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
May 18, 2000
(date of earliest event reported)
PNC MORTGAGE SECURITIES CORP.
as Depositor and Master Servicer under a
Pooling and Servicing Agreement
dated as of April 1, 2000
providing for the issuance of
$325,568,430.21
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-3
Delaware 333-65911 94-2528990
(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
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 State Street Bank and Trust Company, Trustee, dated as
of April 1, 2000.
Item 8. Change in Fiscal Year. Not applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
Not applicable.
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: May 18, 2000.
PNC MORTGAGE SECURITIES CORP.
(Registrant)
By: /s/ Richard Careaga
----------------------------------
Second Vice President and
Assistant General Counsel
(Authorized Officer)
EXHIBIT 7.1
<PAGE> 1
CONFORMED COPY
PNC MORTGAGE SECURITIES CORP.,
as Depositor and Master Servicer
and
STATE STREET BANK AND TRUST COMPANY,
as Trustee
POOLING AND SERVICING AGREEMENT
$325,568,430.21
PNC Mortgage Securities Corp.
Mortgage Pass-Through Certificates
Series 2000-3
Cut-Off Date: April 1, 2000
This Pooling and Servicing Agreement, dated and effective as
of April 1, 2000 (this "Agreement"), is executed by and between
PNC Mortgage Securities Corp., as Depositor and Master Servicer
(the "Company"), and State Street Bank and Trust Company, a
Massachusetts trust company with a corporate trust office at 225
Franklin Street, Boston, MA 02110, 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 PNC
Mortgage Loans and the other property being conveyed by it to the
Trustee for inclusion in the Trust Fund. On the Closing Date, the
Company will acquire the REMIC I Regular Interests and the Class
R-1 Certificates from the REMIC I Trust Fund as consideration for
its transfer to the Trust Fund of the PNC Mortgage Loans and
certain other assets and the deposit into the Certificate Account
of the Clipper Mortgage Loan Purchase Amount 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 Certificates (other than the Class R-1 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
<PAGE> 2
Certificates. The Company has duly authorized the execution and
delivery of this Agreement to provide for (i) the conveyance to
the Trustee of the PNC 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
Clipper Mortgage Loans pursuant to the Clipper Loan Sale
Agreement and (iii) the conveyance to the Trustee of the REMIC I
Regular Interests and the issuance to the Company of the
Certificates (other than the Class R-1 Certificates) representing
in the aggregate the entire beneficial interest of REMIC II. 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 Certificates (other than the Class R-1 Certificates).
The Company is entering into this Agreement, and the Trustee is
accepting the two 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 March 29, 2000, and a Prospectus Supplement,
dated May 2, 2000, of the Company (together, the "Prospectus").
The Junior Subordinate Certificates have been offered for sale
pursuant to a Private Placement Memorandum, dated May 3, 2000.
The Trust Fund and the REMIC II 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, Certificate Interest Rate, initial Class Principal
Balance and Final Maturity Date for the REMIC I Regular Interests
and the Certificates:
<TABLE>
<CAPTION>
REMIC I Interests
Class Designation
for each REMIC I
Regular Interest
and the Class R-1 Type of Remittance Initial Class Final Maturity
Certificates Interest Rate (1) Principal Balance Date*
- ----------------- -------- ------------- ----------------- --------------
<S> <C> <C> <C> <C>
<PAGE> 3
Class D-Y-1 Regular Variable (2) $ 2,817.96 May 2015
Class D-Y-2 Regular 8.000% 108,412.40 May 2030
Class D-Y-E Regular Variable (3) 40,475.79 May 2030
Class D-Z-1 Regular Variable (2) 25,623,111.80 May 2015
Class D-Z-2 Regular 8.000% 216,716,383.35 May 2030
Class D-Z-3 Regular Variable (3) 81,433,686.84 May 2030
Class II-X-M Regular 8.000% (4) -------------- May 2030
Class II-P-M Regular (5) 1,497,379.00 May 2030
Class R-1+ Residual 8.000% 50.00 May 2030
* The Distribution Date in the month following the month the
latest maturing Mortgage Loan in the related Loan Group matures.
+ The Class R-1 Certificates are entitled to receive the
applicable Residual Distribution Amount and any Excess
Liquidation Proceeds.
(1) Interest distributed to the REMIC I Regular Interests
(other than the Class II-P-M Regular Interest, 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 Certificate Interest 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) The Certificate Interest Rate on the Class D-Y-1 and Class D-
Z-1 Regular Interests shall equal, on any Distribution Date, the
weighted average (by principal balance) of the Pass-Through
Rates on the Group I Loans as of the second preceding Due Date
or, with respect to the initial Distribution Date, as of the Cut-
Off Date.
(3) The Certificate Interest Rate on the Class D-Y-3 and Class D-
Z-3 Regular Interests shall equal, on any Distribution Date, the
weighted average (by principal balance) of the Pass-Through
Rates on the Group III Loans as of the second preceding Due Date
or, with respect to the initial Distribution Date, as of the Cut-
Off Date.
(4) The Class II-X-M Regular Interest shall accrue interest on
the Class II-X Notional Amount. The Class II-X-M Regular
Interest shall not be entitled to receive any distributions of
principal.
(5) The Class II-P-M Regular Interest shall not be entitled to
receive any distributions of interest.
</TABLE>
<PAGE> 4
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.
<TABLE>
<CAPTION>
REMIC II Interests
Class Designation
for each REMIC II
Regular Interest
and the Class R-2 Type of Remittance Initial Class Final Maturity
Certificates Interest Rate (1) Principal Balance Date*
- ----------------- -------- ------------- ----------------- --------------
<S> <C> <C> <C> <C>
Class I-A-1 Regular 7.750% (2) $ 23,839,139.00 May 2030
Class II-A-1 Regular 8.000% 146,100,000.00 May 2030
Class II-A-2 Regular 8.000% 31,206,000.00 May 2030
Class II-A-3 Regular 8.000% (3) 3,400,000.00 May 2030
Class II-A-4 Regular 8.000% 19,744,578.00 May 2030
Class III-A-1 Regular 8.500% (4) 75,363,600.00 May 2030
Class II-X Regular 8.000% (5) ------------ May 2030
Class II-P Regular (6) 1,497,379.00 May 2030
Class D-B-1 Regular Variable (7) 9,767,053.00 May 2030
Class D-B-2 Regular Variable (7) 5,860,232.00 May 2030
Class D-B-3 Regular Variable (7) 3,581,252.00 May 2030
Class D-B-4 Regular Variable (7) 2,116,196.00 May 2030
Class D-B-5 Regular Variable (7) 1,302,273.00 May 2030
Class D-B-6 Regular Variable (7) 1,790,628.21 May 2030
Class R-2+ Residual 8.000% 50.00 May 2030
<PAGE> 5
* The Distribution Date in the month following the month the
latest maturing Mortgage Loan matures.
+ The Class R-2 Certificates are entitled to receive the
applicable Residual Distribution Amount.
(1) Interest distributed to the Certificates (other than the
Class II-P Certificates, which will not be entitled to receive
any distributions of interest) on each Distribution Date will
have accrued at the applicable per annum Certificate Interest
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) The Class I-A-1 Certificates shall accrue interest on the
Class I-A-1 Notional Amount and shall not accrue interest on the
Class I-A-1 Principal Balance.
(3) On each Distribution Date on or before the Class II-A-3
Accretion Termination Date, an amount equal to the Class II-A-3
Accrual Amount shall be added to the Class II-A-3 Principal
Balance, and such amount shall be distributed as principal to
certain Classes of Group II-A Certificates and shall not be
distributed as interest to the Class II-A-3 Certificates.
(4) The Class III-A-1 Certificates shall accrue interest on the
Class III-A-1 Notional Amount and shall not accrue interest on
the Class III-A-1 Principal Balance.
(5) The Class II-X Certificates shall accrue interest on the
Class II-X Notional Amount. The Class II-X Certificates shall
not be entitled to receive any distributions of principal.
(6) The Class II-P Certificates shall not be entitled to receive
any distributions of interest.
(7) The Certificate Interest Rate on the Group D-B Certificates
shall equal, on any Distribution Date, the weighted average of
the Certificate Interest Rates on the Class D-Y-1, Class D-Y-2
and Class D-Y-3 Regular Interests.
</TABLE>
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
Certificates (other than the Class R-1 and Class R-2
Certificates) 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. As of the Cut-Off Date, the Mortgage Loans have an
aggregate Principal Balance of $325,568,430.97 and the
Certificates have an Aggregate Certificate Principal Balance of
$325,568,430.21.
W I T N E S S E T H :
<PAGE> 6
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 PNC 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 (the "Trust Fund") to hold the PNC Mortgage Loans, the
Clipper 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 Certificates issued
hereunder as hereinafter provided; and
WHEREAS, the Trustee is a Massachusetts trust company duly
organized and existing under the laws of The Commonwealth of
Massachusetts 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:
ARTICLE I
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
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 (a) the mortgage originator in connection with its
origination of each Mortgage Loan (b) with respect to a Mortgage
Loan originated to refinance mortgage debt, the originator of
<PAGE> 7
such mortgage debt or (c) the Servicer, at any time, in
accordance with the Selling and Servicing Contract.
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-X and Residual Certificates), an initial
Certificate Principal Balance equal to $25,000 and multiples of
$1 in excess thereof, except that one Certificate of each Class
of the Junior Subordinate Certificates may be issued in an amount
that is not an integral multiple of $1. With respect to the Class
II-X 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 Class II-X Certificate may be offered 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%.
Balloon Loan: Any Mortgage Loan which, by its terms, does
not fully amortize the principal balance thereof by its stated
maturity and thus requires a payment at the stated maturity
larger than the monthly payments due thereunder.
Bankruptcy Coverage: $134,389 less (a) any scheduled or
permissible reduction in the amount of Bankruptcy Coverage
pursuant to this definition and (b) Bankruptcy Losses allocated
to the Certificates.
The 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.
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
<PAGE> 8
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.
Book-Entry Certificates: The Class A, Class II-X and Class
II-P 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 banking institutions in Chicago, Illinois, Boston,
Massachusetts 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 Certificates issued pursuant to
this Agreement, executed by the Trustee and authenticated by or
<PAGE> 9
on behalf of the Trustee hereunder in substantially one of the
forms set forth in Exhibit A and B hereto. The additional matter
appearing in Exhibit H shall be deemed incorporated into Exhibit
A as though set forth at the end of such Exhibit.
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
Account attributable to each of such Loan Groups shall be
accounted for separately. Funds in the Certificate Account may
be invested in Eligible Investments pursuant to Section 3.04(b)
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 2.01, Section 3.04,
Section 3.05, Section 4.01 and Section 4.04.
Certificate Group: The Group I, Group II or Group III
Certificates, as applicable.
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. 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.
Certificate Interest Rate: For each Class of Certificates
and REMIC I Regular Interests, the per annum rate set forth as
the Certificate Interest Rate for such Class in the Preliminary
Statement hereto.
Certificate Principal Balance: For each Certificate of any
Class, the portion of the related Class Principal Balance, if
<PAGE> 10
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
and 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, as applicable, which REMIC I Regular Interests, REMIC II
Regular Interests and Residual Certificates, 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 and B. 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" and each Class of Certificates (other than the Class R-1
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."
Class A Certificates: The Class I-A-1, Group II-A and Class
III-A-1 Certificates.
Class B Certificates: The Group D-B Certificates.
Class D-B-1 Certificates: The Certificates designated as
"Class D-B-1" on the face thereof in substantially the form
attached hereto as Exhibit A.
Class D-B-2 Certificates: The Certificates designated as
"Class D-B-2" on the face thereof in substantially the form
attached hereto as Exhibit A.
Class D-B-3 Certificates: The Certificates designated as
"Class D-B-3" on the face thereof in substantially the form
attached hereto as Exhibit A.
Class D-B-4 Certificates: The Certificates designated as
"Class D-B-4" on the face thereof in substantially the form
attached hereto as Exhibit A.
<PAGE> 11
Class D-B-5 Certificates: The Certificates designated as
"Class D-B-5" on the face thereof in substantially the form
attached hereto as Exhibit A.
Class D-B-6 Certificates: The Certificates designated as
"Class D-B-6" on the face thereof in substantially the form
attached hereto as Exhibit A.
Class D-Y Principal Reduction Amounts: For any Distribution
Date, the amounts by which the Class Principal Balances of the
Class D-Y-1, Class D-Y-2 and Class D-Y-3 Regular Interests,
respectively, will be reduced on such Distribution Date by the
allocation of Realized Losses and the distribution of principal,
determined as in Appendix 1.
Class D-Y Regular Interests: The Class D-Y-1, Class D-Y-2
and Class D-Y-3 Regular Interests.
Class D-Y-1 Regular Interest: The uncertificated partial
undivided beneficial ownership interest in REMIC I which
constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
Class D-Y-1 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the Class D-Y-1
Principal Reduction Amount for such Distribution Date over the
principal portion of Realized Losses allocated to the Class D-Y-1
Regular Interest on such Distribution Date.
Class D-Y-2 Regular Interest: The uncertificated partial
undivided beneficial ownership interest in REMIC I which
constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
Class D-Y-2 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the Class D-Y-2
Principal Reduction Amount for such Distribution Date over the
principal portion of Realized Losses allocated to the Class D-Y-2
Regular Interest on such Distribution Date.
Class D-Y-3 Regular Interest: The uncertificated partial
undivided beneficial ownership interest in REMIC I which
constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
Class D-Y-3 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the Class D-Y-3
Principal Reduction Amount for such Distribution Date over the
principal portion of Realized Losses allocated to the Class D-Y-3
Regular Interest on such Distribution Date.
Class D-Z Principal Reduction Amounts: For any Distribution
<PAGE> 12
Date, the amounts by which the Class Principal Balances of the
Class D-Z-1, Class D-Z-2 and Class D-Z-3 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 (i.e. the "related Loan Group" for the Class D-
Z-1 Regular Interest is Loan Group I, the "related Loan Group"
for the Class D-Z-2 Regular Interest is Loan Group II and the
"related Loan Group" for the Class D-Z-3 Regular Interest is Loan
Group III) over the sum of the amounts thereof distributable (i)
in the case of Loan Group II, to the Class II-P-M Regular
Interest in respect of principal on Class II-P Mortgage Loans,
(ii) in the case of Loan Group II, to the Class II-X-M Regular
Interest and (iii) in respect of interest on the related Class D-
Y and Class D-Z Regular Interests and (y) the amount of Realized
Losses allocable to principal for the related Loan Group
(reduced, in the case of Loan Group II, by the portion of such
amount allocable to the Class II-P-M Regular Interest) over (B)
the Class D-Y Principal Reduction Amount for the related Loan
Group.
Class D-Z Regular Interests: The Class D-Z-1, Class D-Z-2
and Class D-Z-3 Regular Interests.
Class D-Z-1 Regular Interest: The uncertificated partial
undivided beneficial ownership interest in REMIC I which
constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
Class D-Z-1 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the Class D-Z-1
Principal Reduction Amount for such Distribution Date over the
principal portion of Realized Losses allocated to the Class D-Z-1
Regular Interest on such Distribution Date.
Class D-Z-2 Regular Interest: The uncertificated partial
undivided beneficial ownership interest in REMIC I which
constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
Class D-Z-2 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the Class D-Z-2
Principal Reduction Amount for such Distribution Date over the
principal portion of Realized Losses allocated to the Class D-Z-2
Regular Interest on such Distribution Date.
Class D-Z-3 Regular Interest: The uncertificated partial
undivided beneficial ownership interest in REMIC I which
constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
<PAGE> 13
Class D-Z-3 Principal Distribution Amount: For any
Distribution Date, the excess, if any, of the Class D-Z-3
Principal Reduction Amount for such Distribution Date over the
principal portion of Realized Losses allocated to the Class D-Z-3
Regular Interest on such Distribution Date.
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.
Class I-A-1 Notional Amount: With respect to any
Distribution Date, the product of (x) the Class I-A-1 Principal
Balance immediately prior to such Distribution Date and (y) a
fraction, the numerator of which is the Group I Certificate
Interest Rate for such Distribution Date and the denominator of
which is 7.750%.
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.
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.
Class II-A-3 Accretion Termination Date: The earlier to
occur of (i) the Distribution Date on which the Class II-A-1
Principal Balance has been reduced to zero and (ii) the Credit
Support Depletion Date.
Class II-A-3 Accrual Amount: For any Distribution Date, an
amount equal to the amounts that would be payable to the Class II-
A-3 Certificates as interest on such Distribution Date pursuant
to clauses (I)(b)(ii) and (I)(b)(iii)(a) of the definition of
"REMIC II Distribution Amount" without regard to the provisos in
such clauses. Notwithstanding the foregoing, for any
Distribution Date after the Class II-A-3 Accretion Termination
Date, the Class II-A-3 Accrual Amount shall be zero.
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.
Class II-A-4 Adjusted Percentage: For any Distribution Date
occurring prior to the Distribution Date in May 2005, 0%; and for
the Distribution Date occurring in May 2005 and any Distribution
Date thereafter, the Class II-A-4 Percentage.
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.
<PAGE> 14
Class II-A-4 Liquidation Amount: For any Distribution Date,
the aggregate, for each Group II Loan which became a Liquidated
Mortgage Loan during the Prior Period, of the lesser of (i) the
Class II-A-4 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 Class II-A-4
Percentage of the Liquidation Principal with respect to such
Mortgage Loan.
Class II-A-4 Percentage: For any Distribution Date, the
lesser of (i) 100% and (ii) the Class II-A-4 Principal Balance
divided by the aggregate Principal Balance of the Group II Loans
(less the Class II-P Principal Balance), in each case immediately
after any allocations of Realized Losses but before any
distributions on such Distribution Date.
Class II-A-4 Prepayment Percentage: For any Distribution
Date, the product of (i) the Class II-A-4 Percentage and (ii) the
Step Down Percentage.
Class II-A-4 Priority Amount: For any Distribution Date, the
sum of (i) the Class II-A-4 Adjusted Percentage of the Principal
Payment Amount for Loan Group II (exclusive of the portion
thereof attributable to principal distributions to the Class II-P
Certificates pursuant to clause (I)(b)(i) of the definition of
"REMIC II Distribution Amount"), (ii) the Class II-A-4 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 Certificates pursuant to clause
(I)(b)(i) of the definition of "REMIC II Distribution Amount")
and (iii) the Class II-A-4 Liquidation Amount.
Class II-P Certificates: The Certificates designated as
"Class II-P" on the face thereof in substantially the form
attached hereto as Exhibit A.
Class II-P Fraction: For each Class II-P Mortgage Loan, a
fraction, the numerator of which is 8.000% less the Pass-Through
Rate on such Class II-P Mortgage Loan and the denominator of
which is 8.000%.
Class II-P Mortgage Loan: Any Group II Loan with a Pass-
Through Rate of less than 8.000% per annum.
Class II-P-M Regular Interest: The uncertificated partial
undivided beneficial ownership interest in REMIC I which
constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
Class II-X Certificates: The Certificates designated as
"Class II-X" on the face thereof in substantially the form
attached hereto as Exhibit A.
<PAGE> 15
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 scheduled to be received as of such Due Date, whether
or not received (and after giving effect to Principal
Prepayments, Monthly P&I Advances and the principal portion of
Realized Losses applied prior to such Due Date), 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 8.000%.
Class II-X-M Regular Interest: The uncertificated partial
undivided beneficial ownership interest in REMIC I which
constitutes a REMIC I Regular Interest and is entitled to
distributions as set forth herein.
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.
Class III-A-1 Notional Amount: With respect to any
Distribution Date, the product of (x) the Class III-A-1 Principal
Balance immediately prior to such Distribution Date and (y) a
fraction, the numerator of which is the Group III Certificate
Interest Rate for such Distribution Date and the denominator of
which is 8.500%.
Class Notional Amount: With respect to the Class II-X
Certificates and Class II-X-M Regular Interest, the Class II-X
Notional Amount. With respect to the Class I-A-1 Certificates,
the Class I-A-1 Notional Amount. With respect to the Class III-A-
1 Certificates, the Class III-A-1 Notional Amount.
Class Principal Balance: For any Class of Certificates and
for any Class of REMIC I 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 the
Certificateholders or the Holders of the REMIC I Regular
Interests from principal payments on the Mortgage Loans or the
REMIC I Regular Interests, as applicable, as reduced from time to
time by (x) distributions of principal to the Certificateholders
or the Holders of the REMIC I Regular Interests of such Class
(including, with respect to the Class II-A-1, Class II-A-2 and
Class II-A-3 Certificates, the portion of the Class II-A-3
Accrual Amount distributed to such Classes) 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
<PAGE> 16
Certificates and REMIC I 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 definitions of "REMIC I Distribution Amount" and
"REMIC II Distribution Amount." In addition to the foregoing, on
each Distribution Date on or before the Class II-A-3 Accretion
Termination Date, the Class II-A-3 Principal Balance shall be
increased by the Class II-A-3 Accrual Amount for such
Distribution Date. Notwithstanding the foregoing, any amounts
distributed in respect of losses pursuant to paragraph (I)(d)(i)
or (I)(d)(ii) of the definition of "REMIC II Distribution Amount"
shall not cause a further reduction in the Class II-P Principal
Balance and any amounts distributed in respect of losses pursuant
to paragraph (I)(d)(xxi) of the definition of "REMIC II
Distribution Amount" shall not cause a further reduction in the
Class Principal Balances of the Group D-B 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 D-Y-1 Regular Interest shall be
referred to as the "Class D-Y-1 Principal Balance" and so on.
The Class Principal Balances for the Class II-X Certificates and
the Class II-X-M Regular Interest shall each be zero.
Class R-1 Certificates: The Certificates designated as
"Class R-1" 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 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 B, which have been designated as the
single class of "residual interest" in REMIC II pursuant to
Section 2.05.
Clean-Up Call Percentage: 10%.
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.
Clipper: Clipper Receivables Corporation, a Delaware
corporation.
Clipper Loan Sale Agreement: The Loan Sale Agreement,
substantially in the form of Exhibit O hereto, to be entered into
between Clipper and the Trustee pursuant to Section 2.01.
Clipper Mortgage Loans: The Mortgage Loans identified as
Clipper Mortgage Loans on the Mortgage Loan Schedule and conveyed
by Clipper to the Trustee pursuant to the Clipper Loan Sale
Agreement.
<PAGE> 17
Clipper Mortgage Loan Purchase Amount: The amount of
$50,279,214.57, which shall be deposited by the Company into the
Certificate Account on the Closing Date and withdrawn therefrom
and applied by the Trustee in payment of the purchase price for
the Clipper Mortgage Loans pursuant to Section 2.01.
Closing Date: May 3, 2000, 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.
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 State of
California, New York or Washington D.C., which owns or leases
land and all or part of a building or buildings located in such
state, 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 which was transferred and
<PAGE> 18
assigned to the Trustee pursuant to Section 2.01 and are from
time to time held as part of the Trust Fund 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 Commonwealth of Massachusetts, 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 225 Franklin Street,
Boston, MA 02110, Attention: Corporate Trust PNC 2000-3.
Credit Support Depletion Date: The first Distribution Date
on which the aggregate Class Principal Balance of the Group D-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.
Curtailment: Any payment (exclusive of any prepayment
penalty) 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.
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
<PAGE> 19
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 (other than the Trustee) 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: April 1, 2000.
Definitive Certificates: Certificates in definitive, fully
registered and certificated form.
<PAGE> 20
Depositary Agreement: The Letter of Representations, dated
May 3, 2000 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, as determined by the
Master Servicer.
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 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 May 25, 2000. The "related Due Date" for
any Distribution Date is the Due Date immediately preceding such
Distribution Date.
DLJ: Donaldson, Lufkin & Jenrette Securities Corporation.
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 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 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.
<PAGE> 21
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:
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;
Repurchase agreements on obligations described in
clause (i) of this definition of "Eligible Investments",
provided that the unsecured obligations of the party
(including the Trustee in its commercial capacity) 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;
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 (including the Trustee in its commercial capacity),
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;
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;
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;
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
<PAGE> 22
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;
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 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
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.
ERISA Restricted Certificate: Any Class B or Residual
Certificate.
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
<PAGE> 23
thereto.
Fannie Mae: The entity formerly known as the Federal
National Mortgage Association, or any successor thereto.
Final Maturity Date: With respect to each Class of the
REMIC I Regular Interests and the Certificates, the date set
forth in the table contained in the Preliminary Statement hereto.
Fitch: Fitch IBCA, Inc., provided that at any time it be a
Rating Agency.
Fraud Coverage: During the period prior to the first
anniversary of the Cut-Off Date, 2.00% of the aggregate principal
balance of the Mortgage Loans as of the Cut-Off Date (the
"Initial Fraud Coverage"), reduced by Fraud Losses allocated to
the Certificates since the Cut-Off Date; 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
Fraud Coverage on the most recent previous anniversary of the Cut-
Off Date (calculated in accordance with the second sentence of
this paragraph) reduced by Fraud Losses allocated to the
Certificates since such anniversary; and during the period on and
after the fifth anniversary of the Cut-Off Date, zero. On each
anniversary of the Cut-Off Date, the 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 Mortgage Loans as of the Due Date in the
preceding month and (ii) the excess of the Initial Fraud Coverage
over cumulative Fraud Losses allocated to the Certificates since
the Cut-Off Date.
The 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 Certificates by
the Rating Agencies.
Fraud Loss: A Realized Loss (or portion thereof) with
respect to 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.
Freddie Mac: The entity formerly known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.
Group D-B Certificates: The Class D-B-1, Class D-B-2, Class
<PAGE> 24
D-B-3, Class D-B-4, Class D-B-5 and Class D-B-6 Certificates.
Group D-B Percentage: At any time, the aggregate Class
Principal Balance of the Group D-B Certificates divided by the
then outstanding aggregate Principal Balance of the Mortgage
Loans.
Group I Certificate Interest Rate: For any Distribution
Date, the weighted average (by principal balance) of the Pass-
Through Rates on the Group I Loans, as of the second preceding
Due Date or, with respect to the initial Distribution Date, as of
the Cut-Off Date.
Group I Certificates: The Class I-A-1 Certificates.
Group I Loans: The Mortgage Loans designated on the
Mortgage Loan Schedule as Group I Loans.
Group I Senior Liquidation Amount: For any Distribution
Date, 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 and (ii) the Group I Senior Prepayment
Percentage of the Liquidation Principal with respect to such
Mortgage Loan.
Group I Senior Percentage: For any Distribution Date, the
lesser of (i) 100% and (ii) the Class I-A-1 Principal Balance
divided by the aggregate Principal Balance of the Group I Loans,
in each case immediately after any allocations of Realized Losses
but before any distributions on such Distribution Date.
Group I Senior Prepayment Percentage, Group II Senior
Prepayment Percentage or Group III Senior Prepayment Percentage:
For any Distribution Date, each of the Group I Senior Prepayment
Percentage, the Group II Senior Prepayment Percentage and the
Group III Senior Prepayment Percentage shall equal 100%, unless
(i) the Group I Senior Percentage for such Distribution Date is
less than or equal to the Group I Senior Percentage as of the
Closing Date, the Group II Senior Percentage for such
Distribution Date is less than or equal to the Group II Senior
Percentage as of the Closing Date and the Group III Senior
Percentage for such Distribution Date is less than or equal to
the Group III Senior Percentage as of the Closing Date, (ii) such
Distribution Date occurs on or after the fifth anniversary of the
first Distribution Date and (iii) the following tests specified
in clauses (a) through (f) are met with respect to each of Loan
Group I, Loan Group II and Loan Group III:
(a) the mean aggregate Principal Balance as of the
Distribution Date in each of the immediately preceding
six calendar months of the Group I Loans which were 60
<PAGE> 25
or more days delinquent as of such date (including
loans in foreclosure and property held by REMIC I) is
less than or equal to 50% of the Subordinate Component
Balance for Loan Group I as of the current Distribution
Date,
(b) the mean aggregate Principal Balance as of the
Distribution Date in each of the immediately preceding
six calendar months of the Group II Loans which were 60
or more days delinquent as of such date (including
loans in foreclosure and property held by REMIC I) is
less than or equal to 50% of the Subordinate Component
Balance for Loan Group II as of the current
Distribution Date,
(c) the mean aggregate Principal Balance as of the
Distribution Date in each of the immediately preceding
six calendar months of the Group III Loans which were
60 or more days delinquent as of such date (including
loans in foreclosure and property held by REMIC I) is
less than or equal to 50% of the Subordinate Component
Balance for Loan Group III as of the current
Distribution Date,
(d) cumulative Realized Losses on the Group I Loans
allocated to the Group D-B Certificates, as a
percentage of the Subordinate Component Balance for
Loan Group I as of the Closing Date, are less than or
equal to, for any Distribution Date (1) before the
sixth anniversary of the first Distribution Date, 30%,
(2) on or after the sixth anniversary but before the
seventh anniversary of the first Distribution Date,
35%, (3) on or after the seventh anniversary but before
the eighth anniversary of the first Distribution Date,
40%, (4) on or after the eighth anniversary but before
the ninth anniversary of the first Distribution Date,
45%, and (5) on or after the ninth anniversary of the
first Distribution Date, 50%,
(e) cumulative Realized Losses on the Group II Loans
allocated to the Group D-B Certificates, as a
percentage of the Subordinate Component Balance for
Loan Group II as of the Closing Date, are less than or
equal to, for any Distribution Date (1) before the
sixth anniversary of the first Distribution Date, 30%,
(2) on or after the sixth anniversary but before the
seventh anniversary of the first Distribution Date,
35%, (3) on or after the seventh anniversary but before
the eighth anniversary of the first Distribution Date,
40%, (4) on or after the eighth anniversary but before
the ninth anniversary of the first Distribution Date,
45%, and (5) on or after the ninth anniversary of the
<PAGE> 26
first Distribution Date, 50%, and
(f) cumulative Realized Losses on the Group III Loans
allocated to the Group D-B Certificates, as a
percentage of the Subordinate Component Balance for
Loan Group III as of the Closing Date, are less than or
equal to, for any Distribution Date (1) before the
sixth anniversary of the first Distribution Date, 30%,
(2) on or after the sixth anniversary but before the
seventh anniversary of the first Distribution Date,
35%, (3) on or after the seventh anniversary but before
the eighth anniversary of the first Distribution Date,
40%, (4) on or after the eighth anniversary but before
the ninth anniversary of the first Distribution Date,
45%, and (5) on or after the ninth anniversary of the
first Distribution Date, 50%,
in which case the Group I Senior Prepayment Percentage, the Group
II Senior Prepayment Percentage and the Group III Senior
Prepayment Percentage shall be calculated as follows: (1) for any
such Distribution Date on or after the fifth anniversary but
before the sixth anniversary of the first Distribution Date, the
Group I Senior Percentage, 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 on or after the sixth anniversary but before the seventh
anniversary of the first Distribution Date, the Group I Senior
Percentage, the Group II Senior Percentage or the 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 on or
after the seventh anniversary but before the eighth anniversary
of the first Distribution Date, the Group I Senior Percentage,
the Group II Senior Percentage or the 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 on or after
the eighth anniversary but before the ninth anniversary of the
first Distribution Date, the Group I Senior Percentage, the Group
II Senior Percentage or the Group III Senior Percentage, as
applicable, for such Distribution Date plus 20% of the
Subordinate Percentage for the related Loan Group for such
Distribution Date; and (5) for any such Distribution Date
thereafter, the Group I Senior Percentage, the Group II Senior
Percentage or the Group III Senior Percentage, as applicable, for
such Distribution Date.
If on any Distribution Date the allocation to the Group I,
Group II or Group III Certificates (other than the Class II-P
Certificates) of Principal Prepayments in the percentage required
would reduce the aggregate Class Principal Balance of such
<PAGE> 27
Certificates below zero, the Group I Senior Prepayment
Percentage, 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 the aggregate Class Principal Balance of such Certificates
to zero. Notwithstanding the foregoing, however, on each
Distribution Date, the Class II-P Certificates will receive the
applicable Class II-P Fraction of all principal payments,
including, without limitation, Principal Prepayments, received in
respect of Class II-P Mortgage Loans.
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, (b) the Group I Senior Prepayment Percentage of the Principal
Prepayment Amount for Loan Group I and (c) the Group I Senior
Liquidation Amount.
Group I Subordinate Balance: For any date of determination,
an amount equal to the then outstanding aggregate Principal
Balance of the Group I Loans reduced by the Class I-A-1 Principal
Balance.
Group I Subordinate Percentage: For any Distribution Date,
the excess of 100% over the Group I Senior Percentage for such
date.
Group I Subordinate Prepayment Percentage: For any
Distribution Date, 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 II Certificates: The Group II-A, Class II-P and Class
II-X Certificates.
Group II Loans: The Mortgage Loans designated on the
Mortgage Loan Schedule as Group II Loans.
Group II Premium Rate Mortgage Loans: The Group II Loans
having Pass-Through Rates in excess of 8.000% per annum.
Group II Senior Liquidation Amount: For any Distribution
Date, 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.
<PAGE> 28
Group II Senior Percentage: For 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 Balance of the Group II Loans (less the Class
II-P Principal Balance), in each case immediately after any
allocations of Realized Losses but before any distributions on
such Distribution Date.
Group II Senior Prepayment Percentage: See the definition of
"Group I Senior Prepayment Percentage, Group II Senior Prepayment
Percentage or Group III Senior Prepayment Percentage."
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 Certificates 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 Certificates 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 Balance: For any date of
determination, an amount equal to the then outstanding aggregate
Principal Balance of the Group II Loans reduced by the aggregate
Class Principal Balance of the Group II-A, Class II-P and
Residual Certificates.
Group II Subordinate Percentage: For any Distribution Date,
the excess of 100% over the Group II Senior Percentage for such
date.
Group II Subordinate Prepayment Percentage: For any
Distribution Date, 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-A Certificates: The Class II-A-1, Class II-A-2,
Class II-A-3 and Class II-A-4 Certificates.
Group III Certificate Interest Rate: For any Distribution
Date, the weighted average (by principal balance) of the Pass-
Through Rates on the Group III Loans, as of the second preceding
Due Date or, with respect to the initial Distribution Date, as of
the Cut-Off Date.
<PAGE> 29
Group III Certificates: The Class III-A-1 Certificates.
Group III Loans: The Mortgage Loans designated on the
Mortgage Loan Schedule as Group III Loans.
Group III Senior Liquidation Amount: For any Distribution
Date, 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 and (ii) the Group III Senior Prepayment
Percentage of the Liquidation Principal with respect to such
Mortgage Loan.
Group III Senior Percentage: For 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, in each case immediately after any allocations of Realized
Losses but before any distributions on such Distribution Date.
Group III Senior Prepayment Percentage: See the definition
of "Group I Senior Prepayment Percentage, Group II Senior
Prepayment Percentage or Group III Senior Prepayment Percentage."
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, (b) the Group III Senior Prepayment Percentage of the
Principal Prepayment Amount for Loan Group III and (c) the Group
III Senior Liquidation Amount.
Group III Subordinate Balance: For any date of
determination, an amount equal to the then outstanding aggregate
Principal Balance of the Group III Loans reduced by the Class III-
A-1 Principal Balance.
Group III Subordinate Percentage: For any Distribution Date,
the excess of 100% over the Group III Senior Percentage for such
date.
Group III Subordinate Prepayment Percentage: For any
Distribution Date, 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%.
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.
Insurance Proceeds: Amounts paid or payable by the insurer
<PAGE> 30
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 and the Certificates
(other than the Class I-A-1 and Class III-A-1 Certificates), the
amount of interest accrued on the respective Class Principal
Balance or Class Notional Amount, as applicable, for the Class I-
A-1 Certificates, the amount of interest accrued on the Class I-A-
1 Notional Amount, and for the Class III-A-1 Certificates, the
amount of interest accrued on the Class III-A-1 Notional Amount,
in each case at the related Certificate Interest 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. The Interest Distribution Amounts for the
Class II-P Certificates and the Class II-P-M Regular Interests
shall equal zero.
Interest Transfer Amount: On any Distribution Date for each
Undercollateralized Group, an amount equal to one month's
interest on the applicable Principal Transfer Amount at the Group
I Certificate Interest Rate for such Distribution Date if the
Undercollateralized Group is Loan Group I, at 8.000% per annum if
the Undercollateralized Group is Loan Group II, or at the Group
III Certificate Interest Rate if the Undercollateralized Group is
Loan Group III, plus any interest accrued on the Senior
Certificates related to such Undercollateralized Group remaining
unpaid from prior Distribution Dates.
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: The Chase Manhattan 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 Certificates: The Class D-B-4, Class D-B-
<PAGE> 31
5 and Class D-B-6 Certificates.
Last Scheduled Distribution Date: With respect to any Class
of Certificates, the Final Maturity Date for such Class;
provided, however, that with respect to the Group I Certificates,
the "Last Scheduled Distribution Date" shall be the Distribution
Date in May 2015.
Lender: An institution from which the Company purchased any
Mortgage Loans pursuant to a Selling and Servicing Contract.
Liquidated Mortgage Loan: A Mortgage Loan for which the
Master Servicer or the applicable Servicer has determined in
accordance with its customary servicing practices that it has
received all amounts which it expects to recover from or on
account of such Mortgage Loan, whether from Insurance Proceeds,
Liquidation Proceeds or otherwise. For purposes of this
definition, acquisition of a Mortgaged Property by the 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 II-P Certificates pursuant to
clauses (I)(b)(i) and (II)(b)(i) of the definition of "REMIC II
Distribution Amount") 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.
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" or "Loan-to-Value Ratio as of
the Cut-Off Date" in Section 2.03 shall be deemed to mean the
then current Principal Balance of a Mortgage Loan divided by the
Original Value.
<PAGE> 32
Lowest Class B Owner: An owner unaffiliated with the Company
or the Master Servicer of (i) a 100% interest in the Class of
Group D-B Certificates with the lowest priority or (ii) a 100%
interest in a class of securities representing such interest in
such Class.
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.
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.
Mortgage File: The following documents or instruments with
respect to each PNC Mortgage Loan transferred and assigned by the
Company pursuant to Section 2.01 and each Clipper Mortgage Loan
transferred and assigned by Clipper pursuant to the Clipper Loan
Sale Agreement, (X) with respect to each Mortgage Loan that is
not a Cooperative Loan:
(i) The original Mortgage Note endorsed to "State Street Bank
and Trust Company, as Custodian/Trustee, without recourse" or
"State Street Bank and Trust Company, as Trustee for the benefit
of the Holders from time to time of PNC Mortgage Securities Corp.
Mortgage Pass-Through Certificates, Series 2000-3, 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 or Clipper, as applicable, 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 are endorsed in blank as of the Closing Date, the
Company shall, within 45 days of the Closing Date, cause such
<PAGE> 33
Mortgage Notes to be endorsed pursuant to the terms set forth
herein; provided, that, with respect to any Mortgage Note whereby
the related Mortgaged Property is located in California, such
original Mortgage Note may be endorsed in blank and the Company
shall not be required to endorse such Mortgage Notes pursuant to
the terms otherwise set forth in this clause (i);
The Buydown Agreement, if applicable;
A Mortgage that is either
(1) the original recorded Mortgage with recording
information thereon for the jurisdiction in which the
Mortgaged Property is located and a Mortgage assignment
thereof in recordable form to "State Street Bank and
Trust Company, as Custodian/Trustee", or to "State
Street Bank and Trust Company, as Trustee for the
Holders of PNC Mortgage Securities Corp. Mortgage Pass-
Through Certificates, Series 2000-3" 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 "State Street Bank and Trust
Company, as Custodian/Trustee" or to "State Street Bank
and Trust Company, as Trustee for the Holders of PNC
Mortgage Securities Corp. Mortgage Pass-Through
Certificates, Series 2000-3" and true and correct
copies, certified by the applicable county recorder or
by the originator or Lender as described above, of all
intervening assignments evidencing a complete chain of
assignment from the originator to the name holder or
the payee endorsing the related Mortgage Note;
provided, that in the event the assignments are
executed in blank as of the Closing Date, the Company
shall, within 45 days of the Closing Date, cause such
assignments to be executed pursuant to the terms set
forth herein; provided, that, with respect to any
Mortgage whereby the related Mortgaged Property is
located in California, the Mortgage assignment may be
executed and acknowledged in blank and the Company
shall not be required to deliver such Mortgage
assignment in the form otherwise set forth in clause
<PAGE> 34
(iii)(1) or this clause (iii)(2);
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
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 "State Street Bank
and Trust Company, as Custodian/Trustee", or to "State Street
Bank and Trust Company, as Trustee for the Holders of PNC
Mortgage Securities Corp. Mortgage Pass-Through Certificates,
Series 2000-3" 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 or Clipper, as applicable, stating
that the original Mortgage Note was lost, misplaced or destroyed,
together with a copy of the related Mortgage Note;
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;
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;
The original recognition agreement by the Cooperative
of the interests of the mortgagee with respect to the
related Cooperative Loan;
The Security Agreement;
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;
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
<PAGE> 35
evidence of recording thereof, evidencing the interest of
the originator under the Security Agreement and the
Assignment of Proprietary Lease;
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;
An executed UCC-1 financing statement showing the
Company or Clipper, as applicable, 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
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,
the address of the Mortgaged Property,
the name of the Mortgagor,
the Original Value of the property subject to the
Mortgage,
the Principal Balance as of the Cut-Off Date,
the Mortgage Interest Rate borne by the Mortgage Note,
whether a Primary Insurance Policy is in effect as of
the Cut-Off Date and, if so, whether such Primary Insurance
Policy is a Special Primary Insurance Policy,
the maturity of the Mortgage Note,
the Servicing Fee and the Master Servicing Fee,
its Loan Group, and
<PAGE> 36
whether it is a PNC Mortgage Loan or a Clipper Mortgage
Loan.
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 or of the Clipper Loan Sale Agreement as from
time to time are held as part of the Trust Fund, the Mortgage
Loans so held being identified in the Mortgage Loan Schedule.
Mortgage Note: The note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Pool: All of the Mortgage Loans.
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.
"Mortgaged Property" shall also refer to property which once
secured the indebtedness of a Mortgagor under the related
Mortgage Loan but which was acquired by the Trust upon
foreclosure or other liquidation of such Mortgage Loan.
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.
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
(including in-house 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
<PAGE> 37
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.
Overcollateralized Group: Any Loan Group, if on any
Distribution Date such Loan Group is not an Undercollateralized
Group and one or both of the other Loan Groups is an
Undercollateralized Group.
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.
PNC Mortgage Loans: The Mortgage Loans identified as PNC
Mortgage Loans on the Mortgage Loan Schedule and conveyed by the
Company to the Trustee pursuant to Section 2.01.
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 per annum rate
equal to the Mortgage Interest Rate for such Mortgage Loan less
the per annum percentage rates related to each of (i) the
Servicing Fee for such Mortgage Loan, (ii) the Master Servicing
Fee for such Mortgage Loan and (iii) if such Mortgage Loan was
covered by a Special Primary Insurance Policy on the Closing Date
(even if no longer so covered), the applicable Special Primary
Insurance Premium. 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.
<PAGE> 38
Payoff: Any Mortgagor payment (exclusive of any prepayment
penalty) 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 May 14, 2000, 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 and
Class II-X Certificates), its Certificate Principal Balance
divided by the applicable Class Principal Balance;
with respect to any Class II-X Certificate, the portion
of the Class II-X Notional Amount evidenced by such
Certificate divided by the Class II-X Notional Amount; and
with respect to any Residual Certificate, the
percentage set forth on the face of such Certificate.
(b) With respect to the rights of each Certificate in
<PAGE> 39
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 II, which for purposes of such rights only shall equal:
(i) with respect to any Certificate (other than the Class II-X
and Class R-2 Certificates), the product of (x) ninety-nine
percent (99%) 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 the retirement of the Class II-X Certificates;
with respect to any Class II-X Certificate, one percent
(1%) of such Certificate's Percentage Interest as calculated
by paragraph (a)(ii) of this definition; and
with respect to any Class R-2 Certificate, 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 or REMIC II, 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
Freddie Mac, 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.
<PAGE> 40
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 or on pools of
mortgage loans that include an individual Mortgage Loan,
providing coverage as required by Section 2.03(xi) (including any
Special Primary Insurance Policy).
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 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
<PAGE> 41
to the Certificates.
Principal Payment: Any payment of principal on a Mortgage
Loan other than a Principal Prepayment.
Principal Payment Amount: For 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 proceeds received with respect to any Mortgage Loan
which was purchased or repurchased 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. In addition, in the event that all or a portion of
the Clipper Mortgage Loan Purchase Amount has not been applied to
the purchase of Clipper Mortgage Loans under the Clipper Loan
Sale Agreement in accordance with Section 2.01, such remaining
portion shall on the first Distribution Date be included in the
Principal Payment Amount for each Loan Group, pro rata according
to the aggregate Principal Balance of the Clipper Mortgage Loans
not so purchased but intended for inclusion in such Loan Group.
Principal Prepayment: Any payment of principal on a Mortgage
Loan which constitutes a Payoff or a Curtailment.
Principal Prepayment Amount: For 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: For any Distribution Date for
each Undercollateralized Group, the excess, if any, of the
aggregate Class Principal Balance of the Class A Certificates
related to such Undercollateralized Group over the aggregate
Principal Balance of the Mortgage Loans in such Loan Group (less,
in the case of Loan Group II, the applicable Class II-P Fraction
thereof with respect to any Class II-P Mortgage Loans), in each
case immediately prior to such Distribution Date.
Prior Period: The calendar month immediately preceding any
Distribution Date.
Pro Rata Allocation: The allocation of the principal portion
of Realized Losses on Mortgage Loans to all Classes of
Certificates (other than the Class II-P Certificates), pro rata
according to their respective Class Principal Balances in
reduction thereof (except if the loss is recognized with respect
to a Class II-P Mortgage Loan, in which case the applicable Class
II-P Fraction of such loss will first be allocated to the Class
<PAGE> 42
II-P Certificates, and the remainder of such loss will be
allocated as set forth above), and the allocation of the interest
portion of such losses to all Classes of Certificates (other than
the Class II-P Certificates), pro rata according to the amount of
interest accrued but unpaid on each such Class, in reduction
thereof, and then to such Classes (other than the Class II-P and
Class II-X Certificates) pro rata according to their respective
Class Principal Balances in reduction thereof.
Prospectus: The Prospectus, dated March 29, 2000, and the
Prospectus Supplement, dated May 2, 2000, of the Company.
Protective Transfer Agreement: The Protective Transfer
Agreement, substantially in the form of Exhibit P hereto, to be
entered into between Fairway Drive Funding Corp. and the Trustee
pursuant to Section 2.01.
Purchase Obligation: An obligation of the Company to
purchase or 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 or pursuant to
Section 3.01, an amount equal to the sum of (i) the Principal
Balance thereof, (ii) unpaid accrued interest thereon, if any,
during the calendar month in which the date of purchase or
repurchase occurs to the last day of such month at a rate equal
to the applicable Pass-Through Rate and (iii) (in the case of a
purchase pursuant to the third sentence of the third paragraph of
Section 3.01 only) the amount of any related unreimbursed
advances by the Master Servicer; 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.
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 Freddie
Mac or Fannie Mae 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
<PAGE> 43
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.
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 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 on Group I, Group II and Group III Loans
shall be allocated to the REMIC I Regular Interests as follows:
The interest portion of such Realized Losses, if any, shall be
allocated among the Classes of REMIC I Regular Interests related
to each such Loan Group pro rata according to the amount of
interest accrued but unpaid thereon, in reduction thereof (i.e.
the "related" Loan Group for the Class D-Y-1 and Class D-Z-1
Regular Interests is Loan Group I, the "related" Loan Group for
the Class D-Y-2, Class D-Z-2 and Class II-X-M Regular Interests
is Loan Group II and the "related" Loan Group for the Class D-Y-3
and Class D-Z-3 Regular Interests is Loan Group III). Any
interest portion of such 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 II-P Fraction
of any principal portion of Realized Losses attributable to a
Class II-P Mortgage Loan shall be allocated to the Class II-P-M
Regular Interest in reduction of the principal balance thereof.
The remainder of the principal portion of Realized Losses with
respect to Loan Group I, Loan Group II and Loan Group III shall
be allocated, first, to the Class D-Y Regular Interest related to
the Loan Group to the extent of the applicable Class D-Y
Principal Reduction Amount in reduction of the Class Principal
Balance of such Regular Interest and, second, the remainder, if
any, of such principal portion of such Realized Losses shall be
allocated to the related Class D-Z Regular Interest in reduction
of the Class Principal Balance thereof.
Except for Special Hazard Losses in excess of the Special
<PAGE> 44
Hazard Coverage, Fraud Losses in excess of the Fraud Coverage and
Bankruptcy Losses in excess of the Bankruptcy Coverage, Realized
Losses with respect to the Mortgage Loans shall be allocated
among the Certificates (i) for Realized Losses allocable to
principal (a) first, to the Class D-B-6 Certificates, until the
Class D-B-6 Principal Balance has been reduced to zero, (b)
second, to the Class D-B-5 Certificates, until the Class D-B-5
Principal Balance has been reduced to zero, (c) third, to the
Class D-B-4 Certificates, until the Class D-B-4 Principal Balance
has been reduced to zero, (d) fourth, to the Class D-B-3
Certificates, until the Class D-B-3 Principal Balance has been
reduced to zero, (e) fifth, to the Class D-B-2 Certificates,
until the Class D-B-2 Principal Balance has been reduced to zero,
(f) sixth, to the Class D-B-1 Certificates, until the Class D-B-1
Principal Balance has been reduced to zero, and (g) seventh, (I)
in the case of such losses on Group I or Group III Loans, to the
Class A Certificates of the related Certificate Group, in
reduction of the Class Principal Balance thereof, or (II) in the
case of such losses on Group II Loans, to the Group II-A and
Residual Certificates, pro rata according to the Class Principal
Balances thereof, in reduction thereof; provided, however, that
if the loss is recognized with respect to a Class II-P Mortgage
Loan, the applicable Class II-P Fraction of such loss will first
be allocated to the Class II-P Certificates, and the remainder of
such loss will be allocated as set forth above in this clause
(i); and (ii) for Realized Losses allocable to interest (a)
first, to the Class D-B-6 Certificates, in reduction of accrued
but unpaid interest thereon and then in reduction of the Class D-
B-6 Principal Balance, (b) second, to the Class D-B-5
Certificates, in reduction of accrued but unpaid interest thereon
and then in reduction of the Class D-B-5 Principal Balance, (c)
third, to the Class D-B-4 Certificates, in reduction of accrued
but unpaid interest thereon and then in reduction of the Class D-
B-4 Principal Balance, (d) fourth, to the Class D-B-3
Certificates, in reduction of accrued but unpaid interest thereon
and then in reduction of the Class D-B-3 Principal Balance, (e)
fifth, to the Class D-B-2 Certificates, in reduction of accrued
but unpaid interest thereon and then in reduction of the Class D-
B-2 Principal Balance, (f) sixth, to the Class D-B-1
Certificates, in reduction of accrued but unpaid interest thereon
and then in reduction of the Class D-B-1 Principal Balance, and
(g) seventh, to the Class A Certificates of the related
Certificate Group and (in the case of such losses on Group II
Loans) to the Class II-X and Residual Certificates, as
applicable, pro rata according to accrued but unpaid interest on
such Classes, in reduction thereof, and then to the Class A
Certificates of the related Certificate Group and (in the case of
such losses on Group II Loans) to the Residual Certificates, as
applicable, pro rata according to the Class Principal Balances
thereof, in reduction thereof; provided, however, that in the
case of clause (i)(g) and (ii)(g) of this paragraph, (X) if such
loss occurs in an Overcollateralized Group and there is a single
<PAGE> 45
Undercollateralized Group, the Senior Certificates related to
such Undercollateralized Group will receive a portion of such
loss (such portion equal to a fraction, the numerator of which is
the Subordinate Component Balance with respect to the
Overcollateralized Group that suffered such loss and the
denominator of which is the aggregate Principal Balance of the
Mortgage Loans in such Overcollateralized Group less (if such
Overcollateralized Group is Loan Group II) the applicable Class
II-P Fraction thereof with respect to any Class II-P Mortgage
Loan), and the remainder of such loss will be allocated to the
Senior Certificates related to the Loan Group that suffered such
loss, and (Y) if such loss occurs in an Overcollateralized Group
and there are two Undercollateralized Groups, the Senior
Certificates related to each Undercollateralized Group will
receive a portion of such loss (such portion equal to the
fraction described in the parenthetical in clause (X) above,
multiplied by a second fraction, the numerator of which is the
Principal Transfer Amount with respect to such
Undercollateralized Group and the denominator of which is the sum
of (1) the Principal Transfer Amount with respect to such
Undercollateralized Group and (2) the Principal Transfer Amount
with respect to the other Undercollateralized Group), and the
remainder of such loss will be allocated to the Senior
Certificates related to the Loan Group that suffered such loss;
provided, further, that all such losses allocated to the Senior
Certificates related to a Loan Group pursuant to clause (X) or
(Y) of the immediately preceding proviso to this paragraph will
be allocated to such Senior Certificates as described in clause
(i)(g) and (ii)(g) of this paragraph.
Special Hazard Losses in excess of the Special Hazard
Coverage, Fraud Losses in excess of the Fraud Coverage and
Bankruptcy Losses in excess of the Bankruptcy Coverage shall be
allocated among the outstanding Classes of Certificates 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 Classes of
Certificates exceeds the aggregate principal balance of the
Mortgage 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 Amounts for the Group I, Group II and Group III
Certificates, and all losses in respect of each such Mortgage
Loan that have been allocated to the Certificates on such
Distribution Date or prior Distribution Dates, then such excess
will be deemed a principal loss and will be allocated to the most
<PAGE> 46
junior Class of Group D-B Certificates, 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 Interests: (i) With respect to REMIC I, the REMIC I
Regular Interests and (ii) with respect to REMIC II, the REMIC II
Regular Interests.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of
1940, as amended. Interest shortfalls related to the Relief Act
shall be allocated in the same manner as Realized Losses
attributable to interest are allocated.
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, with respect to which a separate REMIC
election is to be made.
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,
Liquidation Proceeds 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 or subsequent to such Distribution
Date;
(b) all Curtailments received after 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 Distribution Date, which interest
shall not be included in the calculation of the REMIC I
<PAGE> 47
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, with respect
to the Group I Loans, any Special Primary Insurance Premiums
payable on such Distribution Date; 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
Obligation under Section 2.02 and Section 2.03 or any permitted
purchase or repurchase of such 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 D-Y-1 and Class D-Z-1 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;
second, to the Class D-Y-1 and Class D-Z-1 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;
<PAGE> 48
third, to the Class D-Y-1 and Class D-Z-1 Regular
Interests, the Class D-Y-1 Principal Distribution Amount and
the Class D-Z-1 Principal Distribution Amount, respectively;
and
fourth, 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 Interest, 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 portion of the
Purchase Price paid pursuant to a Purchase Obligation or any
purchase or 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;
second, to the Class D-Y-2, Class D-Z-2 and Class II-X-
M 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;
third, to the Class D-Y-2, Class D-Z-2 and Class II-X-M
Regular Interests and the Class R-1 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;
fourth, to the Class R-1 Certificates, until the Class
Principal Balance thereof has been reduced to zero;
fifth, to the Class D-Y-2 and Class D-Z-2 Regular
Interests, the Class D-Y-2 Principal Distribution Amount and
the Class D-Z-2 Principal Distribution Amount, respectively;
and
<PAGE> 49
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 D-Y-3 and Class D-Z-3 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;
second, to the Class D-Y-3 and Class D-Z-3 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;
third, to the Class D-Y-3 and Class D-Z-3 Regular
Interests, the Class D-Y-3 Principal Distribution Amount and
the Class D-Z-3 Principal Distribution Amount, respectively;
and
fourth, to the Class R-1 Certificates, the Residual
Distribution Amount for Loan Group III for such Distribution
Date.
REMIC I Regular Interests: The Classes of interests in the
REMIC I Trust Fund designated as "regular interests" in the table
titled "REMIC I Interests" in the Preliminary Statement hereto.
REMIC I Trust Fund: All of the assets in the 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: For the Group I
Certificates, on any Distribution Date, the aggregate of all
distributions to the Class D-Y-1 and Class D-Z-1 Regular
Interests (which amount shall be available for distributions to
the Group I, Group D-B and Class R-2 Certificates as provided
herein). For the Group II Certificates, on any Distribution Date,
the aggregate of all distributions to the Class D-Y-2, Class D-Z-
2, Class II-X-M and Class II-P-M Regular Interests (which amount
shall be available for distributions to the Group II, Group D-B
and Class R-2 Certificates as provided herein). For the Group III
Certificates, on any Distribution Date, the aggregate of all
distributions to the Class D-Y-3 and Class D-Z-3 Regular
<PAGE> 50
Interests (which amount shall be available for distributions to
the Group III, Group D-B and Class R-2 Certificates as provided
herein).
REMIC II Distribution Amount: (I) For any Distribution Date
prior to the Credit Support Depletion Date, the REMIC II
Available Distribution Amount for such Distribution Date shall be
distributed to the Certificates (other than the Class R-1
Certificates) in the following amounts and priority:
(a) With respect to the Group I Certificates, on any
Distribution Date prior to the Credit Support Depletion Date, to
the extent of the REMIC II Available Distribution Amount for the
Group I Certificates for such Distribution Date remaining
following prior distributions, if any, on such Distribution Date:
(i) first, to the Class I-A-1 Certificates, the Interest
Distribution Amount for such Class of Certificates remaining
unpaid from previous Distribution Dates;
second, to the Class I-A-1 Certificates, the Interest
Distribution Amount for such Class of Certificates for the
current Distribution Date; and
third, to the Class I-A-1 Certificates, as principal,
the Group I Senior Principal Distribution Amount;
(b) With respect to the Group II and Class R-2
Certificates, on any Distribution Date prior to the Credit
Support Depletion Date, to the extent of the REMIC II Available
Distribution Amount for the Group II Certificates for such
Distribution Date remaining following prior distributions, if
any, on such Distribution Date:
(i) first, to the Class II-P Certificates, 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 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 purchase or 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;
second, to the Group II-A, Class II-X and Class R-2
<PAGE> 51
Certificates, concurrently, the sum of the Interest
Distribution Amounts for such Classes of 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-3
Accretion Termination Date, the amount that would otherwise
be payable to the Class II-A-3 Certificates 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";
third,
(a) to the Group II-A, Class II-X and Class R-2
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;
provided, however, that on or before the Class II-A-3
Accretion Termination Date, the amount that would
otherwise be payable to the Class II-A-3 Certificates
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"; and
(b) on or before the Class II-A-3 Accretion
Termination Date, the Class II-A-3 Accrual Amount, as
principal, sequentially, as follows:
(1) first, until the Class II-A-2
Principal Balance has been reduced to zero,
concurrently, as follows:
(A) 43.7634981628% to the Class II-
A-2 Certificates; and
(B) 56.2365018372% to the Class II-
A-1 Certificates;
(2) second, to the Class II-A-1
Certificates, until the Class II-A-1 Principal
Balance has been reduced to zero; and
(3) third, to the Class II-A-3
Certificates; and
fourth, to the Group II-A and Class R-2 Certificates,
as principal, the Group II Senior Principal Distribution
Amount, sequentially, as follows:
(a) first, to the Class II-A-4 Certificates, an
<PAGE> 52
amount, up to the amount of the Class II-A-4 Priority
Amount for such Distribution Date, until the Class II-A-
4 Principal Balance has been reduced to zero;
(b) second, to the Class R-2 Certificates, until
the Class R-2 Principal Balance has been reduced to
zero;
(c) third, concurrently, until the Class II-A-2
Principal Balance has been reduced to zero, as follows:
(1) 43.7634981628% to the Class II-
A-2 Certificates; and
(2) 56.2365018372% to the Class II-
A-1 Certificates;
(d) fourth, to the Class II-A-1 Certificates,
until the Class II-A-1 Principal Balance has been
reduced to zero;
(e) fifth, to the Class II-A-3 Certificates,
until the Class II-A-3 Principal Balance has been
reduced to zero; and
(f) sixth, to the Class II-A-4 Certificates,
until the Class II-A-4 Principal Balance has been
reduced to zero;
(c) With respect to the Group III Certificates, on any
Distribution Date prior to the Credit Support Depletion Date, to
the extent of the REMIC II Available Distribution Amount for the
Group III Certificates for such Distribution Date remaining
following prior distributions, if any, on such Distribution Date:
(i) first, to the Class III-A-1 Certificates, the Interest
Distribution Amount for such Class of Certificates remaining
unpaid from previous Distribution Dates;
second, to the Class III-A-1 Certificates, the Interest
Distribution Amount for such Class of Certificates for the
current Distribution Date; and
third, to the Class III-A-1 Certificates, as principal,
the Group III Senior Principal Distribution Amount; and
(d) With respect to the Group D-B, Class II-P and Class R-2
Certificates, on any Distribution Date prior to the Credit
Support Depletion Date and subject to the payment of the amounts
pursuant to paragraphs (I)(a), (I)(b) and (I)(c) of this
definition of "REMIC II Distribution Amount", and to the extent
of the REMIC II Available Distribution Amounts for the Group I,
<PAGE> 53
Group II and Group III Certificates for such Distribution Date
remaining following prior distributions, if any, on such
Distribution Date:
(i) first, to the Class II-P Certificates, to the extent of
amounts otherwise available to pay the Subordinate Principal
Distribution Amount (without regard to clause (B)(x) of the
definition thereof) on such Distribution Date, the amount payable
to such Class of Certificates 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;
second, to the Class II-P Certificates, to the extent
of amounts otherwise available to pay the Subordinate
Principal Distribution Amount (without regard to clause
(B)(x) of the definition thereof) on such Distribution Date,
principal in an amount equal to the applicable Class II-P
Fraction of any Realized Loss on a Class II-P Mortgage Loan
incurred in the Prior Period (in each case, other than a
Realized Loss which, pursuant to the definition of "Realized
Loss", is allocated by Pro Rata Allocation); 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 Principal Balance;
third, to the Class D-B-1 Certificates, the Interest
Distribution Amount for such Class of Certificates remaining
unpaid from previous Distribution Dates;
fourth, to the Class D-B-1 Certificates, the Interest
Distribution Amount for such Class of Certificates for the
current Distribution Date;
fifth, to the Class D-B-1 Certificates, the portion of
the Subordinate Principal Distribution Amount allocable to
such Class of Certificates pursuant to the definition of
"Subordinate Principal Distribution Amount", until the Class
D-B-1 Principal Balance has been reduced to zero;
sixth, to the Class D-B-2 Certificates, the Interest
Distribution Amount for such Class of Certificates remaining
unpaid from previous Distribution Dates;
seventh, to the Class D-B-2 Certificates, the Interest
Distribution Amount for such Class of Certificates for the
current Distribution Date;
eighth, to the Class D-B-2 Certificates, the portion of
the Subordinate Principal Distribution Amount allocable to
such Class of Certificates pursuant to the definition of
<PAGE> 54
"Subordinate Principal Distribution Amount", until the Class
D-B-2 Principal Balance has been reduced to zero;
ninth, to the Class D-B-3 Certificates, the Interest
Distribution Amount for such Class of Certificates remaining
unpaid from previous Distribution Dates;
tenth, to the Class D-B-3 Certificates, the Interest
Distribution Amount for such Class of Certificates for the
current Distribution Date;
eleventh, to the Class D-B-3 Certificates, the portion
of the Subordinate Principal Distribution Amount allocable
to such Class of Certificates pursuant to the definition of
"Subordinate Principal Distribution Amount", until the Class
D-B-3 Principal Balance has been reduced to zero;
twelfth, to the Class D-B-4 Certificates, the Interest
Distribution Amount for such Class of Certificates remaining
unpaid from previous Distribution Dates;
thirteenth, to the Class D-B-4 Certificates, the
Interest Distribution Amount for such Class of Certificates
for the current Distribution Date;
fourteenth, to the Class D-B-4 Certificates, the
portion of the Subordinate Principal Distribution Amount
allocable to such Class of Certificates pursuant to the
definition of "Subordinate Principal Distribution Amount",
until the Class D-B-4 Principal Balance has been reduced to
zero;
fifteenth, to the Class D-B-5 Certificates, the
Interest Distribution Amount for such Class of Certificates
remaining unpaid from previous Distribution Dates;
sixteenth, to the Class D-B-5 Certificates, the
Interest Distribution Amount for such Class of Certificates
for the current Distribution Date;
seventeenth, to the Class D-B-5 Certificates, the
portion of the Subordinate Principal Distribution Amount
allocable to such Class of Certificates pursuant to the
definition of "Subordinate Principal Distribution Amount",
until the Class D-B-5 Principal Balance has been reduced to
zero;
eighteenth, to the Class D-B-6 Certificates, the
Interest Distribution Amount for such Class of Certificates
remaining unpaid from previous Distribution Dates;
nineteenth, to the Class D-B-6 Certificates, the
<PAGE> 55
Interest Distribution Amount for such Class of Certificates
for the current Distribution Date;
twentieth, to the Class D-B-6 Certificates, the portion
of the Subordinate Principal Distribution Amount allocable
to such Class of Certificates pursuant to the definition of
"Subordinate Principal Distribution Amount", until the Class
D-B-6 Principal Balance has been reduced to zero;
twenty-first, to each Class of Group D-B Certificates
in order of seniority, the remaining portion, if any, of the
REMIC II Available Distribution Amounts for the Group I,
Group II and Group III Certificates, up to the amount of
unreimbursed Realized Losses previously allocated to such
Class, if any; provided, however, that any amounts
distributed pursuant to this paragraph (I)(d)(xxi) of this
definition of "REMIC II Distribution Amount" shall not cause
a further reduction in the Class Principal Balances of any
of the Group D-B Certificates; and
twenty-second, to the Class R-2 Certificates, the
Residual Distribution Amounts for the Group I, Group II and
Group III Certificates for such Distribution Date.
Notwithstanding the foregoing paragraph (I)(d) of this
definition of "REMIC II Distribution Amount,"
(X) on any Distribution Date occurring after the date on
which one or more of (x) the Class I-A-1 Principal Balance, (y)
the aggregate Class Principal Balance of the Group II-A
Certificates or (z) the Class III-A-1 Principal Balance has been
reduced to zero, all principal received or advanced with respect
to the Mortgage Loans in the Loan Group or Groups related to the
Class A Certificates that have been paid in full (after
distributions of principal to the Class II-P Certificates
pursuant to paragraphs (I)(b)(i), (I)(d)(i) and (I)(d)(ii) above)
shall be paid as principal to the remaining Class A Certificates
of the other Certificate Group or Groups to the extent of and in
reduction of the Class Principal Balances thereof (and, in the
case of the Group II-A Certificates, in the order of priority of
paragraphs (I)(b)(iv)(a) through (I)(b)(iv)(f) above), prior to
any distributions of principal to the Group D-B Certificates
pursuant to paragraph (I)(d) above; provided, however, that if
there are two Certificate Groups with outstanding Class A
Certificates, then such principal will be distributed between
those two Certificate Groups pro rata according to the aggregate
Class Principal Balance of the Class A Certificates of such two
Certificate Groups; provided, further, that principal will not be
distributed as set forth above if on such Distribution Date (a)
the Group D-B Percentage for such Distribution Date is greater
than or equal to 200% of the Group D-B Percentage as of the
Closing Date and (b) the outstanding principal balance of the
<PAGE> 56
Mortgage Loans in each of Loan Group I, Loan Group II and Loan
Group III delinquent 60 days or more averaged 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 Subordinate Component Balance, is less than 50%, and
(Y) if on any Distribution Date any of Loan Group I, Loan
Group II or Loan Group III is an Undercollateralized Group and
the other such Loan Group or Loan Groups is an Overcollateralized
Group, then the REMIC II Available Distribution Amount for the
Certificate Group or Groups related to the Overcollateralized
Group or Groups, to the extent remaining following distributions
of interest and principal to the Certificates in such Certificate
Group pursuant to paragraph (I)(a), (I)(b) or (I)(c) above, as
applicable, shall be paid in the following priority: (1) first,
such remaining amount, up to the Total Transfer Amount for each
such Undercollateralized Group, pro rata according to the Total
Transfer Amount for each such Undercollateralized Group, shall be
distributed (a) first, to the Class A Certificates related to
each such Undercollateralized Group, in payment of any portion of
the Interest Distribution Amounts for such Classes of
Certificates remaining unpaid from such Distribution Date or
previous Distribution Dates, pro rata according to their
respective shares of such unpaid amounts, and (b) second, to the
Class A Certificates related to each such Undercollateralized
Group, as principal (and, in the case of the Group II-A
Certificates, in the order of priority of paragraphs
(I)(b)(iv)(a) through (I)(b)(iv)(f) above), and (2) second, any
remaining amount shall be distributed pursuant to paragraph
(I)(d) above.
(II) For any Distribution Date on or after the Credit
Support Depletion Date, the REMIC II Available Distribution
Amount for such Distribution Date shall be distributed to the
outstanding Classes of Certificates (other than the Class R-1
Certificates) in the following amounts and priority:
(a) With respect to the Group I and Class R-2 Certificates,
on each Distribution Date on or after the Credit Support
Depletion Date, to the extent of the REMIC II Available
Distribution Amount for the Group I Certificates for such
Distribution Date remaining following prior distributions, if
any, on such Distribution Date:
(i) first, to the Class I-A-1 Certificates, the amount payable
to such Class of Certificates on prior Distribution Dates
pursuant to clause (I)(a)(ii) or (II)(a)(ii) of this definition
of "REMIC II Distribution Amount", and remaining unpaid;
second, to the Class I-A-1 Certificates, the Interest
Distribution Amount for such Class of Certificates for the
<PAGE> 57
current Distribution Date;
third, to the Class I-A-1 Certificates, as principal,
the Group I Senior Principal Distribution Amount; and
fourth, after any payments to the Group II or Group III
Certificates pursuant to the last paragraph of this
definition of "REMIC II Distribution Amount," to the Class R-
2 Certificates, the Residual Distribution Amount for the
Group I Certificates for such Distribution Date;
(b) With respect to the Group II and Class R-2
Certificates, on each Distribution Date on or after the Credit
Support Depletion Date, to the extent of the REMIC II Available
Distribution Amount for the Group II Certificates for such
Distribution Date remaining following prior distributions, if
any, on such Distribution Date:
(i) first, to the Class II-P Certificates, 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";
second, to the Group II-A, Class II-X and Class R-2
Certificates, the amount payable to each such Class of
Certificates on prior Distribution Dates pursuant to clause
(I)(b)(iii) or (II)(b)(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;
third, to the Group II-A, Class II-X and Class R-2
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;
fourth, to the Group II-A and Class R-2 Certificates,
pro rata according to Class Principal Balance, as principal,
the Group II Senior Principal Distribution Amount; and
fifth, after any payments to the Group I or Group III
Certificates pursuant to the last paragraph of this
definition of "REMIC II Distribution Amount," to the Class R-
2 Certificates, the Residual Distribution Amount for the
Group II Certificates for such Distribution Date;
(c) With respect to the Group III and Class R-2
Certificates, on each Distribution Date on or after the Credit
Support Depletion Date, to the extent of the REMIC II Available
Distribution Amount for the Group III Certificates for such
Distribution Date remaining following prior distributions, if
<PAGE> 58
any, on such Distribution Date:
(i) first, to the Class III-A-1 Certificates, the amount payable
to such Class of Certificates on prior Distribution Dates
pursuant to clause (I)(c)(iii) or (II)(c)(iii) of this definition
of "REMIC II Distribution Amount", and remaining unpaid;
second, to the Class III-A-1 Certificates, the Interest
Distribution Amount for such Class of Certificates for the
current Distribution Date;
third, to the Class III-A-1 Certificates, as principal,
the Group III Senior Principal Distribution Amount; and
fourth, after any payments to the Group I or Group II
Certificates pursuant to the last paragraph of this
definition of "REMIC II Distribution Amount," to the Class R-
2 Certificates, the Residual Distribution Amount for the
Group III Certificates for such Distribution Date.
If on any Distribution Date any of Loan Group I, Loan Group
II or Loan Group III is an Undercollateralized Group and the
other such Loan Group or Groups is an Overcollateralized Group,
then the REMIC II Available Distribution Amount for the
Certificate Group or Groups related to the Overcollateralized
Group or Groups, to the extent remaining following distributions
of interest and principal to the Certificates in such Certificate
Group pursuant to paragraph (II)(a)(i) through (II)(a)(iii),
paragraph (II)(b)(i) through (II)(b)(iv) or paragraph (II)(c)(i)
through (II)(c)(iii), as applicable, shall be paid in the
following priority: (1) first, such remaining amount, up to an
amount equal to the Total Transfer Amount for each such
Undercollateralized Group, pro rata according to the Total
Transfer Amount for each such Undercollateralized Group, shall be
distributed (a) first, to the Class A Certificates related to
each such Undercollateralized Group, in payment of any portion of
the Interest Distribution Amounts for such Classes of
Certificates remaining unpaid from such Distribution Date or
previous Distribution Dates, pro rata according to their
respective shares of such unpaid amounts, and (b) second, to the
Class A Certificates related to each such Undercollateralized
Group, as principal, pro rata according to Class Principal
Balance, and (2) second, any remaining amount shall be
distributed pursuant to paragraphs (II)(a)(iv), (II)(b)(v) and
(II)(c)(iv) above, as applicable; provided that if there are two
Overcollateralized Groups and the sum of the remaining REMIC II
Available Distribution Amounts for the Certificate Groups related
to such Overcollateralized Groups exceeds the Total Transfer
Amount for the Undercollateralized Group, then the sum of such
remaining REMIC II Available Distribution Amounts will be
distributed to the Certificate Group related to the
Undercollateralized Group in accordance with clause (1) of this
<PAGE> 59
paragraph pro rata according to such remaining REMIC II Available
Distribution Amounts.
REMIC II Regular Interests: The Classes of interests in the
REMIC II Trust Fund designated as "regular interests" in the
table titled "REMIC II Interests" 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
REMIC II Regular Interests and the Class R-2 Certificates issued
hereunder.
Residual Certificates: With respect to REMIC I, the Class R-
1 Certificates, which are being issued in a single class, and
with respect to REMIC II, the Class R-2 Certificates, which are
being issued in a single class. The Class R-1 and Class R-2
Certificates are hereby designated the sole Class of "residual
interests" in REMIC I and REMIC II, 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 and for Loan Group I, Loan
Group II and Loan Group III, any portion of the REMIC I Available
Distribution Amount for Loan Group I, Loan Group II and Loan
Group III, respectively, remaining after all distributions of
such REMIC I Available Distribution Amount pursuant to clause
(a), (b) and (c), as applicable, of the definition of "REMIC I
Distribution Amount" (other than the distribution pursuant to the
last subclause thereof). On any Distribution Date, with respect
to the Class R-2 Certificates and for the Group I, Group II and
Group III Certificates, any portion of the REMIC II Available
Distribution Amount for the Group I, Group II and Group III
Certificates, respectively, remaining after all distributions of
such REMIC II Available Distribution Amount pursuant to clauses
(I)(a), (I)(b), (I)(c), (I)(d), (II)(a), (II)(b) and (II)(c), as
applicable, of the definition of "REMIC II Distribution Amount"
(other than the distributions pursuant to the last subclause of
clauses (I)(d), (II)(a), (II)(b) and (II)(c)). Upon termination
of the obligations created by this Agreement and the REMIC I
Trust Fund and the REMIC II 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 and Class R-2 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,
<PAGE> 60
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.
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, Group II, Group III and
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. In addition, any prepayment penalty received on a
Mortgage Loan will be paid as additional servicing compensation
to the Master Servicer or the related Servicer.
<PAGE> 61
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: The Special Hazard Coverage on the
most recent anniversary of the Cut-Off Date (calculated in
accordance with the second sentence of this paragraph) or, if
prior to the first such anniversary, $3,951,854, in each case
reduced by Special Hazard Losses allocated to the Certificates
since the most recent anniversary of the Cut-Off Date (or, if
prior to the first such anniversary, since the Cut-Off Date). On
each anniversary of the Cut-Off Date, the 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 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 and (c) twice the unpaid principal
balance of the largest single Mortgage Loan, in each case
calculated as of the Due Date in the immediately preceding month,
and (2) $3,951,854 as reduced by the Special Hazard Losses
allocated to the Certificates since the Cut-Off Date.
The 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.
Special Hazard Loss: A Realized Loss (or portion thereof)
with respect to a Mortgage Loan arising from 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 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,
<PAGE> 62
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.
Special Primary Insurance Policy: Each Primary Insurance
Policy covering a Group I Loan the premium of which is payable by
the Trustee pursuant to Section 4.04(a), as identified in the
Mortgage Loan Schedule.
Special Primary Insurance Premium: With respect to each
Special Primary Insurance Policy, the monthly premium payable
thereunder.
Step Down Percentage: For any Distribution Date, the
percentage indicated below:
Distribution Date Occurring In Step Down Percentage
May 2000 through April 2005 0%
May 2005 through April 2006 30%
May 2006 through April 2007 40%
May 2007 through April 2008 60%
May 2008 through April 2009 80%
May 2009 and thereafter 100%
Stripped Interest Rate: For each Group II Loan, the excess,
if any, of the Pass-Through Rate for such Mortgage Loan over
8.000% per annum.
Subordinate Certificates: The Group D-B Certificates.
Subordinate Component Balance: With respect to Loan Group I
at any time, the then outstanding aggregate Principal Balance of
the Group I Loans minus the then outstanding Class I-A-1
Principal Balance. With respect to Loan Group II at any time, the
then outstanding aggregate Principal Balance of the Group II
Loans (less the applicable Class II-P Fraction thereof with
respect to any Class II-P Mortgage Loan) minus the then
outstanding aggregate Class Principal Balance of the Group II-A
and Residual Certificates. With respect to Loan Group III at any
time, the then outstanding aggregate Principal Balance of the
Group III Loans minus the then outstanding Class III-A-1
Principal Balance.
<PAGE> 63
Subordinate Liquidation Amount: For any Distribution Date,
the excess, if any, of the aggregate of Liquidation Principal for
all Mortgage Loans which became Liquidated Mortgage Loans during
the Prior Period, over the sum of the Group I Senior Liquidation
Amount, the Group II Senior Liquidation Amount and the Group III
Senior Liquidation Amount for such Distribution Date.
Subordinate Percentage: The Group I Subordinate Percentage,
Group II Subordinate Percentage or Group III Subordinate
Percentage, as applicable.
Subordinate Principal Distribution Amount: For 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, (ii) 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 Certificates pursuant to clause (I)(b)(i) of the
definition of "REMIC II Distribution Amount"), (iii) the Group
III Subordinate Percentage of the Principal Payment Amount for
Loan Group III, (iv) the Subordinate Principal Prepayments
Distribution Amount (without regard to the proviso in the
definition thereof) and (v) the Subordinate Liquidation Amount
over (B) the sum of (x) the amounts required to be distributed to
the Class II-P Certificates 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 one or more of the
Class I-A-1 Principal Balance, the aggregate Class Principal
Balance of the Group II-A Certificates or the Class III-A-1
Principal Balance has been reduced to zero, principal paid from
the REMIC II Available Distribution Amount related to such Class
A Certificates to the remaining Class A Certificates, as set
forth in clause (X) of the sentence immediately following
paragraph (I)(d) of the definition of "REMIC II Distribution
Amount," and (z) the amounts paid from the REMIC II Available
Distribution Amount for the Certificate Group or Groups related
to an Overcollateralized Group or Groups to the Class A
Certificates related to an Undercollateralized Group or Groups
pursuant to clause (Y) of the sentence immediately following
paragraph (I)(d) of the definition of "REMIC II Distribution
Amount."
On any Distribution Date, the Subordinate Principal
Distribution Amount shall be allocated pro rata, by Class
Principal Balance, among the Classes of Group D-B Certificates
and paid in the order of distribution to such Classes pursuant to
clause (I)(d) 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 D-B
Certificates is less than such Subordination Level as of the
Closing Date, the pro rata portion of the Subordinate Principal
<PAGE> 64
Prepayments Distribution Amount otherwise allocable to the Class
or Classes of Group D-B Certificates junior to such Class will be
distributed to the most senior Class of Group D-B Certificates
for which the Subordination Level is less than the Subordination
Level as of the Closing Date, and to the Class or Classes of
Group D-B Certificates 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 D-B
Certificates shall be as follows: Class D-B-1, Class D-B-2, Class
D-B-3, Class D-B-4, Class D-B-5 and Class D-B-6.
Subordinate Principal Prepayments Distribution Amount: For
any Distribution Date, the sum of (i) the Group I Subordinate
Prepayment Percentage of the Principal Prepayment Amount for Loan
Group I, (ii) 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 Certificates pursuant to clause (I)(b)(i) of the
definition of "REMIC II Distribution Amount") and (iii) the Group
III Subordinate Prepayment Percentage of the Principal Prepayment
Amount for Loan Group III; provided, however, that if the amount
specified in clause (B) of the definition of "Subordinate
Principal Distribution Amount" is greater than the sum of the
amounts specified in clauses (A)(i), (A)(ii), (A)(iii) and (A)(v)
of such definition, then the Subordinate Principal Prepayments
Distribution Amount shall be reduced by the amount of such
excess.
Subordination Level: On any specified date, with respect to
any Class of Group D-B Certificates, the percentage obtained by
dividing the sum of the Class Principal Balances of the Classes
of Group D-B Certificates which are subordinate in right of
payment to such Class by the aggregate Class Principal Balance of
the Certificates as of such date prior to giving effect to
distributions of principal or interest or allocations of Realized
Losses on the Mortgage Loans on such date.
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.
Tax Matters Person: A Holder of a Class R-1 Certificate,
with respect to REMIC I, and a Holder of a Class R-2 Certificate,
with respect to REMIC II, in each case with a Percentage Interest
of at least 0.01% or any Permitted Transferee of such Class R-1
or Class R-2 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 or Class R-2 Certificate. The Company is hereby appointed to
act as the Tax Matters Person for REMIC I so long as it holds a
<PAGE> 65
Class R-1 Certificate, and to act as the Tax Matters Person for
REMIC II so long as it holds a Class R-2 Certificate, in each
case with a Percentage Interest of at least 0.01%. The Company is
hereby appointed to act as agent for the Tax Matters Person for
either REMIC I or REMIC II, to perform the functions of such Tax
Matters Person as provided herein, so long as the Company is the
Master Servicer hereunder, in the event that the Company ceases
to hold a Class R-1 or Class R-2 Certificate, as applicable, with
the required Percentage Interest. In the event that the Company
ceases to be the Master Servicer hereunder, the successor Master
Servicer is hereby appointed to act as agent for the Tax Matters
Person for REMIC I and REMIC II, to perform the functions of such
Tax Matters Person as provided herein. If the Tax Matters Person
for REMIC I or REMIC II becomes a Disqualified Organization, the
last preceding Holder, that is not a Disqualified Organization,
of the Class R-1 or Class R-2 Certificate, as applicable, held by
the Disqualified Organization shall be Tax Matters Person for
such trust pursuant to and as permitted by 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).
Total Transfer Amount: For any Distribution Date and for
any Undercollateralized Group, an amount equal to the sum of the
Interest Transfer Amount and the Principal Transfer Amount for
such Undercollateralized Group.
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.
Trust: The pool of assets consisting of the Trust Fund
conveyed pursuant to Section 2.01 of this Agreement.
Trust Fund: The corpus of the trust created pursuant to
Section 2.01 of this Agreement. The Trust Fund consists of (i)
the PNC Mortgage Loans and (upon purchase thereof by the Trustee
pursuant to Section 2.01) the Clipper Mortgage Loans and all
rights pertaining thereto; (ii) such assets as from time to time
<PAGE> 66
may be held by the Trustee (or its duly appointed agent) in the
Certificate Account (including an initial deposit therein on the
Closing Date by the Company in the amount of the Clipper Mortgage
Loan Purchase Amount for the purchase by the Trustee of the
Clipper Mortgage Loans pursuant to Section 2.01, which initial
deposit shall be irrevocable) 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 or a Buydown Fund Account 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.
Trustee: State Street Bank and Trust Company, 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 Loans in such Loan Group and (b) aggregate Curtailment
Shortfall with respect to the Mortgage Loans in such 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 Certificates and the portions of the
Group D-B Certificates that derive their Interest Distribution
Amounts from the Group I Loans, pro rata according to the amount
of the Interest Distribution Amount or portion thereof 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 Group II and Residual Certificates and the
portions of the Group D-B Certificates that derive their Interest
Distribution Amounts from the Group II Loans, pro rata according
<PAGE> 67
to the amount of the Interest Distribution Amount or portion
thereof 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 Certificates and the portions of the
Group D-B Certificates that derive their Interest Distribution
Amounts from the Group III Loans, pro rata according to the
amount of the Interest Distribution Amount or portion thereof to
which each such Class or portion thereof would otherwise be
entitled in reduction thereof.
Uncompensated Interest Shortfall for Loan Group I shall be
allocated to the Class D-Y-1 and Class D-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 II shall be
allocated to the Class D-Y-2, Class D-Z-2 and Class II-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.
Uncompensated Interest Shortfall for Loan Group III shall be
allocated to the Class D-Y-3 and Class D-Z-3 Regular Interests,
pro rata according to the amount of the Interest Distribution
Amount or portion thereof to which each such Class of Regular
Interests would otherwise be entitled in reduction thereof.
Undercollateralized Group: For any Distribution Date, Loan
Group I, if immediately prior to such Distribution Date the Class
I-A-1 Principal Balance is greater than the aggregate Principal
Balance of the Group I Loans; for any Distribution Date, Loan
Group II, if immediately prior to such Distribution Date the
aggregate Class Principal Balance of the Group II-A and Residual
Certificates is greater than the aggregate Principal Balance of
the Group II Loans (less the applicable Class II-P Fraction
thereof with respect to each Class II-P Mortgage Loan); and for
any Distribution Date, Loan Group III, if immediately prior to
such Distribution Date the Class III-A-1 Principal Balance is
greater than the aggregate Principal Balance of the Group III
Loans.
Underwriting Standards: The underwriting standards of the
Company, Allied Mortgage Corporation, Commerce Security Bank,
Countrywide Home Loans, Inc., Crossland Mortgage Corp., CTX
Mortgage Company, Dime Mortgage Company, Inc., Downey Savings &
Loan Association, F.A., The Jandel Group, L.L.C. (doing business
as First Caliber Mortgage), Globe Mortgage America, GMAC Mortgage
Corporation, Greenpoint Mortgage Corp., HomeSide Lending., Inc.,
Imperial Home Loans, Inc., IndyMac, Inc., Mortgage Network, Inc.,
<PAGE> 68
Numax Mortgage Corporation, Old Kent Mortgage Company, Prism
Mortgage Company, Sierra Pacific Mortgage Company, Inc., Suntrust
Mortgage, Inc., Taylor, Bean & Whitaker, Temple-Inland Mortgage
Corporation and Washtenaw Mortgage Company.
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. The "related Due
Date" for any Withdrawal Date is the Due Date immediately
preceding the related Distribution Date.
ARTICLE II
Conveyance of the Trust Funds; REMIC Election and Designations;
Original Issuance of Certificates
Section 2.01. Conveyance of the Trust Fund; REMIC Election and
Designations. The Trust 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 the Trust is to hold the
Trust Fund and provide for the creation of the REMIC I Regular
Interests and for the issuance, execution and delivery of the
Class R-1 Certificates. The assets of the Trust shall consist of
the Trust Fund. The Trust shall be irrevocable. The Trust shall
be deemed to consist of three sub-trusts, one with respect to
each of the Group I, Group II and Group III Loans.
The assets of the Trust shall remain in the custody of the
Trustee, on behalf of the Trust, and shall be kept in the Trust
except as otherwise expressly set forth herein. Moneys to the
credit of the Trust shall be held by the Trustee and invested as
provided herein. All assets received and held in the Trust will
not be subject to any right, charge, security interest, lien or
claim of any kind in favor of State Street Bank and Trust Company
in its own right, or any Person claiming through it. The
<PAGE> 69
Trustee, on behalf of the Trust, shall not have the power or
authority to transfer, assign, hypothecate, pledge or otherwise
dispose of any of the assets of the Trust to any Person, except
as permitted herein. No creditor of a beneficiary of the Trust,
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 the
Trust, except in accordance with the terms of this Agreement.
Concurrently with the execution and delivery hereof, the
Company (i) 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 Trust Fund (other than the
Clipper Mortgage Loans), including but not limited to all
scheduled payments of principal and interest due after the Cut-
Off Date and received by the Company with respect to the PNC
Mortgage Loans at any time, and all Principal Prepayments
received by the Company after the Cut-Off Date with respect to
the PNC Mortgage Loans (such transfer and assignment by the
Company to be referred to herein as the "Conveyance", and the
assets so transferred and assigned to be referred to herein as
the "PNC Conveyed Assets") and (ii) shall deposit into the
Certificate Account the Clipper Mortgage Loan Purchase Amount.
Concurrently with the execution and delivery hereof, the Trustee
shall (a) execute and deliver the Clipper Loan Sale Agreement,
and withdraw from the Certificate Account the Clipper Mortgage
Loan Purchase Amount and apply such amount to payment of the
purchase price for the assets conveyed to the Trustee under the
Clipper Loan Sale Agreement and (b) execute and deliver the
Protective Transfer Agreement. The Trustee shall have no duty to
review or otherwise determine the adequacy of the Clipper Loan
Sale Agreement and the Protective Transfer Agreement. The Clipper
Mortgage Loans and the other assets conveyed to the Trustee under
the Clipper Loan Sale Agreement and the Protective Transfer
Agreement shall become part of the Trust Fund. The Trustee hereby
accepts the Trust created hereby and accepts delivery of the
Trust Fund on behalf of the Trust 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 PNC Conveyed Assets to the Trustee by the
Company as provided in this Section 2.01 be, and be construed as,
an absolute sale of the PNC Conveyed Assets. It is, further, not
the intention of the parties that such Conveyance be deemed a
pledge of the PNC Conveyed Assets 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
PNC Conveyed Assets are held to be the property of the Company,
<PAGE> 70
or if for any other reason this Agreement is held or deemed to
create a security interest in the PNC Conveyed Assets, 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 PNC Mortgage Loans identified
on the Mortgage Loan Schedule, including the related
Mortgage Notes, Mortgages, Cooperative Stock Certificates,
and Cooperative Leases, all related Substitute Mortgage
Loans and all distributions with respect to such PNC
Mortgage Loans and related Substitute Mortgage Loans payable
on and after the Cut-Off Date; (ii) the Certificate Account,
the Investment Account, and all money or other property held
therein, and the Custodial Accounts for P&I and the
Custodial Accounts for Reserves (to the extent of the
amounts on deposit or other property therein attributable to
the Mortgage Loans); 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 and Cooperative
Leases related to the PNC Mortgage Loans and such other goods,
letters of credit, advices of credit, instruments, money,
<PAGE> 71
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 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 PNC Conveyed
Assets, 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 third 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 PNC Mortgage Loans, which shall on original issuance
thereof and at all times be registered in the name of the
Trustee. In the event that the Mortgage Files delivered or caused
to be delivered by Clipper to the Trustee with respect to the
Clipper Mortgage Loans pursuant to the Clipper Loan Sale
Agreement do not include all the documents or instruments
required to be included therein pursuant to the definition of
"Mortgage File" herein, the Company shall deliver or cause to be
delivered to the Trustee or Custodian such missing documents or
instruments.
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, Clipper, the
Company or the Master Servicer, and the Company shall cause to be
<PAGE> 72
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." Notwithstanding the
immediately preceding sentence, in the event that any Mortgage
Loan is delivered to the Trustee by a custodian which is not an
affiliate of the Company and the related Mortgage File does not
contain an assignment of the Mortgage as required by clause
(X)(iii)(1) or clause (X)(iii)(2) of the definition of "Mortgage
File," the Company shall cause such custodian promptly to deliver
such an assignment, but in no event later than 30 days after the
Closing Date. 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 is not included in the Mortgage File
delivered to the Trustee prior to or concurrently with the
execution and delivery hereof or of the Clipper Loan Sale
Agreement, as applicable (due to a delay on the part of the
recording office), the Company shall 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 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
<PAGE> 73
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 is not included in the Mortgage File delivered to
the Trustee prior to or concurrently with the execution and
delivery hereof or of the Clipper Loan Sale Agreement, as
applicable, 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 or Clipper, as
applicable, 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 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
<PAGE> 74
REMIC I Trust Fund as a REMIC. In furtherance of such intention,
the Tax Matters Person shall, on behalf of the REMIC I Trust
Fund: (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 in the possession of the
Trustee or the Master Servicer, respectively, 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 purchase or 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
<PAGE> 75
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 Tax Matters Person (or any agent therefor appointed
in accordance with the definition of "Tax Matters Person" herein,
if applicable), for the payment of such tax (upon the written
request of the Tax Matters Person or its agent, to the extent
reimbursable, and to the extent that the Tax Matters Person or
its agent 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 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, except as noted, all
documents required (in the case of instruments described in
clauses (X)(v) and (Y)(x) of the definition of "Mortgage File",
known by the Trustee to be required) pursuant to the definition
of "Mortgage File" and 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
<PAGE> 76
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) purchase or 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 purchase or 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,
purchase, 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 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 purchase or
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, and the Company shall be deemed
to have made such representations and warranties as to such
Substitute 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.
Notwithstanding anything herein to the contrary, each Substitute
Mortgage Loan shall be deemed to have the same Pass-Through Rate
as the Mortgage Loan for which it was substituted.
<PAGE> 77
The Purchase Price for each purchased or 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 purchase or 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 PNC Mortgage Loans provided for in Section 2.01 herein and
the conveyance of the Clipper Mortgage Loans provided for in the
Clipper Loan Sale Agreement, 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;
As of the Closing Date, each Mortgage relating to a
Mortgage Loan that is not a Cooperative Loan 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;
Immediately upon the transfer and assignment
contemplated herein and in the Clipper Loan Sale Agreement,
the Trustee shall have good title to, and will be the sole
legal owner of, each PNC Mortgage Loan and Clipper Mortgage
Loan, respectively, free and clear of any encumbrance or
<PAGE> 78
lien (other than any lien under this Agreement);
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;
As of the Closing Date, there is no late assessment for
delinquent taxes outstanding against any Mortgaged Property;
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;
As of the Closing Date, each Mortgaged Property is free
of damage and in good repair, ordinary wear and tear
excepted;
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;
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;
As of the Closing Date, each Mortgage Loan which is not
a Cooperative 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 Fannie Mae or Freddie Mac,
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 Fannie Mae or
Freddie Mac 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
<PAGE> 79
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;
All of the Group I and Group II Loans and approximately
99.8% (by Principal Balance) of the 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;
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;
As of the Closing Date, each insurer issuing a Primary
Insurance Policy holds a rating acceptable to the Rating
Agencies;
Each Mortgage was documented by appropriate Fannie
Mae/Freddie Mac mortgage instruments in effect at the time
of origination, or other instruments approved by the
Company;
As of the Closing Date, the Mortgaged Property securing
each Mortgage relating to a Mortgage Loan that is not a
Cooperative Loan 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;
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;
As of the date of origination, as to Mortgaged
Properties which are units in condominiums or planned unit
developments, all of such units met Fannie Mae or Freddie
Mac requirements, are located in a condominium or planned
unit development projects which have received Fannie Mae or
Freddie Mac approval, or are approvable by Fannie Mae or
Freddie Mac or have otherwise been approved by the Company;
None of the Group I Loans, one of the Group II Loans
and two of the Group III Loans are Buydown Loans;
<PAGE> 80
Based solely on representations of the Mortgagors
obtained at the origination of the related Mortgage Loans,
approximately 71.61% (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 3.72% (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 24.68% (by Principal Balance) of the Group I
Loans will be secured by Mortgaged Properties which were
investor properties of the related Mortgagors; approximately
94.66% (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
1.13% (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
4.21% (by Principal Balance) of the Group II Loans will be
secured by Mortgaged Properties which were investor
properties of the related Mortgagors; and approximately
71.11% (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
1.11% (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
27.78% (by Principal Balance) of the Group III Loans will be
secured by Mortgaged Properties which were investor
properties of the related Mortgagors;
Prior to origination or refinancing, an appraisal of
each Mortgaged Property was made by an appraiser on a form
satisfactory to Fannie Mae or Freddie Mac;
The Mortgage Loans have been underwritten substantially
in accordance with the applicable Underwriting Standards;
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;
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;
With respect to each Cooperative Loan, the Cooperative
Stock that is pledged as security for the Cooperative Loan
<PAGE> 81
is held by a person as a tenant-stockholder (as defined in
Section 216 of the Code) in a cooperative housing
corporation (as defined in Section 216 of the Code);
Each Cooperative Loan is secured by a valid, subsisting
and enforceable (except as such enforcement may be limited
by laws affecting the enforcement of creditors' rights
generally and principles of equity) perfected first lien and
security interest in the related Cooperative Stock securing
the related Mortgage Note, subject only to (a) liens of the
Cooperative for unpaid assessments representing the
Mortgagor's pro rata share of the Cooperative's payments for
its blanket mortgage, current and future real property
taxes, insurance premiums, maintenance fees and other
assessments to which like collateral is commonly subject,
and (b) other matters to which like collateral is commonly
subject which do not materially interfere with the benefits
of the security intended to be provided by the Security
Agreement;
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;
Based upon an appraisal of the Mortgaged Property
securing each Mortgage Loan, approximately 82.48% (by
Principal Balance) of the Group I Loans had a current Loan-
to-Value Ratio less than or equal to 80%, approximately
15.93% (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 approximately 1.59% (by Principal
Balance) of the Group I Loans had a current Loan-to-Value
Ratio greater than 95%; approximately 77.37% (by Principal
Balance) of the Group II Loans had a current Loan-to-Value
Ratio less than or equal to 80%, approximately 20.76% (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 approximately 1.87% (by Principal Balance) of the
Group II Loans had a current Loan-to-Value Ratio greater
than 95%; and approximately 46.42% (by Principal Balance) of
the Group III Loans had a current Loan-to-Value Ratio less
than or equal to 80%, approximately 45.71% (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
approximately 7.87% (by Principal Balance) of the Group III
Loans had a current Loan-to-Value Ratio greater than 95%;
Approximately 70.19% (by Principal Balance) of the
<PAGE> 82
Group I Loans, approximately 41.97% (by Principal Balance)
of the Group II Loans and approximately 38.85% (by Principal
Balance) of the Group III Loans were originated for the
purpose of refinancing existing mortgage debt, including
cash-out refinancings; and approximately 29.81% (by
Principal Balance) of the Group I Loans, approximately
58.03% (by Principal Balance) of the Group II Loans and
approximately 61.16% (by Principal Balance) of the Group III
Loans were originated for the purpose of purchasing the
Mortgaged Property;
Not less than approximately 40.71%, 31.16% and 52.18%
(by Principal Balance) of the Group I Loans, Group II Loans
and Group III Loans, respectively, were originated under
full documentation programs; and
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
purchase or 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 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 purchase or 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 purchase or 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
<PAGE> 83
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 Trust Fund;
Authentication of Class R-1 Certificates. The Trustee
acknowledges the transfer and assignment to it of the property
constituting the 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, does hereby convey to the Company the
REMIC I Regular Interests, and shall cause to be authenticated
and delivered, upon and pursuant to 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.
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 State Street Bank
and Trust Company 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 irrevocably sell, transfer, assign, set over,
and otherwise convey to the Trustee in trust for the benefit of
the Holders of the Certificates (other than the Class R-1
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
<PAGE> 84
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 Certificates (other than 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 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, and all money or other property held
therein, and the Custodial Accounts for P&I and the
Custodial Accounts for Reserves (to the extent of the
amounts on deposit therein attributable to the Mortgage
Loans); (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
<PAGE> 85
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
<PAGE> 86
remain liable for actions of any such Custodian only to the
extent it would otherwise be responsible for such acts hereunder.
The Tax Matters Person shall, on behalf of the REMIC II
Trust Fund, 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 1066 and any appropriate state return to be filed on
behalf of REMIC II for its first taxable year.
The Closing Date is hereby designated as the "startup day"
of REMIC II 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 Tax Matters
Person shall, on behalf of the REMIC II Trust Fund: (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
<PAGE> 87
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 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
Certificateholders (other than the Class R-1 Certificateholders).
In connection therewith, as of the Closing Date, the Trustee
shall cause to be authenticated and delivered, upon and pursuant
to the order of the Company, in exchange for the property
constituting the REMIC II Trust Fund, the Certificates (other
than the Class R-1 Certificates) in Authorized Denominations
evidencing the entire ownership of the REMIC II 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 the Trust Fund 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
<PAGE> 88
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 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
purchase or repurchase any related delinquent Mortgage Loan
delinquent 90 consecutive days or more for an amount equal to its
Purchase Price; provided, however, that the aggregate Purchase
Price of Mortgage Loans so purchased or 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 shall also have the right, but not the
obligation, to direct the Trustee to sell, transfer and assign
any Mortgage Loan that has been delinquent for 90 consecutive
days or more to a third party designated by the Master Servicer
as agent for such third party, upon receipt by the Trustee of
written notification signed by a Servicing Officer of the deposit
in the Certificate Account of the Purchase Price for such
delinquent Mortgage Loan by the Master Servicer on behalf of such
third party or by such third party; provided, however, that if
the Purchase Price is deposited in the Certificate Account by the
Master Servicer on behalf of such third party, the Master
Servicer shall be entitled to retain from the Purchase Price the
amount of any unreimbursed advances made by the Master Servicer
with respect to such Mortgage Loan, and if the Purchase Price is
deposited in the Certificate Account directly by such third
party, the Master Servicer shall be entitled to reimburse itself
for such unreimbursed advances pursuant to Section 3.05(a)(iv).
For purposes of this paragraph, a Mortgage Loan is considered
delinquent for 90 consecutive days if a Monthly Payment is not
<PAGE> 89
received by the first day of the third month following the month
during which such payment was due.
Consistent with the terms of this Section 3.01, the Master
Servicer may waive, modify or vary any term of any Mortgage Loan
or consent to the postponement of strict compliance with any such
term or in any manner grant indulgence to any Mortgagor 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 security for, and the timely and full
collectability of, such Mortgage Loan would not be adversely
affected by such waiver, modification, postponement or
indulgence; provided, however, that (unless the Mortgagor is in
default with respect to the Mortgage Loan or in the reasonable
judgment of the Master Servicer such default is imminent) the
Master Servicer shall not permit any modification with respect to
any Mortgage Loan that would (i) change the applicable Mortgage
Interest Rate, defer or forgive the payment of any principal or
interest, reduce the outstanding principal balance (except for
actual payments of principal) or extend the final maturity date
with respect to such Mortgage Loan, or (ii) be inconsistent with
the terms of any applicable Primary Insurance Policy, FHA
insurance policy, VA guaranty, hazard insurance policy or federal
flood insurance policy. 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
either REMIC to fail to qualify as such under the Code.
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 execute and
furnish to the Master Servicer, at the Master Servicer's
direction, any powers of attorney and other documents prepared by
the Master Servicer and determined by the Master Servicer to be
necessary or appropriate to enable the Master Servicer to carry
out its supervisory, servicing and administrative duties under
this Agreement.
<PAGE> 90
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 Fannie Mae or Freddie Mac 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 either 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 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,
<PAGE> 91
or FHA insurance policy, VA guaranty, Primary Insurance Policy or
other insurance policy (other than any Special Primary 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 (other than any Special Primary
Insurance Policy) 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.
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:
Scheduled installments of principal and interest on the
Mortgage Loans received or advanced by the applicable
Servicers which were due on the related Due Date, net of
<PAGE> 92
Servicing Fees due the applicable Servicers and less any
amounts to be withdrawn later by the applicable Servicers
from the applicable Buydown Fund Accounts;
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
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 into the Certificate Account the
amounts previously deposited into the Investment Account (which
may include a deposit of Eligible Investments) to which the
<PAGE> 93
Holders of the REMIC I Regular Interests and the Class R-1
Certificateholders are entitled or which are necessary for
payment of the Special Primary Insurance Premiums. 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 any Insurance Proceeds or Liquidation Proceeds (including
amounts paid by the Company in respect of any Purchase
Obligation) not previously deposited in the Custodial Accounts
for P&I or the Investment Account, and any amounts paid by the
Company in connection with the exercise of its option to
terminate this Agreement pursuant to Section 9.01 or any other
purchase or repurchase of Mortgage Loans permitted by this
Agreement.
(b) Funds held in the Certificate Account shall be invested
at the written 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. If the Trustee
has not received such written investment directions from the
Master Servicer, the Trustee shall not invest funds held in the
Certificate Account. The Trustee shall have no liability for any
losses on investments of funds held in the Certificate Account.
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:
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;
To reimburse itself or the applicable Servicer for
amounts expended by or for the account of the Master
<PAGE> 94
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;
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;
To reimburse itself or the applicable Servicer for
advances made with respect to related Mortgage Loans (except
for Mortgage Loans purchased pursuant to a Purchase
Obligation or pursuant to the second sentence of the third
paragraph of Section 3.01) which the Master Servicer has
determined to be Nonrecoverable Advances;
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;
To deposit to the Investment Account amounts in the
Certificate Account not required to be on deposit therein at
the time of such withdrawal;
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);
To pay on behalf of the Trustee any Special Primary
Insurance Premium payable by the Trustee pursuant to Section
4.04(a); provided, the Master Servicer shall give written
notice thereof to the Trustee prior to noon New York City
time two Business Days prior to the applicable Distribution
Date; and
after making or providing for the above withdrawals
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.
<PAGE> 95
(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;
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);
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
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
commercially reasonable efforts to keep, and to cause the
Servicers to keep, in full force and effect each Primary
Insurance Policy (except any Special 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, and the Master Servicer shall use commercially
reasonable efforts to keep in full force and effect each Special
Primary Insurance Policy. Notwithstanding the foregoing, the
Master Servicer shall have no obligation to maintain any 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 Appraised Value of the related Mortgaged
Property, unless required by applicable law.
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 Primary Insurance
Policy in effect at the date of the initial issuance of the
Certificates that is required to be kept in force hereunder;
<PAGE> 96
provided, however, that neither the Master Servicer nor any
Servicer shall advance funds for the payment of any premium due
under (i) any Primary Insurance Policy (other than a Special
Primary Insurance Policy) if it shall determine that such an
advance would be a Nonrecoverable Advance or (ii) any Special
Primary Insurance Policy.
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 Fannie
Mae or Freddie Mac. 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
<PAGE> 97
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 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.
<PAGE> 98
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 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.
The Master Servicer may enter into one or more special
servicing agreements with a Lowest Class B Owner, 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.
<PAGE> 99
Any such agreement may contain provisions whereby such Lowest
Class B Owner 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 related delinquent Mortgage Loans, provided that
the Lowest Class B Owner deposits a specified amount of cash with
the Master Servicer that will be available for distribution to
Certificateholders if Liquidation Proceeds are less than they
otherwise may have been had the Servicer acted pursuant to its
normal servicing procedures, (b) purchase such 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 Loans are purchased and/or (c) assume all of the
servicing rights and obligations with respect to such delinquent
Mortgage Loans so long as (i) the Master Servicer has the right
to transfer the servicing rights and obligations of such Mortgage
Loans to another servicer and (ii) such Lowest Class B Owner will
service such Mortgage Loans in accordance with the applicable
Selling and Servicing Contract.
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 three years
after its acquisition by the Master Servicer for REMIC I, unless
the Master Servicer provides to the Trustee an Opinion of Counsel
to the effect that the holding by REMIC I of such Mortgaged
Property subsequent to three 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
<PAGE> 100
selected by the Master Servicer protect and conserve such
property in the same manner and to such extent as is 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 and the Trustee, as applicable, shall comply with
all federal withholding requirements with respect to payments to
Certificateholders of interest or original issue discount that
the Master Servicer or the Trustee 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 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
<PAGE> 101
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
and trust receipt the related Mortgage File to the Master
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, other than Special 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
<PAGE> 102
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 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 make available 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, 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
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
<PAGE> 103
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 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. [Reserved.]
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.
<PAGE> 104
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 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 Holder 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 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;
provided that, with respect to any Balloon Loan that is
delinquent on its maturity date, the Master Servicer will not be
required to advance the related balloon payment but will be
required to continue to make advances in accordance with this
<PAGE> 105
Section 4.02 with respect to such Balloon Loan in an amount equal
to one month's interest on the unpaid principal balance at the
applicable Pass-Through Rate for each Distribution Date to the
extent the Master Servicer deems such amount to be recoverable.
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 written 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 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
<PAGE> 106
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 Company if the Company is no longer
acting as Master Servicer) with a statement in writing of (1) the
amount, as applicable, of (i) interest, (ii) the interest
portion, if any, of Realized Losses, (iii) Uncompensated Interest
Shortfall, (iv) scheduled principal, (v) Principal Prepayments,
(vi) the principal portion of Realized Losses, (vii) the Residual
Distribution Amount and (viii) the Excess Liquidation Proceeds to
be distributed to each Class of REMIC I Regular Interests and
each Class of Certificates on such Distribution Date; (2) the
applicable Class Principal Balance after giving effect to such
distributions (such amounts to be determined in accordance with
the definitions of "REMIC I Distribution Amount" and "REMIC II
Distribution Amount," Section 4.01 and Section 4.04 hereof and
other related definitions set forth in Article I hereof); and (3)
the amount of each Special Primary Insurance Premium payable on
such Distribution Date.
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 Master
<PAGE> 107
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 Master Servicer or such Servicer shall
determine would be a Nonrecoverable Advance, and (b) 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; Payment of
Special Primary Insurance Premiums.
(a) On each Distribution Date, the Trustee (or any duly
appointed paying agent) shall (i) subject to Section
3.05(a)(viii), withdraw from the Certificate Account each Special
Primary Insurance Premium payable on such Distribution Date and
pay such amount to the insurer under the applicable Special
Primary Insurance Policy and (ii) withdraw from the Certificate
Account the REMIC II Available Distribution Amount for such
Distribution Date and distribute, from the amount so withdrawn,
to the extent of the REMIC II Available Distribution Amount, the
REMIC II Distribution Amount to the Certificates (other than the
Class R-1 Certificates), in each case in accordance with the
written statement received from the Master Servicer pursuant to
Section 4.02(b), by (except with respect to the Special Primary
Insurance Premiums) 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 the Special Primary Insurance Premiums, by
means of payment acceptable to the insurer under the respective
Special Primary Insurance Policy.
(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 and
Liquidation Proceeds received and expected to be received during
<PAGE> 108
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:
it is expected that funds sufficient to make such final
distribution will be available in the Certificate Account on
such Distribution Date, and
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 Trustee shall send to each Rating Agency and shall make
available to each Certificateholder the statement required by
Section 4.02(b). The Trustee may make available such statement
and certain other information, including, without limitation,
information required to be provided by the Trustee pursuant to
Sections 3.12 and 3.13, to Certificateholders through the
Trustee's Corporate Trust home page on the world wide web. Such
web page is currently located at
"corporatetrust.statestreet.com". Mortgage-Backed Securities
information is currently available by clicking the "Investor
Information & Reporting" button and selecting the appropriate
transaction. The location of such web page and the procedures
used therein are subject to change from time to time at the
Trustee's discretion.
Upon request by any Certificateholder or Rating Agency or
the Trustee, the Master Servicer shall forward to such
Certificateholder or Rating Agency and 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,
in each case, by Loan Group;
(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
<PAGE> 109
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, in each case, by Loan Group;
(c) The amount of the 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 Bankruptcy Coverage available to
the Senior Certificates remaining as of the close of
business on the applicable Determination Date;
(e) The amount of the Fraud Coverage available to the
Senior Certificates remaining as of the close of business on
the applicable Determination Date; and
(f) The cumulative amount of Realized Losses incurred
in respect of each Loan Group allocated to the related
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.
The Company may make available any reports, statements or
other information to Certificateholders through the Company's
home page on the world wide web. Such web page is located at
"www.pncmsc.com" and information is available by clicking on
"Investor Information."
ARTICLE V
The Certificates
Section 5.01. The Certificates.
(a) The Certificates shall be substantially in the forms
set forth in Exhibit A and B 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 (i) upon and pursuant to the
order of the Company and (ii) 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
<PAGE> 110
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
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).
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
<PAGE> 111
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 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
<PAGE> 112
as Exhibit I.
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.
(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
<PAGE> 113
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.
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.
The provisions of this Section 5.01 set forth prior to
this Section (v) may be modified, added to or eliminated by
the Company and the Trustee, provided that there shall have
been delivered to the Trustee the following:
(A) written notification from each of the Rating
Agencies to the effect that the modification, addition
to or elimination of such provisions will not cause
such Rating Agency to downgrade its then-current
Ratings of the Certificates; 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 or REMIC II to cease to qualify
as a REMIC and will not create a risk that (1) REMIC I
or REMIC II 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.
<PAGE> 114
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
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] 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] CERTIFICATE
BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO HAVE
CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
The Tax Matters Person for each of REMIC I and REMIC
II, 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 ERISA Restricted Certificate
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 an ERISA Restricted
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
<PAGE> 115
Counsel shall not be an expense of the Trustee, the Master
Servicer or the Company or (ii) only in the case of an ERISA
Restricted Certificate that is not a Residual 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); provided that any
transfer, sale, pledge or other disposition of a Junior
Subordinate Certificate shall be exempt from the requirements of
this Section 5.01(e) and Section 5.01(f) if each of the
Certificateholder desiring to effect such transfer and such
Certificateholder's transferee are among the following: (i) DLJ
Mortgage Capital, Inc., (ii) Donaldson, Lufkin & Jenrette
Securities Corporation and (iii) DLJ Mortgage Acceptance Corp.
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, to the effect that such transfer
is exempt from the registration requirements under the Securities
Act, as follows: In the event that a transfer is to be made in
reliance upon an exemption from the Securities Act, the 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 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 or
the Company. Such Opinion of Counsel shall allow for the
forwarding, and the Trustee shall forward, a copy thereof to the
<PAGE> 116
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
Certificate Interest Rates, initial Class Principal Balances and
Final Maturity 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 shall be recorded the name and address of each
Certificateholder. Subject to such reasonable rules and
<PAGE> 117
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 Corporate Trust Office of the
Trustee or at the office of State Street Bank and Trust Company,
N.A., 61 Broadway, New York, New York 10006, Attention: Corporate
Trust Window, 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 cancelled 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 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,
<PAGE> 118
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 II Trust Fund (or with respect to the Class R-1
Certificates, the residual ownership interests in the REMIC I
Trust Fund) as if originally issued, whether or not the lost or
stolen Certificate shall be found at any time.
Section 5.05. Persons Deemed Owners. The Company, the Master
Servicer, the Trustee and any agent of any of them may treat the
Person in whose name any Certificate is registered as the owner
of such Certificate for the purpose of receiving distributions
pursuant to Section 4.01 and Section 4.04 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 of temporary Certificates.
If temporary Certificates are issued, the Trustee shall
cause definitive Certificates to be prepared within ten Business
Days after 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
<PAGE> 119
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 Company 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.
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
<PAGE> 120
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 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
<PAGE> 121
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 Massachusetts and in New York, New York, an
office or agency where Certificates may be surrendered for
registration of transfer or exchange. The Corporate Trust Office
and State Street Bank and Trust Company, N.A., 61 Broadway, New
York, NY 10006, Attention: Corporate Trust Window are 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 Trust Fund or the REMIC I or REMIC II 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
<PAGE> 122
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
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 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 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.
<PAGE> 123
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.
Section 6.05. Trustee Access. The Master Servicer shall afford
the Company and the Trustee, upon reasonable notice, during
normal business hours access to all records maintained by the
Master Servicer, in respect of its rights and obligations
hereunder and access to such of its officers as are responsible
for such obligations. Upon reasonable request, the Master
Servicer, shall furnish the Company and the Trustee with its most
recent financial statements (or, for so long as the Company is
the Master Servicer, the most recent consolidated financial
statements for the Company appearing in the audited financial
statements of PNC Bank Corp., or the entity with whose financial
statements the financial statements of the Company are
consolidated) and such other information as it possesses, and
which it is not prohibited by law or, to the extent applicable,
binding obligations to third parties with respect to
confidentiality from disclosing, regarding its business, affairs,
property and condition, financial or otherwise.
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:
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 II Trust Fund; or
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 have been given to the Master Servicer
by the Trustee, or to the Master Servicer and the Trustee by
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the Holders of Certificates evidencing Percentage Interests
aggregating not less than 25% of the REMIC II Trust Fund; or
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
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
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
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 II 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
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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.
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, subject to the
last sentence of this paragraph, 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
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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 II Trust
Fund; or
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
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
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;
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 II 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 II 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
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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
Section 8.01. Duties of Trustee.
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(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:
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
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 II 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
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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
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:
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;
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;
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;
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 II
Trust Fund; provided, however, that if the payment within a
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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;
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;
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;
In no event shall the Trustee be held liable for acts
or omissions of the Master Servicer (excepting the Trustee's
own actions as Master Servicer). No provision of this
Agreement shall require the Trustee to expend or risk its
own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder (except for the
giving of required notices), or in the exercise of any of
its rights or powers, if it shall have reasonable grounds
for believing the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably
assured to it; and
When the Trustee is acting as Master Servicer pursuant
to Section 7.02, and to the extent permitted under
applicable law, the Trustee is hereby authorized, in making
or disposing of any investment permitted hereunder, to deal
with itself (in its individual capacity) or with any one or
more of its affiliates, whether it or its affiliate is
acting as an agent of the Trustee or of any third person or
dealing as principal for its own account.
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 the use or application of any funds paid to
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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 the Trustee's 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 or the
REMIC II 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,
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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.
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 II 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
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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 and (ii) the Rating Agencies. 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 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 or the REMIC II 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 or the REMIC II Trust Fund and
to vest in such Person or Persons, in such capacity, such title
to the REMIC I Trust Fund or the REMIC II 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
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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 or the REMIC II 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 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
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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, trust company 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 or a principal office and place of business in
Boston, Massachusetts and a 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
<PAGE> 136
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) 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
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, trust company 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 or a principal office and place of business in
Boston, Massachusetts and a 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
<PAGE> 137
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 purchase or 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 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 purchase or repurchase,
over (B) 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 date of
such purchase or 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 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
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
Trust Fund or the disposition of all property acquired upon
foreclosure in respect of any Mortgage Loan, and the payment to
the Certificateholders of all amounts required to be paid to them
<PAGE> 138
hereunder; 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.
On any Distribution Date after the first date on which the
aggregate Principal Balance of the Mortgage Loans is less than
the Clean-Up Call Percentage of the aggregate Principal Balance
of the Mortgage Loans as of the Cut-Off Date, the Company may
purchase or repurchase the outstanding Mortgage Loans and any
Mortgaged Properties acquired by the Trust Fund at the price
stated in clause (i) of the preceding paragraph. If such right is
exercised, the Company shall provide to the Trustee (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 purchase or
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 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 Trust Fund or purchase
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.
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
<PAGE> 139
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 and the REMIC
II Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Company, at its own
expense, obtains for the Trustee an Opinion of Counsel to the
effect that the failure of the REMIC I Trust Fund and REMIC II
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 and the REMIC II Trust
Fund as described in Section 860F of the Code, or (ii) cause the
REMIC I Trust Fund or the REMIC II Trust Fund to fail to qualify
as a REMIC at any time that any Certificates are outstanding:
Within 90 days prior to the final Distribution Date set
forth in the notice given by the Trustee under Section 9.01,
the Tax Matters Person shall prepare the documentation
required and the Tax Matters Person and the Trustee shall
adopt a plan of complete liquidation on behalf of the REMIC
I Trust Fund and the REMIC II 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 and the REMIC
II Trust Fund; and
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 and the REMIC II 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 Tax Matters Person
and the Trustee to adopt such a plan of complete liquidation upon
the written request of the Tax Matters Person and the Trustee and
to take such other action in connection therewith as may be
reasonably requested by the Tax Matters Person or the Trustee.
Section 9.03. Trusts Irrevocable. Except as expressly provided
herein, the trusts created hereby are irrevocable.
<PAGE> 140
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: (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 or the
REMIC II Trust Fund, or to assure the conveyance to the Trustee
of any property included in the REMIC I Trust Fund or the REMIC
II 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
placed 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 II 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 Certificate Interest 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
or the REMIC II 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
<PAGE> 141
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
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.
Without limiting the foregoing, the Trustee shall make the
filings required by Chapter 182 of the Massachusetts General
Laws.
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 or the REMIC II
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 or the REMIC II 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 or the REMIC II 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
<PAGE> 142
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 II 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
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.
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
<PAGE> 143
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 without giving effect
to conflict of laws principles.
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, 55 Water Street,
41st Floor, New York, New York 10041-0003, Attention: Frank
Raiter, or such other address as may hereafter be furnished to
the Trustee and Master Servicer in writing by S&P and (e) in the
case of Fitch, 1 State Street Plaza, New York, New York 10004,
Attention: Glenn Costello, or such other address as may hereafter
be furnished to the Trustee and Master Servicer in writing by
Fitch. 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
<PAGE> 144
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:
the occurrence of an Event of Default pursuant to
Section 7.01, subject to the provisions of Section 8.01(d);
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;
the appointment of a successor Trustee pursuant to
Section 8.08;
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;
any change in the location of the Certificate Account,
any Custodial Account for P&I or any Custodial Account for
Reserves;
<PAGE> 145
the purchase or repurchase of any Mortgage Loan
pursuant to a Purchase Obligation or as permitted by this
Agreement or the purchase or repurchase of the outstanding
Mortgage Loans pursuant to Section 9.01;
the occurrence of the final Distribution Date or the
termination of the trust pursuant to Section 9.01(a)(ii);
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
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 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 in respect of each Distribution Date, without
regard to whether any Certificateholder or the Trustee has
requested such report for such Distribution Date.
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.
By: /s/ Michael A. Aaknes
Its: Vice President
STATE STREET BANK AND TRUST
COMPANY,
as Trustee
<PAGE> 146
By: /s/ James H. Byrnes
Its: Vice President
ACKNOWLEDGEMENT OF CORPORATION
STATE OF ILLINOIS )
) SS.
COUNTY OF LAKE )
On this 3rd day of May, 2000 before me, a Notary Public in
and for said State, personally appeared Michael A. Aaknes, known
to me to be the Vice President of PNC MORTGAGE SECURITIES CORP.,
one of the corporations that executed the within instrument, and
also known to me to be the person who executed it on behalf of
said Corporation, and acknowledged to me that such corporation
executed the within instrument 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)
ACKNOWLEDGEMENT
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
On this 3rd day of May, 2000 before me, a Notary Public in
and for said State, personally appeared James H. Byrnes,
personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are
<PAGE> 147
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/ Maryellen Hunter (SEAL)
Exhibit A
CUSIP 69348R
WN2
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 of this
Certificate is May 3, 2000.
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Company 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 2000-3 Portion of the Class I-A-1
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$23,839,139.00
Class I-A-1 Certificate
<PAGE> 148
Interest Rate: 7.750%
applied to the Class I-A-1
Notional Amount
Cut-Off Date: April 1, 2000
First Distribution Date: May
25, 2000
Last Scheduled Distribution
Date: May 25, 2015
Class I-A-1 Principal Balance
as of the Cut-Off Date:
$23,839,139.00
Class I-A-1 Notional Amount
as of the Cut-Off Date:
$23,843,892.00
Cede & Co.
Registered Owner
Exhibit A
CUSIP 69348R
WP7
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 of this
Certificate is May 3, 2000.
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Company 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.
<PAGE> 149
Series 2000-3 Portion of the Class II-A-1
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$146,100,000.00
Class II-A-1 Certificate Interest Rate: 8.000%
Cut-Off Date: April 1, 2000
First Distribution Date: May
25, 2000
Last Scheduled Distribution Date:
May 25, 2030
Class II-A-1 Principal Balance
as of the Cut-Off Date: $146,100,000.00
Cede & Co.
Registered Owner
Exhibit A
CUSIP 69348R
WQ5
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 of this
Certificate is May 3, 2000.
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Company 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
<PAGE> 150
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
Series 2000-3 Portion of the Class II-A-2
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$31,206,000.00
Class II-A-2 Certificate Interest Rate: 8.000%
Cut-Off Date: April 1, 2000
First Distribution Date: May
25, 2000
Last Scheduled Distribution Date:
May 25, 2030
Class II-A-2 Principal Balance
as of the Cut-Off Date: $31,206,000.00
Cede & Co.
Registered Owner
Exhibit A
CUSIP 69348R
WR3
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 of this
Certificate is May 3, 2000. 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
<PAGE> 151
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 Company 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 2000-3 Portion of the Class II-A-3
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$3,400,000.00
Class II-A-3 Certificate Interest Rate: 8.000%
Cut-Off Date: April 1, 2000
First Distribution Date: May
25, 2000
Last Scheduled Distribution Date:
May 25, 2030
Class II-A-3 Principal Balance
as of the Cut-Off Date: $3,400,000.00
Cede & Co.
Registered Owner
Exhibit A
CUSIP 69348R
WS1
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
<PAGE> 152
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 of this
Certificate is May 3, 2000. [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 Company 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 2000-3 Portion of the Class II-A-4
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$19,744,578.00
Class II-A-4 Certificate Interest Rate: 8.000%
Cut-Off Date: April 1, 2000
First Distribution Date: May 25, 2000
Last Scheduled Distribution Date: May 25, 2030
Class II-A-4 Principal Balance as of the Cut-Off Date: $19,744,578.00
Cede & Co.
Registered Owner
<PAGE> 153
Exhibit A
CUSIP 69348R
WT9
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 of this
Certificate is May 3, 2000.
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Company 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 2000-3 Portion of the Class III-A-1
Principal Balance as of
the Cut-Off Date Evidenced by
this Certificate:
$75,363,600.00
Class III-A-1 Certificate
Interest Rate: 8.500%
applied to the Class III-A-1
Notional Amount
Cut-Off Date: April 1, 2000
First Distribution Date: May
25, 2000
Last Scheduled Distribution
Date: May 25, 2030
Class III-A-1 Principal
Balance
as of the Cut-Off Date:
$75,363,600.00
<PAGE> 154
Class III-A-1 Notional Amount
as of the Cut-Off Date:
$75,447,874.00
Cede & Co.
Registered Owner
Exhibit A
CUSIP 69348R
WV4
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 of this
Certificate is May 3, 2000. 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 Company 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 2000-3 Portion of the Class II-X
Notional Amount as of the
<PAGE> 155
Cut-Off Date Evidenced by this
Certificate:
$10,414,685.00
Class II-X Certificate
Interest Rate: 8.000% applied
to the Class II-X Notional
Amount
Cut-Off Date: April 1, 2000
First Distribution Date: May
25, 2000
Last Scheduled Distribution
Date: May 25, 2030
Class II-X Principal Balance
as of the Cut-Off Date:
$0.00
Class II-X Notional Amount
as of the Cut-Off Date:
$10,414,685.00
Cede & Co.
Registered Owner
Exhibit A
CUSIP 69348R
WX0
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 of this
Certificate is May 3, 2000. 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
<PAGE> 156
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 Company 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 2000-3 Portion of the Class II-P
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
Class II-P Certificate Interest Rate: 0.00% $1,497,379.00
Cut-Off Date: April 1, 2000
First Distribution Date: May 25, 2000
Last Scheduled Distribution Date: May 25, 2030
Class II-P Principal Balance
as of the Cut-Off Date: $1,497,379.00
Cede & Co.
Registered Owner
Exhibit A
CUSIP 69348R
WY8
MORTGAGE PASS-THROUGH CERTIFICATE
Class D-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 of
this Certificate is May 3, 2000. [Assuming that the Mortgage
Loans underlying the Certificates prepay at the prepayment
<PAGE> 157
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 D-B-1 CERTIFICATE PRESENTED FOR
REGISTRATION IN THE NAME OF ANY PERSON, 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
D-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 D-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 2000-3 Portion of the Class D-B-1
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$___________________________
Class D-B-1 Certificate Interest Rate: Variable
Cut-Off Date: April 1, 2000
First Distribution Date: May 25, 2000
Last Scheduled Distribution Date: May 25, 2030
Class D-B-1 Principal Balance
as of the Cut-Off Date: $9,767,053.00
_____________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP 69348R
WZ5
<PAGE> 158
MORTGAGE PASS-THROUGH CERTIFICATE
Class D-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 of
this Certificate is May 3, 2000. [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 D-B-2 CERTIFICATE PRESENTED FOR
REGISTRATION IN THE NAME OF ANY PERSON, 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
D-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 D-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 2000-3 Portion of the Class D-B-2
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$_____________________________
Class D-B-2 Certificate Interest Rate: Variable
<PAGE> 159
Cut-Off Date: April 1, 2000
First Distribution Date: May 25, 2000
Last Scheduled Distribution Date: May 25, 2030
Class D-B-2 Principal Balance
as of the Cut-Off Date: $5,860,232.00
_____________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP 69348R
XA9
MORTGAGE PASS-THROUGH CERTIFICATE
Class D-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 of
this Certificate is May 3, 2000. [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 D-B-3 CERTIFICATE PRESENTED FOR
REGISTRATION IN THE NAME OF ANY PERSON, 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
D-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
<PAGE> 160
THE POOLING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE
AN EXPENSE OF THE TRUSTEE, THE MASTER SERVICER OR THE COMPANY.
The Class D-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 2000-3 Portion of the Class D-B-3
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$_____________________________
Class D-B-3 Certificate Interest Rate: Variable
Cut-Off Date: April 1, 2000
First Distribution Date: May 25, 2000
Last Scheduled Distribution Date: May 25, 2030
Class D-B-3 Principal Balance
as of the Cut-Off Date: $3,581,252.00
_____________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP 69348R
XD3
MORTGAGE PASS-THROUGH CERTIFICATE
Class D-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 of
this Certificate is May 3, 2000. 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
<PAGE> 161
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 D-B-4 CERTIFICATE PRESENTED FOR
REGISTRATION IN THE NAME OF ANY PERSON, 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
D-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 D-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 2000-3 Portion of the Class D-B-4
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$_____________________________
__
Class D-B-4 Certificate Interest Rate: Variable
Cut-Off Date: April 1, 2000
First Distribution Date: May 25, 2000
Last Scheduled Distribution Date: May 25, 2030
Class D-B-4 Principal Balance
as of the Cut-Off Date: $2,116,196.00
_____________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP 69348R
XE1
<PAGE> 162
MORTGAGE PASS-THROUGH CERTIFICATE
Class D-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 of
this Certificate is May 3, 2000. 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 D-B-5 CERTIFICATE PRESENTED FOR
REGISTRATION IN THE NAME OF ANY PERSON, 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
D-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 D-B-5 Certificates will be subordinate in right of
<PAGE> 163
payment to and provide credit support to certain Classes of
Certificates, as described in the Pooling Agreement.
Series 2000-3 Portion of the Class D-B-5
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$_____________________________
__
Class D-B-5 Certificate Interest Rate: Variable
Cut-Off Date: April 1, 2000
First Distribution Date: May 25, 2000
Last Scheduled Distribution Date: May 25, 2030
Class D-B-5 Principal Balance
as of the Cut-Off Date: $1,302,273.00
_____________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP 69348R
XF8
MORTGAGE PASS-THROUGH CERTIFICATE
Class D-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 of
this Certificate is May 3, 2000. 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 D-B-6 CERTIFICATE PRESENTED FOR
REGISTRATION IN THE NAME OF ANY PERSON, THE TRUSTEE SHALL
REQUIRE, EXCEPT AS OTHERWISE SET FORTH IN SECTION 5.01(d) OF
<PAGE> 164
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
D-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 D-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 2000-3 Portion of the Class D-B-6
Principal Balance as of the
Cut-Off Date Evidenced by this
Certificate:
$_____________________________
__
Class D-B-6 Certificate Interest Rate: Variable
Cut-Off Date: April 1, 2000
First Distribution Date: May 25, 2000
Last Scheduled Distribution Date: May 25, 2030
Class D-B-6 Principal Balance
as of the Cut-Off Date: $1,790,628.21
_____________________
Registered Owner
Certificate No. _________
Exhibit A
CUSIP 69348R
XC5
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
<PAGE> 165
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.
IN THE CASE OF ANY CLASS R-2 CERTIFICATE PRESENTED FOR
REGISTRATION IN THE NAME OF ANY PERSON, THE TRUSTEE SHALL REQUIRE
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.
<PAGE> 166
Series 2000-3 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 Certificate Interest
Rate: 8.000%. Additionally the
Class R-2 Certificates are
entitled to the Residual
Distribution Amount as defined
in the Pooling Agreement.
Cut-Off Date: April 1, 2000
First Distribution Date: May 25, 2000
Last Scheduled Distribution Date: May 25, 2030
Class R-2 Principal Balance as of the Cut-Off Date: $50.00
__________________
Registered Owner
Certificate No. _________
Exhibit B
CUSIP 69348R
XB7
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
<PAGE> 167
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.
IN THE CASE OF ANY CLASS R-1 CERTIFICATE PRESENTED FOR
REGISTRATION IN THE NAME OF ANY PERSON, THE TRUSTEE SHALL REQUIRE
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 2000-3 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 Certificate Interest
Rate: 8.000%. 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: April 1, 2000
First Distribution Date: May 25, 2000
Last Scheduled Distribution Date: May 25, 2030
<PAGE> 168
Class R-1 Principal Balance as of the Cut-Off Date: $50.00
__________________
Registered Owner
Certificate No. _________
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
State Street Bank and Trust Company, as Trustee (the "Trustee"),
a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, 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
<PAGE> 169
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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate
to be duly executed.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
(TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
This is one of the Certificates referred to in the
within-mentioned Pooling Agreement.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
Dated:
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
<PAGE> 170
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 II Trust Fund. 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.
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 I Available Distribution Amount
distributable on this Class of Certificate, as requested by the
Holder surrendering the same.
<PAGE> 171
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, the 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 unpaid
accrued interest thereon at the applicable Pass-Through Rate to
the last day of the month in which such repurchase occurs. 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
Principal Balance of the Mortgage Loans at the time of repurchase
being less than ten percent (10%) of the aggregate Principal
Balance of the Mortgage Loans as of the Cut-Off Date.
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.
<PAGE> 172
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.
Exhibit C
[Reserved]
Exhibit D
Mortgage Loan Schedule
Copies of the Mortgage Loan Schedule (which has been
intentionally omitted from this filing) may be obtained from PNC
Mortgage Securities Corp. or State Street Bank and Trust Company
by contacting,
in the case of PNC Mortgage Securities Corp.,
Richie Moore
Master Servicing Department
PNC Mortgage Securities Corp.
75 N. Fairway Drive
Vernon Hills, Illinois 60061
Telephone: (847) 549-3683
Facsimile: (847) 549-3681
in the case of State Street Bank and Trust Company
David Duclos
State Street Corporation
Global Investor Services Group
<PAGE> 173
Corporate Trust
2 Avenue de Lafayette
Boston, MA 02111-1724
Telephone: (617) 662-1314
Facsimile: (617) 662-1435
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
<PAGE> 174
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.
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.
<PAGE> 175
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
<PAGE> 176
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
____________________________________________________________
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
Exhibit F
FORM OF TRANSFEROR CERTIFICATE FOR
JUNIOR SUBORDINATE CERTIFICATES
[Date]
State Street Bank and Trust Company, as Trustee
<PAGE> 177
225 Franklin Street
Boston, MA 02110
Attn: Corporate Trust Department, PNC 2000-3
Re: Purchase of PNC Mortgage Securities Corp. Mortgage Pass-
Through Certificates Series 2000-3, 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
Exhibit G
FORM OF TRANSFEREE'S AGREEMENT FOR
JUNIOR SUBORDINATE CERTIFICATES
[Date]
State Street Bank and Trust Company, as Trustee
225 Franklin Street
Boston, MA 02110
Attn: Corporate Trust Department, PNC 2000-3
PNC Mortgage Securities Corp.
75 N. Fairway Drive
Vernon Hills, Illinois 60061
<PAGE> 178
The undersigned (the "Purchaser") proposes to purchase
Class [ ] Certificates evidencing an undivided interest in PNC
Mortgage Securities Corp. Mortgage Pass-Through Certificates,
Series 2000-3 (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 April 1, 2000 (the "Pooling Agreement"), by and between PNC
Mortgage Securities Corp. ("PNC") and State Street Bank and Trust
Company, as trustee (the "Trustee"), of the PNC Mortgage
Securities Corp. Mortgage Pass-Through Certificates, Series 2000-
3.
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;
(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
<PAGE> 179
(f) If applicable, the Purchaser has complied, and
will continue to comply, with the guidelines established by
Thrift Bulletin 13a issued April 23, 1998, 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).
<PAGE> 180
(c) The Purchaser acknowledges that its Purchased
Certificates bear a legend setting forth the applicable
restrictions on transfer.
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:
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 2000-3
(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
<PAGE> 181
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 __________________, 20__.
[Purchaser]
By:
Its:
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
____________, 20__.
Notary Public
Exhibit H
FORM OF ADDITIONAL MATTER INCORPORATED INTO
THE FORM OF THE CERTIFICATES (OTHER THAN THE CLASS R-1
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
II Trust Fund") whose assets consist of, among other things, a
<PAGE> 182
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
State Street Bank and Trust Company, as Trustee (the "Trustee"),
a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, 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 4.04 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.
<PAGE> 183
IN WITNESS WHEREOF, the Trustee has caused this Certificate
to be duly executed.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
(TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
This is one of the Certificates referred to in the
within-mentioned Pooling Agreement.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
Dated:
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
<PAGE> 184
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 II Trust Fund. 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.
[to be used only in the case of the Junior Subordinate
Certificates:] [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
<PAGE> 185
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 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, the 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 unpaid
accrued interest thereon at the applicable Pass-Through Rate to
the last day of the month in which such repurchase occurs. 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
<PAGE> 186
Principal Balance of the Mortgage Loans at the time of repurchase
being less than ten percent (10%) of the aggregate Principal
Balance of the Mortgage Loans as of the Cut-Off Date.
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.
Exhibit I
TRANSFEROR CERTIFICATE
[Date]
State Street Bank and Trust Company, as Trustee
225 Franklin Street
Boston, MA 02110
Attn: Corporate Trust Department, PNC 2000-3
<PAGE> 187
Re: PNC Mortgage Securities Corp. Mortgage Pass-Through
Certificates, Series 2000-3, Class [R-1] [R-2]
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 2000-3, Class [R-1][R-2] (the "Certificate"),
pursuant to Section 5.01 of the Pooling and Servicing Agreement (the
"Pooling Agreement"), dated as of April 1, 2000 among PNC Mortgage
Securities Corp., as depositor and master servicer (the
"Company") and State Street Bank and Trust Company, 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.
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,
<PAGE> 188
[Seller]
By:
Name:
Title:
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] 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] Certificates, and (ii)
is acquiring the Class [R-1][R-2] 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
<PAGE> 189
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] 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]
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] Certificates
if at any time during the taxable year of the pass-through entity
a disqualified organization is the record holder of an interest
in such entity. (For this purpose, a "pass through entity"
includes a regulated investment company, a real estate investment
trust or common trust fund, a partnership, trust or estate, and
certain cooperatives.)
5. That the Owner is aware that the Trustee will not
register the Transfer of the Class [R-1][R-2] 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] Certificates and the
provisions of Section 5.01 of the Pooling Agreement under which
the Class [R-1][R-2] 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
<PAGE> 190
advice of counsel to constitute a reasonable arrangement to
ensure that the Class [R-1][R-2] 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] 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] 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 and the REMIC II 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]
Certificates has represented to their transferor that, if the
Class [R-1][R-2] Certificates constitute a noneconomic residual
<PAGE> 191
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] Certificates as they become due.
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 _________, 20 __ .
[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
__________________, 20__.
NOTARY PUBLIC
COUNTY OF
STATE OF
My Commission expires the
day
of , 20
Exhibit K
[Reserved]
<PAGE> 192
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 April 1, 2000 between PNC Mortgage Securities Corp., as
Depositor and Master Servicer and State Street Bank and Trust
Company, 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
<PAGE> 193
the Rule 144A Securities.
c. The Buyer has received and reviewed the Private
Placement Memorandum dated as of May 3, 2000 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
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
<PAGE> 194
continue to comply, with the guidelines established by
Thrift Bulletin 13a issued April 23, 1998, by the Office of
Regulatory Activities of the Federal Home Loan Bank System.
[Required only in the case of a transfer of a Class B
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.
Print Name of Seller Print Name of Buyer
By: By:
Name: Name:
Title: Title:
<PAGE> 195
Taxpayer Identification: Taxpayer
Identification:
No.: No.:
Date: Date:
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
$______________________ (the Buyer must own and/or invest on a
discretionary basis at least $100,000,000 in securities unless
the Buyer is a dealer, and, in that case, the Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in
securities) 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
<PAGE> 196
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.
___ 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
<PAGE> 197
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.
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
<PAGE> 198
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:
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.
<PAGE> 199
____ 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.
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:
<PAGE> 200
IF AN ADVISER:
Print Name of Buyer
By:
Name:
Title:
Date:
(SEAL)
Exhibit M
[Date]
[Company]
Re: Pooling and Servicing Agreement dated as of April
1, 2000 by and between PNC Mortgage Securities
Corp., as Depositor and Master Servicer, and State
Street Bank and Trust Company, as Trustee,
relating to PNC Mortgage Securities Corp. Mortgage
Pass-Through Certificates, Series 2000-3
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)(v) and (Y)(x) of the
definition of "Mortgage File," known by the Trustee to be
required) pursuant to the definition of "Mortgage File" and
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
<PAGE> 201
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:
EXHIBIT N
BENEFIT PLAN AFFIDAVIT
State Street Bank and Trust Company, as Trustee
225 Franklin Street
Boston, MA 02110
Attn: Corporate Trust Department, PNC 2000-3
PNC Mortgage Securities Corp.
75 North Fairway Drive
Vernon Hills, IL 60061
RE: PNC MORTGAGE SECURITIES CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-3
(THE "TRUST") CLASS [_-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
<PAGE> 202
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.
IN WITNESS WHEREOF, the Purchaser has caused this
instrument to be duly executed on its behalf, by its duly
authorized officer this _____ day of __________________, 20__.
[Purchaser]
By:
Its:
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
____________, 20__.
Notary Public
Exhibit O
FORM OF LOAN SALE AGREEMENT
<PAGE> 203
CLIPPER RECEIVABLES CORPORATION,
as Seller
STATE STREET BANK AND TRUST COMPANY,
as Trustee
LOAN SALE AGREEMENT
Dated as of April 1, 2000
This Loan Sale Agreement (this "Agreement") is dated as of
April 1, 2000, by and between Clipper Receivables Corporation
("Clipper"), as seller (the "Seller"), and State Street Bank and
Trust Company ("State Street"), as trustee (the "Trustee") under
a Pooling and Servicing Agreement, dated April 1, 2000 (the
"Pooling Agreement") by and between PNC Mortgage Securities Corp.
("PNC") and the Trustee. Pursuant to a Revolving Loan Purchase
Agreement, dated as of December 30, 1998 (the "Revolving Loan
Purchase Agreement"), among Fairway Drive Funding Corp.
("Fairway"), as seller, Clipper, as purchaser, State Street
Capital Corporation, as administrator, State Street, as
relationship bank, and PNC, as servicer, the Seller has purchased
the Conveyed Mortgage Loans (as defined herein) from Fairway. On
the terms and conditions set forth herein, the Seller desires to
sell and the Trustee desires to purchase the Conveyed Mortgage
Loans and certain related rights.
In consideration of the premises and the mutual agreements
hereinafter set forth, the Seller and the Trustee agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms
<PAGE> 204
Whenever used in this Agreement, the following words and
phrases shall have the following meanings specified in this
Article:
Agreement: This Loan Sale Agreement, including all exhibits
and schedules hereto, amendments hereof and supplements hereto.
Clipper: The meaning given in the introductory paragraph
hereto.
Closing Date: May 3, 2000.
Conveyance: The meaning given in Section 2.1.
Conveyed Assets: The meaning given in Section 2.1.
Conveyed Mortgage Loans: The Mortgage Loans sold,
transferred, assigned and conveyed to the Trustee by the Seller
pursuant to Section 2.1 and identified in the Mortgage Loan
Schedule.
Custodian: State Street, or any other party appointed as
Custodian under the Revolving Loan Purchase Agreement.
Cut-Off Date: April 1, 2000.
Fairway: The meaning given in the introductory paragraph
hereto.
Mortgage: The mortgage, deed of trust or other instrument
securing a Mortgage Note.
Mortgage Loan: An individual mortgage loan, including the
related Mortgage Note and Mortgage.
Mortgage Loan File: With respect to any Conveyed Mortgage
Loan, the documents described in the definition of "Mortgage Loan
File" in the Revolving Loan Purchase Agreement.
Mortgage Loan Schedule: The schedule of Mortgage Loans
attached hereto as Schedule I.
Mortgage Note: The note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
PNC: The meaning given in the introductory paragraph hereto.
Person: any individual, corporation, estate, partnership,
limited liability company, joint venture, association, joint
stock company, trust, unincorporated organization, or government
<PAGE> 205
or any agency or political subdivision thereof.
Pooling Agreement: The meaning given in the introductory
paragraph hereto.
Purchase Price: The meaning given in Section 2.1.
Revolving Loan Purchase Agreement: The meaning given in the
introductory paragraph hereto.
Seller: The meaning given in the introductory paragraph
hereto.
State Street: The meaning given in the introductory
paragraph hereto.
Trustee: The meaning given in the introductory paragraph
hereto.
ARTICLE II
SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.1 Sale and Conveyance of Mortgage Loans
Concurrently with the execution and delivery hereof, the
Seller does hereby irrevocably sell, transfer, assign, set over
and otherwise convey to the Trustee, without representation,
warranty or recourse, and the Trustee hereby accepts delivery of,
all the Seller's right, title and interest in and to (i) the
Conveyed Mortgage Loans and all rights pertaining thereto, (ii)
all scheduled payments of principal and interest due after the
Cut-Off Date and received by the Seller with respect to the
Conveyed Mortgage Loans at any time, (iii) all principal
prepayments received by the Seller after the Cut-Off Date with
respect to the Conveyed Mortgage Loans, and (iv) any property
which secured a Conveyed Mortgage Loan and which has been
acquired by foreclosure or deed in lieu of foreclosure after the
Cut-Off Date (such assets described in clauses (i) through (iv)
collectively referred to herein as the "Conveyed Assets," and the
transfer and assignment by the Seller thereof referred to herein
as the "Conveyance").
Notwithstanding anything herein to the contrary, the
transfer of the Conveyed Assets shall not constitute the Trustee
as an intended third-party beneficiary under the Revolving Loan
Purchase Agreement and nothing herein shall entitle the Trustee
to the benefit of any representation, warranty, covenant or
remedy contained therein or assigned thereby.
The price for the Conveyed Assets to be paid by the Trustee
on the Closing Date shall be an amount equal to
<PAGE> 206
$_________________ (the "Purchase Price").
Section 2.2 Custodial Agreement; Release of Mortgage Loan
Files
As of the Closing Date, the ownership of all records and
documents with respect to any Conveyed Mortgage Loan which come
into the possession of the Seller shall immediately vest in the
Trustee and shall be promptly forwarded to the Trustee.
Concurrently herewith, the Seller shall notify the Custodian
of the Conveyance of the Conveyed Mortgage Loans and cause the
Custodian to release the related Mortgage Loan Files to or upon
the order of the Trustee by executing a Notice and Instruction to
Custodian in the form attached hereto as Exhibit A.
ARTICLE III
MISCELLANEOUS PROVISIONS
Section 3.1 Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (including
Section 5-1401 of the New York General Obligations Law) and the
obligations, rights and remedies of the parties hereunder shall
be determined in accordance with such laws without giving effect
to conflict of laws principles other than Section 5-1401 of the
New York General Obligations Law.
Section 3.2 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 Trustee, at 225 Franklin Street,
Boston, MA 02110, Attention: Corporate Trust Department, PNC
Series 2000-3, or such other address as may hereafter be
furnished to the Seller in writing by the Trustee, or (b) in the
case of the Seller, at 225 Franklin Street, 18th Floor, Boston,
MA 02110, Attention: Susan Beck Strader, facsimile no.: (617) 350-
4020, with a copy to State Street Capital Corporation, 225
Franklin Street, Boston, MA 02110, Attention: Susan Beck Strader,
facsimile no.: (617) 350-4020, or such other address as may
hereafter be furnished to the Trustee in writing by the Seller.
Section 3.3 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,
<PAGE> 207
agreements, provisions or terms of this Agreement and shall in no
way affect the validity or enforceability of the other provisions
of this Agreement.
Section 3.4 Waivers and Amendments, Non-contractual Remedies;
Preservation of Remedies
This Agreement may be amended, superseded, canceled, renewed
or extended and the terms hereof may be waived, only by a written
instrument signed by authorized representatives of the parties
or, in the case of a waiver, by an authorized representative of
the party waiving compliance. No such written instrument shall
be effective unless it expressly recites that it is intended to
amend, supersede, cancel, renew or extend this Agreement or to
waive compliance with one or more of the terms hereof, as the
case may be. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any
such right, power or privilege, or any single or partial exercise
of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power
or privilege. The rights and remedies herein provided are
cumulative to, and not exclusive of, any rights or remedies that
any party may otherwise have at law or in equity.
Section 3.5 Captions
All section titles or captions contained in this Agreement
or in any Schedule or Exhibit annexed hereto or referred to
herein, and the table of contents to this Agreement, are for
convenience only, shall not be deemed a part of this Agreement
and shall not affect the meaning or interpretation of this
Agreement.
Section 3.6 Counterparts
This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.
Section 3.7 Entire Agreement
This Agreement (including any Schedule or Exhibit annexed
hereto or referred to herein) between the parties hereto contains
the entire agreement between the parties with respect to the sale
of the Conveyed Assets and the transactions contemplated hereby
and supersedes all prior agreements, written or oral, with
respect thereto.
Section 3.8 Condition Precedent
<PAGE> 208
The Trustee's obligation to purchase the Conveyed Assets
hereunder is conditioned upon and subject to the Trustee's
receipt of available funds from PNC pursuant to the Pooling
Agreement in an amount equal to the Purchase Price.
Section 3.9 No Recourse
No recourse under any obligation, covenant or agreement of
Clipper contained in this Agreement shall be had against J H
Management Corporation ("JHM") or any incorporator, stockholder,
officer, director or employee of Clipper or JHM, by the
enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise, it being
expressly agreed and understood that this Agreement is solely a
corporate obligation of Clipper, and that no personal liability
whatever shall attach to or be incurred by the incorporators,
stockholders, officers, directors or employees of Clipper or JHM,
or any of them under or by reason of any of the obligations,
covenants or agreements of Clipper contained in this Agreement,
or implied therefrom. Trustee expressly waives, as a condition
of and in consideration for the execution of this Agreement, any
and all personal liability against JHM and every such
incorporator, stockholder, officer, director or employee arising
from breaches by Clipper of any such obligations, covenants or
agreements, either at common law or at equity, or by statute or
constitution.
Section 3.10 No Petition
The Trustee agrees that it shall not institute against, or
join any other Person in instituting against, the Seller any
bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, or other proceeding under any federal or
state bankruptcy or similar law, for one year and one day after
the latest maturing Commercial Paper Note (as defined in the
Program Administration Agreement, dated as of September 24, 1992,
between Clipper and State Street Boston Capital Corporation, as
program administrator, as it may be amended from time to time) is
paid.
IN WITNESS WHEREOF, the parties hereto have caused their
names to be signed hereto by their respective officers thereunto
duly authorized as of the date first above written.
CLIPPER RECEIVABLES CORPORATION
By: STATE STREET CAPITAL
CORPORATION, as Program
Administrator
By:
<PAGE> 209
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, solely in its capacity
as Trustee and not individually
By:
Name:
Title:
CONSENTED TO BY:
STATE STREET CAPITAL
CORPORATION, as Program
Administrator
By:
Name:
Title:
Schedule I to Exhibit O
Mortgage Loan Schedule
Exhibit A to Exhibit O
FORM OF NOTICE AND INSTRUCTION TO CUSTODIAN
[Closing Date]
State Street Bank and Trust
Company, as Custodian
225 Franklin Street
Boston, MA 02110
Re: Revolving Loan Purchase Agreement, dated as of December
30, 1998 (the "Revolving Loan Purchase Agreement"),
among Fairway Drive Funding Corp., as seller, Clipper
Receivables Corporation, as purchaser, State Street
Capital Corporation, as administrator, State Street
Bank and Trust Company, as relationship bank, and PNC
Mortgage Securities Corp., as servicer
Ladies and Gentlemen:
<PAGE> 210
We hereby advise you that the mortgage loans specified on
Schedule I hereto (the "Conveyed Mortgage Loans") have been
transferred and assigned, pursuant to a Loan Sale Agreement dated
as of April 1, 2000 between Clipper Receivables Corporation, as
seller (the "Seller"), and State Street Bank and Trust Company,
as trustee (the "Trustee") under a Pooling and Servicing
Agreement dated as of April 1, 2000 by and between PNC Mortgage
Securities Corp. and the Trustee, by the Seller to the Trustee,
and you are hereby instructed to deliver the Mortgage Loan Files
(as defined in the Revolving Loan Purchase Agreement) relating to
such Conveyed Mortgage Loans to the Trustee pursuant to such
instructions as it may provide to you.
Very truly yours,
CLIPPER RECEIVABLES CORPORATION
By: STATE STREET CAPITAL
CORPORATION, as Program
Administrator
By:
Name:
Title:
ACKNOWLEDGED:
STATE STREET BANK AND TRUST
COMPANY, as Custodian
By:
Name:
Title:
Schedule I to Notice and Instruction to Custodian
Exhibit P
FORM OF PROTECTIVE TRANSFER AGREEMENT
This Protective Transfer Agreement (this "Agreement"), dated
as of April 1, 2000, is by and between Fairway Drive Funding
Corp. ("Funding") and State Street Bank and Trust Company (the
"Trustee Bank"), as trustee (in such capacity, the "Trustee")
under a Pooling and Servicing Agreement dated April 1, 2000 by
and between PNC Mortgage Securities Corp. ("PNC") and the
Trustee.
<PAGE> 211
W I T N E S S E T H:
WHEREAS, Funding sold certain mortgage loans and related
property (as defined below, the "Conveyed Assets") to Clipper
Receivables Corporation ("Clipper") pursuant to a Revolving Loan
Purchase Agreement, dated as of December 30, 1998 (the "Funding
Sale Agreement"), among Funding, as Seller, Clipper, as
Purchaser, State Street Capital Corporation, as Administrator,
the Trustee Bank, as Relationship Bank and PNC, as Servicer;
WHEREAS, pursuant to a Loan Sale Agreement (the "Clipper
Loan Sale Agreement"), dated as of April 1, 2000, between Clipper
and the Trustee, Clipper is selling all of its right, title and
interest in and to the Conveyed Assets to the Trustee;
WHEREAS, the Trustee requires assurance of good title to the
Conveyed Assets, and pursuant to Section 13.2(a) of the Funding
Sale Agreement, Funding is obligated to take any action necessary
to protect the interest of Clipper in the Conveyed Assets.
NOW, THEREFORE, in consideration of the covenants made
herein and for other good and valuable consideration the
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. The Funding Sale Agreement provides that it is the
express intent of the parties thereto that the sale, assignment
and transfer of the Conveyed Assets pursuant to the Funding Sale
Agreement constituted a sale of all of Fairway's right, title,
and interest in and to the Conveyed Assets to Clipper.
2. Notwithstanding the foregoing, to the extent that
Funding has retained any interest in the Conveyed Assets, Funding
hereby irrevocably sells, transfers, assigns, sets over and
otherwise conveys to the Trustee, without representation,
warranty or recourse, and the Trustee hereby accepts delivery of,
all of Funding's right, title and interest, if any, in and to (i)
the Mortgage Loans identified on the schedule of Mortgage Loans
attached as Schedule I to the Clipper Loan Sale Agreement (the
"Conveyed Mortgage Loans") and all rights pertaining thereto,
(ii) all scheduled payments of principal and interest due after
April 1, 2000 (the "Cut-Off Date") and received by Funding with
respect to the Conveyed Mortgage Loans at any time, (iii) all
principal prepayments received by Funding after the Cut-Off Date
with respect to the Conveyed Mortgage Loans, and (iv) any
property which secured a Conveyed Mortgage Loan and which has
been acquired by foreclosure or deed in lieu of foreclosure after
the Cut-Off Date (such assets described in clauses (i) through
(iv) collectively referred to herein as the "Conveyed Assets").
3. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (including
<PAGE> 212
Section 5-1401 of the New York General Obligations Law) and the
obligations, rights and remedies of the parties hereunder shall
be determined in accordance with such laws without giving effect
to conflict of laws principles other than Section 5-1401 of the
New York General Obligations Law.
4. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused their
names to be signed hereto by their respective officers thereunto
duly authorized as of the date first above written.
FAIRWAY DRIVE FUNDING CORP.
By:________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, not in its individual
capacity, but solely as
Trustee
By:________________________
Name:
Title:
