the Trust Fund for Series 1998-2A and will receive as
consideration therefor Certificates evidencing the entire beneficial ownership
interest in the Trust Fund for Series 1998-2A. In addition, on the Closing
Date, the Seller will sell the Group 2 Mortgage Loans and certain other
property to the Trust Fund for Series 1998-2B and will receive as consideration
therefor Certificates evidencing the entire beneficial ownership interest in
the Trust Fund for Series 1998-2B. Norwest will be the Master Servicer for the
Mortgage Loans.
The Group 1 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 $445,299,624 and the Group 2 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 $93,459,753. The
initial aggregate principal amount of the Series 1998-2A Certificates will not
exceed the aggregate Outstanding Principal Balances of the Group 1 Mortgage
Loans and the initial aggregate principal amount of the Series 1998-2B
Certificates will not exceed the aggregate Outstanding Principal Balances of
the Group 2 Mortgage Loans.
In consideration of the mutual agreements herein contained, the
Seller, the Master Servicer and the Certificate Trustee agree as follows:
ARTICLE I
Definitions
Whenever used in this Agreement, the following words and phrases,
unless otherwise expressly provided or unless the context otherwise requires,
shall have the meanings specified in this Article.
Account: The Custody Account, the Certificate Account (including each
sub-account thereof), the Protected Accounts, the Master Servicer Collection
Account or the Servicing Accounts as the context may require.
<PAGE> 7
Adjustment Amount: For each anniversary of the Cut-off Date, the
"Adjustment Amount" for each Mortgage Loan Group shall be equal to the amount,
if any, by which the applicable Special Hazard Loss Amount (without giving
effect to the deduction of the Adjustment Amount for such anniversary) exceeds
the lesser of (A) an amount calculated by the Master Servicer and approved by
each of Moody's and Fitch, which amount shall not be less than $500,000, and
(B) the greater of (x) 1.0% (or if greater than 1.0%, the highest percentage of
Mortgage Loans of the applicable Mortgage Loan Group by principal balance
secured by Mortgaged Properties in any California 5-digit ZIP code area) of the
Outstanding Principal Balance of all the Mortgage Loans of the applicable
Mortgage Loan Group on the Distribution Date immediately preceding such
anniversary and (y) twice the Outstanding Principal Balance of the Mortgage
Loan of the applicable Mortgage Loan Group which has the largest Outstanding
Principal Balance on the Distribution Date immediately preceding such
anniversary.
Advancing Date: The Business Day preceding the related Distribution
Date.
Affiliate: As to any Person, any other Person controlling, controlled
by or under common control with such Person. "Control" means the power to
direct the management and policies of a Person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise. "Controlled"
and "Controlling" have meanings correlative to the foregoing. The Certificate
Trustee may conclusively presume that a Person is not an Affiliate of another
Person unless a Responsible Officer of the Certificate Trustee has actual
knowledge to the contrary.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Applicable Credit Rating: A credit rating of Aaa, in the case of
Moody's or a rating of AAA, in the case of Fitch, for any long-term deposit or
security or a rating of Prime-1, in the case of Moody's, or F1 in the case of
Fitch, for any short-term deposit or security.
Appraised Value: For any Mortgaged Property, the amount set forth as
the appraised value of such Mortgaged Property in an appraisal made for the
mortgage originator in connection with its origination of the related Mortgage
Loan.
Assignment Agreement: The Assignment, Assumption and Recognition
Agreement dated as of September 30, 1998 by and among CCC, the Seller and
BSMCC.
Authorized Denominations: With respect to the Certificates, an initial
Certificate Principal Balance equal to $25,000 and integral multiples of $1 in
excess thereof, except that one Certificate of each Series may be issued in a
different amount.
Available Funds: With respect to any Distribution Date, the sum of
the Group 1 Available Funds and the Group 2 Available Funds for such
Distribution Date.
Bankruptcy Code: The United States Bankruptcy Code, as amended as
codified in 11 U.S.C. Sections 101-1330.
Bond Administrator: As defined in the Series Supplement.
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Bond Group: As defined in the Series Supplement.
Bond Pool Grantor Trust: As defined in the Trust Agreement.
Bond Pool Trustee: As defined in the Trust Agreement.
Bonds: The bonds issued pursuant to the Indenture.
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 Chicago, Illinois or in
the jurisdiction in which the applicable Sub-Servicer or the Master Servicer is
authorized or obligated by law or executive order to be closed.
CCC: Capstead Capital Corporation.
Cendant: Cendant Mortgage Corporation, or its successors in interest.
Cendant Mortgage Loans: The Mortgage Loans that were originated or
acquired by Cendant or an affiliate thereof, as indicated on the related
Mortgage Loan Schedule, and that are subject to the Cendant Sub-Servicing
Agreement.
Cendant Sub-Servicing Agreement: (A) The Purchase, Warranties and
Servicing Agreement between Cendant Mortgage Corporation and the Seller, dated
as of May 1, 1998, as such agreement relates to the Mortgage Loans conveyed
under those Term Sheets dated July 31, 1998, August 28, 1998 and September 29,
1998, and such Term Sheets, and (B) the Purchase, Warranties and Servicing
Agreement between Cendant Residential Mortgage Trust and the Seller dated as of
June 1, 1998, as such agreement relates to the Mortgage Loans conveyed under
those Term Sheets dated July 31, 1998, August 28, 1998 and September 29, 1998,
and such Term Sheets.
Certificate: Any mortgage pass-through certificate evidencing a
beneficial ownership interest in a Trust Fund signed and countersigned by the
Certificate Trustee in substantially the forms annexed hereto as Exhibit A-1
and A-2, with the blanks therein appropriately completed.
Certificate Account: The trust account or accounts created and
maintained pursuant to Section 4.02, which shall be denominated "The First
National Bank of Chicago, as Certificate Trustee f/b/o holders of CMC
Securities Corporation III Mortgage Pass-Through Certificates, Series 1998-2 -
Certificate Account" which shall have two sub- accounts as provided in Section
4.02.
Certificate Owner: Any Person who is the beneficial owner of a
Certificate registered in the name of the Depository or its nominee.
Certificate Principal Balance: With respect to a Series of
Certificates, the Initial Certificate Principal Balance of such Series of
Certificates, reduced by all amounts of principal distributed in respect of
such Series of Certificates pursuant to the terms of this Agreement, and
further reduced
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by the principal portion of any Realized Losses allocated in respect of such
Series of Certificates pursuant to the terms of this Agreement.
Certificate Register: The register maintained pursuant to Section
5.03.
Certificate Trustee: The First National Bank of Chicago, or its
successor in interest, or any successor trustee appointed as herein provided.
Certificate Trustee's Fees: The amount to be paid to the Certificate
Trustee for performing its services hereunder. The Certificate Trustee's Fee
shall be agreed to between the Certificate Trustee and the Master Servicer and
shall be payable by the Master Servicer.
Certificateholder: A Holder of a Certificate.
Class Current Principal Balance: As defined in the Series Supplement.
Closing Date: September 30, 1998.
CMCSC III: CMC Securities Corporation III, a Delaware corporation.
Code: The Internal Revenue Code of 1986, as amended.
Compensating Interest Payment: As defined in Section 6.04.
Corporate Trust Office: The office of the Certificate 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 One
First National Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention:
Corporate Trust Services Division, ref: CMCSC III, 1998-2.
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, and (ii) the principal portion of all
Realized Losses allocated prior to such Distribution Date to such Certificate.
Custodial Agreement: For so long as Norwest is acting as Custodian for
the Mortgage Files, this Agreement; and thereafter, any agreement between the
Certificate Trustee and a successor custodian pursuant to which such successor
custodian agrees to act as custodian of some or all of the Mortgage Files.
Custodian: Norwest Bank Minnesota, National Association, or any
successor custodian appointed in accordance with this Agreement and any
applicable Custodial Agreement that has accepted such appointment in connection
therewith.
Custody Account: A trust account created and maintained pursuant to
Section 4.04.
Cut-off Date: September 1, 1998.
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Cut-off Date Balance: $538,759,377.
Debt Service Reduction: Any reduction of the Scheduled Payments which
a Mortgagor is obligated to pay with respect to a Mortgage Loan as a result of
any proceeding under the Bankruptcy Code or any other similar state law or
other proceeding.
Debtor Relief Laws: Any applicable liquidation, conservatorship,
receivership, bankruptcy, insolvency, rearrangement, moratorium,
reorganization, or similar debtor relief laws affecting the rights of creditors
generally from time to time in effect.
Defaulted Mortgage Loan: Any Mortgage Loan as to which the Mortgagor
has failed to make unexcused payment in full of three or more consecutive
Scheduled Payments.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
of the Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding indebtedness under the Mortgage Loan, which
valuation results from a proceeding initiated under the Bankruptcy Code or any
other similar state law or other proceeding.
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 Certificate Trustee) whose
short- term debt obligations or deposit ratings are in one of the two highest
rating categories of Standard & Poor's Ratings Services, Moody's, Fitch and
Duff & Phelps Credit Rating Company or whose deposits are fully insured by the
FDIC or the NCUSIF.
Determination Date: The 18th day of the month of the Distribution
Date, or if such day is not a Business Day, the preceding Business Day.
Discount Mortgage Loan: Any Mortgage Loan in Mortgage Loan Group 1,
Sub-Group 2A or Sub-Group 2B with a Net Rate less than 6.75%, 6.25% or 6.25%
per annum, respectively.
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.
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.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company acceptable
to the Rating Agencies or (ii) an account or accounts the deposits in which are
insured by the FDIC to the limits established by such corporation, provided
that any such deposits not so insured shall be maintained in an account at a
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depository institution or trust company whose commercial paper or other
short-term debt obligations (or, in the case of a depository institution or
trust company which is the principal subsidiary of a holding company, the
commercial paper or other short-term debt or deposit obligations of such
holding company or depository institution, as the case may be) have been rated
by each Rating Agency in its highest short-term rating category, or (iii) a
segregated trust account or accounts (which shall be a "special deposit
account" maintained with the Certificate Trustee or any other federal or state
chartered depository institution or trust company, acting in its fiduciary
capacity, in a manner that is acceptable to the Certificate Trustee and the
Rating Agencies). Eligible Accounts may bear interest.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
Event of Default: An event described in Section 8.01.
Excess Liquidation Proceeds: To the extent that such amount is not
required by law to be paid to the related Mortgagor, the amount, if any, by
which Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed
the sum of (i) the Outstanding Principal Balance of such Mortgage Loan and
accrued but unpaid interest at the related Mortgage Interest Rate through the
last day of the month in which the related Liquidation Date occurs, plus (ii)
related Liquidation Expenses.
Excess Special Hazard Losses: Any Special Hazard Loss or portion
thereof with respect to a Group of Mortgage Loans (i) occurring after the
Special Hazard Termination Date with respect thereto or (ii) if on such date,
in excess of the then applicable Special Hazard Loss Amount.
Fannie Mae: Fannie Mae (a/k/a the Federal National Mortgage
Association) or any successor thereto.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
Fitch: Fitch IBCA, Inc.
Fractional Undivided Interest: With respect to any Series of
Certificates, the fractional undivided interest in the related Trust Fund, as
evidenced by such Certificate.
Freddie Mac: Freddie Mac, formerly the Federal Home Loan Mortgage
Corporation, or any successor thereto.
Group Available Funds: Either the Group 1 Available Funds or the Group
2 Available Funds.
Group 1 Available Funds or Group 2 Available Funds: With respect to
any Distribution Date, an amount equal to the aggregate of the following
amounts with respect to the Mortgage Loans in Mortgage Loan Groups 1 and 2,
respectively: (a) all previously undistributed payments on account of principal
(including the principal portion of Scheduled Payments, Principal Prepayments
and the principal portion of Net Liquidation Proceeds) and all previously
undistributed payments on account of interest received after the Cut-off Date
and on or prior to the related Determination Date, (b) any Monthly Advances and
Compensating Interest Payments by the Master Servicer or a Sub-
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Servicer with respect to such Distribution Date, and (c) any amount reimbursed
by the Master Servicer or a Sub-Servicer pursuant to 4.04(d) in connection with
losses on Permitted Investments, except:
(i) all payments that were due on or before the Cut-off Date;
(ii) all Principal Prepayments and Liquidation Proceeds
received after the applicable Prepayment Period;
(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;
(vi) amounts permitted to be withdrawn from the related
Protected Account or from the Certificate Account pursuant to
Subsection 4.03; and
(vii) amounts retained by a Sub-Servicer pursuant to its
Sub-Servicing Agreement.
Group 1 Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule attached hereto as Exhibit B-1.
Group 2 Mortgage Loans: The Mortgage Loans identified as such on the
Mortgage Loan Schedule attached hereto as Exhibit B-2. The Group 2 Mortgage
Loans consist of the Sub-Group 2A Mortgage Loans and the Sub-Group 2B Mortgage
Loans.
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, a Sub-Servicer or the Certificate 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 Certificate Trustee, its officers,
directors, agents and employees and any separate Co-trustee and its officers,
directors, agents and employees.
Indenture: The Indenture, dated as of March 1, 1998, by and between
the Seller and the Indenture Trustee, as supplemented by the Series Supplement.
Indenture Trustee: The First National Bank of Chicago, or its
successors and assigns, as trustee under the Indenture.
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Independent: When used with respect to any specified Person, this
term means that such Person (a) is in fact independent of the Seller and 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 of the Seller or the Master Servicer as an officer,
employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
Individual Certificate: Any Certificate registered in the name of the
Holder.
Initial Certificate Principal Balance: With respect to the Series
1998-2A Certificates, $445,299,624, and with respect to the Series 1998-2B
Certificates, $93,459,753.
Insurance Policy: With respect to any Mortgage Loan, any Primary
Mortgage Insurance Policy, standard hazard insurance policy, flood insurance
policy or title insurance policy.
Insurance Proceeds: Amounts paid by the Insurer under any Insurance
Policy covering any Mortgage Loan or Mortgaged Property other than amounts
required to be paid over to the Mortgagor pursuant to law or the related
Mortgage Note or Security Instrument and other than amounts used to repair or
restore the Mortgaged Property or to reimburse Insured Expenses.
Insured Expenses: Expenses covered by any Insurance Policy.
Insurer: Any issuer of an Insurance Policy.
Interest Shortfall: With respect to any Distribution Date and each
Mortgage Loan that during the related Prepayment Period was the subject of a
Voluntary Principal Prepayment, or constitutes a Relief Act Mortgage Loan, an
amount determined as follows:
(a) partial principal prepayments: The difference
between (i) one month's interest at the applicable Net Rate on the
amount of such prepayment and (ii) the amount of interest for the
calendar month of such prepayment (adjusted to the applicable Net
Rate) received at the time of such 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;
(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.
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Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
related Sub-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 related Sub-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 related
Sub-Servicer or the Master Servicer and not recovered by the Master Servicer or
such Sub-Servicer under any Primary Mortgage Insurance Policy for reasons other
than the Sub-Servicer's failure to ensure the maintenance of or compliance with
a Primary Mortgage Insurance Policy, such expenses including (a) property
protection expenses, (b) property sales expenses, (c) foreclosure and sale
costs, including court costs and reasonable attorneys' fees, and (d) similar
expenses reasonably paid or incurred in connection with liquidation.
Liquidation Proceeds: Cash received in connection with the
liquidation of a Defaulted Mortgage Loan, whether through trustee's sale,
foreclosure sale, Insurance Proceeds, condemnation proceeds or otherwise.
Loan-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: As defined in the Series Supplement.
Lost Notes: The original Mortgage Notes that have been lost, as
indicated on Exhibit J hereto.
Master Servicer: Norwest Bank Minnesota, National Association, or its
successor in interest, or any successor master servicer with respect to the
Mortgage Loans appointed as herein provided.
Master Servicer Collection Account: The Account created and
maintained pursuant to Section 4.01(d).
Master Servicer Compensation: As defined in Section 4.01(d).
Master Servicing Fee: As to any Distribution Date, an amount equal to
the investment earnings, net of investment losses, on amounts in the Master
Servicer Collection Account and the Certificate Account.
Monthly Advance: The advance in respect of a delinquent Scheduled
Payment required to be made by a Sub- Servicer pursuant to its Sub-Servicing
Agreement or, if such Sub-Servicer fails to make such advance, by the Master
Servicer on the related Advancing Date in accordance with the provisions of
Section 6.03.
Moody's: Moody's Investors Service, a division of Dun and Bradstreet
Corporation.
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Mortgage File: The mortgage documents listed in Section 2.01(c)
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Interest Rate: The annual rate at which interest accrues
from time to time on any Mortgage Loan pursuant to the related Mortgage Note,
which rate is equal to the "Mortgage Interest Rate" set forth with respect
thereto on the Mortgage Loan Schedule.
Mortgage Loan: A mortgage loan transferred and assigned to the
Certificate Trustee pursuant to Section 2.01 or Section 2.04 and held as a part
of either Trust Fund, as identified in the Mortgage Loan Schedule, including a
mortgage loan the property securing which has become an REO Property.
Mortgage Loan Group: Any one of Mortgage Loan Group 1 or Mortgage
Loan Group 2.
Mortgage Loan Group 1: The group of Mortgage Loans which is composed
of the Group 1 Mortgage Loans.
Mortgage Loan Group 2: The group of Mortgage Loans which is composed
of the Group 2 Mortgage Loans.
Mortgage Loan Purchase Agreement: The Mortgage Loan Purchase
Agreement dated as of September 30, 1998, between BSMCC, as seller, and CCC, as
purchaser.
Mortgage Loan Schedule: The schedules attached hereto as Exhibit B-1,
in the case of the Group 1 Mortgage Loans, and Exhibit B-2, in the case of the
Group 2 Mortgage Loans, as each such schedule may be 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.
NCM: National City Mortgage Company, an Ohio corporation, or its
successors in interest.
NCM Mortgage Loans: The Mortgage Loans that were originated or
acquired by NCM, as indicated on the related Mortgage Loan Schedule, and that
are subject to the NCM Sub-Servicing Agreement.
NCM Sub-Servicing Agreement: The Mortgage Loan Purchase and Interim
Servicing Agreement dated as of July 28, 1998 among BSMCC and NCM.
NCUSIF: The National Credit Union Share Insurance Fund or its
successors.
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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 related Sub-Servicer or the Master Servicer in accordance with
the related Sub-Servicing Agreement or this Agreement and (ii) unreimbursed
Servicing Advances and Monthly Advances relating to such Mortgage Loan.
Net Rate: With respect to each Mortgage Loan, the Mortgage Interest
Rate in effect from time to time less the applicable Sub-Servicing Fee
attributable thereto (in each case, expressed as a per annum rate).
Non-Discount Mortgage Loan: Any Mortgage Loan in Mortgage Loan Group
1, Sub-Group 2A or Sub-Group 2B with a Net Rate equal to or greater than 6.75%,
6.25% or 6.25% per annum, respectively.
Nonrecoverable Advance: Any Servicing Advance or Monthly Advance (i)
which was previously made or is proposed to be made by a Sub-Servicer or the
Master Servicer and (ii) which, in the good faith judgment of such Sub-Servicer
or the Master Servicer, as evidenced by an Officer's Certificate of the
Servicer or the Master Servicer, as applicable, will not or, in the case of a
proposed Servicing Advance or Monthly Advance, would not, be ultimately
recoverable by the Sub-Servicer or the Master Servicer from Liquidation
Proceeds, Insurance Proceeds or future payments on the Mortgage Loan for which
such Servicing Advance or Monthly Advance was made or proposed to be made.
Norwest: Norwest Bank Minnesota, National Association, and its
successors in interest.
Officer's Certificate: A certificate signed by a Servicing Officer or
other authorized officer of the applicable Sub-Servicer or the Master Servicer
and delivered to the Certificate Trustee or the Custodian, as required by this
Agreement.
Opinion of Counsel: A written opinion of counsel who is or are
acceptable to the Certificate Trustee and who, unless required to be
Independent (an "Opinion of Independent Counsel"), may be internal counsel for
a Sub-Servicer or the Master Servicer.
Original Value: The lesser of (i) the Appraised Value or (ii) sales
price of a Mortgaged Property at the time of origination of a Mortgage Loan,
except that in instances where either (i) or (ii) is unavailable, the other may
be used to determine Original Value, or if both (i) and (ii) are unavailable,
Original Value may be determined from other sources reasonably acceptable to
the Certificate Trustee.
Outstanding Bonds: As defined in the Series Supplement.
Outstanding Mortgage Loan: With respect to any Due Date, a Mortgage
Loan which, prior to such Due Date, was not the subject of a Principal
Prepayment in full, did not become a Liquidated Mortgage Loan and was not
purchased pursuant to Sections 2.02 or 2.03A or replaced pursuant to Section
2.04.
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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 related Trust Fund less any Net Insurance Proceeds with
respect thereto to the extent applied to principal.
Permitted Investments: Any one or more of the following obligations
or securities held in the name of the Certificate 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 Certificate 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 FDIC;
(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 Certificate Trustee holds
the security therefor;
(iv) securities bearing interest or sold at a discount issued
by any corporation (including the Certificate Trustee) incorporated
under the laws of the United States of America or any state thereof
that have the Applicable Credit Rating or better from each Rating
Agency at the time of such investment or contractual commitment
providing for such investment; provided, however, that securities
issued by any particular corporation will not be Permitted Investments
to the extent that investments therein will cause the then outstanding
principal amount of securities issued by such corporation and held as
part of the related Trust to exceed 10% of the aggregate Outstanding
Principal Balances of all of the Mortgage Loans in the related
Mortgage Loan Group and the principal amount of all Permitted
Investments held as part of the related Trust;
(v) commercial paper (including both non-interest-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;
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(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
Certificate Trustee, including those money market funds managed or
advised by the Master Servicer or an affiliate thereof; 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 Certificate Trustee, the Master Servicer
or any affiliate of the Certificate Trustee or the Master Servicer
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.
Prepayment Period: With respect to any Distribution Date and the
Mortgage Loans (other than the NCM Mortgage Loans that are the subject of a
Voluntary Principal Prepayment in full), the period from the first day through
the last day of the month preceding the month in which the Distribution Date
occurs, and with respect to the NCM Mortgage Loans which are the subject of a
Voluntary Principal Prepayment in full, the period from the eighteenth day of
the month preceding the month in which the Distribution Date occurs to the
seventeenth day of the month in which the Distribution Date occurs.
Primary Mortgage Insurance Policy: Any primary mortgage guaranty
insurance policy issued in connection with a Mortgage Loan which provides
compensation to a Mortgage Note holder in the event of default by the obligor
under such Mortgage Note or the related Security Instrument, or any replacement
policy therefor.
Principal Prepayment: Any payment (whether partial or full) or other
recovery of principal on a Mortgage Loan which is received in advance of its
scheduled Due Date to the extent that it is not accompanied by an amount as to
interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment, including Insurance Proceeds
and the purchase price in connection with any purchase of a Mortgage Loan, any
cash deposit in connection with the substitution of a Mortgage Loan, and the
principal portion of Net Liquidation Proceeds.
Protected Account: An account established and maintained in the name
of the Certificate Trustee for the benefit of Certificateholders by any
Sub-Servicer with respect to the Mortgage Loans and with respect to REO
Property in a Designated Depository Institution for receipt of principal and
interest and other amounts as described in Section 4.01; provided that if such
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Protected Account is not maintained with a Designated Depository Institution,
deposits in such Protected Account must be fully insured by the FDIC or the
NCUSIF or, to the extent not so insured, invested in Permitted Investments.
Purchaser Representation Letter: A letter in substantially the form
attached hereto as Exhibit E.
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, 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
Bonds rated by the Rating Agencies as of the Closing Date.
Rating Agencies: Fitch and Moody's.
Rating Agency Eligible Account: An account, including one maintained
with the Certificate Trustee, which either (i) is a trust account maintained
with the corporate trust department of a depository institution or trust
company (including, without limitation, the Certificate Trustee) organized
under the laws of the United States of America or any one of the states thereof
or the District of Columbia which is not affiliated with the Master Servicer,
any Sub-Servicer or any other master servicer other than the Certificate
Trustee or (ii) is maintained with an entity which is an institution whose
deposits are insured by the FDIC, the unsecured and uncollateralized long-term
debt obligations of which shall be rated "A" or higher by Moody's and "A" or
higher by Fitch, or one of the two highest short-term ratings by each Rating
Agency, and which is either (a) a federal savings association duly organized,
validly existing and in good standing under the federal banking laws, (b) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (c) a national banking association under
the federal banking laws, or (d) a principal subsidiary of a bank holding
company.
Realized Loss: Any (i) Deficient Valuation or (ii) as to any
Liquidated Mortgage Loan, (x) the Outstanding Principal Balance of such
Liquidated Mortgage Loan plus accrued and unpaid interest thereon at the
Mortgage Interest Rate through the last day of the month of such liquidation
less (y) the related Net Liquidation Proceeds 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 Certificate Trustee).
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Relief Act Mortgage Loan: Any Mortgage Loan as to which the Scheduled
Payment thereof has been reduced due to the application of the Relief Act.
REMIC: A real estate mortgage investment conduit, as defined in the
Code.
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REMIC 1: As defined in the Series Supplement.
REMIC 2: As defined in the Series Supplement.
REMIC 3: As defined in the Series Supplement.
REMIC Opinion: An Opinion of Independent Counsel, to the effect that
the proposed action described therein would not, under the REMIC Provisions,
(i) cause any Series REMIC to fail to qualify as a REMIC while any regular
interest in any Series REMIC is outstanding, (ii) result in a tax on prohibited
transactions with respect to any Series REMIC or (iii) constitute a taxable
contribution to any Series REMIC after the Startup Day.
REMIC Provisions: The provisions of the federal income tax law
relating to REMICs, which appear at Sections 860A through 860G of the Code, and
related provisions and regulations promulgated thereunder, as the foregoing may
be in effect from time to time.
REO Property: A Mortgaged Property acquired in the name of the
Certificate Trustee, for the benefit of Certificateholders, by foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.
Repurchase Price: With respect to any Mortgage Loan (or any property
acquired with respect thereto) required to be repurchased pursuant to Section
2.02 or 2.03A 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, plus (ii) all advances (excluding Monthly Advances) relating to
such 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.
Responsible Officer: Any officer assigned to the Corporate Trust
Division (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 Certificate 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 or any other
officer of the Certificate Trustee to whom matters under this Agreement may be
referred.
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), but after taking into consideration any Deficient Valuation or any
Relief Act adjustment, 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.
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: CMC Securities Corporation III, a Delaware corporation, or
its successors in interest.
Series: A Series of Certificates (which may consist of a single
Certificate) evidencing a beneficial interest in the Trust for such Series.
The Series is indicated on the face of a Certificate. The Series issued
pursuant to this Agreement are designated as Series 1998-2A and Series 1998-2B.
Series REMIC: Any of REMIC 1, REMIC 2 or REMIC 3.
Series Supplement: The Series 1998-2 Supplement, dated as of
September 30, 1998, to the Indenture, by and between the Seller, the Indenture
Trustee and the Bond Administrator.
Servicing Account: The separate trust account(s) created and
maintained by each Sub-Servicer pursuant to the related Sub-Servicing Agreement
with respect to the Mortgage Loans or with respect to REO Property in a
Designated Depository Institution for collection of taxes, assessments,
insurance premiums and comparable items as described in Section 3.07.
Servicing Advances: All reasonable and customary "out of pocket"
costs and expenses incurred in the performance by the Master Servicer or any
Sub-Servicer of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of the Mortgaged
Property, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of the REO Property, including reasonable
fees paid to any independent contractor in connection therewith, (iv)
compliance with the obligations under Section 3.07 or 3.10, and (v) in
connection with the liquidation of a Mortgage Loan, expenditures relating to
the purchase or maintenance of the first lien on the Mortgaged Property
pursuant to Section 3.12, all of which reasonable and customary out-of-pocket
costs and expenses are reimbursable to the Master Servicer or such Sub-Servicer
to the extent provided in Sections 4.02(b) and 4.03(b).
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Servicing Officer: Any officer of any Sub-Servicer or the Master
Servicer or of an agent or independent contractor through which all or part of
the Sub-Servicer's servicing responsibilities or the Master Servicer's master
servicing responsibilities are carried out, involved in, or responsible for,
the administration and servicing or master servicing, respectively, of the
Mortgage Loans whose name and specimen signature appear on a list of servicing
officers furnished to the Certificate Trustee by any Sub-Servicer or the Master
Servicer as such list may from time to time be amended in accordance with the
foregoing.
Special Hazard Loss: (i) A Realized Loss suffered by a Mortgaged
Property on account of direct physical loss, exclusive of (a) any loss covered
by a hazard policy or a flood insurance policy required to be maintained in
respect of such Mortgaged Property under Section 3.10 and (b) any loss caused
by or resulting from:
(1) normal wear and tear;
(2) conversion or other dishonest act on the part of the
Certificate Trustee, a Sub-Servicer, the Master
Servicer or any of their agents or employees; or
(3) errors in design, faulty workmanship or faulty
materials, unless the collapse of the property or a
part thereof ensues;
or (ii) any Realized Loss suffered by the related Trust Fund arising from or
related to the presence or suspected presence of hazardous wastes or hazardous
substances on a Mortgage Property as reported by a Sub-Servicer to the Master
Servicer unless such loss to a Mortgaged Property is covered by a hazard policy
or a flood insurance policy required to be maintained in respect of such
Mortgage Property under Section 3.10.
Special Hazard Loss Amount: Upon the initial issuance of the
Certificates, the "Special Hazard Loss Amount" for the Group 1 Mortgage Loans
will equal $4,452,996 and the "Special Hazard Loss Amount" for the Group 2
Mortgage Loans will equal $2,243,054. As of any Distribution Date, the Special
Hazard Loss Amount for each Mortgage Loan Group will equal the initial Special
Hazard Loss Amount for such Mortgage Loan Group minus the sum of (i) the
aggregate amount of Special Hazard Losses that would have been previously
allocated to the Subordinate Bonds of the related Bond Group in the absence of
the Loss Allocation Limitation and (ii) the Adjustment Amount for such Mortgage
Loan Group.
Special Hazard Termination Date: For either Mortgage Loan Group, the
Distribution Date upon which the applicable Special Hazard Loss Amount has been
reduced to zero or a negative number.
Startup Day: September 30, 1998.
Sub-Group: Either Sub-Group 2A or Sub-Group 2B.
Sub-Group 2A: The sub-group of Mortgage Loan Group 2 which consists of
the Sub-Group 2A Mortgage Loans.
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Sub-Group 2A Mortgage Loans: The Mortgage Loans in Mortgage Loan Group
2 designated as the "Sub-Group 2A Mortgage Loans" on the applicable Mortgage
Loan Schedule.
Sub-Group 2B: The sub-group of Mortgage Loan Group 2 which consists of
the Sub-Group 2B Mortgage Loans.
Sub-Group 2B Mortgage Loans: The Mortgage Loans in Mortgage Loan Group
2 designated as the "Sub-Group 2B Mortgage Loans" on the applicable Mortgage
Loan Schedule.
Subordinate Bonds: As defined in the Series Supplement.
Sub-Servicer: (i) Any of Cendant, NCM or WMBFA, or (ii) any Person
with which the Master Servicer and each Trust have entered into an agreement
and which meets the qualifications of a Sub-Servicer pursuant to Section 3.03.
As of the Closing Date, (i) Cendant will be the Sub-Servicer of the Cendant
Mortgage Loans under the Cendant Sub-Servicing Agreement, (ii) NCM will be the
Sub-Servicer of the NCM Mortgage Loans under the NCM Sub-Servicing Agreement,
and (iii) WMBFA will be the Sub-Servicer of the WMBFA Mortgage Loans under the
WMBFA Sub-Servicing Agreement.
Sub-Servicer Remittance Date: The 18th day of each month, or if such
day is not a Business Day, the preceding Business Day.
Sub-Servicing Agreement: Any of the Cendant Sub-Servicing Agreement,
the NCM Sub-Servicing Agreement or the WMBFA Sub-Servicing Agreement.
Sub-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
Sub- Servicing Fee Rate.
Sub-Servicing Fee Rate: With respect to any Mortgage Loan, the per
annum rate of 0.20% for each Cendant Mortgage Loan, 0.25%, for each NCM
Mortgage Loan and 0.25%, for each WMBFA Mortgage Loan, in each case payable
from full payments of accrued interest on each such Mortgage Loan. Any Cendant
Sub-Servicing Fee Rate in excess of 0.20% per annum will be set aside to pay
for lender funded mortgage insurance and will not be treated as servicing
compensation to Cendant and will not be available to make Compensating Interest
Payments.
Substitute Mortgage Loan: A mortgage loan tendered to the Custodian
on behalf of the Certificate 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 fixed 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 in the related Mortgage Loan Group;
(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.
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Trust Agreement: That certain Trust Agreement, dated as of September
30, 1998, by and between the Seller and The First National Bank of Chicago, as
Bond Pool Trustee.
Trust Fund or Trust: With respect to a Series, the pool of assets
subject hereto in which the Certificates of such Series represent a beneficial
interest, constituting the related Trust created hereby and to be administered
hereunder with respect to such Series, consisting of: (i) the related Mortgage
Loans and all rights pertaining thereto including all interest and principal
due with respect to such Mortgage Loans after the Cut-off Date, but excluding
any payments of principal or interest due on or prior to the Cut-off Date; (ii)
such assets as from time to time shall be credited or are required by the terms
of this Agreement to be credited to the Certificate Account with respect to
such Series, excluding any income to the Master Servicer from Permitted
Investments under Section 4.01(a); (iii) such assets as from time to time may
be held by the Master Servicer in the Master Servicer Collection Account,
excluding any income to the Master Servicer from Permitted Investments under
Section 4.01(a)); (iv) any Protected Accounts or Servicing Accounts with
respect to such Series (to the extent the mortgagee has a claim thereto and
excluding any income to the applicable Sub-Servicer or interest payable to
Mortgagors pursuant to applicable law); (v) any REO Property with respect to
such Series; (vi) 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) with respect to such Series; (vii) the Mortgage Loan
Purchase Agreement and the Assignment Agreement to the extent provided in
Section 2.04(a); and (viii) any and all proceeds of the foregoing. The Trust
Fund relating to Series 1998-2A shall include the Mortgage Loans identified on
the Group 1 Mortgage Loan Schedule, and the Trust Fund relating to Series
1998-2B shall include the Mortgage Loans identified the Group 2 Mortgage Loan
Schedule. Reference to Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than a certain percentage of the Trust of a
particular Series means Holders of Certificates the aggregate Fractional
Undivided Interests of such Series of which, as indicated on the face thereof,
is not less than such percentage.
Uninsured Cause: Any cause of damage to a Mortgaged Property or REO
Property such that the complete restoration of such Mortgaged Property or REO
Property is not fully reimbursable by the hazard insurance policies required to
be maintained pursuant to Section 3.10, without regard to whether or not such
policy is maintained.
Voluntary Principal Prepayment: With respect to any Distribution
Date, any Principal Prepayment received from the related Mortgagor on a
Mortgage Loan.
WMBFA: Washington Mutual Bank, F.A., or its successors in interest.
WMBFA Mortgage Loans: The Mortgage Loans that were originated or
acquired by WMBFA, as indicated on the related Mortgage Loan Schedule, and that
are subject to the WMBFA Sub-Servicing Agreement.
WMBFA Sub-Servicing Agreement: The Purchase, Warranties and Servicing
Agreement dated as of May 1, 1998 between BSMCC and WMBFA, as such agreement
relates to the Mortgage Loans conveyed under that Term Sheet dated September
11, 1998, and such Term Sheet.
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ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans to Certificate Trustee.
(a) Two trusts (each, a "Trust") of which the Certificate Trustee
is the trustee are hereby created under the laws of the State of New York for
the benefit of the Holders of the related Series of Certificates. The purpose
of each Trust is to hold the related Trust Fund and provide for the issuance,
execution, authentication and delivery of the related Certificates. The assets
of each Trust shall consist of the related Trust Fund. Each Trust shall be
irrevocable.
The Mortgage Loan documents delivered to the Custodian pursuant to
Section 2.01(c) shall remain in the custody of the Custodian on behalf of the
Certificate Trustee, on behalf of the related Trust. Moneys to the credit of
each Trust shall be held by the Certificate Trustee and invested as provided
herein. All assets received and held in each Trust will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of The
First National Bank of Chicago in its own right, or any Person claiming through
it. The Certificate Trustee, on behalf of each Trust, shall not have the power
or authority to transfer, assign, hypothecate, pledge or otherwise dispose of
any of the assets of such Trust to any Person, except as permitted herein. No
creditor of a beneficiary of a Trust, of the Certificate Trustee, of the Master
Servicer, or of the Seller shall have any right to obtain possession of, or
otherwise exercise legal or equitable remedies with respect to, the property of
a Trust, except in accordance with the terms of this Agreement.
(b) The Seller concurrently with the execution and delivery of
this Agreement, sells, transfers and assigns to the applicable Trust, without
recourse, all its right, title and interest in and to (i) the Mortgage Loans
identified in the Mortgage Loan Schedule for the related Mortgage Loan Group,
including all interest and principal due with respect to such 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 such Mortgage Loans
as from time to time may be held by the Master Servicer or a Sub-Servicer in
the Master Servicer Collection Account or any Protected Accounts (excluding any
income to the Master Servicer or any Sub-Servicer from Permitted Investments),
(iv) such assets relating to such Mortgage Loans as from time to time may be
held by the Certificate Trustee in the Certificate Account (excluding any
income to the Master Servicer from Permitted Investments under Section
4.01(d)), (v) any Servicing Accounts (to the extent the mortgagee has a claim
thereto and excluding any income to a Sub-Servicer or interest payable to
Mortgagors pursuant to applicable law), (vi) any REO Property, (vii) the
Required Insurance Policies and any amounts paid or payable by the Insurer
under any Insurance Policy (to the extent the mortgagee has a claim thereto),
(viii) the Mortgage Loan Purchase Agreement to the extent provided in
Subsection 2.03A(a), and (ix) any proceeds of the foregoing. The Mortgage
Loans that constitute part of the Trusts shall be divided into two separate
Trust Funds, one for each Mortgage Loan Group. 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
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in each 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 Certificate 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 each Trust Fund, and that this
Agreement shall constitute a security agreement under applicable law.
(c) In connection with the above transfer and assignment, the
Seller hereby deposits with the Custodian on behalf of the Certificate Trustee,
with respect to each Mortgage Loan (i) the original Mortgage Note, endorsed
without recourse to the order of the Certificate Trustee and showing an
unbroken chain of endorsements from the original payee thereof to the Person
endorsing it to the Certificate 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 Certificate Trustee of the Security Instrument,
with evidence of recording with respect to each Mortgage Loan in the name of
the Certificate Trustee thereon (or if clause (x) in the proviso 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;
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 Certificate 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 applicable Sub-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"; (y) in lieu of the
Security Instrument, assignment to the Certificate Trustee or intervening
assignments thereof, if the applicable jurisdiction retains the originals of
such documents (as evidenced by a certification from BSMCC, the Master Servicer
or the applicable Sub-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 (z) in lieu of the Mortgage Notes relating to 17
Mortgage Loans, with an aggregate Scheduled Principal Balance as of the Cut-off
Date of $5,796,277, each as identified in the list delivered by the Seller to
the Certificate Trustee on the Closing Date and set forth in Exhibit J hereto,
the Seller may deliver a lost note affidavit and, if available, a copy of the
original Mortgage Note; and provided, further, however, that in the case of
Mortgage Loans which have been prepaid in full after the Cut-off Date and prior
to the Closing Date, the Seller, in lieu of delivering the above documents, may
deliver to the Custodian and to the Certificate Trustee a certification of a
Servicing Officer to such effect and shall deposit all amounts paid in respect
of such Mortgage Loans in the Certificate Account on the Closing Date. The
Seller shall deliver such original documents (including any original documents
as to which certified copies had previously been delivered) to the Custodian on
behalf of the Certificate Trustee promptly after they are received.
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Pursuant to the Sub-Servicing Agreements, each Sub-Servicer shall cause, at its
expense, the Security Instrument and intervening assignments, if any, and the
assignment of the Security Instrument to the Certificate Trustee to be recorded
not later than 180 days after the Closing Date.
Section 2.02. Acceptance of Mortgage Loans by Certificate Trustee.
(a) The Certificate Trustee acknowledges receipt of, subject to further review
and the exceptions which may be noted pursuant to the procedures described
below, and declares that the Custodian holds on behalf of the Certificate
Trustee the documents (or certified copies thereof) delivered to the Custodian
pursuant to Section 2.01 and declares that the Custodian on behalf of the
Certificate Trustee will continue to hold those documents and any amendments,
replacements or supplements thereto and all other assets of each Trust Fund
delivered to it as Certificate Trustee or to the Custodian on behalf of the
Certificate Trustee in trust for the use and benefit of all present and future
Holders of the Certificates. No later than 45 days after the Closing Date (or,
with respect to any Substitute Mortgage Loan, within 5 Business Days after the
receipt by the Custodian on behalf of the Certificate Trustee thereof), the
Certificate Trustee agrees, for the benefit of the Certificateholders, to cause
the Custodian to review each Mortgage File delivered to it and to execute and
deliver, or cause to be executed and delivered, to the Seller, the Certificate
Trustee and the Master Servicer an Initial Certification substantially in the
form annexed hereto as Exhibit G. In conducting such review, the Certificate
Trustee will cause the Custodian to 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-1 and Exhibit
B-2 to this Agreement, as supplemented (provided, however, that with respect to
those documents described in subclauses (c)(iv), (c)(v) and (c)(vi) of Section
2.01, the Custodian's obligations shall extend only to documents actually
delivered pursuant to such subsections). In performing any such review, the
Custodian 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 Custodian 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-1 or Exhibit B-2 or to appear to be defective on its
face, the Custodian shall promptly notify the Certificate Trustee, the Seller
and BSMCC. BSMCC shall correct or cure any such defect within 90 days from the
date of notice from the Custodian 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 Certificate
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 of a
Servicing Officer confirming that such documents have been accepted for
recording, and delivery to the Custodian shall be effected by BSMCC within
thirty days of its receipt of the original recorded document.
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(b) No later than 180 days after the Closing Date, the Certificate
Trustee will cause the Custodian to 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, the Certificate
Trustee and the Master Servicer, a Final Certification substantially in the
form annexed hereto as Exhibit H. In conducting such review, the Certificate
Trustee will cause the Custodian to ascertain whether an original of each
document required to be recorded has been received by the Custodian from the
recording office with evidence of recording thereon or a certified copy has
been received by the Custodian from the recording office. If the Custodian
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-1 and Exhibit B-2 or to appear defective on its face, the Custodian
shall promptly notify the Certificate Trustee and BSMCC (provided, however,
that with respect to those documents described in subsection (c)(iv), (c)(v)
and (c)(vi) of Section 2.01, the Custodian'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 Certificate Trustee and
the Custodian 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 Certificate
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 days from the Certificate 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) Notwithstanding the foregoing and the provisions of Section
2.04, if a Mortgage Loan is discovered to have a defect which, had such defect
been discovered before the Startup Day, would have prevented the Mortgage Loan
from being a "qualified mortgage" within the meaning of Section 860G(a)(3) of
the Code, BSMCC shall, within 90 days after the date such defect is discovered,
purchase such Mortgage Loan at the applicable Repurchase Price, unless BSMCC
delivers to the Certificate Trustee an Opinion of Counsel to the effect that
continuing to hold such Mortgage Loan will not adversely affect the status of
each of REMIC 1, REMIC 2 and REMIC 3 as a REMIC for federal income tax
purposes.
(d) In the event that a Mortgage Loan is purchased by BSMCC in
accordance with Subsections 2.02(a) or (b) above, BSMCC shall remit the
Repurchase Price to the Certificate Trustee for deposit in the appropriate
sub-account of the Certificate Account and shall provide to the Certificate
Trustee written notification detailing the components of the Repurchase Price.
Upon deposit of the Repurchase Price in the appropriate sub-account of the
Certificate Account, the Certificate Trustee shall cause the Custodian to
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 Certificate Trustee.
The Certificate Trustee shall cause BSMCC to amend the Mortgage Loan Schedule,
which was previously delivered to it by Seller in a form agreed to
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between BSMCC and the Custodian, to reflect such repurchase and shall promptly
notify the Master Servicer and the Rating Agencies of such amendment. The
obligation of BSMCC to repurchase any Mortgage Loan as to which such a defect
in a constituent document exists shall be the sole remedy respecting such
defect available to the Certificateholders or to the Certificate Trustee on
their behalf.
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer. (a) The Master Servicer hereby represents and warrants to the
Certificate Trustee as of the Closing Date that:
(i) It is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States of America and throughout the term of this Agreement will
remain a national banking association duly organized, validly existing
and in good standing under the laws of the United States of America,
and has the corporate power and authority to perform its obligations
under this Agreement;
(ii) The execution and delivery of this Agreement have been
duly authorized by all requisite corporate action;
(iii) This Agreement, assuming due authorization, execution,
and delivery by the other parties hereto, will constitute the Master
Servicer's legal, valid and binding obligation, enforceable against it
in accordance with its terms, except only as such enforcement may be
limited by applicable Debtor Relief Laws and that certain equitable
remedies may not be available regardless of whether enforcement is
sought in equity or at law;
(iv) Its execution and delivery of this Agreement and its
performance and compliance with the terms of this Agreement will not
(A) violate its charter or bylaws, (B) to its knowledge, violate any
law or regulation, or any administrative or judicial decree or order
to which it is subject or (C) constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or
other instrument to which it is a party or which may be applicable to
it or any of its assets;
(v) To its best knowledge, it is not in default with respect
to any order or decree of any court or any order, regulation or demand
of any federal, state, municipal or governmental agency, which default
would reasonably be expected to have consequences that would
materially and adversely affect its financial condition or operations
or its performance hereunder;
(vi) It does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant
contained in this Agreement to be performed by it;
(vii) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of its business; and
(viii) No litigation is pending or, to its best knowledge,
threatened against it, which could be reasonably expected to
materially and adversely affect its entering into this Agreement or
performing its obligations under this Agreement or which would have a
material adverse effect on its financial condition.
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Section 2.03A. Assignment of Interest in the Mortgage Loan Purchase
Agreement. (a) The Seller hereby assigns to the Certificate Trustee all of
its right, title and interest in the Mortgage Loan Purchase Agreement and in
that certain Assignment, Assumption and Recognition Agreement dated as of
September 30, 1998, by and among the Seller, CCC and BSMCC, and all of Seller's
rights and obligations pursuant to the Sub-Servicing Agreements, provided that
the Seller retains a joint and several right in the event of breach of the
representations, warranties and covenants of a Sub- Servicer under any of the
Sub-Servicing Agreements 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 a
Mortgage Loan shall be the Certificate Trustee's and the Certificateholders'
sole remedy for any breach thereof. At the request of the Certificate Trustee,
the Seller shall take such actions as may be necessary to enforce the above
right, title and interest on behalf of the Certificate Trustee and the
Certificateholders or shall execute such further documents as the Certificate
Trustee may reasonably require in order to enable the Certificate Trustee to
carry out such enforcement. The Certificate Trustee hereby delegates to the
Master Servicer the rights to enforce the Certificate Trustee's rights under
the Sub-Servicing Agreements, and the Master Servicer hereby accepts such
delegation.
(b) If the Seller, the Master Servicer, the Custodian or the
Certificate 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 Certificate 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 Certificate Trustee; provided, however, that if there is a
breach of any representation set forth in Exhibit C and the Mortgage Loan or
the related property acquired with respect thereto has been sold, then BSMCC
shall pay, in lieu of the Repurchase Price, any excess of the Repurchase Price
over the Net Liquidation Proceeds received upon such sale. (If the Net
Liquidation Proceeds exceed the Repurchase Price, any excess shall be paid to
BSMCC to the extent not required by law to be paid to the borrower.) Any such
purchase by BSMCC shall be made by providing an amount equal to the Repurchase
Price to the Certificate Trustee for deposit in the appropriate sub-account of
the Certificate Account and the Certificate Trustee, upon deposit of the
Repurchase Price in the appropriate sub- account of the Certificate Account and
of written notification detailing the components of such Repurchase Price,
shall cause the Custodian to 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 Certificate Trustee.
The Custodian shall amend the Mortgage Loan Schedule to reflect such repurchase
and shall promptly notify the Master Servicer, the Certificate Trustee 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 Certificate Trustee on their behalf.
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Section 2.04. Substitution of Mortgage Loans. Notwithstanding
anything to the contrary in this Agreement, in lieu of purchasing a Mortgage
Loan pursuant to Sections 2.02 or 2.03A, BSMCC may, no later than the date by
which such purchase by BSMCC would otherwise be required, tender to the
Custodian on behalf of the Certificate Trustee a Substitute Mortgage Loan
accompanied by an Officer's Certificate of BSMCC that such Substitute Mortgage
Loan conforms to the requirements set forth in the definition of "Substitute
Mortgage Loan"; provided, however, that substitution pursuant to this Section
2.04 in lieu of purchase shall not be permitted after the termination of the
two-year period beginning on the Startup Day. The Certificate Trustee shall
cause the Custodian to examine the Mortgage File for any Substitute Mortgage
Loan in the manner set forth in Section 2.02(a) and shall notify the related
Master Servicer in writing, within five Business Days after receipt, whether or
not the documents relating to the Substitute Mortgage Loan satisfy the
requirements of the third sentence of Subsection 2.02(a). Within two Business
Days after such notification, BSMCC shall provide to the Certificate Trustee
for deposit in the appropriate sub-account of the Certificate Account the
amount, if any, by which the Outstanding Principal Balance as of the next
preceding Due Date of the Mortgage Loan for which substitution is being made,
after giving effect to Scheduled Principal due on such date, exceeds the
Outstanding Principal Balance as of such date of the Substitute Mortgage Loan,
after giving effect to Scheduled Principal due on such date, which amount shall
be treated for the purposes of this Agreement as if it were the payment by
BSMCC of the Repurchase Price for the purchase of a Mortgage Loan by BSMCC.
After such notification to BSMCC and, if any such excess exists, upon receipt
of such deposit, the Certificate Trustee shall accept such Substitute Mortgage
Loan, which shall thereafter be deemed to be a Group 1 Mortgage Loan or a Group
2 Mortgage Loan, as applicable, hereunder. In the event of such a
substitution, accrued interest on the Substitute Mortgage Loan for the month in
which the substitution occurs and any Principal Prepayments made thereon during
such month shall be the property of the related Trust Fund and accrued interest
for such month on the Mortgage Loan for which the substitution is made and any
Principal Prepayments made thereon during such month shall be the property of
BSMCC. The Scheduled Principal on a Substitute Mortgage Loan due on the Due
Date in the month of substitution shall be the property of BSMCC and the
Scheduled Principal on the Mortgage Loan for which the substitution is made due
on such Due Date shall be the property of the related Trust Fund. Upon
acceptance of the Substitute Mortgage Loan, the Certificate Trustee shall cause
the Custodian to release to BSMCC the related Mortgage File related to any
Mortgage Loan released pursuant to this Section 2.04 and shall execute and
deliver all instruments of transfer or assignment, without recourse, in form as
provided to it as are necessary to vest in BSMCC title to and rights under any
Mortgage Loan released pursuant to this Section 2.04. BSMCC shall deliver the
documents related to the Substitute Mortgage Loan in accordance with the
provisions of Subsections 2.01(c) and 2.02(b), with the date of acceptance of
the Substitute Mortgage Loan deemed to be the Closing Date for purposes of the
time periods set forth in those Subsections. The representations and
warranties set forth in Exhibit C shall be deemed to have been made by BSMCC
with respect to each Substitute Mortgage Loan as of the date of acceptance of
such Mortgage Loan by the Custodian on behalf of the Certificate Trustee. The
Custodian 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, the Certificate Trustee and the Rating Agencies.
Section 2.05. Representations and Warranties of the Certificate
Trustee. The Certificate Trustee hereby represents and warrants to the Seller
and the Master Servicer, as of the Closing Date (and in the case of paragraphs
(iv) and (v) below throughout the term of the Agreement), that:
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(i) The Certificate Trustee is a national bank duly
organized, validly existing and in good standing under the laws of the
United States with a principal place of business in Chicago, Illinois;
(ii) Subject to the right of the Certificate Trustee to
appoint a co-trustee or separate trustee under Section 9.11 hereof in
order to meet the legal requirements of a particular jurisdiction, the
Certificate Trustee has full power, authority and legal right to
execute and deliver this Agreement and to perform its obligations
under this Agreement and has taken all necessary action to authorize
the execution, delivery and performance by it of this Agreement and
the Certificates;
(iii) To the best of the Certificate Trustee's knowledge,
after reasonable investigation, the execution and delivery by the
Certificate Trustee of this Agreement and the Certificates and the
performance by the Certificate Trustee of its obligations under this
Agreement and the Certificates will not violate any provision of the
Certificate Trustee's charter or bylaws or any law or regulation
governing the Certificate Trustee or any order, writ, judgment or
decree of any court, arbitrator or governmental authority or agency
applicable to the Certificate Trustee or any of its assets. To the
best of the Certificate Trustee's knowledge, after reasonable
investigation, such execution, delivery and performance will not
require the authorization, consent or approval of, the giving of
notice to, the filing or registration with, or the taking of any other
action with respect to, any governmental authority or agency
regulating the fiduciary activities of a national bank. To the best
of the Certificate Trustee's knowledge, after reasonable
investigation, such execution, delivery and performance will not
conflict with, or result in a breach or violation of, any material
indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Certificate Trustee is a party or by which it
or its properties is bound;
(iv) This Agreement has been duly executed and delivered by
the Certificate Trustee. This Agreement, when executed and delivered
by the other parties hereto, will constitute the valid, legal and
binding obligation of the Certificate Trustee, enforceable against the
Certificate Trustee in accordance with its terms, except as the
enforcement thereof may be limited by applicable Debtor Relief Laws
and that certain equitable remedies may not be available regardless of
whether enforcement is sought in equity or at law; and
(v) All funds received by the Certificate Trustee and
required to be deposited in the Certificate Account and the Custody
Account pursuant to this Agreement will be promptly so deposited.
Section 2.06. Issuance of Certificates. The Certificate Trustee
acknowledges the assignment to it of the Mortgage Loans and the other assets
comprising each Trust Fund and, concurrently therewith, has signed, and
countersigned and delivered to the Seller, in exchange therefor, Certificates
in the aggregate Initial Certificate Principal Balance and in such Authorized
Denominations representing such Fractional Undivided Interests as the Seller
has requested. The Certificate 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 Certificate Trustee in trust for the benefit of
the Certificateholders.
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Section 2.07. Representations and Warranties Concerning the Seller.
The Seller hereby represents and warrants to the Certificate Trustee and the
Master Servicer as follows:
(i) the Seller (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and (b) is qualified and in good standing as a foreign corporation to
do business in each jurisdiction where such qualification is
necessary, except where the failure so to qualify would not reasonably
be expected to have a material adverse effect on the Seller's business
as currently conducted or on the Seller'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 currently 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
certificate of incorporation or by-laws of the Seller;
(iv) the execution, delivery and performance by the Seller of
this Agreement and the consummation of the transactions contemplated
hereby do not require the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in
respect of, any state, federal or other governmental authority or
agency, except those consents, approvals, notices, registrations or
other actions as have already been obtained, given or made;
(v) this Agreement has been duly executed and delivered by
the Seller and, assuming due authorization, execution and delivery by
the other parties hereto, constitutes a valid and binding obligation
of the Seller enforceable against it in accordance with its terms
(subject to applicable bankruptcy and insolvency laws and other
similar laws affecting the enforcement of the rights of creditors
generally);
(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
Certificate Trustee, no Mortgage Note and no Security Instrument was
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
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transfer and sell such Mortgage Loan to the Certificate Trustee free
and clear of any encumbrance, equity, lien, pledge, charge, claim or
security interest.
Section 2.08. The Custodian. Notwithstanding anything to the
contrary in this Agreement, the parties hereto acknowledge that the functions
of the Certificate Trustee with respect to the inspection, custody and release
of the Mortgage Files pursuant to Sections 2.01, 2.02, 2.03A and 2.04 shall be
performed by the Custodian. The Custodian shall receive no separate fee from
the Trusts for performing such services. The Certificate Trustee shall not be
liable for any acts or omissions of the Custodian. The parties hereto hereby
appoint Norwest and Norwest hereby accepts such appointment, to serve as
Custodian hereunder. The Certificate Trustee may terminate the Custodian at
any time upon or after the occurrence of an Event of Default and either assume
possession of the Mortgage Files directly or through another Custodian.
ARTICLE III
Administration and Servicing of Mortgage Loans
This Article III and certain other Sections of this Agreement
describe, in summary form, certain provisions of the Sub-Servicing Agreements
entered into between BSMCC and the various Sub-Servicers who will service the
Mortgage Loans. To the extent that any Sub-Servicing Agreement conflicts with
the summaries set forth in this Agreement, the provisions of the applicable
Sub-Servicing Agreement will govern. Except as otherwise set forth herein,
this Article III and the other Sections of this Agreement describing the
Sub-Servicing Agreements are for informational purposes only and do not
establish responsibilities and shall not be construed to impose any obligations
or duties on any Person, including, in particular, the Master Servicer or any
Sub-Servicer.
Section 3.01. Master Servicer to Master Service. (a) The Master
Servicer shall supervise the servicing and administration of the Mortgage Loans
and any related REO Property by each Sub-Servicer in accordance with the terms
of the related Sub-Servicing Agreements and the Master Servicer's normal master
servicing practices, which generally conform to the standards of an institution
prudently master servicing mortgage loans for its own account and shall have
full authority to do anything it reasonably deems appropriate or desirable in
connection with the supervision of such servicing and administration. The
Master Servicer may perform its master servicing responsibilities hereunder
through other agents or independent contractors, but shall not thereby be
released from any of its responsibilities as hereinafter set forth. The
authority of the Master Servicer, in its capacity as master servicer, shall
include, without limitation, the power to consult with and advise any
Sub-Servicer regarding administration of a related Mortgage Loan. The
authority of the Master Servicer shall include, in addition, the power on
behalf of the Certificateholders, the Certificate Trustee or any of them to (i)
execute and deliver customary consents or waivers and other instruments and
documents, (ii) consent to transfers of any related Mortgaged Property and
assumptions of the related Mortgage Notes and Security Instruments (in the
manner provided in this Agreement) and (iii) collect any Insurance Proceeds and
Liquidation Proceeds. Without limiting the generality of the foregoing, the
Master Servicer may, and is hereby authorized, and empowered by the Certificate
Trustee to, execute and deliver, on behalf of itself, the Certificateholders,
the Certificate Trustee, or any of them, any instruments of satisfaction,
cancellation, partial or full release, discharge and all other comparable
instruments, with respect to the related Mortgage Loans, the Insurance Policies
and the accounts related thereto, and the
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Mortgaged Properties. The Master Servicer may exercise this power in its own
name or in the name of the Certificate Trustee.
(b) Notwithstanding the provisions of Subsection 3.01(a), the
Master Servicer shall not take any action which, in the Master Servicer's
reasonable business judgment, would be inconsistent with generally accepted
good master servicing procedures and practices and with the interest of the
Certificate Trustee or the Certificateholders in the related Mortgage Loans or
with the rights and interests of the Certificate Trustee or the
Certificateholders under this Agreement.
(c) The Certificate Trustee shall furnish each Sub-Servicer and
the Master Servicer with any powers of attorney and other documents in form as
provided to it necessary or appropriate to enable each Sub-Servicer to service,
and the Master Servicer to master service, the related Mortgage Loans and REO
Property.
Section 3.02. Sub-Servicing Agreement Between the Master Servicer and
Sub-Servicers.
(a) [Reserved].
(b) As part of its master servicing responsibilities hereunder,
the Master Servicer, for the benefit of the Certificate Trustee and the
Certificateholders, shall enforce the obligations of each Sub-Servicer under
the related Sub-Servicing Agreement. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Sub-Servicing
Agreements and the pursuit of other appropriate remedies, shall be in such form
and carried out to such an extent and at such time as the Master Servicer, in
its good faith business judgment, would require were it the owner of the
related Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at its own expense, provided that the Master Servicer shall not be
required to prosecute or defend any legal action except to the extent that the
Master Servicer shall have received reasonable indemnity for its costs and
expenses in pursuing such action.
(c) Notwithstanding anything contained herein to the contrary, the
parties hereto agree that (i) Cendant shall be the Sub-Servicer of the Cendant
Mortgage Loans pursuant to the Cendant Sub-Servicing Agreement, (ii) WMBFA
shall be the Sub-Servicer of the WMBFA Mortgage Loans pursuant to the WMBFA
Sub-Servicing Agreement, and (iii) NCM shall be the Sub-Servicer of the NCM
Mortgage Loans pursuant to the NCM Sub-Servicing Agreement.
Section 3.03. Successor Sub-Servicers. The Master Servicer shall be
entitled to terminate any Sub-Servicing Agreement that may exist in accordance
with the terms and conditions of such Sub-Servicing Agreement and without any
limitation by virtue of this Agreement; provided, however, that upon
termination, the Master Servicer shall either act as servicer of the related
Mortgage Loans or enter into an appropriate contract with a successor
Sub-Servicer pursuant to which such successor Sub-Servicer will be bound by all
relevant terms of the related Sub-Servicing Agreement pertaining to the
servicing of such Mortgage Loans.
Section 3.04. [Reserved]
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Section 3.05. Assumption of Master Servicing by Certificate Trustee.
(a) [Reserved].
(b) In the event that the Certificate Trustee or its designee as
successor master servicer for the Certificate Trustee assumes the servicing
obligations of the Master Servicer under Section 8.02, upon the reasonable
request of the Certificate Trustee or such designee as successor master
servicer, the Master Servicer shall at its own expense deliver to the
Certificate Trustee, or at its written request to such designee, all documents
and records, electronic or otherwise in the Master Servicer's possession,
relating to the related Mortgage Loans or REO Property and an accounting of
amounts collected and held by it, if any, and will otherwise cooperate and use
its reasonable best efforts to effect the orderly and efficient transfer of the
master servicing responsibilities hereunder to the Certificate Trustee, or at
its written request to such designee as successor master servicer.
Section 3.06. Collection of Mortgage Loan Payments. (a) The Master
Servicer will coordinate and monitor remittances by Sub-Servicers with respect
to the related Mortgage Loans in accordance with this Agreement and the related
Sub-Servicing Agreements.
(b) The Master Servicer shall make its reasonable best efforts to
cause each Sub-Servicer to collect all payments required under the terms and
provisions of the related Sub-Servicing Agreement and to follow collection
procedures comparable to the collection procedures of prudent mortgage lenders
servicing mortgage loans for their own account to the extent such procedures
shall be consistent with this Agreement. Consistent with the foregoing, a Sub-
Servicer may in its discretion (i) waive or permit to be waived any late
payment charge, prepayment charge, assumption fee, or any penalty interest in
connection with the prepayment of a related Mortgage Loan and (ii) suspend or
temporarily reduce or permit to be suspended or temporarily reduced Scheduled
Payments for a period of up to six months, or arrange or permit an arrangement
with a Mortgagor for a scheduled liquidation of delinquencies. In the event a
Sub- Servicer shall consent to the deferment of the due dates for payments due
on a related Mortgage Note, the related Sub-Servicer shall make a Monthly
Advance to the same extent as if such installment were due, owing and
delinquent and had not been deferred through liquidation of the Mortgaged
Property; provided, however, that the obligation of the Sub- Servicer to make a
Monthly Advance shall apply only to the extent that the Sub-Servicer believes,
in good faith, that such advances are not Nonrecoverable Advances.
(c) A Sub-Servicer may not make any advances of amounts due in the
future with respect to a Mortgage Loan and a Sub-Servicer shall not permit (i)
any modification with respect to any Mortgage Loan that would change the
Mortgage Interest Rate, reduce or increase the principal balance (except for
reductions resulting from actual payments of principal) or change the final
maturity date on such Mortgage Loan or (ii) any modification, waiver or
amendment of any term of any related Mortgage Loan that would both (A) effect
an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code
(or final, temporary or proposed Treasury regulations promulgated thereunder)
and (B) cause any Series REMIC to fail to qualify as a REMIC under the Code or
the imposition of any tax on "prohibited transactions" or "contributions after
the startup date" under the REMIC Provisions.
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(d) Promptly after a Sub-Servicer has determined that all amounts
which it expects to recover from or on account of a Mortgage Loan have been
recovered and that no further Liquidation Proceeds will be received in
connection therewith, such Sub-Servicer shall provide to the Master Servicer
and the Certificate Trustee a certificate of a Servicing Officer that such
Mortgage Loan became a Liquidated Mortgage Loan as of the date of such
determination.
Section 3.07. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.
(a) The Sub-Servicers will establish and maintain, in addition to
the Protected Accounts, one or more Servicing Accounts. The Sub-Servicers will
deposit and retain therein all otherwise unapplied collections from the
Mortgagors, including amounts collected for the payment of taxes, assessments,
insurance premiums, or comparable items as agent of the Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in a
Designated Depository Institution in an account designated as a "Mortgage Loan
Servicing Account," held in trust by the Sub-Servicer, as agent for holders of
various pass-through securities and other interests in mortgage loans sold by
it; and agent for various mortgagors, as their interests may appear or under
such other designation as may be permitted by a Sub-Servicing Agreement. The
amount at any time credited to a Servicing Account must be fully insured by the
FDIC or the NCUSIF, or, to the extent that such deposits exceed the limits of
such insurance, such excess must be (i) transferred to another account in a
Designated Depository Institution or (ii) if permitted by applicable law,
invested in Permitted Investments held in trust by the Sub-Servicer as
described above and maturing, or be subject to redemption or withdrawal, no
later than the date on which such funds are required to be withdrawn, and in no
event later than 45 days after the date of investment. The Sub- Servicers may
establish Servicing Accounts not conforming to the foregoing requirements to
the extent that such Servicing Accounts are Rating Agency Eligible Accounts.
Withdrawals of amounts from the Servicing Accounts may be made only to effect
timely payment of taxes, assessments, insurance premiums, or comparable items,
to transfer previously unapplied collections to a Protected Account, to
reimburse the Master Servicer or a Sub-Servicer for any Servicing Advances made
with respect to such items, to refund to any Mortgagors any sums as may be
determined to be overages, to pay interest, if required, to Mortgagors on
balances in the Servicing Accounts or to clear and terminate the Servicing
Accounts at or any time after the termination of this Agreement in accordance
with Section 10.01.
Section 3.08. Access to Certain Documentation and Information
Regarding the Mortgage Loans. Each Sub-Servicer shall provide to the
Certificate Trustee, the Master Servicer and the Seller access to the records
and documentation regarding the related Mortgage Loans and REO Property and the
servicing thereof and to the Certificateholders, the FDIC, and the supervisory
agents and examiners of the FDIC (to which the Certificate Trustee shall also
provide) access to the documentation regarding the related Mortgage Loans
required by applicable regulations, such access being afforded without charge
but only upon reasonable prior written request and during normal business hours
at the offices of the Sub-Servicers, the Custodian or the Certificate Trustee
that are designated by these entities; provided, however, that, unless
otherwise required by law, the Certificate Trustee, the Custodian or the
Sub-Servicer 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; provided, further, however, that the Certificate Trustee and
the Seller shall coordinate their requests for such access so as not to impose
an unreasonable burden on, or cause an interruption
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of, the business of any Sub-Servicer. The Sub-Servicers, the Custodian and the
Certificate 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 their own actual out-of-pocket costs.
Section 3.09. Maintenance of Primary Mortgage Insurance Policies;
Collection Thereunder. Each Sub-Servicer shall exercise its best reasonable
efforts to maintain and keep in full force and effect each Primary Mortgage
Insurance Policy by a Qualified Insurer, or other insurer satisfactory to the
Rating Agencies, with respect to each related conventional Mortgage Loan as to
which as of the Cut-off Date such a Primary Mortgage Insurance Policy was in
effect (or, in the case of a Substitute Mortgage Loan, the date of
substitution) and the original principal amount of the related Mortgage Note
exceeded 80% of the Original Value in an amount at least equal to the excess of
such original principal amount over 75% of such Original Value until the
principal amount of any such Mortgage Loan is reduced below 80% of the Original
Value or, based upon a new appraisal, the principal amount of such Mortgage
Loan represents less than 80% of the new appraised value. The related
Sub-Servicer shall effect the timely payment of the premium on each Primary
Mortgage Insurance Policy. The related Sub-Servicer shall have the power to
substitute for any Primary Mortgage Insurance Policy another substantially
equivalent policy issued by another Qualified Insurer; provided that such
substitution is subject to the condition, to be evidenced by a writing from
each Rating Agency, that it would not cause the ratings on the Bonds to be
downgraded or withdrawn.
Section 3.10. Maintenance of Hazard Insurance and Fidelity Coverage.
(a) Each Sub-Servicer shall maintain and keep, with respect to each related
Mortgage Loan and each REO Property, in full force and effect hazard insurance
(fire insurance with extended coverage) equal to at least the lesser of the
Outstanding Principal Balance of the Mortgage Loan or the current replacement
cost of the Mortgaged Property, and containing a standard mortgagee clause;
provided, however, that the amount of hazard insurance may not be less than the
amount necessary to prevent loss due to the application of any co-insurance
provision of the related policy. Unless applicable state law requires a higher
deductible, the deductible on such hazard insurance policy may be $1000 or 1%
of the applicable amount of coverage, whichever is less. In the case of a
condominium unit or a unit in a planned unit development, the required hazard
insurance shall take the form of a multiperil policy covering the entire
condominium project or planned unit development, in an amount equal to at least
100% of the insurable value based on replacement cost.
(b) Any amounts collected by a Sub-Servicer under any such hazard
insurance policy (other than amounts to be applied to the restoration or repair
of the Mortgaged Property or amounts released to the Mortgagor in accordance
with the Sub-Servicer's normal servicing procedures, the terms of the Mortgage
Note, the Security Instrument or applicable law) shall be deposited initially
in a Protected Account, for transmittal to the appropriate sub-account of the
Certificate Account or Custody Account, subject to withdrawal pursuant to
Section 4.03.
(c) Any cost incurred by a Sub-Servicer in maintaining any such
hazard insurance policy shall not be added to the amount owing under the
related Mortgage Loan for the purpose of calculating monthly distributions to
Certificateholders, notwithstanding that the terms of such Mortgage Loan so
permit. Such costs shall be recoverable by the Sub-Servicer out of related
late
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payments by the Mortgagor or out of Insurance Proceeds or Liquidation Proceeds
or by the Sub-Servicer from the Repurchase Price, to the extent permitted by
Section 4.03.
(d) No earthquake or other additional insurance is to be required
of any Mortgagor or maintained on property acquired with respect to a Security
Instrument other than pursuant to such applicable laws and regulations as shall
at any time be in force and shall require such additional insurance. Each
year, in accordance with standards and procedures required by Freddie Mac, the
Master Servicer shall perform, or cause a Sub-Servicer to perform, a review of
the related Mortgage Loans to determine which, if any, of the Mortgaged
Properties are located in a federally designated special flood hazard area and
for each Mortgaged Property found to be located in a federally designated
special flood hazard area, a Sub-Servicer shall use its best reasonable efforts
to cause with respect to the related Mortgage Loans and each REO Property,
flood insurance (to the extent available and in accordance with mortgage
servicing industry practice) to be maintained. Such flood insurance shall
cover the related Mortgaged Property, including all items taken into account in
arriving at the Appraised Value on which the Mortgage Loan was based, and shall
be in an amount equal to the lesser of (i) the Outstanding Principal Balance of
the related Mortgage Loan and (ii) the minimum amount required under the terms
of coverage to compensate for any damage or loss on a replacement cost basis,
but not more than the maximum amount of such insurance available for the
related Mortgaged Property under either the regular or emergency programs of
the National Flood Insurance Program (assuming that the area in which such
Mortgaged Property is located is participating in such program). Unless
applicable state law requires a higher deductible, the deductible on such flood
insurance may not exceed $1,000 or 1% of the applicable amount of coverage,
whichever is less.
(e) If insurance has not been maintained complying with
Subsections 3.10(a) and (d) and there shall have been a loss which would have
been covered by such insurance had it been maintained, the related Sub-Servicer
shall pay for any necessary repairs.
(f) The related Sub-Servicer shall present, if it is a permitted
claimant, claims under the related hazard insurance or flood insurance policy.
(g) Each Sub-Servicer shall obtain and maintain an errors and
omissions insurance policy covering such Sub-Servicer's officers, employees and
other persons acting on its behalf in connection with its activities under this
Agreement and the related Sub-Servicing Agreement. The amount of coverage
shall be at least equal to the coverage acceptable to Fannie Mae or Freddie Mac
to service loans for it or otherwise in an amount as is commercially available
at a cost that is generally not regarded as excessive by industry standards.
The Master Servicer shall maintain at its own expense and for the duration of
this Agreement a fidelity bond in such amount as is customary for master
servicers or trustees of mortgage loans. The Master Servicer shall promptly
notify the Certificate Trustee of any material change in the terms of its bond
or policy. If any such bond of the Master Servicer ceases to be in effect, the
Master Servicer shall, to the extent possible, give the Certificate Trustee ten
days' notice prior to any such cessation and shall use its best efforts to
obtain a comparable replacement bond or policy, as the case may be. Any
amounts relating to the Mortgage Loans collected under such bond or policy
shall be remitted to the appropriate sub-account of the Certificate Account to
the extent that such amounts have not previously been paid to such account.
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Section 3.11. Due-on-Sale Clauses; Assumption Agreements. (a) In
any case in which a Sub-Servicer is notified that a Mortgaged Property relating
to a Mortgage Loan has been or is about to be conveyed by the Mortgagor, such
Sub-Servicer shall enforce any due-on-sale clause contained in the related
Security Instrument to the extent permitted under the terms of the related
Mortgage Note and by applicable law unless such Sub-Servicer reasonably
believes such enforcement is likely to result in legal action by the Mortgagor.
If such Sub-Servicer reasonably believes that such due-on-sale clause cannot be
enforced under applicable law or if the related Mortgage Loan does not contain
a due-on-sale clause, such Sub-Servicer may consent to a conveyance subject to
the lien of the Mortgage, and to take or enter into an assumption agreement
from or with the Person to whom such property has been or is about to be
conveyed, pursuant to which such Person becomes liable under the related
Mortgage Note and unless prohibited by applicable state law, such Mortgagor
remains liable thereon, on condition, however, that the related Mortgage Loan
shall continue to be covered (if so covered before the related Sub-Servicer
enters into such agreement) by any Primary Mortgage Insurance Policy. The
Sub-Servicer shall notify the Custodian, whenever possible, before the
completion of such assumption agreement, and shall forward to the Custodian on
behalf of the Certificate Trustee the original copy of such assumption
agreement, which copy shall be added by the Custodian to the related Mortgage
File and which shall, for all purposes, be considered a part of such Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. In connection with any such assumption agreement, the interest
rate on the related Mortgage Loan shall not be changed and no other material
alterations in the Mortgage Loan shall be made. Any fee or additional interest
collected by the Sub-Servicer for consenting to any such conveyance or entering
into any such assumption agreement may be retained by the related Sub-Servicer
as additional servicing compensation.
(b) Notwithstanding the foregoing paragraph or any other provision
of this Agreement, a Sub-Servicer shall not be deemed to be in default, breach
or any other violation of its obligations under its Sub-Servicing Agreement by
reason of any assumption of a related Mortgage Loan by operation of law or any
conveyance by the Mortgagor of the related Mortgaged Property or assumption of
a Mortgage Loan which the Sub-Servicer reasonably believes, based on prudent
servicing standards, it may be restricted by law from preventing, for any
reason whatsoever or if the exercise of such right would impair or threaten to
impair any recovery under any applicable Insurance Policy, or, in the
Sub-Servicer's judgment, be reasonably likely to result in legal action by the
Mortgagor or would otherwise adversely affect the Certificateholders.
Section 3.12. Realization Upon Defaulted Mortgage Loans. (a) Each
Sub-Servicer shall foreclose upon or otherwise comparably convert the ownership
of properties securing any related Mortgage Loans that come into and continue
in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.06 except that a
Sub-Servicer shall not foreclose upon or otherwise comparably convert a
Mortgaged Property if there is evidence of environmental hazards or toxic waste
thereon and such Sub-Servicer determines it would be imprudent to do so or not
in accordance with appropriate servicing standards. A Sub-Servicer can
conclusively rely on results of third party inspections from parties it
reasonably believes are qualified to conduct such inspections. In connection
with such foreclosure or other conversion, the related Sub-Servicer shall use
its best reasonable efforts to preserve REO Property and to realize upon
related defaulted Mortgage Loans in such manner as to maximize the receipt of
principal and interest by the Certificateholders, taking into account, among
other things, the timing of foreclosure and the considerations set forth in
Subsection 3.12(b). The foregoing is subject to the proviso that
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a Sub-Servicer shall not be required to expend its own funds in connection with
any foreclosure or towards the restoration of any property unless it determines
in good faith (i) that such restoration or foreclosure will increase the
proceeds of liquidation of the related Mortgage Loan to Certificateholders
after reimbursement to itself for such expenses and (ii) that such expenses
will be recoverable to it either through Liquidation Proceeds (respecting which
it shall have priority for purposes of reimbursements from the Certificate
Account pursuant to Section 4.03) or through Insurance Proceeds (respecting
which it shall have similar priority). A Sub-Servicer shall be responsible for
all other costs and expenses incurred by it in any such proceedings; provided,
however, that it shall be entitled to reimbursement thereof (as well as its
normal servicing compensation), and to receive Excess Liquidation Proceeds as
additional servicing compensation to the extent that transfers or withdrawals
from the Certificate Account with respect thereto are permitted under Section
4.03. Any income from or other funds (net of any income taxes) generated by
REO Property shall be deemed for purposes of this Agreement to be Insurance
Proceeds.
(b) Neither Trust Fund shall acquire any real property (or any
personal property incident to such real property) except in connection with a
default or imminent default of a Mortgage Loan. In the event that a Trust Fund
acquires any real property (or personal property incident to such real
property) in connection with a default or imminent default of a Mortgage Loan,
such property shall be disposed of by such Trust Fund before the close of the
third taxable year following the taxable year in which such Trust Fund acquired
such property (the "grace period") unless the Certificate Trustee shall have
received a REMIC Opinion with respect to such longer retention or the Master
Servicer applies for and receives an extension of the grace period under
Section 856(e)(3) of the Code, in which case such grace period described above
will be extended by the period set forth in such REMIC Opinion or approved
application, as the case may be. The Certificate Trustee and the Master
Servicer shall have no obligation to pay for such REMIC Opinion.
Section 3.13. Certificate Trustee to Cooperate; Release of Mortgage
Files. (a) Upon payment in full of any Mortgage Loan or the receipt by the
related Sub-Servicer of a notification that payment in full will be escrowed in
a manner customary for such purposes, the related Sub-Servicer will immediately
notify the Custodian by a certification signed by a Servicing Officer in the
Form of Exhibit D (which certification shall include a statement to the effect
that all amounts received or to be received in connection with such payment
which are required to be deposited in the Certificate Account have been or will
be so deposited in the appropriate sub-account thereof) and shall request
delivery to the Master Servicer or a Sub-Servicer, as the case may be, of the
Mortgage File. Upon receipt of such certification and request, the Custodian
shall release within five Business Days the related Mortgage File to the Master
Servicer or a Sub-Servicer and execute and deliver to the Master Servicer or
related Sub-Servicer, without recourse, the request for reconveyance, deed of
reconveyance or release or satisfaction of mortgage or such instrument
releasing the lien of the Security Instrument (furnished by the related
Sub-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. If upon receipt of a properly executed request for release the
Custodian fails to release the Mortgage File to the Sub-Servicer within the
time frame required under this Agreement, the Custodian shall indemnify such
Sub-Servicer for any penalties, charges, costs or damages payable as a result
of such failure.
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(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan or collection under a Required Insurance
Policy, the Master Servicer or a Sub-Servicer shall deliver to the Certificate
Trustee and the Custodian a Request for Release signed by a Servicing Officer
on behalf of the Master Servicer or related Sub- Servicer in substantially the
form attached as Exhibit D hereto. Upon receipt of the Request for Release,
the Custodian shall deliver the Mortgage File to the Master Servicer or
Sub-Servicer, as the case may be.
(c) Each Sub-Servicer shall cause each Mortgage File released
pursuant to Subsection 3.13(b) to be returned to the Custodian when the need
therefor no longer exists, and in any event within 21 days of such
Sub-Servicer's receipt thereof, unless the related Mortgage Loan has become a
Liquidated Mortgage Loan and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the appropriate sub-account of the Certificate
Account or such Mortgage File is being used to pursue foreclosure or other
legal proceedings. Prior to return of a Mortgage File to the Custodian, the
related Insurer or Sub-Servicer to whom such file was delivered shall retain
such file in its respective control unless the Mortgage File has been delivered
to an attorney, or to a public trustee or other public official as required by
law, to initiate or pursue legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Sub-Servicer has delivered to the Certificate Trustee and the Custodian a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File was delivered and the purpose or purposes of
such delivery. If a related Mortgage Loan becomes a Liquidated Mortgage Loan,
the Sub-Servicer shall deliver the Request for Release with respect thereto to
the Certificate Trustee and the Custodian upon deposit of the related
Liquidation Proceeds in the appropriate sub-account of the Certificate Account.
(d) The Certificate Trustee shall execute and deliver to the
Master Servicer and the related Sub-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. Together with
such documents or pleadings the Master Servicer or the related Sub-Servicer
shall deliver to the Certificate Trustee a certificate of a Servicing Officer
in which it requests the Certificate Trustee to execute the pleadings or
documents. The certificate shall certify and explain the reasons for which the
pleadings or documents are required. It shall further certify that the
Certificate Trustee's execution and delivery of the pleadings or documents will
not invalidate any insurance coverage under the Required Insurance Policies or
invalidate or otherwise affect the lien of the Security Instrument, except for
the termination of such a lien upon completion of the foreclosure or trustee's
sale.
Section 3.14. Master Servicing and Sub-Servicing Compensation. (a)
As compensation for its activities hereunder, the Master Servicer shall be
entitled to receive the Master Servicing Fee from investment earnings on
amounts in the Master Servicer Collection Account pursuant to Section 4.01(d)
and the Certificate Account pursuant to Sections 4.02(c) and 4.03(b) and, in
the case of the NCM Mortgage Loans, all interest paid by the related Mortgagors
in connection with Voluntary Principal Prepayments received during the
applicable Prepayment Period. Each Sub-Servicer shall be entitled to receive
the Sub-Servicing Fee from full payments of accrued interest on each Mortgage
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Loan for which it is acting as Sub-Servicer, subject to each Sub-Servicer's
obligation to pay Compensating Interest Payments pursuant to Section 6.04.
(b) The Master Servicer or a Sub-Servicer may retain additional
servicing compensation in the form of prepayment charges, if any, assumption
fees, tax service fees, fees for statement of account or payoff, late payment
charges, interest on amounts deposited in any Accounts or Permitted Investments
of such amounts, or otherwise. The related Sub-Servicer is also entitled to
receive Excess Liquidation Proceeds as additional servicing compensation. The
Master Servicer shall be required to pay all expenses it incurs in connection
with its activities under this Agreement, and shall not be entitled to
reimbursement except as provided in this Agreement. Expenses to be paid by the
Master Servicer under this Subsection 3.14(b) shall include payment of the
expenses of the accountants retained pursuant to Section 3.16.
Section 3.15. Annual Statement of Compliance. Within 120 days after
December 31st of each year, commencing December 1998, the Master Servicer at
its own expense (other than with respect to clause (iii) below), shall deliver
to the Certificate Trustee, with a copy to the Rating Agencies, an Officer's
Certificate stating, as to the signer thereof, that (i) a review of the
activities of the Master Servicer during the preceding fiscal year or
applicable portion thereof and of performance under this Agreement has been
made under such officer's supervision, (ii) to the best of such officer's
knowledge, based on such review, the Master Servicer has fulfilled all its
obligations under this Agreement for such year, or, if there has been a default
in the fulfillment of any such obligation, specifying each such default known
to such officer and the nature and status thereof including the steps being
taken by the Master Servicer to remedy such default; (iii) a review of the
reports required to be furnished by each Sub-Servicer pursuant to the
applicable Sub-Servicing Agreement during the Sub-Servicer's most recently
ended fiscal year on or prior to such December 31st has been made under such
officer's supervision; and (iv) to the best of the Servicing Officer's
knowledge, based on his review of such reports (unless the Servicing Officer
has reason to believe that reliance on such reports is not justified), either
nothing has come to the attention of such Officer that would cause such Officer
to believe that a Sub-Servicer has failed to perform and fulfill its duties,
responsibilities and obligations under its Sub-Servicing Agreement in all
material respects throughout the year, or, if there has been a default in
performance or fulfillment of any such duties, responsibilities or obligations,
specifying the nature and status of each such default known to the Servicing
Officer. Copies of such statements shall be provided by the Master Servicer to
the Certificateholders upon request or by the Certificate Trustee at the
expense of the Master Servicer should the Master Servicer fail to provide such
copies.
Section 3.16. Annual Independent Public Accountants' Servicing
Report. (a) Within 120 days after December 31st of each year, commencing
December 1998, the Master Servicer, at its expense, shall furnish to the
Certificate Trustee and the Seller a copy of the Master Servicer's audited
financial statements for the year most recently ended.
(b) Promptly after its receipt from a Sub-Servicer, the Master
Servicer, at its expense, shall furnish to the Certificate Trustee a copy of
the most recently available letter or letters from one or more firms of
Independent certified public accountants who are members of the American
Institute of Certified Public Accountants reporting the results of such firm's
examination of the servicing procedures of any such Sub-Servicer in accordance
with the requirements of the Uniform
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Single Attestation Program for Mortgage Bankers, or such other program as may
be set forth in any such letter.
Section 3.17. REMIC-Related Covenants. For as long as the Series
REMICs shall exist, the Master Servicer and the Certificate Trustee shall act
in accordance herewith to assure continuing treatment of each such Series REMIC
as a REMIC, and the Certificate Trustee shall comply with any directions of the
Master Servicer to assure such continuing treatment. In particular, the
Certificate Trustee shall not (a) sell or permit the sale of all or any portion
of the Mortgage Loans or of any Permitted Investment unless such sale is as a
result of a repurchase of the Mortgage Loans pursuant to this Agreement or the
Certificate Trustee has received a REMIC Opinion prepared at the expense of the
related Trust Fund; and (b) other than with respect to a substitution pursuant
to Section 2.04, accept any contribution to any Series REMIC after the Startup
Day without receipt of a REMIC Opinion.
Section 3.18. Additional Information. The Master Servicer agrees to
furnish the Seller, at no expense to the Master Servicer, from time to time
upon reasonable request, such further information, reports and financial
statements as the Seller deems appropriate to prepare and file all necessary
reports with the Securities and Exchange Commission.
Section 3.19. Master Servicer to be Same Person as Bond
Administrator. Notwithstanding anything herein to the contrary, the Master
Servicer and the Bond Administrator shall be the same Person at all times
during the term of this Agreement (or such earlier date as the Indenture may
have been terminated). If the Master Servicer resigns or is terminated as
master servicer under this Agreement, the successor master servicer shall
assume and perform the obligations of the Bond Administrator under the Series
Supplement.
ARTICLE IV
Accounts
Section 4.01. Protected Accounts and Master Servicer Collection
Account. (a) Pursuant to its Sub-Servicing Agreement, each Sub-Servicer shall
establish and maintain a Protected Account complying with the requirements set
forth in this Section 4.01, with records to be kept with respect thereto on a
Mortgage Loan by Mortgage Loan basis, into which accounts shall be deposited
within two (2) Business Days of receipt all collections of principal and
interest on any Mortgage Loan and with respect to any REO Property received by
the Master Servicer, or such Sub-Servicer, including Principal Prepayments,
Insurance Proceeds, Liquidation Proceeds, and advances (including Monthly
Advances) made from the Sub-Servicer's own funds (less servicing compensation
as permitted by Subsection 3.14(a)) and all other amounts to be deposited in
the Protected Accounts. The Master Servicer is hereby authorized to make
withdrawals from and deposits to the related Protected Accounts for purposes
required or permitted by this Agreement. All Protected Accounts shall be held
in a Designated Depository Institution and segregated on the books of such
institution. The amount at any time credited to a Protected Account shall be
fully insured by the FDIC or the NCUSIF or, to the extent that such balance
exceeds the lesser of $100,000 or the limits of such insurance, such excess
must be invested in Permitted Investments or transferred to the appropriate
sub-account of the Certificate Account or the related Custody Account or may be
deposited in a Rating Agency Eligible Account in the name of the Certificate
Trustee for the benefit of
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Certificateholders and, except as provided in the next sentence, not commingled
with any other funds. The Master Servicer may permit a Sub-Servicer to
transfer funds to other accounts (which shall for purposes hereof be deemed to
be Protected Accounts), commingle accounts or to establish Protected Accounts
not conforming to the foregoing requirements, to the extent that such other
accounts or Protected Accounts meet the requirements of each of the Rating
Agencies for the maintenance of the ratings on the Bonds.
Amounts on deposit in a Protected Account may be invested in Permitted
Investments and, except as provided in the preceding paragraph, shall not be
commingled with any other funds, such Permitted Investments to mature, or to be
subject to redemption or withdrawal, no later than the date on which such funds
are required to be withdrawn for deposit in the Custody Account or Master
Servicer Collection Account, and shall be held until required for such deposit.
The income earned from Permitted Investments made pursuant to this Section 4.01
shall be paid to the related Sub-Servicer as additional compensation for its
obligations under this Agreement, and the risk of loss of moneys required to be
distributed to the Certificateholders resulting from such investments shall be
borne by and be the risk of the related Sub-Servicer. The related Sub-Servicer
shall deposit the amount of any such loss in the related Protected Account
within two Business Days of receipt of notification of such loss but not later
than the second Business Day prior to the Sub-Servicer Remittance Date.
(b) On or before the applicable monthly Sub-Servicer Remittance
Date, each Sub-Servicer shall withdraw from the Protected Accounts or the
Custody Account and shall immediately remit to the Master Servicer Collection
Account amounts representing the following collections and payments (other than
with respect to principal of or interest on the Mortgage Loans due on or before
the Cut-off Date):
(i) Scheduled Payments on the related Mortgage Loans received
or any related portion thereof advanced by the related Sub-Servicer
which were due on or before the related Due Date as specified in the
amortization schedule at the time applicable thereto (after adjustment
for previous Principal Prepayments but before any adjustment to such
amortization schedule by reason of any bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period), net
of the amount thereof comprising the applicable Sub-Servicing Fee due
the related Sub-Servicer;
(ii) Full Principal Prepayments and any Liquidation Proceeds
received by the related Sub-Servicer with respect to such Mortgage
Loans in the related Prepayment Period, with interest to the date of
prepayment or liquidation, net of the amount thereof comprising the
applicable Sub-Servicing Fee due the related Sub- Servicer, to the
extent such amounts exceed the related Compensating Interest Payments;
and
(iii) Partial Principal Prepayments received by the related
Sub-Servicer for such Mortgage Loans in the related Prepayment Period.
With respect to the NCM Mortgage Loans only, NCM shall be obligated
under its Sub-Servicing Agreement to remit to the Master Servicer Collection
Account on each Sub-Servicer Remittance Date any Interest Shortfalls on NCM
Mortgage Loans resulting from Principal Prepayments in full or in part, other
than Voluntary Principal Prepayments in full, in the preceding
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Prepayment Period. The Master Servicer shall remit to the Master Servicer
Collection Account, for deposit in the Certificate Account on the next
succeeding Distribution Date, the amount of Interest Shortfalls on NCM Mortgage
Loans resulting from Voluntary Principal Prepayments in full in the related
Prepayment Period.
(c) Withdrawals may be made from a Protected Account only to make
remittances as provided in Subsections 4.01(b) or 4.03(c), or Section 4.04; to
reimburse the Master Servicer or a Sub-Servicer for Monthly Advances which have
been recovered by subsequent collection from the related Mortgagor; to remove
amounts deposited in error; to remove fees, charges or other such amounts
deposited on a temporary basis; or to clear and terminate the account at the
termination of this Agreement in accordance with Section 10.01. As provided in
Section 4.02(b) certain amounts otherwise due to the Master Servicer or a
Sub-Servicer may be retained by it and need not be deposited in the Master
Servicer Collection Account.
(d) The Master Servicer shall establish and maintain a Master
Servicer Collection Account in the name of the Certificate Trustee for the
benefit of the Certificateholders (and for the benefit of the Master Servicer
to the extent of any investment earnings therein). The Master Servicer shall
deposit to the Master Servicer Collection Account, within one Business Day of
receipt, all amounts received from the Sub-Servicers. The Master Servicer is
hereby authorized to make withdrawals from and deposits to the Master Servicer
Collection Account for purposes required or permitted by this Agreement. The
Master Servicer Collection Account shall be an Eligible Account and amounts on
deposit therein may be invested by the Master Servicer, but if so invested,
only in Permitted Investments selected by the Master Servicer.
All investment earnings on amounts on deposit in the Master Servicer
Collection Account shall be paid to the Master Servicer as additional
compensation for its obligations under this Agreement, and the risk of loss of
moneys required to be distributed to the Certificateholders resulting from such
investments shall be borne by and be the risk of the Master Servicer. The
Master Servicer shall deposit the amount of any such loss in the Master
Servicer Collection Account within two Business Days of receipt of notification
of such loss but not later than the Business Day prior to the Distribution Date
on which the moneys so invested are required to be distributed to the
Certificateholders.
As its compensation (the "Master Servicer Compensation"), the Master
Servicer shall be entitled to receive all investment earnings on amounts in the
Master Servicer Collection Account and the Certificate Account. On the
Business Day prior to each Distribution Date, the Master Servicer shall
withdraw from the Master Servicer Collection Account and remit to the
Certificate Trustee all amounts in the Master Servicing Collection Account, net
of the portion of the Master Servicer Compensation allocable to the Master
Servicer Collection Account and all other amounts permitted to be withdrawn
from such account pursuant to Section 4.03.
Section 4.02. Certificate Account. (a) The Certificate Trustee
shall establish and maintain in the name of the Certificate Trustee, for the
benefit of the Certificateholders, the Certificate Account, which shall be an
Eligible Account. The Certificate Account shall have two separate
sub-accounts, one each for all funds with respect to each Mortgage Loan Group.
The Certificate Trustee will deposit in the appropriate sub-account of the
Certificate Account, as identified by the Master Servicer, as received the
following amounts:
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(i) Any amounts withdrawn from the Master Servicer Collection
Account pursuant to Section 4.01(d) or the Custody Account pursuant to
Section 4.04;
(ii) Any Monthly Advance and any Compensating Interest
Payments;
(iii) Any Insurance Proceeds or Liquidation Proceeds received
by or on behalf of the Master Servicer which were not deposited in a
Protected Account or the Custody Account;
(iv) The Repurchase Price with respect to any Mortgage Loans
purchased by BSMCC pursuant to Sections 2.02 or 2.03, any amounts
which are to be treated pursuant to Section 2.04 as the payment of
such a Repurchase Price and all proceeds of any Mortgage Loans or
property acquired with respect thereto repurchased by BSMCC or its
designee or the Master Servicer pursuant to Section 10.01;
(v) Any amounts required to be deposited with respect to
losses on Permitted Investments pursuant to Section 4.04(d) below; and
(vi) Any other amounts received by or on behalf of the Master
Servicer, a Sub-Servicer or the Certificate Trustee and required to be
deposited in such sub-account of the Certificate Account pursuant to
this Agreement.
(b) All amounts deposited to the Certificate Account shall be
deposited by 12:00 noon New York time in immediately available funds on the
Business Day prior to each Distribution Day and shall be held by the
Certificate Trustee in the name of the Certificate Trustee in trust for the
benefit of the Certificateholders in accordance with the terms and provisions
of this Agreement, subject to the right of the Master Servicer to require the
Certificate Trustee to make withdrawals therefrom as provided herein. The
foregoing requirements for crediting the Certificate Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of (i) prepayment or late payment
charges or assumption, tax service, statement account or payoff, substitution,
satisfaction, release and other like fees and charges and (ii) the items
enumerated in Subsections 4.03(a)(ii), (iii), (iv), (v), (vi), (vii), (viii),
(x) and (xii) need not be credited by the related Sub-Servicer to the Master
Servicer Collection Account and may be retained by the related Sub-Servicer as
servicing compensation or reimbursement of advances. In the event that the
Master Servicer shall deposit or cause to be deposited to the Certificate
Account any amount not required to be credited thereto, or shall deposit or
cause to be deposited to a sub- account of the Certificate Account any amount
which should appropriately be credited to another sub-account of the
Certificate Account, the Certificate Trustee, upon receipt of a written request
therefor signed by a Servicing Officer of the Master Servicer, shall promptly
transfer such amount to the Master Servicer or to the appropriate other sub-
account of the Certificate Account, as applicable, any provision herein to the
contrary notwithstanding.
(c) The Certificate Account shall be an Eligible Account. The
amounts in the Certificate Account may be invested, at the written direction of
the Master Servicer, but only in Permitted Investments. In the absence of
written direction by the Master Servicer, all funds in the Certificate Account
shall remain uninvested. All Permitted Investments shall mature on 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 Certificate Trustee or, if such obligor is any other
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Person, the Business Day preceding such Distribution Date. The Master Servicer
shall be entitled to all investment earnings on amounts in the Certificate
Account. With respect to the Certificate Account and the funds deposited
therein, the Certificate 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
Certificate Trustee) as provided by 12 U.S.C. Section 92a(e), if applicable, or
any applicable comparable state statute applicable to state chartered banking
corporations.
Section 4.03. Permitted Withdrawals and Transfers from the
Certificate Account. (a) The Certificate Trustee will, from time to time on
demand of the Master Servicer, make or cause to be made such withdrawals or
transfers from the appropriate sub-account of the Certificate Account as the
Master Servicer or related Sub-Servicer has designated for such transfer or
withdrawal as specified in a certificate signed by a Servicing Officer (upon
which the Certificate Trustee may conclusively rely) for the following purposes
(limited in the case of amounts due the related Sub-Servicer to those not
withdrawn from the Protected Account in accordance with the terms of this
Agreement):
(i) [Reserved];
(ii) to reimburse the Master Servicer or any Sub-Servicer for
any Monthly Advance of its own funds or any advance of such
Sub-Servicer's own funds, the right of the Master Servicer or a
Sub-Servicer to reimbursement pursuant to this subclause (ii) being
limited to amounts received on a particular related Mortgage Loan
(including, for this purpose, the Repurchase Price therefor, Insurance
Proceeds and Liquidation Proceeds) which represent late payments or
recoveries of the principal of or interest on such Mortgage Loan
respecting which such Monthly Advance or advance was made;
(iii) to reimburse the Master Servicer or any Sub-Servicer
from Insurance Proceeds or Liquidation Proceeds relating to a
particular related Mortgage Loan for amounts expended by the Master
Servicer or such Sub-Servicer pursuant to Section 3.12 in good faith
in connection with the restoration of the related Mortgaged Property
which was damaged by an Uninsured Cause or in connection with the
liquidation of such Mortgage Loan;
(iv) to reimburse the Master Servicer or any Sub-Servicer
from Insurance Proceeds relating to a particular related Mortgage Loan
for Insured Expenses incurred with respect to such Mortgage Loan and
to reimburse the Master Servicer or such Sub-Servicer from Liquidation
Proceeds from a particular related Mortgage Loan for Liquidation
Expenses incurred with respect to such Mortgage Loan; provided that
the related Sub-Servicer shall not be entitled to reimbursement for
Liquidation Expenses with respect to a Mortgage Loan to the extent
that (i) any amounts with respect to such Mortgage Loan were paid as
Excess Liquidation Proceeds pursuant to clause (xii) of this
Subsection 4.03(a) to the related Sub-Servicer; and (ii) such
Liquidation Expenses were not included in the computation of such
Excess Liquidation Proceeds;
(v) to pay any Sub-Servicer, from Liquidation Proceeds or
Insurance Proceeds received in connection with the liquidation of any
Mortgage Loan, the amount which such Sub-Servicer would have been
entitled to receive under its Sub-Servicing Agreement or
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subclause (x) of this Subsection 4.03(a) as servicing compensation on
account of each defaulted Scheduled Payment on such Mortgage Loan if
paid in a timely manner by the related Mortgagor, but only to the
extent that the aggregate of Liquidation Proceeds and Insurance
Proceeds with respect to such Mortgage Loan, after any reimbursement
to any Sub-Servicer, pursuant to subclauses (ii), (iii), (iv) and
(vii) of this Subsection 4.03(a), exceeds the Outstanding Principal
Balance of such Mortgage Loan plus accrued and unpaid interest thereon
at the related Mortgage Interest Rate less the applicable
Sub-Servicing Fee Rate to but not including the date of payment;
(vi) to pay any Sub-Servicer from the Repurchase Price for
any related Mortgage Loan, the amount which such Sub-Servicer would
have been entitled to receive under its Sub-Servicing Agreement or
subclause (x) of this Subsection 4.03(a) as servicing compensation,
but only to the extent that the Repurchase Price with respect to such
Mortgage Loan after any reimbursement to the related Sub-Servicer
pursuant to subclauses (ii) and (vii) of this Subsection 4.03(a)
exceeds the Outstanding Principal Balance of such Mortgage Loan plus
accrued and unpaid interest thereon at the related Mortgage Interest
Rate less the applicable Sub-Servicing Fee Rate through the last day
of the month of repurchase;
(vii) to reimburse the Master Servicer or any Sub-Servicer
for advances (including Monthly Advances) of funds hereunder or under
the related Sub-Servicing Agreement, the right to reimbursement
pursuant to this subclause being limited to amounts received on the
related Mortgage Loan (including, for this purpose, the Repurchase
Price therefor, Insurance Proceeds and Liquidation Proceeds) which
represent late recoveries of the payments for which such advances were
made;
(viii) to pay a Master Servicer or any Sub-Servicer, as the
case may be, with respect to each related Mortgage Loan that has been
purchased pursuant to Section 2.02, 2.03A, 2.04 or 10.01, all amounts
received thereon, representing recoveries of principal that reduce the
Outstanding Principal Balance of such Mortgage Loan below the
Outstanding Principal Balance used in calculating the Repurchase Price
or representing interest included in the calculation of the Repurchase
Price or accrued after the end of the month during which such
repurchase occurs;
(ix) to reimburse the Master Servicer or any Sub-Servicer for
any Monthly Advance or advance, after a Realized Loss has been
allocated with respect to the related Mortgage Loan if the Monthly
Advance or advance has not been reimbursed pursuant to clauses (ii)
and (vii), such reimbursement to come from the sub-account relating to
the Mortgage Loan Group of which the related Mortgage Loan is a part;
(x) to pay to any Sub-Servicer its servicing compensation and
to the Master Servicer the Master Servicer Compensation as set forth
in Section 3.14;
(xi) to reimburse the Master Servicer, the Bond
Administrator, any Sub-Servicer, the Certificate Trustee, the
Indenture Trustee or the Bond Pool Trustee for expenses, costs and
liabilities incurred by and reimbursable to it pursuant to Sections
7.03, 7.04(c), 7.04(d), 7.06 or 11.03, or pursuant to Section 18(e) of
the Series Supplement, which, if not specifically allocable to a
Mortgage Loan Group, shall be allocated between the sub-accounts, pro
rata,
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based on the Scheduled Principal Balances of the Group 1 Mortgage
Loans and the Group 2 Mortgage Loans, respectively;
(xii) to pay to the related Sub-Servicer, as additional
servicing compensation, any Excess Liquidation Proceeds;
(xiii) to reimburse a Sub-Servicer for any amounts to which
it is entitled to reimbursement under the terms of its Sub-Servicing
Agreement;
(xiv) to clear and terminate the Certificate Account pursuant
to Section 10.01; and
(xv) to remove amounts deposited in error.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of accounting for any
reimbursement from the Certificate Account pursuant to subclauses (i) through
(vii), inclusive, and (ix) or with respect to any such amounts which would have
been covered by such subclauses had the amounts not been retained by the Master
Servicer without being deposited in the Certificate Account under Section
4.02(c).
(b) On each Distribution Date, the Certificate Trustee shall make
the following payments in the priority set forth from the funds in the
Certificate Account:
(i) First, the amount of investment earnings, net of losses,
to the Master Servicer; and
(ii) Second, the amount distributable to the Holders of the
Certificates shall be payable in accordance with Section 6.01.
(c) Notwithstanding the provisions of this Section 4.03, the
Master Servicer may, but is not required to, allow the Sub-Servicers to deduct
from amounts received by them or from the related Protected Account, prior to
deposit in the Master Servicer Collection Account or the Custody Account, any
portion to which such Sub-Servicers are entitled as servicing compensation
(including income on Permitted Investments) or reimbursement of any
reimbursable advances made by such Sub-Servicers.
Section 4.04 Custody Account. (a) The Master Servicer shall
establish and maintain for the benefit of the Certificateholders the Custody
Account as a segregated non-interest-bearing trust account in the corporate
trust department of either a Designated Depository Institution or the Master
Servicer. The Custody Account shall be segregated on the books of the
Designated Depository Institution or the Master Servicer, as applicable, and
held by the Designated Depository Institution or the Master Servicer, as
applicable, in trust, and such Account and the funds deposited therein shall
not be subject to, and shall be protected from, all claims, liens, and
encumbrances of any creditors or depositors of the Designated Depository
Institution, the Certificate Trustee, the Master Servicer, any Sub-Servicer or
the Seller (whether made directly, or indirectly through a liquidator or
receiver of the Designated Depository Institution, the Certificate Trustee, the
Master Servicer, any Sub-Servicer or the Seller). If the Custody Account is
maintained with the Certificate Trustee, the Certificate 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
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estate of the Certificate Trustee) as provided by 12 U.S.C. Section 92a(e), if
applicable, or any applicable comparable state statute applicable to state
chartered banking corporations.
(b) Within two Business Days after receipt, each Sub-Servicer
shall withdraw or shall cause to be withdrawn from each Protected Account and
shall immediately deposit or cause to be deposited in the applicable Custody
Account all amounts in the Protected Account not otherwise invested in
Permitted Investments pursuant to Section 4.01 and exceeding the lesser of
$100,000 or the FDIC or the NCUSIF insurance limit (other than with respect to
principal of or interest on the Mortgage Loans due on or before the Cut-off
Date).
(c) Withdrawals may be made from the Custody Account only to make
remittances as provided in Sections 4.01(b) or 4.04(d); to reimburse the Master
Servicer or any Sub-Servicer for advances of principal and interest which have
been recovered by subsequent collection from the related Mortgagor; to remove
amounts deposited in error; to remove fees, charges or other such amounts
deposited on a temporary basis; or to clear and terminate the account at the
termination of this Agreement in accordance with Section 10.01.
(d) Funds in a Custody Account may be invested at the written
direction of the applicable Sub-Servicer in Permitted Investments and, in the
absence of such directions, funds in a Custody Account shall be invested in
Permitted Investments described in clause (iii) or clause (viii) of the
definition thereof. Such Permitted Investments must mature, or be subject to
redemption or withdrawal, no later than the date on which such funds are
required to be withdrawn for deposit in the Master Servicer Collection Account
pursuant to Section 4.01(b) and shall be held in such Account until required
for such deposit. The income earned from Permitted Investments made pursuant
to this Section 4.04 shall be paid to the applicable Sub-Servicer as additional
compensation for its obligations under the applicable Sub-Servicing Agreement,
and the risk of loss of moneys required to be distributed to the
Certificateholders resulting from such investments shall be borne by and be the
risk of the related Sub-Servicer. The amount of any such loss shall be
deposited by the related Sub-Servicer in the applicable Custody Account within
two Business Days of receipt of notification of such loss but not later than
the second Business Day prior to the Distribution Date on which the moneys so
invested are required to be distributed to the Certificateholders.
ARTICLE V
Certificates
Section 5.01. The Certificates.
(a) The Certificates shall be substantially in the form set forth
in Exhibit A-1 and Exhibit A-2 attached hereto and shall be executed by the
Seller, authenticated by the Certificate Trustee and delivered to or upon the
order of the Seller upon receipt by the Certificate Trustee of the documents
specified in Section 2.02. The Certificates shall be issuable in Authorized
Denominations evidencing Fractional Undivided Interests. Certificates shall be
executed by manual or facsimile signature on behalf of the Seller and the
Certificate Trustee by authorized officers of the Seller and the Certificate
Trustee, respectively. Certificates bearing the manual or facsimile signatures
of individuals who were at the time of execution the proper officers of the
Seller and the Certificate Trustee shall bind the Seller and the Certificate
Trustee, respectively, notwithstanding that such
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individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices
at the date of such Certificates. No Certificate shall be entitled to any
benefit under this Agreement, or be valid for any purpose, unless there appears
on such Certificate a certificate of authentication substantially in the form
provided for in Exhibit A-1 and Exhibit A-2 hereto executed by the Seller and
the Certificate Trustee by manual signature, and such certificate upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
(b) No transfer of a Certificate shall be deemed to be made in
accordance with this Section 5.01(b) unless such transfer is made pursuant to
an effective registration statement under the Securities Act or unless the
Certificate Trustee is provided with the certificates and an Opinion of
Counsel, if required, on which the Certificate Trustee may conclusively rely,
which establishes or establish to the Certificate Trustee's satisfaction that
such transfer is exempt from the registration requirements under the Securities
Act, as follows: In the event that a transfer is to be made in reliance upon
an exemption from the Securities Act, the Certificate Trustee shall require, in
order to assure compliance with the Securities Act, that the Certificateholder
desiring to effect such transfer certify to the Certificate Trustee in writing,
by causing the execution of a Purchaser Representation Letter in substantially
the form attached hereto as Exhibit E, with such modifications to such Exhibit
E as may be appropriate to reflect the actual facts of the proposed transfer.
Section 5.02. Certificates Issuable in Series; Authorized
Denominations. The aggregate principal amount of Certificates of a Series that
may be authenticated and delivered under this Agreement is limited to the
aggregate Scheduled Principal Balance of the Mortgage Loans in the related
Mortgage Loan Group as of the Cut-off Date. The aggregate Fractional Undivided
Interest of each Certificate of a Series that may be authenticated and
delivered under this Agreement is limited to 100%. Certificates shall be issued
in Authorized Denominations.
Section 5.03. Registration of Transfer and Exchange of
Certificates. The Certificate Trustee shall cause to be maintained at one of
its offices or at its designated agent, a Certificate Register in which there
shall be recorded the name and address of each Certificateholder. Subject to
such reasonable rules and regulations as the Certificate Trustee may prescribe,
the Certificate Register shall be amended from time to time by the Certificate
Trustee or its agent to reflect notice of any changes received by the
Certificate Trustee or its agent pursuant to Section 11.06. The Certificate
Trustee hereby appoints itself as the initial Certificate Registrar.
Upon surrender for registration of transfer of any Certificate of a
Series to the Certificate Trustee at the office of The First National Bank of
Chicago, One First National Plaza, Suite 0122, Chicago, Illinois 60670,
Attention: Registered Securities, or such other address or agency as may
hereafter be provided to each Certificateholder and the Master Servicer in
writing by the Certificate Trustee, the Certificate Trustee shall execute, and
the Certificate Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of such
Series of Authorized Denominations of like Fractional Undivided Interest. At
the option of the Certificateholders, Certificates of a Series may be exchanged
for other Certificates of such Series in Authorized Denominations of like
Fractional Undivided Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
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surrendered for exchange, the Certificate Trustee shall execute, and
authenticate and deliver, the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or
surrendered for transfer shall (if so required by the Certificate Trustee) be
duly endorsed by, or be accompanied by a written instrument of transfer in form
satisfactory to the Certificate Trustee and duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing.
A reasonable service charge may be made for any such exchange or
transfer of Certificates, and the Certificate Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any exchange or transfer of Certificates.
All Certificates surrendered for exchange or transfer shall be
canceled by the Certificate Trustee.
Section 5.04. Mutilated, Destroyed, Lost or Stolen Certificates. If
(i) any mutilated Certificate of a Series is surrendered to the Certificate
Trustee, or (ii) the Certificate Trustee receives evidence to their
satisfaction of the destruction, loss or theft of any Certificate of a Series,
and there is delivered to the Certificate Trustee such security or indemnity as
it may be required to save it harmless, then, in the absence of notice to the
Certificate Trustee that such Certificate has been acquired by a bona fide
purchaser, the Certificate Trustee shall execute, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of such Series of like Fractional Undivided
Interest. Upon the issuance of any new Certificate under this Section 5.04,
the Certificate 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 Certificate
Trustee) connected therewith. Any replacement Certificate of a Series issued
pursuant to this Section 5.04 shall constitute complete and indefeasible
evidence of ownership in the related Trust, as if originally issued, whether or
not the lost or stolen Certificate shall be found at any time.
Section 5.05. Persons Deemed Owners. The Seller, the Master
Servicer, the Certificate Trustee and any agent of any of them 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, and none of the Seller, the Master
Servicer, the Certificate Trustee, the Certificate Registrar or any agent of
the Seller, the Master Servicer or the Certificate Trustee shall be affected by
notice to the contrary.
Section 5.06. Office for Transfer of Certificates. The Certificate
Trustee shall maintain in New York, New York, an office or agency where
Certificates may be surrendered for registration of transfer or exchange. The
Certificate Trustee's office at 14 Wall Street, 8th Floor, New York, New York
10005, Attention: Corporate Trust, is initially designated for said purposes.
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ARTICLE VI
Payments to Certificateholders
Section 6.01. Distributions to Certificateholders.
(a) On each Distribution Date, the Certificate Trustee shall
distribute the Available Funds with respect to each Series to the
Certificateholders of such Series, by wire transfer in immediately available
funds for the account of each Certificateholder, or by any other means of
payment acceptable to each Certificateholder of record on the immediately
preceding Record Date (other than as provided in Section 10.01 respecting the
final distribution), as specified by each such Certificateholder and at the
address of such Holder appearing in the Certificate Register.
(b) All reductions in the Certificate Principal Balance of a
Certificate effected by distributions of principal with respect to Mortgage
Loans made on any Distribution Date shall be binding upon all Holders of such
Certificate and of any Certificate issued upon the registration of transfer or
exchange therefor or in lieu thereof, whether or not such distribution is noted
on such Certificate. The final distribution of principal of each Certificate
shall be payable in the manner provided above only upon presentation and
surrender thereof on or after the Distribution Date therefor at the office or
agency of the Certificate Registrar specified in the notice delivered pursuant
to Section 10.01(d).
Section 6.02. Statements to Certificateholders.
On or before each Distribution Date, the Master Servicer shall provide
to the Certificate Trustee and the Bond Administrator, with respect to the
Mortgage Loans in each Mortgage Loan Group and the related REO Property,
respectively, a Master Servicer Report in such electronic format as the
Certificate Trustee may reasonably request and in such hardcopy format as the
Master Servicer and the Certificate Trustee shall agree which shall be based
upon reports from the Sub-Servicers received by the Master Servicer on or
before the tenth Business Day of such month with respect to the related
Mortgage Loans and related REO Property in each Mortgage Loan Group and
containing the following information (in respect of the REO Property, only such
information which is applicable) (provided that the information marked with an
"*" below may be provided by the Master Servicer solely in a hardcopy format):
*(i) Aggregate deposits to each subaccount of the
Certificate Account since the date of the preceding statement;
(ii) Amount of each Group Available Funds expected for the
related Distribution Date and attributable to each of the following
categories:
(A) Scheduled Principal;
(B) Principal Prepayments (stated separately for (u)
partial prepayments, (v) full prepayments, (w) Net
Liquidation Proceeds, stating Liquidation Proceeds
and Liquidation Expenses separately), *(x) Insurance
Proceeds, *(y) the
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Repurchase Price in connection with the purchase of a
Mortgage Loan, and *(z) any cash deposit in
connection with the substitution of a Mortgage Loan;
(C) regularly scheduled interest on the Mortgage Loans;
*(D) Monthly Advances made by each Sub-Servicer and the
Master Servicer;
(E) Compensating Interest Payments; and
*(F) reimbursements in connection with losses on Permitted
Investments.
(iii) aggregate Outstanding Principal Balances of the
related Mortgage Loans in each Mortgage Loan Group and each Sub-Group
as of the related Due Date, without giving effect to payments due on
such date;
(iv) Realized Losses with respect to each Mortgage Loan
Group and each Sub-Group for the prior calendar month;
(v) Aggregate Scheduled Principal Balance of the related
Mortgage Loans in each Mortgage Loan Group and each Sub-Group as of
the related Due Date;
*(vi) book value of any collateral acquired by means of
foreclosure, grant of deed in lieu of foreclosure or otherwise in
respect of any related Mortgage Loan in each Mortgage Loan Group;
*(vii) number and aggregate principal balance of related
Mortgage Loans in each Mortgage Loan Group and each Sub-Group which
are 30, 60, 90 and 120 days delinquent as calculated by the related
Sub-Servicer, those which are in foreclosure, those with respect to
which the related Mortgagor is bankrupt, and those which are REO
Property;
(viii) the Interest Shortfall with respect to the related
Distribution Date and portion thereof resulting from Voluntary
Principal Prepayments in full or the provisions of the Relief Act;
(ix) amount if any, by which the aggregate of payments of
Scheduled Principal and interest on the related Mortgage Loans in each
Mortgage Loan Group that were due on the related Due Date and
delinquent, other than as a result of the Relief Act, as of the 18th
day of such month exceeds the sum of the Monthly Advances with respect
to such Mortgage Loans to be made by a Sub-Servicer or the Master
Servicer and Certificate Account Advances for such Distribution Date;
(x) the Adjustment Amount for each Mortgage Loan Group;
and
(xi) such other information regarding each Mortgage Loan
in each Mortgage Loan Group and each Sub- Group, including, but not
limited to, an updated schedule of the Scheduled Principal Balances of
such Mortgage Loans as of the related Due Date, in such
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electronic format as may be reasonably requested by the Certificate
Trustee and, if requested, in such hardcopy format as the Master
Servicer and the Certificate Trustee shall agree.
In addition to the information listed above, the Master Servicer shall supply
to the Bond Administrator in a timely manner any and all information necessary
for the Bond Administrator to perform the calculations and furnish the
statements and reports to be performed or furnished by the Bond Administrator
pursuant to the Series Supplement. Such information shall be calculated on a
Mortgage Loan-by-Mortgage Loan basis, by Sub-Group and by Mortgage Loan Group
to the extent required to enable the Bond Administrator to determine the
amounts payable on the Bonds on each Payment Date (as defined in the
Indenture) and to perform the calculations and provide the reports referred to
in the preceding sentence.
Section 6.03. Monthly Advances. If the Scheduled Payment on a
Mortgage Loan that was due on a related Due Date is delinquent other than as a
result of application of the Relief Act, the applicable Sub-Servicing Agreement
will require the Sub-Servicer to deposit in the Master Servicer Collection
Account on the applicable Sub-Servicer Remittance Date a Monthly Advance in an
amount equal to such deficiency, net of the related Sub-Servicing Fee, except
to the extent the applicable Sub-Servicer determines any such advance to be a
Nonrecoverable Advance. If the applicable Sub-Servicer fails to make such
Monthly Advance on the applicable Sub-Servicer Remittance Date, the Master
Servicer shall make such Monthly Advance, except to the extent the applicable
Sub-Servicer determines any such advance to be a Nonrecoverable Advance. If
applicable, on the Business Day preceding each Distribution Date, the Master
Servicer shall present an Officer's Certificate to the Certificate Trustee (i)
stating that such Master Servicer elects not to make a Monthly Advance in a
stated amount and (ii) detailing the reason it deems the advance to be
nonrecoverable.
Section 6.04. Compensating Interest Payments. Each of Cendant and
WMBFA shall deposit in the Master Servicer Collection Account not later than
the Sub-Servicer Remittance Date immediately preceding the related Distribution
Date an amount equal to the lesser of (i) the aggregate amounts determined
pursuant to clauses (a) and (b) of the definition of Interest Shortfall as
calculated with respect to Mortgage Loans sub-serviced by such Sub-Servicer for
the related Prepayment Period and (ii) the applicable Sub-Servicing Fee for
such Distribution Date. NCM shall deposit in the Master Servicer Collection
Account not later than the Sub-Servicer Remittance Date immediately preceding
the related Distribution Date an amount equal to the aggregate amounts
determined pursuant to clauses (a) and (b) of the definition of Interest
Shortfall (other than amounts with respect to Voluntary Principal Prepayments
in full) as calculated with respect to the Mortgage Loans sub-serviced by NCM
for the related Prepayment Period. The Master Servicer shall deposit in the
Master Servicer Collection Account the amount of any Interest Shortfalls as
calculated with respect to the Mortgage Loans subserviced by NCM resulting from
Voluntary Principal Prepayments in full during the related Prepayment Period.
One Business Day prior to each Distribution Date, the Master Servicer shall
deposit into the Certificate Account the sum of (i) all Compensating Interest
Payments received from the Sub-Servicers or made by the Master Servicer for
such Distribution Date and (ii) Compensating Interest Payments required to be
made by a Sub-Servicer but not made by such Distribution Date (provided that
the amount determined pursuant to (ii) shall not exceed the Master Servicer
Compensation for such Distribution Date). All amounts required to be deposited
into the Master Servicer Collection Account by a Sub-Servicer or the Master
Servicer pursuant to
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this Section 6.04 are referred to herein as "Compensating Interest Payments".
Neither the Master Servicer nor any Sub- Servicer shall be entitled to any
reimbursement of any Compensating Interest Payment.
Section 6.05. Reports of Foreclosures and Abandonment of Mortgaged
Property. Each year the Master Servicer shall report or cause to be reported
to the Internal Revenue Service foreclosures and abandonments of any Mortgaged
Property as required by Section 6050J of the Code.
Section 6.06. Tax Reporting. Neither the Master Servicer nor the
Bond Administrator shall be obligated to prepare, deliver to the Trusts or file
any income tax returns, tax elections, financial statements or other reports of
or with respect to the Trusts, except for such statements or reports as are
otherwise expressly required to be prepared and delivered by the Master
Servicer pursuant to this Agreement.
ARTICLE VII
The Master Servicer
Section 7.01. Liabilities of the Master Servicer. The Master
Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by it herein. The parties
agree that the Master Servicer shall master service the Mortgage Loans in
accordance with the terms of this Agreement. In that regard, the Master
Servicer shall supervise, administer, monitor and oversee the servicing of the
Mortgage Loans by each Sub-Servicer pursuant to the terms of its Sub-Servicing
Agreement, in accordance with this Agreement and applicable laws and
regulations and giving due consideration to customary and usual standards of
practice of prudent mortgage lenders and master servicers. In addition, the
Master Servicer shall (i) oversee and consult with each Sub-Servicer as
appropriate from time to time to fulfill the Master Servicer's obligations
hereunder, (ii) receive, review and evaluate all reports, information and other
data and documents provided to the Master Servicer by each Sub-Servicer and
(iii) otherwise exercise its best efforts, as more fully set forth herein, to
cause each Sub-Servicer to perform and observe the covenants, obligations and
conditions required to be performed under its Sub-Servicing Agreement.
Section 7.02. Merger or Consolidation of the Master Servicer.
(a) [Reserved].
(b) Any Person into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Master Servicer shall be a party, or any Person succeeding to the
business of the Master Servicer, shall be the successor of the Master Servicer
hereunder, without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 7.03. Indemnification of the Indemnified Persons. Each Trust
shall indemnify the Indemnified Persons for, and hold them harmless against,
any loss, liability or expense incurred on their part, arising out of, or in
connection with, this Agreement, the Indenture and the Trust
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Agreement and such Trust, 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, the Indenture or the Trust Agreement, as
applicable (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement, the Indenture or the Trust Agreement,
as applicable), 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. In addition, the Master Servicer shall
indemnify the Indemnified Persons for, and 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, but only to the extent any such loss, liability or expense results
solely from the Master Servicer's failure to perform its duties in strict
compliance with this Agreement. This indemnity shall survive the resignation
or removal of the Certificate Trustee, the Indenture Trustee or the Bond Pool
Trustee and the termination of this Agreement, the Indenture and the Trust
Agreement.
Section 7.04. Limitation on Liability of the Master Servicer and
Others. (a) Neither the Master Servicer, the Bond Administrator, any
Sub-Servicer nor any of their directors, officers, employees or agents shall be
under any liability to the Indemnified Persons, the Seller, any Trust Fund or
the Certificateholders for taking any action or for refraining from taking any
action in good faith pursuant to this Agreement, the Indenture and the Trust
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Master Servicer, the Bond Administrator, any Sub-Servicer
or any such Person against any breach of warranties or representations made
herein or any liability which would otherwise be imposed by reason of such
Person's willful misfeasance, bad faith or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
(b) The Master Servicer and the Bond Administrator and any
director, officer, employee or agent of the Master Servicer or the Bond
Administrator may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder or under the Indenture or the Trust Agreement.
(c) The Master Servicer, the Bond Administrator and each
Sub-Servicer and any director, officer, employee or agent of the Master
Servicer, the Bond Administrator or any Sub-Servicer shall be indemnified by
each Trust and held harmless thereby against any loss, liability or expense
incurred in connection with any legal proceedings relating to this Agreement,
the Indenture, the Trust Agreement, such Trust or the related Certificates,
Bonds or Bond Pool Certificates (including reasonable legal fees and
disbursements of counsel), other than (i) any loss, liability or expense
related to its failure to perform its duties in strict compliance with this
Agreement (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement, the Indenture or the Trust Agreement)
and (ii) any loss, liability or expense incurred by reason of such 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.
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(d) Neither the Master Servicer, the Bond Administrator nor any
Sub-Servicer shall be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its duties under this Agreement and
that in its opinion may involve it in any expense or liability; provided,
however, the Master Servicer, the Bond Administrator and any Sub-Servicer may
in its discretion, with the consent of the Certificate Trustee, undertake any
such action which it may deem necessary or desirable with respect to this
Agreement, the Indenture or the Trust Agreement, any Trust, and the rights and
duties of the parties hereto and the interests of the Certificateholders
hereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
related Trust Fund, and the Master Servicer, the Bond Administrator and any
Sub-Servicer shall be entitled to be reimbursed therefor out of the related
Protected Account or the Certificate Account as provided by Subsection 4.03(a).
Any such indemnification or reimbursement to the Master Servicer and the
Sub-Servicers which is not specifically related to a Mortgage Loan Group shall
be charged against the sub-accounts of the Certificate Account pro rata based
upon the respective outstanding principal amounts of the Mortgage Loans in each
of the Mortgage Loan Groups. Nothing in this Subsection 7.04(d) shall affect
the Master Servicer's obligation to supervise the servicing and administration
of the Mortgage Loans pursuant to Subsection 3.01(a).
(e) In taking or recommending any course of action pursuant to
this Agreement, unless specifically required to do so pursuant to this
Agreement, the Master Servicer shall not be required to investigate or make
recommendations concerning potential liabilities which a Trust might incur as a
result of such course of action by reason of the condition of the Mortgaged
Properties but shall give notice to the Certificate Trustee if it has notice of
such potential liabilities.
(f) Except as otherwise provided herein, the Master Servicer shall
not be liable for any acts or omissions of any Sub-Servicer. In particular,
the Master Servicer shall not be liable for any servicing errors or
interruptions resulting from any failure of any Sub-Servicer to maintain
computer and other information systems that are year-2000 compliant.
Section 7.05. Master Servicer Not to Resign. Except as provided in
Section 7.07, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except upon a determination that any such duties
hereunder are no longer permissible under applicable law and such
impermissibility cannot be cured. Any such determination permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of
Independent Counsel to such effect delivered to the Certificate Trustee. No
such resignation by the Master Servicer shall become effective until the
Certificate Trustee or a successor to the Master Servicer reasonably
satisfactory to the Certificate Trustee shall have assumed the responsibilities
and obligations of the Master Servicer in accordance with Section 8.02 hereof.
The Certificate Trustee shall notify the Rating Agencies of the resignation of
the Master Servicer.
Section 7.06. Indemnification of Indenture Trustee, Bond
Administrator and Bond Pool Trustee.
(a) Each Trust shall indemnify the Indenture Trustee, and its
directors, officers, employees and agents, and hold them harmless against, any
loss, liability or expense incurred without negligence or bad faith on their
part, arising out of, or in connection with, the acceptance
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or administration of the Trust Estate (as defined in the Indenture) pursuant to
the Indenture as supplemented by the Series Supplement, including the costs and
expenses (including reasonable attorney's fees) of defending themselves against
any claim in connection with the exercise or performance of any of their powers
or duties under the Indenture as supplemented by the Series Supplement. The
Indenture Trustee shall be a third party beneficiary with respect to this
subsection (a).
(b) Each Trust shall indemnify the Bond Administrator, and its
directors, officers, employees and agents, and hold them harmless against, any
loss, liability or expense incurred without negligence or bad faith on their
part, arising out of, or in connection with, the performance of its duties
pursuant to the Series Supplement, including the costs and expenses (including
reasonable attorney's fees) of defending themselves against any claim in
connection with the performance of any of their duties under the Series
Supplement. The Bond Administrator shall be a third party beneficiary with
respect to this subsection (b).
(c) Each Trust shall indemnify the Bond Pool Trustee, and its
directors, officers, employees and agents, and hold them harmless against, any
loss, liability or expense incurred without negligence or bad faith on their
part, arising out of, or in connection with, the acceptance or administration
of the Bond Pool Grantor Trust pursuant to the Trust Agreement, including the
costs and expenses (including reasonable attorney's fees) of defending
themselves against any claim in connection with the exercise or performance of
any of their powers or duties under the Trust Agreement. The Bond Pool Trustee
shall be a third party beneficiary with respect to this subsection (c).
Section 7.07. Sale and Assignment of Master Servicing. The Master
Servicer may sell and assign its rights and delegate its duties and obligations
in their entirety as Master Servicer under this Agreement; provided, however,
that: (i) the purchaser or transferee accepting such assignment and delegation
(a) shall be a Person which shall be qualified to service mortgage loans for
Fannie Mae or Freddie Mac; (b) shall have a net worth of not less than
$10,000,000 (unless otherwise approved by each Rating Agency pursuant to clause
(ii) below); (c) shall be reasonably satisfactory to the Certificate Trustee
(as evidenced in a writing signed by the Certificate Trustee); (d) shall
execute and deliver to the Certificate Trustee an agreement, in form and
substance reasonably satisfactory to the Certificate Trustee, which contains an
assumption by such Person of the due and punctual performance and observance of
each covenant and condition to be performed or observed by it as Master
Servicer and Custodian under this Agreement from and after the effective date
of such agreement; (ii) each Rating Agency shall be given prior written notice
of the identity of the proposed successor to the Master Servicer and each
Rating Agency's rating of the Bonds in effect immediately prior to such
assignment, sale and delegation will not be downgraded, qualified or withdrawn
as a result of such assignment, sale and delegation, as evidenced by a letter
to such effect delivered to the Master Servicer and the Certificate Trustee;
and (iii) the Master Servicer assigning and selling the master servicing shall
deliver to the Certificate Trustee an Officer's Certificate and an Opinion of
Independent Counsel, each stating that all conditions precedent to such action
under this Agreement have been completed and such action is permitted by and
complies with the terms of this Agreement. No such assignment or delegation
shall affect any liability of the Master Servicer arising prior to the
effective date thereof.
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ARTICLE VIII
Default
Section 8.01. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(i) The Master Servicer fails to cause to be deposited in the
Certificate Account any amount so required to be deposited pursuant to
this Agreement, and such failure continues unremedied for a period of
two Business Days after the date such deposit was required to be made;
or
(ii) The Master Servicer fails to observe or perform in any
material respect any other covenants and agreements set forth in the
Certificates or this Agreement to be performed by it, which covenants
and agreements materially affect the rights of Certificateholders, and
such failure continues unremedied for a period of 60 days after the
date on which written notice of such failure, properly requiring the
same to be remedied, shall have been given to the Master Servicer by
the Certificate Trustee or to the Master Servicer and the Certificate
Trustee by the Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 25% of the Trust Fund for a
Series; or
(iii) There is entered against the Master Servicer a decree
or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for
the winding up or liquidation of its affairs, and the continuance of
any such decree or order is unstayed and in effect for a period of 60
consecutive days, or an involuntary case is commenced against the
Master Servicer under any applicable insolvency or reorganization
statute and the petition is not dismissed within 60 days after the
commencement of the case; or
(iv) The Master Servicer consents to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings
of or relating to the Master Servicer or substantially all of its
property; or the Master Servicer admits in writing its inability to
pay its debts generally as they become due, files a petition to take
advantage of any applicable insolvency or reorganization statute,
makes an assignment for the benefit of its creditors, or voluntarily
suspends payment of its obligations; or
(v) The Master Servicer assigns or delegates its duties or
rights under this Agreement in contravention of the provisions
permitting such assignment or delegation under Sections 7.05 or 7.07.
In each and every such case, so long as such Event of Default with respect to
the Master Servicer shall not have been remedied, either the Certificate
Trustee or the Holders of Certificates evidencing Fractional Undivided
Interests aggregating not less than 51% of the principal of the Trust Fund for
the affected Series, by notice in writing to the Master Servicer (and to the
Certificate Trustee if given
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by such Certificateholders), with a copy to the Rating Agencies, may terminate
all of the rights and obligations (but not the liabilities) of the Master
Servicer under this Agreement and in and to the Mortgage Loans and/or the REO
Property serviced by the Master Servicer and the proceeds thereof. Upon the
receipt by the Master Servicer of the written notice, all authority and power
of the Master Servicer under this Agreement, whether with respect to the
Certificates, the Mortgage Loans, REO Property or under any other related
agreements, including the Sub-Servicing Agreements (but only to the extent that
such other agreements relate to the Mortgage Loans or REO Property) shall,
subject to Section 8.02, automatically and without further action pass to and
be vested in the Certificate Trustee pursuant to this Section 8.01; and,
without limitation, the Certificate Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the Master Servicer as attorney-in-fact or
otherwise, any and all documents and other instruments and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents, or otherwise. The
Master Servicer agrees to cooperate with the Certificate Trustee in effecting
the termination of the Master Servicer's rights and obligations hereunder,
including, without limitation, the transfer to the Certificate Trustee of (i)
the property and amounts which are then or should be part of the related Trust
or which thereafter become part of such Trust; (ii) originals or copies of all
documents of the Master Servicer reasonably requested by the Certificate
Trustee to enable it to assume the Master Servicer's duties thereunder; and
(iii) the rights and obligations of the Master Servicer under the Sub-Servicing
Agreements with respect to the Mortgage Loans. In addition to any other amounts
which are then, or, notwithstanding the termination of its activities under
this Agreement, may become payable to the Master Servicer under this Agreement,
the Master Servicer shall be entitled to receive, out of any amount received on
account of a Mortgage Loan or REO Property, that portion of such payments which
it would have received as reimbursement pursuant to Section 3.14 if notice of
termination had not been given. The termination of the rights and obligations
of the Master Servicer shall not affect any obligations incurred by the Master
Servicer prior to such termination nor the right of the Master Servicer to its
accrued fees and expenses.
Section 8.02. Certificate Trustee to Act; Appointment of Successor.
(a) Upon the receipt by the Master Servicer of a notice of termination
pursuant to Section 8.01 or an Opinion of Independent Counsel pursuant to
Section 7.05 to the effect that the Master Servicer is legally unable to act or
to delegate its duties to a Person which is legally able to act, the
Certificate Trustee shall automatically become the successor in all respects to
the Master Servicer in its capacity under this Agreement and the transactions
set forth or provided for herein and shall thereafter be subject to all the
responsibilities, duties, liabilities and limitations on liabilities relating
thereto placed on the Master Servicer by the terms and provisions hereof;
provided, however, that the Certificate Trustee (i) shall be under no
obligation to purchase any Mortgage Loan pursuant to Section 10.01; and (ii)
shall have no obligation whatsoever with respect to any liability (other than
advances deemed recoverable and not previously made) incurred by the Master
Servicer at or prior to the time of receipt by the Master Servicer of such
notice or by the Certificate Trustee of such Opinion of Independent Counsel.
As compensation therefor, the Certificate 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 Certificate 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
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and home finance institution which is a Fannie Mae- or Freddie Mac-approved
servicer, and with respect to a successor to the Master Servicer only, having a
net worth of not less than $10,000,000, as the successor to such Master
Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder.
Pending appointment of a successor to the Master Servicer hereunder, the
Certificate Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Certificate 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 Certificate
Trustee under this Subsection 8.02(a), and that such successor shall undertake
and assume the obligations of the Certificate Trustee to pay compensation to
any third Person acting as an agent or independent contractor in the
performance of master servicing responsibilities hereunder. The Certificate
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
(b) If the Certificate 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 Certificate Trustee and,
accordingly, the provisions of Article IX shall be inapplicable to the
Certificate 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 Certificate Trustee in its capacity as Certificate Trustee); the
provisions of Article VII, however, shall apply to it in its capacity as
successor master servicer.
Section 8.03. Notification to Certificateholders. Upon any
termination or appointment of a successor to the Master Servicer, the
Certificate 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 Certificate Trustee shall
transmit by mail to all Certificateholders, within 60 days after the occurrence
of any Event of Default known to the Certificate Trustee, unless such Event of
Default shall have been cured, notice of each such Event of Default hereunder
known to the Certificate Trustee. The Holders of Certificates evidencing
Fractional Undivided Interests aggregating not less than 51% of the Trust Fund
for a Series 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 Certificate 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
Certificate Trustee will afford such Certificateholders access during business
hours to the most recent list of Certificateholders held by the Certificate
Trustee.
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ARTICLE IX
Concerning the Certificate Trustee
Section 9.01. Duties of Certificate Trustee. (a) The Certificate
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 Certificate Trustee. If an Event of Default has
occurred and has not been cured or waived, the Certificate 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 Certificate Trustee pursuant to
any provision of this Agreement, the Certificate Trustee shall examine them to
determine whether they are in the form required by this Agreement; provided,
however, that the Certificate Trustee shall not be responsible for the accuracy
or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Master Servicer hereunder;
provided, further, that the Certificate Trustee shall not be responsible for
the accuracy or verification of any calculation provided to it pursuant to this
Agreement.
(c) The Certificate 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 Certificate 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 Certificate Trustee shall
be determined solely by the express provisions of this Agreement, the
Certificate 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 Certificate Trustee and, in the absence of bad
faith on the part of the Certificate Trustee, the Certificate 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 Certificate Trustee and conforming to the
requirements of this Agreement;
(ii) The Certificate 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 Certificate
Trustee, unless it shall be proved that the Certificate Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Certificate 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
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25% of the Trust Fund for a Series, if such action or non-action
relates to the time, method and place of conducting any proceeding for
any remedy available to the Certificate Trustee, or exercising any
trust or other power conferred upon the Certificate Trustee, under
this Agreement; and
(iv) The Certificate 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 Certificate
Trustee's Corporate Trust Office shall have actual knowledge thereof.
In the absence of such notice, the Certificate Trustee may
conclusively assume there is no such default or Event of Default.
The Certificate 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 Certificate Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Master Servicer under this
Agreement, except during such time, if any, as the Certificate 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 Certificate Trustee and required to
be deposited in the Certificate Account and the Custody Account pursuant to
this Agreement will be promptly so deposited by the Certificate Trustee. The
Certificate Trustee shall not be liable for interest or other compensation on
uninvested funds held under this Agreement.
(f) Except for those actions that the Certificate Trustee is
required to take hereunder, the Certificate 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 Certificate Trustee.
Except as otherwise provided in Section 9.01:
(i) The Certificate Trustee may rely and shall be protected
in acting or refraining from acting in reliance on any resolution,
Officer's Certificate, certificate of a Servicing Officer, certificate
of auditors or any other certificate, statement, instrument, opinion,
report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(ii) The Certificate 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 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 Certificate 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
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provisions of this Agreement, unless such Certificateholders shall
have offered to the Certificate 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 Certificate Trustee of the obligation, upon the occurrence
of an Event of Default of which a Responsible Officer of the
Certificate Trustee's Corporate Trust Office has actual knowledge
(which has not been cured or waived), subject to Section 8.02(b), 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 Certificate 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) Prior to the occurrence of an Event of Default hereunder
and after the curing or waiver of all Events of Default which may have
occurred, the Certificate 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 for a Series and provided that the payment within a
reasonable time to the Certificate 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 Certificate Trustee,
reasonably assured to the Certificate Trustee by the security afforded
to it by the terms of this Agreement. The Certificate 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 Certificate Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or
through Affiliates, agents or attorneys; provided, however, that the
Certificate Trustee may not appoint any agent to perform its custodial
functions with respect to the Mortgage Files other than the Custodian
or paying agent functions under this Agreement without the express
written consent of the Master Servicer, which consent will not be
unreasonably withheld and provided further that the Master Servicer
hereby consents to the appointment of Norwest to perform the custodial
functions provided for herein on behalf of the Certificate Trustee.
The Certificate Trustee shall not be liable or responsible for the
misconduct or negligence of any of the Certificate Trustee's agents or
attorneys or a custodian or paying agent appointed hereunder by the
Certificate Trustee with due care and, when required, with the consent
of the Master Servicer;
(vii) Should the Certificate Trustee deem the nature of any
action required on its part, other than a payment or transfer under
Subsection 4.02(b) or Section 4.03, to be unclear, the Certificate
Trustee may require prior to such action that it be provided by the
Master Servicer with reasonable further instructions;
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(viii) The right of the Certificate Trustee to perform any
discretionary act enumerated in this Agreement shall not be construed
as a duty, and the Certificate Trustee shall not be accountable for
other than its negligence or willful misconduct in the performance of
any such act;
(ix) The Certificate Trustee shall not be required to give
any bond or surety with respect to the execution of the trusts created
hereby or the powers granted hereunder; and
(x) The Certificate 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 and/or the Mortgage Loan Purchase Agreement or the
eligibility of any Mortgage Loan for purposes of this Agreement.
Section 9.03. Certificate Trustee Not Liable for Certificates or
Mortgage Loans. The recitals contained herein and in the Certificates (other
than the signature and countersignature of the Certificate Trustee on the
Certificates) shall be taken as the statements of the Seller, and the
Certificate Trustee shall have no responsibility for their correctness. The
Certificate Trustee makes no representation as to the validity or sufficiency
of the Certificates (other than the signature and countersignature of the
Certificate 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 Certificate Trustee of the obligation to
cause the Custodian to review the Mortgage Files pursuant to Sections 2.02 and
2.04. The Certificate Trustee's signature and countersignature (or
countersignature of its agent) on the Certificates shall be solely in its
capacity as Certificate Trustee and shall not constitute the Certificates an
obligation of the Certificate Trustee in any other capacity. The Certificate
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 Certificate 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 Certificate 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 related Trust Fund or its ability to generate
the payments to be distributed to Certificateholders, under this Agreement The
Certificate Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 9.04. Certificate Trustee May Own Certificates. The
Certificate Trustee in its individual capacity or in any capacity other than as
Certificate Trustee hereunder may become the owner or pledgee of any
Certificates with the same rights it would have if it were not Certificate
Trustee, and may otherwise deal with the parties hereto.
Section 9.05. Fees of Certificate Trustee, Indenture Trustee and Bond
Pool Trustee. The Master Servicer covenants and agrees to pay the fees and
expenses of the Certificate Trustee, the
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Indenture Trustee and the Bond Pool Trustee as provided in, and in accordance
with, such understanding as may be agreed to between the Master Servicer and
such parties. Such compensation obligation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust. Except as provided in Section 7.03, the expenses of the Certificate
Trustee, the Indenture Trustee and the Bond Pool Trustee shall not be the
responsibility of either Trust.
Section 9.06. Eligibility Requirements for Certificate Trustee. The
Certificate Trustee and any successor Certificate 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
Certificate Trustee, $50,000,000, subject to supervision or examination by
federal or state authority and, in the case of a successor Certificate 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 Certificate Trustee shall not be an Affiliate of the Master Servicer,
unless the Certificate Trustee acts as successor Master Servicer hereunder. If
the Certificate 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 Certificate Trustee shall
cease to be eligible in accordance with the provisions of this Section 9.06,
the Certificate Trustee shall resign immediately in the manner and with the
effect specified in Section 9.08.
Section 9.07. Insurance. The Certificate 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 Certificate
Trustee as to the Certificate Trustee's compliance with this Section 9.07 shall
be furnished to the Master Servicer or any Certificateholder upon reasonable
written request.
Section 9.08. Resignation and Removal of the Certificate Trustee.
(a) The Certificate Trustee may at any time resign and be discharged from the
Trusts created hereby by giving written notice thereof to the Master Servicer,
with a copy to the Rating Agencies. Upon receiving such notice of resignation,
the Master Servicer shall promptly appoint a successor Certificate Trustee by
written instrument, in triplicate, one copy of which instrument shall be
delivered to each of the resigning Certificate Trustee and the successor
Certificate Trustee. If no successor Certificate Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Certificate Trustee may petition any court
of competent jurisdiction for the appointment of a successor Certificate
Trustee.
(b) If at any time the Certificate Trustee shall cease to be
eligible in accordance with the provisions of Section 9.06 and shall fail to
resign after written request therefor by the Master Servicer or if at any time
the Certificate Trustee shall become incapable of acting, or shall be
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adjudged a bankrupt or insolvent, or a receiver of the Certificate Trustee or
of its property shall be appointed, or any public officer shall take charge or
control of the Certificate Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Master
Servicer shall be entitled to remove the Certificate Trustee and appoint a
successor Certificate Trustee by written instrument, in triplicate, one copy of
which instrument shall be delivered to each of the Certificate Trustee so
removed and the successor Certificate 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 Certificate Trustee and appoint a successor Certificate 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 Master Servicer, the Certificate Trustee so removed
and the successor so appointed.
(d) No resignation or removal of the Certificate Trustee and
appointment of a successor Certificate 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 Certificate Trustee as
provided in Section 9.09. All costs and expenses incurred in connection with
the resignation or removal of the Certificate Trustee shall be paid by the
Certificate Trustee.
Section 9.09. Successor Certificate Trustee. (a) Any successor
Certificate Trustee appointed as provided in Section 9.08 shall execute,
acknowledge and deliver to the Master Servicer and to its predecessor
Certificate Trustee an instrument accepting such appointment hereunder. The
resignation or removal of the predecessor Certificate Trustee shall then become
effective and such successor Certificate 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 Certificate Trustee herein. The predecessor Certificate Trustee shall
after payment of its outstanding fees and expenses promptly deliver to the
successor Certificate Trustee all assets and records of each Trust held by it
hereunder, and the Master Servicer and the predecessor Certificate 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 Certificate Trustee all such rights, powers, duties and
obligations.
(b) No successor Certificate Trustee shall accept appointment as
provided in this Section 9.09 unless at the time of such acceptance such
successor Certificate Trustee shall be eligible under the provisions of Section
9.06.
(c) Upon acceptance of appointment by a successor Certificate
Trustee as provided in this Section 9.09, the successor Certificate Trustee
shall mail notice of the succession of such Certificate Trustee hereunder to
all Certificateholders at their addresses as shown in the Certificate Register
and to the Rating Agencies. The Master Servicer shall pay the cost of any
mailing by the successor Certificate Trustee.
Section 9.10. Merger or Consolidation of Certificate Trustee. Any
state bank or trust company or national banking association into which the
Certificate 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 Certificate
Trustee shall be a party, or any state bank or trust company or national
banking association
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succeeding to all or substantially all of the corporate trust business of the
Certificate Trustee, shall be the successor of the Certificate Trustee
hereunder, provided such state bank or trust company or national banking
association shall be eligible under the provisions of Section 9.06. Such
succession shall be valid without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 9.11. Appointment of Co-Certificate Trustee or Separate
Certificate 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 a Trust or property constituting the same may at the time be
located, the Master Servicer and the Certificate Trustee acting jointly shall
have the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the Certificate Trustee and the Master Servicer to act
as co-trustee or co-trustees, jointly with the Certificate Trustee, or separate
trustee or separate trustees, of all or any part of a Trust, and to vest in
such Person or Persons, in such capacity, such title to such Trust, or any part
thereof, and, subject to the other provisions of this Section 9.11, such
powers, duties, obligations, rights and trusts as the Master Servicer and the
Certificate Trustee may consider necessary or desirable.
(b) If the Master Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a written request so to
do, or in case an Event of Default with respect to the Master Servicer shall
have occurred and be continuing, the Certificate Trustee shall have the power
to make such appointment without the Master Servicer.
(c) No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor Certificate 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 Certificate Trustee and required to
be conferred on such co-trustee shall be conferred or imposed upon and
exercised or performed by the Certificate 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 Certificate
Trustee hereunder or as successor to the Master Servicer hereunder), the
Certificate 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 related 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 Certificate Trustee.
(e) Any notice, request or other writing given to the Certificate
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 Certificate 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
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protection to, the Certificate Trustee. Every such instrument shall be filed
with the Certificate Trustee.
(f) To the extent not prohibited by law, any separate trustee or
co-trustee may, at any time, request the Certificate Trustee, its agent or
attorney-in-fact, with full power and authority, to do any lawful act under or
with respect to this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties rights, remedies and trusts shall vest
in and be exercised by the Certificate Trustee, to the extent permitted by law,
without the appointment of a new or successor Certificate Trustee.
(g) No trustee under this Agreement shall be personally liable by
reason of any act or omission of another trustee under this Agreement. The
Master Servicer and the Certificate Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee, except
that following the occurrence of any Event of Default which has not been cured,
the Certificate Trustee acting alone may accept the resignation of or remove
any separate trustee or co-trustee.
Section 9.12. Master Servicer Shall Provide Information as Reasonably
Required. The Master Servicer shall furnish to the Certificate Trustee, during
the term of this Agreement, such periodic, special, or other reports or
information (and in such electronic format or other means acceptable to the
Certificate Trustee) as the Master Servicer may have in its possession and as
may reasonably be requested by the Certificate Trustee in order to fulfill its
duties and obligations under this Agreement.
Section 9.13. Certificate Trustee to be Same Person as Indenture
Trustee. Notwithstanding anything herein to the contrary, the Certificate
Trustee shall be the same Person as the Indenture Trustee and the Bond Pool
Trustee at all times during the term of this Agreement.
ARTICLE X
Termination
Section 10.01. Termination Upon Repurchase by the Seller or its
Designee or the Master Servicer or Liquidation of the Mortgage Loans. (a)
Subject to Section 10.02, the respective obligations and responsibilities of
the Seller, the Master Servicer, the Custodian and the Certificate Trustee
created hereby, other than the obligation of the Certificate Trustee or the
Master Servicer to make payments to Certificateholders as hereinafter set forth
and to the Certificate Trustee, shall terminate with respect to a Series upon:
(i) the repurchase by or at the direction of BSMCC or its
designee (or if BSMCC or its designee do not exercise such option, the
Master Servicer) of all Mortgage Loans in the Mortgage Loan Group with
respect to such Series and all REO Property remaining in the Trust
Fund relating to such Mortgage Loan Group at a price equal to the
aggregate Class Current Principal Balances of the Outstanding Bonds of
the related Bond Group, plus accrued and unpaid interest thereon
through the end of the month preceding the month in which such
purchase occurs, plus an amount equal to all outstanding and
unreimbursed advances (including Monthly Advances) made by the Master
Servicer or any Sub-Servicer
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and any other amounts owed to the Master Servicer under the Pooling
and Servicing Agreement or to a Sub- Servicer under the applicable
Sub-Servicing Agreement; 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 for such Series or the disposition of
all property acquired with respect to any Mortgage Loan of such
Series; 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 Trusts 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's living on the date of this Agreement.
(c) [Reserved.]
(d) The right of BSMCC or its designee or the Master Servicer, as
the case may be, to repurchase all Mortgage Loans in a Mortgage Loan Group
pursuant to Subsection 10.01(a)(i) above shall be exercisable only if (i) in
the case of BSMCC, its designee or the Master Servicer, the aggregate unpaid
principal balance of the Mortgage Loans in such Mortgage Loan Group at the time
of any such repurchase is less than 5% of the portion of the Cut-off Date
Balance (or, with respect to the Master Servicer, 2.5% of the portion of the
Cut-off Date Balance) allocable to such Mortgage Loan Group or (ii) in the case
of BSMCC, BSMCC, based upon an Opinion of Counsel, has determined that the
REMIC status of any Series 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) above, BSMCC, its designee or the
Master Servicer, as the case may be, and in the case of (ii) above, BSMCC may
elect to terminate the related Series REMIC at any time, and upon such
election, BSMCC or its designee or the Master Servicer, as the case may be,
shall repurchase all the Mortgage Loans of the related Mortgage Loan Group.
(e) [Reserved].
(f) The Certificate 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 Certificate
Trustee for payment of the final distribution and cancellation. Such notice
shall be given by letter, mailed not earlier than the 15th day and not later
than the 25th day of the month next preceding the month of such final
distribution, and shall specify (i) the Distribution Date upon which final
payment of the Certificates will be made upon presentation and surrender of the
Certificates at the office of the Certificate 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
Certificate Trustee therein specified.
(g) If the option of BSMCC or its designee or the Master Servicer,
as the case may be, to repurchase or cause the repurchase of all Mortgage Loans
in a Mortgage Loan Group under Subsection 10.01(a)(i) above is exercised, BSMCC
and/or its designee or the Master Servicer, as the
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case may be, shall deliver to the Certificate 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 applicable Trust Fund. Upon the presentation and surrender of
the related Certificates, the Certificate Trustee shall distribute all amounts
in the Certificate Account with respect to the related Mortgage Loan Group to
the related Certificateholders. Upon deposit of the required repurchase price
and following such final Distribution Date, the Certificate Trustee shall cause
the Custodian to release promptly to BSMCC and/or its designee or the Master
Servicer, as the case may be, the Mortgage Files for the remaining Mortgage
Loans, and the Accounts shall terminate, subject to the Certificate Trustee's
obligation to hold any amounts payable to Certificateholders in trust without
interest pending final distributions pursuant to Subsection 10.01(i).
(h) In the event that this Agreement is terminated by reason of
the payment or liquidation of all Mortgage Loans or the disposition of all
property acquired with respect to all Mortgage Loans under Subsection
10.01(a)(ii) above, each Sub-Servicer shall deliver to the Certificate Trustee
for deposit in the appropriate sub-account of the Certificate Account all
distributable amounts remaining in their Protected Accounts. Upon the
presentation and surrender of the Certificates, the Certificate Trustee shall
distribute to the Certificateholders, in accordance with their respective
interests, all distributable amounts remaining in the Certificate Account.
Upon deposit by any Sub-Servicers of such distributable amounts and delivery to
the Certificate Trustee of an Officer's Certificate from the Master Servicer
certifying that such deposit has been made, and following such final
Distribution Date, the Certificate Trustee shall cause the Custodian to release
promptly to BSMCC or its designee or the Master Servicer, as the case may be,
the Mortgage Files for the remaining Mortgage Loans, and the Accounts shall
terminate, subject to the Certificate Trustee's obligation to hold any amounts
payable to the Certificateholders in trust without interest pending final
distributions pursuant to Subsection 10.01(i).
(i) If not all of the Certificateholders shall surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Certificate 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 Certificate
Trustee may take appropriate steps, or appoint any agent to take appropriate
steps, to contact the remaining Certificateholders concerning surrender of
their Certificates, and the cost thereof shall be paid out of the funds and
other assets which remain subject to this Agreement.
ARTICLE XI
Miscellaneous Provisions
Section 11.01. [Reserved].
Section 11.02. Amendment. (a) This Agreement may be amended from
time to time by the Seller, the Certificate Trustee and the Master Servicer,
without notice to or the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein that may be defective
or inconsistent with any other provisions herein, to comply with any changes in
the
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Code or to make any other provisions with respect to matters or questions
arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Independent Counsel, adversely affect in any
material respect the interests of any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Seller, the Certificate Trustee and the Master Servicer, with the consent of
BSMCC and the Holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than 51% of the Trust Fund for each affected Series for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (ii) reduce
the aforesaid percentage of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all
Certificates then outstanding, or (iii) cause any of the Series REMICs 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 Certificate
Trustee other than at the Certificate 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, a Sub-Servicer or
the Certificate 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
Certificate 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 Certificate Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Certificate 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 Certificate Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Certificate 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 Master Servicer shall effect such recordation, at the expense of the Trusts
upon the request in writing of a Certificateholder, but only if such direction
is accompanied by an Opinion of Counsel (provided at
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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 Trusts created hereby, 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 Trusts, 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 either 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 Certificate 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 for the affected Series shall have made written
request upon the Certificate Trustee to institute such action, suit or
proceeding in its own name as Certificate Trustee hereunder and shall have
offered to the Certificate Trustee such reasonable indemnity as it may require
against the costs and expenses and liabilities to be incurred therein or
thereby, and (iii) the Certificate Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding.
(d) No one or more Certificateholders shall have any right by
virtue of any provision of this Agreement to affect the rights of any other
Certificateholders or to obtain or seek to obtain priority or preference over
any other such Certificateholder, or to enforce any right under this Agreement,
except in the manner herein provided and for the equal, ratable and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 11.04, each and every Certificateholder and the
Certificate 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 Certificate
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
Certificate Trustee and the Seller, if made in the manner provided in this
Section 11.05.
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(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 Certificate 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 none of the
Certificate Trustee, the Seller, the Master Servicer or 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 Certificate Trustee, the Seller, the Master Servicer, the Custodian 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 Certificate Trustee, the Seller, the Master Servicer
or any Sub-Servicer or any Affiliate thereof shall be disregarded, except as
otherwise provided in Section 11.02(b) and except that, in determining whether
the Certificate Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Certificates
which the Certificate Trustee knows to be so owned shall be so disregarded.
Certificates which have been pledged in good faith to the Certificate Trustee,
the Seller, the Master Servicer or any Sub-Servicer or any Affiliate thereof
may be regarded as outstanding if the pledgor establishes to the satisfaction
of the Certificate Trustee the pledgor's right to act with respect to such
Certificates and that the pledgor is not an Affiliate of the Certificate
Trustee, the Seller, the Master Servicer or any Sub-Servicer, as the case may
be.
Section 11.06. [Reserved]
Section 11.07. Governing Law. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS RULES AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 11.08. Notices. All demands and notices hereunder shall be
in writing and shall be deemed given when delivered at or mailed by registered
mail, return receipt requested, postage prepaid, or by recognized overnight
courier, to (i) in the case of the Seller, 2711 North Haskell Avenue, Suite
900, Dallas, Texas, Attention: Wade Walker, (ii) in the case of BSMCC, 245
Park
-71-
<PAGE> 77
Avenue, New York, New York 10167, Attention: Vice President-Servicing, or to
such other address as may hereafter be furnished to the other parties hereto in
writing; (iii) in the case of the Master Servicer, 11000 Broken Land Parkway,
Columbia, Maryland 21044, Attention: Master Servicing Department (CMCSC III
1998-2) or such other address as may hereafter be furnished to the other
parties in writing; (iii) in the case of the Certificate Trustee, at its
Corporate Trust Office, or such other address as may hereafter be furnished to
the other parties hereto in writing; or (iv) in the case of the Rating
Agencies, (x) Moody's Investors Service, Inc., 99 Church Street, New York, New
York 10007, Attention: Residential Mortgage Department, and (y) Fitch IBCA,
Inc., One State Street Plaza, New York, New York 10004, Attention: Residential
Mortgage Surveillance. Any notice delivered to the Seller, the Master Servicer
or the Certificate Trustee under this Agreement shall be effective only upon
receipt. Any notice required or permitted to be mailed to a Certificateholder,
unless otherwise provided herein, shall be given by first-class mail, postage
prepaid, at the address of such Certificateholder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
Section 11.09. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severed from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the holders thereof.
Section 11.10. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto.
Section 11.11. Article and Section Headings. The article and section
headings herein are for convenience of reference only, and shall not limit or
otherwise affect the meaning hereof.
Section 11.12. Counterparts. This Agreement may be executed in two
or more counterparts each of which when so executed and delivered shall be an
original but all of which together shall constitute one and the same
instrument.
Section 11.13 Notice to Rating Agencies. The article and section
headings herein are for convenience of reference only, and shall not limited or
otherwise affect the meaning hereof. The Certificate Trustee shall use its
best efforts to promptly provide notice to each Rating Agency with respect to
each of the following of which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been cured;
3. The resignation or termination of the Master Servicer or the
Certificate Trustee;
4. The repurchase or substitution of Mortgage Loans;
5. The final payment to Certificateholders; and
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<PAGE> 78
6. Any change in the location of the Custody Account or the
Certificate Account.
In addition, in accordance with Section 3.16, the Certificate Trustee
shall promptly furnish to each Rating Agency a copy of each annual independent
public accountants' servicing report received as described in Section 3.16.
[Remainder of Page Intentionally Left Blank]
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<PAGE> 79
IN WITNESS WHEREOF, the Seller, the Master Servicer and the
Certificate 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.
CMC SECURITIES CORPORATION III, as Seller
By: /s/ WADE WALKER
------------------------------------------
Name: Wade Walker
Title: Vice President
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Master Servicer and Custodian
By: /s/ PETER J. MASTERMAN
------------------------------------------
Name: Peter J. Masterman
-------------------------------------
Title: Vice President
------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO, as
Certificate Trustee
By: /s/ RICK TARNAS
------------------------------------------
Name: R. Tarnas
Title: Vice President
Accepted and Agreed as to
Sections 2.02, 2.03A, 2.04 and 10.01
BEAR STEARNS MORTGAGE CAPITAL
CORPORATION
By: /s/ MARY HAGGERTY
-------------------------
Name: Mary Haggerty
-----------------------
Title: Vice President
----------------------
Pooling and Servicing Agreement - Signature Page
<PAGE> 80
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On the 30th day of September, 1998 before me, a notary public in and
for said State, personally appeared Wade Walker, known to me to be a Vice
President of CMC Securities Corporation III, the corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ CHRIS T. KRECEK
------------------------------
Notary Public
Commission Expires:
[Notarial Seal]
Pooling and Servicing Agreement - Signature Page
<PAGE> 81
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On the 30th day of September, 1998 before me, a notary public in and
for said State, personally appeared Peter J. Masterman, known to me to be a
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.
/s/ CHRIS T. KRECEK
------------------------------
Notary Public
Commission Expires:
[Notarial Seal]
Pooling and Servicing Agreement - Signature Page
<PAGE> 82
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On the 30th day of September, 1998 before me, a notary public in and
for said State, personally appeared R. Tarnas, known to me who, being by me duly
sworn, did depose and say that he/she is a Vice President of The First National
Bank of Chicago, one of the parties that executed the foregoing instrument; that
he/she knows the seal of said Bank; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the Board of Directors
of said Bank; and that he/she signed his/her name thereto by order of the Board
of Directors of said Bank.
/s/ CHRIS T. KRECEK
------------------------------
Notary Public
Commission Expires:
[Notarial Seal]
Pooling and Servicing Agreement - Signature Page
<PAGE> 83
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of September, 1998 before me, a notary public in and
for said State, personally appeared Mary Haggerty, known to me to be a Vice
President of Bear Stearns Mortgage Capital Corporation, the corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ HEIDI M. KAHN
------------------------------
Notary Public
Commission Expires:
[Notarial Seal]
Pooling and Servicing Agreement - Signature Page
<PAGE> 84
EXHIBIT A-1
FORM OF SERIES 1998-2A CERTIFICATES
<PAGE> 85
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.01(b) OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
CMO MORTGAGE PASS-THROUGH
CERTIFICATE, SERIES 1998-2A
evidencing a beneficial interest in a pool of conventional
single-family loans transferred to the Certificate Trustee
referred to below by
CMC SECURITIES CORPORATION III
serviced by
Norwest Bank Minnesota, National Association
as Master Servicer
(This Certificate does not represent an interest in
or obligation of CMC Securities Corporation III,
Norwest Bank Minnesota, National Association
or The First National Bank of Chicago)
No. 0001 100/100th Undivided Interest
This certifies that THE FIRST NATIONAL BANK OF CHICAGO, is the
registered owner of a 100/100th fractional undivided interest in a pool of
conventional one- to four-family residences and individual condominium unit
mortgage loans (the "Mortgage Loans") in the loan group (the "Mortgage Loan
Group") assigned to the series (the "Series") of mortgage pass-through
certificates (the "Certificates") referred to above and transferred to the
Certificate Trustee referred to below by CMC Securities Corporation III ("CMCSC
III"). The Mortgage Loan Group was created pursuant to a Pooling and Servicing
Agreement dated as of September 1, 1998 (the "Agreement") among CMCSC III,
Norwest Bank Minnesota, National Association, as master servicer (the Master
Servicer"), and The First National Bank of Chicago, as certificate trustee (the
"Certificate Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereinbelow. Mortgage Loans having an aggregate principal
amount of $_____ as of September 1, 1998 (the "Cut-Off Date"), after deducting
all payments due on or before the Cut-Off Date, were transferred and assigned to
the Mortgage Loan Group for this Series. 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 the acceptance hereof
assents and by which such holder is bound. Capitalized terms not defined herein
shall have the meanings set forth in the Agreement.
<PAGE> 86
Pursuant to the Agreement, the Certificate Trustee will distribute on
the 25th day of the month, or if such day is not a Business Day, then the next
succeeding Business Day, beginning in October 1998 (each, a "Distribution
Date"), to the Person in whose name this Certificate is registered on the last
Business Day of the month immediately preceding the month of such Distribution
Date, such Person's pro rata share (based on the aggregate fractional undivided
interest evidenced by this Certificate) of the aggregate amount required to be
distributed to the Holders of the Series 1998-2 Certificates pursuant to Section
6.01 of the Agreement. For the purposes hereof, amounts received in connection
with the liquidation of defaulted Mortgage Loans in the Mortgage Loan Group
through Insurance Proceeds, foreclosure or trustee's sales proceeds or
otherwise, shall be deemed to be amounts received on Mortgage Loans in the
Mortgage Loan Group.
Distributions on this Certificate will be made by the Certificate
Trustee by wire transfer in immediately available funds for the account of the
Person entitled thereto as specified by such Person in accordance with the terms
of the Agreement or by such other method as shall be acceptable to both the
Certificate Trustee and such Person. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the
Certificate Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Certificate Trustee in the City of Chicago,
in the State of Illinois.
Unless the certificate of authentication hereon has been executed by
the Certificate Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth above (herein called the "Certificates") and
representing the fractional undivided interest in the Trust Fund created
pursuant to the Agreement.
The Certificates do not represent an obligation of, or an interest in,
CMCSC III, the Master Servicers, or the Certificate Trustee and are not insured
or guaranteed by any governmental agency or other entity. The Certificates are
limited in right of payment to certain collections and recoveries respecting the
Mortgage Loans in the Mortgage Loan Group, all as more specifically set forth
hereinabove and in the Agreement.
As provided in the Agreement, withdrawals from the Certificate Account
may be made by the Certificate Trustee from time to time for purposes other than
distributions to Certificateholders, such purposes including reimbursement to
the related Master Servicers of certain expenses incurred, by them in connection
with the Mortgage Loans in the Mortgage Loan Group.
The Agreement permits, with respect to this Series and with certain
exceptions therein provided, the amendment thereof and the modification of the
rights and obligations of the Master Servicers and the rights of the
Certificateholders of this Series under the Agreement at any time by CMCSC III,
the Master Servicer and the Certificate Trustee with the consent of BSMCC and
the holders of Certificates of this Series evidencing fractional undivided
interests aggregating not less than 51% of the Trust Fund. Any such amendment or
modification shall be effective only as to this Series. Any consent to such an
amendment or modification by the holder of this Certificate shall
-2-
<PAGE> 87
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
exchange therefore 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 of this Series.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Certificate Registrar, which initially is The First National
Bank of Chicago, upon surrender of this Certificate for registration of transfer
at the office or agency maintained by the Certificate Registrar, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Certificate Registrar, duly executed by the holder hereof or such holder as
attorney duly authorized in writing, and thereupon one or more new Certificates
of this Series of authorized denominations evidencing the same aggregate
fractional undivided interest in the Trust Fund will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons. As provided in the Agreement and subject to certain limitations therein
set forth, Certificates in this Series are exchangeable for new Certificates of
this Series of authorized denominations evidencing the same aggregate fractional
undivided interest in the Trust Fund, as requested by the holder surrendering
the same.
No service charge will be made for any such registration of transfer or
exchange, but the Certificate Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
CMCSC III, the Master Servicer, the Certificate Trustee, the
Certificate Registrar and any agent of the Master Servicer, the Certificate
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of
CMCSC III, the Master Servicer, the Certificate Trustee, the Certificate
Registrar or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and each Trust Fund shall
terminate upon (i) the repurchase by or at the direction of BSMCC or its
designee (or if BSMCC or its designee do not exercise such option, the Master
Servicer) of all Mortgage Loans in the Mortgage Loan Group with respect to such
Series and all REO Property remaining in the Trust Fund relating to such
Mortgage Loan Group at a price equal to the aggregate Class Current Principal
Balances of the Outstanding Bonds of the related Bond Group, plus accrued and
unpaid interest thereof through the end of the month preceding the month in
which such purchase occurs, plus an amount equal to all outstanding and
unreimbursed advances (including Monthly Advances) made by the Master Servicer
or any Sub-Servicer and any other amounts owed to the Master Servicer under the
Pooling and Servicing Agreement or to a Sub-Servicer under the applicable
Sub-Servicing Agreement; 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 of such Series or the disposition of all
property acquired with respect to any Mortgage Loan of such Series.
-3-
<PAGE> 88
The right of BSMCC or its designee or the Master Servicer, as the case
may be, to repurchase all Mortgage Loans in a Mortgage Loan Group pursuant to
Subsection 10.01(a)(i) above shall be exercisable only if (i) in the case of
BSMCC, its designee or the Master Servicer, the aggregate unpaid principal
balance of the Mortgage Loans in such Mortgage Loan Group at the time of any
such repurchase is less than 5% of the portion of the Cut-off Date Balance (or,
with respect to the Master Servicer, 2.5% of the portion of the Cut-off Date
Balance) allocable to such Mortgage Loan Group or (ii) in the case of BSMCC,
BSMCC, based upon an Opinion of Counsel, has determined that the REMIC status of
any Series 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) above, BSMCC, its designee or the Master Servicer, as the
case may be, and in the case of (ii) above, BSMCC may elect to terminate the
related Series REMIC at any time, and upon such election, BSMCC or its designee
or the Master Servicer, as the case may be, shall repurchase all the Mortgage
Loans of the related Mortgage Loan Group.
The Certificate Trustee's signature shall be for authentication
purposes only and neither the Certificate Trustee nor any person signing on its
behalf shall have liability on this Certificate (other than for the certificate
of authentication).
[Remainder of Page Intentionally Left Blank]
-4-
<PAGE> 89
IN WITNESS WHEREOF, CMCSC III has caused this Certificate to be duly
executed.
CMC SECURITIES CORPORATION III
By:
----------------------------------
Wade Walker
Vice President
Attest
- ------------------------------
Assistant Secretary
CERTIFICATE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred
to in the within-mentioned Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
as Certificate Trustee
By:
----------------------------------
R. Tarnas, Vice President
Dated: September 30, 1998
-5-
<PAGE> 90
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 fractional undivided interest equal to ______________________ of the
Fractional Undivided Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register.
I (we) further direct the Certificate Registrar to issue a new
Certificate of like Series of a fractional undivided interest equal to
________________________________________________________________________________
____________, to the above named assignee and deliver such Certificate to the
following address:
Dated:
-------------------
-------------------------------------------
tax identification Signature by or on behalf of assignor
no. of assignee: (signature must be signed as registered)
- --------------------------
-------------------------------------------
(signature must be guaranteed by a
commercial bank or trust company or
a member firm of a major stock exchange)
The assignee should include the following for the information of the
Certificate Trustee:
Distributions shall be made by wire transfer 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.
-6-
<PAGE> 91
EXHIBIT A-2
FORM OF SERIES 1998-2B CERTIFICATES
<PAGE> 92
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.01(b) OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
CMO MORTGAGE PASS-THROUGH
CERTIFICATE, SERIES 1998-2B
evidencing a beneficial interest in a pool of conventional
single-family loans transferred to the Certificate Trustee
referred to below by
CMC SECURITIES CORPORATION III
serviced by
Norwest Bank Minnesota, National Association
as Master Servicer
(This Certificate does not represent an interest in
or obligation of CMC Securities Corporation III,
Norwest Bank Minnesota, National Association
or The First National Bank of Chicago)
No. 0001 100/100th Undivided Interest
This certifies that THE FIRST NATIONAL BANK OF CHICAGO, is the
registered owner of a 100/100th fractional undivided interest in a pool of
conventional one- to four-family residences and individual condominium unit
mortgage loans (the "Mortgage Loans") in the loan group (the "Mortgage Loan
Group") assigned to the series (the "Series") of mortgage pass-through
certificates (the "Certificates") referred to above and transferred to the
Certificate Trustee referred to below by CMC Securities Corporation III ("CMCSC
III"). The Mortgage Loan Group was created pursuant to a Pooling and Servicing
Agreement dated as of September 1, 1998 (the "Agreement") among CMCSC III,
Norwest Bank Minnesota, National Association, as master servicer (the Master
Servicer"), and The First National Bank of Chicago, as certificate trustee (the
"Certificate Trustee"), a summary of certain of the pertinent provisions of
which is set forth hereinbelow. Mortgage Loans having an aggregate principal
amount of $_____ as of September 1, 1998 (the "Cut-Off Date"), after deducting
all payments due on or before the Cut-Off Date, were transferred and assigned to
the Mortgage Loan Group for this Series. 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 the acceptance hereof
assents and by which such holder is bound. Capitalized terms not defined herein
shall have the meanings set forth in the Agreement.
<PAGE> 93
Pursuant to the Agreement, the Certificate Trustee will distribute on
the 25th day of the month, or if such day is not a Business Day, then the next
succeeding Business Day, beginning in October 1998 (each, a "Distribution
Date"), to the Person in whose name this Certificate is registered on the last
Business Day of the month immediately preceding the month of such Distribution
Date, such Person's pro rata share (based on the aggregate fractional undivided
interest evidenced by this Certificate) of the aggregate amount required to be
distributed to the Holders of the Series 1998-2 Certificates pursuant to Section
6.01 of the Agreement. For the purposes hereof, amounts received in connection
with the liquidation of defaulted Mortgage Loans in the Mortgage Loan Group
through Insurance Proceeds, foreclosure or trustee's sales proceeds or
otherwise, shall be deemed to be amounts received on Mortgage Loans in the
Mortgage Loan Group.
Distributions on this Certificate will be made by the Certificate
Trustee by wire transfer in immediately available funds for the account of the
Person entitled thereto as specified by such Person in accordance with the terms
of the Agreement or by such other method as shall be acceptable to both the
Certificate Trustee and such Person. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the
Certificate Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Certificate Trustee in the City of Chicago,
in the State of Illinois.
Unless the certificate of authentication hereon has been executed by
the Certificate Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth above (herein called the "Certificates") and
representing the fractional undivided interest in the Trust Fund created
pursuant to the Agreement.
The Certificates do not represent an obligation of, or an interest in,
CMCSC III, the Master Servicers, or the Certificate Trustee and are not insured
or guaranteed by any governmental agency or other entity. The Certificates are
limited in right of payment to certain collections and recoveries respecting the
Mortgage Loans in the Mortgage Loan Group, all as more specifically set forth
hereinabove and in the Agreement.
As provided in the Agreement, withdrawals from the Certificate Account
may be made by the Certificate Trustee from time to time for purposes other than
distributions to Certificateholders, such purposes including reimbursement to
the related Master Servicers of certain expenses incurred, by them in connection
with the Mortgage Loans in the Mortgage Loan Group.
The Agreement permits, with respect to this Series and with certain
exceptions therein provided, the amendment thereof and the modification of the
rights and obligations of the Master Servicers and the rights of the
Certificateholders of this Series under the Agreement at any time by CMCSC III,
the Master Servicer and the Certificate Trustee with the consent of BSMCC and
the holders of Certificates of this Series evidencing fractional undivided
interests aggregating not less than 51% of the Trust Fund. Any such amendment or
modification shall be effective only as to this Series. Any consent to such an
amendment or modification by the holder of this Certificate shall
-2-
<PAGE> 94
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
exchange therefore 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 of this Series.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register of the Certificate Registrar, which initially is The First National
Bank of Chicago, upon surrender of this Certificate for registration of transfer
at the office or agency maintained by the Certificate Registrar, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Certificate Registrar, duly executed by the holder hereof or such holder as
attorney duly authorized in writing, and thereupon one or more new Certificates
of this Series of authorized denominations evidencing the same aggregate
fractional undivided interest in the Trust Fund will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons. As provided in the Agreement and subject to certain limitations therein
set forth, Certificates in this Series are exchangeable for new Certificates of
this Series of authorized denominations evidencing the same aggregate fractional
undivided interest in the Trust Fund, as requested by the holder surrendering
the same.
No service charge will be made for any such registration of transfer or
exchange, but the Certificate Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
CMCSC III, the Master Servicer, the Certificate Trustee, the
Certificate Registrar and any agent of the Master Servicer, the Certificate
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of
CMCSC III, the Master Servicer, the Certificate Trustee, the Certificate
Registrar or any such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and each Trust Fund shall
terminate upon (i) the repurchase by or at the direction of BSMCC or its
designee (or if BSMCC or its designee do not exercise such option, the Master
Servicer) of all Mortgage Loans in the Mortgage Loan Group with respect to such
Series and all REO Property remaining in the Trust Fund relating to such
Mortgage Loan Group at a price equal to the aggregate Class Current Principal
Balances of the Outstanding Bonds of the related Bond Group, plus accrued and
unpaid interest thereof through the end of the month preceding the month in
which such purchase occurs, plus an amount equal to all outstanding and
unreimbursed advances (including Monthly Advances) made by the Master Servicer
or any Sub- Servicer and any other amounts owed to the Master Servicer under the
Pooling and Servicing Agreement or to a Sub-Servicer under the applicable
Sub-Servicing Agreement; 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 of such Series or the disposition of all
property acquired with respect to any Mortgage Loan of such Series.
-3-
<PAGE> 95
The right of BSMCC or its designee or the Master Servicer, as the case
may be, to repurchase all Mortgage Loans in a Mortgage Loan Group pursuant to
Subsection 10.01(a)(i) above shall be exercisable only if (i) in the case of
BSMCC, its designee or the Master Servicer, the aggregate unpaid principal
balance of the Mortgage Loans in such Mortgage Loan Group at the time of any
such repurchase is less than 5% of the portion of the Cut-off Date Balance (or,
with respect to the Master Servicer, 2.5% of the portion of the Cut-off Date
Balance) allocable to such Mortgage Loan Group or (ii) in the case of BSMCC,
BSMCC, based upon an Opinion of Counsel, has determined that the REMIC status of
any Series 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) above, BSMCC, its designee or the Master Servicer, as the
case may be, and in the case of (ii) above, BSMCC may elect to terminate the
related Series REMIC at any time, and upon such election, BSMCC or its designee
or the Master Servicer, as the case may be, shall repurchase all the Mortgage
Loans of the related Mortgage Loan Group.
The Certificate Trustee's signature shall be for authentication
purposes only and neither the Certificate Trustee nor any person signing on its
behalf shall have liability on this Certificate (other than for the certificate
of authentication).
[Remainder of Page Intentionally Left Blank]
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<PAGE> 96
IN WITNESS WHEREOF, CMCSC III has caused this Certificate to be duly
executed.
CMC SECURITIES CORPORATION III
By:
--------------------------------
Wade Walker
Vice President
Attest
- -------------------------
Assistant Secretary
CERTIFICATE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred
to in the within-mentioned Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
as Certificate Trustee
By:
--------------------------------
R. Tarnas, Vice President
Dated: September 30, 1998
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<PAGE> 97
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 fractional undivided interest equal to ______________________ of the
Fractional Undivided Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register.
I (we) further direct the Certificate Registrar to issue a new
Certificate of like Series of a fractional undivided interest equal to
_____________________________________________, to the above named assignee and
deliver such Certificate to the following address:
______________________________________________________________________________
______________________________________________________________________________
Dated:
-------------------
------------------------------------------
tax identification Signature by or on behalf of assignor
no. of assignee: (signature must be signed as registered)
- --------------------------
------------------------------------------
(signature must be guaranteed by a
commercial bank or trust company or
a member firm of a major stock exchange)
The assignee should include the following for the information of the
Certificate Trustee:
Distributions shall be made by wire transfer 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.
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<PAGE> 98
EXHIBIT B-1
GROUP 1 MORTGAGE LOAN SCHEDULE
(Available upon request from the Certificate Trustee)
<PAGE> 99
EXHIBIT B-2
GROUP 2 MORTGAGE LOAN SCHEDULE
(Available upon request from the Certificate Trustee)
<PAGE> 100
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF BSMCC
CONCERNING THE MORTGAGE LOANS
The Seller hereby represents and warrants to the Purchaser as of the
Closing Date or such other date as may be specified below with respect to the
Mortgage Loans being sold by it that:
(a) the Mortgage creates a first lien or a first priority ownership
interest in the estate in fee simple in real property securing the related
Mortgage Note, free and clear of all adverse claims, liens and encumbrances
having priority over the first lien of the Mortgage subject only to (1) the lien
of non-delinquent current real property taxes and assessments not yet due and
payable, (2) covenants, conditions and restrictions, rights of way, easements
and other matters of public record as of the date of recording which are
acceptable to mortgage lending institutions generally and either (A) which are
referred to or otherwise considered in the appraisal made for the originator of
the Mortgage Loan, or (B) which do not adversely affect the appraised value of
the Mortgaged Property as set forth in such appraisal, and (3) other matters to
which like properties are commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the Mortgage or the
use, enjoyment, value or marketability of the related Mortgaged Property;
(b) the terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments which have been recorded to the extent any such recordation is
required by applicable law, and copies of which written instruments are included
in the Mortgage File; and no other instrument of waiver, alteration or
modification has been executed, and no Mortgagor has been released, in whole or
in part, from the terms thereof in connection with an assumption agreement,
which assumption agreement is part of the Mortgage File and the terms of which
are reflected in the Mortgage Loan Schedule;
(c) all buildings upon the Mortgaged Property are insured by a
generally acceptable insurer pursuant to standard hazard insurance policies and
all such standard hazard policies are in effect and on the date of origination
contained a standard mortgagee clause naming Cendant, NCM or WMBFA, as
applicable, and its respective successors in interest as loss payee, and such
policies are still in effect and all premiums due thereon have been paid; if the
Mortgaged Property is located in an area identified by the Federal Emergency
Management Agency is having special flood hazards under the Flood Disaster
Protection Act of 1973, as amended, such Mortgaged Property is covered by flood
insurance in an amount not less than that set forth in Section 3.10(d); the
Mortgage
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<PAGE> 101
obligates the Mortgagor thereunder to maintain all such insurance at the
Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(d) any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity or disclosure
laws applicable to the Mortgage Loan have been complied with in all material
respects;
(e) subject to permitted exceptions set forth in (a), the Mortgage is a
valid, subsisting and enforceable first lien on the related Mortgaged Property,
including all buildings on such Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning systems affixed
to such buildings, and all additions, alterations and replacements made at any
time with respect to the foregoing securing the Mortgage Note's original
principal balance; the Mortgage and the Mortgage Note do not contain any
evidence of any other security interest or other interest or right thereto; such
lien is free and clear of all adverse claims, liens and encumbrances having
priority over the first lien of the Mortgage subject only to permitted
encumbrances set forth in clause (a)(1), (2) and (3) herein; any security
agreement, chattel mortgage or equivalent document related to and delivered in
connection with the Mortgage Loan establishes and creates a valid, subsisting
and enforceable first lien and first priority security interest on the property
described therein;
(f) the Mortgage Note and the related Mortgage are original and genuine
and each is the legal, valid and binding obligation of the maker thereof,
enforceable in all respects in accordance with its terms subject to bankruptcy,
insolvency and other laws of general application affecting the rights of
creditors, and the Seller has taken all action necessary to transfer such rights
of enforceability to the Purchaser; all parties to the Mortgage Note and the
Mortgage had the legal capacity to enter into the Mortgage Loan and to execute
and deliver the Mortgage Note and the Mortgage; and the Mortgage Note and the
Mortgage have been duly and properly executed by such parties; the proceeds of
the Mortgage Loan have been fully disbursed and there is no requirement for
future advances thereunder, and any and all requirements as to completion of any
on-site improvements and as to disbursements of any escrow funds therefor have
been complied with;
(g) the Mortgage Loan is covered by an ALTA lender's title insurance
policy or other generally acceptable form of policy of title insurance, issued
by a title insurer qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring (subject to the exceptions contained in
(a)(1), (2) and (3) above) Cendant, NCM or WMBFA, as applicable, its
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respective successors and assigns, as to the first priority lien of the Mortgage
in the original principal amount of the Mortgage Loan; Cendant, NCM or WMBFA, as
applicable, is the sole insured of its respective lender's title insurance
policy, such respective lender's title insurance policy is in full force and
effect and will be in full force and effect upon the consummation of the
transactions contemplated by this Agreement and the Pooling and Servicing
Agreement and will inure to the benefit of the Purchaser and its assigns without
any further act; and no claims have been made under such lender's title
insurance policy, and no prior holder of the related Mortgage has done, by act
or omission, anything which would impair the coverage of such lender's title
insurance policy;
(h) the Mortgage Loan was originated or acquired by Cendant, in the
case of a Cendant Mortgage Loan, NCM, in the case of a NCM Mortgage Loan, or
WMBFA in the case of a WMBFA Mortgage Loan; the Mortgage Loan complies in all
material respects with all the terms, conditions and requirements of the
underwriting standards of Cendant, NCM or WMBFA, as applicable, in effect at the
time of origination of such Mortgage Loan; provided, however, that certain
Mortgage Loan may have characteristics outside of such underwriting guidelines
where compensating factors are present such as are acceptable to the mortgage
banking industry; the Mortgage Notes and Mortgage are on uniform Fannie
Mae/Freddie Mac instruments or are on forms acceptable to Fannie Mac or Freddie
Mac; the Mortgage Loan bears interest at a fixed rate as set forth in the
Mortgage Loan Schedule, and Monthly Payments under the Mortgage Note are due and
payable on the first day of each month; and the Mortgage Loan contains the usual
and enforceable provisions of the originator at the time of origination for the
acceleration of the payment of the unpaid principal amount if the related
Mortgaged Property is sold without the prior consent of the mortgagee
thereunder;
(i) the related Mortgage contains enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including (1) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (2) otherwise by judicial foreclosure; and
there is no homestead or other exemption available to the Mortgagor which would
interfere with the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage;
(j) if the Mortgage constitutes a deed of trust, a trustee, duly
qualified if required under applicable law to act as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale or attempted sale
after default by the Mortgagor;
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(k) the Mortgage File contains an appraisal of the related Mortgaged
Property made and signed prior to the final approval of the mortgage loan
application by a Qualified Appraiser (as defined in the Cendant Agreement, the
NCM Agreement and the WMBFA Agreement), approved by Cendant, NCM or WMBFA, as
applicable; and the appraisal is in a form generally acceptable to Fannie Mae or
Freddie Mac;
(l) the related Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage referred to
above and such collateral does not serve as security for any other obligation;
(m) the Mortgagor has received all disclosure materials required by
applicable law with respect to the making of mortgage loans similar to the
related Mortgage Loan;
(n) the Mortgage Loan has an original term to maturity of not more than
thirty years, with interest payable in arrears on the first day of each month;
and the Mortgage Loan does not contain terms or provisions which would result in
negative amortization;
(o) each of the Mortgaged Properties consists of a single parcel of
real property with a single-family residence erected thereon, or a two- to
four-family dwelling, or an individual condominium unit in a condominium project
or an individual unit in a planned unit development; no Mortgaged Property
consists of a single parcel of real property with a cooperative housing
development erected thereon; no Mortgaged Property is a mobile home or
manufactured dwelling; and to the best of the Seller's knowledge each Mortgaged
Property is lawfully occupied under applicable law;
(p) [RESERVED]
(q) the assignment of Mortgage from the Seller to the Certificate
Trustee is in recordable form and is acceptable for recording under the laws of
the jurisdiction in which the related Mortgaged Property is located;
(r) Each of Cendant, NCM and WMBFA is, and each Mortgage Loan was
originated by, a savings and loan association, savings bank, commercial bank,
credit union, insurance company or similar institution which is supervised and
examined by a federal or State authority, or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to Section 203 and 211 of
the National Housing Act;
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<PAGE> 104
(s) the information set forth in the Final Mortgage Loan Schedule is
true, complete and correct in all material respects as of the Cut-off Date;
(t) the Mortgage Loan has not been delinquent thirty (30) days or more
on more than one occasion during the twelve months preceding the Cut-off Date;
and as of the Closing Date, the Mortgage Loan is not delinquent in payment more
than 30 days and has not been dishonored; there are no defaults under the terms
of the Mortgage Loan; and, except in the case of a Buydown Loan, none of the
Seller, Cendant, NCM or WMBFA has advanced funds, or induced, solicited or
knowingly received any advance of funds from a party other than the owner of the
Mortgaged Party subject to the related Mortgage, directly or indirectly, for the
payment of any amount required by the Mortgage Loan;
(u) there are no delinquent taxes or other outstanding charges
affecting the related Mortgaged Property, and there are no liens against the
Mortgaged Property resulting from any delinquent assessments;
(v) the Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage Note or
Mortgage unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(w) the Mortgage has not been satisfied, canceled or subordinated, in
whole or in part, or rescinded, and the Mortgaged Property has not been released
from the lien of such Mortgage, in whole or in part, except with respect to
certain releases in part that do not materially affect the value of the
Mortgaged Property, nor has any instrument been executed that would effect any
such satisfaction, release, cancellation, subordination or rescission;
(x) immediately prior to the transfer and assignment to the Purchaser,
the Mortgage Note and the 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 the Mortgage Loan to the Purchaser free
and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest;
(y) there is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note and no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event permitting
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<PAGE> 105
acceleration; and neither the Seller nor any prior mortgagee has waived any
default, breach, violation or event permitting acceleration;
(z) there are no mechanics', or similar liens or claims which have been
filed for work, labor or material affecting the related Mortgaged Property which
are or may be liens to or equal to the lien of the related Mortgage;
(aa) all improvements subject to the Mortgage lie wholly within the
boundaries and building restriction lines of the Mortgaged Property (and wholly
within the project with respect to a condominium unit) except for de minimis
encroachments permitted by the Fannie Mae Guide (MBS Special Servicing Option)
and noted on the appraisal, and no improvements on adjoining properties encroach
upon the Mortgaged Property except those which are insured against by the title
insurance policy referred to in clause (g) above and, all improvements on such
Mortgaged Property comply with all applicable zoning and subdivision laws and
ordinances;
(bb) the Mortgaged Property at origination of the Mortgage Loan was and
currently is free of damage and waste or any such damage and waste is adequately
covered by an insurance policy, and at origination of the Mortgage Loan there
was, and there currently is, no proceeding pending for the total or partial
condemnation thereof;
(cc) no Mortgage Loan has a Loan-to-Value Ratio in excess of 95.00%.
The original Loan-to-Value Ratio of each Mortgage Loan either was not more than
95.00% or the excess over 80.00% is insured as to payment defaults by a Primary
Mortgage Insurance Policy issued by a primary mortgage insurer acceptable to
Fannie Mae and Freddie Mac until the Loan-to-Value Ratio of such Mortgage Loan
is reduced to 80.00%;
(dd) All parties which have had any interest in the Mortgage, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (A) in substantial
compliance with any and all applicable licensing requirements of the laws of the
state wherein the related Mortgaged Property is located, and (B) (1) organized
under the laws of such state, or (2) qualified to do business in such state, or
(3) federal savings and loan associations, national banks, a Federal Home Loan
Bank or the Federal Reserve Bank, or (4) not doing business in such state;
(ee) The Mortgage Loan does not contain "graduated payment"
features; and
(ff) The Mortgagor is not in bankruptcy.
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<PAGE> 106
It is understood and agreed that the representations and warranties set
forth herein will inure to the benefit of the Purchaser, its successors and
assigns, notwithstanding any restrictive or qualified endorsement on any
Mortgage Note or assignment of Mortgage or the examination of any Mortgage File.
Upon any substitution for a Mortgage Loan, the representations and warranties
set forth above shall be deemed to be made by the Seller as to any Substitute
Mortgage Loan as of the date of substitution.
Upon discovery or receipt of notice by the Seller, the Purchaser or the
Certificate Trustee of a breach of any representation or warranty of the Seller
set forth herein which materially and adversely affects the value of the
interests of the Purchaser, the Certificateholder or the Certificate Trustee in
any of the Mortgage Loans delivered to the Purchaser pursuant to this Agreement,
the party discovering or receiving notice of such breach shall give prompt
written notice to the others. In the case of any such breach of a representation
or warranty set forth herein, within 90 days from the date of discovery by the
Seller, or the date the Seller is notified by the party discovering or receiving
notice of such breach (whichever occurs earlier), the Seller will (i) cure or
cause to be cured such breach in all material respects, (ii) purchase or cause
to be purchased the affected Mortgage Loan at the applicable Purchase Price or
(iii) if within two years of the Closing Date, substitute or cause to be
substituted a qualifying Substitute Mortgage Loan in exchange for such Mortgage
Loan. The obligations of the Seller to cure, purchase or substitute (or to cause
the cure, purchase or substitution of) a qualifying Substitute Mortgage Loan
shall constitute the Purchaser's, the Certificate Trustee's and the
Certificateholder's sole and exclusive remedy under this Agreement or otherwise
respecting a breach of representations or warranties hereunder with respect to
the Mortgage Loans, except for the obligation of the Seller to indemnify the
Purchaser for such breach as set forth in and limited by Section 14 of the
Mortgage Loan Purchase Agreement.
Any cause of action against the Seller or relating to or arising out of
a breach by the Seller of any representations and warranties made herein shall
accrue as to any Mortgage Loan upon (i) discovery of such breach by the Seller
or notice thereof by the party discovering such Breach and (ii) failure by the
Seller to cure such breach, purchase such Mortgage Loan or substitute a
qualifying Substitute Mortgage Loan pursuant to the terms hereof.
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EXHIBIT D
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
To: [Custodian]
RE: Pooling and Servicing Agreement dated as of
September 1, 1998, among CMC Securities Corporation III, as
Seller, Norwest Bank Minnesota, National Association, as Master
Servicer and Custodian, and The First National Bank of Chicago,
as Certificate Trustee
In connection with the administration of the Mortgage Loans held by
you, as Custodian, 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:
-----------------------------
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<PAGE> 108
Date:
----------------------------
Custodian
Norwest Bank Minnesota, National Association
Please acknowledge the execution of the above request by your signature and date
below:
- ---------------------------- ----------------------------
Signature Date
Documents returned to Custodian:
- ---------------------------- ----------------------------
Custodian Date
Date: 19
----------------------, --
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By:
--------------------------------
Name:
--------------------------
Title:
-------------------------
D-2
<PAGE> 109
EXHIBIT E
FORM OF PURCHASER REPRESENTATION LETTER
[Purchaser Letterhead]
[Date]
[Issuer]
[Certificate Registrar]
and
[Seller #1]
Ladies and Gentlemen:
In connection with the purchase by [Purchaser] from [Seller #1] of
approximately $________________ aggregate principal amount of Pass-Through
Certificates, CMC Securities Corporation III Collateralized Mortgage
Obligations, Series 1998-2 ("the Certificates"), administered by CMC Securities
Corporation III, we hereby represent and covenant to you the following:
i. [Purchaser] is acquiring the Certificates for itself and not for any
other persons or entity.
ii. [Purchaser] is an "accredited investor" as defined in Rule 501(a) under
the Securities Act of 1933 and is experienced in making investments in
securities comparable to the Certificates.
iii. [Purchaser] has been furnished with all information regarding the
Certificates which it has requested from [Seller #1] or [Issuer].
iv. [Purchaser] has not offered or sold any of the Certificates to,
solicited offers to buy any Certificates from, or otherwise approached
or negotiated with respect to the Certificates with, any prospective
purchaser, or taken any other action which would result in a violation
of Section 5 of the Securities Act of 1933 or any applicable state
securities laws.
v. [Purchaser] is acquiring the Certificates for investment purposes and
not with a view to resale.
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<PAGE> 110
vi. [Purchaser] will not transfer, sell, pledge, encumber or otherwise
dispose of the Certificates in any manner which would result in a
violation of Section 5 of the Securities Act of 1933 or any applicable
state securities laws.[Purchaser] (i) is not an employee benefit plan,
trust or account, including an individual retirement account, that is
subject to the Employee Retirement Income Security Act of 1974, as
amended, or that is described in Section 4975(e)(1) of the Internal
Revenue Code of 1986, as amended, (any such plan, trust or account
being referred to as a "Plan") and (ii) has not acquired and is not
acquiring the Certificates with plan assets, within the meaning of 29
CFR 2510.3-101, of a Plan.
Very truly yours,
[Purchaser]
By:
--------------------------------
Name:
--------------------------
Title:
-------------------------
E-2
<PAGE> 111
EXHIBIT F
[RESERVED]
<PAGE> 112
EXHIBIT G
FORM OF INITIAL CERTIFICATION
CMC Securities Corporation III
2711 N. Haskell, Suite 900
Dallas, Texas 75204
Norwest Bank Minnesota, National Association
1015 10th Avenue S.E.
Mail Station 0031
Minneapolis, MN 55414
The First National Bank of Chicago
1 National Plaza, Suite 0126
Chicago, Illinois 60670
Re: Pooling and Servicing Agreement dated as of September
1, 1998, among CMC Securities Corporation III, as
Seller, Norwest Bank Minnesota, National Association,
as Master Servicer and Custodian, and The First
National Bank of Chicago, as Certificate Trustee
Mortgage Pass-Through Certificates, Series 1998-2
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
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<PAGE> 113
Agreement. The undersigned makes no representation that any documents specified
in subclauses (iv), (v) and (vii) of Section 2.01(c) 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 Pooling and Servicing Agreement.
By:
--------------------------------
Name:
--------------------------
Title:
-------------------------
G-2
<PAGE> 114
EXHIBIT H
FORM OF FINAL CERTIFICATION
CMC Securities Corporation III
2711 N. Haskell, Suite 900
Dallas, Texas 75204
The First National Bank of Chicago
1 National Plaza, Suite 0126
Chicago, Illinois 60670
Re: Pooling and Servicing Agreement dated as of September 1, 1998,
among CMC Securities Corporation III, as Seller, Norwest Bank
Minnesota, National Association, as Master Servicer and
Custodian and The First National Bank of Chicago, as Certificate
Trustee, Mortgage Pass-Through Certificates, Series 1998-2
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(c) 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.
H-1
<PAGE> 115
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
H-2
<PAGE> 116
EXHIBIT I
[RESERVED]
<PAGE> 117
EXHIBIT J
LIST OF MORTGAGE LOANS FOR WHICH MORTGAGE NOTES ARE LOST
(Intentionally Omitted)
