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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
JUNE 26, 1998
(DATE OF EARLIEST EVENT REPORTED)
PNC MORTGAGE SECURITIES CORP.
AS DEPOSITOR AND MASTER SERVICER UNDER A
POOLING AND SERVICING AGREEMENT
DATED AS OF JUNE 1, 1998
PROVIDING FOR THE ISSUANCE OF
$1,110,936,965
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-5
Delaware 333-50053 T/B/D
(State or other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) Number)
75 NORTH FAIRWAY DRIVE
VERNON HILLS, ILLINOIS 60061
(Address of principal executive offices)
Registrant's telephone number, including area code:
(847) 549-6500
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Item 1. CHANGES IN CONTROL OF REGISTRANT. Not applicable.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS. Not applicable.
Item 3. BANKRUPTCY OR RECEIVERSHIP. Not applicable.
Item 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT. Not applicable.
Item 5. OTHER EVENTS. Not applicable.
Item 6. RESIGNATION OF REGISTRANT'S DIRECTORS. Not applicable.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following exhibit is furnished herewith:
7.1 Pooling and Servicing Agreement between PNC
Mortgage Securities Corp., Depositor and Master Servicer,
and U.S. Bank National Association, Trustee, dated as of
June 1, 1998.
Item 8. CHANGE IN FISCAL YEAR. Not applicable.
Item 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not applicable.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Dated: June 26, 1998.
PNC MORTGAGE SECURITIES CORP.
(Registrant)
By: \s\ Thomas G. Lehmann
--------------------------------
Thomas G. Lehmann
Vice President
(Authorized Officer)
3
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EXHIBIT 7.1
EXECUTION VERSION
PNC MORTGAGE SECURITIES CORP.,
as Depositor and Master Servicer
and
U.S. BANK
NATIONAL ASSOCIATION,
as Trustee
POOLING AND SERVICING AGREEMENT
$1,119,809,454.60
PNC Mortgage Securities Corp.
Mortgage Pass-Through Certificates
Series 1998-5
Cut-Off Date: June 1, 1998
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TABLE OF CONTENTS
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ARTICLE I ................................................................ 6
Section 1.01. Definitions ......................................... 6
Accretion Directed Classes .............................................. 6
Aggregate Certificate Principal Balance .................................. 6
Appraised Value .......................................................... 6
Assignment of Proprietary Lease .......................................... 6
Authenticating Agent ..................................................... 7
Authorized Denomination .................................................. 7
Bankruptcy Coverage ...................................................... 7
Bankruptcy Coverage Initial Amount ....................................... 7
Bankruptcy Loss .......................................................... 7
Beneficial Holder ....................................................... 7
Book-Entry Certificates .................................................. 7
Business Day ............................................................. 7
Buydown Agreement ........................................................ 7
Buydown Fund ............................................................. 7
Buydown Fund Account ..................................................... 8
Buydown Loan ............................................................ 8
Certificate ............................................................. 8
Certificate Account ...................................................... 8
Certificateholder or Holder .............................................. 8
Certificate Group ....................................................... 9
Certificate Insurance Policy ............................................ 9
Certificate Insurer ...................................................... 9
Certificate Insurer Default .............................................. 9
Certificate Principal Balance ............................................ 9
Certificate Register and Certificate Registrar .......................... 10
Class .................................................................. 10
Class A Certificates ................................................... 10
Class A-L Regular Interests ............................................. 10
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Class B Certificates .................................................... 10
Class B-L Regular Interests ............................................. 10
Class C-B-1 Certificates ................................................ 10
Class C-B-1-L Regular Interest .......................................... 10
Class C-B-2 Certificates ................................................ 10
Class C-B-2-L Regular Interest .......................................... 10
Class C-B-3 Certificates ................................................ 11
Class C-B-3-L Regular Interest .......................................... 11
Class C-B-4 Certificates ................................................ 11
Class C-B-4-L Regular Interest .......................................... 11
Class C-B-5 Certificates ................................................ 11
Class C-B-5-L Regular Interest .......................................... 11
Class C-B-6 Certificates ................................................ 11
Class C-B-6-L Regular Interest .......................................... 11
Class P Certificates ................................................... 11
Class P-L Regular Interests ............................................. 11
Class P-M Regular Interests ............................................. 11
Class P Fraction ........................................................ 11
Class P Mortgage Loan ................................................... 11
Class X Certificates ................................................... 11
Class X-L Regular Interests ............................................. 11
Class X-M Regular Interests ............................................. 11
Class I-A-1 Certificates ................................................ 11
Class I-A-1-L Regular Interest .......................................... 11
Class I-B-1 Certificates ................................................ 12
Class I-B-1-L Regular Interest .......................................... 12
Class I-B-2 Certificates ................................................ 12
Class I-B-2-L Regular Interest ......................................... 12
Class I-B-3 Certificates ................................................ 12
Class I-B-3-L Regular Interest .......................................... 12
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Class I-B-4 Certificates ................................................ 12
Class I-B-4-L Regular Interest ......................................... 12
Class I-B-5 Certificates ................................................ 12
Class I-B-5-L Regular Interest ......................................... 12
Class I-B-6 Certificates ................................................ 12
Class I-B-6-L Regular Interest ......................................... 12
Class I-P Certificates ................................................ 12
Class I-P Fraction .................................................... 12
Class I-P-L Regular Interest ........................................... 12
Class I-P-M Regular Interest ........................................... 12
Class I-P Mortgage Loan ................................................ 13
Class I-X Certificates ................................................ 13
Class I-X-L Regular Interest ........................................... 13
Class I-X-M Regular Interest ........................................... 13
Class I-X Notional Amount ........................................... 13
Class II-A-1 Certificates ........................................... 13
Class II-A-1-L Regular Interest ...................................... 13
Class II-A-2 Certificates ........................................... 13
Class II-A-2-L Regular Interest ...................................... 13
Class II-A-3 Certificates ........................................... 13
Class II-A-3-L Regular Interest ...................................... 13
Class II-A-4 Certificates ........................................... 13
Class II-A-4-L Regular Interest.......................................... 13
Class II-A-5 Certificates ........................................... 14
Class II-A-5-L Regular Interest ...................................... 14
Class II-A-6 Certificates ........................................... 14
Class II-A-6-L Regular Interest ........................................ 14
Class II-A-7 Certificates ........................................... 14
Class II-A-7-L Regular Interest ...................................... 14
Class II-A-8 Certificates ........................................... 14
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Class II-A-8-L Regular Interest ...................................... 14
Class II-A-8 Accretion Termination Date ................................. 14
Class II-A-8 Accrual Amount ........................................... 14
Class II-A-9 Certificates ........................................... 14
Class II-A-9-L Regular Interest ...................................... 14
Class II-A-10 Certificates ........................................... 14
Class II-A-10-L Regular Interest ...................................... 14
Class II-A-11 Certificates ........................................... 14
Class II-A-11-L Regular Interest ...................................... 15
Class II-A-12 Certificates ........................................... 15
Class II-A-12 Notional Amount ........................................... 15
Class II-A-13 Certificates ........................................... 15
Class II-A-13-L Regular Interest ...................................... 15
Class II-A-14 Certificates ........................................... 15
Class II-A-14-L Regular Interest ...................................... 15
Class II-A-15 Certificates ........................................... 15
Class II-A-15-L Regular Interest ...................................... 15
Class II-A-16 Certificates ........................................... 15
Class II-A-16-L Regular Interest ...................................... 15
Class II-A-17 Certificates ........................................... 15
Class II-A-17-L Regular Interest ...................................... 15
Class II-A-18 Certificates ........................................... 15
Class II-A-18-L Regular Interest ...................................... 15
Class II-A-19 Certificates ........................................... 16
Class II-A-19-L Regular Interest ...................................... 16
Class II-P Certificates ................................................ 16
Class II-P Fraction ..................................................... 16
Class II-P-L Regular Interest ........................................... 16
Class II-P-M Regular Interest ........................................... 16
Class II-P Mortgage Loan ................................................ 16
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Class II-X Certificates ................................................ 16
Class II-X-L Regular Interest ........................................... 16
Class II-X-M Regular Interest ........................................... 16
Class II-X Notional Amount ........................................... 16
Class III-A-1 Certificates ........................................... 16
Class III-A-1-L Regular Interest ...................................... 16
Class III-P Certificates ................................................ 16
Class III-P Fraction ................................................ 17
Class III-P Mortgage Loan ........................................... 17
Class III-P-L Regular Interest ...................................... 17
Class III-P-M Regular Interest ...................................... 17
Class III-X Certificates ................................................ 17
Class III-X-L Regular Interest ...................................... 17
Class III-X-M Regular Interest ...................................... 17
Class III-X Notional Amount ........................................... 17
Class Notional Amount ................................................ 17
Class Principal Balance ................................................ 17
Class R-1 Certificates ................................................ 18
Class R-2 Certificates ................................................ 18
Class R-3 Certificates ................................................ 18
Class R-3-L .......................................................... 18
Class W Regular Interest ................................................ 18
Class Y Regular Interests ........................................... 18
Class Y-1 Regular Interest ........................................... 18
Class Y-1 Principal Distribution Amount ................................. 18
Class Y-2 Regular Interest ........................................... 19
Class Y-2 Principal Distribution Amount ................................. 19
Class Y Principal Reduction Amounts ................................. 19
Class Z Regular Interests ........................................... 21
Class Z Principal Reduction Amounts ................................. 21
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Class Z-1 Regular Interests ........................................... 21
Class Z-1 Principal Distribution Amount ................................. 21
Class Z-2 Regular Interests ........................................... 21
Class Z-2 Principal Distribution Amount ................................. 21
Clearing Agency ................................................ 21
Closing Date ..................................................... 22
Code ............................................................... 22
Combined Bankruptcy Coverage ........................................... 22
Combined Credit Support Depletion Date ................................. 22
Company .......................................................... 23
Compensating Interest ................................................ 23
Cooperative ..................................................... 23
Cooperative Apartment ................................................ 23
Cooperative Lease ................................................ 23
Cooperative Loans ..................................................... 23
Cooperative Stock ................................................ 23
Cooperative Stock Certificate ........................................... 24
Corporate Trust Office ................................................ 24
Corresponding Class ..................................................... 24
Curtailment .......................................................... 24
Curtailment Shortfall ................................................ 24
Custodial Account for P&I ............................................ 24
Custodial Account for Reserves ....................................... 25
Custodial Agreement ..................................................... 25
Custodian ............................................................ 25
Cut-Off Date ..................................................... 25
Deficiency Amount ..................................................... 25
Definitive Certificates ................................................ 26
Depositary Agreement ................................................ 26
Destroyed Mortgage Note ................................................ 26
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Determination Date ...................................................... 26
Disqualified Organization ............................................ 26
Distribution Date ................................................. 26
DTC ................................................................ 26
DTC Participant ................................................. 26
Due Date ........................................................... 26
Eligible Institution ................................................. 26
Eligible Investments ................................................. 27
ERISA ........................................................... 28
Event of Default ................................................. 28
Excess Liquidation Proceeds ............................................ 28
FDIC ................................................................ 28
FHA ................................................................ 28
FHLB ................................................................ 28
FHLMC ........................................................... 28
Fitch ........................................................... 28
FNMA ................................................................ 28
Fraud Coverage Initial Amount ............................................ 28
Fraud Loss ...................................................... 28
Group C-B Certificates ................................................. 29
Group C-B-L Regular Interests ............................................ 29
Group C-B Component Balance ............................................ 29
Group C-B Percentage ................................................. 29
Group C-B Subordinate Liquidation Amount ............................. 29
Group C-B Subordinate Principal Distribution Amount ................... 29
Group I Certificates ................................................. 30
Group I-B Certificates ................................................. 30
Group I-B-L Regular Interests ............................................ 30
Group I-L Regular Interests ............................................ 30
Group I Bankruptcy Coverage ............................................ 30
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Group I Credit Support Depletion Date ................................. 30
Group I Fraud Coverage ................................................ 30
Group I Loans ..................................................... 31
Group I Premium Rate Mortgage Loans ................................. 31
Group I Senior Certificates ........................................... 31
Group I-L Senior Regular Interests ...................................... 31
Group I Senior Liquidation Amount ...................................... 31
Group I Senior Percentage ........................................... 31
Group I Senior Prepayment Percentage ................................. 31
Group I Senior Principal Distribution Amount ............................ 32
Group I Special Hazard Coverage ...................................... 33
Group I Subordinate Liquidation Amount ................................. 33
Group I Subordinate Percentage ...................................... 33
Group I Subordinate Prepayment Percentage ............................ 33
Group I Subordinate Principal Distribution Amount ....................... 33
Group I Subordinate Principal Prepayments Distribution Amount ........ 34
Group II Adjusted Lockout Percentage ................................. 34
Group II Certificates ................................................ 34
Group II-A Certificates ................................................ 34
Group II-A-L Regular Interests ...................................... 34
Group II-L Regular Interests ........................................... 34
Group II Loans ..................................................... 34
Group II Lockout Liquidation Amount ................................. 34
Group II Lockout Priority Amount ...................................... 34
Group II Lockout Percentage ........................................... 35
Group II Lockout Prepayment Percentage ................................. 35
Group II Premium Rate Mortgage Loans ................................. 35
Group II Senior Liquidation Amount ...................................... 35
Group II Senior Percentage ........................................... 35
Group II Senior Prepayment Percentage or Group III Senior Prepayment
Percentage ........................................................... 35
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Group II Senior Principal Distribution Amount ...................... 37
Group II Subordinate Percentage ...................................... 37
Group II Subordinate Prepayment Percentage ............................ 37
Group II Subordinate Principal Prepayments Distribution Amount ........ 38
Group III Certificates ................................................ 38
Group III-L Regular Interests ........................................... 38
Group III Loans ................................................ 38
Group III Premium Rate Mortgage Loans ................................. 38
Group III Senior Liquidation Amount ................................. 38
Group III Senior Percentage ........................................... 38
Group III Senior Principal Distribution Amount ....................... 38
Group III Subordinate Percentage ...................................... 38
Group III Subordinate Prepayment Percentage ............................ 38
Group III Subordinate Principal Prepayments Distribution Amount ........ 38
Indirect DTC Participants ........................................... 39
Insured Certificates ................................................ 39
Insurance Agreement ..................................................... 39
Insurance Proceeds ..................................................... 39
Interest Distribution Amount ........................................... 39
Interest Transfer Amount ................................................ 39
Investment Account ..................................................... 39
Investment Depository ................................................ 40
Junior Subordinate Certificate ...................................... 40
Lender .......................................................... 40
Liquidated Mortgage Loan ................................................ 40
Liquidation Principal ................................................ 40
Liquidation Proceeds ................................................ 40
Loan Group ..................................................... 40
Loan Group I ..................................................... 40
Loan Group II ..................................................... 40
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Loan Group III ..................................................... 40
Loan-to-Value Ratio ..................................................... 41
Master Servicer ................................................ 41
Master Servicing Fee ................................................ 41
Monthly P&I Advance ..................................................... 41
Monthly Payment ................................................ 41
Mortgage .......................................................... 41
Mortgaged Property ..................................................... 41
Mortgage File ..................................................... 41
Mortgage Interest Rate ................................................ 43
Mortgage Loan Schedule ................................................ 43
Mortgage Loans ..................................................... 44
Mortgage Note ..................................................... 44
Mortgage Pool ..................................................... 44
Mortgagor .......................................................... 44
Nonrecoverable Advance ................................................ 44
Non-U.S. Person ................................................ 44
OTS ............................................................... 44
Officer's Certificate ................................................ 44
Opinion of Counsel ...................................................... 44
Original Value ..................................................... 44
Owner .......................................................... 45
Ownership Interest ..................................................... 45
Pass-Through Entity ..................................................... 45
Pass-Through Rate ..................................................... 45
Paying Agent ..................................................... 45
Payoff ........................................................... 45
Payoff Earnings ..................................................... 45
Payoff Interest ................................................ 45
Payoff Period ..................................................... 46
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Percentage Interest ..................................................... 46
Permitted Transferee ................................................ 46
Person .......................................................... 47
Planned Principal Balance ........................................... 47
Prepaid Monthly Payment ................................................ 47
Primary Insurance Policy ................................................ 47
Principal Balance ................................................ 47
Principal Payment ................................................ 48
Principal Payment Amount ................................................ 48
Principal Prepayment ................................................ 48
Principal Prepayment Amount ........................................... 48
Principal Transfer Amount ........................................... 48
Prior Period ..................................................... 48
Pro Rata Allocation ..................................................... 48
Purchase Obligation ..................................................... 49
Purchase Price ..................................................... 49
Qualified Insurer ................................................ 50
Rating Agency ..................................................... 50
Ratings .......................................................... 50
Realized Loss ..................................................... 50
Record Date ..................................................... 53
Regular Interest Group ................................................ 53
Regular Interest Group ........................................... 53
Regular Interests ................................................ 53
REMIC .......................................................... 54
REMIC Provisions ..................................................... 54
REMIC I .......................................................... 54
REMIC I Available Distribution Amount ................................. 54
REMIC I Distribution Amount ........................................... 55
REMIC I Regular Interest ................................................ 57
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REMIC I Trust Fund ..................................................... 57
REMIC II .......................................................... 58
REMIC II Available Distribution Amount ................................. 58
REMIC II Distribution Amount ........................................... 58
REMIC II Regular Interest ........................................... 72
REMIC II Trust Fund ..................................................... 72
REMIC III .......................................................... 72
REMIC III Available Distribution Amount ................................. 72
REMIC III Distribution Amount ........................................... 72
REMIC III Trust Fund ................................................ 74
Remittance Rate ................................................ 74
Residual Certificates ................................................ 74
Residual Distribution Amount ........................................... 74
Responsible Officer ..................................................... 75
S&P .................................................................... 75
Securities Act .......................................................... 75
Security Agreement ..................................................... 75
Selling and Servicing Contract ...................................... 75
Senior Certificates ................................................ 75
Senior Subordinate Certificates ...................................... 75
Servicer .......................................................... 75
Servicing Fee ..................................................... 75
Servicing Officer ................................................ 75
Special Hazard Coverage Initial Amount ................................. 76
Special Hazard Loss ..................................................... 76
Step Down Percentage ................................................ 76
Stripped Interest Rate ................................................ 76
Subordinate Certificates ................................................ 76
Subordination Level ..................................................... 77
Substitute Mortgage Loan ................................................ 77
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Targeted Principal Balance ........................................... 77
Tax Matters Person ..................................................... 77
Termination Date ................................................ 77
Termination Payment ..................................................... 77
Transfer .......................................................... 77
Transferee ..................................................... 78
Transferee Affidavit and Agreement ...................................... 78
Trustee .......................................................... 78
Uncollected Interest ................................................ 78
Uncompensated Interest Shortfall ...................................... 78
Underwriting Standards ................................................ 79
Uninsured Cause ................................................ 79
U.S. Person ..................................................... 79
VA ............................................................... 79
Withdrawal Date ................................................ 79
ARTICLE II Conveyance of the Trust Funds; REMIC Election and
Designations; Original Issuance of Certificates ......... 79
Section 2.01. Conveyance of REMIC I; REMIC Election and Designations ... 79
Section 2.02. Acceptance by Trustee .................................. 84
Section 2.03. Representations and Warranties of the Company
Concerning the Mortgage Loans ............................ 85
Section 2.04. Acknowledgment of Transfer of REMIC I Trust Fund;
Authentication of the Class R-1 Certificates ............. 90
Section 2.05. Conveyance of REMIC II; REMIC Election and Designations .. 90
Section 2.06. Acceptance by Trustee; Authentication of Certificates .... 93
Section 2.07. Conveyance of REMIC III; REMIC Election and Designations . 93
Section 2.08. Acceptance by Trustee; Authentication of Certificates ... 97
ARTICLE III Administration and Servicing of Mortgage Loans .......... 97
Section 3.01. The Company to Act as Master Servicer .................. 97
Section 3.02. Custodial Accounts ...................................... 99
Section 3.03. The Investment Account; Eligible Investments ............. 99
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Section 3.04. The Certificate Account ................................ 100
Section 3.05. Permitted Withdrawals from the Certificate Account, the
Investment Account and Custodial Accounts for P&I and of
Buydown Funds from the Buydown Fund Accounts ........... 101
Section 3.06. Maintenance of Primary Insurance Policies; Collections
Thereunder .......................................... 102
Section 3.07. Maintenance of Hazard Insurance ...................... 103
Section 3.08. Enforcement of Due-on-Sale Clauses; Assumption Agreements 103
Section 3.09. Realization Upon Defaulted Mortgage Loans ............ 104
Section 3.10. Trustee to Cooperate; Release of Mortgage Files ........ 106
Section 3.11. Compensation to the Master Servicer and the Servicers .. 107
Section 3.12. Reports to the Trustee; Certificate Account Statement .. 107
Section 3.13. Annual Statement as to Compliance ...................... 108
Section 3.14. Access to Certain Documentation and Information
Regarding the Mortgage Loans ............................ 108
Section 3.15. Annual Independent Public Accountants' Servicing Report.. 108
Section 3.16. Maintenance of Certificate Insurance Policy; Collections
Thereunder .......................................... 108
Section 3.17. [Reserved.] .......................................... 109
Section 3.18. [Reserved.] .......................................... 109
Section 3.19. [Reserved.] .......................................... 109
Section 3.20. Assumption or Termination of Selling and Servicing
Contracts by Trustee ................................. 109
ARTICLE IV Payments to Certificateholders; Payment of Expenses ..... 110
Section 4.01. Distributions to Holders of REMIC I Regular Interests
and Class R-1 Certificateholders ....................... 110
Section 4.02. Advances by the Master Servicer; Distribution Reports
to the Trustee ......................................... 110
Section 4.03. Nonrecoverable Advances ................................. 111
Section 4.04. Distributions to Certificateholders (other than Class
R-1 and Class R-2 Certificateholders) .................. 112
Section 4.05. Statements to Certificateholders ...................... 113
Section 4.06. Distributions to Holders of REMIC II Regular Interests
and Class R-2 Certificateholders ....................... 114
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ARTICLE V The Certificates .......................................... 114
Section 5.01. The Certificates ..................................... 114
Section 5.02. Certificates Issuable in Classes; Distributions of
Principal and Interest; Authorized Denominations ....... 120
Section 5.03. Registration of Transfer and Exchange of Certificates .. 120
Section 5.04. Mutilated, Destroyed, Lost or Stolen Certificates ....... 121
Section 5.05. Persons Deemed Owners ................................ 121
Section 5.06. Temporary Certificates ................................ 121
Section 5.07. Book-Entry for Book-Entry Certificates ................. 122
Section 5.08. Notices to Clearing Agency ........................... 123
Section 5.09. Definitive Certificates ................................ 123
Section 5.10. Office for Transfer of Certificates ................. 123
ARTICLE VI The Company and the Master Servicer ................. 124
Section 6.01. Liability of the Company and the Master Servicer ....... 124
Section 6.02. Merger or Consolidation of the Company, or the Master
Servicer ............................................... 124
Section 6.03. Limitation on Liability of the Company, the Master
Servicer and Others ................................. 124
Section 6.04. The Company and the Master Servicer not to Resign ....... 125
ARTICLE VII Default ................................................ 125
Section 7.01. Events of Default ..................................... 125
Section 7.02. Trustee to Act; Appointment of Successor ............ 128
Section 7.03. Notification to Certificateholders ...................... 128
ARTICLE VIII Concerning the Trustee ................................ 128
Section 8.01. Duties of Trustee ..................................... 128
Section 8.02. Certain Matters Affecting the Trustee ................. 130
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans ... 130
Section 8.04. Trustee May Own Certificates ........................... 131
Section 8.05. The Master Servicer to Pay Trustee's Fees and Expenses .. 131
Section 8.06. Eligibility Requirements for Trustee .................. 131
Section 8.07. Resignation and Removal of Trustee ...................... 131
Section 8.08. Successor Trustee ..................................... 132
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Section 8.09. Merger or Consolidation of Trustee ...................... 133
Section 8.10. Appointment of Co-Trustee or Separate Trustee ........ 133
Section 8.11. Authenticating Agents ................................ 134
Section 8.12. Paying Agents ........................................... 135
ARTICLE IX Termination ............................................ 135
Section 9.01. Termination Upon Repurchase by the Company or
Liquidation of All Mortgage Loans ...................... 135
Section 9.02. Additional Termination Requirements .................. 137
Section 9.03. Trusts Irrevocable ...................................... 138
ARTICLE X Miscellaneous Provisions ..................................... 139
Section 10.01. Amendment ............................................... 139
Section 10.02. Recordation of Agreement ................................ 140
Section 10.03. Limitation on Rights of Certificateholders ............ 140
Section 10.04. Access to List of Certificateholders ................. 141
Section 10.05. Governing Law .......................................... 141
Section 10.06. Notices ............................................... 141
Section 10.07. Severability of Provisions ........................... 142
Section 10.08. Counterpart Signatures ................................ 142
Section 10.09. Benefits of Agreement ................................ 142
Section 10.10. Notices and Copies to Rating Agencies ................. 142
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Exhibit A ....... Form of Certificates (other than Residual Certificates)
Exhibit B ....... Form of Class R-3 Certificates
Exhibit C ....... Form of Class R-1 and Class R-2 Certificates
Exhibit D ....... Mortgage Loan Schedule
Exhibit E ....... Selling And Servicing Contract
Exhibit F ....... Form Of Transferor Certificate For Junior
Subordinate Certificates
Exhibit G ....... Form Of Transferee's Agreement For Junior
Subordinate Certificates
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(continued)
Exhibit H ....... Form Of Additional Matter Incorporated Into The
Certificates
Exhibit I ....... Transferor Certificate
Exhibit J ....... Transferee Affidavit And Agreement
Exhibit K ....... Form of Certificate Insurance Policy
Exhibit L ....... Form Of Investment Letter
Exhibit M ....... Form of Trustee's Certification Pursuant to Section 2.02
Exhibit N ....... Officer's Certificate With Respect to ERISA Matters
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This Pooling and Servicing Agreement, dated and effective as of June 1,
1998 (this "Agreement"), is executed by and between PNC Mortgage Securities
Corp., as Depositor and Master Servicer (the "Company") and U.S. Bank
National Association, as Trustee (the "Trustee"). Capitalized terms used in
this Agreement and not otherwise defined have the meanings ascribed to such
terms in Article I hereof.
PRELIMINARY STATEMENT
---------------------
The Company at the Closing Date is the owner of the Mortgage Loans and
the other property being conveyed by it to the Trustee for inclusion in
REMIC I. On the Closing Date, the Company will acquire the REMIC I Regular
Interests and the Class R-1 Certificates from REMIC I as consideration for
its transfer to REMIC I of the Mortgage Loans and certain other assets and
will be the owner of the REMIC I Regular Interests and the Class R-1
Certificates.
Thereafter on the Closing Date, the Company will acquire the REMIC II
Regular Interests and the Class R-2 Certificates from REMIC II as consideration
for its transfer to REMIC II of the REMIC I Regular Interests and will be the
owner of the REMIC II Regular Interests and the Class R-2 Certificates.
Thereafter on the Closing Date, the Company will acquire the Certificates
(other than the Class R-1 and Class R-2 Certificates) from REMIC III as
consideration for its transfer to REMIC III of the REMIC II Regular Interests
and will be the owner of the Certificates. The Company has duly authorized the
execution and delivery of this Agreement to provide for (i) the conveyance to
the Trustee of the Mortgage Loans and the issuance to the Company of the REMIC
I Regular Interests and the Class R-1 Certificates representing in the
aggregate the entire beneficial ownership of REMIC I, (ii) the conveyance to
the Trustee of the REMIC I Regular Interests and the issuance to the Company
of the REMIC II Regular Interests and the Class R-2 Certificates representing
in the aggregate the entire beneficial ownership of REMIC II and (ii) the
conveyance to the Trustee by the Company of the REMIC II Regular Interests and
the issuance of the Certificates (other than the Class R-1 and Class R-2
Certificates) representing in the aggregate the entire beneficial interest of
REMIC III. All covenants and agreements made by the Company and the Trustee
herein with respect to the Mortgage Loans and the other property constituting
the assets of REMIC I are for the benefit of the Holders from time to time of
the REMIC I Regular Interests and the Class R-1 Certificates. All covenants
and agreements made by the Company and the Trustee herein with respect to the
REMIC I Regular Interests are for the benefit of the Holders from time to time
of the REMIC II Regular Interests and the Class R-2 Certificates. All
covenants and agreements made by the Company and the Trustee herein with
respect to the REMIC II Regular Interests are for the benefit of the Holders
from time to time of the Certificates (other than the Class R-1 and Class R-2
Certificates). The Company is entering into this Agreement, and the Trustee is
accepting the three separate trusts created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
The Certificates issued hereunder, other than the Junior Subordinate
Certificates, have been offered for sale pursuant to a Prospectus, dated June
24, 1998, and a Prospectus Supplement, dated June 24, 1998, of the Company
(together, the "Prospectus"). The Junior Subordinate Certificates have been
offered for sale pursuant to a Private Placement Memorandum, dated June 26,
1998. The REMIC I Trust Fund, the REMIC II Trust Fund and the REMIC III Trust
Fund created hereunder are collectively intended to be the "Trust" described
in the Prospectus and the Private Placement Memorandum and the Certificates
are intended to be the "Certificates" described therein. The following tables
set forth the designation, type of interest, initial Remittance Rate, initial
Class
1
<PAGE>
Principal Balance, initial Class Notional Amount and Last Scheduled
Distribution Date for the REMIC I Regular Interests and the Class R-1
Certificates, the REMIC II Regular Interests and the Class R-2 Certificates
and each Class of Certificates comprising the interests in REMIC III created
hereunder:
REMIC I Trust Fund
------------------
<TABLE>
<CAPTION>
Class Designation
for each REMIC I
Regular Interest Initial Class
and the Class R-1 Type of Remittance Principal Last Scheduled
Certificates Interest Rate (1) Balance Distribution Date*
- ----------------- -------- ---------- ------------- ------------------
<S> <C> <C> <C> <C>
Class Y-1 Regular 6.750% $4,052,765.20 July 25, 2028
Class Y-2 Regular 6.625% 594,901.31 July 25, 2028
Class Z-1 Regular 6.750% 835,626,209.80 July 25, 2028
Class Z-2 Regular 6.625% 118,315,019.69 July 25, 2028
Class W Regular 7.000% 157,559,176.00 June 25, 2028
Class I-X-M Regular 7.000% (2) -------------- June 25, 2028
Class II-X-M Regular 6.750% (2) -------------- July 25, 2028
Class III-X-M Regular 6.625% (2) -------------- July 25, 2028
Class I-P-M Regular (3) 411,123.27 June 25, 2028
Class II-P-M Regular (3) 2,000,207.99 July 25, 2028
Class III-P-M Regular (3) 1,250,051.14 July 25, 2028
Class R-1+ Residual 6.750% 50.00 July 25, 2028
</TABLE>
* The Distribution Date in the month the latest maturing Mortgage Loan
in the related Loan Group (or Loan Groups, as applicable) matures.
+ The Class R-1 Certificates are entitled to receive the applicable
Residual Distribution Amount and the Excess Liquidation Proceeds.
(1) Interest distributed to the REMIC I Regular Interests (other than the
Class P-M Regular Interests, which shall not be entitled to receive
any distributions of interest) and the Class R-1 Certificates on
each Distribution Date will have accrued at the applicable per
annum Remittance Rate on the Class Principal Balance outstanding
following the immediately prior Distribution Date (or with respect
to the first Distribution Date, as of the Closing Date).
(2) Each Class of the Class X-M Regular Interests will accrue interest on
the related Class Notional Amount. The Class X-M Regular Interests
will not be entitled to receive any distributions of principal.
(3) The Class P-M Regular Interests will not be entitled to receive any
distributions of interest.
As provided herein, with respect to REMIC I, the Company will cause an
election to be made on behalf of REMIC I to be treated for federal income tax
purposes as a REMIC. The REMIC I Regular Interests will be designated regular
interests in REMIC I and the Class R-1 Certificates will be designated the
sole class of residual interest in REMIC I, for purposes of the REMIC
Provisions.
REMIC II
--------
2
<PAGE>
<TABLE>
<CAPTION>
Class Designation
for each REMIC II
Regular Interest Initial Class
and the Class R-2 Type of Remittance Principal Last Scheduled
Certificates Interest Rate (1) Balance Distribution Date*
- ----------------- -------- ---------- ------------- ------------------
<S> <C> <C> <C> <C>
Class I-A-1-L Regular 7.000% $148,870,809.00 June 25, 2028
Class II-A-1-L Regular 6.750% 51,925,345.00 July 25, 2028
Class II-A-2-L Regular 6.750% 50,355,000.00 July 25, 2028
Class II-A-3-L Regular 6.750% 16,600,000.00 July 25, 2028
Class II-A-4-L Regular 6.750% 56,220,000.00 July 25, 2028
Class II-A-5-L Regular 6.750% 78,685,348.00 July 25, 2028
Class II-A-6-L Regular 7.000% 142,475,919.00 July 25, 2028
Class II-A-7-L Regular 6.750% 21,943,500.00 July 25, 2028
Class II-A-8-L Regular 6.750% 11,108,341.00 July 25, 2028
Class II-A-9-L Regular (3) 5,276,886.00 July 25, 2028
Class II-A-10-L Regular 6.750% 24,500,000.00 July 25, 2028
Class II-A-11-L Regular 6.750% 16,000,000.00 July 25, 2028
Class II-A-13-L Regular 6.750% 12,500,000.00 July 25, 2028
Class II-A-14-L Regular 6.750% 24,030,683.00 July 25, 2028
Class II-A-15-L Regular 6.750% 179,261,196.00 July 25, 2028
Class II-A-16-L Regular 6.750% 47,874,997.00 July 25, 2028
Class II-A-17-L Regular 6.750% 43,379,121.00 July 25, 2028
Class II-A-18-L Regular 6.750% 2,000,000.00 July 25, 2028
Class II-A-19-L Regular 6.750% 22,717,000.00 July 25, 2028
Class III-A-1-L Regular 6.625% 114,223,682.00 July 25, 2028
Class I-X-L Regular 7.000% (4) ------------- June 25, 2028
Class II-X-L Regular 6.750% (4) ------------- July 25, 2028
Class III-X-L Regular 6.625% (4) ------------- July 25, 2028
Class I-P-L Regular (3) 411,123.27 June 25, 2028
Class II-P-L Regular (3) 2,000,207.99 July 25, 2028
Class III-P-L Regular (3) 1,250,051.14 July 25, 2028
Class I-B-1-L Regular 6.750% 3,554,331.00 June 25, 2028
Class I-B-2-L Regular 6.750% 1,974,628.00 June 25, 2028
Class I-B-3-L Regular 6.750% 1,500,717.00 June 25, 2028
Class I-B-4-L Regular 6.750% 789,851.00 June 25, 2028
Class I-B-5-L Regular 6.750% 315,940.00 June 25, 2028
Class I-B-6-L Regular 6.750% 552,900.17 June 25, 2028
Class C-B-1-L Regular Variable (5) 18,274,943.00 July 25, 2028
Class C-B-2-L Regular Variable (5) 8,175,632.00 July 25, 2028
Class C-B-3-L Regular Variable (5) 3,847,356.00 July 25, 2028
Class C-B-4-L Regular Variable (5) 3,366,437.00 July 25, 2028
Class C-B-5-L Regular Variable (5) 1,442,758.00 July 25, 2028
Class C-B-6-L Regular Variable (5) 2,404,601.43 July 25, 2028
Class R-3-L Regular 6.750% 50.00 July 25, 2028
Class R-2+ Residual 6.750% 50.00 July 25, 2028
</TABLE>
3
<PAGE>
* The Distribution Date in the month the latest maturing Mortgage Loan
in the related Loan Group (or Loan Groups, as applicable) matures.
+ The Class R-2 Certificates are entitled to receive the applicable
Residual Distribution Amount.
(1) Interest distributed to the REMIC II Regular Interests and the Class
R-2 Certificates (other than the Class P-L and Class II-A-9-L Regular
Interests, which will not be entitled to receive any distributions
of interest) on each Distribution Date will have accrued at the
applicable per annum Remittance Rate on the Class Principal Balance
or Class Notional Amount outstanding following the immediately prior
Distribution Date (or with respect to the first Distribution Date,
as of the Closing Date).
(2) On each Distribution Date on or before the Class II-A-8 Accretion
Termination Date, an amount equal to the Class II-A-8 Accrual Amount
will be added to the Class II-A-8-L Principal Balance, and such amount
will be distributed as principal to certain Classes of Group II-A-L
Regular Interests and will not be distributed as interest to the Class
II-A-8-L Regular Interests.
(3) Each of the Class X-L Regular Interests will accrue interest on their
related Class Notional Amount. The Class X-L Regular Interests will
not be entitled to receive any distributions of principal.
(4) The Class P-L and Class II-A-9-L Regular Interests will not be entitled
to receive any distributions of interest.
(5) The Remittance Rate on the Group C-B-L Regular Interests shall equal, on
any Distribution Date, the average of the Remittance Rates on the Class
Y-1 and Class Y-2 Regular Interests, with such average weighted on the
basis of their respective Class Principal Balances.
As provided herein, with respect to REMIC II, the Company will cause an
election to be made on behalf of REMIC II to be treated for federal income tax
purposes as a REMIC. The REMIC II Regular Interests will be designated regular
interests in REMIC II and the Class R-2 Certificates will be designated the
sole class of residual interest in REMIC II, for purposes of the REMIC
Provisions.
REMIC III
---------
<TABLE>
<CAPTION>
Class Designation
for each of the
Certificates (other
than the Class R-1 Initial Class
and Class R-2 Type of Remittance Principal Last Scheduled
Certificates) Interest Rate (1) Balance Distribution Date*
- ----------------- -------- ---------- ------------- ------------------
<S> <C> <C> <C> <C>
Class I-A-1 Regular 7.000% $148,870,809.00 June 25, 2028
Class II-A-1 Regular 6.750% 51,925,345.00 July 25, 2028
Class II-A-2 Regular 6.750% 50,355,000.00 July 25, 2028
Class II-A-3 Regular 6.750% 16,600,000.00 July 25, 2028
Class II-A-4 Regular 6.750% 56,220,000.00 July 25, 2028
Class II-A-5 Regular 6.750% 78,685,348.00 July 25, 2028
Class II-A-6 Regular 7.000% 142,475,919.00 July 25, 2028
Class II-A-7 Regular 6.550% 21,943,500.00 July 25, 2028
Class II-A-8 Regular 6.750%(2) 11,108,341.00 July 25, 2028
Class II-A-9 Regular (3) 5,276,886.00 July 25, 2028
Class II-A-10 Regular 6.550% 24,500,000.00 July 25, 2028
Class II-A-11 Regular 6.300% 16,000,000.00 July 25, 2028
Class II-A-12 Regular 6.750%(4) ------------- July 25, 2028
Class II-A-13 Regular 6.300% 12,500,000.00 July 25, 2028
Class II-A-14 Regular 6.350% 24,030,683.00 July 25, 2028
Class II-A-15 Regular 6.750% 179,261,196.00 July 25, 2028
Class II-A-16 Regular 6.750% 47,874,997.00 July 25, 2028
Class II-A-17 Regular 6.750% 43,379,121.00 July 25, 2028
Class II-A-18 Regular 6.750% 2,000,000.00 July 25, 2028
Class II-A-19 Regular 6.750% 22,717,000.00 July 25, 2028
Class III-A-1 Regular 6.625% 114,223,682.00 July 25, 2028
Class I-X Regular 7.000% (5) -------------- June 25, 2028
Class II-X Regular 6.750% (5) -------------- July 25, 2028
Class III-X Regular 6.625% (5) -------------- June 25, 2028
Class I-P Regular (3) 411,123.27 June 25, 2028
Class II-P Regular (3) 2,000,207.99 July 25, 2028
Class III-P Regular (3) 1,250,051.14 July 25, 2028
Class I-B-1 Regular 6.750% 3,554,331.00 June 25, 2028
Class I-B-2 Regular 6.750% 1,974,628.00 June 25, 2028
Class I-B-3 Regular 6.750% 1,500,717.00 June 25, 2028
Class I-B-4 Regular 6.750% 789,851.00 June 25, 2028
Class I-B-5 Regular 6.750% 315,940.00 June 25, 2028
Class I-B-6 Regular 6.750% 552,900.17 June 25, 2028
Class C-B-1 Regular Variable (6) 18,274,943.00 July 25, 2028
Class C-B-2 Regular Variable (6) 8,175,632.00 July 25, 2028
Class C-B-3 Regular Variable (6) 3,847,356.00 July 25, 2028
Class C-B-4 Regular Variable (6) 3,366,437.00 July 25, 2028
Class C-B-5 Regular Variable (6) 1,442,758.00 July 25, 2028
Class C-B-6 Regular Variable (6) 2,404,601.43 July 25, 2028
Class R-3+ Residual 6.750% 50.00 July 25, 2028
</TABLE>
4
<PAGE>
* The Distribution Date in the month the latest maturing Mortgage Loan in
the related Loan Group (or Loan Groups, as applicable) matures.
+ The Class R-3 Certificates are entitled to receive the applicable
Residual Distribution Amount.
(1) Interest distributed to the Certificates (other than the Class P and
Class II-A-9 Certificates, which will not be entitled to receive any
distributions of interest) on each Distribution Date will have accrued
at the applicable per annum Remittance Rate on the Class Principal
Balance or Class Notional Amount outstanding following the immediately
prior Distribution Date (or with respect to the first Distribution
Date, as of the Closing Date).
(2) On each Distribution Date on or before the Class II-A-8 Accretion
Termination Date, an amount equal to the Class II-A-8 Accrual
Amount will be added to the Class II-A-8 Principal Balance, and
such amount will be distributed as principal to certain Classes
of Group II-A Certificates and will not be distributed as interest
to the Class II-A-8 Certificates.
(3) Each of the Class X Certificates will accrue interest on their related
Class Notional Amount. The Class X Certificates will not be entitled
to receive any distributions of principal.
(4) The Class II-A-12 Certificates will accrue interest on the Class II-A-12
Notional Amount. The Class II-A-12 Certificates will not be entitled to
receive any distributions of principal.
(5) The Class P and Class II-A-9 Certificates will not be entitled to
receive any distributions of interest.
(6) The Remittance Rate on the Group C-B Certificates shall equal the
Remittance Rate on the Corresponding Class of Group C-B-L Regular
Interests.
5
<PAGE>
As provided herein, with respect to REMIC III, the Company will cause an
election to be made on behalf of REMIC III to be treated for federal income
tax purposes as a REMIC. The Certificates (other than the Class R-1, Class
R-2 and Class R-3 Certificates) will be designated regular interests in REMIC
III and the Class R-3 Certificates will be designated the sole class of
residual interest in REMIC III, for purposes of the REMIC Provisions. As of
the Cut-Off Date, the Mortgage Loans have an aggregate Principal Balance of
$1,119,809,454.60 and the Certificates have an Aggregate Certificate Principal
Balance of $1,119,809,454.60.
W I T N E S S E T H :
---------------------
WHEREAS, the Company is a corporation duly organized and existing under
and by virtue of the laws of the State of Delaware and has full corporate
power and authority to enter into this Agreement and to undertake the
obligations undertaken by it herein;
WHEREAS, the Company is the owner of the Mortgage Loans identified in the
Mortgage Loan Schedule hereto having unpaid Principal Balances on the Cut-Off
Date as stated therein;
WHEREAS, the Company has been duly authorized to (i) create a trust
("REMIC I") to hold the Mortgage Loans and certain other property and
(ii) sell undivided beneficial ownership interests in REMIC I and in order
to do so is selling the REMIC I Regular Interests issued hereunder as
hereinafter provided;
WHEREAS, the Company has been duly authorized to (i) create a trust
("REMIC II") to hold the REMIC I Regular Interests and (ii) sell
undivided beneficial ownership interests in REMIC II and in order to
do so is selling the REMIC II Regular Interests issued hereunder as
hereinafter provided; and
WHEREAS, the Company has been duly authorized to (i) create a trust
("REMIC III") to hold the REMIC II Regular Interests and (ii) sell
undivided beneficial ownership interests in REMIC III and in order to
do so is selling the Certificates issued hereunder as hereinafter provided;
and
WHEREAS, the Trustee is a national banking association duly organized
and existing under the laws of the United States and has full power and
authority to enter into this Agreement.
NOW, THEREFORE, in order to declare the terms and conditions upon
which the Certificates are, and are to be, authenticated, issued and
delivered, and in consideration of the premises and of the purchase and
acceptance of the Certificates by the Holders thereof, the Company covenants
and agrees with the Trustee, for the equal and proportionate benefit of the
respective Holders from time to time of the Certificates, as follows:
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following
meanings:
6
<PAGE>
ACCRETION DIRECTED CLASSES: With respect to the Group II Certificates,
the Class II-A-6, Class II-A-8 and Class II-A-9 Certificates, as applicable,
and the Corresponding Classes of the REMIC I Regular Interests.
AGGREGATE CERTIFICATE PRINCIPAL BALANCE: At any given time, the sum
of the then current Class Principal Balances of the Certificates.
APPRAISED VALUE: The amount set forth in an appraisal made by or
for the mortgage originator in connection with its origination of each
Mortgage Loan.
ASSIGNMENT OF PROPRIETARY LEASE: With respect to a Cooperative
Loan, the assignment or mortgage of the related Cooperative Lease from
the Mortgagor to the originator of the Cooperative Loan.
AUTHENTICATING AGENT: Any authenticating agent appointed by the
Trustee pursuant to Section 8.11.
AUTHORIZED DENOMINATION: With respect to the Certificates (other
than the Class II-A-3, Class II-A-4, Class II-A-12, Class II-A-19,
Class X and Residual Certificates), an initial Certificate Principal
Balance equal to $25,000 and integral multiples of $1 in excess
thereof, except one Certificate of each Class of Class P Certificates
may be issued in a different amount. With respect to the Class II-A-3,
Class II-A-4 and Class II-A-19 Certificates, an initial Certificate
Principal Balance equal to $1,000 and integral multiples of $1 in
excess thereof. With respect to the Class X and Class II-A-12
Certificates, a Class Notional Amount as of the Cut-Off Date equal
to $100,000 and multiples of $1 in excess thereof, except that one
Certificate of each such Class may be issued in a different amount.
With respect to each Class of the Residual Certificates, one
Certificate with a Percentage Interest equal to 0.01% and one
Certificate with a Percentage Interest equal to 99.99%.
BANKRUPTCY COVERAGE: The Group I Bankruptcy Coverage and/or the Combined
Bankruptcy Coverage, as applicable.
BANKRUPTCY COVERAGE INITIAL AMOUNT: With respect to Loan Group I,
$100,000 and with respect to Loan Group II and Loan Group III, $276,396.
BANKRUPTCY LOSS: A loss on a Mortgage Loan arising out of (i) a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court
of competent jurisdiction in a case under the United States Bankruptcy Code,
other than any such reduction that arises out of clause (ii) of this
definition of "Bankruptcy Loss", including, without limitation, any such
reduction that results in a permanent forgiveness of principal, or (ii)
with respect to any Mortgage Loan, a valuation, by a court of competent
jurisdiction in a case under such Bankruptcy Code, of the related Mortgaged
Property in an amount less than the then outstanding Principal Balance of
such Mortgage Loan.
BENEFICIAL HOLDER: A Person holding a beneficial interest in any
Book-Entry Certificate as or through a DTC Participant or an Indirect
DTC Participant or a Person holding a beneficial interest in any Definitive
Certificate.
7
<PAGE>
BOOK-ENTRY CERTIFICATES: The Class A, Class X and Class P Certificates
(except the Class II-A-18 Certificates), beneficial ownership and
transfers of which shall be made through book entries as described
in Section 5.07.
BUSINESS DAY: Any day other than a Saturday, a Sunday, or a day on
which the Certificate Insurer (with respect to matters hereunder affecting
the Certificate Insurer) or banking institutions in Chicago, Illinois or
New York, New York are authorized or obligated by law or executive order
to be closed.
BUYDOWN AGREEMENT: An agreement between a Person and a Mortgagor
pursuant to which such Person has provided a Buydown Fund.
BUYDOWN FUND: A fund provided by the originator of a Mortgage Loan
or another Person with respect to a Buydown Loan which provides an amount
sufficient to subsidize regularly scheduled principal and interest payments
due on such Buydown Loan for a period. Buydown Funds may be (i) funded at
the par values of future payment subsidies, or (ii) funded in an amount
less than the par values of future payment subsidies, and determined by
discounting such par values in accordance with interest accruing on such
amounts, in which event they will be deposited in an account bearing
interest. Buydown Funds may be held in a separate Buydown Fund Account
or may be held in a Custodial Account for P&I or a Custodial Account
for Reserves and monitored by a Servicer.
BUYDOWN FUND ACCOUNT: A separate account or accounts created and
maintained pursuant to Section 3.02 (a) with the corporate trust department
of the Trustee or another financial institution approved by the Master
Servicer, (b) within FDIC insured accounts (or other accounts with comparable
insurance coverage acceptable to the Rating Agencies) created, maintained
and monitored by a Servicer or (c) in a separate non-trust account without
FDIC or other insurance in an Eligible Institution. Such account or accounts
may be non-interest bearing or may bear interest. In the event that a
Buydown Fund Account is established pursuant to clause (b) of the preceding
Sentence, amounts held in such Buydown Fund Account shall not exceed the
level of deposit insurance coverage on such account; accordingly, more
than one Buydown Fund Account may be established.
BUYDOWN LOAN: A Mortgage Loan for which the Mortgage Interest Rate
has been subsidized through a Buydown Fund provided at the time of
origination of such Mortgage Loan.
CERTIFICATE: Any one of the Group I, Group II, Group III, Group
C-B or Residual Certificates, issued pursuant to this Agreement,
executed by the Trustee and authenticated by or on behalf of the
Trustee hereunder in substantially one of the forms set forth in
Exhibit A, B and C hereto. The additional matter appearing in
Exhibit H shall be deemed incorporated into Exhibits A and B as
though set forth at the end of such Exhibits.
CERTIFICATE ACCOUNT: The separate trust account created and
maintained with the Trustee, the Investment Depository or any
other bank or trust company acceptable to the Rating Agencies
which is incorporated under the laws of the United States or
any state thereof pursuant to Section 3.04, which account shall
bear a designation clearly indicating that the funds deposited
therein are held in trust for the benefit of the Trustee on
behalf of the Certificateholders or any other account serving
a similar function acceptable to the Rating Agencies. Funds in
the Certificate Account in respect of the Mortgage Loans in
each of the Loan Groups and amounts withdrawn from the
Certificate
8
<PAGE>
Account attributable to each of such Loan Groups shall be
accounted for separately. Funds in the Certificate Account
may be invested in Eligible Investments and reinvestment
earnings thereon shall be paid to the Master Servicer as
additional servicing compensation. Funds deposited in the
Certificate Account (exclusive of the Master Servicing Fee)
shall be held in trust for the Certificateholders and for
the uses and purposes set forth in Section 3.04, Section
3.05, Section 4.01, Section 4.04 and Section 4.06.
CERTIFICATEHOLDER OR HOLDER: With respect to the
Certificates, the person in whose name a Certificate is
registered in the Certificate Register, except that, solely
for the purposes of giving any consent pursuant to this
Agreement, any Certificate registered in the name of the
Company, the Master Servicer or any affiliate thereof
shall be deemed not to be outstanding and the Percentage
Interest evidenced thereby shall not be taken into account
in determining whether the requisite percentage of
Percentage Interests necessary to effect any such consent
has been obtained; provided, that the Trustee may conclusively
rely upon an Officer's Certificate to determine whether any
Person is an affiliate of the Company or the Master Servicer.
For so long as no Certificate Insurer Default exists, the
Certificate Insurer shall be deemed to be the sole Holder
of all outstanding Insured Certificates, subject to Section
3.16; provided, that the Certificate Insurer shall have no
power without the consent of the Owner of each Certificate
affected thereby to: (i)reduce in any manner the amount of,
or delay the timing of, distributions of principal or interest
required to be made hereunder or reduce the Insured
Certificateholder's Percentage Interest, the Remittance Rate
or the Termination Payment with respect to any of the Insured
Certificates, (ii) reduce the percentage of Percentage Interests
specified in Section 10.01 which are required to amend this
Agreement, (iii) create or permit the creation of any lien
against any part of the REMIC I Trust Fund, the REMIC II Trust
Fund or the REMIC III Trust Fund, (iv) modify any provision in
any way which would permit an earlier retirement of the
Certificates, or (v) amend this definition of
"Certificateholder" or "Holder". With respect to the REMIC I
Regular Interests, the owner of the REMIC I Regular Interests,
which as of the Closing Date shall be the Trustee. With respect
to the REMIC II Regular Interests, the owner of the REMIC II
Regular Interests, which as of the Closing Date shall be the
Trustee.
CERTIFICATE GROUP: Any of the Group I, Group II, Group III
and Group C-B Certificates.
CERTIFICATE INSURANCE POLICY: The Certificate Guaranty
Insurance Policy No. 26869 issued by the Certificate Insurer
in respect of the Class II-A-3 Certificates, a copy of which
is attached hereto as Exhibit K.
CERTIFICATE INSURER: MBIA Insurance Corporation or its
successors in interest.
CERTIFICATE INSURER DEFAULT: The existence and continuance of any of
the following: (a) a failure by the Certificate Insurer to make a payment
required under the Certificate Insurance Policy in accordance with its
terms; (b) the entry of a decree or order of a court or agency having
jurisdiction in respect of the Certificate Insurer in an involuntary case
under any present or future Federal or state bankruptcy, insolvency or
similar law appointing a conservator or receiver or liquidator or other
similar official of the Certificate Insurer or of any substantial part
of its property, or the entering of an order for the winding up or
liquidation of the affairs of the Certificate Insurer and the continuance
of any such decree or order undischarged or unstayed and in force for a
period of 90 consecutive days; (c) the Certificate Insurer shall consent to
the appointment of a conservator
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<PAGE>
or receiver or liquidator or other similar official in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Certificate Insurer or of or relating to
all or substantially all of its property; or (d) the Certificate Insurer
shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of or otherwise voluntarily
commence a case or proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar statute, make an assignment for the benefit
of its creditors, or voluntarily suspend payment of its obligations.
CERTIFICATE PRINCIPAL BALANCE: For each Certificate of any Class, the
portion of the related Class Principal Balance, if any, represented by such
Certificate.
CERTIFICATE REGISTER AND CERTIFICATE REGISTRAR: The register maintained
and the registrar appointed, respectively, pursuant to Section 5.03.
CLASS: All REMIC I Regular Interests or the Class R-1 Certificates
having the same priority and rights to payments on the Mortgage Loans from
the REMIC I Available Distribution Amount, all REMIC II Regular Interests
or the Class R-2 Certificates having the same priority and rights to
payments on the REMIC I Regular Interests from the REMIC II Available
Distribution Amount and all Certificates (other than the Class R-1 and
Class R-2 Certificates) having the same priority and rights to payments on
the REMIC II Regular Interests from the REMIC III Available Distribution
Amount, as applicable, which Certificates, REMIC I Regular Interests and
REMIC II Regular Interests, as applicable, shall be designated as a separate
Class, and which, in the case of the Certificates, shall be set forth in the
applicable forms of Certificates attached hereto as Exhibits A, B and C.
Each Class of REMIC I Regular Interests and the Class R-1 Certificates
shall be entitled to receive the amounts allocated to such Class pursuant
to the definition of "REMIC I Distribution Amount" only to the extent of the
REMIC I Available Distribution Amount for such Distribution Date remaining
after distributions in accordance with prior clauses of the definition of
"REMIC I Distribution Amount", each Class of REMIC II Regular Interests and
the Class R-2 Certificates shall be entitled to receive the amounts
allocated to such Class pursuant to the definition of "REMIC II Distribution
Amount" only to the extent of the REMIC II Available Distribution Amount for
such Distribution Date remaining after distributions in accordance with
prior clauses of the definition of "REMIC II Distribution Amount", and each
Class of Certificates (other than the Class R-1 and Class R-2 Certificates)
shall be entitled to receive the amounts allocated to such Class pursuant to
the definition of "REMIC III Distribution Amount" only to the extent of the
REMIC III Available Distribution Amount for such Distribution Date remaining
after distributions in accordance with prior clauses of the definition of
"REMIC III Distribution Amount."
CLASS A CERTIFICATES: The Class I-A-1, Group II-A and Class III-A-1
Certificates.
CLASS A-L REGULAR INTERESTS: The Class I-A-1-L, Group II-A-L and Class
III-A-1-L Regular Interests.
CLASS B CERTIFICATES: The Group I-B and Group C-B Certificates.
CLASS B-L REGULAR INTERESTS: The Group I-B-L and Group C-B-L Regular
Interests.
10
<PAGE>
CLASS C-B-1 CERTIFICATES: The Certificates designated as "Class C-B-1"
on the face thereof in substantially the form attached hereto as Exhibit
A-C-B-1.
CLASS C-B-1-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II
Regular Interest.
CLASS C-B-2 CERTIFICATES: The Certificates designated as "Class C-B-2"
on the face thereof in substantially the form attached hereto as Exhibit
A-C-B-2.
CLASS C-B-2-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II
Regular Interest.
CLASS C-B-3 CERTIFICATES: The Certificates designated as "Class C-B-3"
on the face thereof in substantially the form attached hereto as Exhibit
A-C-B-3.
CLASS C-B-3-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II
Regular Interest.
CLASS C-B-4 CERTIFICATES: The Certificates designated as "Class C-B-4" on
the face thereof in substantially the form attached hereto as Exhibit
A-C-B-4.
CLASS C-B-4-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II
Regular Interest.
CLASS C-B-5 CERTIFICATES: The Certificates designated as "Class C-B-5"
on the face thereof in substantially the form attached hereto as Exhibit
A-C-B-5.
CLASS C-B-5-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II
Regular Interest.
CLASS C-B-6 CERTIFICATES: The Certificates designated as "Class C-B-6"
on the face thereof in substantially the form attached hereto as Exhibit
A-C-B-6.
CLASS C-B-6-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II
Regular Interest.
CLASS P CERTIFICATES: The Class I-P, Class II-P and Class III-P
Certificates.
CLASS P-L REGULAR INTERESTS: The Class I-P-L, Class II-P-L and Class
III-P-L Regular Interests.
CLASS P-M REGULAR INTERESTS: The Class I-P-M, Class II-P-M and Class
III-P-M Regular Interests.
CLASS P FRACTION: Any of the Class I-P, Class II-P or Class III-P
Fractions, as applicable.
CLASS P MORTGAGE LOAN: Any of the Class I-P, Class II-P or Class III-P
Mortgage Loans.
CLASS X CERTIFICATES: The Class I-X, Class II-X and Class III-X
Certificates.
11
CLASS X-L REGULAR INTERESTS: The Class I-X-L, Class II-X-L and Class
III-X-L Regular Interests.
CLASS X-M REGULAR INTERESTS: The Class I-X-M, Class II-X-M and Class
III-X-M Regular Interests.
CLASS I-A-1 CERTIFICATES: The Certificates designated as "Class I-A-1"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-A-1.
CLASS I-A-1-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II
Regular Interest.
CLASS I-B-1 CERTIFICATES: The Certificates designated as "Class I-B-1"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-B-1.
CLASS I-B-1-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II
Regular Interest.
CLASS I-B-2 CERTIFICATES: The Certificates designated as "Class I-B-2"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-B-2.
CLASS I-B-2-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II
Regular Interest.
CLASS I-B-3 CERTIFICATES: The Certificates designated as "Class I-B-3"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-B-3.
CLASS I-B-3-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II
Regular Interest.
CLASS I-B-4 CERTIFICATES: The Certificates designated as "Class I-B-4"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-B-4.
CLASS I-B-4-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II
Regular Interest.
CLASS I-B-5 CERTIFICATES: The Certificates designated as "Class I-B-5"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-B-5.
CLASS I-B-5-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II
Regular Interest.
CLASS I-B-6 CERTIFICATES: The Certificates designated as "Class I-B-6"
on the face thereof in substantially the form attached hereto as Exhibit
A-I-B-6.
CLASS I-B-6-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II
Regular Interest.
12
<PAGE>
CLASS I-P CERTIFICATES: The Certificates designated as "Class I-P" on the
face thereof in substantially the form attached hereto as Exhibit A-I-P.
CLASS I-P FRACTION: For each Class I-P Mortgage Loan, a fraction, the
numerator of which is 7.000% less the Pass-Through Rate on such Class I-P
Mortgage Loan and the denominator of which is 7.000%.
CLASS I-P-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS I-P-M REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest.
CLASS I-P MORTGAGE LOAN: Any Group I Loan with a Pass-Through Rate of
less than 7.000% per annum.
CLASS I-X CERTIFICATES: The Certificates designated as "Class I-X" on the
face thereof in substantially the form attached hereto as Exhibit A-I-X.
CLASS I-X-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS I-X-M REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest.
CLASS I-X NOTIONAL AMOUNT: With respect to any Distribution Date, the
product of (x) the aggregate scheduled principal balance, as of the second
preceding Due Date after giving effect to payments scheduled to be received as
of such Due Date, whether or not received, or with respect to the initial
Distribution Date, as of the Cut-Off Date, of the Group I Premium Rate
Mortgage Loans and (y) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Group I Premium Rate Mortgage
Loans as of such Due Date and the denominator of which is 7.000%.
CLASS II-A-1 CERTIFICATES: The Certificates designated as "Class II-A-1"
on the face thereof in substantially the form attached hereto as Exhibit
A-II-A-1.
CLASS II-A-1-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-2 CERTIFICATES: The Certificates designated as "Class II-A-2"
on the face thereof in substantially the form attached hereto as Exhibit
A-II-A-2.
CLASS II-A-2-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-3 CERTIFICATES: The Certificates designated as "Class II-A-3"
on the face thereof in substantially the form attached hereto as Exhibit
A-II-A-3.
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<PAGE>
CLASS II-A-3-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-3 REIMBURSEMENT AMOUNT: The sum of (a) all amounts previously
paid by the Certificate Insurer under the Certificate Insurance Policy which
have not been previously reimbursed and (b) interest on the foregoing at the
Late Payment Rate from the date such amount was paid by the Certificate
Insurer until paid in full.
CLASS II-A-4 CERTIFICATES: The Certificates designated as "Class II-A-4"
on the face thereof in substantially the form attached hereto as Exhibit
A-II-A-4.
CLASS II-A-4-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-5 CERTIFICATES: The Certificates designated as "Class II-A-5"
on the face thereof in substantially the form attached hereto as Exhibit
A-II-A-5.
CLASS II-A-5-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-6 CERTIFICATES: The Certificates designated as "Class II-A-6"
on the face thereof in substantially the form attached hereto as Exhibit
A-II-A-6.
CLASS II-A-6-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-7 CERTIFICATES: The Certificates designated as "Class II-A-7"
on the face thereof in substantially the form attached hereto as Exhibit
A-II-A-7.
CLASS II-A-7-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-8 CERTIFICATES: The Certificates designated as "Class II-A-8"
on the face thereof in substantially the form attached hereto as Exhibit
A-II-A-8.
CLASS II-A-8-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-8 ACCRETION TERMINATION DATE: The earlier to occur of (i) the
Distribution Date on which the Class II-A-6 Principal Balance and the Class
II-A-9 Principal Balance have each been reduced to zero and (ii) the Combined
Credit Support Depletion Date.
CLASS II-A-8 ACCRUAL AMOUNT: On any Distribution Date, an amount equal to
the amount allocable to the Class II-A-8-L Regular Interests on such
Distribution Date pursuant to the definition of "Interest Distribution
Amount", without regard to the proviso at the end of the first sentence of
such definition. Notwithstanding the foregoing, for any Distribution Date
after the Class II-A-8 Accretion Termination Date, the Class II-A-8 Accrual
Amount shall be zero.
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<PAGE>
CLASS II-A-9 CERTIFICATES: The Certificates designated as "Class II-A-9"
on the face thereof in substantially the form attached hereto as Exhibit
A-II-A-9.
CLASS II-A-9-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-10 CERTIFICATES: The Certificates designated as "Class
II-A-10" on the face thereof in substantially the form attached hereto as
Exhibit A-II-A-10.
CLASS II-A-10-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-11 CERTIFICATES: The Certificates designated as "Class
II-A-11" on the face thereof in substantially the form attached hereto as
Exhibit A-II-A-11.
CLASS II-A-11-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-12 CERTIFICATES: The Certificates designated as "Class
II-A-12" on the face thereof in substantially the form attached hereto as
Exhibit A-II-A-12.
CLASS II-A-12 NOTIONAL AMOUNT: For any Distribution Date, the sum of (i)
the aggregate Class Principal Balance of the Class II-A-7 and Class II-A-10
Certificates immediately prior to such Distribution Date multiplied by 20/675,
(ii) the aggregate Class Principal Balance of the Class II-A-11 and Class
II-A-13 Certificates immediately prior to such Distribution Date multiplied by
45/675 and (iii) the Class II-A-14 Principal Balance immediately prior to such
Distribution Date multiplied by 40/675.
CLASS II-A-13 CERTIFICATES: The Certificates designated as "Class
II-A-13" on the face thereof in substantially the form attached hereto as
Exhibit A-II-A-13.
CLASS II-A-13-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-14 CERTIFICATES: The Certificates designated as "Class
II-A-14" on the face thereof in substantially the form attached hereto as
Exhibit A-II-A-14.
CLASS II-A-14-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-15 CERTIFICATES: The Certificates designated as "Class
II-A-15" on the face thereof in substantially the form attached hereto as
Exhibit A-II-A-15.
CLASS II-A-15-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-16 CERTIFICATES: The Certificates designated as "Class
II-A-16" on the face thereof in substantially the form attached hereto as
Exhibit A-II-A-16.
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<PAGE>
CLASS II-A-16-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-17 CERTIFICATES: The Certificates designated as "Class
II-A-17" on the face thereof in substantially the form attached hereto as
Exhibit A-II-A-17.
CLASS II-A-17-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-18 CERTIFICATES: The Certificates designated as "Class
II-A-18" on the face thereof in substantially the form attached hereto as
Exhibit A-II-A-18.
CLASS II-A-18-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-A-19 CERTIFICATES: The Certificates designated as "Class
II-A-19" on the face thereof in substantially the form attached hereto as
Exhibit A-II-A-19.
CLASS II-A-19-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-P CERTIFICATES: The Certificates designated as "Class II-P" on
the face thereof in substantially the form attached hereto as Exhibit A-II-P.
CLASS II-P FRACTION: For each Class II-P Mortgage Loan, a fraction, the
numerator of which is 6.750% less the Pass-Through Rate on such Class II-P
Mortgage Loan and the denominator of which is 6.750%.
CLASS II-P-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-P-M REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest.
CLASS II-P MORTGAGE LOAN: Any Group II Loan with a Pass-Through Rate of
less than 6.750% per annum.
CLASS II-X CERTIFICATES: The Certificates designated as "Class II-X" on
the face thereof in substantially the form attached hereto as Exhibit A-II-X.
CLASS II-X-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS II-X-M REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest.
CLASS II-X NOTIONAL AMOUNT: With respect to any Distribution Date, the
product of (x) the aggregate scheduled principal balance, as of the second
preceding Due Date after giving effect to payments
16
<PAGE>
scheduled to be received as of such Due Date, whether or not received, or with
respect to the initial Distribution Date, as of the Cut-Off Date, of the Group
II Premium Rate Mortgage Loans and (y) a fraction, the numerator of which is
the weighted average of the Stripped Interest Rates for the Group II Premium
Rate Mortgage Loans as of such Due Date and the denominator of which is
6.750%.
CLASS III-A-1 CERTIFICATES: The Certificates designated as "Class
III-A-1" on the face thereof in substantially the form attached hereto as
Exhibit A-III-A-1.
CLASS III-A-1-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS III-P CERTIFICATES: The Certificates designated as "Class III-P" on
the face thereof in substantially the form attached hereto as Exhibit A-III-P.
Class III-P Fraction: For each Class III-P Mortgage Loan, a fraction, the
numerator of which is 6.625% less the Pass-Through Rate on such Class III-P
Mortgage Loan and the denominator of which is 6.625%.
CLASS III-P MORTGAGE LOAN: Any Group III Loan with a Pass-Through Rate of
less than 6.625% per annum.
CLASS III-P-L REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS III-P-M REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest.
CLASS III-X CERTIFICATES: The Certificates designated as "Class III-X" on
the face thereof in substantially the form attached hereto as Exhibit A-III-X.
Class III-X-L Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC II which constitutes a REMIC II Regular
Interest.
CLASS III-X-M REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest.
CLASS III-X NOTIONAL AMOUNT: With respect to any Distribution Date, the
product of (x) the aggregate scheduled principal balance, as of the second
preceding Due Date after giving effect to payments scheduled to be received as
of such Due Date, whether or not received, or with respect to the initial
Distribution Date, as of the Cut-Off Date, of the Group III Premium Rate
Mortgage Loans and (y) a fraction, the numerator of which is the weighted
average of the Stripped Interest Rates for the Group III Premium Rate Mortgage
Loans as of such Due Date and the denominator of which is 6.625%.
CLASS NOTIONAL AMOUNT: With respect to any of the Class II-A-12 and
Class X Certificates and the Class X-L and Class X-M Regular Interests, the
related notional amount for any such Class, as specified herein (i.e. the
"Class Notional Amount" for the Class I-X Certificates, the Class I-X-L and
the Class I-X-M Regular Interests is the Class I-X Notional Amount).
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<PAGE>
CLASS PRINCIPAL BALANCE: For any Class of Certificates and for any Class
of Regular Interests, the applicable initial Class Principal Balance therefor
set forth in the Preliminary Statement hereto, corresponding to the rights of
such Class in payments of principal due to be passed through to
Certificateholders or the Holders of the Regular Interests from principal
payments on the Mortgage Loans, the REMIC I Regular Interests or the REMIC II
Regular Interests, as applicable, as reduced from time to time by (x)
distributions of principal to Certificateholders or the Holders of the Regular
Interests of such Class (including, with respect to the Accretion Directed
Classes, the portions of the Class II-A-8 Accrual Amount distributed to such
Classes of Certificates and Regular Interests) and (y) the portion of Realized
Losses allocated to the Class Principal Balance of such Class pursuant to the
definition of "Realized Loss" with respect to a given Distribution Date. For
any Distribution Date, the reduction of the Class Principal Balance of any
Class of Certificates and Regular Interests pursuant to the definition of
"Realized Loss" shall be deemed effective prior to the determination and
distribution of principal on such Class pursuant to the definition of "REMIC I
Distribution Amount", "REMIC II Distribution Amount" and "REMIC III
Distribution Amount". In addition to the foregoing, on each Distribution Date
on or before the Class II-A-8 Accretion Termination Date, the Class II-A-8-L
and Class II-A-8 Principal Balance will be increased by the Class II-A-8
Accrual Amount for such Distribution Date. Notwithstanding the foregoing, any
amounts distributed in respect of losses pursuant to paragraphs (I)(a)(vi) or
(I)(d)(ii) of the definition of "REMIC II Distribution Amount" shall not cause
a further reduction in the Class Principal Balances of the Class P-L Regular
Interests or the Class P Certificates. The Class Principal Balance for the
Class I-A-1 Certificates shall be referred to as the "Class I-A-1 Principal
Balance", the Class Principal Balance for the Class I-A-1-L Regular Interests
shall be referred to as the "Class I-A-1-L Principal Balance" and so on. The
Class Principal Balance for the Class X and Class II-A-12 Certificates and for
the Class X-L Regular Interests shall be zero. Exclusively for the purpose of
determining any subrogation rights of the Certificate Insurer arising under
Section 3.16 hereof, "Class Principal Balance" of the Class II-A-3
Certificates shall not be reduced by the amount of any payments made by the
Certificate Insurer in respect of principal on such Certificates under the
Certificate Insurance Policy, except to the extent such payments have been
reimbursed to the Certificate Insurer pursuant to the provisions of this
Agreement.
CLASS R-1 CERTIFICATES: The Certificates designated as "Class R-1" on the
face thereof in substantially the form attached hereto as Exhibit C, which
have been designated as the single class of "residual interest" in REMIC I
pursuant to Section 2.01.
CLASS R-2 CERTIFICATES: The Certificates designated as "Class R-2" on the
face thereof in substantially the form attached hereto as Exhibit C, which
have been designated as the single class of "residual interest" in REMIC II
pursuant to Section 2.05.
CLASS R-3 CERTIFICATES: The Certificates designated as "Class R-3" on the
face thereof in substantially the form attached hereto as Exhibit B, which
have been designated as the single class of "residual interest" in REMIC III
pursuant to Section 2.07.
CLASS R-3-L: The uncertificated partial undivided beneficial ownership
interest in REMIC II which constitutes a REMIC II Regular Interest.
CLASS W REGULAR INTEREST: The uncertificated partial undivided beneficial
ownership interest in REMIC I which constitutes a REMIC I Regular Interest.
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<PAGE>
CLASS Y REGULAR INTERESTS: The Class Y-1 and Class Y-2 Regular Interests.
CLASS Y-1 REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest.
CLASS Y-1 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, the
excess, if any, of the Class Y-1 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to
the Class Y-1 Regular Interests on such Distribution Date.
CLASS Y-2 REGULAR INTEREST: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest.
CLASS Y-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, the
excess, if any, of the Class Y-2 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to
the Class Y-2 Regular Interests on such Distribution Date.
CLASS Y PRINCIPAL REDUCTION AMOUNTS: For any Distribution Date, the
amounts by which the Class Principal Balances of the Class Y-1 and Class Y-2
Regular Interests, respectively, will be reduced on such Distribution Date by
the allocation of Realized Losses and the distribution of principal,
determined as follows:
For purposes of the succeeding formulas the following symbols shall have the
meanings set forth below:
Y1 = the Class Principal Balance of the Class Y-1 Regular Interests after
distributions on the prior Distribution Date.
Y2 = the Class Principal Balance of the Class Y-2 Regular Interests after
distributions on the prior Distribution Date.
DY1 = the Class Y-1 Principal Reduction Amount.
DY2 = the Class Y-2 Principal Reduction Amount.
P1 = the aggregate of the Class Principal Balances of the Class Y-1 and
Class Z-1 Regular Interests after distributions on the prior
Distribution Date.
P2 = the aggregate of the Class Principal Balances of the Class Y-2 and
Class Z-2 Regular Interests after distributions on the prior
Distribution Date.
DP1 = the aggregate of the Class Y-1 and Class Z-1 Principal Reduction
Amounts.
DP2 = the aggregate of the Class Y-2 and Class Z-2 Principal Reduction
Amounts.
a = .005
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<PAGE>
g = a fraction whose numerator is the Group C-B Component Balance for
Loan Group II after giving effect to allocations of Realized Losses
and distributions to be made on the Distribution Date and whose
denominator is the Group C-B Component Balance for Loan Group III
after giving effect to allocations of Realized Losses and
distributions to be made on the Distribution Date. g is a
non-negative number unless its denominator is zero, in which event
it is undefined.
If g is zero, DY1 = Y1 and DY2 = aDP2.
If g is undefined, DY2 = Y2 and DY1 = aDP1.
In the remaining situations, DY1 and DY2 shall be defined as follows:
(A) If Y1 - a(P1 - DP1)(3)0, Y2- a(P2 - DP2)(3) 0, and g(P2 - (DP2) < (P1 -
DP1), DY1 = Y1 - ag(P2 - DP2) and DY2 = Y2 - a(P2 - DP2).
(B) If Y1 - a(P1 - DP1)(3) 0, Y2 - a(P2 - DP2)(3) 0, and g(P2 - DP2)(3) (P1 -
DP1), DY1 = Y1 - a(P1 - DP1) and DY2 = Y2 - (a/g)(P1 - DP1).
(C) If Y1 - a(P1 - DP1) <0, Y2 - a(P2 - DP2)(3) 0, and Y2 - a(P2 - DP2)(3)Y2
- (Y1/g), DY1 = Y1 - ag(P2 - DP2) and DY2 = Y2 - a(P2 - DP2).
(D) If Y1 - a(P1 - DP1)<0, Y2-(Y1/g)(3)0, and Y2 - a(P2 - DP2)(3)Y2 -
(Y1/g), DY1 = 0 and DY2 = Y2 - (Y1/g).
(E) If Y2 - a(P2 - DP2) <0, Y2 - (Y1/g)<0, and Y1 - a(P1 - DP1)(3) Y1 -
(gY2), DY1 = Y1 - (gY2) and DY2 = 0.
(F) If Y2 - a(P2 - DP2)<0, Y1 - a(P1 - DP1)(3) 0, and Y1 - a(P1 - DP1)(3) Y1
- (gY2), DY1 = Y1 - a(P1 - DP1) and DY2 = Y2 - (a/g)(P1 - DP1).
The purpose of the foregoing definitional provisions together with the related
provisions allocating Realized Losses and defining the Class Y-1, Class Y-2,
Class Z-1 and Class Z-2 Principal Distribution Amounts is to accomplish the
following goals in the following order of priority:
1. Making the ratio of the Class Y-1 Principal Balance to the Class
Y-2 Principal Balance equal to the ratio of the Group C-B Component
Balance for Loan Group II to the Group C-B Component Balance for
Loan Group III, in each case after giving effect to the allocations
of Realized Losses and the distributions to be made through the end
of the Distribution Date to which such provisions relate, and
assuring that each of the Class Y-1, Class Y-2, Class Z-1 and Class
Z-2 Principal Reduction Amounts is greater than or equal to zero for
such Distribution Date;
2. Making the Class Y-1 Principal Balance less than or equal to 0.005
of the sum of the Class Y-1 and Class Z-1 Principal Balances, and
making the Class Y-2 Principal Balance less than or equal to 0.005
of the sum of the Class Y-2 and Class Z-2 Principal Balances, in
each case after giving effect to the allocations of Realized Losses
and the
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distributions to be made through the end of the Distribution Date
to which such provisions relate; and
3. Making the larger of (a) the fraction whose numerator is the Class
Y-1 Principal Balance and whose denominator is the sum of the Class
Y-1 and Class Z-1 Principal Balances and (b) the fraction whose
numerator is the Class Y-2 Principal Balance and whose denominator
is the sum of the Class Y-2 and Class Z-2 Principal Balances as
large as possible while remaining less than or equal to 0.005.
In the event of a failure of the definition of Class Y-1 and Class Y-2
Principal Reduction Amounts to accomplish both of goals 1 and 2 above, the
amounts thereof should be adjusted so as to accomplish such goals within the
requirement that each of the Class Y-1 Principal Reduction Amount and the
Class Y-2 Principal Reduction Amount must be less than or equal to the sum of
(a) the principal portion of Realized Losses to be allocated on the related
Distribution Date for the related Loan Group remaining after the allocation of
such Realized Losses to the related Class P-M Certificates and (b) the
remainder of the REMIC I Available Distribution Amount for the related Loan
Group after reduction thereof by the distributions to be made on such
Distribution Date (i) to the related Class P-M Certificates, (ii) to the
related Class X-M Certificates, (iii) in respect of interest on the related
Class Y and Class Z Certificates and (iv) to the Class R-1 Certificates, or,
if both of such goals cannot be accomplished within such requirement, such
adjustment as is necessary shall be made to accomplish goal 1 within such
requirement. In the event of any conflict among the provisions of the
definition of the Class Y Principal Reduction Amounts, such conflict shall be
resolved on the basis of the goals and their priorities set forth above within
the requirement set forth in the preceding sentence.
CLASS Z REGULAR INTERESTS: The Class Z-1 and Class Z-2 Regular Interests.
CLASS Z PRINCIPAL REDUCTION AMOUNTS: For any Distribution Date, the
amounts by which the Class Principal Balances of the Class Z-1 and Class Z-2
Regular Interests, respectively, will be reduced on such Distribution Date by
the allocation of Realized Losses and the distribution of principal, which
shall be in each case the excess of (A) the sum of (x) the excess of the REMIC
I Available Distribution Amount for the related Loan Group over the sum of the
amounts thereof distributable (i) to the related Class P-M Regular Interests,
(ii) to the related Class X-M Regular Interests, (iii) in respect of interest
on the related Class Y and Class Z Regular Interests and (iv) to the Class R-1
Certificates and (y) the excess of the Realized Losses allocable to principal
for the related Loan Group over the portion of such Realized Losses allocable
to the related Class P-M Regular Interests over (B) the Class Y Principal
Reduction Amount for the related Loan Group.
CLASS Z-1 REGULAR INTERESTS: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest.
CLASS Z-1 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, the
excess, if any, of the Class Z-1 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to
the Class Z-1 Regular Interests on such Distribution Date.
CLASS Z-2 REGULAR INTERESTS: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I Regular
Interest.
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CLASS Z-2 PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date, the
excess, if any, of the Class Z-2 Principal Reduction Amount for such
Distribution Date over the principal portion of Realized Losses allocated to
the Class Z-2 Regular Interests on such Distribution Date.
CLEARING AGENCY: An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended,
which initially shall be DTC.
CLOSING DATE: June 26, 1998, which is the date of settlement of the sale
of the Certificates to the original purchasers thereof.
CODE: The Internal Revenue Code of 1986, as amended.
COMBINED BANKRUPTCY COVERAGE: With respect to Loan Group II and Loan
Group III, the Bankruptcy Coverage Initial Amount for such Loan Groups less
(a) any scheduled or permissible reduction in the amount of Combined
Bankruptcy Coverage pursuant to this definition and (b) Bankruptcy Losses
allocated to the Group II-L, Group III-L and Group C-B-L Regular Interests.
The Combined Bankruptcy Coverage may be reduced upon written confirmation from
the Rating Agencies that such reduction will not adversely affect the then
current ratings assigned to the Certificates by the Rating Agencies
(determined in the case of the Insured Certificates, without regard to the
effect of the Certificate Insurance Policy).
COMBINED CREDIT SUPPORT DEPLETION DATE: The first Distribution Date on
which the aggregate of the Class Principal Balances of the Group C-B
Certificates has been or will be reduced to zero as a result of principal
distributions thereon and the allocation of Realized Losses on such
Distribution Date.
COMBINED FRAUD COVERAGE: During the period prior to the first
anniversary of the Cut-Off Date and with respect to Loan Group II and Loan
Group III, the Fraud Coverage Initial Amount for such Loan Groups reduced by
Fraud Losses allocated to the Group II-L, Group III-L, and Group C-B-L Regular
Interests; during the period from the first anniversary of the Cut-Off Date to
(but not including) the fifth anniversary of the Cut-Off Date, the amount of
the Combined Fraud Coverage on the most recent previous anniversary of the
Cut-Off Date (calculated in accordance with the second sentence of this
definition) reduced by Fraud Losses allocated to the Group II-L, Group III-L
and Group C-B-L Regular Interests since such anniversary; and during the
period on and after the fifth anniversary of the Cut-Off Date, the Combined
Fraud Coverage shall be zero. On each anniversary of the Cut-Off Date, the
Combined Fraud Coverage shall be reduced to the lesser of (i) on the first and
second anniversaries of the Cut-Off Date, 1.00%, and on the third and fourth
anniversaries of the Cut-Off Date, 0.50% of the aggregate principal balance
of the Mortgage Loans in Loan Group II and Loan Group III as of the Due Date
in the preceding month and (ii) the excess of the Fraud Coverage Initial
Amount for Loan Group II and Loan Group III over cumulative Fraud Losses
allocated to the Group II-L, Group III-L and Group C-B-L Regular Interests to
date. The Combined Fraud Coverage may be reduced upon written confirmation
from the Rating Agencies that such reduction will not adversely affect the
then current ratings assigned to the Group II, Group III and Group C-B
Certificates by the Rating Agencies (determined in the case of the Insured
Certificates, without regard to the effect of the Certificate Insurance
Policy).
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COMBINED SPECIAL HAZARD COVERAGE: With respect to Loan Group II and Loan
Group III, the Special Hazard Coverage Initial Amount for such Loan Groups
less Special Hazard Losses allocated to the Group II-L, Group III-L and Group
C-B-L Regular Interests and the amount of any scheduled reduction in the
amount of Combined Special Hazard Coverage as follows: on each anniversary of
the Cut-Off Date, the Combined Special Hazard Coverage shall be reduced, but
not increased, to an amount equal to the lesser of (1) the greatest of (a) the
aggregate principal balance of the Mortgage Loans in the Loan Group II and
Loan Group III located in the single California zip code area containing the
largest aggregate principal balance of the Mortgage Loans, (b) 1.0% of the
aggregate unpaid principal balance of the Mortgage Loans in Loan Group II and
Loan Group III and (c) twice the unpaid principal balance of the largest
single Mortgage Loan in Loan Group II and Loan Group III, in each case
calculated as of the Due Date in the immediately preceding month, and (2) the
Special Hazard Coverage Initial Amount as reduced by the Special Hazard Losses
allocated to the Group II-L, Group III-L and Group C-B-L Regular Interests
since the Cut-Off Date. The Combined Special Hazard Coverage may be reduced
upon written confirmation from the Rating Agencies that such reduction will
not adversely affect the then current ratings assigned to the Certificates by
the Rating Agencies (determined in the case of the Insured Certificates,
without regard to the effect of the Certificate Insurance Policy).
COMPANY: PNC Mortgage Securities Corp., a Delaware corporation, or its
successor-in-interest.
COMPENSATING INTEREST: For any Distribution Date with respect to each
Loan Group and the Mortgage Loans contained therein, the lesser of (i) the sum
of (a) the aggregate Master Servicing Fee payable with respect to such Loan
Group on such Distribution Date, (b) the aggregate Payoff Earnings with
respect to such Loan Group and (c) the aggregate Payoff Interest with respect
to such Loan Group and (ii) the aggregate Uncollected Interest with respect to
such Loan Group.
COOPERATIVE: A private, cooperative housing corporation organized under
the laws of, and headquartered in, the States of New York or New Jersey which
owns or leases land and all or part of a building or buildings located in such
states, including apartments, spaces used for commercial purposes and common
areas therein and whose board of directors authorizes, among other things, the
sale of Cooperative Stock.
COOPERATIVE APARTMENT: A dwelling unit in a multi-dwelling building owned
or leased by a Cooperative, which unit the Mortgagor has an exclusive right to
occupy pursuant to the terms of a proprietary lease or occupancy agreement.
Cooperative Lease: With respect to a Cooperative Loan, the proprietary lease
or occupancy agreement with respect to the Cooperative Apartment occupied by
the Mortgagor and relating to the related Cooperative Stock, which lease or
agreement confers an exclusive right to the holder of such Cooperative Stock
to occupy such apartment.
COOPERATIVE LOANS: Any of the Mortgage Loans made in respect of a
Cooperative Apartment, evidenced by a Mortgage Note and secured by (i) a
Security Agreement, (ii) the related Cooperative Stock Certificate, (iii) an
assignment or mortgage of the Cooperative Lease, (iv) financing statements and
(v) a stock power (or other similar instrument), and ancillary thereto, a
recognition agreement between the Cooperative and the originator of the
Cooperative Loan, each of
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which was transferred and assigned to the Trustee pursuant to Section 2.01 and
are from time to time held as part of REMIC I created hereunder.
COOPERATIVE STOCK: With respect to a Cooperative Loan, the single
outstanding class of stock, partnership interest or other ownership instrument
in the related Cooperative.
COOPERATIVE STOCK CERTIFICATE: With respect to a Cooperative Loan, the
stock certificate or other instrument evidencing the related Cooperative
Stock.
CORPORATE TRUST OFFICE: The corporate trust office of the Trustee in the
State of Minnesota, at which at any particular time its corporate trust
business with respect to this Agreement shall be administered, which office at
the date of the execution of this Agreement is located at 180 East 5th Street,
SPFT0210, St. Paul, MN 55101, Attention: Structured Finance PNC 1998-5.
Corresponding Class: With respect to the Group I Certificates and the Group
I-L Regular Interests, the "Corresponding Class" for the Class I-A-1-L, Class
I-B-1-L, Class I-B-2-L, Class I-B-3-L, Class I-B-4-L, Class I-B-5-L, Class
I-B-6-L, Class I-P-L and Class I-X-L Regular Interests shall be the Class
I-A-1, Class I-B-1, Class I-B-2, Class I-B-3, Class I-B-4, Class I-B-5, Class
I-B-6, Class I-P and Class I-X Certificates, respectively, and vice-versa.
With respect to the Group II Certificates, the Class R-3 Certificates and
the Group II-L Regular Interests, the "Corresponding Class" for the Class
II-A-1-L, Class II-A-2-L, Class II-A-3-L, Class II-A-4-L, Class II-A-5-L,
Class II-A-6-L, Class II-A-7-L, Class II-A-8-L, Class II-A-9-L, Class
II-A-10-L, Class II-A-11-L, Class II-A-13-L, Class II-A-14-L, Class II-A-15-L,
Class II-A-16-L, Class II-A-17-L, Class II-A-18-L, Class II-A-19-L, Class
II-X-L, Class II-P-L and Class R-3-L Regular Interests shall be the Class
II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6,
Class II-A-7, Class II-A-8, Class II-A-9, Class II-A-10, Class II-A-11, Class
II-A-13, Class II-A-14, Class II-A-15, Class II-A-16, Class II-A-17, Class
II-A-18, Class II-A-19, Class II-X, Class II-P and Class R-3 Certificates,
respectively, and vice-versa.
With respect to the Group III Certificates and the Group III-L Regular
Interests, the "Corresponding Class" for the Class III-A-1-L, Class II-X-L and
Class III-P-L Regular Interests shall be the Class III-A-1, Class III-X and
Class III-P Certificates, respectively, and vice-versa.
With respect to the Group C-B Certificates and the Group C-B-L Regular
Interests, the "Corresponding Class" for the Class C-B-1-L, Class C-B-2-L,
Class C-B-3-L, Class C-B-4-L, Class C-B-5-L and Class C-B-6-L Regular
Interests shall be the Class C-B-1, Class C-B-2, Class C-B-3, Class C-B-4,
Class C-B-5 and Class C-B-6 Certificates, respectively, and vice-versa.
CURTAILMENT: Any payment of principal on a Mortgage Loan, made by or on
behalf of the related Mortgagor, other than a Monthly Payment, a Prepaid
Monthly Payment or a Payoff, which is applied to reduce the outstanding
principal balance of the Mortgage Loan.
CURTAILMENT SHORTFALL: With respect to any Curtailment applied with a
Monthly Payment other than a Prepaid Monthly Payment, an amount equal to one
month's interest on such Curtailment at the applicable Pass-Through Rate on
such Mortgage Loan.
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CUSTODIAL ACCOUNT FOR P&I: The Custodial Account for principal and
interest established and maintained by each Servicer pursuant to its Selling
and Servicing Contract and caused by the Master Servicer to be established and
maintained pursuant to Section 3.02 (a) with the corporate trust department of
the Trustee or another financial institution approved by the Master Servicer
such that the rights of the Master Servicer, the Trustee and the
Certificateholders thereto shall be fully protected against the claims of any
creditors of the applicable Servicer and of any creditors or depositors of the
institution in which such account is maintained, (b) within FDIC insured
accounts (or other accounts with comparable insurance coverage acceptable to
the Rating Agencies) created, maintained and monitored by a Servicer or (c) in
a separate non-trust account without FDIC or other insurance in an Eligible
Institution. In the event that a Custodial Account for P&I is established
pursuant to clause (b) of the preceding sentence, amounts held in such
Custodial Account for P&I shall not exceed the level of deposit insurance
coverage on such account; accordingly, more than one Custodial Account for P&I
may be established. Any amount that is at any time not protected or insured in
accordance with the first sentence of this definition of "Custodial Account
for P&I" shall promptly be withdrawn from such Custodial Account for P&I and
be remitted to the Investment Account.
CUSTODIAL ACCOUNT FOR RESERVES: The Custodial Account for Reserves
established and maintained by each Servicer pursuant to its Selling and
Servicing Contract and caused by the Master Servicer to be established and
maintained pursuant to Section 3.02 (a) with the corporate trust department of
the Trustee or another financial institution approved by the Master Servicer
such that the rights of the Master Servicer, the Trustee and the
Certificateholders thereto shall be fully protected against the claims of any
creditors of the applicable Servicer and of any creditors or depositors of the
institution in which such account is maintained, (b) within FDIC insured
accounts (or other accounts with comparable insurance coverage acceptable to
the Rating Agencies) created, maintained and monitored by a Servicer or (c) in
a separate non-trust account without FDIC or other insurance in an Eligible
Institution. In the event that a Custodial Account for Reserves is established
pursuant to clause (b) of the preceding sentence, amounts held in such
Custodial Account for Reserves shall not exceed the level of deposit insurance
coverage on such account; accordingly, more than one Custodial Account for
Reserves may be established. Any amount that is at any time not protected or
insured in accordance with the first sentence of this definition of "Custodial
Account for Reserves" shall promptly be withdrawn from such Custodial Account
for Reserves and be remitted to the Investment Account.
CUSTODIAL AGREEMENT: The agreement, if any, among the Master Servicer,
the Trustee and a Custodian providing for the safekeeping of the Mortgage
Files on behalf of the Certificateholders.
CUSTODIAN: A custodian which is not an affiliate of the Master Servicer
or the Company and which is appointed pursuant to a Custodial Agreement. Any
Custodian so appointed shall act as agent on behalf of the Trustee, and shall
be compensated by the Trustee at no additional charge to the Master Servicer.
The Trustee shall remain at all times responsible under the terms of this
Agreement, notwithstanding the fact that certain duties have been assigned to
a Custodian.
CUT-OFF DATE: June 1, 1998.
DEFICIENCY AMOUNT: With respect to any Distribution Date, the sum of (i)
the amount, if any, by which the Interest Distribution Amount available to be
paid to the Class II-A-3 Certificates, pursuant to
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the priority of payment set forth in the definition of "REMIC III Distribution
Amount", is less than (A) the product of (1) 1/12 of the Class II-A-3
Remittance Rate and (2) the Class II-A-3 Principal Balance immediately prior
to such Distribution Date, minus (B) the sum of (1) the portion of
Uncompensated Interest Shortfall attributable to Curtailment Shortfalls which
is allocable to the Class II-A-3 Certificates, (2) any interest shortfalls
related to the Relief Act allocable to the Class II-A-3 Certificates and (3)
the portion of Uncompensated Interest Shortfall attributable to the failure of
the Master Servicer to pay Compensating Interest which is allocable to the
Class II-A-3 Certificates, (ii) the principal portion of any Realized Losses
allocable to the Class II-A-3 Certificates on such Distribution Date and (iii)
to the extent unpaid on the Last Scheduled Distribution Date, after payment of
all other amounts due to the Class II-A-3 Certificates, any remaining Class
II-A-3 Principal Balance.
DEFINITIVE CERTIFICATES: Certificates in definitive, fully registered and
certificated form.
DEPOSITARY AGREEMENT: The Letter of Representations, dated June 25, 1998
by and among DTC, the Company and the Trustee.
DESTROYED MORTGAGE NOTE: A Mortgage Note the original of which was
permanently lost or destroyed and has not been replaced.
DETERMINATION DATE: A day not later than the 10th day preceding a related
Distribution Date.
DISQUALIFIED ORGANIZATION: Any Person which is not a Permitted
Transferee, but does not include any Pass-Through Entity which owns or holds a
Residual Certificate and of which a Disqualified Organization, directly or
indirectly, may be a stockholder, partner or beneficiary.
DISTRIBUTION DATE: With respect to distributions on the REMIC I Regular
Interests, the REMIC II Regular Interests and the Certificates, the 25th day
(or, if such 25th day is not a Business Day, the Business Day immediately
succeeding such 25th day) of each month, with the first such date being July
27, 1998.
DTC: The Depository Trust Company.
DTC PARTICIPANT: A broker, dealer, bank, other financial institution or
other Person for whom DTC effects book-entry transfers and pledges of
securities deposited with DTC.
DUE DATE: The first day of each calendar month, which is the day on which
the Monthly Payment for each Mortgage Loan is due.
ELIGIBLE INSTITUTION: An institution having (i) the highest short-term
debt rating, and one of the two highest long-term debt ratings of the Rating
Agencies, (ii) with respect to any Custodial Account for P&I and special
Custodial Account for Reserves, an unsecured long-term debt rating of at least
one of the two highest unsecured long-term debt ratings of the Rating
Agencies, (iii) with respect to any Buydown Fund Account or Custodial Account
which also serves as a Buydown Fund Account, the highest unsecured long-term
debt rating by the Rating Agencies, or (iv) the approval of the Rating
Agencies. Such institution may be the Servicer if the applicable Selling and
Servicing Contract requires the Servicer to provide the Master Servicer with
written notice on the Business Day
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following the date on which the Servicer determines that such Servicer's
short-term debt and unsecured long-term debt ratings fail to meet the
requirements of the prior sentence.
ELIGIBLE INVESTMENTS: Any one or more of the obligations or securities
listed below in which funds deposited in the Investment Account, the
Certificate Account, the Custodial Account for P&I and the Custodial Account
for Reserves may be invested:
(i) Obligations of, or guaranteed as to principal and interest by, the
United States or any agency or instrumentality thereof when such obligations
are backed by the full faith and credit of the United States;
(ii) Repurchase agreements on obligations described in clause (i) of this
definition of "Eligible Investments", provided that the unsecured obligations
of the party agreeing to repurchase such obligations have at the time one of
the two highest short term debt ratings of the Rating Agencies and provided
that such repurchaser's unsecured long term debt has one of the two highest
unsecured long term debt ratings of the Rating Agencies;
(iii) Federal funds, certificates of deposit, time deposits and bankers'
acceptances of any U.S. bank or trust company incorporated under the laws of
the United States or any state, provided that the debt obligations of such
bank or trust company (or, in the case of the principal bank in a bank holding
company system, debt obligations of the bank holding company) at the date of
acquisition thereof have one of the two highest short term debt ratings of the
Rating Agencies and unsecured long term debt has one of the two highest
unsecured long term debt ratings of the Rating Agencies;
(iv) Obligations of, or obligations guaranteed by, any state of the
United States or the District of Columbia, provided that such obligations at
the date of acquisition thereof shall have the highest long-term debt ratings
available for such securities from the Rating Agencies;
(v) Commercial paper of any corporation incorporated under the laws of
the United States or any state thereof, which on the date of acquisition has
the highest commercial paper rating of the Rating Agencies, provided that the
corporation has unsecured long term debt that has one of the two highest
unsecured long term debt ratings of the Rating Agencies;
(vi) Securities (other than stripped bonds or stripped coupons) bearing
interest or sold at a discount that are issued by any corporation incorporated
under the laws of the United States or any state thereof and have the highest
long-term unsecured rating available for such securities from the Rating
Agencies; provided, however, that securities issued by any such corporation
will not be investments to the extent that investment therein would cause the
outstanding principal amount of securities issued by such corporation that are
then held as part of the Investment Account or the Certificate Account to
exceed 20% of the aggregate principal amount of all Eligible Investments then
held in the Investment Account and the Certificate Account;
(vii) Units of taxable money market funds (which may be 12b-1 funds, as
contemplated under the rules promulgated by the Securities and Exchange
Commission under
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the Investment Company Act of 1940), which funds have the highest rating
available for such securities from the Rating Agencies or which have been
designated in writing by the Rating Agencies as Eligible Investments; and
(viii) Such other investments the investment in which will not, as
evidenced by a letter from each of the Rating Agencies, result in the
downgrading or withdrawal of the Ratings;
provided, however, that such obligation or security is held for a temporary
period pursuant to Section 1.860G-2(g)(1) of the Treasury Regulations, and
that such period can in no event exceed thirteen months.
In no event shall an instrument be an Eligible Investment if such
instrument (a) evidences a right to receive only interest payments with
respect to the obligations underlying such instrument or (b) has been
purchased at a price greater than the outstanding principal balance of such
instrument.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
EVENT OF DEFAULT: Any event of default as specified in Section 7.01.
EXCESS LIQUIDATION PROCEEDS: With respect to any Distribution Date, the
excess, if any, of aggregate Liquidation Proceeds received during the Prior
Period over the amount that would have been received if Payoffs had been made
with respect to such Mortgage Loans on the date such Liquidation Proceeds were
received.
FDIC: Federal Deposit Insurance Corporation, or any successor thereto.
FHA: Federal Housing Administration, or any successor thereto.
FHLB: Federal Home Loan Bank of San Francisco, or any successor thereto.
FHLMC: Federal Home Loan Mortgage Corporation, or any successor thereto.
FITCH: Fitch IBCA, Inc. provided that at any time it be a Rating Agency.
FNMA: Federal National Mortgage Association, or any successor thereto.
FRAUD COVERAGE INITIAL AMOUNT: With respect to Loan Group I, $3,159,405
and with respect to Loan Group II and Loan Group III, $9,618,391.
FRAUD LOSS: The occurrence of a loss on a Mortgage Loan arising from any
action, event or state of facts with respect to such Mortgage Loan which,
because it involved or arose out of any dishonest, fraudulent, criminal,
negligent or knowingly wrongful act, error or omission by the Mortgagor,
originator (or assignee thereof) of such Mortgage Loan, Lender, a Servicer or
the Master Servicer, would result in an exclusion from, denial of, or defense
to coverage which otherwise would be provided by a Primary Insurance Policy
previously issued with respect to such Mortgage Loan.
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GROUP C-B CERTIFICATES: The Class C-B-1, Class C-B-2, Class C-B-3, Class
C-B-4, Class C-B-5 and Class C-B-6 Certificates.
GROUP C-B-L REGULAR INTERESTS: The Class C-B-1-L, Class C-B-2-L, Class
C-B-3-L, Class C-B-4-L, Class C-B-5-L and Class C-B-6-L Regular Interests.
GROUP C-B COMPONENT BALANCE: With respect to either Loan Group II or Loan
Group III at any time, the outstanding aggregate Principal Balance of the
Mortgage Loans in the applicable Loan Group minus the then outstanding Class
Principal Balance of the Group II or Group III Certificates, as applicable.
GROUP C-B PERCENTAGE: At any time, the aggregate Class Principal Balance
of the Group C-B Certificates divided by the then outstanding aggregate
Principal Balance of the Group II Loans and the Group III Loans.
GROUP C-B SUBORDINATE LIQUIDATION AMOUNT: The excess, if any, of the
aggregate of Liquidation Principal for all Group II Loans and Group III Loans
which became Liquidated Mortgage Loans during the Prior Period, over the sum
of the Group II Senior Liquidation Amount and the Group III Senior Liquidation
Amount for such Distribution Date.
GROUP C-B SUBORDINATE PRINCIPAL DISTRIBUTION AMOUNT: On any Distribution
Date, the excess of (A) the sum of (i) the Group II Subordinate Percentage of
the Principal Payment Amount for Loan Group II (exclusive of the portion
thereof attributable to principal distributions to the Class II-P-L Regular
Interests pursuant to clause (I)(b)(i) of the definition of "REMIC II
Distribution Amount"), (ii) the Group III Subordinate Percentage of the
Principal Payment Amount for Loan Group III (exclusive of the portion thereof
attributable to principal distributions to the Class III-P-L Regular Interests
pursuant to clause (I)(c)(i) of the definition of "REMIC II Distribution
Amount"), (iii) the Group II Subordinate Principal Prepayments Distribution
Amount, (iv) the Group III Subordinate Principal Prepayments Distribution
Amount and (v) the Group C-B Subordinate Liquidation Amount over (B) the sum
of (x) the amounts required to be distributed to the Class II-P-L and Class
III-P-L Regular Interests pursuant to clauses (I)(d)(i) and (I)(d)(ii) of the
definition of "REMIC II Distribution Amount" on such Distribution Date, (y) in
the event that the aggregate Class Principal Balance of either of the Group
II-A-L or Class III-A-1-L Regular Interests has been reduced to zero,
principal paid from the REMIC II Available Distribution Amount of the Regular
Interest Group related to the Class A-L Regular Interests whose Class
Principal Balance has been reduced to zero to the remaining Class A-L Regular
Interests as set forth in clause (X) of the last sentence of paragraph (I)(d)
of the definition of "REMIC II Distribution Amount", and (z) the amounts in
respect of principal paid from the REMIC II Available Distribution Amount of
an Overcollateralized Group to an Undercollateralized Group pursuant to clause
(Y) of the last sentence of paragraph (I)(d) of the definition of "REMIC II
Distribution Amount". Any reduction in the Group C-B Subordinate Principal
Distribution Amount pursuant to clause (B) of this definition shall offset:
(i) first, the amount calculated pursuant to clause (A)(i) and clause (A)(ii)
of this definition, pro rata, (ii) second, the amount calculated pursuant to
clause (A)(v) of this definition and (iii) third, the amount calculated
pursuant to clause (A)(iii) and clause (A)(iv) of this definition, pro rata.
On any Distribution Date, the Group C-B Subordinate Principal Distribution
Amount shall be allocated pro rata, by Class Principal Balance, among the
Classes of Group C-B-L Regular Interests and paid in the order of distribution
to such Classes pursuant to clause (I)(d) of the definition of "REMIC II
Distribution
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Amount" except as otherwise stated in such definition. Notwithstanding the
foregoing, on any Distribution Date prior to distributions on such date, if
the Subordination Level for any Class of Group C-B-L Regular Interests is less
than such percentage as of the Closing Date, the pro rata portion of the Group
C-B Subordinate Principal Prepayments Distribution Amount otherwise allocable
to the Class or Classes junior to such Class will be distributed to the most
senior Class of the Group C-B-L Regular Interests for which the Subordination
Level is less than such percentage as of the Closing Date, and to the Classes
of Group C-B-L Regular Interests senior thereto, pro rata according to the
Class Principal Balances of such Classes. For purposes of this definition and
the definition of "Subordination Level", the relative seniority, from highest
to lowest, of the Group C-B-L Regular Interests shall be as follows: Class
C-B-1-L, Class C-B-2-L, Class C-B-3-L, Class C-B-4-L, Class C-B-5-L and Class
C-B-6-L.
GROUP I CERTIFICATES: The Class I-A-1, Class I-P, Class I-X and Group I-B
Certificates.
GROUP I-B CERTIFICATES: The Class I-B-1, Class I-B-2, Class I-B-3, Class
I-B-4, Class I-B-5 and Class I-B-6 Certificates.
GROUP I-B-L REGULAR INTERESTS: The Class I-B-1-L, Class I-B-2-L, Class
I-B-3-L, Class I-B-4-L, Class I-B-5-L and Class I-B-6-L Regular Interests.
Group I-L Regular Interests: The Class I-A-1-L, Class I-P-L, Class I-X-L and
Group I-B-L Regular Interests.
GROUP I BANKRUPTCY COVERAGE: With respect to Loan Group I, the Bankruptcy
Coverage Initial Amount for such Loan Group less (a) any scheduled or
permissible reduction in the amount of the Group I Bankruptcy Coverage
pursuant to this definition and (b) Bankruptcy Losses allocated to the Group I
Certificates. The Group I Bankruptcy Coverage may be reduced upon written
confirmation from the Rating Agencies that such reduction will not adversely
affect the then current ratings assigned to the Certificates by the Rating
Agencies.
GROUP I CREDIT SUPPORT DELETION DATE: The first Distribution Date on
which the aggregate Class Principal Balance of the Group I-B Certificates has
been or will be reduced to zero as a result of principal distributions thereon
and the allocation of Realized Losses on such Distribution Date.
GROUP I FRAUD COVERAGE: During the period prior to the first anniversary
of the Cut-Off Date and with respect to Loan Group I, the Fraud Coverage
Initial Amount for such Loan Group reduced by Fraud Losses allocated to the
Group I Certificates, and during the period from the first anniversary of the
Cut-Off Date to (but not including) the fifth anniversary of the Cut-Off Date,
the amount of the Group I Fraud Coverage on the most recent previous
anniversary of the Cut-Off Date (calculated in accordance with the second
sentence of this definition) reduced by Fraud Losses allocated to the Group I
Certificates since such anniversary; and during the period on and after the
fifth anniversary of the Cut-Off Date, the Group I Fraud Coverage shall be
zero. On each anniversary of the Cut-Off Date, the Group I Fraud Coverage
shall be reduced to the lesser of (i) on the first, second, third and fourth
anniversaries of the Cut-Off Date, 1.00% of the aggregate principal balance of
the Group I Loans as of the Due Date in the preceding month and (ii) the
excess of the Fraud Coverage Initial Amount for Loan Group I over cumulative
Fraud Losses allocated to the Group I Certificates to date. The Group I Fraud
Coverage may be reduced upon written confirmation from the Rating Agencies
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that such reduction will not adversely affect the then current ratings
assigned to the Group I Certificates by the Rating Agencies.
GROUP I LOANS: The Mortgage Loans designated on the Mortgage Loan
Schedule as Group I Loans.
GROUP I PREMIUM RATE MORTGAGE LOANS: The Group I Loans having
Pass-Through Rates in excess of 7.000% per annum.
GROUP I SENIOR CERTIFICATES: The Class I-A-1, Class I-X and Class I-P
Certificates.
GROUP I-L SENIOR REGULAR INTERESTS: The Class I-A-1-L, Class I-X-L and
Class I-P-L Regular Interests.
GROUP I SENIOR LIQUIDATION AMOUNT: The aggregate, for each Group I Loan
which became a Liquidated Mortgage Loan during the Prior Period, of the lesser
of: (i) the Group I Senior Percentage of the Principal Balance of such
Mortgage Loan (exclusive of the Class I-P Fraction thereof, with respect to
any Class I-P Mortgage Loan), and (ii) the Group I Senior Prepayment
Percentage of the Liquidation Principal with respect to such Mortgage Loan.
GROUP I SENIOR PERCENTAGE: With respect to any Distribution Date, the
Class I-A-1 Principal Balance divided by the aggregate Class Principal Balance
of the Group I Certificates (less the Class I-P Principal Balance), in each
case immediately prior to the Distribution Date.
GROUP I SENIOR PREPAYMENT PERCENTAGE: (i) On any Distribution Date
occurring before the Distribution Date in the month of the fifth anniversary
of the first Distribution Date, 100%; (ii) on any other Distribution Date on
which the Group I Senior Percentage for such Distribution Date exceeds the
Group I Senior Percentage as of the Closing Date, 100%; and (iii) on any other
Distribution Date in each of the months of the fifth anniversary of the first
Distribution Date and thereafter, 100%, unless:
(a) the mean aggregate Principal Balance of Group I Loans which are
60 or more days delinquent (including loans in foreclosure and
property held by REMIC I) for each of the immediately preceding
six calendar months is less than or equal to 50% of the aggregate
Class Principal Balances of the Group I-B Certificates as of such
Distribution Date, and
(b) cumulative Realized Losses on the Group I Loans allocated to the
Group I-B Certificates are less than or equal to (1) for any
Distribution Date before the month of the sixth anniversary of
the month of the first Distribution Date, 30% of the sum of the
Class Principal Balances of the Group I-B Certificates as of the
Cut-Off Date, (2) for any Distribution Date in or after the month
of the sixth anniversary of the month of the first Distribution
Date but before the seventh anniversary of the month of the first
Distribution Date, 35% of the sum of the Class Principal Balances
of the Group I-B Certificates as of the Cut-Off Date, (3) for any
Distribution Date in or after the month of the seventh
anniversary of the month of the first Distribution Date but
before the eighth anniversary of the month of the first
Distribution Date, 40% of the
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sum of the Class Principal Balances of the Group I-B Certificates
as of the Cut-Off Date, (4) for any Distribution Date in or after
the month of the eighth anniversary of the month of the first
Distribution Date but before the ninth anniversary of the month
of the first Distribution Date, 45% of the sum of the Class
Principal Balances of the Group I-B Certificates as of the
Cut-Off Date, and (5) for any Distribution Date in or after the
month of the ninth anniversary of the month of the first
Distribution Date, 50% of the sum of the Class Principal Balances
of the Group I-B Certificates as of the Cut-Off Date,
in which case, as follows: (1) for any such Distribution Date in or after
the month of the fifth anniversary of the month of the first Distribution
Date but before the sixth anniversary of the month of the first Distribution
Date, the Group I Senior Percentage for such Distribution Date plus 70% of
the Group I Subordinate Percentage for such Distribution Date; (2) for any
such Distribution Date in or after the month of the sixth anniversary of the
month of the first Distribution Date but before the seventh anniversary of
the month of the first Distribution Date, the Group I Senior Percentage for
such Distribution Date plus 60% of the Group I Subordinate Percentage for
such Distribution Date; (3) for any such Distribution Date in or after the
month of the seventh anniversary of the month of the first Distribution Date
but before the eighth anniversary of the month of the first Distribution
Date, the Group I Senior Percentage for such Distribution Date plus 40% of
the Group I Subordinate Percentage for such Distribution Date; (4) for any
such Distribution Date in or after the month of the eighth anniversary of the
month of the first Distribution Date but before the ninth anniversary of the
month of the first Distribution Date, the Group I Senior Percentage for such
Distribution Date plus 20% of the Group I Subordinate Percentage for such
Distribution Date; and (5) for any such Distribution Date thereafter, the
Group I Senior Percentage for such Distribution Date.
If on any Distribution Date the allocation to the Group I-L Senior
Regular Interests (other than the Class I-P-L Regular Interests) of Principal
Prepayments in the percentage required would reduce the sum of the Class
Principal Balances of such Regular Interests below zero, the Group I Senior
Prepayment Percentage for such Distribution Date shall be limited to the
percentage necessary to reduce such sum to zero. Notwithstanding the
foregoing, however, on each Distribution Date, the Class I-P-L Regular
Interests will receive the Class I-P Fraction of all principal payments,
including, without limitation, Principal Prepayments, received in respect of
each Class I-P Mortgage Loan.
GROUP I SENIOR PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date,
an amount equal to the sum of (a) the Group I Senior Percentage of the
Principal Payment Amount for Loan Group I (exclusive of the portion thereof
attributable to principal distributions to the Class I-P-L Regular Interests
pursuant to clauses (I)(a)(i) and (II)(a)(i) of the definition of "REMIC II
Distribution Amount"), (b) the Group I Senior Prepayment Percentage of the
Principal Prepayment Amount for Loan Group I (exclusive of the portion thereof
attributable to principal distributions to the Class I-P-L Regular Interests
pursuant to clauses (I)(a)(i) and (II)(a)(i) of the definition of "REMIC II
Distribution Amount") and (c) the Group I Senior Liquidation Amount.
GROUP I SPECIAL HAZARD COVERAGE: With respect to Loan Group I, the
Special Hazard Coverage Initial Amount for such Loan Group less Special Hazard
Losses allocated to the Group I-L Regular Interests, and the amount of any
scheduled reduction in the amount of Group I Special Hazard Coverage as
follows: on each anniversary of the Cut-Off Date, the Group I Special Hazard
Coverage shall be reduced, but not increased, to an amount equal to the lesser
of (1) the greatest of
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(a) the aggregate principal balance of the Mortgage Loans in Loan Group I
located in the single California zip code area containing the largest
aggregate principal balance of such Mortgage Loans, (b) 1% of the aggregate
unpaid principal balance of the Mortgage Loans in Loan Group I and (c) twice
the unpaid principal balance of the largest single Mortgage Loan in Loan Group
I, in each case calculated as of the Due Date in the immediately preceding
month, and (2) the Special Hazard Coverage Initial Amount as reduced by the
Special Hazard Losses allocated to the Group I-L Regular Interests since the
Cut-Off Date. The Group I Special Hazard Coverage may be reduced upon written
confirmation from the Rating Agencies that such reduction will not adversely
affect the then current ratings assigned to the Certificates by the Rating
Agencies.
GROUP I SUBORDINATE LIQUIDATION AMOUNT: The excess, if any, of the
aggregate of Liquidation Principal for all Group I Loans which became
Liquidated Mortgage Loans during the Prior Period, over the related Group I
Senior Liquidation Amount for such Distribution Date.
GROUP I SUBORDINATE PERCENTAGE: With respect to any Distribution Date,
the excess of 100% over the Group I Senior Percentage for such date.
GROUP I SUBORDINATE PREPAYMENT PERCENTAGE: On any Distribution Date for
Loan Group I, the excess of 100% over the Group I Senior Prepayment Percentage
for such Distribution Date; provided, however, that if the Class I-A-1
Principal Balance has been reduced to zero, then the Group I Subordinate
Prepayment Percentage shall equal 100%.
GROUP I SUBORDINATE PRINCIPAL DISTRIBUTION AMOUNT: On any Distribution
Date, the excess of (A) the sum of (i) the Group I Subordinate Percentage of
the Principal Payment Amount for Loan Group I (exclusive of the portion
thereof attributable to principal distributions to the Class I-P-L Regular
Interests pursuant to clause (I)(a)(i) of the definition of "REMIC II
Distribution Amount"), (ii) the Group I Subordinate Principal Prepayments
Distribution Amount and (iii) the Group I Subordinate Liquidation Amount over
(B) the amounts required to be distributed to the Class I-P-L Regular
Interests pursuant to clauses (I)(a)(v) and (I)(a)(vi) of the definition of
"REMIC II Distribution Amount" on such Distribution Date, as applicable. Any
reduction in the Group I Subordinate Principal Distribution Amount pursuant to
clause (B) of this definition shall offset: (i) first, the amount calculated
pursuant to clause (A)(i) of this definition, (ii) second, the amount
calculated pursuant to clause (A)(iii) of this definition and (iii) third, the
amount calculated pursuant to clause (A)(ii) of this definition. On any
Distribution Date, the Group I Subordinate Principal Distribution Amount shall
be allocated pro rata, by Class Principal Balance, among the Classes of Group
I-B-L Regular Interests, and paid in the order of distribution to such Classes
pursuant to clause (I)(a) of the definition of "REMIC II Distribution Amount",
except as otherwise stated in such definition. Notwithstanding the foregoing,
on any Distribution Date prior to distributions on such date, if the
Subordination Level for any Class of Group I-B-L Regular Interests is less
than such percentage as of the Closing Date, the pro rata portion of the Group
I Subordinate Principal Prepayments Distribution Amount otherwise allocable to
the Class or Classes junior to such Class will be distributed to the most
senior Class of the Group I-B-L Regular Interests for which the Subordination
Level is less than such percentage as of the Closing Date, and to the Classes
of Group I-B-L Regular Interests senior thereto, pro rata according to the
Class Principal Balances of such Classes. For purposes of this definition and
the definition of "Subordination Level", the relative seniority, from highest
to lowest, of the Group I-B-L Regular Interests shall be as follows: Class
I-B-1-L, Class I-B-2-L, Class I-B-3-L, Class I-B-4-L, Class I-B-5-L and Class
I-B-6-L.
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GROUP I SUBORDINATE PRINCIPAL PREPAYMENTS DISTRIBUTION AMOUNT: On any
Distribution Date, the Group I Subordinate Prepayment Percentage of the
Principal Prepayment Amount for Loan Group I (exclusive of the portion thereof
attributable to principal distributions to the Class I-P-L Regular Interests
pursuant to clause (I)(a)(i) of the definition of "REMIC II Distribution
Amount").
GROUP II ADJUSTED LOCKOUT PERCENTAGE: For any Distribution Date
occurring prior to the Distribution Date in July 2003, 0%, and for the July
2003 Distribution Date and any Distribution Date thereafter, the Group II
Lockout Percentage.
GROUP II CERTIFICATES: The Group II-A, Class II-X and Class II-P
Certificates.
GROUP II-A CERTIFICATES: The Class II-A-1, Class II-A-2, Class II-A-3,
Class II-A-4, Class II-A-5, Class II-A-6, Class II-A-7, Class II-A-8, Class
II-A-9, Class II-A-10, Class II-A-11, Class II-A-12, Class II-A-13, Class
II-A-14, Class II-A-15, Class II-A-16, Class II-A-17, Class II-A-18 and Class
II-A-19 Certificates.
GROUP II-A-L REGULAR INTERESTS: The Class II-A-1-L, Class II-A-2-L, Class
II-A-3-L, Class II-A-4-L, Class II-A-5-L, Class II-A-6-L, Class II-A-7-L,
Class II-A-8-L, Class II-A-9-L, Class II-A-10-L, Class II-A-11-L, Class
II-A-13-L, Class II-A-14-L, Class II-A-15-L, Class II-A-16-L, Class II-A-17-L,
Class II-A-18-L and Class II-A-19-L Certificates.
GROUP II-L REGULAR INTERESTS: The Group II-A-L, Class II-X-L, Class
II-P-L and Class R-3-L Regular Interests.
GROUP II LOANS: The Mortgage Loans designated on the Mortgage Loan
Schedule as Group II Loans.
GROUP II LOCKOUT LIQUIDATION AMOUNT: The aggregate, for each Group II Loan
which became a Liquidated Mortgage Loan during the calendar month preceding
the month of the Distribution Date, of the lesser of (i) the Group II Lockout
Percentage of the Principal Balance of such Mortgage Loan (exclusive of the
Class II-P Fraction thereof, with respect to any Class II-P Mortgage Loan) and
(ii) the Group II Lockout Percentage on any Distribution Date occurring prior
to the fifth anniversary of the first Distribution Date, and the Group II
Lockout Prepayment Percentage on the fifth anniversary of the first
Distribution Date and each Distribution Date thereafter, in each case, of the
Liquidation Principal with respect to such Mortgage Loan.
GROUP II LOCKOUT PRIORITY AMOUNT: For any Distribution Date, the sum of
(i) the Group II Adjusted Lockout Percentage of the Principal Payment Amount
for Loan Group II (exclusive of the portion thereof attributable to principal
distributions to the Class II-P-L Regular Interests pursuant to clause
(I)(a)(i) of the definition of "REMIC II Distribution Amount"), (ii) the Group
II Lockout Prepayment Percentage of the Principal Prepayment Amount for Loan
Group II (exclusive of the portion thereof attributable to principal
distributions to the Class II-P-L Regular Interests pursuant to clause
(I)(a)(i) of the definition of "REMIC II Distribution Amount") and (iii) the
Group II Lockout Liquidation Amount.
GROUP II LOCKOUT PERCENTAGE: For any Distribution Date, the lesser of (a)
100% and (b) the aggregate Class Principal Balance of the Class II-A-5 and
Class II-A-18 Certificates divided by the
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aggregate Principal Balance of the Group II Loans (less the Class II-P
Principal Balance), in each case immediately prior to such Distribution Date.
GROUP II LOCKOUT PREPAYMENT PERCENTAGE: For any Distribution Date, the
product of the Group II Lockout Percentage and the Step Down Percentage.
GROUP II PREMIUM RATE MORTGAGE LOANS: The Group II Loans having
Pass-Through Rates in excess of 6.750% per annum.
GROUP II SENIOR LIQUIDATION AMOUNT: The aggregate, for each Group II Loan
which became a Liquidated Mortgage Loan during the Prior Period, of the lesser
of: (i) the Group II Senior Percentage of the Principal Balance of such
Mortgage Loan (exclusive of the Class II-P Fraction thereof, with respect to
any Class II-P Mortgage Loan), and (ii) the Group II Senior Prepayment
Percentage of the Liquidation Principal with respect to such Mortgage Loan.
GROUP II SENIOR PERCENTAGE: With respect to any Distribution Date, the
lesser of (i) 100% and (ii) the aggregate Class Principal Balance of the Group
II-A and Residual Certificates divided by the aggregate Principal Balances of
the Group II Loans (less the Class II-P Principal Balance), in each case
immediately prior to the Distribution Date.
GROUP II SENIOR PREPAYMENT PERCENTAGE OR GROUP III SENIOR PREPAYMENT
PERCENTAGE: (i) On any Distribution Date occurring before the Distribution
Date in the month of the fifth anniversary of the first Distribution Date,
both the Group II Senior Prepayment Percentage and the Group III Senior
Prepayment Percentage shall equal 100%; (ii) on any other Distribution Date on
which either the Group II Senior Percentage for such Distribution Date exceeds
the Group II Senior Percentage as of the Closing Date or the Group III Senior
Percentage for such Distribution Date exceeds the Group III Senior Percentage
as of the Closing Date, both the Group II Senior Prepayment Percentage and the
Group III Senior Prepayment Percentage shall equal 100%; and (iii) on any
other Distribution Date in each of the months of the fifth anniversary of the
first Distribution Date and thereafter, both the Group II Senior Prepayment
Percentage and the Group III Senior Prepayment Percentage shall equal 100%,
unless the following tests specified in clauses (a) through (d) are met with
respect to both of Loan Group II and Loan Group III:
(a) the mean aggregate Principal Balance of the Group II Loans which
are 60 or more days delinquent (including loans in foreclosure
and property held by REMIC I) for each of the immediately
preceding six calendar months is less than or equal to 50% of the
related Group C-B Component Balance as of such Distribution Date,
(b) the mean aggregate Principal Balance of the Group III Loans which
are 60 or more days delinquent (including loans in foreclosure
and property held by REMIC I) for each of the immediately
preceding six calendar months is less than or equal to 50% of the
related Group C-B Component Balance as of such Distribution Date,
(c) cumulative Realized Losses on the Group II Loans allocated to the
Group C-B Certificates is less than or equal to (1) for any
Distribution Date before the month of the sixth anniversary of
the month of the first Distribution Date, 30% of the related
Group C-B Component Balance as of the Closing Date, (2) for any
Distribution Date
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in or after the month of the sixth anniversary of the month of
the first Distribution Date but before the seventh anniversary
of the month of the first Distribution Date, 35% of the related
Group C-B Component Balance as of the Closing Date, (3) for any
Distribution Date in or after the month of the seventh
anniversary of the month of the first Distribution Date but
before the eighth anniversary of the month of the first
Distribution Date, 40% of the related Group C-B Component
Balance as of the Closing Date, (4) for any Distribution Date in
or after the month of the eighth anniversary of the month of the
first Distribution Date but before the ninth anniversary of the
month of the first Distribution Date, 45% of the related Group
C-B Component Balance as of the Closing Date, and (5) for any
Distribution Date in or after the month of the ninth anniversary
of the month of the first Distribution Date, 50% of the related
Group C-B Component Balance as of the Closing Date, and
(d) cumulative Realized Losses on the Group III Loans allocated
to the Group C-B Certificates is less than or equal to (1) for
any Distribution Date before the month of the sixth anniversary
of the month of the first Distribution Date, 30% of the related
Group C-B Component Balance as of the Closing Date, (2) for any
Distribution Date in or after the month of the sixth anniversary
of the month of the first Distribution Date but before the
seventh anniversary of the month of the first Distribution Date,
35% of the related Group C-B Component Balance as of the Closing
Date, (3) for any Distribution Date in or after the month of the
seventh anniversary of the month of the first Distribution Date
but before the eighth anniversary of the month of the first
Distribution Date, 40% of the related Group C-B Component
Balance as of the Closing Date, (4) for any Distribution Date in
or after the month of the eighth anniversary of the month of the
first Distribution Date but before the ninth anniversary of the
month of the first Distribution Date, 45% of the related Group
C-B Component Balance as of the Closing Date, and (5) for any
Distribution Date in or after the month of the ninth anniversary
of the month of the first Distribution Date, 50% of the related
Group C-B Component Balance as of the Closing Date,
in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Group II Senior Percentage or the Group III Senior Percentage, as applicable,
for such Distribution Date plus 70% of the Subordinate Percentage for the
related Loan Group for such Distribution Date; (2) for any such Distribution
Date in or after the month of the sixth anniversary of the month of the first
Distribution Date but before the seventh anniversary of the month of the first
Distribution Date, the Group II Senior Percentage or Group III Senior
Percentage, as applicable, for such Distribution Date plus 60% of the
Subordinate Percentage for the related Loan Group for such Distribution Date;
(3) for any such Distribution Date in or after the month of the seventh
anniversary of the month of the first Distribution Date but before the eighth
anniversary of the month of the first Distribution Date, the Group II Senior
Percentage or Group III Senior Percentage, as applicable, for such
Distribution Date plus 40% of the Subordinate Percentage for the related Loan
Group for such Distribution Date; (4) for any such Distribution Date in or
after the month of the eighth anniversary of the month of the first
Distribution Date but before the ninth anniversary of the month of the first
Distribution Date, the Group II Senior Percentage or Group III Senior
Percentage, as applicable, for such Distribution Date plus 20% of the
Subordinate Percentage
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for the related Loan Group for such Distribution Date; and (5) for any such
Distribution Date thereafter, the Group II Senior Percentage or Group III
Senior Percentage, as applicable, for such Distribution Date.
If on any Distribution Date the allocation to the Group II-L Regular
Interests or the Group III-L Regular Interests (other than the Class II-P-L
and Class III-P-L Regular Interests) of Principal Prepayments in the
percentage required would reduce the sum of the Class Principal Balances of
such Regular Interests below zero, the Group II Senior Prepayment Percentage
or the Group III Senior Prepayment Percentage, as applicable, for such
Distribution Date shall be limited to the percentage necessary to reduce such
sum to zero. Notwithstanding the foregoing, however, on each Distribution
Date, the Class II-P-L Regular Interests will receive the Class II-P Fraction
of all principal payments, including, without limitation, Principal
Prepayments, received in respect of each Class II-P Mortgage Loan and the
Class III-P-L Regular Interests will receive the Class III-P Fraction of all
principal payments, including, without limitation, Principal Prepayments,
received in respect of each Class III-P Mortgage Loan.
GROUP II SENIOR PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution Date,
an amount equal to the sum of (a) the Group II Senior Percentage of the
Principal Payment Amount for Loan Group II (exclusive of the portion thereof
attributable to principal distributions to the Class II-P-L Regular Interests
pursuant to clauses (I)(b)(i) and (II)(b)(i) of the definition of "REMIC II
Distribution Amount"), (b) the Group II Senior Prepayment Percentage of the
Principal Prepayment Amount for Loan Group II (exclusive of the portion
thereof attributable to principal distributions to the Class II-P-L Regular
Interests pursuant to clauses (I)(b)(i) and (II)(b)(i) of the definition of
"REMIC II Distribution Amount") and (c) the Group II Senior Liquidation
Amount.
GROUP II SUBORDINATE PERCENTAGE: With respect to any Distribution Date,
the excess of 100% over the Group II Senior Percentage for such date.
GROUP II SUBORDINATE PREPAYMENT PERCENTAGE: On any Distribution Date for
Loan Group II, the excess of 100% over the Group II Senior Prepayment
Percentage for such Distribution Date; provided, however, that if the
aggregate Class Principal Balance of the Group II-A and Residual Certificates
has been reduced to zero, then the Group II Subordinate Prepayment Percentage
shall equal 100%.
GROUP II SUBORDINATE PRINCIPAL PREPAYMENTS DISTRIBUTION AMOUNT: On any
Distribution Date, the Group II Subordinate Prepayment Percentage of the
Principal Prepayment Amount for Loan Group II (exclusive of the portion
thereof attributable to principal distributions to the Class II-P-L Regular
Interests pursuant to clause (I)(b)(i) of the definition of "REMIC II
Distribution Amount").
GROUP III CERTIFICATES: The Class III-A-1, Class III-X and Class III-P
Certificates.
GROUP III-L REGULAR INTERESTS: The Class III-A-1-L, Class III-X-L and
Class III-P-L Regular Interests.
GROUP III LOANS: The Mortgage Loans designated on the Mortgage Loan
Schedule as Group III Loans.
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GROUP III PREMIUM RATE MORTGAGE LOANS: The Group III Loans having
Pass-Through Rates in excess of 6.625% per annum.
GROUP III SENIOR LIQUIDATION AMOUNT: The aggregate, for each Group III
Loan which became a Liquidated Mortgage Loan during the Prior Period, of the
lesser of: (i) the Group III Senior Percentage of the Principal Balance of
such Mortgage Loan (exclusive of the Class III-P Fraction thereof, with
respect to any Class III-P Mortgage Loan), and (ii) the Group III Senior
Prepayment Percentage of the Liquidation Principal with respect to such
Mortgage Loan.
GROUP III SENIOR PERCENTAGE: With respect to any Distribution Date, the
lesser of (i) 100% and (ii) the Class III-A-1 Principal Balance divided by the
aggregate Principal Balance of the Group III Loans (less the Class III-P
Principal Balance), in each case immediately prior to the Distribution Date.
GROUP III SENIOR PRINCIPAL DISTRIBUTION AMOUNT: For any Distribution
Date, an amount equal to the sum of (a) the Group III Senior Percentage of the
Principal Payment Amount for Loan Group III (exclusive of the portion thereof
attributable to principal distributions to the Class III-P-L Regular Interests
pursuant to clauses (I)(c)(i) and (II)(c)(i) of the definition of "REMIC II
Distribution Amount"), (b) the Group III Senior Prepayment Percentage of the
Principal Prepayment Amount for Loan Group III (exclusive of the portion
thereof attributable to principal distributions to the Class III-P-L Regular
Interests pursuant to clauses (I)(c)(i) and (II)(c)(i) of the definition of
"REMIC II Distribution Amount", as applicable) and (c) the Group III Senior
Liquidation Amount.
GROUP III SUBORDINATE PERCENTAGE: With respect to any Distribution Date,
the excess of 100% over the Group III Senior Percentage for such date.
GROUP III SUBORDINATE PREPAYMENT PERCENTAGE: On any Distribution Date for
Loan Group III, the excess of 100% over the Group III Senior Prepayment
Percentage for such Distribution Date; provided, however, that if the Class
III-A-1 Principal Balance has been reduced to zero, then the Group III
Subordinate Prepayment Percentage shall equal 100%.
GROUP III SUBORDINATE PRINCIPAL PREPAYMENTS DISTRIBUTION AMOUNT: On any
Distribution Date, the Group III Subordinate Prepayment Percentage of the
Principal Prepayment Amount for Loan Group III (exclusive of the portion
thereof attributable to principal distributions to the Class III-P-L Regular
Interests pursuant to clause (I)(c)(i) of the definition of "REMIC II
Distribution Amount").
INDIRECT DTC PARTICIPANTS: Entities such as banks, brokers, dealers or
trust companies, that clear through or maintain a custodial relationship with
a DTC Participant, either directly or indirectly.
INSURED CERTIFICATES: The Class II-A-3 Certificates.
INSURED PAYMENT: With respect to the Insured Certificates, (i) as of any
Distribution Date, any Deficiency Amount, and (ii) any Preference Amount.
INSURANCE AGREEMENT: The Insurance Agreement, dated as of June 1, 1998,
among the Certificate Insurer, the Trustee and the Company.
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INSURANCE PROCEEDS: Amounts paid or payable by the insurer under any
Primary Insurance Policy or any other insurance policy (including any
replacement policy permitted under this Agreement), covering any Mortgage Loan
or Mortgaged Property, including, without limitation, any hazard insurance
policy required pursuant to Section 3.07, any title insurance policy required
pursuant to Section 2.03, and any FHA insurance policy or VA guaranty.
INTEREST DISTRIBUTION AMOUNT: On any Distribution Date, for any Class of
the REMIC I Regular Interests, the REMIC II Regular Interests and Residual
Certificates, the amount of interest accrued on the respective Class Principal
Balance or Class Notional Amount, as applicable, at the related Remittance
Rate for such Class during the Prior Period, in each case before giving effect
to allocations of Realized Losses for the Prior Period or distributions to be
made on such Distribution Date, reduced by Uncompensated Interest Shortfall,
interest shortfalls related to the Relief Act and the interest portion of
Realized Losses allocated to such Class pursuant to the definitions of
"Uncompensated Interest Shortfall", "Relief Act" and "Realized Loss",
respectively; provided, however, that in the case of the Class II-A-8-L
Regular Interests on or before the Class II-A-8 Accretion Termination Date,
such amount shall be reduced by the Class II-A-8 Accrual Amount. The Interest
Distribution Amount for the Class II-A-9-L and Class P-L Regular Interests
shall equal zero.
INTEREST TRANSFER AMOUNT: On any Distribution Date, an amount equal to
one month's interest on the Principal Transfer Amount at 6.750% per annum if
the Undercollateralized Group is Loan Group II and at 6.625% per annum if the
Undercollateralized Group is Loan Group III, plus any shortfall of interest on
the Group II-L Regular Interests (if the Undercollateralized Group is Loan
Group II) or Group III-L Regular Interests (if the Undercollateralized Group
is Loan Group III) from prior Distribution Dates, including accrued and unpaid
interest on such shortfall at the applicable rate set forth above.
INVESTMENT ACCOUNT: The commingled account (which shall be commingled
only with investment accounts related to series of pass-through certificates
with a class of certificates which has a rating equal to the highest of the
Ratings of the Certificates) maintained by the Master Servicer in the trust
department of the Investment Depository pursuant to Section 3.03 and which
bears a designation acceptable to the Rating Agencies.
INVESTMENT DEPOSITORY: Chemical Bank, New York, New York or another bank
or trust company designated from time to time by the Master Servicer. The
Investment Depository shall at all times be an Eligible Institution.
JUNIOR SUBORDINATE CERTIFICATE: The Class I-B-4, Class I-B-5, Class
I-B-6, Class C-B-4, Class C-B-5 and Class C-B-6 Certificates.
LAST SCHEDULED DISTRIBUTION DATE: With respect to each Class of the
REMIC I Regular Interests, the REMIC II Regular Interests and the
Certificates, the date set forth in the table contained in the Preliminary
Statement hereto.
LATE PAYMENT RATE: The rate of interest publicly announced by Citibank,
N.A. at its principal office in New York, New York as its prime rate (any
change in such prime rate of interest to be effective on the date such change
is announced by Citibank, N.A.) plus two (2) percentage points. The Late
Payment Rate shall be computed on the basis of a year of 365 days calculating
the actual
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number of days elapsed. In no event shall the Late Payment Rate exceed
the maximum rate permissible under law applicable to the Insurance Agreement
limiting interest rates.
LENDER: An institution from which the Company purchased any Mortgage
Loans pursuant to a Selling and Servicing Contract.
LIQUIDATED MORTGAGE LOAN: A Mortgage Loan as to which the Master Servicer
or the applicable Servicer has determined in accordance with its customary
servicing practices that all amounts which it expects to recover from or on
account of such Mortgage Loan, whether from Insurance Proceeds, Liquidation
Proceeds or otherwise have been recovered. For purposes of this definition,
acquisition of a Mortgaged Property by the REMIC I Trust Fund shall not
constitute final liquidation of the related Mortgage Loan.
LIQUIDATION PRINCIPAL: The principal portion of Liquidation Proceeds
received (exclusive of the portion thereof attributable to distributions to
the Class P-L Regular Interests pursuant to clauses (I)(a)(i), (I)(b)(i),
(I)(c)(i),(II)(a)(i), (II)(b)(i) and (II)(c)(i) of the definition of "REMIC II
Distribution Amount", as applicable) with respect to each Mortgage Loan which
became a Liquidated Mortgage Loan (but not in excess of the principal balance
thereof) during the Prior Period.
LIQUIDATION PROCEEDS: Amounts after deduction of amounts reimbursable
under Section 3.05(a)(i) and (ii) received and retained in connection with the
liquidation of defaulted Mortgage Loans, whether through foreclosure or
otherwise, other than Insurance Proceeds.
LOAN GROUP: Loan Group I, Loan Group II or Loan Group III, as applicable.
LOAN GROUP I: The group of Mortgage Loans comprised of the Group I Loans.
LOAN GROUP II: The group of Mortgage Loans comprised of the Group II
Loans.
LOAN GROUP III: The group of Mortgage Loans comprised of the Group III
Loans.
LOAN-TO-VALUE RATIO: The original principal amount of a Mortgage Loan
divided by the Original Value; however, references to "current Loan-to-Value
Ratio" shall mean the then current Principal Balance of a Mortgage Loan
divided by the Original Value.
MASTER SERVICER: The Company, or any successor thereto appointed as
provided pursuant to Section 7.02, acting to service and administer the
Mortgage Loans pursuant to Section 3.01.
MASTER SERVICING FEE: The fee charged by the Master Servicer for
supervising the mortgage servicing and advancing certain expenses, equal to a
per annum rate set forth for each Mortgage Loan in Exhibit D on the
outstanding Principal Balance of such Mortgage Loan, payable monthly from the
Certificate Account, the Investment Account or the Custodial Account for P&I.
MONTHLY P&I ADVANCE: An advance of funds by the Master Servicer pursuant
to Section 4.02 or a Servicer pursuant to its Selling and Servicing Contract
to cover delinquent principal and interest installments.
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MONTHLY PAYMENT: The scheduled payment of principal and interest on a
Mortgage Loan (including any amounts due from a Buydown Fund, if any) which is
due on the related Due Date for such Mortgage Loan.
MORTGAGE: The mortgage, deed of trust or other instrument securing a
Mortgage Note.
MORTGAGED PROPERTY: With respect to any Mortgage Loan, other than a
Cooperative Loan, the real property, together with improvements thereto, and,
with respect to any Cooperative Loan, the related Cooperative Stock and
Cooperative Lease, securing the indebtedness of the Mortgagor under the
related Mortgage Loan.
MORTGAGE FILE: The following documents or instruments with respect to
each Mortgage Loan transferred and assigned pursuant to Section 2.01, (X) with
respect to each Mortgage Loan that is not a Cooperative Loan:
(i) The original Mortgage Note endorsed to "U.S. Bank National
Association, as Custodian/Trustee, without recourse" or "U.S. Bank
National Association, as Trustee for the benefit of the Holders from time
to time of PNC Mortgage Securities Corp. Mortgage Pass-Through
Certificates, Series 1998-5, without recourse" and all intervening
endorsements evidencing a complete chain of endorsements from the
originator to the Trustee, or, in the event of any Destroyed Mortgage
Note, a copy or a duplicate original of the Mortgage Note, together with
an original lost note affidavit from the originator of the
related Mortgage Loan or the Company stating that the original Mortgage
Note was lost, misplaced or destroyed, together with a copy of the
related Mortgage Note; in the event the Mortgage Notes or the assignments
referred to in Section (iii)(2) of this definition of "Mortgage File" are
endorsed or executed in blank as of the Closing Date, the Company shall,
within 45 days of the Closing Date, cause such Mortgage Notes or
assignments to be endorsed or executed pursuant to the terms set forth
herein;
(ii) The Buydown Agreement, if applicable;
(iii) A Mortgage that is either
(1) the original recorded Mortgage with recording information
thereon for the jurisdiction in which the Mortgaged Property is located,
together with a Mortgage assignment thereof in recordable form to "U.S.
Bank National Association, as Custodian/Trustee", or to "U.S. Bank
National Association, as Trustee for the Holders of PNC Mortgage
Securities Corp. Mortgage Pass-Through Certificates, Series 1998-5" and
all intervening assignments evidencing a complete chain of assignment,
from the originator to the name holder or the payee endorsing the related
Mortgage Note; or
(2) a copy of the Mortgage which represents a true and correct
reproduction of the original Mortgage and which has either been certified
(i) on the face thereof by the public recording office in the appropriate
jurisdiction in which the Mortgaged Property is located, or (ii) by the
originator or Lender as a true and correct copy the original of which has
been sent for recordation and an original Mortgage assignment thereof
duly executed and acknowledged in recordable form to "U.S. Bank National
Association, as Custodian/Trustee"
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or to "U.S. Bank National Association, as Trustee for the Holders of PNC
Mortgage Securities Corp. Mortgage Pass-Through Certificates, Series
1998-5" and all intervening assignments evidencing a complete chain of
assignment from the originator to the name holder or the payee endorsing
the related Mortgage Note;
(iv) A copy of (a) the title insurance policy, or (b) in lieu
thereof, a title insurance binder, a copy of an attorney's title opinion,
certificate or other evidence of title acceptable to the Company; and
(v) For any Mortgage Loan that has been modified or amended, the
original instrument or instruments effecting such modification or
amendment;
and (Y) with respect to each Cooperative Loan:
(i) the original Mortgage Note endorsed to "U.S. Bank National
Association, as Custodian/Trustee", or to "U.S. Bank National Association,
as Trustee for the Holders of PNC Mortgage Securities Corp. Mortgage
Pass-Through Certificates, Series 1998-5" and all intervening endorsements
evidencing a complete chain of endorsements, from the originator to the
Trustee, or, in the event of any Destroyed Mortgage Note, a copy or a
duplicate original of the Mortgage Note, together with an original lost
note affidavit from the originator of the related Mortgage Loan or the
Company stating that the original Mortgage Note was lost, misplaced or
destroyed, together with a copy of the related Mortgage Note;
(ii) A counterpart of the Cooperative Lease and the Assignment
of Proprietary Lease to the originator of the Cooperative Loan with
intervening assignments showing an unbroken chain of title from such
originator to the Trustee;
(iii) The related Cooperative Stock Certificate, representing the
related Cooperative Stock pledged with respect to such Cooperative Loan,
together with an undated stock power (or other similar instrument)
executed in blank;
(iv) The original recognition agreement by the Cooperative of
the interests of the mortgagee with respect to the related Cooperative
Loan;
(v) The Security Agreement;
(vi) Copies of the original UCC-1 financing statement, and any
continuation statements, filed by the originator of such Cooperative Loan
as secured party, each with evidence of recording thereof, evidencing the
interest of the originator under the Security Agreement and the Assignment
of Proprietary Lease;
(vii) Copies of the filed UCC-3 assignments of the security
interest referenced in clause (vi) above showing an unbroken chain of
title from the originator to the Trustee, each with evidence of recording
thereof, evidencing the interest of the originator under the Security
Agreement and the Assignment of Proprietary Lease;
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(viii) An executed assignment of the interest of the originator in
the Security Agreement, Assignment of Proprietary Lease and the
recognition agreement referenced in clause (iv) above, showing an unbroken
chain of title from the originator to the Trustee;
(ix) An executed UCC-1 financing statement showing the Company as
debtor and the Trustee as secured party, each in a form sufficient for
filing, evidencing the interest of such debtors in the Cooperative Loans;
and
(x) For any Cooperative Loan that has been modified or amended,
the original instrument or instruments effecting such modification or
amendment.
MORTGAGE INTEREST RATE: For any Mortgage Loan, the per annum rate at which
interest accrues on such Mortgage Loan pursuant to the terms of the related
Mortgage Note.
MORTGAGE LOAN SCHEDULE: The schedule, as amended from time to time, of
Mortgage Loans attached hereto as Exhibit D, which shall set forth as to each
Mortgage Loan the following, among other things:
(i) its loan number,
(ii) the address of the Mortgaged Property,
(iii) the name of the Mortgagor,
(iv) the Original Value of the property subject to the Mortgage,
(v) the Principal Balance as of the Cut-Off Date,
(vi) the Mortgage Interest Rate borne by the Mortgage Note,
(vii) whether a Primary Insurance Policy is in effect as of the
Cut-Off Date,
(viii) the maturity of the Mortgage Note,
(ix) the Servicing Fee and the Master Servicing Fee, and
(x) its Loan Group.
MORTGAGE LOANS: With respect to each Cooperative Loan, the related
Mortgage Note, Security Agreement, Assignment of Proprietary Lease,
Cooperative Stock Certificate and Cooperative Lease, and, with respect to
each Mortgage Loan other than a Cooperative Loan, the Mortgages and the
related Mortgage Notes, each transferred and assigned to the Trustee
pursuant to the provisions hereof as from time to time are held as part of the
REMIC I Trust Fund, the Mortgage Loans so held being identified in the
Mortgage Loan Schedule.
MORTGAGE NOTE: The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGE POOL: All of the Mortgage Loans.
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MORTGAGOR: The obligor on a Mortgage Note.
NONRECOVERABLE ADVANCE: With respect to any Mortgage Loan, any advance
which the Master Servicer shall determine to be a Nonrecoverable Advance
pursuant to Section 4.03 and which was, or is proposed to be, made by (i) the
Master Servicer or (ii) a Servicer pursuant to its Selling and Servicing
Contract.
NON-U.S. PERSON: A Person that is not a U.S. Person.
NOTICE: The telephonic or telegraphic notice, promptly confirmed in
writing by telecopy substantially in the form of Exhibit A attached to the
Certificate Insurance Policy, the original of which is subsequently delivered
by registered or certified mail, from the Trustee specifying the Insured
Payment which shall be due and owing on the applicable Distribution Date.
OTS: The Office of Thrift Supervision, or any successor thereto.
OFFICER's CERTIFICATE: A certificate signed by the Chairman of the Board,
the President, a Vice President, or the Treasurer of the Master Servicer and
delivered to the Trustee.
OPINION OF COUNSEL: A written opinion of counsel, who shall be reasonably
acceptable to the Trustee and who may be counsel for the Company or the Master
Servicer.
ORIGINAL VALUE: With respect to any Mortgage Loan other than a Mortgage
Loan originated for the purpose of refinancing an existing mortgage debt, the
lesser of (a) the Appraised Value (if any) of the Mortgaged Property at the
time the Mortgage Loan was originated or (b) the purchase price paid for the
Mortgaged Property by the Mortgagor. With respect to a Mortgage Loan
originated for the purpose of refinancing existing mortgage debt, the Original
Value shall be equal to the Appraised Value of the Mortgaged Property at the
time the Mortgage Loan was originated or the appraised value at the time the
refinanced mortgage debt was incurred.
OVERCOLLATERALIZED GROUP: With respect to Loan Group II, if on any
Distribution Date such Loan Group is not an Undercollateralized Group, and
with respect to Loan Group III, if on any Distribution Date such Loan Group is
not an Undercollateralized Group.
OWNER: Each Holder of an Insured Certificate who, on the applicable
Distribution Date, is entitled under the terms of the Insured Certificates to
payment thereunder.
OWNERSHIP INTEREST: With respect to any Residual Certificate, any
ownership or security interest in such Residual Certificate, including any
interest in a Residual Certificate as the Holder thereof and any other
interest therein whether direct or indirect, legal or beneficial, as owner or
as pledgee.
PASS-THROUGH ENTITY: Any regulated investment company, real estate
investment trust, common trust fund, partnership, trust or estate, and any
organization to which Section 1381 of the Code applies.
PASS-THROUGH RATE: For each Mortgage Loan, a rate equal to the Mortgage
Interest Rate for such Mortgage Loan less the applicable per annum percentage
rates related to each of the Servicing
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Fee and the Master Servicing Fee. For each Mortgage Loan, any calculation of
monthly interest at such rate shall be based upon annual interest at such rate
(computed on the basis of a 360-day year of twelve 30-day months) on the
unpaid Principal Balance of the related Mortgage Loan divided by twelve, and
any calculation of interest at such rate by reason of a Payoff shall be based
upon annual interest at such rate on the outstanding Principal Balance of the
related Mortgage Loan multiplied by a fraction, the numerator of which is the
number of days elapsed from the Due Date of the last scheduled payment of
principal and interest to, but not including, the date of such Payoff, and the
denominator of which is (a) for Payoffs received on a Due Date, 360, and (b)
for all other Payoffs, 365.
PAYING AGENT: Any paying agent appointed by the Trustee pursuant to
Section 8.12.
PAYOFF: Any Mortgagor payment of principal on a Mortgage Loan equal to
the entire outstanding Principal Balance of such Mortgage Loan, if received in
advance of the last scheduled Due Date for such Mortgage Loan and accompanied
by an amount of interest equal to accrued unpaid interest on the Mortgage Loan
to the date of such payment-in-full.
PAYOFF EARNINGS: For any Distribution Date with respect to each Mortgage
Loan on which a Payoff was received by the Master Servicer during the Payoff
Period, the aggregate of the interest earned by the Master Servicer from
investment of each such Payoff from the date of receipt of such Payoff until
the Business Day immediately preceding the related Distribution Date (net of
investment losses).
PAYOFF INTEREST: For any Distribution Date with respect to a Mortgage
Loan for which a Payoff was received on or after the first calendar day of the
month of such Distribution Date and before the 15th calendar day of such
month, an amount of interest thereon at the applicable Pass-Through Rate from
the first day of the month of distribution through the day of receipt thereof;
to the extent (together with Payoff Earnings and the aggregate Master
Servicing Fee) not required to be distributed as Compensating Interest on such
Distribution Date, Payoff Interest shall be payable to the Master Servicer as
additional servicing compensation.
PAYOFF PERIOD: With respect to the first Distribution Date, the period
from the Cut-Off Date through July 14, 1998, inclusive; and with respect to
any Distribution Date thereafter, the period from the 15th day of the Prior
Period through the 14th day of the month of such Distribution Date, inclusive.
PERCENTAGE INTEREST: (a) With respect to the right of each Certificate
of a particular Class in the distributions allocated to such Class,
"Percentage Interest" shall mean the percentage undivided beneficial ownership
interest evidenced by such Certificate of such Class, which percentage shall
equal:
(i) with respect to any Certificate (other than the Residual,
Class X and Class II-A-12 Certificates), its Certificate Principal
Balance divided by the applicable Class Principal Balance;
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(ii) with respect to the Class X and Class II-A-12 Certificates,
the portion of the respective Class Notional Amount evidenced by such
Certificate divided by the respective Class Notional Amount; and
(iii) with respect to the Residual Certificates, the percentage
set forth on the face of such Certificate.
(b) With respect to the rights of each Certificate in connection with
Sections 5.09, 7.01, 8.01(c), 8.02, 8.07, 10.01 and 10.03, "Percentage
Interest" shall mean the percentage undivided beneficial interest evidenced by
such Certificate in REMIC III, which for purposes of such rights only shall
equal:
(i) with respect to any Certificate (other than the Class X,
Class II-A-12 and Class R-3 Certificates), the product of (x) ninety-six
percent (96%) and (y) the percentage calculated by dividing its
Certificate Principal Balance by the Aggregate Certificate Principal
Balance of the Certificates; provided, however, that the percentage in
(x) above shall be increased by one percent (1%) upon each retirement of
the Certificates referenced in the parenthetical above (other than the
Class R-3 Certificates);
(ii) with respect to any of the Class X and Class II-A-12
Certificates, one percent (1%) of such Certificate's Percentage Interest
as calculated by paragraph (a)(ii) of this definition; and
(iii) with respect to the Class R-3 Certificates, zero.
Permitted Transferee: With respect to the holding or ownership of any
Residual Certificate, any Person other than (i) the United States, a State or
any political subdivision thereof, or any agency or instrumentality of any of
the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Code Section 521) which is
exempt from the taxes 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), (iv) rural electric and telephone
cooperatives described in Code Section 1381(a)(2)(C), (v) any "electing large
partnership" as defined in Section 775(a) of the Code, (vi) any Person from
whom the Trustee has not received an affidavit to the effect that it is not a
"disqualified organization" within the meaning of Section 860E(e)(5) of the
Code, and (vii) any other Person so designated by the Company based upon an
Opinion of Counsel that the transfer of an Ownership Interest in a Residual
Certificate to such Person may cause REMIC I, REMIC II or REMIC III, as
applicable, to fail to qualify as a REMIC at any time that the Certificates
are outstanding. The terms "United States", "State" and "International
Organization" shall have the meanings set forth in Code Section 7701 or
successor provisions. A corporation shall not be treated as an instrumentality
of the United States or of any State or political subdivision thereof if all
of its activities are subject to tax, and, with the exception of the FHLMC, a
majority of its board of directors is not selected by such governmental unit.
PERSON: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
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PLANNED PRINCIPAL BALANCE: The amount set forth in the table attached as
Appendix A to the Prospectus, for the applicable Distribution Date, for the
Class II-A-7, Class II-A-10, Class II-A-11, Class II-A-13 and Class II-A-14
Certificates, which amount shall also constitute the "Planned Principal
Balance" for the Corresponding Classes of Group II-L Regular Interests.
PREFERENCE AMOUNT: Any amount previously distributed to an Insured
Certificateholder on the Insured Certificates that is recoverable and sought
to be recovered as a voidable preference by a trustee in bankruptcy pursuant
to the United States Bankruptcy Code (11 U.S.C.), as amended from time to time
in accordance with a final nonappealable order of a court having competent
jurisdiction.
PREPAID MONTHLY PAYMENT: Any Monthly Payment received prior to its
scheduled Due Date, which is intended to be applied to a Mortgage Loan on its
scheduled Due Date and held in the related Custodial Account for P&I until the
Withdrawal Date following its scheduled Due Date.
PRIMARY INSURANCE POLICY: A policy of mortgage guaranty insurance, if
any, on an individual Mortgage Loan, providing coverage as required by Section
2.03(xi).
PRINCIPAL BALANCE: Except as used in Sections 2.02, 3.09 and 9.01 and for
purposes of the definition of Purchase Price, at the time of any
determination, the principal balance of a Mortgage Loan remaining to be paid
at the close of business on the Cut-Off Date, after application of all
scheduled principal payments due on or before the Cut-Off Date, whether or not
received, reduced by all amounts distributed or (except when such
determination occurs earlier in the month than the Distribution Date) to be
distributed to Certificateholders through the Distribution Date in the month
of determination that are reported as allocable to principal of such Mortgage
Loan.
For purposes of the definition of Purchase Price and as used in Sections
2.02, 3.09 and 9.01, at the time of any determination, the principal balance
of a Mortgage Loan remaining to be paid at the close of business on the
Cut-Off Date, after deduction of all scheduled principal payments due on or
before the Cut-Off Date, whether or not received, reduced by all amounts
distributed or to be distributed to Certificateholders through the
Distribution Date in the month of determination that are reported as allocable
to principal of such Mortgage Loan.
In the case of a Substitute Mortgage Loan, "Principal Balance" shall
mean, at the time of any determination, the principal balance of such
Substitute Mortgage Loan transferred to the REMIC I Trust Fund, on the date of
substitution, reduced by all amounts distributed or to be distributed to
Certificateholders through the Distribution Date in the month of determination
that are reported as allocable to principal of such Substitute Mortgage Loan.
The Principal Balance of a Mortgage Loan (including a Substitute Mortgage
Loan) shall not be adjusted solely by reason of any bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period. Whenever a
Realized Loss has been incurred with respect to a Mortgage Loan during a
calendar month, the Principal Balance of such Mortgage Loan shall be reduced
by the amount of such Realized Loss as of the Distribution Date next following
the end of such calendar month after giving effect to the allocation of
Realized Losses and distributions of principal to the Certificates.
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PRINCIPAL PAYMENT: Any payment of principal on a Mortgage Loan other than
a Principal Prepayment.
PRINCIPAL PAYMENT AMOUNT: On any Distribution Date and for any Loan
Group, the sum with respect to the Mortgage Loans in such Loan Group of (i)
the scheduled principal payments on the Mortgage Loans due on the related Due
Date, (ii) the principal portion of repurchase proceeds received with respect
to any Mortgage Loan which was repurchased by the Company pursuant to a
Purchase Obligation or as permitted by this Agreement during the Prior Period,
and (iii) any other unscheduled payments of principal which were received with
respect to any Mortgage Loan during the Prior Period, other than Payoffs,
Curtailments and Liquidation Principal.
PRINCIPAL PREPAYMENT: Any payment of principal on a Mortgage Loan which
constitutes a Payoff or a Curtailment.
PRINCIPAL PREPAYMENT AMOUNT: On any Distribution Date and for any Loan
Group, the sum with respect to the Mortgage Loans in such Loan Group of (i)
Curtailments received during the Prior Period from such Mortgage Loans and
(ii) Payoffs received during the Payoff Period from such Mortgage Loans.
PRINCIPAL TRANSFER AMOUNT: On any Distribution Date, the excess, if any,
of the aggregate Class Principal Balance of the Class A-L Regular Interests of
the Undercollateralized Group over the aggregate Principal Balance of the
Mortgage Loans in the related Loan Group (less the applicable Class P Fraction
of any Class P Mortgage Loans in such Loan Group).
PRIOR PERIOD: The calendar month immediately preceding any Distribution
Date.
PRO RATA ALLOCATION: (i) With respect to losses on Group I Loans, the
allocation of the principal portion of Realized Losses to the outstanding
Group I-L Regular Interests (other than the Class I-P-L Regular Interests),
pro rata according to their respective Class Principal Balances, in reduction
of their respective Class Principal Balances (except if the loss is recognized
with respect to a Class I-P Mortgage Loan, in which case the Class I-P
Fraction of such loss will first be allocated to the Class I-P-L Regular
Interests, and the remainder of such loss will be allocated as set forth
above), and the allocation of the interest portion of Realized Losses to the
outstanding Group I-L Regular Interests, pro rata according to the amount of
interest accrued but unpaid on each such Class of Group I-L Regular Interests
in reduction thereof, and then pro rata according to the respective Class
Principal Balances of each such Class of Group I-L Regular Interests in
reduction of their respective Class Principal Balances (other than the Class
I-P-L Regular Interests) and (ii) with respect to losses on Group II Loans or
Group III Loans, the allocation of the principal portion of Realized Losses
relating to a Group II Loan or Group III Loan to all Classes of the Group
II-L, Group III-L and Group C-B-L Regular Interests, other than the Class
II-P-L and Class III-P-L Regular Interests, pro rata according to their
respective Class Principal Balances (except if the loss is recognized with
respect to a Class II-P Mortgage Loan or a Class III-P Mortgage Loan, in which
case the applicable Class P Fraction of such loss will first be allocated to
the related Class P-L Regular Interests, and the remainder of such loss will
be allocated as set forth above), and the allocation of the interest portion
of Realized Losses to all Classes of the Group II-L, Group III-L and Group
C-B-L Regular Interests pro rata according to the amount of interest accrued
but unpaid on each such Class, other than the Class II-A-9-L, Class II-P-L and
Class III-P-L Regular Interests, in reduction thereof and then in reduction of
their related Class Principal
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Balances (other than the Class II-A-9-L, Class II-P-L and Class III-P-L
Regular Interests). Any losses allocated among all Classes of REMIC II
Regular Interests pursuant to this definition of "Pro Rata Allocation" shall
also be allocated to the Corresponding Class of Certificates in the same
manner and amounts as they reduce such attributes of the Corresponding Class
of REMIC II Regular Interests; provided, however, that the interest portion of
such losses allocated to the Class II-A-7-L, Class II-A-10-L, Class II-A-11-L,
Class II-A-13-L and Class II-A-14-L Regular Interests and applied to reduce
the Interest Distribution Amount thereof shall be allocated to the Class
II-A-7, Class II-A-10, Class II-A-11, Class II-A-13 and Class II-A-14
Certificates in reduction of the distribution to such Certificates pursuant to
the distributions set forth in clause (b)(ii) of the definition of "REMIC III
Distribution Amount", pro rata according to the allocation set forth in such
definition.
PROSPECTUS: The Prospectus, dated June 24, 1998, and the Prospectus
Supplement, dated June 24, 1998, of the Company.
PURCHASE OBLIGATION: An obligation of the Company to repurchase Mortgage
Loans under the circumstances and in the manner provided in Section 2.02 or
Section 2.03.
PURCHASE PRICE: With respect to any Mortgage Loan to be purchased
pursuant to a Purchase Obligation, an amount equal to the sum of the Principal
Balance thereof, and unpaid accrued interest thereon, if any, to the last day
of the calendar month in which the date of repurchase occurs at a rate equal
to the applicable Pass-Through Rate; provided, however, that no Mortgage Loan
shall be purchased or required to be purchased pursuant to Section 2.03, or
more than two years after the Closing Date under Section 2.02, unless (a) the
Mortgage Loan to be purchased is in default, or default is in the judgment of
the Company reasonably imminent, or (b) the Company, at its expense, delivers
to the Trustee an Opinion of Counsel to the effect that the purchase of such
Mortgage Loan will not give rise to a tax on a prohibited transaction, as
defined in Section 860F(a) of the Code; provided, further, that in the case of
clause (b) above, the Company will use its reasonable efforts to obtain such
Opinion of Counsel if such opinion is obtainable.
QUALIFIED INSURER: A mortgage guaranty insurance company duly qualified
as such under the laws of the states in which the Mortgaged Properties are
located if such qualification is necessary to issue the applicable insurance
policy or bond, duly authorized and licensed in such states to transact the
applicable insurance business and to write the insurance provided by the
Primary Insurance Policies and approved as an insurer by FHLMC or FNMA and the
Master Servicer. A Qualified Insurer must have the rating required by the
Rating Agencies.
RATING AGENCY: Initially, each of S&P and Fitch and thereafter, each
nationally recognized statistical rating organization that has rated the
Certificates at the request of the Company, or their respective successors in
interest.
RATINGS: As of any date of determination, the ratings, if any, of the
Certificates as assigned by the Rating Agencies (determined in the case of the
Insured Certificates, without regard to the Certificate Insurance Policy).
REALIZED LOSS: For any Distribution Date, with respect to any Mortgage
Loan which became a Liquidated Mortgage Loan during the related Prior Period,
the sum of (i) the principal balance of such Mortgage Loan remaining
outstanding and the principal portion of Nonrecoverable Advances
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actually reimbursed with respect to such Mortgage Loan (the principal portion
of such Realized Loss), and (ii) the accrued interest on such Mortgage Loan
remaining unpaid and the interest portion of Nonrecoverable Advances actually
reimbursed with respect to such Mortgage Loan (the interest portion of such
Realized Loss). For any Distribution Date, with respect to any Mortgage Loan
which is not a Liquidated Mortgage Loan, the amount of the Bankruptcy Loss
incurred with respect to such Mortgage Loan as of the related Due Date.
Realized Losses, Special Hazard Losses, Fraud Losses and Bankruptcy
Losses shall be allocated to the REMIC I Regular Interests as follows: The
interest portion of Realized Losses, if any, shall be allocated among the
Classes of REMIC I Regular Interests related to such Loan Group pro rata
according to the amount of interest accrued but unpaid thereon, in reduction
thereof. Any interest portion of Realized Losses in excess of the amount
allocated pursuant to the preceding sentence shall be treated as a principal
portion of Realized Losses not attributable to any specific Mortgage Loan in
such Loan Group and allocated pursuant to the succeeding sentences. The
applicable Class P Fraction of any principal portion of Realized Losses
attributable to a Class P Mortgage Loan in the Loan Group shall be allocated
to the related Class P-M Certificates in reduction of the principal balance
thereof. The remainder of the principal portion of Realized Losses shall be
allocated, first, to the Class Y Certificates related to the Loan Group to the
extent of the applicable Class Y Principal Reduction Amount in reduction of
the Class Principal Balance of such Certificates and, second, the remainder,
if any, of such principal portion of Realized Losses shall be allocated to the
related Class Z Certificates in reduction of the Class Principal Balance
thereof.
Realized Losses, Special Hazard Losses, Fraud Losses and Bankruptcy
Losses allocated to any Class of REMIC II Regular Interests shall also be
allocated to the Corresponding Class of Certificates and applied to reduce the
Class Principal Balance for such Class of Certificates in the same manner and
amounts as they reduce such attributes of the Corresponding Class of REMIC II
Regular Interests; provided, however, that the allocation of the interest
portion of such losses is subject to the proviso contained in the last
sentence of the definition of "Pro Rata Allocation" herein.
Except for Special Hazard Losses in excess of Group I Special Hazard
Coverage, Fraud Losses in excess of Group I Fraud Coverage and Bankruptcy
Losses in excess of Group I Bankruptcy Coverage, Realized Losses with respect
to the Group I Loans shall be allocated among the Group I-L Regular Interests
(i) for Realized Losses allocable to principal (a) first, to the Class I-B-6-L
Regular Interests, until the Class I-B-6-L Principal Balance has been reduced
to zero, (b) second, to the Class I-B-5-L Regular Interests, until the Class
I-B-5-L Principal Balance has been reduced to zero, (c) third, to the Class
I-B-4-L Regular Interests, until the Class I-B-4-L Principal Balance has been
reduced to zero, (d) fourth, to the Class I-B-3-L Regular Interests, until the
Class I-B-3-L Principal Balance has been reduced to zero, (e) fifth, to the
Class I-B-2-L Regular Interests, until the Class I-B-2-L Principal Balance has
been reduced to zero, (f) sixth, to the Class I-B-1-L Regular Interests, until
the Class I-B-1-L Principal Balance has been reduced to zero, and (g) seventh,
to the Class I-A-1-L Regular Interests in reduction of the Class I-A-1-L
Principal Balance; provided, however, that if the loss is recognized with
respect to a Class I-P Mortgage Loan, the Class I-P Fraction of such loss will
first be allocated to the Class I-P-L Regular Interests and the remainder of
such loss will be allocated as described above in this clause (i); and (ii)
for Realized Losses allocable to interest (a) first, to the Class I-B-6-L
Regular Interests, in reduction of accrued but unpaid interest thereon and
then in reduction of the Class I-B-6-L Principal Balance, (b) second, to the
Class I-B-5-L Regular Interests, in reduction of accrued but unpaid interest
thereon and then in reduction of the Class I-B-5-
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L Principal Balance, (c) third, to the Class I-B-4-L Regular Interests, in
reduction of accrued but unpaid interest thereon and then in reduction of the
Class I-B-4-L Principal Balance, (d) fourth, to the Class I-B-3-L Regular
Interests, in reduction of accrued but unpaid interest thereon and then in
reduction of the Class I-B-3-L Principal Balance, (e) fifth, to the Class
I-B-2-L Regular Interests, in reduction of accrued but unpaid interest thereon
and then in reduction of the Class I-B-2-L Principal Balance, (f) sixth, to
the Class I-B-1-L Regular Interests, in reduction of accrued but unpaid
interest thereon and then in reduction of the Class I-B-1-L Principal Balance,
and (g) seventh, to the Class I-A-1-L and Class I-X-L Regular Interests pro
rata according to accrued but unpaid interest on such Classes of REMIC II
Regular Interests and then in reduction of the Class Principal Balance of the
Class I-A-1-L Regular Interests.
Except for Special Hazard Losses in excess of the Combined Special Hazard
Coverage, Fraud Losses in excess of the Combined Fraud Coverage and Bankruptcy
Losses in excess of the Combined Bankruptcy Coverage, Realized Losses with
respect to the Group II Loans and Group III Loans shall be allocated among the
Group II-L, Group III-L and Group C-B-L Regular Interests (i) for Realized
Losses allocable to principal (a) first, to the Class C-B-6-L Regular
Interests, until the Class C-B-6-L Principal Balance has been reduced to zero,
(b) second, to the Class C-B-5-L Regular Interests, until the Class C-B-5-L
Principal Balance has been reduced to zero, (c) third, to the Class C-B-4-L
Regular Interests, until the Class C-B-4-L Principal Balance has been reduced
to zero, (d) fourth, to the Class C-B-3-L Regular Interests, until the Class
C-B-3-L Principal Balance has been reduced to zero, (e) fifth, to the Class
C-B-2-L Regular Interests, until the Class C-B-2-L Principal Balance has been
reduced to zero, (f) sixth, to the Class C-B-1-L Regular Interests, until the
Class C-B-1-L Principal Balance has been reduced to zero and (g) seventh, to
(I) the Group II-A-L Regular Interests and the Residual Certificates or (II)
the Class III-A-1-L Regular Interests, as applicable, pro rata, according to
their respective Class Principal Balances in reduction thereof; provided,
however, that if the loss is recognized with respect to a Class P Mortgage
Loan, the Class P Fraction of such loss will first be allocated to the related
Class P-L Regular Interests, and the remainder of such loss will be allocated
as described above in this clause (i); and (ii) for Realized Losses allocable
to interest (a) first, to the Class C-B-6-L Regular Interests, in reduction of
accrued but unpaid interest thereon and then in reduction of the Class C-B-6-L
Principal Balance, (b) second, to the Class C-B-5-L Regular Interests, in
reduction of accrued but unpaid interest thereon and then in reduction of the
Class C-B-5-L Principal Balance, (c) third, to the Class C-B-4-L Regular
Interests, in reduction of accrued but unpaid interest thereon and then in
reduction of the Class C-B-4-L Principal Balance, (d) fourth, to the Class
C-B-3-L Regular Interests, in reduction of accrued but unpaid interest thereon
and then in reduction of the Class C-B-3-L Principal Balance, (e) fifth, to
the Class C-B-2-L Regular Interests, in reduction of accrued but unpaid
interest thereon and then in reduction of the Class C-B-2-L Principal Balance,
(f) sixth, to the Class C-B-1-L Regular Interests, in reduction of accrued but
unpaid interest thereon and then in reduction of the Class C-B-1-L Principal
Balance, and (g) seventh, to (I) the Residual Certificates and the Group
II-A-L Regular Interests (other than the Class II-A-9-L Regular Interests) or
(II) the Class III-A-1-L Regular Interests, as applicable, pro rata according
to accrued but unpaid interest on such Classes of REMIC II Regular Interests
and then in reduction of the Class Principal Balances of the Group II-A-L
(other than the Class II-A-9-L Regular Interests) or Class III-A-1-L Regular
Interests, as applicable; provided that, in the case of clause (i)(g) and
(ii)(g) of this paragraph, losses on Group II Loans will only be allocated to
the Group II-L Regular Interests and the Residual Certificates and losses on
Group III Loans will only be allocated to the Group III-L Regular Interests;
and provided further that, all losses allocated to principal and interest
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that would otherwise be allocable to the Class II-A-4-L Regular Interests
shall be allocated instead to the Class II-A-18-L Regular Interests, until the
Class II-A-18-L Principal Balance has been reduced to zero.
Special Hazard Losses on Group I Loans in excess of the Group I Special
Hazard Coverage, Fraud Losses on Group I Loans in excess of the Group I Fraud
Coverage, and Bankruptcy Losses on Group I Loans in excess of the Group I
Bankruptcy Coverage shall be allocated among the Group I-L Regular Interests
by Pro Rata Allocation.
Special Hazard Losses on Group II Loans and Group III Loans in excess of
the Combined Special Hazard Coverage, Fraud Losses on Group II Loans and Group
III Loans in excess of the Combined Fraud Coverage, and Bankruptcy Losses on
Group II Loans and Group III Loans in excess of the Combined Bankruptcy
Coverage shall be allocated among the Group II-L, Group III-L and Group C-B-L
Regular Interests by Pro Rata Allocation.
On each Distribution Date, after giving effect to the principal
distributions and allocations of losses as provided in this Agreement (without
regard to this paragraph), if the aggregate Class Principal Balance of all
outstanding Group I-L Regular Interests exceeds the aggregate principal
balance of the Group I Loans remaining to be paid at the close of business on
the Cut-Off Date, after deduction of (i) all principal payments due on or
before the Cut-Off Date in respect of each such Mortgage Loan whether or not
paid and (ii) all amounts of principal in respect of each such Mortgage Loan
that have been received or advanced and included in the REMIC II Available
Distribution Amount for Loan Group I, and all losses in respect of each such
Mortgage Loan that have been allocated to the REMIC II Regular Interests, on
such Distribution Date or prior Distribution Dates, then such excess will be
deemed a principal loss and will be allocated to the most junior Class of
Group I-B-L Regular Interests, in reduction of the Class Principal Balance
thereof.
On each Distribution Date, after giving effect to the principal
distributions and allocations of losses as provided in this Agreement (without
regard to this paragraph), if the aggregate Class Principal Balance of all
outstanding Group II-L, Group III-L and Group C-B-L Regular Interests exceeds
the aggregate principal balance of the Group II Loans and Group III Loans
remaining to be paid at the close of business on the Cut-Off Date, after
deduction of (i) all principal payments due on or before the Cut-Off Date in
respect of each such Mortgage Loan whether or not paid and (ii) all amounts of
principal in respect of each such Mortgage Loan that have been received or
advanced and included in the REMIC II Available Distribution Amount for Loan
Group II and Loan Group III, and all losses in respect of each such Mortgage
Loan that have been allocated to the REMIC II Regular Interests, on such
Distribution Date or prior Distribution Dates, then such excess will be deemed
a principal loss and will be allocated to the most junior Class of Group C-B-L
Regular Interests, in reduction of the Class Principal Balance thereof.
RECORD DATE: The last Business Day of the month immediately preceding the
month of the related Distribution Date.
REGULAR INTEREST GROUP: Any of the Group I-L, Group II-L, Group III-L and
Group C-B-L Regular Interests.
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REGULAR INTERESTS: (i) With respect to REMIC I, the REMIC I Regular
Interests, (ii) with respect to REMIC II, the REMIC II Regular Interests and
(iii) with respect to the REMIC III, the Certificates (other than the Residual
Certificates).
RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Interest shortfalls related to the Relief Act for Loan Group I shall be
allocated to the Group I-L Regular Interests pro rata according to the amount
of the Interest Distribution Amount to which each such Class would otherwise
be entitled in reduction thereof.
Interest shortfalls related to the Relief Act for Loan Group II shall be
allocated to the Group II-L Regular Interests and the portion of the Group
C-B-L Regular Interests that derives its Interest Distribution Amount from the
Group II Loans pro rata according to the amount of the Interest Distribution
Amount to which each such Class (or portion thereof) would otherwise be
entitled in reduction thereof.
Interest shortfalls related to the Relief Act for Loan Group III shall be
allocated to the Group III-L Regular Interests and the portion of the Group
C-B-L Regular Interests that derives its Interest Distribution Amount from the
Group III Loans pro rata according to the amount of the Interest Distribution
Amount to which each such Class (or portion thereof) would otherwise be
entitled in reduction thereof.
Interest shortfalls related to the Relief Act for Loan Group II shall be
allocated to the Class II-X-M, Class Y-1 and Class Z-1 Regular Interests, pro
rata according to the amount of the Interest Distribution Amount to which each
such Class of Regular Interests would otherwise be entitled in reduction
thereof.
Interest shortfalls related to the Relief Act for Loan Group III shall be
allocated to the Class III-X-M, Class Y-2 and Class Z-2 Regular Interests, pro
rata according to the amount of the Interest Distribution Amount to which each
such Class of Regular Interests would otherwise be entitled in reduction
thereof.
Interest shortfalls related to the Relief Act for Loan Group I shall be
allocated to the Class W and Class I-X-M Regular Interests, pro rata according
to the amount of the Interest Distribution Amount to which each such Class of
Regular Interests would otherwise be entitled in reduction thereof.
REMIC: A real estate mortgage investment conduit, as such term is defined
in the Code.
REMIC PROVISIONS: Sections 860A through 860G of the Code, related Code
provisions and regulations promulgated thereunder, as the foregoing may be in
effect from time to time.
REMIC I: The segregated pool of assets consisting of the REMIC I Trust
Fund conveyed in trust to the Trustee for the benefit of the Holders of the
REMIC I Regular Interests and the Class R-1 Certificateholders pursuant to
Section 2.01, with respect to which a separate REMIC election is to be made.
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REMIC I AVAILABLE DISTRIBUTION AMOUNT: With respect to each Loan Group
on any Distribution Date, the sum of the following amounts with respect to the
Mortgage Loans in such Loan Group:
(1) the total amount of all cash received by or on behalf of the
Master Servicer with respect to such Mortgage Loans by the Determination
Date for such Distribution Date and not previously distributed (including
Monthly P&I Advances made by Servicers, proceeds of Mortgage Loans in
such Loan Group which have been liquidated and scheduled amounts of
distributions from Buydown Funds respecting Buydown Loans, if any),
except:
(a) all scheduled payments of principal and interest
collected but due on a date subsequent to the related Due Date;
(b) all Curtailments received after the Prior Period
(together with any interest payment received with such prepayments
to the extent that it represents the payment of interest accrued on
a related Mortgage Loan subsequent to the Prior Period);
(c) all Payoffs received after the Payoff Period
immediately preceding such Distribution Date (together with any
interest payment received with such Payoffs to the extent that it
represents the payment of interest accrued on the Mortgage Loans
for the period subsequent to the Prior Period), and interest which
was accrued and received on Payoffs received during the period from
the 1st to the 14th day of the month of such Determination Date,
which interest shall not be included in the calculation of the
REMIC I Available Distribution Amount for any Distribution Date;
(d) Insurance Proceeds and Liquidation Proceeds received on
such Mortgage Loans after the Prior Period;
(e) all amounts in the Certificate Account which are due
and reimbursable to a Servicer or the Master Servicer pursuant to
the terms of this Agreement;
(f) the sum of the Master Servicing Fee and the Servicing
Fee for each such Mortgage Loan; and
(g) Excess Liquidation Proceeds;
(2) the sum, to the extent not previously distributed, of the
following amounts, to the extent advanced or received, as applicable,
by the Master Servicer:
(a) any Monthly P&I Advance made by the Master Servicer to
the Trustee with respect to such Distribution Date relating to such
Mortgage Loans; and
(b) Compensating Interest; and
(3) the total amount, to the extent not previously distributed, of
all cash received by the Distribution Date by the Trustee or the Master
Servicer, in respect of a Purchase
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Obligation under Section 2.02 and Section 2.03 or any permitted
repurchase of a Mortgage Loan.
REMIC I DISTRIBUTION AMOUNT: For any Distribution Date, the REMIC I
Available Distribution Amount shall be distributed to the REMIC I Regular
Interests and the Class R-1 Certificates in the following amounts and
priority:
(a) To the extent of the REMIC I Available Distribution Amount for
Loan Group I:
(i) first, to the Class I-P-M Regular Interests, the aggregate
for all of the Class I-P Mortgage Loans of the product for each Class
I-P Mortgage Loan of the applicable Class I-P Fraction and the sum of
(x) scheduled payments of principal on such Class I-P Mortgage Loan due
on or before the related Due Date in respect of which no distribution
has been made on any previous Distribution Date and which were received
by the Determination Date, or which have been advanced as part of a
Monthly P&I Advance with respect to such Distribution Date, (y) the
principal portion received in respect of such Class I-P Mortgage Loan
during the Prior Period of (1) Curtailments, (2) Insurance Proceeds,
(3) the amount, if any, of the principal portion of the Purchase Price
paid pursuant to a Purchase Obligation or any repurchase of a Mortgage
Loan permitted hereunder and (4) Liquidation Proceeds and (z) the
principal portion of Payoffs received in respect of such Class I-P
Mortgage Loan during the Payoff Period;
(ii) second, to the Class W and Class I-X-M Regular Interests,
concurrently, the Interest Distribution Amounts for such Classes of
Regular Interests remaining unpaid from previous Distribution Dates;
(iii) third, to the Class W and Class I-X-M Regular Interests,
concurrently, the Interest Distribution Amounts for such Classes of
Regular Interests for the current Distribution Date;
(iv) fourth, to the Class W Regular Interests, until the Class
W Principal Balance has been reduced to zero; and
(v) fifth, to the Class R-1 Certificates, the Residual
Distribution Amount for Loan Group I for such Distribution Date.
(b) To the extent of the REMIC I Available Distribution Amount for
Loan Group II:
(i) first, to the Class II-P-M Regular Interests, the
aggregate for all of the Class II-P Mortgage Loans of the product for
each Class II-P Mortgage Loan of the applicable Class II-P Fraction and
the sum of (x) scheduled payments of principal on such Class II-P
Mortgage Loan due on or before the related Due Date in respect of which
no distribution has been made on any previous Distribution Date and which
were received by the Determination Date, or which have been advanced as
part of a Monthly P&I Advance with respect to such Distribution Date, (y)
the principal portion received in respect of such Class II-P Mortgage
Loan during the Prior Period of (1) Curtailments, (2) Insurance Proceeds,
(3) the amount, if any, of the principal
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portion of the Purchase Price paid pursuant to a Purchase Obligation or
any repurchase of a Mortgage Loan permitted hereunder and (4)
Liquidation Proceeds and (z) the principal portion of Payoffs received
in respect of such Class II-P Mortgage Loan during the Payoff Period;
(ii) second, to the Class II-X-M, Class Y-1 and Class Z-1
Regular Interests and the Class R-1 Certificates, concurrently, the sum
of the Interest Distribution Amounts for such Classes of Regular
Interests and Certificates remaining unpaid from previous Distribution
Dates, pro rata according to their respective shares of such unpaid
amounts;
(iii) third, to the Class II-X-M, Class Y-1 and Class Z-1
Regular Interests and the Class R-1 Certificates, concurrently, the sum
of the Interest Distribution Amounts for such Classes of Certificates
for the current Distribution Date, pro rata according to their
respective Interest Distribution Amounts;
(iv) fourth, to the Class R-1 Certificates until the Class
R-1 Principal Balance has been reduced to zero;
(v) fifth, to the Class Y-1 and Class Z-1 Regular Interests,
the Class Y-1 Principal Distribution Amount and the Class Z-1 Principal
Distribution Amount, respectively;
(vi) sixth, to the Class R-1 Certificates, the Residual
Distribution Amount for Loan Group II for such Distribution Date.
(c) To the extent of the REMIC I Available Distribution Amount for
Loan Group III:
(i) first, to the Class III-P-M Regular Interests, the
aggregate for all of the Class III-P Mortgage Loans of the product for
each Class III-P Mortgage Loan of the applicable Class III-P Fraction
and the sum of (x) scheduled payments of principal on such Class III-P
Mortgage Loan due on or before the related Due Date in respect of which
no distribution has been made on any previous Distribution Date and
which were received by the Determination Date, or which have been
advanced as part of a Monthly P&I Advance with respect to such
Distribution Date, (y) the principal portion received in respect of
such Class III-P Mortgage Loan during the Prior Period of (1)
Curtailments, (2) Insurance Proceeds, (3) the amount, if any, of the
principal portion of the Purchase Price paid pursuant to a Purchase
Obligation or any repurchase of a Mortgage Loan permitted hereunder and
(4) Liquidation Proceeds and (z) the principal portion of Payoffs
received in respect of such Class III-P Mortgage Loan during the Payoff
Period;
(ii) second, to the Class III-X-M, Class Y-2 and Class Z-2
Regular Interests, concurrently, the sum of the Interest Distribution
Amounts for such Classes of Regular Interests remaining unpaid from
previous Distribution Dates, pro rata according to their respective
shares of such unpaid amounts;
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(iii) third, to the Class III-X-M, Class Y-2 and Class Z-2
Regular Interests, concurrently, the sum of the Interest Distribution
Amounts for such Classes of Regular Interests for the current
Distribution Date, pro rata according to their respective Interest
Distribution Amounts;
(iv) fourth, to the Class Y-2 and Class Z-2 Regular Interests,
the Class Y-2 Principal Distribution Amount and the Class Z-2 Principal
Distribution Amount, respectively; and
(v) fifth, to the Class R-1 Certificates, the Residual
Distribution Amount for Loan Group III for such Distribution Date.
REMIC I REGULAR INTEREST: The Classes of Regular Interests in the REMIC I
Trust Fund designated as "regular interests" in the table titled "REMIC I
Trust Fund" in the Preliminary Statement hereto.
REMIC I TRUST FUND: The corpus of the trust created pursuant to Section
2.01 of this Agreement. The REMIC I Trust Fund consists of (i) the Mortgage
Loans and all rights pertaining thereto; (ii) such assets as from time to time
may be held by the Trustee (or its duly appointed agent) in the Certificate
Account or the Investment Account (except amounts representing the Master
Servicing Fee or the Servicing Fee); (iii) such assets as from time to time
may be held by Servicers in a Custodial Account for P&I or Custodial Account
for Reserves related to the Mortgage Loans (except amounts representing the
Master Servicing Fee or the Servicing Fee); (iv) property which secured a
Mortgage Loan and which has been acquired by foreclosure or deed in lieu of
foreclosure or, in the case of a Cooperative Loan, a similar form of
conversion, after the Cut-Off Date; and (v) amounts paid or payable by the
insurer under any FHA insurance policy or any Primary Insurance Policy and
proceeds of any VA guaranty and any other insurance policy related to any
Mortgage Loan or the Mortgage Pool. The Certificate Insurance Policy shall
not be a part of the REMIC I Trust Fund.
REMIC II: The segregated pool of assets consisting of the REMIC II Trust
Fund conveyed in trust to the Trustee for the benefit of the Holders of the
REMIC II Regular Interests and the Class R-2 Certificateholders pursuant to
Section 2.05, with respect to which a separate REMIC election is to be made.
REMIC II AVAILABLE DISTRIBUTION AMOUNT: With respect to the Group I-L
Regular Interests, on any Distribution Date, the aggregate of all
distributions with respect to the Class I-X-M, Class I-P-M and Class W Regular
Interests. With respect to the Group II-L Regular Interests, on any
Distribution Date, the aggregate of all distributions with respect to the
Class II-X-M, Class II-P-M, Class Y-1 and Class Z-1 Regular Interests. With
respect to the Group III-L Regular Interests, on any Distribution Date, the
aggregate of all distributions with respect to the Class III-X-M, Class
III-P-M, Class Y-2 and Class Z-2 Regular Interests.
REMIC II DISTRIBUTION AMOUNT: (I) For any Distribution Date prior to the
Group I Credit Support Depletion Date or the Combined Credit Support Depletion
Date, as applicable, the REMIC II Available Distribution Amount shall be
distributed to the REMIC II Regular Interests in the following amounts and
priority:
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(a) With respect to the Group I-L Regular Interests and the Class
R-2 Certificates, on any Distribution Date prior to the Group I Credit
Support Depletion Date, to the extent of the REMIC II Available Distribution
Amount for the Group I-L Regular Interests remaining following prior
distributions, if any, on such Distribution Date:
(i) first, to the Class I-P-L Regular Interests, the aggregate
for all Class I-P Mortgage Loans of the product for each Class I-P
Mortgage Loan of the applicable Class I-P Fraction and the sum of (x)
scheduled payments of principal on such Class I-P Mortgage Loan due on
or before the related Due Date in respect of which no distribution has
been made on any previous Distribution Date and which were received by
the Determination Date, or which have been advanced as part of a Monthly
P&I Advance with respect to such Distribution Date, (y) the principal
portion received in respect of such Class I-P Mortgage Loan during the
Prior Period of (1) Curtailments, (2) Insurance Proceeds, (3) the amount,
if any, of the principal portion of the Purchase Price paid pursuant to a
Purchase Obligation or any repurchase of a Mortgage Loan permitted
hereunder and (4) Liquidation Proceeds and (z) the principal portion of
Payoffs received in respect of such Class I-P Mortgage Loan during the
Payoff Period;
(ii) second, to the Class I-A-1-L and Class I-X-L Regular
Interests, concurrently, the sum of the Interest Distribution Amounts for
such Classes of Regular Interests remaining unpaid from previous
Distribution Dates, pro rata according to their respective shares of such
unpaid amounts;
(iii) third, to the Class I-A-1-L and Class I-X-L Regular
Interests, concurrently, the sum of the Interest Distribution Amounts
for such Classes of Regular Interests for the current Distribution Date,
pro rata according to their respective Interest Distribution Amounts;
(iv) fourth, to the Class I-A-1-L Regular Interests, as
principal, the Group I Senior Principal Distribution Amount;
(v) fifth, to the Class I-P-L Regular Interests, to the extent
of amounts otherwise available to pay the Group I Subordinate Principal
Distribution Amount (without regard to clause (B) of the definition
thereof) on such Distribution Date, the amount payable to the Class I-P-L
Regular Interests on previous Distribution Dates pursuant to clause
(I)(a)(vi) of this definition of "REMIC II Distribution Amount" and
remaining unpaid from such previous Distribution Dates;
(vi) sixth, to the Class I-P-L Regular Interests, to the extent
of amounts otherwise available to pay the Group I Subordinate Principal
Distribution Amount (without regard to clause (B) of the definition
thereof) on such Distribution Date, an amount equal to the Class I-P
Fraction of any Realized Loss on a Class I-P Mortgage Loan, other than
a Special Hazard Loss, Fraud Loss or Bankruptcy Loss in excess of the
Group I Special Hazard Coverage, Group I Fraud Coverage or Group I
Bankruptcy Coverage, as applicable, provided that any amounts distributed
in respect of losses pursuant to paragraph (I)(a)(v) or this paragraph
(I)(a)(vi) of this definition of "REMIC II Distribution Amount" shall
not cause a further reduction in the Class I-P-L Principal Balance;
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(vii) seventh, to the Class I-B-1-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests
remaining unpaid from previous Distribution Dates;
(viii) eighth, to the Class I-B-1-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests for the
current Distribution Date;
(ix) ninth, to the Class I-B-1-L Regular Interests, the portion
of the Group I Subordinate Principal Distribution Amount allocable to
such Class of Regular Interests pursuant to the definition of "Group I
Subordinate Principal Distribution Amount", until the Class I-B-1-L
Principal Balance has been reduced to zero;
(x) tenth, to the Class I-B-2-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests
remaining unpaid from previous Distribution Dates;
(xi) eleventh, to the Class I-B-2-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests for the
current Distribution Date;
(xii) twelfth, to the Class I-B-2-L Regular Interests, the
portion of the Group I Subordinate Principal Distribution Amount
allocable to such Class of Regular Interests pursuant to the definition
of "Group I Subordinate Principal Distribution Amount", until the Class
I-B-2-L Principal Balance has been reduced to zero;
(xiii) thirteenth, to the Class I-B-3-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests
remaining unpaid from previous Distribution Dates;
(xiv) fourteenth, to the Class I-B-3-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests for the
current Distribution Date;
(xv) fifteenth, to the Class I-B-3-L Regular Interests, the
portion of the Group I Subordinate Principal Distribution Amount
allocable to such Class of Regular Interests pursuant to the definition
of "Group I Subordinate Principal Distribution Amount", until the Class
I-B-3-L Principal Balance has been reduced to zero;
(xvi) sixteenth, to the Class I-B-4-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests
remaining unpaid from previous Distribution Dates;
(xvii) seventeenth, to the Class I-B-4-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests for the
current Distribution Date;
(xviii) eighteenth, to the Class I-B-4-L Regular Interests, the
portion of the Group I Subordinate Principal Distribution Amount
allocable to such Class of Regular Interests pursuant to the definition
of "Group I Subordinate Principal Distribution Amount", until the Class
I-B-4-L Principal Balance has been reduced to zero;
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(xix) nineteenth, to the Class I-B-5-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests
remaining unpaid from previous Distribution Dates;
(xx) twentieth, to the Class I-B-5-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests for the
current Distribution Date;
(xxi) twenty-first, to the Class I-B-5-L Regular Interests, the
portion of the Group I Subordinate Principal Distribution Amount
allocable to such Class of Regular Interests pursuant to the definition
of "Group I Subordinate Principal Distribution Amount", until the Class
I-B-5-L Principal Balance has been reduced to zero;
(xxii) twenty-second, to the Class I-B-6-L Regular Interests,
the Interest Distribution Amount for such Class of Regular Interests
remaining unpaid from previous Distribution Dates;
(xxiii) twenty-third, to the Class I-B-6-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests for the
current Distribution Date;
(xxiv) twenty-fourth, to the Class I-B-6-L Regular Interests, the
portion of the Group I Subordinate Principal Distribution Amount
allocable to such Class of Regular Interests pursuant to the definition
of "Group I Subordinate Principal Distribution Amount", until the Class
I-B-6-L Principal Balance has been reduced to zero;
(xxv) twenty-fifth, to each Class of Group I-B-L Regular
Interests in the order of seniority, the remaining portion, if any, of
the REMIC II Available Distribution Amount for the Group I-L Regular
Interests, up to the amount of unreimbursed Realized Losses previously
allocated to such Class, if any, provided that any amounts distributed
pursuant to this paragraph (I)(a)(xxv) of this definition of "REMIC II
Distribution Amount" shall not cause a further reduction in the Class
Principal Balances of the Group I-B-L Regular Interests; and
(xxvi) twenty-sixth, to the Class R-2 Certificates, the Residual
Distribution Amount for the Group I-L Regular Interests for such
Distribution Date;
(b) With respect to the Group II-L and the Class R-2 Certificates, on
any Distribution Date prior to the Combined Credit Support Depletion Date, to
the extent of the REMIC II Available Distribution Amount for the Group II-L
Regular Interests remaining following prior distributions, if any, on such
Distribution Date:
(i) first, to the Class II-P-L Regular Interests, the aggregate
for all Class II-P Mortgage Loans of the product for each Class II-P
Mortgage Loan of the applicable Class II-P Fraction and the sum of (x)
scheduled payments of principal on such Class II-P Mortgage Loan due on
or before the related Due Date in respect of which no distribution has
been made on any previous Distribution Date and which were received by
the Determination Date, or which have been advanced as part of a Monthly
P&I Advance with respect to such Distribution Date, (y) the principal
portion received in respect of such Class II-P Mortgage
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Loan during the Prior Period of (1) Curtailments, (2) Insurance Proceeds,
(3) the amount, if any, of the principal portion of the Purchase Price
paid pursuant to a Purchase Obligation or any repurchase of a Mortgage
Loan permitted hereunder and (4) Liquidation Proceeds and (z) the
principal portion of Payoffs received in respect of such Class II-P
Mortgage Loan during the Payoff Period;
(ii) second, to the Group II-A-L Regular Interests entitled to
interest, the Class II-X-L and Class R-3-L Regular Interests and the Class
R-2 Certificates, the sum of the Interest Distribution Amounts for such
Classes of Regular Interests and Certificates remaining unpaid from
previous Distribution Dates, pro rata according to their respective shares
of such unpaid amounts; provided, however, that on or before the Class
II-A-8 Accretion Termination Date, the amount that would otherwise be
payable to the Class II-A-8-L Regular Interests pursuant to this clause
(I)(b)(ii) will be paid instead as principal as set forth in clause
(I)(b)(iii)(b) of this definition of "REMIC II Distribution Amount";
(iii) third,
(a) to the Group II-A-L Regular Interests entitled
to interest, the Class II-X-L and Class R-3-L Regular Interests and
the Class R-2 Certificates, concurrently, the sum of the Interest
Distribution Amounts for such Classes of Regular Interests and
Certificates for the current Distribution Date, pro rata according
to their respective Interest Distribution Amounts provided, however,
that on or before the Class II-A-8 Accretion Termination Date, the
amount that would otherwise be payable to the Class II-A-8-L Regular
Interests pursuant to this clause (I)(b)(iii)(a) will be paid instead
as principal as set forth in clause (I)(b)(iii)(b) of this definition
of "REMIC II Distribution Amount";
(b) on or before the Class II-A-8 Accretion Termination
Date, the Class II-A-8 Accrual Amount, as principal, as follows:
(1) first, to the Class II-A-6-L and Class II-A-9-L
Regular Interests, pro rata, to the extent necessary to reduce
the Class II-A-6-L Principal Balance and the Class II-A-9-L
Principal Balance to their respective Targeted Principal
Balances for such Distribution Date; and
(2) second, to the Class II-A-8-L Regular Interests,
until the Class II-A-8-L Principal Balance has been reduced to
zero; and
(iv) fourth, to the Group II-A-L and Class R-3-L Regular
Interests and the Class R-2 Certificates, as principal, the Group II
Senior Principal Distribution Amount, as follows;
(a) first, to the Class II-A-5-L and Class II-A-18-L
Regular Interests, pro rata, an amount, up to the amount of the
Group II Lockout Priority Amount for such Distribution Date, until
the Class Principal Balances of the Class II-A-5-L and Class
II-A-18-L Regular Interests have each been reduced to zero;
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<PAGE>
(b) second, concurrently, the portion of the Group II
Senior Principal Distribution Amount remaining after the
distributions described above, until the Class II-A-15-L Principal
Balance has been reduced to zero;
(1) 29.6867598569%, sequentially, as follows:
(A) first, to the Class R-2 Certificates and the
Class R-3-L Regular Interests, pro rata, until the
Class Principal Balance of each of such Certificates
and Regular Interests has been reduced to zero;
(B) second, to the Class II-A-15-L Regular
Interests;
(2) 7.4522775892% to the Class II-A-16-L Regular
Interests;
(3) 23.3504697794% sequentially, as follows:
(A) first, to the Class II-A-1-L Regular
Interests, until the Class II-A-1-L Principal Balance
has been reduced to $29,623,525;
(B) second, concurrently, until the Class
II-A-2-L Principal Balance has been reduced to zero:
(x) 49.1218111758%, to the Class II-A-2-L
Regular Interests;
(y) 37.7714145904%, to the Class II-A-17-L
Regular Interests; and
(z) 13.1067742338%, to the Class II-A-1-L
Regular Interests; and
(C) third, to the Class II-A-1-L Regular
Interests, until the Class II-A-1-L Principal Balance
has been reduced to zero; and
(4) 39.5104927746%, sequentially, as follows;
(A) first, to the Class II-A-7-L Regular
Interests, to the extent necessary to reduce the Class
II-A-7-L Principal Balance to its Planned Principal
Balance for such Distribution Date;
(B) second, to the Class II-A-11-L Regular
Interests, to the extent necessary to reduce the Class
II-A-11-L Principal Balance to its Planned Principal
Balance for such Distribution Date;
(C) third, to the Class II-A-10-L Regular
Interests, to the extent necessary to reduce the Class
II-A-10-L Principal Balance to its Planned Principal
Balance for such Distribution Date;
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<PAGE>
(D) fourth, to the Class II-A-13-L Regular
Interests, to the extent necessary to reduce the Class
II-A-13-L Principal Balance to its Planned Principal
Balance for such Distribution Date;
(E) fifth, to the Class II-A-14-L Regular
Interests, to the extent necessary to reduce the Class
II-A-14-L Principal Balance to its Planned Principal
Balance for such Distribution Date;
(F) sixth, to the Class II-A-6-L and Class
II-A-9-L Regular Interests, pro rata, to the extent
necessary to reduce the Class Principal Balances of
the Class II-A-6-L and Class II-A-9-L Regular Interests
to their respective Targeted Principal Balances for
such Distribution Date (after giving effect to the
distribution of the Class II-A-8 Accrual Amount for
such Distribution Date);
(G) seventh, to the Class II-A-8-L Regular
Interests, until the Class II-A-8-L Principal Balance
has been reduced to zero;
(H) eighth, to the Class II-A-6-L and Class
II-A-9-L Regular Interests, pro rata, until the Class
Principal Balances of the Class II-A-6-L and Class
II-A-9-L Regular Interests have been reduced to zero;
(I) ninth, to the Class II-A-7-L Regular
Interests, until the Class II-A-7-L Principal Balance
has been reduced to zero;
(J) tenth, to the Class II-A-11-L Regular
Interests, until the Class II-A-11-L Principal Balance
has been reduced to zero;
(K) eleventh, to the Class II-A-10-L Regular
Interests, until the Class II-A-10-L Principal Balance
has been reduced to zero;
(L) twelfth, to the Class II-A-13-L Regular
Interests, until the Class II-A-13-L Principal Balance
has been reduced to zero; and
(M) thirteenth, to the Class II-A-14-L Regular
Interests, until the Class II-A-14-L Principal Balance
has been reduced to zero;
(c) third, concurrently, the portion of the Group II Senior
Principal Distribution Amount remaining after the distributions
described above, until the Class II-A-3-L Principal Balance has
been reduced to zero:
(1) 38.2587678782% to the Class II-A-3-L Regular
Interests;
(2) 10.7388812127% the Class II-A-17-L Regular
Interests, until the Class II-A-17 Principal Balance has been
reduced to zero;
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<PAGE>
(3) 6.6261351129% the Class II-A-16-L Regular Interests,
until the Class II-A-16 Principal Balance has been reduced to
zero; and
(4) 44.3762157962%, sequentially, as follows
(A) first, to the Class II-A-7-L Regular
Interests, to the extent necessary to reduce the Class
II-A-7-L Principal Balance to its Planned Principal
Balance for such Distribution Date;
(B) second, to the Class II-A-11-L Regular
Interests, to the extent necessary to reduce the Class
II-A-11-L Principal Balance to its Planned Principal
Balance for such Distribution Date;
(C) third, to the Class II-A-10-L Regular
Interests, to the extent necessary to reduce the Class
II-A-10-L Principal Balance to its Planned Principal
Balance for such Distribution Date;
(D) fourth, to the Class II-A-13-L Regular
Interests, to the extent necessary to reduce the Class
II-A-13-L Principal Balance to its Planned Principal
Balance for such Distribution Date;
(E) fifth, to the Class II-A-14-L Regular
Interests, to the extent necessary to reduce the Class
II-A-14-L Principal Balance to its Planned Principal
Balance for such Distribution Date;
(F) sixth, to the Class II-A-6-L and Class
II-A-9-L Regular Interests, pro rata, to the extent
necessary to reduce the Class Principal Balances of the
Class II-A-6-L and Class II-A-9-L Regular Interests to
their respective Targeted Principal Balances for such
Distribution Date (after giving effect to the
distribution of the Class II-A-8 Accrual Amount for
such Distribution Date);
(G) seventh, to the Class II-A-8-L Regular
Interests, until the Class II-A-8-L Principal Balance
has been reduced to zero;
(H) eighth, to the Class II-A-6-L and Class
II-A-9-L Regular Interests, pro rata, until the Class
Principal Balances of the Class II-A-6-L and Class
II-A-9-L Regular Interests have been reduced to zero;
(I) ninth, to the Class II-A-7-L Regular
Interests, until the Class II-A-7-L Principal Balance
has been reduced to zero;
(J) tenth, to the Class II-A-11-L Regular
Interests, until the Class II-A-11-L Principal Balance
has been reduced to zero;
(K) eleventh, to the Class II-A-10-L Regular
Interests, until the Class II-A-10-L Principal Balance
has been reduced to zero;
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(L) twelfth, to the Class II-A-13-L Regular
Interests, until the Class II-A-13-L Principal Balance
has been reduced to zero; and
(M) thirteenth, to the Class II-A-14-L Regular
Interests, until the Class II-A-14-L Principal Balance
has been reduced to zero;
(d) fourth, to the Class II-A-4-L and Class II-A-19-L
Regular Interests, pro rata, the portion of the Group II Senior
Principal Distribution Amount remaining after the distributions
described above, until the Class Principal Balances of the Class
II-A-4-L and Class II-A-19-L Regular Interests have been reduced
to zero; and
(e) fifth, to the Class II-A-5-L and Class II-A-18-L
Regular Interests, pro rata, the portion of the Group II Senior
Principal Distribution Amount remaining after the distributions
described above, until the Class Principal Balances of the Class
II-A-5-L and Class II-A-18-L Regular Interests have been reduced
to zero;
(c) With respect to the Group III-L Regular Interests, on any
Distribution Date prior to the Combined Credit Support Depletion Date, to the
extent of the REMIC II Available Distribution Amount for the Group III-L
Regular Interests remaining following prior distributions, if any, on such
Distribution Date:
(i) first, to the Class III-P-L Regular Interests, the
aggregate for all Class III-P Mortgage Loans of the product for each
Class III-P Mortgage Loan of the applicable Class III-P Fraction and the
sum of (x) scheduled payments of principal on such Class III-P Mortgage
Loan due on or before the related Due Date in respect of which no
distribution has been made on any previous Distribution Date and which
were received by the Determination Date, or which have been advanced as
part of a Monthly P&I Advance with respect to such Distribution Date,
(y) the principal portion received in respect of such Class III-P
Mortgage Loan during the Prior Period of (1) Curtailments, (2) Insurance
Proceeds, (3) the amount, if any, of the principal portion of the
Purchase Price paid pursuant to a Purchase Obligation or any repurchase
of a Mortgage Loan permitted hereunder and (4) Liquidation Proceeds and
(z) the principal portion of Payoffs received in respect of such Class
III-P Mortgage Loan during the Payoff Period;
(ii) second, to the Class III-A-1-L and Class III-X-L Regular
Interests, the sum of the Interest Distribution Amounts for such Classes
of Regular Interests remaining unpaid from previous Distribution Dates,
pro rata according to their respective shares of such unpaid amounts;
(iii) third, to the Class III-A-1-L and Class III-X-L Regular
Interests, concurrently, the sum of the Interest Distribution Amounts
for such Classes of Regular Interests for the current Distribution Date,
pro rata according to their respective Interest Distribution Amounts;
(iv) fourth, to the Class III-A-1-L Regular Interests, as
principal, the Group III Senior Principal Distribution Amount;
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<PAGE>
(d) With respect to the Group C-B-L, Class II-P-L and Class III-P-L
Regular Interests and the Class R-2 Certificates, on any Distribution Date
prior to the Combined Credit Support Depletion Date and subject to the payment
of the amounts pursuant to paragraph (I)(b) and paragraph (I)(c) of this
definition of "REMIC II Distribution Amount", and to the extent of the REMIC
II Available Distribution Amount for the Group II-L and Group III-L Regular
Interests remaining following prior distributions, if any, on such
Distribution Date:
(i) first, to the Class II-P-L and Class III-P-L Regular
Interests, to the extent of amounts otherwise available to pay the Group
C-B Subordinate Principal Distribution Amount (without regard to clause
(B) of the definition thereof) on such Distribution Date, the amount
payable to the Class II-P-L and Class III-P-L Regular Interests on
previous Distribution Dates pursuant to clause (I)(d)(ii) of this
definition of "REMIC II Distribution Amount" and remaining unpaid from
such previous Distribution Dates; provided, that if the amounts
otherwise available to pay the Group C-B Subordinate Principal
Distribution Amount for any such Distribution Date are insufficient to
cover such outstanding principal losses for the Class II-P-L and Class
III-P-L Regular Interests as set forth above, then the amounts otherwise
available to pay the Group C-B Subordinate Principal Distribution Amount
will be allocated pro rata to the Class II-P-L and Class III-P-L Regular
Interests based on the amount such Regular Interests are entitled to
receive pursuant to this clause;
(ii) second, to the Class II-P-L and Class III-P-L Regular
Interests, to the extent of amounts otherwise available to pay the Group
C-B Subordinate Principal Distribution Amount (without regard to clause
(B) of the definition thereof) on such Distribution Date, an amount
equal to the Class II-P or Class III-P Fraction, as applicable, of any
Realized Loss on a Class II-P or Class III-P Mortgage Loan, other than
a Special Hazard Loss in excess of the Combined Special Hazard
Coverage, a Fraud Loss in excess of the Combined Fraud Coverage or
a Bankruptcy Loss in excess of the Combined Bankruptcy Coverage,
provided that any amounts distributed in respect of losses pursuant to
paragraph (I)(d)(i) or this paragraph (I)(d)(ii) of this definition of
"REMIC II Distribution Amount" shall not cause a further reduction in
the Class II-P-L or Class III-P-L Principal Balance; provided further,
that if the amounts otherwise available to pay the Group C-B
Subordinate Principal Distribution Amount for any such Distribution
Date are insufficient to cover such outstanding principal losses for
the Class II-P-L and Class III-P-L Regular Interests as set forth
above, then the amounts otherwise available to pay the Group C-B
Subordinate Principal Distribution Amount will be allocated
pro rata to the Class II-P-L and Class III-P-L Regular Interests based
on the amount such Regular Interests are entitled to receive pursuant
to this clause;
(iii) third, to the Class C-B-1-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests
remaining unpaid from previous Distribution Dates;
(iv) fourth, to the Class C-B-1-L Regular Interests, the Interest
Distribution Amount for such Class of Regular Interests for the current
Distribution Date;
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<PAGE>
(v) fifth, to the Class C-B-1-L Regular Interests, the portion of
the Group C-B Subordinate Principal Distribution Amount allocable to
such Class of Regular Interests pursuant to the definition of "Group
C-B Subordinate Principal Distribution Amount", until the Class
C-B-1-L Principal Balance has been reduced to zero;
(vi) sixth, to the Class C-B-2-L Regular Interests, the Interest
Distribution Amount for such Class of Regular Interests remaining unpaid
from previous Distribution Dates;
(vii) seventh, to the Class C-B-2-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests for
the current Distribution Date;
(viii) eighth, to the Class C-B-2-L Regular Interests, the portion
of the Group C-B Subordinate Principal Distribution Amount allocable
to such Class of Regular Interests pursuant to the definition of "Group
C-B Subordinate Principal Distribution Amount", until the Class C-B-2-L
Principal Balance has been reduced to zero;
(ix) ninth, to the Class C-B-3-L Regular Interests, the Interest
Distribution Amount for such Class of Regular Interests remaining
unpaid from previous Distribution Dates;
(x) tenth, to the Class C-B-3-L Regular Interests, the Interest
Distribution Amount for such Class of Regular Interests for the current
Distribution Date;
(xi) eleventh, to the Class C-B-3-L Regular Interests, the portion
of the Group C-B Subordinate Principal Distribution Amount allocable to
such Class of Regular Interests pursuant to the definition of "Group C-B
Subordinate Principal Distribution Amount", until the Class C-B-3-L
Principal Balance has been reduced to zero;
(xii) twelfth, to the Class C-B-4-L Regular Interests, the Interest
Distribution Amount for such Class of Regular Interests remaining unpaid
from previous Distribution Dates;
(xiii) thirteenth, to the Class C-B-4-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests for the
current Distribution Date;
(xiv) fourteenth, to the Class C-B-4-L Regular Interests, the
portion of the Group C-B Subordinate Principal Distribution Amount
allocable to such Class of Regular Interests pursuant to the definition
of "Group C-B Subordinate Principal Distribution Amount", until the
Class C-B-4-L Principal Balance has been reduced to zero;
(xv) fifteenth, to the Class C-B-5-L Regular Interests, the Interest
Distribution Amount for such Class of Regular Interests remaining unpaid
from previous Distribution Dates;
(xvi) sixteenth, to the Class C-B-5-L Regular Interests, the Interest
Distribution Amount for such Class of Regular Interests for the current
Distribution Date;
(xvii) seventeenth, to the Class C-B-5-L Regular Interests, the
portion of the Group C-B Subordinate Principal Distribution Amount
allocable to such Class of Regular Interests pursuant to the definition
of "Group C-B Subordinate Principal Distribution Amount", until the
Class C-B-5-L Principal Balance has been reduced to zero;
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<PAGE>
(xviii) eighteenth, to the Class C-B-6-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests
remaining unpaid from previous Distribution Dates;
(xix) nineteenth, to the Class C-B-6-L Regular Interests, the
Interest Distribution Amount for such Class of Regular Interests for
the current Distribution Date;
(xx) twentieth, to the Class C-B-6-L Regular Interests, the portion
of the Group C-B Subordinate Principal Distribution Amount allocable
to such Class of Regular Interests pursuant to the definition of
"Group C-B Subordinate Principal Distribution Amount", until the Class
C-B-6-L Principal Balance has been reduced to zero;
(xxi) twenty-first, to the Certificate Insurer, the Class II-A-3
Reimbursement Amount;
(xxii) twenty-second, to each Class of Group C-B-L Regular
Interests in the order of seniority, the remaining portion, if any, of
the REMIC II Available Distribution Amount for the Group II-L and
Group III-L Regular Interests, up to the amount of unreimbursed
Realized Losses previously allocated to such Class, if any, provided
that any amounts distributed pursuant to this paragraph (I)(d)(xxii)
of this definition of "REMIC II Distribution Amount" shall not cause
a further reduction in the Class Principal Balances of the Group
C-B-L Regular Interests; and
(xxiii) twenty-third, to the Class R-2 Certificates, the
Residual Distribution Amount for the Group II-L and Group III-L Regular
Interests for such Distribution Date;
Notwithstanding the foregoing,
(X) on any Distribution Date occurring on or after the date on
which the aggregate Class Principal Balance of the Group II-A-L Regular
Interests or the Class III-A-1-L Regular Interests has been reduced to zero,
the remaining Class A-L Regular Interests of the other Regular Interest Group
will be entitled to receive as principal, in addition to any principal
payments otherwise described above, all amounts in respect of principal on
the Mortgage Loans in the Loan Group relating to the Class A-L Regular
Interests that have been paid in full (after distributions of principal to the
Class II-P-L or Class III-P-L Regular Interests pursuant to paragraph
(I)(b)(i) or (I)(c)(i) above), which amounts will be paid in accordance with
paragraphs (I)(b)(iv) or (I)(c)(iv) above, as applicable, to the extent of and
in reduction of the Class Principal Balances thereof, prior to any
distributions of principal to the Group C-B-L Regular Interests in paragraph
(I)(d) above, provided, however, that principal will not be distributed as set
forth above if on such Distribution Date (a) the Group C-B Percentage for such
Distribution Date is greater than or equal to 200% of the Group C-B Percentage
as of the Closing Date and (b) the average outstanding principal balance of
the Mortgage Loans in either of Loan Group II or Loan Group III delinquent 60
days or more over the last six months (including Mortgage Loans in foreclosure
and Mortgage Loans the property of which is held by REMIC I and acquired by
foreclosure or deed in lieu of foreclosure), as a percentage of the related
Group C-B Component Balance, is less than 50%, and
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(Y) if on any Distribution Date either of Loan Group II or Loan
Group III is an Undercollateralized Group and the other Loan Group is an
Overcollateralized Group, then the REMIC II Available Distribution Amount of
the Overcollateralized Group, to the extent any such amounts are remaining
after distributions to the Class P-L, Class X-L and Class A-L Regular
Interests of the Overcollateralized Group pursuant to paragraphs (I)(b) or
(I)(c), as applicable, will be paid in the following priority: (i) an amount
equal to the Interest Transfer Amount will be paid to the Undercollateralized
Group and (ii) an amount equal to the Principal Transfer Amount will be paid
to the Undercollateralized Group, and (iii) any remaining amounts will be
distributed pursuant to paragraph (I)(d) of this definition of "REMIC II
Distribution Amount".
(II) For any Distribution Date on or after the Group I Credit Support
Depletion Date or the Combined Credit Support Depletion Date, as applicable,
the REMIC II Available Distribution Amount shall be distributed to the
outstanding Classes of REMIC II Regular Interests and the Class R-2
Certificates in the following amounts and priority:
(a) With respect to the Group I-L Regular Interests and Class R-2
Certificates, on each Distribution Date on or after the Group I Credit Support
Depletion Date, to the extent of the REMIC II Available Distribution Amount
for the Group I-L Regular Interests remaining following prior distributions,
if any, on such Distribution Date:
(i) first, to the Class I-P-L Regular Interests, principal in
the amount that would otherwise be distributed to such Class on such
Distribution Date pursuant to clause (I)(a)(i) of this definition of
"REMIC II Distribution Amount";
(ii) second, to the Class I-A-1-L and Class I-X-L Regular
Interests, the amount payable to each such Class of Regular Interests
on prior Distribution Dates pursuant to clause (I)(a)(ii) or
(II)(a)(iii) of this definition of "REMIC II Distribution Amount",
and remaining unpaid, pro rata according to such amount payable to
the extent of amounts available;
(iii) third, to the Class I-A-1-L and Class I-X-L Regular Interests,
the sum of the Interest Distribution Amounts for such Classes of Regular
Interests for the current Distribution Date, pro rata according to their
respective Interest Distribution Amounts;
(iv) fourth, to the Class I-A-1-L Regular Interests, the Group I
Senior Principal Distribution Amount; and
(v) fifth, to the Class R-2 Certificates, the Residual Distribution
Amount for the Group I-L Regular Interests for such Distribution Date;
(b) With respect to the Group II-L Regular Interests and the Class
R-2 Certificates, on each Distribution Date on or after the Combined Credit
Support Depletion Date, to the extent of the REMIC II Available Distribution
Amount for the Group II-L Regular Interests remaining following prior
distributions, if any, on such Distribution Date:
(i) first, to the Class II-P-L Regular Interests, principal in the
amount that would otherwise be distributed to such Class on such
Distribution Date pursuant to clause (I)(b)(i) of this definition of
"REMIC II Distribution Amount";
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(ii) second, to the Group II-A-L, Class II-X-L and Class R-3-L
Regular Interests and the Class R-2 Certificates, the amount payable to
each such Class of Regular Interests and Certificates on prior
Distribution Dates pursuant to clause (I)(b)(ii) or (II)(b)(iii) of this
definition of "REMIC II Distribution Amount", and remaining unpaid, pro
rata according to such amount;
(iii) third, to the Group II-A-L Regular Interests entitled to
interest and the Class II-X-L and Class R-3-L Regular Interests and the
Class R-2 Certificates, the sum of the Interest Distribution Amounts for
such Classes of Regular Interests and Certificates for the current
Distribution Date, pro rata according to their respective Interest
Distribution Amounts;
(iv) fourth, to the Group II-A-L and Class R-3-L Regular Interests
and the Class R-2 Certificates, the Group II Senior Principal
Distribution Amount, pro rata according to their respective Class
Principal Balances;
(v) fifth, to the Certificate Insurer, the Class II-A-3
Reimbursement Amount; and
(vi) sixth, to the Class R-2 Certificates, the Residual
Distribution Amount for the Group II-L Regular Interests for such
Distribution Date;
(c) With respect to the Group III-L Regular Interests and the Class
R-2 Certificates, on each Distribution Date on or after the Combined Credit
Support Depletion Date, to the extent of the REMIC II Available Distribution
Amount for the Group III-L Regular Interests remaining following prior
distributions, if any, on such Distribution Date:
(i) first, to the Class III-P-L Regular Interests, principal in
the amount that would otherwise be distributed to such Class on such
Distribution Date pursuant to clause (I)(c)(i) of this definition of
"REMIC II Distribution Amount";
(ii) second, to the Class III-A-1-L and Class III-X-L Regular
Interests, the amount payable to each such Class of Regular Interests on
prior Distribution Dates pursuant to clause (I)(c)(ii) or (II)(c)(iii) of
this definition of "REMIC II Distribution Amount", and remaining unpaid,
pro rata according to such amount payable to the extent of amounts
available;
(iii) third, to the Class III-A-1-L and Class III-X-L Regular
Interests, the Interest Distribution Amount for such Class of Regular
Interests for the current Distribution Date, pro rata according to their
respective Interest Distribution Amounts;
(iv) fourth, to the Class III-A-1-L Regular Interests, the Group
III Senior Principal Distribution Amount; and
(v) fifth, to the Class R-2 Certificates, the Residual Distribution
Amount for the Group III-L Regular Interests for such Distribution Date.
Notwithstanding the foregoing and prior to distributions pursuant to
paragraph (II)(b)(vi) or (II)(c)(v), if on any Distribution Date either of
Loan Group II or Loan Group III is an Undercollateralized Group and the other
Loan Group is an Overcollateralized Group, then the
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REMIC II Available Distribution Amount of the Overcollateralized Group, to the
extent any such amounts are remaining after distributions to the Class P-L,
Class X-L and Class A-L Regular Interests of the Overcollateralized Group
pursuant to paragraphs (II)(b) or (II)(c), as applicable, will be paid in the
following priority: (i) an amount equal to the Interest Transfer Amount will
be paid to the Undercollateralized Group and (ii) an amount equal to the
Principal Transfer Amount will be paid to the Undercollateralized Group.
REMIC II REGULAR INTEREST: The Classes of Regular Interests in the REMIC
II Trust Fund designated as "regular interests" in the table titled "REMIC II
Trust Fund" in the Preliminary Statement hereto.
REMIC II TRUST FUND: The REMIC II Trust Fund created pursuant to Section
2.05 of this Agreement. The REMIC II Trust Fund consists of the REMIC I
Regular Interests to be held by the Trustee for the benefit of the Holders
from time to time of the Certificates issued hereunder (other than the Class
R-1 and Class R-3 Certificates).
REMIC III: The segregated pool of assets consisting of the REMIC II
Regular Interests conveyed in trust to the Trustee for the benefit of the
Certificateholders (other than the Class R-1 and Class R-2 Certificateholders)
pursuant to Section 2.07, with respect to which a separate REMIC election is
to be made.
REMIC III AVAILABLE DISTRIBUTION AMOUNT: With respect to the Group I
Certificates, on any Distribution Date, the aggregate of all distributions
with respect to the Group I-L Regular Interests. With respect to the Group II
Certificates, on any Distribution Date, the aggregate of all distributions
with respect to the Group II-L Regular Interests. With respect to the Group
III Certificates, on any Distribution Date, the aggregate of all distributions
with respect to the Group III-L Regular Interests. With respect to the Group
C-B Certificates, on any Distribution Date, the aggregate of all distributions
with respect to the Group C-B-L Regular Interests.
REMIC III DISTRIBUTION AMOUNT: The REMIC III Available Distribution
Amount shall be distributed to the Certificates (other than the Class R-1 and
Class R-2 Certificates) in the following amounts and priority:
(a) With respect to the Group I and Class R-3 Certificates, to the
extent of the REMIC III Available Distribution Amount for the Group I
Certificates:
(i) to each Class of Group I Certificates, the amounts
distributed to its Corresponding Class on such Distribution Date; and
(ii) to the Class R-3 Certificates, the applicable Residual
Distribution Amount, if any.
(b) With respect to the Group II and Class R-3 Certificates, to the
extent of the REMIC III Available Distribution Amount for the Group II
Certificates:
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(i) to each Class of Group II Certificates other than the Class
II-A-7, Class II-A-10, Class II-A-11, Class II-A-12, Class II-A-13 and
Class II-A-14 Certificates, the amounts distributed to its Corresponding
Class on such Distribution Date;
(ii) (A) to the Class II-A-7, Class II-A-10, Class II-A-11, Class
II-A-13 and Class II-A-14 Certificates, the amounts distributed as
principal to its Corresponding Class on such Distribution Date and (B) to
the Class II-A-7, Class II-A-10, Class II-A-11, Class II-A-12, Class
II-A-13 and Class II-A-14 Certificates, the amounts distributed as
interest to the Class II-A-7-L, Class II-A-10-L, Class II-A-11-L, Class
II-A-13-L and Class II-A-14-L Regular Interests on such Distribution Date
concurrently as follows: (I) to the Class II-A-7 Certificates, an amount
equal to the product of 1/12 of the Class II-A-7 Remittance Rate and the
Class II-A-7 Principal Balance (before allocating Realized Losses of
principal and giving effect to distributions of principal, in each case,
on such Distribution Date); (II) to the Class II-A-10 Certificates, an
amount equal to the product of 1/12 of the Class II-A-10 Remittance Rate
and the Class II-A-10 Principal Balance (before allocating Realized
Losses of principal and giving effect to distributions of principal, in
each case, on such Distribution Date); (III) to the Class II-A-11
Certificates, an amount equal to the product of 1/12 of the Class II-A-11
Remittance Rate and the Class II-A-11 Principal Balance (before
allocating Realized Losses of principal and giving effect to
distributions of principal, in each case, on such Distribution Date);
(IV) to the Class II-A-12 Certificates, an amount equal to the product of
1/12 of the Class II-A-12 Remittance Rate and the Class II-A-12 Notional
Amount before such Distribution Date; (V) to the Class II-A-13
Certificates, an amount equal to the product of 1/12 of the Class II-A-13
Remittance Rate and the Class II-A-13 Principal Balance (before
allocating Realized Losses of principal and giving effect to
distributions of principal, in each case, on such Distribution
Date); (VI) to the Class II-A-14 Certificates, an amount equal to the
product of 1/12 of the Class II-A-14 Remittance Rate and the Class
II-A-14 Principal Balance (before allocating Realized Losses of principal
and giving effect to distributions of principal, in each case, on such
Distribution Date); and
(iii) to the Class R-3 Certificates, the amounts distributed to
its Corresponding Class on such Distribution Date.
(c) With respect to the Group III Certificates, to the extent of the
REMIC III Available Distribution Amount for the Group III Certificates, to
each Class of Group III Certificates, the amounts distributed to its
Corresponding Class on such Distribution Date.
(d) With respect to the Group C-B and Class R-3 Certificates, to the
extent of the REMIC III Available Distribution Amount for the Group C-B
Certificates:
(i) to each Class of Group C-B Certificates, the amounts
distributed to its Corresponding Class on such Distribution Date; and
(ii) to the Class R-3 Certificates, the applicable Residual
Distribution Amount, if any.
In each case where a distribution is required to be made concurrently to two
or more Classes of Certificates pursuant to this definition of "REMIC III
Distribution Amount", if the portion of the REMIC III Available Distribution
Amount from which such deemed distribution is required to be
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made is insufficient to make such distribution in full to such Classes of
Certificates, such distribution shall be allocated between such Classes of
Certificates pro rata according to the respective amounts to which they are
otherwise entitled from such distribution.
REMIC III TRUST FUND: The REMIC III Trust Fund created pursuant to
Section 2.07 of this Agreement. The REMIC III Trust Fund consists of the REMIC
II Regular Interests to be held by the Trustee for the benefit of the Holders
from time to time of the Certificates issued hereunder (other than the Class
R-1 and Class R-2 Certificates).
REMITTANCE RATE: For each Class of Certificates and the REMIC I Regular
Interests and the REMIC II Regular Interests, the per annum rate set forth as
the Remittance Rate for such Class in the Preliminary Statement hereto.
RESIDUAL CERTIFICATES: With respect to REMIC I, the Class R-1
Certificates, which are being issued in a single class, with respect to REMIC
II, the Class R-2 Certificates, which are being issued in a single class and
with respect to REMIC III, the Class R-3 Certificates, which are being issued
in a single class. The Class R-1, Class R-2 and Class R-3 Certificates are
hereby designated the sole Class of "residual interests" in REMIC I, REMIC II
and REMIC III, respectively, for purposes of Section 860G(a)(2) of the Code.
RESIDUAL DISTRIBUTION AMOUNT: On any Distribution Date, with respect to
the Class R-1 Certificates, any portion of the REMIC I Available Distribution
Amount remaining after all distributions to the REMIC I Regular Interests and
Class R-1 Certificates pursuant to clauses (a)(i) through (a)(iv), (b)(i)
through (b)(v) or (c)(i) through (c)(iv), as applicable, of the definition of
"REMIC I Distribution Amount", with respect to the Class R-2 Certificates, any
portion of the REMIC II Available Distribution Amount remaining after all
distributions to the REMIC II Regular Interests and the Class R-2 Certificates
and the payment of the Class II-A-3 Reimbursement Amount pursuant to clauses
(I)(a)(i) through (I)(a)(xxv), (I)(d)(i) through (I)(d)(xxii), (II)(a)(i)
through (II)(a)(iv), (II)(b)(i) through (II)(b)(v) or (II)(c)(i) through
(II)(c)(iv), as applicable, of the definition of "REMIC II Distribution
Amount" and with respect to the Class R-3 Certificates, any portion of the
REMIC III Available Distribution Amount remaining after all distributions to
the Certificates pursuant to clauses (a)(i) or (d)(i) of the definition of
"REMIC III Distribution Amount". Upon termination of the obligations created
by this Agreement and the REMIC I Trust Fund, the REMIC II Trust Fund and the
REMIC III Trust Fund created hereby, the amounts which remain on deposit in
the Certificate Account after payment to the Holders of the REMIC I Regular
Interests of the amounts set forth in Section 9.01 of this Agreement, and
subject to the conditions set forth therein, shall be distributed to the Class
R-1, Class R-2 and Class R-3 Certificates in accordance with the preceding
sentence of this definition as if the date of such distribution were a
Distribution Date.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any officer
assigned to and working in its Corporate Trust Department or similar group and
also, with respect to a particular matter, any other officer to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
S&P: Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., provided that at any time it be a Rating Agency.
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SECURITIES ACT: The Securities Act of 1933, as amended.
SECURITY AGREEMENT: With respect to a Cooperative Loan, the agreement or
mortgage creating a security interest in favor of the originator of the
Cooperative Loan in the related Cooperative Stock.
SELLING AND SERVICING CONTRACT: (a) The contract (including the PNC
Mortgage Securities Corp. Selling Guide and PNC Mortgage Securities Corp.
Servicing Guide to the extent incorporated by reference therein) between the
Company and a Person relating to the sale of the Mortgage Loans to the Company
and the servicing of such Mortgage Loans for the benefit of the
Certificateholders, which contract is substantially in the form of Exhibit E
hereto, as such contract may be amended or modified from time to time;
provided, however, that any such amendment or modification shall not
materially adversely affect the interests and rights of Certificateholders and
(b) any other similar contract providing substantially similar rights and
benefits as those provided by the forms of contract attached as Exhibit E
hereto.
SENIOR CERTIFICATES: The Group I Senior Certificates, the Group II
Certificates, the Group III Certificates and the Residual Certificates.
Senior Subordinate Certificates: The Subordinate Certificates other than the
Junior Subordinate Certificates.
SERVICER: A mortgage loan servicing institution to which the Master
Servicer has assigned servicing duties with respect to any Mortgage Loan under
a Selling and Servicing Contract; provided, however, the Master Servicer may
designate itself or one or more other mortgage loan servicing institutions as
Servicer upon termination of an initial Servicer's servicing duties.
SERVICING FEE: For each Mortgage Loan, the fee paid to the Servicer
thereof to perform primary servicing functions for the Master Servicer with
respect to such Mortgage Loan, equal to the per annum rate set forth for each
Mortgage Loan in the Mortgage Loan Schedule on the outstanding Principal
Balance of such Mortgage Loan.
SERVICING OFFICER: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans or the
Certificates, as applicable, whose name and specimen signature appear on a
list of servicing officers furnished to the Trustee by the Master Servicer, as
such list may from time to time be amended.
SPECIAL HAZARD COVERAGE INITIAL AMOUNT: With respect to Loan Group I,
$1,579,702 and with respect to and Loan Group II and Loan Group III,
$9,769,365.
SPECIAL HAZARD LOSS: The occurrence of any direct physical loss or damage
to a Mortgaged Property not covered by a standard hazard maintenance policy
with extended coverage which is caused by or results from any cause except:
(i) fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, vandalism, aircraft, vehicles, smoke, sprinkler
leakage, except to the extent of that portion of the loss which was uninsured
because of the application of a co-insurance clause of any insurance policy
covering these perils; (ii) normal wear and tear, gradual deterioration,
inherent vice or inadequate maintenance of all or part thereof; (iii) errors
in design, faulty workmanship or materials, unless the collapse of the
property or a part thereof ensues and then only
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for the ensuing loss; (iv) nuclear reaction or nuclear radiation or
radioactive contamination, all whether controlled or uncontrolled and whether
such loss be direct or indirect, proximate or remote or be in whole or in part
caused by, contributed to or aggravated by a peril covered by this definition
of Special Hazard Loss; (v) hostile or warlike action in time of peace or war,
including action in hindering, combating or defending against an actual,
impending or expected attack (a) by any government of sovereign power (de jure
or de facto), or by an authority maintaining or using military, naval or air
forces, (b) by military, naval or air forces, or (c) by an agent of any such
government, power, authority or forces; (vi) any weapon of war employing
atomic fission or radioactive force whether in time of peace or war; (vii)
insurrection, rebellion, revolution, civil war, usurped power or action taken
by governmental authority in hindering, combating or defending against such
occurrence; or (viii) seizure or destruction under quarantine or customs
regulations, or confiscation by order of any government or public authority.
STEP DOWN PERCENTAGE: For any Distribution Date, the percentage indicated
below:
<TABLE>
<CAPTION>
Distribution Date Occurring In Step Down Percentage
------------------------------ --------------------
<S> <C>
July 1998 through June 2003 0%
July 2003 through June 2004 30%
July 2004 through June 2005 40%
July 2005 through June 2006 60%
July 2006 through June 2007 80%
July 2007 and thereafter 100%
</TABLE>
STRIPPED INTEREST RATE: For each Group I Loan, the excess, if any, of
the Pass-Through Rate for such Mortgage Loan over 7.000%. For each Group II
Loan, the excess, if any, of the Pass-Through Rate for such Mortgage Loan over
6.750%. For each Group III Loan, the excess, if any, of the Pass-Through Rate
for such Mortgage Loan over 6.625%.
SUBORDINATE CERTIFICATES: The Group I-B and Group C-B Certificates.
SUBORDINATION LEVEL: On any specified date, with respect to any of the
Group C-B-L Regular Interests, the percentage obtained by dividing the sum of
the Class Principal Balances of the Classes of REMIC II Regular Interests
which are subordinate in right of payment to such Class (provided that no
Class of Group C-B-L Regular Interests shall be subordinate in right of
payment to the Class C-B-6-L Regular Interests) by the aggregate Class
Principal Balances of the Group II-L, Group III-L and Group C-B-L Regular
Interests as of such date prior to giving effect to distributions of principal
or interest or allocations of Realized Losses on the Group II Loans and the
Group III Loans on such date. On any specified date, with respect to any of
the Group I-B-L Regular Interests, the percentage obtained by dividing the sum
of the Class Principal Balances of the Classes of Group I-B-L Regular
Interests which are subordinate in right of payment to such Class (provided
that no Class of Group I-B-L Regular Interests shall be subordinate in right
of payment to the Class I-B-6-L Regular Interests) by the aggregate Class
Principal Balances of the Group I-L Regular Interests, as applicable, as of
such date prior to giving effect to distributions of principal or interest or
allocations of Realized Losses on the Group I Loans on such date.
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SUBSTITUTE MORTGAGE LOAN: A Mortgage Loan which is substituted for
another Mortgage Loan pursuant to and in accordance with the provisions of
Section 2.02.
TARGETED PRINCIPAL BALANCE: The respective amounts set forth in the table
attached as Appendix B to the Prospectus, for the applicable Distribution
Date, for each of the Class II-A-6 and Class II-A-9 Certificates, which
amounts shall also constitute the "Targeted Principal Balance" for the Class
II-A-6-L and Class II-A-9-L Regular Interests, respectively.
TAX MATTERS PERSON: A Holder of the Class R-1 Certificate, with respect
to REMIC I, a Holder of the Class R-2 Certificate, with respect to REMIC II
and a holder of the Class R-3 Certificate with respect to REMIC III, in each
case holding a Certificate having an Authorized Denomination of at least 0.01%
or any Permitted Transferee of such Class R-1, Class R-2 or Class R-3
Certificateholder designated as succeeding to the position of Tax Matters
Person with respect to the applicable trust fund in a notice to the Trustee
signed by authorized representatives of the transferor and transferee of such
Class R-1, Class R-2 or Class R-3 Certificate. If the Tax Matters Person for
REMIC I, REMIC II or REMIC III becomes a Disqualified Organization, the last
preceding Holder of such Authorized Denomination of the Class R-1, Class R-2
or Class R-3 Certificate, as applicable, that is not a Disqualified
Organization shall be Tax Matters Person for such trust pursuant to Section
5.01(c). If any Person is appointed as tax matters person by the Internal
Revenue Service pursuant to the Code, such Person shall be Tax Matters Person.
TERMINATION DATE: The date upon which final payment of the Certificates
will be made pursuant to the procedures set forth in Section 9.01(b).
TERMINATION PAYMENT: The final payment delivered to the
Certificateholders on the Termination Date pursuant to the procedures set
forth in Section 9.01(b).
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Residual Certificate.
TRANSFEREE: Any Person who is acquiring by Transfer any Ownership
Interest in a Residual Certificate.
TRANSFEREE AFFIDAVIT AND AGREEMENT: An affidavit and agreement in the
form attached hereto as Exhibit J.
TRUSTEE: U.S. Bank National Association, or its successor-in-interest as
provided in Section 8.09, or any successor trustee appointed as herein
provided.
UNCOLLECTED INTEREST: With respect to any Distribution Date for any
Mortgage Loan on which a Payoff was made by a Mortgagor during the related
Payoff Period, except for Payoffs received during the period from the first
through the 14th day of the month of such Distribution Date, an amount equal
to one month's interest at the applicable Pass-Through Rate on such Mortgage
Loan less the amount of interest actually paid by the Mortgagor with respect
to such Payoff.
UNCOMPENSATED INTEREST SHORTFALL: With respect to a Loan Group, for any
Distribution Date, the excess, if any, of (i) the sum of (a) aggregate
Uncollected Interest with respect to the Mortgage
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Loans in the related Loan Group and (b) aggregate Curtailment Shortfall with
respect to the Mortgage Loans in the related Loan Group over (ii) Compensating
Interest with respect to such Loan Group.
Uncompensated Interest Shortfall for Loan Group I shall be allocated to
the Group I-L Regular Interests pro rata according to the amount of the
Interest Distribution Amount to which each such Class would otherwise be
entitled in reduction thereof.
Uncompensated Interest Shortfall for Loan Group II shall be allocated to
the Group II-L Regular Interests and the portion of the Group C-B-L Regular
Interests that derives its Interest Distribution Amount from the Group II
Loans pro rata according to the amount of the Interest Distribution Amount to
which each such Class (or portion thereof) would otherwise be entitled in
reduction thereof.
Uncompensated Interest Shortfall for Loan Group III shall be allocated to
the Group III-L Regular Interests and the portion of the Group C-B-L Regular
Interests that derives its Interest Distribution Amount from the Group III
Loans pro rata according to the amount of the Interest Distribution Amount to
which each such Class (or portion thereof) would otherwise be entitled in
reduction thereof.
Uncompensated Interest Shortfall for Loan Group II shall be allocated to
the Class II-X-M, Class Y-1 and Class Z-1 Regular Interests, pro rata
according to the amount of the Interest Distribution Amount to which each such
Class of Regular Interests would otherwise be entitled in reduction thereof.
Uncompensated Interest Shortfall for Loan Group III shall be allocated to
the Class III-X-M, Class Y-2 and Class Z-2 Regular Interests, pro rata
according to the amount of the Interest Distribution Amount to which each such
Class of Regular Interests would otherwise be entitled in reduction thereof.
Uncompensated Interest Shortfall for Loan Group I shall be allocated to
the Class W and Class I-X-M Regular Interests, pro rata according to the
amount of the Interest Distribution Amount to which each such Class of Regular
Interests would otherwise be entitled in reduction thereof.
UNDERCOLLATERALIZED GROUP: With respect to Loan Group II, if on any
Distribution Date the aggregate Class Principal Balance of the Group II-A-L
Regular Interests is greater than the aggregate Principal Balance of the
Mortgage Loans in Loan Group II less the Class II-P Fraction of any Class II-P
Mortgage Loans, and with respect to Loan Group III, if on any Distribution
Date the Class III-A-1-L Principal Balance is greater than the aggregate
Principal Balance of the Mortgage Loans in Loan Group III less the Class III-P
Fraction of any Class III-P Mortgage Loans.
UNDERWRITING STANDARDS: The underwriting standards of the Company,
Cendant Mortgage Corporation, Bank of America, FSB, Old Kent Mortgage Company,
Headlands Mortgage Company, HomeSide Lending, Inc., PHH Mortgage Services
Corporation, Peoples Heritage Bank, PNC Mortgage Corp. of America, Washington
Mutual Savings Bank, Western Financial Bank, F.S.B., National City Mortgage
Co., First Republic Savings Bank, Commerce Security Bank and Universal
American Mortgage Company.
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UNINSURED CAUSE: Any cause of damage to a Mortgaged Property, the cost of
the complete restoration of which is not fully reimbursable under the hazard
insurance policies required to be maintained pursuant to Section 3.07.
U.S. PERSON: A citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, or an estate or
trust that is subject to U.S. federal income tax regardless of the source of
its income.
VA: The Department of Veterans Affairs, formerly known as the Veterans
Administration, or any successor thereto.
WITHDRAWAL DATE: Any day during the period commencing on the 18th day of
the month of the related Distribution Date (or if such day is not a Business
Day, the immediately preceding Business Day) and ending on the last Business
Day prior to the 21st day of the month of such Distribution Date.
ARTICLE II
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CONVEYANCE OF THE TRUST FUNDS; REMIC ELECTION AND DESIGNATIONS; ORIGINAL
ISSUANCE OF CERTIFICATES
Section 2.01. CONVEYANCE OF REMIC I; REMIC ELECTION AND DESIGNATIONS.
A trust ("REMIC I") of which the Trustee is the trustee is hereby created
under the laws of the State of New York for the benefit of the Holders of the
REMIC I Regular Interests and the Class R-1 Certificates. The purpose of
REMIC I is to hold the REMIC I Trust Fund and provide for the issuance,
execution and delivery of the Class R-1 Certificates. The assets of REMIC I
shall consist of the REMIC I Trust Fund. REMIC I shall be irrevocable.
The assets of REMIC I shall remain in the custody of the Trustee, on
behalf of REMIC I, and shall be kept in REMIC I. Moneys to the credit of
REMIC I shall be held by the Trustee and invested as provided herein. All
assets received and held in REMIC I will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of U.S. Bank National
Association in its own right, or any Person claiming through it. The Trustee,
on behalf of REMIC I, shall not have the power or authority to transfer,
assign, hypothecate, pledge or otherwise dispose of any of the assets of REMIC
I to any Person, except as permitted herein. No creditor of a beneficiary of
REMIC I, of the Trustee, of the Master Servicer or of the Company shall have
any right to obtain possession of, or otherwise exercise legal or equitable
remedies with respect to, the property of REMIC I, except in accordance with
the terms of this Agreement.
Concurrently with the execution and delivery hereof, the Company does
hereby irrevocably sell, transfer, assign, set over and otherwise convey to
the Trustee, in trust for the benefit of the Holders of REMIC I Regular
Interests and the Class R-1 Certificates, without recourse, all the Company's
right, title and interest in and to the REMIC I Trust Fund, including but not
limited to (i) all scheduled payments of principal and interest due after the
Cut-Off Date and received by the Company with respect to the Mortgage Loans at
any time, and all Principal Prepayments received by the Company after the
Cut-Off Date with respect to the Mortgage Loans (such transfer and
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assignment by the Company to be referred to herein as the "Conveyance"). The
Trustee hereby accepts REMIC I created hereby and accepts delivery of the
REMIC I Trust Fund on behalf of REMIC I and acknowledges that it holds the
Mortgage Loans for the benefit of the Holders of the REMIC I Regular Interests
and the Class R-1 Certificates issued pursuant to this Agreement. It is the
express intent of the parties hereto that the Conveyance of the REMIC I Trust
Fund to the Trustee by the Company as provided in this Section 2.01 be, and be
construed as, an absolute sale of the REMIC I Trust Fund. It is, further, not
the intention of the parties that such Conveyance be deemed a pledge of the
REMIC I Trust Fund by the Company to the Trustee to secure a debt or other
obligation of the Company. However, in the event that, notwithstanding the
intent of the parties, the REMIC I Trust Fund is held to be the property of
the Company, or if for any other reason this Agreement is held or deemed to
create a security interest in the REMIC I Trust Fund, then
(a) this Agreement shall be deemed to be a security agreement;
(b) the Conveyance provided for in this Section 2.01 shall be deemed to
be a grant by the Company to the Trustee of a security interest in all of the
Company's right, title, and interest, whether now owned or hereafter acquired,
in and to:
(I) All accounts, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of deposit,
goods, letters of credit, advices of credit and investment property
consisting of, arising from or relating to any of the property described
in (i), (ii) and (iii) below: (i) the Mortgage Loans identified on the
Mortgage Loan Schedule, including the related Mortgage Notes, Mortgages,
Cooperative Stock Certificates, and Cooperative Leases, all Substitute
Mortgage Loans and all distributions with respect to such Mortgage Loans
and Substitute Mortgage Loans payable on and after the Cut-Off Date; (ii)
the Certificate Account, the Investment Account, the Custodial Accounts
for P&I, the Custodial Accounts for Reserves, and all money or other
property held therein; and (iii) amounts paid or payable by the
insurer under any FHA insurance policy or any Primary Insurance Policy
and proceeds of any VA guaranty and any other insurance policy related to
any Mortgage Loan or the Mortgage Pool;
(II) All accounts, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of deposit,
goods, letters of credit, advices of credit, investment property, and
other rights arising from or by virtue of the disposition of, or
collections with respect to, or insurance proceeds payable with respect
to, or claims against other persons with respect to, all or any part of
the collateral described in (I) above (including any accrued discount
realized on liquidation of any investment purchased at a discount); and
(III) All cash and non-cash proceeds of the collateral
described in (I) and (II) above;
(c) the possession by the Trustee of the Mortgage Notes, the Mortgages,
the Security Agreements, Assignments of Proprietary Lease, Cooperative Stock
Certificates, Cooperative Leases and such other goods, letters of credit,
advices of credit, instruments, money, documents, chattel paper or
certificated securities shall be deemed to be possession by the secured party
or possession by a purchaser for purposes of perfecting the security interest
pursuant to the Uniform Commercial Code (including, without limitation,
Sections 9-305 and 9-115 thereof) as in force in the relevant jurisdiction;
and
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(d) notifications to persons holding such property, and acknowledgments,
receipts or confirmations from persons holding such property, shall be deemed
to be notifications to, or acknowledgments, receipts or confirmations from,
securities intermediaries, bailees or agents of, or persons holding for, the
Trustee, as applicable for the purpose of perfecting such security interest
under applicable law.
The Company and the Trustee at the direction of the Company shall, to the
extent consistent with this Agreement, take such actions as may be necessary
to ensure that, if this Agreement were deemed to create a security interest in
the REMIC I Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. In connection
herewith, the Trustee shall have all of the rights and remedies of a secured
party and creditor under the Uniform Commercial Code as in force in the
relevant jurisdiction.
In connection with the sale, transfer and assignment referred to in the
first paragraph of this Section 2.01, the Company, concurrently with the
execution and delivery hereof, does deliver to, and deposit with, or cause to
be delivered to and deposited with, the Trustee or Custodian the Mortgage
Files for the Mortgage Loans, which shall on original issuance thereof and at
all times be registered in the name of the Trustee.
Concurrently with the execution and delivery hereof, the Company shall
cause assignments of the Mortgage Loans to the Trustee to be recorded or
filed, except in states where, in the opinion of counsel admitted to practice
in such state acceptable to the Company, the Trustee and the Rating Agencies
submitted in lieu of such recording or filing, such recording or filing is not
required to protect the Trustee's interest in such Mortgage Loans against
creditors of, or against sale, further assignments, satisfaction or discharge
by the Lender, a Servicer, the Company or the Master Servicer, and the Company
shall cause to be filed the Form UCC-3 assignment and Form UCC-1 financing
statement referred to in clause (Y)(vii) and (ix), respectively, of the
definition of "Mortgage File." In connection with its servicing of Cooperative
Loans, the Master Servicer will use its best efforts to file timely
continuation statements, if necessary, with regard to each financing statement
and assignment relating to Cooperative Loans.
In instances where the original recorded Mortgage or any intervening
assignment thereof (recorded or in recordable form) relating to a Mortgage
Loan cannot be delivered by the Company to the Trustee prior to or
concurrently with the execution and delivery hereof (due to a delay on the
part of the recording office), the Company may, in lieu of delivering such
original documents, deliver to the Trustee a fully legible reproduction of the
original Mortgage or intervening assignment provided that the related Lender
or originator certifies on the face of such reproduction(s) or copy as
follows: "Certified true and correct copy of original which has been
transmitted for recordation." For purposes hereof, transmitted for recordation
means having been mailed or otherwise delivered for recordation to the
appropriate authority. In all such instances, the Company shall transmit the
original recorded Mortgage and any intervening assignments with evidence of
recording thereon (or a copy of such original Mortgage or intervening
assignment certified by the applicable recording office)(collectively,
"Recording Documents") to the Trustee within 270 days after the execution and
delivery hereof. In instances where, due to a delay on the part of the
recording office where any such Recording Documents have been delivered for
recordation, the Recording Documents cannot be delivered to the Trustee within
270 days after execution and delivery hereof, the Company shall
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deliver to the Trustee within such time period a certificate (a "Company
Officer's Certificate") signed by the Chairman of the Board, President, any
Vice President or Treasurer of the Company stating the date by which the
Company expects to receive such Recording Documents from the applicable
recording office. In the event that Recording Documents have still not been
received by the Company and delivered to the Trustee by the date specified in
its previous Company Officer's Certificate delivered to the Trustee, the
Company shall deliver to the Trustee by such date an additional Company
Officer's Certificate stating a revised date by which the Company expects to
receive the applicable Recording Documents. This procedure shall be repeated
until the Recording Documents have been received by the Company and delivered
to the Trustee.
In instances where, due to a delay on the part of the title insurer, a
copy of the title insurance policy for a particular Mortgage Loan cannot be
delivered to the Trustee prior to or concurrently with the execution and
delivery hereof, the Company shall provide a copy of such title insurance
policy to the Trustee within 90 days after the Company's receipt of the
Recording Documents necessary to issue such title insurance policy. In
addition, the Company shall, subject to the limitations set forth in the
preceding sentence, provide to the Trustee upon request therefor a duplicate
title insurance policy for any Mortgage Loan.
For Mortgage Loans for which the Company has received a Payoff after the
Cut-Off Date and prior to the date of execution and delivery hereof, the
Company, in lieu of delivering the above documents, herewith delivers to the
Trustee a certification of a Servicing Officer of the nature set forth in
Section 3.10.
The Trustee is authorized, with the Master Servicer's consent, to appoint
any bank or trust company approved by and unaffiliated with each of the
Company and the Master Servicer as Custodian of the documents or instruments
referred to above in this Section 2.01, and to enter into a Custodial
Agreement for such purpose, provided, however, that the Trustee shall be and
remain liable for the acts of any such Custodian only to the extent that it is
responsible for its own acts hereunder.
The Company and the Trustee agree that the Company, as agent for the Tax
Matters Person, shall, on behalf of the REMIC I Trust Fund, elect to treat the
REMIC I Trust Fund as a REMIC within the meaning of Section 860D of the Code
and, if necessary, under applicable state laws. Such election shall be
included in the Form 1066 and any appropriate state return to be filed on
behalf of REMIC I for its first taxable year.
The Closing Date is hereby designated as the "startup day" of REMIC I
within the meaning of Section 860G(a)(9) of the Code.
The regular interests (as set forth in the table contained in the
Preliminary Statement hereto) relating to the REMIC I Trust Fund are hereby
designated as "regular interests" for purposes of Section 860G(a)(1) of the
Code. The Class R-1 Certificates are being issued in a single Class, which is
hereby designated as the sole class of "residual interest" in the REMIC I
Trust Fund for purposes of Section 860G(a)(2) of the Code.
The parties intend that the affairs of the REMIC I Trust Fund formed
hereunder shall constitute, and that the affairs of the REMIC I Trust Fund
shall be conducted so as to qualify the
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REMIC I Trust Fund as a REMIC. In furtherance of such intention, the Company
covenants and agrees that it shall act as agent for the Tax Matters Person
(and the Company is hereby appointed to act as agent for such Tax Matters
Person) on behalf of the REMIC I Trust Fund and that in such capacity it
shall: (a) prepare and file, or cause to be prepared and filed, a federal tax
return using a calendar year as the taxable year and using an accrual method
of accounting for the REMIC I Trust Fund when and as required by the REMIC
Provisions and other applicable federal income tax laws; (b) make an election,
on behalf of the trust, for the REMIC I Trust Fund to be treated as a REMIC on
the federal tax return of the REMIC I Trust Fund for its first taxable year,
in accordance with the REMIC Provisions; (c) prepare and forward, or cause to
be prepared and forwarded, to the Holders of the REMIC I Regular Interests and
the Class R-1 Certificates and the Trustee, all information reports as and
when required to be provided to them in accordance with the REMIC Provisions,
and make available the information necessary for the application of Section
860E(e) of the Code; (d) conduct the affairs of the REMIC I Trust Fund at all
times that any REMIC I Regular Interests are outstanding so as to maintain the
status of the REMIC I Trust Fund as a REMIC under the REMIC Provisions; (e)
not knowingly or intentionally take any action or omit to take any action that
would cause the termination of the REMIC status of the REMIC I Trust Fund; and
(f) pay the amount of any federal prohibited transaction penalty taxes imposed
on the REMIC I Trust Fund when and as the same shall be due and payable (but
such obligation shall not prevent the Company or any other appropriate person
from contesting any such tax in appropriate proceedings and shall not prevent
the Company from withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings); provided, that the Company shall be entitled
to be indemnified by the REMIC I Trust Fund for any such prohibited
transaction penalty taxes if the Company's failure to exercise reasonable care
was not the primary cause of the imposition of such prohibited transaction
penalty taxes.
The Trustee and the Master Servicer shall promptly provide the Company
with such information as the Company may from time to time request for the
purpose of enabling the Company to prepare tax returns.
In the event that a Mortgage Loan is discovered to have a defect which,
had such defect been discovered before the startup day, would have prevented
such Mortgage Loan from being a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code, and the Company does not repurchase such
Mortgage Loan within 90 days of such date, the Master Servicer, on behalf of
the Trustee, shall within 90 days of the date such defect is discovered sell
such Mortgage Loan at such price as the Master Servicer in its sole
discretion, determines to be the greatest price that will result in the
purchase thereof within 90 days of such date, unless the Master Servicer
delivers to the Trustee an Opinion of Counsel to the effect that continuing to
hold such Mortgage Loan will not adversely affect the status of the electing
portion of the REMIC I Trust Fund as a REMIC for federal income tax purposes.
In the event that any tax is imposed on "prohibited transactions" of the
REMIC I Trust Fund as defined in Section 860F of the Code and not paid by the
Company pursuant to clause (f) of the third preceding paragraph, such tax
shall be charged against amounts otherwise distributable to the Class R-1
Certificateholders. Notwithstanding anything to the contrary contained herein,
the Trustee is hereby authorized to retain from amounts otherwise
distributable to the Class R-1 Certificateholders on any Distribution Date
sufficient funds to reimburse the Company in its capacity as agent for the Tax
Matters Person for the payment of such tax (upon the written request of the
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Company, to the extent reimbursable, and to the extent that the Company has
not been previously reimbursed therefor).
Section 2.02. ACCEPTANCE BY TRUSTEE. The Trustee acknowledges receipt (or
with respect to any Mortgage Loan subject to a Custodial Agreement, receipt by
the Custodian thereunder) of the documents (or certified copies thereof as
specified in Section 2.01) referred to in Section 2.01 above, but without
having made the review required to be made within 45 days pursuant to this
Section 2.02, and declares that as of the Closing Date it holds and will hold
such documents and the other documents constituting a part of the Mortgage
Files delivered to it, and the REMIC I Trust Fund, as Trustee in trust, upon
the trusts herein set forth, for the use and benefit of the Holders from time
to time of the REMIC I Regular Interests and Class R-1 Certificates. The
Trustee agrees, for the benefit of the Holders of the REMIC I Regular
Interests and Class R-1 Certificates, to review or cause the Custodian to
review each Mortgage File within 45 days after the Closing Date and deliver to
the Company a certification in the form attached as Exhibit M hereto, to the
effect that all documents required (in the case of instruments described in
clauses (X)(vi) and (Y)(x) of the definition of "Mortgage File", known by the
Trustee to be required) pursuant to the third paragraph of Section 2.01 have
been executed and received, and that such documents relate to the Mortgage
Loans identified in the Mortgage Loan Schedule. In performing such review, the
Trustee may rely upon the purported genuineness and due execution of any such
document, and on the purported genuineness of any signature thereon. The
Trustee shall not be required to make any independent examination of any
documents contained in each Mortgage File beyond the review specifically
required herein. The Trustee makes no representations as to: (i) the validity,
legality, enforceability or genuineness of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any Mortgage Loan. If the
Trustee finds any document or documents constituting a part of a Mortgage File
not to have been executed or received, or to be unrelated to the Mortgage
Loans identified in the Mortgage Loan Schedule, the Trustee shall promptly so
notify the Company. The Company hereby covenants and agrees that, if any such
defect cannot be corrected or cured, the Company shall, not later than 60 days
after the Trustee's notice to it respecting such defect, within the
three-month period commencing on the Closing Date (or within the two-year
period commencing on the Closing Date if the related Mortgage Loan is a
"defective obligation" within the meaning of Section 860G(a)(4)(B)(ii) of the
Code and Treasury Regulation Section 1.860G-2(f)), either (i) repurchase the
related Mortgage Loan from the Trustee at the Purchase Price, or (ii)
substitute for any Mortgage Loan to which such defect relates a different
mortgage loan (a "Substitute Mortgage Loan") which is a "qualified replacement
mortgage" (as defined in the Code) and, (iii) after such three-month or
two-year period, as applicable, the Company shall repurchase the Mortgage Loan
from the Trustee at the Purchase Price but only if the Mortgage Loan is in
default or default is, in the judgment of the Company, reasonably imminent. If
such defect would cause the Mortgage Loan to be other than a "qualified
mortgage" (as defined in the Code), then notwithstanding the previous
sentence, repurchase or substitution must occur within the sooner of (i) 90
days from the date the defect was discovered or (ii) in the case of
substitution, two years from the Closing Date.
Such Substitute Mortgage Loan shall mature no later than, and not more
than two years earlier than, have a principal balance and Loan-to-Value Ratio
equal to or less than, and have a Pass-Through Rate on the date of
substitution equal to or no more than 1% greater than the Mortgage Loan being
substituted for. If the aggregate of the principal balances of the Substitute
Mortgage
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Loans substituted for a Mortgage Loan is less than the Principal Balance of
such Mortgage Loan, the Company shall pay the difference in cash to the
Trustee for deposit into the Certificate Account, and such payment by the
Company shall be treated in the same manner as proceeds of the repurchase by
the Company of a Mortgage Loan pursuant to this Section 2.02. Furthermore,
such Substitute Mortgage Loan shall otherwise have such characteristics so
that the representations and warranties of the Company set forth in Section
2.03 hereof would not have been incorrect had such Substitute Mortgage Loan
originally been a Mortgage Loan. A Substitute Mortgage Loan may be substituted
for a defective Mortgage Loan whether or not such defective Mortgage Loan is
itself a Substitute Mortgage Loan.
The Purchase Price for each repurchased Mortgage Loan shall be deposited
by the Company in the Certificate Account and, upon receipt by the Trustee of
written notification of such deposit signed by a Servicing Officer, the
Trustee shall release to the Company the related Mortgage File and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as shall be necessary to vest in the Company or its designee
or assignee title to any Mortgage Loan released pursuant hereto. The
obligation of the Company to repurchase or substitute any Mortgage Loan as to
which such a defect in a constituent document exists shall constitute the sole
remedy respecting such defect available to the Holders of the REMIC I Regular
Interests or the Class R-1 Certificateholders or the Trustee on behalf of the
Holders of the REMIC I Regular Interests or the Class R-1 Certificateholders.
Section 2.03. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Concerning the Mortgage Loans. With respect to the conveyance of the Mortgage
Loans provided for in Section 2.01 herein, the Company hereby represents and
warrants to the Trustee that as of the Cut-Off Date unless otherwise
indicated:
(i) The information set forth in the Mortgage Loan Schedule was
true and correct in all material respects at the date or dates respecting
which such information is furnished;
(ii) As of the Closing Date, each Mortgage is a valid and
enforceable (subject to Section 2.03(xvi)) first lien on an unencumbered
estate in fee simple or leasehold estate in the related Mortgaged
Property subject only to (a) liens for current real property taxes and
special assessments; (b) covenants, conditions and restrictions, rights
of way, easements and other matters of public record as of the date of
recording such Mortgage, such exceptions appearing of record being
acceptable to mortgage lending institutions generally or specifically
reflected in the appraisal obtained in connection with the origination of
the Mortgage Loan; (c) exceptions set forth in the title insurance policy
relating to such Mortgage, such exceptions being acceptable to mortgage
lending institutions generally; and (d) 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;
(iii) As of the Closing Date, the Company had good title to, and
was the sole owner of, each Mortgage Loan free and clear of any
encumbrance or lien, and immediately upon the transfer and assignment
herein contemplated, the Trustee shall have good title to, and will be
the sole legal owner of, each Mortgage Loan, free and clear of any
encumbrance or lien (other than any lien under this Agreement);
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(iv) As of the day prior to the Cut-Off Date, all payments due
on each Mortgage Loan had been made and no Mortgage Loan had been
delinquent (i.e., was more than 30 days past due) more than once in the
preceding 12 months and any such delinquency lasted for no more than 30
days;
(v) As of the Closing Date, there is no late assessment for
delinquent taxes outstanding against any Mortgaged Property;
(vi) As of the Closing Date, there is no offset, defense or
counterclaim to any Mortgage Note, including the obligation of the
Mortgagor to pay the unpaid principal or interest on such Mortgage Note
except to the extent that the Buydown Agreement for a Buydown Loan
forgives certain indebtedness of a Mortgagor;
(vii) As of the Closing Date, each Mortgaged Property is free of
damage and in good repair, ordinary wear and tear excepted;
(viii) Each Mortgage Loan at the time it was made complied with all
applicable state and federal laws, including, without limitation, usury,
equal credit opportunity, disclosure and recording laws;
(ix) Each Mortgage Loan was originated by a savings association,
savings 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 FHA and will be serviced by an institution
which meets the servicer eligibility requirements established by the
Company;
(x) As of the Closing Date, each Mortgage Loan is covered by an ALTA
form or CLTA form of mortgagee title insurance policy or other form of
policy of insurance which, as of the origination date of such Mortgage
Loan, was acceptable to FNMA or FHLMC, and has been issued by, and is the
valid and binding obligation of, a title insurer which, as of the
origination date of such Mortgage Loan, was acceptable to FNMA or FHLMC
and qualified to do business in the state in which the related Mortgaged
Property is located. Such policy insures the originator of the Mortgage
Loan, its successors and assigns as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan subject to
the exceptions set forth in such policy. Such policy is in full force and
effect and will be in full force and effect and inure to the benefit of
the Holders of the REMIC I Regular Interests and the Class R-1
Certificateholders upon the consummation of the transactions contemplated
by this Agreement and no claims have been made under such policy, and no
prior holder of the related Mortgage, including the Company, has done,
by act or omission, anything which would impair the coverage of such
policy;
(xi) Not less than approximately 90.4% (by Principal Balance) of
the Group I Loans and all of the Group II Loans and Group III Loans with
Loan-to-Value Ratios as of the Cut-Off Date in excess of 80% were covered
by a Primary Insurance Policy or an FHA insurance policy or a VA
guaranty, and such policy or guaranty is valid and remains in full force
and effect;
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(xii) As of the Closing Date, all policies of insurance required by
this Agreement or by a Selling and Servicing Contract have been validly
issued and remain in full force and effect, including such policies
covering the Company, the Master Servicer or any Servicer;
(xiii) As of the Closing Date, each insurer issuing a Primary
Insurance Policy holds a rating acceptable to the Rating Agencies;
(xiv) Each Mortgage was documented by appropriate FNMA/FHLMC
mortgage instruments in effect at the time of origination, or other
instruments approved by the Company;
(xv) As of the Closing Date, the Mortgaged Property securing each
Mortgage is improved with a one- to four-family dwelling unit, including
units in a duplex, condominium project, townhouse, a planned unit
development or a de minimis planned unit development;
(xvi) As of the Closing Date, each Mortgage and Mortgage Note is
the legal, valid and binding obligation of the maker thereof and is
enforceable in accordance with its terms, except only as such
enforcement may be limited by laws affecting the enforcement of
creditors' rights generally and principles of equity;
(xvii) As of the date of origination, as to Mortgaged Properties
which are units in condominiums or planned unit developments, all of
such units met FNMA or FHLMC requirements, are located in a condominium
or planned unit development projects which have received FNMA or FHLMC
approval, or are approvable by FNMA or FHLMC;
(xviii) Approximately 0.1% (by Principal Balance) of the Group II
Loans are Buydown Loans, and none of the Group I Loans and Group III
Loans are Buydown Loans;
(xix) Based solely on representations of the Mortgagors obtained at
the origination of the related Mortgage Loans, approximately 77.16% (by
Principal Balance) of the Group I Loans will be secured by owner occupied
Mortgaged Properties which are the primary residences of the related
Mortgagors, approximately 1.73% (by Principal Balance) of the Group I
Loans will be secured by owner occupied Mortgaged Properties which were
second or vacation homes of the Mortgagors and approximately 21.11% (by
Principal Balance) of the Group I Loans will be secured by Mortgaged
Properties which were investor properties of the related Mortgagors;
approximately 98.26% (by Principal Balance) of the Group II Loans will be
secured by owner occupied Mortgaged Properties which are the primary
residences of the related Mortgagors, approximately 1.46% (by Principal
Balance) of the Group II Loans will be secured by owner occupied
Mortgaged Properties which were second or vacation homes of the
Mortgagors and approximately 0.28% (by Principal Balance) of the Group
II Loans will be secured by Mortgaged Properties which were investor
properties of the related Mortgagors; approximately 99.02% (by Principal
Balance) of the Group III Loans will be secured by owner occupied
Mortgaged Properties which are the primary residences of the related
Mortgagors, approximately 0.41% (by Principal Balance) of the Group III
Loans will be secured by owner occupied Mortgaged Properties which were
second or vacation homes of the Mortgagors and approximately 0.56% (by
Principal Balance) of the Group III Loans will be secured by Mortgaged
Properties which were investor properties of
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the related Mortgagors; and none of the Group I Loans, Group II Loans and
Group III Loans will be secured by interests in Cooperative Apartments;
(xx) Prior to origination or refinancing, an appraisal of each
Mortgaged Property was made by an appraiser on a form satisfactory to
FNMA or FHLMC;
(xxi) The Mortgage Loans have been underwritten substantially in
accordance with the applicable Underwriting Standards;
(xxii) All of the Mortgage Loans have due-on-sale clauses; by the
terms of the Mortgage Notes, however, the due on sale provisions may not
be exercised at the time of a transfer if prohibited by law;
(xxiii) The Company used no adverse selection procedures in
selecting the Mortgage Loans from among the outstanding fixed-rate
conventional mortgage loans purchased by it which were available for
inclusion in the Mortgage Pool and as to which the representations and
warranties in this Section 2.03 could be made;
(xxiv) With respect to any Mortgage Loan as to which an affidavit
has been delivered to the Trustee certifying that the original Mortgage
Note is a Destroyed Mortgage Note, if such Mortgage Loan is subsequently
in default, the enforcement of such Mortgage Loan or of the related
Mortgage by or on behalf of the Trustee will not be materially adversely
affected by the absence of the original Mortgage Note;
(xxv) Based upon an appraisal of the Mortgaged Property securing
each Mortgage Loan, approximately 88.75% (by Principal Balance) of the
Group I Loans had a current Loan-to-Value Ratio less than or equal to
80%, approximately 11.25% (by Principal Balance) of the Group I Loans
had a current Loan-to-Value Ratio greater than 80% but less than or
equal to 95% and no Group I Loan had a current Loan-to-Value Ratio
greater than 95%; approximately 89.51% (by Principal Balance) of the
Group II Loans had a current Loan-to-Value Ratio less than or equal to
80%, approximately 10.49% (by Principal Balance) of the Group II Loans
had a current Loan-to-Value Ratio greater than 80% but less than or equal
to 95% and no Group II Loan had a current Loan-to-Value Ratio greater
than 95%; approximately 97.85% (by Principal Balance) of the Group III
Loans had a current Loan-to-Value Ratio less than or equal to 80%,
approximately 2.16% (by Principal Balance) of the Group III Loans had a
current Loan-to-Value Ratio greater than 80% but less than or equal to 95%
and no Group III Loan had a current Loan-to-Value Ratio greater than 95%;
(xxvi) Approximately 58.56% (by Principal Balance) of the Group I
Loans, approximately 60.39% (by Principal Balance) of the Group II Loans
and approximately 89.49% (by Principal Balance) of the Group III Loans
were originated for the purpose of refinancing existing mortgage debt,
including cash-out refinancings and approximately 41.44% (by Principal
Balance) of the Group I Loans, approximately 39.61% (by Principal Balance)
of the Group II Loans and approximately 10.51% (by Principal Balance) of
the Group III Loans were originated for the purpose of purchasing the
Mortgaged Property;
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(xxvii) Not less than approximately 36.24%, 93.90% and 74.05% (by
Principal Balance) of the Group I Loans, Group II Loans and Group III
Loans, respectively, were originated under full documentation programs;
(xxviii) Each Mortgage Loan constitutes a qualified mortgage under
Section 860G(a)(3)(A) of the Code and Treasury Regulations Section
1.860G-2(a)(1).
It is understood and agreed that the representations and warranties set
forth in this Section 2.03 shall survive delivery of the respective Mortgage
Files to the Trustee or the Custodian, as the case may be, and shall continue
throughout the term of this Agreement. Upon discovery by any of the Company,
the Master Servicer, the Trustee or the Custodian of a breach of any of the
foregoing representations and warranties which materially and adversely
affects the value of the related Mortgage Loans or the interests of the
Certificateholders in the related Mortgage Loans, the Company, the Master
Servicer, the Trustee or the Custodian, as the case may be, discovering such
breach shall give prompt written notice to the others. Within 90 days of its
discovery or its receipt of notice of breach, the Company shall repurchase,
subject to the limitations set forth in the definition of "Purchase Price", or
substitute for the affected Mortgage Loan or Mortgage Loans or any property
acquired in respect thereof from the Trustee, unless it has cured such breach
in all material respects. After the end of the three-month period beginning on
the "start-up day", any such substitution shall be made only if the Company
provides to the Trustee and the Certificate Insurer an Opinion of Counsel
reasonably satisfactory to the Trustee that each Substitute Mortgage Loan will
be a "qualified replacement mortgage" within the meaning of Section 860G(a)(4)
of the Code. Such substitution shall be made in the manner and within the time
limits set forth in Section 2.02. Any such repurchase by the Company shall be
accomplished in the manner and at the Purchase Price, if applicable, but shall
not be subject to the time limits, set forth in Section 2.02. It is understood
and agreed that the obligation of the Company to provide such substitution or
to make such repurchase of any affected Mortgage Loan or Mortgage Loans or any
property acquired in respect thereof as to which a breach has occurred and is
continuing shall constitute the sole remedy respecting such breach available
to the Holders of the REMIC I Regular Interests and the Class R-1
Certificateholders or the Trustee on behalf of the Holders of the REMIC I
Regular Interests and the Class R-1 Certificateholders.
Section 2.04. ACKNOWLEDGMENT OF TRANSFER OF REMIC I TRUST FUND;
AUTHENTICATION OF THE CLASS R-1 CERTIFICATES. The Trustee acknowledges the
transfer and assignment to it of the property constituting the REMIC I Trust
Fund, but without having made the review required to be made within 45 days
pursuant to Section 2.02, and, as of the Closing Date, shall cause to be
authenticated and delivered to or upon the order of the Company, the Class R-1
Certificates in Authorized Denominations evidencing the residual beneficial
ownership interest in the REMIC I Trust Fund.
Section 2.05. CONVEYANCE OF REMIC II; REMIC ELECTION AND DESIGNATIONS. A
trust ("REMIC II") of which the Trustee is the trustee is hereby created under
the laws of the State of New York for the benefit of the Holders of the REMIC
II Regular Interests and the Class R-2 Certificates. The purpose of REMIC II
is to hold the REMIC II Trust Fund and provide for the issuance, execution and
delivery of the REMIC II Regular Interests and the Class R-2 Certificates.
The assets of REMIC II shall consist of the REMIC II Trust Fund. REMIC II
shall be irrevocable.
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The assets of REMIC II shall remain in the custody of the Trustee, on
behalf of REMIC II, and shall be kept in REMIC II. Moneys to the credit of
REMIC II shall be held by the Trustee and invested as provided herein. All
assets received and held in REMIC II will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of U.S. Bank National
Association in its own right, or any Person claiming through it. The Trustee,
on behalf of REMIC II, shall not have the power or authority to transfer,
assign, hypothecate, pledge or otherwise dispose of any of the assets of REMIC
II to any Person, except as permitted herein. No creditor of a beneficiary of
REMIC II, of the Trustee, of the Master Servicer or of the Company shall have
any right to obtain possession of, or otherwise exercise legal or equitable
remedies with respect to, the property of REMIC II, except in accordance with
the terms of this Agreement.
Concurrently with the execution and delivery hereof, the Company does
hereby agree to irrevocably sell, transfer, assign, set over, and otherwise
convey to the Trustee in trust for the benefit of the Holders of the REMIC II
Regular Interests and the Class R-2 Certificates, without recourse, all the
Company's right, title and interest in and to the REMIC II Trust Fund,
including all interest and principal received by the Company on or with
respect to the REMIC I Regular Interests after the Cut-Off Date. The Trustee
hereby accepts REMIC II created hereby and accepts delivery of the REMIC II
Trust Fund on behalf of REMIC II and acknowledges that it holds the REMIC I
Regular Interests for the benefit of the Holders of the REMIC II Regular
Interests and the Class R-2 Certificates issued pursuant to this Agreement. It
is the express intent of the parties hereto that the conveyance of the REMIC
II Trust Fund to the Trustee by the Company as provided in this Section 2.05
be, and be construed as, an absolute sale of the REMIC II Trust Fund. It is,
further, not the intention of the parties that such conveyance be deemed a
pledge of the REMIC II Trust Fund by the Company to the Trustee to secure a
debt or other obligation of the Company. However, in the event that,
notwithstanding the intent of the parties, the REMIC II Trust Fund is held to
be the property of the Company, or if for any other reason this Agreement is
held or deemed to create a security interest in the REMIC II Trust Fund, then
(a) this Agreement shall be deemed to be a security agreement;
(b) the conveyance provided for in this Section 2.05 shall be deemed to
be a grant by the Company to the Trustee of a security interest in all of the
Company's right, title, and interest, whether now owned or hereafter acquired,
in and to:
(I) All accounts, contract rights, general intangibles, chattel
paper, instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit and investment
property consisting of, arising from or relating to any of the property
described below: The uncertificated REMIC I Regular Interests, including
without limitation all rights represented thereby in and to (i) the
Mortgage Loans identified on the Mortgage Loan Schedule, including the
related Mortgage Notes, Mortgages, Cooperative Stock Certificates, and
Cooperative Leases, all Substitute Mortgage Loans and all distributions
with respect to such Mortgage Loans and Substitute Mortgage Loans payable
on and after the Cut-Off Date, (ii) the Certificate Account, the
Investment Account, the Custodial Accounts for P&I, the Custodial
Accounts for Reserves and all money or other property held therein; (iii)
amounts paid or payable by the insurer under any FHA insurance policy or
any Primary Insurance Policy and proceeds of any VA guaranty and any
other insurance policy related to any Mortgage Loan or the Mortgage Pool;
(iv) all property or rights arising from or by virtue
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of the disposition of, or collections with respect to, or insurance
proceeds payable with respect to, or claims against other persons with
respect to, all or any part of the collateral described in (i)-(iii)
above (including any accrued discount realized on liquidation of any
investment purchased at a discount), and (v) all cash and non-cash
proceeds of the collateral described in (i)-(iv) above;
(II) All accounts, general intangibles, chattel paper, instruments,
documents, money, deposit accounts, certificates of deposit, goods,
letters of credit, advices of credit, investment property and other
rights arising from or by virtue of the disposition of, or collections
with respect to, or insurance proceeds payable with respect to, or claims
against other persons with respect to, all or any part of the collateral
described in (I) above (including any accrued discount realized on
liquidation of any investment purchased at a discount); and
(III) All cash and non-cash proceeds of the collateral described
in (I) and (II) above;
(c) the possession by the Trustee of the Mortgage Notes, the Mortgages
and such other goods, letters of credit, advices of credit, instruments,
money, documents, chattel paper or certificated securities shall be deemed to
be possession by the secured party or possession by a purchaser for purposes
of perfecting the security interest pursuant to the Uniform Commercial Code
(including, without limitation, Sections 9-305 and 9-115 thereof) as in force
in the relevant jurisdiction; and
(d) notifications to persons holding such property, and acknowledgments,
receipts or confirmations from persons holding such property, shall be deemed
notifications to, or acknowledgments, receipts or confirmations from,
securities intermediaries, bailees or agents of, or persons holding for, the
Trustee, as applicable for the purpose of perfecting such security interest
under applicable law.
The Company and the Trustee shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the REMIC II Trust
Fund, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and will be maintained as such
throughout the term of this Agreement. In connection herewith, the Trustee
shall have all of the rights and remedies of a secured party and creditor
under the Uniform Commercial Code as in force in the relevant jurisdiction.
The Trustee is authorized, with the Master Servicer's consent, to appoint
any bank or trust company approved by and unaffiliated with each of the
Company and the Master Servicer as Custodian of the documents or instruments
referred to above in this Section 2.05, and to enter into a Custodial
Agreement for such purpose; provided, however, that the Trustee shall be and
remain liable for actions of any such Custodian only to the extent it would
otherwise be responsible for such acts hereunder.
The Company and the Trustee agree that the Company, on behalf of the
REMIC II Trust Fund, shall elect to treat the REMIC II Trust Fund as a REMIC
within the meaning of Section 860D of the Code and, if necessary, under
applicable state laws. Such election shall be included in the Form
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1066 and any appropriate state return to be filed on behalf of the REMIC
constituted by the REMIC II Trust Fund for its first taxable year.
The Closing Date is hereby designated as the "startup day" of the REMIC
constituted by the REMIC II Trust Fund within the meaning of Section
860G(a)(9) of the Code.
The regular interests (as set forth in the table contained in the
Preliminary Statement hereto) relating to the REMIC II Trust Fund are hereby
designated as "regular interests" for purposes of Section 860G(a)(1) of the
Code. The Class R-2 Certificates are being issued in a single Class, which is
hereby designated as the sole class of "residual interest" in the REMIC II
Trust Fund for purposes of Section 860G(a)(2) of the Code.
The parties intend that the affairs of the REMIC II Trust Fund formed
hereunder shall constitute, and that the affairs of the REMIC II Trust Fund
shall be conducted so as to qualify it as, a REMIC. In furtherance of such
intention, the Company covenants and agrees that it shall act as agent for the
Tax Matters Person (and the Company is hereby appointed to act as Tax Matters
Person) on behalf of the REMIC II Trust Fund and that in such capacity it
shall: (a) prepare and file, or cause to be prepared and filed, a federal tax
return using a calendar year as the taxable year for the REMIC II Trust Fund
when and as required by the REMIC provisions and other applicable federal
income tax laws; (b) make an election, on behalf of the REMIC II Trust Fund,
to be treated as a REMIC on the federal tax return of the REMIC II Trust Fund
for its first taxable year, in accordance with the REMIC provisions; (c)
prepare and forward, or cause to be prepared and forwarded, to the Holders of
the REMIC II Regular Interests and the Class R-2 Certificates all information
reports as and when required to be provided to them in accordance with the
REMIC provisions; (d) conduct the affairs of the REMIC II Trust Fund at all
times that any of the REMIC II Regular Interests and the Class R-2
Certificates are outstanding so as to maintain the status of the REMIC II
Trust Fund as a REMIC under the REMIC provisions; (e) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of the REMIC II Trust Fund; and (f) pay the
amount of any federal prohibited transaction penalty taxes imposed on the
REMIC II Trust Fund when and as the same shall be due and payable (but such
obligation shall not prevent the Company or any other appropriate person from
contesting any such tax in appropriate proceedings and shall not prevent the
Company from withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings); provided, that the Company shall be entitled to
be indemnified from the REMIC II Trust Fund for any such prohibited
transaction penalty taxes if the Company's failure to exercise reasonable care
was not the primary cause of the imposition of such prohibited transaction
penalty taxes.
In the event that any tax is imposed on "prohibited transactions" of the
REMIC II Trust Fund as defined in Section 860F of the Code and not paid by the
Company pursuant to clause (f) of the preceding paragraph, such tax shall be
charged against amounts otherwise distributable to the Holders of the Class
R-2 Certificates. Notwithstanding anything to the contrary contained herein,
the Company is hereby authorized to retain from amounts otherwise
distributable to the Holders of the Class R-2 Certificates on any Distribution
Date sufficient funds to reimburse the Company for the payment of such tax (to
the extent that the Company has not been previously reimbursed therefor).
Section 2.06. ACCEPTANCE BY TRUSTEE; AUTHENTICATION OF CERTIFICATES. The
Trustee acknowledges and accepts the assignment to it of the property
constituting the REMIC II Trust Fund
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and declares that as of the Closing Date it holds and shall hold any documents
constituting a part of the REMIC II Trust Fund, and the REMIC II Trust Fund,
as Trustee in trust, upon the trusts herein set forth, for the use and benefit
of all present and future Holders of the REMIC II Regular Interests and the
Class R-2 Certificates. In connection therewith, as of the Closing Date, the
Trustee shall cause to be authenticated and delivered to or upon the order of
the Company, in exchange for the property constituting the REMIC II Trust
Fund, the Class R-2 Certificates in Authorized Denominations evidencing the
residual ownership interest in the REMIC II Trust Fund.
Section 2.07. CONVEYANCE OF REMIC III; REMIC ELECTION AND DESIGNATIONS. A
trust ("REMIC III") of which the Trustee is the trustee is hereby created
under the laws of the State of New York for the benefit of the Holders of the
Certificates (other than the Class R-1 and Class R-2 Certificates). The
purpose of REMIC III is to hold the REMIC III Trust Fund and provide for the
issuance, execution and delivery of the Certificates (other than the Class R-1
and Class R-2 Certificates). The assets of REMIC III shall consist of the
REMIC III Trust Fund. REMIC III shall be irrevocable.
The assets of REMIC III shall remain in the custody of the Trustee, on
behalf of REMIC III, and shall be kept in REMIC III. Moneys to the credit of
REMIC III shall be held by the Trustee and invested as provided herein. All
assets received and held in REMIC III will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of U.S. Bank
National Association in its own right, or any Person claiming through it. The
Trustee, on behalf of REMIC III, shall not have the power or authority to
transfer, assign, hypothecate, pledge or otherwise dispose of any of the
assets of REMIC III to any Person, except as permitted herein. No creditor of
a beneficiary of REMIC III, of the Trustee, of the Master Servicer or of the
Company shall have any right to obtain possession of, or otherwise exercise
legal or equitable remedies with respect to, the property of REMIC III, except
in accordance with the terms of this Agreement.
Concurrently with the execution and delivery hereof, the Company does
hereby agree to irrevocably sell, transfer, assign, set over, and otherwise
convey to the Trustee in trust for the benefit of the Certificateholders
(other than the Class R-1 and Class R-2 Certificateholders), without recourse,
all the Company's right, title and interest in and to the REMIC III Trust
Fund, including all interest and principal received by the Company on or with
respect to the REMIC II Regular Interests after the Cut-Off Date. The Trustee
hereby accepts REMIC III created hereby and accepts delivery of the REMIC III
Trust Fund on behalf of REMIC III and acknowledges that it holds the REMIC II
Regular Interests for the benefit of the Holders of the Certificates (other
than the Class R-1 and Class R-2 Certificates) issued pursuant to this
Agreement. It is the express intent of the parties hereto that the conveyance
of the REMIC III Trust Fund to the Trustee by the Company as provided in this
Section 2.07 be, and be construed as, an absolute sale of the REMIC III Trust
Fund. It is, further, not the intention of the parties that such conveyance be
deemed a pledge of the REMIC III Trust Fund by the Company to the Trustee to
secure a debt or other obligation of the Company. However, in the event that,
notwithstanding the intent of the parties, the REMIC III Trust Fund is held to
be the property of the Company, or if for any other reason this Agreement is
held or deemed to create a security interest in the REMIC III Trust Fund, then
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(a) this Agreement shall be deemed to be a security agreement;
(b) the conveyance provided for in this Section 2.07 shall be deemed to
be a grant by the Company to the Trustee of a security interest in all of the
Company's right, title, and interest, whether now owned or hereafter acquired,
in and to:
(I) All accounts, contract rights, general intangibles, chattel
paper, instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit and investment
property consisting of, arising from or relating to any of the property
described below: The uncertificated REMIC II Regular Interests, including
without limitation all rights represented thereby in and to (i) the
Mortgage Loans identified on the Mortgage Loan Schedule, including the
related Mortgage Notes, Mortgages, Cooperative Stock Certificates, and
Cooperative Leases, all Substitute Mortgage Loans and all distributions
with respect to such Mortgage Loans and Substitute Mortgage Loans payable
on and after the Cut-Off Date, (ii) the Certificate Account, the
Investment Account, the Custodial Accounts for P&I, the Custodial
Accounts for Reserves and all money or other property held therein; (iii)
amounts paid or payable by the insurer under any FHA insurance
policy or any Primary Insurance Policy and proceeds of any VA guaranty
and any other insurance policy related to any Mortgage Loan or the
Mortgage Pool; (iv) all property or rights arising from or by virtue of
the disposition of, or collections with respect to, or insurance proceeds
payable with respect to, or claims against other persons with respect to,
all or any part of the collateral described in (i)-(iii) above (including
any accrued discount realized on liquidation of any investment purchased
at a discount), and (v) all cash and non-cash proceeds of the collateral
described in (i)-(iv) above;
(II) All accounts, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of deposit,
goods, letters of credit, advices of credit, investment property and
other rights arising from or by virtue of the disposition of, or
collections with respect to, or insurance proceeds payable with respect
to, or claims against other persons with respect to, all or any part of
the collateral described in (I) above (including any accrued discount
realized on liquidation of any investment purchased at a discount); and
(III) All cash and non-cash proceeds of the collateral described
in (I) and (II) above;
(c) the possession by the Trustee of the Mortgage Notes, the Mortgages
and such other goods, letters of credit, advices of credit, instruments,
money, documents, chattel paper or certificated securities shall be deemed to
be possession by the secured party or possession by a purchaser for purposes
of perfecting the security interest pursuant to the Uniform Commercial Code
(including, without limitation, Sections 9-305 and 9-115 thereof) as in force
in the relevant jurisdiction; and
(d) notifications to persons holding such property, and acknowledgments,
receipts or confirmations from persons holding such property, shall be deemed
notifications to, or acknowledgments, receipts or confirmations from,
securities intermediaries, bailees or agents of, or persons holding for, the
Trustee, as applicable for the purpose of perfecting such security interest
under applicable law.
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The Company and the Trustee shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the REMIC III Trust
Fund, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and will be maintained as such
throughout the term of this Agreement. In connection herewith, the Trustee
shall have all of the rights and remedies of a secured party and creditor
under the Uniform Commercial Code as in force in the relevant jurisdiction.
The Trustee is authorized, with the Master Servicer's consent, to appoint
any bank or trust company approved by and unaffiliated with each of the
Company and the Master Servicer as Custodian of the documents or instruments
referred to above in this Section 2.07, and to enter into a Custodial
Agreement for such purpose; provided, however, that the Trustee shall be and
remain liable for actions of any such Custodian only to the extent it would
otherwise be responsible for such acts hereunder.
The Company and the Trustee agree that the Company, on behalf of the
REMIC III Trust Fund, shall elect to treat the REMIC III Trust Fund as a REMIC
within the meaning of Section 860D of the Code and, if necessary, under
applicable state laws. Such election shall be included in the Form 1066 and
any appropriate state return to be filed on behalf of the REMIC constituted by
the REMIC III Trust Fund for its first taxable year.
The Closing Date is hereby designated as the "startup day" of the REMIC
constituted by the REMIC III Trust Fund within the meaning of Section
860G(a)(9) of the Code.
The regular interests (as set forth in the table contained in the
Preliminary Statement hereto) relating to the REMIC III Trust Fund are hereby
designated as "regular interests" for purposes of Section 860G(a)(1) of the
Code. The Class R-3 Certificates are being issued in a single Class, which is
hereby designated as the sole class of "residual interest" in the REMIC III
Trust Fund for purposes of Section 860G(a)(2) of the Code.
The parties intend that the affairs of the REMIC III Trust Fund formed
hereunder shall constitute, and that the affairs of the REMIC III Trust Fund
shall be conducted so as to qualify it as, a REMIC. In furtherance of such
intention, the Company covenants and agrees that it shall act as agent for the
Tax Matters Person (and the Company is hereby appointed to act as Tax Matters
Person) on behalf of the REMIC III Trust Fund and that in such capacity it
shall: (a) prepare and file, or cause to be prepared and filed, a federal tax
return using a calendar year as the taxable year for the REMIC III Trust Fund
when and as required by the REMIC provisions and other applicable federal
income tax laws; (b) make an election, on behalf of the REMIC III Trust Fund,
to be treated as a REMIC on the federal tax return of the REMIC III Trust Fund
for its first taxable year, in accordance with the REMIC provisions; (c)
prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders (other than the Class R-1 and Class R-2 Certificateholders)
all information reports as and when required to be provided to them in
accordance with the REMIC provisions; (d) conduct the affairs of the REMIC III
Trust Fund at all times that any Certificates are outstanding so as to
maintain the status of the REMIC III Trust Fund as a REMIC under the REMIC
provisions; (e) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC status of the REMIC
III Trust Fund; and (f) pay the amount of any federal prohibited transaction
penalty taxes imposed on the REMIC III Trust Fund when and as the same shall
be due
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and payable (but such obligation shall not prevent the Company or any
other appropriate person from contesting any such tax in appropriate
proceedings and shall not prevent the Company from withholding payment of such
tax, if permitted by law, pending the outcome of such proceedings); provided,
that the Company shall be entitled to be indemnified from the REMIC III Trust
Fund for any such prohibited transaction penalty taxes if the Company's
failure to exercise reasonable care was not the primary cause of the
imposition of such prohibited transaction penalty taxes.
In the event that any tax is imposed on "prohibited transactions" of the
REMIC III Trust Fund as defined in Section 860F of the Code and not paid by
the Company pursuant to clause (f) of the preceding paragraph, such tax shall
be charged against amounts otherwise distributable to the Holders of the Class
R-3 Certificates. Notwithstanding anything to the contrary contained herein,
the Company is hereby authorized to retain from amounts otherwise
distributable to the Holders of the Class R-3 Certificates on any Distribution
Date sufficient funds to reimburse the Company for the payment of such tax (to
the extent that the Company has not been previously reimbursed therefor).
Section 2.08. ACCEPTANCE BY TRUSTEE; AUTHENTICATION OF CERTIFICATES. The
Trustee acknowledges and accepts the assignment to it of the property
constituting the REMIC III Trust Fund and declares that as of the Closing Date
it holds and shall hold any documents constituting a part of the REMIC III
Trust Fund, and the REMIC III Trust Fund, as Trustee in trust, upon the trusts
herein set forth, for the use and benefit of all present and future
Certificateholders (other than the Class R-1 and Class R-2
Certificateholders). In connection therewith, as of the Closing Date, the
Trustee shall cause to be authenticated and delivered to or upon the order of
the Company, in exchange for the property constituting the REMIC III Trust
Fund, the Certificates (other than the Class R-1 and Class R-2 Certificates)
in Authorized Denominations evidencing the entire ownership of the REMIC III
Trust Fund.
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. THE COMPANY TO ACT AS MASTER SERVICER. The Company shall
act as Master Servicer to service and administer the Mortgage Loans on behalf
of the Trustee and for the benefit of the Certificateholders in accordance
with the terms hereof and in the same manner in which, and with the same care,
skill, prudence and diligence with which, it services and administers similar
mortgage loans for other portfolios, and shall have full power and authority
to do or cause to be done any and all things in connection with such servicing
and administration which it may deem necessary or desirable, including,
without limitation, the power and authority to bring actions and defend REMIC
I, REMIC II and REMIC III on behalf of the Trustee in order to enforce the
terms of the Mortgage Notes. The Master Servicer may perform its master
servicing responsibilities through agents or independent contractors, but
shall not thereby be released from any of its responsibilities hereunder and
the Master Servicer shall diligently pursue all of its rights against such
agents or independent contractors.
The Master Servicer shall make reasonable efforts to collect or cause to
be collected all payments called for under the terms and provisions of the
Mortgage Loans and shall, to the extent such procedures shall be consistent
with this Agreement and the terms and provisions of any Primary Insurance
Policy, any FHA insurance policy or VA guaranty, any hazard insurance policy,
and federal
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flood insurance, cause to be followed such collection procedures as are
followed with respect to mortgage loans comparable to the Mortgage Loans and
held in portfolios of responsible mortgage lenders in the local areas where
each Mortgaged Property is located. The Master Servicer shall enforce
"due-on-sale" clauses with respect to the related Mortgage Loans, to
the extent permitted by law, subject to the provisions set forth in Section
3.08.
Consistent with the foregoing, the Master Servicer may in its discretion
(i) waive or cause to be waived any assumption fee or late payment charge in
connection with the prepayment of any Mortgage Loan and (ii) only upon
determining that the coverage of any applicable insurance policy or guaranty
related to a Mortgage Loan will not be materially adversely affected, arrange
a schedule, running for no more than 180 days after the first delinquent Due
Date, for payment of any delinquent installment on any Mortgage Note or for
the liquidation of delinquent items. The Master Servicer shall have the right,
but not the obligation, to repurchase any related delinquent Mortgage Loan 90
days after the first delinquent Due Date for an amount equal to its Purchase
Price; provided, however, that the aggregate Purchase Price of Mortgage Loans
so repurchased shall not exceed one-half of one percent (0.50%) of the
aggregate Principal Balance, as of the Cut-Off Date, of all Mortgage Loans.
The Master Servicer is hereby authorized and empowered by the Trustee to
execute and deliver or cause to be executed and delivered on behalf of the
Holders of the REMIC I Regular Interests and the Class R-1 Certificateholders,
and the Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release, discharge or modification,
assignments of Mortgages and endorsements of Mortgage Notes in connection with
refinancings (in jurisdictions where such assignments are the customary and
usual standard of practice of mortgage lenders) and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Properties. The Trustee shall furnish the Master Servicer, at the
Master Servicer's direction, with any powers of attorney and other documents
necessary or appropriate to enable the Master Servicer to carry out its
supervisory, servicing and administrative duties under this Agreement.
The Master Servicer and each Servicer shall obtain (to the extent
generally commercially available from time to time) and maintain fidelity bond
and errors and omissions coverage acceptable to FNMA or FHLMC with respect to
their obligations under this Agreement and the applicable Selling and
Servicing Contract, respectively. The Master Servicer or each Servicer, as
applicable, shall establish escrow accounts for, or pay when due (by means of
an advance), any tax liens in connection with the Mortgaged Properties that
are not paid by the Mortgagors when due to the extent that any such payment
would not constitute a Nonrecoverable Advance when made. Notwithstanding the
foregoing, the Master Servicer shall not permit any modification with respect
to any Mortgage Loan that would both constitute a sale or exchange of such
Mortgage Loan within the meaning of Section 1001 of the Code (including any
proposed, temporary or final regulations promulgated thereunder) (other than
in connection with a proposed conveyance or assumption of such Mortgage Loan
that is treated as a Principal Prepayment or in a default situation) and cause
any of the REMICs to fail to qualify as such under the Code. The Master
Servicer shall be entitled to approve a request from a Mortgagor for a partial
release of the related Mortgaged Property, the granting of an easement thereon
in favor of another Person, any alteration or demolition of the related
Mortgaged Property or other similar matters if it has determined, exercising
its good faith business judgment in the same manner as it would if it were the
owner of the related Mortgage Loan, that the
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security for, and the timely and full collectability of, such Mortgage Loan
would not be adversely affected thereby and that the applicable trust fund
would not fail to continue to qualify as a REMIC under the Code as a result
thereof and that no tax on "prohibited transactions" or "contributions" after
the startup day would be imposed on either REMIC as a result thereof.
In connection with the servicing and administering of each Mortgage Loan,
the Master Servicer and any affiliate of the Master Servicer (i) may perform
services such as appraisals, default management and brokerage services that
are not customarily provided by servicers of mortgage loans, and shall be
entitled to reasonable compensation therefor and (ii) may, at its own
discretion and on behalf of the Trustee, obtain credit information in the form
of a "credit score" from a credit repository.
Section 3.02. CUSTODIAL ACCOUNTS. The Master Servicer shall cause to be
established and maintained by each Servicer under the Master Servicer's
supervision the Custodial Account for P&I, Buydown Fund Accounts (if any) and
special Custodial Account for Reserves and shall deposit or cause to be
deposited therein daily the amounts related to the Mortgage Loans required by
the Selling and Servicing Contracts to be so deposited. Proceeds received with
respect to individual Mortgage Loans from any title, hazard, or FHA insurance
policy, VA guaranty, Primary Insurance Policy, or other insurance policy
covering such Mortgage Loans shall be deposited first in the Custodial Account
for Reserves if required for the restoration or repair of the related
Mortgaged Property. Proceeds from such insurance policies not so deposited in
the Custodial Account for Reserves shall be deposited in the Custodial Account
for P&I, and shall be applied to the balances of the related Mortgage Loans as
payments of interest and principal.
The Master Servicer is hereby authorized to make withdrawals from and to
issue drafts against the Custodial Accounts for P&I and the Custodial Accounts
for Reserves for the purposes required or permitted by this Agreement. Each
Custodial Account for P&I and each Custodial Account for Reserves shall bear a
designation clearly showing the respective interests of the applicable
Servicer, as trustee, and of the Master Servicer, in substantially one of the
following forms:
(a) With respect to the Custodial Account for P&I: (i)
[Servicer's Name], as agent, trustee and/or bailee of principal and
interest custodial account for PNC Mortgage Securities Corp., its
successors and assigns, for various owners of interests in PNC Mortgage
Securities Corp. mortgage-backed pools or (ii) [Servicer's Name] in trust
for PNC Mortgage Securities Corp.;
(b) With respect to the Custodial Account for Reserves: (i)
[Servicer's Name], as agent, trustee and/or bailee of taxes and insurance
custodial account for PNC Mortgage Securities Corp., its successors and
assigns for various mortgagors and/or various owners of interests in PNC
Mortgage Securities Corp. mortgage-backed pools or (ii) [Servicer's Name]
in trust for PNC Mortgage Securities Corp. and various Mortgagors.
The Master Servicer hereby undertakes to assure remittance to the
Certificate Account of all amounts relating to the Mortgage Loans that have
been collected by any Servicer and are due to the Certificate Account pursuant
to Section 4.01 of this Agreement.
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Section 3.03. THE INVESTMENT ACCOUNT; ELIGIBLE INVESTMENTS.(a) Not
later than the Withdrawal Date, the Master Servicer shall withdraw or direct
the withdrawal of funds in the Custodial Accounts for P&I, for deposit in the
Investment Account, in an amount representing:
(i) Scheduled installments of principal and interest on the
Mortgage Loans received or advanced by the applicable Servicers which
were due on the Due Date prior to such Withdrawal Date, net of Servicing
Fees due the applicable Servicers and less any amounts to be withdrawn
later by the applicable Servicers from the applicable Buydown Fund
Accounts;
(ii) Payoffs and the proceeds of other types of liquidations of
the Mortgage Loans received by the applicable Servicer for such Mortgage
Loans during the applicable Payoff Period, with interest to the date of
Payoff or liquidation less any amounts to be withdrawn later by the
applicable Servicers from the applicable Buydown Fund Accounts; and
(iii) Curtailments received by the applicable Servicers in the
Prior Period.
At its option, the Master Servicer may invest funds withdrawn from the
Custodial Accounts for P&I, as well as any Buydown Funds, Insurance Proceeds
and Liquidation Proceeds previously received by the Master Servicer (including
amounts paid by the Company in respect of any Purchase Obligation or its
substitution obligations set forth in Section 2.02 or Section 2.03 or in
connection with the exercise of the option to terminate this Agreement
pursuant to Section 9.01) for its own account and at its own risk, during any
period prior to their deposit in the Certificate Account. Such funds, as well
as any funds which were withdrawn from the Custodial Accounts for P&I on or
before the Withdrawal Date, but not yet deposited into the Certificate
Account, shall immediately be deposited by the Master Servicer with the
Investment Depository in an Investment Account in the name of the Master
Servicer and the Trustee for investment only as set forth in this Section
3.03. The Master Servicer shall bear any and all losses incurred on any
investments made with such funds and shall be entitled to retain all gains
realized on such investments as additional servicing compensation. Not later
than the Business Day prior to the Distribution Date, the Master Servicer
shall deposit such funds, net of any gains (except Payoff Earnings) earned
thereon, in the Certificate Account.
(b) Funds held in the Investment Account shall be invested in (i) one or
more Eligible Investments which shall in no event mature later than the
Business Day prior to the related Distribution Date (except if such Eligible
Investments are obligations of the Trustee, such Eligible Investments may
mature on the Distribution Date), or (ii) such other instruments as shall be
required to maintain the Ratings.
Section 3.04. THE CERTIFICATE ACCOUNT.
(a) Not later than the Business Day prior to the related Distribution
Date, the Master Servicer shall direct the Investment Depository to deposit
the amounts previously deposited into the Investment Account (which may
include a deposit of Eligible Investments) to which the Holders of the REMIC I
Regular Interests and Class R-1 Certificateholders are entitled into the
Certificate Account. In addition, not later than the Business Day prior to the
Distribution Date, the Master Servicer shall deposit into the Certificate
Account any Monthly P&I Advances or other payments required to be made by the
Master Servicer pursuant to Section 4.02 of this Agreement and
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any Insurance Proceeds or Liquidation Proceeds (including amounts paid by the
Company in respect of any Purchase Obligation or in connection with the
exercise of its option to terminate this Agreement pursuant to Section 9.01)
not previously deposited in the Custodial Accounts for P&I or the Investment
Account. The Trustee shall deposit into the Certificate Account amounts
received under the Certificate Insurance Policy in accordance with Section
3.16(b) hereof.
(b) Funds held in the Certificate Account shall be invested at the
direction of the Master Servicer in (i) one or more Eligible Investments which
shall in no event mature later than the Business Day prior to the related
Distribution Date (except if such Eligible Investments are obligations of the
Trustee, such Eligible Investments may mature on the Distribution Date), or
(ii) such other instruments as shall be required to maintain the Ratings. The
Master Servicer shall be entitled to receive any gains earned on such Eligible
Investments and shall bear any losses suffered in connection therewith.
Section 3.05. PERMITTED WITHDRAWALS FROM THE CERTIFICATE ACCOUNT, THE
INVESTMENT ACCOUNT AND CUSTODIAL ACCOUNTS FOR P&I AND OF BUYDOWN FUNDS FROM
THE BUYDOWN FUND ACCOUNTS.
(a) The Master Servicer is authorized to make withdrawals, from time
to time, from the Investment Account, the Certificate Account or the Custodial
Accounts for P&I established by the Servicers of amounts deposited therein in
respect of the Certificates, as follows:
(i) To reimburse itself or the applicable Servicer for Monthly
P&I Advances made pursuant to Section 4.02 or a Selling and Servicing
Contract, such right to reimbursement pursuant to this paragraph (i)
being limited to amounts received on particular Mortgage Loans
(including, for this purpose, Insurance Proceeds and Liquidation
Proceeds) which represent late recoveries of principal and/or interest
respecting which any such Monthly P&I Advance was made;
(ii) To reimburse itself or the applicable Servicer for amounts
expended by or for the account of the Master Servicer pursuant to Section
3.09 or amounts expended by such Servicer pursuant to the Selling and
Servicing Contracts in connection with the restoration of property
damaged by an Uninsured Cause or in connection with the liquidation of a
Mortgage Loan;
(iii) To pay to itself, with respect to the related Mortgage
Loans, the Master Servicing Fee (net of Compensating Interest reduced by
Payoff Earnings and Payoff Interest) as to which no prior withdrawals
from funds deposited by the Master Servicer have been made;
(iv) To reimburse itself or the applicable Servicer for advances
made with respect to related Mortgage Loans which the Master Servicer has
determined to be Nonrecoverable Advances;
(v) To pay to itself reinvestment earnings deposited or earned
in the Investment Account and the Certificate Account to which it is
entitled and to reimburse itself for expenses incurred by and
reimbursable to it pursuant to Section 6.03;
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(vi) To deposit to the Investment Account amounts in the
Certificate Account not required to be on deposit therein at the time of
such withdrawal;
(vi) To deposit in the Certificate Account, not later than the
Business Day prior to the related Distribution Date, the amounts
specified in Section 3.04(a); and
after making or providing for the above withdrawals
(vii) To clear and terminate the Investment Account and the
Certificate Account following termination of this Agreement pursuant to
Section 9.01.
Since, in connection with withdrawals pursuant to paragraphs (i) and
(ii), the Master Servicer's entitlement thereto is limited to collections or
other recoveries on the related Mortgage Loan, the Master Servicer or the
applicable Servicer shall keep and maintain separate accounting for each
Mortgage Loan, for the purpose of justifying any such withdrawals.
(b) The Master Servicer (or the applicable Servicer, if such Servicer
holds and maintains a Buydown Fund Account) is authorized to make withdrawals,
from time to time, from the Buydown Fund Account or Custodial Account for P&I
established by any Servicer under its supervision of the following amounts of
Buydown Funds:
(i) To deposit each month in the Investment Account the amount
necessary to supplement payments received on Buydown Loans;
(ii) In the event of a Payoff of any Mortgage Loan having a
related Buydown Fund, to apply amounts remaining in Buydown Fund Accounts
to reduce the required amount of such principal Payoff (or, if the
Mortgagor has made a Payoff, to refund such remaining Buydown Fund
amounts to the Person entitled thereto);
(iii) In the event of foreclosure or liquidation of any Mortgage
Loan having a Buydown Fund, to deposit remaining Buydown Fund amounts in
the Investment Account as Liquidation Proceeds; and
(iv) To clear and terminate the portion of any account
representing Buydown Funds following termination of this Agreement
pursuant to Section 9.01;
(c) The Trustee is authorized to make withdrawals from time to time
from the Certificate Account to reimburse itself for advances it has made
pursuant to Section 7.01(a) hereof that it has determined to be Nonrecoverable
Advances.
Section 3.06. MAINTENANCE OF PRIMARY INSURANCE POLICIES; COLLECTIONS
THEREUNDER. The Master Servicer shall use its best reasonable efforts to keep,
and to cause the Servicers to keep, in full force and effect each Primary
Insurance Policy required with respect to a Mortgage Loan, in the manner set
forth in the applicable Selling and Servicing Contract, until no longer
required. Notwithstanding the foregoing, the Master Servicer shall have no
obligation to maintain such Primary Insurance Policy for a Mortgage Loan for
which the outstanding Principal Balance thereof at any time subsequent to
origination was 80% or less of the value of the related Mortgaged Property (as
determined by the appraisal obtained at the time of origination), unless
required by applicable law.
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Unless required by applicable law, the Master Servicer shall not cancel
or refuse to renew, or allow any Servicer under its supervision to cancel or
refuse to renew, any such Primary Insurance Policy in effect at the date of
the initial issuance of the Certificates that is required to be kept in force
hereunder; provided, however, that neither the Master Servicer nor any
Servicer shall advance funds for the payment of any premium due under any
Primary Insurance Policy if it shall determine that such an advance would be a
Nonrecoverable Advance.
Section 3.07. MAINTENANCE OF HAZARD INSURANCE. The Master Servicer
shall cause to be maintained for each Mortgage Loan (other than a Cooperative
Loan) fire insurance with extended coverage in an amount which is not less
than the original principal balance of such Mortgage Loan, except in cases
approved by the Master Servicer in which such amount exceeds the value of the
improvements to the Mortgaged Property. The Master Servicer shall also require
fire insurance with extended coverage in a comparable amount on property
acquired upon foreclosure, or deed in lieu of foreclosure, of any Mortgage
Loan (other than a Cooperative Loan). Any amounts collected under any such
policies (other than amounts to be applied to the restoration or repair of the
related Mortgaged Property) shall be deposited into the Custodial Account for
P&I, subject to withdrawal pursuant to the applicable Selling and Servicing
Contract and pursuant to Section 3.03 and Section 3.05. Any unreimbursed costs
incurred in maintaining any insurance described in this Section 3.07 shall be
recoverable as an advance by the Master Servicer from the Investment Account
or the Certificate Account. Such insurance shall be with insurers approved by
the Master Servicer and FNMA or FHLMC. Other additional insurance may be
required of a Mortgagor, in addition to that required pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. Where any part of any improvement to the
Mortgaged Property (other than a Mortgaged Property secured by a Cooperative
Loan) is located in a federally designated special flood hazard area and in a
community which participates in the National Flood Insurance Program at the
time of origination of the related Mortgage Loan, the Master Servicer shall
cause flood insurance to be provided. The hazard insurance coverage required
by this Section 3.07 may be met with blanket policies providing protection
equivalent to individual policies otherwise required. The Master Servicer or
the applicable Servicer shall be responsible for paying any deductible amount
on any such blanket policy. The Master Servicer agrees to present, or cause to
be presented, on behalf of and for the benefit of the Trustee and
Certificateholders, claims under the hazard insurance policy respecting any
Mortgage Loan, and in this regard to take such reasonable actions as shall be
necessary to permit recovery under such policy.
Section 3.08. ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.
When any Mortgaged Property is about to be conveyed by the Mortgagor, the
Master Servicer shall, to the extent it has knowledge of such prospective
conveyance and prior to the time of the consummation of such conveyance,
exercise on behalf of the Trustee the Trustee's rights to accelerate the
maturity of such Mortgage Loan, to the extent that such acceleration is
permitted by the terms of the related Mortgage Note, under any "due-on-sale"
clause applicable thereto; provided, however, that the Master Servicer shall
not exercise any such right if the due-on-sale clause, in the reasonable
belief of the Master Servicer, is not enforceable under applicable law or if
such exercise would result in non-coverage of any resulting loss that would
otherwise be covered under any insurance policy. In the event the Master
Servicer is prohibited from exercising such right, the Master Servicer is
authorized to take or enter into an assumption and modification agreement from
or with the Person to whom a Mortgaged Property has been or is about to be
conveyed, pursuant to which such Person becomes
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liable under the Mortgage Note and, unless prohibited by applicable state law
or unless the Mortgage Note contains a provision allowing a qualified borrower
to assume the Mortgage Note, the Mortgagor remains liable thereon; provided
that the Mortgage Loan shall continue to be covered (if so covered before the
Master Servicer enters such agreement) by any related Primary Insurance
Policy. The Master Servicer is also authorized to enter into a substitution of
liability agreement with such Person, pursuant to which the original Mortgagor
is released from liability and such Person is substituted as Mortgagor and
becomes liable under the Mortgage Note. The Master Servicer shall not enter
into any substitution or assumption with respect to a Mortgage
Loan if such substitution or assumption shall (i) both constitute a
"significant modification" effecting an exchange or reissuance of such
Mortgage Loan under the Code (or Treasury regulations promulgated thereunder)
and cause the REMICs to fail to qualify as a REMIC under the REMIC Provisions
or (ii) cause the imposition of any tax on "prohibited transactions" or
"contributions" after the startup day under the REMIC Provisions. The Master
Servicer shall notify the Trustee that any such substitution or assumption
agreement has been completed by forwarding to the Trustee the original copy of
such substitution or assumption agreement and other documents and instruments
constituting a part thereof. In connection with any such assumption or
substitution agreement, the terms of the related Mortgage Note shall not be
changed. Any fee collected by the applicable Servicer for entering into an
assumption or substitution of liability agreement shall be retained by such
Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption
of a Mortgage Loan by operation of law or any assumption which the Master
Servicer may be restricted by law from preventing, for any reason whatsoever.
Section 3.09. REALIZATION UPON DEFAULTED MORTGAGE LOANS. The Master
Servicer shall foreclose upon or otherwise comparably convert, or cause to be
foreclosed upon or comparably converted, the ownership of any Mortgaged
Property securing a Mortgage Loan which comes into and continues in default
and as to which no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.01. In lieu of such foreclosure or
other conversion, and taking into consideration the desirability of maximizing
net Liquidation Proceeds after taking into account the effect of Insurance
Proceeds upon Liquidation Proceeds, the Master Servicer may, to the extent
consistent with prudent mortgage loan servicing practices, accept a payment of
less than the outstanding Principal Balance of a delinquent Mortgage Loan in
full satisfaction of the indebtedness evidenced by the related Mortgage Note
and release the lien of the related Mortgage upon receipt of such payment. The
Master Servicer shall not foreclose upon or otherwise comparably convert a
Mortgaged Property if the Master Servicer is aware of evidence of toxic waste,
other hazardous substances or other evidence of environmental contamination
thereon and the Master Servicer determines that it would be imprudent to do
so. In connection with such foreclosure or other conversion, the Master
Servicer shall cause to be followed such practices and procedures as it shall
deem necessary or advisable and as shall be normal and usual in general
mortgage servicing activities. The foregoing is subject to the provision that,
in the case of damage to a Mortgaged Property from an Uninsured Cause, the
Master Servicer shall not be required to advance its own funds towards the
restoration of the property unless it shall be determined in the sole judgment
of the Master Servicer, (i) that such restoration will increase the proceeds
of liquidation of the Mortgage Loan to Certificateholders after reimbursement
to itself for such expenses, and (ii) that such expenses will be
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recoverable to it through Liquidation Proceeds. The Master Servicer shall be
responsible for all other costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof (as well as its normal servicing compensation) as an advance. The
Master Servicer shall maintain information required for tax reporting purposes
regarding any Mortgaged Property which is abandoned or which has been
foreclosed or otherwise comparably converted. The Master Servicer shall report
such information to the Internal Revenue Service and the Mortgagor in the
manner required by applicable law.
With respect to each of the Group C-B Certificates and the Group I-B
Certificates, the Master Servicer may enter into a special servicing agreement
with an unaffiliated holder of a 100% Percentage Interest of the Class B
Certificate with the lowest priority or a holder of a 100% interest in a class
of securities representing such interests in such Class, subject to each
Rating Agency's acknowledgment that the Ratings of the Certificates in effect
immediately prior to the entering into of such agreement would not be
qualified, downgraded or withdrawn and the Certificates would not be placed on
credit review status (except for possible upgrading) as a result of such
agreement. Any such agreement may contain provisions whereby such holder may
(a) instruct the Master Servicer to instruct a Servicer to the extent provided
in the applicable Selling and Servicing Contract to commence or delay
foreclosure proceedings with respect to delinquent Mortgage Loans and will
contain provisions for the deposit of cash with the Master Servicer by the
holder that would be available for distribution to Certificateholders if
Liquidation Proceeds are less than they otherwise may have been had the
Servicer acted in accordance with its normal procedures or (b) purchase
delinquent Mortgage Loans from the REMIC I Trust Fund immediately prior to the
commencement of foreclosure proceedings at a price equal to the aggregate
outstanding Principal Balance of such Mortgage Loans plus accrued interest
thereon at the applicable Mortgage Interest Rate through the last day of the
month in which such Mortgage Loan is purchased.
REMIC I shall not acquire any real property (or personal property
incident to such real property) except in connection with a default or
imminent default of a Mortgage Loan. In the event that REMIC I acquires any
real property (or personal property incident to such real property) in
connection with a default or imminent default of a Mortgage Loan, such
property shall be disposed of by the Master Servicer within two years after
its acquisition by the Master Servicer for REMIC I, unless the Master Servicer
provides to the Trustee and the Certificate Insurer an Opinion of Counsel to
the effect that the holding by REMIC I of such Mortgaged Property subsequent
to two years after its acquisition will not result in the imposition of taxes
on "prohibited transactions" of REMIC I as defined in Section 860F of the Code
or under the law of any state in which real property securing a Mortgage Loan
owned by REMIC I is located or cause REMIC I to fail to qualify as a REMIC for
federal income tax purposes or for state tax purposes under the laws of any
state in which real property securing a Mortgage Loan owned by REMIC I is
located at any time that any Certificates are outstanding. The Master Servicer
shall manage, conserve, protect and operate each such property for the
Certificateholders solely for the purpose of its prompt disposition and sale
in a manner which does not cause such property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) or result in
the receipt by the REMIC of any "income from non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code or any "net income from
foreclosure property" which is subject to taxation under the REMIC Provisions.
Pursuant to its efforts to sell such property, the Master Servicer shall
either itself or through an agent selected by the Master Servicer protect and
conserve such property in the same manner and to such extent as is
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customary in the locality where such property is located and may, incident to
its conservation and protection of the interests of the Certificateholders,
rent the same, or any part thereof, as the Master Servicer deems to be in the
best interest of the Master Servicer and the Certificateholders for the period
prior to the sale of such property. Additionally, the Master Servicer shall
perform the tax withholding and shall file information returns with respect to
the receipt of mortgage interests received in a trade or business, the reports
of foreclosures and abandonments of any Mortgaged Property and the information
returns relating to cancellation of indebtedness income with respect to any
Mortgaged Property required by Sections 6050H, 6050J and 6050P, respectively,
of the Code, and deliver to the Trustee an Officers' Certificate on or before
March 31 of each year stating that such reports have been filed. Such reports
shall be in form and substance sufficient to meet the reporting requirements
imposed by Sections 6050H, 6050J and 6050P of the Code.
Notwithstanding any other provision of this Agreement, the Master
Servicer shall comply with all federal withholding requirements with respect
to payments to Certificateholders of interest or original issue discount that
the Master Servicer reasonably believes are applicable under the Code. The
consent of Certificateholders shall not be required for any such withholding.
Without limiting the foregoing, the Master Servicer agrees that it will not
withhold with respect to payments of interest or original issue discount in
the case of a Certificateholder that has furnished or caused to be furnished
an effective Form W-8 or an acceptable substitute form or a successor form and
who is not a "10 percent shareholder" within the meaning of Code Section
871(h)(3)(B) or a "controlled foreign corporation" described in Code Section
881(c)(3)(C) with respect to REMIC I, REMIC II, REMIC III or the Depositor.
In the event the Trustee withholds any amount from interest or original issue
discount payments or advances thereof to any Certificateholder pursuant to
federal withholding requirements, the Trustee shall indicate the amount
withheld to such Certificateholder.
Section 3.10. TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES. Upon the
Payoff or scheduled maturity of any Mortgage Loan, the Master Servicer shall
cause such final payment to be immediately deposited in the related Custodial
Account for P&I or the Investment Account. Upon notice thereof, the Master
Servicer shall promptly notify the Trustee by a certification (which
certification shall include a statement to the effect that all amounts
received in connection with such payment which are required to be deposited in
either such account have been so deposited) of a Servicing Officer and shall
request delivery to it of the Mortgage File. Upon receipt of such
certification and request, the Trustee shall, not later than the fifth
succeeding Business Day, release the related Mortgage File to the Master
Servicer or the applicable Servicer indicated in such request. With any such
Payoff or other final payment, the Master Servicer is authorized to prepare
for and procure from the trustee or mortgagee under the Mortgage which secured
the Mortgage Note a deed of full reconveyance or other form of satisfaction or
assignment of Mortgage and endorsement of Mortgage Note in connection with a
refinancing covering the Mortgaged Property, which satisfaction, endorsed
Mortgage Note or assigning document shall be delivered by the Master Servicer
to the person or persons entitled thereto. No expenses incurred in connection
with such satisfaction or assignment shall be payable to the Master Servicer
by the Trustee or from the Certificate Account, the related Investment Account
or the related Custodial Account for P&I. From time to time as appropriate for
the servicing or foreclosure of any Mortgage Loan, including, for this
purpose, collection under any Primary Insurance Policy, the Trustee shall,
upon request of the Master Servicer and delivery to it of a trust receipt
signed by a Servicing Officer, release not later than the fifth Business Day
following the date of receipt of such request the related Mortgage File to the
Master
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Servicer or the related Servicer as indicated by the Master Servicer
and shall execute such documents as shall be necessary to the prosecution of
any such proceedings. Such trust receipt shall obligate the Master Servicer to
return the Mortgage File to the Trustee when the need therefor by the Master
Servicer no longer exists, unless the Mortgage Loan shall be liquidated, in
which case, upon receipt of a certificate of a Servicing Officer similar to
that herein above specified, the trust receipt shall be released by the
Trustee to the Master Servicer.
Section 3.11. COMPENSATION TO THE MASTER SERVICER AND THE SERVICERS. As
compensation for its activities hereunder, the Master Servicer shall be
entitled to receive from the Investment Account or the Certificate Account the
amounts provided for by Section 3.05(a)(iii). The Master Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder and shall not be entitled to reimbursement therefor, except as
specifically provided herein.
As compensation for its activities under the applicable Selling and
Servicing Contract, the applicable Servicer shall be entitled to withhold or
withdraw from the related Custodial Account for P&I the amounts provided for
in such Selling and Servicing Contract. Each Servicer is required to pay all
expenses incurred by it in connection with its servicing activities under its
Selling and Servicing Contract (including payment of premiums for Primary
Insurance Policies, if required) and shall not be entitled to reimbursement
therefor except as specifically provided in such Selling and Servicing
Contract and not inconsistent with this Agreement.
Section 3.12. REPORTS TO THE TRUSTEE; CERTIFICATE ACCOUNT STATEMENT. Not
later than 15 days after each Distribution Date, the Master Servicer shall
forward a statement, certified by a Servicing Officer, to the Trustee and the
Certificate Insurer setting forth the status of the Certificate Account as of
the close of business on such Distribution Date and showing, for the period
covered by such statement, the aggregate of deposits into and withdrawals from
the Certificate Account for each category of deposit specified in Section 3.04
and each category of withdrawal specified in Section 3.05, and stating that
all distributions required by this Agreement have been made (or if any
required distribution has not been made, specifying the nature and amount
thereof). The Trustee shall provide such statements to any Certificateholder
upon request at the expense of the Master Servicer. Such statement shall
also, to the extent available, include information regarding delinquencies on
the Mortgage Loans, indicating the number and aggregate Principal Balance of
Mortgage Loans which are one, two, three or more months delinquent, the number
and aggregate Principal Balance of Mortgage Loans with respect to which
foreclosure proceedings have been initiated and the book value of any
Mortgaged Property acquired by the REMIC I Trust Fund through foreclosure,
deed in lieu of foreclosure or other exercise of the REMIC I Trust Fund's
security interest in the Mortgaged Property.
Section 3.13. ANNUAL STATEMENT AS TO COMPLIANCE. The Master Servicer
shall deliver to the Trustee and the Certificate Insurer, on or before April
30 of each year, beginning with the first April 30 succeeding the Cut-Off Date
by at least six months, an Officer's Certificate stating as to the signer
thereof, that (i) a review of the activities of the Master Servicer during the
preceding calendar year and performance under this Agreement has been made
under such officer's supervision, and (ii) to the best of such officer's
knowledge, based on such review, the Master Servicer has fulfilled all its
obligations under this Agreement throughout 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. Copies of
such statement shall be provided by the Master Servicer to
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Certificateholders upon request or by the Trustee (solely to the extent that
such copies are available to the Trustee) at the expense of the Master
Servicer, should the Master Servicer fail to so provide such copies.
Section 3.14. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE MORTGAGE LOANS. In the event that the Certificates are legal for
investment by federally-insured savings associations, the Master Servicer
shall provide to the OTS, the FDIC and the supervisory agents and examiners of
the OTS and the FDIC access to the documentation regarding the related
Mortgage Loans required by applicable regulations of the OTS or the FDIC, as
applicable, and shall in any event provide such access to the documentation
regarding such Mortgage Loans to the Trustee and its representatives, such
access being afforded without charge, but only upon reasonable request and
during normal business hours at the offices of the Master Servicer designated
by it.
Section 3.15. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT. On
or before April 30 of each year, beginning with the first April 30 succeeding
the Cut-Off Date by at least six months, the Master Servicer, at its expense,
shall cause a firm of independent public accountants to furnish a statement to
the Trustee and the Certificate Insurer to the effect that, in connection with
the firm's examination of the financial statements as of the previous December
31 of the Master Servicer's parent corporation (which shall include a limited
examination of the Master Servicer's financial statements), nothing came to
their attention that indicated that the Master Servicer was not in compliance
with Section 3.02, Section 3.03, Section 3.04, Section 3.05, Section 3.11,
Section 3.12 and Section 3.13 of this Agreement, except for (i) such
exceptions as such firm believes to be immaterial, and (ii) such other
exceptions as are set forth in such statement.
Section 3.16. MAINTENANCE OF CERTIFICATE INSURANCE POLICY; COLLECTIONS
THEREUNDER.
(a) Prior to Noon New York City time on the third Business Day prior
to each Distribution Date, the Master Servicer shall determine if a Deficiency
Amount for such Distribution Date exists and, if so, shall immediately notify
the Trustee who shall complete the Notice and submit such Notice in accordance
with the Certificate Insurance Policy to the Certificate Insurer no later than
12:00 P.M., New York City time, on the second Business Day immediately
preceding each Distribution Date, as a claim for an Insured Payment in an
amount equal to such Deficiency Amount. If at any time the Trustee determines
that a Preference Amount is payable under the terms of the Certificate
Insurance Policy, the Trustee shall take the actions required by the terms of
the Certificate Insurance Policy to obtain payment of such Preference Amount
by the Certificate Insurer.
(b) Upon receipt of an Insured Payment from the Certificate Insurer
on behalf of the Insured Certificateholders, the Trustee shall deposit such
Insured Payment in the Certificate Account. All such amounts on deposit in
the Certificate Account shall remain uninvested. The Trustee shall include on
each Distribution Date the Deficiency Amount for such Distribution Date in the
amount distributed to the applicable Insured Certificateholders pursuant to
Section 4.04. If on any Distribution Date, the Trustee or the Master Servicer
determines that the Certificate Insurer has paid more under the Certificate
Insurance Policy than is required by the terms thereof, the Trustee shall
promptly return the excess amount to the Certificate Insurer.
(c) The Trustee shall (i) receive as attorney-in-fact of each Insured
Certificateholder any Insured Payment from the Certificate Insurer and (ii)
distribute such Insured Payment to such Insured
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Certificateholders as set forth in subsection (b) above. Insured Payments
disbursed by the Trustee from proceeds of the Certificate Insurance Policy
shall not be considered payment by the REMIC III Trust Fund with respect to
the Insured Certificates, nor shall such disbursement of such Insured Payments
discharge the obligations of the REMIC III Trust Fund with respect to the
amounts thereof, and the Certificate Insurer shall become owner of such
amounts to the extent covered by such Insured Payments as the deemed assignee
of such Insured Certificateholders. The Trustee hereby agrees on behalf of
each Insured Certificateholder (and each Insured Certificateholder, by its
acceptance of its Insured Certificates, hereby agrees) for the benefit of the
Certificate Insurer that, to the extent the Certificate Insurer makes Insured
Payments, either directly or indirectly (as by paying through the Trustee), to
the Insured Certificateholders, the Certificate Insurer will be subrogated to
the rights of the Insured Certificateholders to the extent of such payments.
Section 3.17. [Reserved.]
Section 3.18. [Reserved.]
Section 3.19. [Reserved.]
Section 3.20. ASSUMPTION OR TERMINATION OF SELLING AND SERVICING
CONTRACTS BY TRUSTEE. In the event the Master Servicer, or any successor
Master Servicer, shall for any reason no longer be the Master Servicer
(including by reason of an Event of Default), the Trustee as trustee hereunder
or its designee shall thereupon assume all of the rights and obligations of
the Master Servicer under the Selling and Servicing Contracts with respect to
the related Mortgage Loans unless the Trustee elects to terminate the Selling
and Servicing Contracts with respect to such Mortgage Loans in accordance with
the terms thereof. The Trustee, its designee or the successor servicer for the
Trustee shall be deemed to have assumed all of the Master Servicer's interest
therein with respect to the related Mortgage Loans and to have replaced the
Master Servicer as a party to the Selling and Servicing Contracts to the same
extent as if the rights and duties under the Selling and Servicing Contracts
relating to such Mortgage Loans had been assigned to the assuming party,
except that the Master Servicer shall not thereby be relieved of any liability
or obligations under the Selling and Servicing Contracts with respect to the
Master Servicer's duties to be performed prior to its termination hereunder.
The Master Servicer at its expense shall, upon request of the Trustee,
deliver to the assuming party all documents and records relating to the
Selling and Servicing Contracts and the Mortgage Loans then being master
serviced by the Master Servicer and an accounting of amounts collected and
held by the Master Servicer and otherwise use its best efforts to effect the
orderly and efficient transfer of the rights and duties under the related
Selling and Servicing Contracts relating to such Mortgage Loans to the
assuming party.
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS; PAYMENT OF EXPENSES
Section 4.01. DISTRIBUTIONS TO HOLDERS OF REMIC I REGULAR INTERESTS AND
CLASS R-1 CERTIFICATEHOLDERS. On each Distribution Date, the Trustee (or any
duly appointed paying agent) (i) shall be deemed to have distributed from the
Certificate Account the REMIC I Distribution Amount
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to the Holders of the REMIC I Regular Interests and to have deposited such
amount for their benefit into the Certificate Account and (ii) from the
Certificate Account shall distribute to the Class R-1 Certificateholders the
sum of (a) the Excess Liquidation Proceeds and (b) the amounts to be
distributed to the Class R-1 Certificateholders pursuant to the definition of
"REMIC I Distribution Amount" for such Distribution Date, all in accordance
with written statements received from the Master Servicer pursuant to Section
4.02(b), by wire transfer in immediately available funds for the account of
each such Holders and the Class R-1 Certificateholder, or by any other means
of payment acceptable to each such Holder and the Class R-1 Certificateholder
of record on the immediately preceding Record Date (other than as provided in
Section 9.01 respecting the final distribution), as specified by each such
Certificateholder and at the address of such Holder appearing in the
Certificate Register. Notwithstanding any other provision of this Agreement,
no actual distributions pursuant to clause (i) of this Section 4.01 shall be
made on account of the deemed distributions described in this paragraph except
in the event of a liquidation of REMIC III and REMIC II and not REMIC I.
Section 4.02. ADVANCES BY THE MASTER SERVICER; DISTRIBUTION REPORTS TO
THE TRUSTEE.
(a) To the extent described below, the Master Servicer is obligated
to advance its own funds to the Certificate Account to cover any shortfall
between (i) payments scheduled to be received in respect of Mortgage Loans,
and (ii) the amounts actually deposited in the Certificate Account on account
of such payments. The Master Servicer's obligation to make any advance or
advances described in this Section 4.02 is effective only to the extent that
such advance is, in the good faith judgment of the Master Servicer made on or
before the Business Day immediately following the Withdrawal Date,
reimbursable from Insurance Proceeds or Liquidation Proceeds of the related
Mortgage Loans or recoverable as late Monthly Payments with respect to the
related Mortgage Loans or otherwise.
Prior to the close of business on the Business Day immediately following
each Withdrawal Date, the Master Servicer shall determine whether or not it
will make a Monthly P&I Advance on the Business Day prior to the next
succeeding Distribution Date (in the event that the applicable Servicer fails
to make such advances) and shall furnish a statement to the Trustee, the
Paying Agent, if any, and to any Certificateholder requesting the same,
setting forth the aggregate amount to be distributed on the next succeeding
Distribution Date on account of principal and interest in respect of the
Mortgage Loans, stated separately. In the event that full scheduled amounts of
principal and interest in respect of the Mortgage Loans shall not have been
received by or on behalf of the Master Servicer prior to such Determination
Date and the Master Servicer shall have determined that a Monthly P&I Advance
shall be made in accordance with this Section 4.02, the Master Servicer shall
so specify and shall specify the aggregate amount of such advance.
In the event that the Master Servicer shall be required to make a Monthly
P&I Advance, it shall on the Business Day prior to the related Distribution
Date either (i) deposit in the Certificate Account an amount equal to such
Monthly P&I Advance, (ii) make an appropriate entry in the records of the
Certificate Account that funds in such account being held for future
distribution or withdrawal have been, as permitted by this Section 4.02, used
by the Master Servicer to make such Monthly P&I Advance, or (iii) make
advances in the form of any combination of (i) and (ii) aggregating the amount
of such Monthly P&I Advance. Any funds being held for future distribution to
Certificateholders and so used shall be replaced by the Master Servicer by
deposit in the Certificate Account on the Business Day immediately preceding
any future Distribution Date to the extent that
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funds in the Certificate Account on such Distribution Date with respect to the
Mortgage Loans shall be less than payments to Certificateholders required to
be made on such date with respect to the Mortgage Loans. Under each Selling
and Servicing Contract, the Master Servicer is entitled to receive from the
Custodial Accounts for P&I established by the Servicers amounts received by
the applicable Servicers on particular Mortgage Loans as late payments of
principal and interest or as Liquidation or Insurance Proceeds and respecting
which the Master Servicer has made an unreimbursed advance of principal and
interest. The Master Servicer is also entitled to receive other amounts from
the related Custodial Accounts for P&I established by the Servicers to
reimburse itself for prior Nonrecoverable Advances respecting Mortgage Loans
serviced by such Servicers. The Master Servicer shall deposit these amounts in
the Investment Account prior to withdrawal pursuant to Section 3.05.
In accordance with Section 3.05, Monthly P&I Advances are reimbursable to
the Master Servicer from cash in the Investment Account or the Certificate
Account to the extent that the Master Servicer shall determine that any such
advances previously made are Nonrecoverable Advances pursuant to Section 4.03.
(b) Prior to Noon New York City time two Business Days prior to each
Distribution Date, the Master Servicer shall provide the Trustee and the
Certificate Insurer with a statement regarding the amount of the Deficiency
Amount, if any, to be paid by the Certificate Insurer and the amount of
principal and interest, the Residual Distribution Amount and the Excess
Liquidation Proceeds to be distributed to each Class of REMIC I Regular
Interests, each Class of REMIC II Regular Interests and each Class of
Certificates on such Distribution Date (such amounts to be determined in
accordance with the definitions of "REMIC I Distribution Amount", "REMIC II
Distribution Amount" and "REMIC III Distribution Amount", Section 4.01,
Section 4.04 and Section 4.06 hereof and other related definitions set forth
in Article I hereof).
Section 4.03. NONRECOVERABLE ADVANCES. Any advance previously made by a
Servicer pursuant to its Selling and Servicing Contract with respect to a
Mortgage Loan or by the Master Servicer that the Master Servicer shall
determine in its good faith judgment not to be ultimately recoverable from
Insurance Proceeds or Liquidation Proceeds or otherwise with respect to such
Mortgage Loan or recoverable as late Monthly Payments with respect to such
Mortgage Loan shall be a Nonrecoverable Advance. The determination by the
Master Servicer that it or the applicable Servicer has made a Nonrecoverable
Advance or that any advance would constitute a Nonrecoverable Advance, shall
be evidenced by an Officer's Certificate of the Master Servicer delivered to
the Trustee on the Determination Date and detailing the reasons for such
determination. Notwithstanding any other provision of this Agreement, any
insurance policy relating to the Mortgage Loans, or any other agreement
relating to the Mortgage Loans to which the Company or the Master Servicer is
a party, (a) the Company, the Master Servicer, and each Servicer shall not be
obligated to, and shall not, make any advance that, after reasonable inquiry
and in its sole discretion, the Company, the Master Servicer, or such Servicer
shall determine would be a Nonrecoverable Advance, and (b) the Company, the
Master Servicer, and each Servicer shall be entitled to reimbursement for any
advance as provided in Section 3.05(a)(i), (ii) and (iv) of this Agreement.
Section 4.04. DISTRIBUTIONS TO CERTIFICATEHOLDERS (OTHER THAN CLASS R-1
AND CLASS R-2 CERTIFICATEHOLDERS).
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(a) On each Distribution Date, the Trustee (or any duly appointed paying
agent) shall (i) withdraw from the Certificate Account, the REMIC III
Available Distribution Amount for such Distribution Date and shall distribute,
from the amount so withdrawn, to the extent of the REMIC III Available
Distribution Amount, the REMIC III Distribution Amount to the Certificates
(other than the Class R-1 and Class R-2 Certificates) and to the Certificate
Insurer in respect of the Certificate Insurer's subrogation to certain rights
to payments due to the Insured Certificateholders (as set forth in Section
3.16) and (ii) withdraw the Deficiency Amount, if any, from the Certificate
Account and distribute such amounts to the applicable Insured
Certificateholders, all (except with respect to payments to the Certificate
Insurer) in accordance with written statements received from the Master
Servicer pursuant to Section 4.02(b), by wire transfer in immediately
available funds for the account of, or by check mailed to, each such
Certificateholder of record on the immediately preceding Record Date (other
than as provided in Section 9.01 respecting the final distribution), as
specified by each such Certificateholder and at the address of such Holder
appearing in the Certificate Register and with respect to payments to the
Certificate Insurer, by means of payment acceptable to the Certificate
Insurer.
(b) All reductions in the Certificate Principal Balance of a Certificate
effected by distributions of principal and all allocations of Realized Losses
made on any Distribution Date shall be binding upon all Holders of such
Certificates and of any Certificates 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 (and the final distribution upon the Class R-1 and Class R-2
Certificates upon the termination of REMIC I and REMIC II) 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
4.04(c)(ii) and Section 9.01(b).
(c) Whenever, on the basis of Curtailments, Payoffs and Monthly Payments
on the Mortgage Loans and Insurance Proceeds, proceeds of the Certificate
Insurance Policy and Liquidation Proceeds received and expected to be received
during the Payoff Period, the Master Servicer has notified the Trustee that it
believes that the entire remaining unpaid Class Principal Balance of any Class
of Certificates will become distributable on the next Distribution Date, the
Trustee shall, no later than the 18th day of the month of such Distribution
Date, mail or cause to be mailed to each Person in whose name a Certificate to
be so retired is registered at the close of business on the Record Date and to
the Rating Agencies a notice to the effect that:
(i) it is expected that funds sufficient to make such final
distribution will be available in the Certificate Account on such
Distribution Date, and
(ii) if such funds are available, (A) such final distribution
will be payable on such Distribution Date, but only upon presentation and
surrender of such Certificate at the office or agency of the Certificate
Registrar maintained for such purpose (the address of which shall be set
forth in such notice), and (B) no interest shall accrue on such
Certificate after such Distribution Date.
Section 4.05. STATEMENTS TO CERTIFICATEHOLDERS. With each distribution
from the Certificate Account on a Distribution Date, the Master Servicer shall
prepare and forward to the Trustee (and to the Company if the Company is no
longer acting as Master Servicer), and the Trustee shall forward
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to each Certificateholder, a statement setting forth, to the extent
applicable: the amount of the distribution payable to the applicable Class
that represents principal and the amount that represents interest, and the
applicable Class Principal Balance after giving effect to such distribution.
Upon request by any Certificateholder or the Trustee, the Master Servicer
shall forward to such Certificateholder, the Trustee and the Company (if the
Company is no longer acting as Master Servicer) an additional report which
sets forth with respect to the Mortgage Loans:
(a) The number and aggregate Principal Balance of the Mortgage
Loans delinquent one, two and three months or more;
(b) The (i) number and aggregate Principal Balance of Mortgage
Loans with respect to which foreclosure proceedings have been initiated,
and (ii) the number and aggregate book value of Mortgaged Properties
acquired through foreclosure, deed in lieu of foreclosure or other
exercise of rights respecting the Trustee's security interest in the
Mortgage Loans;
(c) The amount of the Group I Special Hazard Coverage and the
Combined Special Hazard Coverage available to the Senior Certificates
remaining as of the close of business on the applicable Determination
Date;
(d) The amount of the Group I Bankruptcy Coverage and the Combined
Bankruptcy Coverage available to the Senior Certificates remaining as of
the close of business on the applicable Determination Date;
(e) The amount of the Group I Fraud Coverage and Combined Fraud
Coverage available to the Senior Certificates remaining as of the close
of business on the applicable Determination Date;
(f) The amount of the Class II-A-3 Reimbursement Amount as of the
applicable Determination Date and any amount payable to the Certificate
Insurer pursuant to its subrogation rights; and
(g) The amount of Realized Losses incurred in respect of each Loan
Group allocable to the Certificates on the related Distribution Date and
the cumulative amount of Realized Losses incurred in respect of each Loan
Group allocated to such Certificates since the Cut-Off Date.
Upon request by any Certificateholder, the Master Servicer, as soon as
reasonably practicable, shall provide the requesting Certificateholder with
such information as is necessary and appropriate, in the Master Servicer's
sole discretion, for purposes of satisfying applicable reporting requirements
under Rule 144A of the Securities Act.
Section 4.06. DISTRIBUTIONS TO HOLDERS OF REMIC II REGULAR INTERESTS AND
CLASS R-2 CERTIFICATEHOLDERS. On each Distribution Date, the Trustee (or any
duly appointed paying agent) (i) shall be deemed to have distributed from the
Certificate Account the REMIC II Distribution Amount to the Holders of the
REMIC II Regular Interests and to have deposited such amount for their benefit
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into the Certificate Account and (ii) from the Certificate Account shall
distribute (A) to the Certificate Insurer the amounts to be distributed to
the Certificate Insurer pursuant to the definition of "REMIC II Distribution
Amount" for such Distribution Date and (B) to the Class R-2 Certificateholders
the amounts to be distributed to the Class R-2 Certificateholders pursuant to
the definition of "REMIC II Distribution Amount" for such Distribution Date,
all (except with respect to payments to the Certificate Insurer) in accordance
with written statements received from the Master Servicer pursuant to Section
4.02(b), by wire transfer in immediately available funds for the account of
each such Holders and the Class R-2 Certificateholder, or by any other means
of payment acceptable to each such Holder and the Class R-2 Certificateholder
of record on the immediately preceding Record Date (other than as provided in
Section 9.01 respecting the final distribution), as specified by each such
Certificateholder and at the address of such Holder appearing in the
Certificate Register and, with respect to payments to the Certificate Insurer,
by means of payment acceptable to the Certificate Insurer. Notwithstanding any
other provision of this Agreement, no actual distributions pursuant to clause
(i) of this Section 4.06 shall be made on account of the deemed distributions
described in this paragraph except in the event of a liquidation of REMIC III
and not REMIC II.
ARTICLE V
THE CERTIFICATES
Section 5.01. THE CERTIFICATES.
(a) The Certificates shall be substantially in the forms set forth in
Exhibit A, B and C with the additional insertion from Exhibit H attached
hereto, and shall be executed by the Trustee, authenticated by the Trustee (or
any duly appointed Authenticating Agent) and delivered to or upon the order of
the Company upon receipt by the Trustee of the documents specified in Section
2.01. The Certificates shall be issuable in Authorized Denominations
evidencing Percentage Interests. Certificates shall be executed by manual or
facsimile signature on behalf of the Trustee by authorized officers of the
Trustee. Certificates bearing the manual or facsimile signatures of
individuals who were at the time of execution the proper officers of the
Trustee shall bind the Trustee, notwithstanding that such 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 herein executed by the Trustee or any Authenticating Agent 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) The following definitions apply for purposes of this Section 5.01:
"Disqualified Organization" means any Person which is not a Permitted
Transferee, but does not include any "Pass-Through Entity" which owns or holds
a Residual Certificate and of which a Disqualified Organization, directly or
indirectly, may be a stockholder, partner or beneficiary; "Pass-Through
Entity" means any regulated investment company, real estate investment trust,
common trust fund, partnership, trust or estate, and any organization to which
Section 1381 of the Code applies; "Ownership Interest" means, with respect to
any Residual Certificate, any ownership or security interest in such Residual
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Certificate, including any interest in a Residual Certificate as the Holder
thereof and any other interest therein whether direct or indirect, legal or
beneficial, as owner or as pledgee; "Transfer" means any direct or indirect
transfer or sale of, or directly or indirectly transferring or selling any
Ownership Interest in a Residual Certificate; and "Transferee" means any
Person who is acquiring by Transfer any Ownership Interest in a Residual
Certificate.
(c) Restrictions on Transfers of the Residual Certificates to
Disqualified Organizations are set forth in this Section 5.01(c).
(i) Each Person who has or who acquires any Ownership Interest
in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trustee or
its designee under clause (iii)(A) below to deliver payments to a Person
other than such Person and to negotiate the terms of any mandatory sale
under clause (iii)(B) below and to execute all instruments of transfer
and to do all other things necessary in connection with any such sale.
The rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any Ownership
Interest in a Residual Certificate to a U.S. Person, the Trustee
shall require delivery to it, and shall not register the Transfer of
any Residual Certificate until its receipt of (1) an affidavit and
agreement (a "Transferee Affidavit and Agreement") attached hereto as
Exhibit J from the proposed Transferee, in form and substance
satisfactory to the Company, representing and warranting, among
other things, that it is not a Non-U.S. Person, that such transferee
is a Permitted Transferee, that it is not acquiring its Ownership
Interest in the Residual Certificate that is the subject of the
proposed Transfer as a nominee, trustee or agent for any Person who
is not a Permitted Transferee, that for so long as it retains its
Ownership Interest in a Residual Certificate, it will endeavor to
remain a Permitted Transferee, and that it has reviewed the
provisions of this Section 5.01(c) and agrees to be bound by
them, and (2) a certificate, attached hereto as Exhibit I, from the
Holder wishing to transfer the Residual Certificate, in form and
substance satisfactory to the Company, representing and warranting,
among other things, that no purpose of the proposed Transfer is to
allow such Holder to impede the assessment or collection of tax.
(C) Notwithstanding the delivery of a Transferee Affidavit and
Agreement by a proposed Transferee under clause (B) above, if the
Trustee has actual knowledge that the proposed Transferee is not a
Permitted Transferee, no Transfer of an Ownership Interest in a
Residual Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest
in a Residual Certificate agrees by holding or acquiring such
Ownership Interest (i) to require a
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Transferee Affidavit and Agreement from any other Person to whom such
Person attempts to transfer its Ownership Interest and to provide a
certificate to the Trustee in the form attached hereto as Exhibit J;
(ii) to obtain the express written consent of the Company prior to
any transfer of such Ownership Interest, which consent may be
withheld in the Company's sole discretion; and (iii) to provide a
certificate to the Trustee in the form attached hereto as Exhibit I.
(ii) The Trustee shall register the Transfer of any Residual
Certificate only if it shall have received the Transferee Affidavit and
Agreement, a certificate of the Holder requesting such transfer in the
form attached hereto as Exhibit J and all of such other documents as
shall have been reasonably required by the Trustee as a condition to such
registration.
(iii) (A) If any "disqualified organization" (as defined in Section
860E(e)(5) of the Code) shall become a holder of a Residual Certificate,
then the last preceding Permitted Transferee shall be restored, to the
extent permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such Residual
Certificate. If any Non-U.S. Person shall become a holder of a Residual
Certificate, then the last preceding holder which is a U.S. Person shall
be restored, to the extent permitted by law, to all rights and
obligations as Holder thereof retroactive to the date of registration of
the Transfer to such Non-U.S. Person of such Residual Certificate. If a
transfer of a Residual Certificate is disregarded pursuant to the
provisions of Treasury Regulations Section 1.860E-1 or Section 1.860G-3,
then the last preceding Permitted Transferee shall be restored, to the
extent permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such Residual
Certificate. The Trustee shall be under no liability to any Person for
any registration of Transfer of a Residual Certificate that is in fact
not permitted by this Section 5.01(c) or for making any payments due on
such Certificate to the holder thereof or for taking any other action
with respect to such holder under the provisions of this Agreement.
(B) If any purported Transferee shall become a Holder of a
Residual Certificate in violation of the restrictions in this
Section 5.01(c) and to the extent that the retroactive restoration
of the rights of the Holder of such Residual Certificate as
described in clause (iii)(A) above shall be invalid, illegal or
unenforceable, then the Company shall have the right, without notice
to the Holder or any prior Holder of such Residual Certificate, to
sell such Residual Certificate to a purchaser selected by the
Company on such terms as the Company may choose. Such purported
Transferee shall promptly endorse and deliver each Residual
Certificate in accordance with the instructions of the Company. Such
purchaser may be the Company itself or any affiliate of the Company.
The proceeds of such sale, net of the commissions (which may include
commissions payable to the Company or its affiliates), expenses and
taxes due, if any, shall be remitted by the Company to such
purported Transferee. The terms and conditions of any sale under
this clause (iii)(B) shall be determined in the sole discretion of
the Company, and the Company shall not be liable to any Person
having an Ownership Interest in a Residual Certificate as a result
of its exercise of such discretion.
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(iv) The Company, on behalf of the Trustee, shall make available,
upon written request from the Trustee, all information necessary to
compute any tax imposed (A) as a result of the Transfer of an Ownership
Interest in a Residual Certificate to any Person who is not a Permitted
Transferee, including the information regarding "excess inclusions" of
such Residual Certificates required to be provided to the Internal
Revenue Service and certain Persons as described in Treasury Regulation
Section 1.860D-1(b)(5), and (B) as a result of any regulated investment
company, real estate investment trust, common trust fund, partnership,
trust, estate or organizations described in Section 1381 of the Code
having as among its record holders at any time any Person who is not a
Permitted Transferee. Reasonable compensation for providing such
information may be required by the Company from such Person.
(v) The provisions of this Section 5.01 set forth prior to this
Section (v) may be modified, added to or eliminated, provided that there
shall have been delivered to the Trustee the following:
(A) written notification from each Rating Agencies to the
effect that the modification, addition to or elimination of such
provisions will not cause such Rating Agencies to downgrade its
then-current Ratings of the Certificates (determined in the case of
the Insured Certificates, without regard to the effect of the
Certificate Insurance Policy); and
(B) an Opinion of Counsel, in form and substance satisfactory
to the Company (as evidenced by a certificate of the Company), to
the effect that such modification, addition to or absence of such
provisions will not cause REMIC I, REMIC II and REMIC III to cease
to qualify as a REMIC and will not create a risk that (1) REMIC I,
REMIC II and REMIC III may be subject to an entity-level tax caused
by the Transfer of any Residual Certificate to a Person which is not
a Permitted Transferee or (2) a Certificateholder or another Person
will be subject to a REMIC-related tax caused by the Transfer of a
Residual Certificate to a Person which is not a Permitted
Transferee.
(vi) The following legend shall appear on all Residual Certificates:
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE
ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE
COMPANY AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT EITHER (A) THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER THAN
A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM
THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS
SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (C) ANY
ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE (ANY SUCH
PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B), OR (C) BEING
HEREINAFTER REFERRED TO AS A "DISQUALIFIED
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ORGANIZATION"), OR (D) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (2) NO
PURPOSE OF SUCH TRANSFER IS TO ENABLE THE TRANSFEROR TO IMPEDE THE
ASSESSMENT OR COLLECTION OF TAX. SUCH AFFIDAVIT SHALL INCLUDE CERTAIN
REPRESENTATIONS AS TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OF ANY
TRANSFER, SALE OR OTHER DISPOSITION OF THIS CLASS [R-1] [R-2] [R-3]
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED
ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE
OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A
CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THE
CLASS [R-1][R-2] [R-3]CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL
BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
(vii) The Tax Matters Person for each of REMIC I, REMIC II and REMIC
III, while not a Disqualified Organization, shall be the tax matters
person for the related REMIC within the meaning of Section 6231(a)(7) of
the Code and Treasury Regulation Section 1.860F-4(d).
(d) In the case of any Class B, Class II-A-18 or Residual Certificates
presented for registration in the name of any Person, the Trustee shall
require either (i) an Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee and the Company to the effect that the
purchase or holding of a Class B, Class II-A-18 or Residual Certificate is
permissible under applicable law, will not constitute or result in a
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975
of the Code, and will not subject the Trustee, the Master Servicer or the
Company to any obligation or liability (including obligations or liabilities
under Section 406 of ERISA or Section 4975 of the Code) in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not be an expense
of the Trustee, the Master Servicer or the Company or (ii) only in the case of
a Class B or Class II-A-18 Certificate, an officer's certificate substantially
in the form of Exhibit N attached hereto acceptable to and in form and
substance satisfactory to the Trustee and the Company, which officer's
certificate shall not be an expense of the Trustee, the Master Servicer or the
Company.
(e) No transfer, sale, pledge or other disposition of a Junior
Subordinate Certificate shall be made unless such transfer, sale, pledge or
other disposition is made in accordance with this Section 5.01(e) or Section
5.01(f). Each Person who, at any time, acquires any ownership interest in any
Junior Subordinate Certificate shall be deemed by the acceptance or
acquisition of such ownership interest to have agreed to be bound by the
following provisions of this Section 5.01(e) and Section 5.01(f), as
applicable. No transfer of a Junior Subordinate Certificate shall be deemed to
be made in accordance with this Section 5.01(e) unless such transfer is made
pursuant to an effective registration statement under the Securities Act or
unless the Trustee is provided with the certificates and an Opinion of
Counsel, if required, on which the Trustee may conclusively rely, which
establishes or establish to the 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
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exemption from the Securities Act, the Trustee shall require, in order to
assure compliance with the Securities Act, that the Certificateholder desiring
to effect such transfer certify to the Trustee in writing, in substantially
the form attached hereto as Exhibit F, the facts surrounding the transfer,
with such modifications to such Exhibit F as may be appropriate to reflect the
actual facts of the proposed transfer, and that the Certificateholder's
proposed transferee certify to the Trustee in writing, in substantially the
form attached hereto as Exhibit G, the facts surrounding the transfer, with
such modifications to such Exhibit G as may be appropriate to reflect the
actual facts of the proposed transfer. If such certificate of the proposed
transferee does not contain substantially the substance of Exhibit G, the
Trustee shall require an Opinion of Counsel satisfactory to it that such
transfer may be made without registration, which Opinion of Counsel shall not
be obtained at the expense of the Trustee, the REMIC I Trust Fund, the REMIC
II Trust Fund, the REMIC III Trust Fund or the Company. Such Opinion of
Counsel shall allow for the forwarding, and the Trustee shall forward, a copy
thereof to the Rating Agencies. Notwithstanding the foregoing, any Junior
Subordinate Certificate may be transferred, sold, pledged or otherwise
disposed of in accordance with the requirements set forth in Section 5.01(f).
(f) To effectuate a Certificate transfer of a Junior Subordinate
Certificate in accordance with this Section 5.01(f), the proposed transferee
of such Certificate must provide the Trustee and the Company with an
investment letter substantially in the form of Exhibit L attached hereto,
which investment letter shall not be an expense of the Trustee or the Company,
and which investment letter states that, among other things, such transferee
(i) is a "qualified institutional buyer" as defined under Rule 144A, acting
for its own account or the accounts of other "qualified institutional buyers"
as defined under Rule 144A, and (ii) is aware that the proposed transferor
intends to rely on the exemption from registration requirements under the
Securities Act provided by Rule 144A. Notwithstanding the foregoing, the
proposed transferee of such Certificate shall not be required to provide the
Trustee or the Company with Annex 1 or Annex 2 to the form of Exhibit L
attached hereto if the Company so consents prior to each such transfer. Such
transfers shall be deemed to have complied with the requirements of this
Section 5.01(f). The Holder of a Certificate desiring to effect such transfer
does hereby agree to indemnify the Trustee, the Company, and the Certificate
Registrar against any liability that may result if transfer is not made in
accordance with this Agreement.
Section 5.02. CERTIFICATES ISSUABLE IN CLASSES; DISTRIBUTIONS OF
PRINCIPAL AND INTEREST; AUTHORIZED DENOMINATIONS. The aggregate principal
amount of the Certificates that may be authenticated and delivered under this
Agreement is limited to the aggregate Principal Balance of the Mortgage Loans
as of the Cut-Off Date, as specified in the Preliminary Statement to this
Agreement, except for Certificates authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Certificates pursuant to Section 5.03. Such aggregate principal amount shall
be allocated among one or more Classes having designations, types of
interests, initial per annum Remittance Rates, initial Class Principal
Balances, initial Component Principal Balances and last scheduled Distribution
Dates as specified in the Preliminary Statement to this Agreement. The
aggregate Percentage Interest of each Class of Certificates of which the Class
Principal Balance equals zero as of the Cut-Off Date 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
Trustee shall cause to be maintained at one of its offices or at its
designated agent, a Certificate Register in which there
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shall be recorded the name and address of each Certificateholder. Subject to
such reasonable rules and regulations as the Trustee may prescribe, the
Certificate Register shall be amended from time to time by the Trustee or its
agent to reflect notice of any changes received by the Trustee or its agent
pursuant to Section 10.06. The Trustee hereby appoints itself as the initial
Certificate Registrar.
Upon surrender for registration of transfer of any Certificate to the
Trustee at the office of First Trust of New York, National Association, 100
Wall Street, Suite 1600, New York, NY 10005, Attention: Tom Bowen, or such
other address or agency as may hereafter be provided to the Master Servicer in
writing by the Trustee, the Trustee shall execute, and the Trustee or any
Authenticating Agent shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of
Authorized Denominations of like Percentage Interest. At the option of the
Certificateholders, Certificates may be exchanged for other Certificates in
Authorized Denominations of like Percentage Interest, upon surrender of the
Certificates to be exchanged at any such office or agency. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute, and
the Trustee, or any Authenticating Agent, shall 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 Trustee or any Authenticating Agent) be duly endorsed by, or
be accompanied by a written instrument of transfer in form satisfactory to the
Trustee or any Authenticating Agent 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 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 Trustee or any Authenticating Agent.
Section 5.04. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (i)
any mutilated Certificate is surrendered to the Trustee or any Authenticating
Agent, or (ii) the Trustee or any Authenticating Agent receives evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
there is delivered to the Trustee or any Authenticating Agent (and with
respect to the Insured Certificates, the Certificate Insurer) such security or
indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Trustee or any Authenticating Agent that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Trustee or any Authenticating Agent shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like Percentage Interest. Upon the
issuance of any new Certificate under this Section 5.04, the Trustee or any
Authenticating Agent may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee or any
Authenticating Agent) connected therewith. Any replacement Certificate issued
pursuant to this Section 5.04 shall constitute complete and indefeasible
evidence of ownership in the REMIC III Trust Fund (or with respect to the
Class R-1 and Class R-2 Certificates, the residual ownership interests in the
REMIC I Trust Fund and REMIC II Trust Fund, respectively) as if originally
issued, whether or not the lost or stolen Certificate shall be found at any
time.
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Section 5.05. PERSONS DEEMED OWNERS. The Company, the Master Servicer,
the Trustee, the Certificate Insurer 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
4.01, Section 4.04 and Section 4.06 and for all other purposes whatsoever, and
neither the Company, the Master Servicer, the Trustee, the Certificate
Registrar nor any agent of the Company, the Master Servicer or the Trustee
shall be affected by notice to the contrary.
Section 5.06. TEMPORARY CERTIFICATES. Upon the initial issuance of the
Certificates, the Trustee may execute, and the Trustee or any Authenticating
Agent shall authenticate and deliver, temporary Certificates which are
printed, lithographed, typewritten or otherwise produced, in any Authorized
Denomination, of the tenor of the definitive Certificates in lieu of which
they are issued and with such variations in form from the forms of the
Certificates set forth as Exhibits A, B, C and H hereto as the Trustee's
officers executing such Certificates may determine, as evidenced by their
execution of the Certificates. Notwithstanding the foregoing, the
Certificates may remain in the form set forth in this definition of "Temporary
Certificates."
If temporary Certificates are issued, the Trustee shall cause definitive
Certificates to be prepared within ten Business Days of the Closing Date or as
soon as practicable thereafter. After preparation of definitive Certificates,
the temporary Certificates shall be exchangeable for definitive Certificates
upon surrender of the temporary Certificates at the office or agency of the
Trustee to be maintained as provided in Section 5.10 hereof, without charge to
the holder. Any tax or governmental charge that may be imposed in connection
with any such exchange shall be borne by the Master Servicer. Upon surrender
for cancellation of any one or more temporary Certificates, the Trustee shall
execute and the Trustee or any Authenticating Agent shall authenticate and
deliver in exchange therefor a like principal amount of definitive
Certificates of Authorized Denominations. Until so exchanged, the temporary
Certificates shall in all respects be entitled to the same benefits under this
Agreement as definitive Certificates.
Section 5.07. BOOK-ENTRY FOR BOOK-ENTRY CERTIFICATES. Notwithstanding the
foregoing, the Book-Entry Certificates, upon original issuance, shall be
issued in the form of one or more typewritten Certificates of Authorized
Denomination representing the Book-Entry Certificates, to be delivered to DTC,
the initial Clearing Agency, by, or on behalf of, the Company. The Book-Entry
Certificates shall initially be registered on the Certificate Register in the
name of Cede & Co., the nominee of DTC, as the initial Clearing Agency, and no
Beneficial Holder shall receive a definitive certificate representing such
Beneficial Holder's interest in any Class of Book-Entry Certificate, except as
provided above and in Section 5.09. Each Book-Entry Certificate shall bear the
following legend:
Unless this Certificate 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 Certificate issued is registered in the name of Cede & Co. or
such other name as is requested 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.
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Unless and until definitive, fully registered Book-Entry Certificates (the
"Definitive Certificates") have been issued to the Beneficial Holders pursuant
to Section 5.09:
(a) the provisions of this Section 5.07 shall be in full force and
effect with respect to the Book-Entry Certificates;
(b) the Master Servicer and the Trustee may deal with the Clearing
Agency for all purposes with respect to the Book-Entry Certificates
(including the making of distributions on the Book-Entry Certificates) as
the sole Certificateholder;
(c) to the extent that the provisions of this Section 5.07 conflict
with any other provisions of this Agreement, the provisions of this
Section 5.07 shall control; and
(d) the rights of the Beneficial Holders shall be exercised only
through the Clearing Agency and the DTC Participants and shall be limited
to those established by law and agreements between such Beneficial
Holders and the Clearing Agency and/or the DTC Participants. Pursuant to
the Depositary Agreement, unless and until Definitive Certificates are
issued pursuant to Section 5.09, the initial Clearing Agency will make
book-entry transfers among the DTC Participants and receive and transmit
distributions of principal and interest on the related Class of
Book-Entry Certificates to such DTC Participants.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Holders of Book-Entry
Certificates evidencing a specified Percentage Interest, such direction or
consent may be given by the Clearing Agency at the direction of Beneficial
Holders owning Book-Entry Certificates evidencing the requisite Percentage
Interest represented by the Book-Entry Certificates. The Clearing Agency may
take conflicting actions with respect to the Book-Entry Certificates to the
extent that such actions are taken on behalf of the Beneficial Holders.
Section 5.08. NOTICES TO CLEARING AGENCY. Whenever notice or other
communication to the Certificateholders is required under this Agreement,
unless and until Definitive Certificates shall have been issued to the related
Certificateholders pursuant to Section 5.09, the Trustee shall give all such
notices and communications specified herein to be given to Holders of the
Book-Entry Certificates to the Clearing Agency which shall give such notices
and communications to the related DTC Participants in accordance with its
applicable rules, regulations and procedures.
Section 5.09. DEFINITIVE CERTIFICATES. If (a) the Master Servicer
notifies the Trustee in writing that the Clearing Agency is no longer willing
or able to discharge properly its responsibilities under the Depositary
Agreement with respect to the Book-Entry Certificates and the Trustee or the
Master Servicer is unable to locate a qualified successor, (b) the Master
Servicer, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system with respect to the Book-Entry Certificates
through the Clearing Agency or (c) after the occurrence of an Event of
Default, Certificateholders holding Book-Entry Certificates evidencing
Percentage Interests aggregating not less than 66% of the aggregate Class
Principal Balance of such Certificates advise the Trustee and the Clearing
Agency through DTC Participants in writing that the continuation of a
book-entry system with respect to the Book-Entry Certificates through the
Clearing Agency is no longer in the best interests of the Certificateholders
with respect to such Certificates, the Trustee shall notify all
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Certificateholders of Book-Entry Certificates of the occurrence of any such
event and of the availability of Definitive Certificates. Upon surrender to
the Trustee of the Book-Entry Certificates by the Clearing Agency, accompanied
by registration instructions from the Clearing Agency for registration, the
Trustee shall execute and the Trustee or any Authenticating Agent shall
authenticate and deliver the Definitive Certificates. Neither the Company, the
Master Servicer nor the Trustee shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates
for all of the Certificates all references herein to obligations imposed upon
or to be performed by the Clearing Agency shall be deemed to be imposed upon
and performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates, and the Trustee shall recognize the Holders of
Definitive Certificates as Certificateholders hereunder.
Section 5.10. OFFICE FOR TRANSFER OF CERTIFICATES. The Trustee shall
maintain in New York, New York, an office or agency where Certificates may be
surrendered for registration of transfer or exchange. First Trust of New York,
National Association, 100 Wall Street, Suite 1600, New York, New York 10005,
Attention: Tom Bowen, is initially designated for said purposes.
ARTICLE VI
THE COMPANY AND THE MASTER SERVICER
Section 6.01. LIABILITY OF THE COMPANY AND THE MASTER SERVICER. The
Company and the Master Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon and undertaken by the
Company or the Master Servicer, as applicable, herein.
Section 6.02. MERGER OR CONSOLIDATION OF THE COMPANY, OR THE MASTER
SERVICER. Any corporation into which the Company or the Master Servicer may be
merged or consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Company or the Master Servicer shall
be a party, or any corporation succeeding to the business of the Company or
the Master Servicer, shall be the successor of the Company or the Master
Servicer hereunder, 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 6.03. LIMITATION ON LIABILITY OF THE COMPANY, THE MASTER SERVICER
AND OTHERS. Neither the Company nor the Master Servicer nor any of the
directors, officers, employees or agents of the Company or the Master Servicer
shall be under any liability to the REMIC I, REMIC II or REMIC III Trust Fund
or the Certificateholders for any action taken by such Person or by a Servicer
or for such Person's or Servicer's refraining from the taking of any action in
good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Company, the Master
Servicer or any such Person against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of reckless disregard of duties and
obligations hereunder. The Company, the Master Servicer and any director,
officer, employee or agent of the Company or the Master Servicer may rely in
good faith on any document of any kind properly executed and submitted by any
Person respecting any matters arising hereunder. The Company, the Master
Servicer and any director, officer, employee or agent of the Company or the
Master Servicer shall be indemnified by the REMIC I Trust Fund and held
harmless against any loss, liability or expense incurred in connection with
any legal action relating to this Agreement or the Certificates, other than
any
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loss, liability or expense relating to any Mortgage Loan (other than as
otherwise permitted in this Agreement) or incurred by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. The Company and the Master Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Mortgage Loans in accordance with this
Agreement and which in its opinion may involve it in any expense or liability;
provided, however, that the Company or the Master Servicer may in its
discretion undertake any such action which it may deem necessary or desirable
with respect to the Mortgage Loans, this Agreement, the Certificates or 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 REMIC I Trust Fund and the Company and the Master Servicer
shall be entitled to be reimbursed therefor out of the Certificate Account, as
provided by Section 3.05.
Section 6.04. THE COMPANY AND THE MASTER SERVICER NOT TO RESIGN. The
Company shall not resign from the obligations and duties (including, without
limitation, its obligations and duties as initial Master Servicer) hereby
imposed on it except upon determination that its duties hereunder are no
longer permissible under applicable law. Any successor Master Servicer shall
not resign from the obligations and duties hereby imposed on it except upon
determination that its duties hereunder are no longer permissible under
applicable law. Any such determination permitting the resignation of the
Company or any successor Master Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor Master Servicer shall have
assumed the Master Servicer's responsibilities and obligations in accordance
with Section 7.02 hereof.
If the Company is no longer acting as Master Servicer, then the
successor Master Servicer shall give prompt written notice to the Company of
any information received by such successor Master Servicer which affects or
relates to an ongoing obligation or right of the Company under this Agreement.
ARTICLE VII
DEFAULT
Section 7.01. EVENTS OF DEFAULT. (a) In case one or more of the following
Events of Default by the Master Servicer or by a successor Master Servicer
shall occur and be continuing, that is to say:
(i) Any failure by the Master Servicer to deposit into the
Certificate Account any payment required to be deposited therein by the
Master Servicer under the terms of this Agreement which continues
unremedied for a period of ten days after the date upon which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Master Servicer by the Trustee or to the Master
Servicer and the Trustee by the Holders of Certificates evidencing
Percentage Interests aggregating not less than 25% of the REMIC III Trust
Fund; or
(ii) Failure on the part of the Master Servicer duly to
observe or perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in the
Certificates or in this Agreement which continues unremedied for a period
of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall
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have been given to the Master Servicer by the Trustee, or to the Master
Servicer and the Trustee by the Holders of Certificates evidencing
Percentage Interests aggregating not less than 25% of the REMIC III
Trust Fund; or
(iii) A decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
trustee in bankruptcy, conservator or receiver or liquidator in any
bankruptcy, insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation
of its affairs, shall have been entered against the Master Servicer and
such decree or order shall have remained in force undischarged or
unstayed for a period of 60 days; or
(iv) The Master Servicer shall consent to the appointment
of a trustee in bankruptcy, conservator or receiver or liquidator in any
bankruptcy, insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Master Servicer
or of or relating to all or substantially all of its property; or
(v) The Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition
to take advantage of any applicable bankruptcy, insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(vi) Any failure of the Master Servicer to make any Monthly
P&I Advance (other than a Nonrecoverable Advance) which continues
unremedied at the opening of business on the Distribution Date in respect
of which such Monthly P&I Advance was to have been made;
then, and in each and every such case, so long as an Event of Default shall
not have been remedied, either the Trustee, or the Holders of Certificates
evidencing Percentage Interests aggregating not less than 25% of the REMIC III
Trust Fund, by notice in writing to the Company and the Master Servicer (and
to the Trustee if given by the Certificateholders, in which case such notice
shall set forth evidence reasonably satisfactory to the Trustee that such
Event of Default has occurred and shall not have been remedied) may terminate
all of the rights (other than its right to reimbursement for advances) and
obligations of the Master Servicer, including its right to the Master
Servicing Fee, under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, if any. Such determination shall be final and binding. On or
after the receipt by the Master Servicer of such written notice, all authority
and power of the Master Servicer under this Agreement, whether with respect to
the Certificates or the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee pursuant to and under this Section 7.01; and, without
limitation, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice
of termination, whether to complete the transfer and endorsement or assignment
of the Mortgage Loans and related documents, or otherwise. The Master Servicer
agrees to cooperate with the Trustee in effecting the termination of the
Master Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee for administration by it of all cash
amounts which shall at the time be credited by the Master Servicer to the
Certificate Account or thereafter be received with respect to the Mortgage
Loans.
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Notwithstanding the foregoing, if an Event of Default described in
clause (vi) of this Section 7.01(a) shall occur, the Trustee shall, by notice
in writing to the Master Servicer, which may be delivered by telecopy,
immediately suspend all of the rights and obligations of the Master Servicer
thereafter arising under this Agreement, but without prejudice to any rights
it may have as a Certificateholder or to reimbursement of Monthly P&I Advances
and other advances of its own funds, and the Trustee shall act as provided in
Section 7.02 to carry out the duties of the Master Servicer, including the
obligation to make any Monthly P&I Advance the nonpayment of which was an
Event of Default described in clause (vi) of this Section 7.01(a). Any such
action taken by the Trustee must be prior to the distribution on the relevant
Distribution Date. If the Master Servicer shall within two Business Days
following such suspension remit to the Trustee the amount of any Monthly P&I
Advance the nonpayment of which by the Master Servicer was an Event of Default
described in clause (vi) of this Section 7.01(a), the Trustee shall permit the
Master Servicer to resume its rights and obligations as Master Servicer
hereunder. The Master Servicer agrees that it will reimburse the Trustee for
actual, necessary and reasonable costs incurred by the Trustee because of
action taken pursuant to clause (vi) of this Section 7.01(a). The Master
Servicer agrees that if an Event of Default as described in clause (vi) of
this Section 7.01(a) shall occur more than two times in any twelve month
period, the Trustee shall be under no obligation to permit the Master Servicer
to resume its rights and obligations as Master Servicer hereunder.
(b) In case one or more of the following Events of Default by the
Company shall occur and be continuing, that is to say:
(i) Failure on the part of the Company duly to observe or
perform in any material respect any of the covenants or agreements on the
part of the Company contained in the Certificates or in this Agreement
which continues unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given to the Company by the Trustee, or to the Company
and the Trustee by the Holders of Certificates evidencing Percentage
Interests aggregating not less than 25% of the REMIC III Trust Fund; or
(ii) A decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
trustee in bankruptcy, conservator or receiver or liquidator in any
bankruptcy, insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation
of its affairs, shall have been entered against the Company and such
decree or order shall have remained in force undischarged or unstayed for
a period of 60 days; or
(iii) The Company shall consent to the appointment of a
trustee in bankruptcy, conservator or receiver or liquidator in any
bankruptcy, insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Company or of or
relating to all or substantially all of its property; or
(iv) The Company shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of any applicable bankruptcy, insolvency or reorganization
statute, make an assignment for the benefit of creditors, or voluntarily
suspend payment of its obligations;
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then, and in each and every such case, so long as such Event of Default shall
not have been remedied, the Holders of Certificates evidencing Percentage
Interests aggregating not less than 25% of the REMIC III Trust Fund, by notice
in writing to the Company and the Trustee, may direct the Trustee in
accordance with Section 10.03 to institute an action, suit or proceeding in
its own name as Trustee hereunder to enforce the Company's obligations
hereunder.
(c) In any circumstances in which this Agreement states that
Certificateholders owning Certificates evidencing a certain percentage
Percentage Interest in the REMIC III Trust Fund may take certain action, such
action shall be taken by the Trustee, but only if the requisite percentage of
Certificateholders required under this Agreement for taking like action or
giving like instruction to the Trustee under this Agreement shall have so
directed the Trustee in writing.
Section 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. On and after the
time the Master Servicer receives a notice of termination pursuant to Section
7.01, the Trustee shall be the successor in all respects to the Master
Servicer under this Agreement and under the Selling and Servicing Contracts
with respect to the Mortgage Loans in the Mortgage Pool and with respect to
the transactions set forth or provided for herein and shall have all the
rights and powers and be subject to all the responsibilities, duties and
liabilities relating thereto arising after the Master Servicer receives such
notice of termination placed on the Master Servicer by the terms and
provisions hereof and thereof, and shall have the same limitations on
liability herein granted to the Master Servicer; provided, that the Trustee
shall not under any circumstances be responsible for any representations and
warranties or any Purchase Obligation of the Company or any liability incurred
by the Master Servicer at or prior to the time the Master Servicer was
terminated as Master Servicer and the Trustee shall not be obligated to make a
Monthly P&I Advance if it is prohibited by law from so doing. As compensation
therefor, the Trustee shall be entitled to all funds relating to the Mortgage
Loans which the Master Servicer would have been entitled to retain or to
withdraw from the Certificate Account if the Master Servicer had continued to
act hereunder, except for those amounts due to the Master Servicer as
reimbursement for advances previously made or amounts previously expended and
are otherwise reimbursable hereunder. Notwithstanding the above, the Trustee
may, if it shall be unwilling to so act, or shall if it is unable to so act,
appoint, or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution having a net worth of not
less than $10,000,000 as the successor to the Master Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities
of the Master Servicer hereunder. Pending any such appointment, the Trustee is
obligated to act in such capacity. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor
shall agree; provided, however, that no such compensation shall, together with
the compensation to the Trustee, be in excess of that permitted the Master
Servicer hereunder. The Trustee and such successor shall take such actions,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
Section 7.03. NOTIFICATION TO CERTIFICATEHOLDERS. Upon any such
termination or appointment of a successor to the Master Servicer, the Trustee
shall give prompt written notice thereof to Certificateholders at their
respective addresses appearing in the Certificate Register.
ARTICLE VIII
CONCERNING THE TRUSTEE
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Section 8.01. DUTIES OF TRUSTEE.
(a) The Trustee, prior to the occurrence of an Event of Default and after
the curing 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. In case an Event of Default has occurred (which has not been cured
or waived) the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they are in the form required by this Agreement; provided, however,
that the Trustee shall not be responsible for the accuracy or content of any
such certificate, statement, opinion, report, or other order or instrument
furnished by the Company or Master Servicer to the Trustee pursuant to this
Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default and after the
curing of all such Events of Default which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be
read into this Agreement against the Trustee, and, in the absence of bad
faith on the part of the Trustee, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement; and
(ii) The Trustee shall not be personally liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Certificateholders holding Certificates which
evidence Percentage Interests aggregating not less than 25% of the REMIC
III Trust Fund relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or relating to the
exercise of any trust or power conferred upon the Trustee under this
Agreement.
(d) Within ten days after the occurrence of any Event of Default
known to the Trustee, the Trustee shall transmit by mail to the Rating
Agencies notice of each Event of Default. Within 90 days after the
occurrence of any Event of Default known to the Trustee, the Trustee
shall transmit by mail to all Certificateholders (with a copy to the
Rating Agencies) notice of each Event of Default, unless such Event of
Default shall have been cured or waived; provided, however, the Trustee
shall be protected in withholding such notice if and so long as a
Responsible Officer of the Trustee in good faith determines that the
withholding of such notice is in the best interests of the
Certificateholders; and provided, further, that in the case of any Event
of Default of the character specified in Section
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7.01(i) and Section 7.01(ii) no such notice to Certificateholders or to
the Rating Agencies shall be given until at least 30 days after the
occurrence thereof.
Section 8.02. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as otherwise
provided in Section 8.01:
(i) The Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(iii) The Trustee shall not be personally liable for any action
taken or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(iv) Prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or document, unless requested in writing to do so by the Holders of
Certificates evidencing Percentage Interests aggregating not less than
25% of the REMIC III Trust Fund; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security, if any, afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against such
expense or liability as a condition to proceeding;
(v) The Trustee may execute the trust or any of the powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys; and
(vi) The Trustee shall not be deemed to have knowledge or notice of
any matter, including without limitation an Event of Default, unless
actually known by a Responsible Officer, or unless written notice thereof
referencing this Agreement or the Certificates is received at the
Corporate Trust Office at the address set forth in Section 10.06.
Section 8.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS. The
recitals contained herein (other than those relating to the due organization,
power and authority of the Trustee) and in the Certificates (other than the
execution of, and certificate of authentication on, the Certificates) shall be
taken as the statements of the Company and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Agreement or of the Certificates or any
Mortgage Loan. The Trustee shall not be accountable for the use or application
by the Company of any of the Certificates or of the proceeds of such
Certificates, or for
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the use or application of any funds paid to the Master Servicer, the Servicers
or the Company in respect of the Mortgage Loans or deposited into the
Custodial Accounts for P&I, any Buydown Fund Account, or the Custodial
Accounts for P&I by any Servicer or into the Investment Account, or the
Certificate Account by the Master Servicer or the Company.
Section 8.04. TRUSTEE MAY OWN CERTIFICATES. The Trustee or any agent or
affiliate of the Trustee, in its individual or any other capacity, may become
the owner or pledgee of Certificates with the same rights it would have if it
were not Trustee.
Section 8.05. THE MASTER SERVICER TO PAY TRUSTEE'S FEES AND EXPENSES.
Subject to any separate written agreement with the Trustee, the Master
Servicer covenants and agrees to, and the Master Servicer shall, pay the
Trustee from time to time, and the Trustee shall be entitled to payment, for
all services rendered by it in the execution of the trust hereby created and
in the exercise and performance of any of the powers and duties hereunder of
the Trustee. Except as otherwise expressly provided herein, the Master
Servicer shall pay or reimburse the Trustee upon its request for all
reasonable expenses and disbursements incurred or made by the Trustee in
accordance with any of the provisions of this Agreement and indemnify the
Trustee from any loss, liability or expense incurred by it hereunder
(including the reasonable compensation and the expenses and disbursements of
its counsel and of all persons not regularly in its employ) except any such
expense or disbursement as may arise from its negligence or bad faith. Such
obligation shall survive the termination of this Agreement or resignation or
removal of the Trustee. The Company shall, at its expense, prepare or cause to
be prepared all federal and state income tax and franchise tax and information
returns relating to the REMIC I Trust Fund, the REMIC II Trust Fund or the
REMIC III Trust Fund required to be prepared or filed by the Trustee and shall
indemnify the Trustee for any liability of the Trustee arising from any error
in such returns.
Section 8.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee hereunder
shall at all times be (i) an institution insured by the FDIC, (ii) a
corporation or association organized and doing business under the laws of the
United States of America or of any state, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of not
less than $50,000,000 and subject to supervision or examination by federal or
state authority and (iii) acceptable to the Rating Agencies. If such
corporation or association publishes reports of condition at least annually,
pursuant to law or to the requirements of any aforementioned supervising or
examining authority, then for the purposes of this Section 8.06, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 8.06, the Trustee shall resign
immediately in the manner and with the effect specified in Section 8.07.
Section 8.07. RESIGNATION AND REMOVAL OF TRUSTEE. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Master Servicer. Upon receiving such notice of
resignation, the Master Servicer shall promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee. If
no successor trustee shall have been so appointed and shall have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
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If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.06 and shall fail to resign after written request
therefor by the Master Servicer, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then the Master
Servicer may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the Trustee so removed, one copy to the successor.
The Holders of Certificates evidencing Percentage Interests aggregating
more than 50% of the REMIC III Trust Fund may at any time remove the Trustee
and appoint a successor trustee by written instrument or instruments, in
triplicate, signed by such Holders or their attorneys in-fact duly authorized,
one complete set of which instruments shall be delivered to the Master
Servicer, one complete set to the Trustee so removed and one complete set to
the successor so appointed.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 8.07 shall become
effective upon acceptance of appointment by the successor trustee as provided
in Section 8.08. Any expenses associated with the resignation of the Trustee
shall be borne by the Trustee, and any expenses associated with the removal of
the Trustee shall be borne by the Master Servicer.
Section 8.08. SUCCESSOR TRUSTEE. Any successor trustee appointed as
provided in Section 8.07 shall execute, acknowledge and deliver to the Master
Servicer and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee herein. The predecessor shall deliver
to the successor trustee all Mortgage Files, related documents, statements and
all other property held by it hereunder, and the Master Servicer and the
predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor trustee all such rights, powers,
duties and obligations.
No successor trustee shall accept appointment as provided in this Section
8.08 unless at the time of such appointment such successor trustee shall be
eligible under the provisions of Section 8.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.08, the Master Servicer shall mail notice of the succession of such
trustee hereunder to (i) all Certificateholders at their addresses as shown in
the Certificate Register, (ii) the Rating Agencies and (iii) the Certificate
Insurer. If the Master Servicer fails to mail such notice within ten days
after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed.
Section 8.09. MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation or
association into which the Trustee may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
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successor of the Trustee hereunder, provided such resulting or successor
corporation shall be eligible under the provisions of Section 8.06, 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 8.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
REMIC I Trust Fund, the REMIC II Trust Fund or REMIC III Trust Fund may at the
time be located, the Master Servicer and the Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the REMIC I Trust Fund, the REMIC II Trust Fund or REMIC III Trust Fund and
to vest in such Person or Persons, in such capacity, such title to the REMIC I
Trust Fund, the REMIC II Trust Fund or REMIC III Trust Fund, or any part
thereof, and, subject to the other provisions of this Section 8.10, such
powers, duties, obligations, rights and trusts as the Master Servicer and the
Trustee may consider necessary or desirable; provided, that the Trustee shall
remain liable for all of its obligations and duties under this Agreement. If
the Master Servicer shall not have joined in such appointment within 15 days
after the receipt by it of a request so to do, or in case an Event of Default
shall have occurred and be continuing, the Trustee alone shall have the power
to make such appointment; provided, that the Trustee shall remain liable for
all of its obligations and duties under this Agreement. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 8.06 hereunder and no notice to
Certificateholders of the appointment of co-trustee(s) or separate trustee(s)
shall be required under Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly and severally, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed by the
Trustee (whether as Trustee hereunder or as successor to the Master Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the REMIC I Trust Fund, the REMIC II Trust
Fund or the REMIC III Trust Fund or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustee(s) and co-trustee(s),
as effectively as if given to each of them. Every instrument appointing any
separate trustee(s) or co-trustee(s) shall refer to this Agreement and the
conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful
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act under or in respect of 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 the
trust shall vest in and be exercised by the Trustee, to the extent permitted
by law, without the appointment of a new or successor trustee.
Section 8.11. AUTHENTICATING AGENTS. The Trustee may appoint one or more
Authenticating Agents which shall be authorized to act on behalf of the
Trustee in authenticating Certificates. Wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication on behalf of the Trustee by an Authenticating Agent and
a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be acceptable to the
Master Servicer and must be a corporation or banking association organized and
doing business under the laws of the United States of America or of any state,
having a principal office and place of business in New York, New York, having
a combined capital and surplus of at least $15,000,000, authorized under such
laws to do a trust business and subject to supervision or examination by
federal or state authorities.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency
business of any Authenticating Agent, shall continue to be the Authenticating
Agent so long as it shall be eligible in accordance with the provisions of the
first paragraph of this Section 8.11 without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating
Agent.
Any Authenticating Agent may at any time resign by giving written notice
of resignation to the Trustee and to the Master Servicer. The Trustee may,
upon prior written approval of the Master Servicer, at any time terminate the
agency of any Authenticating Agent by giving written notice of termination to
such Authenticating Agent and to the Master Servicer. Upon receiving a notice
of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible in accordance with the
provisions of the first paragraph of this Section 8.11, the Trustee may
appoint, upon prior written approval of the Master Servicer, a successor
Authenticating Agent, shall give written notice of such appointment to the
Master Servicer and shall mail notice of such appointment to all
Certificateholders. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. Any reasonable compensation paid to
an Authenticating Agent shall be a reimbursable expense pursuant to Section
8.05 if paid by the Trustee.
Section 8.12. PAYING AGENTS. The Trustee may appoint one or more Paying
Agents which shall be authorized to act on behalf of the Trustee in making
withdrawals from the Certificate Account, and distributions to
Certificateholders as provided in Section 4.01, Section 4.04(a), Section 4.06
and Section 9.01(b) to the extent directed to do so by the Master Servicer.
Wherever reference is made in this Agreement to the withdrawal from the
Certificate Account by the Trustee, such reference shall be deemed to include
such a withdrawal on behalf of the Trustee by a Paying Agent. Whenever
reference is made in this Agreement to a distribution by the Trustee or the
furnishing of a statement to Certificateholders by the Trustee, such reference
shall be deemed to include such a
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distribution or furnishing on behalf of the Trustee by a Paying Agent. Each
Paying Agent shall provide to the Trustee such information concerning the
Certificate Account as the Trustee shall request from time to time. Each
Paying Agent must be reasonably acceptable to the Master Servicer and must be
a corporation or banking association organized and doing business under the
laws of the United States of America or of any state, having a principal
office and place of business in New York, New York, having a combined capital
and surplus of at least $15,000,000, authorized under such laws to do a trust
business and subject to supervision or examination by federal or state
authorities.
Any corporation into which any Paying Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which any Paying Agent shall be a
party, or any corporation succeeding to the corporate agency business of any
Paying Agent, shall continue to be the Paying Agent provided that such
corporation after the consummation of such merger, conversion, consolidation
or succession meets the eligibility requirements of this Section 8.12.
Any Paying Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Master Servicer; provided, that the
Paying Agent has returned to the Certificate Account or otherwise accounted,
to the reasonable satisfaction of the Master Servicer, for all amounts it has
withdrawn from the Certificate Account. The Trustee may, upon prior written
approval of the Master Servicer, at any time terminate the agency of any
Paying Agent by giving written notice of termination to such Paying Agent and
to the Master Servicer. Upon receiving a notice of resignation or upon such a
termination, or in case at any time any Paying Agent shall cease to be
eligible in accordance with the provisions of the first paragraph of this
Section 8.12, the Trustee may appoint, upon prior written approval of the
Master Servicer, a successor Paying Agent, shall give written notice of such
appointment to the Master Servicer and shall mail notice of such appointment
to all Certificateholders. Any successor Paying Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Paying Agent. Any reasonable compensation paid to any
Paying Agent shall be a reimbursable expense pursuant to Section 8.05 if paid
by the Trustee.
ARTICLE IX
TERMINATION
Section 9.01. TERMINATION UPON REPURCHASE BY THE COMPANY OR LIQUIDATION
OF ALL MORTGAGE LOANS.
(a) Except as otherwise set forth in this Article IX, including, without
limitation, the obligation of the Master Servicer to make payments to
Certificateholders as hereafter set forth, the respective obligations and
responsibilities of the Company, the Master Servicer and the Trustee created
hereby shall terminate upon (i) the repurchase by the Company pursuant to the
following paragraph of this Section 9.01(a) of all Mortgage Loans and all
property acquired in respect of any Mortgage Loan remaining in the REMIC I
Trust Fund at a price equal, after the deduction of related advances, to the
sum of (x) the excess of (A) 100% of the aggregate outstanding Principal
Balance of such Mortgage Loans (other than Liquidated Mortgage Loans) plus
accrued interest at the applicable Pass-Through Rate with respect to such
Mortgage Loan (other than a Liquidated Mortgage Loan) through the last day of
the month of such repurchase, over (B) with respect to any
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Mortgage Loan which is not a Liquidated Mortgage Loan, the amount of the
Bankruptcy Loss incurred with respect to such Mortgage Loan as of the date of
such repurchase by the Company to the extent that the Principal Balance of
such Mortgage Loan has not been previously reduced by such Bankruptcy Loss,
and (y) the appraised fair market value as of the effective date of the
termination of the trust created hereby of (A) all property in the REMIC I
Trust Fund which secured a Mortgage Loan and which was acquired by foreclosure
or deed in lieu of foreclosure after the Cut-Off Date, including related
Insurance Proceeds, and (B) all other property in the REMIC I Trust Fund, any
such appraisal to be conducted by an appraiser mutually agreed upon by the
Company and the Trustee, or (ii) the later of the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the REMIC I Trust Fund or the disposition of all property
acquired upon foreclosure in respect of any Mortgage Loan, and the payment to
Certificateholders of all amounts required to be paid to them hereunder and
the payment to the Certificate Insurer of any remaining amounts pursuant to
the priority set forth in the definition of "REMIC II Distribution Amount" of
the Class II-A-3 Reimbursement Amount; provided, however, that in no event
shall the trusts created hereby continue beyond the expiration of 21 years
from the death of the survivor of the issue of Joseph P. Kennedy, the late
ambassador of the United States to the Court of St. James, living on the date
hereof.
The Company may repurchase the outstanding Mortgage Loans and any
Mortgaged Properties acquired by the REMIC I Trust Fund at the price stated in
clause (i) of the preceding paragraph provided that the aggregate Principal
Balance of the Mortgage Loans at the time of any such repurchase aggregates
less than five percent of the aggregate Principal Balance of the Mortgage
Loans as of the Cut-Off Date. If such right is exercised, the Company shall
provide to the Trustee and the Certificate Insurer (and to the Master
Servicer, if the Company is no longer acting as Master Servicer) the written
certification of an officer of the Company (which certification shall include
a statement to the effect that all amounts required to be paid in order to
repurchase the Mortgage Loans have been deposited in the Certificate Account)
and the Trustee shall promptly execute all instruments as may be necessary to
release and assign to the Company the Mortgage Files and any foreclosed
Mortgaged Property pertaining to the REMIC I Trust Fund.
In no event shall the Company be required to expend any amounts other than
those described in the first paragraph of this Section 9.01(a) in order to
terminate the REMIC I Trust Fund or repurchase the Mortgage Loans under this
Section 9.01.
(b) Notice of any termination, specifying the date upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
and cancellation, shall be given promptly by letter from the Trustee to
Certificateholders mailed not less than 30 days prior to such final
distribution, specifying (i) the date upon which final payment of the
Certificates will be made upon presentation and surrender of Certificates at
the office of the Certificate Registrar therein designated (the "Termination
Date"), (ii) the amount of such final payment (the "Termination Payment") and
(iii) that the Record Date otherwise applicable to the Distribution Date upon
which the Termination Date occurs is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the
Certificate Registrar therein specified. Upon any such notice, the Certificate
Account shall terminate subject to the Master Servicer's obligation to hold
all amounts payable to Certificateholders in trust without interest pending
such payment.
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In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the Termination Date,
the Company shall give a second written notice to the remaining
Certificateholders to surrender their Certificates for cancellation and
receive the Termination Payment with respect thereto. If within one year after
the second notice all the Certificates shall not have been surrendered for
cancellation, the Company may 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 in trust
hereunder.
Section 9.02. ADDITIONAL TERMINATION REQUIREMENTS.
(a) In the event the Company exercises its purchase option as provided in
Section 9.01, the REMIC I Trust Fund, the REMIC II Trust Fund and the REMIC
III Trust Fund shall be terminated in accordance with the following additional
requirements, unless the Company, at its own expense, obtains for the Trustee
and the Certificate Insurer an Opinion of Counsel to the effect that the
failure of the REMIC I Trust Fund, the REMIC II Trust Fund and REMIC III Trust
Fund to comply with the requirements of this Section 9.02 will not (i) result
in the imposition of taxes on "prohibited transactions" of the REMIC I Trust
Fund, the REMIC II Trust Fund and the REMIC III Trust Fund as described in
Section 860F of the Code, or (ii) cause the REMIC I Trust Fund, the REMIC II
Trust Fund or the REMIC III Trust Fund to fail to qualify as a REMIC at any
time that any Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date set forth in
the notice given by the Trustee under Section 9.01, the Company, in its
capacity as agent of the Tax Matters Person shall prepare the
documentation required and adopt a plan of complete liquidation on behalf
of the REMIC I Trust Fund, the REMIC II Trust Fund and the REMIC III
Trust Fund meeting the requirements of a qualified liquidation under
Section 860F of the Code and any regulations thereunder, as evidenced by
an Opinion of Counsel obtained at the expense of the Company, on behalf
of the REMIC I Trust Fund, the REMIC II Trust Fund and the REMIC III
Trust Fund; and
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Master
Servicer as agent of the Trustee shall sell all of the assets of the
REMIC I Trust Fund, the REMIC II Trust Fund and the REMIC III Trust Fund
to the Company for cash in the amount specified in Section 9.01.
(b) By its acceptance of any Residual Certificate, the Holder thereof
hereby agrees to authorize the Company to adopt such a plan of complete
liquidation upon the written request of the Company and to take such other
action in connection therewith as may be reasonably requested by the Company.
Section 9.03. TRUSTS IRREVOCABLE. Except as expressly provided herein,
the trusts created hereby are irrevocable.
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ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. AMENDMENT.
(a) This Agreement may be amended from time to time by the Master
Servicer, the Company and the Trustee, without the consent of any of the
Certificateholders, but with the prior written consent of the Certificate
Insurer with respect to any amendment that adversely affects the interests of
any of the Insured Certificateholders, (i) to cure any ambiguity; (ii) to
correct or supplement any provision herein which may be defective or
inconsistent with any other provisions herein; (iii) to comply with any
requirements imposed by the Code or any regulations thereunder; (iv) to
correct the description of any property at any time included in the REMIC I
Trust Fund, the REMIC II Trust Fund or the REMIC III Trust Fund, or to assure
the conveyance to the Trustee of any property included in the REMIC I Trust
Fund, the REMIC II Trust Fund or the REMIC III Trust Fund; and (v) pursuant to
Section 5.01(c)(v). No such amendment (other than one entered into pursuant to
clause (iii) of the preceding sentence) shall adversely affect in any material
respect the interest of any Certificateholder. Prior to entering into any
amendment without the consent of Certificateholders pursuant to this
paragraph, the Trustee may require an Opinion of Counsel to the effect that
such amendment is permitted under this paragraph. The placement of an
"original issue discount" legend on, or any change required to correct any
such legend previously place on, a Certificate shall not be deemed any
amendment to this Agreement.
(b) This Agreement may also be amended from time to time by the Master
Servicer, the Company and the Trustee with the consent of the Holders of
Certificates evidencing Percentage Interests aggregating not less than 66% of
the REMIC III Trust Fund for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Agreement
or of modifying in any manner the rights of the Certificateholders; provided,
however, that no such amendment shall, without the consent of the Holder of
each Certificate affected thereby (i) reduce in any manner the amount of, or
delay the timing of, distributions of principal or interest required to be
made hereunder or reduce the Certificateholder's Percentage Interest, the
Remittance Rate or the Termination Payment with respect to any of the
Certificates, (ii) reduce the percentage of Percentage Interests specified in
this Section 10.01 which are required to amend this Agreement, (iii) create or
permit the creation of any lien against any part of the REMIC I Trust Fund,
the REMIC II Trust Fund or the REMIC III Trust Fund, or (iv) modify any
provision in any way which would permit an earlier retirement of the
Certificates.
Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder. Any failure to provide such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amendment.
It shall not be necessary for the consent of Certificateholders under
this Section 10.01 to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
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authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
Section 10.02. 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 the comparable
jurisdictions in which any Mortgaged Property is situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Company and at its expense on direction by the Trustee, but
only upon direction accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders.
Section 10.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement, the REMIC I Trust Fund, the REMIC II Trust Fund or REMIC III Trust
Fund, 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 REMIC I Trust Fund, the REMIC II Trust Fund or
the REMIC III Trust Fund, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote or in any manner
otherwise to control the operation and management of the REMIC I Trust Fund,
the REMIC II Trust Fund or the REMIC III Trust Fund or the obligations of the
parties hereto (except as provided in Section 5.09, Section 7.01, Section
8.01, Section 8.02, Section 8.07, Section 10.01 and this Section 10.03), nor
shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder 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.
No Certificateholder shall have any right by virtue or by availing of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing Percentage Interests aggregating not less
than 25% of the REMIC III Trust Fund shall have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused
to institute any such action, suit or proceeding. However, the Trustee is
under no obligation to exercise any of the extraordinary trusts or powers
vested in it by this Agreement or to make any investigation of matters arising
hereunder or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the
Certificateholders unless such Certificateholders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby. It is understood and intended, and
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the
136
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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 10.03, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
For so long as no Certificate Insurer Default exists, the Certificate
Insurer shall be deemed to be the sole Holder of all outstanding Insured
Certificates with respect to any rights hereunder (other than the right to
receive distributions on such Insured Certificates, except as provided in
Section 3.16); provided that such rights may not be used to reduce the rights
of the Insured Certificateholders to receive distributions or to otherwise
impair their rights under this Agreement as further described in the
definition of "Certificateholder."
Section 10.04. ACCESS TO LIST OF CERTIFICATEHOLDERS. The Certificate
Registrar shall furnish or cause to be furnished to the Trustee, within 30
days after receipt of a request by the Trustee in writing, a list, in such
form as the Trustee may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date for payment of
distributions to such Certificateholders.
If three or more Certificateholders (hereinafter referred to as
"applicants") apply in writing to the Trustee, and such application states
that the applicants desire to communicate with other Certificateholders with
respect to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt
of such list from the Certificate Registrar, afford such applicants access
during normal business hours to the most recent list of Certificateholders
held by the Trustee. If such a list is as of a date more than 90 days prior to
the date of receipt of such applicants' request, the Trustee shall promptly
request from the Certificate Registrar a current list as provided above, and
shall afford such applicants access to such list promptly upon receipt.
Every Certificateholder, by receiving and holding the same, agrees with the
Master Servicer and the Trustee that neither the Master Servicer nor the
Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Certificateholders hereunder,
regardless of the source from which such information was derived.
Section 10.05. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
Section 10.06. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered or certified mail to (a) in the case of
the Company, 75 North Fairway Drive, Vernon Hills, Illinois 60061, Attention:
General Counsel (with a copy directed to the attention of the Master Servicing
Department) or such other address as may hereafter be furnished to the Trustee
in writing by the Company, (b) in the case of the Trustee, at its Corporate
Trust Office, or such other address as may hereafter be furnished to the
Master Servicer in writing by the Trustee, (c) in the case of the Certificate
Registrar, at its Corporate Trust Office, or such other address as may
hereafter be furnished to the Trustee in writing by the Certificate Registrar,
(d) in the case of S&P, 26 Broadway,
137
<PAGE>
15th Floor, New York, New York 10004, Attention: Frank Raiter, or such other
address as may hereafter be furnished to the Trustee and Master Servicer in
writing by S&P, (e) in the case of Fitch, 1 State Street Plaza, New York, New
York, Attention: George Massim, or such other address as may hereafter be
furnished to the Trustee and Master Servicer in writing by DCR and (f) in the
case of the Certificate Insurer, to MBIA Insurance Corporation, 113 King
Street, Armonk, New York 10504, Attn: Insured Portfolio Management -
Structured Finance (IPM-SF), or such other address as may hereafter be
furnished to the Trustee and Master Servicer in writing by the Certificate
Insurer. Notices to the Rating Agencies shall also be deemed to have been duly
given if mailed by first class mail, postage prepaid, to the above listed
addresses of the Rating Agencies. Any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder 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 10.07. 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 severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
Section 10.08. COUNTERPART SIGNATURES. For the purpose of facilitating
the recordation of this Agreement as herein provided and for other purposes,
this Agreement may be executed simultaneously in any number of counterparts,
each of which counterparts shall be deemed to be an original, and such
counterparts shall constitute but one and the same instrument.
Section 10.09. BENEFITS OF AGREEMENT. Nothing in this Agreement or in any
Certificate, expressed or implied, shall give to any Person, other than the
parties hereto and their respective successors hereunder, any separate trustee
or co-trustee appointed under Section 8.10 and the Certificateholders, any
benefit or any legal or equitable right, remedy or claim under this Agreement.
Section 10.10. Notices and Copies to Rating Agencies.
(a) The Trustee shall notify the Rating Agencies of the occurrence of any
of the following events, in the manner provided in Section 10.06:
(i) the occurrence of an Event of Default pursuant to Section 7.01,
subject to the provisions of Section 8.01(d);
(ii) the appointment of a successor Master Servicer pursuant to
Section 7.02;
(b) The Master Servicer shall notify the Rating Agencies of the
occurrence of any of the following events, or in the case of clauses (iii),
(iv), (vii) and (viii) promptly upon receiving notice thereof, in the manner
provided in Section 10.06:
(i) any amendment of this Agreement pursuant to Section 10.01;
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(ii) the appointment of a successor Trustee pursuant to Section
8.08;
(iii) the filing of any claim under or the cancellation or
modification of any fidelity bond and errors and omissions coverage
pursuant to Section 3.01 and Section 3.06 with respect to the Master
Servicer or any Servicer;
(iv) any change in the location of the Certificate Account, any
Custodial Account for P&I or any Custodial Account for Reserves;
(v) the repurchase of any Mortgage Loan pursuant to a Purchase
Obligation or the repurchase of the outstanding Mortgage Loans pursuant
to Section 9.01;
(vi) the occurrence of the final Distribution Date or the
termination of the trust pursuant to Section 9.01(a)(ii);
(vii) the failure of the Master Servicer to make a Monthly P&I
Advance following a determination on the Determination Date that the
Master Servicer would make such advance pursuant to Section 4.02; and
(viii) the failure of the Master Servicer to make a determination on
the Determination Date regarding whether it would make a Monthly P&I
Advance when a shortfall exists between (x) payments scheduled to be
received in respect of the Mortgage Loans and (y) the amounts actually
deposited in the Certificate Account on account of such payments,
pursuant to Section 4.02.
The Master Servicer shall provide copies of the statements pursuant to Section
4.02, Section 4.05, Section 3.12, Section 3.13 or Section 3.15 or any other
statements or reports to the Rating Agencies (with a copy to the Certificate
Insurer) in such time and manner that such statements or determinations are
required to be provided to Certificateholders. With respect to the reports
described in the second paragraph of Section 4.05, the Master Servicer shall
provide such reports to the Rating Agencies (with a copy to the Certificate
Insurer) in respect of each Distribution Date, without regard to whether any
Certificateholder or the Trustee has requested such report for such
Distribution Date.
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IN WITNESS WHEREOF, the Company and the Trustee have caused their names
to be signed hereto by their respective officers, thereunto duly authorized,
and their respective seals, duly attested, to be hereunto affixed, all as of
the day and year first above written.
PNC MORTGAGE SECURITIES CORP.
(SEAL)
By: /s/ Daniel P. Hoffman
---------------------
Daniel P. Hoffman
Its: Vice President
U.S. BANK NATIONAL ASSOCIATION
(SEAL)
By: /s/Sheryl A. Christopherson
---------------------------
Its: Vice President
<PAGE>
<PAGE>
ACKNOWLEDGEMENT OF CORPORATION
STATE OF ILLINOIS )
) SS.
COUNTY OF LAKE )
On this 26th day of June 1998 before me, a Notary Public in and for said
State, personally appeared, known to me to be the of PNC MORTGAGE SECURITIES
CORP., one of the corporations that executed the within interest, 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
pursuant to its By-Laws or a resolution of its Board of Directors.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in the certificate first above written.
/s/Laura A. Kelsey
------------------
Notary Public
(SEAL)
<PAGE>
CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF MINNESOTA )
) SS.
COUNTY OF RAMSEY )
On this 26th day of June 1998 before me, a Notary Public in and for said
State, personally appeared S. Christopherson, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to
me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
WITNESS my hand and official seal.
Signature /s/Deborah J. Franco (SEAL)
--------------------
<PAGE>
<PAGE>
Exhibit A-I-A-1
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-A-1
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
100% of the Basic Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is ____%, and the amount of OID
attributable to the short period is not more than $________ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Basic Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class I-A-1 Principal
Balance as of the Cut-Off Date
Evidenced by this Certificate:
$
-------------------
Class I-A-1 Remittance Rate: 6.750%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class I-A-1 Principal Balance
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-1
<PAGE>
Exhibit A-I-X
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-X
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
100% of the Basic Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $__________ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is _____%, and the amount of OID
attributable to the short period is not more than $___________ per $100,000
of initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Basic Prepayment Assumption or any other rate.]
Series 1998-5 Portion of the Class I-X Notional
Amount as of the Cut-Off Date
Evidenced by this Certificate:
$
-------------------
Class I-X Remittance Rate: 7.000% applied to the Class
I-X Notional Amount
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class I-X Principal Balance
as of the Cut-Off Date: $0.00
Class I-X Notional Amount
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-2
<PAGE>
Exhibit A-I-P
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-P
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
Interest is not payable with respect to this Certificate. [Assuming that the
Mortgage Loans underlying the Certificates prepay at the prepayment assumption
used by the issuer in pricing this Certificate (i.e., 100% of the Basic
Prepayment Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more
than $ per $100,000 of initial Certificate Principal Balance, the
yield to maturity is %, and the amount of OID attributable to the short
period is not more than $ per $100,000 of initial Certificate
Principal Balance, computed under the exact method. No representation is made
that the Mortgage Loans will prepay at a rate based on the Basic Prepayment
Assumption or any other rate.]
Series 1998-5 Portion of the Class I-P Principal
Balance as of the Cut-Off
Date evidenced by this Certificate:
Class I-P Remittance Rate: 0.00% $
----------------------
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class I-P Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
A-3
<PAGE>
Exhibit A-I-B-1
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-B-1
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended
(the "Code"). The issue date (the "Issue Date") of this Certificate is June
26, 1998. [Assuming that the Mortgage Loans underlying the Certificates prepay
at the prepayment assumption used by the issuer in pricing this Certificate
(i.e., 100% of the Basic Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Basic Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS I-B-1 CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS) (A "PLAN"), A TRUSTEE OF ANY
SUCH PLAN, OR ANY OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION, THE TRUSTEE SHALL REQUIRE, EXCEPT AS
OTHERWISE SET FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN
OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE AND THE COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF A CLASS I-B-1 CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE
POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF
THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY.
The Class I-B-1 Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-5 Portion of the Class I-B-1 Principal
Balance as of the Cut-Off Date
Evidenced by this Certificate:
$
-------------------
Class I-B-1 Remittance Rate: 7.000%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class I-B-1 Principal Balance
as of the Cut-Off Date: $[ ]
---------------
Registered Owner
Certificate No. --------
A-4
<PAGE>
Exhibit A-I-B-2
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-B-2
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended
(the "Code"). The issue date (the "Issue Date") of this Certificate is June
26, 1998. [Assuming that the Mortgage Loans underlying the Certificates prepay
at the prepayment assumption used by the issuer in pricing this Certificate
(i.e., 100% of the Basic Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Basic Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS I-B-2 CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS) (A "PLAN"), A TRUSTEE OF ANY
SUCH PLAN, OR ANY OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION, THE TRUSTEE SHALL REQUIRE, EXCEPT AS
OTHERWISE SET FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN
OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE AND THE COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF A CLASS I-B-2 CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE
POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF
THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY.
The Class I-B-2 Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-5 Portion of the Class I-B-2 Principal
Balance as of the Cut-Off Date
Evidenced by this Certificate:
$
--------------------
Class I-B-2 Remittance Rate: 7.000%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class I-B-2 Principal Balance
as of the Cut-Off Date: $[ ]
----------------
Registered Owner
Certificate No.-----
A-5
<PAGE>
Exhibit A-I-B-3
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-B-3
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended
(the "Code"). The issue date (the "Issue Date") of this Certificate is June
26, 1998. [Assuming that the Mortgage Loans underlying the Certificates prepay
at the prepayment assumption used by the issuer in pricing this Certificate
(i.e., 100% of the Basic Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Basic Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS I-B-3 CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS) (A "PLAN"), A TRUSTEE OF ANY
SUCH PLAN, OR ANY OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION, THE TRUSTEE SHALL REQUIRE, EXCEPT AS
OTHERWISE SET FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN
OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE AND THE COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF A CLASS I-B-3 CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN
THE POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN
EXPENSE OF THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY.
The Class I-B-3 Certificates will be subordinate in right of pay
ment to and provide credit support to certain Classes of Certificates, as
described in the Pooling Agreement.
Series 1998-5 Portion of the Class I-B-3
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$
----------------------
Class I-B-3 Remittance Rate: 7.000%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class I-B-3 Principal Balance
as of the Cut-Off Date: $[ ]
-------------------
Registered Owner
Certificate No. --------
A-6
<PAGE>
Exhibit A-I-B-4
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-B-4
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended
(the "Code"). The issue date (the "Date") of this Certificate is June 26,
1998. [Assuming that the Mortgage Loans underlying the Certificates prepay at
the prepayment assumption used by the issuer in pricing this Certificate
(i.e., 100% of the Basic Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Basic Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS I-B-4 CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS) (A "PLAN"), A TRUSTEE OF ANY
SUCH PLAN, OR ANY OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION, THE TRUSTEE SHALL REQUIRE, EXCEPT AS
OTHERWISE SET FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN
OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE AND THE COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF A CLASS I-B-4 CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE
POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF
THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION OR
THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND EXCEPT IN ACCORDANCE WITH SECTION 5.01(e) OF THE POOLING
AGREEMENT.
The Class I-B-4 Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-5 Portion of the Class I-B-4
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate: $
------------
Class I-B-4 Remittance Rate: 7.000%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class I-B-4 Principal Balance
as of the Cut-Off Date: $[ ]
----------------
Registered Owner
Certificate No._____
A-7
<PAGE>
Exhibit A-I-B-5
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-B-5
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended
(the "Code"). The issue date (the "Date") of this Certificate is June 26,
1998. [Assuming that the Mortgage Loans underlying the Certificates prepay at
the prepayment assumption used by the issuer in pricing this Certificate
(i.e., 250% of the Basic Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Basic Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS I-B-5 CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS) (A "PLAN"), A TRUSTEE OF ANY
SUCH PLAN, OR ANY OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION, THE TRUSTEE SHALL REQUIRE, EXCEPT AS
OTHERWISE SET FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN
OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE AND THE COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF A CLASS I-B-5 CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT
THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN
THE POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE
OF THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION OR
THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND EXCEPT IN ACCORDANCE WITH SECTION 5.01(e) OF THE POOLING
AGREEMENT.
The Class I-B-5 Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-5 Portion of the Class I-B-5
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$
------------------
Class I-B-5 Remittance Rate: 7.000%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class I-B-5 Principal Balance
as of the Cut-Off Date: $[ ]
-------------------
Registered Owner
Certificate No. -----
A-9
<PAGE>
Exhibit A-I-B-6
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class I-B-6
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended
(the "Code"). The issue date (the "Date") of this Certificate is June 26,
1998. [Assuming that the Mortgage Loans underlying the Certificates prepay at
the prepayment assumption used by the issuer in pricing this Certificate
(i.e., 250% of the Basic Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Basic Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS I-B-6 CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS) (A "PLAN"), A TRUSTEE OF ANY
SUCH PLAN, OR ANY OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION, THE TRUSTEE SHALL REQUIRE, EXCEPT AS
OTHERWISE SET FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN
OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE AND THE COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF A CLASS I-B-6 CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT
THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN
THE POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN
EXPENSE OF THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
REGISTRATION OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933 AND EXCEPT IN ACCORDANCE WITH SECTION
5.01(e) OF THE POOLING AGREEMENT.
The Class I-B-6 Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-5 Portion of the Class I-B-6
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$
---------------------
Class I-B-6 Remittance Rate: 7.000%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class I-B-6 Principal Balance
as of the Cut-Off Date: $[ ]
----------------
Registered Owner
Certificate No. -------
A-10
<PAGE>
Exhibit A-II-A-1
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-1
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-1
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$
--------------------
Class II-A-1 Remittance Rate: 6.750%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-1 Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
A-11
<PAGE>
Exhibit A-II-A-2
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-2
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-2
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$
------------------
Class II-A-2 Remittance Rate: 6.750%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-2 Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
A-12
<PAGE>
Exhibit A-II-A-3
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-3
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-3
Principal Balance as of
the Cut-Off Date Evidenced by this
Certificate:
$
-----------------
Class II-A-3 Remittance Rate: 6.750%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-3 Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
A-13
<PAGE>
Exhibit A-II-A-4
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-4
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-4
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$
---------------------
Class II-A-4 Remittance Rate: 6.750%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-4 Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
A-13
<PAGE>
Exhibit A-II-A-5
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-5
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-5
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$
--------------------
Class II-A-5 Remittance Rate: 6.750%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-5 Principal Balance as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-15
<PAGE>
Exhibit A-II-A-6
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-6
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-6
Principal Balance as of
the Cut-Off Date Evidenced by this
Certificate:
$
---------------------
Class II-A-6 Remittance Rate: 7.000%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-6 Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
A-16
<PAGE>
Exhibit A-II-A-7
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-7
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-7
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$
-----------------------
Class II-A-7 Remittance Rate: 6.550%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-7 Principal Balance as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-17
<PAGE>
Exhibit A-II-A-8
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-8
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-8
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$
-------------------------
Class II-A-8 Remittance Rate: 6.750%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-8 Principal Balance as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-18
<PAGE>
Exhibit A-II-A-9
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-9
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
Interest is not payable with respect to this Certificate.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-9
Principal Balance as of
the Cut-Off Date Evidenced by this
Certificate:
$
-------------------------
Class II-A-9 Remittance Rate: 0.000%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-9 Principal Balance as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-19
<PAGE>
Exhibit A-II-A-10
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-10
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-10
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$
-----------------------------
Class II-A-10 Remittance Rate: 6.550%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-10 Principal Balance as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-20
<PAGE>
Exhibit A-II-A-11
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-11
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-11
Principal Balance as of the Cut-Off
Date Evidenced by this Certificate:
$
----------------------
Class II-A-11 Remittance Rate: 6.300%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-11 Principal Balance as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-21
<PAGE>
Exhibit A-II-A-12
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-12
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-12
Notional Amount as of the Cut-Off
Date Evidenced by this
Certificate:
$
-----------------------
Class II-A-12 Remittance Rate: 6.750%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-12 Principal Balance as of the Cut-Off Date: $0.00
Class II-A-12 Notional Amount as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-22
<PAGE>
Exhibit A-II-A-13
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-13
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-13
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$
-------------------------
Class II-A-13 Remittance Rate: 6.300%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-13 Principal Balance as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-23
<PAGE>
Exhibit A-II-A-14
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-14
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-14
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$
-----------------------
Class II-A-14 Remittance Rate: 6.350%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-14 Principal Balance as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-24
<PAGE>
Exhibit A-II-A-15
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-15
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-15
Principal Balance as of
the Cut-Off Date Evidenced by this
Certificate:
$
-------------------------
Class II-A-15 Remittance Rate: 6.750%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-15 Principal Balance as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-25
<PAGE>
Exhibit A-II-A-16
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-16
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-16
Principal Balance as of
the Cut-Off Date Evidenced by this
Certificate:
$
-----------------------
Class II-A-16 Remittance Rate: 6.750%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-16 Principal Balance as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-26
<PAGE>
Exhibit A-II-A-17
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-17
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-17
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$
-----------------------
Class II-A-17 Remittance Rate: 6.750%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-17 Principal Balance as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-27
<PAGE>
Exhibit A-II-A-18
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-18
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS II-A-18 CERTIFICATE PRESENTED FOR REGISTRATION IN THE
NAME OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE (OR COMPARABLE PROVISIONS OF
ANY SUBSEQUENT ENACTMENTS) (A "PLAN"), A TRUSTEE OF ANY SUCH PLAN, OR ANY
OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH
ACQUISITION, THE TRUSTEE SHALL REQUIRE, EXCEPT AS OTHERWISE SET FORTH IN
SECTION 5.01(d) OF THE POOLING AGREEMENT, AN OPINION OF COUNSEL ACCEPTABLE TO
AND IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE COMPANY TO THE
EFFECT THAT THE PURCHASE OR HOLDING OF A CLASS II-A-18 CERTIFICATE IS
PERMISSIBLE UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE MASTER SERVICER OR THE
COMPANY TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE
UNDERTAKEN IN THE POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN
EXPENSE OF THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY.
The Class II-A-18 Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-5 Portion of the Class II-A-18
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$
------------------------
Class II-A-18 Remittance Rate: 6.750%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-18 Principal Balance as of the Cut-Off Date: $
Registered Owner
Certificate No. 1
A-28
<PAGE>
Exhibit A-II-A-19
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-A-19
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class II-A-19
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$
--------------------------
Class II-A-19 Remittance Rate: 6.750%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-A-19 Principal Balance as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-30
<PAGE>
Exhibit A-II-X
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-X
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000
of initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Series 1998-5 Portion of the Class II-X Notional
Amount as of the Cut-Off Date
Evidenced by this Certificate:
$
---------------------------
Class II-X Remittance Rate: 6.750% applied to the Class
II-X Notional Amount
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-X Principal Balance
as of the Cut-Off Date: $0.00
Class II-X Notional Amount
as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-31
<PAGE>
Exhibit A-II-P
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class II-P
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
Interest is not payable with respect to this Certificate. [Assuming that the
Mortgage Loans underlying the Certificates prepay at the prepayment assumption
used by the issuer in pricing this Certificate (i.e., 100% of the Basic
Prepayment Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more
than $ per $100,000 of initial Certificate Principal Balance, the
yield to maturity is %, and the amount of OID attributable to the short
period is not more than $ per $100,000 of initial Certificate
Principal Balance, computed under the exact method. No representation is made
that the Mortgage Loans will prepay at a rate based on the Basic Prepayment
Assumption or any other rate.]
Series 1998-5 Portion of the Class II-P Principal
Balance as of the Cut-Off Date
evidenced by this Certificate:
$
------------------------------
Class II-P Remittance Rate: 0.00%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class II-P Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
A-32
<PAGE>
Exhibit A-III-A-1
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class III-A-1
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000 of
initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Unless this Certificate 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
Certificate issued is registered in the name of Cede & Co. or such other name
as is requested 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.
Series 1998-5 Portion of the Class III-A-1
Principal Balance as of the
Cut-Off Date Evidenced by
this Certificate:
$
---------------------------
Class III-A-1 Remittance Rate: 6.625%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class III-A-1 Principal Balance
as of the Cut-Off Date: $
Cede & Co.
Registered Owner
A-33
<PAGE>
Exhibit A-III-X
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class III-X
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
[Assuming that the Mortgage Loans underlying the Certificates prepay at the
prepayment assumption used by the issuer in pricing this Certificate (i.e.,
250% of the Standard Prepayment Assumption as described in the Prospectus
Supplement), this Certificate has been issued with original issue discount
("OID") of no more than $ per $100,000 of initial Certificate
Principal Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per $100,000
of initial Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate based on
the Standard Prepayment Assumption or any other rate.]
Series 1998-5 Portion of the Class III-X
Notional Amount as of the
Cut-Off Date Evidenced by this
Certificate:
$
-----------------------------
Class III-X Remittance Rate: 6.625% applied
to the Class III-X Notional Amount
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class III-X Principal Balance
as of the Cut-Off Date: $0.00
Class III-X Notional Amount
as of the Cut-Off Date: $[ ]
Cede & Co.
Registered Owner
A-34
<PAGE>
Exhibit A-III-P
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class III-P
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended.
The issue date (the "Issue Date") of this Certificate is June 26, 1998.
Interest is not payable with respect to this Certificate. [Assuming that the
Mortgage Loans underlying the Certificates prepay at the prepayment assumption
used by the issuer in pricing this Certificate (i.e., 250% of the Standard
Prepayment Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no more
than $ per $100,000 of initial Certificate Principal Balance, the
yield to maturity is %, and the amount of OID attributable to the short
period is not more than $ per $100,000 of initial Certificate
Principal Balance, computed under the exact method. No representation is made
that the Mortgage Loans will prepay at a rate based on the Standard Prepayment
Assumption or any other rate.]
Series 1998-5 Portion of the Class III-P Principal
Balance as of the Cut-Off Date evidenced
by this Certificate:
$
-----------------------------------
Class III-P Remittance Rate: 0.00%
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class III-P Principal Balance as of the Cut-Off Date:
Cede & Co.
Registered Owner
A-35
<PAGE>
Exhibit A-C-B-1
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class C-B-1
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended
(the "Code"). The issue date (the "Issue Date") of this Certificate is June
26, 1998. [Assuming that the Mortgage Loans underlying the Certificates prepay
at the prepayment assumption used by the issuer in pricing this Certificate
(i.e., 250% of the Standard Prepayment Assumption as described in the
Prospectus Supplement), this Certificate has been issued with original issue
discount ("OID") of no more than $ per $100,000 of initial
Certificate Principal Balance, the yield to maturity is %, and the amount
of OID attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the exact
method. No representation is made that the Mortgage Loans will prepay at a
rate based on the Standard Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS C-B-1 CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS) (A "PLAN"), A TRUSTEE OF ANY
SUCH PLAN, OR ANY OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION, THE TRUSTEE SHALL REQUIRE, EXCEPT AS
OTHERWISE SET FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN
OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE AND THE COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF A CLASS C-B-1 CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE
POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF
THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY.
The Class C-B-1 Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-5 Portion of the Class C-B-1 Principal
Balance as of the Cut-Off Date
Evidenced by this Certificate:
$
-------------------------------
Class C-B-1 Remittance Rate: Variable
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class C-B-1 Principal Balance
as of the Cut-Off Date: $
---------------------
Registered Owner
Certificate No.
-----
A-36
<PAGE>
Exhibit A-C-B-2
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class C-B-2
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended
(the "Code"). The issue date (the "Issue Date") of this Certificate is June
26, 1998. [Assuming that the Mortgage Loans underlying the Certificates prepay
at the prepayment assumption used by the issuer in pricing this Certificate
(i.e., 250% of the Standard Prepayment Assumption as described in the
Prospectus Supplement), this Certificate has been issued with original issue
discount ("OID") of no more than $ per $100,000 of initial
Certificate Principal Balance, the yield to maturity is %, and the amount
of OID attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the exact
method. No representation is made that the Mortgage Loans will prepay at a
rate based on the Standard Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS C-B-2 CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS) (A "PLAN"), A TRUSTEE OF ANY
SUCH PLAN, OR ANY OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION, THE TRUSTEE SHALL REQUIRE, EXCEPT AS
OTHERWISE SET FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN
OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE AND THE COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF A CLASS C-B-2 CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE
POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF
THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY.
The Class C-B-2 Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-5 Portion of the Class C-B-2
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$
---------------------------
Class C-B-2 Remittance Rate: Variable
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class C-B-2 Principal Balance
as of the Cut-Off Date: $
-------------------
Registered Owner
Certificate No.
-----
A-37
<PAGE>
Exhibit A-C-B-3
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class C-B-3
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended
(the "Code"). The issue date (the "Issue Date") of this Certificate is June
26, 1998. [Assuming that the Mortgage Loans underlying the Certificates prepay
at the prepayment assumption used by the issuer in pricing this Certificate
(i.e., 250% of the Standard Prepayment Assumption as described in the
Prospectus Supplement), this Certificate has been issued with original issue
discount ("OID") of no more than $ per $100,000 of initial
Certificate Principal Balance, the yield to maturity is %, and the amount
of OID attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the exact
method. No representation is made that the Mortgage Loans will prepay at a
rate based on the Standard Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS C-B-3 CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS) (A "PLAN"), A TRUSTEE OF ANY
SUCH PLAN, OR ANY OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION, THE TRUSTEE SHALL REQUIRE, EXCEPT AS
OTHERWISE SET FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN
OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE AND THE COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF A CLASS C-B-3 CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN
THE POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN
EXPENSE OF THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY.
The Class C-B-3 Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-5 Portion of the Class C-B-3 Principal
Balance as of the Cut-Off Date
Evidenced by this Certificate:
$
---------------------------
Class C-B-3 Remittance Rate: Variable
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class C-B-3 Principal Balance
as of the Cut-Off Date: $
---------------------
Registered Owner
Certificate No.
-----
A-38
<PAGE>
Exhibit A-C-B-4
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class C-B-4
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended
(the "Code"). The issue date (the "Date") of this Certificate is June 26,
1998. [Assuming that the Mortgage Loans underlying the Certificates prepay at
the prepayment assumption used by the issuer in pricing this Certificate
(i.e., 250% of the Standard Prepayment Assumption as described in the
Prospectus Supplement), this Certificate has been issued with original issue
discount ("OID") of no more than $ per $100,000 of initial
Certificate Principal Balance, the yield to maturity is %, and the amount
of OID attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the exact
method. No representation is made that the Mortgage Loans will prepay at a
rate based on the Standard Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS C-B-4 CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS) (A "PLAN"), A TRUSTEE OF ANY
SUCH PLAN, OR ANY OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION, THE TRUSTEE SHALL REQUIRE, EXCEPT AS
OTHERWISE SET FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN
OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE AND THE COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF A CLASS C-B-4 CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE
POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF
THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION OR
THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND EXCEPT IN ACCORDANCE WITH SECTION 5.01(e) OF THE POOLING
AGREEMENT.
The Class C-B-4 Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-5 Portion of the Class C-B-4 Principal
Balance as of the Cut-Off Date
Evidenced by this Certificate:
$
--------------------------
Class C-B-4 Remittance Rate: Variable
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class C-B-4 Principal Balance
as of the Cut-Off Date: $
-----------------------
Registered Owner
Certificate No.
---------
A-39
<PAGE>
Exhibit A-C-B-5
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class C-B-5
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended
(the "Code"). The issue date (the "Date") of this Certificate is June 26,
1998. [Assuming that the Mortgage Loans underlying the Certificates prepay at
the prepayment assumption used by the issuer in pricing this Certificate
(i.e., 250% of the Standard Prepayment Assumption as described in the
Prospectus Supplement), this Certificate has been issued with original issue
discount ("OID") of no more than $ per $100,000 of initial
Certificate Principal Balance, the yield to maturity is %, and the amount
of OID attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the exact
method. No representation is made that the Mortgage Loans will prepay at a
rate based on the Standard Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS C-B-5 CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS) (A "PLAN"), A TRUSTEE OF ANY
SUCH PLAN, OR ANY OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION, THE TRUSTEE SHALL REQUIRE, EXCEPT AS
OTHERWISE SET FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN
OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE AND THE COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF A CLASS C-B-5 CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE
POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF
THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION OR
THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND EXCEPT IN ACCORDANCE WITH SECTION 5.01(e) OF THE POOLING
AGREEMENT.
The Class C-B-5 Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-5 Portion of the Class C-B-5 Principal
Balance as of the Cut-Off Date Evidenced
by this Certificate:
$
--------------------------
Class C-B-5 Remittance Rate: Variable
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class C-B-5 Principal Balance
as of the Cut-Off Date: $
-----------------------------
Registered Owner
Certificate No.
--------
A-41
<PAGE>
Exhibit A-C-B-6
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class C-B-6
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consists of, among other things,
a pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP
This Certificate represents ownership of a "regular interest" in a "real
estate mortgage investment conduit," as those terms are defined in Sections
860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended
(the "Code"). The issue date (the "Date") of this Certificate is June 26,
1998. [Assuming that the Mortgage Loans underlying the Certificates prepay at
the prepayment assumption used by the issuer in pricing this Certificate
(i.e., 250% of the Standard Prepayment Assumption as described in the
Prospectus Supplement), this Certificate has been issued with original issue
discount ("OID") of no more than $ per $100,000 of initial
Certificate Principal Balance, the yield to maturity is %, and the amount
of OID attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the exact
method. No representation is made that the Mortgage Loans will prepay at a
rate based on the Standard Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS C-B-6 CERTIFICATE PRESENTED FOR REGISTRATION IN
THE NAME OF AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS) (A "PLAN"), A TRUSTEE OF ANY
SUCH PLAN, OR ANY OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH
PLAN TO EFFECT SUCH ACQUISITION, THE TRUSTEE SHALL REQUIRE, EXCEPT AS
OTHERWISE SET FORTH IN SECTION 5.01(d) OF THE POOLING AGREEMENT, AN
OPINION OF COUNSEL ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY
TO THE TRUSTEE AND THE COMPANY TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF A CLASS C-B-6 CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW, WILL
NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE
POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF
THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF REGISTRATION OR
THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND EXCEPT IN ACCORDANCE WITH SECTION 5.01(e) OF THE POOLING
AGREEMENT.
The Class C-B-6 Certificates will be subordinate in right of payment to and
provide credit support to certain Classes of Certificates, as described in the
Pooling Agreement.
Series 1998-5 Portion of the Class C-B-6 Principal
Balance as of the Cut-Off Date
Evidenced by this Certificate:
$
-------------------------
Class C-B-6 Remittance Rate: Variable
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class C-B-6 Principal Balance
as of the Cut-Off Date: $
-------------------------
Registered Owner
Certificate No.
--------
A-43
<PAGE>
Exhibit B
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class R-3
Evidencing a Percentage Interest in a trust fund whose assets consist of
interests in another trust fund whose assets consist of, among other things, a
pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE COMPANY AND
THE CERTIFICATE REGISTRAR THAT (1) SUCH TRANSFEREE IS NOT EITHER (A) THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY
OF ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE
DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY
CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED
BY SECTION 511 OF THE CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION
1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES
(A), (B), OR (C) BEING HEREINAFTER REFERRED TO AS A "DISQUALIFIED
ORGANIZATION"), OR (D) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (2) NO
PURPOSE OF SUCH TRANSFER IS TO ENABLE THE TRANSFER TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX. SUCH AFFIDAVIT SHALL INCLUDE CERTAIN REPRESENTATIONS AS TO
THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE
REGISTRATION IN THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER
DISPOSITION OF THIS CLASS R-3 CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN
AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE
OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO
BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF A CLASS
R-3 CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE
CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
NO TRANSFER OF ANY CLASS R-3 CERTIFICATE SHALL BE MADE UNLESS THE TRANSFEREE
PROVIDES THE COMPANY AND THE TRUSTEE WITH AN OPINION OF COUNSEL ACCEPTABLE TO
AND IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE COMPANY TO THE
EFFECT THAT THE PURCHASE OR HOLDING OF A CLASS R-3 CERTIFICATE IS PERMISSIBLE
UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT
SUBJECT THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE POOLING
AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE,
THE MASTER SERVICER, THE REMIC I TRUST FUND, THE REMIC II TRUST FUND OR THE
COMPANY.
Solely for U.S. federal income tax purposes, this Certificate represents a
"residual interest" in a "real estate mortgage investment conduit," as those
terms are defined in Sections 860G and 860D, respectively, of the Internal
Revenue Code of 1986, as amended.
Series 1998-5 Percentage Interest evidenced by
this Class R-3 Certificate
in the distributions to be made
with respect to the Class R-3
Certificates:
-------------%
Class R-3 Remittance Rate: 6.750%. Additionally the
Class R-3 Certificates are entitled to the Residual
Distribution Amount as defined in the Pooling
Agreement.
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class R Principal Balance as of the Cut-Off Date: $50.00
------------------
Registered Owner
Certificate No.
----
B-1
<PAGE>
Exhibit C-R-1
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class R-1
Evidencing a Percentage Interest in certain distributions with respect to a
pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE COMPANY AND
THE CERTIFICATE REGISTRAR THAT (1) SUCH TRANSFEREE IS NOT EITHER (A) THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY
OF ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE
DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY
CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED
BY SECTION 511 OF THE CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION
1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES
(A), (B), OR (C) BEING HEREINAFTER REFERRED TO AS A "DISQUALIFIED
ORGANIZATION"), OR (D) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (2) NO
PURPOSE OF SUCH TRANSFER IS TO ENABLE THE TRANSFER TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX. SUCH AFFIDAVIT SHALL INCLUDE CERTAIN REPRESENTATIONS AS TO
THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE
REGISTRATION IN THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER
DISPOSITION OF THIS CLASS R-1 CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN
AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE
OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO
BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF A CLASS
R-1 CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE
CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
NO TRANSFER OF ANY CLASS R-1 CERTIFICATE SHALL BE MADE UNLESS THE TRANSFEREE
PROVIDES THE COMPANY AND THE TRUSTEE WITH AN OPINION OF COUNSEL ACCEPTABLE TO
AND IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE COMPANY TO THE
EFFECT THAT THE PURCHASE OR HOLDING OF A CLASS R-1 CERTIFICATE IS PERMISSIBLE
UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT
SUBJECT THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE POOLING
AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE,
THE MASTER SERVICER, THE REMIC I TRUST FUND, THE REMIC II TRUST FUND OR THE
COMPANY.
Solely for U.S. federal income tax purposes, this Certificate represents a
"residual interest" in a "real estate mortgage investment conduit," as those
terms are defined in Sections 860G and 860D, respectively, of the Internal
Revenue Code of 1986, as amended.
Series 1998-5 Percentage Interest evidenced by this
Class R-1 Certificate in the
distributions to be made with
respect to the Class R-1
Certificates: %
-------
Class R-1 Remittance Rate: 6.750%. Additionally the
Class R-1 Certificates are entitled to Excess
Liquidation Proceeds and the Residual Distribution
Amount as defined in the Pooling Agreement.
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class R-1 Principal Balance as of the Cut-Off Date: $50.00
--------------------
Registered Owner
Certificate No.
------
B-1
<PAGE>
This Certificate does not represent an obligation of or interest in PNC
Mortgage Securities Corp. or any of its affiliates, including PNC Bank Corp.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed by
any agency or instrumentality of the United States.
This certifies that the above-named Registered Owner is the registered
owner of certain interests in a trust fund (the "REMIC I Trust Fund") whose
assets consist of, among other things, a pool (the "Mortgage Pool") of
conventional one- to four-family mortgage loans (the "Mortgage Loans"), formed
and administered by PNC Mortgage Securities Corp. (the "Company"), which term
includes any successor entity under the Pooling Agreement referred to below.
The Mortgage Pool was created pursuant to a Pooling and Servicing Agreement,
dated as of the Cut-Off Date stated above (the "Pooling Agreement"), between
the Company and U.S. Bank National Association, as Trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Pooling Agreement. Nothing herein shall be
deemed inconsistent with such meanings, and in the event of any conflict
between the Pooling Agreement and the terms of this Certificate, the Pooling
Agreement shall control. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Pooling Agreement, to which
Pooling Agreement the Holder of this Certificate, by virtue of the acceptance
hereof, assents and by which such Holder is bound.
Distributions will be made, pursuant to the Pooling Agreement, on the
25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on
the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last day (or if such
last day is not a Business Day, the Business Day immediately preceding such
last day) of the month immediately preceding the month of such distribution
(the "Record Date"), to the extent of such Certificateholder's Percentage
Interest represented by this Certificate in the portion of the REMIC I
Available Distribution Amount for such Distribution Date then distributable on
the Certificates of this Class, as specified in Section 4.01 of the Pooling
Agreement.
Distributions on this Certificate will be made by the Trustee by wire
transfer or check mailed to the address of the Person entitled thereto, as
such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate to the Certificate
Registrar.
Reference is hereby made to the further provisions of this Certificate
set forth below, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling Agreement or be valid for any
purpose.
B-1
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:
----------------------------------
(TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
This is one of the Certificates referred to in the within-mentioned Pooling
Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------
Dated:
--------------------
B-1
<PAGE>
PNC MORTGAGE SECURITIES CORP.
MORTGAGE PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series and Class
specified hereon (herein called the "Certificates") and representing certain
interests in the REMIC I Trust Fund.
The Certificates do not represent an obligation of, or an interest in,
the Company or any of its affiliates and are not insured or guaranteed by any
governmental agency. The Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Pooling Agreement. In the event funds
are advanced with respect to any Mortgage Loan, such advance is reimbursable
to the Master Servicer from the related recoveries on such Mortgage Loan or
from other cash deposited in the Certificate Account to the extent that such
advance is not otherwise recoverable.
As provided in the Pooling Agreement, withdrawals from the Certificate
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement to the Master
Servicer of advances made, or certain expenses incurred, by it.
The Pooling Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Certificateholders under the Pooling
Agreement at any time by the Company, the Master Servicer and the Trustee with
the consent of the Holders of the Certificates evidencing Percentage Interests
aggregating not less than 66% of the REMIC III Trust Fund. For the purposes of
such provision and except as provided below, voting rights relating to 100% of
the Aggregate Certificate Principal Balance will be allocated pro rata (by
Certificate Principal Balance) among such Certificates. The Pooling Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of the Holders of any of the Certificates.
As provided in the Pooling Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices of the Certificate Registrar or the office maintained
by the Trustee in the City and State of New York, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Trustee or any Authenticating Agent duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of Authorized
Denominations evidencing the same Percentage Interest set forth hereinabove
will be issued to the designated transferee or transferees.
No transfer of a Certificate will be made unless such transfer is exempt
from or is made in accordance with the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") and any applicable
state securities laws. In the event that a transfer is to be made without
registration or qualification under applicable laws, (i) in the event such
transfer is made pursuant to Rule 144A under the Securities Act, the Company
and the Trustee shall require the transferee to execute an investment letter
in substantially the form attached as Exhibit L to the Pooling Agreement,
which investment letter shall not be an expense of the Company, the Master
Servicer or the Trustee and (ii) in the event that such a transfer is not made
pursuant to Rule 144A under the Securities Act, the Company may require an
Opinion of Counsel satisfactory to the Company that such transfer may be made
without such registration or qualification, which Opinion of Counsel shall not
be an expense of the Company, the Master Servicer or the Trustee. Neither the
Company nor the Trustee will register the Certificate under the Securities
Act, qualify the Certificate under any state securities law or provide
registration rights to any purchaser. Any Holder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Company
and the Master Servicer against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state
laws.
The Certificates are issuable only as registered Certificates without
coupons in Authorized Denominations specified in the Pooling Agreement. As
provided in the Pooling Agreement and subject to
B-1
<PAGE>
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of Authorized Denominations evidencing the same aggregate
interest in the portion of the REMIC I Available Distribution Amount
distributable on this Class of Certificate, as requested by the Holder
surrendering the same.
A reasonable service charge may be made for any such registration of
transfer or exchange, and the Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and the Certificate Registrar and any agent of the
Company, the Trustee or the Certificate Registrar may treat the Person in
whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Company, the Trustee, the Certificate Registrar nor
any such agent shall be affected by notice to the contrary.
The obligations created by the Pooling Agreement and the trust funds
created thereby shall terminate upon (i) the later of the maturity or other
liquidation (including repurchase by the Company) of the last Mortgage Loan
remaining in the REMIC I Trust Fund or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan,
and (ii) the payment to Certificateholders of all amounts held by the Trustee
and required to be paid to them pursuant to the Pooling Agreement. In the
event that the Company repurchases any Mortgage Loan pursuant to the Pooling
Agreement, such Pooling Agreement generally requires that the Trustee
distribute to the Certificateholders in the aggregate an amount equal to 100%
of the unpaid Principal Balance of such Mortgage Loan, plus accrued interest
at the applicable Pass-Through Rate to the next scheduled Due Date for the
Mortgage Loan. The Pooling Agreement permits, but does not require, the
Company to repurchase from the REMIC I Trust Fund all Mortgage Loans at the
time subject thereto and all property acquired in respect of any Mortgage Loan
upon payment to the Certificateholders of the amounts specified in the Pooling
Agreement. The exercise of such right will effect early retirement of the
Certificates, the Company's right to repurchase being subject to the aggregate
unpaid Principal Balance of the Mortgage Loans at the time of repurchase being
less than five percent (5%) of the aggregate unpaid Principal Balance of the
Mortgage Loans as of the Cut-Off Date.
B-1
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ------------------------------------
- ------------------------------------
- ------------------------------------
(Please print or typewrite name and address, including postal zip code of
assignee. Please insert social security or other identifying number of
assignee.)
the within Mortgage Pass-Through Certificate and hereby irrevocably
constitutes and appoints
- ----------------------------------
Attorney to transfer said Certificate on the Certificate Register, with full
power of substitution in the premises.
Dated:
----------------------------------
Signature Guaranteed
------------------------------------
NOTICE: The signature to this assignment must
correspond with the name as written upon
the face of the within instrument in every
particular, without alteration or
enlargement or any change whatever. This
Certificate does not represent an
obligation of or an interest in PNC
Mortgage Securities Corp. or any of its
affiliates, including PNC Bank Corp.
Neither this Certificate nor the underlying
Mortgage Loans are guaranteed by any agency
or instrumentality of the United States.
B-1
<PAGE>
Exhibit C-R-2
CUSIP
MORTGAGE PASS-THROUGH CERTIFICATE
Class R-2
Evidencing a Percentage Interest in certain distributions with respect to a
pool of conventional one- to four-family mortgage loans formed and
administered by
PNC MORTGAGE SECURITIES CORP.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE COMPANY AND
THE CERTIFICATE REGISTRAR THAT (1) SUCH TRANSFEREE IS NOT EITHER (A) THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY
OF ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE
DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY
CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED
BY SECTION 511 OF THE CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION
1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES
(A), (B), OR (C) BEING HEREINAFTER REFERRED TO AS A "DISQUALIFIED
ORGANIZATION"), OR (D) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (2) NO
PURPOSE OF SUCH TRANSFER IS TO ENABLE THE TRANSFER TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX. SUCH AFFIDAVIT SHALL INCLUDE CERTAIN REPRESENTATIONS AS TO
THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE
REGISTRATION IN THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER
DISPOSITION OF THIS CLASS R-2 CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN
AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE
OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO
BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF A CLASS
R-2 CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE
CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
NO TRANSFER OF ANY CLASS R-2 CERTIFICATE SHALL BE MADE UNLESS THE TRANSFEREE
PROVIDES THE COMPANY AND THE TRUSTEE WITH AN OPINION OF COUNSEL ACCEPTABLE TO
AND IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE COMPANY TO THE
EFFECT THAT THE PURCHASE OR HOLDING OF A CLASS R-2 CERTIFICATE IS PERMISSIBLE
UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION UNDER SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE AND WILL NOT
SUBJECT THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE POOLING
AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE,
THE MASTER SERVICER, THE REMIC I TRUST FUND, THE REMIC II TRUST FUND OR THE
COMPANY.
Solely for U.S. federal income tax purposes, this Certificate represents a
"residual interest" in a "real estate mortgage investment conduit," as those
terms are defined in Sections 860G and 860D, respectively, of the Internal
Revenue Code of 1986, as amended.
Series 1998-5 Percentage Interest evidenced by
this Class R-2 Certificate in the
distributions to be made with
respect to the Class R-2
Certificates:
----------------%
Class R-2 Remittance Rate: 6.750%.
Additionally the Class R-2 Certificates
are entitled to Excess Liquidation
Proceeds and the Residual Distribution
Amount as defined in the Pooling Agreement.
Cut-Off Date: June 1, 1998
First Distribution Date: July 27, 1998
Last Scheduled Distribution Date:
Class R-2 Principal Balance as of the Cut-Off Date: $50.00
-------------------
Registered Owner
Certificate No.
-------
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This Certificate does not represent an obligation of or interest in PNC
Mortgage Securities Corp. or any of its affiliates, including PNC Bank Corp.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed by
any agency or instrumentality of the United States.
This certifies that the above-named Registered Owner is the registered
owner of certain interests in a trust fund (the "REMIC II Trust Fund") whose
assets consist of, among other things, a pool (the "Mortgage Pool") of
conventional one- to four-family mortgage loans (the "Mortgage Loans"), formed
and administered by PNC Mortgage Securities Corp. (the "Company"), which term
includes any successor entity under the Pooling Agreement referred to below.
The Mortgage Pool was created pursuant to a Pooling and Servicing Agreement,
dated as of the Cut-Off Date stated above (the "Pooling Agreement"), between
the Company and U.S. Bank National Association, as Trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Pooling Agreement. Nothing herein shall be
deemed inconsistent with such meanings, and in the event of any conflict
between the Pooling Agreement and the terms of this Certificate, the Pooling
Agreement shall control. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Pooling Agreement, to which
Pooling Agreement the Holder of this Certificate, by virtue of the acceptance
hereof, assents and by which such Holder is bound.
Distributions will be made, pursuant to the Pooling Agreement, on the
25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on
the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last day (or if such
last day is not a Business Day, the Business Day immediately preceding such
last day) of the month immediately preceding the month of such distribution
(the "Record Date"), to the extent of such Certificateholder's Percentage
Interest represented by this Certificate in the portion of the REMIC II
Available Distribution Amount for such Distribution Date then distributable on
the Certificates of this Class, as specified in Section 4.06 of the Pooling
Agreement.
Distributions on this Certificate will be made by the Trustee by wire
transfer or check mailed to the address of the Person entitled thereto, as
such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate to the Certificate
Registrar.
Reference is hereby made to the further provisions of this Certificate
set forth below, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling Agreement or be valid for any
purpose.
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<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:
-----------------------------------
(TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
This is one of the Certificates referred to in the within-mentioned Pooling
Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
----------------------
Dated:
-------------------
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<PAGE>
PNC MORTGAGE SECURITIES CORP.
MORTGAGE PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series and Class
specified hereon (herein called the "Certificates") and representing certain
interests in the REMIC II Trust Fund.
The Certificates do not represent an obligation of, or an interest in,
the Company or any of its affiliates and are not insured or guaranteed by any
governmental agency. The Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Pooling Agreement. In the event funds
are advanced with respect to any Mortgage Loan, such advance is reimbursable
to the Master Servicer from the related recoveries on such Mortgage Loan or
from other cash deposited in the Certificate Account to the extent that such
advance is not otherwise recoverable.
As provided in the Pooling Agreement, withdrawals from the Certificate
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement to the Master
Servicer of advances made, or certain expenses incurred, by it.
The Pooling Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Certificateholders under the Pooling
Agreement at any time by the Company, the Master Servicer and the Trustee with
the consent of the Holders of the Certificates evidencing Percentage Interests
aggregating not less than 66% of the REMIC III Trust Fund. For the purposes of
such provision and except as provided below, voting rights relating to 100% of
the Aggregate Certificate Principal Balance will be allocated pro rata (by
Certificate Principal Balance) among such Certificates. The Pooling Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of the Holders of any of the Certificates.
As provided in the Pooling Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices of the Certificate Registrar or the office maintained
by the Trustee in the City and State of New York, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Trustee or any Authenticating Agent duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of Authorized
Denominations evidencing the same Percentage Interest set forth hereinabove
will be issued to the designated transferee or transferees.
No transfer of a Certificate will be made unless such transfer is exempt
from or is made in accordance with the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") and any applicable
state securities laws. In the event that a transfer is to be made without
registration or qualification under applicable laws, (i) in the event such
transfer is made pursuant to Rule 144A under the Securities Act, the Company
and the Trustee shall require the transferee to execute an investment letter
in substantially the form attached as Exhibit L to the Pooling Agreement,
which investment letter shall not be an expense of the Company, the Master
Servicer or the Trustee and (ii) in the event that such a transfer is not made
pursuant to Rule 144A under the Securities Act, the Company may require an
Opinion of Counsel satisfactory to the Company that such transfer may be made
without such registration or qualification, which Opinion of Counsel shall not
be an expense of the Company, the Master Servicer or the Trustee. Neither the
Company nor the Trustee will register the Certificate under the Securities
Act, qualify the Certificate under any state securities law or provide
registration rights to any purchaser. Any Holder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Company
and the Master Servicer against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state
laws.
The Certificates are issuable only as registered Certificates without
coupons in Authorized Denominations specified in the Pooling Agreement. As
provided in the Pooling Agreement and subject to
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<PAGE>
certain limitations therein set forth, Certificates are exchangeable for new
Certificates of Authorized Denominations evidencing the same aggregate
interest in the portion of the REMIC II Available Distribution Amount
distributable on this Class of Certificate, as requested by the Holder
surrendering the same.
A reasonable service charge may be made for any such registration of
transfer or exchange, and the Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and the Certificate Registrar and any agent of
the Company, the Trustee or the Certificate Registrar may treat the Person in
whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Company, the Trustee, the Certificate Registrar nor
any such agent shall be affected by notice to the contrary.
The obligations created by the Pooling Agreement and the trust funds
created thereby shall terminate upon (i) the later of the maturity or other
liquidation (including repurchase by the Company) of the last Mortgage Loan
remaining in the REMIC I Trust Fund or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan,
and (ii) the payment to Certificateholders of all amounts held by the Trustee
and required to be paid to them pursuant to the Pooling Agreement. In the
event that the Company repurchases any Mortgage Loan pursuant to the Pooling
Agreement, such Pooling Agreement generally requires that the Trustee
distribute to the Certificateholders in the aggregate an amount equal to 100%
of the unpaid Principal Balance of such Mortgage Loan, plus accrued interest
at the applicable Pass-Through Rate to the next scheduled Due Date for the
Mortgage Loan. The Pooling Agreement permits, but does not require, the
Company to repurchase from the REMIC I Trust Fund all Mortgage Loans at the
time subject thereto and all property acquired in respect of any Mortgage Loan
upon payment to the Certificateholders of the amounts specified in the Pooling
Agreement. The exercise of such right will effect early retirement of the
Certificates, the Company's right to repurchase being subject to the aggregate
unpaid Principal Balance of the Mortgage Loans at the time of repurchase being
less than five percent (5%) of the aggregate unpaid Principal Balance of the
Mortgage Loans as of the Cut-Off Date.
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<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ----------------------------------
- ----------------------------------
- ----------------------------------
(Please print or typewrite name and address, including postal zip code of
assignee. Please insert social security or other identifying number of
assignee.)
the within Mortgage Pass-Through Certificate and hereby irrevocably
constitutes and appoints
- ----------------------------------
Attorney to transfer said Certificate on the Certificate Register, with full
power of substitution in the premises.
Dated:
---------------------------
Signature Guaranteed
-------------------------------
NOTICE: The signature to this assignment must
correspond with the name as written
upon the face of the within instrument
in every particular, without alteration
or enlargement or any change whatever.
This Certificate does not represent an
obligation of or an interest in PNC
Mortgage Securities Corp. or any of its
affiliates, including PNC Bank Corp.
Neither this Certificate nor
the underlying Mortgage Loans are
guaranteed by any agency or
instrumentality of the United States.
B-1
<PAGE>
Exhibit D
MORTGAGE LOAN SCHEDULE
Copies of the Mortgage Loan Schedules (which have been intentionally
omitted from this filing) may be obtained from PNC Mortgage Securities Corp.
or U.S. Bank National Association by contacting,
in the case of PNC Mortgage Securities Corp.,
Richie Moore
Master Servicing Department
PNC Mortgage Securities Corp.
75 N. Fairway Dr.
Vernon Hills, Illinois 60061
Telephone: (847) 549-3683
Facsimile: (847) 549-3681
in the case of U.S. Bank National Association,
Tina Hatfield
Corporate Trust Department
U.S. Bank National Association
180 E. Fifth Street
St. Paul, Minnesota 55101
Telephone: (612) 244-5021
Facsimile: (612) 244-0711
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<PAGE>
<PAGE>
Exhibit E
SELLING AND SERVICING
CONTRACT
This Selling and Servicing Contract (this "Agreement") is made and entered
into by PNC Mortgage Securities Corp. and its successors and assigns ("PNC
Mortgage") and the entity identified below and its successors and assigns (the
"Company").
WITNESSETH:
WHEREAS, this Company wishes to sell first lien residential mortgage
loans to, and service first lien residential mortgage loans on behalf of, PNC
Mortgage; and
WHEREAS, the Company has submitted a Seller Application to PNC Mortgage
and has been approved by PNC Mortgage for participation in the PNC Mortgage
Purchase Programs; and
WHEREAS, the Company has received and reviewed the PNC Mortgage Purchase
Programs Seller Guide (the "Seller Guide"), as well as the PNC Mortgage
Servicing Guide (the "Servicing Guide" and, together with the Seller Guide,
the "Guides"), and understands each and every provision thereof;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, PNC Mortgage and the Company hereby agree as
follows:
1. Guides. The Guides, which set forth the terms and conditions
under which PNC Mortgage may elect to purchase mortgage loans from the
Company, and the Company shall service mortgage loans on behalf of PNC
Mortgage, are a supplement to this Agreement and such Guides, as may be
amended or supplemented from time to time by PNC Mortgage, are incorporated
into this Agreement in full by reference and made a part hereof as fully as if
set forth at length herein. All capitalized terms used and not defined herein
have the meanings ascribed to them in the Guides.
2. Company's Duties. The Company shall diligently perform all duties
incident to the origination, sale and servicing of the mortgage loans subject
to this Agreement. In the performance of its servicing duties, the Company
shall exercise the same degree of care it exercises when servicing mortgage
loans for its own account, but in no event shall the Company exercise less
care than a reasonable prudent servicer would exercise under similar
circumstances. In addition, the Company shall comply with all of the
provisions of the Guides and with all other requirements and instructions of
PNC Mortgage. The Company shall perform such duties at its sole expense,
except as otherwise expressly provided in the Guides.
3. Representations, Warranties and Covenants of the Company; Remedies
of PNC Mortgage. With respect to each mortgage loan sold by the Company to
PNC Mortgage pursuant to the terms of this Agreement, the Company shall make
all of the representations, warranties and covenants set forth in the Guide
and, in the event of the breach of any of such representations, warranties and
covenants, PNC Mortgage shall have all of the remedies available at law or in
equity, as well as all of the remedies set forth in the Guide, including, but
not limited to, repurchase and indemnification. The representations and
warranties made by the Company with respect to any mortgage loan subject to
this Agreement, as well as the remedies available to PNC Mortgage upon the
breach thereof, shall survive: (a) any investigation regarding the mortgage
loan conducted by PNC Mortgage, its assignees or designees, (b) the
liquidation of the mortgage loan, (c) the purchase of the mortgage loan by PNC
Mortgage, its assignee or designee, (d) the repurchase of the mortgage loan by
the Company and (e) the termination of this Agreement.
4. Compensation. The Company shall be compensated for its services
hereunder as specified in the Guides.
E-1
<PAGE>
5. No Assignment. This Agreement may not be assigned by the Company
without the prior written consent of PNC Mortgage. The Company hereby
consents to the assignment by PNC Mortgage of all or any part of its rights
and obligations under this Agreement to any affiliate designated by PNC
Mortgage. Any other transfer by PNC Mortgage will be allowed and be effective
upon written notice by PNC Mortgage to the Company.
6. Prior Agreements. This Agreement supersedes any prior agreements
and understandings between PNC Mortgage and the Company governing the subject
matter hereof; provided, however, the Company shall not be released from any
responsibility or liability that may have arisen under such agreements and
understanding.
7. Effective Date of Agreement. This Agreement is not effective
until it is executed and accepted by PNC Mortgage at its home office in
Illinois.
8. Notices. All notices, requests, demands or other communications
that are to be given under this Agreement shall be in writing, addressed to
the appropriate parties, and shall be sent by certified mail, return receipt
requested, postage prepaid, if to the Company, at the address below and, if to
PNC Mortgage, to the appropriate address or facsimile number specified in the
Guides. Any such notice, request, demand or other communication shall be
deemed effective upon receipt.
9. Independent Contractor. At no time shall the Company represent
that it is acting as an agent, partner or joint venturer of PNC Mortgage. The
Company shall at all times act as an independent contracting party.
10. Amendment. This Agreement may not be amended or modified orally,
and no provision of this Agreement may be waived or amended, except in writing
signed by the party against whom enforcement is sought. Such a written waiver
or amendment must expressly reference this Agreement. However, by their terms
the Guides may be amended or supplemented by PNC Mortgage from time to time.
Any such amendment(s) to the Guides shall be in writing and be binding upon
the parties hereto on and after the effective date specified therein.
11. Miscellaneous. This Agreement, including all documents
incorporated by reference herein, constitutes the entire understanding between
the parties hereto and supersedes all other agreements, covenants,
representations, warranties, understandings and communications between the
parties, whether written or oral, with respect to the transactions
contemplated by this Agreement. All section headings contained herein are for
convenience only and shall not be construed as part of this Agreement. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall as to such jurisdiction be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
portions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction, and to this end, the provisions hereof are
severable. This Agreement shall be governed by, and construed and enforced in
accordance with, applicable federal laws and laws of the State of Illinois,
without reference to conflict of laws principles. This Agreement may be
executed in one or more counterparts, each of which shall constitute an
original and all of which shall constitute the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement by proper
officials duly authorized on the dates hereinafter set forth. This Agreement
shall take effect as of the date of its execution in original or facsimile
signature by a duly authorized officer of PNC Mortgage.
- ----------------------------- ----------------------------
Name of the Company Company I.D. Number
- ----------------------------- ----------------------------
Type of organization Organized under laws of
E-2
<PAGE>
- --------------------------------------------------------------------
Principal place of business: street address, city, state, zip code
- --------------------------------------------------------------------
Typed name and title of the Company's authorized officer
- ----------------------------------------------- -----------------
Signature of the Company's authorized officer Date
Agreed to and accepted by PNC Mortgage Securities Corp.
- --------------------------------------------------------------------
Typed name and title of authorized representative
- ------------------------------------------------ -----------------
Signature of authorized representative Date
E-3
<PAGE>
Exhibit F
FORM OF TRANSFEROR CERTIFICATE FOR
JUNIOR SUBORDINATE CERTIFICATES
[Date]
U.S. Bank National Association, as Trustee
180 East 5th Street, SPFT0210
St. Paul, MN 55101
Re: Purchase of PNC Mortgage Securities Corp. Mortgage Pass-Through
Certificates Series 1998-5, Class [ ] (the "Certificates")
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we certify that
(a) we understand the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act") and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act,
and (b) we have not offered or sold any certificates to, or solicited offers
to buy any Certificates from, any person, or otherwise approached or
negotiated with any person with respect thereto, or taken any other action
which would result in a violation of Section 5 of the Act.
Very truly yours,
[Name of Transferor]
By:_______________________
Authorized Officer
F-1
<PAGE>
Exhibit G
FORM OF TRANSFEREE'S AGREEMENT FOR
JUNIOR SUBORDINATE CERTIFICATES
[Date]
U.S. Bank National Association
180 East 5th Street, SPFT0210
St. Paul, MN 55101
PNC Mortgage Securities Corp.
75 N. Fairway Drive
Vernon Hills, Illinois 60061
The undersigned (the "Purchaser") proposes to purchase Class [ ]
Certificates evidencing an undivided interest in PNC Mortgage Securities Corp.
Mortgage Pass-Through Certificates, Series 1998-5 (the "Purchased
Certificates") in the principal amount of $______________. In doing so, the
Purchaser hereby acknowledges and agrees as follows:
Section 1. Definitions. Each capitalized term used herein and not
otherwise defined herein shall have the meaning ascribed to it in the Pooling
and Servicing Agreement, dated as of June 1, 1998 (the "Pooling Agreement"),
by and between PNC Mortgage Securities Corp. ("PNC") and U.S. Bank National
Association, as trustee (the "Trustee"), of the PNC Mortgage Securities Corp.
Mortgage Pass-Through Certificates, Series 1998-5.
Section 2. Representations and Warranties of the Purchaser. In
connection with the proposed transfer, the Purchaser represents and warrants
to PNC and the Trustee that:
(a) The Purchaser is duly organized, validly existing and in
good standing under the laws of the jurisdiction in which the Purchaser is
organized, is authorized to invest in the Purchased Certificates, and to enter
into this Agreement, and duly executed and delivered this Agreement;
(b) The Purchaser is acquiring the Purchased Certificates for
its own account as principal and not with a view to the distribution thereof,
in whole or in part;
(c) The Purchaser is an "accredited investor" as such term is
defined in paragraph (a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) of Section 501
of Regulation D under the Securities Act of 1933, as amended (the "Act"), has
knowledge of financial and business matters and is capable of evaluating the
merits and risks of an investment in the Purchased Certificates; the Purchaser
has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision; and the Purchaser is able
to bear the economic risk of an investment in the Purchased Certificates and
can afford a complete loss of such investment;
(d) The Purchaser is not affiliated with the Trustee;
G-1
<PAGE>
(e) The Purchaser confirms that PNC has made available to the
Purchaser the opportunity to ask questions of, and receive answers from PNC
concerning the trust funds created pursuant to the Pooling Agreement (the
"Trust Funds"), the purchase by the Purchaser of the Purchased Certificates
and all matters relating thereto that PNC possesses or can acquire without
unreasonable effort or expense; and
(f) If applicable, the Purchaser has complied, and will continue to
comply, with the guidelines established by Thrift Bulletin 12 issued December
13, 1988, by the Office of Regulatory Activities of the Federal Home Loan Bank
System; and
(g) The Purchaser will provide the Trustee and the Master Servicer
with affidavits substantially in the form of Exhibit A attached hereto.
Section 3.Transfer of Purchased Certificates.
(a) The Purchaser understands that the Purchased Certificates have
not been registered under the Act, or any state securities laws and that no
transfer may be made unless the Purchased Certificates are registered under
the Act and under applicable state law or unless an exemption from
registration is available. The Purchaser further understands that neither PNC
nor the Trust Funds are under any obligation to register the Purchased
Certificates or make an exemption available. In the event that such a transfer
is to be made within two years from the Closing Date without registration
under the Act or applicable state securities laws, (i) the Trustee shall
require, in order to assure compliance with such laws, that the
Certificateholder's prospective transferee each certify to PNC and the Trustee
as to the factual basis for the registration or qualification exemption relied
upon, and (ii) the Trustee or PNC may require an Opinion of Counsel that such
transfer may be made pursuant to an exemption from the Act and state
securities laws, which Opinion of Counsel shall not be an expense of the
Trustee or PNC. Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee and PNC against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
(b) No transfer of a Purchased Certificate shall be made unless the
transferee provides PNC and the Trustee with (i) a Transferee's Agreement,
substantially in the form of this Agreement, and (ii) either (a) an affidavit
substantially in the form of Exhibit A hereto that the proposed transferee (x)
is not an employee benefit plan or other plan or arrangement subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Internal
Revenue Code of 1986, as amended, or comparable provisions of any subsequent
enactments (a "Plan"), a trustee of any Plan, or any other Person who is using
the "plan assets" of any Plan to effect such acquisition or (y) is an
insurance company, the source of funds to be used by it to purchase the
Purchased Certificates is an "insurance company general account" (within the
meaning of Department of Labor Prohibited Transaction Class Exemption ("PTCE")
95-60), and the purchase is being made in reliance upon the availability of
the exemptive relief afforded under Sections I and III of PTCE 95-60, or (b) a
Benefit Plan Opinion (as defined in Exhibit A hereto).
(c) The Purchaser acknowledges that its Purchased Certificates bear
a legend setting forth the applicable restrictions on transfer.
G-2
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
validly executed by its duly authorized representative as of the day and the
year first above written.
[Purchaser]
By: ______________
Its:
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<PAGE>
Exhibit A to Form of Transferee Agreement (Exhibit G)
PNC MORTGAGE SECURITIES CORP.
BENEFIT PLAN AFFIDAVIT
----------------------
RE: PNC MORTGAGE SECURITIES CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-5
(THE "TRUST") CLASS [ ] CERTIFICATES
(THE "PURCHASED CERTIFICATES")
Under penalties of perjury, I, _____________________, declare that, to
the best of my knowledge and belief, the following representations are true,
correct and complete; and
1. That I am the _______________ of __________________ (the
"Purchaser"), whose taxpayer identification number is ___________, and on
behalf of which I have the authority to make this affidavit.
2. That the Purchaser is acquiring a Purchased Certificate
representing an interest in the Trust Funds.
3. That the Purchaser (i) is not an employee benefit plan or
other plan or arrangement subject to the prohibited transaction provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or
comparable provisions of any subsequent enactments (a "Plan"), a trustee of
any Plan, or any other Person who is using the "plan assets" of any Plan to
effect such acquisition, (ii) has provided a "Benefit Plan Opinion"
satisfactory to PNC Mortgage Securities Corp. (the "Company") and the Trustee
of the Trust Funds or (iii) is an insurance company, the source of funds to be
used by it to purchase the Purchased Certificates is an "insurance company
general account" (within the meaning of Department of Labor Prohibited
Transaction Class Exemption ("PTCE") 95-60), and the purchase is being made in
reliance upon the availability of the exemptive relief afforded under Sections
I and III of PTCE 95-60. A Benefit Plan Opinion is an opinion of counsel to
the effect that the proposed transfer (a) is permissible under applicable law,
(b) will not constitute or result in a non-exempt prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code, and (c) will not subject the
Trustee, the Master Servicer or the Company to any obligation or liability
(including obligations or liabilities under Section 406 of ERISA or Section
4975 of the Code) in addition to those undertaken in this Agreement, which
Benefit Plan Opinion shall not be an expense of the Trustee, the Master
Servicer or the Company.
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
duly executed on its behalf, by its duly authorized officer this _____ day of
__________________, 199__.
[Purchaser]
By: _________________
Its:
G-4
<PAGE>
Personally appeared before me _______________, known or proved to me
to be the same person who executed the foregoing instrument and to be a
________________ of the Purchaser, and acknowledged to me that (s)he executed
the same as his/her free act and deed and as the free act and deed of the
Purchaser.
SUBSCRIBED and SWORN to before me this day of ____________, 19__.
-----------------------
Notary Public
G-5
<PAGE>
Exhibit H
FORM OF ADDITIONAL MATTER INCORPORATED INTO
THE FORM OF THE CERTIFICATES (OTHER THAN THE CLASS R-1 AND CLASS R-2
CERTIFICATES)
This Certificate does not represent an obligation of or interest in PNC
Mortgage Securities Corp. or any of its affiliates, including PNC Bank Corp.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed by
any agency or instrumentality of the United States.
This certifies that the above-named Registered Owner is the registered
owner of certain interests in a trust fund (the "REMIC III Trust Fund") whose
assets consist of interests in a trust fund (the "REMIC II Trust Fund") whose
assets consist of interests in a trust fund (the "REMIC I Trust Fund") whose
assets consist of, among other things, a pool (the "Mortgage Pool") of
conventional one- to four-family mortgage loans (the "Mortgage Loans"), formed
and administered by PNC Mortgage Securities Corp. (the "Company"), which term
includes any successor entity under the Pooling Agreement referred to below.
The Mortgage Pool was created pursuant to a Pooling and Servicing Agreement,
dated as of the Cut-Off Date stated above (the "Pooling Agreement"), between
the Company and U.S. Bank National Association, as Trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Pooling Agreement. Nothing herein shall be
deemed inconsistent with such meanings, and in the event of any conflict
between the Pooling Agreement and the terms of this Certificate, the Pooling
Agreement shall control. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Pooling Agreement, to which
Pooling Agreement the Holder of this Certificate, by virtue of the acceptance
hereof, assents and by which such Holder is bound.
Distributions will be made, pursuant to the Pooling Agreement, on the
25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on
the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last day (or if such
last day is not a Business Day, the Business Day immediately preceding such
last day) of the month immediately preceding the month of such distribution
(the "Record Date"), to the extent of such Certificateholder's Percentage
Interest represented by this Certificate in the portion of the REMIC III
Available Distribution Amount for such Distribution Date then distributable on
the Certificates of this Class, as specified in Section 4.04 of the Pooling
Agreement.
Distributions on this Certificate will be made by the Trustee by wire
transfer or check mailed to the address of the Person entitled thereto, as
such name and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate to the Certificate
Registrar.
Reference is hereby made to the further provisions of this Certificate
set forth below, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling Agreement or be valid for any
purpose.
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<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By: _________________________
(TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
This is one of the Certificates referred to in the within-mentioned
Pooling Agreement.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: ______________________
Dated: __________________
H-2
<PAGE>
PNC MORTGAGE SECURITIES CORP.
MORTGAGE PASS-THROUGH CERTIFICATE
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the Series and Class
specified hereon (herein called the "Certificates") and representing certain
interests in the REMIC III Trust Fund.
The Certificates do not represent an obligation of, or an interest in,
the Company or any of its affiliates and are not insured or guaranteed by any
governmental agency. The Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Pooling Agreement. In the event funds
are advanced with respect to any Mortgage Loan, such advance is reimbursable
to the Master Servicer from the related recoveries on such Mortgage Loan or
from other cash deposited in the Certificate Account to the extent that such
advance is not otherwise recoverable.
As provided in the Pooling Agreement, withdrawals from the Certificate
Account may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement to the Master
Servicer of advances made, or certain expenses incurred, by it.
The Pooling Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Certificateholders under the Pooling
Agreement at any time by the Company, the Master Servicer and the Trustee with
the consent of the Holders of the Certificates evidencing Percentage Interests
aggregating not less than 66% of the REMIC III Trust Fund. For the purposes of
such provision and except as provided below, voting rights relating to 100% of
the Aggregate Certificate Principal Balance will be allocated pro rata (by
Certificate Principal Balance) among such Certificates. Any such consent by
the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent is made upon this Certificate. The Pooling
Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Pooling Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices of the Certificate Registrar or the office maintained
by the Trustee in the City and State of New York, duly endorsed by, or
accompanied by an assignment in the form below or other written instrument of
transfer in form satisfactory to the Trustee or any Authenticating Agent duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of Authorized
Denominations evidencing the same Percentage Interest set forth hereinabove
will be issued to the designated transferee or transferees.
No transfer of a Certificate will be made unless such transfer is exempt
from or is made in accordance with the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") and any applicable
state securities laws. In the event that a transfer is to be made without
registration or qualification under applicable laws, (i) in the event such
transfer is made pursuant to Rule 144A under the Securities Act, the Company
and the Trustee shall require the transferee to execute an investment letter
in substantially the form attached as Exhibit L to the Pooling Agreement,
which investment letter shall not be an expense of the Company, the Master
Servicer or the Trustee and (ii) in the event that such a transfer is not made
pursuant to Rule 144A under the Securities Act, the Company may require an
Opinion of Counsel satisfactory to the Company that such transfer may be made
without such registration or qualification, which Opinion of Counsel shall not
be an expense of the Company, the Master Servicer or the Trustee. Neither the
Company nor the Trustee will register the Certificate under the Securities
Act, qualify the Certificate under any state securities law or provide
registration rights to any purchaser. Any Holder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Company
and the Master Servicer against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state
laws.
H-3
<PAGE>
The Certificates are issuable only as registered Certificates without
coupons in Authorized Denominations specified in the Pooling Agreement. As
provided in the Pooling Agreement and subject to certain limitations therein
set forth, Certificates are exchangeable for new Certificates of Authorized
Denominations evidencing the same aggregate interest in the portion of the
REMIC III Available Distribution Amount distributable on this Class of
Certificate, as requested by the Holder surrendering the same.
A reasonable service charge may be made for any such registration of
transfer or exchange, and the Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and the Certificate Registrar and any agent of
the Company, the Trustee or the Certificate Registrar may treat the Person in
whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Company, the Trustee, the Certificate Registrar nor
any such agent shall be affected by notice to the contrary.
The obligations created by the Pooling Agreement and the trust funds
created thereby shall terminate upon (i) the later of the maturity or other
liquidation (including repurchase by the Company) of the last Mortgage Loan
remaining in the REMIC I Trust Fund or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan,
and (ii) the payment to Certificateholders of all amounts held by the Trustee
and required to be paid to them pursuant to the Pooling Agreement. In the
event that the Company repurchases any Mortgage Loan pursuant to the Pooling
Agreement, such Pooling Agreement generally requires that the Trustee
distribute to the Certificateholders in the aggregate an amount equal to 100%
of the unpaid Principal Balance of such Mortgage Loan, plus accrued interest
at the applicable Pass-Through Rate to the next scheduled Due Date for the
Mortgage Loan. The Pooling Agreement permits, but does not require, the
Company to repurchase from the REMIC I Trust Fund all Mortgage Loans at the
time subject thereto and all property acquired in respect of any Mortgage Loan
upon payment to the Certificateholders of the amounts specified in the Pooling
Agreement. The exercise of such right will effect early retirement of the
Certificates, the Company's right to repurchase being subject to the aggregate
unpaid Principal Balance of the Mortgage Loans at the time of repurchase being
less than five percent (5%) of the aggregate unpaid Principal Balance of the
Mortgage Loans as of the Cut-Off Date.
H-4
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- --------------------------------
- --------------------------------
- --------------------------------
(Please print or typewrite name and address, including postal zip code of
assignee. Please insert social security or other identifying number of
assignee.)
the within Mortgage Pass-Through Certificate and hereby irrevocably
constitutes and appoints
- --------------------------------
Attorney to transfer said Certificate on the Certificate Register, with full
power of substitution in the premises.
Dated: __________
Signature Guaranteed
---------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as
written upon the face of the within
instrument in every particular,
without alteration or enlargement or
any change whatever. This
Certificate does not represent an
obligation of or an interest in PNC
Mortgage Securities Corp. or
any of its affiliates, including
PNC Bank Corp. Neither this
Certificate nor the underlying
Mortgage Loans are guaranteed by
any agency or instrumentality
of the United States.
H-5
<PAGE>
Exhibit I
TRANSFEROR CERTIFICATE
[Date]
U.S. Bank National Association, as Trustee
180 East 5th Street, SPFT0210
St. Paul, MN 55101
Attn: Structured Finance
Re: PNC Mortgage Securities Corp. Mortgage Pass-Through
Certificates, Series 1998-5, Class [R-1] [R-2] [R-3]
Ladies and Gentlemen:
This letter is delivered to you in connection with the sale from
(the "Seller") to (the "Purchaser") of
$____________________ initial Certificate Principal Balance of Mortgage
Pass-Through Certificates, Series 1998-5, Class [R-1][R-2][R-3] (the
"Certificate"), pursuant to Section 5.01 of the Pooling and Servicing
Agreement (the "Pooling Agreement"), dated as of June 1, 1998 among PNC
Mortgage Securities Corp., as depositor and master servicer (the "Company")
and U.S. Bank National Association, as trustee (the "Trustee"). All terms used
herein and not otherwise defined shall have the meanings set forth in the
Pooling Agreement. The Seller hereby certifies, represents and warrants to,
and covenants with, the Company and the Trustee that:
1. No purpose of the Seller relating to the sale of the Certificate by
the Seller to the Purchaser is or will be to enable the Seller to impede the
assessment or collection of tax.
2. The Seller understands that the Purchaser has delivered to the
Trustee and the Company a transferee affidavit and agreement in the form
attached to the Pooling Agreement as Exhibit J. The Seller does not know or
believe that any representation contained therein is false.
3. The Seller has no actual knowledge that the proposed Transferee is
not a Permitted Transferee.
4. The Seller has no actual knowledge that the Purchaser would be
unwilling or unable to pay taxes due on its share of the taxable income
attributable to the Certificates.
5. The Seller has conducted a reasonable investigation of the financial
condition of the Purchaser and, as a result of the investigation, found that
the Purchaser has historically paid its debts as they came due, and found no
significant evidence to indicate that the Purchaser will not continue to pay
its debts as they come due in the future.
I-1
<PAGE>
6. The Purchaser has represented to the Seller that, if the
Certificates constitute a noneconomic residual interest, it (i) understands
that as holder of a noneconomic residual interest it may incur tax liabilities
in excess of any cash flows generated by the interest, and (ii) intends to pay
taxes associated with its holding of the Certificates as they become due.
Very truly yours,
[Seller]
By:
------------------------
Name:
Title: ---------------
I-2
<PAGE>
Exhibit J
TRANSFEREE AFFIDAVIT AND AGREEMENT\
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Owner] (record or
beneficial owner of the Class [R-1][R-2] [R-3] Certificate (the "Owner")), a
[savings institution] [corporation] duly organized and existing under the laws
of [the State of ] [the United States], on behalf of which he
makes this affidavit and agreement.
2. That the Owner (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section
860E(e)(5) of the Internal Revenue Code of 1986, as amended (the "Code") and
will endeavor to remain other than a disqualified organization for so long as
it retains its ownership interest in the Class [R-1][R-2][R-3] Certificates,
and (ii) is acquiring the Class [R-1][R-2][R-3] Certificates for its own
account or for the account of another Owner from which it has received an
affidavit and agreement in substantially the same form as this affidavit and
agreement. (For this purpose, a disqualified organization" means the United
States, any state or political subdivision thereof, or any agency or
instrumentality of any of the foregoing (other than an instrumentality all of
the activities of which are subject to tax and, except for the Federal Home
Loan Mortgage Corporation, a majority of whose board of directors is not
selected by any such governmental entity, or any foreign government or
international organization, or any agency or instrumentality of such foreign
government or organization, any rural electric or telephone cooperative, or
any organization (other than certain farmers' cooperatives) that is generally
exempt from federal income tax unless such organization is subject to the tax
on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be imposed on
transfers of the Class [R-1][R-2][R-3] Certificates after March 31, 1988; (ii)
that such tax would be on the transferor, or, if such transfer is through an
agent (which person includes a broker, nominee or middle-man) for a
disqualified organization, on the agent; (iii) that the person other-wise
liable for the tax shall be relieved of liability for the tax if the
transferee furnishes to such person an affidavit that the transferee is not a
disqualified organization and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that the Class
[R-1][R-2][R-3] Certificates may be a "noneconomic residual interest" within
the meaning of Treasury regulations promulgated pursuant to the Code and that
the transferor of a noneconomic residual interest will remain liable for any
taxes due with respect to the income on such residual interest, if a
significant purpose of the transfer was 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 Class [R-1][R-2][R-3] Certificates if at any time during
the taxable year of the pass-through entity a disqualified organization is the
record holder of an interest in such entity. (For this purpose, a "pass
through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives.)
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<PAGE>
5. That the Owner is aware that the Trustee will not register the
Transfer of the Class [R-1][R-2][R-3] Certificates unless the transferee, or
the transferees' agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Owner expressly agrees that it will not consummate any such transfer if it
knows or believes that any of the representations contained in such affidavit
and agreement are false.
6. That the Owner has reviewed the restrictions set forth on the
face of the Class [R-1][R-2][R-3] Certificates and the provisions of Section
5.01 of the Pooling Agreement under which the Class [R-1][R-2][R-3]
Certificates were issued (in particular, clauses (iii)(A) and (iii)(B) of
Section 5.01(c) which authorize the Trustee to deliver payments to a person
other than the Owner and negotiate a mandatory sale by the Trustee in the
event the Owner holds such Certificates in violation of Section 5.01). The
Owner expressly agrees to be bound by and to comply with such restrictions and
provisions.
7. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to
constitute a reasonable arrangement to ensure that the Class [R-1][R-2][R-3]
Certificates will only be owned, directly or indirectly, by an Owner that is
not a disqualified organization.
8. The Owner's Taxpayer Identification Number is __________.
9. That no purpose of the Owner relating to the purchase of the
Class [R-1][R-2][R-3] Certificates by the Owner is or will be to enable the
transferor to impede the assessment or collection of tax.
10. That the Owner has no present knowledge or expectation that it
will be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.
11. That the Owner has no present knowledge or expectation that it
will become insolvent or subject to a bankruptcy proceeding for so long as any
of the Certificates remain outstanding.
12. That no purpose of the Owner relating to any sale of the Class
[R-1][R-2][R-3] Certificates by the Owner will be to impede the assessment or
collection of tax.
13. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate
or trust whose income from sources without the United States is includible in
gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
14. The Owner hereby agrees to cooperate with the Company and to
take any action required of it by the Code or Treasury regulations thereunder
(whether now or hereafter promulgated) in order to create or maintain the
REMIC status of the REMIC I Trust Fund, the REMIC II Trust Fund and the REMIC
III Trust Fund (the "Trust Funds").
15. The Owner hereby agrees that it will not take any action that
could endanger the REMIC status of the Trust Funds or result in the imposition
of tax on the Trust Funds unless counsel for, or acceptable to, the Company
has provided an opinion that such action will not result in the loss of such
REMIC status or the imposition of such tax, as applicable.
16. The Owner as transferee of the Class [R-1][R-2][R-3]
Certificates has represented to their transferor that, if the Class
[R-1][R-2][R-3] Certificates constitute a noneconomic residual interest, the
Owner (i) understands that as holder of a noneconomic residual interest it may
incur tax liabilities in excess of any cash flows generated by the interest,
and (ii) intends to pay taxes associated with its holding of the Class
[R-1][R-2][R-3] Certificates as they become due.
J-2
<PAGE>
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors,
by its [Title of Officer] and its corporate seal to be hereunto attached,
attested by its [Assistant] Secretary, this _____ day of ____, 19__.
[Name of Owner]
By:
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known or
proved to me to be the same person who executed the foregoing instrument and
to be the [Title of Officer] of the 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 __________________, 19__.
NOTARY PUBLIC
COUNTY OF
STATE OF
My Commission expires the day
of ________, 19 __
J-3
<PAGE>
Exhibit K
Form of Certificate Insurance Policies
CERTIFICATE GUARANTY INSURANCE POLICY
-------------------------------------
OBLIGATIONS: PNC Mortgage Securities Corp. POLICY NUMBER: 26869
Mortgage Pass-Through Certificates, Series 1998-5
$16,600,000 Class II-A-3 Certificates
MBIA Insurance Corporation (the "Insurer"), in consideration of the payment
of the premium and subject to the terms of this Certificate Guaranty Insurance
Policy (this "Policy"), hereby unconditionally and irrevocably guarantees to any
Owner that an amount equal to each full and complete Insured Payment will be
received from the Insurer by U.s. Bank National Association, or its successor,
as trustee for the Owners (the "Trustee"), on behalf of the Owners, for
distribution by the Trustee to each Owner of each Owner's share of the Insured
Payment. The Insurer's obligations hereunder with respect to a particular
Insured Payment shall be discharged to the extent funds equal to the applicable
Insured Payment are received by the Trustee, whether or not such funds are
properly applied by the Trustee. Insured Payments shall be made only at the
time set forth in this Policy and no accelerated Insured Payments shall be made
regardless of any acceleration of the Obligations, unless such acceleration is
at the sole option of the Insurer. This Policy does not provide credit
enhancement for any Class of Certificates other than the Obligations.
Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Trust, the REMIC or the
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference Amount on the
Business Day following receipt on a Business Day by the Fiscal Agent (as
described below) of (i) a certified copy of the order requiring the return of a
preference payment, (ii) an opinion of counsel satisfactory to the Insurer that
such order is final and not subject to appeal, (iii) an assignment in such form
as is reasonably required by the Insurer, irrevocably assigning to the Insurer
all rights and claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or otherwise with respect
to such preference payment and (iv) appropriate instruments to effect the
appointment of the Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Insurer, provided that if such documents are received after
12:00 noon New York City time on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be disbursed to
the receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
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<PAGE>
such receiver or trustee in bankruptcy, in which case such payment shall be
disbursed to such Owner.
The Insurer will pay any other amount payable hereunder no later than 12:00
noon New York City time on the later of the Distribution Date on which the
related distribution is due or the second Business Day following receipt in new
York, New York on a Business Day by State Street Bank and Trust Company, N.A.,
as Fiscal Agent for the Insurer or any successor fiscal agent appointed by the
Insurer (the "Fiscal Agent") of a Notice (as described below); provided that if
such Notice is received after 12:00 noon New York City time on such Business
Day, it will be deemed to be received on the following Business Day. If any
such Notice received by the Fiscal Agent is not in proper form or is otherwise
insufficient for the purpose of making claim hereunder it shall be deemed not to
have been received by the Fiscal Agent for purposes of this paragraph, and the
Insurer or the Fiscal Agent, as the case may be, shall promptly so advise the
Trustee and the Trustee may submit an amended Notice.
Insured Payments due hereunder unless otherwise stated herein will be
disbursed by the Fiscal Agent to the Trustee on behalf of the Owners by wire
transfer of immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference Amounts, any amount
held by the Trustee for the payment of such Insured Payment and legally
available therefor.
The Fiscal Agent is the agent of the Insurer only and the Fiscal Agent
shall in no event be liable to Owners for any acts of the Fiscal Agent or any
failure of the Insurer to deposit or cause to be deposited, sufficient funds
to make payments due under this Policy.
As used herein, the following terms shall have the following meanings:
"AGREEMENT" means the Pooling and Servicing Agreement dated as of June 1,
1998 between PNC Mortgage Securities Corp., as depositor and master servicer,
and the Trustee, as trustee, without regard to any amendment or supplement
thereto unless approved in writing by the Certificate Insurer.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on
which the Insurer or banking institutions in New York City or in the city in
which the corporate trust office of the Trustee under the Agreement or the
Insurer is located are authorized or obligated by law or executive order to
close.
"DEFICIENCY AMOUNT" means, with respect to any Distribution Date, the sum
of (i) the amount, if any, by which the amount available to be paid as interest
to the Class II-A-3 Certificates, pursuant to the priority of payment set forth
in the Agreement, is less than (A) the product of (1) 1/12 of the Remittance
Rate applicable to the Class II-A-3 Certificates and (2) the Class II-A-3
Principal Balance immediately prior to such Distribution Date, minus (B) the
sum of the amounts allocable to the Class II-A-3 Certificates of (1) any
prepayment interest shortfalls relating to Curtailments, (2) any prepayment
interest shortfalls relating to the Master Servicer's failure to pay
Compensating Interest, and (3) any interest shortfalls related to the
Soldier's and Sailor's Civil Relief Act of 1940, as amended (the "Relief
Act") (ii) the principal portion of any
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<PAGE>
Realized Losses allocated to the Class II-A-3 Certificates on such Distribution
Date and (iii) to the extent unpaid on the Last Scheduled Distribution Date,
after payment of all other amounts due to the Class II-A-3 Certificates, any
remaining Class II-A-3 Principal Balance.
"INSURED PAYMENT" means (i) as of any Distribution Date any Deficiency
Amount and (ii) any Preference Amount.
"NOTICE" means the telephonic or telegraphic notice, promptly confirmed in
writing by telecopy substantially in the form of Exhibit A attached hereto, the
original of which is subsequently delivered by registered or certified mail,
from the Trustee specifying the Insured Payment which shall be due and owing
on the applicable Distribution Date.
"OWNER" means each Holder (as defined in the Agreement) of an Obligation
who, on the applicable Distribution Date, is entitled under the terms of the
Obligations to payment thereunder.
"PREFERENCE AMOUNT" means any amount previously distributed to an owner on
the Obligations that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time in accordance with a final
nonappealable order of a court having competent jurisdiction.
"RELIEF ACT" means the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Agreement as of the date of execution
of this Policy, without giving effect to any subsequent amendment to or
modification of the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice hereunder or service of process on the Fiscal Agent may be made
at the address listed below for the Fiscal Agent or such other address as the
Insurer shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor, 61 Broadway, New
York, New York 10006 Attention: municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Trustee in writing.
This Policy is being issued under and pursuant to, and shall be construed
under, the laws of the State of New York, without giving effect to the conflict
of laws principles thereof.
The insurance provided by this Policy is not covered by the Property/
Casualty Insurance Security Fund specified in Article 76 of the New York
Insurance Law.
This Policy is not cancelable for any reason. The premium on this Policy
is not refundable for any reason including payment, or provision being made for
payment, prior to maturity of the Obligations.
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<PAGE>
IN WITNESS WHEREOF, the Insurer has caused this Policy to be executed and
attested this 26th day of June 1998.
MBIA INSURANCE CORPORATION
----------------------------
President
----------------------------
Assistant Secretary
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<PAGE>
EXHIBIT A
TO CERTIFICATE GUARANTY INSURANCE POLICY
NUMBER 26869
NOTICE UNDER CERTIFICATE GUARANTY
INSURANCE POLICY NUMBER: 26869
State Street Bank and Trust Company, N.A., as Fiscal Agent
for MBIA Insurance Corporation
15th Floor
61 Broadway
New York, NY 10006
Attention: Municipal Registrar and
Paying Agency
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
The undersigned, a duly authorized officer of [NAME OF TRUSTEE], as trustee
(the "Trustee"), hereby certifies to State Street Bank and Trust company, N.A.
(the "Fiscal Agent") and MBIA Insurance Corporation (the "Insurer"), with
reference to Certificate Guaranty Insurance Policy Number: 26869 (the "Policy")
issued by the Insurer in respect of the $16,600,000 PNC Mortgage Securities
Corp., Mortgage Pass-Through Certificates, Series 1998-5, Class II-A-3
Certificates (the "Obligations"), that:
(i) the Trustee is the trustee under the Pooling and Servicing
Agreement dated as of June 1, 1998, between PNC Mortgage Securities
Corp., as depositor and master servicer, and the Trustee, as trustee for
the Owners;
(ii) the amount due under clause (i) of the definition of Deficiency
Amount for the Distribution Date occurring on [ ] (the "Applicable
Distribution Date") is $[ ];
(iii) the amount due under clause (ii) of the definition of Deficiency
Amount for the Applicable Distribution Date is $[ ];
(iv) the amount due under clause (iii) of the definition of Deficiency
Amount for the Applicable Distribution Date is $[ ];
(v) the sum of the amounts listed in paragraphs (ii), (iii) and (iv)
above is $[ ] (the "Deficiency Amount");
K-5
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(vi) the amount of previously distributed payments on the Obligations
that is recoverable and sought to be recovered as a voidable preference
by a trustee in bankruptcy pursuant to the Bankruptcy Code in accordance
with a final nonappealable order of a court having competent jurisdiction
is $[ ] (the "Preference Amount");
(vii) the total Insured Payment due is $[ ], which amount equals
the sum of the Deficiency Amount and the Preference Amount,
(viii) the Trustee is making a claim under and pursuant to the terms of
the Policy for the dollar amount of the Insured Payment set forth in (v)
above to be applied to the payment of the Deficiency Amount for the
Applicable Distribution Date in accordance with the Agreement and for the
dollar amount of the Insured Payment set forth in (vi) above to be
applied to the payment of any Preference Amount; and
(ix) the Trustee directs that payment of the Insured Payment be made
to the following account by bank wire transfer of federal or other
immediately available funds in accordance with the terms of the Policy:
[TRUSTEE'S ACCOUNT NUMBER].
Any capitalized term used in this Notice and not otherwise defined herein
shall have the meaning assigned thereto in the Policy.
ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE COMPANY
OR OTHER PERSON FILES AN APPLICATION FOR INSURANCE OR STATEMENT OF CLAIM
CONTAINING ANY MATERIALLY FALSE INFORMATION, OR CONCEALS FOR THE PURPOSE OF
MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL THERETO, COMMITS A
FRAUDULENT INSURANCE ACT, WHICH IS A CRIME, AND SHALL ALSO BE SUBJECT TO A CIVIL
PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS AND THE STATED VALUE OF THE CLAIM
FOR EACH SUCH VIOLATION.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
under the Policy as of the [ ] day of [ ], [ ].
[NAME OF TRUSTEE], as Trustee
By
--------------------------
Title
--------------------------
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<PAGE>
Exhibit L
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
----------------------
----------------------
----------------------
----------------------
The undersigned seller, as registered holder (the "Seller"), intends to
transfer the Rule 144A Securities described above to the undersigned buyer
(the "Buyer").
1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the Seller
hereby certifies the following facts: Neither the Seller nor anyone acting on
its behalf has offered, transferred, pledged, sold or otherwise disposed of
the Rule 144A Securities, any interest in the Rule 144A Securities or any
other similar security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of the Rule 144A Securities, any interest in the
Rule 144A Securities or any other similar security from, or otherwise
approached or negotiated with respect to the Rule 144A Securities, any
interest in the Rule 144A Securities 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 Securities under the Securities Act
of 1933, as amended (the "1933 Act"), or that would render the disposition of
the Rule 144A Securities a violation of Section 5 of the 1933 Act or require
registration pursuant thereto, and that the Seller has not offered the Rule
144A Securities to any person other than the Buyer or another "qualified
institutional buyer" as defined in Rule 144A under the 1933 Act.
2. The Buyer warrants and represents to, and covenants with, the
Seller, the Trustee and the Master Servicer (as defined in the Pooling and
Servicing Agreement (the "Agreement") dated as of June 1, 1998 between PNC
Mortgage Securities Corp., as Depositor and Master Servicer and U.S. Bank
National Association, as Trustee) pursuant to Section 5.01(f) of the
Agreement, as follows:
a. The Buyer understands that the Rule 144A Securities have not
been registered under the 1933 Act or the securities laws of any state.
b. The Buyer 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 Securities.
c. The Buyer has received and reviewed the Private Placement
Memorandum dated as of June __, 1998 relating to the Rule 144A Securities
and has been furnished with all information regarding the Rule 144A
Securities that it has requested from the Seller, the Trustee, the
Company or the Master Servicer.
d. Neither the Buyer nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Rule 144A
Securities, any interest in the Rule 144A Securities or any other similar
security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Rule 144A Securities, any interest in the
Rule 144A Securities or any other similar security
L-1
<PAGE>
from, or otherwise approached or negotiated with respect to the Rule 144A
Securities, any interest in the Rule 144A Securities 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
Securities under the 1933 Act or that would render the disposition of
the Rule 144A Securities a violation of Section 5 of the 1933 Act or
require registration pursuant thereto, nor will it act, nor has it
authorized or will it authorize any person to act, in such manner with
respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as that term is
defined in Rule 144A under the 1933 Act and has (1) completed either of
the forms of certification to that effect attached hereto as Annex 1 or
Annex 2, or (2) obtained the waiver of the Company with respect to Annex
1 and Annex 2 pursuant to Section 5.01(f) of the Agreement. The Buyer is
aware that the sale to it is being made in reliance on Rule 144A. The
Buyer is acquiring the Rule 144A Securities for its own account or the
accounts of other qualified institutional buyers, understands that such
Rule 144A Securities 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.
f. The Buyer is not affiliated with (i) the Trustee or (ii) any
Rating Agency that rated the Rule 144A Securities.
g. If applicable, the Buyer has complied, and will continue to
comply, with the guidelines established by Thrift Bulletin 12 issued
December 13, 1988, by the Office of Regulatory Activities of the Federal
Home Loan Bank System.
[Required only in the case of a transfer of a Subordinate Certificate]
[3. The Buyer warrants and represents to, and covenants with, the Trustee, the
Master Servicer and the Company that (1) the Buyer is not an employee benefit
plan (within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), subject to the prohibited
transaction provisions of ERISA ("Plan"), or a plan (within the meaning of
Section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code")) subject to
Section 4975 of the Code (also a "Plan"), and the Buyer is not directly or
indirectly purchasing the Rule 144A Securities on behalf of, as investment
manager of, as named fiduciary of, as trustee of, or with "plan assets" of any
Plan, (2) the Buyer's purchase of the Rule 144A Securities is permissible
under applicable law, will not constitute or result in a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code and will
not subject the Trustee, the Master Servicer or the Company to any obligation
or liability (including obligations or liabilities under Section 406 of ERISA
or Section 4975 of the Code) in addition to those undertaken in this Agreement
and the Buyer has provided an Opinion of Counsel to such effect in accordance
with Section 5.01(d) of the Agreement or (3) the Buyer is an insurance
company, the source of funds to be used by it to purchase the Rule 144A
Securities is an "insurance company general account" (within the meaning of
Department of Labor Prohibited Transaction Class Exemption ("PTCE") 95-60),
and the purchase is being made in reliance upon the availability of the
exemptive relief afforded under Sections I and III of PTCE 95-60.]
4. This document may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together,
shall constitute one and the same document.
IN WITNESS WHEREOF, each of the parties has executed this document as of the
date set forth below.
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<PAGE>
------------------------ ----------------------------
Print Name of Seller Print Name of Buyer
By: By:
Name: Name:
Title: Title:
Taxpayer Identification: _____ Taxpayer Identification: _____
No.: No.:
----------------- ----------------
Date: Date:
---------------- ----------------
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<PAGE>
Annex 1 to Exhibit L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Buyers 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
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested on a
discretionary basis $______________________1 in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer 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 Buyer (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 Buyer (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.
___ Broker-Dealer. The Buyer is a dealer registered pursuant to Section 15
-------------
of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer 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 or
territory or the District of Columbia.
___ State or Local Plan. The Buyer 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.
- ------------------------
1 Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
L-1-1
<PAGE>
___ ERISA Plan. The Buyer is an employee benefit plan within the meaning of
----------
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and is subject to the fiduciary responsibility provisions of
ERISA.
___ Investment Adviser. The Buyer is an investment adviser registered under
------------------
the Investment Advisers Act of 1940.
___ SBIC. The Buyer 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 Buyer is a business development
----------------------------
company as defined in Section 202(a)(22) of the Investment Advisers Act of
1940.
___ Trust Fund. The Buyer 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 Buyer, (ii) securities that are part
of an unsold allotment to or subscription by the Buyer, if the Buyer 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 Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is
a majority-owned, consolidated subsidiary of another enterprise and the Buyer
is not itself a reporting company under the Securities Exchange Act of 1934.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Buyer may be in reliance on Rule 144A.
L-1-2
<PAGE>
------ ------ Will the Buyer be purchasing the Rule 144A
Yes No Securities only for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer agrees
that, in connection with any purchase of securities sold to the Buyer for the
account of a third party (including any separate account) in reliance on Rule
144A, the Buyer 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 Buyer agrees that the Buyer will not purchase securities for
a third party unless the Buyer 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.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of Rule 144A
Securities will constitute a reaffirmation of this certification as of the
date of such purchase.
------------------------
Print Name of Buyer
By:
--------------------
Name:
Title:
Date:
------------------
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<PAGE>
ANNEX 2 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers 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 Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, and
(ii) as marked below, the Buyer alone, or the Buyer'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 Buyer's most recent fiscal
year. For purposes of determining the amount of securities owned by the Buyer
or the Buyer's Family of Investment Companies, the cost of such securities was
used.
----- The Buyer owned $___________________ in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule
144A).
____ The Buyer is part of a Family of Investment Companies which owned in
the aggregate $______________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer'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 Buyer or are part of the Buyer'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.
5. The Buyer 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 Buyer
will be in reliance on Rule 144A. In addition, the Buyer will only purchase
for the Buyer's own account.
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<PAGE>
6. The undersigned will notify each of the parties to which this
certification is made of any changes in the information and conclusions
herein. Until such notice, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
--------------------
Print Name of Buyer
By:
----------------------
Name:
Title:
Date:
IF AN ADVISER:
----------------------
Print Name of Buyer
By:-----------------------
Name:
Title:
Date:
---------------------
(SEAL)
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<PAGE>
Exhibit M
[Date]
[Company]
Re: Pooling and Servicing Agreement dated as of June 1, 1998 by and
between PNC Mortgage Securities Corp., as Depositor and Master
Servicer, and U.S. Bank National Association, as Trustee,
relating to PNC Mortgage Securities Corp. Mortgage Pass-Through
Certificates, Series 1998-5
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that,
except as noted on the attachment hereto, as to each Mortgage Loan listed in
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
listed on the attachment hereto) it or the Custodian on its behalf has
reviewed the documents delivered to it or to the Custodian on its behalf
pursuant to Section 2.01 of the Pooling and Servicing Agreement and has
determined that (i) all documents required (in the case of instruments
described in clauses (X)(vi) and (Y)(x) of the definition of "Mortgage File,"
known by the Trustee to be required) pursuant to the third paragraph of
Section 2.01 of the Pooling and Servicing Agreement have been executed and
received as of the date hereof are in its possession or in the possession of
the Custodian on its behalf and (ii) all such documents have been executed
and relate to the Mortgage Loans identified in the Mortgage Loan Schedule. The
Trustee has made no independent examination of such documents beyond the
review specifically required in the above referenced Pooling and Servicing
Agreement and has relied upon the purported genuineness and due execution of
any such documents and upon the purported genuineness of any signature
thereon. The Trustee makes no representations as to: (i) the validity,
legality, enforceability or genuineness of any of the documents contained in
each Mortgage File or any of the Mortgage Loans identified on the Mortgage
Loan Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
--------------------
as Trustee
By:
-----------------
Name:
Title:
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<PAGE>
EXHIBIT N
BENEFIT PLAN AFFIDAVIT
----------------------
U.S. Bank National Association, as Trustee
180 East 5th Street, SPFT0210
St. Paul, MN 55101
Attn: Structured Finance
PNC Mortgage Securities Corp.
75 North Fairway Drive
Vernon Hills, IL 60061
RE: PNC MORTGAGE SECURITIES CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-5
(THE "TRUST") CLASS [II-A-18] [_-B-_] CERTIFICATES
(THE "PURCHASED CERTIFICATES")
Under penalties of perjury, I, _____________________, declare that, to
the best of my knowledge and belief, the following representations are true,
correct and complete; and
1. That I am the _______________ of __________________ (the
"Purchaser"), whose taxpayer identification number is ___________, and on
behalf of which I have the authority to make this affidavit.
2. That the Purchaser is acquiring a Purchased Certificate representing
an interest in the Trust Funds.
3. That the Purchaser is either:
(a) not an employee benefit plan or other plan subject to the prohibited
transaction provisions of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code") (a "Plan") or any other person (including an investment
manager, a named fiduciary or a trustee of any Plan) acting directly or
indirectly on behalf of, or purchasing any of the Purchased Certificates with
"plan assets" of, any Plan within the meaning of the Department of Labor
("DOL") regulation at 29 C.F.R. Section 2510.3-101; or
(b) an insurance company, the source of funds to be used by it to
purchase the Purchased Certificates is an "insurance company general account"
(within the meaning of DOL Prohibited Transaction Class Exemption ("PTCE")
95-60), and the purchase is being made in reliance upon the availability of
the exemptive relief afforded under Sections I and III of PTCE 95-60.
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IN WITNESS WHEREOF, the Purchaser has caused this instrument to be duly
executed on its behalf, by its duly authorized officer this _____ day of
__________________, 199__.
[Purchaser]
By:
----------------------
Its:
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Personally appeared before me ______________________, known or proved to me to
be the same person who executed the foregoing instrument and to be a
________________ of the Purchaser, and acknowledged to me that (s)he executed
the same as his/her free act and deed and as the free act and deed of the
Purchaser.
SUBSCRIBED and SWORN to before me this day of ____________, 19__.
--------------------
Notary Public
O-1
