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
March 30, 2000
(date of earliest event reported)
PNC MORTGAGE SECURITIES CORP.
as Depositor and Master Servicer under a
Pooling and Servicing Agreement
dated as of March 1, 2000
providing for the issuance of
$297,712,191
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-2
Delaware 333-72879 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 filed 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 March 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: April 14, 2000.
PNC MORTGAGE SECURITIES CORP.
(Registrant)
By: /s/ Richard Careaga
-----------------------------------
Richard Careaga
Second Vice President
(Authorized Officer)
<PAGE> 1
Exhibit 7.1
EXECUTION COPY
PNC MORTGAGE SECURITIES CORP.,
as Depositor and Master Servicer
and
STATE STREET BANK AND TRUST COMPANY,
as Trustee
POOLING AND SERVICING AGREEMENT
$300,871,340.99
PNC Mortgage Securities Corp.
Mortgage Pass-Through Certificates
Series 2000-2
Cut-Off Date: March 1, 2000
This Pooling and Servicing Agreement, dated and effective as of
March 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
Certificates. The Company has duly authorized the execution and
delivery of this Agreement to provide for (i) the conveyance to the
<PAGE> 2
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
March 29, 2000, of the Company (together, the "Prospectus"). The
Junior Subordinate Certificates have been offered for sale pursuant to
a Private Placement Memorandum, dated March 30, 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>
Class Y-1 Regular 7.375% $ 45,563.58 April 2030
Class Y-2 Regular 7.750% 101,430.72 April 2030
Class Z-1 Regular 7.375% 91,081,600.13 April 2030
Class Z-2 Regular 7.750% 207,509,314.56 April 2030
Class X-M Regular 7.750% (2) ------- April 2030
Class P-M Regular (3) 2,133,382.00 April 2030
Class R-1+ Residual 7.750% 50.00 April 2030
<PAGE> 3
* The Distribution Date in the month following the month the latest
maturing Mortgage Loan matures.
+ The Class R-1 Certificates are entitled to receive the Class R-1
Residual Distribution Amount and any Excess Liquidation Proceeds.
(1) Interest distributed to the REMIC I Regular Interests (other than
the Class 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 Class X-M Regular Interest shall accrue interest on the Class
X Notional Amount. The Class X-M Regular Interest shall not be
entitled to receive any distributions of principal.
(3) The Class P-M Regular Interest shall not be entitled to receive
any distributions of interest.
</TABLE>
As provided herein, with respect to REMIC I, the Company will
cause an election to be made on behalf of REMIC I to be treated for
federal income tax purposes as a REMIC. The REMIC I Regular Interests
will be designated regular interests in REMIC I and the Class R-1
Certificates will be designated the sole class of residual interest in
REMIC I, for purposes of the REMIC Provisions.
REMIC II Interests
<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 A-1 Regular 7.750% $ 227,809,475.00 April 2030
Class A-2 Regular 7.750% 27,609,065.00 April 2030
Class A-3 Regular 7.750% 23,750,000.00 April 2030
Class A-4 Regular 7.750% 342,000.00 April 2030
Class A-5 Regular (2) 4,183,751.00 April 2030
Class X Regular 7.750% (3) ----------- April 2030
Class P Regular (2) 2,133,382.00 April 2030
Class B-1 Regular Variable (4) 6,468,734.00 April 2030
Class B-2 Regular Variable (4) 3,760,891.00 April 2030
Class B-3 Regular Variable (4) 1,654,793.00 April 2030
Class B-4 Regular Variable (4) 1,504,357.00 April 2030
<PAGE> 4
Class B-5 Regular Variable (4) 601,742.00 April 2030
Class B-6 Regular Variable (4) 1,053,050.99 April 2030
Class R-2+ Residual 7.750% 50.00 April 2030
* 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 Class R-2
Residual Distribution Amount.
(1) Interest distributed to the Certificates (other than the Class P
and Class A-5 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 P and Class A-5 Certificates shall not be entitled to
receive any distributions of interest.
(3) The Class X Certificates shall accrue interest on the Class X
Notional Amount. The Class X Certificates shall not be entitled to
receive any distributions of principal.
(4) The Certificate Interest Rate on the Class B Certificates shall
equal, on any Distribution Date, the weighted average of the
Certificate Interest Rates on the Class Y-1 and Class Y-2 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 $300,871,341.37
and the Certificates have an Aggregate Certificate Principal Balance
of $300,871,340.99.
W I T N E S S E T H :
WHEREAS, the Company is a corporation duly organized and existing
under and by virtue of the laws of the State of Delaware and has full
corporate power and authority to enter into this Agreement and to
undertake the obligations undertaken by it herein;
WHEREAS, the Company is the owner of the 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
<PAGE> 5
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 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 A-3, Class 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
<PAGE> 6
Junior Subordinate Certificates may be issued in an amount that is not
an integral multiple of $1. With respect to the Class A-3
Certificates, an initial Certificate Principal Balance equal to $1,000
and multiples of $1 in excess thereof. With respect to the Class 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
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%.
Bankruptcy Coverage: $118,081 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 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 Certificates (other than the
Class A-4 Certificates) and the Class P and Class X 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
<PAGE> 7
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 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 Subgroups and amounts withdrawn from the
Certificate Account attributable to each of such Subgroups 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
<PAGE> 8
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.
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 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
<PAGE> 9
Distribution Date remaining after distributions in accordance with
prior clauses of the definition of "REMIC II Distribution Amount."
Class A Certificates: The Class A-1, Class A-2, Class A-3, Class
A-4 and Class A-5 Certificates.
Class A-1 Certificates: The Certificates designated as "Class A-
1" on the face thereof in substantially the form attached hereto as
Exhibit A.
Class A-2 Certificates: The Certificates designated as "Class A-
2" on the face thereof in substantially the form attached hereto as
Exhibit A.
Class A-3 Certificates: The Certificates designated as "Class A-
3" on the face thereof in substantially the form attached hereto as
Exhibit A.
Class A-4 Certificates: The Certificates designated as "Class A-
4" on the face thereof in substantially the form attached hereto as
Exhibit A.
Class A-5 Certificates: The Certificates designated as "Class A-
5" on the face thereof in substantially the form attached hereto as
Exhibit A.
Class A-5 Fraction: 375/7750.
Class A-5 Principal Distribution Amount: For any Distribution
Date, the Subgroup 1 Senior Principal Distribution Amount multiplied
by the Class A-5 Fraction.
Notwithstanding the foregoing, if on such Distribution Date or
any prior Distribution Dates there has been an increase in the Senior
Component Balance for one Subgroup and a reduction in the Senior
Component Balance for the other Subgroup as a result of the
application of the fourth paragraph of the definition of "Realized
Loss" (the net increase in the Senior Component Balance for one
Subgroup resulting from such aggregate increases and reductions
referred to herein as the "Component Increase" and such Subgroup the
"Increased Subgroup"), then the Class A-5 Principal Distribution
Amount calculated in accordance with the first paragraph of this
definition shall be adjusted as follows: (A) if the Increased
Subgroup is Subgroup 1, then the Class A-5 Principal Distribution
Amount shall be reduced by the product of (x) the Subgroup 1 Senior
Principal Distribution Amount, (y) the Class A-5 Fraction and (z) a
fraction, the numerator of which is the Component Increase and the
denominator of which is the Subgroup 1 Senior Component Balance (after
giving effect to any increase or reduction thereof resulting from
allocations of losses but before giving effect to any reduction
thereof resulting from distributions of principal on such Distribution
Date), and (B) if the Increased Subgroup is Subgroup 2, then the Class
<PAGE> 10
A-5 Principal Distribution Amount shall be increased by the product of
(x) the Subgroup 2 Senior Principal Distribution Amount, (y) the Class
A-5 Fraction and (z) a fraction, the numerator of which is the
Component Increase and the denominator of which is the Subgroup 2
Senior Component Balance (after giving effect to any increase or
reduction thereof resulting from allocations of losses but before
giving effect to any reduction thereof resulting from distributions of
principal on such Distribution Date).
Class B Certificates: The Class B-1, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6 Certificates.
Class B-1 Certificates: The Certificates designated as "Class B-
1" on the face thereof in substantially the form attached hereto as
Exhibit A.
Class B-2 Certificates: The Certificates designated as "Class B-
2" on the face thereof in substantially the form attached hereto as
Exhibit A.
Class B-3 Certificates: The Certificates designated as "Class B-
3" on the face thereof in substantially the form attached hereto as
Exhibit A.
Class B-4 Certificates: The Certificates designated as "Class B-
4" on the face thereof in substantially the form attached hereto as
Exhibit A.
Class B-5 Certificates: The Certificates designated as "Class B-
5" on the face thereof in substantially the form attached hereto as
Exhibit A.
Class B-6 Certificates: The Certificates designated as "Class B-
6" on the face thereof in substantially the form attached hereto as
Exhibit A.
Class P Certificates: The Certificates designated as "Class P" on
the face thereof in substantially the form attached hereto as Exhibit
A.
Class P Fraction: For each Class P Mortgage Loan, a fraction, the
numerator of which is 7.375% less the Pass-Through Rate on such Class
P Mortgage Loan and the denominator of which is 7.375%.
Class P Mortgage Loan: Any Mortgage Loan with a Pass-Through Rate
of less than 7.375% per annum.
Class 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 Principal Balance: For any Class of Certificates and for
<PAGE> 11
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 and (y) the portion of Realized Losses allocated to the
Class Principal Balance of such Class pursuant to the definition of
"Realized Loss" with respect to a given Distribution Date. For any
Distribution Date, the reduction of the Class Principal Balance of any
Class of Certificates and 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." Notwithstanding the foregoing, any amounts
distributed in respect of losses pursuant to paragraph (I)(v) or
(I)(vi) of the definition of "REMIC II Distribution Amount" shall not
cause a further reduction in the Class P Principal Balance and any
amounts distributed in respect of losses pursuant to paragraph
(I)(xxv) of the definition of "REMIC II Distribution Amount" shall not
cause a further reduction in the Class Principal Balances of the Class
B Certificates. The Class Principal Balance for the Class A-1
Certificates shall be referred to as the "Class A-1 Principal
Balance," the Class Principal Balance for the Class Y-1 Regular
Interest shall be referred to as the "Class Y-1 Principal Balance" and
so on. The Class Principal Balances for the Class X Certificates and
the Class 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.
Class X Certificates: The Certificates designated as "Class X" on
the face thereof in substantially the form attached hereto as Exhibit
A.
Class 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 Premium Rate Mortgage Loans and (y) a
<PAGE> 12
fraction, the numerator of which is the weighted average of the
Stripped Interest Rates for the Premium Rate Mortgage Loans as of such
Due Date and the denominator of which is 7.750%.
Class 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 Y Principal Reduction Amounts: For any Distribution Date,
the amounts by which the Class Principal Balances of the Class Y-1 and
Class Y-2 Regular Interests, respectively, will be reduced on such
Distribution Date by the allocation of Realized Losses and the
distribution of principal, determined as in Appendix 1.
Class Y Regular Interests: The Class Y-1 and Class Y-2 Regular
Interests.
Class Y-1 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the Class Y-1 Principal Reduction Amount
for such Distribution Date over the principal portion of Realized
Losses allocated to the Class Y-1 Regular Interest on such
Distribution Date.
Class 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 Y-2 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the Class Y-2 Principal Reduction Amount
for such Distribution Date over the principal portion of Realized
Losses allocated to the Class Y-2 Regular Interest on such
Distribution Date.
Class Y-2 Regular Interest: The uncertificated partial undivided
beneficial ownership interest in REMIC I which constitutes a REMIC I
Regular Interest and is entitled to distributions as set forth herein.
Class Z Principal Reduction Amounts: For any Distribution Date,
the amounts by which the Class Principal Balances of the Class Z-1 and
Class Z-2 Regular Interests, respectively, will be reduced on such
Distribution Date by the allocation of Realized Losses and the
distribution of principal, which shall be in each case the excess of
(A) the sum of (x) the excess of the REMIC I Available Distribution
Amount for the related Subgroup (i.e. the "related Subgroup" for the
Class Z-1 Regular Interest is Subgroup 1 and the "related Subgroup"
for the Class Z-2 Regular Interest is Subgroup 2) over the sum of the
amounts thereof distributable (i) to the Class P-M Regular Interest in
respect of principal on Class P Mortgage Loans, (ii) to the Class X-M
Regular Interest, (iii) in respect of interest on the related Class Y
and Class Z Regular Interests and (iv) (in the case of Subgroup 1) to
the Class R-1 Certificates and (y) the amount of Realized Losses
allocable to principal for the related Subgroup (reduced by the
<PAGE> 13
portion of such amount allocable to the Class P-M Regular Interest)
over (B) the Class Y Principal Reduction Amount for the related
Subgroup.
Class Z Regular Interests: The Class Z-1 and Class Z-2 Regular
Interests.
Class Z-1 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the Class Z-1 Principal Reduction Amount
for such Distribution Date over the principal portion of Realized
Losses allocated to the Class Z-1 Regular Interest on such
Distribution Date.
Class 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 Z-2 Principal Distribution Amount: For any Distribution
Date, the excess, if any, of the Class Z-2 Principal Reduction Amount
for such Distribution Date over the principal portion of Realized
Losses allocated to the Class Z-2 Regular Interest on such
Distribution Date.
Class 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.
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.
Clipper Mortgage Loan Purchase Amount: The amount of
$220,014,471.76, 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: March 30, 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.
<PAGE> 14
Company: PNC Mortgage Securities Corp., a Delaware corporation,
or its successor-in-interest.
Compensating Interest: For any Distribution Date, the lesser of
(i) the sum of (a) the aggregate Master Servicing Fee payable with
respect to the Mortgage Loans on such Distribution Date, (b) the
aggregate Payoff Earnings with respect to the Mortgage Loans and (c)
the aggregate Payoff Interest with respect to the Mortgage Loans and
(ii) the aggregate Uncollected Interest with respect to the Mortgage
Loans.
Cooperative: A private, cooperative housing corporation organized
under the laws of, and headquartered in, the State of 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 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
<PAGE> 15
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 2000-2.
Credit Support Depletion Date: The first Distribution Date on
which the aggregate Class Principal Balance of the Class 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 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
<PAGE> 16
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: March 1, 2000.
DCR: Duff and Phelps Credit Rating Co., provided that at any time
it be a Rating Agency.
Definitive Certificates: Certificates in definitive, fully
registered and certificated form.
Depositary Agreement: The Letter of Representations, dated March
28, 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.
<PAGE> 17
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 April 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.
Eligible Investments: Any one or more of the obligations or
securities listed below in which funds deposited in the Investment
Account, the Certificate Account, the Custodial Account for P&I and
the Custodial Account for Reserves may be invested:
(i) Obligations of, or guaranteed as to principal and interest by,
the United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United
States;
(ii) Repurchase agreements on obligations described in clause (i) of
this definition of "Eligible Investments", provided that the unsecured
obligations of the party (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;
<PAGE> 18
(iii) Federal funds, certificates of deposit, time deposits and
bankers' acceptances of any U.S. bank or trust company incorporated
under the laws of the United States or any state (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;
(iv) Obligations of, or obligations guaranteed by, any state of the
United States or the District of Columbia, provided that such
obligations at the date of acquisition thereof shall have the highest
long-term debt ratings available for such securities from the Rating
Agencies;
(v) Commercial paper of any corporation incorporated under the laws
of the United States or any state thereof, which on the date of
acquisition has the highest commercial paper rating of the Rating
Agencies, provided that the corporation has unsecured long term debt
that has one of the two highest unsecured long term debt ratings of
the Rating Agencies;
(vi) Securities (other than stripped bonds or stripped coupons)
bearing interest or sold at a discount that are issued by any
corporation incorporated under the laws of the United States or any
state thereof and have the highest long-term unsecured rating
available for such securities from the Rating Agencies; provided,
however, that securities issued by any such corporation will not be
investments to the extent that investment therein would cause the
outstanding principal amount of securities issued by such corporation
that are then held as part of the Investment Account or the
Certificate Account to exceed 20% of the aggregate principal amount of
all Eligible Investments then held in the Investment Account and the
Certificate Account;
(vii) Units of taxable money market funds (which may be 12b-1
funds, as contemplated under the rules promulgated by the Securities
and Exchange Commission under the Investment Company Act of 1940),
which funds have the highest rating available for such securities from
the Rating Agencies or which have been designated in writing by the
Rating Agencies as Eligible Investments; and
(viii) Such other investments the investment in which will not, as
evidenced by a letter from each of the Rating Agencies, result in the
downgrading or withdrawal of the Ratings;
provided, however, that such obligation or security is held for a
temporary period pursuant to Section 1.860G-2(g)(1) of the Treasury
Regulations, and that such period can in no event exceed thirteen
months.
In no event shall an instrument be an Eligible Investment if such
instrument (a) evidences a right to receive only interest payments
with respect to the obligations underlying such instrument or (b) has
been purchased at a price greater than the outstanding principal
balance of such instrument.
<PAGE> 19
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Restricted Certificate: Any Class B, Class A-4 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 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.
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
<PAGE> 20
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.
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 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, the
amount of interest accrued on the respective Class Principal Balance
or Class Notional Amount, as applicable, 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 P and Class A-5
Certificates and the Class P-M Regular Interest shall equal zero.
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 B-4, Class B-5 and
<PAGE> 21
Class B-6 Certificates.
Last Scheduled Distribution Date: With respect to any Class of
Certificates, the Final Maturity Date for such Class.
Lender: An institution from which the Company purchased any
Mortgage Loans pursuant to a Selling and Servicing Contract.
Liquidated Mortgage Loan: A Mortgage Loan as to which the Master
Servicer or the applicable Servicer has determined in accordance with
its customary servicing practices that all amounts which it expects to
recover from or on account of such Mortgage Loan, whether from
Insurance Proceeds, Liquidation Proceeds or otherwise, have been
recovered. For purposes of this definition, acquisition of a Mortgaged
Property by the Trust Fund shall not constitute final liquidation of
the related Mortgage Loan.
Liquidation Principal: The principal portion of Liquidation
Proceeds received (exclusive of the portion thereof attributable to
distributions to the Class P Certificates pursuant to clauses (I)(i)
and (II)(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-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.
Lockout Adjusted Percentage: For any Distribution Date occurring
prior to the Distribution Date in April 2005, 0%; and for the
Distribution Date occurring in April 2005 and any Distribution Date
thereafter, the Lockout Percentage.
Lockout Liquidation Amount: The aggregate, for each Mortgage Loan
which became a Liquidated Mortgage Loan during the calendar month
preceding the month of the Distribution Date, of the lesser of (i) the
Lockout Percentage of the Principal Balance of such Mortgage Loan
(exclusive of the Class P Fraction thereof, with respect to any Class
P Mortgage Loan) and (ii) the Lockout Percentage of the Liquidation
Principal with respect to such Mortgage Loan.
Lockout Percentage: For any Distribution Date, the aggregate
Class Principal Balance of the Class A-2 and Class A-4 Certificates
divided by the aggregate Principal Balance of the Mortgage Loans (less
<PAGE> 22
the Class P Principal Balance), in each case immediately prior to such
Distribution Date.
Lockout Prepayment Percentage: For any Distribution Date, the
product of the Lockout Percentage and the Step Down Percentage.
Lockout Priority Amount: For any Distribution Date, the sum of
(i) the Lockout Adjusted Percentage of the Principal Payment Amount
(exclusive of the portion thereof attributable to principal
distributions to the Class P Certificates pursuant to clause (I)(i) of
the definition of "REMIC II Distribution Amount"), (ii) the Lockout
Prepayment Percentage of the Principal Prepayment Amount (exclusive of
the portion thereof attributable to principal distributions to the
Class P Certificates pursuant to clause (I)(i) of the definition of
"REMIC II Distribution Amount") and (iii) the Lockout Liquidation
Amount.
Lowest Class B Owner: An unaffiliated owner of (i) a 100%
interest in the Class of Class 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:
<PAGE> 23
(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 2000-2, 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
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);
(ii) The Buydown Agreement, if applicable;
(iii) A Mortgage that is either
(1) the original recorded Mortgage with recording
information thereon for the jurisdiction in which the
Mortgaged Property is located 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
2000-2" 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
2000-2" 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
<PAGE> 24
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
(iii)(1) or this clause (iii)(2);
(iv) A copy of (a) the title insurance policy, or (b) in lieu thereof,
a title insurance binder, a copy of an attorney's title opinion,
certificate or other evidence of title acceptable to the Company; and
(v) For any Mortgage Loan that has been modified or amended, the
original instrument or instruments effecting such modification or
amendment;
and (Y) with respect to each Cooperative Loan:
(i) the original Mortgage Note endorsed to "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 2000-2" 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;
(ii) A counterpart of the Cooperative Lease and the Assignment of
Proprietary Lease to the originator of the Cooperative Loan with
intervening assignments showing an unbroken chain of title from such
originator to the Trustee;
(iii) The related Cooperative Stock Certificate, representing the
related Cooperative Stock pledged with respect to such Cooperative
Loan, together with an undated stock power (or other similar
instrument) executed in blank;
(iv) The original recognition agreement by the Cooperative of the
interests of the mortgagee with respect to the related Cooperative
Loan;
(v) The Security Agreement;
(vi) Copies of the original UCC-1 financing statement, and any
continuation statements, filed by the originator of such Cooperative
Loan as secured party, each with evidence of recording thereof,
evidencing the interest of the originator under the Security Agreement
and the Assignment of Proprietary Lease;
(vii) Copies of the filed UCC-3 assignments of the security
<PAGE> 25
interest referenced in clause (vi) above showing an unbroken chain of
title from the originator to the Trustee, each with evidence of
recording thereof, evidencing the interest of the originator under the
Security Agreement and the Assignment of Proprietary Lease;
(viii) An executed assignment of the interest of the originator in
the Security Agreement, Assignment of Proprietary Lease and the
recognition agreement referenced in clause (iv) above, showing an
unbroken chain of title from the originator to the Trustee;
(ix) An executed UCC-1 financing statement showing the Company 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
(x) For any Cooperative Loan that has been modified or amended, the
original instrument or instruments effecting such modification or
amendment.
Mortgage Interest Rate: For any Mortgage Loan, the per annum rate
at which interest accrues on such Mortgage Loan pursuant to the terms
of the related Mortgage Note.
Mortgage Loan Schedule: The schedule, as amended from time to
time, of Mortgage Loans attached hereto as Exhibit D, which shall set
forth as to each Mortgage Loan the following, among other things:
(i) its loan number,
(ii) the address of the Mortgaged Property,
(iii) the name of the Mortgagor,
(iv) the Original Value of the property subject to the Mortgage,
(v) the Principal Balance as of the Cut-Off Date,
(vi) the Mortgage Interest Rate borne by the Mortgage Note,
(vii) whether a Primary Insurance Policy is in effect as of the
Cut-Off Date,
(viii) the maturity of the Mortgage Note,
(ix) the Servicing Fee and the Master Servicing Fee, and
(x) 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
<PAGE> 26
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 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.
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.
<PAGE> 27
Pass-Through Rate: For each Mortgage Loan, a per annum rate equal
to the Mortgage Interest Rate for such Mortgage Loan less the
applicable per annum percentage rates related to each of (i) the
Servicing Fee and (ii) the Master Servicing Fee. For each Mortgage
Loan, any calculation of monthly interest at such rate shall be based
upon annual interest at such rate (computed on the basis of a 360-day
year of twelve 30-day months) on the unpaid Principal Balance of the
related Mortgage Loan divided by twelve, and any calculation of
interest at such rate by reason of a Payoff shall be based upon annual
interest at such rate on the outstanding Principal Balance of the
related Mortgage Loan multiplied by a fraction, the numerator of which
is the number of days elapsed from the Due Date of the last scheduled
payment of principal and interest to, but not including, the date of
such Payoff, and the denominator of which is (a) for Payoffs received
on a Due Date, 360, and (b) for all other Payoffs, 365.
Paying Agent: Any paying agent appointed by the Trustee pursuant
to Section 8.12.
Payoff: Any Mortgagor payment (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 April 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
<PAGE> 28
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 X Certificates), its Certificate Principal Balance divided by
the applicable Class Principal Balance;
(ii) with respect to the Class X Certificates, the portion of the
Class X Notional Amount evidenced by such Certificate divided by the
Class X Notional Amount; and
(iii) 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 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 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 clause (x)
above shall be increased by one percent (1%) upon the retirement of
the Class X Certificates;
(ii) with respect to any Class X Certificate, one percent (1%) of such
Certificate's Percentage Interest as calculated by paragraph (a)(ii)
of this definition; and
(iii) 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.
<PAGE> 29
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.
Premium Rate Mortgage Loans: The Mortgage Loans having Pass-
Through Rates either (i) in excess of 7.375% per annum and less than
7.750% per annum or (ii) in excess of 7.750% per annum.
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).
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
<PAGE> 30
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 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, the sum of
the Subgroup 1 Principal Payment Amount and the Subgroup 2 Principal
Payment Amount for such Distribution Date.
Principal Prepayment: Any payment of principal on a Mortgage Loan
which constitutes a Payoff or a Curtailment.
Principal Prepayment Amount: For any Distribution Date, the sum
of the Subgroup 1 Principal Prepayment Amount and the Subgroup 2
Principal Prepayment Amount for 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 to all Classes of Certificates (other than the Class P
and Class A-5 Certificates), pro rata according to their respective
Class Principal Balances in reduction thereof (except (x) if the loss
is recognized with respect to a Class P Mortgage Loan, in which case
the applicable Class P Fraction of such loss will first be allocated
to the Class P Certificates and (y) if the loss is recognized with
respect to a Subgroup 1 Loan, in which case the Class A-5 Fraction of
such loss (or of the remainder of such loss, if the applicable Class P
Fraction of such loss has been allocated to the Class P Certificates
in accordance with clause (x) above) will first be allocated to the
Class A-5 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 P and Class A-5 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 P, Class A-5
and Class X Certificates) pro rata according to their respective Class
Principal Balances in reduction thereof; provided, however, that until
<PAGE> 31
the Class A-4 Principal Balance has been reduced to zero, the
principal portion of Realized Losses that would otherwise be allocated
to the Class A-3 Certificates pursuant to this definition shall
instead be allocated to the Class A-4 Certificates, in reduction of
the Class A-4 Principal Balance, and the interest portion of Realized
Losses that would otherwise be allocated to the Class A-3 Certificates
pursuant to this definition shall instead be allocated to the Class A-
4 Certificates, in reduction of accrued but unpaid interest thereon,
and then in reduction of the Class A-4 Principal Balance.
Prospectus: The Prospectus, dated March 29, 2000, and the
Prospectus Supplement, dated March 29, 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 DCR and thereafter,
each nationally recognized statistical rating organization that has
<PAGE> 32
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 each of the Subgroup 1 and Subgroup 2 Loans
shall be allocated to the Class Y, Class Z, Class P-M and Class X-M
Regular Interests as follows: The interest portion of such Realized
Losses, if any, shall be allocated among the Class Y and Class Z
Regular Interests related to each such Subgroup (i.e. the "related"
Subgroup for the Class Y-1 and Class Z-1 Regular Interests is Subgroup
1 and the "related" Subgroup for the Class Y-2 and Class Z-2 Regular
Interests is Subgroup 2) and the Class X-M Regular Interest, pro rata
according to (i) in the case of the Class Y and Class Z Regular
Interests, the amount of interest accrued but unpaid thereon, and (ii)
in the case of the Class X-M Regular Interest, the portion of the
amount of interest accrued but unpaid thereon attributable to such
Subgroup, in each case in reduction thereof. 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 Subgroup
and allocated pursuant to the succeeding sentences. The applicable
Class P Fraction of any principal portion of Realized Losses
attributable to a Class P Mortgage Loan shall be allocated to the
Class P-M Regular Interest in reduction of the principal balance
thereof. The remainder of the principal portion of Realized Losses on
each of the Subgroup 1 and Subgroup 2 Loans shall be allocated, first,
to the Class Y Regular Interest related to the Subgroup to the extent
of the applicable Class 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 Z Regular Interest in
reduction of the Class Principal Balance thereof.
Except for 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, Realized Losses with
<PAGE> 33
respect to the Mortgage Loans shall be allocated among the
Certificates (i) for Realized Losses allocable to principal (a) first,
to the Class B-6 Certificates, until the Class B-6 Principal Balance
has been reduced to zero, (b) second, to the Class B-5 Certificates,
until the Class B-5 Principal Balance has been reduced to zero, (c)
third, to the Class B-4 Certificates, until the Class B-4 Principal
Balance has been reduced to zero, (d) fourth, to the Class B-3
Certificates, until the Class B-3 Principal Balance has been reduced
to zero, (e) fifth, to the Class B-2 Certificates, until the Class B-2
Principal Balance has been reduced to zero, (f) sixth, to the Class B-
1 Certificates, until the Class B-1 Principal Balance has been reduced
to zero, (g) seventh, if the loss is recognized with respect to a
Subgroup 1 Loan, to the Class A-5 Certificates, the Class A-5 Fraction
of such loss, until the Class A-5 Principal Balance has been reduced
to zero, and (h) eighth, to the Class A Certificates (other than the
Class A-5 Certificates) and the 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 P Mortgage Loan, the applicable Class P Fraction of
such loss will first be allocated to the Class 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 B-6 Certificates, in reduction of accrued but
unpaid interest thereon and then in reduction of the Class B-6
Principal Balance, (b) second, to the Class B-5 Certificates, in
reduction of accrued but unpaid interest thereon and then in reduction
of the Class B-5 Principal Balance, (c) third, to the Class B-4
Certificates, in reduction of accrued but unpaid interest thereon and
then in reduction of the Class B-4 Principal Balance, (d) fourth, to
the Class B-3 Certificates, in reduction of accrued but unpaid
interest thereon and then in reduction of the Class B-3 Principal
Balance, (e) fifth, to the Class B-2 Certificates, in reduction of
accrued but unpaid interest thereon and then in reduction of the Class
B-2 Principal Balance, (f) sixth, to the Class B-1 Certificates, in
reduction of accrued but unpaid interest thereon and then in reduction
of the Class B-1 Principal Balance, and (g) seventh, to the Class A
Certificates (other than the Class A-5 Certificates) and the Class X
and Residual Certificates, pro rata according to accrued but unpaid
interest on such Classes, in reduction thereof, and then pro rata
according to their Class Principal Balances in reduction thereof;
provided, however, that (X) if on any Distribution Date multiple
losses are to be allocated both to the Class B Certificates pursuant
to clauses (i)(a) through (i)(f) and to the Senior Certificates
pursuant to clauses (i)(g) and (i)(h), then the proportion of such
losses to be so allocated pursuant to clauses (i)(a) through (i)(f),
on the one hand, and clauses (i)(g) and (i)(h), on the other, shall
first be calculated based on the aggregate amount of losses to be
allocated, and then each individual loss shall be so allocated
pursuant to such clauses in the same proportions calculated for the
losses in the aggregate; and (Y) if on any Distribution Date multiple
losses are to be allocated both to the Class B Certificates pursuant
to clauses (ii)(a) through (ii)(f) and to the Senior Certificates
<PAGE> 34
pursuant to clause (ii)(g), then each such loss shall similarly be so
allocated, in the same proportions as such losses in the aggregate;
provided, further, that until the Class A-4 Principal Balance has been
reduced to zero, all principal losses that would otherwise be
allocated to the Class A-3 Certificates pursuant to clause (i) of this
paragraph shall instead be allocated to the Class A-4 Certificates, in
reduction of the Class A-4 Principal Balance, and all interest losses
that would otherwise be allocated to the Class A-3 Certificates
pursuant to clause (ii) of this paragraph shall instead be allocated
to the Class A-4 Certificates, in reduction of accrued but unpaid
interest on the Class A-4 Certificates, and then in reduction of the
Class A-4 Principal Balance.
If, as a result of the allocation of losses pursuant to the
immediately preceding paragraph, the Senior Component Balance for
either Subgroup becomes greater than the aggregate Principal Balance
of the Mortgage Loans in such Subgroup (reduced by the Class P
Fraction of the Principal Balance of any Class P Mortgage Loan), then
such Senior Component Balance shall be reduced by the amount of such
excess, and such excess shall be added to the Senior Component Balance
for the other Subgroup.
Special Hazard Losses on Mortgage Loans in excess of the Special
Hazard Coverage, Fraud Losses on Mortgage Loans in excess of the Fraud
Coverage and Bankruptcy Losses on Mortgage Loans 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 I Available
Distribution Amount, 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 junior Class of Class
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,
<PAGE> 35
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: On any Distribution Date,
the sum of the following amounts with respect to all of the Mortgage
Loans or, for each Subgroup, with respect to the Mortgage Loans in
such Subgroup, as applicable:
(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 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 Mortgage Loan; and
<PAGE> 36
(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 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:
(i) first, to the Class P-M Regular Interest, the aggregate for all
of the Class P Mortgage Loans of the product for each Class P Mortgage
Loan of the applicable Class P Fraction and the sum of (x) scheduled
payments of principal on such Class 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 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 P
Mortgage Loan during the Payoff Period;
(ii) second, to the Class Y-1, Class Y-2, Class Z-1, Class Z-2 and
Class 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;
(iii) third, to the Class Y-1, Class Y-2, Class Z-1, Class Z-2 and
Class 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;
<PAGE> 37
(iv) fourth, to the Class R-1 Certificates, until the Class Principal
Balance thereof has been reduced to zero (such distributions shall be
deemed to be made from the REMIC I Available Distribution Amount for
Subgroup 1);
(v) fifth, to the Class Y-1, Class Y-2, Class Z-1 and Class Z-2
Regular Interests, the Class Y-1 Principal Distribution Amount, the
Class Y-2 Principal Distribution Amount, the Class Z-1 Principal
Distribution Amount and the Class Z-2 Principal Distribution Amount,
respectively; and
(vi) sixth, to the Class R-1 Certificates, the Class R-1 Residual
Distribution Amount 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: On any Distribution Date,
the aggregate of all distributions to the Class Y-1, Class Y-2, Class
Z-1, Class Z-2, and Class P-M and Class X-M Regular Interests.
REMIC II Distribution Amount: (I) For any Distribution Date prior
to the Credit Support Depletion Date, the REMIC II Available
Distribution Amount shall be distributed to the Certificates (other
than the Class R-1 Certificates) in the following amounts and
priority:
(i) first, to the Class P Certificates, the aggregate for all Class P
Mortgage Loans of the product for each Class P Mortgage Loan of the
applicable Class P Fraction and the sum of (x) scheduled payments of
principal on such Class 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 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 P
Mortgage Loan during the Payoff Period;
(ii) second, to the Class A, Class X and Class R-2 Certificates,
concurrently, the sum of the Interest Distribution Amounts for such
<PAGE> 38
Classes of Certificates remaining unpaid from previous Distribution
Dates, pro rata according to their respective shares of such unpaid
amounts;
(iii) third, to the Class A, Class 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;
(iv) fourth, to the Class A and Class R-2 Certificates, as principal,
the Senior Principal Distribution Amount, sequentially, as follows:
(a) first, to the Class A-5 Certificates, an amount,
up to the amount of the Class A-5 Principal Distribution
Amount for such Distribution Date, until the Class A-5
Principal Balance has been reduced to zero;
(b) second, to the Class A-2 and Class A-4
Certificates, pro rata, an amount, up to the amount of the
Lockout Priority Amount for such Distribution Date, until
their respective Class Principal Balances have each been
reduced to zero;
(c) third, to the Class R-2 Certificates, until the
Class R-2 Principal Balance has been reduced to zero;
(d) fourth, to the Class A-1 Certificates, until the
Class A-1 Principal Balance has been reduced to zero;
(e) fifth, to the Class A-3 Certificates, until the
Class A-3 Principal Balance has been reduced to zero; and
(f) sixth, to the Class A-2 and Class A-4
Certificates, pro rata, until their Class Principal Balances
have each been reduced to zero;
(v) fifth, to the Class P Certificates, to the extent of amounts
otherwise available to pay the Subordinate Principal Distribution
Amount (without regard to clause (B) of the definition thereof) on
such Distribution Date, the amount payable to such Class of
Certificates on previous Distribution Dates pursuant to clause (I)(vi)
of this definition of "REMIC II Distribution Amount" and remaining
unpaid from such previous Distribution Dates;
(vi) sixth, to the Class P Certificates, to the extent of amounts
otherwise available to pay the Subordinate Principal Distribution
Amount (without regard to clause (B) of the definition thereof) on
such Distribution Date, principal in an amount equal to the applicable
Class P Fraction of any Realized Loss on a Class P Mortgage Loan
(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)(v) or this paragraph (I)(vi) of this definition of "REMIC II
Distribution Amount" shall not cause a further reduction in the Class
<PAGE> 39
P Principal Balance;
(vii) seventh, to the Class B-1 Certificates, the Interest
Distribution Amount for such Class of Certificates remaining unpaid
from previous Distribution Dates;
(viii) eighth, to the Class B-1 Certificates, the Interest
Distribution Amount for such Class of Certificates for the current
Distribution Date;
(ix) ninth, to the Class 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 B-1 Principal Balance has been
reduced to zero;
(x) tenth, to the Class B-2 Certificates, the Interest Distribution
Amount for such Class of Certificates remaining unpaid from previous
Distribution Dates;
(xi) eleventh, to the Class B-2 Certificates, the Interest
Distribution Amount for such Class of Certificates for the current
Distribution Date;
(xii) twelfth, to the Class B-2 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 B-2 Principal Balance has been
reduced to zero;
(xiii) thirteenth, to the Class B-3 Certificates, the Interest
Distribution Amount for such Class of Certificates remaining unpaid
from previous Distribution Dates;
(xiv) fourteenth, to the Class B-3 Certificates, the Interest
Distribution Amount for such Class of Certificates for the current
Distribution Date;
(xv) fifteenth, to the Class 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 B-3 Principal Balance has been
reduced to zero;
(xvi) sixteenth, to the Class B-4 Certificates, the Interest
Distribution Amount for such Class of Certificates remaining unpaid
from previous Distribution Dates;
(xvii) seventeenth, to the Class B-4 Certificates, the Interest
Distribution Amount for such Class of Certificates for the current
Distribution Date;
(xviii) eighteenth, to the Class 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 B-4 Principal Balance has been
reduced to zero;
(xix) nineteenth, to the Class B-5 Certificates, the Interest
Distribution Amount for such Class of Certificates remaining unpaid
from previous Distribution Dates;
(xx) twentieth, to the Class B-5 Certificates, the Interest
Distribution Amount for such Class of Certificates for the current
Distribution Date;
(xxi) twenty-first, to the Class B-5 Certificates, the portion of
<PAGE> 40
the Subordinate Principal Distribution Amount allocable to such Class
of Certificates pursuant to the definition of "Subordinate Principal
Distribution Amount", until the Class B-5 Principal Balance has been
reduced to zero;
(xxii) twenty-second, to the Class B-6 Certificates, the Interest
Distribution Amount for such Class of Certificates remaining unpaid
from previous Distribution Dates;
(xxiii) twenty-third, to the Class B-6 Certificates, the Interest
Distribution Amount for such Class of Certificates for the current
Distribution Date;
(xxiv) twenty-fourth, to the Class 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 B-6 Principal Balance has been
reduced to zero;
(xxv) twenty-fifth, to each Class of Class B Certificates in order
of seniority, 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)(xxv) of this
definition of "REMIC II Distribution Amount" shall not cause a further
reduction in the Class Principal Balances of any of the Class B
Certificates; and
(xxvi) twenty-sixth, to the Class R-2 Certificates, the Class R-2
Residual Distribution Amount for such Distribution Date.
(II) For any Distribution Date on or after the Credit Support
Depletion Date, the REMIC II Available Distribution Amount shall be
distributed to the outstanding Classes of Certificates (other than the
Class R-1 Certificates) in the following amounts and priority:
(i) first, to the Class P Certificates, principal in the amount that
would otherwise be distributed to such Class on such Distribution Date
pursuant to clause (I)(i) of this definition of "REMIC II Distribution
Amount";
(ii) second, to the Class A, Class X and Class R-2 Certificates, the
amount payable to each such Class of Certificates on prior
Distribution Dates pursuant to clause (I)(iii) or (II)(iii) of this
definition of "REMIC II Distribution Amount", and remaining unpaid,
pro rata according to such amount payable to the extent of amounts
available;
(iii) third, to the Class A, Class 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;
(iv) fourth, to the Class A-5 Certificates, the Class A-5 Principal
Distribution Amount;
(v) fifth, to the Class A Certificates (other than the Class A-5
Certificates) and the Class R-2 Certificates, pro rata according to
Class Principal Balance, as principal, the Senior Principal
Distribution Amount (reduced by the Class A-5 Principal Distribution
Amount); and
<PAGE> 41
(vi) sixth, to the Class R-2 Certificates, the Class R-2 Residual
Distribution Amount for such Distribution Date.
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, (i) with
respect to the Class R-1 Certificates, any portion of the REMIC I
Available Distribution Amount remaining after all distributions of the
REMIC I Available Distribution Amount pursuant to the definition of
"REMIC I Distribution Amount" (other than the distribution pursuant to
the last clause thereof) and (ii) with respect to the Class R-2
Certificates, any portion of the REMIC II Available Distribution
Amount remaining after all distributions of the REMIC II Available
Distribution Amount pursuant to clauses (I) and (II), as applicable,
of the definition of "REMIC II Distribution Amount" (other than the
distributions pursuant to the last subclause of clauses (I) and (II)).
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, 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.
<PAGE> 42
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 Class A, Class P, Class X and Residual
Certificates.
Senior Liquidation Amount: For any Distribution Date, the sum of
(i) the Subgroup 1 Senior Liquidation Amount and (ii) the Subgroup 2
Senior Liquidation Amount.
Senior Percentage: With respect to any Distribution Date, the
aggregate Class Principal Balance of the Class A and Residual
Certificates divided by the aggregate Principal Balance of the
Mortgage Loans (less the Class P Principal Balance), in each case
immediately prior to the Distribution Date.
Senior Prepayment Percentage, Subgroup 1 Senior Prepayment
Percentage or Subgroup 2 Senior Prepayment Percentage: On any
Distribution Date, each of the Senior Prepayment Percentage, the
Subgroup 1 Senior Prepayment Percentage and the Subgroup 2 Senior
Prepayment Percentage shall equal 100%, unless (i) the Senior
Percentage for such Distribution Date is less than or equal to the
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) and (b)
are met:
(a) the mean aggregate Principal Balance as of the Distribution
Date in each of the immediately preceding six calendar
months of the Mortgage 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 aggregate Class Principal Balance of the Class B
Certificates as of the current Distribution Date, and
(b) cumulative Realized Losses on the Mortgage Loans allocated
to the Class B Certificates, as a percentage of the
<PAGE> 43
aggregate Class Principal Balance of the Class B
Certificates 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 Senior Prepayment Percentage, the Subgroup 1 Senior
Prepayment Percentage and the Subgroup 2 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 Senior Percentage, the Subgroup 1 Senior
Percentage or the Subgroup 2 Senior Percentage, as applicable, for
such Distribution Date plus 70% of the related Subordinate Percentage
(i.e. the "related" Subordinate Percentage for the Senior Percentage
is the Subordinate Percentage, for the Subgroup 1 Senior Percentage is
the Subgroup 1 Subordinate Percentage, and for the Subgroup 2 Senior
Percentage is the Subgroup 2 Subordinate Percentage) 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 Senior Percentage, the Subgroup 1 Senior
Percentage or the Subgroup 2 Senior Percentage, as applicable, for
such Distribution Date plus 60% of the related Subordinate Percentage
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 Senior Percentage, the Subgroup 1 Senior
Percentage or the Subgroup 2 Senior Percentage, as applicable, for
such Distribution Date plus 40% of the related Subordinate Percentage
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 Senior Percentage, the Subgroup 1 Senior
Percentage or the Subgroup 2 Senior Percentage, as applicable, for
such Distribution Date plus 20% of the related Subordinate Percentage
for such Distribution Date; and (5) for any such Distribution Date
thereafter, the Senior Percentage, the Subgroup 1 Senior Percentage or
the Subgroup 2 Senior Percentage, as applicable, for such Distribution
Date.
If on any Distribution Date the allocation to the Class A and
Residual Certificates of Principal Prepayments on Subgroup 1 Loans and
Subgroup 2 Loans in the percentages required pursuant to this
definition of "Subgroup 1 Senior Prepayment Percentage" and "Subgroup
2 Senior Prepayment Percentage" (without regard to this paragraph)
would reduce the aggregate Class Principal Balance of such
Certificates below zero, then (X) the Subgroup 1 Senior Prepayment
Percentage for such Distribution Date shall be limited to the
<PAGE> 44
percentage necessary to reduce the aggregate Class Principal Balance
of such Certificates to zero (or, if such objective cannot be
accomplished by so limiting the Subgroup 1 Senior Prepayment
Percentage, then the Subgroup 1 Senior Prepayment Percentage shall
equal zero and the Subgroup 2 Senior Prepayment Percentage shall be
limited to the percentage necessary to accomplish such objective) and
(Y) the Senior Prepayment Percentage shall equal the weighted average
(by Principal Prepayment Amount for the related Subgroup) of the
Subgroup 1 Senior Prepayment Percentage and Subgroup 2 Senior
Prepayment Percentage so adjusted. Notwithstanding the foregoing,
however, on each Distribution Date, the Class P Certificates will
receive the applicable Class P Fraction of all principal payments,
including, without limitation, Principal Prepayments, received in
respect of Class P Mortgage Loans.
Senior Principal Distribution Amount: For any Distribution Date,
the sum of (i) the Subgroup 1 Senior Principal Distribution Amount and
(ii) the Subgroup 2 Senior Principal Distribution Amount.
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.
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, $3,989,156, 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
<PAGE> 45
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
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) $3,989,156 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, impending or expected attack (a) by any
government of sovereign power (de jure or de facto), or by an
authority maintaining or using military, naval or air forces, (b) by
military, naval or air forces, or (c) by an agent of any such
government, power, authority or forces; (vi) any weapon of war
employing atomic fission or radioactive force whether in time of peace
or war; (vii) insurrection, rebellion, revolution, civil war, usurped
power or action taken by governmental authority in hindering,
combating or defending against such occurrence; or (viii) seizure or
destruction under quarantine or customs regulations, or confiscation
by order of any government or public authority.
Step Down Percentage: For any Distribution Date, the percentage
indicated below:
Distribution Date Occurring In Step
Down Percentage
<PAGE> 46
April 2000 through March 20050%
April 2005 through March 200630%
April 2006 through March 200740%
April 2007 through March 200860%
April 2008 through March 200980%
April 2009 and thereafter 100%
Stripped Interest Rate: (i) For each Subgroup 1 Loan, the excess
of the Pass-Through Rate for such Mortgage Loan over 7.375% per annum,
and (ii) for each Subgroup 2 Loan, the excess of the Pass-Through Rate
for such Mortgage Loan over 7.750% per annum.
Subgroup: Subgroup 1 or Subgroup 2, as applicable.
Subgroup 1: The subgroup of Mortgage Loans comprised of the
Subgroup 1 Loans.
Subgroup 1 Initial Senior Component Balance: $86,464,183.91.
Subgroup 1 Loans: The Mortgage Loans with Pass-Through Rates
less than 7.750% per annum.
Subgroup 1 Principal Payment Amount: For any Distribution Date,
the sum of (i) the scheduled principal payments on the Subgroup 1
Loans due on the related Due Date, (ii) the principal portion of
proceeds received with respect to any Subgroup 1 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 Subgroup 1 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 Subgroup 1 Principal Payment Amount and Subgroup 2
Principal Payment Amount, pro rata according to the aggregate
Principal Balance of the Clipper Mortgage Loans not so purchased but
intended for inclusion in such Subgroup.
Subgroup 1 Principal Prepayment Amount: For any Distribution
Date, the sum of (i) Curtailments received during the Prior Period
from Subgroup 1 Loans and (ii) Payoffs received during the Payoff
Period from Subgroup 1 Loans.
Subgroup 1 Senior Component Balance: For any date of
determination, an amount equal to the Subgroup 1 Initial Senior
Component Balance (i) reduced by (a) all principal distributed
previously to the Class A and Residual Certificates derived from
Subgroup 1 and (b) all principal losses allocated to such Certificates
derived from Subgroup 1 and (ii) reduced or increased, as applicable,
<PAGE> 47
by any reduction or addition thereto made on any Distribution Date in
accordance with the fourth paragraph of the definition of "Realized
Loss"; provided, however, that if on any Distribution Date, after
giving effect to the adjustments to the Subgroup 1 and Subgroup 2
Senior Component Balance on such Distribution Date pursuant to this
definition and the definition of "Subgroup 2 Senior Component Balance"
(without regard to the provisos to such definitions), either the
Subgroup 1 or Subgroup 2 Senior Component Balance is a negative
number, then such Senior Component Balance shall be increased to zero
and the other Senior Component Balance shall be reduced by the amount
of such increase. For any Distribution Date, the reduction or increase
of the Subgroup 1 Senior Component Balance in respect of losses on
Mortgage Loans shall be deemed effective prior to the determination
and distribution of principal on the Certificates on such Distribution
Date
Subgroup 1 Senior Liquidation Amount: The aggregate, for each
Subgroup 1 Loan which became a Liquidated Mortgage Loan during the
Prior Period, of the lesser of: (i) the Subgroup 1 Senior Percentage
of the Principal Balance of such Mortgage Loan (exclusive of the Class
P Fraction thereof, with respect to any Class P Mortgage Loan) and
(ii) the Subgroup 1 Senior Prepayment Percentage of the Liquidation
Principal with respect to such Mortgage Loan.
Subgroup 1 Senior Percentage: For any Distribution Date, the
Subgroup 1 Senior Component Balance divided by the aggregate Principal
Balance of the Subgroup 1 Loans (less the Class P Principal Balance),
in each case immediately prior to the Distribution Date.
Subgroup 1 Senior Prepayment Percentage: See the definition of
"Senior Prepayment Percentage, Subgroup 1 Senior Prepayment Percentage
or Subgroup 2 Senior Prepayment Percentage."
Subgroup 1 Senior Principal Distribution Amount: For any
Distribution Date, an amount equal to the sum of (a) the Subgroup 1
Senior Percentage of the Subgroup 1 Principal Payment Amount
(exclusive of the portion thereof attributable to principal
distributions to the Class P Certificates pursuant to clauses (I)(i)
and (II)(i) of the definition of "REMIC II Distribution Amount"), (b)
the Subgroup 1 Senior Prepayment Percentage of the Subgroup 1
Principal Prepayment Amount (exclusive of the portion thereof
attributable to principal distributions to the Class P Certificates
pursuant to clauses (I)(i) and (II)(i) of the definition of "REMIC II
Distribution Amount") and (c) the Subgroup 1 Senior Liquidation
Amount.
Subgroup 1 Subordinate Percentage: For any Distribution Date, the
excess of 100% over the Subgroup 1 Senior Percentage for such date.
Subgroup 2: The subgroup of Mortgage Loans comprised of the
Subgroup 2 Loans.
<PAGE> 48
Subgroup 2 Initial Senior Component Balance: $197,230,208.02.
Subgroup 2 Loans: The Mortgage Loans with Pass-Through Rates
greater than or equal to 7.750% per annum.
Subgroup 2 Principal Payment Amount: For any Distribution Date,
the sum of (i) the scheduled principal payments on the Subgroup 2
Loans due on the related Due Date, (ii) the principal portion of
proceeds received with respect to any Subgroup 2 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 Subgroup 2 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 Subgroup 1 Principal Payment Amount and Subgroup 2
Principal Payment Amount, pro rata according to the aggregate
Principal Balance of the Clipper Mortgage Loans not so purchased but
intended for inclusion in such Subgroup.
Subgroup 2 Principal Prepayment Amount: For any Distribution
Date, the sum of (i) Curtailments received during the Prior Period
from Subgroup 2 Loans and (ii) Payoffs received during the Payoff
Period from Subgroup 2 Loans.
Subgroup 2 Senior Component Balance: For any date of
determination, an amount equal to the Subgroup 2 Initial Senior
Component Balance (i) reduced by (a) all principal distributed
previously to the Class A and Residual Certificates derived from
Subgroup 2 and (b) all principal losses allocated to such Certificates
derived from Subgroup 2 and (ii) reduced or increased, as applicable,
by any reduction or addition thereto made on any Distribution Date in
accordance with the fourth paragraph of the definition of "Realized
Loss"; provided, however, that if on any Distribution Date, after
giving effect to the adjustments to the Subgroup 2 and Subgroup 1
Senior Component Balance on such Distribution Date pursuant to this
definition and the definition of "Subgroup 1 Senior Component Balance"
(without regard to the provisos to such definitions), either the
Subgroup 1 or Subgroup 2 Senior Component Balance is a negative
number, then such Senior Component Balance shall be increased to zero
and the other Senior Component Balance shall be reduced by the amount
of such increase. For any Distribution Date, the reduction or increase
of the Subgroup 2 Senior Component Balance in respect of losses on
Mortgage Loans shall be deemed effective prior to the determination
and distribution of principal on the Certificates on such Distribution
Date.
Subgroup 2 Senior Liquidation Amount: The aggregate, for each
Subgroup 2 Loan which became a Liquidated Mortgage Loan during the
<PAGE> 49
Prior Period, of the lesser of: (i) the Subgroup 2 Senior Percentage
of the Principal Balance of such Mortgage Loan and (ii) the Subgroup 2
Senior Prepayment Percentage of the Liquidation Principal with respect
to such Mortgage Loan.
Subgroup 2 Senior Percentage: For any Distribution Date, the
Subgroup 2 Senior Component Balance divided by the aggregate Principal
Balance of the Subgroup 2 Loans, in each case immediately prior to the
Distribution Date.
Subgroup 2 Senior Prepayment Percentage: See the definition of
"Senior Prepayment Percentage, Subgroup 1 Senior Prepayment Percentage
or Subgroup 2 Senior Prepayment Percentage."
Subgroup 2 Senior Principal Distribution Amount: For any
Distribution Date, an amount equal to the sum of (a) the Subgroup 2
Senior Percentage of the Subgroup 2 Principal Payment Amount, (b) the
Subgroup 2 Senior Prepayment Percentage of the Subgroup 2 Principal
Prepayment Amount and (c) the Subgroup 2 Senior Liquidation Amount.
Subgroup 2 Subordinate Percentage: For any Distribution Date, the
excess of 100% over the Subgroup 2 Senior Percentage for such date.
Subordinate Certificates: The Class B Certificates.
Subordinate Component Balance: With respect to Subgroup 1 at any
time, the then outstanding aggregate Principal Balance of the Subgroup
1 Loans (less the applicable Class P Fraction thereof with respect to
any Class P Mortgage Loan) minus the then outstanding Subgroup 1
Senior Component Balance. With respect to Subgroup 2 at any time, the
then outstanding aggregate Principal Balance of the Subgroup 2 Loans
minus the then outstanding Subgroup 2 Senior Component Balance.
Subordinate Liquidation Amount: 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 Senior
Liquidation Amount for such Distribution Date.
Subordinate Percentage: With respect to any Distribution Date,
the excess of 100% over the Senior Percentage for such date.
Subordinate Prepayment Percentage: For any Distribution Date, the
excess of 100% over the Senior Prepayment Percentage for such
Distribution Date; provided, however, that if the aggregate Class
Principal Balance of the Class A and Residual Certificates has been
reduced to zero, then the Subordinate Prepayment Percentage shall
equal 100%.
Subordinate Principal Distribution Amount: For any Distribution
Date, the excess of (A) the sum of (i) the Subordinate Percentage of
the Principal Payment Amount (exclusive of the portion thereof
attributable to principal distributions to the Class P Certificates
<PAGE> 50
pursuant to clause (I)(i) of the definition of "REMIC II Distribution
Amount"), (ii) the Subordinate Principal Prepayments Distribution
Amount (without regard to the proviso in the definition thereof) and
(iii) the Subordinate Liquidation Amount over (B) the amounts required
to be distributed to the Class P Certificates pursuant to clauses
(I)(v) and (I)(vi) of the definition of "REMIC II Distribution Amount"
on such Distribution Date.
On any Distribution Date, the Subordinate Principal Distribution
Amount shall be allocated pro rata, by Class Principal Balance, among
the Classes of Class B Certificates and paid in the order of
distribution to such Classes pursuant to clause (I) 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 Class B Certificates is less than such Subordination
Level as of the Closing Date, the pro rata portion of the Subordinate
Principal Prepayments Distribution Amount otherwise allocable to the
Class or Classes of Class B Certificates junior to such Class will be
distributed to the most senior Class of Class 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 Class 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 Class B Certificates shall be as follows: Class B-1, Class B-2,
Class B-3, Class B-4, Class B-5 and Class B-6.
Subordinate Principal Prepayments Distribution Amount: On any
Distribution Date, the Subordinate Prepayment Percentage of the
Principal Prepayment Amount (exclusive of the portion thereof
attributable to principal distributions to the Class P Certificates
pursuant to clause (I)(i) of the definition of "REMIC II Distribution
Amount"); 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) and
(A)(iii) 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 Class B Certificates, the percentage obtained by dividing the
sum of the Class Principal Balances of the Classes of Class 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.
<PAGE> 51
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 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).
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
<PAGE> 52
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 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 deposits 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 Subgroup, 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 Subgroup and (b) aggregate Curtailment Shortfall with respect to
the Mortgage Loans in such Subgroup over (ii) Compensating Interest
with respect to such Subgroup. With respect to all of the Mortgage
Loans, for any Distribution Date, the sum of the Uncompensated
Interest Shortfall for each Subgroup.
Uncompensated Interest Shortfall for all of the Mortgage Loans
shall be allocated to all Classes of Certificates, pro rata according
to the amount of the Interest Distribution Amount to which each such
Class would otherwise be entitled in reduction thereof.
Uncompensated Interest Shortfall for each of Subgroup 1 and
Subgroup 2 shall be allocated among the Class Z and Class Y Regular
Interests related to such Subgroup (i.e. the "related" Subgroup for
the Class Z-1 and Class Y-1 Regular Interests is Subgroup 1) and the
portion of the Class X-M Regular Interest that derives its Interest
<PAGE> 53
Distribution Amount from such Subgroup, 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.
Underwriting Standards: The underwriting standards of the
Company, Alta Residential Mortgage, Inc., Commerce Security Bank,
Countrywide Home Loans, Inc., Crossland Mortgage Corp., CTX Mortgage
Company, Firstar Home Mortgage Corporation, Flagstar Bank, FSB, Globe
Mortgage America, Greenpoint Mortgage Corp., North American Mortgage
Company, Old Kent Mortgage Company, PNC Mortgage Corp. of America and
Prism 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 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
<PAGE> 54
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 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
<PAGE> 55
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
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, 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
<PAGE> 56
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 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
<PAGE> 57
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 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
<PAGE> 58
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 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
<PAGE> 59
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 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
<PAGE> 60
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 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
<PAGE> 61
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.
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:
<PAGE> 62
(i) The information set forth in the Mortgage Loan Schedule was true
and correct in all material respects at the date or dates respecting
which such information is furnished;
(ii) As of the Closing Date, each Mortgage 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;
(iii) 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 lien (other than any lien under this Agreement);
(iv) As of the day prior to the Cut-Off Date, all payments due on each
Mortgage Loan had been made and no Mortgage Loan had been delinquent
(i.e., was more than 30 days past due) more than once in the preceding
12 months and any such delinquency lasted for no more than 30 days;
(v) As of the Closing Date, there is no late assessment for
delinquent taxes outstanding against any Mortgaged Property;
(vi) As of the Closing Date, there is no offset, defense or
counterclaim to any Mortgage Note, including the obligation of the
Mortgagor to pay the unpaid principal or interest on such Mortgage
Note except to the extent that the Buydown Agreement for a Buydown
Loan forgives certain indebtedness of a Mortgagor;
(vii) As of the Closing Date, each Mortgaged Property is free of
damage and in good repair, ordinary wear and tear excepted;
(viii) Each Mortgage Loan at the time it was made complied with all
applicable state and federal laws, including, without limitation,
usury, equal credit opportunity, disclosure and recording laws;
(ix) Each Mortgage Loan was originated by a savings association,
savings bank, credit union, insurance company, or similar institution
which is supervised and examined by a federal or state authority or by
a mortgagee approved by the FHA and will be serviced by an institution
which meets the servicer eligibility requirements established by the
Company;
(x) As of the Closing Date, each Mortgage Loan 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
<PAGE> 63
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 upon the
consummation of the transactions contemplated by this Agreement and no
claims have been made under such policy, and no prior holder of the
related Mortgage, including the Company, has done, by act or omission,
anything which would impair the coverage of such policy;
(xi) All of the Mortgage 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;
(xii) As of the Closing Date, all policies of insurance required
by this Agreement or by a Selling and Servicing Contract have been
validly issued and remain in full force and effect, including such
policies covering the Company, the Master Servicer or any Servicer;
(xiii) As of the Closing Date, each insurer issuing a Primary
Insurance Policy holds a rating acceptable to the Rating Agencies;
(xiv) Each Mortgage was documented by appropriate Fannie
Mae/Freddie Mac mortgage instruments in effect at the time of
origination, or other instruments approved by the Company;
(xv) As of the Closing Date, the Mortgaged Property securing each
Mortgage 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;
(xvi) As of the Closing Date, each Mortgage and Mortgage Note is
the legal, valid and binding obligation of the maker thereof and is
enforceable in accordance with its terms, except only as such
enforcement may be limited by laws affecting the enforcement of
creditors' rights generally and principles of equity;
(xvii) As of the date of origination, as to Mortgaged Properties
which are units in condominiums or planned unit developments, all of
such units met 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;
(xviii) None of the Mortgage Loans is a Buydown Loan;
(xix) Based solely on representations of the Mortgagors obtained
at the origination of the related Mortgage Loans, approximately 95.50%
(by Principal Balance) of the Mortgage Loans will be secured by owner
occupied Mortgaged Properties which are the primary residences of the
related Mortgagors, approximately 2.44% (by Principal Balance) of the
Mortgage Loans will be secured by owner occupied Mortgaged Properties
which were second or vacation homes of the Mortgagors and
approximately 2.06% (by Principal Balance) of the Mortgage Loans will
<PAGE> 64
be secured by Mortgaged Properties which were investor properties of
the related Mortgagors;
(xx) 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;
(xxi) The Mortgage Loans have been underwritten substantially in
accordance with the applicable Underwriting Standards;
(xxii) All of the Mortgage Loans have due-on-sale clauses; by the
terms of the Mortgage Notes, however, the due on sale provisions may
not be exercised at the time of a transfer if prohibited by law;
(xxiii) The Company used no adverse selection procedures in
selecting the Mortgage Loans from among the outstanding fixed-rate
conventional mortgage loans purchased by it which were available for
inclusion in the Mortgage Pool and as to which the representations and
warranties in this Section 2.03 could be made;
(xxiv) With respect to each Cooperative Loan, the Cooperative Stock
that is pledged as security for the Cooperative Loan 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);
(xxv) 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;
(xxvi) 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;
(xxvii) Based upon an appraisal of the Mortgaged Property securing
each Mortgage Loan, approximately 90.39% (by Principal Balance) of the
Mortgage Loans had a current Loan-to-Value Ratio less than or equal to
80%, approximately 9.61% (by Principal Balance) of the Mortgage Loans
had a current Loan-to-Value Ratio greater than 80% but less than or
equal to 95% and none of the Mortgage Loans had a current Loan-to-
Value Ratio greater than 95%;
(xxviii) Approximately 30.61% (by Principal Balance) of the Mortgage
Loans were originated for the purpose of refinancing existing mortgage
debt, including cash-out refinancings; and approximately 69.39% (by
Principal Balance) of the Mortgage Loans were originated for the
<PAGE> 65
purpose of purchasing the Mortgaged Property;
(xxix) Not less than approximately 62.90% (by Principal Balance) of
the Mortgage Loans were originated under full documentation programs;
and
(xxx) 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 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.
<PAGE> 66
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 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
<PAGE> 67
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
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
<PAGE> 68
relevant jurisdiction; and
(d) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such
property, shall be deemed notifications to, or acknowledgments,
receipts or confirmations from, securities intermediaries, bailees or
agents of, or persons holding for, the Trustee, as applicable for the
purpose of perfecting such security interest under applicable law.
The Company and the Trustee shall, to the extent consistent with
this Agreement, take such actions as may be necessary to ensure that,
if this Agreement were deemed to create a security interest in the
REMIC II Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and
will be maintained as such throughout the term of this Agreement. In
connection herewith, the Trustee shall have all of the rights and
remedies of a secured party and creditor under the Uniform Commercial
Code as in force in the relevant jurisdiction.
The Trustee is authorized, with the Master Servicer's consent, to
appoint any bank or trust company approved by and unaffiliated with
each of the Company and the Master Servicer as Custodian of the
documents or instruments referred to above in this Section 2.05, and
to enter into a Custodial Agreement for such purpose; provided,
however, that the Trustee shall be and remain liable for actions of
any such Custodian only to the extent it would otherwise be
responsible for such acts hereunder.
The 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
<PAGE> 69
taxable year for the REMIC II Trust Fund when and as required by the
REMIC provisions and other applicable federal income tax laws; (b)
make an election, on behalf of the REMIC II Trust Fund, to be treated
as a REMIC on the federal tax return of the REMIC II Trust Fund for
its first taxable year, in accordance with the REMIC provisions; (c)
prepare and forward, or cause to be prepared and forwarded, to the
Holders of the REMIC II Regular Interests and the Class R-2
Certificates all information reports as and when required to be
provided to them in accordance with the REMIC provisions; (d) conduct
the affairs of the REMIC II Trust Fund at all times that any of the
REMIC II Regular Interests and the Class R-2 Certificates are
outstanding so as to maintain the status of the REMIC II Trust Fund as
a REMIC under the REMIC provisions; (e) not knowingly or intentionally
take any action or omit to take any action that would cause the
termination of the REMIC status of the REMIC II Trust Fund; and (f)
pay the amount of any federal prohibited transaction penalty taxes
imposed on the REMIC II Trust Fund when and as the same shall be due
and payable (but such obligation shall not prevent the Company or any
other appropriate person from contesting any such tax in appropriate
proceedings and shall not prevent the Company from withholding payment
of such tax, if permitted by law, pending the outcome of such
proceedings); provided, that the Company shall be entitled to be
indemnified from the REMIC II Trust Fund for any such prohibited
transaction penalty taxes if the Company's failure to exercise
reasonable care was not the primary cause of the imposition of such
prohibited transaction penalty taxes.
In the event that any tax is imposed on "prohibited transactions"
of the REMIC II Trust Fund as defined in Section 860F of the Code and
not paid by the Company pursuant to clause (f) of the preceding
paragraph, such tax shall be charged against amounts otherwise
distributable to the Holders of the Class R-2 Certificates.
Notwithstanding anything to the contrary contained herein, the Company
is hereby authorized to retain from amounts otherwise distributable to
the Holders of the Class R-2 Certificates on any Distribution Date
sufficient funds to reimburse the Company for the payment of such tax
(to the extent that the Company has not been previously reimbursed
therefor).
Section 2.06. Acceptance by Trustee; Authentication of Certificates.
The Trustee acknowledges and accepts the assignment to it of the
property constituting the REMIC II Trust Fund 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
<PAGE> 70
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 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
<PAGE> 71
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 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
<PAGE> 72
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.
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
<PAGE> 73
"credit score" from a credit repository.
Section 3.02. Custodial Accounts. The Master Servicer shall cause to
be established and maintained by each Servicer under the Master
Servicer's supervision the Custodial Account for P&I, Buydown Fund
Accounts (if any) and special Custodial Account for Reserves and shall
deposit or cause to be deposited therein daily the amounts related to
the Mortgage Loans required by the Selling and Servicing Contracts to
be so deposited. Proceeds received with respect to individual Mortgage
Loans from any title, hazard, or FHA insurance policy, VA guaranty or
Primary Insurance Policy or other insurance policy covering such
Mortgage Loans shall be deposited first in the Custodial Account for
Reserves if required for the restoration or repair of the related
Mortgaged Property. Proceeds from such insurance policies not so
deposited in the Custodial Account for Reserves shall be deposited in
the Custodial Account for P&I, and shall be applied to the balances of
the related Mortgage Loans as payments of interest and principal.
The Master Servicer is hereby authorized to make withdrawals from
and to issue drafts against the Custodial Accounts for P&I and the
Custodial Accounts for Reserves for the purposes required or permitted
by this Agreement. Each Custodial Account for P&I and each Custodial
Account for Reserves shall bear a designation clearly showing the
respective interests of the applicable Servicer, as trustee, and of
the Master Servicer, in substantially one of the following forms:
(a) With respect to the Custodial Account for P&I: (i)
[Servicer's Name], as agent, trustee and/or bailee of principal
and interest custodial account for PNC Mortgage Securities Corp.,
its successors and assigns, for various owners of interests in
PNC Mortgage Securities Corp. mortgage-backed pools or (ii)
[Servicer's Name] in trust for PNC Mortgage Securities Corp.;
(b) With respect to the Custodial Account for Reserves: (i)
[Servicer's Name], as agent, trustee and/or bailee of taxes and
insurance custodial account for PNC Mortgage Securities Corp.,
its successors and assigns for various mortgagors and/or various
owners of interests in PNC Mortgage Securities Corp. mortgage-
backed pools or (ii) [Servicer's Name] in trust for PNC Mortgage
Securities Corp. and various Mortgagors.
The Master Servicer hereby undertakes to assure remittance to the
Certificate Account of all amounts relating to the Mortgage Loans that
have been collected by any Servicer and are due to the Certificate
Account pursuant to Section 4.01 of this Agreement.
Section 3.03. The Investment Account; Eligible Investments.(a) Not
later than the Withdrawal Date, the Master Servicer shall withdraw or
direct the withdrawal of funds in the Custodial Accounts for P&I, for
deposit in the Investment Account, in an amount representing:
(i) Scheduled installments of principal and interest on the Mortgage
<PAGE> 74
Loans received or advanced by the applicable Servicers which were due
on the related Due Date, net of Servicing Fees due the applicable
Servicers and less any amounts to be withdrawn later by the applicable
Servicers from the applicable Buydown Fund Accounts;
(ii) Payoffs and the proceeds of other types of liquidations of the
Mortgage Loans received by the applicable Servicer for such Mortgage
Loans during the applicable Payoff Period, with interest to the date
of Payoff or liquidation less any amounts to be withdrawn later by the
applicable Servicers from the applicable Buydown Fund Accounts; and
(iii) Curtailments received by the applicable Servicers in the
Prior Period.
At its option, the Master Servicer may invest funds withdrawn
from the Custodial Accounts for P&I, as well as any Buydown Funds,
Insurance Proceeds and Liquidation Proceeds previously received by the
Master Servicer (including amounts paid by the Company in respect of
any Purchase Obligation or its substitution obligations set forth in
Section 2.02 or Section 2.03 or in connection with the exercise of the
option to terminate this Agreement pursuant to Section 9.01) for its
own account and at its own risk, during any period prior to their
deposit in the Certificate Account. Such funds, as well as any funds
which were withdrawn from the Custodial Accounts for P&I on or before
the Withdrawal Date, but not yet deposited into the Certificate
Account, shall immediately be deposited by the Master Servicer with
the Investment Depository in an Investment Account in the name of the
Master Servicer and the Trustee for investment only as set forth in
this Section 3.03. The Master Servicer shall bear any and all losses
incurred on any investments made with such funds and shall be entitled
to retain all gains realized on such investments as additional
servicing compensation. Not later than the Business Day prior to the
Distribution Date, the Master Servicer shall deposit such funds, net
of any gains (except Payoff Earnings) earned thereon, in the
Certificate Account.
(b) Funds held in the Investment Account shall be invested in
(i) one or more Eligible Investments which shall in no event mature
later than the Business Day prior to the related Distribution Date
(except if such Eligible Investments are obligations of the Trustee,
such Eligible Investments may mature on the Distribution Date), or
(ii) such other instruments as shall be required to maintain the
Ratings.
Section 3.04. The Certificate Account.
(a) Not later than the Business Day prior to the related
Distribution Date, the Master Servicer shall direct the Investment
Depository to deposit into the Certificate Account the amounts
previously deposited into the Investment Account (which may include a
deposit of Eligible Investments) to which the Holders of the REMIC I
Regular Interests and the Class R-1 Certificateholders are entitled.
In addition, not later than the Business Day prior to the Distribution
Date, the Master Servicer shall deposit into the Certificate Account
<PAGE> 75
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:
(i) To reimburse itself or the applicable Servicer for Monthly P&I
Advances made pursuant to Section 4.02 or a Selling and Servicing
Contract, such right to reimbursement pursuant to this paragraph (i)
being limited to amounts received on particular Mortgage Loans
(including, for this purpose, Insurance Proceeds and Liquidation
Proceeds) which represent late recoveries of principal and/or interest
respecting which any such Monthly P&I Advance was made;
(ii) To reimburse itself or the applicable Servicer for amounts
expended by or for the account of the Master Servicer pursuant to
Section 3.09 or amounts expended by such Servicer pursuant to the
Selling and Servicing Contracts in connection with the restoration of
property damaged by an Uninsured Cause or in connection with the
liquidation of a Mortgage Loan;
(iii) To pay to itself, with respect to the related Mortgage
Loans, the Master Servicing Fee (net of Compensating Interest reduced
by Payoff Earnings and Payoff Interest) as to which no prior
withdrawals from funds deposited by the Master Servicer have been
<PAGE> 76
made;
(iv) 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;
(v) To pay to itself reinvestment earnings deposited or earned in the
Investment Account and the Certificate Account to which it is entitled
and to reimburse itself for expenses incurred by and reimbursable to
it pursuant to Section 6.03;
(vi) To deposit to the Investment Account amounts in the Certificate
Account not required to be on deposit therein at the time of such
withdrawal;
(vii) To deposit in the Certificate Account, not later than the
Business Day prior to the related Distribution Date, the amounts
specified in Section 3.04(a); and
after making or providing for the above withdrawals
(viii) To clear and terminate the Investment Account and the
Certificate Account following termination of this Agreement pursuant
to Section 9.01.
Since, in connection with withdrawals pursuant to paragraphs (i)
and (ii), the Master Servicer's entitlement thereto is limited to
collections or other recoveries on the related Mortgage Loan, the
Master Servicer or the applicable Servicer shall keep and maintain
separate accounting for each Mortgage Loan, for the purpose of
justifying any such withdrawals.
(b) The Master Servicer (or the applicable Servicer, if such
Servicer holds and maintains a Buydown Fund Account) is authorized to
make withdrawals, from time to time, from the Buydown Fund Account or
Custodial Account for P&I established by any Servicer under its
supervision of the following amounts of Buydown Funds:
(i) To deposit each month in the Investment Account the amount
necessary to supplement payments received on Buydown Loans;
(ii) In the event of a Payoff of any Mortgage Loan having a related
Buydown Fund, to apply amounts remaining in Buydown Fund Accounts to
reduce the required amount of such principal Payoff (or, if the
Mortgagor has made a Payoff, to refund such remaining Buydown Fund
amounts to the Person entitled thereto);
(iii) In the event of foreclosure or liquidation of any Mortgage
Loan having a Buydown Fund, to deposit remaining Buydown Fund amounts
in the Investment Account as Liquidation Proceeds; and
(iv) To clear and terminate the portion of any account representing
Buydown Funds following termination of this Agreement pursuant to
Section 9.01;
(c) The Trustee is authorized to make withdrawals from time to
time from the Certificate Account to reimburse itself for advances it
<PAGE> 77
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 required with respect to a
Mortgage Loan, in the manner set forth in the applicable Selling and
Servicing Contract, until no longer required. Notwithstanding the
foregoing, the Master Servicer shall have no obligation to maintain
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 such Primary Insurance Policy in
effect at the date of the initial issuance of the Certificates that is
required to be kept in force hereunder; provided, however, that
neither the Master Servicer nor any Servicer shall advance funds for
the payment of any premium due under any Primary Insurance Policy if
it shall determine that such an advance would be a Nonrecoverable
Advance.
Section 3.07. Maintenance of Hazard Insurance. The Master Servicer
shall cause to be maintained for each Mortgage Loan (other than a
Cooperative Loan) fire insurance with extended coverage in an amount
which is not less than the original principal balance of such Mortgage
Loan, except in cases approved by the Master Servicer in which such
amount exceeds the value of the improvements to the Mortgaged
Property. The Master Servicer shall also require fire insurance with
extended coverage in a comparable amount on property acquired upon
foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan
(other than a Cooperative Loan). Any amounts collected under any such
policies (other than amounts to be applied to the restoration or
repair of the related Mortgaged Property) shall be deposited into the
Custodial Account for P&I, subject to withdrawal pursuant to the
applicable Selling and Servicing Contract and pursuant to Section 3.03
and Section 3.05. Any unreimbursed costs incurred in maintaining any
insurance described in this Section 3.07 shall be recoverable as an
advance by the Master Servicer from the Investment Account or the
Certificate Account. Such insurance shall be with insurers approved by
the Master Servicer and 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
<PAGE> 78
cause flood insurance to be provided. The hazard insurance coverage
required by this Section 3.07 may be met with blanket policies
providing protection equivalent to individual policies otherwise
required. The Master Servicer or the applicable Servicer shall be
responsible for paying any deductible amount on any such blanket
policy. The Master Servicer agrees to present, or cause to be
presented, on behalf of and for the benefit of the Trustee and
Certificateholders, claims under the hazard insurance policy
respecting any Mortgage Loan, and in this regard to take such
reasonable actions as shall be necessary to permit recovery under such
policy.
Section 3.08. Enforcement of Due-on-Sale Clauses; Assumption
Agreements. When any Mortgaged Property is about to be conveyed by the
Mortgagor, the Master Servicer shall, to the extent it has knowledge
of such prospective conveyance and prior to the time of the
consummation of such conveyance, exercise on behalf of the Trustee the
Trustee's rights to accelerate the maturity of such Mortgage Loan, to
the extent that such acceleration is permitted by the terms of the
related Mortgage Note, under any "due-on-sale" clause applicable
thereto; provided, however, that the Master Servicer shall not
exercise any such right if the due-on-sale clause, in the reasonable
belief of the Master Servicer, is not enforceable under applicable law
or if such exercise would result in non-coverage of any resulting loss
that would otherwise be covered under any insurance policy. In the
event the Master Servicer is prohibited from exercising such right,
the Master Servicer is authorized to take or enter into an assumption
and modification agreement from or with the Person to whom a Mortgaged
Property has been or is about to be conveyed, pursuant to which such
Person becomes 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
<PAGE> 79
Mortgage Note shall not be changed. Any fee collected by the
applicable Servicer for entering into an assumption or substitution of
liability agreement shall be retained by such Servicer as additional
servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by
reason of any assumption of a Mortgage Loan by operation of law or any
assumption which the Master Servicer may be restricted by law from
preventing, for any reason whatsoever.
Section 3.09. Realization Upon Defaulted Mortgage Loans. The Master
Servicer shall foreclose upon or otherwise comparably convert, or
cause to be foreclosed upon or comparably converted, the ownership of
any Mortgaged Property securing a Mortgage Loan which comes into and
continues in default and as to which no satisfactory arrangements can
be made for collection of delinquent payments pursuant to Section
3.01. In lieu of such foreclosure or other conversion, and taking into
consideration the desirability of maximizing net Liquidation Proceeds
after taking into account the effect of Insurance Proceeds upon
Liquidation Proceeds, the Master Servicer may, to the extent
consistent with prudent mortgage loan servicing practices, accept a
payment of less than the outstanding Principal Balance of a delinquent
Mortgage Loan in full satisfaction of the indebtedness evidenced by
the related Mortgage Note and release the lien of the related Mortgage
upon receipt of such payment. The Master Servicer shall not foreclose
upon or otherwise comparably convert a Mortgaged Property if the
Master Servicer is aware of evidence of toxic waste, other hazardous
substances or other evidence of environmental contamination thereon
and the Master Servicer determines that it would be imprudent to do
so. In connection with such foreclosure or other conversion, the
Master Servicer shall cause to be followed such practices and
procedures as it shall deem necessary or advisable and as shall be
normal and usual in general mortgage servicing activities. The
foregoing is subject to the provision that, in the case of damage to a
Mortgaged Property from an Uninsured Cause, the Master Servicer shall
not be required to advance its own funds towards the restoration of
the property unless it shall be determined in the sole judgment of the
Master Servicer, (i) that such restoration will increase the proceeds
of liquidation of the Mortgage Loan to Certificateholders after
reimbursement to itself for such expenses, and (ii) that such expenses
will be 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.
<PAGE> 80
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. 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
<PAGE> 81
foreclosure property" which is subject to taxation under the REMIC
Provisions. Pursuant to its efforts to sell such property, the Master
Servicer shall either itself or through an agent selected by the
Master Servicer protect and conserve such property in the same manner
and to such extent as is 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 request, the
<PAGE> 82
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, if
required) and shall not be entitled to reimbursement therefor except
as specifically provided in such Selling and Servicing Contract and
not inconsistent with this Agreement.
Section 3.12. Reports to the Trustee; Certificate Account Statement.
Not later than 15 days after each Distribution Date, the Master
<PAGE> 83
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 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.
<PAGE> 84
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.
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.
<PAGE> 85
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. 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
<PAGE> 86
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 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 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,
<PAGE> 87
(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; and 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).
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 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.
(a) On each Distribution Date, the Trustee (or any duly
appointed paying agent) shall 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
accordance with written statements received from the Master Servicer
pursuant to Section 4.02(b), by wire transfer in immediately available
funds for the account of, or by check mailed to, each such
Certificateholder of record on the immediately preceding Record Date
(other than as provided in Section 9.01 respecting the final
distribution), as specified by each such Certificateholder and at the
address of such Holder appearing in the Certificate Register.
(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
<PAGE> 88
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 the Payoff
Period, the Master Servicer has notified the Trustee that it believes
that the entire remaining unpaid Class Principal Balance of any Class
of Certificates will become distributable on the next Distribution
Date, the Trustee shall, no later than the 18th day of the month of
such Distribution Date, mail or cause to be mailed to each Person in
whose name a Certificate to be so retired is registered at the close
of business on the Record Date and to the Rating Agencies a notice to
the effect that:
(i) it is expected that funds sufficient to make such final
distribution will be available in the Certificate Account on such
Distribution Date, and
(ii) if such funds are available, (A) such final distribution will be
payable on such Distribution Date, but only upon presentation and
surrender of such Certificate at the office or agency of the
Certificate Registrar maintained for such purpose (the address of
which shall be set forth in such notice), and (B) no interest shall
accrue on such Certificate after such Distribution Date.
Section 4.05. Statements to Certificateholders. With each
distribution from the Certificate Account on a Distribution Date, the
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 statements 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
<PAGE> 89
forth with respect to the Mortgage Loans:
(a) The number and aggregate Principal Balance of the
Mortgage Loans delinquent one, two and three months or more;
(b) The (i) number and aggregate Principal Balance of
Mortgage Loans with respect to which foreclosure proceedings have
been initiated, and (ii) the number and aggregate book value of
Mortgaged Properties acquired through foreclosure, deed in lieu
of foreclosure or other exercise of rights respecting the
Trustee's security interest in the Mortgage Loans;
(c) The amount of the 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 allocated to
the 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
<PAGE> 90
evidencing Percentage Interests. Certificates shall be executed by
manual or facsimile signature on behalf of the Trustee by authorized
officers of the Trustee. Certificates bearing the manual or facsimile
signatures of individuals who were at the time of execution the proper
officers of the Trustee shall bind the Trustee, notwithstanding that
such individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for
any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein executed
by the Trustee or any Authenticating Agent by manual signature, and
such certificate upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated
the date of their authentication.
(b) The following definitions apply for purposes of this Section
5.01: "Disqualified Organization" means any Person which is not a
Permitted Transferee, but does not include any "Pass-Through Entity"
which owns or holds a Residual Certificate and of which a Disqualified
Organization, directly or indirectly, may be a stockholder, partner or
beneficiary; "Pass-Through Entity" means any regulated investment
company, real estate investment trust, common trust fund, partnership,
trust or estate, and any organization to which Section 1381 of the
Code applies; "Ownership Interest" means, with respect to any Residual
Certificate, any ownership or security interest in such Residual
Certificate, including any interest in a Residual Certificate as the
Holder thereof and any other interest therein whether direct or
indirect, legal or beneficial, as owner or as pledgee; "Transfer"
means any direct or indirect transfer or sale of, or directly or
indirectly transferring or selling any Ownership Interest in a
Residual Certificate; and "Transferee" means any Person who is
acquiring by Transfer any Ownership Interest in a Residual
Certificate.
(c) Restrictions on Transfers of the Residual Certificates to
Disqualified Organizations are set forth in this Section 5.01(c).
(i) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition
of such Ownership Interest to have agreed to be bound by the following
provisions and to have irrevocably authorized the Trustee or its
designee under clause (iii)(A) below to deliver payments to a Person
other than such Person and to negotiate the terms of any mandatory
sale under clause (iii)(B) below and to execute all instruments of
transfer and to do all other things necessary in connection with any
such sale. The rights of each Person acquiring any Ownership Interest
in a Residual Certificate are expressly subject to the following
provisions:
(A) Each Person holding or acquiring any Ownership
<PAGE> 91
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 as
Exhibit I.
(ii) The Trustee shall register the Transfer of any Residual
Certificate only if it shall have received the Transferee Affidavit
and Agreement, a certificate of the Holder requesting such transfer in
<PAGE> 92
the form attached hereto as Exhibit J and all of such other documents
as shall have been reasonably required by the Trustee as a condition
to such registration.
(iii) (A) If any "disqualified organization" (as defined in
Section 860E(e)(5) of the Code) shall become a holder of a Residual
Certificate, then the last preceding Permitted Transferee shall be
restored, to the extent permitted by law, to all rights and
obligations as Holder thereof retroactive to the date of registration
of such Transfer of such Residual Certificate. If any Non-U.S. Person
shall become a holder of a Residual Certificate, then the last
preceding holder which is a U.S. Person shall be restored, to the
extent permitted by law, to all rights and obligations as Holder
thereof retroactive to the date of registration of the Transfer to
such Non-U.S. Person of such Residual Certificate. If a transfer of a
Residual Certificate is disregarded pursuant to the provisions of
Treasury Regulations Section 1.860E-1 or Section 1.860G-3, then the
last preceding Permitted Transferee shall be restored, to the extent
permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such
Residual Certificate. The Trustee shall be under no liability to any
Person for any registration of Transfer of a Residual Certificate that
is in fact not permitted by this Section 5.01(c) or for making any
payments due on such Certificate to the holder thereof or for taking
any other action with respect to such holder under the provisions of
this Agreement.
(B) If any purported Transferee shall become a Holder
of a Residual Certificate in violation of the restrictions
in this Section 5.01(c) and to the extent that the
retroactive restoration of the rights of the Holder of such
Residual Certificate as described in clause (iii)(A) above
shall be invalid, illegal or unenforceable, then the Company
shall have the right, without notice to the Holder or any
prior Holder of such Residual Certificate, to sell such
Residual Certificate to a purchaser selected by the Company
on such terms as the Company may choose. Such purported
Transferee shall promptly endorse and deliver each Residual
Certificate in accordance with the instructions of the
Company. Such purchaser may be the Company itself or any
affiliate of the Company. The proceeds of such sale, net of
the commissions (which may include commissions payable to
the Company or its affiliates), expenses and taxes due, if
any, shall be remitted by the Company to such purported
Transferee. The terms and conditions of any sale under this
clause (iii)(B) shall be determined in the sole discretion
of the Company, and the Company shall not be liable to any
Person having an Ownership Interest in a Residual
Certificate as a result of its exercise of such discretion.
(iv) The Company, on behalf of the Trustee, shall make available, upon
written request from the Trustee, all information necessary to compute
any tax imposed (A) as a result of the Transfer of an Ownership
<PAGE> 93
Interest in a Residual Certificate to any Person who is not a
Permitted Transferee, including the information regarding "excess
inclusions" of such Residual Certificates required to be provided to
the Internal Revenue Service and certain Persons as described in
Treasury Regulation Section 1.860D-1(b)(5), and (B) as a result of any
regulated investment company, real estate investment trust, common
trust fund, partnership, trust, estate or organizations described in
Section 1381 of the Code having as among its record holders at any
time any Person who is not a Permitted Transferee. Reasonable
compensation for providing such information may be required by the
Company from such Person.
(v) The provisions of this Section 5.01 set forth prior to this
Section (v) may be modified, added to or eliminated 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.
(vi) The following legend shall appear on all Residual Certificates:
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER
AFFIDAVIT TO THE COMPANY AND THE TRUSTEE THAT (1) SUCH TRANSFEREE
IS NOT EITHER (A) THE UNITED STATES, ANY STATE OR POLITICAL
SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE
DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM THE
TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS
SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (C) ANY
ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B), OR (C)
BEING HEREINAFTER REFERRED TO AS A "DISQUALIFIED ORGANIZATION"),
OR (D) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (2) NO PURPOSE
OF SUCH TRANSFER IS TO ENABLE THE TRANSFEROR TO IMPEDE THE
<PAGE> 94
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.
(vii) 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 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
<PAGE> 95
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
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.
<PAGE> 96
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 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
<PAGE> 97
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, 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.
<PAGE> 98
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
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
<PAGE> 99
Certificates (including the making of distributions on the Book-
Entry Certificates) as the sole Certificateholder;
(c) to the extent that the provisions of this Section 5.07
conflict with any other provisions of this Agreement, the
provisions of this Section 5.07 shall control; and
(d) the rights of the Beneficial Holders shall be exercised
only through the Clearing Agency and the DTC Participants and
shall be limited to those established by law and agreements
between such Beneficial Holders and the Clearing Agency and/or
the DTC Participants. Pursuant to the Depositary Agreement,
unless and until Definitive Certificates are issued pursuant to
Section 5.09, the initial Clearing Agency will make book-entry
transfers among the DTC Participants and receive and transmit
distributions of principal and interest on the related Class of
Book-Entry Certificates to such DTC Participants.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Holders of Book-Entry Certificates evidencing a specified Percentage
Interest, such direction or consent may be given by the Clearing
Agency at the direction of Beneficial Holders owning Book-Entry
Certificates evidencing the requisite Percentage Interest represented
by the Book-Entry Certificates. The Clearing Agency may take
conflicting actions with respect to the Book-Entry Certificates to the
extent that such actions are taken on behalf of the Beneficial
Holders.
Section 5.08. Notices to Clearing Agency. Whenever notice or other
communication to the Certificateholders is required under this
Agreement, unless and until Definitive Certificates shall have been
issued to the related Certificateholders pursuant to Section 5.09, the
Trustee shall give all such notices and communications specified
herein to be given to Holders of the Book-Entry Certificates to the
Clearing Agency which shall give such notices and communications to
the related DTC Participants in accordance with its applicable rules,
regulations and procedures.
Section 5.09. Definitive Certificates. If (a) the Master Servicer
notifies the Trustee in writing that the Clearing Agency is no longer
willing or able to discharge properly its responsibilities under the
Depositary Agreement with respect to the Book-Entry Certificates and
the Trustee or the Master Servicer is unable to locate a qualified
successor, (b) the Master Servicer, at its option, advises the Trustee
in writing that it elects to terminate the book-entry system with
respect to the Book-Entry Certificates through the Clearing Agency or
(c) after the occurrence of an Event of Default, Certificateholders
holding Book-Entry Certificates evidencing Percentage Interests
aggregating not less than 66% of the aggregate Class Principal Balance
of such Certificates advise the Trustee and the Clearing Agency
through DTC Participants in writing that the continuation of a book-
<PAGE> 100
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 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
<PAGE> 101
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 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.
If the Company is no longer acting as Master Servicer, then the
<PAGE> 102
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:
(i) Any failure by the Master Servicer to deposit into the
Certificate Account any payment required to be deposited therein by
the Master Servicer under the terms of this Agreement which continues
unremedied for a period of ten days after the date upon which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Master Servicer by the Trustee or to the Master
Servicer and the Trustee by the Holders of Certificates evidencing
Percentage Interests aggregating not less than 25% of the REMIC II
Trust Fund; or
(ii) Failure on the part of the Master Servicer duly to observe or
perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in the
Certificates or in this Agreement which continues unremedied for a
period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall 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
(iii) A decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
trustee in bankruptcy, conservator or receiver or liquidator in any
<PAGE> 103
bankruptcy, insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or
(iv) The Master Servicer shall consent to the appointment of a trustee
in bankruptcy, conservator or receiver or liquidator in any
bankruptcy, insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the Master
Servicer or of or relating to all or substantially all of its
property; or
(v) The Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable bankruptcy, insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(vi) Any failure of the Master Servicer to make any Monthly P&I
Advance (other than a Nonrecoverable Advance) which continues
unremedied at the opening of business on the Distribution Date in
respect of which such Monthly P&I Advance was to have been made;
then, and in each and every such case, so long as an Event of Default
shall not have been remedied, either the Trustee, or the Holders of
Certificates evidencing Percentage Interests aggregating not less than
25% of the REMIC 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 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
<PAGE> 104
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 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
(ii) A decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a trustee
in bankruptcy, conservator or receiver or liquidator in any
bankruptcy, insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the
Company and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or
(iii) The Company shall consent to the appointment of a trustee in
bankruptcy, conservator or receiver or liquidator in any bankruptcy,
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Company or of
<PAGE> 105
or relating to all or substantially all of its property; or
(iv) The Company shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable bankruptcy, insolvency or reorganization statute, make an
assignment for the benefit of creditors, or voluntarily suspend
payment of its obligations;
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 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
<PAGE> 106
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.
(a) The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. In case an Event of Default
has occurred (which has not been cured or waived) the Trustee shall
exercise such of the rights and powers vested in it by this Agreement,
and use the same degree of care and skill in its exercise as a prudent
person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine
them to determine whether they are in the form required by this
Agreement; provided, however, that the Trustee shall not be
responsible for the accuracy or content of any such certificate,
statement, opinion, report, or other order or instrument furnished by
the Company or Master Servicer to the Trustee pursuant to this
Agreement.
(c) No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct; provided,
however, that:
(i) Prior to the occurrence of an Event of Default and after the
curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement,
<PAGE> 107
(ii) 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
(iii) 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 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:
(i) The Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(ii) The Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such Opinion of Counsel;
(iii) The Trustee shall not be personally liable for any action
taken or omitted by it in good faith and reasonably believed by it to
be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
<PAGE> 108
(iv) Prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the
Holders of Certificates evidencing Percentage Interests aggregating
not less than 25% of the REMIC II Trust Fund; provided, however, that
if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security, if any, afforded to it by the
terms of this Agreement, the Trustee may require reasonable indemnity
against such expense or liability as a condition to proceeding;
(v) The Trustee may execute the trust or any of the powers hereunder
or perform any duties hereunder either directly or by or through
agents or attorneys;
(vi) The Trustee shall not be deemed to have knowledge or notice of
any matter, including without limitation an Event of Default, unless
actually known by a Responsible Officer, or unless written notice
thereof referencing this Agreement or the Certificates is received at
the Corporate Trust Office at the address set forth in Section 10.06;
(vii) 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
(viii) 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 hereeunder, 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 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
<PAGE> 109
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, 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
<PAGE> 110
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 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
<PAGE> 111
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 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.
<PAGE> 112
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 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,
<PAGE> 113
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 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
<PAGE> 114
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 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
<PAGE> 115
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 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.
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 provided that
the aggregate Principal Balance of the Mortgage Loans at the time of
any such purchase or repurchase aggregates less than ten percent of
the aggregate Principal Balance of the Mortgage Loans as of the Cut-
Off Date. If such right is exercised, the Company shall provide to the
Trustee (and 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
<PAGE> 116
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 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:
(i) 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
<PAGE> 117
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Master
Servicer as agent of the Trustee shall sell all of the assets of the
REMIC I Trust Fund 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.
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
<PAGE> 118
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 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
<PAGE> 119
association; nor shall any Certificateholder be under any liability to
any third person by reason of any action taken by the parties to this
Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by
availing of any provision of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect
to this Agreement, unless such Holder previously shall have given to
the Trustee a written notice of default and of the continuance
thereof, as hereinbefore provided, and unless also the Holders of
Certificates evidencing Percentage Interests aggregating not less than
25% of the REMIC 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
<PAGE> 120
communication which such applicants propose to transmit, then the
Trustee shall, within five Business Days after the receipt of such
list from the Certificate Registrar, afford such applicants access
during normal business hours to the most recent list of
Certificateholders held by the Trustee. If such a list is as of a date
more than 90 days prior to the date of receipt of such applicants'
request, the Trustee shall promptly request from the Certificate
Registrar a current list as provided above, and shall afford such
applicants access to such list promptly upon receipt.
Every Certificateholder, by receiving and holding the same,
agrees with the Master Servicer and the Trustee that neither the
Master Servicer nor the Trustee shall be held accountable by reason of
the disclosure of any such information as to the names and addresses
of the Certificateholders hereunder, regardless of the source from
which such information was derived.
Section 10.05. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations,
rights and remedies of the parties hereunder shall be determined in
accordance with such laws 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 DCR, 17 State
Street, 12th floor, New York, New York 10004, Attention: RMBS
Monitoring, or such other address as may hereafter be furnished to the
Trustee and Master Servicer in writing by DCR. 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
<PAGE> 121
covenants, agreements, provisions or terms of this Agreement shall be
for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement
and shall in no way affect the validity or enforceability of the other
provisions of this Agreement or of the Certificates or the rights of
the Holders thereof.
Section 10.08. Counterpart Signatures. For the purpose of facilitating
the recordation of this Agreement as herein provided and for other
purposes, this Agreement may be executed simultaneously in any number
of counterparts, each of which counterparts shall be deemed to be an
original, and such counterparts shall constitute but one and the same
instrument.
Section 10.09. Benefits of Agreement. Nothing in this Agreement or in
any Certificate, expressed or implied, shall give to any Person, other
than the parties hereto and their respective successors hereunder, any
separate trustee or co-trustee appointed under Section 8.10 and the
Certificateholders, any benefit or any legal or equitable right,
remedy or claim under this Agreement.
Section 10.10. Notices and Copies to Rating Agencies.
(a) The Trustee shall notify the Rating Agencies of the
occurrence of any of the following events, in the manner provided in
Section 10.06:
(i) the occurrence of an Event of Default pursuant to Section 7.01,
subject to the provisions of Section 8.01(d);
(ii) the appointment of a successor Master Servicer pursuant to
Section 7.02;
(b) The Master Servicer shall notify the Rating Agencies of the
occurrence of any of the following events, or in the case of clauses
(iii), (iv), (vii) and (viii) promptly upon receiving notice thereof,
in the manner provided in Section 10.06:
(i) any amendment of this Agreement pursuant to Section 10.01;
(ii) the appointment of a successor Trustee pursuant to Section 8.08;
(iii) the filing of any claim under or the cancellation or
modification of any fidelity bond and errors and omissions coverage
pursuant to Section 3.01 and Section 3.06 with respect to the Master
Servicer or any Servicer;
(iv) any change in the location of the Certificate Account, any
Custodial Account for P&I or any Custodial Account for Reserves;
(v) the 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;
<PAGE> 122
(vi) the occurrence of the final Distribution Date or the termination
of the trust pursuant to Section 9.01(a)(ii);
(vii) the failure of the Master Servicer to make a Monthly P&I
Advance following a determination on the Determination Date that the
Master Servicer would make such advance pursuant to Section 4.02; and
(viii) the failure of the Master Servicer to make a determination
on the Determination Date regarding whether it would make a Monthly
P&I Advance when a shortfall exists between (x) payments scheduled to
be received in respect of the Mortgage Loans and (y) the amounts
actually deposited in the Certificate Account on account of such
payments, pursuant to Section 4.02.
The Master Servicer shall provide copies of the statements pursuant to
Section 4.02, Section 4.05, Section 3.12, Section 3.13 or Section 3.15
or any other statements or reports to the Rating Agencies 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
By: /s/ David Duclos
- - - - - - - - - - - -
Its: Vice President
ACKNOWLEDGEMENT OF CORPORATION
STATE OF ILLINOIS )
) SS.
COUNTY OF LAKE )
<PAGE> 123
On this 30th day of March 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/ Maralee A. Lacki
- - - - - - - - - - - - - - - - -
Notary Public
(SEAL)
CERTIFICATE OF ACKNOWLEDGEMENT
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
On this 30th day of March 2000 before me, a Notary Public in and
for said State, personally appeared David Duclos, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies) and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature /s/ Maryellen Hunter (SEAL)
- - - - - - - - -
Copies of Appendix 1: Definition of Class Y Principal Reduction
Amounts (which has been intentionally omitted from this filing) may be
obtained from PNC Mortgage Securities Corp. or State Street Bank and
<PAGE> 124
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
Corporate Trust
2 Avenue de Lafayette
Boston, MA 02111-1724
Telephone: (617) 662-1314
Facsimile: (617) 662-1435
Exhibit A
CUSIP 69348R VY9
MORTGAGE PASS-THROUGH CERTIFICATE
Class 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 March 30,
2000. Assuming that the Mortgage Loans underlying the Certificates
prepay at the prepayment assumption used by the issuer in pricing this
Certificate (i.e., 250% of the Standard Prepayment Assumption as
described in the Prospectus Supplement), this Certificate has been
issued with original issue discount ("OID") of no more than $
per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short
period is not more than $ per $100,000 of initial
Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate
based on the Standard Prepayment Assumption or any other rate.
<PAGE> 125
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 2000-2 Portion of the Class A-1
Principal Balance as of
the Cut-Off Date Evidenced by this
Certificate:
$227,809,475.00
Class A-1 Certificate Interest Rate: 7.750%
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class A-1 Principal Balance as of the Cut-Off Date: $227,809,475.00
Cede & Co.
Registered Owner
Exhibit A
CUSIP 69348R VZ6
MORTGAGE PASS-THROUGH CERTIFICATE
Class 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 March 30,
2000. [Assuming that the Mortgage Loans underlying the Certificates
prepay at the prepayment assumption used by the issuer in pricing this
Certificate (i.e., 250% of the Standard Prepayment Assumption as
described in the Prospectus Supplement), this Certificate has been
<PAGE> 126
issued with original issue discount ("OID") of no more than $
per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short
period is not more than $ per $100,000 of initial
Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate
based on the Standard Prepayment Assumption or any other rate.]
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to
the 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 2000-2 Portion of the Class A-2
Principal Balance as of
the Cut-Off Date Evidenced by this
Certificate:
$27,609,065.00
Class A-2 Certificate Interest Rate: 7.750%
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class A-2 Principal Balance as of the Cut-Off Date: $27,609,065.00
Cede & Co.
Registered Owner
Exhibit A
CUSIP 69348R WA0
MORTGAGE PASS-THROUGH CERTIFICATE
Class 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.
<PAGE> 127
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 March 30,
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 2000-2 Portion of the Class A-3
Principal Balance as of
the Cut-Off Date Evidenced by this
Certificate:
$23,750,000.00
Class A-3 Certificate Interest Rate: 7.750%
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class A-3 Principal Balance as of the Cut-Off Date: $23,750,000.00
Cede & Co.
Registered Owner
Exhibit A
CUSIP 69348R WB8
MORTGAGE PASS-THROUGH CERTIFICATE
Class A-4
Evidencing a Percentage Interest in a trust fund whose assets consist
of interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage
loans formed and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a
"real estate mortgage investment conduit," as those terms are defined
<PAGE> 128
in Sections 860G and 860D, respectively, of the Internal Revenue Code
of 1986, as amended. The issue date of this Certificate is March 30,
2000. [Assuming that the Mortgage Loans underlying the Certificates
prepay at the prepayment assumption used by the issuer in pricing this
Certificate (i.e., 250% of the Standard Prepayment Assumption as
described in the Prospectus Supplement), this Certificate has been
issued with original issue discount ("OID") of no more than $
per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short
period is not more than $ per $100,000 of initial
Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate
based on the Standard Prepayment Assumption or any other rate.]
IN THE CASE OF ANY CLASS A-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 A-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.
Series 2000-2 Portion of the Class A-4
Principal Balance as of
the Cut-Off Date Evidenced by this
Certificate:
$342,000.00
Class A-4 Certificate Interest Rate: 7.750%
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class A-4 Principal Balance as of the Cut-Off Date: $342,000.00
DLJ Mortgage Capital, Inc.
Registered Owner
Exhibit A
CUSIP 69348R WC6
MORTGAGE PASS-THROUGH CERTIFICATE
<PAGE> 129
Class A-5
Evidencing a Percentage Interest in a trust fund whose assets consist
of interests in another trust fund whose assets consists of, among
other things, a pool of conventional one- to four-family mortgage
loans formed and administered by
PNC MORTGAGE SECURITIES CORP.
This Certificate represents ownership of a "regular interest" in a
"real estate mortgage investment conduit," as those terms are defined
in Sections 860G and 860D, respectively, of the Internal Revenue Code
of 1986, as amended. The issue date of this Certificate is March 30,
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., 250% of the Standard Prepayment Assumption as
described in the Prospectus Supplement), this Certificate has been
issued with original issue discount ("OID") of no more than $
per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short
period is not more than $ per $100,000 of initial
Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate
based on the Standard Prepayment Assumption or any other rate.
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to
the 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 2000-2 Portion of the Class A-5
Principal Balance as of
the Cut-Off Date Evidenced by this
Certificate:
$4,183,751.00
Class A-5 Certificate Interest Rate: 0.000%
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class A-5 Principal Balance as of the Cut-Off Date: $4,183,751.00
Cede & Co.
<PAGE> 130
Registered Owner
Exhibit A
CUSIP 69348R WD4
MORTGAGE PASS-THROUGH CERTIFICATE
Class 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 March 30,
2000. Assuming that the Mortgage Loans underlying the Certificates
prepay at the prepayment assumption used by the issuer in pricing this
Certificate (i.e., 250% of the Standard Prepayment Assumption as
described in the Prospectus Supplement), this Certificate has been
issued with original issue discount ("OID") of no more than $
per $100,000 of initial Certificate Principal Balance, the
yield to maturity is %, and the amount of OID attributable to the
short period is not more than $ per $100,000 of initial
Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate
based on the Standard Prepayment Assumption or any other rate.
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to
the 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 2000-2 Portion of the Class X Notional
Amount as of the
Cut-Off Date Evidenced by this
Certificate:
$6,405,290.00
Class X Certificate Interest Rate:
7.750% applied to the Class X Notional Amount
<PAGE> 131
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class X Principal Balance as of the Cut-Off Date: $0.00
Class X Notional Amount as of the Cut-Off Date: $6,405,290.00
Cede & Co.
Registered Owner
Exhibit A
CUSIP 69348R WE2
MORTGAGE PASS-THROUGH CERTIFICATE
Class 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 March 30,
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., 250% of the Standard Prepayment Assumption as
described in the Prospectus Supplement), this Certificate has been
issued with original issue discount ("OID") of no more than $
per $100,000 of initial Certificate Principal Balance, the yield to
maturity is %, and the amount of OID attributable to the short
period is not more than $ per $100,000 of initial
Certificate Principal Balance, computed under the exact method. No
representation is made that the Mortgage Loans will prepay at a rate
based on the Standard Prepayment Assumption or any other rate.
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to
the 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> 132
Series 2000-2 Portion of the Class P
Principal Balance as of
the Cut-Off Date Evidenced
by this Certificate: $2,133,382.00
Class P Certificate Interest Rate: 0.00%
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class P Principal Balance as of the Cut-Off Date: $2,133,382.00
Cede & Co.
Registered Owner
Exhibit A
CUSIP 69348R WH5
MORTGAGE PASS-THROUGH CERTIFICATE
Class 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 March 30, 2000. [Assuming that the Mortgage Loans underlying the
Certificates prepay at the prepayment assumption used by the issuer in
pricing this Certificate (i.e., 250% of the Standard Prepayment
Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no
more than $ per $100,000 of initial Certificate Principal
Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the
exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any
other rate.]
IN THE CASE OF ANY CLASS 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 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
<PAGE> 133
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 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 2000-2 Portion of the Class B-1 Principal
Balance as of the Cut-Off Date
Evidenced by this Certificate:
$
Class B-1 Certificate Interest Rate: Variable
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class B-1 Principal Balance
as of the Cut-Off Date: $6,468,734.00
Registered Owner
Certificate No.
Exhibit A
CUSIP 69348R WJ1
MORTGAGE PASS-THROUGH CERTIFICATE
Class 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 March 30, 2000. [Assuming that the Mortgage Loans underlying the
Certificates prepay at the prepayment assumption used by the issuer in
pricing this Certificate (i.e., 250% of the Standard Prepayment
Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no
more than $ per $100,000 of initial Certificate Principal
Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the
exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any
other rate.]
IN THE CASE OF ANY CLASS B-2 CERTIFICATE PRESENTED FOR REGISTRATION
<PAGE> 134
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 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 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 2000-2 Portion of the Class B-2 Principal
Balance as of the Cut-Off Date
Evidenced by this Certificate:
$
Class B-2 Certificate Interest Rate: Variable
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class B-2 Principal Balance
as of the Cut-Off Date: $3,760,891.00
Registered Owner
Certificate No.
Exhibit A
CUSIP 69348R WK8
MORTGAGE PASS-THROUGH CERTIFICATE
Class 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 March 30, 2000. [Assuming that the Mortgage Loans underlying the
Certificates prepay at the prepayment assumption used by the issuer in
pricing this Certificate (i.e., 250% of the Standard Prepayment
Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no
<PAGE> 135
more than $ per $100,000 of initial Certificate Principal
Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the
exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any
other rate.]
IN THE CASE OF ANY CLASS 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 B-3 CERTIFICATE IS PERMISSIBLE UNDER
APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE MASTER SERVICER
OR THE COMPANY TO ANY OBLIGATION OR LIABILITY (INCLUDING
OBLIGATIONS OR LIABILITIES UNDER SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE POOLING
AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE
TRUSTEE, THE MASTER SERVICER OR THE COMPANY.
The Class 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 2000-2 Portion of the Class B-3 Principal
Balance as of the Cut-Off Date
Evidenced by this Certificate:
$
Class B-3 Certificate Interest Rate: Variable
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class B-3 Principal Balance as of the Cut-Off Date: $1,654,793.00
Registered Owner
Certificate No.
Exhibit A
CUSIP 69348R WL6
MORTGAGE PASS-THROUGH CERTIFICATE
Class 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
<PAGE> 136
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 March 30, 2000. Assuming that the Mortgage Loans underlying the
Certificates prepay at the prepayment assumption used by the issuer in
pricing this Certificate (i.e., 250% of the Standard Prepayment
Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no
more than $ per $100,000 of initial Certificate Principal
Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the
exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any
other rate.
IN THE CASE OF ANY CLASS 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 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 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 2000-2 Portion of the Class B-4 Principal
Balance as of the Cut-Off Date
Evidenced by this Certificate:
$
Class B-4 Certificate Interest Rate: Variable
Cut-Off Date: March 1, 2000
<PAGE> 137
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class B-4 Principal Balance as of the Cut-Off Date: $1,504,357.00
Registered Owner
Certificate No.
Exhibit A
CUSIP 69348R WM4
MORTGAGE PASS-THROUGH CERTIFICATE
Class 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 March 30, 2000. Assuming that the Mortgage Loans underlying the
Certificates prepay at the prepayment assumption used by the issuer in
pricing this Certificate (i.e., 250% of the Standard Prepayment
Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no
more than $ per $100,000 of initial Certificate Principal
Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the
exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any
other rate.
IN THE CASE OF ANY CLASS 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 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.
<PAGE> 138
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 B-5 Certificates will be subordinate in right of payment to
and provide credit support to certain Classes of Certificates, as
described in the Pooling Agreement.
Series 2000-2 Portion of the Class B-5 Principal
Balance as of the Cut-Off Date
Evidenced by this Certificate:
$601,742.00
Class B-5 Certificate Interest Rate: Variable
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class B-5 Principal Balance as of the Cut-Off Date: $601,742.00
DLJ Mortgage Capital, Inc.
Registered Owner
Exhibit A
CUSIP 69348R VX1
MORTGAGE PASS-THROUGH CERTIFICATE
Class 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 March 30, 2000. Assuming that the Mortgage Loans underlying the
Certificates prepay at the prepayment assumption used by the issuer in
pricing this Certificate (i.e., 250% of the Standard Prepayment
Assumption as described in the Prospectus Supplement), this
Certificate has been issued with original issue discount ("OID") of no
more than $ per $100,000 of initial Certificate Principal
Balance, the yield to maturity is %, and the amount of OID
attributable to the short period is not more than $ per
$100,000 of initial Certificate Principal Balance, computed under the
exact method. No representation is made that the Mortgage Loans will
prepay at a rate based on the Standard Prepayment Assumption or any
<PAGE> 139
other rate.
IN THE CASE OF ANY CLASS 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 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 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 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 2000-2 Portion of the Class B-6 Principal
Balance as of the Cut-Off Date
Evidenced by this Certificate:
$
Class B-6 Certificate Interest Rate: Variable
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class B-6 Principal Balance as of the Cut-Off Date: $1,053,050.99
Registered Owner
Certificate No.
Exhibit A
CUSIP 69348R WG7
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> 140
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.
Series 2000-2 Percentage Interest evidenced by
this Class R-2 Certificate in the
distributions to be made with
<PAGE> 141
respect to the Class R-2
Certificates: %
Class R-2 Certificate Interest Rate:
7.750%. Additionally the Class R-2
Certificates are entitled to the
Residual Distribution Amount as
defined in the Pooling Agreement.
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
Class R-2 Principal Balance as of the Cut-Off Date: $50.00
Registered Owner
Certificate No.
Exhibit B
CUSIP 69348R WF9
MORTGAGE PASS-THROUGH CERTIFICATE
Class R-1
Evidencing a Percentage Interest in certain distributions with respect
to a pool of conventional one- to four-family mortgage loans formed
and administered by
PNC MORTGAGE SECURITIES CORP.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO
THE COMPANY AND THE CERTIFICATE REGISTRAR THAT (1) SUCH TRANSFEREE IS
NOT EITHER (A) THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION
THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR
ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY
ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE
CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511
OF THE CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C)
OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A),
(B), OR (C) BEING HEREINAFTER REFERRED TO AS A "DISQUALIFIED
ORGANIZATION"), OR (D) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (2)
NO PURPOSE OF SUCH TRANSFER IS TO ENABLE THE TRANSFER TO IMPEDE THE
ASSESSMENT OR COLLECTION OF TAX. SUCH AFFIDAVIT SHALL INCLUDE CERTAIN
REPRESENTATIONS AS TO THE FINANCIAL CONDITION OF THE PROPOSED
TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CLASS R-1
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A
DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF
NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE
DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING,
BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
<PAGE> 142
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 2000-2 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:
7.750%. Additionally the Class R-1
Certificates are entitled to Excess
Liquidation Proceeds and the Residual
Distribution Amount as defined in the
Pooling Agreement.
Cut-Off Date: March 1, 2000
First Distribution Date: April 25, 2000
Last Scheduled Distribution Date: April 25, 2030
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
<PAGE> 143
"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 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.
<PAGE> 144
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
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
<PAGE> 145
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.
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
<PAGE> 146
Agreement, such Pooling Agreement generally requires that the Trustee
distribute to the Certificateholders in the aggregate an amount equal
to 100% of the unpaid Principal Balance of such Mortgage Loan, plus
accrued interest at the applicable Pass-Through Rate to the next
scheduled Due Date for the Mortgage Loan. The Pooling Agreement
permits, but does not require, the Company to repurchase from the
REMIC I Trust Fund all Mortgage Loans at the time subject thereto and
all property acquired in respect of any Mortgage Loan upon payment to
the Certificateholders of the amounts specified in the Pooling
Agreement. The exercise of such right will effect early retirement of
the Certificates, the Company's right to repurchase being subject to
the aggregate unpaid Principal Balance of the Mortgage Loans at the
time of repurchase being less than ten percent (10%) of the aggregate
unpaid 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 C
<PAGE> 147
[Reserved]
Exhibit D
Mortgage Loan Schedule
Copies of Exhibit D 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
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
<PAGE> 148
WHEREAS, the Company has submitted a Seller Application to PNC
Mortgage and has been approved by PNC Mortgage for participation in
the PNC Mortgage Purchase Programs; and
WHEREAS, the Company has received and reviewed the PNC Mortgage
Purchase Programs Seller Guide (the "Seller Guide"), as well as the
PNC Mortgage Servicing Guide (the "Servicing Guide" and, together with
the Seller Guide, the "Guides"), and understands each and every
provision thereof;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, PNC Mortgage and the Company
hereby agree as follows:
1. Guides. The Guides, which set forth the terms and
conditions under which PNC Mortgage may elect to purchase mortgage
loans from the Company, and the Company shall service mortgage loans
on behalf of PNC Mortgage, are a supplement to this Agreement and such
Guides, as may be amended or supplemented from time to time by PNC
Mortgage, are incorporated into this Agreement in full by reference
and made a part hereof as fully as if set forth at length herein. All
capitalized terms used and not defined herein have the meanings
ascribed to them in the Guides.
2. Company's Duties. The Company shall diligently perform all
duties incident to the origination, sale and servicing of the mortgage
loans subject to this Agreement. In the performance of its servicing
duties, the Company shall exercise the same degree of care it
exercises when servicing mortgage loans for its own account, but in no
event shall the Company exercise less care than a reasonable prudent
servicer would exercise under similar circumstances. In addition, the
Company shall comply with all of the provisions of the Guides and with
all other requirements and instructions of PNC Mortgage. The Company
shall perform such duties at its sole expense, except as otherwise
expressly provided in the Guides.
3. Representations, Warranties and Covenants of the Company;
Remedies of PNC Mortgage. With respect to each mortgage loan sold by
the Company to PNC Mortgage pursuant to the terms of this Agreement,
the Company shall make all of the representations, warranties and
covenants set forth in the Guide and, in the event of the breach of
any of such representations, warranties and covenants, PNC Mortgage
shall have all of the remedies available at law or in equity, as well
as all of the remedies set forth in the Guide, including, but not
limited to, repurchase and indemnification. The representations and
warranties made by the Company with respect to any mortgage loan
subject to this Agreement, as well as the remedies available to PNC
Mortgage upon the breach thereof, shall survive: (a) any
investigation regarding the mortgage loan conducted by PNC Mortgage,
its assignees or designees, (b) the liquidation of the mortgage loan,
(c) the purchase of the mortgage loan by PNC Mortgage, its assignee or
designee, (d) the repurchase of the mortgage loan by the Company and
<PAGE> 149
(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.
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
<PAGE> 150
section headings contained herein are for convenience only and shall
not be construed as part of this Agreement. Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction
shall as to such jurisdiction be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
portions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction, and to this end, the provisions
hereof are severable. This Agreement shall be governed by, and
construed and enforced in accordance with, applicable federal laws and
laws of the State of Illinois, without reference to conflict of laws
principles. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of
which shall constitute the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement by
proper officials duly authorized on the dates hereinafter set forth.
This Agreement shall take effect as of the date of its execution in
original or facsimile signature by a duly authorized officer of PNC
Mortgage.
Name of the Company Company I.D. Number
Type of organization Organized under laws of
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
<PAGE> 151
FORM OF TRANSFEROR CERTIFICATE FOR
JUNIOR SUBORDINATE CERTIFICATES
[Date]
State Street Bank and Trust Company, as Trustee
225 Franklin Street
Boston, MA 02110
Attn: Corporate Trust Department, PNC 2000-2
Re: Purchase of PNC Mortgage Securities Corp. Mortgage Pass-
Through Certificates Series 2000-2, 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 2000-2
<PAGE> 152
PNC Mortgage Securities Corp.
75 N. Fairway Drive
Vernon Hills, Illinois 60061
The undersigned (the "Purchaser") proposes to purchase Class
[ ] Certificates evidencing an undivided interest in PNC Mortgage
Securities Corp. Mortgage Pass-Through Certificates, Series 2000-2
(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 March 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 2000-2.
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> 153
(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).
(c) The Purchaser acknowledges that its Purchased
<PAGE> 154
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 2000-2
(THE "TRUST") CLASS [ ] CERTIFICATES
(THE "PURCHASED CERTIFICATES")
Under penalties of perjury, I, , declare that, to the best of my
knowledge and belief, the following representations are true, correct
and complete; and
1. That I am the of (the "Purchaser"), whose taxpayer
identification number is , and on behalf of which I have the
authority to make this affidavit.
2. That the Purchaser is acquiring a Purchased Certificate
representing an interest in the Trust Funds.
3. That the Purchaser (i) is not an employee benefit plan
or other plan or arrangement subject to the prohibited transaction
provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), or comparable provisions of any
subsequent enactments (a "Plan"), a trustee of any Plan, or any other
Person who is using the "plan assets" of any Plan to effect such
acquisition, (ii) has provided a "Benefit Plan Opinion" satisfactory
to PNC Mortgage Securities Corp. (the "Company") and the Trustee of
the Trust Funds or (iii) is an insurance company, the source of funds
to be used by it to purchase the Purchased Certificates is an
"insurance company general account" (within the meaning of Department
of Labor Prohibited Transaction Class Exemption ("PTCE") 95-60), and
the purchase is being made in reliance upon the availability of the
exemptive relief afforded under Sections I and III of PTCE 95-60. A
Benefit Plan Opinion is an opinion of counsel to the effect that the
proposed transfer (a) is permissible under applicable law, (b) will
<PAGE> 155
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 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
<PAGE> 156
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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
STATE STREET BANK AND TRUST COMPANY, as
Trustee
By:
<PAGE> 157
(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 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
<PAGE> 158
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 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
<PAGE> 159
of transfer or exchange, and the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Company, the Trustee and the Certificate Registrar and any
agent of the Company, the Trustee or the Certificate Registrar may
treat the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and neither the Company, the Trustee,
the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Pooling Agreement and the trust
funds created thereby shall terminate upon (i) the later of the
maturity or other liquidation (including repurchase by the Company) of
the last Mortgage Loan remaining in the REMIC I Trust Fund or the
disposition of all property acquired upon foreclosure or deed in lieu
of foreclosure of any Mortgage Loan, and (ii) the payment to
Certificateholders of all amounts held by the Trustee and required to
be paid to them pursuant to the Pooling Agreement. In the event that
the Company repurchases any Mortgage Loan pursuant to the Pooling
Agreement, such Pooling Agreement generally requires that the Trustee
distribute to the Certificateholders in the aggregate an amount equal
to 100% of the unpaid Principal Balance of such Mortgage Loan, plus
accrued interest at the applicable Pass-Through Rate to the next
scheduled Due Date for the Mortgage Loan. The Pooling Agreement
permits, but does not require, the Company to repurchase from the
REMIC I Trust Fund all Mortgage Loans at the time subject thereto and
all property acquired in respect of any Mortgage Loan upon payment to
the Certificateholders of the amounts specified in the Pooling
Agreement. The exercise of such right will effect early retirement of
the Certificates, the Company's right to repurchase being subject to
the aggregate unpaid Principal Balance of the Mortgage Loans at the
time of repurchase being less than ten percent (10%) of the aggregate
unpaid 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:
<PAGE> 160
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 2000-2
Re: PNC Mortgage Securities Corp. Mortgage Pass-Through
Certificates, Series 2000-2, 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 2000-2, Class [R-1][R-2] (the "Certificate"), pursuant to
Section 5.01 of the Pooling and Servicing Agreement (the "Pooling
Agreement"), dated as of March 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
<PAGE> 161
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,
[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
<PAGE> 162
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 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
<PAGE> 163
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 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
<PAGE> 164
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 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.
<PAGE> 165
NOTARY PUBLIC
COUNTY OF
STATE OF
My Commission expires the
day
of , 20
Exhibit K
[Reserved]
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
<PAGE> 166
Pooling and Servicing Agreement (the "Agreement") dated as of March 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 the Rule 144A Securities.
c. The Buyer has received and reviewed the Private
Placement Memorandum dated as of March 30, 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
<PAGE> 167
in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the 1933 Act.
f. The Buyer is not affiliated with (i) the Trustee or
(ii) any Rating Agency that rated the Rule 144A Securities.
g. If applicable, the Buyer has complied, and will
continue to comply, with the guidelines established by Thrift
Bulletin 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
<PAGE> 168
By: By:
Name: Name:
Title: Title:
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 in its latest annual financial
<PAGE> 169
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 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.
<PAGE> 170
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 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.
<PAGE> 171
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.
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
<PAGE> 172
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:
IF AN ADVISER:
Print Name of Buyer
By:
Name:
Title:
Date:
(SEAL)
<PAGE> 173
Exhibit M
[Date]
[Company]
Re: Pooling and Servicing Agreement dated as of March 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 2000-2
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 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
<PAGE> 174
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 2000-2
PNC Mortgage Securities Corp.
75 North Fairway Drive
Vernon Hills, IL 60061
RE: PNC MORTGAGE SECURITIES CORP.
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-2
(THE "TRUST") CLASS [A-4] [B-] CERTIFICATES
(THE "PURCHASED CERTIFICATES")
Under penalties of perjury, I, , declare that, to the best of my
knowledge and belief, the following representations are true, correct
and complete; and
1. That I am the of (the "Purchaser"), whose taxpayer
identification number is , and on behalf of which I have the
authority to make this affidavit.
2. That the Purchaser is acquiring a Purchased Certificate
representing an interest in the Trust Funds.
3. That the Purchaser is either:
(a) not an employee benefit plan or other plan subject to the
prohibited transaction provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code") (a "Plan") or
any other person (including an investment manager, a named fiduciary
or a trustee of any Plan) acting directly or indirectly on behalf of,
or purchasing any of the Purchased Certificates with "plan assets" of,
any Plan within the meaning of the Department of Labor ("DOL")
regulation at 29 C.F.R. Section 2510.3-101; or
(b) an insurance company, the source of funds to be used by it
to purchase the Purchased Certificates is an "insurance company
general account" (within the meaning of DOL Prohibited Transaction
Class Exemption ("PTCE") 95-60), and the purchase is being made in
reliance upon the availability of the exemptive relief afforded under
<PAGE> 175
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
CLIPPER RECEIVABLES CORPORATION,
as Seller
STATE STREET BANK AND TRUST COMPANY,
as Trustee
LOAN SALE AGREEMENT
Dated as of March 1, 2000
<PAGE> 176
This Loan Sale Agreement (this "Agreement") is dated as of March
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 March 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
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: March 30, 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: March 1, 2000.
Fairway: The meaning given in the introductory paragraph hereto.
Mortgage: The mortgage, deed of trust or other instrument
securing a Mortgage Note.
<PAGE> 177
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 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
<PAGE> 178
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 $ (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 2000-2, or such
other address as may hereafter be furnished to the Seller in writing
<PAGE> 179
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, 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
<PAGE> 180
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
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
<PAGE> 181
By: STATE STREET CAPITAL
CORPORATION, as Program Administrator
By:
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
<PAGE> 182
Company, as relationship bank, and PNC Mortgage Securities
Corp., as servicer
Ladies and Gentlemen:
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 March 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
March 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 March 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 March 1, 2000 by and between PNC
Mortgage Securities Corp. ("PNC") and the Trustee.
<PAGE> 183
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 March 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 March 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 Section 5-
1401 of the New York General Obligations Law) and the obligations,
rights and remedies of the parties hereunder shall be determined in
<PAGE> 184
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:
