As filed with the Securities Exchange Commission on January 24, 2000
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PNC MORTGAGE ACCEPTANCE CORP.
(Exact name of registrant as specified in its charter)
Missouri 43-1681393
(State or other jurisdiction (I.R.S. Employer of
incorporation or organization) Identification Number)
PNC Mortgage Acceptance Corp.
210 West 10th Street, 6th Floor
Kansas City, Missouri 64105
(816) 435-5000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Douglas D. Danforth, Jr.
PNC Mortgage Acceptance Corp.
210 West 10th Street, 6th Floor
Kansas City, Missouri 64105
(816) 435-5000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copy to:
Patrick J. Respeliers
Stephen W. Grow
Morrison & Hecker L.L.P.
2600 Grand Avenue
Kansas City, Missouri 64108
(816) 691-2600
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act of 1933, please check the following
box. [_]
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CALCULATION OF REGISTRATION FEE*
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Proposed Maximum Proposed Maximum Amount of
Title of Amount to be Offering Price Aggregate Offering Registration
Securities to Registered (1) Per Security (2) Price (2) Fee
be Registered
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Mortgage Pass $1,827,599,959 100% $1,827,599,959 $482,486 (3)
Through
Certificates
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(1) Or, if any of the securities registered hereunder are interest only
securities, such greater amount as shall result in net proceeds of
$1,827,599,959 to the registrant. This Registration Statement also registers
an indeterminate amount of the securities which may be sold by PNC Capital
Markets, Inc. in market making transactions. This Registration Statement
also registers market making transactions by PNC Capital Markets, Inc. with
respect to those classes of the registrant's series 1999-CM1 commercial
mortgage pass-through certificates that were previously registered under
Registration Statement No. 333-60749.
(2) Estimated solely for the purpose of calculating the registration fee. (3)
$1,827,599,959 aggregate principal amount of Mortgage Pass-Through
Certificates registered by the registrant under Registration Statement No.
333-60749 and not previously sold are consolidated in this Registration
Statement pursuant to Rule 429. The Registration Fee has been previously
paid by the registrant under the foregoing Registration Statement in
connection with such unsold amount of Mortgage Pass-Through Certificates.
* To the extent that any series of certificates offered pursuant to this
Registration Statement evidences a beneficial ownership interest in a trust fund
containing mortgage-backed securities that have been previously issued by the
registrant, this Registration Statement is deemed to register such underlying
mortgage-backed securities.
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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EXPLANATORY NOTE
This Registration Statement contains (i) a base prospectus to be used for
transactions involving mortgage loans secured by multifamily and commercial
properties, (ii) a form of prospectus supplement to be used for transactions
involving mortgage loans secured by multifamily and commercial properties and
(iii) a prospectus supplement for use in market-making activities by PNC Capital
Markets, Inc., an affiliate of registrant, with respect to Commercial Mortgage
Pass-Through Certificates, Series 1999-CM1, that have been issued and sold under
Registration Statement No. 333-60749.
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SUBJECT TO COMPLETION, DATED JANUARY 24, 2000
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securitiesi and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Prospectus
PNC Commercial Mortgage Acceptance Corp.,
Depositor
Mortgage Pass-Through Certificates
(issuable in series)
Our name is PNC Commercial Mortgage Acceptance Corp. and we intend to
offer commercial mortgage pass-through certificates from time to time. These
offers may be made through one or more different methods, including offerings
through underwriters. See "Method of Distribution."
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The Offered Certificates: The Trust Assets:
The offered certificates will be The assets of each trust will issuable in
series. Each series of include:
offered certificates will:
o mortgage loans secured by first
o have its own series designation, and junior liens on, or security
o consist of one or more classes interests in, various interests in
with various payment characteristics, commercial and multifamily real
o evidence beneficial ownership properties,
interests in a trust established by o mortgage-backed securities that
us, and directly or indirectly evidence
o be payable solely out of trust interests in, or are directly or
assets. indirectly secured by, such types
of mortgage loans,
We do not currently intend to o direct obligations of the United
list the offered certificates of any States or other governmental
series on any national securities agencies, or
exchange or the Nasdaq stock market. o some combination of such types
of mortgage loans, mortgage-backed
securities and government
securities.
Trust assets may also include
letters of credit, surety bonds,
insurance policies, guarantees, reserve
funds, guaranteed investment contracts,
interest rate or currency exchange
agreements, interest rate cap or floor
agreements, or other similar
instruments and agreements.
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In connection with each offering, we will prepare a supplement to this
prospectus in order to describe in more detail the particular certificates being
offered and the related trust assets. In that document, we will also state the
price to the public for each class of offered certificates or explain the method
for determining such price. In addition, in that document, we will identify the
applicable lead or managing underwriter(s), if any, and the relevant
underwriting arrangements. You may not purchase the offered certificates of any
series unless you have also received the prospectus supplement for that series.
You should carefully consider the risk factors beginning on page 6 in this
prospectus, as well as those set forth in the related prospectus supplement,
prior to investing.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the offered certificates or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
The date of this Prospectus is ____________, _____.
<PAGE>
Important Notice About The Information Presented In This Prospectus
When deciding whether to invest in any of the offered certificates, you
should only rely on the information contained in this prospectus and the related
prospectus supplement. We have not authorized any dealer, salesman or other
person to give any information or to make any representation that is different.
In addition, information in this prospectus or any related prospectus supplement
is current only as of the date on its cover. By delivery of this prospectus and
any related prospectus supplement, we are not offering to sell any securities,
and are not soliciting an offer to buy any securities, in any state where the
offer and sale is not permitted.
TABLE OF CONTENTS
IMPORTANT NOTICE ABOUT THE INFORMATION
PRESENTED IN THIS PROSPECTUS.......................1
SUMMARY OF PROSPECTUS..................................1
RISK FACTORS...........................................6
DESCRIPTION OF THE TRUST ASSETS.......................29
YIELD AND MATURITY CONSIDERATIONS.....................34
PNC COMMERCIAL MORTGAGE CORP..........................38
DESCRIPTION OF THE CERTIFICATES.......................39
DESCRIPTION OF THE GOVERNING DOCUMENTS................45
DESCRIPTION OF CREDIT SUPPORT.........................57
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS...............59
FEDERAL INCOME TAX CONSEQUENCES.......................68
STATE AND OTHER TAX CONSEQUENCES......................99
LEGAL INVESTMENT.....................................102
USE OF PROCEEDS......................................104
METHOD OF DISTRIBUTION...............................104
WHERE YOU CAN FIND MORE INFORMATION..................105
LEGAL MATTERS........................................105
FINANCIAL INFORMATION................................105
RATING...............................................106
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SUMMARY OF PROSPECTUS
This summary contains selected information from this prospectus. It does
not contain all of the information you need to consider in making your
investment decision. To understand all of the terms of a particular offering of
certificates, you should read carefully this prospectus and the related
prospectus supplement in full.
Who We Are
PNC Commercial Mortgage Acceptance Corp. is a Missouri corporation and a
wholly owned subsidiary of Midland Loan Services, Inc. Our principal offices are
located at:
210 West 10th Street
6th Floor
Kansas City, Missouri 64105
Our main telephone number is (816) 435-5000. See "PNC Commercial Mortgage
Acceptance Corp."
The Securities Being Offered
The securities that will be offered pursuant to this prospectus and the
related prospectus supplements consist of mortgage pass-through certificates.
These certificates will be issued in series, and each series will, in turn,
consist of one or more classes. Each class of offered certificates must, at the
time of issuance, be assigned an investment grade rating by at least one
nationally recognized statistical rating organization. Typically, the four
highest rating categories, within which there may be sub-categories or
gradations to indicate relative standing, signify investment grade. See
"Rating."
Each series of offered certificates will evidence beneficial ownership
interests in a trust established by us and containing the assets described in
this prospectus and the related prospectus supplement.
The Offered Certificates may be Issued with Other Certificates
We may not publicly offer all the mortgage pass-through certificates
evidencing interests in a particular trust. We may elect to:
o retain some of those certificates;
o place some privately with institutional investors; or
o deliver some to the applicable seller as partial consideration for the
related mortgage assets.
In addition, some of those certificates may not satisfy the rating
requirement described above for offered certificates.
The Governing Documents
In general, a pooling and servicing agreement or other similar agreement
or collection of agreements will govern--
o the creation of and transfer of assets to each trust;
o the issuance of the related series of certificates; and
o the servicing and administration of the trust assets.
The parties to the governing document(s) will always include a trustee and
us. We will be responsible for establishing the trust relating to each series of
offered certificates. In addition, we will transfer or arrange for the transfer
of the initial trust assets to that trust. In general, the trustee will be
responsible for, among other things, making payments and preparing and
disseminating certain reports to the holders of the offered and non-offered
certificates.
If the trust assets include mortgage loans, the parties to the governing
document(s) will also include--
o a master servicer that will generally be responsible for performing customary
servicing duties with respect to those mortgage loans that are not defaulted,
non-performing or otherwise problematic in any material respect; and
o a special servicer that will generally be responsible for servicing and
administering mortgage loans that are defaulted, non-performing or otherwise
problematic in any material respect and real estate assets acquired in
respect of defaulted mortgage loans.
The same person or entity, or affiliated entities, may act as both master
servicer and special servicer for any trust.
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If the trust assets include mortgage-backed securities, the parties to the
governing document(s) may also include a manager that will be responsible for
performing various administrative duties with respect to the mortgage-backed
securities. If the related trustee assumes these duties, however, there will be
no manager.
In the related prospectus supplement, we will identify the trustee and any
master servicer, special servicer or manager for each trust and will describe
their respective duties in further detail.
See "Description of the Governing Documents."
Certain Characteristics of the Mortgage Assets
The trust assets with respect to any series of offered certificates will,
in general, include mortgage loans. Each mortgage loan to be included in a trust
will constitute the obligation of one or more persons to repay a debt. Each
mortgage loan will be secured by a first or junior lien on, or security interest
in, the ownership, leasehold or other interest(s) of the related borrower or
another person in one or more commercial or multifamily real properties. In
particular, those properties may include:
o rental or cooperatively-owned buildings with multiple dwelling units;
o retail properties related to the sale of consumer goods and other products,
or related to providing entertainment, recreational or personal services, to
the general public;
o office buildings;
o hospitality properties;
o casino properties;
o health care-related facilities;
o industrial facilities;
o warehouse facilities, mini-warehouse facilities and self-storage facilities;
o restaurants, taverns and other establishments involved in the food and
beverage industry;
o manufactured housing communities, mobile home parks and recreational vehicle
parks;
o recreational and resort properties;
o arenas and stadiums;
o churches and other religious facilities;
o parking lots and garages;
o mixed use properties;
o other income-producing properties; and
o unimproved land that is zoned for multifamily residential or commercial use.
The mortgage loans to be included in a trust may have a variety of payment
terms. For example, a mortgage loan:
o may provide for the accrual of interest at a mortgage interest rate that is
fixed over its term, that resets on one or more specified dates or that
otherwise adjusts from time to time;
o may provide for the accrual of interest at a mortgage interest rate that may
be converted at the borrower's election from an adjustable to a fixed
interest rate or from a fixed to an adjustable interest rate;
o may provide for no accrual of interest;
o may provide for level payments to stated maturity, for payments that reset in
amount on one or more specified dates or for payments that otherwise adjust
from time to time to accommodate changes in the interest rate or to reflect
the occurrence of certain events;
o may be fully amortizing or, alternatively, may be partially amortizing or
non-amortizing, with a substantial payment of principal due on its stated
maturity date;
o may permit the negative amortization or deferral of accrued interest;
o may prohibit some or all voluntary prepayments or require payment of a
premium, fee or charge in connection with those prepayments; and/or
o may provide for payments of principal, interest or both, on due dates that
occur monthly, bimonthly, quarterly, semi-annually, annually or at some other
interval.
Any mortgage loan may have two or more component parts, each having
characteristics that are otherwise described in this prospectus as being
attributable to separate and distinct mortgage loans.
We do not originate mortgage loans. However, Midland Loan Services, Inc.
or one of our other affiliates may originate some of the mortgage loans
underlying the offered certificates. Unless we expressly state otherwise in the
related prospectus supplement, the repayment of any of the mortgage loans to be
included in a trust will not be guaranteed or insured by us, any of our
affiliates, any governmental agency or instrumentality or any other person. See
"Description of the Trust Assets--Mortgage Loans."
The trust assets with respect to any series of offered certificates may
also include mortgage participations, mortgage pass-through certificates,
collateralized mortgage obligations and other mortgage-backed securities, that
evidence an interest
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in, or are secured by a pledge of, one or more mortgage loans of the type
described above. See "Description of the Trust Assets--Mortgage-Backed
Securities."
We will describe the specific characteristics of the mortgage assets
underlying a series of offered certificates in the related prospectus
supplement.
In general, the total outstanding principal balance of the mortgage assets
transferred by us to any particular trust will equal or exceed the initial total
outstanding principal balance of the related series of certificates. In the
event that the total outstanding principal balance of the related mortgage
assets initially delivered by us to the related trustee is less than the initial
total outstanding principal balance of any series of certificates, we may
deposit or arrange for the deposit of cash or liquid investments on an interim
basis with the related trustee to cover the shortfall. For 90 days following the
date of initial issuance of that series of certificates, we will be entitled to
obtain a release of the deposited cash or investments if we deliver or arrange
for delivery of a corresponding amount of mortgage assets. If we fail, however,
to deliver mortgage assets sufficient to make up the entire shortfall, any of
the cash or, following liquidation, investments remaining on deposit with the
related trustee will be used by the related trustee to pay down the principal
balance of the related series of certificates, as described in the related
prospectus supplement.
Certain Characteristics of the Offered Certificates
An offered certificate may entitle the holder to receive:
o a stated principal amount;
o interest on a principal balance or notional amount, at a fixed, variable or
adjustable pass-through rate;
o specified, fixed or variable portions of the interest, principal or other
amounts received on the related mortgage assets;
o payments of principal, with disproportionate, nominal or no distributions of
interest;
o payments of interest, with disproportionate, nominal or no distributions of
principal;
o payments of interest or principal that commence only as of a specified date
or only after the occurrence of certain events, such as the payment in full
of the interest and principal outstanding on one or more other classes of
certificates of the same series;
o payments of principal to be made, from time to time or for designated
periods, at a rate that is faster (and, in some cases, substantially faster)
or slower (and, in some cases, substantially slower) than the rate at which
payments or other collections of principal are received on the related
mortgage assets;
o payments of principal to be made based on a specified principal payment
schedule or other methodology, which payments may be limited to the amount of
available funds; or
o payments of all or part of the prepayment or repayment premiums, fees and
charges, equity participation payments or other similar items received on the
related mortgage assets.
Any class of offered certificates may be senior or subordinate to one or
more other classes of certificates of the same series, including a non-offered
class of certificates of that series, for purposes of some or all payments,
allocations of losses or both.
A class of offered certificates may have two or more component parts, each
having characteristics that are otherwise described in this prospectus as being
attributable to separate and distinct classes.
We will describe the specific characteristics of each class of offered
certificates in the related prospectus supplement. See "Description of the
Certificates."
The Trust will Include Collection and Distribution Accounts
The master servicer must establish and maintain one or more collection
accounts for deposit of all payments and collections received or advanced on the
Mortgage Loans. The trustee must establish a distribution account for deposit of
amounts from the collection account to be used for distributions of principal
and interest to certificate holders.
Credit Support and Interest Rate Protection for the Offered Certificates
Some classes of offered certificates may be protected in full or in part
against certain defaults and losses on the related mortgage assets through the
subordination of one or more other classes of certificates of the same series or
by other types of credit support. The other types of credit support may include
a letter of credit, a surety bond, an insurance policy, a guarantee or a reserve
fund. We will describe the credit support, if any, for each class
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of offered certificates in the related prospectus supplement.
The assets of any particular trust may also include any of the following
agreements:
o guaranteed investment contracts pursuant to which moneys held in the funds
and accounts established for the related series of certificates will be
invested at a specified rate;
o interest rate exchange agreements, interest rate cap or floor agreements, or
other agreements and arrangements designed to reduce the effects of interest
rate fluctuations on the related mortgage assets or on one or more classes of
offered certificates of the related series; or
o if any of the mortgage assets are payable in a foreign currency, foreign
currency exchange agreements or other agreements and arrangements designed to
reduce the effects of foreign currency fluctuations on the related mortgage
assets or one or more classes of offered certificates of the related series.
We will describe the types of reinvestment and interest rate protection,
if any, for each class of offered certificates in the related prospectus
supplement.
See "Risk Factors," "Description of the Trust Funds" and "Description of
Credit Support."
Advances to Cover Delinquent Payments of Principal and Interest on the Mortgage
Assets.
If the related trust assets include mortgage loans, the master servicer,
the trustee, any provider of credit support and any other specified person may
be obligated to make, or may have the option of making, certain advances with
respect to delinquent scheduled payments of principal, interest or both on the
mortgage loans. Any party making advances will be entitled to reimbursement from
subsequent recoveries on the related mortgage loan and as otherwise described in
this prospectus or the related prospectus supplement. That party may also be
entitled to receive interest on its advances for a specified period. See
"Description of the Certificates--Advances in Respect of Delinquencies."
If the related trust assets include mortgage-backed securities, we will
describe in the related prospectus supplement any comparable advancing
obligation in respect of those mortgage-backed securities or the underlying
mortgage loans.
Optional Termination
We will describe in the related prospectus supplement any circumstances in
which a specified party is permitted or obligated to purchase or sell any of the
mortgage assets underlying a series of offered certificates. In particular, a
master servicer, special servicer or other designated party may be permitted or
obligated to purchase or sell:
o all the mortgage assets in any particular trust, which would cause a termina-
tion of the trust; or
o that portion of the mortgage assets in any particular trust as is necessary
or sufficient to retire one or more classes of offered certificates of the
related series.
See "Description of the Certificates--Termination."
Federal Income Tax Consequences
Any class of offered certificates will constitute or evidence ownership of
either:
o "regular interests" or "residual interests" in a "real estate mortgage
investment conduit" under Sections 860A through 860G of the Internal Revenue
Code of 1986; or
o "regular interests" or "residual interests" in a "financial asset
securitization investment trust" under Section 860L(a) of the Internal
Revenue Code of 1986; or
o interests in a grantor trust under Subpart E of Part I of Subchapter J of the
Internal Revenue Code of 1986.
See "Federal Income Tax Consequences."
ERISA Considerations
If you are a fiduciary of an employee benefit plan or other retirement
plan or arrangement, you should review with your legal advisor whether the
purchase or holding of offered certificates could give rise to a transaction
that is prohibited or is not otherwise permissible under applicable law. See
"ERISA Considerations."
Legal Investment
If your investment authority is subject to legal restrictions, you should
consult your legal advisor to determine whether and to what extent the offered
certificates constitute a legal investment for you. We will specify in the
related prospectus
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supplement which classes of the offered certificates will constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984. See "Legal Investment."
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RISK FACTORS
You should consider the following factors, as well as the factors set forth
under "Risk Factors" in the related prospectus supplement, in deciding whether
to purchase offered certificates.
A Number of Factors that Affect the Liquidity of Your Certificates May Have an
Adverse Effect on the Value of Your Certificates
The offered certificates may have limited or no liquidity. We cannot
assure you that a secondary market for your certificates will develop. There
will be no obligation on the part of anyone to establish a secondary market.
Even if a secondary market does develop for your certificates, it may provide
you with less liquidity than you anticipated and it may not continue for the
life of your certificates.
We will describe in the related prospectus supplement the information that
will be available to you with respect to your certificates. The limited nature
of such information may adversely affect the liquidity of your certificates.
We do not currently intend to list the offered certificates on any
national securities exchange or the Nasdaq stock market.
Lack of liquidity will impair your ability to sell your certificates and
may prevent you from doing so at a time when you may want or need to sell your
certificates. This lack of liquidity could adversely affect the market value of
your certificates. We do not expect that you will have any redemption rights
with respect to your certificates.
If you decide to sell your certificates, you may have to sell them at a
discount from the price you paid for reasons unrelated to the performance of
your certificates or the related mortgage assets. Pricing information regarding
your certificates may not be generally available on an ongoing basis.
The Market Value of Your Certificates Will be Sensitive to Fluctuations in
Prevailing Interest Rates and Spreads
The market value of your certificates will be sensitive to fluctuations in
current interest rates. However, a change in the market value of your
certificates as a result of an upward or downward movement in current interest
rates may not equal the change in the market value of your certificates as a
result of an equal but opposite movement in interest rates.
Investor perceptions regarding the quality of commercial mortgage-backed
securities generally as an investment relative to alternative investments such
as U.S. treasury securities will affect the market value of your certificates.
That market value will decline if potential investors prefer the safety of
investments such as U.S. treasury securities. This may occur regardless of the
performance of your certificates or the related mortgage assets.
Payments on Your Certificates Will be Made Solely From the Limited Assets of the
Related Trust
Your certificates do not represent obligations of any person or entity and
do not represent a claim against any assets other than those of the related
trust. Unless we expressly state otherwise in the related prospectus supplement,
neither we, nor any of our affiliates nor any governmental agency or
instrumentality or other person will guarantee or insure payment on your
certificates. If the related trust assets are insufficient to make payments on
your certificates, you will bear the resulting loss. Any advances made by a
master servicer or other party with respect to the mortgage assets underlying
your certificates are intended solely to provide liquidity and not credit
support. The party making those advances will have a right to reimbursement,
probably with interest, which is senior to your right to receive payment on your
certificates.
Any Credit Support for Your Certificates May be Insufficient to Protect You
Against all Potential Losses
The Amount of Credit Support Will be Limited
The rating agencies that assign ratings to your certificates will
establish the amount of credit support, if any, for your certificates based on,
among other things, an assumed level of defaults, delinquencies and losses with
respect to the related mortgage assets. Actual losses may, however, exceed the
assumed levels. See "Description of the Certificates--Allocation of Losses and
Shortfalls" and "Description of Credit Support." If actual losses on the related
mortgage assets exceed the assumed
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levels, you may be required to bear the additional losses.
Credit Support May Not Cover All Types of Losses
The credit support, if any, for your certificates may not cover all of
your potential losses. For example, certain forms of credit support may not
cover or may provide limited protection against losses that you may suffer by
reason of fraud or negligence or as a result of certain uninsured casualties at
the real properties securing the related mortgage loans. You may be required to
bear any losses that are not covered by the credit support.
Disproportionate Benefits to Certain Classes and Series
If a form of credit support covers multiple classes or series and losses
exceed the amount of the credit support, it is possible that the holders of
offered certificates of another series or class will be disproportionately
benefited by this credit support to your detriment.
The Investment Performance of Your Certificates Will Depend Upon Payments,
Defaults and Losses on the Underlying Mortgage Loans
The Terms of the Underlying Mortgage Loans Will Affect Payments on Your
Certificates
Each of the mortgage loans underlying the offered certificates will
specify the terms on which the related borrower must repay the outstanding
principal amount of the loan. The rate, timing and amount of scheduled payments
of principal may vary significantly from mortgage loan to mortgage loan. The
rate at which the underlying mortgage loans amortize will directly affect the
rate at which the principal balance or notional amount of your certificates is
paid down or otherwise reduced.
In addition, any mortgage loan underlying the offered certificates may
permit the related borrower to prepay the loan during some or all of the loan
term. In general, a borrower will be more likely to prepay its mortgage loan
when it has an economic incentive to do so, such as obtaining a larger loan on
the same underlying real property or a lower or otherwise more advantageous
interest rate through refinancing. If a mortgage loan includes some form of
prepayment restriction, the likelihood of prepayment should be less.
These restrictions may include:
o an absolute or partial prohibition against voluntary prepayments during some
or all of the loan term; or
o a requirement that voluntary prepayments be accompanied by some form of
prepayment premium, fee or charge during some or all of the loan term.
In many cases, a mortgage loan will have no restrictions on the
application of insurance proceeds or condemnation proceeds as a prepayment of
principal.
The amount, rate and timing of payments and other collections on the
mortgage loans will, to some degree, be unpredictable because of borrower
defaults and because of casualties and condemnations with respect to the
underlying real properties.
The investment performance of your certificates may vary materially and
adversely from your expectations due to:
o the rate of prepayments and other unscheduled collections of principal on the
underlying mortgage loans being faster or slower than you anticipated, or
o the rate of defaults on the underlying mortgage loans being faster, or the
severity of losses on the underlying mortgage loans being greater, than you
anticipated.
The actual yield to you, as a holder of an offered certificate, may not
equal the yield you anticipated at the time of your purchase, and the total
return on investment that you expected may not be realized. In deciding whether
to purchase any offered certificates, you should make an independent decision as
to the appropriate prepayment, default and loss assumptions to be used. If the
trust assets underlying your certificates include mortgage-backed securities,
the terms of those securities may lessen or enhance the effects to you that may
result from prepayments, defaults and losses on the mortgage loans underlying
those securities.
Prepayments on the Underlying Mortgage Loans Will Affect the Average Life of
Your Certificates
Payments of principal and/or interest on your certificates will depend
upon, among other things, the rate and timing of payments on the related
mortgage assets. Prepayments on the underlying mortgage loans may result in a
faster rate of principal payments on your certificates, which would result in
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a shorter average life for your certificates, than if these prepayments had not
occurred. The rate and timing of principal prepayments on pools of mortgage
loans varies among pools and is influenced by a variety of economic,
demographic, geographic, social, tax and legal factors. Accordingly, neither you
nor we can predict the rate and timing of principal prepayments on the mortgage
loans directly or indirectly underlying your certificates. As a result,
repayment of your certificates could occur significantly earlier or later, and
the average life of your certificates could be significantly shorter or longer,
than you expected.
The extent to which prepayments on the underlying mortgage loans
ultimately affect the average life of your certificates depends on the terms and
provisions of your certificates. A class of offered certificates may entitle the
holders to a pro rata share of any prepayments on the related mortgage loans, to
all or a disproportionately large share of those prepayments, or to none or a
disproportionately small share of those prepayments. If you are entitled to a
disproportionately large share of any prepayments on the underlying mortgage
loans, your certificates may be retired at an earlier date. If, however, you are
only entitled to a small share of the prepayments on the underlying mortgage
loans, the average life of your certificates may be extended. Your entitlement
to receive payments, including prepayments, of principal of the underlying
mortgage loans may:
o vary based on the occurrence of certain events, such as the retirement of one
or more other classes of certificates of the same series; or
o be subject to certain contingencies, such as prepayment and default rates
with respect to the underlying mortgage loans.
We will describe the terms and provisions of your certificates more fully
in the related prospectus supplement.
Prepayments on the Underlying Mortgage Loans Will Affect the Yield on Your
Certificates
If you purchase your certificates at a discount or premium, the yield on
your certificates will be sensitive to prepayments on the mortgage loans. If you
purchase your certificates at a discount, you should consider the risk that a
slower than anticipated rate of principal payments on the underlying mortgage
loans could result in your actual yield being lower than your anticipated yield.
Alternatively, if you purchase your certificates at a premium, you should
consider the risk that a faster than anticipated rate of principal payments on
the underlying mortgage loans could result in your actual yield being lower than
your anticipated yield. The potential effect that prepayments may have on the
yield of your certificates will increase as the discount deepens or the premium
increases. If the amount of interest payable on your certificates is
disproportionately large, as compared to the amount of principal payable on your
certificates, you may fail to recover your original investment under some
prepayment scenarios.
Delinquencies, Defaults and Losses on the Underlying Mortgage Loans May Affect
the Amount and Timing of Payments on Your Certificates
The rate and timing of delinquencies and defaults, and the severity of
losses, on the underlying mortgage loans will affect the amount and timing of
payments on the related series of offered certificates to the extent that their
effects are not offset by delinquency advances or some form of credit support.
Unless otherwise covered by delinquency advances or some form of credit
support, defaults on the underlying mortgage loans may delay payments on the
related series of offered certificates while the defaulted mortgage loans are
worked-out or liquidated. However, liquidations of defaulted mortgage loans
prior to maturity could affect the yield and average life of an offered
certificate in a manner similar to a voluntary prepayment.
If you calculate your anticipated yield to maturity based on an assumed
rate of default and amount of losses on the underlying mortgage loans that is
lower than the default rate and amount of losses actually experienced, then, to
the extent that you are required to bear the additional losses, your actual
yield to maturity will be lower than you calculated and could, under certain
scenarios, be negative. Furthermore, the timing of losses on the underlying
mortgage loans can affect your yield. In general, the earlier you bear any loss
on an underlying mortgage loan, the greater the negative effect on your yield.
See "--Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon
the Performance and Value of the Underlying Real Property and the Related
Borrower's Ability to Refinance the Property" below.
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An Increased Risk of Default Is Associated With Balloon Payments
Any of the mortgage loans underlying your certificates may be
non-amortizing or only partially amortizing. The borrowers under those mortgage
loans are required to make substantial payments of principal and interest (that
is, balloon payments) on the maturity dates of the loans. The ability of a
borrower to make a balloon payment generally depends upon the borrower's ability
to refinance or sell the real property securing the loan. The ability of the
borrower to refinance or sell the property will be affected by a number of
factors, including:
o the fair market value and condition of the underlying real property;
o the prevailing level of interest rates;
o the borrower's equity in the underlying real property;
o the borrower's financial condition;
o the operating history of the underlying real property;
o changes in zoning and tax laws;
o changes in competition in the relevant area;
o changes in rental rates in the relevant area;
o changes in governmental regulation and fiscal policy;
o prevailing general and regional economic conditions;
o the state of the fixed income and mortgage markets; and
o the availability of credit for multifamily rental or commercial properties.
See "--Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon
the Performance and Value of the Underlying Real Property and the Related
Borrower's Ability to Refinance the Property" below.
Neither we nor any of our affiliates have an obligation to refinance any
mortgage loan underlying your certificates.
The related master servicer or special servicer may, within prescribed
limits, extend and modify mortgage loans underlying your certificates that are
in default or as to which a payment default is imminent in order to maximize
recoveries on those loans. The related master servicer or special servicer is
only required to determine that any extension or modification is reasonably
likely to produce a greater recovery than a liquidation of the real property
securing the defaulted loan. The decision of the master servicer or special
servicer to extend or modify a mortgage loan may not in fact produce a greater
recovery.
Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon the
Performance and Value of the Underlying Real Property and the Related Borrower's
Ability to Refinance the Property
Most of the Mortgage Loans Underlying Your Certificates Will be Nonrecourse
Loans to Entities
You should consider all of the mortgage loans underlying your certificates
to be non-recourse loans. This means that, in the event of a default, recourse
will be limited to the related real property or properties securing the
defaulted mortgage loan. In those cases where recourse to a borrower or
guarantor is permitted by the loan documents, we generally will not undertake
any evaluation of the financial condition of the borrower or guarantor. Unlike
individuals, entities formed to acquire real property generally do not have
personal assets and creditworthiness at stake. A borrower's sophistication can
lead to protracted litigation or bankruptcy in default situations.
Consequently, full and timely payment on each mortgage loan underlying
your certificates will depend on one or more of the following:
o the sufficiency of the net operating income of the applicable real property;
o the market value of the applicable real property at or prior to maturity; and
o the ability of the related borrower to refinance or sell the applicable real
property.
In general, the value of a multifamily or commercial property will depend
on its ability to generate net operating income. The ability of an owner to
finance a multifamily or commercial property will depend, in large part, on the
property's value and ability to generate net operating income.
Unless we state otherwise in the related prospectus supplement, none of
the mortgage loans underlying your certificates will be insured or guaranteed by
us, any of our affiliates or any governmental entity or private mortgage
insurer.
The risks associated with lending on multifamily and commercial properties
are inherently different from those associated with lending on the
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security of single-family residential properties. This is because multifamily
rental and commercial real estate lending involves larger loans and, as
described above, repayment is dependent upon the successful operation and value
of the related real estate project.
We May Not Know What Underwriting Standards the Originator of a Mortgage Loan
Applied
The originators of the mortgage loans may have used underwriting criteria
that differ from the criteria which our affiliates use, and in some cases we may
be unable to verify the criteria that the originator used. Loans may have been
originated over long periods of time using varying underwriting standards that
we cannot now confirm. We will not generally reunderwrite mortgage loans
acquired for inclusion in a trust. Instead, we will rely upon representations
and warranties by the seller of the mortgage loan and the seller's obligation to
repurchase the loan if a representation or warranty was not true when made.
Many Risk Factors are Common to Most or All Multifamily and Commercial
Properties
The following factors, among others, will affect the ability of a
multifamily or commercial property to generate net operating income and,
accordingly, its value:
o the age, design and construction quality of the property;
o perceptions regarding the safety, convenience and attractiveness of the
property;
o the characteristics of the neighborhood where the property is
located;
o the proximity and attractiveness of competing properties;
o the existence and construction of competing properties;
o the adequacy of the property's management and maintenance;
o national, regional or local economic conditions, including plant closings,
industry slowdowns and unemployment rates;
o local real estate conditions, including an increase in or oversupply of
comparable commercial or residential space;
o demographic factors;
o customer tastes and preferences;
o retroactive changes in building codes; and
o changes in governmental rules, regulations and fiscal policies, including
environmental legislation.
Particular factors that may adversely affect the ability of a multifamily
or commercial property to generate net operating income include:
o an increase in interest rates, real estate taxes and other operating
expenses;
o an increase in the capital expenditures needed to maintain the property or
make improvements;
o a decline in the financial condition of a major tenant and, in particular, a
sole tenant or anchor tenant;
o an increase in vacancy rates;
o a decline in rental rates as leases are renewed or replaced; and
o natural disasters and civil disturbances such as earthquakes, hurricanes,
floods, eruptions or riots.
The volatility of net operating income generated by a multifamily or
commercial property over time will be influenced by many of the foregoing
factors, as well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
o the rental rates at which leases are renewed or replaced; o the percentage
of total property expenses in relation to revenue;
o the ratio of fixed operating expenses to those that vary with revenues; and
o the level of capital expenditures required to maintain the property and to
maintain or replace tenants.
Therefore, commercial and multifamily properties with short-term or less
creditworthy sources of revenue and/or relatively high operating costs, such as
those operated as hospitality and self-storage properties, can be expected to
have more volatile cash flows than commercial and multifamily properties with
medium- to long-term leases from creditworthy tenants and/or relatively low
operating costs. A decline in the real estate market will tend to have a more
immediate effect on the net operating income of commercial and multifamily
properties with short-term revenue sources and may lead to higher rates of
delinquency or defaults on the mortgage loans secured by those properties.
The Successful Operation of a Multifamily or Commercial Property Depends on
Tenants
Generally, multifamily and commercial properties are subject to leases.
The owner of a
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multifamily or commercial property typically uses lease or rental payments for
the following purposes:
o to pay for maintenance and other operating expenses associated with the
property;
o to fund repairs, replacements and capital improvements at the
property; and
o to service mortgage loans secured by, and any other debt
obligations associated with operating, the property.
Factors that may adversely affect the ability of a multifamily or
commercial property to generate net operating income from lease and rental
payments include:
o an increase in vacancy rates, which may result from tenants deciding not to
renew an existing lease or discontinuing operations;
o an increase in tenant payment defaults;
o a decline in rental rates as leases are entered into, renewed or extended at
lower rates;
o an increase in the capital expenditures needed to maintain the property or to
make improvements; and
o a decline in the financial condition of a major or sole tenant.
Various factors that will affect the operation and value of a commercial
property include:
o the business operated by the tenants;
o the creditworthiness of the tenants; and
o the number of tenants.
Dependence on a Single Tenant or a Small Number of Tenants Makes a Property
Riskier Collateral
In those cases where an income-producing property is leased to a single
tenant or is primarily leased to one or a small number of major tenants, a
deterioration in the financial condition or a change in the plan of operations
of any such tenant can have particularly significant effects on the net
operating income generated by the property. If a single or major tenant defaults
under its lease or fails to renew its lease, the resulting adverse financial
effect on the operation of the property will be substantially more severe than
would be the case for a property occupied by a large number of less significant
tenants.
An income-producing property operated for retail, office or industrial
purposes also may be adversely affected by a decline in a particular business or
industry if a concentration of tenants at the property is engaged in that
business or industry.
Tenant Bankruptcy Adversely Affects Property Performance
The bankruptcy or insolvency of a major tenant, or a number of smaller
tenants, at a commercial property may adversely affect the income produced by
the property. Under the U.S. bankruptcy code, a tenant has the option of
assuming or rejecting any unexpired lease. If the tenant rejects the lease, the
landlord's claim for breach of the lease would be a general unsecured claim
against the tenant unless there is collateral securing the claim.
The claim would be limited to:
o the unpaid rent under the lease for the periods prior to the bankruptcy
petition or any earlier surrender of the leased premises, plus
o an amount equal to the rent under the lease for the greater of one year or
15% (but not more than 3 years) of the remaining lease term.
The Success of an Income-Producing Property Depends on Reletting Vacant Spaces
The operations at an income-producing property will be adversely affected
if the owner or property manager is unable to renew leases or relet space on
comparable terms when existing leases expire or become defaulted. Even if
vacated space is successfully relet, the costs associated with reletting can be
substantial and could reduce cash flow from the property. Moreover, if a tenant
defaults in its lease obligations, the landlord may incur substantial costs and
experience significant delays associated with enforcing its rights and
protecting its investment, including costs incurred in renovating and reletting
the property.
If a property has multiple tenants, re-leasing expenditures may be more
frequent than in the case of a property with fewer tenants, which would reduce
the cash flow generated by the multi-tenanted property. Multi-tenanted
properties may also experience higher continuing vacancy rates and greater
volatility in rental income and expenses.
Property Value May Be Adversely Affected Even When Current Operating Income Is
Not
Various factors may affect the value of multifamily and commercial
properties without
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affecting their current net operating income, including:
o changes in interest rates;
o the availability of refinancing sources;
o changes in governmental regulations, licensing or fiscal policy;
o changes in zoning or tax laws; and
o potential environmental or other legal liabilities.
Property Management May Affect Property Operations and Value
The operation of an income-producing property will depend upon the
property manager's performance and viability. The property manager generally is
responsible for:
o responding to changes in the local market;
o planning and implementing the rental structure, including staggering
durations of leases and establishing levels of rent payments;
o operating the property and providing building services;
o managing operating expenses; and
o ensuring that maintenance and capital improvements are carried out in a
timely fashion.
Income-producing properties that derive revenues primarily from short-term
rental commitments, such as hospitality or self-storage properties, generally
require more intensive management than properties leased to tenants under
long-term leases.
By controlling costs, providing appropriate and efficient services to
tenants and maintaining improvements in good condition, a property manager can
maintain or improve occupancy rates, business and cash flow, reduce operating
and repair costs and preserve building value. However, management errors can, in
some cases, impair the long-term viability of an income-producing property.
Maintaining a Property in Good Condition is Expensive
An owner may expend a substantial amount to maintain, renovate or
refurbish a commercial or multifamily property. The effects of poor construction
quality will increase over time in the form of increased maintenance and capital
improvements. Even superior construction will deteriorate over time if
management does not schedule and perform adequate maintenance in a timely
fashion.
Competition Will Adversely Affect the Profitability and Value of an Income-
Producing Property
Some income-producing properties are located in highly competitive areas.
Comparable income-producing properties located in the same area compete on the
basis of a number of factors including:
o rental rates;
o location;
o type of business or services and amenities offered; and
o nature and condition of the particular property.
The profitability and value of an income-producing property may be
adversely affected by a comparable property that:
o offers lower rents;
o has lower operating costs;
o offers a more favorable location; or
o offers better facilities.
Costs of renovating, refurbishing or expanding an income-producing
property in order to remain competitive can be substantial.
The Types and Concentrations of Income-Producing Properties Underlying the
Mortgage Loans in a Trust Will Subject Your Certificates to Special Risks
The mortgage loans underlying a series of offered certificates may be
secured by numerous types of multifamily and commercial properties. The adequacy
of an income-producing property as security for a mortgage loan depends in large
part on its value and ability to generate net operating income. The following is
a discussion of some of the various factors that may affect the value and
operations of the listed types of multifamily and commercial properties. The
effect of these factors upon your certificates will be dependent upon the
relative amounts of each particular property type included in a trust.
Multifamily Rental Properties
Factors affecting the value and operation of a multifamily rental property
include:
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o the physical attributes of the property, such as its age, appearance,
amenities and construction quality;
o the types of services offered at the property;
o the location of the property;
o the characteristics of the surrounding neighborhood, which may change over
time;
o the rents charged for dwelling units at the property relative to the rents
charged for comparable units at competing properties;
o the ability of management to provide adequate maintenance and insurance;
o the property's reputation;
o the level of mortgage interest rates, which may encourage tenants to purchase
rather than lease housing;
o the existence or construction of competing or alternative residential
properties, including other apartment buildings and complexes, manufactured
housing communities, mobile home parks and single-family housing;
o the ability of management to respond to competition;
o the tenant mix and whether the property is primarily occupied by workers from
a particular company or type of business, personnel from a local military
base or students;
o adverse local, regional or national economic conditions, which may limit the
amount that may be charged for rents and may result in a reduction in timely
rent payments or a reduction in occupancy levels;
o state and local regulations, which may affect the property owner's ability to
increase rent to the market rent for an equivalent apartment;
o the extent to which the property is subject to land use restrictive covenants
or contractual covenants that require that units be rented to low income
tenants;
o the extent to which the cost of operating the property, including the cost of
utilities and the cost of required capital expenditures, may increase; and
o the extent to which increases in operating costs may be passed through to
tenants.
Because units in a multifamily rental property are leased to individuals,
usually for no more than a year, the property is likely to respond relatively
quickly to a downturn in the local economy or to the closing of a major employer
in the area.
Certain states regulate the relationship of an owner and its tenants at a
multifamily rental property. Among other things, these states may:
o require written leases;
o require good cause for eviction;
o require disclosure of fees;
o prohibit unreasonable rules;
o prohibit retaliatory evictions;
o prohibit restrictions on a resident's choice of unit vendors;
o limit the basis on which a landlord may increase rent; or
o prohibit a landlord from terminating a tenancy solely by reason of the sale
of the owner's building.
Apartment building owners have been the subject of suits under state
"Unfair and Deceptive Practices Acts" and other general consumer protection
statutes for coercive, abusive or unconscionable leasing and sales practices.
Some counties and municipalities also impose rent control regulations on
apartment buildings. These regulations may limit rent increases to:
o fixed percentages;
o percentages of increases in the consumer price index; o increases set or
approved by a governmental agency; or o increases determined through
mediation or binding arbitration.
In many cases, the rent control laws do not provide for decontrol of
rental rates upon vacancy of individual units. Any limitations on a landlord's
ability to raise rents at a multifamily rental property may impair the
landlord's ability to repay a mortgage loan secured by the property or to meet
operating costs.
Some multifamily rental properties are subject to land use restrictive
covenants or contractual covenants in favor of federal or state housing
agencies. These covenants generally require that a minimum number or percentage
of units be rented to tenants who have incomes that are substantially lower than
median incomes in the area or region. These covenants may limit the potential
rental rates that an owner can charge at a multifamily rental property, the
potential tenant base for the property or both. An owner may subject a
multifamily rental property to these covenants in exchange for tax credits or
rent subsidies. When the credits or subsidies cease, net operating income will
decline.
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Some mortgage loans underlying the offered certificates will be secured by
the related borrower's interest in multiple units in a residential condominium
project and the related voting rights in the owners' association for the
project. Due to the nature of condominiums, a default on any of those mortgage
loans will not allow the holder of the mortgage loan the same flexibility in
realizing on its real property collateral as is generally available with respect
to multifamily rental properties that are not condominiums. The rights of other
unit owners, the governing documents of the owners' association and the state
and local laws applicable to condominiums must be considered and respected.
Consequently, servicing and realizing upon the collateral for those mortgage
loans could subject the lender to greater delay, expense and risk than a loan
secured by a multifamily rental property that is not a condominium.
Cooperatively-Owned Apartment Buildings
Some multifamily properties are owned or leased by cooperative
corporations. In general, each shareholder in the corporation is entitled to
occupy a particular apartment unit pursuant to a long-term proprietary lease or
occupancy agreement.
A cooperative corporation is directly responsible for building maintenance
and payment of real estate taxes and hazard and liability insurance premiums. A
cooperative corporation's ability to meet debt service obligations on a mortgage
loan secured by, and to pay all other operating expenses of, the cooperatively
owned property depends primarily upon the receipt of:
o maintenance payments from the tenant/shareholders, and
o any rental income from units or commercial space that the cooperative
corporation might control.
A cooperative corporation may have to impose special assessments on the
tenant/shareholders in order to pay unanticipated expenditures. Accordingly, a
cooperative corporation is highly dependent on the financial well being of its
tenant/shareholders.
In a typical cooperative conversion plan, the owner of a rental apartment
building contracts to sell the building to a newly formed cooperative
corporation. The owner or sponsor allocates shares to each apartment unit, and
the current tenants have a certain period to subscribe at prices discounted from
the prices to be offered to the public after this period. As part of the
consideration for the sale, the owner or sponsor receives all the unsold shares
of the cooperative corporation. In general, the sponsor controls the
corporation's board of directors and management for a limited period of time. If
the sponsor holds the shares allocated to a large number of apartment units, the
lender on a mortgage loan secured by a cooperatively owned property may be
adversely affected by a decline in the creditworthiness of the sponsor.
Many cooperative conversion plans are "non-eviction" plans. Under a
non-eviction plan, a tenant at the time of conversion who chooses not to
purchase shares is entitled to reside in the unit as a subtenant of the owner of
the shares allocated to the apartment unit. Any applicable rent control or rent
stabilization laws would continue to be applicable to the sub-tenancy. In
addition, the subtenant may be entitled to renew its lease for an indefinite
number of years with continued protection from rent increases above those
permitted by any applicable rent control and rent stabilization laws. The
owner/shareholder is responsible for the maintenance payments to the cooperative
corporation without regard to whether it receives rent from the subtenant or
whether the rent payments are lower than maintenance payments on the unit. Newly
formed cooperative corporations typically have the greatest concentration of
non-tenant/shareholders.
Retail Properties
The term "retail property" encompasses a broad range of properties at
which businesses sell consumer goods and other products and provide various
entertainment, recreational or personal services to the general public. Some
examples of retail properties include:
o shopping centers;
o factory outlet centers;
o malls;
o automotive sales and service centers;
o consumer oriented businesses;
o department stores;
o grocery stores;
o convenience stores;
o specialty shops;
o gas stations;
o movie theaters;
o fitness centers;
o bowling alleys;
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o salons; and
o dry cleaners.
Unless owner occupied, retail properties generally derive all or a
substantial percentage of their income from lease payments from commercial
tenants. Therefore, it is important for the owner of a retail property to
attract and keep tenants, particularly significant tenants, that are able to
meet their lease obligations. In order to attract tenants, the owner of a retail
property may be required:
o to lower rents;
o to grant a potential tenant a "free rent" or reduced rent period;
o to improve the condition of the property generally; or
o to make at its own expense, or grant a rent abatement to cover, tenant
improvements for a potential tenant.
A prospective tenant will also be interested in the number and type of
customers that it will be able to attract at a particular retail property. The
ability of a tenant at a particular retail property to attract customers will be
affected by a number of factors related to the property and the surrounding
area, including:
o competition from other retail properties;
o perceptions regarding the safety, convenience and attractiveness of the
property;
o perceptions regarding the safety of the surrounding area;
o demographics of the surrounding area;
o the strength and stability of the local, regional and national economies;
o traffic patterns and access to major thoroughfares;
o the visibility of the property;
o availability of parking;
o the particular mixture of the goods and services offered at the property;
o customer tastes, preferences and spending patterns; and
o the drawing power of other tenants.
The success of a retail property is often dependent on the success of its
tenants' businesses. A significant component of the total rent paid by tenants
of retail properties is often tied to a percentage of gross sales or revenues.
Declines in sales or revenues of the tenants will likely cause a corresponding
decline in percentage rents and/or impair the tenants' ability to pay their rent
or other occupancy costs. A default by a tenant under its lease could result in
delays and costs in enforcing the landlord's rights. A decline in the local
economy and reduced consumer spending would directly and adversely affect retail
properties.
Repayment of a mortgage loan secured by a retail property will be affected
by the expiration of space leases at the property and the ability of the
borrower to renew or relet the space on comparable terms. Even if vacant space
is successfully relet, the costs associated with reletting, including tenant
improvements, leasing commissions and free rent, may be substantial and could
reduce cash flow from a retail property.
The presence or absence of an anchor tenant in a multi-tenanted retail
property can be important. Anchor tenants play a key role in generating customer
traffic and making the center desirable for other tenants. An "anchor tenant"
is, in general, a retail tenant whose space is substantially larger in size than
that of other tenants at the same retail property and whose operation is vital
in attracting customers to the property. At some retail properties, the anchor
tenant owns the space it occupies. In those cases where the property owner does
not control the space occupied by the anchor tenant, the property owner may not
be able to take actions with respect to the space that it otherwise typically
would take, such as granting concessions to retain an anchor tenant or removing
an ineffective anchor tenant. In some cases, an anchor tenant may cease to
operate at the property, even though it continues to own or pay rent on the
vacant space. If an anchor tenant ceases operations at a retail property, other
tenants at the property may be entitled to terminate their leases prior to the
scheduled termination date or to pay rent at a reduced rate for the remaining
term of the lease.
Various factors will adversely affect the economic performance of an
"anchored" retail property, including:
o an anchor tenant's failure to renew its lease;
o termination of an anchor tenant's lease;
o the bankruptcy or economic decline of an anchor tenant or a self-owned
anchor;
o the cessation of the business of a self-owned anchor or of an anchor tenant,
even if it continues to own the property or pay rent; or
o a loss of an anchor tenant's ability to attract shoppers.
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Retail properties may also face competition from sources outside a given
real estate market or with lower operating costs. For example, all of the
following compete with more traditional department stores and specialty shops
for consumer dollars:
o factory outlet centers;
o discount shopping centers and clubs;
o catalogue retailers;
o television shopping networks and programs;
o internet web sites; and
o telemarketing.
Similarly, home movie rentals and pay-per-view movies provide alternate
sources of entertainment to movie theaters. Continued growth of these
alternative retail outlets, which are often characterized by lower operating
costs, and entertainment sources could adversely affect the rents collectible at
retail properties.
Gas stations, automotive sales and service centers and dry cleaners also
pose unique environmental risks because of the nature of their businesses.
Office Properties
Factors affecting the value and operation of an office property include:
o the number and quality of the tenants, particularly significant tenants, at
the property;
o the physical attributes of the building in relation to competing buildings;
o the location of the property with respect to the central business district or
population centers;
o demographic trends within the metropolitan area to move away from or towards
the central business district;
o social trends combined with space management trends, which may change towards
options such as telecommuting or "hoteling" to satisfy space needs;
o tax incentives offered to businesses or property owners by cities or suburbs
adjacent to or near where the building is located;
o local competitive conditions, such as the supply of office space or the
existence or construction of new competitive office buildings;
o the quality and philosophy of building management;
o access to mass transportation; and
o changes in zoning laws.
An economic decline in a tenant's business may adversely affect an office
property. The risk of such an economic decline is increased if revenue is
dependent on a single tenant or if there is a significant concentration of
tenants in a particular business or industry.
Office properties are also subject to competition with other office
properties in the same market. Competitive factors affecting an office property
include:
o rental rates;
o the building's age, condition and design, including floor sizes and layout;
o access to public transportation and availability of parking; and
o amenities offered to its tenants, including sophisticated building systems,
such as fiber optic cables, satellite communications or other base building
technological features.
The cost of refitting office space for a new tenant is often higher than
for other property types.
The success of an office property also depends on the local economy.
Factors influencing a company's decision to locate in a given area include:
o the cost and quality of labor;
o tax incentives; and
o quality of life matters, such as schools and cultural amenities.
The strength and stability of the local or regional economy will affect an
office property's ability to attract stable tenants on a consistent basis. A
central business district may have a substantially different economy from that
of a suburb.
Hospitality Properties
Hospitality properties may involve different types of hotels and motels,
including:
o full service hotels;
o resort hotels with many amenities;
o limited service hotels;
o hotels and motels associated with national or regional franchise chains;
o hotels that are not affiliated with any franchise chain but may have their
own brand identity; and
o other lodging facilities.
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Factors affecting the economic performance of a hospitality property
include:
o the location of the property and its proximity to major population centers or
attractions;
o the seasonal nature of business at the property;
o the level of room rates relative to those charged by competitors;
o quality and perception of the franchise affiliation;
o economic conditions, either local, regional or national, which may limit the
amount that can be charged for a room and may result in a reduction in
occupancy levels;
o the existence or construction of competing hospitality properties;
o nature and quality of the services and facilities;
o financial strength and capabilities of the owner and operator;
o the need for continuing expenditures for modernizing, refurbishing and
maintaining existing facilities;
o increases in operating costs, which may not be offset by increased room
rates;
o the property's dependence on business and commercial travelers and tourism;
and
o changes in travel patterns caused by changes in access, energy prices,
labor strikes, relocation of highways, the reconstruction of additional
highways or other factors.
Because limited service hotels and motels are relatively quick and
inexpensive to construct and may quickly reflect a positive value, an
over-building of these hotels and motels could occur in any given region, which
would likely adversely affect occupancy and daily room rates. Further, because
rooms at hospitality properties are generally rented for short periods of time,
hospitality properties tend to be more sensitive to adverse economic conditions
and competition than many other types of commercial properties. Additionally,
the revenues of certain hospitality properties, particularly those located in
regions whose economies depend upon tourism, may be highly seasonal in nature.
Hospitality properties may be operated pursuant to franchise agreements.
The continuation of a franchise is typically subject to specified operating
standards and other terms and conditions. The franchisor periodically inspects
its licensed properties to confirm adherence to its operating standards. The
failure of the hospitality property to maintain those standards or adhere to
those other terms and conditions could result in the loss or cancellation of the
franchise license. It is possible that the franchisor could condition the
continuation of a franchise license on the completion of capital improvements or
the making of certain capital expenditures that the owner of the hospitality
property determines are too expensive or are otherwise unwarranted in light of
the operating results or prospects of the property. In that event, the owner of
the hospitality property may elect to allow the franchise license to lapse. In
any case, if the franchise is terminated, the owner of the hospitality property
may seek to obtain a suitable replacement franchise or to operate the property
independently of a franchise license. The loss of a franchise license could have
a material adverse effect upon the operations or value of the hospitality
property, because of the loss of associated name recognition, marketing support
and centralized reservation systems provided by the franchisor.
The viability of any hospitality property that is a franchise of a
national or a regional hotel or motel chain is dependent upon:
o the continued existence and financial strength of the franchisor;
o the public perception of the franchise service mark; and
o the duration of the franchise licensing agreement.
A franchisor may restrict the transferability of its franchise license
agreements. In this case, the lender must obtain the consent of the franchisor
for the continued use of the franchise license by the hospitality property
following a foreclosure. Conversely, a lender may be unable to remove a
franchisor that it desires to replace following a foreclosure. Further, in the
event of a foreclosure on a hospitality property, the lender or other purchaser
of the hospitality property may not be entitled to the rights under any
associated liquor license. That party would be required to apply for its own
liquor license. There can be no assurance that a new license could be obtained
or that it could be obtained promptly.
Casino Properties
Factors affecting the economic performance of a casino property include:
o location, including proximity to or easy access from major population
centers;
o appearance; o economic conditions, either local, regional or national, which
may limit the amount of
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disposable income that potential patrons may have for gambling;
o the existence or construction of competing casinos;
o dependence on tourism; and
o local or state governmental regulation.
Competition among major casinos may involve attracting patrons by
providing alternate forms of entertainment, such as performers and sporting
events, and offering low-priced or free food and lodging. In addition, casino
owners may expend substantial sums to modernize, refurbish and maintain existing
facilities.
Because of their dependence on disposable income of patrons, casino
properties are likely to respond quickly to a downturn in the economy.
To avoid criminal influence, the ownership and operation of casino
properties is often subject to local or state governmental regulation. A
government agency or authority may have jurisdiction over or influence with
respect to the foreclosure of a casino property and/or the bankruptcy of its
owner or operator. In some jurisdictions, it may be necessary to receive
governmental approval before foreclosing, which could result in substantial
delays to a lender. Gaming licenses are not transferable, including in
connection with a foreclosure. We can not assure you that a lender or another
purchaser in foreclosure or otherwise will be able to obtain the requisite
approvals to continue operating the foreclosed property as a casino.
Any given state or municipality that currently allows legalized gambling
could pass legislation banning it.
The loss of a gaming license for any reason would have a material adverse
effect on the value of a casino property.
Health Care-Related Properties
Health-care related properties include:
o hospitals;
o skilled nursing facilities;
o nursing homes;
o congregate care facilities; and
o in some cases, assisted living centers and housing for seniors.
Health care-related facilities, particularly nursing homes, may receive a
substantial portion of their revenues from government reimbursement programs,
primarily Medicaid and Medicare. Medicaid and Medicare are subject to:
o statutory and regulatory changes;
o retroactive rate adjustments;
o administrative rulings;
o policy interpretations;
o delays by fiscal intermediaries; and
o government funding restrictions.
All of the foregoing can adversely affect the operating revenues of a
health care-related facility. Moreover, governmental payors have employed
cost-containment measures that limit payments to health care providers. In
addition, there are currently under consideration various proposals for national
health care relief that could further limit these payments.
Providers of long-term nursing care and other medical services are highly
regulated by federal, state and local law. They are subject to numerous factors
that can increase the cost of operation, limit growth and, in extreme cases,
require or result in suspension or cessation of operations, including:
o federal and state licensing requirements;
o facility inspections;
o rate setting;
o reimbursement policies; and
o laws relating to the adequacy of medical care, distribution of
pharmaceuticals, use of equipment, personnel operating policies and
maintenance of and additions to facilities and services.
Under applicable federal and state laws and regulations, Medicare and
Medicaid reimbursements generally may not be made to any person other than the
provider who actually furnished the related material goods and services.
Accordingly, if a lender forecloses on a health care-related facility, neither
the lender nor a subsequent lessee or operator of the property would generally
be entitled to obtain from federal or state governments any outstanding
reimbursement payments relating to services furnished at the property prior to
the foreclosure. Furthermore, in the event of foreclosure, there can be no
assurance that a lender or other purchaser in a foreclosure sale would be
entitled to the rights under any required licenses and regulatory approvals. The
lender or other purchaser may have to apply for its
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own licenses and approvals. There can be no assurance that a new license could
be obtained or that a new approval would be granted.
Health care-related facilities are generally "special purpose" properties
that could not be readily converted to general residential, retail or office
use. This will adversely affect their liquidation value. Furthermore, transfers
of health care-related facilities are subject to regulatory approvals under
state, and in some cases federal, law that are not required for transfers of
most other types of commercial properties.
Industrial Properties
Industrial properties may be adversely affected by reduced demand for
industrial space occasioned by a decline in a particular industry segment and/or
by a general slowdown in the economy. In addition, an industrial property that
suited the particular needs of its original tenant may be difficult to relet to
another tenant or may become functionally obsolete relative to newer properties.
The value and operation of an industrial property depends on:
o location of the property, the desirability of which in a particular instance
may depend on:
(1) availability of labor services;
(2) proximity to supply sources and customers; and
(3) accessibility to various modes of transportation and shipping,
including railways, roadways, airline terminals and ports;
o building design of the property, the desirability of which in a particular
instance may depend on:
(1) ceiling heights;
(2) column spacing;
(3) number and depth of loading bays;
(4) divisibility;
(5) floor loading capacities;
(6) truck turning radius;
(7) overall functionality; and
(8) adaptability of the property, because industrial tenants often need
space that is acceptable for highly specialized activities; and
o the quality and creditworthiness of individual tenants, because industrial
properties frequently have higher tenant concentrations.
Industrial properties are generally "special purpose" properties that an
owner could not readily convert to general residential, retail or office use.
This will adversely affect their liquidation value.
Industrial properties may also pose unique environmental risks depending
upon the nature of the business conducted at the property.
Warehouse, Mini-Warehouse and Self-Storage Facilities
Warehouse, mini-warehouse and self-storage properties are considered
vulnerable to competition because both acquisition costs and break-even
occupancy are relatively low. In addition, an owner would incur substantial
capital expenditures to convert a warehouse, mini-warehouse or self-storage
property to an alternative use. These factors will materially impair the
liquidation value of the property if its operation for storage purposes becomes
unprofitable due to decreased demand, competition, age of improvements or other
factors.
Successful operation of a warehouse, mini-warehouse or self-store property
depends on:
o building design;
o location and visibility;
o tenant privacy;
o efficient access to the property;
o proximity to potential users, including apartment complexes or commercial
users;
o services provided at the property, such as security;
o age and appearance of the improvements; and
o quality of management.
Warehouse properties may pose environmental risks depending upon the
nature of the business conducted in the warehouse.
Restaurants and Taverns
Factors affecting the economic viability of individual restaurants,
taverns and other establishments that are part of the food and beverage service
industry include:
o competition from facilities having businesses similar to a particular
restaurant or tavern;
o perceptions by prospective customers of safety, convenience, services and
attractiveness;
o the cost, quality and availability of food and beverage products;
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o negative publicity, resulting from instances of food contamination,
food-borne illness, crime and similar events;
o changes in demographics, consumer habits and traffic patterns;
o the ability to provide or contract for capable management; and
o retroactive changes to building codes, similar ordinances and other legal
requirements.
Adverse economic conditions, whether local, regional or national, may
limit the amount that may be charged for food and beverages and the extent to
which potential customers dine out. Because of the nature of the business,
restaurants and taverns tend to respond to adverse economic conditions more
quickly than do many other types of commercial properties. Furthermore, the
transferability of any operating, liquor and other licenses to an entity
acquiring a bar or restaurant, either through purchase or foreclosure, is
subject to local law requirements.
The food and beverage service industry is highly competitive. The
principal means of competition are:
o segment;
o product;
o price;
o value;
o quality;
o service;
o convenience;
o location; and
o the nature and condition of the restaurant facility.
A restaurant or tavern operator competes with the operators of comparable
establishments in the area in which its restaurant or tavern is located. Other
restaurants could have:
o lower operating costs;
o more favorable locations;
o more effective marketing;
o more efficient operations; or
o better facilities.
The location and condition of a particular restaurant or tavern will
affect the number of customers and, to a certain extent, the prices that the
operator may charge. The characteristics of an area or neighborhood in which a
restaurant or tavern is located may change over time or in relation to competing
facilities. Also, the cleanliness and maintenance at a restaurant or tavern will
affect its appeal to customers. In the case of a regionally- or nationally-known
chain restaurant, there may be costly expenditures for renovation, refurbishment
or expansion, regardless of its condition.
Factors affecting the success of a regionally- or nationally-known chain
restaurant include:
o actions and omissions of any franchisor, including management practices that
adversely affect the nature of the business or that require renovation,
refurbishment, expansion or other expenditures;
o the degree of support the franchisor provides or arranges, including its
franchisee organizations and third-party providers of products or services;
and
o the bankruptcy or business discontinuation of the franchisor or any of its
franchisee organizations or third-party providers.
Chain restaurants may be operated under franchise agreements, and these
agreements typically do not contain provisions protective of lenders. A
franchisor typically may terminate a borrower's rights as a franchisee without
informing the lender, and the borrower may be precluded from competing with the
franchisor upon termination. In addition, a lender that acquires title to a
restaurant site through foreclosure or similar proceedings may be restricted in
the use of the site or may be unable to succeed to the rights of the franchisee
under the related franchise agreement. The transferability of a franchise may be
subject to other restrictions. Also, federal and state franchise regulations may
impose additional risk, including the risk that the transfer of a franchise
acquired through foreclosure or similar proceedings may require registration
with governmental authorities or disclosure to prospective transferees.
Manufactured Housing Communities, Mobile Home Parks and Recreational Vehicle
Parks
Manufactured housing communities and mobile home parks consist of land
that is divided into "spaces" or "home sites" that are primarily leased to
owners of the individual mobile homes or other housing units. The homeowner
often invests in site-specific improvements such as carports, steps, fencing,
skirts around the base of the home, and landscaping. The landowner typically
provides private roads within the park, common facilities and, in many cases,
utilities. Due to relocation costs and, in some cases, demand for home sites,
the value of a
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mobile home or other housing unit in place in a manufactured housing community
or mobile home park is generally higher, and can be significantly higher, than
the value of the same unit not placed in a manufactured housing community or
mobile home park. As a result, a well-operated manufactured housing community or
mobile home park that has achieved stabilized occupancy is typically able to
maintain occupancy at or near that level. For the same reason, a lender that
provided financing for the home of a tenant who defaulted on his or her space
rent generally has an incentive to keep rental payments current until the home
can be resold in place, rather than to allow the unit to be removed from the
park. In general, the individual mobile homes and other housing units will not
constitute collateral for a mortgage loan underlying a series of certificates.
Recreational vehicle parks lease spaces primarily or exclusively for motor
homes, travel trailers and portable truck campers, primarily designed for
recreational, camping or travel use. In general, parks that lease recreational
vehicle spaces have a less stable tenant population than parks occupied
predominantly by mobile homes. However, it is not unusual for the owner of a
recreational vehicle to leave the vehicle at the park on a year-round basis or
to use the vehicle as low cost housing and reside in the park indefinitely.
Factors that affect the successful operation of a manufactured housing
community, mobile home park or recreational vehicle park include:
o the number of comparable competing properties in the local market;
o the age, appearance and reputation of the property;
o the quality of management; and
o the types of facilities and services it provides.
Manufactured housing communities and mobile home parks also compete
against alternative forms of residential housing, including multifamily rental
properties, cooperatively owned apartment buildings, condominium complexes and
single-family residential developments. Recreational vehicle parks also compete
against alternative forms of recreation and short-term lodging, such as staying
at a hotel at the beach.
Manufactured housing communities, mobile home parks and recreational
vehicle parks are "special purpose" properties that the operator cannot readily
convert to general residential, retail or office use. This will adversely affect
the liquidation value of the property if its current operations become
unprofitable due to competition, age of the improvements or other factors.
Certain states regulate the relationship of an owner of a manufactured
housing community or mobile home park and its tenants in a manner similar to the
way they regulate the relationship between a landlord and tenant at a
multifamily rental property. Some states also regulate changes in the use of a
manufactured housing community or mobile home park and require that the owner
give written notice to its tenants a substantial period of time prior to the
projected change.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on manufactured housing
communities and mobile home parks. These ordinances may limit rent increases to:
o fixed percentages;
o percentages tied to the consumer price index;
o increases set or approved by a governmental agency; or
o increases determined through mediation or binding arbitration.
In many cases, the rent control laws either do not permit vacancy
decontrol or permit vacancy decontrol only in the relatively rare event that the
mobile home or manufactured housing unit is removed from the home site. Local
authority to impose rent control on manufactured housing communities and mobile
home parks is pre-empted by state law in certain states and rent control is not
imposed at the state level in those states. In some states, however, local rent
control ordinances are not pre-empted for tenants having short-term or
month-to-month leases, and properties there may be subject to various forms of
rent control with respect to those tenants.
Recreational and Resort Properties
Security for a mortgage loan may include a golf course, marina, ski
resort, amusement park or other property used for recreational purposes or as a
resort. Factors affecting the economic performance of a property of this type
include:
o the location and appearance of the property;
o the appeal of the recreational activities offered;
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o the existence or construction of competing properties, whether or not they
offer the same activities;
o the need to make capital expenditures to maintain, refurbish, improve and/or
expand facilities in order to attract potential patrons;
o geographic location and dependence on tourism;
o changes in travel patterns caused by changes in energy prices, strikes,
location of highways, construction of additional highways and similar
factors;
o seasonality of the business, which may cause periodic fluctuations in
operating revenues and expenses;
o sensitivity to weather and climate changes; and
o local, regional and national economic conditions.
Statutes and government regulations that govern the use of, and
construction on, rivers, lakes and other waterways will affect a marina or other
recreational or resort property located next to water.
Because of the nature of the business, recreational and resort properties
tend to respond to adverse economic conditions more quickly than other types of
commercial properties.
Recreational and resort properties are generally "special purpose"
properties that the owner cannot readily convert to alternative uses. This will
adversely affect their liquidation value.
Arenas and Stadiums
The success of an arena or stadium generally depends on its ability to
attract patrons to a variety of events, including:
o sporting events;
o musical events;
o theatrical events;
o animal shows; and/or
o circuses.
The ability to attract patrons is dependent on such factors as:
o the appeal of the particular event;
o the cost of admission;
o perceptions by prospective patrons of the safety, convenience, services and
attractiveness of the arena or stadium;
o perceptions by prospective patrons of the safety of the surrounding area; and
o the alternative forms of entertainment available in the particular locale.
In some cases, an arena's or stadium's success will depend on its ability
to attract and keep a sporting team as a tenant. An arena or stadium may become
unprofitable, or unacceptable to a sporting team, due to decreased attendance,
competition and age of improvements. Often, substantial expenditures must be
made to modernize, refurbish and/or maintain existing facilities.
Arenas and stadiums are "special purpose" properties that the owner cannot
readily convert to alternative uses. The "special purpose" nature of these
facilities will adversely affect their liquidation value.
Churches and Other Religious Facilities
Churches and other religious facilities generally depend on charitable
donations to meet expenses and pay for maintenance and capital expenditures.
Several social, political and economic factors affect attendance at a religious
facility and the willingness of attendees to make donations. Local, regional or
national economic conditions may also adversely affect donations. Religious
facilities are "special purpose" properties that the owner cannot readily
convert to alternative uses. The "special purpose" nature of these facilities
will adversely affect their liquidation value.
Parking Lots and Garages
The primary source of income for parking lots and garages is the rental
fees charged for parking spaces. Factors affecting the success of a parking lot
or garage include:
o the number of rentable parking spaces and rates charged;
o the location of the lot or garage and, in particular, its proximity to places
where large numbers of people work, shop or live;
o the amount of alternative parking spaces in the area;
o the availability of mass transit; and
o the perceptions of the safety, convenience and services of the lot or garage.
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Unimproved Land
The value of unimproved land is largely a function of its potential use.
The land's potential use may depend on:
o its location;
o its size;
o the surrounding neighborhood; and
o local zoning laws.
Borrower Concentration Within a Trust Exposes Investors to Greater Risk of
Default and Loss
A particular borrower or group of related borrowers may be associated with
multiple real properties securing the mortgage loans in any particular trust.
The bankruptcy or insolvency of, or other financial problems with respect to,
that borrower or group of borrowers could have an adverse effect on the
operation of all of the related real properties and on the ability of those
properties to produce sufficient cash flow to make required payments on the
related mortgage loans. For example, if a borrower or group of related borrowers
that owns or controls several real properties experiences financial difficulty
at one of those properties, it could defer maintenance at another of those
properties in order to satisfy current expenses with respect to the first
property. That borrower or group of related borrowers could also attempt to
avert foreclosure by filing a bankruptcy petition that might have the effect of
interrupting debt service payments on all the related mortgage loans for an
indefinite period. In addition, multiple real properties owned by the same
borrower or related borrowers are likely to have common management. This would
increase the risk that financial or other difficulties experienced by the
property manager could have a greater impact on the lender, including one of the
trusts, holding the related loans.
Loan Concentration Within a Trust Exposes Investors to Greater Risk of Default
and Loss
Any of the mortgage loans in one of the trusts may be substantially larger
than the other loans in that trust. In general, the inclusion in a trust of one
or more mortgage loans that have outstanding principal balances that are
substantially larger than the other mortgage loans in the trust can result in
losses that are more severe, relative to the size of the related mortgage pool,
than would be the case if the total balance of that pool were distributed more
evenly.
Geographic Concentration Within a Trust Exposes Investors to Greater Risk of
Default and Loss
If a concentration of mortgage loans in any of the trusts is secured by
real properties in a particular locale, state or region, the holders of the
related offered certificates will have a greater exposure to:
o any adverse economic developments that occur in the locale, state or region
where the properties are located;
o changes in the real estate market where the properties are located;
o changes in governmental rules and fiscal policies in the governmental
jurisdiction where the properties are located; and
o acts of nature, including floods, tornadoes and earthquakes, in the areas
where properties are located.
Changes in Pool Composition Will Change the Nature of Your Investment
The mortgage loans underlying any series of offered certificates will
amortize at different rates and mature on different dates. In addition, some of
those mortgage loans may be prepaid or liquidated. As a result, the relative
composition of the mortgage pool will change over time.
If you purchase certificates with a pass-through rate that is equal to or
calculated based upon a weighted average of interest rates on the underlying
mortgage loans, your pass-through rate will be affected, and may decline, as the
relative composition of the mortgage pool changes.
In addition, as payments and other collections of principal are received
with respect to the underlying mortgage loans, the remaining mortgage pool
backing your certificates may exhibit an increased concentration with respect to
property type, number and affiliation of borrowers and geographic location.
Subordinate Debt Increases the Likelihood of a Borrower Default
Most mortgage loans included in one of the trusts will either:
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o prohibit the related borrower from encumbering the related real property with
additional secured debt; or
o require the consent of the holder of the mortgage loan prior to so
encumbering the property.
However, a lender may be unaware of a violation of this prohibition until
the borrower otherwise defaults on the mortgage loan. You should be aware that a
lender, such as one of the trusts, may not realistically be able to prevent a
borrower from incurring subordinate debt.
The existence of any secured subordinated indebtedness increases the
difficulty of refinancing a mortgage loan backing your certificates at the
loan's maturity. In addition, the related borrower may have difficulty repaying
multiple loans. Moreover, the filing of a petition in bankruptcy by, or on
behalf of, a junior lienholder may prevent the senior lienholder from taking
action to foreclose its lien. See "Certain Legal Aspects of Mortgage
Loans--Subordinate Financing".
Borrower Bankruptcy May Adversely Affect Payment on Your Certificates
Under the U.S. bankruptcy code, the filing of a petition in bankruptcy by
or against a borrower will stay the sale of a real property owned by that
borrower, as well as the commencement or continuation of a foreclosure action.
In addition, if a court determines that the value of a real property is less
than the principal balance of the mortgage loan it secures, the court may reduce
the amount of secured indebtedness to the then-value of the property. Such an
action would make the lender a general unsecured creditor for the difference
between the then-value of the property and the amount of its outstanding
mortgage indebtedness. A bankruptcy court also may:
o grant a debtor a reasonable time to cure a payment default on a mortgage
loan;
o reduce monthly payments due under a mortgage loan;
o change the rate of interest due on a mortgage loan; or
o otherwise alter the mortgage loan's repayment schedule.
Additionally, the borrower, as debtor-in-possession, or its bankruptcy
trustee has certain special powers to avoid, subordinate or disallow debts. In
certain circumstances, the claims of a secured lender, such as one of the
trusts, may be subordinated to financing obtained by a debtor-in-possession
subsequent to its bankruptcy.
Under the U.S. bankruptcy code, a lender will be stayed from enforcing a
borrower's assignment of rents and leases. The U.S. bankruptcy code also may
interfere with a lender's ability to enforce lockbox requirements. The legal
proceedings necessary to resolve these issues can be time consuming and may
significantly delay the receipt of rents. Rents also may escape an assignment to
the extent they are used by a borrower to maintain its property or for other
court authorized expenses.
As a result of the foregoing, the related trust's recovery with respect to
borrowers in bankruptcy proceedings may be significantly delayed, and the total
amount ultimately collected may be substantially less than the amount owed.
Environmental Liabilities Will Adversely Affect the Value and Operation of
Contaminated Property and May Deter a Lender from Foreclosing
We can give you no assurance as to any environmental testing conducted at
the related real properties in connection with the origination of the mortgage
loans underlying your certificates:
o that the environmental testing identified all adverse environmental
conditions and risks at the related real properties;
o that the results of the environmental testing were accurately evaluated in
all cases;
o that the related borrowers have implemented or will implement all
operations and maintenance plans and other remedial actions recommended by
an environmental consultant that conducted the testing at the related real
properties; or
o that any recommended remedial action will fully remediate or otherwise
address all the identified adverse environmental conditions and risks.
In addition, tenants, such as gasoline stations or dry cleaners, or
conditions or operations in the vicinity of the property, such as leaking
underground storage tanks at another property nearby, could adversely affect the
current environmental condition of a real property securing a mortgage loan
underlying your certificates.
Various environmental laws may make a current or previous owner or
operator of real property liable for the costs of removal or remediation of
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hazardous or toxic substances on, under or adjacent to the property. Those laws
often impose liability whether or not the owner or operator knew of, or was
responsible for, the presence of the hazardous or toxic substances. For example,
certain laws impose liability for release of asbestos containing materials into
the air or require the removal or containment of the materials. The owner's
liability for any required remediation generally is unlimited and could exceed
the value of the property and/or the total assets of the owner. In addition, the
presence of hazardous or toxic substances, or the failure to remediate the
adverse environmental condition, may adversely affect the owner's or operator's
ability to use the affected property. In certain states, contamination of a
property may give rise to a lien on the property to ensure the costs of cleanup.
In some of those states, this lien has priority over the lien of an existing
mortgage. In addition, third parties may seek recovery from owners or operators
of real property for personal injury associated with exposure to hazardous
substances, including asbestos and lead-based paint. Persons who arrange for the
disposal or treatment of hazardous or toxic substances may be liable for the
costs of removal or remediation of the substances at the disposal or treatment
facility.
The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, commonly referred to as "CERCLA", together with certain
other federal and state laws, provide that a secured lender, such as one of the
trusts, may be liable as an "owner" or "operator" of the real property,
regardless of whether the borrower or a previous owner caused the environmental
damage, if:
o agents or employees of the lender are deemed to have participated in the
management of the borrower, or
o under certain conditions, the lender actually takes possession of a
borrower's property or control of its day-to-day operations, including
through the appointment of a receiver or foreclosure.
Although recently enacted legislation clarifies the activities in which a
lender may engage without becoming subject to liability under CERCLA and similar
federal laws, that legislation has no applicability to state environmental laws.
Moreover, future laws, ordinances or regulations could impose material
environmental liability.
Federal law requires owners of residential housing constructed prior to
1978 to disclose to potential residents or purchasers:
o any condition on the property that causes exposure to lead-based paint, and
o the potential hazards to pregnant women and young children, including that
the ingestion of lead-based paint chips and/or the inhalation of dust
particles from lead-based paint by children can cause permanent injury, even
at low levels of exposure.
Property owners may be liable for injuries to their tenants or third
parties resulting from exposure under various laws that impose affirmative
obligations on property owners of residential housing containing lead-based
paint.
Some Provisions in the Mortgage Loans Underlying Your Certificates May Be
Challenged as Being Unenforceable
Cross-Collateralization Arrangements
It may be possible to challenge cross-collateralization arrangements
involving more than one borrower as a fraudulent conveyance, even if the
borrowers are related. If one of those borrowers were to become a debtor in a
bankruptcy case, creditors of the bankrupt party or the representative of the
bankruptcy estate of the bankrupt party could seek to have the bankruptcy court
avoid any lien granted by the bankrupt party to secure repayment of another
borrower's loan. In order to do so, the court would have to determine that:
o the bankrupt party was--
1) insolvent at the time of granting the lien,
2) rendered insolvent by the granting of the lien,
3) left with inadequate capital, or
4) not able to pay its debts as they matured; and
o the bankrupt party did not receive fair consideration or reasonably
equivalent value for pledging its property to secure the debt of the other
borrower.
If the court were to conclude that the granting of the lien was an
avoidable fraudulent conveyance, it could nullify the lien or mortgage effecting
the cross-collateralization. The court could also allow the bankrupt party to
recover payments it made pursuant to the avoided cross-collateralization.
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Prepayment Premiums, Fees and Charges
Under the laws of a number of states, the enforceability of any mortgage
loan provisions that require payment of a prepayment premium, fee or charge upon
a voluntary and/or an involuntary prepayment is unclear. If those provisions
were unenforceable in connection with an involuntary prepayment, borrowers would
have an incentive to default in order to prepay their loans.
Due-on-sale and Debt Acceleration Clauses
Many of the mortgage loans underlying the offered certificates will
contain a due-on-sale clause. This clause permits the lender, with some
exceptions, to accelerate the maturity of the mortgage loan upon the sale,
transfer or conveyance of:
o the related real property; or
o an ownership interest in the related borrower.
All of the mortgage loans will include some form of debt-acceleration
clause, which permits the lender to accelerate the debt upon specified monetary
or non-monetary defaults by the related borrower. The courts of all states will
enforce acceleration clauses in the event of a material payment default. The
equity courts of any state, however, may refuse to allow the foreclosure of a
mortgage or deed of trust or to permit the acceleration of the indebtedness if:
o the default is deemed to be immaterial;
o the exercise of these remedies would be inequitable or unjust; or
o the circumstances would render the acceleration unconscionable.
Assignments of Leases
Many of the mortgage loans underlying the offered certificates will also
be secured by an assignment of leases and rents. The related borrower will
assign its interest in the leases on the related real property and the income
from those leases to the lender as additional security for the related mortgage
loan. Generally, the borrower may continue to collect rents until the borrower
defaults. In some cases, state law may require that the lender take possession
of the property, obtain a judicial appointment of a receiver or take some other
similar action before becoming entitled to collect the rents. In addition, the
commencement of bankruptcy or similar proceedings by or in respect of the
borrower will adversely affect the lender's ability to collect the rents. See
"Certain Legal Aspects of Mortgage Loans--Bankruptcy Laws."
Defeasance
A mortgage loan underlying a series of offered certificates may, during
specified periods and subject to certain conditions, permit the related borrower
to pledge to the holder of the mortgage loan a specified amount of direct,
non-callable United States government securities in exchange for releasing the
lien on the underlying real property. The cash amount which a borrower must
expend to purchase the required United States government securities may exceed
the principal balance of the mortgage loan. There can be no assurance that a
court would not interpret that excess amount as a form of prepayment premium or
would not take it into account for usury purposes. In some states, some forms of
prepayment premiums are unenforceable. If the payment of that excess amount were
held to be unenforceable, the remaining portion of the cash amount to be
delivered may be insufficient to purchase the requisite amount of United States
government securities.
Lack of Insurance Coverage Exposes a Trust to Risk for Certain Special Hazard
Losses
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of a property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in the related
policy. The specific forms of policy vary from state to state. Most insurance
policies do not cover any physical damage resulting from:
o war;
o revolution;
o governmental actions;
o floods and other water-related causes;
o earth movement, including earthquakes; landslides and mudflows;
o wet or dry rot;
o vermin;
o domestic animals; and
o certain other kinds of risks.
Unless the related mortgage loan documents specifically require the
borrower to insure against physical damage arising from these causes, and the
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borrower does so, the resulting losses may be borne by you as a holder of
offered certificates.
Mortgage Loans Secured by Mortgages On Ground Leases Create Risks not Present
when Lending on a Fee Ownership Interest in a Real Property
In order to secure a mortgage loan, a borrower may grant a lien on its
leasehold interest in a real property as tenant under a ground lease. If the
ground lease does not provide for notice to a lender of a default by the
borrower under the lease, and a reasonable opportunity for the lender to cure
the default, the lender may be unable to prevent termination of the lease and
may lose its collateral.
In addition, upon the bankruptcy of a landlord or a tenant under a ground
lease, the debtor entity has the right to assume or reject the ground lease. If
a debtor landlord rejects the lease, the tenant has the right to remain in
possession of its leased premises at the rent reserved in the lease for the
term, including renewals. If a debtor tenant rejects any or all of its leases,
the tenant's lender may not be able to succeed to the tenant's position under
the lease unless the landlord has specifically granted the lender that right. If
both the landlord and the tenant are involved in bankruptcy proceedings, it is
possible that the trustee for your certificates could be deprived of its
security interest in the leasehold estate, notwithstanding lender protection
provisions contained in the lease or mortgage loan documents.
Changes in Zoning Laws May Adversely Affect the Use or Value of a Real Property
Due to changes in zoning requirements after an income-producing property
was built, a property may not comply with current zoning laws, including
density, use, parking and set back requirements. Accordingly, the property may
be a "permitted non-conforming structure" or the operation of the property may
be a "permitted non-conforming use". This means that the owner is not required
to alter the property's structure or use to comply with the new law, but the
owner may be limited in its ability to rebuild the premises "as is" in the event
of a substantial casualty loss. This may adversely affect the cash flow
available following the casualty. If a substantial casualty were to occur,
insurance proceeds may not be sufficient to pay a mortgage loan secured by the
property in full. In addition, if the property were repaired or restored in
conformity with the current law, its value or revenue-producing potential may be
less than before the casualty.
Compliance With the Americans With Disabilities Act of 1990 May be Expensive
Under the Americans With Disabilities Act of 1990, all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. If a property does not currently comply with
that law, the owner of the property may be required to incur significant costs
in order to bring the property into compliance. In addition, noncompliance could
result in the imposition of fines by the federal government or an award or
damages to private litigants.
Litigation may Adversely Affect a Borrower's Ability to Repay its Mortgage Loan
A borrower may be a defendant in litigation arising out of, among other
things, the following:
o breach of contract involving a tenant, a supplier or other party;
o negligence resulting in a personal injury; or
o responsibility for an environmental problem.
Litigation will divert the borrower's attention from operating its
property. If the litigation were decided adversely to the borrower, the award to
the plaintiff may adversely affect the borrower's ability to repay a mortgage
loan secured by the property.
"Residual Interests" in a "Real Estate Mortgage Investment Conduit" Have Adverse
Tax Consequences
Inclusion of Taxable Income in Excess of Cash Received
If you own a certificate that is a "residual interest" in a "real estate
mortgage investment conduit" or "REMIC", you will have to report on your income
tax return as ordinary income your pro rata share of the taxable income of the
REMIC, regardless of the amount or timing of your possible receipt of any cash
on the certificate. As a result, your certificate may have "phantom income"
early in the term of the REMIC, because the taxable income from the certificate
may exceed the amount of cash you actually receive. Although you will have a
corresponding amount of tax losses later in the term of the REMIC, the present
value of the "phantom income" may significantly exceed the present value of the
tax losses. Therefore, the after-tax yield on any "residual interest"
certificate may be significantly
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less than that of a corporate bond or other instrument having similar cash flow
characteristics. In fact, certain offered certificates which are "residual
interests" may have a negative value.
You must report your share of the taxable income and net loss of the REMIC
until all the certificates in the related series have a principal balance of
zero. See "Federal Income Tax Consequences--REMICs".
Some Taxable Income of a "Residual Interest" can not be Offset under the Tax
Code
A portion of the taxable income from a "residual interest" certificate may
be treated as "excess inclusion" under the Internal Revenue Code of 1986. You
will have to pay tax on the "excess inclusion" regardless of whether you have
other credits, deductions or losses.
In particular, the tax on "excess inclusion":
o generally will not be reduced by losses from other activities;
o for a tax-exempt holder, will be treated as unrelated business taxable
income; and
o for a foreign holder, will not qualify for any exemption from withholding
tax.
Certain Entities Should not Invest in Certificates which are "Residual
Interests"
The fees and non-interest expenses of a REMIC will be allocated pro rata
to certificates that are "residual interests" of the REMIC. However, individuals
will only be able to deduct these expenses as miscellaneous itemized deductions,
which are subject to numerous restrictions and limitations under the Internal
Revenue Code of 1986. Therefore, the certificates that are "residual interests"
generally are not appropriate investments for:
o individuals;
o estates;
o trusts beneficially owned by any individual or estate; and
o pass-through entities having any individual, estate or trust as a
shareholder, member or partner.
In addition, the "residual interest" certificates are subject to numerous
transfer restrictions. These restrictions reduce your ability to liquidate a
"residual interest" certificate. For example, unless we indicate otherwise in
the related prospectus supplement, you will not be able to transfer a "residual
interest" certificate to a non-U.S. person under the Internal Revenue Code of
1986.
See "Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC
Residual Certificates".
Problems With Book-Entry Registration
Your certificates may be issued in book-entry form through the facilities
of The Depository Trust Company. As a result:
o you will be able to exercise your rights as a certificateholder only
indirectly through DTC and its participating organizations;
o you may have only limited access to information regarding your certificates;
o you may suffer delays in the receipt of payments on your certificates; and
o your ability to pledge or otherwise take action with respect to your
certificates may be limited due to the lack of a physical certificate
evidencing your ownership of those certificates.
See "Description of the Certificates--Book-Entry Registration and
Definitive Certificates."
Potential Conflicts of Interest Can Affect a Person's Performance
The master servicer or special servicer for any of the trusts, or any of
their respective affiliates, may purchase certificates evidencing interests in
that trust.
In addition, the master servicer or special servicer for any of the
trusts, or any of their respective affiliates, may have interests in, or other
financial relationships with, borrowers under the related mortgage loans.
In servicing the mortgage loans in any of the trusts, the related master
servicer and special servicer will each be required to observe the terms of the
governing document(s) for the related series of offered certificates and, in
particular, to act in accordance with the servicing standard described in the
related prospectus supplement. You should consider, however, that either of
these parties, if it or an affiliate owns certificates, or has financial
interests in or other financial dealings with any of the related borrowers, may
have interests when dealing with the mortgage loans that are in conflict with
your
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interests. For example, if the related special servicer owns any certificates,
it could seek to mitigate the potential loss on its certificates from a troubled
mortgage loan by delaying enforcement in the hope of realizing greater proceeds
in the future. However, this action by a special servicer could result in a
lower recovery to the related trust than would have been the case if the special
servicer had not delayed in taking enforcement action.
Furthermore, the master servicer or special servicer for any of the trusts
may service existing and new loans for third parties, including portfolios of
loans similar to the mortgage loans included in that trust. The properties
securing these other loans may be in the same markets as and compete with the
properties securing mortgage loans in that trust. Accordingly, that master
servicer or special servicer may be acting on behalf of parties with conflicting
interests.
The Rating on a Class of Certificates Reflects only the Rating Agency's
Assessment of the Likelihood That Certificate Holders Will Receive Payments to
Which They Are Legally Entitled.
Ratings on mortgage pass-through certificates reflect no assessment of the
likelihood of principal prepayments by borrowers or of the degree to which the
prepayments might differ from those originally anticipated. As a result, if you
purchase any offered certificates, you might suffer a lower than anticipated
yield. For example, if you purchase interest only certificates, you might, in
certain cases, fail to recoup your initial investment even though you receive
all payments to which you are entitled. Ratings also do not evaluate the price
of the certificates or the suitability of the certificates as an investment for
you.
You Should Not Place Undue Reliance Upon Forward-Looking Statements
This prospectus and the related prospectus supplement contain
forward-looking statements that involve risks and uncertainties. Actual events
could differ from those anticipated in these forward-looking statements because
of a variety of factors, including the risks described in the "Risk Factors"
sections and elsewhere in this prospectus or the related prospectus supplement.
You should make your own estimate of future events that you consider material
before you invest.
DESCRIPTION OF THE TRUST ASSETS
We will be responsible for establishing the trust underlying each series
of offered certificates. The assets of the trust will primarily consist of:
o various types of multifamily and/or commercial mortgage loans;
o mortgage participations, pass-through certificates, collateralized mortgage
obligations or other mortgage-backed securities that directly or indirectly
evidence interests in, or are secured by pledges of, one or more of various
types of multifamily and/or commercial mortgage loans;
o direct obligations of the United States or other governmental agencies; or
o a combination of mortgage loans, mortgage-backed securities or government
securities of the types described above.
We do not originate mortgage loans. Accordingly, we must acquire each of
the mortgage loans to be included in one of the trusts from the originator or a
subsequent assignee. In some cases, that originator or subsequent assignee will
be Midland Loan Services, Inc. or another of our affiliates.
Unless we indicate otherwise in the related prospectus supplement, neither
we nor any of our affiliates nor any governmental agency or instrumentality or
other person will guarantee or insure any of those mortgage assets.
Mortgage Loans
Each mortgage loan underlying the offered certificates will constitute the
obligation of one or more persons to repay a debt. A promissory note or bond
will evidence that obligation. That obligation will be secured by a mortgage,
deed of trust or other security instrument that creates a first or junior lien
on, or security interest in, one or more of the following types of real
property:
o rental or cooperatively-owned buildings with multiple dwelling units;
o retail properties related to the sale of consumer goods and other products to
the general public, such as shopping centers, malls, factory outlet centers,
automotive sales centers, department stores and other retail stores, grocery
stores,
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specialty shops, convenience stores and gas stations;
o retail properties related to providing entertainment, recreational and
personal services to the general public, such as movie theaters, fitness
centers, bowling alleys, salons, dry cleaners and automotive service centers;
o office properties;
o hospitality properties, such as hotels, motels and other lodging facilities;
o casino properties;
o health care-related properties, such as hospitals, skilled nursing
facilities, nursing homes, congregate care facilities and, in some cases,
assisted living centers and senior housing;
o industrial properties;
o warehouse facilities, mini-warehouse facilities and self-storage facilities;
o restaurants, taverns and other establishments involved in the food and
beverage industry;
o manufactured housing communities, mobile home parks and recreational vehicle
parks;
o recreational and resort properties, such as recreational vehicle parks,
golf courses, marinas, ski resorts and amusement parks;
o arenas and stadiums;
o churches and other religious facilities;
o parking lots and garages;
o mixed use properties; and
o unimproved land zoned for multifamily residential or commercial use.
A mortgage loan may encumber the following types of real property
interests:
o a fee interest or estate, which consists of ownership of the property for an
indefinite period;
o an estate for years, which consists of ownership of the property for a
specified period of years;
o a leasehold interest or estate, which consists of a right to occupy and use
the property for a specified period of years, subject to the terms and
conditions of a lease;
o shares in a cooperative corporation that owns the property; or
o any other real estate interest under applicable local law.
Any of these real property interests may be subject to deed restrictions,
easements, rights of way and other matters of public record. Zoning laws and
other legal restrictions may apply to the use of any particular real property
and the improvements constructed on it.
If indicated in the related prospectus supplement, a junior lien on the
real property may secure one or more of the mortgage loans underlying a series
of offered certificates. However, the trust may not include the loan or loans
secured by the more senior liens on that property. The primary risk to the
holder of a mortgage loan secured by a junior lien on a real property is the
possibility that the foreclosure proceeds remaining after payment of the loans
secured by more senior liens will be insufficient to pay the junior loan in
full. In a foreclosure proceeding, the sale proceeds are applied:
o first to the payment of court costs and fees in connection with the
foreclosure;
o second to the payment of real estate taxes; and
o third to the payment of all principal, interest, prepayment or acceleration
penalties, if any, and all other amounts owing to the holder of the senior
loans.
The claims of the holders of the senior loans must be satisfied in full before
the holder of the junior loan receives any payments on the junior loan. If a
lender forecloses on a junior loan, it does so subject to any related senior
loans.
If indicated in the related prospectus supplement, the mortgage loans
underlying a series of offered certificates may be delinquent as of the date the
certificates are initially issued. In those cases, we will describe in the
related prospectus supplement the period of the delinquency, any forbearance
arrangement then in effect, the condition of the related real property and the
ability of the related real property to generate income to service the mortgage
debt. However, we will not transfer to a trust any mortgage loan if we know, at
the time of transfer, that the loan is:
o more than 90 days delinquent in any scheduled principal or interest payment;
or
o in foreclosure.
Default and Loss Considerations with Respect to the Mortgage Loans
Mortgage loans secured by liens on income-producing properties differ
substantially from mortgage loans secured by owner-occupied single-family homes.
The repayment of a loan secured by a lien on an income-producing property
typically
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depends upon the successful operation of the property and its ability to
generate income sufficient to make payments on the loan. This is particularly
true because most or all of the mortgage loans underlying the offered
certificates will be non-recourse loans.
The debt service coverage ratio of a multifamily or commercial mortgage
loan is a measure of the likelihood of default on the loan. In general, the
"debt service coverage ratio" of a multifamily or commercial mortgage loan at
any given time is the ratio of:
o the amount of income derived or expected to be derived from the related real
property for a twelve-month period that is available to pay debt service, to
o the annualized scheduled payments of principal and/or interest on the
mortgage loan and any other senior loans that are secured by the related real
property.
The amount described in clause (a) of the preceding sentence is often a
highly subjective number based on several assumptions and adjustments to
revenues and expenses for the property. We will provide a more detailed
discussion of its calculation in the related prospectus supplement.
The cash flow generated by a multifamily or commercial property will
generally fluctuate over time and may or may not suffice to make the mortgage
loan payments, cover operating expenses and fund capital improvements. The
condition of the local real estate market and/or area economy may affect
operating revenues of a non-owner occupied, income-producing property. Changes
in market and business conditions tend to affect properties leased, occupied or
used on a short-term basis (such as certain health care-related facilities,
hotels and motels, recreational vehicle parks, and mini-warehouse and
self-storage facilities) more rapidly than properties typically leased for
longer periods (such as warehouses, retail stores, office buildings and
industrial facilities).
Some commercial properties may be owner-occupied or leased to a small
number of tenants. The operating revenues of these properties may depend
substantially on the financial condition of the borrower or one or a few
tenants. Mortgage loans secured by liens on owner-occupied and single-tenant
properties may pose a greater likelihood of default and loss than loans secured
by liens on multifamily properties or on multi-tenant commercial properties.
Increased property operating expenses can increase the likelihood of a
default on a loan secured by the property. Increases in property operating
expenses may result from:
o increases in energy costs and labor costs;
o increases in interest rates and real estate tax rates; and
o changes in governmental rules, regulations and fiscal policies.
Some "net leases" of commercial properties may obligate the lessee, rather
than the borrower/landlord, to pay operating expenses. However, a net lease will
yield stable net operating income to the borrower/landlord only if the lessee
can pay both increased operating expenses and rent payments.
Lenders also look to the loan-to-value ratio of a mortgage loan as a
factor in evaluating the likelihood of loss if a property is liquidated
following a default. In general, the "loan-to-value ratio" of a multifamily or
commercial mortgage loan at any given time is the ratio, expressed as a
percentage, of:
o the then outstanding principal balance of the mortgage loan and any other
senior loans that are secured by the related real property, to
o the estimated value of the related real property based on an appraisal, a
cash flow analysis, a recent sales price or another method.
A low loan-to-value ratio means the borrower has a large amount of its own
equity in the property that secures its loan. In these circumstances:
o the borrower has a greater financial incentive to perform under the mortgage
loan in order to protect its equity, and
o the lender has greater protection against loss on liquidation following a
default.
Loan-to-value ratios are not necessarily an accurate measure of the
likelihood of loss in a pool of multifamily and commercial mortgage loans. For
example, estimated property value at the time the loan was originated may exceed
the value of the property when the offered certificates are issued. Property
values fluctuate. Even current appraisals are not necessarily reliable estimates
of value. Appraised values of income-producing properties are generally based
on:
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o the market comparison method, which takes into account the recent resale
value of comparable properties at the date of the appraisal;
o the cost replacement method, which takes into account the cost of replacing
the property at such date;
o the income capitalization method, which takes into account the property's
projected net cash flow; or
o some combination of these methods.
Each of these appraisal methods presents analytical difficulties:
o it is often difficult to find truly comparable properties that have recently
been sold;
o the replacement cost of a property may have little to do with its current
market value; and
o income capitalization is inherently based on inexact projections of income
and expense and selection of a capitalization rate and discount rate.
If different appraisal methods yield significantly different results, an
accurate determination of value and, correspondingly, a reliable analysis of the
likelihood of default and loss, is even more difficult.
A property's performance will affect its value. As a result, if a
multifamily or commercial mortgage loan defaults because the income generated by
the related property is insufficient to pay operating costs and expenses as well
as debt service, then the value of the property will decline and a liquidation
loss may occur.
We believe that the foregoing considerations are important factors that
generally distinguish mortgage loans secured by liens on income-producing real
estate from single-family mortgage loans. However, the originators of the
mortgage loans underlying the offered certificates may not have considered all
these factors for the loans they originated.
See "Risk Factors-Repayment of a Commercial or Multifamily Mortgage Loan
Depends Upon the Performance and Value of the Underlying Real Property and the
Related Borrower's Ability to Refinance the Property."
Payment Provisions of the Mortgage Loans
Except as described in the related prospectus supplement, each of the
mortgage loans included in one of the trusts will have the following features:
o an original term to maturity of not more than approximately 40 years; and
o scheduled payments of principal, interest or both, to be made on specified
dates, that occur monthly, bimonthly quarterly, semi-annually, annually or
at some other interval.
A mortgage loan included in one of the trusts may also:
o provide for the accrual of interest at a mortgage interest rate that is fixed
over its term, that resets on one or more specified dates or that otherwise
adjusts from time to time;
o provide for the accrual of interest at a mortgage interest rate that may be
converted at the borrower's election from an adjustable to a fixed interest
rate or from a fixed to an adjustable interest rate;
o provide for no accrual of interest;
o provide for level payments to stated maturity, for payments that reset in
amount on one or more specified dates or for payments that otherwise adjust
from time to time to accommodate changes in the interest rate or to reflect
the occurrence of certain events;
o be fully amortizing or partially amortizing or non-amortizing, with a
substantial payment of principal due on its stated maturity date;
o permit the negative amortization or deferral of accrued interest; and/or
o prohibit some or all voluntary prepayments or require payment of a premium,
fee or charge in connection with those prepayments.
Mortgage Loan Information in Prospectus Supplements
In general, the prospectus supplement will provide the following
information about the mortgage loans in each trust:
o the total outstanding principal balance and the largest, smallest and average
outstanding principal balances;
o the type or types of property that provide security for repayment;
o the earliest and latest origination date and maturity date;
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o the original and remaining terms to maturity, or the range thereof, and the
weighted average original and remaining terms to maturity;
o loan-to-value ratios either at origination or at a more recent date, or the
range thereof, and the weighted average of those loan-to-value ratios;
o the mortgage interest rates, or the range thereof, and the weighted average
mortgage interest rate;
o if any mortgage loans have adjustable mortgage interest rates, the index or
indices upon which the adjustments are based, the adjustment dates, the range
of gross margins and the weighted average gross margin, and any limits on
mortgage interest rate adjustments at the time of any adjustment and over the
life of the loan;
o information on the payment characteristics, including applicable prepayment
restrictions;
o debt service coverage ratios either at origination or at a more recent date,
or the range thereof, and the weighted average of those debt service coverage
ratios; and
o the geographic distribution of the properties securing the mortgage loans on
a state-by-state basis.
If we are unable to provide the specific information described above at
the time a series of offered certificates is initially offered, we will provide:
o more general information in the related prospectus supplement; and
o specific information in a Current Report on Form 8-K filed with the SEC
within 15 days after the issuance of the certificates.
If a trust includes any mortgage loan, or group of related mortgage loans,
that represent a material concentration of credit risk, we will include in the
related prospectus supplement financial statements or other financial
information on the related real property or properties.
Mortgage-Backed Securities
The mortgage backed-securities underlying a series of offered certificates
may include:
o mortgage participations, mortgage pass-through certificates, collateralized
mortgage obligations or other mortgage-backed securities that are not insured
or guaranteed by any governmental agency or instrumentality; or
o certificates issued and/or insured or guaranteed by the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association, the
Governmental National Mortgage Association, the Federal Agricultural Mortgage
Corporation or another federal or state governmental agency or
instrumentality.
In addition, each of those mortgage-backed securities will directly or
indirectly evidence an interest in, or be secured by a pledge of, multifamily
and/or commercial mortgage loans.
We will describe in the related prospectus supplement characteristics of
the mortgage-backed securities included in a trust, including the following
information:
o the initial and outstanding principal amount(s) and type of the securities;
o the original and remaining term(s) to stated maturity of the securities;
o the pass-through or bond rate(s) of the securities or the formula for
determining these rate(s);
o the payment characteristics of the securities;
o the identity of the issuer(s), servicer(s) and trustee(s) for the securities;
o a description of the related credit support, if any; o the type(s) of
mortgage loans underlying the securities; o the circumstances under which the
underlying mortgage loans, or the securities themselves, may be purchased
prior to maturity;
o the terms and conditions for substituting mortgage loans backing the
securities; and
o the characteristics of any agreements or instruments providing interest rate
protection to the securities.
In our reports filed under the Exchange Act of 1934, we will provide the
same information about mortgage-backed securities included in a trust as is
provided by the issuer of the security:
o in its own reports filed under the Securities Exchange Act of 1934, if the
security was publicly offered; or
o in whatever reports the issuer of the security provides to the related
trustee, if the security was privately issued.
If specified in the prospectus supplement for a series of certificates, a
trust fund may contain one or more mortgage-backed securities issued by us that
each represent an interest in one or more underlying mortgage loans. The
prospectus supplement for a
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series will contain the disclosure concerning the mortgage-backed securities
described in the preceding paragraph and, in particular, will disclose the
underlying mortgage loans appropriately in light of the percentage of the
aggregate principal balance of all assets represented by the principal balance
of the mortgage-backed securities.
Government Securities
The prospectus supplement for a series of certificates evidencing
interests in assets of a trust fund that include government securities will
specify, to the extent available:
o the aggregate approximate initial and outstanding principal amounts or
notional amounts, as applicable, and types of the government securities to be
included in the trust fund;
o the original and remaining terms to stated maturity of the government
securities;
o whether the government securities are entitled only to interest payments,
only to principal payments or to both;
o the interest rates of the government securities or the formula to determine
the rates, if any;
o the applicable payment provisions for the government securities; and
o to what extent, if any, the obligation evidenced by the related series of
certificates is backed by the full faith and credit of the United States.
Undelivered Mortgage Assets
In general, the total outstanding principal balance of the mortgage assets
transferred by us to any particular trust will equal or exceed the initial total
outstanding principal balance of the related series of certificates. If we
initially deliver to the trustee mortgage assets with total outstanding
principal balances less than the initial total outstanding principal balance of
any series of certificates, we may cover the shortfall by depositing or
arranging to deposit with the related trustee cash or liquid investments on an
interim basis. For 90 days following the date of initial issuance of that series
of certificates, we will be entitled to obtain a release of the deposited cash
or investments if we deliver or arrange for delivery of a corresponding amount
of mortgage assets. However, If we fail to deliver mortgage assets sufficient to
make up the entire shortfall, the related trustee will liquidate the investments
and use the cash and proceeds of the liquidation to pay down the total principal
balance of the related series of certificates, as described in the related
prospectus supplement.
YIELD AND MATURITY CONSIDERATIONS
The yield on your certificates will depend on:
o the price you paid for your certificates;
o the pass-through rate on your certificates;
o the amount and timing of payments on your certificates.
The following discussion contemplates a trust established by us that
consists primarily of mortgage loans. If one of the trusts also includes a
mortgage-backed security, the payment terms of that security will lessen or
enhance the effects that the characteristics and behavior of mortgage loans
backing that security can have on the yield to maturity and/or weighted average
life of a class of offered certificates. If one of the trusts includes a
mortgage-backed security or government security, we will discuss in the related
prospectus supplement the effect, if any, that these securities may have on the
yield to maturity and weighted average lives of the related offered
certificates.
Pass-Through Rate
A class of interest-bearing offered certificates may have a fixed,
variable or adjustable pass-through rate. We will specify in the related
prospectus supplement the pass-through rate for each class of interest-bearing
offered certificates or, if the pass-through rate is variable or adjustable, the
method of determining the pass-through rate.
Payment Delays
There will be a delay between the date on which payments on the underlying
mortgage loans are due and the date on which those payments are passed through
to you and other investors. That delay will reduce the yield that would
otherwise be produced if mortgage loan payments were passed through on your
certificates on the same date that the payments were due.
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Yield and Prepayment Considerations
The yield to maturity on your certificates will be affected by the rate of
principal payments on the mortgage loans and the allocation of those principal
payments to reduce the principal balance or notional amount of your
certificates. The rate of principal payments will be affected by the following:
o the amortization schedules of the mortgage loans, which may change from time
to time to reflect, among other things, changes in mortgage interest rates or
partial prepayments of principal;
o the dates on which any balloon payments are due; and
o the rate of principal prepayments on the mortgage loans, including voluntary
prepayments by borrowers and involuntary prepayments resulting from
liquidations, casualties or purchases of mortgage loans.
Because the rate of principal prepayments will depend on future events and
a variety of factors, we cannot give you any assurance as to what that rate will
be.
The yield to maturity of your certificates may vary from your anticipated
yield depending upon:
o whether you purchased your certificates at a discount or premium and, if so,
the extent of that discount or premium; and
o when, and to what degree, payments of principal on the underlying mortgage
loans reduce the principal balance or notional amount of your certificates.
If you purchase your certificates at a discount, you should consider the
risk that a slower than anticipated rate of principal payments on the underlying
mortgage loans could result in an actual yield to you that is lower than your
anticipated yield. If you purchase your certificates at a premium, you should
consider the risk that a faster than anticipated rate of principal payments on
the underlying mortgage loans could result in an actual yield to you that is
lower than your anticipated yield.
If your certificates entitle you to payments of interest, with
disproportionate, nominal or no payments of principal, you should consider that
your yield will be extremely sensitive to prepayments on the underlying mortgage
loans and, under some prepayment scenarios, may be negative.
If a class of offered certificates accrues interest on a notional amount,
that notional amount will, in general, either:
(a) be based on the principal balances of some or all of the mortgage assets
in the related trust; or
(b) be equal to the total principal balance of one or more of the other
classes of certificates of the same series.
Accordingly, the yield on that class of certificates will be inversely
related to, as applicable, the rate at which payments and other collections of
principal are received on the mortgage assets referred to in clause (a) above or
payments are made in reduction of the total principal balance of the class or
classes of certificates referred to in clause (b) above.
Several factors may influence repayments of principal on the mortgage
loans, including:
o the availability of mortgage credit;
o the relative economic vitality of the area in which the related real
properties are located;
o the quality of management of the related real properties;
o the servicing of the mortgage loans;
o possible changes in tax laws; and
o the availability of other investment opportunities.
In general, those factors which increase the attractiveness of selling or
refinancing a multifamily or commercial property that secures a mortgage loan,
as well as those factors which increase the likelihood of default under the
mortgage loan, would be expected to cause the rate of prepayment to accelerate.
In contrast, those factors having an opposite effect would be expected to cause
the rate of prepayment to slow.
The existence and enforceability of prepayment restrictions, such as
prepayment lock-out periods and requirements that voluntary principal
prepayments be accompanied by prepayment premiums, fees or charges, could also
effect the rate of principal payments on the mortgage loans. If enforceable,
those provisions could either bar or discourage a borrower from voluntarily
prepaying its mortgage loan, which could slow the rate of prepayments.
Prevailing market interest rates for mortgage loans of a comparable type,
term and risk level, may also affect the rate of prepayment. As prevailing
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market interest rates decline, a borrower may have an increased incentive to
refinance its mortgage loan. Even in the case of adjustable rate mortgage loans,
as prevailing market interest rates decline, the related borrowers may have an
increased incentive to refinance in order to:
o convert to a fixed rate loan and thereby "lock in" that rate; or
o take advantage of a different index, margin or rate cap or floor on another
adjustable rate mortgage loan.
Subject to prevailing market interest rates and economic conditions
generally, a borrower may sell a real property in order to:
o realize its equity in the property;
o meet cash flow needs; or
o make other investments.
Federal and state tax laws, which are subject to change, may motivate
borrowers to sell their properties prior to the exhaustion of tax depreciation
benefits. We make no representation as to:
o the particular factors that will affect prepayments of, or losses on, the
mortgage loans underlying any series of offered certificates;
o the relative importance of those factors;
o the percentage of the principal balance of those mortgage loans that will be
paid or incur a loss as of any date; or
o the overall rate of prepayments or losses on those mortgage loans.
Weighted Average Life and Maturity
The rate at which principal payments are received or losses are realized
on the mortgage loans underlying any series of offered certificates will affect
the ultimate maturity and the weighted average life of one or more classes of
the offered certificates of that related series. In general, weighted average
life refers to the average amount of time that will elapse from the date of
issuance of an instrument until each dollar allocable as principal of the
instrument is repaid to the investor.
The weighted average life and maturity of a class of offered certificates
will be influenced by the rate at which principal on the underlying mortgage
loans is paid to that class, whether in the form of scheduled amortization or
prepayments, including voluntary prepayments by borrowers and involuntary
prepayments resulting from liquidations, casualties or condemnations and
purchases of mortgage loans out of the related trust.
Prepayment rates on loans are commonly measured relative to a prepayment
standard or model, such as the Constant Prepayment Rate or "CPR" prepayment
model or the Standard Prepayment Assumption or "SPA" prepayment model. CPR
represents an assumed constant rate of prepayment each month (expressed as an
annual percentage) relative to the then outstanding principal balance of a pool
of mortgage loans for the life of the loans. SPA represents an assumed variable
rate of prepayment each month (expressed as an annual percentage) relative to
the then outstanding principal balance of a pool of mortgage loans, with
different prepayment assumptions often expressed as percentages of SPA. For
example, a prepayment assumption of 100% of SPA might assume prepayment rates of
0.2% per annum of the then outstanding principal balance of those loans in the
first month of the life of the loans and an additional 0.2% per annum in each
month thereafter until the thirtieth month. Beginning in the thirtieth month,
and in each month thereafter during the life of the loans, 100% of SPA would
assume a constant prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption is a
historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical prepayment
experience for single-family mortgage loans. It is unlikely that the prepayment
experience of the mortgage loans underlying any series of offered certificates
will conform to any particular level of CPR or SPA.
In the prospectus supplement for a series of offered certificates, we will
include tables, if applicable, setting forth the projected weighted average life
of each class of those offered certificates with a total principal balance, and
the percentage of the initial total certificate principal balance of each class
that would be outstanding on specified dates, based on the assumptions stated in
that prospectus supplement, including assumptions regarding prepayments on the
underlying mortgage loans. Those tables and assumptions illustrate the
sensitivity of the weighted average lives of the certificates to various assumed
prepayment rates and are not intended to predict, or to provide information that
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will enable you to predict, the actual weighted average lives of your
certificates.
Other Factors Affecting Yield, Weighted Average Life and Maturity
Balloon Payments; Extensions of Maturity
Some or all of the mortgage loans underlying a series of offered
certificates may require the borrower to make a balloon payment at maturity. A
borrower's ability to make a balloon payment typically will depend upon its
ability either to:
o refinance the loan; or
o to sell the related real property.
If a borrower is unable to refinance or sell the property, the borrower might
default on the mortgage loan unless the maturity of the mortgage loan is
extended in connection with a workout. If a borrower defaults, recovery of
proceeds may be delayed by bankruptcy proceedings or adverse economic conditions
in the market where the property is located.
In order to minimize losses on defaulted mortgage loans, the related
master servicer or special servicer may be authorized within prescribed limits
to modify mortgage loans that are in default or as to which a payment default is
reasonably foreseeable. Any defaulted balloon payment or modification that
extends the maturity of a mortgage loan may delay payments of principal on your
certificates and extend the weighted average life of your certificates.
Negative Amortization
Mortgage loans that permit negative amortization to occur can affect the
weighted average life of a class of certificates. Negative amortization loans
require current interest payments at a rate lower than the rate at which
interest is accruing on the mortgage loan. The unpaid portion of the current
interest is added to the related principal balance. Negative amortization most
commonly occurs on adjustable rate mortgage loans that:
o limit the amount by which the scheduled payment may adjust in response to a
change in the mortgage interest rate;
o provide that the scheduled payment will adjust less frequently than the
mortgage interest rate; or
o provide for constant scheduled payments regardless of adjustments to the
mortgage interest rate.
Negative amortization on loans in a trust may cause negative amortization
on the offered certificates. We will describe in the related prospectus
supplement, if applicable, how this negative amortization will be allocated
among the classes of a series of offered certificates.
The portion of any mortgage loan negative amortization allocated to a
class of offered certificates may result in a deferral of some or all of the
interest payable on those certificates. Deferred interest may be added to the
aggregate principal balance of a class of offered certificates. During a period
of increasing interest rates, an adjustable rate mortgage loan that permits
negative amortization would be expected to not amortize or to amortize at a
slower rate than if interest rates were declining or remaining constant. This
slower rate of mortgage loan amortization would cause a slower rate of
amortization for one or more classes of certificates of the related series. This
would increase the weighted average lives of those classes of certificates to
which mortgage loan negative amortization is allocated or that bear the effects
of a slower rate of amortization of the underlying mortgage loans.
During a period of declining interest rates, the scheduled payment on an
adjustable rate mortgage loan may exceed the amount necessary to amortize the
loan fully over its remaining amortization schedule and pay interest at the then
applicable mortgage interest rate. The result is the accelerated amortization of
the mortgage loan. The acceleration in amortization of a mortgage loan will
shorten the weighted average lives of those classes of certificates that entitle
their holders to a portion of the principal payments on the mortgage loan.
The extent to which the inclusion in a trust of mortgage loans that permit
negative amortization will affect the yield on your certificates will depend
upon:
o whether you purchase your certificates at a premium or a discount; and
o whether the payment characteristics of the underlying mortgage loans delay or
accelerate the payments of principal on, or in reduction of the notional
amount of, your certificates.
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See "-Yield and Prepayment Considerations".
Foreclosures and Payment Plans
The weighted average life of and yield on your certificates will be
affected by:
o the number of foreclosures with respect to the underlying mortgage loans; and
o the principal amount of the foreclosed mortgage loans in relation to the
principal amount of those mortgage loans that are repaid in accordance with
their terms.
Servicing decisions made with respect to mortgage loans, including the use
of payment plans prior to a demand for acceleration and the restructuring of
mortgage loans in bankruptcy proceedings or otherwise, may also affect the
payment patterns of particular mortgage loans and the weighted average life of
and yield on your certificates.
Losses and Shortfalls on the Mortgage Assets
The yield on your certificates will directly depend on the extent to which
you are required to bear the effects of any losses or shortfalls in collections
on the underlying mortgage loans and the timing of those losses and shortfalls.
In general, the earlier that you bear any loss or shortfall, the greater the
negative effect on the yield of your certificates.
The amount of any losses or shortfalls in collections on the mortgage
assets in any of the trusts will, to the extent not covered or offset by draws
on any reserve fund or under any instrument of credit support, be allocated
among the various classes of certificates of the related series in the priority
and manner, and subject to the limitations, that we specify in the related
prospectus supplement. As described in the related prospectus supplement, those
allocations may be effected by:
o a reduction in the entitlements to interest and/or the total principal
balances of one or more classes of certificates; and/or
o the establishment of a priority of payments among classes of certificates.
If you purchase subordinated certificates, the yield to maturity on those
certificates may be extremely sensitive to losses and shortfalls in collections
on the underlying mortgage loans.
Additional Certificate Amortization
If your certificates have a principal balance, then they entitle you to a
specified portion of the principal payments received on the underlying mortgage
loans. They may also entitle you to payments of principal from the following
sources:
o amounts attributable to interest accrued but not currently payable on one or
more other classes of certificates;
o interest received or advanced on the underlying mortgage assets that is in
excess of the interest currently accrued on the certificates of the
applicable series;
o prepayment premiums, fees and charges, payments from equity participations or
any other amounts received on the underlying mortgage assets that do not
constitute interest or principal; or
o any other amounts described in the related prospectus supplement.
The amortization of your certificates out of the sources described in the
prior paragraph would shorten their weighted average life and, if your
certificates were purchased at a premium, reduce their yield to maturity.
PNC COMMERCIAL MORTGAGE ACCEPTANCE CORP.
We were incorporated in the State of Missouri on September 17, 1996. We
are a wholly-owned subsidiary of Midland Loan Services, Inc., a Delaware
corporation. We were organized, among other things, for the purposes of issuing
debt securities and establishing trusts, selling beneficial interests therein
and acquiring and selling mortgage assets to those trusts. Our principal
executive offices are located at:
210 West 10th Street
6th Floor
Kansas City, Missouri 64105
Our telephone number is (816) 435-5000. We do not have, and we do not
expect to have, any significant assets.
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DESCRIPTION OF THE CERTIFICATES
Each series of offered certificates, together with any non-offered
certificates of the same series, will represent the entire beneficial ownership
interest in a trust established by us. Each series of offered certificates will
consist of one or more classes. Any non-offered certificates of that series will
likewise consist of one or more classes.
A "series" of certificates are all those certificates that:
o have the same series designation;
o were issued pursuant to the same governing documents; and
o represent beneficial ownership interests in the same trust.
A "class" of certificates are all those certificates of a particular
series that:
o have the same class designation; and
o have the same payment terms.
The respective classes of offered and non-offered certificates of any
series may have a variety of payment terms. An offered certificate may entitle
the holder to receive:
o a stated principal amount, which will be represented by its principal
balance;
o interest on a principal balance or notional amount, at a fixed, variable or
adjustable pass-through rate;
o specified, fixed or variable portions of the interest, principal or other
amounts received on the related mortgage assets;
o payments of principal, with disproportionate, nominal or no distributions of
interest;
o payments of interest, with disproportionate, nominal or no distributions of
principal;
o payments of interest or principal that commence only as of a specified date
or only after the occurrence of certain events, such as the payment in full
of the interest and principal outstanding on one or more other classes of
certificates of the same series;
o payments of principal to be made, from time to time or for designated
periods, at a rate that is faster (and, in some cases, substantially faster)
or slower (and, in some cases, substantially slower) than the rate at which
payments or other collections of principal are received on the related
mortgage assets;
o payments of principal to be made, subject to available funds, based on a
specified principal payment schedule or other methodology; or
o payments of all or part of the prepayment or repayment premiums, fees and
charges, equity participations payments or other similar items received on
the related mortgage assets.
Any class of offered certificates may be senior or subordinate to one or
more other classes of certificates of the same series, including a non-offered
class of certificates of that series, for purposes of some or all payments
and/or allocations of losses or other shortfalls.
A class of offered certificates may have two or more component parts, each
having characteristics that are described in this prospectus as being
attributable to separate and distinct classes. For example, a class of offered
certificates may have a total principal balance on which it accrues interest at
a fixed, variable or adjustable rate. That class of offered certificates may
also accrue interest on a total notional amount at a different fixed, variable
or adjustable rate. In addition, a class of offered certificates may accrue
interest on one portion of its total principal balance or notional amount at one
fixed, variable or adjustable rate and on another portion of its total principal
balance or notional amount at a different fixed, variable or adjustable rate.
Each class of offered certificates will be issued in minimum denominations
corresponding to specified principal balances, notional amounts or percentage
interests, as described in the related prospectus supplement. A class of offered
certificates may be issued in fully registered, definitive form and evidenced by
physical certificates or may be issued in book-entry form through the facilities
of The Depository Trust Company. Offered certificates held in fully registered,
definitive form may be transferred or exchanged, subject to any restrictions on
transfer described in the related prospectus supplement, at the location
specified in the related prospectus supplement, without the payment of any
service charges, except for any tax or other governmental charge payable in
connection with the transfer or exchange. Interests in offered certificates held
in book entry form will be transferred on the book-entry records of DTC and its
participating organizations.
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See"--Book Entry Registration and Definitive Certificates".
Payments on the Certificates
Payments on a series of offered certificates may occur monthly, bimonthly,
quarterly, semi-annually, annually or at any other specified interval. In the
prospectus supplement for each series of offered certificates, we will identify:
o the periodic payment date for that series; and
o the record date as of which certificateholders entitled to payments on any
particular payment date will be established.
All payments with respect to a class of offered certificates on any
payment date will be allocated pro rata among the outstanding certificates of
that class in proportion to the respective principal balances, notional amounts
or percentage interests, as the case may be, of those certificates. Payments on
an offered certificate will be made to the holder entitled thereto either:
o by wire transfer of immediately available funds to the account of that holder
at a bank or similar entity, provided that the holder has furnished the party
making the payments with wiring instructions no later than the applicable
record date and has satisfied any other conditions specified in the related
prospectus supplement; or
o by check mailed to the address of that holder as it appears in the
certificate register, in all other cases.
In general, the final payment on any offered certificate will be made only
upon presentation and surrender of that certificate at the location specified to
the holder in the notice of final payment.
Payments of Interest
In the case of each class of interest-bearing offered certificates,
interest will accrue from time to time, at the applicable pass-through rate and
in accordance with the applicable interest accrual method, on the total
outstanding principal balance or notional amount of that class.
The pass-through rate for a class of interest-bearing offered certificates
may be fixed, variable or adjustable. We will specify in the related prospectus
supplement the pass-through rate for each class of interest-bearing offered
certificates or, in the case of a variable or adjustable pass-through rate, the
method for determining that pass-through rate.
Interest may accrue with respect to any offered certificate on the basis
of:
o a 360-day year consisting of 12 30-day months;
o the actual number of days elapsed during each relevant period in a year
assumed to consist of 360 days;
o the actual number of days elapsed during each relevant period in a normal
calendar year; or
o another method identified in the related prospectus supplement.
We will identify the interest accrual method for each class of offered
certificates in the related prospectus supplement.
Subject to available funds and any adjustments to interest entitlements
described in the related prospectus supplement, accrued interest on each class
of interest-bearing offered certificates will normally be payable on each
payment date. However, in the case of some classes of interest-bearing offered
certificates, which we will refer to as "compound interest certificates",
payments of accrued interest will only begin on a particular payment date or
under the circumstances described in the related prospectus supplement. Prior to
that time, the amount of accrued interest otherwise payable on that class will
be added to its total principal balance on each date or otherwise deferred as
described in the related prospectus supplement.
If a class of offered certificates accrues interest on a total notional
amount, that total notional amount, in general, will be either:
(a) based on the principal balances of some or all of the related mortgage
assets; or
(b) equal to the total principal balances of one or more other
classes of certificates of the same series.
Reference to the notional amount of any certificate is solely for
convenience in making certain calculations of interest and does not represent
the right to receive any distributions of principal.
We will describe in the related prospectus supplement the extent to which
the amount of accrued interest that is payable on, or that may be
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added to the total principal balance of, a class of interest-bearing offered
certificates may be reduced as a result of any contingencies, including
shortfalls in interest collections due to prepayments, delinquencies, losses and
deferred interest on the related mortgage assets.
Payments of Principal
A class of offered certificates may or may not have a total principal
balance. If it does, the total principal balance outstanding from time to time
will represent the maximum amount that the holders of that class will be
entitled to receive as principal out of the future cash flow on the related
mortgage assets and the other related trust assets. The total outstanding
principal balance of any class of offered certificates will be reduced by:
o payments of principal actually made to the holders of that class; and
o if and to the extent that we so specify in the related prospectus supplement,
losses of principal on the related mortgage assets that are allocated to or
are required to be borne by that class.
If a class of offered certificates are compound interest certificates,
then the total outstanding principal balance of that class may be increased by
the amount of any interest accrued, but not currently payable, on that class. We
will describe in the related prospectus supplement any other adjustments to the
total outstanding principal balance of a class of offered certificates.
Unless we so state in the related prospectus supplement, the initial total
principal balance of all classes of a series will not be greater than the total
outstanding principal balance of the related mortgage assets transferred by us
to the related trust. We will specify the expected initial total principal
balance of each class of offered certificates in the related prospectus
supplement.
The payments of principal to be made on a series of offered certificates
from time to time will, in general, be a function of the payments, other
collections and advances received or made on the mortgage assets as described in
the related prospectus supplement. Payments of principal on a series of offered
certificates may also be made from the following sources:
o amounts attributable to interest accrued but not currently payable on one or
more other classes of certificates;
o interest received or advanced on the underlying mortgage assets that exceeds
the interest currently accrued on the certificates of the applicable series;
o prepayment premiums, fees and charges, payments from equity participations or
any other amounts received on the underlying mortgage assets that do not
constitute interest or principal; or
o any other amounts described in the related prospectus supplement.
We will describe in the related prospectus supplement the principal
entitlement of each class of offered certificates on each payment date.
Allocation of Losses and Shortfalls
If and to the extent that any losses or shortfalls in collections on the
mortgage assets in any of the trusts are not covered or offset by delinquency
advances or draws on any reserve fund or under any instrument of credit support,
they will be allocated among the classes of certificates of the related series
in the priority and manner, and subject to the limitations, specified in the
related prospectus supplement. As described in the related prospectus
supplement, the allocations may be effected as follows:
o by reducing the entitlements to interest and/or the total principal balances
of one or more of those classes; and/or
o by establishing a priority of payments among those classes.
See "Description of Credit Support."
Advances in Respect of Delinquencies
If any trust established by us includes mortgage loans, then as and to the
extent described in the related prospectus supplement, the related master
servicer, the related trustee, any related provider of credit support and any
other specified person may be obligated to advance, or have the option of
advancing, delinquent payments of principal and interest due on those mortgage
loans, other than balloon payments. If there are any limitations with respect to
a party's advancing obligations, we will discuss those limitations in the
related prospectus supplement.
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Advances are intended to maintain a regular flow of scheduled interest and
principal payments to certificateholders. Advances are not a guarantee against
losses. The advancing party will be entitled to recover all of its advances out
of subsequent recoveries on the related mortgage loans, including amounts drawn
under any fund or instrument constituting credit support, and out of any other
specific sources identified in the related prospectus supplement.
If and to the extent that we specify in the related prospectus supplement,
any entity making advances will be entitled to receive interest on some or all
of those advances for a specified period during which they are outstanding at
the rate specified in that prospectus supplement. That entity may be entitled to
payment of interest on its outstanding advances periodically from general
collections on the mortgage assets in the related trust, or at such other times
and from such sources as we may describe in the related prospectus supplement,
prior to any payment to the related series of certificateholders.
If any trust established by us includes mortgage-backed securities, we
will discuss in the related prospectus supplement any comparable advancing
obligations in respect of those securities or the mortgage loans that back them.
Reports to Certificateholders
On or about each payment date, the related trustee will forward to each
offered certificateholder a statement substantially in the form, or specifying
the information, set forth in the related prospectus supplement. In general,
that statement will include information regarding:
o the payments made on that payment date with respect to the applicable class
of offered certificates; and
o the recent performance of the mortgage assets.
Within a reasonable period of time after the end of each calendar year,
the trustee will be required to furnish to each person who at any time during
the calendar year was a holder of an offered certificate a statement containing
information regarding the principal, interest and other amounts paid on the
applicable class of offered certificates, totaled for that calendar year or the
applicable portion thereof during which the person was a certificateholder. The
obligation to provide that annual statement will be deemed to have been
satisfied by the related trustee to the extent that substantially comparable
information is provided pursuant to any requirements of the Internal Revenue
Code of 1986.
See, also, "--Book-Entry Registration and Definitive Certificates" below.
If one of the trusts includes mortgage-backed securities, the ability of
the related trustee to include in any payment date statement information
regarding the mortgage loans that back those securities will depend on
comparable reports being received with respect to them.
Voting Rights
Voting rights will be allocated among the respective classes of offered
and non-offered certificates of each series in the manner described in the
related prospectus supplement. Certificateholders will generally not have a
right to vote, except with respect to certain amendments to the governing
documents or as otherwise specified in the related prospectus supplement. See
"Description of the governing Documents--Amendment."
As and to the extent described in the related prospectus supplement, the
holders of specified amounts of certificates of a particular series will have
the right to act as a group to remove or replace the related trustee, master
servicer, special servicer or manager. In general, any removal or replacement
must be for cause. We will identify exceptions in the related prospectus
supplement.
Termination
The trust for each series of offered certificates will terminate and cease
to exist following:
o the final payment or other liquidation of the last mortgage asset in that
trust; and
o the payment, or provision for payment, to the certificateholders of that
series of all amounts required to be paid to them.
Written notice of termination of a trust will be given to each affected
certificateholder, and the final distribution will be made only upon
presentation and surrender of the certificates of the related series at the
location to be specified in the notice of termination.
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If we so specify in the related prospectus supplement, one or more
designated parties will be entitled to purchase all of the mortgage assets
underlying a series of offered certificates, resulting in an early retirement of
the certificates and an early termination of the related trust. We will describe
in the related prospectus supplement the circumstances under which that purchase
may occur.
In addition, if we so specify in the related prospectus supplement, on a
specified date or upon the reduction of the total principal balance of a
specified class or classes of certificates by a specified percentage or amount,
a party designated in the related prospectus supplement may be authorized or
required to solicit bids for the purchase of all the mortgage assets of the
related trust or of a sufficient portion of the mortgage assets to retire that
class or those classes of certificates. The solicitation of bids must be
conducted in a commercially reasonable manner, and assets will, in general, be
sold at their fair market value. If the fair market value of the mortgage assets
being sold is less than their unpaid balance, then the certificateholders of one
or more classes of certificates may receive an amount less than the total
certificate principal balance of, and accrued and unpaid interest on, their
certificates.
Book-Entry Registration and Definitive Certificates
Any class of offered certificates may be issued in book-entry form through
the facilities of The Depository Trust Company. If so, that class will be
represented by one or more global certificates registered in the name of DTC or
its nominee. If we so specify in the related prospectus supplement, we will
arrange for clearance and settlement through the Euroclear System or CEDEL,
S.A., for so long they are participants in DTC.
The Depository Trust Company
DTC is:
o a limited-purpose trust company organized under the New York Banking Law;
o a "banking corporation" within the meaning of the New York Banking Law;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
o a "clearing agency" registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934.
DTC was created to hold securities for DTC participants and to facilitate
the clearance and settlement of securities transactions between DTC participants
through electronic computerized book-entry changes in their accounts, which
eliminates the need for physical movement of securities certificates. DTC
participants that maintain accounts with DTC include securities brokers and
dealers, banks, trust companies and clearing corporations and may include other
organizations. DTC is owned by a number of DTC participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as banks, brokers, dealers and trust companies that
directly or indirectly clear through or maintain a custodial relationship with a
DTC participant that maintains an account with DTC. The rules applicable to DTC
and DTC participants are on file with the SEC.
Purchases of book-entry certificates under the DTC system must be made by
or through, and will be recorded on the records of, the brokerage firm, bank,
thrift institution or other financial intermediary (each, a "Financial
Intermediary") that maintains the beneficial owner's account for this purpose.
In turn, the Financial Intermediary's ownership of those certificates will be
recorded on the records of DTC or, alternatively, if the beneficial owner's
Financial Intermediary is not a DTC participant, on the records of a
participating firm that acts as agent for the Financial Intermediary, whose
interest will in turn be recorded on the records of DTC. A beneficial owner of
book-entry certificates must rely on the foregoing procedures to evidence its
beneficial ownership of those certificates. The beneficial ownership interest of
the owner of a book-entry certificate may only be transferred by compliance with
the rules, regulations and procedures of the Financial Intermediaries and DTC
participants.
DTC has no knowledge of the actual beneficial owners of the book-entry
certificates. DTC's records reflect only the identity of the DTC participants to
whose accounts those certificates are credited, which may or may not be the
actual beneficial owners. The DTC participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC participants,
and by DTC participants to Financial Intermediaries and beneficial owners, will
be governed by arrangements
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among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Payments on the book-entry certificates will be made to DTC. DTC's
practice is to credit DTC participants' accounts on the related payment date in
accordance with their respective holdings shown on DTC's records, unless DTC has
reason to believe that it will not receive payment on that date. Disbursement of
payments by DTC participants to Financial Intermediaries and beneficial owners
will be:
o governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or
registered in "street name";
o the sole responsibility of each DTC participant, subject to any statutory or
regulatory requirements in effect from time to time.
Under a book-entry system, beneficial owners may receive payments after
the related payment date.
The only "certificateholders" of book-entry certificates will be DTC or
its nominee. Parties to the governing documents for any series of offered
certificates need not recognize beneficial owners of book-entry certificates as
"certificateholders". The beneficial owners of book-entry certificates will be
permitted to exercise the rights of "certificateholders" only indirectly through
the DTC participants, who in turn will exercise their rights through DTC. We
have been informed that DTC will take action permitted to be taken by a
"certificateholder" only at the direction of one or more DTC participants. DTC
may take conflicting actions with respect to the book-entry certificates to the
extent that the actions are taken on behalf of Financial Intermediaries whose
holdings include those certificates.
Because DTC can act only on behalf of DTC participants, who in turn act on
behalf of Financial Intermediaries and certain beneficial owners, the ability of
a beneficial owner to pledge its interest in a class of book-entry certificates
to persons or entities that do not participate in the DTC system, or otherwise
to take actions in respect of its interest in a class of book-entry
certificates, may be limited due to the lack of a physical certificate
evidencing the interest.
Unless we specify otherwise in the related prospectus supplement,
beneficial owners of affected offered certificates initially issued in
book-entry form will not be able to obtain physical certificates that represent
those offered certificates, unless:
o we advise the related trustee in writing that DTC is no longer willing or
able to discharge properly its responsibilities as depository with respect to
those offered certificates and we are unable to locate a qualified successor;
or
o we elect, at our option, to terminate the book-entry system through DTC with
respect to those offered certificates.
Upon the occurrence of either of the two events described above, DTC will
be required to notify all DTC participants of the availability through DTC of
physical certificates with respect to the affected offered certificates. Upon
surrender by DTC of the certificate or certificates representing a class of
book-entry offered certificates, together with instructions for registration,
the related trustee or other designated party will be required to issue to the
beneficial owners identified in those instructions physical certificates
representing those offered certificates.
Cedelbank
Cedelbank is incorporated under the laws of Luxembourg as a professional
depository. Cedelbank holds securities for its participants and facilitates the
clearance and settlement of securities through electronic book-entry changes in
their cash and securities accounts. Transactions can settle in Cedelbank in any
of 28 currencies, including United States dollars. Cedelbank provides
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing to its participants. Cedelbank
interfaces with domestic markets in several countries. The Luxembourg Monetary
Institute regulates Cedelbank as a professional depository. Cedelbank
participants are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. Indirect access to Cedelbank is
also available to others, such as banks, brokers, dealers, and trust companies
that maintain a clearing or custodial relationship with a Cedelbank participant.
Euroclear
The Euroclear System was created in 1968 to hold securities for
participants and to clear and
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settle transactions between participants through simultaneous electronic
book-entry delivery against payment. Transactions may now be settled in any of
40 currencies, including United States dollars. The Euroclear System includes
various other services, including securities lending and borrowing, and
interfaces with domestic markets in several countries. The Euroclear System is
operated by the Brussels, Belgium office of Morgan Guaranty Trust Company of New
York (the "Euroclear Operator"), under a contract with Euroclear Clearance
System S.C., a Belgian cooperative corporation. All operations are conducted by
the Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator. Euroclear
participants include banks (including central banks), securities brokers and
dealers. Indirect access to Euroclear is also available to other firms that
maintain a clearing or custodial relationship with a Euroclear participant.
The Euroclear Operator is the Belgian branch of a New York banking
corporation that is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
The Euroclear Operator acts only on behalf of Euroclear participants, and
has no record of or relationship with persons holding through participants.
DESCRIPTION OF THE GOVERNING DOCUMENT
The offered certificates of each series will be issued pursuant to a
pooling and servicing agreement or other similar agreement or collection of
agreements (individually and collectively, the "Governing Document"). In
general, the parties to the Governing Document for a series of offered
certificates will include us, a trustee, a master servicer and a special
servicer. However, if the related trust assets include mortgage-backed
securities, the Governing Document may include a manager as a party, but may not
include a master servicer, special servicer or other servicer as a party. We
will identify in the related prospectus supplement the parties to the Governing
Document for a series of offered certificates. Midland Loan Services, our parent
corporation, will be the master servicer for each of the trusts, unless we
specify a different master servicer in the related prospectus supplement.
Midland Loan Services may also be the special servicer for some of the trusts.
Any party to the Governing Document for a series of offered certificates,
or any of its affiliates, may own certificates issued thereunder. Except in
limited circumstances, certificates that are held by the related master
servicer, special servicer or manager will have the same voting rights as
certificates held by others.
A form of a pooling and servicing agreement has been filed as an exhibit
to the registration statement of which this prospectus is a part. However, the
provisions of the Governing Document for each series of offered certificates
will vary depending upon the nature of the certificates to be issued thereunder
and the nature of the related trust assets. The following summaries describe
certain provisions that may appear in the Governing Document for each series of
offered certificates. The prospectus supplement for each series of offered
certificates will provide additional information regarding the Governing
Document for that series. The summaries in this prospectus do not describe all
of the provisions of the Governing Document for each series of certificates. You
should refer to the provisions of the Governing Document for your certificates
and to the description of those provisions in the related prospectus supplement
for additional information. We will provide a copy of the Governing Document,
exclusive of exhibits, that relates to your certificates, without charge, upon
written request addressed to our principal executive offices specified under
"PNC Commercial Mortgage Acceptance Corp."
Assignment of Mortgage Assets
At the time of initial issuance of any series of offered certificates, we
will assign or cause to be assigned to the designated trustee the mortgage
assets to be included in the related trust, together with certain related
assets. We will specify in the related prospectus all material documents for the
related mortgage assets that will be delivered to the related trustee, and all
other actions to be taken by us or any prior holder of the related mortgage
assets, in connection with that assignment. Concurrently with that assignment,
the related trustee will deliver to our designee or us the certificates of that
series in exchange for the mortgage assets and the other assets to be included
in the related trust.
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Each mortgage asset included in one of the trusts will be identified in a
schedule appearing as an exhibit to the related Governing Document. That
schedule generally will include detailed information about each mortgage asset
transferred to the related trust, including:
o in the case of a mortgage loan:
1) the address of the related real property and the type of that
property;
2) the mortgage interest rate and, if applicable, the applicable index,
gross margin, adjustment date and any rate cap information;
3) the remaining term to maturity;
4) the remaining amortization term; and
5) the outstanding principal balance; and
o in the case of a mortgage-backed security, the outstanding principal balance
and the pass-through rate or coupon rate.
Representations and Warranties with Respect to Mortgage Assets;
Repurchases and Other Remedies
Unless we state otherwise in the prospectus supplement for any series of
offered certificates, we will, with respect to each mortgage asset in the
related trust, make or assign, or cause to be made or assigned, certain
representations and warranties (the person making the representations and
warranties, the "Warranting Party") covering, by way of example:
o the accuracy of the information set forth for each mortgage asset on the
schedule of mortgage assets appearing as an exhibit to the Governing Document
for that series;
o the Warranting Party's title to each mortgage asset and the authority of the
Warranting Party to sell that mortgage asset; and
o in the case of a mortgage loan:
1) the enforceability of the related mortgage note and mortgage;
2) the existence of title insurance insuring the lien priority of the
related mortgage;
3) the payment status of the mortgage loan; and
4) the delivery of all documents required to be delivered with respect
to the mortgage loan as contemplated under "--Assignment of Mortgage
Assets."
We will identify the Warranting Party, and give a more complete sampling
of the representations and warranties made by the Warranting Party, in the
related prospectus supplement. We will also specify in the related prospectus
supplement any remedies against the Warranting Party available to the related
certificateholders, or the related trustee on their behalf, in the event of a
breach of any of those representations and warranties. In most cases, the
Warranting Party will be a prior holder of the particular mortgage assets.
Collection and Other Servicing Procedures With Respect to Mortgage Loans
The Governing Document for each series of offered certificates will govern
the servicing and administration of any mortgage loans included in the related
trust.
In general, the related master servicer and special servicer, directly or
through sub-servicers, will be obligated to service and administer for the
benefit of the related certificateholders the mortgage loans in any of the
trusts. The master servicer and the special servicer will be required to service
and administer those mortgage loans in accordance with applicable law and,
further, in accordance with the terms of the related Governing Document, the
mortgage loans themselves and any instrument of credit support included in that
trust. Subject to the foregoing, the master servicer and the special servicer
will each have full power and authority to do any and all things in connection
with the servicing and administration of the mortgage loans that it may deem
necessary and desirable.
As part of its servicing duties, each of the master servicer and the
special servicer for one of the trusts will be required to make reasonable
efforts to collect all payments called for under the terms and provisions of the
related mortgage loans that it services and, in general will be obligated to
follow the same collection procedures that it would follow for comparable
mortgage loans held for its own account, provided that:
o those procedures are consistent with the terms of the related Governing
Document; and
o they do not impair recovery under any instrument of credit support included
in the related trust.
Consistent with the foregoing, the master servicer and the special servicer
will each be
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permitted, in its discretion, to waive any default charge in connection with
collecting a late payment on any defaulted any mortgage loan.
Accounts
We expect that Governing Document will require the Master Servicer to
establish and maintain one or more collection accounts in the name of the
trustee for the benefit of certificateholders. The master servicer will
generally be required to deposit into the collection account all amounts
received on or in respect of the mortgage loans. The master servicer may make
withdrawals from the collection account to, among other things:
o remit certain amounts for the related payment date into the distribution
account;
o pay certain property protection expenses, taxes, assessments and
insurance premiums and certain third-party expenses in accordance with the
Governing Document;
o pay accrued and unpaid servicing fees and other servicing compensation to the
master servicer and the special servicer; and
o reimburse the master servicer, the special servicer, the trustee and us for
certain expenses; and
o provide indemnification to master servicer, the Special Servicer and us, as
described in the Governing Document.
The related prospectus supplement may provide for additional circumstances
when the master servicer may make withdrawals from the collection account.
We expect that the Governing Document for each series of certificates will
require the trustee to establish a distribution account into which the master
servicer will deposit amounts held in the collection account from which
certificateholder distributions will be made for each payment date. On each
payment date, the trustee will apply amounts on deposit in the distribution
account generally to make distributions of interest and principal to the
certificateholders in the manner and in the amounts described in the related
prospectus supplement.
The amount at any time credited to the collection account or the
distribution account may be invested in Permitted Investments that:
o are payable on demand; or
o in general mature or are subject to withdrawal or redemption on the date so
specified in the Governing Document.
The master servicer must remit to the distribution account on or before
the business day preceding the related payment date amounts on deposit in the
collection account that are required for distribution to certificateholders.
The income from the investment of funds in the collection account and the
distribution account in Permitted Investments will constitute additional
compensation for the master servicer or the trustee. The risk of loss of funds
in the collection account and the distribution account resulting from such
investments will be borne by the master servicer or trustee, as applicable. The
amount of each such loss must be deposited by the master servicer or the trustee
in the collection account or the distribution account, as the case may be,
promptly as realized.
We expect that the Governing Document for each series of certificates will
require that an account be established and maintained for use in connection
with:
o real properties acquired upon foreclosure of a mortgage loan, which are
commonly referred to as "REO properties"; and
o if specified in the related prospectus supplement, certain other real
properties securing the mortgage loans.
To the extent set forth in the Governing Document, certain withdrawals
from this account will be made to, among other things:
o make remittances to the collection account as required;
o pay taxes, assessments, insurance premiums, other amounts necessary for the
proper operation, management and maintenance of the REO properties and other
specified real properties securing the mortgage loans and certain third-party
expenses; and
o reimburse certain expenses in respect of the REO properties and the other
specified real properties securing the mortgage loans.
The amount at any time credited to this account may be invested in
Permitted Investments that are payable on demand or mature, or are subject to
withdrawal or redemption, on or before the
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business day preceding the day on which these amounts must be remitted to the
master servicer for deposit in the collection account. The income from the
investment of funds in the account in Permitted Investments will be for the
benefit of the master servicer, the special servicer or the trustee, as
applicable, and the risk of loss of funds in this account resulting from such
investments will be borne by the master servicer, the special servicer or the
trustee, as applicable.
Permitted Investments
"Permitted Investments" will generally consist of one or more of the
following, unless the rating agencies rating certificates of a series require
other or additional investments:
o direct obligations of, or obligations guaranteed as to full and timely
payment of principal and interest by, the United States or any agency or
instrumentality thereof, provided that such obligations are backed by the
full faith and credit of the United States of America;
o direct obligations of the Federal Home Loan Mortgage Corporation (debt
obligations only), the Federal National Mortgage Association (debt
obligations only), the Federal Farm Credit System (consolidated system-wide
bonds and notes only), the Federal Home Loan Banks (consolidated debt
obligations only), the Student Loan Marketing Association (debt obligations
only), the Financing Corp. (consolidated debt obligations only) and the
Resolution Funding Corp. (debt obligations only);
o federal funds, time deposits in, or unsecured certificates of deposit of, or
bankers' acceptances, or repurchase obligations, all having maturities of not
more than 365 days, issued by any bank or trust company, savings and loan
association or savings bank, depositing institution or trust company having
the highest short-term rating available from each rating agency rating the
certificates of a series;
o commercial paper having a maturity of 365 days or less (including both
non-interest-bearing discount obligations and interest-bearing obligations
payable on demand or on a specified date not more than one year after the
date of issuance thereof and demand notes that constitute vehicles for
investment in commercial paper) that is rated by each rating agency rating
the certificates of a series in its highest short-term unsecured rating
category;
o shares of taxable money market funds or mutual funds that seek to maintain a
constant net asset value and have been rated by each rating agency rating the
certificates of a series as permitted investments with respect to this
definition;
o if previously confirmed in writing to the trustee, any other demand, money
market or time deposit, or any other obligation, security or investment, as
may be acceptable to each rating agency rating the certificates of a series
as a permitted investment of funds backing securities having ratings
equivalent to each such rating agency's highest initial rating of the
certificates; and
o other obligations acceptable as Permitted Investments to each rating agency
rating the certificates of a series.
Insurance
The Governing Document for each series will require that the master
servicer use reasonable efforts in accordance with the servicing standard
specified in the related prospectus supplement to cause each borrower to
maintain insurance in accordance with the related mortgage loan documents, which
generally will include a standard fire and hazard insurance policy with extended
coverage. To the extent required by the related mortgage loan, the coverage of
each such standard hazard insurance policy will be in an amount that is at least
equal to the lesser of:
o the full replacement cost of the improvements and equipment securing the
mortgage loan; or
o the outstanding principal balance owing on the mortgage loan or the amount as
is necessary to prevent any reduction in such policy by reason of the
application of co-insurance and to prevent the trustee for the series from
being deemed to be a co-insurer in each case with a replacement cost rider.
o The master servicer will also use its reasonable efforts to cause each
borrower to maintain any other insurance required by the related mortgage
loan.
Subject to the requirements for modification, waiver or amendment of a
mortgage loan (See "--Modifications, Waivers and Amendments"), the master
servicer may in its reasonable discretion consistent with the servicing standard
set forth in the related Governing Document waive the requirement of a mortgage
loan that the related borrower maintain earthquake insurance on the related
mortgaged property. If a mortgaged property is located in a
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federally designated special flood hazard area, the master servicer will also
use its best efforts in accordance with the servicing standard in the related
prospectus supplement to cause the related borrower to maintain flood insurance
in an amount equal to the lessor of the unpaid principal balance of the related
mortgage loan and the maximum amount obtainable with respect to the mortgage
loan. The Governing Document will provide that the master servicer must maintain
the foregoing insurance if the related borrower fails to maintain this insurance
to the extent the insurance is available at commercially reasonable rates and to
the extent the trustee, as mortgagee, has an insurable interest.
The cost of any insurance maintained by the master servicer will be
advanced by the master servicer. The special servicer will cause to be
maintained fire and hazard insurance with extended coverage on each REO property
in an amount that is at least equal to the full replacement cost of the
improvements and equipment. The cost of any insurance for an REO property will
be payable out of amounts collected on the related REO property or will be
advanced by the master servicer. The special servicer will maintain flood
insurance providing substantially the same coverage as described above on any
REO property that was located in a federally designated special flood hazard
area at the time the related mortgage loan was originated. The special servicer
will maintain with respect to each REO property:
o public liability insurance;
o loss of rent endorsements; and
o such other insurance as provided in the related mortgage loan.
Any insurance that is required to be maintained with respect to any REO
property will only be so required to the extent the insurance is available at
commercially reasonable rates.
The Governing Document will provide that the master servicer or special
servicer, as applicable, may satisfy its obligation to cause hazard insurance
policies to be maintained by maintaining a master force placed insurance policy
insuring against losses on the mortgage loans or REO properties, as the case may
be. The incremental cost of the insurance allocable to any particular mortgage
loan or REO property, if not borne by the related borrower, will be advanced by
the master servicer.
Alternatively, the master servicer or special servicer, as applicable, may
satisfy its obligation by maintaining, at its expense, a blanket policy (i.e.,
not a master force placed policy) insuring against losses on the mortgage loans
or REO properties, as the case may be. If a blanket or master force placed
policy contains a deductible clause, the master servicer or the special
servicer, as applicable, will be obligated to deposit in the collection account
all sums that would have been deposited in the account but for such clause to
the extent that the deductible exceeds the deductible limitation that pertained
to the related mortgage loan, or in the absence of any such deductible
limitation, the deductible limitation that is consistent with the servicing
standard under the Governing Document.
The prospectus supplement may describe other provisions concerning the
insurance policies required to be maintained under the Governing Document.
Unless otherwise specified in the applicable prospectus supplement, no
pool insurance policy, special hazard insurance policy, bankruptcy bond,
repurchase bond or guarantee insurance will be maintained with respect to the
mortgage loans.
Fidelity Bonds and Errors and Omissions Insurance
The Governing Document for each series will generally require that the
master servicer and the special servicer obtain and maintain in effect a
fidelity bond or similar form of insurance coverage (which may provide blanket
coverage) or any combination thereof insuring against loss occasioned by fraud,
theft or other intentional misconduct of the officers and employees of the
master servicer and the special servicer. The Governing Document will allow the
master servicer and the special servicer to self-insure against loss occasioned
by the errors and omissions of the officers and employees of the master servicer
and the special servicer so long as certain criteria set forth in the Governing
Document are met.
Servicing Compensation and Payment of Expenses
The master servicer's principal compensation for its activities under the
Governing Document for each series will come from the payment to it or retention
by it, with respect to each mortgage loan, of a "servicing fee". The exact
amount and calculation of the servicing fee will be established in the
prospectus supplement and
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Governing Document for the related series. Since the total unpaid principal
balance of the mortgage loans will generally decline over time, the master
servicer's servicing compensation will ordinarily decrease as the mortgage loans
amortize.
In addition, the Governing Document for a series may provide that the
master service is entitled to receive, as additional compensation:
o prepayment premiums, late fees and certain other fees collected from
borrowers;
o any interest or other income earned on funds deposited in the collection
account and, distribution account except to the extent such income is
required to be paid to the related borrowers, any escrow accounts.
The amount and calculation of the fee for the servicing of specially
serviced mortgage loans will be described in the prospectus supplement and the
Governing Document for each series.
In addition to the compensation described above, the master servicer and
the special servicer or any other party specified in the applicable prospectus
supplement, may retain, or be entitled to the reimbursement of, such other
amounts and expenses as are described in the applicable prospectus supplement.
Modifications, Waivers and Amendments
The Governing Document for each series will provide the master servicer or
the special servicer with the discretion to modify, waive or amend certain of
the terms of any mortgage loan without the consent of the trustee or any
certificateholder subject to certain conditions set listed in the Governing
Document. These conditions will general include the condition that the
modification, waiver or amendment will not result in the mortgage loan ceasing
to be a "qualified mortgage" under the REMIC regulations.
Events of Default
In summary, the Governing Document for each series will provide that the
following are events of default with respect to the master servicer and special
servicer:
o any failure by the master servicer or the special servicer to remit to the
collection account, or any failure by the master servicer to remit to the
trustee for deposit into the distribution account, any amount the Governing
Document requires to be so remitted;
o any failure by the master servicer or special servicer duly to observe or
perform in any material respect any of its other covenants or agreements or
the breach of its representations or warranties (which breach materially and
adversely affects the interests of the certificateholders, the trustee, the
master servicer or the special servicer with respect to any mortgage loan)
under the Governing Document, which in each case continues unremedied for 30
days after the giving of written notice of such failure to the master
servicer or the special servicer by the trustee or us, or to the master
servicer, special servicer, the trustee and us, by the holders of
certificates evidencing voting rights of at least 25% of any affected class;
o confirmation in writing by any of the rating agencies that the then current
rating assigned to any class of certificates would be withdrawn, downgraded
or qualified unless the master servicer or special servicer, as applicable,
is removed;
o certain events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings and certain actions by, on behalf of or
against the master servicer or special servicer, as applicable, indicating
its insolvency or inability to pay its obligations; or
o any failure by the master servicer to make a required advance.
The related prospectus supplement may provide or other events of default
to the extent required by the rating agencies rating certificates of a series.
Rights Upon Event of Default
As long as an event of default remains unremedied, the trustee may
terminate all of the rights and obligations of the master servicer or special
servicer, as the case may be, and the trustee must do so upon the written
direction of the holders of certificates entitled to 25% of the aggregate voting
rights of all certificates of a series. The Governing Document provides that the
terminated master servicer or special servicer remains entitled to receive all
accrued and unpaid servicing compensation through the date of termination plus,
in the case of the master servicer, all advances and interest thereon as
provided in the Governing Document. The Governing Document for the series may
specify that
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the special servicer is entitled under certain circumstances to continue to
receive workout fees and other similar fees after it is terminated.
The holders of certificates evidencing at least 66 2/3% of the total
voting rights of the certificates of a series may, on behalf of all holders of
certificates, waive any default by the master servicer or special servicer in
the performance of its obligations under the Governing Document and its
consequences, except a default in making any required deposits to (including
advances) or payments from the collection account or the distribution account or
in remitting payments as received, in each case in accordance with the Governing
Document. Upon any such waiver of a past default, the default will cease to
exist, and any event of default arising therefrom will be deemed to have been
remedied for every purpose of the Governing Document. No such waiver will extend
to any subsequent or other default or impair any resulting right.
On and after the date of termination, the trustee will succeed to all
authority and power of the terminated master servicer or special servicer under
the Governing Document and will be entitled to compensation similar to that to
which the terminated master servicer or special servicer would have been
entitled. The trustee must appoint, or petition a court of competent
jurisdiction to appoint, an established mortgage loan servicing institution to
act as successor to the terminated master servicer or special servicer under the
Governing Document if :
o the trustee is unwilling or unable to act as successor;
o the holders of certificates evidencing a majority of the total voting rights
so request; or
o the trustee is not rated in one of its two highest long-term unsecured debt
rating categories by each of the rating agencies rating the certificates of
such series.
the appointment of which will not result in the downgrading, withdrawal or
qualification of the ratings then assigned to any class of certificates as
evidenced in writing by each rating agency rating the certificates of such
series.
The trustee and any successor may agree upon the servicing compensation to be
paid, which in no event may be greater than the compensation payable to the
master servicer or the special servicer, as the case may be, under the Governing
Document.
Other Matters
The master servicer and/or the special servicer for one of the trusts,
directly or through sub-servicers, must also perform various other customary
functions of a servicer of comparable loans, including:
o maintaining escrow or impound accounts for the payment of taxes, insurance
premiums, ground rents and similar items, or otherwise monitoring the timely
payment of those items;
o ensuring that the related properties are properly insured;
o attempting to collect delinquent payments;
o supervising foreclosures;
o negotiating modifications;
o responding to borrower requests for partial releases of the encumbered
property, easements, consents to alteration or demolition and similar
matters;
o protecting the interests of certificateholders with respect to senior
lienholders;
o conducting inspections of the related real properties on a periodic or other
basis;
o collecting and evaluating financial statements for the related real
properties;
o managing or overseeing the management of real properties acquired on behalf
of the trust through foreclosure, deed-in-lieu of foreclosure or otherwise;
and
o maintaining servicing records relating to mortgage loans in the trust.
We will specify in the related prospectus supplement when, and the extent
to which, servicing of a mortgage loan is to be transferred from a master
servicer to a special servicer. In general, a special servicer for any of the
trusts will be responsible for the servicing and administration of:
o mortgage loans that are delinquent in respect of a specified number of
scheduled payments;
o mortgage loans as to which there is a material non-monetary default;
o mortgage loans as to which the related borrower has entered into or consented
to bankruptcy, appointment of a receiver or conservator or similar insolvency
proceeding, or the related borrower has become the subject of a decree or
order for such a proceeding which shall have remained in force undischarged
or unstayed for a specified number of days; and
o real properties acquired as part of the trust in respect of defaulted
mortgage loans.
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The related Governing Document may also may provide that if a default on a
mortgage loan in the related trust has occurred or, in the judgment of the
related master servicer, a payment default is reasonably foreseeable, the
related master servicer may elect to transfer the servicing of that mortgage
loan, in whole or in part, to the related special servicer. When the
circumstances no longer warrant a special servicer continuing to service a
particular mortgage loan, such as when the related borrower is paying in
accordance with the forbearance arrangement entered into between the special
servicer and that borrower, the master servicer will generally resume the
servicing duties with respect to the particular mortgage loan.
Unless we state otherwise in the related prospectus supplement, the master
servicer for your series will be responsible for filing and settling claims in
respect of particular mortgage loans for your series under any applicable
instrument of credit support. See "Description of Credit Support" in this
prospectus.
A borrower's failure to make required mortgage loan payments may mean that
operating income from the related borrower's real property is insufficient to
service the mortgage debt, or may reflect the diversion of that income from the
servicing of the mortgage debt. In addition, a borrower that is unable to make
mortgage loan payments may also be unable to make timely payment of taxes and
otherwise to maintain and insure the related real property. In general, the
related special servicer will be required to:
o monitor any mortgage loan that is in default;
o evaluate whether the causes of the default can be corrected over a reasonable
period without significant impairment of the value of the related real
property;
o initiate corrective action in cooperation with the mortgagor if cure is
likely;
o inspect the related real property; and o take such other actions as it
deems necessary and appropriate.
A significant period of time may elapse before a special servicer is able
to assess the success of any corrective action or the need for additional
initiatives. The time within which a special servicer can make the initial
determination of appropriate action, evaluate the success of corrective action,
develop additional initiatives, institute foreclosure proceedings and actually
foreclose (or accept a deed to a real property in lieu of foreclosure) on behalf
of the certificateholders of the related series may vary considerably depending
on:
o the particular mortgage loan;
o the related real property;
o the borrower;
o the presence of an acceptable party to assume the mortgage loan;
o and the laws of the jurisdiction in which the related real Property is
located.
If a borrower files a bankruptcy petition, the special servicer may not be
permitted to accelerate the maturity of the defaulted loan or to foreclose on
the related real property for a considerable period of time. See "Certain Legal
Aspects of Mortgage Loans-Bankruptcy Laws."
A special servicer may also perform certain limited duties in respect of
mortgage loans for which the master servicer is primarily responsible, such as
performing property inspections and collecting and evaluating financial
statements. A master servicer may perform certain limited duties in respect of
any mortgage loan for which the special servicer is primarily responsible, such
as continuing to receive payments on the mortgage loan, making certain
calculations with respect to the mortgage loan and making remittances and
preparing certain reports to the related trustee and/or certificateholders with
respect to the mortgage loan. The duties of the master servicer and special
servicer for your series will be more fully described in the related prospectus
supplement.
Sub-Servicers
A master servicer or special servicer may delegate its servicing
obligations to one or more third-party servicers or sub-servicers. However,
unless we specify otherwise in the related prospectus supplement, the master
servicer or special servicer will remain obligated under the related Governing
Document. Each sub-servicing agreement between a master servicer or special
servicer, as applicable, and a sub-servicer must provide for servicing of the
applicable mortgage loans consistent with the related Governing Document. Each
master servicer or special servicer for one of the trusts must monitor the
performance of sub-servicers that it retains.
Unless we specify otherwise in the related prospectus supplement, any
master servicer or special servicer for the related trust will be solely liable
for
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all fees owed by it to any sub-servicer, regardless of whether the master
servicer's or special servicer's compensation pursuant to the related Governing
Document is sufficient to pay those fees. Each sub-servicer will be entitled to
reimbursement from the master servicer or special servicer, as the case may be,
that retained it, for certain expenditures that it makes, generally to the same
extent the master servicer or special servicer would be reimbursed under the
related Governing Document.
Collection of Payments on Mortgage-Backed Securities
Unless we specify otherwise in the related prospectus supplement, if a
mortgage-backed security is included among the trust assets underlying any
series of offered certificates, then:
o that mortgage-backed security will be registered in the name of the related
trustee or its designee;
o the related trustee will receive payments on that mortgage-backed security;
and
o subject to any conditions described in the related prospectus supplement, the
related trustee or a designated manager will, on behalf and at the expense
of the trust, exercise all rights and remedies in respect of that mortgaged-
backed security, including the prosecution of any legal action necessary in
connection with any payment default.
Certain Matters Regarding the Master Servicer, the Special Servicer, the REMIC
Administrator, the Manager and the Depositor
Unless we specify otherwise in the related prospectus supplement, no
master servicer, special servicer or manager for any of the trusts may resign
from its obligations in such capacity, except upon--
o the appointment of, and the acceptance of the appointment by, a successor to
the resigning party and receipt by the related trustee of written
confirmation from each applicable rating agency that the resignation and
appointment will not result in a withdrawal or downgrade of any rating
assigned by that rating agency to any class of certificates of the related
series; or
o a determination that those obligations are no longer permissible under
applicable law or are in material conflict by reason of applicable law with
any other activities carried on by the resigning party.
In general, no resignation will become effective until the related trustee
or other successor has assumed the obligations and duties of the resigning
master servicer, special servicer or manager, as the case may be. Each master
servicer, special servicer and, if it receives distributions on mortgage-backed
securities, manager for one of the trusts will be required to maintain a
fidelity bond and errors and omissions policy or their equivalent that provides
coverage against losses that may be sustained as a result of an officer's or
employee's misappropriation of funds or errors and omissions, subject to such
limitations as to amount of coverage, deductible amounts, conditions, exclusions
and exceptions as may be permitted by the rating agencies assigning ratings to
the related series of certificates.
In no event will we, any master servicer, special servicer or manager for
one of the trusts, or any of our or their respective directors, officers,
employees or agents be under any liability to the related trust or
certificateholders for any action taken, or not taken, in good faith pursuant to
the Governing Document for any series of certificates or for errors in judgment.
None of those persons or entities will be protected, however, against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of obligations or duties under the
Governing Document for any series of certificates or by reason of reckless
disregard of those obligations and duties.
Furthermore, the Governing Document for each series of offered
certificates will entitle us, the master servicer, special servicer and/or
manager for the related trust, and our and their respective directors, officers,
employees and agents to indemnification out of the related trust assets for any
loss, liability or expense incurred in connection with any legal action that
relates to that Governing Document or series of offered certificates or to the
related trust. The indemnification will not extend, however, to any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of obligations or duties under that Governing
Document, or by reason of reckless disregard of those obligations or duties.
Neither we nor any master servicer, special servicer or manager for the
related trust will be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its respective responsibilities under the
Governing Document for any series of offered certificates or that in its opinion
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may involve it in any ultimate expense or liability. However, we and each of
those other parties may undertake any legal action that may be necessary or
desirable with respect to the enforcement and/or protection of the rights and
duties of the parties to the Governing Document for any series of offered
certificates and the interests of the certificateholders of that series under
that Governing Document. In that event, the legal expenses and costs of the
action, and any liability resulting therefrom, will be expenses, costs and
liabilities of the related trust and payable out of related trust assets.
Any person into which we or any related master servicer, special servicer
or manager may be merged or consolidated, or any person resulting from any
merger or consolidation to which we or any related master servicer, special
servicer or manager is a party, or any person succeeding to the business of us
or any related master servicer, special servicer or manager, will be the
successor of us or that master servicer, special servicer or manager, as the
case may be, under the Governing Document for each series of offered
certificates.
The compensation arrangements with respect to the master servicer, special
servicer and/or manager for any of the trusts will be described in the related
prospectus supplement. In general, that compensation will be payable out of the
related trust assets.
Amendment
The Governing Document for each series of offered certificates may be
amended by the parties thereto, without the consent of any of the holders of
those certificates, or of any non-offered certificates of the same series, for
the following reasons:
1) to cure any ambiguity;
2) to correct, modify or supplement any provision in the Governing
Document that is inconsistent with any other provision in the
Governing Document, in this prospectus or the related prospectus
supplement or to correct any error;
3) to add any other provisions with respect to matters or questions
arising under the Governing Document that are not inconsistent with
the existing provisions of that document;
4) to the extent applicable, to relax or eliminate any requirement under
the Governing Document imposed by the provisions of the Internal
Revenue Code of 1986 relating to REMICs if the provisions of that
code are amended or clarified so as to allow for the relaxation or
elimination of that requirement;
5) to relax or eliminate any requirement under the Governing Document
imposed by the Securities Act of 1933 or the rules under that Act if
the Securities Act of 1933 or those rules are amended or clarified so
as to allow for the relaxation or elimination of that requirement;
6) to comply with any requirements imposed by the Internal Revenue Code
of 1986 or any final, temporary or, in some cases, proposed
regulation, revenue ruling, revenue procedure or other written
official announcement or interpretation relating to federal income
tax laws, or to avoid a prohibited transaction or reduce the
incidence of any tax that would arise from any actions taken with
respect to the operation of any REMIC created under the Governing
Document;
7) to the extent applicable, to modify, add to or eliminate certain
transfer restrictions relating to the certificates that are "residual
interests" in a REMIC; or
8) for any other purpose.
However, no amendment of the Governing Document for any series of offered
certificates, other than an amendment for any of the specific purposes described
in clauses (6) and (7) above, may adversely affect in any material respect the
interests of any holders of offered or non-offered certificates of that series.
In addition, no amendment of the Governing Document for any series of offered
certificates covered solely by clause (8) above may result in a downgrade or
withdrawal of any then current rating assigned to any class of certificates of
the related series, as evidenced by written confirmation to that effect from
each applicable rating agency obtained by or delivered to the related trustee.
In general, the Governing Document for a series of offered certificates
may also be amended by the parties to that document, with the consent of the
holders of offered and non-offered certificates representing not less than
66-2/3%, or another percentage specified in the related prospectus supplement,
of all the voting rights allocated to those classes of that series that are
affected by the
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amendment. However, the Governing Document for a series of offered certificates
may not be amended to:
o reduce in any manner the amount of, or delay the timing of, payments received
on the related mortgage assets that are required to be distributed on any
offered or non-offered certificate of that series without the consent of the
holder of that certificate; or
o adversely affect in any material respect the interests of the holders of any
class of offered or non-offered certificates of that series in any other
manner without the consent of the holders of all certificates of that class;
or
o modify the provisions of the Governing Document relating to amendments
thereof without the consent of the holders of all offered and non-offered
certificates of that series then outstanding.
List of Certificateholders
Three or more certificateholders of record of any series may request
access to a recent list of certificateholders for that series for the purpose of
communicating with other holders of certificates of the same series with respect
to their rights under the related Governing Document. The related trustee or
other certificate registrar of that series will afford the requesting
certificateholders access during normal business hours to the most recent list
of certificateholders of that series. If the date of the list is more than 90
days before the date of receipt of the certificateholders' request, then the
trustee, if it is not the certificate registrar for that series, must request
from the registrar a current list and provide access to the current list
promptly upon receipt.
The Trustee
The trustee for each series of offered certificates will be named in the
related prospectus supplement. The commercial bank, national banking
association, banking corporation or trust company that serves as trustee for any
series of offered certificates may have typical banking relationships with us
and our affiliates and with any of the other parties to the related Governing
Document and its affiliates.
Duties of the Trustee
The trustee for each series of offered certificates will make no
representation as to the validity or sufficiency of those certificates, the
related Governing Document or any underlying mortgage asset or related document
and will not be accountable for the use or application by or on behalf of any
other party to the related Governing Document of any funds paid to that party in
respect of those certificates or the underlying mortgage assets. If no event of
default has occurred and is continuing, the trustee for each series will be
required to perform only those duties specifically required under the related
Governing Document. However, upon receipt of any of the various certificates,
reports or other instruments required to be furnished to it pursuant to the
related Governing Document, the trustee must examine those documents and
determine whether they conform to the requirements of that Governing Document.
Certain Matters Regarding the Trustee
Unless the related prospectus supplement describes another source of
payment, the fees of the trustee for any series of offered certificates will be
paid by the related trust assets.
The trustee for each series of offered certificates will be entitled to
indemnification, out of related trust assets, for any loss, liability or expense
incurred by that trustee in connection with its acceptance or administration of
its trusts under the related Governing Document. The indemnification of a
trustee will not extend to any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence on the part of the trustee in the
performance of its obligations and duties under the related Governing Document,
or by reason of its reckless disregard of those obligations or duties.
The trustee for each series of offered certificates will be entitled to
execute any of its trusts or powers and perform any of its duties under the
related Governing Document, either directly or by or through agents or
attorneys. The trustee will not be responsible for any willful misconduct or
negligence on the part of any such agent or attorney appointed by it with due
care.
Resignation and Removal of the Trustee
The trustee for any series of offered certificates may resign at any time.
We will be obligated to appoint a successor to a resigning trustee. We may also
remove the trustee for any series of offered certificates if that trustee ceases
to be eligible to continue as such under the related Governing Document. Unless
we indicate otherwise
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in the related prospectus supplement, the trustee for any series of offered
certificates may also be removed at any time by the holders of the offered and
non-offered certificates of that series evidencing not less than 51%, or such
other percentage specified in the related prospectus supplement, of the voting
rights for that series. However, if the removal was without cause, the
certificateholders effecting the removal may be responsible for any costs and
expenses incurred by the terminated trustee in connection with its removal. Any
resignation or removal of a trustee and appointment of a successor trustee will
not become effective until acceptance of the appointment by the successor
trustee.
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DESCRIPTION OF CREDIT SUPPORT
Credit support may be provided with respect to one or more classes of the
offered certificates of any series or with respect to the related mortgage
assets. That credit support may be in the form of any of the following:
o the subordination of one or more other classes of certificates of the same
series;
o the use of a letter of credit, a surety bond, an insurance policy or a
guarantee;
o interest rate or foreign currency exchange agreements;
o the establishment of one or more reserve funds; or
o any combination of the
foregoing.
If and to the extent described in the related prospectus supplement, any
of the above forms of credit support may provide credit enhancement for
non-offered certificates, as well as offered certificates, or for more than one
series of certificates.
If you are the beneficiary of any particular form of credit support, that
credit support may not protect you against all risks of loss and will not
guarantee payment to you of all amounts to which you are entitled under your
certificates. If losses or shortfalls occur that exceed the amount covered by
that credit support or that are of a type not covered by that credit support,
you will bear your allocable share of deficiencies. Moreover, if that credit
support covers the offered certificates of more than one class or series and
total losses on the related mortgage assets exceed the amount of that credit
support, it is possible that the holders of offered certificates of other
classes and/or series will be disproportionately benefited by that credit
support to your detriment.
If you are the beneficiary of any particular form of credit support, we
will include in the related prospectus supplement a description of the
following:
o the nature and amount of coverage under that credit support;
o any conditions to payment not otherwise described in this prospectus;
o any conditions under which the amount of coverage under that credit support
may be reduced and under which that credit support may be terminated or
replaced; and
o the material provisions relating to that credit support.
Additionally, we will set forth in the related prospectus supplement
certain information with respect to the obligor, if any, under any instrument of
credit support.
Subordinate Certificates
If and to the extent described in the related prospectus supplement, one
or more classes of certificates of any series may be subordinate to one or more
other classes of certificates of that series. If you purchase subordinate
certificates, your right to receive distributions out of collections and
advances on the related trust assets on any payment date will be subordinated to
the corresponding rights of the holders of the more senior classes of
certificates. If and to the extent described in the related prospectus
supplement, the subordination of a class of certificates may apply only in the
event of certain types of losses or shortfalls. In the related prospectus
supplement, we will set forth information concerning the method and amount of
subordination provided by a class or classes of subordinate certificates in a
series and the circumstances under which that subordination will be available.
If the mortgage assets in any trust are divided into separate groups, each
supporting a separate class or classes of certificates of the related series,
credit support may be provided by cross-support provisions requiring that
distributions be made on senior certificates evidencing interests in one group
of mortgage assets prior to distributions on subordinate certificates evidencing
interests in a different group of mortgage assets. We will describe in the
related prospectus supplement the manner and conditions for applying any
cross-support provisions.
Insurance or Guarantees with Respect to Mortgage Loans
The mortgage loans included in any trust may be covered for certain
default risks by insurance policies or guarantees. If so, we will describe in
the related prospectus supplement the nature of these default risks and the
extent of the coverage.
Arrangements Providing Interest Rate Protection
The trust assets for a series of offered certificates may include
guaranteed investment
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contracts pursuant to which moneys held in the funds and accounts established
for that series will be invested at a specified rate. The trust assets may also
include:
o interest rate exchange agreements;
o interest rate cap agreements;
o interest rate floor agreements; or
o other agreements or arrangements intended to reduce the effects of interest
rate fluctuations.
In the related prospectus supplement, we will describe any agreements or
other arrangements designed to protect the holders of a class of offered
certificates against shortfalls resulting from movements or fluctuations in
interest rates. If applicable, we will also identify any obligor under the
agreement or other arrangement.
Arrangements Providing Foreign Currency Protection
If any of the mortgage assets are payable in a foreign currency, the trust
assets for a series of offered certificates may include:
o foreign currency exchange agreements; or
o other agreements and arrangements designed to reduce the effects of foreign
currency fluctuations on the related mortgage assets or one or more classes
of offered certificates of the related series.
In the related prospectus supplement, we will describe any of these
agreements or other arrangements. If applicable, we will also identify any
obligor under the agreement or other arrangement.
Letter of Credit
If and to the extent described in the prospectus supplement, deficiencies
in amounts otherwise payable on a series of offered certificates or certain
classes of those certificates will be covered by one or more letters of credit,
issued by a bank or other financial institution specified in the related
prospectus supplement. Under a letter of credit, the issuing financial
institution will be obligated to honor draws under the letter of credit for a
total fixed dollar amount, net of unreimbursed payments under the letter of
credit, generally equal to a percentage of either:
o the total principal balance of some or all of the related mortgage assets as
of the date the related trust was formed; or
o the initial total principal balance of one or more classes of certificates of
the applicable series.
This percentage will be specified in the related prospectus supplement.
The letter of credit may permit draws only in the event of certain types of
losses and shortfalls. The amount available under the letter of credit will, in
all cases, be reduced to the extent of the unreimbursed payments under the
letter of credit and may otherwise be reduced as described in the related
prospectus supplement. The obligations of the issuing financial institution
under the letter of credit for any series of offered certificates will expire at
the earlier of the date specified in the related prospectus supplement or the
termination of the related trust.
Certificate Insurance and Surety Bonds
If and to the extent described in the related prospectus supplement,
deficiencies in amounts otherwise payable on a series of offered certificates or
certain classes of those certificates will be covered by insurance policies or
surety bonds provided by one or more insurance companies or sureties. Those
instruments may cover, with respect to one or more classes of the offered
certificates of the related series, timely distributions of interest and
principal or timely distributions of interest and distributions of principal on
the basis of a schedule of principal distributions set forth in or determined in
the manner specified in the related prospectus supplement. We will describe in
the related prospectus supplement any limitations on the draws that may be made
under any such instrument.
Reserve Funds
If and to the extent described in the related prospectus supplement,
deficiencies in amounts otherwise payable on a series of offered certificates or
certain classes of those certificates will be covered, to the extent of
available funds, by one or more reserve funds in which cash, a letter of credit,
permitted investments, a demand note or a combination of the foregoing, will be
deposited, in the amounts specified in the related prospectus supplement. If and
to the extent described in the related prospectus supplement, the reserve fund
for the related series of offered certificates may also be funded over time.
Amounts on deposit in any reserve fund for a series of offered
certificates will be applied for the purposes, in the manner, and to the extent
specified in
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the related prospectus supplement. If and to the extent described in the related
prospectus supplement, reserve funds may be established to provide protection
only against certain types of losses and shortfalls. Following each payment date
for the related series of offered certificates, amounts in a reserve fund in
excess of any required balance may be released from the reserve fund under the
conditions and to the extent specified in the related prospectus supplement.
Credit Support with Respect to MBS
If and to the extent described in the related prospectus supplement, any
mortgage-backed security included in one of the trusts and/or the mortgage loans
that back that security may be covered by one or more of the types of credit
support described in this prospectus. We will specify in the related prospectus
supplement, as to each form of credit support, the information indicated above
with respect to that mortgage-backed security, to the extent that the
information is material and available.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
Most, if not all, of the underlying mortgage loans will be secured by
multifamily and commercial properties in the United States. Some mortgage loans
underlying a series of offered certificates may be secured by multifamily and
commercial properties outside the United States.
The following discussion contains general summaries of certain legal
aspects of mortgage loans secured by multifamily and commercial properties in
the United States. Because these legal aspects are governed by applicable state
law and these laws may differ substantially, the summaries do not purport to
cover all applicable laws, to reflect the laws of any particular state or to
encompass the laws of all jurisdictions in which the security for the mortgage
loans underlying the offered certificates is situated. Accordingly, you should
be aware that the summaries are qualified in their entirety by reference to the
applicable laws of those states. See "Description of the Trust Assets--Mortgage
Loans."
If a significant percentage of mortgage loans underlying a series of
offered certificates are secured by properties in a particular state, we will
discuss the relevant state laws in the related prospectus supplement, to the
extent they vary materially from this discussion. For purposes of this
discussion, "mortgage loan" means a multifamily or commercial mortgage loan that
directly or indirectly backs a series of offered certificates.
Each mortgage loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property. The instrument
granting a security interest in real property may be a mortgage, deed of trust
or a deed to secure debt, depending upon the prevailing practice and law in the
state in which the related mortgaged property is located. Mortgages, deeds of
trust and deeds to secure debt are called "mortgages" in this prospectus
supplement. A mortgage creates a lien upon, or grants a title interest in, the
covered real property, and represents the security for the repayment of the
indebtedness evidenced by the note or bond. The priority of this lien or
interest depends on the terms of the mortgage. The priority, in some cases, will
depend on:
o the terms of separate subordination agreements or inter-creditor agreements
with others that hold interests in the real property;
o the knowledge of the parties to the mortgage; and
o the order of recordation of the mortgage in the appropriate public recording
office.
However, the lien of a recorded mortgage will generally be subordinate to
later-arising liens for real estate taxes and assessments and other charges
imposed under governmental police powers.
Types of Mortgage Instruments
There are two parties to a mortgage-
o a mortgagor, who is the owner of the encumbered interest into the subject
property and usually the borrower; and
o a mortgagee, who is the lender.
In contrast, a deed of trust is a three-party instrument. The parties to
a deed of trust are-
o the trustor, the equivalent of a mortgagor;
o the trustee to whom the real property is conveyed; and
o the beneficiary, who is the lender.
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Under a deed of trust, the trustor grants the property, irrevocably until
the debt is paid, in trust and generally with a power of sale, to the trustee to
secure repayment of the related note or bond.
A deed to secure debt typically has two parties. Pursuant to a deed to
secure debt, the grantor, who is the equivalent of a mortgagor, conveys title to
the real property to the grantee, who is the lender, generally with a power of
sale, until the debt is repaid.
If the borrower is a land trust, there would be an additional party
because legal title to the property is held by a land trustee under a land trust
agreement for the benefit of the borrower. At origination of a mortgage loan
involving a land trust, the borrower may execute a separate undertaking to make
payments on the mortgage note. In no event is the land trustee personally liable
for the mortgage note obligation.
The mortgagee's authority under a mortgage, the trustee's authority under
a deed of trust and the grantee's authority under a deed to secure debt are
governed by:
o the express provisions of the related instrument;
o the law of the state in which the real property is located;
o certain federal laws; and
o in some deed-of-trust transactions, the directions of the beneficiary.
Leases and Rents
Mortgages that encumber income-producing property often contain an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases. Under an assignment of rents and leases, the
borrower assigns to the lender the borrower's rights under, and all income from,
each lease. The borrower generally retains a revocable license to directly
collect the rents until a default. If the borrower defaults, the license
terminates and the lender is entitled to collect the rents directly. Local law
may require that the lender take possession of the property, obtain a
court-appointed receiver and/or take other similar action before becoming
entitled to collect the rents.
Mortgages that encumber a hotel or motel generally require the borrower to
pledge room rates as additional security for the loan. In most states, these
rates are considered accounts receivable under the Uniform Commercial Code. In
general, the lender must file financing statements in order to perfect its
security interest in the room rates and must file continuation statements,
generally every five years, to maintain that perfection. Mortgage loans secured
by hotels or motels may be included in one of the trusts even if the security
interest in the room rates was not perfected or the requisite Uniform Commercial
Code filings were allowed to lapse. A lender will generally be required to
commence a foreclosure action or otherwise take possession of the property in
order to enforce its rights to collect the room rates following a default, even
if the lender's security interest in room rates is perfected under applicable
non-bankruptcy law.
In the bankruptcy setting, the lender will be stayed from enforcing its
rights to collect hotel and motel room rates. However, the room rates will
constitute "cash collateral" and cannot be used by the bankrupt borrower without
a hearing or the lender's consent or unless the lender's interest in the room
rates is given adequate protection, such as a cash payment for otherwise
encumbered funds or a replacement lien on unencumbered property, in either case
equal in value to the amount of room rates that the bankrupt borrower proposes
to use. See "-Bankruptcy Laws".
Personal Property
Certain types of mortgaged properties, such as hotels, motels and nursing
homes, may include personal property that may, to the extent owned by the
borrower and not previously pledged, constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the Uniform Commercial Code. Accordingly, if a borrower
pledges personal property as security for a mortgage loan, the lender generally
must file Uniform Commercial Code financing statements in order to perfect its
security interest in the personal property and must file continuation
statements, generally every five years, to maintain that perfection. In certain
cases, mortgage loans secured in part by personal property may be included in
one of the trusts even if the security interest in the personal property was not
perfected or the requisite Uniform Commercial Code filings were allowed to
lapse.
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Foreclosure
Foreclosure Procedures Vary From State to State
Foreclosure is a legal procedure that allows the lender to recover its
mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the borrower defaults in payment or performance of its obligations
under the note or mortgage, the lender has the right to institute foreclosure
proceedings to sell the real property at public auction to satisfy the
indebtedness.
The two primary methods of foreclosing a mortgage are:
o judicial foreclosure, involving court proceedings; and
o non-judicial foreclosure pursuant to a power of sale granted in the mortgage
instrument.
Other foreclosure procedures are available in some states, but they are
either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses are raised or counterclaims are made. A foreclosure
action sometimes requires several years to complete.
Judicial Foreclosure
A judicial foreclosure proceeding is conducted in a court having
jurisdiction over the mortgaged property. Generally, the action is initiated by
the service of legal pleadings upon all parties having a recorded subordinate
interest in the real property and all parties in possession of the property,
under leases or otherwise, whose interests are subordinate to the mortgage.
Difficulties in locating defendants can delay proceedings. When the lender's
right to foreclose is contested, the legal proceedings can be time-consuming.
Upon a successful completion of the judicial foreclosure proceeding, the court
generally issues a judgment of foreclosure and appoints a referee or other
officer to conduct a public sale of the mortgaged property. The proceeds of the
public sale are used to satisfy the judgment. These sales are made in accordance
with procedures that vary from state to state.
Equitable and Other Limitations on Enforceability of Certain Provisions
Courts have traditionally used general equitable principles to limit the
remedies available to lenders in foreclosure actions where the court viewed the
foreclosures as harsh or unfair. Relying on these principles, a court may:
o alter the specific terms of a loan as necessary to prevent or remedy an
injustice, undue oppression or overreaching;
o require the lender to determine the cause of the borrower's default and the
likelihood that the borrower will be able to reinstate the loan;
o require the lender to reinstate a loan or recast a payment schedule in order
to accommodate a borrower that is suffering from a temporary financial
disability; or
o limit the lender's foreclosure rights in the case of a non-monetary default,
such as a failure to adequately maintain the mortgaged property or an
impermissible further encumbrance of the mortgaged property.
Some courts have addressed the issue of whether federal or state
constitutional provisions reflecting due process concerns for adequate notice
require that a borrower receive notice in addition to statutorily-prescribed
minimum notice. For the most part, these cases have upheld the reasonableness of
the statutory notice provisions or have found that a public sale under a
mortgage providing for a power of sale does not involve sufficient state action
to trigger constitutional protections.
In addition, some states may have statutory protection such as the right
of the borrower to reinstate its mortgage loan after commencement of foreclosure
proceedings but prior to a foreclosure sale.
Nonjudicial Foreclosure/Power of Sale
In states permitting non-judicial foreclosure proceedings, foreclosure of
a deed of trust is generally accomplished by a non-judicial trustee's sale
pursuant to a power of sale typically granted in the deed of trust. A power of
sale may also be contained in any other type of mortgage instrument if
applicable law so permits. A power of sale under a deed of trust allows the
trustee to conduct a non-judicial public sale generally following a request from
the beneficiary/lender to sell the property after a default by the borrower if
notice of sale is given in
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accordance with the terms of the mortgage and applicable state law.
In some states, prior to a non-judicial public sale, the trustee under the
deed of trust must record a notice of default and notice of sale and send a copy
to the borrower and to any other party who has recorded a request for a copy of
a notice of default and notice of sale. In addition, in some states, the trustee
must provide notice to any other party having an interest of record in the real
property, including junior lienholders. A notice of sale must be posted in a
public place and, in most states, published for a specified period of time in
one or more newspapers. The borrower or junior lienholder may then have the
right during a reinstatement period required in some states to cure the default
by paying the entire actual amount in arrears, without regard to the
acceleration of the indebtedness, plus the lender's expenses incurred in
enforcing the obligation. In other states, the borrower or the junior lienholder
is not provided a period to reinstate the loan, but has only the right to pay
off the entire debt to prevent the foreclosure sale. Generally, state law
governs the procedure for public sale, the parties entitled to notice, the
method of giving notice and the applicable time periods.
Public Sale
A third party may be unwilling to purchase a mortgaged property at a
public sale because of:
o difficulty in determining the exact status of title to the property due to,
among other things, redemption rights that may exist; and
o possible physical deterioration of the property that may have occurred during
the foreclosure proceedings.
Therefore, it is common for the lender to purchase the mortgaged property,
subject to the borrower's right in some states to remain in possession during a
redemption period. In that case, the lender will have both the benefits and
burdens of ownership, including the obligation to:
o pay debt service on any senior mortgages;
o pay taxes;
o obtain casualty insurance; and
o make repairs necessary to render the property suitable for sale.
The costs of operating and maintaining a commercial or multifamily
residential property may be significant and may be greater than the income
derived from that property. The lender also will commonly obtain the services of
a real estate broker and pay the broker's commission in connection with the sale
or lease of the property. Whether the ultimate proceeds of the sale of the
property equal the lender's investment in the property depends upon market
conditions. Moreover, because of the expenses associated with acquiring, owning
and selling a mortgaged property, a lender could realize an overall loss on a
mortgage loan even if the mortgaged property is sold at foreclosure, or resold
after it is acquired through foreclosure, for an amount equal to the full
outstanding principal amount of the loan plus accrued interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may have to
keep senior mortgage loans current in order to avoid foreclosure of its interest
in the property. In addition, if the foreclosure of a junior mortgage triggers
the enforcement of a "due-on-sale" clause contained in a senior mortgage, the
junior mortgagee could be required to pay the full amount of the senior mortgage
indebtedness or face foreclosure.
Rights of Redemption
The purposes of a foreclosure action are to enable the lender to realize
upon its security and to bar the borrower, and all persons who have interests in
the property that are subordinate to that of the foreclosing lender, from
exercising their "equity of redemption". The doctrine of equity of redemption
provides that, until the property encumbered by a mortgage has been sold in
accordance with a properly conducted foreclosure and foreclosure sale, those
having interests that are subordinate to that of the foreclosing lender have the
right to redeem the property by paying the entire debt with interest. Those
having an equity of redemption must generally be made parties and joined in the
foreclosure proceeding in order for their equity of redemption to be terminated.
Equity of redemption is a common-law, non-statutory right that should be
distinguished from post-sale statutory rights of redemption. In some states, the
borrower and foreclosed junior lienholders are given a statutory period in which
to redeem the property after a foreclosure. In some states, statutory redemption
may occur only upon payment of the foreclosure sale price. In other states,
redemption may be permitted if the former borrower pays only a portion of the
sums due. A statutory right of redemption will diminish the ability of the
lender to
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sell the foreclosed property, because the exercise of a right of redemption
would defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to own the
property until the redemption period has expired. In some states, a post-sale
statutory right of redemption may exist following a judicial foreclosure, but
not following a trustee's sale under a deed of trust.
Anti-Deficiency Legislation
Some or all of the mortgage loans may be non-recourse loans. Recourse
after default on these loans will be limited to the related mortgaged property
and any other assets pledged to secure the related mortgage loan. However, even
if a mortgage loan provides for recourse to the borrower's other assets, a
lender's ability to realize upon those assets may be limited by state law. For
example, in some states, a lender cannot obtain a deficiency judgment against
the borrower following foreclosure or sale under a deed of trust. A deficiency
judgment is a personal judgment against the former borrower equal to the
difference between the net amount realized upon the public sale of the real
property and the amount due to the lender. Other states may require the lender
to exhaust the security afforded under a mortgage before bringing a personal
action against the borrower. In certain other states, the lender has the option
of bringing a personal action against the borrower on the debt without first
exhausting the security, but in doing so, the lender may be precluded from
foreclosing upon the security. Finally, other statutory provisions, designed to
protect borrowers from exposure to large deficiency judgments that might result
from bidding at below-market values at the foreclosure sale, limit any
deficiency judgment to the excess of the outstanding debt over the fair market
value of the property at the time of the sale.
Leasehold Considerations
Mortgage loans may be secured by a mortgage on the borrower's leasehold
interest under a ground lease. Leasehold mortgage loans are subject to certain
risks not associated with mortgage loans secured by a lien on the fee estate of
the borrower. The most significant of these risks is that if the borrower's
leasehold were to be terminated, the leasehold mortgagee would lose its
security. This risk may be lessened if the ground lease:
o requires the lessor to give the lender notices of lessee defaults and an
opportunity to cure them;
o permits the leasehold estate to be assigned to and by the lender or the
purchaser at a foreclosure sale; and
o contains certain other protective provisions typically included in a
"mortgageable" ground lease.
Certain mortgage loans, however, may be secured by ground leases that do
not contain these provisions.
Cooperative Shares
Mortgage loans may be secured by a security interest on the borrower's
ownership interest in shares, and the proprietary leases belonging to those
shares, allocable to cooperative dwelling units that may be vacant or occupied
by non-owner tenants. Loans secured in this manner are subject to certain risks
not associated with mortgage loans secured by a lien on a borrower's fee estate
in real property. The loan typically is subordinate to any mortgage on the
cooperative's building. This mortgage, if foreclosed, could extinguish the
equity in the building and the proprietary leases of the dwelling units derived
from ownership of the shares of the cooperative. Further, transfer of shares in
a cooperative is subject to various regulations as well as to restrictions under
the governing documents of the cooperative. The shares may be canceled in the
event that associated maintenance charges due under the related proprietary
leases are not paid. Typically, a recognition agreement between the lender and
the cooperative provides, among other things, that the lender may cure a default
under a proprietary lease.
Under the laws applicable in many states, "foreclosure" on cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the Uniform Commercial Code and the security agreement relating to the
shares. Article 9 of the Uniform Commercial Code requires that a sale be
conducted in a "commercially reasonable" manner, which may be dependent upon,
among other things, the notice given the debtor and the method, manner, time,
place and terms of the sale. Article 9 of the Uniform Commercial Code provides
that the proceeds of the sale will be applied first to pay the costs and
expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally provides
that the lender's right to reimbursement is subject to the right of the
cooperative corporation to receive sums due under the proprietary leases.
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Bankruptcy Laws
The U.S. bankruptcy code and state insolvency laws may interfere with or
affect a lender's ability to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the U.S. bankruptcy code, virtually all
actions, including foreclosure actions and deficiency judgment proceedings,
affecting the debtor are automatically stayed upon the filing of the bankruptcy
petition. It is not unusual for the debtor to make no interest or principal
payments during the course of the bankruptcy case. The delay and the
consequences of the delay caused by an automatic stay can be significant. Also,
the filing of a petition in bankruptcy by or on behalf of a junior lienholder
may stay the senior lender from taking action to foreclose out the junior lien.
Under the U.S. bankruptcy code, the amount and terms of a mortgage loan
secured by a lien on property of the debtor may be modified under certain
circumstances, provided that substantive and procedural safeguards protective of
the lender are met. A bankruptcy court may, among other things:
o reduce the secured portion of the outstanding amount of the loan to the
then-current value of the property, which would leave the lender a general
unsecured creditor for the difference between the then-current value of the
property and the outstanding balance of the loan;
o reduce the amount of each scheduled payment, by means of a reduction in the
rate of interest and/or an alteration of the repayment schedule, with or
without affecting the unpaid principal balance of the loan;
o extend or shorten the term to maturity;
o permit the debtor to cure a mortgage loan default by paying the arrearage
over a number of years; or
o permit the debtor, through its rehabilitative plan, to reinstate a mortgage
loan payment schedule even if the lender has obtained a final judgment of
foreclosure prior to the filing of the debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
blocking the ability of a secured lender to enforce the borrower's assignment of
rents and leases related to the mortgaged property. Even if the lender is
ultimately allowed to enforce the assignment, the legal proceedings necessary to
resolve the issue could be time-consuming, and cause delays in the lender's
receipt of the rents
The commencement of a bankruptcy case involving the tenant under a lease
of the related property may impair a borrower's ability to make payment on a
mortgage loan. Under the U.S. bankruptcy code, the filing of a petition in
bankruptcy by or on behalf of a tenant results in a stay in bankruptcy against
the commencement or continuation of any state court proceeding for past due
rent, for accelerated rent, for damages or for a summary eviction order with
respect to a default under the lease that occurred prior to the filing of the
tenant's bankruptcy petition. In addition, the U.S. bankruptcy code generally
provides that a trustee or debtor-in-possession may, subject to approval of the
court:
o assume the lease and retain it or assign it to a third party; or
o reject the lease.
If the lease is assumed, the trustee, debtor-in-possession or assignee, if
applicable, must cure any defaults under the lease, compensate the lessor for
its losses and provide the lessor with "adequate assurance" of future
performance. These remedies may be insufficient, and any assurances provided to
the lessor may be inadequate. If the debtor rejects the lease, the lessor will
be treated, except potentially to the extent of any security deposit, as an
unsecured creditor with respect to its claim for damages for termination of the
lease. The U.S. bankruptcy code also limits a lessor's damages for lease
rejection to:
o the rent under the lease without regard to acceleration for the greater of
one year, or 15%, not to exceed three years, of the remaining term of the
lease; plus
o unpaid rent to the earlier of the surrender of the property or the tenant's
bankruptcy filing.
Environmental Considerations
A lender may be subject to environmental risks when taking a security
interest in real property. Of particular concern may be properties that are or
have been used for industrial, manufacturing, military or disposal activity.
These environmental risks include the possible diminution of the value of a
contaminated property or, as discussed below, potential liability for clean-up
costs or other remedial actions. These remedial or clean-up costs could exceed
the value of the property or the amount of the lender's loan. In certain
circumstances, a lender may decide to abandon a contaminated mortgaged
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property as collateral for its loan rather than foreclose and risk liability for
clean-up costs.
Superlien Laws
Under the laws of many states, contamination on a property may give rise
to a lien on the property for clean-up costs. In several states, such a lien has
priority over all existing liens, including those of existing mortgages. In
these states, the lien of a mortgage may lose its priority to such a
"superlien".
CERCLA
The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, commonly referred to as "CERCLA", imposes strict
liability on present and past "owners" and "operators" of contaminated real
property for the costs of clean-up. A secured lender may be liable as an "owner"
or "operator" of a contaminated mortgaged property if agents or employees of the
lender have participated in the management of the mortgaged property or the
operations of the borrower. Liability may exist even if the lender did not cause
or contribute to the contamination and regardless of whether the lender has
actually taken possession of the mortgaged property through foreclosure, deed in
lieu of foreclosure or otherwise. Moreover, liability is not limited to the
original or unamortized principal balance of a loan or to the value of the
mortgaged property. Excluded from CERCLA's definition of "owner" or "operator",
however, is a person who, without participating in the management of the
facility, holds indicia of ownership primarily to protect his security interest.
This is the so-called "secured creditor exemption".
The Asset Conservation, Lender Liability and Deposit Insurance Act of 1996
amended, among other things, the provisions of CERCLA with respect to lender
liability and the secured creditor exemption. This Act offers substantial
protection to lenders by defining the activities in which a lender can engage
without losing the benefit of the secured creditor exemption. In order for a
lender to be deemed to have participated in the management of a mortgaged
property, the lender must actually participate in the operational affairs of the
property of the borrower. The Act provides that "merely having the capacity to
influence, or unexercised right to control" operations does not constitute
participation in management. A lender will lose the protection of the secured
creditor exemption only if:
o it exercises decision-making control over the borrower's environmental
compliance and hazardous substance handling and disposal practices; or
o assumes day-to-day management of operational functions of the mortgaged
property.
The Act also provides that a lender will continue to have the benefit of
the secured creditor exemption even if it purchases a mortgaged property at a
foreclosure sale or accepts a deed-in-lieu of foreclosure, provided that the
lender seeks to sell the mortgaged property at the earliest practicable
commercially reasonable time on commercially reasonable terms.
Certain Other Federal and State Laws
Many states have statutes similar to CERCLA, and not all those statutes
provide for a secured creditor exemption. In addition, under federal law, there
is potential liability relating to hazardous wastes and underground storage
tanks under the federal Resource Conservation and Recovery Act.
Certain federal, state and local laws, regulations and ordinances govern
the management, removal, encapsulation or disturbance of asbestos-containing
materials. These laws, as well as common law standards, may impose liability for
releases of or exposure to asbestos-containing materials and may permit third
parties to seek recovery from owners or operators of real properties for
personal injuries associated with such releases.
Federal law requires owners of residential housing constructed prior to
1978 to disclose to potential residents or purchasers any known lead-based paint
hazards and imposes treble damages for any failure to disclose. In addition, the
ingestion of lead-based paint chips or dust particles by children can result in
lead poisoning. The owner of a property where these circumstances exist may be
held liable for injuries and for the costs of removal or encapsulation of the
lead-based paint.
In a few states, transfers of some types of properties are conditioned
upon cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
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Beyond statute-based environmental liability, there exist common law
causes of action related to hazardous environmental conditions on a property,
such as actions based on nuisance or on toxic tort resulting in death, personal
injury or damage to property. Although it may be more difficult to hold a lender
liable under common law causes of action, unanticipated or uninsured liabilities
of the borrower may jeopardize the borrower's ability to meet its loan
obligations.
Federal, state and local environmental regulatory requirements change
often. It is possible that compliance with a new regulatory requirement could
impose significant compliance costs on a borrower. These costs may jeopardize
the borrower's ability to meet its loan obligations.
Additional Considerations
Remediating hazardous substance contamination at a property can be very
costly. If a lender becomes liable, it can bring an action for contribution
against the owner or operator who created the environmental hazard. However,
that individual or entity may be without substantial assets. Accordingly, it is
possible that the costs could become a liability of the related trust and
occasion a loss to the related certificateholders.
If the operations on a foreclosed property are subject to environmental
laws and regulations, the lender must operate the property in accordance with
those laws and regulations. This compliance may entail substantial expense,
especially in the case of industrial or manufacturing properties.
In addition, a lender may have to disclose environmental conditions on a
property to government entities and/or to prospective buyers, including
prospective buyers at a foreclosure sale or following foreclosure. This
disclosure may decrease the amount that prospective buyers are willing to pay
for the affected property, sometimes substantially.
Environmental Site Assessments
In most cases, an environmental site assessment of each mortgaged property
will have been performed in connection with the origination of the related
mortgage loan or at some time prior to the issuance of the related series of
offered certificates. Environmental site assessments, however, vary considerably
in their content, quality and cost. Even when adhering to good professional
practices, environmental consultants will sometimes not detect significant
environmental problems.
Due-on-Sale and Due-on-Encumbrance Provisions
Certain of the mortgage loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the mortgaged
property. In recent years, court decisions and legislative actions placed
substantial restrictions on the right of lenders to enforce these clauses in
many states. However, the Garn-St. Germain Depository Institutions Act of 1982
generally preempts state laws that prohibit the enforcement of due-on-sale
clauses and permits lenders to enforce these clauses in accordance with their
terms, subject to certain limitations prescribed in that Act and the regulations
promulgated under the Act.
Junior Liens; Rights of Holders of Senior Liens
Any of the trusts may include mortgage loans secured by junior liens, and
the loans secured by the related senior liens may not be included in that trust.
The primary risk to holders of mortgage loans secured by junior liens is the
possibility that adequate funds will not be received in connection with a
foreclosure of the related senior liens to satisfy fully both the senior loans
and the junior loan.
In the event that a holder of a senior lien forecloses on a mortgaged
property, the proceeds of the foreclosure or similar sale will be applied in
accordance with the law of the state in which the property is located.
Generally, that order is as follows:
o first, to the payment of court costs and fees in connection with the
foreclosure;
o second, to real estate taxes;
o third, in satisfaction of all principal, interest, any prepayment or
acceleration penalties, and any other sums due and owing to the holder of the
senior liens; and
o last, in satisfaction of all principal, interest, any prepayment and
acceleration penalties and any other sums due and owing to the holder of the
junior mortgage loan.
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Subordinate Financing
The terms of certain of the mortgage loans may not restrict the borrower
from using the mortgaged property as security for one or more additional loans,
or the restrictions may be unenforceable. If a borrower encumbers a mortgaged
property with one or more junior liens, the senior lender is exposed to the
following additional risks:
o the borrower may have difficulty servicing and repaying multiple loans;
o if the subordinate financing permits recourse to the borrower, as is
frequently the case, and the senior loan does not permit recourse, a borrower
may have more incentive to repay sums due on the subordinate loan;
o acts of the senior lender that prejudice the junior lender or impair the
junior lender's security, such as the senior lender agreeing to an increase
in the principal amount of or the interest rate payable on the senior loan,
may create a superior priority in favor of the junior lender;
o if the borrower defaults on the senior loan and/or any junior loan or loans,
the existence of junior loans and actions taken by junior lenders can impair
the security available to the senior lender and can interfere with or delay
the taking of action by the senior lender; and
o the bankruptcy of a junior lender may operate to stay foreclosure or similar
proceedings by the senior lender.
Default Interest and Limitations on Prepayments
Notes and mortgages may contain provisions that require the borrower to
pay a late charge or additional interest if payments are late. They may also
contain provisions that prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment premium, fee or
charge. In certain states, there are or may be specific limitations on the late
charges that a lender may collect from a borrower for delinquent payments.
Certain states also limit the amounts that a lender may collect from a borrower
as an additional charge if the loan is prepaid. In addition, the enforceability
of provisions that provide for prepayment premiums, fees and charges upon an
involuntary prepayment is unclear under the laws of many states.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 provides that state usury limitations do not apply to certain types
of residential (including multifamily) first mortgage loans originated by
certain lenders after March 31, 1980. Title V authorized any state to re-impose
interest rate limits by adopting, before April 1, 1983, a law or constitutional
provision that expressly rejects application of the federal law. In addition,
even where Title V is not rejected, any state may adopt a provision limiting
discount points or other charges on mortgage loans covered by Title V. Certain
states have taken action to re-impose interest rate limits and/or to limit
discount points or other charges.
Certain Laws and Regulations
Multifamily and commercial properties are subject to compliance with
various federal, state and local statutes and regulations. Failure to comply,
together with an inability to remedy any failure, could result in material
diminution in the value of a mortgaged property.
Americans with Disabilities Act
Under Title III of the Americans with Disabilities Act of 1990 and the
related rules, public accommodations, such as hotels, restaurants, shopping
centers, hospitals, schools and social service center establishments, must
remove architectural and communication barriers that are structural in nature
from existing places of public accommodation to the extent "readily achievable".
In addition, under the ADA, alterations to a place of public accommodation or a
commercial facility are to be made so that, to the maximum extent feasible, the
altered portions are readily accessible to and usable by disabled individuals.
The "readily achievable" standard takes into account, among other factors, the
financial resources of the affected site owner, landlord or other applicable
person. In addition to imposing a possible financial burden on the borrower in
its capacity as owner or landlord, the ADA may also impose requirements on a
foreclosing lender who succeeds to the interest of the borrower as owner or
landlord. Furthermore, since the "readily achievable" standard may vary
depending on the financial condition of the owner or landlord, a foreclosing
lender who is financially more capable than the borrower of complying with the
requirements of the ADA may be subject to more
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stringent requirements than those to which the borrower is subject.
Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, a
borrower who enters military service after the origination of a loan, including
a borrower who was in reserve status and is called to active duty after
origination of the mortgage loan, may not be charged interest, including fees
and charges, above an annual rate of 6% during the period of the borrower's
active duty status, unless a court orders otherwise upon application of the
lender. The Act applies to individuals who are members of the Army, Navy, Air
Force, Marines, National Guard, Reserves, Coast Guard and officers of the U.S.
Public Health Service assigned to duty with the military. Because the Act
applies to individuals who enter military service, including reservists who are
called to active duty, after origination of the related mortgage loan, no
information can be provided as to the number of loans with individuals as
borrowers that may be affected by the Act.
Application of the Act would adversely affect, for an indeterminate period
of time, the ability of a master servicer or special servicer to collect the
full amount of interest on certain of the mortgage loans underlying the offered
certificates. Any shortfalls in interest collections resulting from the
application of the Act would result in a reduction of the amounts distributable
to the holders of certificates of the related series, and would not be covered
by advances or, unless otherwise specified in the related prospectus supplement,
any form of credit support provided in connection with the certificates. In
addition, the Act imposes limitations that would impair the ability of a master
servicer or special servicer to foreclose on an affected mortgage loan during
the borrower's period of active duty status and, under certain circumstances,
during an additional three-month period after the active duty status ceases.
Forfeitures in Drug and RICO Proceedings
Federal law provides that the government can seize property owned by
persons convicted of drug-related crimes or criminal violations of the Racketeer
Influenced and Corrupt Organizations, or "RICO" statute, if the property was
used in, or purchased with, the proceeds of those crimes. Under procedures
contained in the comprehensive Crime Control Act of 1984, the government may
seize the property even before conviction. The government must publish notice of
the forfeiture proceeding and give notice to all parties "known to have an
alleged interest in the property", including the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that:
o its mortgage was executed and recorded before commission of the crime upon
which the forfeiture is based; or
o the lender was, at the time of execution of the mortgage, "reasonably without
cause to believe" that the property was used in, or purchased with the
proceeds of, illegal drug or RICO activities.
FEDERAL INCOME TAX CONSEQUENCES
This is a general discussion of the material federal income tax
consequences of owning the offered certificates. To the extent it relates to
matters of law or legal conclusions, it represents the opinion of our counsel,
subject to any qualifications as may be expressed in this discussion. Unless
otherwise specified in the related prospectus supplement, our counsel for each
series will be Morrison & Hecker L.L.P.
This discussion is directed to certificateholders that hold the offered
certificates as "capital assets" within the meaning of Section 1221 of the
Internal Revenue Code of 1986 (for purposes of this "Federal Income Tax
Consequences" section and the "ERISA Considerations" section, the "Code"). It
does not purport to discuss all federal income tax consequences that may be
relevant to owners of the offered certificates, particularly as to investors
subject to special treatment under the Code, such as:
o banks;
o insurance companies; and
o foreign investors.
Further, this discussion and the opinion referred to below are based on
authorities that can change, or be interpreted differently, with possible
retroactive effect. No rulings have been or will be sought from the Internal
Revenue Service with respect to any of the federal income tax consequences
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discussed below. Accordingly, the IRS may take contrary positions.
Investors and preparers of tax returns (including those filed by any REMIC
or other issuer) should be aware that under applicable Treasury regulations a
provider of advice on specific issues of law is not considered an income tax
return preparer unless the advice:
o is given with respect to events that have occurred at the time the advice is
rendered and is not given with respect to the consequences of contemplated
actions; and
o is directly relevant to the determination of an entry on a tax return.
Accordingly, even if this discussion addresses an issue regarding the tax
treatment of the owner of certificates, investors should consult their own tax
advisors regarding that issue. Investors should do so not only as to federal
taxes, but also as to state and local taxes. See "State and Other Tax
Consequences".
The following discussion addresses securities of three general types:
o certificates representing interests in a trust, or a portion of a trust, as
to which a designated party under the related Governing Document (the "REMIC
Administrator") will make a real estate mortgage investment conduit ("REMIC")
election under Sections 860A through 860G of the Code;
o certificates representing interests in a trust, or portion of a trust, as to
which a fixed asset securitization investment trust ("FASIT") election is
made under Section 860L of the Code; and
o certificates ("Grantor Trust Certificates") representing interests in a trust
or a portion of a trust (a "Grantor Trust Fund"), as to which no REMIC or
FASIT election will be made.
The prospectus supplement for each series will indicate whether a REMIC
election, or elections, will be made for the related trust and, if such an
election is to be made, will identify all "regular interests" and "residual
interests" in the REMIC. If so specified in the applicable prospectus
supplement, the portion of a trust fund as to which a REMIC election is not made
may be treated as either a grantor trust for federal income tax purposes or a
FASIT. For purposes of this tax discussion, references to a "certificateholder"
or a "holder" are to the beneficial owner of a certificate.
The following discussion is limited in applicability to the offered
certificates. Moreover, this discussion applies only to the extent that mortgage
assets held by a trust consist solely of mortgage loans. To the extent that
other trust assets, including mortgage-backed securities and government
securities, are to be held by a trust, the tax consequences associated with the
inclusion of such assets will be disclosed in the related prospectus supplement.
The following discussion is based in part upon the rules governing
original issue discount that are set forth in Sections 1271-1273 and 1275 of the
Code and in the Treasury regulations issued under such sections (the "OID
Regulations"). It is also based on the rules governing REMICs in Sections
860A-860G of the Code and in the Treasury regulations issued under those
statutes (the "REMIC Regulations"). The OID Regulations do not adequately
address certain issues relevant to, and in some instances provide that they are
not applicable to, securities such as the offered certificates.
REMICs
Classification of REMICs
With respect to each series as to which the REMIC Administrator will make
a REMIC election, our counsel will deliver its opinion generally to the effect
that, assuming compliance with all provisions of the related Governing Document
and certain other documents, and subject to certain assumptions set forth
therein, the related trust, or each applicable portion of the trust, will
qualify as a REMIC and the REMIC Certificates offered with respect thereto will
be considered to evidence ownership of "regular interests" (such certificates,
the "REMIC Regular Certificates") or the sole class of "residual interests"
(such certificates, the "REMIC Residual Certificates") in that REMIC within the
meaning of sections 860A-860G of the Code.
Qualification as a REMIC
In order for the trust to qualify as a REMIC, there must be ongoing
compliance on the part of the trust with the requirements set forth in the Code.
The trust must fulfill an asset test, which requires that no more than a de
minimis portion of its assets, as of the close of the third calendar month
beginning after the "Startup Day" (which for purposes of this discussion
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is the date of issuance of the certificates) and at all times thereafter, may
consist of assets other than "qualified mortgages" and "permitted investments."
The REMIC Regulations provide a "safe harbor" pursuant to which the de minimis
requirement is met if at all times the total adjusted basis of the nonqualified
assets is less than 1% of the total adjusted basis of all the REMIC's assets. An
entity that fails to meet the safe harbor may nevertheless demonstrate that it
holds no more than a de minimis amount of nonqualified assets. A REMIC also must
provide "reasonable arrangements" to prevent its residual interest from being
held by "disqualified organizations" and applicable tax information to
transferors or agents that violate this requirement. Accordingly, the Governing
Document for each series will contain provisions intended to assure that the
asset and reasonable arrangements tests will be met at all times that the
Certificates are outstanding. See "--Taxation of Owners of REMIC Residual
Certificates--Tax and Restrictions on Transfer of REMIC Residual Certificates to
Certain Organizations."
A qualified mortgage is any obligation that is principally secured by an
interest in real property and that is either transferred to the REMIC on the
Startup Day or is purchased by the REMIC within a three-month period after that
date pursuant to a fixed-price contract in effect on the Startup Day. Qualified
mortgages include whole mortgage loans if, in general:
o the fair market value of the real property security (including buildings and
structural components) is at least 80% of the principal balance of the
mortgage loan either at origination or as of the Startup Day (an original
loan-to-value ratio of not more than 125% with respect to the real property
security); or
o substantially all the proceeds of the mortgage loan or the underlying
mortgage loan were used to acquire, improve or protect an interest in real
property that, at the origination date, was the only security for the
mortgage loan or underlying mortgage loan.
If the mortgage loan has been substantially modified other than in
connection with a default or reasonably foreseeable default, it must meet the
loan-to-value test in the first bullet point of the preceding sentence as of the
date of the last such modification or at closing. A qualified mortgage includes
a qualified replacement mortgage, which is any property that would have been
treated as a qualified mortgage if it were transferred to the REMIC pool on the
Startup Day and that is received either:
o in exchange for any qualified mortgage within a three-month period
thereafter; or
o in exchange for a "defective obligation" within a two-year period
thereafter.
A "defective obligation" includes:
o a mortgage in default or as to which default is reasonably foreseeable;
o a mortgage as to which a customary representation or warranty made at the
time of transfer to the REMIC pool has been breached;
o a mortgage that was fraudulently procured by the mortgagor; and
o a mortgage that was not in fact principally secured by real property (but
only if such mortgage is disposed of within 90 days of discovery).
A mortgage loan that is "defective" as described in the last bullet point
and that is not sold or, if within two years of the Startup Day, exchanged,
within 90 days of discovery, ceases to be a qualified mortgage after such 90-day
period. For purposes of this discussion, where the applicable prospectus
supplement provides for a fixed retained yield with respect to the mortgaged
properties underlying a series of certificates, references to the mortgaged
properties will be deemed to refer to that portion of the mortgaged properties
held by the trust fund which does not include the fixed retained yield.
Permitted investments include cash flow investments, qualified reserve
assets and foreclosure property. A cash flow investment is any investment,
earning a return in the nature of interest, of amounts received on or with
respect to qualified mortgages for a temporary period, not to exceed 13 months,
until the next scheduled distribution to holders of interests in the REMIC.
Foreclosure property is real property acquired by the REMIC in connection with
default or imminent default of a qualified mortgage and generally held for not
more than three years after the year in which the property is acquired, with
extensions granted by the IRS.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity may lose its status as a REMIC for that
year and thereafter. In that event, such entity may be
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taxable as a corporation, and the related REMIC Certificates may not be accorded
the status or given the tax treatment described below. Although the Code
authorizes the Treasury Department to issue regulations providing relief in the
event of an inadvertent termination of REMIC status, no such regulations have
been issued. Any such relief, moreover, may be accompanied by sanctions, such as
the imposition of a corporate tax on all or a portion of the related trust's
income for the period in which the requirements for the status are not
satisfied. The Governing Document with respect to each REMIC will include
provisions designed to maintain the related trust's status as a REMIC under the
Code. It is not anticipated that the status of any trust as a REMIC will be
inadvertently terminated.
Characterization of Investments in REMIC Certificates
If 95% or more of the assets of the REMIC qualify for any of the following
characterizations at all times during a calendar year, the REMIC Certificates
will qualify for the corresponding status in their entirety for that calendar
year:
o "real estate assets" within the meaning of Section 856(c)(5)(B) of the Code,
and
o assets described in Section 7701(a)(19)(C) of the Code (to the extent that
the REMIC assets constitute mortgages on property not used for residential
or certain other prescribed purposes, the REMIC Certificates will not be
treated as assets qualifying under Section 7701(a)(19)(C)).
Interest (including original issue discount) on the REMIC Regular
Certificates and income allocated to the REMIC Residual Certificates will be
interest described in Section 856(c)(3)(B) of the Code to the extent that such
certificates are treated as "real estate assets" within the meaning of Section
856(c)(5)(B) of the Code. If less than 95% of the REMIC's assets consist of
assets described the preceding paragraph, then a REMIC certificate will qualify
for the corresponding tax treatment in such categories in the proportion that
such REMIC assets are qualifying assets.
In addition, the REMIC Regular Certificates will be:
o "qualified mortgages" within the meaning of Section 860G(a)(3) of the Code in
the hands of another REMIC, and
o "permitted assets" under Section 860L(c)(1)(G) for a "financial asset
securitization investment trust" or "FASIT".
The REMIC Administrator will determine the percentage of the REMIC's
assets that constitute assets described in the foregoing sections of the Code
with respect to each calendar quarter based on the average adjusted basis of
each category of the assets held by the REMIC during such calendar quarter. The
REMIC Administrator will report those determinations to certificateholders in
the manner and at the times required by applicable Treasury regulations.
The assets of the REMIC will include, in addition to mortgage loans,
payments on mortgage loans held pending distribution on the REMIC Certificates
and any property acquired by foreclosure held pending sale, and may include
amounts in reserve accounts. It is unclear whether property acquired by
foreclosure held pending sale, and amounts in reserve accounts would be
considered to be part of the mortgage loans, or whether those assets, to the
extent not invested in assets described in the foregoing sections of the Code,
otherwise would receive the same treatment as the mortgage loans for purposes of
all of the foregoing sections of the Code. In addition, in some instances
mortgage loans may not be treated entirely as assets described in the foregoing
sections of the Code. If so, we will describe in the related prospectus
supplement the mortgage loans that may not be so treated. Treasury regulations
do provide, however, that cash received from payments on mortgage loans held
pending distribution is considered part of the mortgage loans for purposes of
Section 856(c)(4)(A) of the Code.
To the extent an offered certificate represents ownership of an interest
in any mortgage loan that is secured in part by the related borrower's interest
in an account containing any holdback of loan proceeds, a portion of the
certificate may not represent ownership of assets described in Section
7701(a)(19)(C) of the Code and "real estate assets" under Section 856(c)(4)(A)
of the Code. Also the interest on the certificate may not constitute "interest
on obligations secured by mortgages on real property" within the meaning of
Section 856(c)(3)(B) of the Code.
Finally, holders of REMIC Certificates should be aware that:
o REMIC Certificates held by a regulated investment company will not constitute
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"government securities" within the meaning of Code Section 851(b)(3)(A)(i);
and
o REMIC Certificates held by a real estate investment trust will not constitute
"Government Securities" within the meaning of Code Section 856(c)(4)(A).
REMIC certificates held by certain financial institutions will constitute
an "evidence of indebtedness" within the meaning of Code Section 582(c)(i).
Tiered REMIC Structures
For certain series of REMIC Certificates, two or more separate elections
may be made to treat designated portions of the related trust as separate REMICs
("Tiered REMICs") for federal income tax purposes. As to each such series of
REMIC Certificates, assuming compliance with all provisions of the related
Governing Document, the Tiered REMICs will each qualify as a REMIC, and the
REMIC Certificates issued by the Tiered REMICs will be considered "regular
interests" or the sole class of "residual interests" to evidence ownership of
REMIC Regular Certificates or REMIC Residual Certificates in the related REMIC
within the meaning of the Code.
Solely for purposes of determining whether the REMIC Certificates will be
"real estate assets" within the meaning of Section 856(c)(5)(B) of the Code, and
"loans secured by an interest in real property" under Section 7701(a)(19)(C) of
the Code, and whether the income on such certificates is interest described in
Section 856(c)(3)(B) of the Code, the Tiered REMICs will be treated as one
REMIC.
Taxation of Owners of REMIC Regular Certificates
Except as otherwise stated in this discussion, REMIC Regular Certificates
will be treated for federal income tax purposes as debt instruments issued by
the REMIC and not as ownership interests in the REMIC or its assets. Unless
otherwise provided herein, interest on the REMIC Regular Certificates will be
taxed as ordinary income to the holders of such Certificates using the accrual
method of accounting, regardless of the certificateholder's normal methods of
accounting.
Original Issue Discount
Certain REMIC Regular Certificates may be issued with "original issue
discount" within the meaning of Section 1273(a) of the Code. Any holders of
REMIC Regular Certificates issued with original issue discount generally will be
required to include original issue discount in income as it accrues, in
accordance with the "constant yield" method described below, in advance of the
receipt of the cash attributable to such income. In addition, Section 1272(a)(6)
of the Code provides special rules applicable to REMIC Regular Certificates and
certain other debt instruments issued with original issue discount. Regulations
have not been issued under that section. Further, the application of the OID
Regulations to the REMIC Regular Certificates remains unclear in other respects
because the OID Regulations either do not address, or are subject to varying
interpretation with regard to, several relevant issues.
The Code requires that a reasonable prepayment assumption be used with
respect to mortgage loans held by a REMIC in computing the accrual of original
issue discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of such discount to
reflect differences between the actual prepayment rate and the prepayment
assumption. The prepayment assumption is to be determined in a manner prescribed
in Treasury regulations that have not yet been issued. The Conference Committee
Report accompanying the Tax Reform Act of 1986 (the "Committee Report")
indicates that Congress intended that the regulations will provide that the
prepayment assumption used with respect to a REMIC Regular Certificate will be
the same as that used in pricing the initial offering of such REMIC Regular
Certificate. The prepayment assumption used in reporting original issue discount
for each series of REMIC Regular Certificates will be consistent with this
standard and will be disclosed in the related prospectus supplement. However,
neither we nor any other person will make any representation that the mortgage
loans will in fact prepay at a rate conforming to the prepayment assumption or
at any other rate or that the prepayment assumption will not be challenged by
the IRS on audit.
The original issue discount, if any, on a REMIC Regular Certificate will
be the excess of its stated redemption price at maturity over its issue price.
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The issue price of a particular class of REMIC Regular Certificates will
be the first cash price at which a substantial amount of REMIC Regular
Certificates of that class is sold to the public (excluding sales to bond
houses, brokers and underwriters). If less than a substantial amount of a
particular class of REMIC Regular Certificates is sold for cash on or prior to
the related date of initial issuance, the issue price for such class will be its
fair market value on the related issue date. The issue price of a REMIC Regular
Certificate also includes the amount paid by an initial certificateholder for
accrued interest that relates to a period prior to the issue date of the REMIC
Regular Certificate.
Under the OID Regulations, the stated redemption price of a REMIC Regular
Certificate is equal to the total of all payments to be made on such certificate
other than "qualified stated interest". "Qualified stated interest" is interest
that is unconditionally payable at least annually during the entire term of the
instrument, at:
o a "single fixed rate";
o a "qualified floating rate";
o an "objective rate";
o a combination of a single fixed rate and one or more "qualified floating
rates" or one "qualified inverse floating rate"; or
o a combination of "qualified floating rates" that can reasonably be expected
to have approximately the same values throughout the term of the instrument.
In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
such REMIC Regular Certificates. If the original issue discount rules apply to
such certificates, we will describe in the related prospectus supplement the
manner in which these rules will be applied with respect to those certificates
in preparing information returns to the certificateholders and the IRS.
Certain classes of the REMIC Regular Certificates may provide for the
first interest payment with respect to those certificates to be made more than
one month after the date of issuance, a period which is longer than the
subsequent monthly intervals between interest payments. Assuming the "accrual
period" (as defined below) for original issue discount is each monthly period
that ends on a payment date, in some cases, as a consequence of this "long first
accrual period", some or all interest payments may be required to be included in
the stated redemption price of the REMIC Regular Certificate and accounted for
as original issue discount. Because interest on REMIC Regular Certificates must
in any event be accounted for under an accrual method, applying this analysis
would result in only a slight difference in the timing of the inclusion in
income of the yield on the REMIC Regular Certificates.
In addition, if the accrued interest to be paid on the first payment date
is computed with respect to a period that begins prior to the related issue
date, a portion of the purchase price paid for a REMIC Regular Certificate will
reflect such accrued interest. In such cases, information returns provided to
the certificateholders and the IRS will be based on the position that the
portion of the purchase price paid for the interest accrued with respect to
periods prior to the related issue date is treated as part of the overall cost
of that REMIC Regular Certificate, and not as a separate asset the cost of which
is recovered entirely out of interest received on the next payment date, and
that portion of the interest paid on the first payment date in excess of
interest accrued for a number of days corresponding to the number of days from
the related issue date to the first payment date should be included in the
stated redemption price of that REMIC Regular Certificate. However, the OID
Regulations state that all or some portion of such accrued interest may be
treated as a separate asset the cost of which is recovered entirely out of
interest paid on the first payment date. It is unclear how an election to do so
would be made under the OID Regulations and whether that election could be made
unilaterally by a certificateholder.
Notwithstanding the general definition, original issue discount on a REMIC
Regular Certificate will be considered zero if it is less than a de minimis
amount determined under the Code. Original issue discount on a REMIC Regular
Certificate will be considered to be de minimis if it is less than 0.25% of the
stated redemption price of the REMIC Regular Certificate multiplied by its
weighted average maturity. For this purpose, the weighted average maturity of
the REMIC Regular Certificate is computed as the sum of the amounts determined,
as to each payment included in the stated redemption price of such REMIC Regular
Certificate, by multiplying:
o the number of complete years, rounding down for partial years, from the issue
date until such payment is expected to be made, presumably
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taking into account the relevant prepayment assumption, by
o a fraction, the numerator of which is the amount of the payment, and the
denominator of which is the stated redemption price at maturity of such REMIC
Regular Certificate.
Under the OID Regulations, original issue discount of only a de minimis
amount, other than de minimis original issue discount attributable to a
so-called "teaser" interest rate or an initial interest holiday, will be
included in income as each payment of stated principal is made, based on the
product of:
o the total amount of such de minimis original issue discount; and
o a fraction, the numerator of which is the amount of such principal payment
and the denominator of which is the outstanding stated principal amount of
the REMIC Regular Certificate.
The OID Regulations also would permit a certificateholder to elect to
accrue de minimis original issue discount into income currently based on a
constant yield method. See "-Taxation of Owners of REMIC Regular
Certificates-Market Discount" below for a description of this election under the
OID Regulations.
If original issue discount on a REMIC Regular Certificate is in excess of
a de minimis amount, the holder of that certificate must include in ordinary
gross income the sum of the "daily portions" of original issue discount for each
day during its taxable year on which it held the REMIC Regular Certificate,
including the purchase date but excluding the disposition date. In the case of
an original holder of a REMIC Regular Certificate, the daily portions of
original issue discount will be determined as follows.
As to each "accrual period", a calculation will be made of the portion of
the original issue discount that accrued during such accrual period. Unless we
state otherwise in the related prospectus supplement, each accrual period will
begin on a date that corresponds to a payment date, or in the case of the first
period, begins on the issue date, and ends on the day preceding the immediately
following payment date. The portion of original issue discount that accrues in
any accrual period will equal the excess, if any, of:
o the sum of:
o the present value, as of the end of the accrual period, of all of the
distributions remaining to be made on the REMIC Regular Certificate, if any,
in future periods; and
o the distributions made on such REMIC Regular Certificate during the accrual
period of amounts included in the stated redemption price, over the adjusted
issue price of such REMIC Regular Certificate at the beginning of the accrual
period.
The present value of the remaining distributions referred to in the
preceding sentence will be calculated:
o assuming that distributions on the REMIC Regular Certificate will be received
in future periods based on the mortgage loans being prepaid at a rate equal
to the applicable prepayment assumption;
o using a discount rate equal to the original yield to maturity of the
certificate; and
o taking into account events, including actual prepayments, that have occurred
before the close of the accrual period.
For these purposes, the original yield to maturity of the certificate will
be calculated based on its issue price and assuming that distributions on the
certificate will be made in all accrual periods based on the mortgage loans
being prepaid at a rate equal to the applicable prepayment assumption. The
adjusted issue price of a REMIC Regular Certificate at the beginning of any
accrual period will equal the issue price of the certificate, increased by the
total amount of original issue discount that accrued with respect to the
certificate in prior accrual periods, and reduced by the amount of any
distributions made on the certificate in prior accrual periods other than
amounts of qualified stated interest. The original issue discount accruing
during any accrual period, computed as described above, will be allocated
ratably to each day during the accrual period to determine the daily portion of
original issue discount for such day. Although original issue discount will be
reported to certificateholders based on the applicable prepayment assumption,
there is no assurance that the mortgage loans will be prepaid at that rate and
no representation is made to the certificateholders that mortgage loans will be
prepaid at that rate or at any other rate.
A subsequent purchaser of a REMIC Regular Certificate that purchases the
certificate at a cost, excluding any portion of that cost attributable to
accrued qualified stated interest, less than its
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remaining stated redemption price will also be required to include in gross
income the daily portions of any original issue discount with respect to the
certificate. However, each daily portion will be reduced, if that cost is in
excess of its "adjusted issue price", in proportion to the ratio such excess
bears to the total original issue discount remaining to be accrued on the REMIC
Regular Certificate. The adjusted issue price of a REMIC Regular Certificate on
any given day between payment dates equals the sum of:
o the adjusted issue price, or, in the case of the first accrual period, the
issue price, of that certificate at the beginning of the accrual period which
includes such day; plus
o the daily portions of original issue discount for all days during the accrual
period prior to such day.
A holder who pays an acquisition premium instead may elect to accrue
original issue discount by treating the purchase as a purchase at original
issue.
If the foregoing method for computing original issue discount results in a
negative amount of original issue discount as to any accrual period with respect
to a REMIC Regular Certificate, the amount of original issue discount allocable
to that accrual period will be zero. That is, no current deduction of the
negative amount will be allowed to the holder of the certificate. The holder
will instead only be permitted to offset the negative amount against future
positive original issue discount, if any, attributable to that certificate.
Although not free from doubt, it is possible that a certificateholder may be
permitted to deduct a loss to the extent his or her basis in the certificate
exceeds the maximum amount of payments the certificateholder could ever receive
with respect to the certificate. However, any such loss may be a capital loss,
which is limited in its deductibility. The foregoing considerations are
particularly relevant to Stripped Interest Certificates, which can have negative
yields under certain circumstances that are not default related. A "Stripped
Interest Certificate" is a certificate that entitles the holder to payment of
interest, with disproportionate, little or no payments of principal.
Market Discount
A certificateholder that purchases a REMIC Regular Certificate at a market
discount, other than a de minimis amount, in the case of a REMIC Regular
Certificate issued without original issue discount, at a purchase price less
than its remaining stated principal amount, or in the case of a REMIC Regular
Certificate issued with original issue discount, at a purchase price less than
its adjusted issue price, will recognize gain upon receipt of each distribution
representing some or all of the stated redemption price. In particular, under
Section 1276 of the Code such a certificateholder generally must allocate the
portion of each distribution representing some or all of the stated redemption
price first to accrued market discount not previously included in income, and to
recognize ordinary income to that extent. A certificateholder may elect to
include market discount in income currently as it accrues rather than including
it on a deferred basis in accordance with the foregoing. If made, this election
will apply to all market discount bonds acquired by the certificateholder on or
after the first day of the first taxable year to which the election applies.
The OID Regulations also permit a certificateholder to elect to accrue all
interest and discount, including de minimis market or original issue discount,
in income as interest, and to amortize premium, based on a constant yield
method. If a certificateholder makes this election with respect to a REMIC
Regular Certificate with market discount, the certificateholder would be deemed
to have made an election to include currently market discount in income with
respect to all other debt instruments having market discount that the
certificateholder acquires during the taxable year of the election or
thereafter, and possibly previously acquired instruments. Similarly, a
certificateholder that made this election for a certificate that is acquired at
a premium would be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that the
certificateholder owns or acquires. See "-Taxation of Owners of REMIC Regular
Certificates-Premium" below. Each of the elections in this and the preceding
paragraph to accrue interest, discount and premium with respect to a certificate
on a constant yield method or as interest would be irrevocable except with the
approval of the IRS.
However, market discount with respect to a REMIC Regular Certificate will
be considered to be zero for purposes of Section 1276 of the Code if the market
discount is less than 0.25% of the remaining stated redemption price of that
REMIC Regular Certificate multiplied by the number of complete years to maturity
remaining after the date of its purchase. In interpreting a similar rule with
respect to original issue discount on obligations payable in installments, the
OID Regulations refer to the weighted average maturity of obligations. It is
likely
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that the IRS would apply the same rule with respect to market discount,
presumably taking into account the applicable prepayment assumption. If market
discount is treated as de minimis under this rule, it appears that the actual
discount would be treated in a manner similar to original issue discount of a de
minimis amount. See "-Taxation of Owners of REMIC Regular Certificates-Original
Issue Discount" above. Such treatment would result in discount being included in
income at a slower rate than discount would be required to be included in income
using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. The Treasury Department has not yet issued treasury regulations
implementing the market discount rules; therefore, you should consult your own
tax advisors regarding the application of these rules and the advisability of
making any of the elections allowed under Code Sections 1276 through 1278. Until
the Treasury Department issues regulations, certain rules described in the
Committee Report apply. The Committee Report indicates that in each accrual
period market discount on REMIC Regular Certificates should accrue, at the
certificateholder's option:
o on the basis of a constant yield method;
o in the case of a REMIC Regular Certificate issued without original issue
discount, in an amount that bears the same ratio to the total remaining
market discount as the stated interest paid in the accrual period bears to
the total amount of stated interest remaining to be paid on the REMIC Regular
Certificate as of the beginning of the accrual period; or
o in the case of a REMIC Regular Certificate issued with original issue
discount, in an amount that bears the same ratio to the total remaining
market discount as the original issue discount accrued in the accrual period
bears to the total original issue discount remaining on the REMIC Regular
Certificate at the beginning of the accrual period.
The prepayment assumption used in calculating the accrual of original
issue discount is also used in calculating the accrual of market discount. To
the extent that REMIC Regular Certificates provide for monthly or other periodic
distributions throughout their term, the effect of these rules may be to require
market discount to be includible in income at a rate that is not significantly
slower than the rate at which that discount would accrue if it were original
issue discount. Moreover, in any event a holder of a REMIC Regular Certificate
generally will be required to treat a portion of any gain on the sale or
exchange of that certificate as ordinary income to the extent of the market
discount accrued to the date of disposition under one of the foregoing methods,
less any accrued market discount previously reported as ordinary income.
Further, under Section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule referred to above applies. Any such
deferred interest expense would not exceed the market discount that accrues
during that taxable year and is, in general, allowed as a deduction not later
than the year in which the market discount is includible in income. If a holder,
however, has elected to include market discount in income currently as it
accrues, the interest deferral rule described above would not apply.
Premium
A REMIC Regular Certificate purchased at a cost that is greater than its
remaining stated redemption price at maturity will be considered to be purchased
at a premium. For the purposes of the preceding sentence, any portion of that
cost attributable to accrued qualified stated interest at maturity is excluded.
The holder of such a REMIC Regular Certificate may elect under Section 171 of
the Code to amortize this premium under the constant yield method over the life
of the certificate. If a holder elects to amortize the premium, that premium
would be amortized on a constant yield method and would be applied as an offset
against qualified stated interest (and not as a separate deduction item). If
made, such an election will apply to all debt instruments having amortizable
bond premium that the holder owns or subsequently acquires. The OID Regulations
also permit certificateholders to elect to include all interest, discount and
premium in income based on a constant yield method, further treating the
certificateholder as having made the election to amortize premium generally. See
"-Taxation of Owners of REMIC Regular Certificates-Market Discount" above. The
Committee report states that the same rules that apply to accrual of market
discount will also apply in amortizing bond premium
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under Section 171 of the Code. These rules will require use of a Prepayment
Assumption in accruing market discount with respect to REMIC Regular
Certificates without regard to whether those certificates have original issue
discount.
The Treasury Department issued final Treasury regulations in December 1997
which address the amortization of bond premiums (the "Premium Amortization
Regulations"). The preamble to the Premium Amortization Regulations indicate
that they do not apply to Regular Interests in a REMIC or any pool of debt
instruments the yield on which may be affected by prepayments. The Premium
Amortization Regulations describe the yield method of amortizing premium and
provide that a bond holder may offset the premium against corresponding interest
income only as that income is taken into account under the bond holder's method
of accounting. For instruments that may be called or prepaid prior to maturity,
a bond holder will be deemed to exercise its option and an issuer will be deemed
to exercise its redemption right in a manner that maximizes the holder's yield.
A holder of a debt instrument may elect to amortize bond premium under the
Premium Amortization Regulations for the taxable year containing the effective
date, with the election applying to all the holder's debt instruments held on
the first day of the taxable year. Because the Premium Amortization Regulations
are specifically not applicable to Regular Certificates purchasers who pay a
premium for their Regular Certificates should consult their tax advisors
regarding any election to amortize premium and the method to be employed.
Realized Losses
Under Section 166 of the Code, both corporate holders of the REMIC Regular
Certificates and noncorporate holders of the REMIC Regular Certificates that
acquire the certificates in connection with a trade or business should be
allowed to deduct, as ordinary losses, any losses sustained during a taxable
year in which their certificates become wholly or partially worthless as the
result of one or more realized losses on the mortgage loans. However, it appears
that a noncorporate holder that does not acquire a REMIC Regular Certificate in
connection with a trade or business will not be entitled to deduct a loss under
Section 166 of the Code until that holder's certificate becomes wholly worthless
(that is, until its principal balance has been reduced to zero), and that the
loss will be characterized as a short-term capital loss.
Each holder of a REMIC Regular Certificate will be required to accrue
interest and original issue discount with respect to that certificate, without
giving effect to any reductions in distributions attributable to defaults or
delinquencies on the related mortgage loans, until it can be established that
any such reduction ultimately will not be recoverable. As a result, the amount
of taxable income reported in any period by the holder of a REMIC Regular
Certificate could exceed the amount of economic income actually realized by the
holder in that period. Although the holder of a REMIC Regular Certificate
eventually will recognize a loss or reduction in income attributable to
previously accrued and included income that, as the result of a realized loss,
ultimately will not be realized, the law is unclear with respect to the timing
and character of that loss or reduction in income.
Taxation of Owners of REMIC Residual Certificates
General
Although a REMIC is a separate entity for federal income tax purposes, a
REMIC generally is not subject to entity-level taxation, except with regard to
income from prohibited transactions and certain other transactions. See
"-Prohibited Transactions Tax and Other Taxes" below. Rather, the taxable income
or net loss of a REMIC is generally taken into account by the holder of the
REMIC Residual Certificates. Accordingly, the REMIC Residual Certificates will
be subject to tax rules that differ significantly from those that would apply if
the REMIC Residual Certificates were treated for federal income tax purposes as
direct ownership interests in the mortgage loans or as debt instruments issued
by the REMIC.
A holder of a REMIC Residual Certificate generally will be required to
report its daily portion of the taxable income or, subject to the limitations
noted in this discussion, the net loss of the REMIC for each day during a
calendar quarter that such holder owned such REMIC Residual Certificate. For
this purpose, the taxable income or net loss of the REMIC will be allocated to
each day in the calendar quarter ratably using a "30 days per month/90 days per
quarter/360 days per year" convention unless otherwise disclosed in the related
prospectus supplement. The daily amounts so allocated will then be allocated
among the REMIC Residual Certificateholders in proportion to their respective
ownership interests on that day. Any amount included in the gross income or
allowed as a loss of
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any REMIC Residual Certificateholder by virtue of this paragraph will be treated
as ordinary income or loss. Ordinary income derived from the REMIC Residual
Certificates will be "portfolio income" for taxpayers subject to the Code
Section 469 limitation or the deductibility of "passive losses." The taxable
income of the REMIC will be determined under the rules described below in
"-Taxable Income of the REMIC" and will be taxable to the REMIC Residual
Certificateholders without regard to the timing or amount of cash distributions
by the REMIC until the REMIC's termination.
A holder of a REMIC Residual Certificate that purchased the certificate
from a prior holder also will be required to report on its federal income tax
return amounts representing its daily share of the taxable income or net loss of
the REMIC for each day that it holds that REMIC Residual Certificate. Those
daily amounts generally will equal the amounts of taxable income or net loss
determined as described above. The Committee Report indicates that certain
modifications of the general rules may be made, by regulations, legislation or
otherwise to reduce or increase the income of a REMIC Residual Certificateholder
that purchased that REMIC Residual Certificate from a prior holder of that
certificate at a price greater than (or less than) the adjusted basis (as
defined below) such REMIC Residual Certificate would have had in the hands of an
original holder of the certificate. The REMIC Regulations, however, do not
provide for any such modifications.
Any payments received by a holder of a REMIC Residual Certificate from the
seller of that certificate in connection with the acquisition of that REMIC
Residual Certificate will be taken into account in determining the income of
that holder for federal income tax purposes. Although it appears likely that any
such payment would be includible in income immediately upon its receipt, the IRS
might assert that the payment should be included in income over time according
to an amortization schedule or according to some other method. Because of the
uncertainty concerning the treatment of these payments, it is recommended that
holders of REMIC Residual Certificates consult their tax advisors concerning the
treatment of these payments for income tax purposes.
The amount of income REMIC Residual Certificateholders must report, or the
tax liability associated with that income, may exceed the amount of cash
distributions received from the REMIC for the corresponding period.
Consequently, REMIC Residual Certificateholders should have other sources of
funds sufficient to pay any federal income taxes due as a result of their
ownership of REMIC Residual Certificates or unrelated deductions against which
income may be offset, subject to the rules relating to "excess inclusions",
residual interests without "significant value" and "non-economic" residual
interests discussed below. The fact that the tax liability associated with the
income allocated to REMIC Residual Certificateholders may exceed the cash
distributions received by those REMIC Residual Certificateholders for the
corresponding period may significantly adversely affect those REMIC Residual
Certificateholders' after-tax rate of return. This disparity between income and
distributions may not be offset by corresponding losses or reductions of income
attributable to the REMIC Residual Certificateholder until subsequent tax years
and, then, may not be completely offset due to changes in the Code, tax rates or
character of the income or loss. REMIC Residual Certificates may in some
instances have negative "value". See "Risk Factors-Federal Tax Considerations
Regarding REMIC Residual Certificates".
Taxable Income of the REMIC
The taxable income of the REMIC will equal:
o the income from the mortgage loans and other assets of the REMIC; plus
o any cancellation of indebtedness income due to the allocation of realized
losses to REMIC Regular Certificates; less
o the sum of:
1. the deductions allowed to the REMIC for interest, including original
issue discount;
2. stated interest for Regular Certificates;
3. amortization of any premium with respect to mortgage loans; and
4. servicing fees and other expenses (except as otherwise stated in this
prospectus.)
For purposes of determining its taxable income, the REMIC will have an
initial total basis in its assets equal to the sum of the issue prices of all
REMIC Certificates, or, if a class of REMIC Certificates is not sold initially,
their fair market values. Such total basis will be allocated among the mortgage
loans and the other assets of the REMIC in proportion to their respective fair
market values.
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The issue price of any REMIC Certificates offered by this prospectus will
be determined in the manner described above under "-Taxation of Owners of REMIC
Regular Certificates-Original Issue Discount". The issue price of a REMIC
Certificate received in exchange for an interest in the mortgage loans or other
property will equal the fair market value of those interests in the mortgage
loans or other property. Accordingly, if one or more classes of REMIC
Certificates are retained initially rather than sold, the REMIC Administrator
may be required to estimate the fair market value of those interests in order to
determine the basis of the REMIC in the mortgage loans and other property held
by the REMIC.
Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount
income with respect to mortgage loans that it holds will be equivalent to the
method for accruing original issue discount income for holders of REMIC Regular
Certificates, that is, under the constant yield method taking into account the
applicable prepayment assumption. However, a REMIC that acquires loans at a
market discount must include such market discount in income currently, as it
accrues, on a constant yield basis. See "-Taxation of Owners of REMIC Regular
Certificates" above, which describes a method for accruing this discount income
that is analogous to that required to be used by a REMIC for mortgage loans with
market discount that it holds.
A mortgage loan will be deemed to have been acquired with discount (or
premium) to the extent that the REMIC's basis in the mortgage loan, determined
as described in the preceding paragraph, is less than (or greater than) its
stated redemption price. Any such discount will be includible in the income of
the REMIC as it accrues, in advance of receipt of the cash attributable to that
income, under a method similar to the method described above for accruing
original issue discount on the REMIC Regular Certificates. It is anticipated
that each REMIC will elect under Section 171 of the Code to amortize any premium
on the mortgage loans. Premium on any mortgage loan to which that election
applies may be amortized under a constant yield method, presumably taking into
account the applicable prepayment assumption.
A REMIC will be allowed deductions for interest, including original issue
discount, on the REMIC Regular Certificates equal to the deductions that would
be allowed if the REMIC Regular Certificates were indebtedness of the REMIC.
Original issue discount will be considered to accrue for this purpose as
described above under "-Taxation of Owners of REMIC Regular
Certificates-Original Issue Discount", except that the de minimis rule and the
adjustments for subsequent holders of REMIC Regular Certificates described in
that section will not apply.
If a class of REMIC Regular Certificates is issued at a price in excess of
the stated redemption price of that class (such excess, "Issue Premium"), the
net amount of interest deductions that are allowed the REMIC in each taxable
year with respect to the REMIC Regular Certificates of that class will be
reduced by an amount equal to the portion of the Issue Premium that is
considered to be amortized or repaid in that year. Although the matter is not
entirely certain, it is likely that Issue Premium would be amortized under a
constant yield method in a manner analogous to the method of accruing original
issue discount described above under "-Taxation of Owners of REMIC Regular
Certificates-Original Issue Discount".
As a general rule, a REMIC will determine its taxable income in the same
manner as if it were an individual having the calendar year as its taxable year
and using the accrual method of accounting. However, the REMIC may not take into
account any item of income, gain, loss or deduction allocable to a prohibited
transaction. See "-Prohibited Transactions Tax and Other Taxes" below. Further,
the limitation on miscellaneous itemized deductions imposed on individuals by
Section 67 of the Code will not be applied at the REMIC level. As a result, the
REMIC will be allowed deductions for servicing, administrative and other
non-interest expenses in determining its taxable income. All these expenses will
be allocated as a separate item to the holders of REMIC Certificates, subject to
the limitation of Section 67 of the Code. See "-Possible Pass-Through of
Miscellaneous Itemized Deductions" below. If the deductions allowed to the REMIC
exceed its gross income for a calendar quarter, that excess will be the net loss
for the REMIC for that calendar quarter.
Basis Rules, Net Losses and Distributions
The adjusted basis of a REMIC Residual Certificate will be equal to the
amount paid for that REMIC Residual Certificate, increased by amounts included
in the income of the holder of a REMIC Residual Certificate and decreased, but
not below zero, by distributions made, and by net losses allocated, to that
holder.
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A holder of a REMIC Residual Certificate may not take into account any net
loss for any calendar quarter to the extent the net loss exceeds the holder's
adjusted basis in its REMIC Residual Certificate as of the close of such
calendar quarter, determined without regard to that net loss. Any loss that is
not currently deductible by reason of this limitation may be carried forward
indefinitely to future calendar quarters and, subject to the same limitation,
may be used only to offset income from the REMIC Residual Certificate. The
ability of the holders of REMIC Residual Certificates to deduct net losses may
be subject to additional limitations under the Code. We recommend that you
consult your tax advisors as to these limitations.
Any distribution on a REMIC Residual Certificate will be treated as a
nontaxable return of capital to the extent it does not exceed the holder's
adjusted basis in the REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated
as gain from the sale of that REMIC Residual Certificate. Holders of certain
REMIC Residual Certificates may be entitled to distributions early in the term
of the related REMIC under circumstances in which their bases in those REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as nontaxable returns of capital. Their bases in those REMIC
Residual Certificates will initially equal the amount paid for the REMIC
Residual Certificates and will be increased by their allocable shares of taxable
income of the REMIC. However, such bases increases may not occur until the end
of the calendar quarter, or perhaps the end of the calendar year, with respect
to which such REMIC taxable income is allocated to the REMIC Residual
Certificateholders. To the extent such REMIC Residual Certificateholders'
initial bases are less than the distributions to such REMIC Residual
Certificateholders (and increases in such initial bases either occur after such
distributions or, together with their initial bases, are less than the amount of
such distributions), gain will be recognized to such REMIC Residual
Certificateholders on such distributions and will be treated as gain from the
sale of their REMIC Residual Certificates.
The effect of these rules is that a holder of a REMIC Residual Certificate
may not amortize its basis in a REMIC Residual Certificate, but may only recover
its basis through distributions, through the deduction of any net losses of the
REMIC or upon the sale of its REMIC Residual Certificate. See "-Sales of REMIC
Certificates" below. For a discussion of possible modifications of these rules
that may require adjustments to income of a holder of a REMIC Residual
Certificate other than an original holder in order to reflect any difference
between the cost of such REMIC Residual Certificate to that holder and the
adjusted basis such REMIC Residual Certificate would have in the hands of an
original holder see "-Taxation of Owners of REMIC Residual Certificates-General"
above.
Excess Inclusions
Any "excess inclusions" with respect to a REMIC Residual Certificate will
be subject to federal income tax in all events. For holders of REMIC Residual
Certificates, excess inclusions:
o will not be permitted to be offset by deductions, losses or loss carryovers
from other activities;
o will be treated as "unrelated business taxable income" to an otherwise
tax-exempt organization; and
o will not be eligible for any rate reduction or exemption under any applicable
tax treaty with respect to the 30% United States withholding tax imposed on
distributions to REMIC Residual Certificateholders that are foreign
investors. See, however "-Foreign Investors in REMIC Certificates" below.
Furthermore, for purposes of the alternative minimum tax:
o excess inclusions will not be permitted to be offset by the alternative tax
net operating loss deduction; and
o alternative minimum taxable income may not be less than the taxpayer's excess
inclusions.
This last rule has the effect of preventing non-refundable tax credits
from reducing the taxpayer's income tax to an amount lower than the alternative
minimum tax on excess inclusions.
In general, the "excess inclusions" with respect to a REMIC Residual
Certificate for any calendar quarter will be the excess, if any, of:
o the daily portions of REMIC taxable income allocable to that REMIC Residual
Certificate,
over
o the sum of the "daily accruals" (as defined below) for each day during that
quarter that the REMIC Residual Certificate was held by the REMIC Residual
Certificateholder.
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The daily accruals of a REMIC Residual Certificateholder will be
determined by allocating to each day during a calendar quarter its ratable
portion of the product of the "adjusted issue price" of the REMIC Residual
Certificate at the beginning of the calendar quarter and 120% of the "long-term
Federal rate" in effect on the issue date. For this purpose, the adjusted issue
price of a REMIC Residual Certificate as of the beginning of any calendar
quarter will be equal to:
o the issue price of the REMIC Residual Certificate;
o increased by the sum of the daily accruals for all prior quarters; and
o decreased, but not below zero, by any distributions made with respect to that
REMIC Residual Certificate before the beginning of that quarter.
The issue price of a REMIC Residual Certificate is the initial offering
price to the public, excluding bond houses and brokers, at which a substantial
amount of the REMIC Residual Certificates were sold. The "long-term Federal
rate" is an average of current yields on Treasury securities with a remaining
term of greater than nine years, computed and published monthly by the IRS.
Although it has not done so, the Treasury Department also has authority
to issue regulations that would treat the entire amount of income accruing on a
REMIC Residual Certificate as an excess inclusion if the REMIC Residual
Certificates are considered not to have "significant value".
The REMIC Regulations provide that in order to be treated as having
significant value, the REMIC Residual Certificates must have:
o a total issue price at least equal to 2% of the total issue prices of all of
the related REMIC's regular and residual interests; and
o the anticipated weighted average life of the REMIC Residual Certificates must
equal or exceed 20% of the anticipated weighted average life of the REMIC,
based on the Prepayment Assumption and on any required or permitted clean up
calls or required liquidation provided for in the REMIC's organizational
documents.
In the related prospectus supplement we will disclose whether offered
REMIC Residual Certificates may be considered to have "significant value" under
the REMIC Regulations. Any disclosure that a REMIC Residual Certificate will
have "significant value" will be based upon certain assumptions, and we will
make no representation that a REMIC Residual Certificate will have "significant
value" for purposes of the above-described rules.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the total excess inclusions with respect to those REMIC
Residual Certificates, reduced, but not below zero, by the real estate
investment trust taxable income, within the meaning of Section 857(b)(2) of the
Code, excluding any net capital gain, will be allocated among the shareholders
of that trust in proportion to the dividends received by those shareholders from
that trust, and any amount so allocated will be treated as an excess inclusion
with respect to a REMIC Residual Certificate as if held directly by such
shareholder. Regulated investment companies, common trust funds and certain
cooperatives are subject to similar rules.
The Small Business Job Protection Act of 1996 has eliminated the special
rule permitting Section 593 institutions ("thrift institutions") to use net
operating losses and other allowable deductions to offset their excess inclusion
income from REMIC Residual Certificates that have "significant value" within the
meaning of the REMIC Regulations, effective for taxable years beginning after
December 31, 1995, except with respect to REMIC Residual Certificates
continuously held by a thrift institution since November 1, 1995.
Noneconomic REMIC Residual Certificates
Under the REMIC Regulations, transfers of "non-economic" REMIC Residual
Certificates will be disregarded for all federal income tax purposes if "a
significant purpose of the transfer was to enable the transferor to impede the
assessment or collection of tax". If a transfer is disregarded, the purported
transferor will continue to remain liable for any taxes due with respect to the
income on that "non-economic" REMIC Residual Certificate. The REMIC Regulations
provide that a REMIC Residual Certificate is non-economic unless, based on the
Prepayment Assumption and on any required or permitted clean up call or required
liquidation provided for in the REMIC's organizational documents:
1. the present value of the expected future distributions, discounted using the
"applicable Federal rate" for obligations whose term ends on the close of the
last quarter in which excess
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inclusions are expected to accrue with respect to the REMIC Residual
Certificate, which rate is computed and published monthly by the IRS, on the
REMIC Residual Certificate equals at least the present value of the expected
tax on the anticipated excess inclusions; and
2. the transferor reasonably expects that the transferee will receive
distributions with respect to the REMIC Residual Certificate at or after the
time the taxes accrue on the anticipated excess inclusions in an amount
sufficient to satisfy the accrued taxes.
Accordingly, all transfers of REMIC Residual Certificates that may
constitute non-economic residual interests will be subject to certain
restrictions under the terms of the related Governing Document that are intended
to reduce the possibility of any such transfer being disregarded. These
restrictions will require each party to a transfer to provide an affidavit that
no purpose of the transfer is to impede the assessment or collection of tax,
including certain representations as to the financial condition of the
prospective transferee as well as the prospective transferee's acknowledgement
that it understands that it may incur tax liabilities in excess of any cash flow
generated by the REMIC Residual Interest. In addition, the transferor will also
be required to make a reasonable investigation to determine the transferee's
historic payment of its debts and ability to continue to pay its debts as they
come due in the future. Prior to purchasing a REMIC Residual Certificate,
prospective purchasers should consider the possibility that a purported transfer
of that REMIC Residual Certificate by such a purchaser to another purchaser at
some future date may be disregarded in accordance with the above-described rules
which would result in the retention of tax liability by the first purchaser.
We will disclose in the related prospectus supplement whether offered
REMIC Residual Certificates may be considered "non-economic" residual interests
under the REMIC Regulations. Any disclosure that a REMIC Residual Certificate
will not be considered "non-economic" will be based upon certain assumptions,
and we will make no representation that a REMIC Residual Certificate will not be
considered "non-economic" for purposes of the above-described rules. See
"-Foreign Investors in REMIC Certificates" below for additional restrictions
applicable to transfers of certain REMIC Residual Certificates to foreign
persons.
Mark-to-Market Rules
The IRS recently released regulations under Section 475 of the Code (the
"Mark-to-Market Regulations") relating to the requirement that a securities
dealer mark to market securities held for sale to customers. This mark-to-market
requirement applies to all securities owned by a dealer, except to the extent
that the dealer has specifically identified a security as held for investment.
The Mark-to-Market Regulations provide that for purposes of this mark-to-market
requirement, a REMIC Residual Certificate is not treated as a security for
purposes of Section 475 of the Code, and thus is not subject to the
mark-to-market rules. It is recommended that prospective purchasers of a REMIC
Residual Certificate consult their tax advisors regarding the Mark-to-Market
Regulations.
Foreign Investors
The REMIC Regulations provide that the transfer of a REMIC Residual
Certificate that has a "tax avoidance potential" to a "foreign person" will be
disregarded for federal income tax purposes. This rule appears to apply to a
transferee who is not a U.S. Person (as defined below in "--Foreign Investors in
REMIC Certificates") unless the transferee's income in respect of the REMIC
Residual Certificate is effectively connected with the conduct of a United
States trade or business. A REMIC Residual Certificate is deemed to have a tax
avoidance potential unless, at the time of transfer, the transferor reasonably
expects that the REMIC will distribute to the transferee amounts that will equal
at least 30% of each excess inclusion, and that these amounts will be
distributed at or after the time the excess inclusion accrues and not later than
the end of the calendar year following the year of accrual. If the non-U.S.
Person transfers the REMIC Residual Certificate to a U.S. Person, the transfer
will be disregarded, and the foreign transferor will continue to be treated as
the owner, if the transfer has the effect of allowing the transferor to avoid
tax on accrued excess inclusions.
Any attempted transfer or pledge in violation of the transfer restrictions
will be absolutely null and void and will vest no rights in any purported
transferee. Investors in REMIC Residual Certificates are advised to consult
their own tax advisors with respect to transfers of the REMIC Residual
Certificates and, in addition, pass-through entities are advised to consult
their own tax advisors with respect to any tax that may be imposed on a
pass-through entity.
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Unless we state otherwise in the related prospectus supplement, transfers
of REMIC Residual Certificates to investors that are not United States Persons
(as defined below in "-Foreign Investors in REMIC Certificates") will be
prohibited under the related Governing Document. If transfers of REMIC Residual
Certificates to investors that are not United States Persons are permitted
pursuant to the related Governing Document, we will describe in the related
prospectus supplement any additional restrictions applicable to transfers of
certain REMIC Residual Certificates to those persons.
Pass-Through of Non-Interest Expenses of the REMIC as Itemized Deductions
A REMIC will generally allocate its fees and expenses to the holders of
the related REMIC Residual Certificates. Temporary Treasury regulations
indicate, however, that in the case of a REMIC that is similar to a single class
grantor trust, such fees and expenses and a matching amount of additional income
will be allocated among holders of the related REMIC Regular and Residual
Certificates on a daily basis in proportion to the relative amounts of income
accruing to each Certificateholder on that day. Unless we state otherwise in the
related prospectus supplement, such fees and expenses will be allocated to
holders of the related REMIC Residual Certificates in their entirety and not to
the holders of the related REMIC Regular Certificates.
A holder of a REMIC Residual Certificates or REMIC Regular Certificates,
who receives an allocation of fees and expenses in accordance with the preceding
discussion, and who is an individual, estate or trust, or a "pass-through
entity" beneficially owned by one or more individuals, estates or trusts will:
o add an amount equal to that individual's, estate's or trust's share of those
fees and expenses to that holder's gross income; and
o treat that individual's, estate's or trust's share of those fees and expenses
as a miscellaneous itemized deduction allowable subject to the limitation of
Section 67 of the Code, which permits such deductions only to the extent
they, together with other miscellaneous itemized deductions of the holder,
exceed 2% of such taxpayer's adjusted gross income.
In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of:
o 3% of the excess of the individual's adjusted gross income over that amount;
and
o 80% of the amount of itemized deductions otherwise allowable for the
taxable year.
The amount of additional taxable income reportable by REMIC
Certificateholders that are subject to the limitations of either Section 67 or
Section 68 of the Code may be substantial. As a result, these certificateholders
may have total taxable income in excess of the total amount of cash received on
the certificates with respect to interest at the pass-through rate on such
certificates or discount thereon. Furthermore, in determining the alternative
minimum taxable income of a holder of a REMIC Certificate that is an individual,
estate or trust, or a "pass-through entity" beneficially owned by one or more
individuals, estates or trusts, no deduction will be allowed for that holder's
allocable portion of servicing fees and other miscellaneous itemized deductions
of the REMIC, even though an amount equal to the amount of these fees and other
deductions will be included in the holder's gross income. Accordingly, REMIC
Residual Certificates will generally not be appropriate investments for:
o individuals;
o estates or trusts; or
o pass-through entities beneficially owned by one or more individuals, estates
or trusts.
It is recommended that these prospective investors consult with their tax
advisors prior to making an investment in such certificates.
Sales of REMIC Certificates
If a REMIC Certificate is sold, the selling certificateholder will
recognize gain or loss equal to the difference between the amount realized on
the sale and its adjusted basis in the REMIC Certificate. The adjusted basis of
a REMIC Regular Certificate generally will equal:
o the cost of the REMIC Regular Certificate to the certificateholder;
o increased by income reported by such certificateholder with respect to the
REMIC Regular Certificate (including original issue discount and market
discount income); and
o reduced (but not below zero) by distributions (other than qualified stated
interest) on that
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REMIC Regular Certificate received by that certificateholder and by any
amortized premium.
The adjusted basis of a REMIC Residual Certificate will be determined as
described above under "-Taxation of Owners of REMIC Residual Certificates-Basis
Rules, Net Losses and Distributions". Except as described below, any gain or
loss will be capital gain or loss, provided the REMIC Certificate is held as a
capital asset (generally, property held for investment) within the meaning of
Section 1221 of the Code. However, REMIC Certificates will be "evidences of
indebtedness" within the meaning of Section 582(c)(1) of the Code, so that a
bank or thrift institution's gain or loss recognized from the sale of a REMIC
Certificate to which this Section applies will be ordinary income or loss. The
Code as of the date of this prospectus provides for lower rates as to long-term
capital gains than those applicable to the short-term capital gains and ordinary
income realized or received by individuals. No such rate differential exists for
corporations. In addition, the distinction between a capital gain or loss and
ordinary income or loss remains relevant for other purposes.
Gain from the sale of a REMIC Regular Certificate that might otherwise be
a capital gain will be treated as ordinary income to the extent of the gain that
does not exceed the excess, if any, of:
o the amount that would have been includible in the seller's income with
respect to such REMIC Regular Certificate assuming that income had accrued on
the certificate at a rate equal to 110% of the "applicable Federal rate"
(generally, a rate based on an average of current yields on Treasury
securities having a maturity comparable to that of the certificate based on
the application of the Prepayment Assumption to such certificate), determined
as of the date of purchase of the REMIC Regular Certificate; over
o the amount of ordinary income actually includible in the seller's income
prior to the sale.
In addition, gain recognized on the sale of a REMIC Regular Certificate by
a seller who purchased the REMIC Regular Certificate at a market discount will
be taxable as ordinary income in an amount not exceeding the portion of such
discount that accrued during the period the REMIC Certificate was held by that
holder, reduced by any market discount included in income under the rules
described above under "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" and "--Premium".
A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that the certificate is held as part of a "conversion transaction" within the
meaning of Section 1258 of the Code. A conversion transaction generally is one
in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in such transaction. The amount of gain so realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" at the time the taxpayer
enters into the conversion transaction, subject to appropriate reduction for
prior inclusion of interest and other ordinary income items from the
transaction.
Finally, a non-corporate taxpayer may elect to have net capital gain taxed
at ordinary income rates rather than capital gains rates in order to include the
net capital gain in total net investment income for the taxable year, for
purposes of the rule that limits the deduction of interest on indebtedness
incurred to purchase or carry property held for investment to a taxpayer's net
investment income.
Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires that REMIC Residual
Certificate, or acquires any other residual interest in a REMIC or any similar
interest in a "taxable mortgage pool" (as defined in Section 7701(i) of the
Code) during the period beginning six months before, and ending six months
after, the date of a sale, that sale will be subject to the "wash sale" rules of
Section 1091 of the Code. In that event, any loss realized by the REMIC Residual
Certificateholder on the sale will not be deductible, but instead will be added
to the REMIC Residual Certificateholder's adjusted basis in the newly-acquired
asset.
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Prohibited Transactions Tax and Other Taxes
The Code imposes a tax on REMICs equal to 100% of the net income derived
from "prohibited transactions" (a "Prohibited Transactions Tax"). In general,
subject to certain specified exceptions a prohibited transaction means:
o the disposition of a mortgage loan;
o the receipt of income from a source other than a mortgage loan or certain
other permitted investments;
o the receipt of compensation for services; or
o gain from the disposition of an asset purchased with the payments on the
mortgage loans for temporary investment pending distribution on the REMIC
Certificates.
It is not anticipated that any REMIC will engage in any prohibited
transactions as to which it would be subject to a material Prohibited
Transaction Tax.
In addition, certain contributions to a REMIC made after the day on which
the REMIC issues all of its interests could result in the imposition of a tax on
the REMIC equal to 100% of the value of the contributed property (a
"Contributions Tax"). Each Governing Document will include provisions designed
to prevent the acceptance of any contributions that would be subject to this
tax.
REMICs also are subject to federal income tax at the highest corporate
rate on "net income from foreclosure property", determined by reference to the
rules applicable to real estate investment trusts. "Net income from foreclosure
property" generally means income from foreclosure property other than qualifying
rents and other qualifying income for a real estate investment trust. Under
certain circumstances, the special servicer may be authorized to conduct
activities with respect to a real property acquired by a trust that causes the
trust to incur this tax if doing so would, in the reasonable discretion of the
special servicer, maximize the net after-tax proceeds to certificateholders.
However, under no circumstance will the special servicer cause the acquired real
property to cease to be a "permitted investment" under Section 860G(a)(5) of the
Code.
Unless otherwise disclosed in the related prospectus supplement, it is not
anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
Unless we state otherwise in the related prospectus supplement, and to the
extent permitted by then applicable laws, any Prohibited Transactions Tax,
Contributions Tax, tax on "net income from foreclosure property" or state or
local income or franchise tax that may be imposed on the REMIC will be borne by
the related REMIC Administrator, master servicer, special servicer, manager or
trustee, in any case out of its own funds, if the person has sufficient assets
to do so, and the tax arises out of a breach of that person's obligations under
the related Governing Document. Any such tax not borne by a REMIC Administrator,
master servicer, special servicer, manager or trustee would be charged against
the related trust resulting in a reduction in amounts payable to holders of the
related REMIC Certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to Certain
Organizations
An entity will not qualify as a REMIC unless there are reasonable
arrangements designed to ensure that;
o residual interests in the entity are not held by disqualified organizations;
and
o information necessary for the application of the tax described in this
prospectus will be made available.
Restrictions on the transfer of REMIC Residual Certificates and certain
other provisions that are intended to meet this requirement will be included in
each Governing Document, and will be discussed in any prospectus supplement
relating to the offering of any REMIC Residual Certificate.
If a REMIC Residual Certificate is transferred to a "disqualified
organization" (as defined below), a tax would be imposed on the transfer of that
REMIC Residual Certificate in an amount (determined under the REMIC Regulations)
equal to the product of:
o the present value of the total anticipated excess inclusions with respect to
such REMIC Residual Certificate for periods after the transfer; and
o the highest marginal federal income tax rate applicable to corporations.
The present value will be calculated using a discount rate equal to the
"applicable Federal rate" for obligations whose term ends on the close of the
last quarter in which excess inclusions are expected
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to accrue with respect to the REMIC Residual Certificate.
The anticipated excess inclusions must be determined as of the date that
the REMIC Residual Certificate is transferred and must be based on:
o events that have occurred up to the time of the transfer;
o the Prepayment Assumption; and
o any required or permitted clean up calls or required liquidation provided for
in the REMIC's organizational documents.
This tax generally would be imposed on the transferor of the REMIC
Residual Certificate. However, if the transfer is through an agent for a
disqualified organization, the tax would instead be imposed on the agent. A
transferor of a REMIC Residual Certificate would in no event be liable for this
tax if the transferee furnishes to the transferor an affidavit that the
transferee is not a disqualified organization and, as of the time of the
transfer, the transferor does not have actual knowledge that this affidavit is
false.
In addition, if a Disqualified Organization is the record holder of an
interest in a pass-through entity that owns a Residual Certificate, the
pass-through entity must pay tax equal to the product of (1) the amount of
excess inclusion income of the REMIC for that taxable year allocable to the
interest held by the Disqualified Organization; multiplied by (2) the highest
marginal federal income tax rate imposed on corporations by Code Section
11(b)(1).
A pass-through entity will not be subject to this tax for any period,
however, if each record holder of an interest in the pass-through entity
furnishes to the pass-through entity:
o the holder's social security number and a statement under penalties of
perjury that the social security number is that of the record holder; or
o a statement under penalties of perjury that the record holder is not a
disqualified organization.
For taxable years beginning on or after January 1, 1998, if an "electing
large partnership" holds a REMIC Residual Certificate, all interests in the
electing large partnership are treated as held by disqualified organizations for
purposes of the tax imposed upon a pass-through entity by Section 860E(c) of the
Code. An exception to this tax, otherwise available to a pass-through entity
that is furnished certain affidavits by record holders of interests in the
entity and that does not know such affidavits are false, is not available to an
electing large partnership.
For these purposes, a "disqualified organization" means:
o the United States, any State or political subdivision thereof, any foreign
government, any international organization, or any agency or instrumentality
of the foregoing (but would not include an instrumentality if all of its
activities are subject to tax and, except for the Federal Home Loan Mortgage
Corporation, a majority of its board of directors is not selected by any such
governmental agency);
o any organization (other than certain farmers' cooperatives described in
Section 521 of the Code) that is exempt from federal income tax, unless it is
subject to the tax or "unrelated business taxable income" imposed by Section
511 of the Code; or
o a rural electric or telephone cooperative.
For these purposes, a "pass-through entity" means any regulated investment
company, real estate investment trust, trust, partnership or certain other
entities described in Section 860E(e)(6) of the Code. An "electing large
partnership" means any partnership having more than 100 members during the
preceding tax year (other than certain service partnerships and commodity
pools), which elect to apply simplified reporting provisions under the Code. In
addition, a person holding an interest in a pass-through entity as a nominee for
another person will, with respect to that interest, be treated as a pass-through
entity.
Liquidation and Termination
A REMIC will terminate after the payment date following the REMIC's
receipt of the final payment in respect of the mortgage loans or upon the
REMIC's sale of its assets following its adoption of a plan of complete
liquidation. If the REMIC adopts a plan of complete liquidation, within the
meaning of Code Section 860F(a)(4)(A)(i), which may be accomplished by
designating in the REMIC's final tax return a date on which such adoption is
deemed to occur, and sells all of its assets other than cash within a 90-day
period beginning on that date, the REMIC will not be subject to any Prohibited
Transaction Tax. The REMIC must credit or distribute in liquidation
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all of the sale proceeds plus its cash, other than the amounts retained to meet
claims, to holders of Regular and REMIC Residual Certificates within the 90-day
period. The last distribution on a REMIC Regular Certificate will be treated as
a payment in retirement of a debt instrument. In the case of a REMIC Residual
Certificate, if the last distribution on the REMIC Residual Certificate is less
than the REMIC Residual Certificateholder's adjusted basis in that certificate,
the REMIC Residual Certificateholder should (but may not) be treated as
realizing a capital loss equal to the amount of this difference.
Reporting and Other Administrative Matters
Solely for purposes of the administrative provisions of the Code, the
REMIC will be treated as a partnership and REMIC Residual Certificateholders
will be treated as partners. Unless otherwise stated in the related prospectus
supplement, the REMIC Administrator will file REMIC federal income tax returns
on behalf of the related REMIC, and will be designated as and will act as the
"tax matters person" with respect to the REMIC in all respects. Tax information
reports will be furnished quarterly to each REMIC Residual Certificateholder who
holds a REMIC Residual Certificate on any day in the prior calendar quarter as
discussed below.
As the tax matters person, the REMIC Administrator, subject to certain
notice requirements and various restrictions and limitations, generally will
have the authority to act on behalf of the REMIC and the holders of REMIC
Residual Certificates in connection with the administrative and judicial review
of items of income, deduction, gain or loss of the REMIC, as well as the REMIC's
classification. Holders of REMIC Residual Certificates generally will be
required to report these REMIC items consistently with their treatment on the
related REMIC's tax return and may in some circumstances be bound by a
settlement agreement between the REMIC Administrator, as tax matters person, and
the IRS concerning any of these REMIC items. Adjustments made to the REMIC's tax
return may require a holder of a REMIC Residual Certificate to make
corresponding adjustments on its return, and an audit of the REMIC's tax return,
or the adjustments resulting from such an audit, could result in an audit of the
return of a holder of a REMIC Residual Certificate.
No REMIC will be registered as a tax shelter pursuant to Section 6111 of
the Code because it is not anticipated that any REMIC will have a net loss for
any of the first five taxable years of its existence. Any person that holds a
REMIC Residual Certificate as a nominee for another person may be required to
furnish to the related REMIC, in a manner to be provided in Treasury
regulations, the name and address of that person and other information.
Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent to individual holders of REMIC Regular Interests and the
IRS. Holders of REMIC Regular Certificates that are:
o corporations;
o trusts;
o securities dealers; and
o certain other non-individuals;
will be provided interest and original issue discount income information and the
information set forth in the following paragraph upon request in accordance with
the requirements of the applicable regulations. The information must be provided
by the later of 30 days after the end of the quarter for which the information
was requested, or two weeks after the receipt of the request. The REMIC must
also comply with rules requiring a privately placed REMIC Regular Certificate
issued with original issue discount to disclose on its face the amount of
original issue discount and the issue date, and requiring such information to be
reported to the IRS. Reporting with respect to REMIC Residual Certificates,
including:
o income;
o excess inclusions;
o investment expenses; and
o relevant information regarding qualification of the REMIC's assets;
will be made as required under the Treasury regulations, generally on a
quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price
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that the REMIC may not have, these regulations only require that information
pertaining to the appropriate proportionate method of accruing market discount
be provided. See "--Taxation of Owners of REMIC Regular Certificates--Market
Discount".
Unless we state otherwise in the related prospectus supplement, the REMIC
Administrator will have the responsibility for complying with the foregoing
reporting rules.
Backup Withholding with Respect to REMIC Certificates
Payments of interest and principal, as well as payments of proceeds from
the sale of REMIC Certificates, may be subject to the "backup withholding tax"
under Section 3406 of the Code at a rate of 31% if recipients of these payments
fail to furnish to the payor certain information, including their taxpayer
identification numbers, or otherwise fail to establish an exemption from this
tax. Any amounts deducted and withheld from a distribution to a recipient would
be allowed as a credit against that recipient's federal income tax. Furthermore,
the IRS may impose certain penalties on a recipient of payments that is required
to supply information but does not do so in the proper manner.
Foreign Investors in REMIC Certificates
Unless we stated otherwise in the related prospectus supplement, a holder
of a REMIC Regular Certificate that is not a "United States Person" (as defined
below) and is not subject to federal income tax as a result of any direct or
indirect connection to the United States in addition to its ownership of a REMIC
Regular Certificate generally will not be subject to United States federal
income or withholding tax in respect of a distribution on a REMIC Regular
Certificate if the holder complies to the extent necessary with certain
identification requirements. These requirements include delivery of a statement,
signed by the certificateholder under penalties of perjury, certifying that the
certificateholder is not a United State Person and providing the name and
address of the certificateholder. If a non-United States Person's REMIC Regular
Certificate is effectively connected with the conduct by the Certificateholder
of a trade or business within the United States, then the income realized on the
certificate will be subject to U.S. income tax at regular graduated income tax
rates.
For these purposes, "United States Person" means:
o a citizen or resident of the United States;
o a corporation, partnership or other entity created or organized in, or under
the laws of, the United States or any political subdivision of the United
States;
o an estate whose income from sources outside 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; or
o a trust as to which (1) a court in the United States is able to exercise
primary supervision over the administration of the trust and (2) one or more
United States Persons have the authority to control all substantial decisions
of the trust.
It is possible that the IRS may assert that the foregoing tax exemption
should not apply with respect to a REMIC Regular Certificate held by a holder of
a REMIC Residual Certificate that owns directly or indirectly a 10% or greater
interest in the certificates. If the holder does not qualify for exemption,
distributions of interest to that holder, including distributions in respect of
accrued original issue discount, may be subject to a tax rate of 30%, subject to
reduction under any applicable tax treaty.
It is possible, under regulations promulgated under Section 881 of the
Code concerning conduit financing transactions, that the exemption from
withholding taxes described above may not be available to a holder who is not a
United States person and (1) owns 10% or more of one or more underlying
borrowers or (2) if the holder is a controlled foreign corporation, is related
to one or more borrowers.
Further, it appears that a REMIC Regular Certificate would not be included
in the estate of a nonresident alien individual and would not be subject to
United States estate taxes. However, it is recommended that certificateholders
who are nonresident alien individuals consult their tax advisors concerning this
question.
Unless we state otherwise in the related prospectus supplement, transfers
of REMIC Residual Certificates will be prohibited under the related Governing
Document to any investor that is:
o a foreign person; or
o a United States Person, if classified as a partnership under the Code, unless
all of its beneficial owners are United States Persons.
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GRANTOR TRUST FUNDS
-------------------
Classification of Grantor Trust Funds
With respect to each series of certificates as to which no REMIC election
will be made, our counsel will deliver its opinion to the effect that, assuming
compliance with all provisions of the related Governing Document, the related
Grantor Trust Fund will be classified as a grantor trust under subpart E, part I
of subchapter J of the Code and not as a partnership or an association taxable
as a corporation.
For purposes of the following discussion, a certificate representing an
undivided equitable ownership interest in the principal of the mortgage loans
constituting the related Grantor Trust Fund, together with interest thereon at a
pass-through rate, will be referred to as a "Grantor Trust Fractional Interest
Certificate". A certificate representing ownership of all or a portion of the
difference between interest paid on the mortgage loans constituting the related
Grantor Trust Fund (net of normal administration fees) and interest paid to the
holders of Grantor Trust Fractional Interest Certificates issued with respect to
the Grantor Trust Fund will be referred to as a "Grantor Trust Strip
Certificate". A Grantor Trust Strip Certificate may also evidence a nominal
ownership interest in the principal of the mortgage loans constituting the
related Grantor Trust Fund.
Characterization of Investments in Grantor Trust Certificates
Grantor Trust Fractional Interest Certificates
In the case of Grantor Trust Fractional Interest Certificates, unless we
state otherwise in the related prospectus supplement, our counsel will deliver
an opinion that, in general, Grantor Trust Fractional Interest Certificates will
represent interests in:
o "loans secured by an interest in real property" within the meaning of Section
7701(a)(19)(C)(v) of the Code, but generally only to the extent that the
underlying mortgage loans have been made with respect to property that is
used for residential or certain other prescribed purposes;
o "obligation[s] (including any participation or certificate of beneficial
ownership therein) which . . . [are] principally secured by an interest in
real property" within the meaning of Section 860G(a)(3) of the Code;
o "permitted assets" within the meaning of Section 860L(a)(1)(C) of the Code;
and
o "real estate assets" within the meaning of Section 856(c)(5)(B) of the
Code.
In addition, our counsel will deliver an opinion that interest on Grantor
Trust Fractional Interest Certificates will to the same extent be considered
"interest on obligations secured by mortgages on real property or on interests
in real property" within the meaning of Section 856(c)(3)(B) of the Code.
Grantor Trust Strip Certificates
Even if Grantor Trust Strip Certificates evidence an interest in a Grantor
Trust Fund:
o consisting of mortgage loans that are "loans secured by an interest in real
property" within the meaning of Section 7701(a)(19)(C)(v) of the Code;
o consisting of mortgage loans that are "real estate assets" within the meaning
of Section 856(c)(5)(B) of the Code; and
o interest on which is "interest on obligations secured by mortgages on real
property" within the meaning of Section 856(c)(3)(A) of the Code;
o it is unclear whether the Grantor Trust Strip Certificates, and the income
therefrom, will be so characterized. Our counsel will not deliver any opinion
on these questions. We recommend that prospective purchasers to which the
characterization of an investment in Grantor Trust Strip Certificates is
material consult their tax advisors regarding whether the Grantor Trust Strip
Certificates, and the income therefrom, will be so characterized.
The Grantor Trust Strip Certificates will be:
o "obligation[s] (including any participation or certificate of beneficial
ownership therein) which [are] principally secured by an interest in real
property" within the meaning of Section 860G(a)(3)(A) of the Code; and,
o in general, "permitted assets" within the meaning of Section 860L(a)(1)(C)
of the Code.
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Taxation of Owners of Grantor Trust Fractional Interest Certificates
Holders of a particular series of Grantor Trust Fractional Interest
Certificates generally will be:
o required to report on their federal income tax returns their shares of the
entire income from the mortgage loans, including amounts used to pay
reasonable servicing fees and other expenses, in accordance with their method
of accounting; and
o will be entitled to deduct their shares of any such reasonable servicing fees
and other expenses subject to the limitations discussed below.
Because of stripped interests, market or original issue discount, or premium,
the amount includible in income on account of a Grantor Trust Fractional
Interest Certificate may differ significantly from the amount distributable
thereon representing interest on the mortgage loans.
Under Section 67 of the Code, an individual, estate or trust holding a
Grantor Trust Fractional Interest Certificate directly or through certain
pass-through entities will be allowed a deduction for these reasonable servicing
fees and expenses only to the extent that the total of that holder's
miscellaneous itemized deductions exceeds 2% of that holder's adjusted gross
income. In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of:
o 3% of the excess of the individual's adjusted gross income over such amount;
or
o 80% of the amount of itemized deductions otherwise allowable for the
taxable year.
The amount of additional taxable income reportable by holders of Grantor
Trust Fractional Interest Certificates who are subject to the limitations of
either Section 67 or Section 68 of the Code may be substantial. Further,
certificateholders (other than corporations) subject to the alternative minimum
tax may not deduct miscellaneous itemized deductions in determining such
holder's alternative minimum taxable income.
Although it is not entirely clear, it appears that in transactions in
which multiple classes of Grantor Trust Certificates (including Grantor Trust
Strip Certificates) are issued, these fees and expenses should be allocated
among the classes of Grantor Trust Certificates using a method that recognizes
that each such class benefits from the related services. In the absence of
statutory or administrative clarification as to the method to be used, we
currently expect that information returns or reports to the IRS and
certificateholders will be based on a method that allocates such expenses among
classes of Grantor Trust Certificates with respect to each period based on the
distributions made to each such class during that period.
The federal income tax treatment of Grantor Trust Fractional Interest
Certificates of any series will depend on whether they are subject to the
"stripped bond" rules of Section 1286 of the Code. The separation of ownership
of the right to receive some or all of the interest payments on an obligation
from ownership of the right to resume some or all of the principal payments
creates "stripped bonds" with respect to principal payments and stripped coupons
with respect to interest payments. Grantor Trust Fractional Interest
Certificates may be subject to those rules if:
o a class of Grantor Trust Strip Certificates is issued as part of the same
series; or
o we or any of our affiliates retains (for our or their own account or for
purposes of resale) a right to receive a specified portion of the interest
payable on a mortgage asset.
Further, the IRS has ruled that an unreasonably high servicing fee
retained by a seller or servicer will be treated as a retained ownership
interest in mortgages that constitutes a stripped coupon. We will include in the
related prospectus supplement information regarding servicing fees paid to a
master servicer, a special servicer, any sub-servicer or their respective
affiliates.
If Stripped Bond Rules Apply
If the stripped bond rules apply, each Grantor Trust Fractional Interest
Certificate will be treated as having been issued with "original issue discount"
within the meaning of Section 1273(a) of the Code. This is subject, however, to
the discussion below regarding:
o the treatment of certain stripped bonds as market discount bonds; and
o de minimis market discount.
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See "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--Market Discount" below.
Under the stripped bond rules, the holder of a Grantor Trust Fractional
Interest Certificate (whether a cash or accrual method taxpayer) will be
required to report original issue discount from its Grantor Trust Fractional
Interest Certificate for each month in an amount equal to the income that
accrues on the certificate in that month calculated under a constant yield
method, in accordance with the rules of the Code relating to original issue
discount. This economic accrual of income includible in the income of the
Grantor Trust Fractional Interest Certificateholder in any taxable year may
exceed amounts actually received during the year.
The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of the certificate's stated redemption price over
its issue price. The issue price of a Grantor Trust Fractional Interest
Certificate as to any purchaser will be equal to the price paid by the purchaser
of the Grantor Trust Fractional Interest Certificate. The stated redemption
price of a Grantor Trust Fractional Interest Certificate will be:
o the sum of all payments to be made on such certificate, other than "qualified
stated interest", if any;
o the certificate's share of reasonable servicing fees and other expenses.
See "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--If Stripped Bond Rules Do Not Apply" for a definition of
"qualified stated interest". In general, the amount of such income that accrues
in any month would equal the product of:
o the holder's adjusted basis in the Grantor Trust Fractional Interest
Certificate at the beginning of that month (see "--Sales of Grantor Trust
Certificates" below); and
o the yield of the Grantor Trust Fractional Interest Certificate to the holder.
The yield would be computed as the rate (compounded based on the regular
interval between payment dates) that, if used to discount the holder's share of
future payments on the mortgage loans, would cause the present value of those
future payments to equal the price at which the holder purchased the
certificate. In computing yield under the stripped bond rules, a
certificateholder's share of future payments on the mortgage loans will not
include any payments made in respect of any ownership interest in the mortgage
loans retained by us, a master servicer, a special servicer, any sub-servicer or
their respective affiliates, but will include such certificateholder's share of
any reasonable servicing fees and other expenses.
Section 1272(a)(6) of the Code requires:
o the use of a reasonable prepayment assumption in accruing original issue
discount; and
o adjustments in the accrual of original issue discount when prepayments do not
conform to the prepayment assumption, with respect to certain categories of
debt instruments.
Legislation in 1997 extended the scope of that section to any pool of debt
instruments the yield on which may be affected by reason of prepayments. The
precise application of the new legislation is unclear in certain respects. For
example, it is uncertain whether:
o a prepayment assumption will be applied
1) collectively to all a taxpayer's investments in pools of debt
instruments; or
2) on an investment-by-investment basis; and
o the assumed prepayment rate is to be determined based on conditions:
1) at the time of the first sale of the Grantor Trust Fractional Interest
Certificate or,
2) with respect to any holder, at the time of purchase of the Grantor
Trust Fractional Interest Certificate by that holder.
It is recommended that certificateholders consult their tax advisors
concerning reporting original issue discount with respect to Grantor Trust
Fractional Interest Certificates.
In the case of a Grantor Trust Fractional Interest Certificate acquired at
a price equal to the principal amount of the mortgage loans allocable to that
certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Fractional Interest Certificate
acquired at a discount or premium (that is, at a price less than or greater than
such principal amount, respectively), the use of a reasonable prepayment
assumption would increase or decrease the yield, and thus accelerate or
decelerate, respectively, the reporting of income.
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In the absence of statutory or administrative clarification, we currently
expect that information reports or returns to the IRS and certificateholders
will be based on:
o a prepayment assumption determined when certificates are offered and sold
hereunder; and
o on a constant yield computed using a representative initial offering price
for each class of certificates.
However, neither we nor any other person will make any representation
that:
o the mortgage loans will in fact prepay at a rate conforming to the applicable
prepayment assumption or any other rate or
o the applicable prepayment assumption will not be challenged by the IRS on
audit.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the information returns or
reports, even if otherwise accepted as accurate by the IRS, will in any event be
accurate only as to the initial certificateholders of each series who bought at
that price.
Under Treasury Regulation Section 1.1286-1, certain stripped bonds are to
be treated as market discount bonds and, accordingly, any purchaser of such a
bond is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon:
o there is no original issue discount or only a de minimis amount of original
issue discount; or
o the annual stated rate of interest payable on the original bond is no more
than one percentage point lower than the gross interest rate payable on the
original mortgage loan, before subtracting any servicing fee or any stripped
coupon.
If interest payable on a Grantor Trust Fractional Interest Certificate is
more than one percentage point lower than the gross interest rate payable on the
mortgage loans, we will disclose that fact in the related prospectus supplement.
If the original issue discount or market discount on a Grantor Trust Fractional
Interest Certificate determined under the stripped bond rules is less than the
product of:
o 0.25% of the stated redemption price; and
o the weighted average years to maturity of the mortgage loans,
then such original issue discount or market discount will be considered to be de
minimis. Original issue discount or market discount of only a de minimis amount
will be included in income in the same manner as de minimis original issue
discount and market discount described in "--Taxation of Owners of Grantor Trust
Fractional Interest Certificates--If Stripped Bond Rules Do Not Apply" and
"--Market Discount" below.
If Stripped Bond Rules Do Not Apply
Subject to the discussion below on original issue discount, if the
stripped bond rules do not apply to a Grantor Trust Fractional Interest
Certificate, the certificateholder will be required to report its share of the
interest income on the mortgage loans in accordance with the certificateholder's
normal method of accounting. In that case, the original issue discount rules
will apply, even if the stripped bond rules do not apply, to a Grantor Trust
Fractional Interest Certificate to the extent it evidences an interest in
mortgage loans issued with original issue discount.
The original issue discount, if any, on the mortgage loans will equal the
difference between the stated redemption price of such mortgage loans and their
issue price. For a definition of "stated redemption price", see "--Taxation of
Owners of REMIC Regular Certificates--Original Issue Discount" above. In
general, the issue price of a mortgage loan will be the amount received by the
borrower from the lender under the terms of the mortgage loan, less any "points"
paid by the borrower. The stated redemption price of a mortgage loan will equal
its principal amount, unless the mortgage loan provides for an initial "teaser",
or below-market interest rate. The determination as to whether original issue
discount will be considered to be de minimis will be calculated using the same
test as in the REMIC discussion. See "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above.
In the case of mortgage loans bearing adjustable or variable interest
rates, we will describe in the related prospectus supplement the manner in which
such rules will be applied with respect to those mortgage loans by the trustee
or master servicer, as applicable, in preparing information returns to the
certificateholders and the IRS.
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If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a mortgage loan will be required to be
accrued and reported in income each month, based on a constant yield. Under
recent legislation, Section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing yield with respect to any pool of debt
instruments, the yield on which may be affected by prepayments. The precise
application of the new legislation is unclear in certain respects. For example,
it is uncertain:
o whether a prepayment assumption will be applied:
(1) collectively to all a taxpayer's investments in pools of debt
instruments; or
(2) on an investment-by-investment basis.
o as to investments in Grantor Trust Fractional Interest Certificates, whether
the assumed prepayment rate is to be determined based on conditions:
(1) at the time of the first sale of the Grantor Trust Fractional Interest
Certificate or,
(2) with respect to any holder, at the time of that holder's purchase of
the Grantor Trust Fractional Interest Certificate.
We recommend that certificateholders consult their own tax advisors
concerning reporting original issue discount with respect to Grantor Trust
Fractional Interest Certificates and refer to the related prospectus supplement
with respect to each series to determine whether and in what manner the original
issue discount rules will apply to mortgage loans in such series.
A purchaser of a Grantor Trust Fractional Interest Certificate that
purchases such Grantor Trust Fractional Interest Certificate at a cost less than
the certificate's allocable portion of the total remaining stated redemption
price of the mortgage loans held in the related trust must also include in gross
income the certificate's daily portions of any original issue discount with
respect to the mortgage loans. However, each such daily portion will be reduced,
if the cost of the Grantor Trust Fractional Interest Certificate to the
purchaser is in excess of the certificate's allocable portion of the total
"adjusted issue prices" of the mortgage loans held in the related trust,
approximately in proportion to the ratio the excess bears to the certificate's
allocable portion of the total original issue discount remaining to be accrued
on the mortgage loans.
The adjusted issue price of a mortgage loan on any given day equals the
sum of:
o the adjusted issue price (or, in the case of the first accrual period, the
issue price) of the mortgage loan at the beginning of the accrual period that
includes that day; and
o the daily portions of original issue discount for all days during the accrual
period prior to that day.
The adjusted issue price of a mortgage loan at the beginning of any
accrual period will equal the issue price of the mortgage loan, increased by:
o the total amount of original issue discount with respect to such mortgage
loan that accrued in prior accrual periods, and reduced by
o the amount of any payments made on the mortgage loan in prior accrual periods
of amounts included in its stated redemption price.
In the absence of statutory or administrative clarification, we currently
expect that information reports or returns to the IRS and certificateholders
will be based on:
o a prepayment assumption determined when certificates are offered and sold
hereunder and disclosed in the related prospectus supplement; and
o a constant yield computed using a representative initial offering price for
each class of certificates.
However, neither we nor any other person will make any representation
that:
o the mortgage loans will in fact prepay at a rate conforming to the applicable
prepayment assumption or any other rate; or
o the applicable prepayment assumption will not be challenged by the IRS on
audit.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the information returns or
reports, even if otherwise accepted as accurate by the IRS, will in any event be
accurate only as to the initial certificateholders of each series who bought at
that price.
Market Discount
If the stripped bond rules do not apply to a Grantor Trust Fractional
Interest Certificate, a
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certificateholder may be subject to the market discount rules of Sections 1276
through 1278 of the Code to the extent an interest in a mortgage loan is
considered to have been purchased at a "market discount". That is:
o in the case of a mortgage loan issued without original issue discount, at a
purchase price less than its remaining stated redemption price (as defined
above); or
o in the case of a mortgage loan issued with original issue discount, at a
purchase price less than its adjusted issue price (as defined above).
If market discount is in excess of a de minimis amount (as described
below), the holder generally will be required to include in income in each month
the amount of such discount that has accrued (under the rules described in the
next paragraph) through that month that has not previously been included in
income, but limited, in the case of the portion of such discount that is
allocable to any mortgage loan, to the payment of stated redemption price on the
mortgage loan that is received by (or, in the case of accrual basis
certificateholders, due to) the trust in that month. A certificateholder may
elect to include market discount in income currently as it accrues (under a
constant yield method based on the yield of the certificate to such holder)
rather than including it on a deferred basis in accordance with the foregoing
under rules similar to those described in "--Taxation of Owners of REMIC Regular
Interests--Market Discount" above.
Section 1276(b)(3) of the Code authorizes the Treasury Department to issue
regulations providing for the method for accruing market discount on debt
instruments, the principal of which is payable in more than one installment.
Until regulations are issued by the Treasury Department, certain rules described
in the Committee Report apply. Under those rules, in each accrual period market
discount on the mortgage loans should accrue, at the holder's option:
o on the basis of a constant yield method;
o in the case of a mortgage loan issued without original issue discount, in an
amount that bears the same ratio to the total remaining market discount as
the stated interest paid in the accrual period bears to the total stated
interest remaining to be paid on the mortgage loan as of the beginning of the
accrual period; or
o in the case of a mortgage loan issued with original issue discount, in an
amount that bears the same ratio to the total remaining market discount as
the original issue discount accrued in the accrual period bears to the total
original issue discount remaining at the beginning of the accrual period.
Under recent legislation, Section 1272(a)(6) of the Code requires that a
prepayment assumption be used in computing the accrual of original issue
discount with respect to any pool of debt instruments, the yield on which may be
affected by prepayments. Because the mortgage loans will be such a pool, it
appears that the prepayment assumption used (or that would be used) in
calculating the accrual of original issue discount, if any, is also to be used
in calculating the accrual of market discount. However, the precise application
of the new legislation is unclear in certain respects. For example, it is
uncertain whether:
o a prepayment assumption will be applied:
(1) collectively to all of a taxpayer's investments in pools of debt
instruments, or
(2) on an investment-by-investment basis; and
o the assumed prepayment rate is to be determined:
(1) at the time of the first sale of the Grantor Trust Fractional Interest
Certificate, or
(2) with respect to any holder, at the time of that holder's purchase of the
Grantor Trust Fractional Interest Certificate.
Moreover, because regulations clarifying the legislation referred to in
the preceding paragraph have not been issued, it is not possible to predict what
effect these regulations might have on the tax treatment of a mortgage loan
purchased at a discount in the secondary market. We recommend that
certificateholders consult their own tax advisors concerning accrual of market
discount with respect to Grantor Trust Fractional Interest Certificates.
Certificateholders should also refer to the related prospectus supplement with
respect to each series to determine whether and in what manner the market
discount will apply to mortgage loans in that series purchased at a market
discount.
To the extent that the mortgage loans provide for periodic payments of
stated redemption price, market discount may be required to be included in
income at a rate that is not significantly slower than the rate at which the
discount would be included in income if it were original issue discount.
Market discount with respect to mortgage loans may be considered to be de
minimis and, if so, will be includible in income under de minimis rules similar
to those described above in "--REMICs--
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Taxation of Owners of REMIC Regular Certificates --Original Issue Discount"
above.
Further, under the rules described above in "--REMICs--Taxation of Owners
of REMIC Regular Certificates--Market Discount", any discount that is not
original issue discount and exceeds a de minimis amount may require the deferral
of interest expense deductions attributable to accrued market discount not yet
includible in income, unless an election has been made to report market discount
currently as it accrues. This rule applies without regard to the origination
dates of the mortgage loans. If such an election is made to accrue market
discount on a Grantor Trust Fractional Interest Certificate on a constant yield
basis, such election is deemed made with respect to all other debt instruments
with market discount which the certificateholder acquires during the year of
election or thereafter.
Premium
If a certificateholder is treated as acquiring the underlying mortgage
loans at a premium, that is, at a price in excess of their remaining stated
redemption price, the certificateholder may elect under Section 171 of the Code
to amortize using a constant yield method the portion of such premium allocable
to mortgage loans originated after September 27, 1985. Amortizable premium is
treated as an offset to interest income on the related debt instrument, rather
than as a separate interest deduction. However, premium allocable to mortgage
loans originated before September 28, 1985 or to mortgage loans for which an
amortization election is not made, should be:
o allocated among the payments of stated redemption price on the mortgage loan;
and
o allowed as a deduction as such payments are made (or, for a certificateholder
using the accrual method of accounting, when such payments of stated
redemption price are due).
A certificateholder that makes this election for a mortgage loan or any
other debt instrument that is acquired at a premium will be deemed to have made
an election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that the certificateholder acquires during the year of
the election or thereafter.
It is not clear whether a prepayment assumption should be used in
computing amortization of premium allowable under Section 171 of the Code
similar to that described for calculating the accrual of market discount of
Grantor Trust Fractional Interest Certificates. See "--Taxation of Owners of
Grantor Trust Fractional Interest Certificates--Market Discount", above.
If a premium is not subject to amortization using a reasonable prepayment
assumption, the holder of a Grantor Trust Fractional Interest Certificate
representing an interest in a mortgage loan acquired at a premium should
recognize a loss if a mortgage loan with respect to an asset prepays in full,
equal to the difference between:
o the portion of the prepaid principal amount of the mortgage loan or
underlying mortgage loan that is allocable to the certificate; and
o the portion of the adjusted basis of the certificate that is allocable to the
mortgage loan or underlying mortgage loan.
If a reasonable prepayment assumption is used to amortize the premium, it
appears that such a loss would be available, if at all, only if prepayments have
occurred at a rate faster than the reasonable assumed prepayment rate. It is not
clear whether any other adjustments would be required to reflect differences
between an assumed prepayment rate and the actual rate of prepayments.
The IRS has issued Premium Amortization Regulations. The Premium
Amortization Regulations specifically do not apply to pre-payable debt
instruments or any pool of debt instruments the yield on which may be affected
by prepayments, such as the trust fund, which are subject to Section 1272(a)(6)
of the Code. Absent further guidance from the IRS and to the extent set forth in
the related prospectus supplement, the trustee will account for amortizable bond
premium in the manner described in this section. Prospective purchasers should
consult their tax advisors regarding amortizable bond premium and the Premium
Amortization Regulations.
Taxation of Owners of Grantor Trust Strip Certificates
The "stripped coupon" rules of Section 1286 of the Code will apply to the
Grantor Trust Strip Certificates. Except as described above in "-Taxation of
Owners of Grantor Trust Fractional Interest Certificates--If Stripped Bond Rules
Apply", no regulations or published rulings under Section 1286 of the Code have
been issued and some uncertainty
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exists as to how it will be applied to securities such as the Grantor Trust
Strip Certificates. Accordingly, we recommend that holders of Grantor Trust
Strip Certificates consult their tax advisors concerning the method to be used
in reporting income or loss with respect to these certificates.
The OID Regulations do not apply to "stripped coupons", although they
provide general guidance as to how the original issue discount sections of the
Code will be applied.
Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the Grantor Trust Strip
Certificates based on a constant yield method. In effect, each holder of Grantor
Trust Strip Certificates would include as interest income in each month an
amount equal to the product of the holder's adjusted basis in the Grantor Trust
Strip Certificate at the beginning of that month and the yield of the Grantor
Trust Strip Certificate to the holder. This yield would be calculated based on:
o the price paid for that Grantor Trust Strip Certificate by its holder; and
o the payments remaining to be made thereon at the time of the purchase;
o plus an allocable portion of the servicing fees and expenses to be paid with
respect to the mortgage loans.
See "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates--If Stripped Bond Rules Apply" above.
As noted above, Section 1272(a)(6) of the Code requires that:
o a prepayment assumption be used in computing the accrual of original issue
discount with respect to certain categories of debt instruments; and
o adjustments be made in the amount and rate of accrual of such discount when
prepayments do not conform to such prepayment assumption.
It appears that those provisions would apply to Grantor Trust Strip
Certificates. It is uncertain whether the assumed prepayment rate would be
determined based on conditions:
o at the time of the first sale of the Grantor Trust Strip Certificate or,
o with respect to any subsequent holder, at the time of purchase of the Grantor
Trust Strip Certificate by that holder.
If the method for computing original issue discount under Section
1272(a)(6) results in a negative amount of original issue discount as to any
accrual period with respect to a REMIC Regular Certificate, the amount of
original issue discount allocable to that accrual period will be zero. That is,
no current deduction of the negative amount will be allowed to the holder of the
certificate. The holder will instead only be permitted to offset the negative
amount against future positive original issue discount (if any) attributable to
the certificate. Although not free from doubt, it is possible that a
certificateholder may be permitted to deduct a loss to the extent his or her
basis in the certificate exceeds the maximum amount of payments the
certificateholder could ever receive with respect to the certificate. However,
any such loss may be a capital loss, which is limited in its deductibility. The
foregoing considerations are particularly relevant to Stripped Interest
Certificates, which can have negative yields under circumstances that are not
default related.
The accrual of income on the Grantor Trust Strip Certificates will be
significantly slower using a prepayment assumption than if yield is computed
assuming no prepayments. In the absence of statutory or administrative
clarification, we currently expect that information returns or reports to the
IRS and certificateholders will be based on:
o the applicable prepayment assumption disclosed in the related prospectus
supplement; and
o a constant yield computed using a representative initial offering price for
each class of certificates.
However, neither we nor any other person will make any representation
that:
o the mortgage loans will in fact prepay at a rate conforming to the applicable
prepayment assumption or at any other rate; or
o the applicable prepayment assumption will not be challenged by the IRS on
audit.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the information returns or
reports, even if otherwise accepted as accurate by the IRS, will in any event be
accurate only as to the initial certificateholders of each series who bought at
that price. We recommend that prospective purchasers of
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the Grantor Trust Strip Certificates consult their tax advisors regarding the
use of the applicable prepayment assumption.
Sales of Grantor Trust Certificates
Any gain or loss, equal to the difference between the amount realized on
the sale or exchange of a Grantor Trust Certificate and its adjusted basis,
recognized on the sale or exchange of a Grantor Trust Certificate by an investor
who holds the Grantor Trust Certificate as a capital asset, will be capital gain
or loss, except as described below.
The adjusted basis of a Grantor Trust Certificate generally will equal its
cost:
o increased by any income reported by the seller, including original issue
discount and market discount income; and
o reduced (but not below zero) by any:
(1) previously reported losses;
(2) amortized premium; and
(3) distributions with respect to such Grantor Trust Certificate.
The Code as of the date of this prospectus provides for lower rates as to
long-term capital gains, than those applicable to the short-term capital gains
and ordinary income realized or received by individuals. No such rate
differential exists for corporations. In addition, the distinction between a
capital gain or loss and ordinary income or loss remains relevant for other
purposes.
Gain or loss from the sale of a Grantor Trust Certificate may be partially
or wholly ordinary and not capital in certain circumstances. Gain attributable
to accrued and unrecognized market discount will be treated as ordinary income,
as will gain or loss recognized by banks and other financial institutions
subject to Section 582(c) of the Code.
Furthermore, a portion of any gain that might otherwise be capital gain
may be treated as ordinary income to the extent that the Grantor Trust
Certificate is held as part of a "conversion transaction" within the meaning of
Section 1258 of the Code. A conversion transaction generally is one in which the
taxpayer has taken two or more positions in the same or similar property that
reduce or eliminate market risk, if substantially all of the taxpayer's return
is attributable to the time value of the taxpayer's net investment in such
transaction. The amount of gain realized in a conversion transaction that is
recharacterized as ordinary income generally will not exceed the amount of
interest that would have accrued on the taxpayer's net investment at 120% of the
appropriate "applicable Federal rate" at the time the taxpayer enters into the
conversion transaction, subject to appropriate reduction for prior inclusion of
interest and other ordinary income items from the transaction. The "applicable
Federal rate" is computed and published monthly by the IRS.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include the net capital
gain in total net investment income for that taxable year, for purposes of the
rule that limits the deduction of interest on indebtedness incurred to purchase
or carry property held for investment to a taxpayer's net investment income.
Grantor Trust Reporting
Unless we state otherwise in the related prospectus supplement, the
trustee will furnish to each holder of a Grantor Trust Certificate with each
distribution a statement setting forth the amount of the distribution allocable
to:
o principal on the underlying mortgage loans; and
o interest thereon at the related pass-through rate.
In addition, the trustee will furnish, within a reasonable time after the
end of each calendar year, to each holder of a Grantor Trust Certificate who was
such a holder at any time during the year:
o information regarding the amount of servicing compensation received by the
master servicer, the special servicer or any sub-servicer; and
o such other customary factual information as the trustee deems necessary or
desirable to enable holders of Grantor Trust Certificates to prepare their
tax returns.
The trustee will furnish comparable information to the IRS as and when
required by law to do so. Because the rules for accruing discount and amortizing
premium with respect to the Grantor Trust Certificates are uncertain in various
respects, we can give no assurance that the IRS will agree with the trustee's
information reports of such items of income and expense. Moreover, these
information reports, even if otherwise accepted as accurate by the IRS, will in
any event be accurate only as to the initial certificateholders that bought
their certificates at the
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representative initial offering price used in preparing the reports.
On August 13, 1998, the IRS published proposed regulations, which will,
when effective, establish a reporting framework for interests in "widely held
fixed investment trusts" similar to that for regular interests in REMICs. A
widely-held fixed investment trust is defined as any entity classified as a
"trust" under Treasury Regulation Section 301.7701-4(c) in which any interest is
held by a middleman. A middleman would include, but is not limited to:
o a custodian of a person's account;
o a nominee; and
o a broker holding an interest for a customer in street name.
These regulations are proposed to be effective for calendar years
beginning on or after the date that the final regulations are published in the
Federal Register.
Backup Withholding
In general, the rules described above in "--REMICs--Backup Withholding
with Respect to REMIC Certificates" will also apply to Grantor Trust
Certificates.
Foreign Investors
In general, the discussion with respect to REMIC Regular Certificates in
"--REMICs--Foreign Investors in REMIC Certificates" above applies to Grantor
Trust Certificates. However, unless we state otherwise in the related prospectus
supplement, Grantor Trust Certificates will be eligible for exemption from U.S.
withholding tax, subject to the conditions described in such discussion, only to
the extent the related mortgage loans were originated after July 18, 1984.
To the extent that interest on a Grantor Trust Certificate would be exempt
under Sections 871(h)(1) and 881(c) of the Code from United States withholding
tax, and the Grantor Trust Certificate is not held in connection with a
certificateholder's trade or business in the United States, the Grantor Trust
Certificate will not be subject to United States estate taxes in the estate of a
nonresident alien individual.
FASITs
- ------
If and to the extent set forth in the prospectus supplement relating to a
particular series of certificates, an election may be made to treat the related
trust fund or one or more segregated pools of assets therein as one or more
financial asset securitization investment trusts, or FASITs, within the meaning
of the Code Section 860L(a). Qualification as a FASIT requires ongoing
compliance with certain conditions. With respect to each series of FASIT
certificates, our counsel will advise us that in such firm's opinion, assuming:
o the making of such an election;
o compliance with the pooling agreement; and
o compliance with any changes in the law, including any amendments to the Code
or applicable Treasury Regulations thereunder,
each FASIT pool will qualify as a FASIT. In that case, the regular certificates
will be considered to be "regular interests" in the FASIT and will be treated
for federal income tax purposes as if they were newly originated debt
instruments, and the residual certificate will be considered to be "ownership
interest" in the FASIT pool. The prospectus supplement for each series of
certificates will indicate whether one or more FASIT elections will be made with
respect to the related trust fund.
FASIT treatment has become available pursuant to recently enacted
legislation, and no Treasury regulations have as yet been issued detailing the
circumstances under which a FASIT election may be made or the consequences of
such an election. If a FASIT election is made with respect to any trust fund or
as to any segregated pool of assets therein, the related prospectus supplement
will describe the federal income tax consequences of the election.
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STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Federal
Income Tax Consequences", potential investors should consider the state and
local tax consequences of the acquisition, ownership, and disposition of the
offered certificates. State tax law may differ substantially from the
corresponding federal law, and the discussion above does not purport to describe
any aspect of the tax laws of any state or other jurisdiction. Therefore, we
recommend that prospective investors consult their tax advisors with respect to
the various tax consequences of investments in the offered certificates.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA")
and Section 4975 of the Code impose certain requirements on certain employee
benefit plans, and on other retirement plans and arrangements, including:
o individual retirement accounts and annuities,
o Keogh plans,
o collective investment funds,
o separate accounts, and
o insurance company general accounts,
o as well as on funds or entities in which these plans, accounts or
arrangements are invested.
ERISA and the Code also impose certain requirements on fiduciaries of
these plans, accounts or arrangements, in connection with the investment of the
assets of the related plan, account or arrangement.
Some employee benefit plans, such as governmental plans, and church plans
which have not made an election under the Code are not subject to ERISA
requirements. Accordingly, assets of these plans may be invested in the offered
certificates without regard to the ERISA considerations described below, subject
to the provisions of other applicable federal and state laws. Any such plan
which is qualified and exempt from taxation under Sections 401(a) and 501(a) of
the Code, however, is subject to the prohibited transaction rules in Section 503
of the Code.
ERISA imposes certain general fiduciary requirements on fiduciaries,
including:
o investment prudence and diversification; and
o the investment of the assets of the related plan, account or arrangement in
accordance with the documents governing the plan, account or arrangement.
Section 406 of ERISA and Section 4975 of the Code also prohibit a broad
range of transactions involving assets of a plan, account or arrangement and
persons who have certain specified relationships to the plan, account or
arrangement, unless a statutory or administrative exemption is available. The
types of transactions that are prohibited include:
o sales, exchanges or leases of property;
o loans or other extensions of credit; and
o the furnishing of goods and services.
Certain persons that participate in a prohibited transaction may be
subject to an excise tax imposed under Section 4975 of the Code and/or a penalty
imposed under Section 502(i) of ERISA, unless a statutory or administrative
exemption is available. In addition, the persons involved in the prohibited
transaction may have to cancel the transaction and pay an amount to the plan,
account or arrangement for any losses realized by the plan, account or
arrangement for any profits realized by these persons. In addition, individual
retirement accounts involved in the prohibited transaction may be disqualified
which would result in adverse tax consequences to the owner of the account.
Regulation of Assets Included in a Plan, Account or Arrangement
A fiduciary's investment of the assets of a plan, account or arrangement
in offered certificates may cause the underlying mortgage assets and other trust
assets to be deemed assets of the plan, account or arrangement. Section
2510.3-101 of the United States Department of Labor regulations provides that
when a plan, account or arrangement acquires an equity interest in an entity,
the assets of the plan, account or arrangement include both the equity interest
and an undivided interest in each of the underlying assets of the entity, unless
an exception applies. The underlying assets will not be included if
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the equity participation in the entity is not "significant". Equity
participation by benefit plan investors will be "significant" if, on any date,
25% or more of the value of any class of equity interests in the entity is held
by benefit plan investors, which include benefit plans such as governmental
plans, church plans and other plans not subject to ERISA. The percentage owned
by benefit plan investors is determined by excluding the investments of persons:
o with discretionary authority or control over the assets of the entity;
o who provide investment advice directly or indirectly for a fee with respect
to the assets; and
o who are affiliates of the these persons.
In the case of a trust, investments by us or by the related trustee,
master servicer, special servicer, any other party with discretionary authority
over the trust assets and the affiliates of these persons will be excluded.
Because the availability of this exemption depends upon the identity of
the holders of the offered certificates at any time, there can be no assurance
that any class of the offered certificates will qualify for this exemption.
A fiduciary of an investing plan is any person who in connection with the
assets of the plan, account or arrangement:
o has discretionary authority or control over the management or disposition of
assets; or
o provides investment advice for a fee.
If the mortgage loans and other trust assets constitute assets of a plan,
account or arrangement, then any party exercising management or discretionary
control regarding those assets, such as the related trustee, master servicer or
special servicer, any sub-servicer or affiliates of these parties may be deemed
to be a "fiduciary" with respect to the investing plan, account or arrangement
and be subject to the fiduciary responsibility provisions of ERISA. In addition,
if the trust assets constitute assets of a plan, account or arrangement,
transactions involving the trust assets may involve prohibited transactions
under ERISA or the Code. For example, if a person who has a relationship to a
plan, account or arrangement is a borrower under a mortgage loan included in the
trust assets, the purchase of certificates by the plan, account or arrangement
could constitute a prohibited loan between the plan, account or arrangement and
the party in interest.
The Department of Labor regulations provide that where a plan, account or
arrangement purchases a "guaranteed governmental mortgage pool certificate", the
assets of the plan, account or arrangement include the certificate but do not
include any of the mortgages underlying the certificate. The regulations include
in the definition of a "guaranteed governmental mortgage pool certificate"
certain certificates issued or guaranteed by the federal Home Loan Mortgage
Corporation, the Government National Mortgage Association or the Federal
National Mortgage Association but do not include certificates issued or
guaranteed by the Federal Agricultural Mortgage Corporation. Accordingly, even
if these types of mortgaged-backed securities, other than Federal Agricultural
Mortgage Corporation certificates, included in the trust assets were deemed to
be assets of the investors of a plan, account or arrangement, the underlying
mortgages, other than the mortgages underlying any Federal Agricultural Mortgage
Corporation certificates, would not be treated as assets of the plan, account or
arrangement. Private label mortgage participations, mortgage pass-through
certificates, Federal Agricultural Mortgage Corporation certificates or other
mortgage-backed securities are not "guaranteed governmental mortgage pool
certificates" within the meaning of the regulations.
In addition, the acquisition or holding of offered certificates by or on
behalf of a plan, account or arrangement could give rise to a prohibited
transaction if we or the related trustee, master servicer or special servicer or
any related underwriter, sub-servicer, REMIC administrator, manager, borrower or
obligor under any credit enhancement mechanism, or certain of their affiliates,
has, or acquires, a relationship to an investing plan, account or arrangement.
If you invest on behalf of a plan, account or arrangement, you should
consult your legal counsel and review the ERISA discussion in the related
prospectus supplement before purchasing any certificates.
Prohibited Transaction Exemptions
If you are a fiduciary of a plan, account or arrangement, before
purchasing any offered certificates, you should consider the availability of one
of the Department of Labor's prohibited transaction exemptions, such as
prohibited transaction class exemption 75-1, which exempts certain transactions
involving plans, accounts and
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arrangements and certain broker-dealers, reporting dealers and banks.
We cannot provide any assurance that such a class exemption will apply
with respect to any particular investment on behalf of a plan, account or
arrangement in the certificates or, even if it were deemed to apply, that the
exemption would apply to all transactions that may occur in connection with the
investment. The prospectus supplement with respect to the offered certificates
of any series may contain additional information regarding the availability of
other exemptions, such as the one discussed below.
Underwriters Exemptions
The Department of Labor has issued individual prohibited transaction
exemptions to most of the underwriters that we would use. Each of these
individual prohibited transaction exemptions generally exempt from the
application of the prohibited transaction provisions of ERISA and the Code
certain transactions relating to, among other things:
o the servicing and operation of certain trust assets pools, and
o the purchase, sale and holding of certain certificates that are underwritten
by that underwriter, or any person under common control with that
underwriter.
In order for these exemptions to apply, certain requirements must be
satisfied, including:
o the acquisition of the certificate by a plan, account or arrangement must be
on terms that are at least as favorable to the plan, account or arrangement
as they would be in an arm's-length transaction with an unrelated party;
o the rights and interests evidenced by the certificates must not be
subordinated to the rights and interests evidenced by the other certificates
evidencing interests in the same mortgage asset pool;
o at the time of its acquisition by the plan, account or arrangement, the
certificate must be rated in one of the three highest generic rating
categories of any nationally recognized statistical rating organization;
o the trustee cannot be an affiliate of us, the servicer and certain other
persons;
o the sum of all payments made to and retained by the trustee, the servicer
and certain other persons must represent not more than reasonable
compensation for underwriting the certificates;
o the sum of all payments made to and retained by us must represent not more
than the fair market value of obligations deposited in the trust;
o the sum of all payments made to and retained by the master servicer, the
special servicer and any sub-servicer must represent not more than reasonable
compensation for such person's services and reimbursement of such person's
reasonable expenses in connection therewith; and
o the investing plan, account or arrangement must be an accredited investor.
The prospectus supplement with respect to the offered certificates of any
series may contain additional information regarding the availability of these
exemptions.
Insurance Company General Accounts
The Small Business Job Protection Act of 1996 added a new Section 401(c)
to ERISA, which provides relief from the fiduciary and prohibited transaction
provisions of ERISA and the Code for transactions involving an insurance company
general account. This exemption is in addition to any exemption that may be
available under prohibited transaction class exemption 95-60 for the purchase
and holding of offered certificates by an insurance company general account.
Pursuant to Section 401(c) of ERISA, the Department of Labor was required
to issue final regulations no later than December 31, 1997, providing guidance
for determining, in cases where insurance policies supported by an insurer's
general account are issued to or for the benefit of a plan, account or
arrangement on or before December 31, 1998, which general account assets
constitute assets of the plan, account or arrangement. The Department of Labor
has not yet issued such final regulations. Section 401(c) of ERISA generally
provides that, until the date which is 18 months after those final regulations
become final, no person shall be subject to liability under Part 4 of Title I of
ERISA and Section 4975 of the Code on the basis of a claim that the assets of an
insurance company general account constitute assets of a plan, account or
arrangement, unless:
o as otherwise provided by the Secretary of Labor in those final regulations to
prevent avoidance of the regulations; or
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o an action is brought by the Secretary of Labor for certain breaches of
fiduciary duty which would also constitute a violation of federal or state
criminal law.
Any assets of an insurance company general account which support insurance
policies issued to a plan, account or arrangement after December 31, 1998 or
issued to a plan, account or arrangement on or before December 31, 1998 for
which the insurance company does not comply with the final regulations under
section 401(c) of ERISA may be treated as assets of the plan, account or
arrangement. In addition, because Section 401(c) of ERISA does not relate to
insurance company separate accounts, separate account assets are still treated
as assets of any plan, account or arrangement invested in the separate account.
If you are contemplating the investment of general account assets in offered
certificates, you should consult your legal counsel as to the applicability of
Section 401(c) of ERISA and the availability of exemptive relief under
prohibited transaction class exemption 95-60.
Consultation With Counsel
If you are a plan fiduciary which proposes to purchase offered
certificates on behalf of or with assets of a plan, account or arrangement, you
should consider your general fiduciary obligations under ERISA and you should
consult with your legal counsel as to the potential applicability of ERISA and
the Code to any investment and the availability of any prohibited transaction
exemption in connection with any investment.
Tax Exempt Investors
A plan, account or arrangement that is exempt from federal income taxation
pursuant to Section 501 of the Code will be subject to federal income taxation
to the extent that its income is "unrelated business taxable income" within the
meaning of Section 512 of the Code. All "excess inclusions" of a REMIC allocated
to a REMIC residual certificate held by a tax-exempt plan, account or
arrangement will be considered "unrelated business taxable income" and will be
subject to federal income tax.
See "Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC
Residual Certificates-Excess Inclusions" in this prospectus.
LEGAL INVESTMENT
If and to the extent specified in the related prospectus supplement, the
offered certificates of any series will constitute "mortgage related securities"
for purposes of the Secondary Mortgage Market Enhancement Act of 1984 ("SMMEA").
"Mortgage related securities" are legal investments to the same extent that,
under applicable law, obligations issued by or guaranteed as to principal and
interest by the United States or any of its agencies or instrumentalities
constitute legal investments for entities, the authorized investments of which
are subject to state regulation.
Prior to December 31, 1996, classes of offered certificates would be
"mortgage related securities" for purposes of SMMEA only if they:
o were rated in one of the two highest rating categories by at least one
nationally recognized statistical rating organization; and
o were part of a series evidencing interests in a trust asset consisting of
loans directly secured by a first lien on a single parcel of real estate upon
which is located a dwelling or mixed residential and commercial structure,
and originated by the types of originators specified in SMMEA.
Further, under SMMEA as originally enacted, if a state enacted legislation
prior to October 3, 1991 that specifically limited the legal investment
authority of any entities referred to in the preceding paragraph with respect to
"mortgage related securities" under such definition, offered certificates would
constitute legal investments for entities subject to the legislation only to the
extent provided in that legislation.
Effective December 31, 1996, the definition of "mortgage related
securities" was modified to include among the types of loans to which the
securities may relate, loans secured by "one or more parcels of real estate upon
which is located one or more commercial structures". In addition, the related
legislative history states that this expanded definition includes multifamily
loans secured by more than one parcel of real estate upon which is located more
than one structure. Until September 23, 2001, any state
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may enact legislation limiting the extent to which "mortgage related securities"
under this expanded definition would constitute legal investments under that
state's laws.
SMMEA also amended the legal investment authority of federally chartered
depository institutions as follows:
o federal savings and loan associations and federal savings banks may invest
in, sell or otherwise deal with "mortgage related securities" without
limitation as to the percentage of their assets represented by those
securities; and
o federal credit unions may invest in "mortgage related securities" and
national banks may purchase "mortgage related securities" for their own
account without regard to the limitations generally applicable to investment
securities prescribed in 12 U.S.C. 24 (Seventh),
subject in each case to the regulations that the applicable federal regulatory
authority may prescribe.
Effective December 31, 1996, the Office of the Comptroller of the Currency
amended 12 C.F.R. Part 1 to authorize national banks to purchase and sell for
their own account, without limitation as to a percentage of the bank's capital
and surplus (but subject to compliance with certain general standards concerning
"safety and soundness" and retention of credit information in 12 C.F.R. Section
1.5), certain "Type IV securities", defined in 12 C.F.R. Section 1.2(1) to
include certain "commercial mortgage-related securities" and "residential
mortgage-related securities". As defined, "commercial mortgage-related security"
and "residential mortgage-related security" mean, in relevant part, "mortgage
related security" within the meaning of SMMEA, provided that, in the case of a
"commercial mortgage-related security," it "represents ownership of a promissory
note or certificate of interest or participation that is directly secured by a
first lien on one or more parcels of real estate upon which one or more
commercial structures are located and that is fully secured by interests in a
pool of loans to numerous obligors." In the absence of any rule or
administrative interpretation by the Office of the Comptroller of the Currency
defining the term "numerous obligors," no representation is made as to whether
any class of offered certificates will qualify as "commercial mortgage-related
securities", and thus as "Type IV securities", for investment by national banks.
The National Credit Union Administration has adopted rules, codified at 12
C.F.R. Part 703, which permit federal credit unions to invest in "mortgage
related securities" under certain limited circumstances, other than stripped
mortgage related securities, residual interests in mortgage related securities,
and commercial mortgage related securities, unless the credit union has obtained
written approval from the National Credit Union Administration to participate in
the "investment pilot program" described in 12 C.F.R. Section 703.140. The
Office of Thrift Supervision has issued Thrift Bulletin 13a (December 1, 1998),
"Management of Interest Rate Risk, Investment Securities, and Derivatives
Activities", which thrift institutions subject to the jurisdiction of the Office
of Thrift Supervision should consider before investing in any of the offered
certificates.
All depository institutions considering an investment in the offered
certificates should review the "Supervisory Policy Statement on Investment
Securities and End-User Derivatives Activities" of the Federal Financial
Institutions Examination Council, which has been adopted by the Board of
Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Office of Thrift Supervision and the Office of the Comptroller
of the Currency effective May 26, 1998, and by the National Credit Union
Administration effective October 1, 1998. The policy statement sets forth
general guidelines which depository institutions must follow in managing risks,
including market, credit, liquidity, operational (transaction), and legal risks,
applicable to all securities, including mortgage pass-through securities and
mortgage-derivative products used for investment purposes.
There may be other restrictions on your ability either to purchase certain
classes of offered certificates or to purchase any class of offered certificates
representing more than a specified percentage of your assets. We make no
representations as to the proper characterization of any class of offered
certificates for legal investment or other purposes. Also, we make no
representations as to the ability of particular investors to purchase any class
of offered certificates under applicable legal investment restrictions. These
uncertainties may adversely affect the liquidity of any class of offered
certificates. Accordingly, if your investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities you should consult with your legal advisor in determining
whether and to what extent the offered certificates of any class and series
constitute legal investments or are subject to investment, capital or other
restrictions.
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USE OF PROCEEDS
Unless otherwise specified in the related prospectus supplement, the net
proceeds to be received from the sale of the offered certificates of any series
will be applied by us to the purchase of assets for the related trust or will be
used by us to cover expenses related to these purchases. We expect to sell the
certificates from time to time, but the timing and amount of offerings of
certificates will depend on a number of factors, including the volume of
mortgage assets acquired by us, prevailing interest rates, availability of funds
and general market conditions.
METHOD OF DISTRIBUTION
The certificates offered by this prospectus and the related prospectus
supplements will be offered in series through one or more of the methods
described below. The prospectus supplement prepared for the offered certificates
of each series will describe the method of offering being utilized for the
offered certificates and will state the net proceeds to us from the sale of the
offered certificates.
We intend that offered certificates will be offered through the following
methods from time to time and that offerings may be made concurrently through
more than one of these methods or that an offering of the offered certificates
of a particular series may be made through a combination of two or more of these
methods. Such methods are as follows:
o by negotiated firm commitment or best efforts underwriting and public
offering by one or more underwriters specified in the related prospectus
supplement;
o by placements by us with institutional investors through dealers; and
o by direct placements by us with institutional investors.
In addition, if specified in the related prospectus supplement, the
offered certificates of a series may be offered in whole or in part to the
seller of the related mortgage assets that would comprise the related trust
assets for the certificates. Furthermore, the related trust assets for one
series of offered certificates may include offered certificates from other
series.
If underwriters are used in a sale of any offered certificates, other than
in connection with an underwriting on a best efforts basis, the offered
certificates will be acquired by the underwriters for their own account. These
certificates may be resold from time to time in one or more transactions,
including negotiated transactions, at fixed public offering prices or at varying
prices to be determined at the time of sale or at the time of commitment
therefor. The managing underwriter or underwriters with respect to the offer and
sale of offered certificates of a particular series will be described on the
cover of the prospectus supplement relating to the series and the members of the
underwriting syndicate, if any, will be named in the relevant prospectus
supplement.
Underwriters may receive compensation from us or from purchasers of the
offered certificates in the form of discounts, concessions or commissions.
Underwriters and dealers participating in the distribution of the offered
certificates may be deemed to be underwriters in connection with the
certificates, and any discounts or commissions received by them from us and any
profit on the resale of offered certificates by them may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933.
It is anticipated that the underwriting agreement pertaining to the sale
of the offered certificates of any series will provide that:
o the obligations of the underwriters will be subject to certain conditions
precedent;
o the underwriters will be obligated to purchase all the certificates if any
are purchased (other than in connection with an underwriting on a best
efforts basis); and
o in limited circumstances, we will indemnify the several underwriters and the
underwriters will indemnify us against certain civil liabilities, including
liabilities under the Securities Act of 1933, or will contribute to payments
required to be made in respect of any liabilities.
The prospectus supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of the offering
and any agreements to be entered into between us and purchasers of offered
certificates of the series.
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We anticipate that the offered certificates will be sold primarily to
institutional investors. Purchasers of offered certificates, including dealers,
may, depending on the facts and circumstances of the purchases, be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 in connection
with re-offers and sales by them of offered certificates. Holders of offered
certificates should consult with their legal advisors in this regard prior to
any reoffer or sale.
Where You Can Find More Information
We have filed with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933 with respect to the certificates
offered by this prospectus. This prospectus forms a part of the registration
statement. This prospectus and the related prospectus supplement do not contain
all of the information with respect to an offering that is contained in the
registration statement. For further information regarding the documents referred
to in this prospectus and the related prospectus supplement, you should refer to
the registration statement and its exhibits.
You can inspect the registration statement and its exhibits, and make
copies of these documents at prescribed rates, at the public reference
facilities maintained by the SEC at its Public Reference Section:
450 Fifth Street, N.W.
Washington, D.C. 20549,
and at its Regional Offices located as follows:
Chicago Regional Office:
500 West Madison
14th Floor
Chicago, Illinois 60661
New York Regional Office
Seven World Trade Center
New York, New York 10048.
You can also obtain copies of these materials electronically through the
SEC's Web site at www.sec.gov.
In connection with each series of offered certificates, we will file or
arrange to have filed with the SEC with respect to the related trust any
periodic reports that are required under the Securities Exchange Act of 1934.
All documents and reports that are so filed for any particular trust prior to
the termination of an offering of certificates are incorporated by reference
into, and should be considered a part of, this prospectus. Upon request, we will
provide without charge to each person receiving this prospectus in connection
with an offering, a copy of any or all documents or reports that are so
incorporated by reference. All requests should be directed to us in writing at:
210 West 10th Street
6th Floor
Kansas City, Missouri 64105
Attention: Lawrence D. Ashley
or by telephone at (816) 435-5000.
LEGAL MATTERS
Unless otherwise specified in the related prospectus supplement, certain
legal matters in connection with the certificates of each series, including
certain federal income tax consequences, will be passed upon for us by Morrison
& Hecker L.L.P., our counsel.
FINANCIAL INFORMATION
A new trust will be formed with respect to each series, and no trust will
engage in any business activities or have any assets or obligations prior to the
issuance of the related series. Accordingly, no financial statements with
respect to any trust will be included in this prospectus or in the related
prospectus supplement. We have determined that our financial statements will not
be material to the offering of any offered certificates.
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RATINGS
It is a condition to the issuance of any class of offered certificates
that they will have been rated not lower than investment grade, that is, in one
of the four highest rating categories, by at least one nationally recognized
statistical rating organization.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders of the certificates of all collections on the underlying
mortgage assets to which the holders are entitled. These ratings address:
o the structural, legal and issuer-related aspects associated with the
certificates;
o the nature of the underlying mortgage assets; and
o the credit quality of the guarantor, if any.
Ratings on mortgage pass-through certificates do not represent any
assessment of the likelihood of principal prepayments by borrowers or of the
degree by which the prepayments might differ from those originally anticipated.
As a result, if you purchase any offered certificates, you might suffer a lower
than anticipated yield. In addition, if you purchase Stripped Interest
Certificates you might, in certain cases, fail to recoup your initial
investment. Furthermore, ratings on mortgage pass-through certificates do not
address the price of the certificates or the suitability of the certificates to
you as an investment.
In particular, ratings on the offered certificates of any series will not
represent any assessment of:
o the tax attributes of those certificates or of the related trust;
o whether or to what extent prepayments of principal may be received on the
underlying mortgage loans;
o the likelihood or frequency of prepayments of principal on the underlying
mortgage loans;
o the degree to which the amount or frequency of prepayments on the underlying
mortgage loans might differ from those originally anticipated;
o whether or to what extent the interest distributable on any class of offered
certificates may be reduced in connection with interest shortfalls resulting
from the timing of voluntary prepayments;
o the likelihood that prepayment premiums, fees and charges or interest in
excess of interest at the related mortgage interest rates will be received
with respect to the underlying mortgage loans; or
o whether the holders of any Stripped Interest Certificates, despite receiving
all distributions of interest to which they are entitled, would or would not
ultimately recover their initial investments in those certificates.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.
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The information in this prospectus is not complete and may be changed. We may
not sell thesese securities until the registration statement filed with the
Securities and Exchange Commission is effective. This propsectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, Dated January 24, 2000
PROSPECTUS SUPPLEMENT
(To Prospectus dated _______, 2000)
$_____________(Approximate)
PNC Mortgage Acceptance Corp.
as Depositor
Midland Loan Services, Inc. and _________________
as Mortgage Loan Sellers
and
Midland Loan Services, Inc.
as Master Servicer and Special Servicer
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES ____-___
-------------------------
PNC Mortgage Acceptance Corp. is offering [eight] classes of its series
____-___ commercial mortgage pass-through certificates, which represent
beneficial ownership interests in a trust. The trust's assets will primarily be
____ loans secured by [first] liens on ___ commercial and multifamily
residential properties. The offered certificates are not obligations of PNC
Mortgage Acceptance Corp. or any of its affiliates. No governmental agency or
any other person will insure or guaranty the certificates or the underlying
mortgage loans.
PNC Mortgage Acceptance Corp. will not list the offered certificates on any
national securities exchange or on any automated quotation system of any
registered securities association such as NASDAQ.
Investing in the certificates involves risks. See "Risk Factors" beginning
on page S-13 of this prospectus supplement and page 6 of the prospectus.
The following classes of the series ____-___ certificates are being offered
by this prospectus supplement:
<TABLE>
<CAPTION>
Initial
Principal Approximate Initial Description of Pass-
Balance or Pass-Through Through Scheduled Final Ratings
Class Notional Amount Rate Rate Distribution Date ____/_____
_____ _______________ ____ ____ _________________ __________
<S> <C> <C> <C>
[Class S ................. $___________ ______% ________20__
Class A-1A............... $___________ ______% ________20__
Class A-1B............... $___________ ______% ________20__
Class A-2................ $___________ ______% ________20__
Class A-3................ $___________ ______% ________20__
Class A-4................ $___________ ______% ________20__
Class B-1 ............... $___________ ______% ________20__
Class B-2]............... $___________ ______% ________20__
</TABLE>
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved the offered certificates or determined if this
prospectus supplement and the accompanying prospectus are truthful and complete.
It is unlawful to represent otherwise.
__________________________________ and PNC Capital Markets, Inc., as
underwriters, will purchase the offered certificates from the depositor. They
will offer the offered certificates for sale to the public at negotiated prices
determined at the time of sale. The depositor will receive approximately
$________________ in sale proceeds, plus accrued interest, before expenses. It
is expected that delivery of the offered certificates will be made in book-entry
form only through the facilities of The Depository Trust Company in the United
States, or Cedel Bank, S.A. or the Euroclear System, in Europe, against payment
therefor on or about ___________, 200__.
---------------------------------
[Underwriters] PNC Capital Markets, Inc.
__________________________
The date of this Prospectus Supplement is _______________, ______
<PAGE>
Important Notice about Information Presented in this Prospectus Supplement
and the Accompanying Prospectus
We provide information to you about the offered certificates in two
separate documents that progressively provide more detail:
o the accompanying prospectus, which provides general information, some of
which may not apply to the offered certificates, and
o this prospectus supplement, which describes the specific terms of the
offered certificates.
You should read both this prospectus supplement and the prospectus before
investing in any of the offered certificates.
You should rely only on the information contained in this prospectus
supplement and accompanying prospectus. If the descriptions of the offered
certificates in the prospectus and in this prospectus supplement vary, you
should rely on the information in this prospectus supplement.
We include cross-references in this prospectus supplement and the
prospectus to captions in these materials where you can find further related
discussions. Unless we tell you otherwise, all references to captions are to
sections of this prospectus supplement. The table of contents on page S-3
provides the page numbers on which these captions are located.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement are defined under the caption "Index of Definitions" on
page S-93 in this prospectus supplement.
Limitations on Offers or Solicitations
We do not intend this document to be an offer or solicitation:
o if used in a jurisdiction in which such offer or solicitation is not
authorized;
o if the person making such offer or solicitation is not qualified to do so;
or
o if such offer or solicitation is made to anyone to whom it is unlawful to
make such offer or solicitation.
You should rely only on the information contained in this document, the
accompanying prospectus and the related registration statement. We have not
authorized anyone to provide you with information that is different. This
document may only be used where it is legal to sell these securities. The
information in this document may only be accurate as of the date of this
document.
Until _________, 200_, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealer's obligation to deliver
a prospectus when acting as an underwriter and with respect to unsold allotments
or subscriptions.
S-2
<PAGE>
TABLE OF CONTENTS
SUMMARY...........................................S-4
RISK FACTORS......................................S-13
DESCRIPTION OF THE MORTGAGE POOL..................S-30
General........................................S-30
Security for the Mortgage Loans................S-30
Underwriting Standards.........................S-31
Certain Terms and Conditions of the
Mortgage Loans.................................S-32
Certain Characteristics of the Mortgage Pool...S-36
Other Information..............................S-39
The Sellers....................................S-42
Changes in Mortgage Pool Characteristics.......S-42
Representations and Warranties; Repurchase.....S-43
MASTER SERVICER AND SPECIAL SERVICER..............S-45
DESCRIPTION OF THE CERTIFICATES...................S-46
General........................................S-46
Principal Balances and Notional Amounts........S-47
Pass-Through Rates.............................S-47
Distributions..................................S-48
Treatment of REO Properties....................S-52
Appraisal Reductions of Loan Balances..........S-52
Application of Realized Losses and Expense
Losses to Principal Balances...................S-54
Prepayment Interest Excesses and Shortfalls....S-55
Scheduled Final Distribution Date..............S-55
Subordination..................................S-56
Optional Termination...........................S-56
Voting Rights..................................S-57
Delivery, Form and Denomination................S-57
Registration and Transfer of Definitive
Certificates...................................S-60
YIELD AND MATURITY CONSIDERATIONS.................S-60
Rate and Timing of Principal Payments..........S-60
Yield Sensitivity of the Interest Only
Certificates...................................S-63
Weighted Average Life..........................S-64
THE POOLING AND SERVICING AGREEMENT...............S-66
Assignment of the Mortgage Loans...............S-66
Servicing of the Mortgage Loans; Collection
of Payments....................................S-67
Collection Activities..........................S-68
Advances.......................................S-68
Accounts.......................................S-69
Enforcement of "Due-on-Sale"Clauses............S-71
Enforcement of "Due-on-Encumbrance"
Clauses........................................S-71
Inspections....................................S-72
Realization Upon Mortgage Loans................S-73
Amendments, Modifications and Waivers..........S-75
The Trustee....................................S-75
Servicing Compensation and Payment of
Expenses.......................................S-77
Special Servicing..............................S-77
The Controlling Class Representative...........S-79
Sub-Servicers..................................S-80
Reports to Certificateholders; Where You
Can Find More Information......................S-81
MATERIAL FEDERAL INCOME TAX
CONSEQUENCES......................................S-83
ERISA CONSIDERATIONS..............................S-85
Plan Asset Regulation..........................S-86
Individual Exemption...........................S-86
Other Exemptions...............................S-88
Insurance Company Purchasers...................S-88
LEGAL INVESTMENT..................................S-89
PLAN OF DISTRIBUTION..............................S-91
USE OF PROCEEDS...................................S-92
LEGAL MATTERS.....................................S-92
RATINGS...........................................S-92
INDEX OF DEFINITIONS..............................S-94
EXHIBIT A-1 - Certain Characteristics of the
Mortgage Loans and Mortgaged Properties...........A-1-1
EXHIBIT A-2 - Mortgage Pool Information...........A-2-2
EXHIBIT B - Significant Loan Summaries............B-1
EXHIBIT C - Form of Trustee Report................C-1
EXHIBIT D - Decrement Tables for the Class A-1A,
Class A-1B, Class A-2, Class A-3, Class A-4, Class
B-1 and Class B-2 Certificates....................D-1
EXHIBIT E - Price/Yield Tables for the Class S
Certificates......................................E-1
EXHIBIT F - Summary Term Sheet....................F-1
S-3
<PAGE>
SUMMARY
o This summary highlights selected information from this prospectus supplement
and does not contain all of the information that you need to consider in
making your investment decision. To understand the terms of the offered
certificates you must carefully read this entire document and the
accompanying prospectus.
o This summary provides an overview of certain calculations, cash flows and
other information to aid your understanding and is qualified by the full
description of these calculations, cash flows and other information in this
prospectus supplement and the accompanying prospectus.
o We provide information on the privately offered certificates in this
prospectus supplement only to enhance your understanding of the offered
certificates.
<TABLE>
<CAPTION>
Initial Description Approximate
Principal Approximate Approximate Weighted of Initial
Balance Percent of Percent of Average Principal Pass- Pass-
or Notional Rating by Initial Pool Credit Life Window Through Through
Class Amount ____/____ Balance Support (Years) (Months/Year) Rate Rate
Senior Certificates
<S> <C> <C> <C> <C> <C> <C>
[S $__________ N/A N/A ____ N/A ______%
A-1A $__________ _____% _____% ____ _____-_____ ______%
A-1B $__________ _____% _____% ____ _____-_____ ______%
Subordinate Certificates
A-2 $__________ _____% _____% ____ _____-_____ ______%
A-3 $__________ _____% _____% ____ _____-_____ ______%
A-4 $__________ _____% _____% ____ _____-_____ ______%
B-1 $__________ _____% _____% ____ _____-_____ ______%
B-2 $__________ _____% _____% ____ _____-_____ ______%
B-3 to D] $__________ -- _____% -- -- -- -- --
</TABLE>
[ ] Offered certificates. [ ] These certificates are no offered by
this prospectus supplement. They
constitute "privately offered
certificates".
The total initial principal balances and notional amounts for the certificates
may vary by up to [5%].
The column entitled "Principal Window" lists the months during which
certificateholders would receive distributions of principal. The weighted
average life and principal window figures are based on the maturity assumptions
described under "Yield and Maturity Considerations" assuming no prepayments and
that the hyper-amortization loans pay on their anticipated repayment dates.
The percentages indicated under the column "Approximate Percent of Credit
Support" with respect to the class [A-1A and class A-1B] certificates represent
the approximate credit support for the class [A-1A and class A-1B] certificates
in the aggregate.
The notional amount for the class [S] certificates will generally be equal to
the total principal balance of the other classes of certificates identified in
the table above.
["Variable IO" refers to a variable pass-through rate that is equal to the
excess, if any, of (1) a weighted average coupon derived from net interest rates
on the loans that will back the certificates, over (2) a weighted average of the
pass-through rates in respect of each of the other classes of certificates
identified in the table above.
"WAC Cap" refers to a variable pass-through rate that is equal to the lesser of
(1) the initial pass-through rate for the subject class of certificates and (2)
a weighted average coupon derived from net interest rates on the loans that will
back the certificates.
"WAC" refers to a variable pass-through rate that is equal to a weighted average
coupon derived from net interest rates on the loans that will back the
certificates.]
The privately offered certificates will also include the following classes of
certificates that are not shown above: [class E, class R-I, class R-II and class
R-III]. These other privately offered certificates do not have principal
balances, notional amounts or pass-through rates. They do not provide any
material credit support for the offered certificates.
S-4
<PAGE>
Relevant Parties and Dates
Depositor
PNC Mortgage Acceptance Corp., a wholly-owned subsidiary of Midland Loan
Services, Inc. PNC Mortgage Acceptance Corp.'s principal offices are located at
210 West 10th Street, 6th Floor, Kansas City, Missouri, 64105, telephone number
(816) 435-5000. See "PNC Mortgage Acceptance Corporation" in the prospectus.
Sellers
Midland Loan Services, Inc., a wholly owned subsidiary of PNC Bank, N.A.,
is selling ___ loans (____%). Midland is an affiliate of PNC Capital Markets,
Inc.
_____________________, is selling ___ loans (___%).
Underwriters
____________________ and PNC Capital Markets, Inc. __________________ is
the lead manager and sole bookrunner for this offering. PNC Capital Markets is
the co-manager.
Master Servicer and Special Servicer
Midland Loan Services, Inc. or any successor master servicer or special
servicer. See "Master Servicer and Special Servicer". Trustee
________________________________. See "The Pooling and Servicing
Agreement--The Trustee".
Controlling Class
The most subordinate class of principal balance certificates that has at
least [25%] of its initial principal balance still outstanding. If no class has
at least [25%] of its initial principal balance still outstanding, the most
subordinate class of principal balance certificates still outstanding will be
the controlling class.
Controlling Class Representative
The holder of a majority of the controlling class may appoint a
representative. The special servicer must notify the controlling class
representative before it takes certain actions and must obtain the controlling
class representative's approval on certain matters. The controlling class
representative may replace the special servicer without cause. See "The Pooling
and Servicing Agreement--General" and "--The Controlling Class Representative".
Significant Dates
Cut-off Date
______________, 20__.
Closing Date
On or about ______________, 20__.
Distribution Date
Payments on the offered certificates are scheduled to occur monthly,
commencing in _______ 200_. [The distribution date for each month will be the
later of:
o the ____ calendar day of that month, or if that day is not a business day,
then the next business day, and
o the ______ business day after the determination date for the month.]
Scheduled Final Distribution Date
The distribution date on which a class's principal balance or notional
amount would become zero if there are:
o no defaults or delinquencies,
o no prepayments of any kind, except that it is assumed that hyper-
amortization loans will pay on their anticipated repayment dates; and
o no modifications or extensions of any loans.
Please note that it is very unlikely that these assumptions will hold true.
See "Description of the Certificates--Scheduled Final Distribution Date".
S-5
<PAGE>
Rated Final Distribution Date
The distribution date in ________, 20__, which is the distribution date
occurring three years after the end of the amortization term of the loan with
the longest remaining amortization term on the closing date. See "Ratings".
Record Date
For each distribution date, the close of business on the _____ business day
of the prior calendar month.
Interest Accrual Period
For each distribution date, the prior calendar month. Collection Period
Collection Period
For each distribution date, the period beginning the day after the
determination date in the preceding month and ending on the related
determination date. For the first distribution date, the collection period
begins the day after the cut-off date.
Determination Date
[For each distribution date, the ______ calendar day of the month or, if
that day is not a business day, the first business day before that day.]
Due Date
The date scheduled payments come due under each mortgage loan (disregarding
grace periods). The due date for all the mortgage loans is the first day of the
month.
Information About the Certificates
Offered Certificates
We are offering the following classes of PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates, Series ____-___.
[Class S
Class A-1A
Class A-1B
Class A-2
Class A-3
Class A-4
Class B-1
Class B-2]
We have not registered the other classes of certificates under the
Securities Act of 1933 and are not offering them to you.
The approximate initial class principal balance, initial pass-through rate
and interest type of each class of the offered certificates will be as listed on
the chart on page S-4.
Certificate Designations
In this prospectus supplement, we will refer to the following groups of
certificates by the indicated designations:
Designation Related Classes
Offered certificates Classes [S, A-1A, A-1B, A-2, A-3, A-4, B-1
and B-2]
Privately offered certificates Classes [B-3, B-4, B-5, B-6, B-7, B-8, C, D,
E, R-I, R-II and R-III]
Senior certificates Classes [S, A-1A and A-1B]
Principal balance certificates Classes [A-1A, A-1B, A-2, A-3, A-4, B-1, B-2,
B-3, B-4, B-5, B-6, B-7, B-8, C and D]
Interest only certificates Class [S]
Subordinate certificates Classes [A-2, A-3, A-4, B-1, B-2, B-3, B-4,
B-5, B-6, B-7, B-8, C and D]
Deferred interest certificates Class [E]
Residual certificates Classes [R-I, R-II and R-III]
S-6
<PAGE>
Accrual of Interest
Each class of offered certificates will bear interest. In each case, that
interest will accrue during each interest accrual period based upon--
o the pass-through rate applicable for the particular class for that interest
accrual period,
o the aggregate principal balance or notional amount, as the case may be,
of the particular class outstanding immediately prior to the related
distribution date, and
o the assumption that each year consists of 360 days and 12 30-day months.
Distributions
Distributions to Senior Certificates
- ------------------------------------
On each distribution date, funds available for distribution from the
mortgage loans, net of prepayment premiums and deferred interest, will be
distributed to the holders of the senior certificates in the following order:
Interest on Senior Certificates: to pay interest to the holders of the
senior certificates in an amount equal to their interest entitlement.
Principal on [Class A-1A and Class A-1B] Certificates: to pay principal
from the funds available for principal distributions to the holders of the
[class A-1A and class A-1B] certificates, in that order, until reduced to zero.
If the principal amount of each class of principal balance certificates other
than [class A-1A and class A-1B] certificates has been reduced to zero, funds
available for principal distributions will be distributed to the holders of the
[class A-1A and class A-1B] certificates, pro rata, rather than sequentially.
Reimbursement of [Class A-1A and Class A-1B] Losses: to reimburse the
holders of the [class A-1A and class A-1B] certificates, pro rata, for any
losses on the mortgage loans that resulted in an unreimbursed reduction of the
principal balances of such certificates, plus interest on such amounts.
Distributions to Subordinate Certificates
- -----------------------------------------
On each distribution date, following the above distributions on the senior
certificates, the trustee will distribute the remaining portion of the funds
available for distribution to the holders of each class of subordinate
certificates in alphabetical and numerical order of class designation. In the
case of each class of subordinate certificates, those payments will be as
follows:
o first, distributions of interest in an amount equal to the class' interest
entitlement;
o second, to pay principal from the funds available for principal
distributions, if the principal balance of the class [A-1A and class A-1B]
certificates and each other class of subordinate certificates, if any,
with an earlier alphabetical and numerical class designation, has been
reduced to zero; and
o third, to reimburse the class for any losses on the mortgage loans that
resulted in an unreimbursed reduction of the principal balance of such
class of certificates, plus interest on such amounts.
Each class of subordinate certificates will receive distributions only
after all required distributions have been made on the senior certificates and
each other class of subordinate certificates, if any, with an earlier
alphabetical and numerical class designation.
In this prospectus supplement, "alphabetical and numerical order" is
determined first by alphabetical order, and then if the alphabetical
designations are the same, by numerical order.
Distribution of Prepayment Premiums
Any prepayment premium collected on a mortgage loan during a collection
period will be distributed to the holders of the offered certificates on the
next distribution date as set forth in "Description of the
Certificates--Distributions--Distributions of Prepayment Premiums".
Subordination
The rights of the subordinate certificates to receive payments of principal
and interest will be subordinated to the rights of the senior certificates. Each
class of subordinate certificates is also subordinate to the rights of holders
of each other class of subordinate certificates with an earlier alphabetical and
numerical class designation.
Such subordination results from:
o applying the funds available from the loans in the order described above;
and
o allocating losses on the loans and certain default-related and
unanticipated expenses of the trust to the certificates in reverse order
of their alphabetical and numerical class designations.
S-7
<PAGE>
After the balances of all subordinate certificates have been reduced to
zero, losses are allocated to the [class A-1A and A-1B] certificates in
proportion to their class principal balances.
The [class S] certificates receive no such allocations but do incur
reductions of their notional amount whenever the principal balance is reduced on
any class.
The certificates have no other form of credit enhancement.
Prepayment Interest Shortfalls and Excesses
If a borrower prepays a loan before the determination date in any calendar
month and pays interest which accrued on the prepayment from the beginning of
the calendar month, then that interest, net of master servicer fees, is a
"prepayment interest excess".
If a borrower prepays a loan after the determination date in a calendar
month and does not pay interest on the prepayment through the end of the
calendar month, then this interest shortfall, net of master servicer fees, is a
"prepayment interest shortfall".
Prepayment interest excesses collected during a collection period will
first offset prepayment interest shortfalls during the collection period. The
master servicer retains any remaining amount as additional servicing
compensation. The master servicer must cover prepayment interest shortfalls not
offset by prepayment interest excesses from its own funds up to certain maximum
amounts.
If and to the extent there are prepayment interest shortfalls not offset by
prepayment interest excesses or covered by the master servicer from its own
funds, then those prepayment interest shortfalls will be allocated among the
certificates in proportion to the interest accrued on each certificate during
the corresponding interest accrual period. Such net interest shortfalls
allocated to a class will reduce the distributable certificate interest on the
class. See "The Pooling and Servicing Agreement--Servicing Compensation and
Payment of Expenses".
Advances
The master servicer must make advances for delinquent payments of principal
(except for delinquent balloon payments) and/or interest on the loans and to
cover certain servicing expenses.
If the master servicer fails to make a required advance and the trustee is
aware of the failure, the trustee must make it.
Advances are required only if the advancing party determines in its
reasonable discretion that they are ultimately recoverable from future
collections on the related loan or mortgaged property.
All advances will accrue interest at the "prime rate".
To the extent not offset by collected late payment charges on the related
loan or default interest on any loan, payments of advance interest will reduce
the cash available to pay interest on the most subordinate class of certificates
then outstanding. See "The Pooling and Servicing Agreement--Advances".
Appraisal Reductions
If certain adverse events or circumstances occur or exist with respect to a
loan or the related mortgaged property, the master servicer or the special
servicer must obtain a new appraisal of the mortgaged property. If the principal
balance of the loan, plus certain other amounts due under the loan, is more than
[90%] of the new appraised value plus the amount of any escrows or reserves for
the loan that are not related to taxes or insurance, the amount of interest that
the master servicer is required to advance will be reduced. Due to the payment
priorities, this reduction in advances will reduce the cash available to pay
interest on the most subordinate class of certificates then outstanding. See
"Description of the Certificates--Appraisal Reductions."
Information About the Mortgage Loans
The certificates will represent beneficial ownership interests in a trust
fund created by the depositor. The trust fund will consist primarily of a pool
of ____ [fixed-rate] loans with a total cut-off date principal balance of
approximately $_________, plus or minus [5%]. We frequently refer to the total
cut-off date principal balance of the loans as the "initial pool balance".
S-8
<PAGE>
We include in this prospectus supplement a variety of information regarding
the loans and mortgaged properties. In reviewing this information, you should be
aware that:
o All numerical information provided about the loans is provided on an
approximate basis.
o All weighted average information provided about the loans or any sub-group
of loans reflects the weighting of those loans by their respective cut-off
date principal balances. The "cut-off date principal balance" of any loan
is its unpaid principal balance on ________, 20__, after application of
all payments of principal due on the loan on or before that date, whether
or not those payments are received.
o In the presenting the cut-off date principal balances of the loans, we have
assumed that:
(i) all scheduled payments of principal and/or interest due on the loans
on or before ___________, 20__ are timely made, and,
(ii) there are no prepayments or other unscheduled collections of principa
with respect to any of the loans during the period from __________,
20__ up to and including __________, 20__.
o When information about the loans or the properties is expressed as a
percentage, the percentage is based upon the cut-off date principal
balances of the related loans and not the number of loans.
o Some of the loans provide that they are cross-collateralized and
cross-defaulted with one or more other loans. Except as otherwise
indicated, when a loan is cross-collateralized and cross-defaulted with
another loan, we have presented the information regarding those loans as
if each of them was secured only by a lien on the corresponding propert
identified on Exhibit A-1 to this prospectus supplement. One such exception
is that each and every loan in any particular group of cross-collateralized
and cross-defaulted loans is treated as having the combined loan-to-value
ratio and the combined debt service coverage ratio for that entire group.
None of the loans is cross-collateralized with any loan that will not be
included in the trust.
o In making the count of loans in the trust fund, any single loan evidenced
by one or more notes and secured by mortgages over multiple properties was
counted as one loan. In some cases, for purposes of providing certain
property-specific information with respect to such multiple property loans
we have allocated each such loan among its related properties based upon:
o relative appraised values;
o relative underwritable cash flow; or
o prior allocations reflected in the related loan documents.
The loan-to-value ratios and debt service coverage ratios shown for each of the
separate properties securing a multiple property loan are the ratios for that
loan based upon all of those properties.
o In some cases, when multiple parcels of property secure a single
indebtedness, we have treated those parcels as a single "property" because
of their proximity to each other, the interrelationship of their operations
or for other reasons deemed appropriate by us.
o Whenever we refer to a particular property by name, we mean the property
identified by that name on Exhibit A-1 to this prospectus supplement.
o Statistical information regarding the loans may change prior to the date of
initial issuance of the certificates due to changes in the composition of
the mortgage pool prior to that date.
A [first] lien on a fee simple or leasehold estate in a mortgaged property
secures each loan.
o Fee - ____ properties (____%).
o Leasehold - ____ properties (____%).
o Fee/Leasehold - ___ properties (____%).
The mortgage pool includes ___ separate sets of cross-collateralized loans.
The largest of these sets is ____% of the initial pool balance.
You should consider all of the loans to be non-recourse. You should also
consider them not to be insured or guaranteed by any person or entity.
________________ loans (_____%) are "balloon loans" that are expected to
have more than [10%] of their original principal balance remaining unpaid at
their maturity date.
____ of the loans (____%) are hyper-amortization loans and provide for an
increase in their interest rate and/or principal amortization prior to maturity.
S-9
<PAGE>
____ Mortgage Loans (____%) have remaining amortization terms that are
substantially the same as their remaining terms to maturity.
The loans generally grant the related borrower a right to transfer its loan
under certain conditions, including the lender's prior consent. Some of the
loans may provide that the lender cannot unreasonably withhold its consent to
the proposed transferee.
Property types included in the mortgage pool include:
o multifamily - ___ properties (____%).
o retail - ___ properties (____%).
o office - ___ properties (____%).
o industrial - ___ properties (____%).
o hospitality - ___ properties (____%).
o mixed use - ___ properties (____%).
o manufactured housing - __ properties (___%).
o self storage - __ properties (____%).
o credit tenant lease - __ property (____%).
Properties located in each of ______ and ______ secure at least [10%] of
the initial pool balance. Also, properties located in each of _____, ______,
_______, _______ and ______ secure at least [5%], but less than [10%], of the
initial pool balance. None of the remaining ____ jurisdictions has mortgaged
properties securing [5%] or more of the initial pool balance.
No set of loans to a single borrower or to a single group of affiliated
borrowers constitutes more than ____% of the initial pool balance.
_________ properties (____%) are at least 50% occupied by a major tenant or
the borrower.
___________________ loans (____%) permit the borrower to defease its loan,
subject to certain conditions.
Other than loans allowing defeasance, the loans generally permit voluntary
prepayments after any lock-out period if a prepayment premium is also paid.
Prepayment premiums are generally calculated based on a yield maintenance
formula or a specified percentage of the amount prepaid. The prepayment premium
percentage will remain constant over time. The tables included in Exhibit A-2
analyze the percentage of the declining balance of the mortgage pool that will
be within a lock-out period or in which principal prepayments must be
accompanied by the indicated prepayment premium, for each of the time periods
indicated.
As of the cut-off date, the loans have the following characteristics:
o mortgage rates range from _____% to _____% per annum, with a weighted
average mortgage rate of _____% per annum;
o remaining terms to stated maturity range from __ months to ___ months,
with a weighted average remaining term to stated maturity of ___ months;
o cut-off date principal balances range from $______ to $_________, with an
average cut-off date principal balance of $_________;
o a weighted average underwritable debt service coverage ratio of ____x (see
"Description of the Mortgage Pool--Other Information"); and
o a weighted average cut-off date loan-to-value ratio of ____% (see
"Description of the Mortgage Pool--Other Information").
Any weighted average loan-to-value and debt service coverage ratio
calculations in this prospectus supplement exclude the __ loan (___%) secured by
a mortgaged property subject to a credit tenant lease.
The characteristics of the loans are more fully described under
"Description of the Mortgage Pool" and in the Exhibits.
Yield and Prepayment Considerations
The yield on an offered certificate will depend on many factors, including:
o the pass-through rate for the certificate in effect from time to time;
o whether the certificate is purchased at a discount or premium;
o the timing of principal distributions that reduce the principal balance
or notional amount of the certificate;
o appraisal reductions;
o expense losses; and
o realized losses.
See "Description of the Certificates--Distributions--Application of
Available Funds" and
S-10
<PAGE>
"--Distributions--Principal Distribution Amount".
We cannot predict the actual rate of principal prepayments. You should
independently estimate prepayment rates to use in evaluating an investment in
the offered certificates. See "Yield and Maturity Considerations".
A different rate of principal payments than you anticipate will cause the
actual yield to vary, perhaps significantly, from your expected yield.
You may be unable to reinvest principal distributions in an alternative
investment with a comparable yield. The [class S] certificates are interest-only
certificates and receive no distributions of principal. The yield to maturity of
[class S] certificates will be very sensitive to the prepayment, repurchase,
extension, default and recovery experience on the mortgage loans. These may
fluctuate significantly from time to time. A rate of principal payments,
liquidations, unreimbursed expense or losses on the mortgage loans that is more
rapid than you expect will significantly reduce your expected yield to maturity
on these certificates. See "Yield and Maturity Considerations--Yield Sensitivity
of the Interest Only Certificates".
Additional Information About the Certificates
Tax Status of the Certificates
An election will be made to treat the trust as three separate "real estate
mortgage investment conduits" - REMIC I, REMIC II and REMIC III - for federal
income tax purposes. In the opinion of counsel, the trust will qualify for this
treatment.
Pertinent federal income tax consequences of an investment in the offered
certificates include:
o Each class of offered certificates will constitute a "regular interest" in
REMIC III.
o The regular interests will be treated as newly originated debt instruments
for federal income tax purposes.
o You will be required to report income on the offered certificates in
accordance with the accrual method of accounting.
o The [class S and class B-2] certificates will be, and the other classes of
the offered certificates will not be, issued with original issue discount.
See "Material Federal Income Tax Consequences" in this prospectus
supplement and in the accompanying prospectus.
Optional Termination
If the total stated principal balance of all outstanding principal balance
certificates is less than [1%] of the initial pool balance on any distribution
date, then each of the following in this order has an option to purchase all
loans and property in the trust fund at a specified price:
o the majority holders of the controlling class,
o the master servicer,
o the special servicer, and
o any holder of more than [50%] of the class R-I certificates.
Such a purchase will terminate the trust fund and cause early retirement of
the then outstanding certificates. See "Description of the
Certificates--Optional Termination".
Denominations
You may purchase offered certificates in minimum denominations of [$5,000]
initial principal balance or notional amount, as applicable, and in any higher
whole-dollar denomination.
Clearance and Settlement
You must hold your certificates in book-entry form. In the United States,
we will deliver through the facilities of The Depository Trust Company. In
Europe, we may deliver through the facilities of Cedelbank or the Euroclear
System. DTC, Cedelbank or Euroclear rules and operating procedures govern
transfers within the system. Crossmarket transfers between persons holding
directly or indirectly through DTC, on the one hand, and counterparties holding
directly or indirectly through Cedelbank or Euroclear, on the other, will be
effected in DTC through Citibank, N.A., the depositary for Cedelbank, or the
Brussels, Belgium office of Morgan Guaranty Trust Company of New York, the
depositary for Euroclear.
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ERISA Considerations
Subject to important considerations described under "ERISA Considerations"
in this prospectus supplement and in the accompanying prospectus, the [class S,
class A-1A and class A-1B] certificates are eligible for purchase by persons
investing assets of employee benefit plans or individual retirement accounts.
The [class A-2, class A-3, class A-4, class B-1 and class B-2] certificates
may not be purchased by, or transferred to, any employee benefit plan or other
retirement arrangement subject to the Employee Retirement Income Security Act of
1974, or Section 4975 of the Internal Revenue Code of 1986, or any person
investing the assets of any such employee benefit plan or other retirement
arrangement. This prohibition does not apply to an insurance company investing
assets of its general account under circumstances that would qualify for an
exemption under Sections I and III of prohibited transaction class exemption
95-60.
If you are a fiduciary of any retirement plan or other employee benefit plan or
arrangement subject to ERISA or section 4975 of the Internal Revenue Code of
1986, you should review carefully with your legal advisors whether the purchase
or holding of the offered certificates could give rise to a transaction that is
prohibited under ERISA or Section 4975 of the Internal Revenue Code of 1986. See
"ERISA Considerations" in this prospectus supplement and in the prospectus.
Ratings
It is a condition of the issuance of the offered certificates that they
receive credit ratings no lower than the ratings indicated on the cover of this
prospectus supplement from ______________ and _______________.
A credit rating is not a recommendation to buy, sell or hold securities and
may be revised or withdrawn at any time by the assigning rating agency.
See "Ratings" in this prospectus supplement and in the prospectus for a
discussion of the basis upon which ratings are given, the limitations of and
restrictions on the ratings, and the conclusions that should not be drawn from a
rating.
Legal Investment
The [class S, A-1A, A-1B and A-2] certificates will [not] be "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984 [so long as they are rated in one of the two highest rating
categories by at least one nationally recognized statistical rating
organization.]
If your investment authority is restricted by law, then you should consult
your own legal advisors to determine whether and to what extent the offered
certificates constitute legal investments for you. See "Legal Investment" in
this prospectus supplement and in the prospectus.
Reports To Certificateholders
The trustee will make monthly reports available to certificateholders of
record.
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RISK FACTORS
You should carefully consider the risks before making an investment
decision. In particular, the timing and amount of distributions on your
certificates will depend on payments and other recoveries received on the loans.
Therefore, you should carefully consider the risk factors relating to the loans
and the mortgaged properties.
The risks and uncertainties described below are not the only ones relating
to the offered certificates. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair your
investment.
If any of the following risks actually occur, your investment could be
materially and adversely affected.
This prospectus supplement also contains forward-looking statements that
involve risks and uncertainties. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of a variety
of factors, including the risks described below and elsewhere in this prospectus
supplement and the prospectus.
Your Investment Is Not Insured or Guaranteed and Your Source for Repayment Is
Limited
You should consider all of the loans to be nonrecourse loans. You should
also consider them not to be insured or guaranteed by any person or entity. If a
default occurs, the lender's remedies generally are limited to foreclosing
against the specific real property and other assets pledged to secure the
defaulted loan. Such remedies may be insufficient to provide a full return on
your investment. Payment of amounts due under a loan prior to maturity is
dependent primarily on the sufficiency of the net operating income of the
mortgaged property. Payment of a loan at maturity is primarily dependent upon
the borrower's ability to sell or refinance the property for an amount
sufficient to repay the loan.
The offered certificates will represent interests solely in the assets of
the trust and will not represent an interest in or an obligation of any other
person. Distributions on any class of the offered certificates will depend
solely on the amount and timing of payments on the loans.
____________________ of the loans (____%) were originated within 12 months
prior to the cut-off date. Consequently, these loans do not have a long-standing
payment history.
The Repayment of a Multifamily or Commercial Loan Is Dependent on the Cash Flow
Produced by the Property, Which Can Be Volatile and Insufficient to Allow Timely
Payment on Your Certificates
The loans are secured by various types of income-producing commercial
properties. Because, among other things, commercial lending typically involves
larger loans, it is generally thought to expose a lender to greater risk than
one-to-four family residential lending.
The repayment of a commercial loan is typically dependent upon the ability
of the applicable property to produce cash flow. Even the liquidation value of a
commercial property is determined, in substantial part, by the amount of the
property's cash flow or its potential to generate cash flow. However, net
operating income and cash flow can be volatile and may be insufficient to cover
debt service on the loan at any given time.
A large number of factors may adversely affect the net operating income,
cash flow and property value of the mortgaged properties. Some of these factors
relate to the property itself, such as:
o the age, design and construction quality of the property;
o perceptions regarding the safety, convenience and attractiveness of the
property;
o the proximity and attractiveness of competing properties;
o the adequacy of the property's management and maintenance;
o increases in operating expenses at the property and in relation to
competing properties;
o an increase in the capital expenditures needed to maintain the property or
make improvements;
o the dependence upon a single tenant, or a concentration of tenants in a
particular business or industry;
o a decline in the financial condition of a major tenant;
o an increase in vacancy rates; and
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o a decline in rental rates as leases are renewed or entered into with new
tenants.
Others factors are more general in nature, such as:
o national, regional or local economic conditions, including plant
closings, military base closings, industry slowdowns and unemployment
rates;
o local real estate conditions, such as an oversupply of competing
properties, space or housing;
o demographic factors;
o decreases in consumer confidence;
o changes in consumer tastes and preferences; and
o retroactive changes in building codes.
The volatility of net operating income will be influenced by many of the
foregoing factors, as well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
o tenant defaults;
o in the case of rental properties, the rate at which new rentals occur;
and
o the property's "operating leverage" (i.e., the percentage of total
property expenses in relation to revenue, the ratio of fixed operating
expenses to those that vary with revenues, and the level of capital
expenditures required to maintain the property and to retain or replace
tenants).
A decline in the real estate market or in the financial condition of a
major tenant will tend to have a more immediate effect on the net operating
income of properties with short-term revenue sources and may lead to higher
rates of delinquency or defaults under loans.
Converting Commercial Properties to Alternative Uses May Require Significant
Expenditures Which Could Reduce Payments on Your Certificates
Some of the mortgaged properties may not be readily convertible to
alternative uses if the current use of those properties were to become
unprofitable for any reason. Converting commercial properties to alternate uses
generally requires substantial capital expenditures. In addition, zoning or
other restrictions also may prevent alternative uses. The liquidation value of
any such mortgaged property consequently may be substantially less than the
liquidation value of a property that the owner could readily adapt to other
uses.
Property Value May Be Adversely Affected Even When There Is No Change in Current
Operating Income
Various factors may adversely affect the value of the mortgaged properties
without affecting the properties' current net operating income. These factors
include, among others:
o changes in governmental regulations, fiscal policy, zoning or tax laws;
o potential environmental legislation or liabilities or other legal
liabilities;
o the availability of refinancing; and
o changes in interest rate levels.
Tenant Concentration Increases the Risk That Cash Flow Will Be Interrupted,
Which May Have an Adverse Effect on the Payment of Your Certificates
A deterioration in the financial condition of a tenant can be particularly
significant if a mortgaged property is leased to a single tenant or a small
number of tenants, or if the lease payments of such tenant or tenants account
for a significant portion of the property's gross revenue. Such properties are
more susceptible to interruptions of cash flow if a tenant fails to renew its
lease or defaults under its lease. This is so because the owner may:
o suffer severe financial effects from the absence of all or a significant
portion of the property's rental income;
o require more time to re-lease the space; and
o incur substantial capital costs to make the space appropriate for
replacement tenants.
For ___properties (____%), a single tenant or the borrower occupies more
than [50%] of the related mortgaged property.
____ loan (____%) is secured by a mortgaged property subject to a credit
tenant lease. This loan has a lower debt service coverage ratio and a higher
loan-to-value ratio than would have been acceptable if the property had been
leased to a less creditworthy tenant. The tenant for this property has a
long-term local issuer credit rating of "___" from Standard & Poor's. This loan
is fully amortizing over the lease term of the related credit tenant.
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A concentration of particular tenants among the mortgaged properties or of
tenants in a particular business or industry may also adversely affect retail
and office properties.
Leasing Mortgaged Properties to Multiple Tenants May Result in Higher Re-Leasing
Expenditures, Which May Have an Adverse Effect on the Payment of Your
Certificates
If a mortgaged property has multiple tenants, re-leasing expenditures may
be more frequent than in the case of mortgaged properties with fewer tenants.
These additional expenses will reduce the cash flow available for debt service
payments. Mortgaged properties with multiple tenants also may experience higher
continuing vacancy rates and greater volatility in rental income and expenses.
The Presence of Large Loans or a Large Concentration of Loans Among Related
Borrowers Increases the Possibility of Losses on the Loans Which May Have an
Adverse Effect on Your Certificates
The effect of mortgage pool loan losses will be more severe if:
o the pool is comprised of a small number of loans, each with a relatively
large principal amount; or
o the losses relate to loans that account for a disproportionately large
percentage of the pool's aggregate principal balance.
The __ largest loans, or groups of cross-collateralized loans, represent
___% of the initial pool balance. The potential loss on any of these loans may
have a more adverse effect on the offered certificates than a loss on a smaller
loan. Each of the other loans represents less than ___% of the initial pool
balance.
A concentration of loans with the same borrower or related borrowers also
can pose increased risks. Several groups of loans are made to the same borrower
or to borrowers related through common ownership and where, in general, the
related mortgaged properties are commonly managed. The three largest of these
groups represent ___%, ___% and ___%, respectively, of the initial pool balance.
The mortgaged properties for __ loans (___%) are owned by affiliated borrowers
and are also commonly managed by the same property management company. This
property management company is also related to each of the separate borrowers
through common ownership.
The bankruptcy or insolvency of any borrower in any such group could have
an adverse effect on the operation of all of the related mortgaged properties
and on the ability of such related mortgaged properties to produce sufficient
cash flow to make required payments on the related loans. For example, if a
person that owns or controls several mortgaged properties experiences financial
difficulty at one such property, it could:
o defer maintenance at one or more other mortgaged properties in order to
satisfy current expenses with respect to the mortgaged property
experiencing financial difficulty, or
o attempt to avert foreclosure by filing a bankruptcy petition that might
have the effect of interrupting monthly payments for an indefinite period
on all the related loans.
Large Geographic Concentrations of Mortgaged Properties May Have an Adverse
Effect on the Payment of Your Certificates
Concentrations of mortgaged properties in geographic areas may increase the
risk that adverse economic or other developments or a natural disaster affecting
a particular region of the country could increase the frequency and severity of
losses on loans secured by the properties. In recent periods, several regions of
the United States have experienced significant real estate downturns. Regional
economic declines or adverse conditions in regional real estate markets could
adversely affect the income from, and market value of, the mortgaged properties
located in such region. Other regional factors such as earthquakes, floods or
hurricanes or changes in governmental rules or fiscal policies also may
adversely affect the mortgaged properties located in such region. For example,
mortgaged properties located in California may be more susceptible to certain
hazards (such as earthquakes) than properties in other parts of the country.
The mortgaged properties are located in __ jurisdictions. Mortgaged
properties located in each of _____________and __________ secure at least [10%]
of the initial pool balance. Also, mortgaged properties located in each of
_________, ________, _______, __________ and ________ secure at least [5%], but
less than [10%], of the initial pool balance. None of the remaining __
jurisdictions has mortgaged properties securing [5%] or more of the initial pool
balance. See "Description of the Mortgage Pool".
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<PAGE>
Large Concentrations of Multifamily Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Multifamily properties secure ___% of the initial pool balance.
A large number of factors may affect the value and successful operation of
a multifamily property, including:
o the physical attributes of the property, such as its age, appearance and
construction quality;
o the location of the property;
o the characteristics of the surrounding neighborhood;
o the ability of management to provide adequate maintenance and insurance;
o the types of services and amenities provided at the property;
o the property's reputation;
o the tenant mix, such as a tenant population that is dependent upon
students, workers from a particular business or personnel from a local
military base;
o the level of mortgage interest rates, which may encourage tenants to
purchase rather than rent housing;
o the presence of competing properties;
o local or national economic conditions;
o the extent to which a property is subject to covenants that require
rental to low income tenants;
o state and local regulations, such as rent control regulations and
regulations that govern eviction; and
o government assistance/rent subsidy programs.
___ multifamily properties (___%) are residential condominium projects.
These properties are subject to the governing documents of the owners'
association, local laws applicable to condominiums and other special
considerations. Consequently, realizing upon any such property following a
default under the related loan could expose the trust to greater delay, expense
and risk than a loan secured by a property that is not a condominium.
Large Concentrations of Retail Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Retail properties secure ___% of the initial pool balance. The quality and
success of a retail property's tenants significantly affect the property's
value. For example, if the sales of retail tenants were to decline, rents tied
to a percentage of gross sales may decline and those tenants may be unable to
pay their rent or other occupancy costs.
The success of tenants at a retail property will be affected by:
o competition from other retail properties;
o perceptions regarding the safety, convenience and attractiveness of the
property;
o demographics of the surrounding area;
o traffic patterns and access to major thoroughfares;
o availability of parking;
o customer tastes and preferences; and
o the drawing power of other tenants.
The presence or absence of an "anchor store" at a retail property also can
be important. Anchors play a key role in generating customer traffic and making
a retail property desirable for other tenants. Consequently, the economic
performance of an anchored retail property will be adversely affected by:
o an anchor store's failure to renew its lease;
o termination of an anchor store's lease;
o the bankruptcy or economic decline of an anchor store or self-owned
anchor; or
o an anchor store closing its business, even if, as a tenant, it continues
to pay rent.
If an anchor store at a mortgaged property were to close, the related
borrower may be unable to replace the anchor in a timely manner or without
suffering adverse economic consequences. Furthermore, some anchor stores have
co-tenancy clauses in their leases that permit them to cease operating if
certain other stores are not operated at the mortgaged property or if certain
other covenants are breached. Some non-anchor tenants may also be permitted to
terminate their leases if certain other stores are not operated or if those
tenants fail to meet certain business objectives.
Retail properties also face competition from sources outside a given real
estate market. For example, all of the following compete with more traditional
retail properties for consumer dollars:
o factory outlet centers;
o discount shopping centers and clubs;
o catalogue retailers;
o home shopping networks;
o internet web sites; and
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<PAGE>
o telemarketing.
These alternative retail outlets often have lower operating costs than
traditional retail properties. Continued growth of these alternative retail
outlets could adversely affect the rents, income and market value of the retail
properties in the mortgage pool.
Moreover, additional competing retail properties may be built in the areas
where the retail properties are located.
Large Concentrations of Office Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Office properties secure ___% of the initial pool balance.
A large number of factors may adversely affect the value of office
properties, including:
o the quality of an office property's tenants;
o the diversity of an office property's tenants or reliance on a single or
dominant tenant;
o the physical attributes of the property in relation to competing office
properties, such as age, condition, design, location, access to
transportation and ability to offer certain amenities, such as
sophisticated building systems;
o the desirability of the area as a business location; and
o the strength and nature of the local economy, including labor costs and
quality, tax environment and quality of life for employees.
Moreover, the cost of refitting office space for a new tenant is often
higher than the cost of refitting other types of property.
Large Concentrations of Industrial Properties Securing Loans Will Subject Your
Investment to the Special Risks of Such Properties
Industrial properties secure ___% of the initial pool balance. Various
factors may adversely affect the economic performance of an industrial property,
including:
o reduced demand for industrial space because of a decline in a particular
industry segment;
o a property becoming functionally obsolete;
o strikes or the unavailability of labor sources;
o changes in energy prices;
o relocation of highways and the construction of additional highways or
other changes in access;
o a change in the proximity of supply sources; and
o environmental hazards.
Large Concentrations of Hospitality Properties Securing Loans Will Subject Your
Investment to the Special Risks of Such Properties
Hospitality properties secure ___% of the initial pool balance. Various
factors may adversely affect the economic performance of a hospitality property,
including:
o adverse local, regional, national or international economic and social
conditions, which may limit the amount that can be charged for a room and
reduce occupancy levels;
o the construction of competing hospitality properties;
o continuing expenditures for modernizing, refurbishing and maintaining
existing facilities prior to the expiration of their anticipated useful
lives;
o a deterioration in the financial strength or managerial capabilities of
the owner and operator of a hospitality property; and
o changes in travel patterns, changes in access, increases in energy prices,
strikes, relocation of highways or the construction of additional highways.
Because rooms at hospitality properties generally are rented for short
periods of time, the financial performance of those properties tend to be
affected by adverse economic conditions and competition more quickly than other
types of commercial properties.
Moreover, the hospitality industry is generally seasonal in nature. This
seasonality can be expected to cause periodic fluctuations in a hospitality
property's revenues, occupancy levels, room rates and operating expenses.
Further, in the event of a foreclosure, the trustee or a purchaser of a
hospitality property probably would not be entitled to the rights under any
liquor license for that property. Such party would be required to apply for a
new license in its own name. The inability to obtain a new liquor license may
have an adverse effect on the value of a hospitality property.
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The Affiliation of Some of the Properties with a Franchise or Hotel Management
Company May Have an Adverse Effect on the Payment of Your Certificates
___ of the hospitality properties (___%) are operated as franchises of
national hotel chains or managed by a hotel management company. The performance
of a hospitality property operated as a franchise or by a hotel management
company depends in part on:
o the continued existence and financial strength of the franchisor or
hotel management company;
o the public perception of the franchise or hotel chain service mark; and
o the duration of the franchise license or management agreements.
The transferability of a franchise license agreement may be restricted. In
the event of a foreclosure, the lender or its agent may not have the right to
use the franchise license without the franchisor's consent. Conversely, in some
instances, the lender may be unable to remove a franchisor or a hotel management
company that it desires to replace following a foreclosure.
The adverse effect of an economic decline in a particular hotel chain will
be more significant if there is a concentration of hotels operated by that chain
among the properties securing loans in the mortgage pool. In this regard, the
largest concentration consists of __ hospitality properties (___%) that are
operated as ________ franchises.
Certain Additional Risks Relating to Tenants
The income from, and market value of, the mortgaged properties leased to
various tenants would be adversely affected if:
o space in the mortgaged properties could not be leased or re-leased;
o tenants were unable to meet their lease obligations;
o a significant tenant were to become a debtor in a bankruptcy case; or
o rental payments could not be collected for any other reason.
Even if vacated space is successfully relet, the costs associated with
reletting, including tenant improvements and leasing commissions, could be
substantial and could reduce cash flow from the mortgaged properties. Moreover,
if a tenant defaults in its obligations to a borrower, the borrower may incur
substantial costs and experience significant delays associated with enforcing
its rights and protecting its investment, including costs incurred in renovating
and reletting the property.
Tenant Bankruptcy May Adversely Affect the Income Produced by the Property and
May Have an Adverse Effect on the Payment of Your Certificates
The bankruptcy or insolvency of a major tenant, or a number of smaller
tenants, in retail and office properties may adversely affect the income
produced by a mortgaged property. Under federal bankruptcy law, a tenant/debtor
has the option of affirming or rejecting any unexpired lease. If the tenant
rejects the lease, the landlord's claim for breach of the lease would be a
general unsecured claim against the tenant, absent collateral securing the
claim. The claim would be limited to:
o the unpaid rent under the lease for the periods prior to the bankruptcy
petition or the earlier surrender of the leased premises, plus
o the rent under the lease for the greater of one year or 15%, not to
exceed 3 years, of the remaining term of the lease.
Federal or State Environmental Laws May Affect the Value of a Mortgaged Property
or the Ability of a Borrower to Make Required Loan Payments and May Have an
Adverse Effect on the Payment of Your Certificates
Various environmental laws may make a current or previous owner or operator
of real property liable for the costs of removal or remediation of hazardous or
toxic substances on, under, adjacent to, or in the property. Those laws often
impose liability whether or not the owner or operator knew of, or was
responsible for, the presence of the hazardous or toxic substances. For example,
certain laws impose liability for release of asbestos-containing materials into
the air or require the removal or containment of these materials. In some
states, contamination of a property may give rise to a lien on the property to
assure payment of the costs of cleanup. In some states, this lien has priority
over the lien of a pre-existing mortgage. Additionally, third parties may seek
recovery from owners or operators of real properties for personal injury
associated with exposure to asbestos, lead-based paint or other hazardous
substances.
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The owner's liability for any required remediation generally is not limited
by law and could exceed the value of the property and/or the aggregate assets of
the owner. The presence of hazardous or toxic substances also may adversely
affect the owner's ability to refinance the property or to sell the property to
a third party. The presence of, or strong potential for contamination by,
hazardous substances consequently can materially adversely affect the value of
the property and a borrower's ability to repay its loan.
In addition, under certain circumstances, a lender (such as the trust)
could be liable for the costs of responding to an environmental hazard. See
"Certain Legal Aspects of the Mortgage Loans--Environmental Considerations" in
the prospectus.
Environmental Issues Relating to Specific Properties May Have an Adverse Effect
on the Payment of Your Certificates
Environmental site assessments were obtained for ___ of the mortgaged
properties (___%) during the [24]-month period ending on ___________, 20__. The
assessments for __ of those mortgaged properties (___%) were obtained more than
18 months prior to the cut-off date. The assessments for ___ of those mortgaged
properties (___%) did not satisfy all of the requirements necessary to be
considered "Phase I" environmental site assessments.
Environmental consultants have detected asbestos or lead-based paint at
several mortgaged properties by sampling. The environmental consultants suspect
that asbestos or lead-based paint may be located at other mortgaged properties.
In some cases, the asbestos or lead-based paint is in poor condition. The
asbestos or lead-based paint found or suspected is not expected to present a
significant risk as long as the related mortgaged property is properly managed
or, when recommended by the consultant, the problem is remedied or abated.
Nonetheless, the value of a mortgaged property as collateral for the related
loan could be adversely affected, and claims for damages could arise from
parties injured by such asbestos or lead-based paint.
In certain cases, an assessment disclosed other known or potential adverse
environmental conditions, such as underground storage tanks or soil or
groundwater contamination. We cannot assure you, however, that the environmental
assessments revealed all existing or potential environmental risks or that all
adverse environmental conditions have been completely remediated.
Except as described herein, where an assessment disclosed a known or
potential material and adverse environmental condition, the originator required
the borrower to:
o escrow funds deemed sufficient to ensure remediation of or to monitor
the environmental issue;
o obtain an environmental insurance policy that covers the environmental
issue; or
o establish an operations and maintenance plan that, if implemented, would
prevent any material and adverse consequences resulting from the
environmental issue.
Set forth below are some of the known or potential material and adverse
environmental conditions for which an escrow has been established to cover
remediation costs or an environmental insurance policy has been obtained to
cover potential clean-up costs:
o ___ mortgaged properties (___%) - potential or existing contamination
arising from the operation of dry cleaning facilities upon or near such
properties;
o ___ mortgaged properties (___%) - potential or existing contamination
arising from the operation of gas stations or automobile/marine repair
facilities upon or near such properties;
o ___ mortgaged property (___%) - by the former use of this property as
part of an oil production field;
o ___ mortgaged property (___%) - by the presence of underground storage
tanks upon this property; or
o ___ mortgaged properties (___%) - by the presence of leaking underground
storage tanks or other adverse environmental conditions on or near such
properties.
In some cases, the environmental consultant did not recommend that any
action be taken with respect to a known or potential adverse environmental
condition at a mortgaged property or a nearby property because:
o a remediation, under the supervision of an environmental regulatory
agency, had been completed or was currently underway;
o an environmental regulatory agency had issued a "no further action"
letter regarding the condition; or
o a responsible party with respect to the condition had already been
identified.
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No environmental site assessments were obtained for ___ mortgaged
properties (___%). For ___mortgaged properties (___%) a "Phase II" environmental
site assessment was recommended but not performed. In general, the decision not
to take the foregoing actions with respect to any of those mortgaged properties
was based upon the borrower or the lender obtaining an environmental insurance
policy with respect to the mortgaged property.
For ___ of the mortgaged properties (___%), the depositor will obtain a
separate secured creditor impaired property group policy covering certain
environmental matters with respect to such properties. For each of ___ other
mortgaged properties (___%), _______________ obtained a separate secured
creditor impaired property policy covering certain environmental matters with
respect to such properties. See "Description of the Mortgage Pool--Environmental
Insurance" for a more detailed description of these secured creditor impaired
property policies.
Each environmental insurance policy obtained with respect to a mortgaged
property contains certain coverage limits. In addition, the policies do not
provide coverage for adverse environmental conditions at levels below legal
limits or for conditions involving asbestos and lead-based paint. There is no
assurance that any escrowed funds will be sufficient to complete remediation of
any environmental conditions affecting the related mortgaged property.
The environmental assessments, when obtained, have not revealed any
environmental liability that the depositor believes would have a material
adverse effect on the borrowers' businesses, assets or results of operations
taken as a whole. Nevertheless, there may be material environmental liabilities
of which the depositor is unaware. Moreover, there is no assurance that:
o future laws, ordinances or regulations will not impose any material
environmental liability; or
o the current environmental condition of the mortgaged properties will not be
adversely affected by tenants or by the condition of land or operations in
the vicinity of the mortgaged properties, such as underground storage
tanks.
Before the special servicer acquires title to a property on behalf of the
trust or assumes operation of the mortgaged property, it must obtain an
environmental assessment of the mortgaged property. This requirement will
decrease the likelihood that the trust will become liable under any
environmental law. However, this requirement may effectively preclude
foreclosure until a satisfactory environmental assessment is obtained or any
required remedial action is completed. There is accordingly some risk that the
mortgaged property will decline in value while this assessment is being obtained
or the remedial work completed. Moreover, there is no assurance this requirement
will protect the trust from liability under environmental laws.
Borrower May Be Unable to Repay the Remaining Principal Balance on Its Maturity
Date or Anticipated Repayment Date, Which May Have an Adverse Effect on the
Payment of Your Certificates
__________ of the loans (___%) are expected to have more than [10%] of the
original principal balance remaining unpaid on their stated maturity date or, in
the case of hyper-amortization loans, on their anticipated repayment date. We
cannot assure you that each borrower will have the ability to repay the
remaining principal balance on the pertinent date. Additionally, a borrower in a
hyper-amortization loan is not obligated to repay its loan on the anticipated
repayment date. Loans with substantial remaining principal balances at their
stated or anticipated maturity involve greater risk than fully amortizing loans.
A borrower's ability to repay a loan on its maturity date or anticipated
repayment date typically will depend upon its ability either to refinance the
loan or to sell the mortgaged property at a price sufficient to permit
repayment. A borrower's ability to achieve either of these goals will be
affected by a number of factors, including:
o the availability of, and competition for, credit for commercial and
multifamily properties;
o prevailing interest rates;
o the fair market value of the related properties;
o the borrower's equity in the related properties;
o the borrower's financial condition;
o the operating history and occupancy level of the property;
o tax laws; and
o prevailing general and regional economic conditions.
The availability of funds in the credit markets fluctuates over time.
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See "Description of the Mortgage Pool - Certain Terms and Conditions of the
Mortgage Loans".
Borrowers That Are Not Special-Purpose Entities May be More Likely to Pursue a
Bankruptcy
The organizational documents of the borrowers for ___ loans (___%) do not
limit the borrowers' business activities to owning their respective properties.
Most of the borrowers (and any special-purpose entity having an interest in
any of the borrowers) do not have an independent director whose consent would be
required to file a voluntary bankruptcy petition on behalf of the borrower. One
of the purposes of an independent director (or of a special-purpose entity
having an interest in the borrower) is to reduce the likelihood of a bankruptcy
petition filing intended solely to benefit an affiliate and not justified by the
borrower's own economic circumstances.
The Borrower's Ability to Effect Other Borrowings May Reduce the Cash Flow
Available to the Property, Which May Have an Adverse Effect on the Payment of
Your Certificates
The loans generally do not permit the borrower to incur additional
indebtedness using the mortgaged property as collateral. However, ___ property
(___%) is known to be encumbered by a subordinate mortgage securing other debt
of the related borrower. The borrower for ___ other loan (___%) is also known to
have, and other borrowers may have, other unsecured debt, including debt
incurred in the ordinary course of business.
When a borrower (or its constituent members) also has one or more other
outstanding loans (even if subordinated, unsecured or mezzanine loans), the
trust is subjected to additional risk. The borrower and/or its constituent
members may have difficulty servicing and repaying multiple loans. The existence
of another loan generally will make it more difficult for the borrower to obtain
refinancing of the loan, which may jeopardize repayment of the loan. Moreover,
the need to service additional debt may reduce the cash flow available to the
borrower to operate and maintain the mortgaged property.
Additionally, if the borrower (or its constituent members) defaults on its
loan and/or any other loan, actions taken by other lenders could impair the
security available to the trust. If a junior lender files an involuntary
petition for bankruptcy against the borrower or the borrower files a voluntary
petition to stay enforcement by a junior lender, the trust's ability to
foreclose on the property will be automatically stayed, and principal and
interest payments might not be made during the course of the bankruptcy case.
The bankruptcy of another lender also may operate to stay foreclosure by the
trust.
Further, if another loan secured by the mortgaged property is in default,
the other lender may foreclose on the mortgaged property, unless the other
lender has agreed not to foreclose. A foreclosure by the other lender may cause
a delay in payments and/or an involuntary repayment of the loan prior to
maturity. The trust may also be subject to the costs and administrative burdens
of involvement in foreclosure proceedings or related litigation.
Bankruptcy Proceedings Relating to a Borrower May Result in a Restructuring of
the Loan
Under federal bankruptcy law, the filing of a petition in bankruptcy by or
against a borrower will stay the sale of the real property that the borrower
owns, as well as the commencement or continuation of a foreclosure action. In
addition, if a court determines that the value of the mortgaged property is less
than the principal balance of the loan it secures, the court may prevent a
lender from foreclosing on the mortgaged property, subject to certain
protections available to the lender. As part of a restructuring plan, a court
also may reduce the amount of secured indebtedness to the current value of the
mortgaged property. Such an action would make the lender a general unsecured
creditor for the difference between the current value of the property and the
amount of its loan. A bankruptcy court also may:
o grant a debtor a reasonable time to cure a payment default on a loan;
o reduce monthly payments due under a loan;
o change the rate of interest due on a loan; or
o otherwise alter the loan's repayment schedule.
Moreover, the filing of a petition in bankruptcy by, or on behalf of, a
junior lienholder may stay the senior lienholder from taking action to foreclose
on the junior lien. Additionally, the borrower's trustee or the borrower, as
debtor-in-possession, has certain special powers to avoid, subordinate or
disallow debts. In certain circumstances, the claims of the trustee may be
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subordinated to financing obtained by a debtor-in-possession subsequent to its
bankruptcy.
Under federal bankruptcy law, the lender will be stayed from enforcing a
borrower's assignment of rents and leases. Federal bankruptcy law also may
interfere with a lender's ability to enforce any lockbox requirements. The legal
proceedings necessary to resolve these issues can be time-consuming and may
significantly delay the lender's receipt of rents. Rents also may escape an
assignment if the borrower uses the rents to maintain the mortgaged property or
for other court authorized expenses.
Thus, the trustee's recovery from borrowers in bankruptcy proceedings may
be significantly delayed, and the total amount ultimately collected may be
substantially less than the amount owed.
The Operation of Commercial Properties Is Dependent upon Successful Management
The successful operation of a real estate project depends upon the property
manager's performance and viability. The property manager is generally
responsible for:
o responding to changes in the local market;
o planning and implementing a rental structure for the property;
o operating the property and providing building services;
o managing operating expenses; and
o assuring that maintenance and capital improvements are completed in a
timely fashion.
Properties deriving revenues primarily from short-term sources are
generally more management intensive than properties leased to creditworthy
tenants under long-term leases.
A good property manager can improve cash flow, reduce vacancy, leasing and
repair costs and preserve building value if it:
o controls costs;
o provides appropriate service to tenants; and
o maintains the improvements.
On the other hand, management errors can, in some cases, impair short-term
cash flow and the long-term viability of an income-producing property.
The depositor makes no representation or warranty as to the skills of any
present or future managers. Additionally, the depositor cannot assure you that
the property managers will be in a financial condition to fulfill their
management responsibilities throughout the terms of their respective management
agreements.
Property Inspections Performed on the Mortgaged Properties May Not Reflect All
Conditions That Require Repair on the Property
Licensed engineers or consultants inspected all of the mortgaged properties
in connection with the origination of the loans to assess items such as:
o structure;
o exterior walls;
o roofing;
o interior construction;
o mechanical and electrical systems; and
o general condition of the site, buildings and other improvements.
However, there is no assurance that the inspectors identified all
conditions requiring repair or replacement.
The Absence of or Inadequacy of Insurance Coverage on the Mortgaged Properties
May Have an Adverse Effect on the Payment of Your Certificates
The mortgaged properties may suffer casualty losses due to risks that
insurance does not cover or for which insurance coverage is inadequate. There is
also no assurance borrowers will be able to maintain adequate insurance.
Moreover, changes in laws may materially affect the borrower's ability to
reconstruct the property or make major repairs or may materially increase the
cost of such reconstruction or repairs.
Certain of the mortgaged properties are located in [California, Texas and
along the southeastern coastal areas of the United States]. These areas have
historically been at greater risk regarding acts of nature (such as hurricanes,
floods and earthquakes) than other areas. The loans generally do not
specifically require the borrowers to maintain earthquake or hurricane
insurance.
As a result of any of the foregoing, the amount available to make
distributions on the certificates could be reduced.
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Appraisals May Inaccurately Reflect the Value of the Mortgaged Properties
The originators obtained an appraisal or other market analysis of each
mortgaged property in connection with the origination or acquisition of the
related loan. The resulting estimates of value were used to calculate the
Cut-off Date LTV Ratios referred to in this prospectus supplement. Those
estimates represent the analysis and opinion of the person performing the
appraisal or market analysis and are not guarantees of present or future values.
Moreover, the values of the mortgaged properties may have changed significantly
since the appraisal or market valuation was performed. In addition, appraisals
seek to establish the amount a typically motivated buyer would pay a typically
motivated seller. Such amount could be significantly higher than the amount
obtained from the sale of a mortgaged property under a distress or liquidation
sale. Information regarding the values of mortgaged properties available to the
depositor is presented in Exhibits A-1, A-2 and B for illustrative purposes
only.
The Timing of Loan Amortization May Have an Adverse Effect on the Payment of
Your Certificates
As principal payments or prepayments are made on loans in the mortgage
pool, the remaining certificateholders may be subject to more risk because of
the decreased:
o number of mortgaged properties;
o diversity of mortgaged property types;
o diversity of geographic locations; and
o number of borrowers and affiliated borrowers.
Classes of the certificates that have a later alphabetical or numerical
designation or a lower payment priority are more likely to be exposed to this
concentration risk than are classes with an earlier alphabetical or numerical
designation or higher priority. This is because principal on the certificates is
generally payable in sequential order, and no class entitled to distribution of
principal generally receives principal until the principal amount of the
preceding class or classes entitled to receive principal has been reduced to
zero.
Subordination of Subordinate Certificates Will Affect the Timing of Payments and
the Application of Losses on Your Certificates
As described in this prospectus supplement, unless your certificates are
[class S, class A-1A or class A-1B] certificates, your rights to receive
distributions of amounts collected or advanced on or in respect of the loans
will be subordinated to those of the holders of the certificates with an earlier
alphabetical or numerical designation. See "Description of the Certificates -
Distributions" and "-Subordination; Allocation of Losses and Certain Expenses"
in this prospectus supplement and "Risk Factors - Any Credit Support for Your
Certificates May be Insufficient to Protect You Against All Potential
Losses--Disproportionate Benefits to Certain Classes and Series" in the
prospectus.
The Operation of a Mortgaged Property upon Foreclosure of the Loan May Affect
the Tax Status of the Trust and May Have an Adverse Effect on the Payment of
Your Certificates
If the trust acquires a mortgaged property pursuant to a foreclosure or
deed in lieu of foreclosure, the special servicer will generally retain an
independent contractor to operate the property. Any net income from such
operation (other than qualifying "rents from real property"), or any rental
income based on the net profits of a tenant or sub-tenant or allocable to a
non-customary service, will subject the trust to a federal tax on such income at
the highest marginal corporate tax rate (currently [35%]), and in addition, to
possible state or local tax. In such event, the net proceeds available for
distribution to certificateholders will be reduced. The special servicer may
permit the trust to earn "net income from foreclosure property" that is subject
to tax if it determines that the net after-tax benefit to certificateholders is
greater than under another method of operating or leasing the mortgaged
property. If the mortgaged property did not qualify as foreclosure property
because of certain disqualifying events, any income realized from operation or
disposition of the property would be subject to a 100% prohibited transaction
tax. It is not anticipated that the trust will receive any income from
prohibited transactions.
State Laws Applicable to the Enforcement of Lender Remedies May Affect the
Timing of Payments on Your Certificates and May Have an Adverse Effect on the
Payment of Your Certificates
[All] of the loans permit the lender to accelerate the debt upon default by
the borrower. The courts of all states will enforce acceleration clauses in the
event of a material payment default. State equity courts, however, may refuse to
permit foreclosure or acceleration if a default is deemed
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immaterial or the exercise of those remedies would be unjust or unconscionable.
If a mortgaged property has tenants, the borrower assigns its income as
landlord to the lender as further security, while retaining a license to collect
rents as long as there is no default. If the borrower defaults, the license
terminates and the lender is entitled to collect rents. In certain
jurisdictions, such assignments may not be perfected as security interests until
the lender takes actual possession of the property's cash flow. In some
jurisdictions, the lender may not be entitled to collect rents until the lender
takes possession of the mortgaged property, secures the appointment of a
receiver or otherwise acts to enforce its remedies. In addition, as previously
discussed, a bankruptcy or similar proceeding commenced by or for the borrower
could adversely affect the lender's ability to collect the rents.
The laws of some states, including [California], prohibit more than one
"judicial action" to enforce a mortgage obligation. Some courts have construed
the term "judicial action" broadly. In the case of a loan secured by mortgaged
properties located in multiple states, the master servicer or special servicer
may be required to foreclose first on mortgaged properties located in states
where such "one action" rules apply (and where non-judicial foreclosure is
permitted) before foreclosing on properties located in states where judicial
foreclosure is the only permitted method of foreclosure. As a result, state laws
may limit the trust's ability to realize upon the loans. Foreclosure actions may
also, in certain circumstances, subject the trust to liability as a
"lender-in-possession" or result in the equitable subordination of the claims of
the trustee to the claims of other creditors of the borrower. The master
servicer or the special servicer may take these state laws into consideration in
deciding which remedy to choose following a default by a borrower.
Loans Secured by Mortgages on a Leasehold Interest Will Subject Your Investment
to a Risk of Loss Upon a Lease Default
____ of the mortgaged properties (___%) are encumbered by mortgages on a
borrower's leasehold interest under ground leases. ___ other mortgaged
properties (___%) are encumbered by mortgages on a borrower's leasehold interest
under ground leases and the fee interest of the owner of the property.
Leasehold loans are subject to risks not associated with loans secured by a
lien on the fee estate of the borrower. The most significant of these risks is
that if the landlord terminates the borrower's leasehold interest upon a lease
default, the leasehold mortgagee would lose its security. The ground lease loans
may require the master servicer to give notices or to take actions in addition
to those required for a fee loan in order for the trust to avail itself of its
rights under the related loan. Generally, the related ground lease:
o requires the landlord to give the leasehold mortgagee notice of tenant
defaults and an opportunity to cure them prior to enforcing its remedies;
o prohibits any amendment of the ground lease without the lender's prior
consent;
o permits the leasehold estate to be assigned to the leasehold mortgagee
or the purchaser at a foreclosure sale; and
o contains certain other protective provisions typically included in a
"mortgageable" ground lease.
Upon the bankruptcy of a landlord or tenant under a ground lease, the
debtor entity has the right to assume or reject the lease. If a debtor landlord
rejects the lease, the tenant has the right to remain in possession of its
leased premises for the term of the lease including renewals, at the same rent.
If a debtor tenant/borrower rejects any or all of its leases, the leasehold
lender could succeed to the tenant/ borrower's position under the lease only if
the landlord specifically grants the lender such right. As a result, the lender
may lose its security. If both the landlord and the tenant/borrower are involved
in bankruptcy proceedings, the trustee may be unable to enforce the bankrupt
tenant/borrower's obligation to not terminate a ground lease rejected by a
bankrupt landlord. In such circumstances, a ground lease could be terminated
notwithstanding lender protection agreements.
Ground leases securing the mortgaged properties may provide that the ground
rent payable under the lease increases during the lease term. These increases
may adversely affect the cash flow and net income of the borrower from the
mortgaged property.
The execution of a mortgage over its fee interest by an owner/landlord to
secure the debt of a borrower/tenant may be subject to challenge as a fraudulent
conveyance. Among other things, a legal challenge to the granting of the liens
may focus on the benefits realized by the owner/landlord from the loan. If a
court concluded that the granting of the mortgage was an avoidable fraudulent
conveyance, it
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might take actions detrimental to the holders of the certificates, including,
under certain circumstances, invalidating the mortgage over the fee interest of
the owner/landlord.
Cross-Collateralization of Groups of Loans Could Have an Adverse Effect on the
Payment of Your Certificates
Cross-collateralization arrangements involving more than one borrower could
be challenged as fraudulent conveyances:
o by creditors of the related borrower in an action brought outside a
bankruptcy case; or
o if the borrower were to become a debtor in a bankruptcy case, by the
borrower or its representative.
A lien granted by a borrower for the benefit of another borrower in a
cross-collateralization arrangement could be avoided if a court were to
determine that:
1. such borrower was:
o insolvent when it granted the lien;
o rendered insolvent by the granting of the lien;
o left with inadequate capital by granting the lien; or
o not able to pay its debts as they matured; and
2. such borrower did not receive fair consideration or reasonably equivalent
value when it allowed its mortgaged property or properties to be encumbered
by a lien securing the indebtedness of the other borrower.
Among other things, a legal challenge to the granting of the liens may
focus on the benefits realized by such borrower from the respective loan
proceeds, as well as the overall cross-collateralization. If a court were to
conclude that the granting of the liens was an avoidable fraudulent conveyance,
that court could subordinate all or part of the loan to existing or future
indebtedness of that borrower. The court also could recover payments made under
that loan or take other actions detrimental to the holders of the certificates,
including, under certain circumstances, invalidating the loan or the mortgages
securing the cross-collateralized loans.
The Trust May Not Control the Termination of Leases Upon Foreclosure
In some jurisdictions, a lease may terminate upon the transfer of a
mortgaged property to a foreclosing lender or purchaser at foreclosure if the
tenant lease is:
o subordinate to the lien created by the mortgage, and
o does not contain provisions requiring the tenant to recognize a
successor owner following foreclosure as landlord under the lease (also
known as attornment provisions).
The depositor has not reviewed all the leases to determine if they have
these provisions. Accordingly, if a mortgaged property is located in one of
these jurisdictions and is leased to one or more desirable tenants under leases
that are subordinate to the mortgage but do not contain attornment provisions,
the mortgaged property could experience a further decline in value if such
tenants' leases were terminated. This is particularly likely if the tenants were
paying above-market rents or could not be replaced.
If a lease is not subordinate to a mortgage, the trust will not have the
right to remove the tenant upon foreclosure of the mortgaged property, unless it
has otherwise agreed with the tenant. If a non-subordinate lease contains
provisions inconsistent with the mortgage or that could affect the enforcement
of the lender's rights, the provisions of the lease will take precedence over
the provisions of the mortgage. Many anchor tenant leases may not be
subordinate, or, if subordinate, may provide that the lease terms control in
certain matters, such as the application of insurance proceeds. Some non-anchor
leases may also not be subordinate to the related mortgage.
Litigation Arising Out of Ordinary Business May Have an Adverse Effect on Your
Certificates
There may be pending or threatened legal proceedings against the borrowers
and/or managers of the mortgaged properties and their affiliates arising out of
the ordinary business of the borrowers, managers and affiliates. We cannot
assure you that any such litigation would not have a material adverse effect on
the distributions on the certificates.
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The Cash Flow From Mortgaged Properties Not in Compliance With the Americans
with Disabilities Act May be Affected, Which May Have an Adverse Effect on the
Payment of Your Certificates
Under the Americans with Disabilities Act of 1990, all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. Borrowers may incur costs complying with the
ADA. In addition, noncompliance could result in the imposition of fines by the
federal government or an award of damages to private litigants.
Various Conflicts of Interest May Have an Adverse Effect on Your Certificates
[Conflicts Between Various Classes of Certificateholders. The special
servicer is given considerable latitude in determining when and how to liquidate
or modify defaulted loans. The controlling class representative has the right to
replace the special servicer. At any given time, the holders of the most
subordinate class of principal balance certificates that has at least 25% of its
initial principal balance still outstanding will control the controlling class
representative. If no class has at least 25% of its initial principal balance
still outstanding, the most subordinate class of principal balance certificates
still outstanding will be the controlling class. These holders may have
interests in conflict with those of the holders of the other certificates. For
instance, these holders might desire to mitigate the potential for loss to their
certificates from a troubled loan by deferring enforcement in the hope of
maximizing future proceeds. However, the interests of the trust may be better
served by prompt action, since delay followed by a market downturn could result
in less proceeds to the trust than would have been realized if earlier action
had been taken.
It is anticipated that an entity managed by an affiliate of Midland Loan
Services, Inc., the initial special servicer, will acquire most of the privately
offered certificates, including those that have the right to appoint the initial
controlling class representative. Under such circumstances, the special servicer
may have interests that conflict with the interests of the other holders of the
certificates.]
[Conflicts Between the Trust and Affiliates of the Sellers. Conflicts of
interest may arise between the trust and affiliates of each of the sellers that
engage in the acquisition, development, operation, financing and disposition of
real estate.
Those conflicts may arise because affiliates of each of the sellers intend
to continue to actively acquire, develop, operate, finance and dispose of real
estate-related assets in the ordinary course of their business. During the
course of their business activities, those affiliates may acquire or sell
properties, or finance loans secured by properties which may include the
mortgaged properties or properties that are in the same markets as the mortgaged
properties. In such case, the interests of those affiliates may differ from, and
compete with, the interests of the trust. Decisions made with respect to those
assets may adversely affect the amount and timing of distributions on the
certificates. Midland Loan Services, Inc., one of the sellers, is also the
initial master servicer and special servicer.]
[Conflicts Between Managers and the Loan Borrowers. Substantially all of
the property managers for the mortgaged properties or their affiliates manage
additional properties, including properties that may compete with the mortgaged
properties. Affiliates of the managers, and certain of the managers themselves,
also may own other properties, including competing properties. The managers of
the mortgaged properties may accordingly experience conflicts of interest in the
management of the mortgaged properties.
Conflicts Between Sellers of Loans and Classes of Certificateholders.
Affiliates of the sellers could acquire the certificates entitled to appoint the
controlling class representative. Decisions made by the controlling class
representative may favor the interests of affiliates of such certificateholders
in a manner that could adversely affect the amount and timing of distributions
on the other certificates.]
[Midland Loan Services, Inc. May Have Conflicts as a Seller and as
Master Servicer. Each seller is obligated to substitute a qualified
substitute loan or to repurchase a loan if:
o there is a defect with respect to the documents relating to the loan, or
o one or more of its representations or warranties concerning the loan in
the related loan purchase agreement are breached,
provided that such defect or breach materially and adversely affects the
interests of the certificateholders and such defect or breach is not cured as
required. The ability of Midland to perform its obligations as master servicer
and special servicer under the pooling and servicing agreement may be
jeopardized if it incurs significant liabilities for the repurchase or
substitution of loans. In addition, since the pooling and servicing
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agreement requires the master servicer to enforce on behalf of the trust the
sellers' obligations to repurchase or substitute loans, Midland may experience a
conflict of interest to the extent that Midland is obligated to repurchase or
substitute a loan as a seller.]
Prepayments May Reduce the Yield on Your Certificates
The yield to maturity on your certificates may depend, in significant part,
upon the rate and timing of principal payments on the loans. For this purpose,
principal payments include:
o voluntary prepayments, if permitted, and
o involuntary prepayments resulting from:
1. casualty or condemnation of mortgaged properties,
2. defaults and liquidations by borrowers, or
3. repurchases upon a seller's breach of a representation or warranty.
Because the notional amount of the class S certificates is based upon the
principal balance of the certificates with principal amounts, the yield to
maturity on the class S certificates will be extremely sensitive to the rate and
timing of prepayments of principal.
The investment performance of your certificates may vary materially and
adversely from your expectations if the actual rate of prepayment is higher or
lower than you anticipate.
Voluntary prepayments under certain of the loans require payment of a
prepayment premium unless the loan is within a specified number of days of the
anticipated repayment date or stated maturity date, as the case may be. See
"Description of the Mortgage Pool - Certain Terms and Conditions of the Mortgage
Loans - Prepayment Provisions". Nevertheless, we cannot assure you that the
related borrowers will refrain from prepaying their loans due to the existence
of a prepayment premium. We also cannot assure you that involuntary prepayments
will not occur. The rate at which voluntary prepayments occur on the loans will
be affected by a variety of factors, including:
o the terms of the loans;
o the length of any prepayment lockout period;
o the level of prevailing interest rates;
o the availability of mortgage credit;
o the applicable yield maintenance charges or percentage premiums;
o the master servicer's or special servicer's ability to enforce those
charges or premiums;
o the occurrence of casualties or natural disasters; and
o economic, demographic, tax, legal or other factors.
Generally, the loan documents do not require the borrower to pay a
prepayment premium for prepayments in connection with a casualty or
condemnation, unless an event of default has occurred and is continuing. In
addition, if a seller repurchases any mortgage from the trust due to breaches of
representations or warranties, the repurchase price paid will be passed through
to the holders of the certificates with the same effect as if the loan had been
prepaid, except that no prepayment premium would be payable. Such a repurchase
may therefore adversely affect the yield to maturity on your certificates.
The Effect of State Laws Upon the Enforceability of Prepayment Premiums May
Affect the Payment and Yield of Your Certificates
Provisions requiring prepayment premiums and lock-out periods may not be
enforceable in some states and under federal bankruptcy law. Those provisions
for charges and premiums also may constitute interest under applicable usury
laws. Accordingly, we cannot assure you that the obligation to pay a prepayment
premium or to prohibit prepayments will be enforceable. We also cannot assure
you that any foreclosure proceeds will be sufficient to pay an enforceable
prepayment premium. Additionally, although the collateral substitution
provisions related to defeasance do not have the same effect on the
certificateholders as prepayment, we cannot assure you that a court would not
interpret those provisions as requiring a prepayment premium. In certain
jurisdictions, those collateral substitution provisions might therefore be
deemed unenforceable under applicable law, or usurious.
The Yield on Your Certificate Will Be Affected by the Price at Which the
Certificate Was Purchased and the Rate, Timing and Amount of Distributions on
the Certificate
The yield on any certificate will depend on (1) the price at which the
certificate is purchased by an investor and (2) the rate, timing and amount of
distributions on the certificate. The rate, timing and amount of distributions
on any certificate will, in turn, depend on, among other things:
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o the interest rate for the certificate;
o the rate and timing of principal payments, including prepayments, and
other principal collections on or in respect of the loans;
o the extent to which principal collections are applied to or otherwise
result in a reduction of the principal balance or notional amount of the
certificate;
o the rate, timing and severity of losses on or in respect of the loans or
unanticipated expenses of the trust;
o the timing and severity of any interest shortfalls resulting from
prepayments;
o the timing and severity of any reductions in advances as described under
"Description of the Certificates--Appraisal Reductions of Loan Balances";
and
o the extent to which prepayment premiums are collected and, in turn,
distributed on the certificate.
You Bear the Risk of Borrower Defaults
The rate and timing of delinquencies or defaults on the loans will affect
the following aspects of the certificates:
o the aggregate amount of distributions on them;
o their yield to maturity;
o their rates of principal payments; and
o their weighted average lives.
The rights of holders of each class of subordinate certificates to receive
certain payments of principal and interest otherwise payable on their
certificates will be subordinated to the rights of the holders of the more
senior certificates having an earlier alphabetical and numerical class
designation. See "Description of the Certificates - Distributions." Losses on
the loans will be allocated to the [class D, class C, class B-8, class B-7,
class B-6, class B-5, class B-4, class B-3, class B-2, class B-1, class A-4,
class A-3 and class A-2] certificates, in that order, reducing amounts otherwise
payable to each class. Any remaining losses would then be allocated to the
[class A-1A and class A-1B] certificates, pro rata, based on their
then-outstanding class principal balances.
If losses on the loans exceed the aggregate principal amount of the classes
of certificates subordinated to a particular class, that class will suffer a
loss equal to the full amount of the excess (up to the outstanding principal
amount of the class).
If you calculate your anticipated yield based on assumed rates of default
and losses that are lower than the default rate and losses actually experienced
and such losses are allocable to your certificates, your actual yield to
maturity will be lower than your assumed yield. Under certain extreme scenarios,
your yield could be negative. In general, the earlier a loss borne by your
certificates occurs, the greater the effect on your yield to maturity.
Additionally, delinquencies and defaults on the loans may significantly
delay the receipt of distributions by you on your certificates, unless:
o the master servicer makes advances to cover delinquent payments, or
o the subordination of another class of certificates fully offsets the
effects of any such delinquency or default.
Also, if the related borrower does not repay a loan with a
hyper-amortization feature by its anticipated repayment date, the effect will be
to increase the weighted average life of your certificates and, if your
certificate was purchased at a discount, may reduce your yield to maturity.
Compensation and Other Payments to the Master Servicer, the Special Servicer and
the Trustee May Have an Adverse Effect on the Payment of Your Certificates
To the extent described in this prospectus supplement, the master servicer,
the special servicer and the trustee will each be entitled to receive interest
on unreimbursed advances made by it. This interest will generally accrue from
the date on which the related advance is made or the related expense is incurred
through the date of reimbursement. In addition, under certain circumstances,
including delinquencies in the payment of principal and interest, a loan will be
specially serviced, and the special servicer is entitled to compensation for
special servicing activities. The right to receive interest on advances or
special servicing compensation is senior to the rights of certificateholders to
receive distributions.
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A Number of Factors That Affect the Liquidity of Your Certificates May Have an
Adverse Effect on the Value of Your Certificates
Your certificates will not be listed on any securities exchange, and there
is currently no secondary market for the offered certificates. While
___________________ and _______________ each currently intends to make a
secondary market in the offered certificates, it is not obligated to do so.
Accordingly, you may not have an active or liquid secondary market for your
certificates. Lack of liquidity could result in a substantial decrease in the
market value of your certificates. Furthermore, you should be aware that the
market for securities of the same type as the certificates has recently been
volatile and offered very limited liquidity. Finally, affiliates of the sellers
may acquire certain classes of offered certificates in which case the market for
those classes of offered certificates may not be as liquid as if third parties
had acquired such certificates.
Risk of Pass-Through Rate Variability
The interest rates of the [class S, class B-1 and class B-2] certificates
are based on a weighted average of certain net mortgage rates of the loans.
Loans with relatively high interest rates are more likely to prepay than loans
with relatively low interest rates. Higher rates of principal payments on loans
having mortgage interest rates above the weighted average interest rate of the
loans will have the effect of reducing the interest rate of such certificates.
In addition, the pass-through rates on the [class A-1B, class A-2, class A-3 and
class A-4] certificates may not exceed the weighted average of the net mortgage
rates of the loans.
[Computer Programming Problems Related to the Year 2000 May Have Adverse Effects
on the Payment of Your Certificates
We are aware of the issues associated with the programming code in existing
computer systems as the year 2000 approaches. The "year 2000 problem" is
pervasive and complex; virtually every computer operation will be affected in
some way by the rollover of the two-digit year value to 00. The issue is whether
computer systems will properly recognize date-sensitive information when the
year changes to 2000. Systems that do not properly recognize such information
could generate erroneous data or otherwise fail.
We have been advised by each of the master servicer, the special servicer
and the trustee that they either:
o are implementing modifications to their respective existing systems to
the extent required to cause them to be year 2000 compliant, or
o will acquire computer systems that are year 2000 compliant.
However, we have not made any independent investigation of the computer
systems of the master servicer, the special servicer or the trustee. In the
event that the computer systems of the master servicer, the special servicer or
the trustee are not fully year 2000 compliant, the resulting disruptions in the
collection or distribution of receipts on the loans could materially adversely
affect your investment.
Additionally, we have not made any independent investigation of the
computer systems of any borrower or any tenant of a mortgaged property. The
operation of a borrower or a tenant at a mortgaged property may be dependent
upon computer systems that are not fully year 2000 compliant. In such case,
disruptions could occur in the borrower's collection of rents and other income
from such mortgaged property, potentially resulting in disruptions in the
borrower's required payments due in connection with such loan.]
Other Risks
See "Risk Factors" in the prospectus for a description of certain other
risks and special considerations that may be applicable to your certificates.
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DESCRIPTION OF THE MORTGAGE POOL
General
The mortgage pool will consist of ___ multifamily and commercial "whole"
loans, with an aggregate Cut-off Date Principal Balance of $__________ (the
"Initial Pool Balance"), subject to a variance of plus or minus [5%]. In making
this count, each Multiple Property Loan was counted as one loan. The Multiple
Property Loans and all other loans in the mortgage pool are collectively
referred to as the "Mortgage Loans". All numerical information concerning the
Mortgage Loans is approximate.
The "Cut-off Date Principal Balance" of each Mortgage Loan is its unpaid
principal balance as of __________ 1, 20__ (the "Cut-off Date"), after
application of all principal payments due on or before such date, whether or not
received.
The description of the Mortgage Loans in this prospectus supplement is a
generalized description of the Mortgage Loans in the aggregate. Many of the
individual Mortgage Loans have special terms and provisions that are different
from the generalized, aggregated description.
A brief summary of some of the terms of the [5] largest Mortgage Loans, or
groups of Cross-Collateralized Loans, is set forth in Exhibit B. Additionally,
certain information regarding Mortgage Loans secured by Mortgages encumbering
multifamily properties is set forth in Exhibit A-1.
Each Mortgage Loan is evidenced by one or more separate promissory notes.
Each Mortgage Loan is secured by a mortgage, deed of trust, deed to secure debt
or other similar security instrument (all of the foregoing are individually a
"Mortgage" and collectively the "Mortgages"), which creates a lien on one or
more of a fee simple estate or a leasehold estate in one or more parcels of real
property (a "Mortgaged Property") improved for multifamily or commercial use.
See Exhibit A-2 for information as to the percentage of the Initial Pool Balance
represented by each type of Mortgaged Property.
None of the Mortgage Loans is insured or guaranteed by the United States of
America, by any governmental agency or instrumentality, by any private mortgage
insurer or by the depositor, the sellers, the master servicer, the special
servicer, the trustee, the underwriters or any of their respective affiliates.
All of the Mortgage Loans should be considered non-recourse loans. This
means that if the loan is in default, the lender's remedies are limited to
foreclosing or acquiring the related Mortgaged Property and any other assets
pledged to secure the loan. For those Mortgage Loans that permit recourse
against any person or entity, the depositor has not evaluated the financial
condition of those persons or entities. In many cases, the only assets such
entities may have are those pledged to secure the loan.
The depositor will purchase the Mortgage Loans on or before the closing
date from the sellers, in each case pursuant to separate mortgage loan purchase
and sale agreements entered into between the depositor and the particular
seller. As described under "Description of the Mortgage Pool--Representations
and Warranties; Repurchase", each seller must generally repurchase a Mortgage
Loan or substitute a Qualified Substitute Mortgage Loan if a representation or
warranty made by the seller in its mortgage loan purchase agreement about the
Mortgage Loan was incorrect at the time it was made, if the breach materially
and adversely affects the interests of the certificateholders and is not cured.
There can be no assurance that any seller has or will have sufficient assets
with which to fulfill any repurchase or substitution obligations that may arise.
The depositor will not have any obligation to fulfill any repurchase obligation
if a seller fails to do so. The depositor will assign the Mortgage Loans,
together with the depositor's rights and remedies against the sellers in respect
of breaches of representations or warranties regarding the Mortgage Loans, to
the trustee pursuant to the pooling and servicing agreement.
Security for the Mortgage Loans
All of the Mortgage Loans are secured by a [first] lien encumbering one or
more of a fee simple estate or a leasehold estate in the related Mortgaged
Property, subject generally only to:
o liens for real estate and other taxes and special assessments not yet
delinquent or accruing interest or penalties,
o rights of tenants, as tenants only, under third party leases which were
not required to be subordinated,
o covenants, conditions, restrictions, rights of way, easements and other
matters of public record as of the date of recording of the Mortgage or
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otherwise specified in the applicable lender's title insurance policy,
o purchase money security interests,
o other exceptions and encumbrances on the Mortgaged Property that are
reflected in the related title insurance policies, and o other matters to
which like properties are commonly subject.
Ground Leases
The Mortgages for __ Mortgaged Properties (___%) encumber the related
borrower's leasehold interest in the related Mortgaged Property. For each ground
lease, the related ground lessors have agreed to afford the mortgagee certain
notices and rights, including without limitation, cure rights with respect to
breaches of the related ground lease by the related borrower. The Mortgages for
__ other Mortgaged Properties (___%) encumber both the related borrower's
leasehold interest and the fee interest of the owner/landlord in the related
Mortgaged Property.
Cross-Collateralized Loans
The mortgage pool includes __ separate sets of Mortgage Loans (the
"Cross-Collateralized Loans") that are cross-collateralized and cross-defaulted
with one or more related Cross-Collateralized Loans. None of the Mortgage Loans
are cross-collateralized or cross-defaulted with any mortgage loan not included
in the mortgage pool. No set of related Cross-Collateralized Loans constitutes
more than ___% of the Initial Pool Balance. See Exhibit A-1 for more information
regarding the Cross-Collateralized Loans.
Multiple Property Loans
For purposes of the statistical information contained in this prospectus
supplement and the Exhibits, a single indebtedness secured by separate Mortgages
encumbering separate Mortgaged Properties is considered as one Mortgage Loan
(collectively, the "Multiple Property Loans").
However, for purposes of providing certain property-specific information
for the Multiple Property Loans, each such Mortgage Loan has been allocated
among its respective Mortgaged Properties based upon:
o relative appraised value;
o relative underwritable cash flow; or
o prior allocations reflected in the related loan documents.
Underwriting Standards
The following is a discussion of the customary underwriting policies and
procedures used to originate the Mortgage Loans. Such policies and procedures
involved an evaluation of both the prospective borrower and the proposed real
estate collateral.
Factors typically analyzed in connection with a Mortgaged Property include:
Physical Characteristics:
o age and condition;
o appraised value;
o gross square footage, net rentable area and gross land area;
o number of units, rooms or beds; and
o property interest to be mortgaged (fee or
leasehold).
Tenants:
o current tenants' size and identity;
o termination or purchase option rights;
o term, expiration and rental rates under current leases;
o leasing commissions; and
o tenant improvements and concessions.
Financial Information:
o historical cash flow;
o applicable market rentals for similar properties;
o historical vacancy rate and credit loss rate;
o debt service coverage ratio; and
o loan-to-value ratio.
A site inspection of the related Mortgaged Property was also typically
performed, and third party appraisals and engineering reports were generally
obtained. Environmental site assessments were obtained in connection with ___
Mortgaged Properties (___%), and environmental insurance policies were obtained
for the remaining Mortgaged Properties.
Factors typically analyzed in connection with a prospective borrower
include:
o credit history;
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o capitalization and overall financial resources; and
o management skill and experience in the applicable property type.
The above information has been provided by the sellers and has not been
independently verified by the depositor, the master servicer, the special
servicer, the underwriters or the trustee.
Certain Terms and Conditions of the Mortgage Loans
Due Dates
Monthly Payments are due on the [first] day of each month.
Mortgage Rates; Calculations of Interest
_______________ of the Mortgage Loans (____%) accrue interest on the basis
of the actual number of days elapsed each month in an assumed 360-day year. The
remainder of the Mortgage Loans accrue interest on the basis of an assumed
360-day year with twelve 30-day months. Except with respect to the
Hyper-Amortization Loans, each Mortgage Loan generally accrues interest at an
annualized rate that is fixed for the entire term of such Mortgage Loan and does
not permit any negative amortization or the deferral of fixed interest.
Amortization of Principal
Many of the Mortgage Loans provide for monthly payments of principal based
on amortization schedules substantially longer than their remaining terms.
_________________ Mortgage Loans (____%) are "balloon loans" that are expected
to have more than [10%] of their original principal balance remaining unpaid at
their maturity date. ___ of the Mortgage Loans (___%) are hyper-amortization
loans that will have substantial balloon payments on their Anticipated Repayment
Date. Such hyper-amortization loans also provide for an increase in their
interest rate and/or principal amortization prior to maturity. ____ Mortgage
Loans (___%) have remaining amortization terms that are substantially the same
as their remaining terms to maturity. However, if the Monthly Payment for any
Mortgage Loan (including any Hyper-Amortization Loan) is calculated on an
assumed 30/360 basis but interest accrues on an actual/360 basis, there will be
a remaining balance or a larger balloon payment due upon maturity.
The weighted average Maturity/ARD LTV Ratio of the mortgage pool is ____%.
See "Description of the Mortgage Pool--Other Information".
___ of the Mortgage Loans (___%) (the "Hyper-Amortization Loans") have the
following characteristics:
o each bears interest until its Anticipated Repayment Date at its Initial
Interest Rate;
o each bears interest on and after its Anticipated Repayment Date at its
Revised Interest Rate, and
o each requires that all gross revenue from the Mortgaged Property from and
after its Anticipated Repayment Date be deposited into a lockbox account
controlled by the lender and generally applied in the following order
(although individual loans may have exceptions):
o to tax and insurance reserves;
o to interest at the Initial Interest Rate;
o to all other amounts owed the lender not set
forth below;
o to all principal due under the original
amortization;
o to all other reserves;
o to all approved operating or capital
expenses;
o to all other principal then outstanding;
o to all outstanding Deferred Interest; and
o to the borrower.
To the extent not paid from gross revenues, the payment of interest accrued
at the excess of the Revised Interest Rate over the Initial Interest Rate is
deferred until the maturity date or when the principal is prepaid in full. The
deferred interest may also bear interest at the Revised Interest Rate. The
accrued and deferred interest, and interest thereon, is referred to as "Deferred
Interest").
"Anticipated Repayment Date" or "ARD" means for any Hyper-Amortization Loan
the date on and after which the Revised Interest Rate applies and the lockbox is
activated.
"Initial Interest Rate" means for any Hyper-Amortization Loan the rate at
which such Hyper-Amortization Loan accrues interest from its origination until
its Anticipated Repayment Date.
"Revised Interest Rate" means for any Hyper-Amortization Loan the increased
rate at which the Hyper-Amortization Loan bears interest from and
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after its Anticipated Repayment Date. The Revised Interest Rate is typically
equal to the greater of:
o its Initial Interest Rate plus [2%], or
o the yield rate on the U.S. Treasury obligation that matures in the month or
succeeding month in which the original maturity date of the
Hyper-Amortization Loan occurs plus [2%].
The Revised Interest Rate may also be subject to a cap equal to its Initial
Interest Rate plus a percentage specified in the related note.
However, for __ Hyper-Amortization Loans (___%), the Revised Interest Rate
is equal to the Initial Interest Rate plus ___% and __%, respectively.
Prepayment Provisions
____________ of the Mortgage Loans (____%) are subject to specified periods
following origination during which no voluntary prepayments are allowed (a
"Lock-out Period").
The Mortgage Loans (other than the Defeasance Loans) generally permit the
borrower to voluntarily prepay the Mortgage Loan after the Lock-out Period if it
pays a prepayment premium. The Mortgage Loan documents generally provide for a
specified period prior to maturity during which a prepayment may be made without
a prepayment premium. Other than as described below or during any such "open
period", the Mortgage Loans prohibit any borrower from making a partial
prepayment.
A borrower does not have to pay a prepayment premium if it pays a
Hyper-Amortization Loan on or after its Anticipated Repayment Date.
With respect to Mortgage Loans other than the Defeasance Loans, the
applicable prepayment premium is generally calculated:
o for ___ Mortgage Loans, for a certain period (a "Yield Maintenance Period")
after the origination of the related Mortgage Loan or the expiration of the
applicable Lock-out Period, if any, on the basis of a yield maintenance
formula or, for some Mortgage Loans, a specified percentage of the amount
prepaid if the percentage is greater than the yield maintenance amount,
o for ___ Mortgage Loan, after the expiration of the applicable Yield
Maintenance Period, a specified percentage of the amount prepaid, which
percentage will remain constant over time, and
o for ___ Mortgage Loan, no prepayment premium is required after the
expiration of the applicable Lock-out Period.
Exhibit A-1 contains more specific information about the prepayment
premiums for each Mortgage Loan.
Each Mortgage Loan providing for the payment of a yield maintenance amount
in connection with a permitted principal prepayment provides that the amount
will be calculated by one of the following methods:
o [subtracting the amount of principal being prepaid from the discounted
present value (using a discount rate determined in accordance with the
note), as of the prepayment date, of the remaining scheduled payments of
principal and interest on that Mortgage Loan from the prepayment date
through its maturity date (including any balloon payment);] or
o [multiplying:
1. the amount of principal being prepaid; times
2. the difference obtained by subtracting a United States Treasury
Security yield rate (determined in accordance with the note) from the
interest rate applicable to the related Mortgage Loan; times
3. a present value factor calculated using the following formula:
1 - (1+r) -n
------------
r
r = the specified yield rate (per item 2. above)
n = number of years, and any fraction thereof, remaining between the
prepayment date and the maturity date of the Mortgage Loan, or
Anticipated Repayment Date for Hyper-Amortization Loans.]
The Mortgage Loans typically:
o provide that a borrower has to pay a prepayment premium in connection with
any involuntary prepayment resulting from a casualty or condemnation only
if the loan is in default;
o require the payment of the applicable prepayment premium for any prepayment
after an event of default (but prior to the sale by the mortgagee of the
Mortgaged Property through foreclosure or otherwise); and
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o permit the borrower to transfer the Mortgaged Property to a third party
without prepaying the Mortgage Loan if certain conditions are satisfied,
including, without limitation, an assumption by the transferee of all of
the borrower's obligations under the Mortgage Loan.
The depositor makes no representation as to the enforceability of the
provisions of any Mortgage Loan requiring the payment of a prepayment premium or
as to the collectability of any prepayment premium.
The tables included in Exhibit A-2 set forth an analysis of the percentage
of the declining balance of the mortgage pool that, for each of the time periods
indicated, will be within a Lock-out Period or in which Principal Prepayments
must be accompanied by the indicated prepayment premium.
Defeasance
For ___ of the Mortgage Loans (____%) (the "Defeasance Loans"), even though
a voluntary prepayment may be generally prohibited, the borrower may, after the
expiration of a specified period during which defeasance is prohibited, obtain a
release of the related Mortgaged Property by pledging certain substitute
collateral to the holder of the Mortgage Loan. No defeasance may occur before
the second anniversary of the closing date. This substitute collateral consists
of direct, non-callable United States Treasury obligations that provide for
payments prior, but as close as possible, to all dates on which a Monthly
Payment or final balloon payment is due. Each of the payments on the substitute
collateral must be equal to or greater than the Monthly Payment or final balloon
payment due on such date. For Hyper-Amortization Loans, the payments on the
substitute collateral must be sufficient to pay-off the loan on its Anticipated
Repayment Date. Any excess amounts will be returned to the borrower.
The master servicer will require the cost, if any, of a defeasance to be
paid by the borrower and not by the trust.
"Due-on-Encumbrance" and "Due-on-Sale" Provisions
The Mortgages contain "due-on-encumbrance" clauses that permit the holder
of the Mortgage to accelerate the maturity of the related Mortgage Loan if the
borrower encumbers the related Mortgaged Property without the consent of the
mortgagee. The master servicer or special servicer, as applicable, will
determine, in a manner consistent with the servicing standard described under
"The Pooling and Servicing Agreement--Servicing of the Mortgage Loans;
Collection of Payments", whether to exercise any right the mortgagee may have
under any such clause to accelerate payment of a Mortgage Loan upon, or to
withhold its consent to, any additional encumbrance of the related Mortgaged
Property.
The Mortgages generally prohibit the borrower from transferring any
material interest in the Mortgaged Property or allowing a material change in the
ownership or control of the related borrower without the mortgagee's prior
consent. However, a transfer or change generally will be permitted if certain
conditions specified in the related Mortgage Loan documents are satisfied. These
conditions may include one or more of the following:
o no event of default exists;
o the proposed transferee meets the mortgagee's customary underwriting
criteria;
o the Mortgaged Property continues to meet the mortgagee's customary
underwriting criteria; and
o an acceptable assumption agreement is executed.
The related Mortgages may also allow changes in the ownership or control of
the related borrower between partners, members or shareholders as of the closing
of the Mortgage Loan, family members, affiliated companies and certain specified
individuals, or for estate planning purposes.
The master servicer or the special servicer, as applicable, will determine,
in a manner consistent with the servicing standard described under "The Pooling
and Servicing Agreement--Servicing of the Mortgage Loans; Collection of
Payments", whether to exercise any right the mortgagee may have to accelerate
payment of a Mortgage Loan upon, or to withhold its consent to, any transfer of
all or any of a Mortgaged Property or any transfer or change in ownership or
control of the related borrower. The depositor makes no representation as to the
enforceability of any due-on-sale or due-on-encumbrance provision in any
Mortgage Loan that is the subject of a proceeding under federal bankruptcy law.
See "Certain Legal Aspects of Mortgage Loans--Due-on-Sale and Due-on-Encumbrance
Provisions" in the prospectus.
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Hazard, Liability and Other Insurance
Generally, each Mortgage Loan requires that the Mortgaged Property be
insured against loss or damage by fire or other risks and hazards covered by a
standard extended coverage insurance policy. The minimum amount of such
insurance is usually the lesser of the full replacement cost of the Mortgaged
Property or the outstanding principal balance of the loan, but in any event in
an amount sufficient to ensure that the insurer would not deem the borrower a
co-insurer. Generally, each Mortgage Loan also requires that the related
borrower maintain the following insurance during the term of the Mortgage Loan:
o comprehensive public liability insurance, typically with a minimum limit
of [$1,000,000] per occurrence;
o if any part of the Mortgaged Property upon which a material improvement is
located lies in a special flood hazard area and for which flood insurance
has been made available, a flood insurance policy in an amount equal to the
least of the outstanding principal balance of the loan, full replacement
cost of the Mortgaged Property and the maximum limit of coverage available
from governmental sources;
o if deemed advisable by the originator, rent loss and/or business
interruption insurance in an amount equal to all net operating income from
the operation of the Mortgaged Property for a period as required by the
Mortgage; and
o if applicable, insurance against loss or damage from explosion of steam
boilers, air conditioning equipment, high pressure piping, machinery and
equipment, pressure vessels or similar apparatus.
The Mortgage Loans generally do not require the borrower to maintain
earthquake insurance.
With respect to many of the Mortgage Loans, the borrower has satisfied the
applicable insurance requirements by obtaining blanket insurance policies. The
mortgagee generally has the right to review and approval the blanket insurance
policy, including the amount of insurance and the number of properties covered
by the policy. Casualty and Condemnation
Subject to the rights of the lessor under any ground lease, the Mortgage
Loan documents typically provide that all material insurance proceeds or
condemnation awards will be paid to the mortgagee if:
o the Mortgaged Property is damaged by fire or another casualty; or
o any taking or exercise of the power of eminent domain occurs with
respect to a Mortgaged Property.
In general, the mortgagee then has the option to either apply the proceeds or
awards to the outstanding indebtedness of the Mortgage Loan, or allow the
borrower to use the proceeds to restore the Mortgaged Property. However, if
certain specified conditions are satisfied, the mortgagee may be required to pay
the proceeds or awards to the borrower for restoration of the Mortgaged
Property. In certain of the Mortgage Loans, the lease between the borrower and a
tenant of all or part of the Mortgaged Property may require the borrower or the
tenant to restore the Mortgaged Property if a casualty or condemnation occurs.
In this case, the Mortgage Loan documents may permit the application of all
applicable proceeds or awards to satisfy the requirement.
Financial Reporting
The Mortgages generally contain a covenant that requires the borrower to
provide the mortgagee with certain financial reports at least once a year about
the borrower's operations at the Mortgaged Property. Such reports typically
include information about income and expenses for the property for the period
covered by such reports, and/or current tenancy information. However, in the
case of owner-occupied properties, the borrower typically provides financial
information for itself instead of the Mortgaged Property.
Delinquencies
[No] Mortgage Loan was 30 or more days delinquent in respect of any Monthly
Payment as of the Cut-off Date, or during the 12 months immediately preceding
the Cut-off Date.
Prior Bankruptcies
Some of the borrowers under the Mortgage Loans or their affiliates have
been parties to, and/or
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some of the underlying real properties have been the subject of, prior
bankruptcy proceedings.
Borrower Escrows and Reserve Accounts
In many of the Mortgage Loans, the borrower was required, or may under
certain circumstances in the future be required, to establish one or more
reserve or escrow accounts (such accounts, "Reserve Accounts") for those matters
and in such amounts deemed necessary by the originator of the loan. These
matters may include one or more of the following:
o necessary repairs and replacements,
o tenant improvements and leasing commissions,
o real estate taxes and assessments,
o water and sewer charges,
o insurance premiums,
o environmental remediation,
o improvements mandated under the Americans
with Disabilities Act of 1990, or
o deferred maintenance and/or scheduled capital
improvements.
Exhibit A-1 contains more specific information about the Reserve Accounts
for each Mortgage Loan.
Certain Characteristics of the Mortgage Pool
Concentration of Mortgage Loans and Borrowers
The largest single Mortgage Loan has a Cut-off Date Principal Balance that
represents ___% of the Initial Pool Balance. The __ largest individual Mortgage
Loans (or sets of Cross-Collateralized Loans) represent in the aggregate ____%
of the Initial Pool Balance. No set of Mortgage Loans made to a single borrower
or to a single group of affiliated borrowers constitutes more than ___% of the
Initial Pool Balance. See Exhibit A-1 for further information regarding these
Mortgage Loans.
Environmental Risks
Environmental site assessments were obtained for ___ of the Mortgaged
Properties (____%) during the [24]-month period ending on ___________, 20__. The
assessments for __ of those Mortgaged Properties (___%) were obtained more than
__ months prior to the Cut-off Date. The assessments for __ of those Mortgaged
Properties (___%) did not satisfy all of the requirements necessary to be
considered "Phase I" environmental site assessments.
No environmental site assessments were obtained for ___ Mortgaged
Properties (___%). For each of __ Mortgaged Properties (___), a "Phase II"
environmental site assessment was recommended but not performed. In general, the
decision not to take either of the foregoing actions with respect to any of
those Mortgaged Properties was based upon the borrower or the lender obtaining
an environmental insurance policy with respect to the Mortgaged Property.
Except as described herein, where an environmental site assessment
disclosed a known or potential material and adverse environmental condition, the
originator required the borrower to:
o escrow funds deemed sufficient to ensure
remediation of or to monitor the environmental
issue;
o obtain an environmental insurance policy that
covers the environmental issue; or
o establish an operations and maintenance plan that,
if implemented, would prevent any material and
adverse consequences resulting from the
environmental issue.
In some cases, the environmental consultant did not recommend that any
action be taken with respect to a known or potential adverse environmental
condition at a Mortgaged Property or a nearby property because:
o a remediation, under the supervision of an
environmental regulatory agency, had been
completed or was currently underway;
o an environmental regulatory agency had issued a
"no further action" letter regarding the condition;
or
o a responsible party with respect to the condition
had already been identified.
See "Risk Factors--Environmental Issues Relating to Specific Properties May
Have an Adverse Effect on the Payment of Your Certificates" for more information
about the environmental condition of certain Mortgaged Properties.
Some of the Mortgaged Properties are in areas of known groundwater
contamination or in the vicinity of sites containing "leaking underground
storage tanks" or other potential sources of groundwater contamination. The
environmental site
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assessments mentioned above generally do not anticipate that the borrower will
have to undertake remedial investigations or actions at these sites. Further,
the federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980 and certain state environmental laws provide for a third-party defense
that generally would preclude liability for a party whose property is
contaminated by off-site sources. In addition, in its final "Policy Toward
Owners of Property Containing Contaminated Aquifers," dated May 24, 1995, the
United States Environmental Protection Agency stated that it would not take
enforcement actions against the owner of such property to require the
performance of remediation actions or the payment of remediation costs. This
policy statement is subject to certain conditions and applies only if the
hazardous substances have come to be located on or in a property solely as a
result of subsurface migration in an aquifer from a source or sources outside
the property.
Even if the owners of these Mortgaged Properties and the trust fund are not
liable for such contamination, enforcement of the borrower's or the trust fund's
rights against third parties may result in additional transaction costs. In
addition, the presence of such contamination or potential contamination may
affect the borrower's ability to:
o refinance the Mortgage Loan using the
Mortgaged Property as collateral,or
o sell the Mortgaged Property to a third party.
It may also affect the value of the Mortgaged Property that may be realized upon
any foreclosure.
You should understand that the results of the environmental site
assessments do not constitute an assurance or guaranty by the underwriters, the
depositor, the originators, the sellers, the borrowers, any environmental
consultants or any other person as to the absence or extent of the existence of
any environmental condition on the Mortgaged Properties that could result in
environmental liability. Given the scope of the environmental site assessments,
an environmental condition that affects a Mortgaged Property may not be
discovered or its severity revealed during the course of the assessment.
Further, no assurance can be given that future changes in applicable
environmental laws, the development or discovery of presently unknown
environmental conditions at the Mortgaged Properties or the deterioration of
existing conditions will not require material expenses for remediation or other
material liabilities. There can be no assurance that any hold-back or other
escrow of funds to pay the cost of completing any clean-up, remediation or
compliance actions with respect to a Mortgaged Property will be sufficient to
complete such actions.
[Environmental Insurance
Depositor Group Policy.
In connection with the issuance of the certificates, the depositor will
obtain a secured creditor impaired property group policy covering environmental
matters with respect to ___ Mortgaged Properties (___%). In general, that group
policy provides coverage for the following losses, subject to no deductibles
and, further, to the coverage limits discussed below:
o if during the term of the policy, adverse
environmental conditions exist at levels above
legal limits on an insured Mortgaged Property
and the borrower defaults under the related
Mortgage Loan, the insurer will indemnify the
trust for the outstanding principal balance of the
related Mortgage Loan on the date of the default,
together with accrued interest;
o if the trust becomes legally obligated to pay as a
result of a claim first made against the trust and
reported to the insurer during the term of the
policy, for bodily injury, property damage or
clean-up costs resulting from adverse
environmental conditions on, under or emerging
from an insured Mortgaged Property, the insurer
will cover that claim; and
o if the trust enforces the related mortgage and the
related insured Mortgaged Property is acquired
by the trust, the insurer will thereafter pay clean-
up costs for adverse environmental conditions at
levels above legal limits which exist on or under
that Mortgaged Property.
The coverage limits for this secured creditor impaired property group
policy are as follows:
o the per occurrence limit will equal [125%] of the
principal balance of the related Mortgage Loan,
and
o the aggregate limit will equal [40%] of the
aggregate principal balance of all the covered Mortgage Loans.
_______ Individual Policies.
Additionally, with respect to ___ Mortgage Loans (___%) to be acquired by
the depositor from
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_____________, secured creditor impaired property policies were obtained
covering environmental matters with respect to the related Mortgaged Properties.
In general, each of these policies provide coverage for the following losses,
subject to the exclusions from coverage discussed under "--Environmental
Insurance--General Information" below:
o if during the term of the policy, adverse
environmental conditions exist at levels above
legal limits on the related insured Mortgaged
Property and the borrower defaults under the
related Mortgage Loan, the insurer will
indemnify the trust for the outstanding principal
balance of the related Mortgage Loan on the date
of the default, together with accrued interest;
o if the trust becomes legally obligated to pay as a
result of a claim first made against the trust and
reported to the insurer during the term of the
policy, for bodily injury, property damage or
clean-up costs resulting from adverse
environmental conditions on, under or emerging
from the related insured Mortgaged Property, the
insurer will cover that claim; and
o if the trust enforces the related mortgage and the
related insured Mortgaged Property is acquired
by the trust, the insurer will thereafter pay clean-
up costs for adverse environmental conditions at
levels above legal limits which exist on or under
that Mortgaged Property;
provided that the trustee, the master servicer and/or the special servicer first
became aware of those adverse environmental conditions during the term of the
policy and the appropriate party reported those conditions to the government in
accordance with applicable law.
General Information.
Each of the secured creditor impaired property policies described above,
including the group policy, require that the appropriate party associated with
the trust report a claim during the term of the related policy. None of those
policies includes coverage for asbestos and lead-based paint. Furthermore, none
of those policies pays for unreimbursed servicing advances.
The premium for each of the secured creditor impaired policies described
above, including the group policy, has been or, as of the date of initial
issuance of the certificates, will be paid in full. The insurer under each of
those policies is either ___________________________________ or
______________________________________________.]
Geographic Concentration
Mortgaged Properties located in ________ and _____ secure approximately
____% and ____%, respectively, of the Initial Pool Balance. Additionally,
Mortgaged Properties located in each of _______, _______, _____________, and
__________ secure at least [5%], but less than [10%], of the Initial Pool
Balance. The occurrence of adverse economic conditions in any such jurisdiction
may affect repayments of the related Mortgage Loans or the value of such
Mortgaged Properties. Such Mortgaged Properties may be more susceptible to
certain special hazard losses than properties located in other areas of the
country. No more than [5%] of the Initial Pool Balance is secured by Mortgaged
Properties located in any other jurisdiction. See "Risk Factors--Increased
Geographic Concentrations of Mortgaged Properties May Have an Adverse Effect on
the Payment of Your Certificates" and Exhibit A-2.
Zoning Compliance
The originator for each Mortgage Loan generally received assurances that
all of the improvements located upon each respective Mortgaged Property complied
with all zoning laws in all respects material to the continued use of the
related Mortgaged Property, or that the improvements qualified as permitted
non-conforming uses. Where a Mortgaged Property is operated as a permitted
non-conforming use, an analysis was generally conducted as to whether existing
replacement cost hazard insurance or, if necessary, supplemental "law and
ordinance coverage" would, in the event of a material casualty, be sufficient to
satisfy the entire Mortgage Loan or, taking into account the cost of the repair,
be sufficient to pay down that Mortgage Loan to a level that the remaining
collateral would be adequate security for the remaining loan amount.
Tenant Matters
Certain additional information regarding Mortgaged Properties that are
owner occupied or leased in whole or in large part to a single tenant is listed
in Exhibit A-2. Generally, these owners or major tenants do not have
investment-grade credit ratings. The major tenants generally occupy their
premises pursuant to leases which may require them to pay all applicable real
property taxes, maintain
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insurance over the improvements thereon and maintain the physical condition of
such improvements. For __ of the Mortgaged Properties (____%), the owner or
major tenant occupies [50%] or more of the Mortgaged Property.
Other Information
Each of the tables in Exhibit A-2 lists certain characteristics of the
mortgage pool presented, where applicable, as of the Cut-off Date. The sum in
any column of any of the tables in Exhibit A-2 may not add to 100% and may not
equal the indicated total due to rounding. For a detailed presentation of
certain of the characteristics of the Mortgage Loans and the Mortgaged
Properties, on an individual basis, see Exhibit A-1. For a brief summary of
certain of the terms of the [5] largest Mortgage Loans, or groups of
Cross-Collateralized Loans, see Exhibit B. Certain information regarding
Mortgage Loans secured by Mortgages encumbering multifamily properties is listed
in Exhibit A-1. Finally, certain information regarding the Reserve Accounts for
each Mortgage Loan is set forth in Exhibit A-1.
For purposes of the tables in Exhibit A-2 and for the information included
in this prospectus supplement and in Exhibits A-1 and B the following
definitions and assumptions apply:
Debt Service Coverage Ratio
In general, income property lenders use debt service coverage ratios (DSCR)
to measure the ratio of (a) cash currently generated by a property that is
available for debt service to (b) required debt service payments. However, debt
service coverage ratios only measure the current, or recent, ability of a
property to service mortgage debt. If a property does not possess a stable
operating expectancy (for instance, if it is subject to material leases that are
scheduled to expire during the loan term and that provide for above-market rents
and/or that may be difficult to replace), a debt service coverage ratio may not
be a reliable indicator of a property's ability to service the mortgage debt
over the entire remaining loan term.
For purposes of this prospectus supplement, including for the tables in
Exhibit A-2 and the information in Exhibits A-1 and B, the "Debt Service
Coverage Ratio" or "DSCR" for any Mortgage Loan (or group of
Cross-Collateralized Loans) is the ratio of either the "Underwritable Cash Flow"
estimated to be produced by the related Mortgaged Property or Properties or the
Most Recent Net Operating Income, as described below, to the annualized amount
of debt service payable under that Mortgage Loan (or that group of
Cross-Collateralized Loans). All debt service coverage ratio information
included in this prospectus supplement excludes the ___ Mortgaged Property
subject to a credit tenant lease.
"Most Recent DSCR" for a Mortgage Loan (or group of Cross-Collateralized
Loans) is the ratio of its Most Recent Net Operating Income to the annualized
amount of debt service payable under that Mortgage Loan (or group of
Cross-Collateralized Loans).
"U/W DSCR" or "Underwritable Debt Service Coverage Ratio" for a Mortgage
Loan (or group of Cross-Collateralized Loans) is the ratio of its Underwritable
Cash Flow calculated in connection with the underwriting of the Mortgage Loan to
the annualized amount of debt service payable under that Mortgage Loan (or group
of Cross-Collateralized Loans).
"Underwritable Cash Flow" in each case is an estimate of stabilized cash
flow available for debt service. In general, it is the estimated stabilized
revenue derived from the use and operation of a Mortgaged Property (consisting
primarily of rental income) less the sum of:
o estimated stabilized operating expenses (such as
utilities, administrative expenses, repairs and
maintenance, management fees and advertising),
o fixed expenses (such as insurance, real estate
taxes and, if applicable, ground lease payments),
and
o recurring capital expenditures and reserves for
capital expenditures, including tenant
improvement costs and leasing commissions.
Underwritable Cash Flow generally does not reflect interest expenses and
non-cash items such as depreciation and amortization.
In determining Underwritable Cash Flow for a Mortgaged Property, the seller
relied on rent rolls and other generally unaudited financial information
provided by the borrowers and calculated stabilized estimates of cash flow that
took into consideration historical financial statements, material changes in the
operating position of the Mortgaged Property of which the seller was aware
(e.g., new signed leases or end of "free rent" periods and market data), and
estimated recurring capital expenditures and reserves for leasing commission and
tenant improvements. The seller made certain adjustments to particular
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items in the operating statements and operating information obtained from the
borrowers, resulting in either an increase or decrease in the estimate of
Underwritable Cash Flow derived therefrom. These adjustments were based upon the
seller's evaluation of such operating statements and operating information and
the assumptions applied by the borrowers in preparing such statements and
information. Such adjustments may not have been consistent with generally
accepted accounting principles. In certain cases, partial year operating income
data was annualized, with certain adjustments for items deemed not appropriate
to be annualized, or borrower supplied "trailing-12 months" income and/or
expense information was utilized. In certain instances, historical expenses were
inflated. For purposes of calculating Underwritable Cash Flow for Mortgage Loans
where leases have been executed by one or more affiliates of the borrower, the
rents under some of such leases have been adjusted to reflect market rents for
similar properties. In some instances, lease rentals were adjusted to take into
account rent increases scheduled to occur within the next 12 months. Several
Mortgage Loans are secured by Mortgaged Properties with newly constructed
improvements and, accordingly, there were no historical operating results or
financial statements available with respect to such Mortgaged Properties. In
such cases, items of revenue and expense used in calculating Underwritable Cash
Flow were generally derived from rent rolls, estimates set forth in the related
appraisal or from borrower-supplied information.
The amount of any underwritten or contractual recurring replacement reserve
amounts and/or underwritten or contractual leasing commissions and tenant
improvements for each of the Mortgaged Properties is shown in the table titled
"Engineering Reserves and Recurring Replacement Reserves" on Exhibit A-1. The
underwritten or contractual recurring replacement reserve amounts shown on
Exhibit A-1 are expressed as dollars per unit in the case of multifamily rental
properties and manufactured housing communities, a percentage of total
departmental revenues in the case of hospitality properties and dollars per
leasable square footage in the case of other commercial properties.
No assurance can be given with respect to the accuracy of the information
provided by any borrowers, or the adequacy of the procedures used by the seller
in determining the presented operating information.
The Debt Service Coverage Ratios are presented for illustrative purposes
only and, as discussed above, are limited in their usefulness in assessing the
current, or predicting the future, ability of a Mortgaged Property to generate
sufficient cash flow to repay the Mortgage Loan. Accordingly, no assurance can
be given, and no representation is made that the Debt Service Coverage Ratios
accurately reflect that ability.
Loan-to-Value
References in the tables to "Cut-off Date Loan-to-Value" or "Cut-off Date
LTV" are references to the ratio, expressed as a percentage, of the Cut-off Date
Principal Balance of a Mortgage Loan (or the aggregate Cut-off Date Principal
Balance of a group of Cross-Collateralized Loans) to the value of the related
Mortgaged Property or Properties as determined by the most recent appraisal or
market valuation of such Mortgaged Property, as described below. All
loan-to-value ratio information included in this prospectus supplement does not
include the 1 Mortgaged Property subject to a credit tenant lease.
References to "Maturity/ARD Balance" is the principal balance of a Mortgage
Loan (or the aggregate principal balance of a group of Cross-Collaterialized
Loans) anticipated to be outstanding at its maturity date, or for a
Hyper-Amortization Loan, at its Anticipated Repayment Date (calculated based on
the Maturity Assumptions and a 0% CPR).
References to "Maturity/ARD LTV" or "Maturity/ARD LTV Ratio" are references
to the ratio, expressed as a percentage, of the Maturity/ARD Balance of a
Mortgage Loan (excluding the Mortgage Loans expected to fully amortize over
their remaining term) to the value of the related Mortgaged Property or
Properties as determined by the most recent appraisal or market valuation of
such Mortgaged Property or Properties available to the depositor.
Each Mortgaged Property was appraised at the request of the originator of
the Mortgage Loan by a state certified appraiser or an appraiser belonging to
the Appraisal Institute. The purpose of each appraisal was to provide an opinion
of the fair market value of the Mortgaged Property. None of the depositor, the
sellers, the master servicer, the special servicer, the underwriters or the
trustee or any other entity has prepared or obtained a separate independent
appraisal or reappraisal, unless such person was the originator of the Mortgage
Loan. There can be no assurance that another appraiser would have arrived at the
same
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<PAGE>
opinion of value. No representation is made that any appraised value would
approximate either the value that would be determined in a current appraisal of
the Mortgaged Property or the amount that would be realized upon a sale.
Accordingly, you should not place undue reliance on the loan-to-value ratios set
forth in this prospectus supplement.
Year Built/Renovated
References to "years built/renovated" are references to the later of the
year in which a Mortgaged Property was originally constructed or the most recent
year in which the Mortgaged Property was substantially renovated.
Weighted Averages
References to "weighted averages" are references to averages weighted on
the basis of the Cut-off Date Principal Balances of the Mortgage Loans.
Most Recent Appraised Value
References to "Most Recent Appraised Value" for each of the Mortgaged
Properties is the "as is" or, if provided, the "as cured" value estimate
reflected in the most recent appraisal or market valuation obtained by or
otherwise in the possession of the related seller. The "cured value" is
generally calculated as the sum of:
o the "as is" value set forth in the related appraisal
or market valuation, plus
o the estimated costs (as of the date of the
appraisal or market valuation), if any, of
implementing any deferred maintenance required
to be undertaken immediately or in the short
term under the terms of the related Mortgage
Loan.
In general, the amount of these estimated costs is based on:
o an estimate by the individual preparing the
appraisal or market valuation,
o an estimate by the related borrower,
o the estimate set forth in the property condition
assessment conducted in connection with the
origination of the related Mortgage Loan, or
o a combination of these estimates.
Leasable Square Footage
References to "S.F." or "Sq.Ft." means, in the case of any Mortgaged
Property that is a commercial property (other than a hospitality property), the
estimated square footage of its gross leasable area, as reflected in information
provided by the related borrower or in the appraisal or market valuation on
which the Most Recent Appraised Value of the Mortgaged Property is based.
Units
References to (1) in the case of any Mortgaged Property that is a
multifamily rental property, its estimated number of apartments, regardless of
the number or size of rooms in the apartments, and (2) in the case of any
Mortgaged Property that is a manufactured housing community, its estimated
number of pads to which a mobile home can be hooked up, in each case, as
reflected in information provided by the related borrower or in the appraisal or
market valuation on which the Most Recent Appraised Value is based.
Rooms
References to "Rooms" means, in the case of any Mortgaged Property that is
a hospitality property, its estimated number of rooms and/or suites, without
regard to the size of the rooms or the number or size of the rooms in the
suites, as reflected in information provided by the related borrower or in the
appraisal or market valuation on which the Most Recent Appraised Value of the
property is based.
Occupancy Rate At Underwriting
References to "Occupancy Rate at Underwriting" or "Occupancy Rate at U/W"
generally mean the percentage of leasable square footage, in the case of
Mortgaged Properties that are commercial properties (other than hospitality
properties), or units, in the case of Mortgaged Properties that are multifamily
rental properties and manufactured housing communities, of the subject Mortgaged
Properties that were occupied or leased as of the approximate date of the
original underwriting of the related Mortgage Loan or such later date as we
considered appropriate, in any event as reflected in information provided by the
related borrower or in the appraisal or market valuation on which the Most
Recent Appraised Value of the Mortgaged Property is based. Information shown in
this prospectus supplement with respect to any weighted average of
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occupancy rates at underwriting excludes hospitality properties from the
relevant calculations.
Major Tenant
References to "Major Tenant" means any one of the top three tenants (based
on the net rentable area of its space) of a commercial property that leases at
least [10%] or more of the net rentable area of the Mortgaged Property.
Most Recent Operating Statement Date
References to "Most Recent Operating Statement Date" means, with respect to
each of the Mortgage Loans, the date indicated on Exhibit A-1 as the "most
recent operating statement date" with respect to the Mortgage Loan. In general,
this date is the end date of the period covered by the latest available annual
or, in some cases, partial-year operating statement for the related Mortgaged
Property.
Most Recent Net Operating Income
References to "Most Recent Net Operating Income" mean, with respect to each
of the Mortgaged Properties, its total cash flow that was available for annual
debt service on the related Mortgage Loan, calculated as the most recent
revenues less most recent expenses for that Mortgaged Property. For purposes of
calculating the most recent net operating income for each of the Mortgaged
Properties:
o "most recent revenues" are the revenues
received, or annualized or estimated in certain
cases, in respect of a Mortgaged Property for the
12-month period ended as of the most recent
operating statement date, based upon the latest
available annual or, in some cases, partial-year
operating statement and other information
furnished by the related borrower, and
o "most recent expenses" are the expenses
incurred, or annualized or estimated in certain
cases, for a Mortgaged Property for the 12-
month period ended as of the most recent
operating statement end date, based upon the
latest available annual or, in some cases, partial-
year operating statement and other informatioN
furnished by the related borrower.
The Sellers
Midland Loan Services, Inc.
Midland Loan Services, L.P., was organized under the laws of the State of
Missouri in 1992 as a limited partnership. On April 3, 1998, Midland Loan
Services, Inc., a newly formed, wholly owned subsidiary of PNC Bank, National
Association, acquired substantially all of the assets of Midland Loan Services,
L.P. Since 1994, Midland has been originating commercial and multifamily
mortgage loans for the purpose of securitization. Midland is an affiliate of PNC
Capital Markets, Inc. See "Master Servicer and Special Servicer".
[___ Mortgage Loans (____%) were originated by Midland. Midland will sell
these Mortgage Loans directly to the depositor on the closing date.]
[_____________________________
[Add disclosure for other Sellers]
Changes in Mortgage Pool Characteristics
The description in this prospectus supplement of the mortgage pool and the
Mortgaged Properties is based upon the mortgage pool as expected to be
constituted at the close of business on the Cut-off Date, as adjusted for
scheduled principal payments due on the Mortgage Loans on or before the Cut-off
Date. Prior to the issuance of the certificates, one or more Mortgage Loans may
be removed from the mortgage pool if:
o the depositor deems such removal necessary or
appropriate, or
o the loan is prepaid.
A limited number of other mortgage loans may be included in the mortgage
pool prior to the issuance of the certificates, unless including such mortgage
loans would materially alter the characteristics of the mortgage pool as
described in this prospectus supplement. Accordingly, the range of interest
rates and maturities, as well as the other characteristics of the Mortgage Loans
constituting the mortgage pool at the time the certificates are issued may vary
from those described in this prospectus supplement.
A Current Report on Form 8-K will be filed, together with the pooling and
servicing agreement, with the Securities and Exchange Commission within
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15 days after the closing date. If Mortgage Loans are removed from or added to
the mortgage pool as set forth in the preceding paragraph, the removal or
addition will be noted in the Form 8-K.
Representations and Warranties; Repurchase
The following is a summary of certain of the representations and warranties
to be made by each seller with respect to each of its Mortgage Loans. Other
representations and warranties may also be required by the Rating Agencies or
the purchasers of the privately offered certificates. The representations will
be made as of the closing date or as of another date specifically stated in the
representation or warranty. There may be exceptions to some of the
representations and warranties.
1. The information in the schedule of the Mortgage Loans attached to the
related mortgage loan purchase agreement is true and correct in all
material respects as of the Cut-off Date.
2. The seller owns the Mortgage Loans and is conveying them free and clear of
any pledge, lien or security interest.
3. No scheduled payment of principal and interest under any Mortgage Loan is
30 days or more past due nor has been during the preceding 12-month period.
4. The related Mortgage constitutes a valid and enforceable first lien upon
the related Mortgaged Property, subject to:
o creditors' rights and general principles of
equity,
o liens for current real estate taxes and
assessments not yet delinquent or accruing
interest or penalties,
o exceptions and exclusions specifically
referred to in the lender's title insurance
policy,
o purchase money security interests,
o other matters to which like properties are
commonly subject,
o the rights of tenants to remain at the related
Mortgaged Property following foreclosure,
and
o the lien for another Mortgage Loan which is
cross-collateralized with such Mortgage
Loan.
5. The related Mortgage has not been satisfied, cancelled, rescinded or
subordinated in whole or in material part.
6. The seller is not aware of any proceeding pending for the total or partial
condemnation of or affecting the related Mortgaged Property.
7. The related Mortgaged Property is or will be covered by an American Land
Title Association (or an equivalent or state-approved form) lender's title
insurance policy that insures that the related Mortgage is a valid, first
priority lien on such Mortgaged Property, subject only to the exceptions
stated in the policy.
8. The proceeds of the Mortgage Loan have been fully disbursed (subject to
funds being held back pending the satisfaction of certain leasing, repair
or other conditions), and there is no obligation for future advances with
respect to such Mortgage Loan.
9. Each note, Mortgage and other agreement of the borrower with respect to the
Mortgage Loan is its legal, valid and binding obligation, enforceable in
accordance with its terms, subject to:
o the non-recourse provisions of the loan;
o applicable state anti-deficiency or market
value limit deficiency legislation;
o bankruptcy, insolvency, reorganization and
state laws related to creditors' rights; and
o general principles of equity.
The pooling and servicing agreement will require that the custodian, the
master servicer, the special servicer or the trustee notify the applicable
seller upon its becoming aware:
o of any breach of certain representations or
warranties made by that seller in its mortgage
loan purchase agreement, or
o that any document required to be included in the
mortgage file does not conform to the
requirements of the pooling and servicin
agreement. See "The Pooling and Servicing
Agreement--Assignment of the Mortgage Loans".
Subject to the discussion below, the applicable mortgage loan purchase agreement
provides that, if a breach or default that materially and adversely affects the
interests of the trustee or the certificateholders is
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not cured within 90 days after discovery of the breach or defect by the
applicable seller, the depositor, the custodian, the master servicer, the
special servicer or the trustee, the applicable seller will either:
1. repurchase the affected Mortgage Loan for a purchase price (the
"Repurchase Price") equal to the sum of:
o outstanding principal balance,
o unpaid accrued interest at the applicable rate (in absence of a default
and excluding any Deferred Interest) to, but not including, the date of
repurchase,
o the amount of any unreimbursed Servicing Advances relating to such
Mortgage Loan,
o accrued interest on Advances (including P&I Advances) at the Advance
Rate,
o the amount of any unpaid servicing compensation (other than master
servicing fees) and trust fund expenses allocable to the Mortgage Loan,
and
o the amount of any expenses reasonably incurred by the master servicer,
the special servicer or the trustee in respect of the repurchase
obligation, including any expenses arising out of the enforcement of
the repurchase obligation, or
2. substitute a Qualified Substitute Mortgage Loan for the affected Mortgage
Loan and pay the trustee a shortfall amount equal to the difference between
the Repurchase Price of the affected Mortgage Loan calculated as of the
date of substitution and the Stated Principal Balance of the Qualified
Substitute Mortgage Loan as of the date of substitution.
If the Mortgage Loan continues to be a "qualified mortgage" within the
meaning of the REMIC provisions of the Code, the 90-day period will not commence
until the seller receives notice of or discovers that the Mortgage Loan is a
defective Mortgage Loan. If the breach or defect cannot be cured within the
90-day period, then so long as the seller has commenced and is diligently
proceeding with the cure of the breach or defect, the 90-day period will be
extended for an additional 90 days. However, the seller will be entitled to an
extension only if it delivers to the depositor an officer's certificate:
o describing the measures being taken to cure the breach or defect,
o stating that it is possible to cure the breach or defect cured within
the 90 day period, and
o stating that the breach or defect does not cause the Mortgage Loan to fail
to be a "qualified mortgage" within the meaning of the REMIC provisions of
the Internal Revenue Code of 1986.
A "Qualified Substitute Mortgage Loan" is a mortgage loan which must, on
the date of substitution:
1. have an outstanding principal balance, after application of all scheduled
payments of principal and interest due during or prior to the month of
substitution, not in excess of the Stated Principal Balance of the deleted
Mortgage Loan as of the due date in the calendar month during which the
substitution occurs;
2. have a mortgage rate not less than the Mortgage Rate of the deleted
Mortgage Loan;
3. have the same due date as the deleted Mortgage Loan; 4. accrue interest on
the same basis as the deleted Mortgage Loan (for example, on the basis
of a 360-day year consisting of twelve 30-day months);
5. have a remaining term to stated maturity not greater than, and not more
than two years less than, the remaining term to stated maturity of the
deleted Mortgage Loan;
6. have an original loan to-value-ratio not higher than that of the deleted
Mortgage Loan and a current loan-to-value ratio not higher than the then
current loan-to-value ratio of the deleted Mortgage Loan;
7. comply as of the date of substitution with all of the representations and
warranties listed in the applicable mortgage loan purchase agreement;
8. have an environmental report for the related Mortgaged Property, which will
be part of the related mortgage file;
9. have an original debt service coverage ratio not less than the original
debt service coverage ratio of the deleted Mortgage Loan and a current debt
service coverage ratio not less than the then current debt service coverage
ratio of the deleted Mortgage Loan;
10. be determined by an opinion of counsel to be a "qualified replacement
mortgage" within the meaning of Section 860G(a)(4) of the Internal Revenue
Code of 1986;
11. not have a maturity date after the date three years prior to the Rated
Final Distribution Date;
12. not be substituted for a deleted Mortgage Loan unless the trustee has
received prior confirmation in writing by each Rating Agency that the
substitution will not result in the withdrawal, downgrade, or qualification
of the rating
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assigned by the Rating Agency to any class of the certificates then rated
by the Rating Agency. The seller will pay the cost, if any, of obtaining
the confirmation;
13. not be substituted for a deleted Mortgage Loan if it
would result in the termination of the REMIC status of REMIC I, REMIC II or
REMIC III or the imposition of tax on REMIC I, REMIC II or REMIC III other
than a tax on income expressly permitted or contemplated to be received by
the terms of the pooling and servicing agreement; and
14. not be substituted for a deleted Mortgage Loan unless the controlling class
representative has approved the substitution in its reasonable discretion.
If one or more mortgage loans are substituted for one or more deleted
Mortgage Loans, then:
o the amounts described in clause (1) will be determined on the basis of
total principal balances,
o the rates described in clause (2) above will be determined on a weighted
average basis, and
o the remaining term to stated maturity referred to in clause (5) above will
be determined on a weighted average basis.
When a Qualified Substitute Mortgage Loan is substituted for a deleted
Mortgage Loan, the applicable seller will certify that the Qualified Substitute
Mortgage Loan meets all of the requirements of the above definition and shall
send the certification to the trustee and the controlling class representative.
The obligations of the sellers to substitute, repurchase or cure constitute
the sole remedies available to the trustee for the benefit of the holders of
certificates for:
o a breach of a representation or warranty with regard to a Mortgage Loan
by a seller, or
o missing or defective Mortgage Loan documentation.
[In addition to the above remedies for breach of representations and
warranties, the controlling class representative may require a seller to
establish a cash reserve or provide a letter of credit in the amount of __% of
the principal balance of any Mortgage Loan if the related Mortgage, assignment
of leases, certain financing statements or certain assignments in favor of the
trustee remain missing, unrecorded or unfiled __ months or more after the
closing because such document was never provided in the proper form, was lost or
was returned unrecorded or unfiled as a result of a defect, but only if such
omission would materially and adversely affect the enforcement of the related
lien or security interest or the value of the Mortgage Loan at such time. If the
seller fails to cure such defects or repurchase or replace the related Mortgage
Loan when required by the related loan purchase agreement, the cash reserve or
letter of credit for the related Mortgage Loan may under certain circumstances
be applied to reimburse the trust for any expenses directly incurred as a result
of such document defects, including the costs of enforcing the seller's
obligations or curing such document defects.]
If a seller defaults on its obligation to substitute, repurchase, cure [or
provide a cash reserve or letter of credit], no other person will have an
obligation to fulfill the seller's obligations. No assurance can be given that
any seller will fulfill its obligations. If such obligations are not met, as to
a Mortgage Loan that is not a "qualified mortgage" within the meaning of the
REMIC provision of the Internal Revenue Code of 1986, REMIC I, REMIC II and
REMIC III may be disqualified.
MASTER SERVICER AND SPECIAL SERVICERMASTER SERVICER AND SPEICAL SERVICER
Background
Midland Loan Services, L.P., was organized under the laws of the State of
Missouri in 1992 as a limited partnership. On April 3, 1998, Midland Loan
Services, Inc., a newly-formed, wholly-owned subsidiary of PNC Bank, National
Association, acquired substantially all of the assets of Midland Loan Services,
L.P. Midland is a real estate financial services company that provides loan
servicing and asset management for large pools of commercial and multifamily
real estate assets and that originates commercial real estate loans. Midland's
address is:
210 West 10th Street
6th Floor
Kansas City, Missouri 64105.
Midland will serve as the master servicer for the trust fund. In addition,
Midland and its affiliates
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are the seller with respect to ___ of the Mortgage Loans (____%). See
"Description of the Mortgage Pool--The Sellers".
Standard & Poor's Ratings Services and Fitch IBCA, Inc. have approved
Midland as a master and special servicer for investment grade-rated commercial
and multifamily mortgage-backed securities. Midland is also a HUD/FHA-approved
mortgagee and a FannieMae-approved multifamily loan servicer.
Midland's Servicing Portfolio
As of __________, _____, Midland was servicing approximately ________
commercial and multifamily loans with a principal balance of approximately
$_____ billion. The collateral for these loans is located in all 50 states, the
District of Columbia, Puerto Rico and Canada. Approximately _______ of the
loans, with a total principal balance of approximately $___ billion, pertain to
commercial and multifamily mortgage-backed securities. The portfolio includes
multifamily, office, retail, hospitality and other types of income producing
properties. Midland also services newly-originated loans and loans acquired in
the secondary market for:
o financial institutions,
o private investors, and
o issuers of commercial and multifamily mortgage-backed securities.
DESCRIPTION OF THE CERTIFICATES
General
The certificates are issued under the pooling and servicing agreement and
will consist of [20] classes:
o [Class S Certificates
o Class A-1A Certificates
o Class A-1B Certificates
o Class A-2 Certificates
o Class A-3 Certificates
o Class A-4 Certificates
o Class B-1 Certificates
o Class B-2 Certificates
o Class B-3 Certificates
o Class B-4 Certificates
o Class B-5 Certificates
o Class B-6 Certificates
o Class B-7 Certificates
o Class B-8 Certificates
o Class C Certificates
o Class D Certificates
o Class E Certificates
o Class R-I Certificates
o Class R-II Certificates
o Class R-III Certificates]
We are only offering the [class S, A-1A, A-1B, A-2, A-3, A-4, B-1 and B-2]
certificates to you. See "The Pooling and Servicing Agreement" in this
prospectus supplement and "Description of the Certificates" and "Description of
the Governing Document" in the prospectus for additional important information
regarding the terms of the pooling and servicing agreement and the certificates.
The pooling and servicing agreement will be filed with the Securities and
Exchange Commission on Form 8-K within 15 days after the closing date.
The certificates represent the entire beneficial ownership interest in a
trust fund consisting primarily of:
o the Mortgage Loans and principal and interest due after the Cut-off Date
and all payments under and proceeds of the Mortgage Loans received after
the Cut-off Date (exclusive of Principal Prepayments received prior to the
Cut-off Date and scheduled payments of principal and interest due on or
before the Cut-off Date),
o any Mortgaged Property acquired on behalf of the trust fund through
foreclosure, deed-in-lieu of foreclosure or otherwise (upon acquisition, an
"REO Property"),
o funds or assets from time to time deposited in the Collection Account, the
Distribution Account, the Interest Reserve Account and any account
established in connection with REO Properties (an "REO Account"),
o the rights of the mortgagee under all insurance policies with respect to
the Mortgage Loans, and
o the depositor's rights and remedies under the applicable mortgage loan
purchase agreement, and all of the mortgagee's right, title and interest in
the Reserve Accounts.
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[The class E certificates will evidence undivided interests in a grantor
trust consisting of collections of Deferred Interest on the Mortgage Loans. The
principal balance certificates and the interest only certificates will not
receive any Deferred Interest collected on the Mortgage Loans.]
As described under "Material Federal Income Tax Consequences", the [class
R-I, R-II and R-III] certificates will constitute "residual interests" in a
REMIC. We do not anticipate that the residual certificates will receive any
distributions of cash from the trust.
Principal Balances and Notional Amounts
Upon initial issuance, the respective classes of principal balance
certificates will have the class principal balances set forth in the table on
page S-4, which may in the aggregate vary by up to [5%].
The principal balance of any class of principal balance certificates
outstanding at any time represents the maximum amount that holders are entitled
to receive as distributions allocable to principal. The principal balance of
each class will be reduced by:
o amounts distributed to the class as principal, and
o any Realized Losses and Expense Losses allocated to the class.
The [class S] certificates are interest-only certificates, have no
principal balances and are not entitled to distributions of principal. The total
notional amount of the [class S] certificates as of any date is equal to 100% of
the total principal balance of the Principal Balance Certificates.
The "Stated Principal Balance" of each Mortgage Loan will generally equal
its unpaid principal balance as of the Cut-off Date (or in the case of a
Qualified Substitute Mortgage Loan as of the date of substitution), after
applying payments due on or before that date (whether or not received), reduced
(to not less than zero) on each subsequent distribution date by:
o any payments or other collections (or advances for such amounts) of
principal of such Mortgage Loan that have been distributed on the
certificates on such date or would have been distributed on such date if
they had not been applied to cover Additional Trust Fund Expenses, and
o the principal portion of any Realized Loss allocable to such Mortgage Loan
during the related Collection Period.
However, except as stated in the discussion under
"--Distributions--Treatment of REO Properties", if any Mortgage Loan is paid in
full, liquidated or otherwise removed from the trust fund, the Stated Principal
Balance of the Mortgage Loan will be zero beginning on the first distribution
date following the Collection Period during which the event occurred.
Pass-Through Rates
The rate per annum at which any class of offered certificates accrues
interest from time to time is its "pass-through rate".
The pass-through rate for the class A-1A certificates is fixed at ______%
per annum.
The pass-through rates for the [class A-1B, class A-2, class A-3 and class
A-4] certificates for each interest accrual period will equal the lesser of (1)
the initial pass-through rate for that class, and (2) the weighted average of
the Net Mortgage Rates for the related distribution date, weighted on the basis
of the Mortgage Loans' respective Stated Principal Balances immediately before
the distribution date.
The pass-through rates for the [class B-1 and class B-2] certificates for
each interest accrual period will equal the weighted average of the Net Mortgage
Rates for the related distribution date, weighted on the basis of the Mortgage
Loans' respective Stated Principal Balances immediately before the distribution
date.
The pass-through rates for the [class B-3, class B-4 and class B-5]
certificates for each interest accrual period will equal the lesser of (1)
______% and (2) the weighted average of the Net Mortgage Rates for the related
distribution date, weighted on the basis of the Mortgage Loans' respective
Stated Principal Balances immediately before the distribution date. The
pass-through rates for the class [B-6, class B-7, class B-8, class C and class
D] certificates for each interest accrual period will equal the lesser of (1)
______% and (2) the weighted average of the Net Mortgage Rates for the related
distribution date, weighted on the basis of the Mortgage Loans' respective
Stated Principal Balances immediately before the distribution date.
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The pass-through rate on the [class S] certificates for the initial
interest accrual period will equal ______%. For each subsequent interest accrual
period, the pass-through rate on the [class S] certificates will generally be a
per annum rate equal to the excess of:
o the weighted average of the Net Mortgage Rates for the related distribution
date, weighted on the basis of the Mortgage Loans' respective Stated
Principal Balances immediately before the distribution date, over
o the weighted average of the pass-through rates for the principal balance
certificates for that interest accrual period, weighted on the basis of the
respective principal balances thereof immediately before the distribution
date.
The "Net Mortgage Rate" for each Mortgage Loan is the interest rate for the
Mortgage Loan minus the master servicer fee and the trustee fee. This
calculation is made without giving effect to any Revised Interest Rate or any
default rate. The Net Mortgage Rate for any Mortgage Loan will be determined
without regard to any post-closing date modification, waiver or amendment of the
Mortgage Loan's terms for purposes of calculating pass-through rates.
The certificates accrue interest on the basis of a 360-day year consisting
of twelve 30-day months. Therefore, when calculating the pass-through rate for
each class of certificates for a distribution date, the Net Mortgage Rate of a
Mortgage Loan that accrues interest on an actual/360 basis (the "Interest
Reserve Loans") will be adjusted to an annual rate generally equal to:
o a fraction, expressed as a percentage, the numerator of which is,
subject to adjustment as described below, 12 times the amount of interest
that accrued or would have accrued with respect to that Mortgage Loan on an
actual/360 basis during the related interest accrual period, based on its
Stated Principal Balance immediately preceding that distribution date and
its mortgage interest rate in effect as of __________, 200_, and the
denominator of which is the Stated Principal Balance of the Mortgage Loan
immediately prior to that distribution date, minus
o the related master servicer fee and the trustee fee.
Notwithstanding the foregoing, if the subject distribution date occurs
during January (except during a leap year) or February, then, in the case of any
particular Interest Reserve Loan, the numerator of the fraction described in the
first bullet point of the preceding paragraph will be decreased by any Interest
Reserve Amount with respect to that Mortgage Loan that is transferred from the
Collection Account to the Interest Reserve Account during that month.
Furthermore, if the subject distribution date occurs during March, then, in the
case of any particular Interest Reserve Loan, the numerator of the fraction
described in the first bullet point of the preceding paragraph will be increased
by any Interest Reserve Amounts with respect to that Mortgage Loan that are
transferred from the Interest Reserve Account to the Distribution Account during
that month.
See "The Pooling and Servicing Agreement--Servicing Compensation and
Payment of Expenses".
Distributions
Method, Timing and Amount
Payments on the offered certificates are scheduled to occur monthly,
commencing in _______ 200_. [The distribution date for each month will be the
later of:
o the ___ calendar day of that month, or if that day is not a business
day, then the next business day, and
o the _____ business day after the determination date for the month.]
The "Record Date" for each distribution date is the last business day of
the month preceding the month in which the distribution date occurs. Except for
the final distribution, all distributions will be made by the trustee to the
persons in whose names the certificates are registered at the close of business
on the Record Date. The distributions will be made:
o by wire transfer of immediately available funds if the certificateholder
provides the trustee with wiring instructions on or before the Record Date,
or
o otherwise by check mailed to the certificateholder.
The final distribution on a certificate will be made only upon presentment
or surrender of the certificate as specified in the notice of final
distribution.
The final distribution on any certificate will be determined without regard
to possible future
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reimbursement of any Realized Loss or Expense Loss previously allocated to the
certificate. Any distribution after the final distribution to reimburse a
previously-allocated Realized Loss or Expense Loss will be made by check mailed
to the certificateholder that surrendered the certificate. Such a distribution
is possible, but unlikely.
Distributions on a class of certificates are allocated among the
outstanding certificates of the class based on their principal or notional
balances.
Determining Available Funds
The total distribution on the certificates will equal the Available Funds.
The "Available Funds" for a distribution date in general will equal:
o amounts on deposit in the Collection Account at close of business on the
Determination Date, excluding:
1. Monthly Payments collected but due on a due date after the related
Collection Period,
2. prepayment premiums and Deferred Interest (which are distributed
separately),
3. amounts payable or reimbursable to any person other than the
certificateholders (including amounts payable to the master servicer,
the special servicer or the trustee as compensation or to reimburse
outstanding Advances, and amounts payable as Additional Trust Fund
Expenses),
4. amounts deposited in the Collection Account in error,
5. if the distribution date occurs during January of any year that is
not a leap year or February of any year, the Interest Reserve
Amounts for the Interest Reserve Loans to be deposited into the
Interest Reserve Account; plus
o any P&I Advances and Compensating Interest Payments made for the
distribution date and not already included; plus
o if the distribution date occurs during March of any year, the Interest
Reserve Amounts in the Interest Reserve Account.
"Principal Prepayments" are payments of principal on a Mortgage Loan that:
o are received before the scheduled due date, and
o are not accompanied by interest representing the full amount of
scheduled interest due in any month after the month of payment.
The "Collection Period" for a distribution date:
o begins on the day after the Determination Date in the preceding month
(or, in the case of the ___________ 20__ distribution date, on the day
after the Cut-off Date), and
o ends on the Determination Date in the month in which the distribution
date occurs.
[The "Determination Date" for a distribution date is the ________ calendar
day of the month or, if that day is not a business day, the first business day
before that day.]
Applying Available Funds
On each distribution date, the trustee will first apply Available Funds to
make distributions to the holders of the senior certificates in the following
order:
1. to pay interest to the holders of the classes of senior certificates, up to
an amount equal to, and pro rata as among those classes in accordance with,
the Distributable Certificate Interest for that class for that distribution
date;
2. to pay principal from the Principal Distribution Amount for that
distribution date:
o first to the holders of the [class A-1A] certificates; and
o second to the holders of the [class A-1B] certificates;
in each case, up to an amount equal to the lesser of:
(a) the then-outstanding principal balance of the class; and
(b) the remaining portion of the Principal Distribution Amount.
However, principal payments will be made to the [class A-1A and class A-1B]
certificates up to an amount equal to, and pro rata based on, their
outstanding class principal balances:
o if the principal balance of the subordinate certificates has been
reduced to zero; or
o on the final distribution date, if the trust fund is terminated as
discussed under "--Optional Termination" below; and
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3. to reimburse the holders of the [class A-1A and class A-1B] certificates,
up to an amount equal to, and pro rata as among those classes in accordance
with the amount of Realized Losses and Expense Losses, if any, previously
allocated to the [class A-1A and class A-1B] certificates and for which no
reimbursement has previously been paid; plus all unpaid interest on such
amounts (compounded monthly) at the pass-through rates for those classes.
On each distribution date, the holders of each class of subordinate
certificates will be entitled to the following distributions, to the extent of
the Available Funds remaining after all required distributions have been made on
the senior certificates and each other class of subordinate certificates, if
any, with an earlier alphabetical and numerical class designation:
1. distributions of interest, up to an amount equal to the
Distributable Certificate Interest in respect of such class of
certificates for that distribution date;
2. if the principal balance of the [class A-1A and class A-1B] certificates
and each other class of subordinate certificates, if any, with an earlier
alphabetical and numerical class designation has been reduced to zero,
distributions of principal, up to an amount equal to the lesser of:
(a) the then-outstanding principal balance of that class, and
(b) the remaining Principal Distribution Amount (or, on the final
distribution date in connection with the termination of the trust
fund, up to an amount equal to the then-outstanding principal
balance of the class); and
3. distributions for the purpose of reimbursement, up to an amount equal to
all Realized Losses and Expense Losses, if any, previously allocated to
such class and for which no reimbursement has previously been paid; plus
all unpaid interest on such amounts (compounded monthly) at the pass-
through rates for those classes.
"Alphabetical and numerical order" is determined first by alphabetical
order, and then if the alphabetical designations are the same, by numerical
order.
The trustee will pay any remaining Available Funds to the holders of the
residual certificates.
Reimbursement of previously allocated Realized Losses and Expense Losses
will not constitute distributions of principal for any purpose and will not
reduce the principal balances of the reimbursed certificates.
Distributable Certificate Interest
The "Distributable Certificate Interest" for each class of certificates
will equal:
o the interest accrued for the prior calendar month, at the applicable
pass-through rate on the principal balance or notional amount of the class
at the close of the preceding distribution date (or in the case of the
first distribution date, the Cut-off Date),
o reduced (to not less than zero) by the class's allocable share of
any Net Aggregate Prepayment Interest Shortfall for the distribution
date, and
o increased by the class's Class Interest Shortfall, if any, for the
distribution date.
See "--Prepayment Interest Shortfalls" below.
The "Class Interest Shortfall" for a class of certificates for a
distribution date equals:
o zero on the initial distribution date; and
o for subsequent distribution dates, the sum of:
1. the excess, if any, of:
o all Distributable Certificate Interest for the class on the
preceding distribution date,
over
o all distributions of interest made for the class on the preceding
distribution date, plus
2. to the extent permitted by law, one month's interest on such excess at
the pass-through rate for the class (or, in the case of the [class S]
certificates, at a rate equal to the weighted average of the pass-
through rates for the principal balance certificates, weighted on the
basis of their respective principal balances).
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Principal Distribution Amount
The "Principal Distribution Amount " for any distribution date will, in
general, equal the following:
o the principal portions of all Monthly Payments (other than balloon
payments) and Assumed Monthly Payments due or deemed due, as the case may
be, on the Mortgage Loans on the due dates occurring during the related
Collection Period; plus
o all payments (including voluntary principal prepayments and balloon
payments) and other collections received on the Mortgage Loans during
the related Collection Period that were identified and applied by the
master servicer as recoveries of principal, in each case net of any
portion of such amounts that represents a payment or other recovery of
the principal portion of any Monthly Payment (other than a balloon
payment) due, or the principal portion of any Assumed Monthly Payment
deemed due, on a Mortgage Loan on a due date during or prior to the
related Collection Period and not previously paid or recovered.
If on any distribution date the aggregate amount of distributions of
principal made on the principal balance certificates is less than the Principal
Distribution Amount, then the amount of the shortfall will be included in the
Principal Distribution Amount for the next distribution date.
The "Monthly Payment" for any Mortgage Loan (other than any REO Mortgage
Loan) will, in general, be the scheduled payment of principal and/or interest
(excluding balloon payments, default interest and Deferred Interest) due from
time to time. The Monthly Payment will be adjusted for any waiver, modification
or amendment of the terms of the Mortgage Loan whether agreed to by the master
servicer or special servicer, or resulting from a bankruptcy or similar
proceeding.
The "Assumed Monthly Payment":
o for a balloon loan that is delinquent as to all or any portion of
its balloon payment beyond the end of the Collection Period in which
its original maturity date occurs, is an amount that is deemed due on
its original maturity date and on each successive due date that it
remains or is deemed to remain outstanding. This amount is equal to
the Monthly Payment that would have been due if the balloon payment had
not become due, and the loan had continued to amortize under the
amortization schedule, if any, in effect immediately prior to maturity
and had continued to accrue interest in accordance with its terms in
effect immediately prior to maturity.
o for a Mortgage Loan as to which the related Mortgaged Property has become
an REO Property, is an amount that is deemed due on each due date while
the REO Property remains part of the trust fund. This amount is equal
to the Monthly Payment (or, in the case of a balloon loan described in the
preceding bullet point, the Assumed Monthly Payment) due on the last due
date before acquisition of the REO Property.
Distributions of Prepayment Premiums
Any prepayment premium collected during a Collection Period will be
distributed on the next distribution date. Prepayment premiums distributed to
the holders of a class of certificates may be insufficient to compensate them
fully for any loss in yield attributable to the related Principal Prepayments.
Any prepayment premium will be distributed as follows. The holders of each
class of offered certificates receiving principal distributions on a
distribution date will be entitled to an amount equal to the product of:
o the prepayment premium available for distribution, multiplied by
o a fraction (not more than one or less than zero):
1. the numerator of which equals the excess, if any, of the
pass-through rate applicable to that class of offered certificates,
over the Discount Rate, and
2. the denominator of which equals the excess, if any, of the interest
rate for the prepaid Mortgage Loan, over the Discount Rate,
multiplied by
o a fraction (not more than one or less than zero):
1. the numerator of which is equal to the aggregate distributions of
principal to be made with respect to that class of offered
certificates on that distribution date, and
2. the denominator of which is equal to the Principal Distribution
Amount for that distribution date.
The "Discount Rate" is the rate which, when compounded monthly, is
equivalent to the Treasury Rate when compounded semi-annually.
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The "Treasury Rate" is the yield calculated by the linear interpolation of
the yields of U.S. Treasury constant maturities with a maturity date (one longer
and one shorter) most nearly approximating the maturity date (or
Hyper-Amortization Date, if applicable) of the Mortgage Loan prepaid. The
trustee will use the yields reported in Federal Reserve Statistical Release H.15
- - Selected Interest Rates under the heading "U.S. government securities/Treasury
constant maturities" for the calendar week before the Principal Prepayment. If
Release H.15 is no longer published, the trustee will select a comparable
publication to determine the Treasury Rate.
All prepayment premiums not distributed to holders of offered principal
balance certificates will be distributed to the holders of the interest only
certificates.
Treatment of REO Properties
If the trust fund acquires a Mortgaged Property through foreclosure, deed
in lieu of foreclosure or otherwise, then, until the REO Property is liquidated,
the related Mortgage Loan (an "REO Mortgage Loan") will be treated as
outstanding for several purposes, including:
o determining distributions on the certificates,
o allocations of Realized Losses and Expense Losses to the
certificates,
o computing master servicing fees, special servicing fees and trustee
fees, and
o determining pass-through rates and the Principal Distribution Amount.
Net operating revenues and other net proceeds derived from such REO
Property will be "applied" by the master servicer as principal, interest and
other amounts "due" on the Mortgage Loan. With some exceptions, the master
servicer and the trustee are required to make P&I Advances on the REO Mortgage
Loan, if proceeds received from the REO Property are less than the Assumed
Monthly Payment for the REO Mortgage Loan. See "The Pooling and Servicing
Agreement--Advances".
Appraisal Reductions of Loan Balances
An Appraisal Reduction will be calculated following the earliest of any of
the following "Appraisal Reduction Events" affecting a Mortgage Loan:
o the third anniversary of the effective date of a modification agreed to by
the special servicer that extends a Mortgage Loan's maturity date without
changing the amount of the Monthly Payment,
o [120] days after an uncured delinquency occurs on a Mortgage Loan,
o [45] days after the effective date of a modification agreed to by
the special servicer that reduces the amount of the Monthly Payment, or
changes any other material economic term of the Mortgage Loan,
o [60] days after a receiver is appointed or an involuntary bankruptcy
proceeding commences,
o immediately after a borrower declares bankruptcy, and
o immediately after a Mortgage Loan becomes an REO Mortgage Loan.
The "Appraisal Reduction" for any Mortgage Loan as to which any Appraisal
Reduction Event has occurred will be an amount equal to:
o the outstanding Stated Principal Balance of such Mortgage Loan as of
the last day of the related Collection Period, less
o the excess, if any, of:
1. [90%] of the appraised or otherwise estimated value of the related
Mortgaged Property or Properties, plus the amount of any escrows or
reserves for the Mortgage Loan that are not related to taxes or
insurance,
2. the sum of:
(a) all unpaid interest on the principal balance of the Mortgage Loan
(without giving effect to any default rates or Revised Interest
Rates), but only if not previously advanced by the master
servicer or the trustee,
(b) all unreimbursed Advances for the Mortgage Loan, plus interest at
the Advance Rate, and
(c) all currently due and unpaid real estate taxes and assessments
and insurance premiums and all other amounts, including, if
applicable, ground rents, due and unpaid under the Mortgage Loan
(which taxes, premiums and other amounts have not been escrowed
and are not the subject of an Advance).
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Within [60] days after the special servicer becomes aware of an Appraisal
Reduction Event, the special servicer must:
o obtain a fair market value appraisal of the related Mortgaged Property or
REO Property from an independent appraiser who is a member of the Appraisal
Institute, with at least five years experience in the related property type
and in the jurisdiction in which the Mortgaged Property or REO Property is
located, or
o at its discretion, conduct an internal property valuation in accordance
with the servicing standard if the Mortgage Loan has an outstanding
principal balance equal to or less than [$1,000,000].
Each of the above is referred to as an "Updated Appraisal". If the special
servicer has completed or obtained an appraisal or internal valuation during the
prior [12] months, the special servicer may use that appraisal or valuation as
the "Updated Appraisal" for purposes of calculating the Appraisal Reduction, if
using such appraisal or valuation is consistent with the servicing standard. The
master servicer will pay the cost of any Updated Appraisal as a Servicing
Advance, unless the Updated Appraisal is an internal valuation performed by the
special servicer or if the Advance would be a nonrecoverable Advance.
If the special servicer is not using a previously obtained appraisal or
internal valuation to calculate the Appraisal Reduction, the special servicer
must estimate the value of the related Mortgaged Property or REO Property (the
"Appraisal Reduction Estimate"). This estimate will be used to calculate the
Appraisal Reduction until the Updated Appraisal is completed.
The master servicer will calculate the Appraisal Reduction based on the
Updated Appraisal or the special servicer's Appraisal Reduction Estimate. If the
Appraisal Reduction is calculated using the Appraisal Reduction Estimate, then
on the first distribution date after the delivery of the Updated Appraisal, the
master servicer will adjust the Appraisal Reduction to take into account the
Updated Appraisal.
The special servicer will obtain annual updates of the Updated Appraisal
during the continuance of an Appraisal Reduction Event. The master servicer will
pay the cost of such annual updates as a Servicing Advance, unless the Advance
would be nonrecoverable. In addition, the controlling class representative may
at any time request the special servicer to obtain (at the controlling class
representative's expense) an Updated Appraisal. The master servicer will
recalculate the Appraisal Reduction each time an Updated Appraisal is obtained.
The master servicer will deliver a copy of each Updated Appraisal to the trustee
and the controlling class representative within [15] days after it receives the
Updated Appraisal from the special servicer. Upon request, the trustee will
provide each Updated Appraisal to any holder of the privately offered
certificates.
The Appraisal Reduction will be eliminated upon full payment or liquidation
of the Mortgage Loan or if the Mortgage Loan becomes a Corrected Mortgage Loan
and the borrower makes three consecutive monthly debt service payments.
An Appraisal Reduction:
o will reduce the master servicer's and the trustee's obligation to
advance delinquent interest on the Mortgage Loan;
o may reduce current distributions to one or more of the then most
subordinate classes of principal balance certificates; and
o may cause an Expense Loss to be allocated to one or more of the then most
subordinate classes of principal balance certificates.
See "The Pooling and Servicing Agreement--Advances".
Application of Realized Losses and Expense
Losses to Principal Balances
If immediately following distributions on any distribution date the Stated
Principal Balance of the Mortgage Pool is less than the total principal balance
of the principal balance certificates, then the principal balances of the
various classes of the principal balance certificates will be reduced as
follows:
o First, the principal balances of the various classes of the subordinate
certificates will be reduced, sequentially in reverse alphabetical
and numerical order beginning with the [class D] certificates. The
principal balance of the lowest class will be reduced until:
o the deficit is reduced to zero; or
o the principal balance of that class is reduced
to zero.
o Any deficit remaining after reducing the principal balance of the
most subordinate class to
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zero will be applied to reduce the principal balance of the next
lowest class, and so forth until the deficit is eliminated or until
the total principal balance on all the subordinate certificates is
reduced to zero.
If any portion of the deficit remains after the total principal balance of
all the subordinate certificates is reduced to zero, then the class principal
balances of the [class A-1A and class A-1B] certificates will be reduced, in
proportion to their remaining class principal balances, until:
o the deficit is reduced to zero; or
o the principal balance of the [class A-1A and A-1B] certificates is
reduced to zero.
In general, any such deficit will result from Realized Losses and/or
Expense Losses on the Mortgage Loans. Accordingly, these reductions in the
principal balances allocate Realized Losses and Expense Losses among the
certificates.
Any reduction in the principal balance of any class of principal balance
certificates also reduces the notional amount of the interest only certificates.
Within a given class of principal balance certificates, Realized Losses and
Expense Losses will be allocated to holders in proportion to their percentage
interests in the class.
Realized Losses arise when the master servicer becomes unable to collect
all amounts due and owing under a Mortgage Loan for any reason, including:
o fraud;
o bankruptcy; or
o an uninsured casualty loss.
If the Mortgage Loan and any related REO Property have been fully
liquidated, the "Realized Loss" would equal:
o the sum of:
1. the outstanding principal balance;
2. accrued and unpaid interest on the loan to but not including the due
date in the Collection Period when the liquidation occurs, excluding
Deferred Interest and default interest in excess of the mortgage
interest rate;
3. all unreimbursed Servicing Advances; and
4. all outstanding liquidation expenses;
minus
o the total liquidation proceeds received, if any.
If any part of the debt due under a Mortgage Loan is forgiven, then the
amount forgiven would also be a Realized Loss.
The trust fund incurs "Expense Losses" when it pays Additional Trust Fund
Expenses that are not of the type typically subject to a Servicing Advance or
are of such type but were the subject of a determination that such Servicing
Advance, if made, would be nonrecoverable.
"Additional Trust Fund Expenses" include, among other things:
o special servicing fees, workout fees and disposition fees,
o interest on Advances not paid from default interest and late payment
charges,
o the cost of legal opinions obtained as part of servicing the loans and
administering the trust fund, if these costs are not covered by a Servicing
Advance or paid by a borrower,
o certain unanticipated, non-Mortgage Loan specific expenses of the
Trust Fund, including:
1. indemnities and reimbursements to the trustee, the master servicer,
the special servicer and the depositor, and
2. certain federal, state and local taxes, and related expenses payable
out of the trust fund, and
o other trust fund expenses not included in the calculation of Realized Loss
for which there is no corresponding collection from a borrower.
Prepayment Interest Excesses and Shortfalls
If a borrower prepays all or part of a Mortgage Loan on or before the
Determination Date in any calendar month and pays interest which accrued on the
prepayment from the beginning of the calendar month through the day preceding
the prepayment date, then such interest (less related master servicer fees) is a
"Prepayment Interest Excess".
If a borrower prepays all or part of a Mortgage Loan after the
Determination Date in a calendar month and does not pay interest on the
prepayment through the end of the calendar month, then this shortfall in a full
month's interest on the
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prepayment (less related master servicer fees) is a "Prepayment Interest
Shortfall".
Prepayment Interest Excesses collected during a Collection Period will be
used to offset Prepayment Interest Shortfalls during the Collection Period. The
master servicer will retain any remaining amount as additional servicing
compensation.
The master servicer must pay out of its own funds, without right of
reimbursement, any Prepayment Interest Shortfalls in respect of the Mortgage
Loans that are not offset by Prepayment Interest Excesses. However, the maximum
amount that the master servicer must pay is the Stated Principal Balance of the
Mortgage Loans on which it has received its master servicing fee for such
distribution date multiplied by _____% per annum. Any payment that the master
servicer makes to cover such shortfalls will be a "Compensating Interest
Payment."
The total of all Prepayment Interest Shortfalls remaining in a Collection
Period after offsetting Prepayment Interest Excesses and applying Compensating
Interest Payments, is the "Net Aggregate Prepayment Interest Shortfall" for the
distribution date.
The trustee will allocate any Net Aggregate Prepayment Interest Shortfall
among the certificates in proportion to the interest accrued on each class for
the distribution date. Such an allocation will reduce the Distributable
Certificate Interest for each class.
See "The Pooling and Servicing Agreement--Servicing Compensation and
Payment of Expenses".
Scheduled Final Distribution Date
The "Scheduled Final Distribution Date" for a class of certificates is the
distribution date on which its principal balance or notional amount would become
zero if there is no:
o early termination of the trust,
o repurchase of any loan,
o default or delinquency on any loan,
o prepayment of any kind, except that Hyper-Amortization Loans are
assumed to pay on their Anticipated Repayment Dates, or
o modification or extension of any loan.
It is very unlikely that these assumptions will hold true.
The Scheduled Final Distribution Date for each class of the offered
certificates is the distribution date in the month and year listed for such
class in the "Scheduled Final Distribution Date" column in the table on the
cover page. These Scheduled Final Distribution Dates were calculated without
regard to any delays in the collection of balloon payments and without regard to
a reasonable liquidation time with respect to any Mortgage Loans that may be
delinquent. Accordingly, if there are defaults on the Mortgage Loans, the actual
final distribution date for one or more classes may be later, and could be
substantially later, than the related Scheduled Final Distribution Date(s).
Since the rate of payment (including voluntary and involuntary prepayments)
of the Mortgage Loans may exceed the scheduled rate of payments, and may exceed
such scheduled rate by a substantial amount, the actual final distribution date
for one or more classes may be earlier, and could be substantially earlier, than
the related Scheduled Final Distribution Date(s). The rate of payments
(including prepayments) on the Mortgage Loans will depend on the characteristics
of the Mortgage Loans, as well as on the prevailing level of interest rates and
other economic factors. No assurance can be given as to actual payment
experience.
Subordination
The right of each class of subordinate certificates to receive principal
and interest distributions is subordinated to the rights of:
o the senior certificates, and
o each other class of subordinate certificates with
an earlier alphabetical and numerical class designation.
This subordination is intended to:
o protect the senior certificates against losses associated with
delinquent and defaulted Mortgage Loans, and
o enhance the likelihood of timely receipt by senior certificateholders of
the full amount of Distributable Certificate Interest payable to them,
and the ultimate receipt by the [class A-1A and class A-1B]
certificateholders of principal equal to the initial class principal
balance of those classes.
Similarly, but to decreasing degrees, this subordination is also intended
to increase the likelihood that the holders of the other classes of
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offered certificates will timely receive all of the Distributable Certificate
Interest payable on their certificates on each distribution date, and that they
will eventually be paid all of their principal.
The subordination will be accomplished by:
o applying Available Funds as described above under "--Distributions",
and
o allocating Realized Losses and Expense Losses to the principal balance
certificates in reverse alphabetical and numerical order.
Realized Losses and Expense Losses are allocated to the [class A-1A and
class A-1B] certificates in proportion to their principal balances.
No losses are allocated to the [class S] certificates, but any reduction in
the principal balance of a class of principal balance certificates will reduce
the notional amount of the [class S] certificates.
No other form of credit enhancement is provided.
Optional Termination
If on any distribution date the total Stated Principal Balance of the
Mortgage Loans is less than [1%] of the Initial Pool Balance, then each of the
following (in this order) has an option to terminate the trust:
o the majority holders of the Controlling Class,
o the master servicer,
o the special servicer, and
o the holder of the majority of the class R-I certificate interests.
The termination is effected by purchasing all the Mortgage Loans and all
property acquired in respect of any Mortgage Loan then remaining in the trust
fund. Termination would cause early retirement of all then-outstanding
certificates.
The option exercise price equals the sum of:
o 100% of the total unpaid principal balance of the remaining Mortgage
Loans other than:
1. loans as to which the special servicer has determined all payments
or recoveries have been made, and
2. loans as to which the Mortgaged Property has become an REO Property,
o accrued and unpaid interest on those Mortgage Loans to the due date
in the Collection Period when the termination occurs (excluding
Deferred Interest),
o unreimbursed Servicing Advances plus interest at the Advance Rate,
and
o the fair market value of any other property (including REO Property)
remaining in the trust fund.
The option exercise price, net of amounts payable to persons other than
certificateholders, will constitute Available Funds for the final distribution
date.
Voting Rights
At all times during the term of the pooling and servicing agreement the
voting rights for the certificates will be allocated as follows:
o [98%] to the holders of the classes of principal balance certificates in
proportion to the principal balances of these classes, and
o [2%] to the holders of the interest only certificates.
Each certificateholder of a class will share in the voting rights of that
class in proportion to the certificateholder's percentage interest in the class.
Delivery, Form and Denomination
Book-Entry Certificates
Initially, the offered certificates will be registered in the name of a
nominee of The Depository Trust Company. Investors will hold their beneficial
interests in the offered certificates through the book-entry facilities of DTC.
Investors will not receive physical certificates except in the limited
circumstances described below.
DTC has informed the depositor that its nominee will be Cede & Co.
Accordingly, Cede & Co. is expected to be the holder of record of the offered
certificates. Certificateholders may also hold certificates through Cedelbank or
Euroclear (in Europe), if they are participants in those systems or indirectly
through organizations that are participants in those systems. Cedelbank and
Euroclear will hold omnibus positions on behalf of their participants through
customers' certificates accounts in Cedelbank's and Euroclear's names on the
books of their respective depositaries, which in turn will hold such positions
in customers' certificates accounts in
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the depositaries' names on the books of DTC. Citibank, N.A. will act as
depositary for Cedelbank and the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York will act as depositary for Euroclear.
Transfers between DTC participants will occur in accordance with DTC rules.
Transfers between Cedelbank participants and Euroclear participants will occur
in accordance with their rules.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank or
Euroclear, on the other, will be effected in DTC in accordance with DTC rules
through Cedelbank's or Euroclear's depositary. Cedelbank participants and
Euroclear participants may not deliver instructions directly to these
depositaries.
Because of time-zone differences, credits of certificates received in
Cedelbank or Euroclear as a result of a transaction with a DTC participant will
be made during subsequent certificates settlement processing and dated the
business day following the DTC settlement date. Such credits or any transactions
in such certificates settled during such processing will be reported to the
relevant Cedelbank or Euroclear participant on such business day. Cash received
in Cedelbank or Euroclear as a result of sales of certificates by or through a
Cedelbank participant or a Euroclear participant to a DTC participant will be
received with value on the DTC settlement date, but will be available in the
relevant Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
The trustee will not be responsible for monitoring or restricting transfer
of ownership interests in offered certificates through the book-entry facilities
of DTC.
In DTC's book-entry system, a purchaser purchases through, or as, a direct
participant. The direct participant receives credit for the certificates on
DTC's records. The ownership interest of each beneficial owner is ultimately
reflected on the records of one of DTC's direct or indirect participants.
Beneficial owners are expected to receive written confirmations detailing the
transaction and periodic statements of their holdings, from the direct or
indirect DTC participant with whom the beneficial owner dealt. Neither the
depositor, the trustee, the master servicer, the special servicer nor any paying
agent is responsible for records of ultimate beneficial ownership or for
payments to ultimate beneficial owners.
So long as any class of offered certificates are held in book-entry form:
o actions by certificateholders will be taken by DTC upon instructions from
its participants, who in turn receive instructions directly or indirectly
from the beneficial owners of those certificates, and
o distributions, notices, reports and statements to certificateholders will
be sent to DTC or its nominee as the registered holder of those
certificates for ultimate distribution to beneficial owners of those
certificates in accordance with DTC procedures and applicable law.
Neither DTC nor its nominee will consent or vote with respect to the
offered certificates. Instead, DTC and its nominee take steps to facilitate
consent or voting in accordance with instructions from participants, who in turn
are expected to follow instructions issued by the beneficial owners of those
certificates.
Because DTC can only act on behalf of its participants, who in turn act on
behalf of indirect participants and certain banks, a beneficial owner may be
able to pledge or otherwise deal in offered certificates only with persons that
participate in the DTC system.
Under a book-entry format, beneficial owners may experience delays in their
receipt of payments, since distributions by the trustee or a paying agent on
behalf of the trustee will be paid directly to DTC's nominee.
Definitive Certificates
The trustee will issue definitive physical certificates to
certificateholders only if:
o the depositor elects to terminate the book-entry system, or
o DTC is no longer willing or able to act as depositary and the
depositor cannot locate a qualified successor to DTC.
The trustee would then issue definitive physical certificates upon
surrender of the physical certificates held by DTC with instructions from DTC
for registering definitive physical certificates in the names of the beneficial
owners. Upon becoming registered holders of certificates, those beneficial
owners will then be entitled directly to:
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o receive payments,
o exercise voting rights, and
o transfer and exchange their certificates.
Definitive certificates will be transferable and exchangeable at the
offices of the trustee, the certificate registrar or another transfer agent.
The Depository Trust Company
DTC is:
o a limited purpose trust company organized under New York law,
o a "banking corporation" within the meaning of the New York Banking
Law,
o a member of the Federal Reserve System,
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and
o a "clearing agency" registered pursuant to Section 17A of the
Securities Exchange Act of 1934, as amended.
DTC was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions among participants
through electronic computerized book-entry changes in participants' securities
and cash accounts. This greatly reduces the need for physical movement of
certificates and cash in securities transactions. Participants that maintain
accounts with DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. The rules
applicable to DTC and its participants are on file with the Securities and
Exchange Commission. Indirect access to the DTC system is available to banks,
brokers, dealers, trust companies and other institutions who maintain a clearing
or custodial relationship with a direct participant. DTC is owned by a number of
its participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc.
To facilitate transfers, all offered certificates deposited with DTC are
registered in the name of DTC's nominee, Cede & Co. The deposit of offered
certificates with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership.
DTC does not know who are the ultimate beneficial owners of the offered
certificates. DTC's records reflect only the identity of the direct participants
to whose account offered certificates are credited on DTC's records. The
participants are responsible for keeping account of the certificates that they
hold for their customers.
If DTC or a direct or indirect participant becomes insolvent, then the
ability of ultimate beneficial owners to obtain timely payment may be impaired.
If an insolvency causes a loss that exceeds the limits of applicable Securities
Investor Protection Corporation insurance or if such coverage is unavailable,
the ultimate payment of amounts distributable on offered certificates may be
impaired.
[DTC management is aware that some computer applications, systems, and the
like for processing data that are dependent upon calendar dates, including dates
before, on, and after January 1, 2000, may encounter "Year 2000 problems." DTC
has informed its participants and other members of the financial community that
it has developed and is implementing a program so that DTC's systems, as the
same relate to the timely payment of distributions (including principal and
income payments) to securityholders, book-entry deliveries, and settlement of
trades within DTC, continue to function appropriately on or after January 1,
2000. This program includes a technical assessment and a remediation plan, each
of which is complete. Additionally, DTC's plan includes a testing phase, which
is expected to be completed within appropriate time frames.]
[However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to its participants, issuers and
their agents, as well as third party vendors from whom DTC licenses software and
hardware, and third party vendors on whom DTC relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. DTC has informed its participants and other
members of the financial community that it is contacting (and will continue to
contact) third party vendors from whom DTC acquires services to:
o impress upon them the importance of such services being Year 2000
compliant; and
o determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their services.
In addition, DTC is in the process of developing such contingency plans as
it deems appropriate.]
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According to DTC, the foregoing information with respect to DTC has been
provided to its participants and other members of the financial community for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.
Cedelbank
Cedelbank is incorporated under the laws of Luxembourg as a professional
depository. Cedelbank holds securities for its participants and facilitates the
clearance and settlement of securities through electronic book-entry changes in
their cash and securities accounts. Transactions can settle in Cedelbank in any
of 28 currencies, including United States dollars. Cedelbank provides
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing to its participants. Cedelbank
interfaces with domestic markets in several countries. The Luxembourg Monetary
Institute regulates Cedelbank as a professional depository. Cedelbank
participants are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. Indirect access to Cedelbank is
also available to others, such as banks, brokers, dealers, and trust companies
that maintain a clearing or custodial relationship with a Cedelbank participant.
Euroclear
The Euroclear System was created in 1968 to hold securities for
participants and to clear and settle transactions between participants through
simultaneous electronic book-entry delivery against payment. Transactions may
now be settled in any of 40 currencies, including United States dollars. The
Euroclear System includes various other services, including securities lending
and borrowing, and interfaces with domestic markets in several countries. The
Euroclear System is operated by the Brussels, Belgium office of Morgan Guaranty
Trust Company of New York (the "Euroclear Operator"), under a contract with
Euroclear Clearance System S.C., a Belgian cooperative corporation. All
operations are conducted by the Euroclear Operator, and all Euroclear securities
clearance accounts and Euroclear cash accounts are accounts with the Euroclear
Operator. Euroclear participants include banks (including central banks),
securities brokers and dealers. Indirect access to Euroclear is also available
to other firms that maintain a clearing or custodial relationship with a
Euroclear participant.
The Euroclear Operator is the Belgian branch of a New York banking
corporation that is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
The Euroclear Operator acts only on behalf of Euroclear participants, and
has no record of or relationship with persons holding through participants.
Denominations
The trust will issue the offered certificates in minimum denominations of
[$5,000] initial principal balance or notional amount (or in any whole dollar
amount in excess of [$5,000]). However, the trust may issue one certificate for
each class in a lower denomination to make up the difference between certificate
interests sold and the total amount offered.
Registration and Transfer of Definitive Certificates
Subject to the restrictions in the pooling and servicing agreement, holders
may transfer or exchange any definitive physical certificate in whole or in
part. No transfer or exchange can be of an amount smaller than the denominations
specified under "--Delivery, Form and Denomination --Denominations" above. The
registered holder or his attorney-in-fact must surrender the definitive
certificate at the corporate trust office of the certificate registrar appointed
under the pooling and servicing agreement or at the office of any transfer
agent. The certificate must be accompanied by:
o an executed instrument of assignment and transfer, in the case of
transfer, or
o a written request for exchange, in the case of exchange.
The certificate registrar will cancel the old certificate and execute and
deliver (or mail) a new definitive certificate to the appropriate person within
a reasonable period of time.
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New certificates sent by first class mail will be sent at the risk of the
transferee or holder to the address specified by the person presenting the old
certificates for transfer or exchange and requesting such mailing.
The certificate registrar may decline to register an exchange or transfer
during the [15] days preceding any distribution date.
The certificate registrar will not charge a fee for registering a transfer
or exchange. However, the certificate registrar may require the transferor of a
privately offered certificate to reimburse it for any tax, expense or other
governmental charge it incurs in effecting the transfer.
For a discussion of certain transfer restrictions, see "ERISA
Considerations".
YIELD AND MATURITY CONSIDERATIONS
The yield on any offered certificate will depend on:
o the pass-through rate in effect from time to time for the
certificate;
o the price paid for the certificate, plus accrued interest;
o the rate and timing of payments of principal on the certificate; and
o the aggregate amount of distributions on the certificate.
Rate and Timing of Principal Payments
The yield to holders of the [class S] certificates and any other offered
certificates purchased at a discount or premium will be affected by the rate and
timing of principal payments made in reduction of the principal balance or
notional amount of those certificates. As described in this prospectus
supplement, the Principal Distribution Amount for each distribution date
generally will be distributed to the holders of the [class A-1A and/or class
A-1B] certificates until their principal balance is reduced to zero, and then
will be distributed to the holders of each remaining class of principal balance
certificates, sequentially in alphabetical and numerical order of class
designation, in each case until the principal balance of each class of
certificates is, in turn, reduced to zero.
Reductions in the principal balance of the principal balance certificates
will reduce the notional amount of the [class S] certificates.
The rate and timing of principal payments made in reduction of the
principal balance of the offered certificates will be directly related to the
rate and timing of principal payments on the Mortgage Loans, which will in turn
be affected by:
o the amortization schedules of the loans, including any
hyper-amortization of a Hyper-Amortization Loan following its
Anticipated Repayment Date,
o the dates on which balloon payments are due, and
o the rate and timing of Principal Prepayments and other unscheduled
collections on the loans, including:
1. liquidations of Mortgage Loans due to defaults, casualties or
condemnations affecting the Mortgaged Properties, or
2. repurchases of Mortgage Loans out of the trust fund in the manner
described under "Description of the Mortgage Pool--Representations and
Warranties; Repurchase" and "Description of the Certificates--Optional
Termination".
Prepayments, liquidations and repurchases of the Mortgage Loans will result
in distributions on the principal balance certificates of amounts that would
otherwise have been distributed over the remaining terms of the Mortgage Loans.
Conversely, defaults on the Mortgage Loans, particularly at or near their stated
maturity dates, may result in significant delays in payments of principal on the
Mortgage Loans (and, accordingly, on the principal balance certificates) while
work-outs are negotiated, foreclosures are completed or bankruptcy proceedings
are resolved. The yield to investors in the subordinate certificates will be
very sensitive to the timing and magnitude of losses on the Mortgage Loans due
to liquidations following a default, and will also be very sensitive to
delinquencies in payment. In addition, the special servicer has the option,
subject to certain limitations, to extend the maturity of Mortgage Loans
following a default in the payment of a balloon payment. See "The Pooling and
Servicing Agreement--Servicing of the Mortgage Loans; Collection of Payments"
and "--Realization Upon Mortgage Loans" in this prospectus supplement and
"Certain Legal Aspects of the Mortgage Loans--Foreclosure" in the prospectus.
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The rate and timing of principal payments and defaults and the severity of
losses on the Mortgage Loans may be affected by a number of factors, including,
without limitation:
o the terms of the Mortgage Loans (for example, the provisions requiring the
payment of prepayment premiums and amortization terms that require balloon
payments),
o prevailing interest rates,
o the market value of the Mortgaged Properties,
o the demographics and relative economic vitality of the areas in
which the Mortgaged Properties are located,
o the general supply and demand for such facilities (and their uses)
in the areas in which the Mortgaged Properties are located,
o the quality of management of the Mortgaged Properties,
o the servicing of the Mortgage Loans,
o federal and state tax laws (which are subject to change), and
o other opportunities for investment.
The rate of prepayment on the mortgage pool is likely to be affected by the
amount of any required prepayment premiums and the borrowers' ability to
refinance their related Mortgage Loans. If prevailing market interest rates for
mortgage loans of a comparable type, term and risk level have decreased enough
to offset any required prepayment premium, a borrower may have an increased
incentive to refinance its Mortgage Loan for purposes of converting to another
fixed rate loan with a lower interest rate.
However, the ability of a borrower to refinance its Mortgage Loan will be
affected not only by prevailing market rates, but also by the current market
value of the Mortgaged Property. See "Risk Factors--Yield Considerations" in
this prospectus supplement and "Certain Legal Aspects of the Mortgage Loans" in
the prospectus.
You should consider the risk that rapid rates of prepayments on the
Mortgage Loans, and corresponding increased payments of principal on the
principal balance certificates, may coincide with periods of low prevailing
interest rates. During these periods, the effective interest rates on securities
in which you may choose to reinvest amounts paid to you as principal may be
lower than the yield on your certificate. Conversely, slower rates of
prepayments on the Mortgage Loans, and corresponding decreased payments of
principal on the principal balance certificates, may coincide with periods of
high prevailing interest rates. During these periods, the amount of principal
payments available to you for reinvestment at such high prevailing interest
rates may be relatively small. In addition, some borrowers may sell Mortgaged
Properties in order to realize their equity therein, to meet cash flow needs or
to make other investments. Some borrowers may also be motivated by federal and
state tax laws (which are subject to change) to sell Mortgaged Properties prior
to the exhaustion of tax depreciation benefits.
If the markets for commercial and multifamily real estate experience an
overall decline in property values, the outstanding balance of a Mortgage Loan
could exceed the value of the Mortgaged Property. A borrower under a
non-recourse loan would then have a decreased incentive to fund operating cash
flow deficits and, as a result, actual losses could be higher than you
originally anticipated.
Neither the depositor nor the sellers make any representation as to:
o the particular factors that will affect the rate and timing of
prepayments and defaults on the Mortgage Loans,
o the relative importance of such factors,
o the percentage of the Mortgage Loans that will default or be
prepaid, or
o the overall rate of prepayment, default or principal payment on the
Mortgage Loans.
The extent to which the yield to maturity of any class of offered
certificates may vary from your anticipated yield will depend upon the degree to
which they are purchased at a discount or premium and when, and to what degree,
payments of principal on the Mortgage Loans are in turn distributed on or
otherwise result in the reduction of the principal balance or notional amount of
your certificates. You should consider the risk that your actual yield may be
lower than anticipated if:
o in the case of any principal balance certificate purchased at a
discount, principal payments on the Mortgage Loans are slower than you
anticipated, and
o in the case of any principal balance certificate purchased at a premium (or
the interest only certificates, which have no principal balances),
principal payments on the Mortgage Loans are faster than you anticipated.
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In general, the earlier a payment of principal on the Mortgage Loans is
distributed in reduction of the principal balance of any principal balance
certificate purchased at a discount or premium (or, in the case of an interest
only certificate, applied in reduction of its notional amount), the greater will
be the effect on your yield to maturity. As a result, the effect on your yield
of principal payments on the Mortgage Loans occurring at a rate higher (or
lower) than the rate you anticipated during any particular period would not be
fully offset by a subsequent like reduction (or increase) in the rate of such
principal payments.
The yield to maturity of the interest only certificates will be highly
sensitive to the rate and timing of principal payments (including by reason of
prepayments, repurchases, extensions, defaults and liquidations) on the Mortgage
Loans. If you intend to purchase the interest only certificates, you should
fully consider the risk that if there is an extremely rapid rate of amortization
and prepayment on the principal balance certificates, you may not recover your
initial investment. Because the rate of principal payments on the Mortgage Loans
will depend on future events and a variety of factors (as described more fully
below), the depositor can give you no assurance as to such rate or the rate of
Principal Prepayments in particular. The depositor is not aware of any relevant
publicly available or authoritative statistics with respect to the historical
prepayment experience of a large group of commercial and/or multifamily loans
comparable to the Mortgage Loans. See "Risk Factors--Yield Considerations".
Balloon Payments and Anticipated Repayment Date Payments
Most of the Mortgage Loans are either balloon loans that will have
substantial balloon payments due at their stated maturities or are
Hyper-Amortization Loans that will have a substantial balance still owing on
their Anticipated Repayment Dates. A borrower's ability to pay a balloon
payment, or pay-off a loan on its Anticipated Repayment Date, may depend on its
ability to sell or refinance the property. Factors beyond the borrower's control
may affect this ability, including:
o the level of interest rates and general economic conditions at the
time, and
o changes in federal, state or local laws, including tax,
environmental and safety laws.
A failure to make a balloon payment on time, or to pay-off an
Hyper-Amortization Loan on its Anticipated Repayment Date, will lengthen the
average life of the certificates. See the Remaining Terms to Stated Maturity
Table in Exhibit A-2 for additional information regarding the maturity dates of
the Mortgage Loans.
Losses and Shortfalls
The yield to holders of the offered certificates will also depend on the
extent to which such holders are required to bear the effects of losses or
shortfalls on the Mortgage Loans.
Shortfalls in Available Funds may result from:
o shortfalls in collections of amounts payable on the Mortgage Loans
(unless advanced),
o additional master servicer or special servicer compensation,
o Additional Trust Fund Expenses, including interest on Advances, or
o other similar items.
Shortfalls in Available Funds (other than Net Aggregate Prepayment Interest
Shortfalls) will generally be borne by holders of each class of principal
balance certificates in reverse alphabetical and numerical order in each case to
the extent of amounts otherwise payable to the class. Any such shortfalls will
be allocated to the holders of the [class A-1A and class A-1B] certificates on a
pro rata basis.
Realized Losses and Expense Losses will be:
o allocated to the principal balance certificates in reverse
alphabetical and numerical order of their class designation, and
o applied to reduce the principal balance of each affected class and the
notional amount of the interest only certificates.
As a result, a loss on any one of the Mortgage Loans could cause a
significant loss of an investor's investment in any class, but especially the
subordinate certificates with the latest alphabetic and numeric designations.
You should make your own estimate of the expected timing and severity of
Realized Losses and Expense Losses before investing in any subordinate
certificate.
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Pass-Through Rates
The pass-through rate for the [class S] certificates is sensitive to
changes in:
o the weighted average of the Net Mortgage Rates, and
o the weighted average of the pass-through rates for the principal
balance certificates.
The pass-through rates for the offered certificates (other than the [class
A-1A] certificates) are sensitive to changes in the weighted average of the Net
Mortgage Rates.
The weighted average of the pass-through rates for the principal balance
certificates will fluctuate based on the relative sizes of the principal
balances of those classes.
The weighted average of the Net Mortgage Rates will fluctuate over the
lives of the offered certificates as a result of scheduled amortization,
voluntary prepayments, liquidations and repurchases of loans.
If principal reductions occur on loans with higher than average Net
Mortgage Rates at a rate proportionally faster than principal reductions on the
mortgage pool as a whole, the pass-through rates for the [class S, class B-1 and
class B-2] certificates will be adversely affected.
In addition, the pass-through rates for the [class A-1B, class A-2, class
A-3 and class A-4] certificates may not exceed the weighted average of the Net
Mortgage Rates.
Delay in Payment of Distributions
Monthly distributions will be made no earlier than the ____ day of the
month following the month in which the interest accrued on the certificates. You
should take this delay into account in determining how much to pay for the
offered certificates.
Yield Sensitivity of the Interest Only Certificates
The yield to maturity of the interest only certificates will be especially
sensitive to the prepayment, repurchase, default and loss experience on the
Mortgage Loans, which may fluctuate significantly from time to time. A rapid
rate of principal payments (including prepayments resulting from liquidations
and repurchases) will have a material negative effect on the yield to maturity
of the interest only certificates. There can be no assurance that the Mortgage
Loans will prepay at any particular rate. If you intend to purchase interest
only certificates, you should fully consider the risk that a rapid rate of
prepayments on the Mortgage Loans could result in your receiving total
distributions that are less than the amount you paid for the interest only
certificates.
The table in Exhibit E indicates the sensitivity of the pre-tax yield to
maturity on the interest only certificates to various constant rates of
prepayment on the Mortgage Loans. That table projects the monthly total payments
of interest on the interest only certificates and computes the corresponding
pre-tax yields to maturity on a corporate bond equivalent basis, based on the
following assumptions:
o the Maturity Assumptions described under "- Weighted Average Life"
below,
o that the total purchase prices of the interest only certificates are:
o expressed in 32nds (e.g. _____ means ________%) as a percentage of
the initial aggregate notional amount of the class S certificates,
and
o exclusive of accrued interest, and
o that the initial pass-through rate and the initial notional amount for the
interest only certificates are as set forth in this prospectus supplement.
Any differences between these assumptions and the actual characteristics
and performance of the Mortgage Loans and the interest only certificates will
likely result in yields differing from those shown in the table in Exhibit E.
Discrepancies between assumed and actual characteristics and performance
underscore the hypothetical nature of that table. The depositor has provided
that table to give you a general sense of the sensitivity of yields in varying
prepayment scenarios.
The pre-tax yields in the table in Exhibit E were calculated by determining
the monthly discount rates that, when applied to the assumed stream of cash
flows to be paid on the interest only certificates, would cause the discounted
present value of such assumed stream of cash flows to equal the assumed purchase
price of those certificates, including accrued interest. These monthly rates
were then converted to semi-annual corporate bond equivalent rates. Such
calculation does not take into account:
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o Prepayment Interest Shortfalls, or
o the interest rates at which you may be able to reinvest
distributions on the interest only certificates.
Accordingly, the table in Exhibit E does not reflect the return on an
investment in the interest only certificates when such reinvestment rates are
considered.
Notwithstanding the assumed prepayment rates reflected in the table in
Exhibit E, it is highly unlikely that the Mortgage Loans will be prepaid
according to one particular pattern. For this reason, and because the timing of
cash flows is critical to determining yields, the pre-tax yield to maturity on
the interest only certificates is likely to differ from those shown in that
table, even if all of the Mortgage Loans prepay at the indicated CPRs over any
given time period or over the entire life of the interest only certificates.
You should make your investment decision based on your assessment of the
anticipated rates of prepayment under a variety of scenarios.
Weighted Average Life
Weighted average life refers to the average amount of time that will
elapse from the date a security is issued to the date each dollar is distributed
in reduction of the principal balance of the security. The weighted average life
of each class of principal balance certificates is determined by:
o multiplying the amount of each distribution in reduction of the principal
balance of that class by the number of years from the date of purchase to
the related distribution date,
o adding the results, and
o dividing the sum by the total distributions in reduction of the
principal balance of that class.
The weighted average life of any principal balance certificate will be
influenced by, among other things:
o the rate at which principal of the Mortgage Loans is paid or
otherwise collected or advanced, and
o the extent that payments, collections and/or advances of principal are
applied to reduce the certificate's principal balance.
Prepayments on Mortgage Loans may be measured by a prepayment standard or
model. The model used in this prospectus supplement is the "Constant Prepayment
Rate" or "CPR" model. The CPR model represents an assumed constant rate of
prepayment each month, expressed as an annual rate, relative to the then
outstanding principal balance of a pool of mortgage loans for the life of those
loans. As used in each of the tables in Exhibit D, the column headed "0%"
assumes that none of the Mortgage Loans is prepaid before maturity, except that
each Hyper-Amortization Loan is assumed to pay on its Anticipated Repayment
Date. The columns headed ["25%", "50%", "75%"and"100%"] assume that no
prepayments are made on any Mortgage Loan during the Mortgage Loan's Lock-out
Period or Yield Maintenance Period, if any, and are otherwise made on each of
the Mortgage Loans at the indicated CPRs. The tables and assumptions are
intended to illustrate the sensitivity of the weighted average life of a class
of offered certificates (other than the interest only certificates) to various
prepayment rates and are not intended to predict or to provide information that
will enable you to predict the actual weighted average life of any class of
offered certificates. Consequently, no assurance can be given and no
representation is made that:
o prepayments of the Mortgage Loans (whether or not in a Lock-out
Period or a Yield Maintenance Period) will conform to any particular
CPR,
o all the Mortgage Loans will prepay in accordance with the
assumptions at the same rate, or
o Mortgage Loans that are in a Lock-out Period or Yield Maintenance
Period will not prepay.
The tables in Exhibit D and E have been prepared on the basis of the
following assumptions (collectively, the "Maturity Assumptions"):
o the Initial Pool Balance is approximately $____________,
o the initial principal balance or notional amount for each class of
offered certificates is the amount on the cover page,
o the pass-through rate for each class of certificates is as described
in this prospectus supplement,
o the scheduled Monthly Payments for each Mortgage Loan are the
amounts listed in Exhibit A-1,
o all Monthly Payments are due and timely received on the [first] day
of each month,
o there are no delinquencies or losses on the Mortgage Loans,
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o there are no extensions of maturity of the Mortgage Loans,
o there are no Appraisal Reductions for the Mortgage Loans,
o there are no casualties or condemnations affecting the Mortgaged
Properties,
o prepayments are made on each of the Mortgage Loans at the indicated
CPRs, except that:
1. no prepayments are received for any Mortgage Loan during a Lock-out
Period or Yield Maintenance Period, and
2. Hyper-Amortization Loans are paid in full on their Anticipated
Repayment Dates,
o no one exercises its right to terminate the trust fund as described
under "Description of the Certificates--Optional Termination",
o no Mortgage Loan is required to be repurchased or replaced by a
seller or other party,
o no Prepayment Interest Shortfalls are incurred,
o there are no Additional Trust Fund Expenses,
o distributions on the certificates are made on the ____ day of each
month, commencing in ______ 20__,
o the certificates are settled with investors on ______________, 20__,
o the only expenses payable out of the trust are the master servicer
and the trustee fees, and
o the prepayment provisions for each Mortgage Loan are assumed to begin on
the first payment date of such Mortgage Loan and any resulting prepayment
premiums are allocated as described under "Description of the
Certificates--Distributions--Distributions of Prepayment Premiums".
To the extent that the Mortgage Loans have characteristics that differ from
those assumed in preparing the tables in Exhibit D, the offered certificates
(other than the interest only certificates) may mature earlier or later than
indicated by the tables.
It is highly unlikely that the Mortgage Loans will prepay in accordance
with the Maturity Assumptions at any constant rate or that all the Mortgage
Loans will prepay in accordance with the Maturity Assumptions at the same rate.
In addition, variations in the actual prepayment experience and the balance of
the Mortgage Loans that prepay may increase or decrease the percentages of
initial class principal balances (and weighted average lives) shown in the
tables in Exhibit D. These variations may occur even if the average prepayment
experience of the Mortgage Loans were to reflect the Maturity Assumptions and
any of the specified CPR percentages.
You should conduct your own analyses of the rates at which the Mortgage
Loans may be expected to prepay.
Subject to the above discussion and assumptions, the tables in Exhibit D
indicate:
o the weighted average life of each class of the offered certificates
(other than the interest only certificates), and
o the percentages of the
initial principal balance of each class of the offered certificates (other
than the interest only certificates) that would be outstanding after each
of the listed distribution dates at various CPRs, starting after the
expiration of lockout, defeasance and yield maintenance periods.
THE POOLING AND SERVICING AGREEMENT
The certificates will be issued under a pooling and servicing agreement to
be dated as of ___________, 20__ among the depositor, the master servicer, the
special servicer and the trustee.
You may obtain a free copy of the pooling and servicing agreement (without
exhibits) by writing to:
PNC Mortgage Acceptance Corp.
210 West 10th Street, 6th Floor
Kansas City, Missouri 64105
Attention: Lawrence D. Ashley
You may also request a copy by telephone at (816) 435-5000.
Assignment of the Mortgage Loans
By the closing date, the sellers must assign the Mortgage Loans to the
trustee for the benefit of the certificateholders. The assignments will be
without recourse. Each seller must also deliver the following documents, among
others, for each of its Mortgage Loans:
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o the original note, endorsed (without recourse) to the order of the
trustee;
o the original or a copy of the related mortgage(s), together with originals
or copies of any intervening assignments of such document(s), in each case
(unless the particular document has not been returned from the applicable
recording office) with evidence of recording noted on the document;
o the original or a copy of any related assignment(s) of leases and rents (if
any such item is a document separate from the mortgage), together with
originals or copies of any intervening assignments of any such document(s),
in each case (unless the particular document has not been returned from the
applicable recording office) with evidence of recording noted on the
document;
o an assignment of each related mortgage in favor of the trustee in
recordable form;
o an assignment of any related assignment(s) of leases and rents (if
any such item is a document separate from the mortgage) in favor of the
trustee, in recordable form;
o an original or copy of the related lender's title insurance policy (or, if
a title insurance policy has not yet been issued, a commitment for title
insurance "marked-up" at the closing of such Mortgage Loan or other binding
commitment to issue title insurance);
o originals or copies of all assumptions, modifications and substitution
agreements in those instances where the terms or provisions of the mortgage
have been modified or the Mortgage Loan assumed; and
o a copy of each assignment in favor of the trustee of each effective
UCC financing statement.
If a seller cannot deliver any original recorded document described above
or a copy of such document showing evidence of having been recorded on the
closing date, the seller will deliver it promptly after receipt from the
recording office, and in any case shall use best efforts to deliver such
documents not later than 180 days after the closing date.
The trustee is obligated to review the documents delivered to it for each
Mortgage Loan within 45 days after the later of delivery or the closing date and
report any missing documents or certain types of defects to the depositor and
the controlling class representative. Ninety days after the closing date, the
sellers will make an inquiry with each appropriate recording office regarding
the status of each unreturned assignment and will notify the trustee of the
results of their inquires. The scope of the trustee's review of each mortgage
file is, in general, limited solely to confirming that certain of the documents
listed above have been received in the manner specified. None of the trustee,
the master servicer, the special servicer or the custodian is under any duty or
obligation to inspect, review or examine any of the documents relating to the
Mortgage Loans to determine whether such document is valid, effective,
enforceable, in recordable form or otherwise appropriate for the represented
purpose.
Servicing of the Mortgage Loans; Collection of Payments
The pooling and servicing agreement will require:
o the master servicer to service and administer the Mortgage Loans;
and
o the special servicer to service and administer the Specially
Serviced Mortgage Loans and REO Mortgage Loans;
on behalf of the trust fund solely in the best interests of and for the benefit
of all of the certificateholders and the trustee in accordance with the mortgage
loan documents and the pooling and servicing agreement.
Unless the pooling and servicing agreement requires a contrary specific
course of action, the master servicer and the special servicer must each act in
accordance with the higher of the following standards:
o in the same manner, and with the same care, skill, prudence and diligence,
with which it services and administers similar mortgage loans for other
third-party portfolios, giving due consideration to customary and usual
standards of practice that prudent institutional commercial mortgage loan
servicers use for comparable mortgage loans, or
o in the same manner in which, and with the same care, skill, prudence and
diligence with which, it services and administers similar mortgage loans
that it owns.
In observing this standard, the master servicer and special servicer may
take into account their other obligations under the pooling and servicing
agreement. However, they must disregard:
o any other relationship that the master servicer, the special
servicer, any sub-servicer or any of
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their affiliates have with any borrower or its affiliates;
o the ownership of any certificate by the master servicer, the special
servicer or their affiliates;
o their obligation to make Advances or incur servicing expenses;
o the master servicer's, the special servicer's or any sub-servicer's
right to receive compensation for its services;
o the ownership, servicing or management for others by the master
servicer, the special servicer or any sub-servicer of any other
mortgage loans or property; and
o any obligation of the master servicer, the special servicer, any
sub-servicer or any of their affiliates to replace or repurchase any
Mortgage Loan that it sold to the trust fund.
However, neither the master servicer nor the special servicer, nor any of
their directors, members, managers, officers, employees or agents, will have any
liability to the trust fund or the certificateholders for:
o taking any action or refraining from taking any action in good
faith; or
o for errors in judgment.
The master servicer, the special servicer and such persons are not
protected against liability for:
o breaching their representations or warranties in the pooling and
servicing agreement,
o breaching the servicing standards in the pooling and servicing
agreement,
o willful misfeasance, misrepresentation, bad faith, fraud or
negligence in performing its duties under the pooling and servicing
agreement, or
o negligent disregard of its obligations or duties under the pooling
and servicing agreement.
The master servicer and the special servicer must make reasonable efforts
to collect amounts due under the Mortgage Loans, and must follow collection
procedures consistent with the servicing standard under the pooling and
servicing agreement. The special servicer may waive late payment charges or
penalty fees on delinquent Monthly Payments or balloon payments on Specially
Serviced Mortgage Loans. The master servicer may waive such amounts on all other
Mortgage Loans.
Collection Activities
The master servicer monitors the performance of all loans. It tracks the
status of outstanding payments due, grace periods and due dates. It calculates
and assesses late fees. The master servicer has created a customized collection
system that:
o downloads all current loan information from the servicing system on
a daily basis,
o prepares several regular delinquency reports,
o generates and mails a series of delinquency notice letters,
including payment-reminder letters to borrowers at 10 days past due,
and more strongly worded collection letters at 30 and 60 days past due,
and
o flags higher-risk Mortgage Loans, such as those with a large principal
balance or chronic delinquency, so that the borrower receives a telephone
call rather than a letter.
A delinquent Mortgage Loan will be transferred to the special servicer when
the loan becomes a Specially Serviced Mortgage Loan. See "--Special Servicing".
Advances
Except as noted below, if a loan is delinquent at the close of business on
the Determination Date for a distribution date, the master servicer will advance
an amount equal to the Monthly Payment or the Assumed Monthly Payment, as
applicable (each such amount, a "P&I Advance").
The master servicer must make the P&I Advance on the business day before
each distribution date.
The amount of interest to be advanced for a Mortgage Loan for which an
Appraisal Reduction has been calculated will equal the product of:
1. the amount of interest that would otherwise be required to be
advanced, and
2. a fraction,
o whose numerator equals the Stated Principal Balance of the loan at
the close of the preceding distribution date less the Appraisal
Reduction, and
o whose denominator is such Stated Principal Balance.
In addition to P&I Advances, the master servicer will also be obligated to
make cash advances
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("Servicing Advances," and together with P&I Advances, "Advances") to pay:
o certain costs and expenses incurred in connection with defaulted Mortgage
Loans, acquiring or managing REO Property or selling defaulted Mortgage
Loans or REO Properties,
o delinquent real estate taxes, assessments and hazard insurance
premiums, and
o other similar costs and expenses necessary to protect and preserve
the security of a Mortgage.
If the master servicer fails to make a required Advance and the trustee is
aware of the failure, the trustee must make the Advance.
However, each of the master servicer and the trustee only has to make an
Advance if it determines that it will be recoverable from late payments,
insurance proceeds, liquidation proceeds or other collections on the Mortgage
Loan. Neither the master servicer nor the trustee is required to make any
Advance that it determines is not so recoverable. If the master servicer makes
such a nonrecoverability determination, it must deliver to the trustee an
officer's certificate explaining the procedures and basis for the determination
and supplying documentation which supports the determination, which will include
a copy of the Updated Appraisal and any other information or reports obtained by
the master servicer or the trustee, such as:
o property operating statements,
o rent rolls,
o property inspection reports, and
o engineering reports.
The trustee will be entitled to rely conclusively on a nonrecoverability
determination by the master servicer.
Unless there is a nonrecoverability determination, the obligation to make
Advances on a Mortgage Loan continues until foreclosure and liquidation of the
loan and related properties. Advances are intended to provide a limited amount
of liquidity, not to guarantee or insure against losses.
If the special servicer agrees to a modification of a Mortgage Loan that
forgives loan payments or other amounts that the master servicer or the trustee
previously advanced, and the master servicer or the trustee determines that no
other source of payment or reimbursement for such Advances is available to it,
such Advances will be deemed to be nonrecoverable.
The master servicer and the trustee will each be entitled to recover any
P&I Advances made by it, out of its own funds, from collections on the Mortgage
Loan as to which the Advance was made. If the master servicer or the trustee
determines that an Advance previously made is not so recoverable, that Advance,
plus interest, will be repaid from amounts on deposit in the Collection Account
before further distributions on the certificates.
Interest is payable on Advances at a floating rate (the "Advance Rate")
equal to the prime rate as published in The Wall Street Journal. Advance
interest will be paid first from default interest on any Mortgage Loan and late
payment charges collected on the related Mortgage Loan. If those collections are
insufficient, any remaining Advance interest will be paid from general
collections on all Mortgage Loans at the time that the Advance is repaid.
However, no interest will accrue for any P&I Advance until after the grace
period for the related Mortgage Loan has expired. In addition, no interest will
accrue for a P&I Advance if the borrower pays the delinquent Monthly Payment on
or before the business day before the related distribution date.
If interest on Advances is not offset by default interest or other amounts,
the shortfall will reduce amounts payable on the certificates. Hence, it is
possible that the making of Advances (and the charging of interest on Advances
while they are outstanding) could reduce total amounts payable to
certificateholders even if all amounts due from borrowers are eventually
received.
Accounts
Collection Account
The master servicer will establish and maintain a segregated account or
accounts (the "Collection Account") into which it must deposit the following
amounts relating to the Mortgage Loans:
o all principal payments;
o all payments of interest, including default interest and Deferred
Interest, and any prepayment premiums, late fees and late payment
charges;
o any amounts required to be deposited by the master servicer for:
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1. losses realized on permitted investments of funds in the Collection
Account, and
2. Prepayment Interest Shortfalls;
o all Net REO Proceeds transferred from an REO Account;
o all condemnation proceeds, insurance proceeds and net liquidation
proceeds not required to be applied to restore or repair the Mortgaged
Property;
o any amounts received from borrowers as recoveries of Servicing
Advances;
o proceeds of any purchase or repurchase of a Mortgage Loan by the
applicable seller; and
o other amounts that the pooling and servicing agreement requires the master
servicer to deposit into the Collection Account.
The master servicer will deposit these amounts into the Collection Account
within one day after receipt. The Collection Account will be held by the master
servicer for the benefit of the trustee and the certificateholders.
See "Description of the Mortgage Pool--Representations and Warranties;
Repurchase", "The Pooling and Servicing Agreement--Realization Upon Mortgage
Loans" and "Description of the Certificates--Optional Termination".
"REO Proceeds" for any REO Property and the related Mortgage Loan are all
revenues received by the special servicer on the REO Property or REO Mortgage
Loan other than liquidation proceeds.
"Net REO Proceeds" for any REO Property and the related Mortgage Loan are
REO Proceeds less any insurance premiums, taxes, assessments and other costs and
expenses permitted to be paid from the related REO Account.
The master servicer need not deposit into the Collection Account any
payments in the nature of NSF check charges, assumption fees, loan modification
fees, loan service transaction fees, extension fees, demand fees, beneficiary
statement charges and similar fees. To the extent permitted by applicable law
and as provided in the pooling and servicing agreement, the master servicer or
the special servicer may retain such amounts as additional servicing
compensation. If the master servicer mistakenly deposits any amount into the
Collection Account, it may withdraw the mistaken deposit from the Collection
Account at any time.
Interest Reserve Account
The master servicer will establish and maintain an "Interest Reserve
Account" for the benefit of the holders of the certificates. For the
distribution date in each January (other than a leap year) and each February,
the master servicer will deposit into the Interest Reserve Account for each
Mortgage Loan bearing interest computed on an actual/360 basis (the "Interest
Reserve Loans") an amount equal to one day's interest at the related Mortgage
Rate on its Stated Principal Balance as of the due date in the month in which
the distribution date occurs (the "Interest Reserve Amount"). The master
servicer will not make the deposit if the applicable Monthly Payment has not
been paid or advanced. The master servicer will calculate the Interest Reserve
Amount without regard to the adjustments to the Net Mortgage Rates for Interest
Reserve Loans described under "Description of the Certificates--Pass-Through
Rates". For distribution dates in March of each year, the master servicer will
deposit the Interest Reserve Amounts into the Distribution Account and include
these amounts as part of the Available Funds for the distribution date.
Distribution Account
The trustee will establish a segregated account or accounts (the
"Distribution Account") into which the master servicer must deposit the
following amounts:
o a total amount equal to the Available Funds (to the extent included
in the Collection Account or the Interest Reserve Account);
o any prepayment premiums and Deferred Interest received during the
Collection Period; and
o all P&I Advances required for the distribution date and not already
included in the Available Funds.
The master servicer will deposit these amounts into the Distribution
Account on the business day before each distribution date. The Distribution
Account will be held by the trustee for the benefit of the certificateholders.
See "Description of the Certificates--Distributions".
Where Accounts May be Maintained
The Collection Account and the Distribution Account must each be either:
o for funds that will be held for more than 30 days, an account or accounts
maintained with a depository institution or trust company the long-term
unsecured debt obligations of which are
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related "__" or better by _____ (or, if not so rated by _____, then
otherwise approved by _____), and "___" or better by ________ (or, if not
so rated by ___________, then otherwise approved by _________); or
o for funds that will be held for 30 days or less, an account or accounts
maintained with a depository institution or trust company, the short-term
unsecured debt obligations of which are rated "___" or better by _____ (or,
if not so rated by _____, then otherwise approved by _____), and "___" or
better by ___________ (or, if not so rated by ____________, then otherwise
approved by _____________); or
o a segregated trust account or accounts maintained with a federal- or
state-chartered depository institution or trust company acting in its
fiduciary capacity:
1. having a combined capital and surplus of at least $50,000,000,
2. subject to supervision or examination by a federal or state
authority, and
3. for state-chartered institutions, subject to regulations regarding
fiduciary funds on deposit substantially similar to 12 CFR 9.10(b);
or
o an account which each of the Rating Agencies confirms will not, in and of
itself, result in a downgrading, withdrawal or qualification of the rating
then assigned by such Rating Agency to any class of certificates.
Investment of Funds in the Accounts
Amounts on deposit in such accounts may be invested in United States
government securities and other investments specified in the pooling and
servicing agreement. See "Description of the Governing Document--Collection and
Other Servicing Procedures With Respect to Mortgage Loans--Accounts" in the
prospectus for a listing of permitted investments.
Withdrawals from the Collection Account
The master servicer may withdraw funds from the Collection Account for the
following purposes:
o to remit Available Funds, Deferred Interest and prepayment premiums
to the Distribution Account,
o to pay or reimburse itself or the trustee for Advances and interest on
Advances, that payment or reimbursement to be made from the sources
described under "--Advances" above,
o to pay the unpaid portion of the master servicing fee and special servicing
fee (in the case of the master servicing fee, from interest received on the
related Mortgage Loan),
o to pay the trustee fee to the trustee,
o to pay to itself any investment income earned on funds deposited in
the Collection Account,
o to pay any Prepayment Interest Excess received in the preceding
Collection Period to itself as additional servicing compensation,
o to pay to itself or the special servicer other amounts constituting
additional servicing compensation,
o to pay to the depositor, the applicable seller or other purchaser with
respect to each Mortgage Loan or REO Property that has been purchased or
repurchased by it, all amounts received on such loan or property during the
related Collection Period and subsequent to the date as of which the amount
required to effect the purchase or repurchase was determined,
o to reimburse or pay itself, the special servicer, the trustee and/or the
depositor for other unreimbursed expenses that are reimbursable under the
pooling and servicing agreement,
o to satisfy any indemnification obligations of the trust fund under
the pooling and servicing agreement,
o to pay to the trustee amounts requested by it to pay taxes on
certain net income with respect to REO Properties,
o to withdraw any amount mistakenly deposited into the Collection
Account, and
o to clear and terminate the Collection Account upon termination and
liquidation of the trust fund.
Enforcement of "Due-on-Sale" Clauses
The master servicer or the special servicer will exercise or waive
"due-on-sale" clauses in Mortgage Loan documents in accordance with the
servicing standard. However, the master servicer or the special servicer, as
applicable, may waive a "due-on-sale" clause only if it first obtains written
confirmation from:
o [______________, with respect to any Mortgage Loan, group of
cross-collateralized Mortgage Loans or group of Mortgage Loans with
affiliated borrowers that has a then outstanding principal balance equal to
or greater than the lesser of $__ million and __% of the then outstanding
principal balance of all of the Mortgage Loans], and
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o [_____, with respect to any Mortgage Loan that at such time is one of the
__ largest loans in the trust,]
that the waiver will not result in a qualification, downgrade or withdrawal of
the rating then assigned by that Rating Agency to any class of certificates. The
master servicer or the special servicer must use reasonable efforts to require
the new borrower to pay the cost of the Rating Agency confirmation. The master
servicer will advance any costs not paid by the new borrower as a Servicing
Advance (unless the Advance would be nonrecoverable).
See "--The Controlling Class Representative" for additional limitations on
the ability of the master servicer and the special servicer to waive
"due-on-sale" clauses.
If the master servicer or the special servicer waives the "due-on-sale"
clause it may either:
o release the original borrower from liability under the Mortgage Loan
and substitute the new owner as the borrower, or
o enter into an assumption agreement with the new owner of the
Mortgaged Property.
To the extent permitted by law, the master servicer or the special
servicer, as applicable, will enter into an assumption or substitution agreement
only if the credit status of the prospective new owner is in compliance with:
o the master servicer's or the special servicer's, as applicable,
regular commercial mortgage origination or servicing standards and
criteria,
o the terms of the Mortgage Loan, and
o any other standards set by the master servicer or the special
servicer, as applicable, consistent with the servicing standard.
If a Mortgage Loan is assumed, the only permitted modifications that may be
made as part of the assumption are those described below under "--Amendments,
Modifications and Waivers."
The master servicer or special servicer may retain as additional servicing
compensation any assumption fees paid by the borrower or the new owner. See
"Certain Legal Aspects of the Mortgage Loans--Due-on-Sale and Due-on-Encumbrance
Provisions" in the prospectus.
In a bankruptcy or similar proceeding involving a Mortgaged Property, a
court may substitute a new owner or impose a junior or senior lien on the
Mortgaged Property, without the consent of the master servicer, the special
servicer or the trustee.
Enforcement of "Due-on-Encumbrance" Clauses
The Mortgage Loans contain a "due-on-encumbrance" clause, which generally
either:
o provides that the Mortgage Loan will (or may at the related mortgagee's
option) become due and payable upon the creation of any lien or other
encumbrance on the Mortgaged Property, or
o requires the consent of the related mortgagee to the creation of any
lien or other encumbrance on the Mortgaged Property.
Such clauses usually permit the owner of the Mortgage Loan to either:
o accelerate the payments due on the Mortgage Loan, or
o withhold its consent to the creation of any such lien or other
encumbrance.
The master servicer or the special servicer, as applicable, may in
accordance with the servicing standard either exercise or waive the trust fund's
rights under the "due-on-encumbrance" clause. However, the master servicer or
the special servicer, as applicable, may consent to the creation of any lien or
encumbrance only if it first obtains written confirmation from each of the
Rating Agencies that such consent will not result in a qualification, downgrade
or withdrawal of the rating then assigned by that Rating Agency to any class of
certificates.
The master servicer or the special servicer must use reasonable efforts to
require the borrower to pay the cost of such Rating Agency confirmation. The
master servicer will advance any costs not paid by the borrower as a Servicing
Advance (unless the Advance would be nonrecoverable).
See "--The Controlling Class Representative" for additional limitations on
the ability of the master servicer and the special servicer to waive
"due-on-encumbrance" clauses.
The master servicer or the special servicer may forbear from enforcing any
"due-on-encumbrance" provision in connection with any junior or senior lien on a
Mortgaged Property
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imposed in a bankruptcy proceeding involving the Mortgaged Property without
obtaining a Rating Agency confirmation.
Inspections
The special servicer is responsible for inspecting the Mortgaged Properties
securing Specially Serviced Mortgage Loans and REO Properties. The master
servicer is responsible for inspecting the other Mortgaged Properties. The
special servicer may at its option assume the master servicer's obligation to
inspect some or all of the Mortgaged Properties. Each Mortgaged Property and REO
Property will be inspected at least once every two years. If a Mortgage Loan has
a then current principal balance of at least $__ million or is a Specially
Serviced Mortgaged Loan, the related Mortgaged Property will be inspected at
least once every year. The annual inspections described above will be done at
the expense of the servicer performing the inspection. In addition, the special
servicer will inspect any Mortgaged Property if the related borrower is 60 or
more days delinquent in the payment of a Monthly Payment or other obligation. If
the last annual inspection was performed more than ___ months ago, the special
servicer will perform the inspection at its expense. Otherwise, the master
servicer will advance the cost of any such inspection as a Servicing Advance
(unless the Advance would be nonrecoverable). The master servicer and the
special servicer will cause a written inspection report to be prepared as soon
as reasonably possible after completing the inspection. A copy of each
inspection report must be delivered to the trustee and the controlling class
representative within 15 days after its preparation.
Realization Upon Mortgage Loans
Standards for Conduct Generally in Effecting Foreclosure or the Sale of
Defaulted Loans
The master servicer will advance costs and expenses of a foreclosure or
other acquisition as a Servicing Advance, unless the Advance would be
nonrecoverable.
The special servicer may proceed with a non-judicial foreclosure under the
laws of the state where the property is located. The special servicer need not
pursue a deficiency judgment against the borrower or any other party if the laws
of the state do not permit a deficiency judgment after a non-judicial
foreclosure. The special servicer may also refrain from seeking a deficiency
judgment if it determines that the likely recovery would not warrant the cost,
time, expense and/or exposure of pursuing the deficiency judgment and delivers
an officer's certificate to the trustee to that effect.
Until the conditions listed in the next sentence are satisfied, the special
servicer may not obtain title or possession or take any other action regarding a
Mortgaged Property on behalf of the trust fund, if as a result the trustee or
the trust fund would be considered to hold title, to be a
"mortgagee-in-possession", or to be an "owner" or "operator" within the meaning
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980 or any comparable law. The special servicer may proceed with such steps if
it has determined, based on an updated environmental assessment report prepared
by an independent person who regularly conducts environmental audits, that:
o the Mortgaged Property complies with applicable environmental laws or, if
not, after consultation with an environmental consultant, that it would be
in the trust fund's best economic interest to take necessary corrective
measures, and
o there are no circumstances present at the Mortgaged Property
relating to the use, management or disposal of hazardous materials for
which investigation, testing, monitoring, containment, clean-up or
remediation could be required under current federal, state or local law
or regulation or, if any such hazardous materials are present for which
such action could be required, after consultation with an environmental
consultant, that it would be in the trust fund's best economic interest
to take such actions.
The cost of any environmental assessments, as well as the cost of any
remedial, corrective or other further action contemplated by the prior paragraph
will be advanced as a Servicing Advance, unless the advance would not be
recoverable.
If title to any Mortgaged Property is acquired in foreclosure or by
deed-in-lieu of foreclosure, the deed or certificate of sale will be issued to
the trustee, or to its nominee (which will not include the master servicer or
the special servicer) or to a separate trustee or co-trustee on behalf of the
trustee. Notwithstanding any such acquisition of title and cancellation of the
related Mortgage Loan, the Mortgage Loan will be considered to be a Mortgage
Loan held in the trust fund until the related REO Property is sold by the trust
fund, which must occur
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before the close of the third taxable year following the taxable year in which
the trust acquired the property. The Internal Revenue Service has the authority
to grant a three year extension of this period. The principal balance of the
loan will be reduced by Net REO Proceeds allocated to it as a recovery of
principal.
If the trust fund acquires a Mortgaged Property by foreclosure or
deed-in-lieu of foreclosure upon a default of a Mortgage Loan, the special
servicer must administer the Mortgaged Property so that it qualifies at all
times as "foreclosure property" within the meaning of section 860G(a)(8) of the
Internal Revenue Code. An "independent contractor," within the meaning of
applicable Treasury regulations, must manage and operate any Mortgaged Property,
unless the special servicer provides the trustee with an opinion of counsel that
the operation and management of the property other than through an independent
contractor will not cause the property to fail to qualify as "foreclosure
property". The expense of the legal opinion will be covered by a Servicing
Advance, unless the advance would not be recoverable. Generally, REMIC I will
not be taxed on income received on Mortgaged Property which constitutes "rents
from real property," under section 856(c)(3)(A) of the Internal Revenue Code and
the related Treasury regulations.
"Rents from real property" do not include the portion of any rental based
on the net income or gain of any tenant or sub-tenant. No determination has been
made whether rent on any of the Mortgaged Properties meets this requirement.
"Rents from real property" include charges for services customarily
furnished or rendered in connection with the rental of real property, whether or
not the charges are separately stated. Services furnished to the tenants of a
particular building will be considered customary if, in the geographic market in
which the building is located, tenants in buildings that are of a similar class
are customarily provided with the service. The depositor has not determined
whether the services furnished to the tenants of the Mortgaged Properties are
"customary" within the meaning of applicable regulations. It is therefore
possible that a portion of the rental income from a Mortgaged Property owned by
the trust fund would not constitute "rents from real property."
Net income from a trade or business operated or managed by an independent
contractor on a Mortgaged Property owned by REMIC I does not constitute "rents
from real property." Finally, any income from the sale of REO Property that is
held by REMIC I as a dealer in property is not considered "rent from real
property."
If the REO Property remains "foreclosure property", any income that is not
"rent from real property" is subject to tax at the highest corporate rate
(currently [35%]). REMIC I may also be subject to state and local taxes on such
amounts. In addition, certain income from REO Property may be subject to a
"prohibited transactions" tax. Any such income would be subject to a 100% tax;
however, REMIC I does not expect any income from any REO Property to be subject
to this 100% tax. See "Federal Income Tax Consequences--Prohibited Transactions
Tax and Other Taxes" in the prospectus.
Any such taxes would be chargeable against the related income for purposes
of determining the Net REO Proceeds available for distribution to holders of
certificates. The pooling and servicing agreement allows the special servicer to
cause the trust fund to earn "net income from foreclosure property" that is
subject to tax, if it determines that the net after-tax benefit to
certificateholders is greater than what would be realized under another method
of operating or leasing the Mortgaged Property. See "Federal Income Tax
Consequences--Taxation of Owners of REMIC Regular Certificates", "--Taxation of
Holders of REMIC Residual Certificates" in the prospectus.
Sale of Specially Serviced Mortgage Loans and REO Properties
The special servicer may offer to sell a Specially Serviced Mortgage Loan
or an REO Property, if it determines that:
o no satisfactory arrangements can be made to collect delinquent
payments, and
o the sale would be in the best economic interests of the trust fund.
The special servicer must give the trustee and the controlling class
representative written notice that it is contemplating a sale at least [10]
business days before considering any further action. The controlling class
representative may purchase the loan or property, directly or through an
affiliate, for cash equal to the Repurchase Price.
If the controlling class representative (or a designated affiliate) fails
to purchase the loan or property within [30] days after the controlling class
representative receives notice, either the special
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servicer or the master servicer, in that order of priority, may purchase the
loan or property, directly or through an affiliate, for cash equal to the
Repurchase Price.
If none of the forgoing purchases the loan or property, the special
servicer may then offer to sell the loan or property if and when the special
servicer determines that the sale would be in the best economic interests of the
trust fund. The special servicer must sell the loan or property within the
period specified in the pooling and servicing agreement, including extensions.
The controlling class representative, the master servicer and the special
servicer may offer to purchase any such loan or property. The special servicer
will accept any offer received from any person:
o that it determines to be a fair price, unless the highest offeror is
the special servicer or one of its affiliates, or
o that the trustee determines to be a fair price, if the highest
offeror is the special servicer or one of its affiliates.
In making such a fairness determination, the special servicer or trustee
may rely upon an updated independent appraisal. Any offer from the depositor,
the master servicer, the special servicer, any borrower, the manager of a
Mortgaged Property or any of their affiliates in the amount of the Repurchase
Price shall be deemed to be a fair price.
Neither the trustee (in its individual capacity) nor any of its affiliates
may purchase or offer to purchase the loan or property.
The special servicer may accept an offer other than the highest offer if it
determines that accepting the offer would be in the best interests of the
certificateholders. For example, the person making the lower offer could be more
likely to perform its obligations or the lower offer may have more favorable
terms.
Amendments, Modifications and Waivers
Subject to any restrictions applicable to REMICs, and to limitations under
the pooling and servicing agreement, the master servicer may amend any term that
does not affect the maturity date, interest rate, principal balance,
amortization term or payment frequency (each, a "Money Term") of, or materially
impair the collateral securing, any loan that is not a Specially Serviced
Mortgage Loan.
Subject to restrictions applicable to REMICs and to limitations in the
pooling and servicing agreement, the special servicer may agree to a
modification, waiver or amendment of the terms of any Specially Serviced
Mortgage Loan if, in the special servicer's reasonable judgment:
o the related borrower is in default or default is reasonably
foreseeable, and
o the modification, waiver or amendment would increase the recovery to
certificateholders on a net present value basis.
See, however, "--The Controlling Class Representative".
Examples of the types of modifications, waivers or amendments to which the
special servicer may agree include:
o reducing the amounts owing under the loan by forgiving principal,
accrued interest and/or any prepayment premium,
o reducing the amount of the monthly payment on the loan, including a
reduction in the interest rate,
o not enforcing any right granted under any note or mortgage relating
to the loan,
o extending the maturity date of the loan, and/or
o accepting a principal prepayment during a Lock-out Period.
However, the special servicer may not permit a borrower to extend the
maturity date to a date later than:
o ___ years before the Rated Final Distribution Date,
o __ years before any ground lease that secures the loan expires, or
o __ months after the original maturity date for the Mortgage Loan.
Modifications of a Mortgage Loan that forgive principal or interest (other
than Deferred Interest and, in some cases, default interest) will cause Realized
Losses on the loan. Such Realized Losses will be allocated among the classes of
certificates as described under "Description of the Certificates--Realized
Losses and Allocations of Certain Expenses".
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The Trustee
______________ will act as trustee. The address of the trustee's corporate
trust office is:
[
]
All requests relating to the transfer of certificates should be delivered
to the trustee at:
[
]
Resignation and Removal of Trustee
The trustee may resign at any time by notifying the depositor, the master
servicer, the special servicer and the Rating Agencies in writing. The master
servicer will appoint the successor trustee. Before appointing a successor
trustee, the master servicer must obtain confirmation from _____ that the
successor trustee's appointment will not adversely affect the rating then
assigned by _____ to any of the certificates. The resigning trustee must pay any
cost of obtaining the confirmation from _____. However, if the
certificateholders remove the trustee without cause, the costs and expenses of
the trustee incurred in connection with the removal and the cost of obtaining
the confirmation from _____ will be paid as an Additional Trust Fund Expense. If
the successor trustee is not appointed within 30 days after the notice of
resignation, the resigning trustee may petition a court of competent
jurisdiction to appoint a successor trustee.
The depositor or the master servicer may remove the trustee if, among other
things:
o the trustee becomes ineligible to continue as such under the pooling
and servicing agreement,
o the trustee becomes incapable of acting,
o the trustee is adjudged bankrupt or insolvent,
o a receiver is appointed for the trustee or its property, or
o any public officer takes charge or control of the trustee or its
property.
The holders of certificates evidencing a majority of the total voting
rights may remove the trustee upon written notice to the master servicer, the
special servicer, the depositor and the trustee.
Resignation or removal of the trustee is effective only when the successor
trustee accepts the appointment.
Trustee Fee
The pooling and servicing agreement entitles the trustee to a monthly fee
from amounts in the Collection Account. The fee is equal to _____% of the then
outstanding principal balance of each Mortgage Loan calculated on the basis of a
360-day year consisting of twelve 30-day months.
Indemnification of Trustee
The trust will indemnify the trustee and its directors, officers,
employees, agents and affiliates against any and all losses, liabilities,
damages, claims or expenses (including reasonable attorneys' fees) arising under
the pooling and servicing agreement or the certificates (but only to the extent
that they are expressly reimbursable under the pooling and servicing agreement
or are unanticipated expenses incurred by the REMIC). However, the
indemnification will not apply to matters resulting from the negligence,
misrepresentation, fraud, bad faith or willful misconduct of the indemnified
person or for any expense or liability specifically required to be borne by the
trustee in the pooling and servicing agreement. The trustee need not expend or
risk its own funds or otherwise incur financial liability in performing its
duties under the pooling and servicing agreement, or in exercising its rights or
powers, if in the trustee's opinion the repayment of such funds or adequate
indemnity against the risk of liability is not reasonably assured.
The master servicer and the special servicer will each indemnify the
trustee and its directors, officers, employees, agents and affiliates for
similar losses related to the willful misconduct, fraud, misrepresentation, bad
faith and/or negligence in the performance or negligent disregard by the master
servicer or the special servicer, as the case may be, of its duties under the
pooling and servicing agreement.
Duties of the Trustee
If no event of default has occurred of which the trustee has actual
knowledge and after the curing of all events of default that may have occurred,
the trustee must perform only those duties specifically imposed under the
pooling and servicing agreement. If an event of default has occurred and has not
been cured, the trustee will be required to use the same degree of skill and
care in exercising its rights and
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powers under the pooling and servicing agreement that a prudent person would use
in its own personal affairs under similar circumstances. Upon receipt of the
various certificates, reports or other documents required to be furnished to it,
the trustee must examine the documents and determine whether they conform on
their face to the requirements of the pooling and servicing agreement.
If the master servicer fails to make a required Advance and the trustee is
aware of the failure, the trustee must make the Advance unless it deems the
Advance nonrecoverable. See "--Advances".
Except for funds held by the trustee, the trustee will not be accountable
for:
o the use or application by the depositor of any certificates or the
proceeds of the certificates,
o the use or application of funds paid to the depositor, the master
servicer or the special servicer relating to the Mortgage Loans, or
o the use or application of funds deposited in or withdrawn from the
Collection Account or the Distribution Account by the depositor, the
master servicer or the special servicer.
The trustee, the special servicer and master servicer will make no
representation as to:
o the validity or sufficiency of the pooling and servicing agreement,
the certificates, this prospectus supplement or the prospectus, or
o the validity, enforceability or sufficiency of the Mortgage Loans or
related documents.
Servicing Compensation and Payment of Expenses
The master servicer will be entitled to a monthly servicing fee for each
Mortgage Loan. The fee is calculated at the per annum rate listed in Exhibit A-1
based on the then outstanding principal balance of the loan. The master
servicing fee is calculated on a 30/360 basis.
The master servicing fee for each loan will be retained by the master
servicer from payments and collections (including insurance proceeds and
liquidation proceeds) on the loan. The master servicer may also retain as
additional servicing compensation:
o all investment income earned on amounts in the Reserve Accounts (to the
extent consistent with applicable law and the related Mortgage Loan
documents) and the Collection Account,
o all amounts collected on the Mortgage Loans (except Specially Serviced
Mortgage Loans) in the nature of late payment charges or late fees (to the
extent not offset against advance interest on the related Mortgage Loan),
loan service transaction fees, extension fees, demand fees, modification
fees, assumption fees, beneficiary statement charges and similar fees and
charges (but excluding prepayment premiums or default interest),
o all insufficient funds check charges (including insufficient funds
check charges arising from Specially Serviced Mortgage Loans), and
o any Prepayment Interest Excess (to the extent not offset against any
Prepayment Interest Shortfall).
If Midland resigns or is terminated as the master servicer and the
successor master servicer agrees to perform the services of the master servicer
for an amount less than the master servicing fee, the certificateholders will
not receive any portion of the excess master servicing fee.
The master servicer will pay all expenses incurred by it in connection with
its responsibilities under the pooling and servicing agreement (subject to
reimbursement as provided in the agreement), including all fees of any
sub-servicers retained by it.
Special Servicing
Ability of Controlling Class Representative to Remove Special Servicer
Midland will be the initial special servicer. The controlling class
representative may at any time remove the special servicer without cause and
appoint a successor special servicer. The removal of the special servicer and
appointment of a successor special servicer will be effective only when:
o the successor special servicer has assumed in writing all of the
responsibilities, duties and liabilities of the special servicer under
the pooling and servicing agreement, and
o each Rating Agency confirms to the trustee in writing that such appointment
and assumption will not result, in and of itself, in a downgrading,
withdrawal or qualification of the rating then assigned by the Rating
Agency to any class of certificates.
The controlling class representative must pay the cost of obtaining such
Rating Agency
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confirmation. The removed special servicer may receive all amounts accrued and
owing to it on or prior to the effective date of the removal.
Duties of Special Servicer
The duties of the special servicer relate primarily to Specially Serviced
Mortgage Loans and to any REO Property. A "Specially Serviced Mortgage Loan" is
any Mortgage Loan for which at least one of the following conditions exist:
Loans with Monetary Defaults
o The borrower is at least 60 days delinquent in paying principal and
interest or other obligation(regardless of whether P&I Advances have been
reimbursed), or
o the borrower has failed to make a balloon payment (except where the master
servicer and the special servicer agree in writing that the loan is likely
to be paid in full within 30 days after such default);
however, such loans cease to be Specially Serviced Mortgage Loans when:
o the borrower brings the loan current (under workout terms agreed to
by the special servicer for a balloon payment default),
o the borrower makes three consecutive full and timely monthly
payments, and
o no other circumstances exist that would cause the loan to be characterized
as a Specially Serviced Mortgage Loan.
Loans that are likely to have Monetary Defaults
o The borrower has expressed to the master servicer an inability to
pay or a hardship in paying the loan in accordance with its terms,
o the master servicer has received notice of a foreclosure or
threatened foreclosure of any lien on the property securing the loan,
o the master servicer or special servicer has received notice that the
borrower has:
1. become the subject of any bankruptcy, insolvency or similar
proceeding,
2. admitted in writing the inability to pay its debts as they come due,
or
3. made an assignment for the benefit of creditors, or o the master
servicer proposes to commence foreclosure or other workout
arrangements;
however, such loans cease to be Specially Serviced Mortgage Loans when:
o the above circumstances cease to exist in the good faith judgment of
the special servicer, and
o no other circumstances exist that would cause the loan to be characterized
as a Specially Serviced Mortgage Loan.
Loans with Nonmonetary Defaults
o The master servicer or the special servicer has notice that a nonmonetary
default that materially and adversely affects the interests of the
certificateholders has occurred and the default remains uncured after the
specified grace period (or, if no grace period is specified, after 60
days);
however, such loans cease to be Specially Serviced Mortgage Loans when:
o the default is cured, and
o no other circumstances exist that would cause the loan to be characterized
as a Specially Serviced Mortgage Loan.
A default requiring a Servicing Advance will be deemed to materially and
adversely affect the interests of certificateholders.
The special servicer will prepare an asset status report within 30 days
after a loan becomes a Specially Serviced Mortgage Loan. The asset status report
will be delivered to the controlling class representative and each Rating
Agency.
Special Servicer Compensation
The special servicer is entitled to a monthly special servicing fee. The
special servicing fee is an amount equal to 1/12th of ____% of the Stated
Principal Balance of each Specially Serviced Mortgage Loan. The special servicer
will also receive a disposition fee on any Specially Serviced Mortgage Loan or
REO Property sold, transferred or otherwise liquidated equal to __% of:
o the proceeds of the sale or liquidation of any Specially Serviced
Mortgage Loan or REO Property
less
o any broker's commission and related brokerage referral fees.
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No disposition fee will be paid in connection with:
o the repurchase of a Mortgage Loan as described under "Description of
the Mortgage Pool--Representations and Warranties; Repurchase",
o the termination of the trust as described under "Description of the
Certificates--Optional Termination", or
o the purchase of any defaulted Mortgage Loan by the controlling class
representative, the master servicer or special servicer as described under
"The Pooling and Servicing Agreement--Realization Upon Mortgage Loans--Sale
of Specially Serviced Mortgage Loans and REO Properties".
Each of these fees, plus certain special servicing expenses, will be paid
from funds that would otherwise be used to pay principal and interest on the
certificates.
The special servicer is also entitled to a workout fee equal to ___% of
the Net Collections received by the master servicer or the special servicer on
each Corrected Mortgage Loan. "Net Collections" means all payments of interest
and principal and all prepayment premiums.
A loan which has ceased to be a Specially Serviced Mortgage Loan by virtue
of a cure resulting from a modification, restructuring or workout negotiated by
the special servicer evidenced by a signed writing is a "Corrected Mortgage
Loan".
If any Corrected Mortgage Loan again becomes a Specially Serviced Mortgage
Loan, any right to the workout fee terminates for the initial modification,
restructuring or workout. However, the special servicer will receive a new
workout fee for the loan upon resolution or workout of a subsequent event of
default under the loan. If the special servicer is terminated for any reason, it
will retain the right to receive any workout fees payable on Mortgage Loans that
became Corrected Mortgage Loans while it acted as special servicer. The
successor special servicer will not be entitled to any portion of such workout
fees.
The special servicer may also retain as additional servicing compensation:
o all investment income earned on amounts on deposit in any REO
Account, and
o if permitted under the Mortgage Loan, late payment charges or late fees (to
the extent not offset against advance interest on the related Mortgage
Loan), assumption fees, loan modification fees, extension fees, loan
service transaction fees, beneficiary statement charges or similar items
that are collected on Specially Serviced Mortgage Loans.
Additional special servicing compensation does not include default interest
or prepayment premiums or any other amount required to be deposited or retained
in the Collection Account.
The Controlling Class Representative
Selection
Holders of more than [50%] of the principal balance of the Controlling
Class may appoint a controlling class representative to represent their
interests. If at any time the holders of the Controlling Class have not
appointed a controlling class representative, the holder owning the largest
percentage of the principal balance of the Controlling Class will be the
controlling class representative.
The "Controlling Class" is the most subordinate class of principal balance
certificates that still has at least [25%] of its original principal balance
outstanding. If no class has at least [25%] of its initial principal balance
still outstanding, the most subordinate class of principal balance certificates
still outstanding will be the controlling class.
Rights and Powers
[The controlling class representative has the right to direct the special
servicer (and the master servicer solely with respect to clause 2 below) about
the following matters:
1. foreclosure or similar conversion of the ownership of properties securing
Specially Serviced Mortgage Loans that are in default, including acquiring
an REO Property,
2. any material amendment, waiver or modification of any Mortgage Loan
and any amendment, waiver or modification of a Specially Serviced
Mortgage Loan,
3. proposed sale of a defaulted Mortgage Loan or REO Property, except upon
termination of the trust fund as described under "Description of the
Certificates--Optional Termination",
4. acceptance of a discounted payoff,
5. determination to bring an REO Property into compliance with environmental
laws or to
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address hazardous materials located at an REO Property,
6. release of collateral, other than in accordance with the terms or
upon satisfaction of a loan,
7. acceptance of substitute or additional collateral, other than in
accordance with the terms of a loan,
8. any waiver of a "due-on-sale" or "due-on-encumbrance" clause, and
9. acceptance of an assumption agreement releasing a borrower from
liability under a loan.
The special servicer or the master servicer, as applicable, may not take
any of the above actions unless the controlling class representative has
approved such action in writing within [10] business days after being notified
of the proposed action and provided with all reasonably requested information.
The controlling class representative will be considered to have approved any
such action if the controlling class representative does not notify the special
servicer or the master servicer, as applicable, within [10] business days.
In addition, except as otherwise described below, the controlling class
representative may direct the special servicer to take, or refrain from taking,
such actions as the controlling class representative may consider advisable or
as to which provision is otherwise made in the pooling and servicing agreement.
Notwithstanding the foregoing, no advice, direction or objection given or
made by the controlling class representative, as contemplated by either of the
two preceding paragraphs, may:
o require or cause the special servicer or the master servicer to violate
applicable law, the terms of any Mortgage Loan or any other provision of
the pooling and servicing agreement including the special servicer's or
the master servicer's obligation to act in accordance with the servicing
standard described in this prospectus supplement;
o a result in certain adverse tax consequences for the trust;
o expose the trust, the depositor, the master servicer, the special
servicer, the trustee or any of their respective affiliates,
directors, officers, employees or agents, to any material claim,
suit or liability; or
o materially expand the scope of the master servicer's or special servicer's
responsibilities under the pooling and servicing agreement.
The special servicer and the master servicer are to disregard any such advice,
direction or objection that does so. In addition, unless the pooling and
servicing agreement provides otherwise, the special servicer will not be
required to seek approval from the controlling class representative for any
actions listed in clauses 1, 2 (but only for a waiver, modification or amendment
involving a Money Term) and 3 above that it seeks to take with respect to any
particular Specially Serviced Mortgage Loan if:
o the special servicer has, as described above, notified the controlling
class representative in writing of various actions that the special
servicer proposes to take with respect to the workout or liquidation of
that Mortgage Loan, and
o for [60] days following the first notice, the controlling class
representative has objected to all of those proposed actions and has
failed to suggest any alternative actions that the special servicer
reasonably considers to be consistent with the servicing standard.
You should consider the effects that the rights and powers of the
controlling class representative discussed above could have on the actions of
the special servicer.]
Limitation on Liability of Controlling Class Representative
The controlling class representative and its officers, directors, employees
and owners will have no liability to certificateholders for any action taken, or
for refraining from the taking of any action, in good faith or for errors in
judgment. By accepting certificates, each certificateholder agrees that the
controlling class representative:
o may have special relationships and interests that conflict with
those of holders of one or more classes of certificates,
o may act solely in the interests of the holders of the Controlling
Class,
o has no duties to certificateholders, except for holders of the
Controlling Class,
o may act to favor the interests of the Controlling Class over the
interests of other classes, and
o will violate no duty and incur no liability by acting solely in the
interests of the Controlling Class.
No certificateholder may take legal action against the controlling class
representative because it
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acted solely in the interests of the Controlling Class. The special servicer
generally must keep confidential all advice, directions, recommendations and/or
objections received from the controlling class representative.
Sub-Servicers
The master servicer and special servicer may each delegate its servicing
obligations to one or more third-party sub-servicers. However, the special
servicer must obtain the approval of _____ before it may retain sub-servicers
for Mortgage Loans with outstanding principal balances greater than or equal to
25% or more of the then outstanding principal balance of all the Mortgage Loans.
Despite any such delegation, the master servicer or special servicer remains
directly responsible for the delegated duties and for the acts and omissions of
any sub-servicer. The master servicer or the special servicer must monitor the
performance of any sub-servicer that it uses. On the closing date, _____Mortgage
Loans (__%) will be serviced by sub-servicers. Except for the sub-servicing
agreements related to these Mortgage Loans, each sub-servicing agreement must
provide that if the master servicer or the special servicer is no longer acting
in such capacity under the pooling and servicing agreement, the trustee or any
successor to the master servicer or special servicer may:
o assume the master servicer's or special servicer's rights under the
sub-servicing agreement, and/or
o terminate the sub-servicer without payment of a termination fee.
The sub-servicing agreement for the ____ Mortgage Loans that will be
sub-serviced on the closing date provide that the related sub-servicer may only
be terminated if it is in default under the sub-servicing agreement.
The master servicer and special servicer are solely responsible for the
fees owed to any sub-servicer they retain, even if those fees are more than the
fees they are receiving under the pooling and servicing agreement. Generally,
each sub-servicer will be reimbursed for any expenses for which the master
servicer or special servicer would be reimbursed under the pooling and servicing
agreement. See "-- Servicing Compensation and Payment of Expenses".
Reports to Certificateholders; Where You Can Find More Information
Monthly Reports
On each distribution date, the trustee will issue a statement based on
information that the master servicer furnishes. The trustee will mail upon
request and otherwise make available electronically the statement to the
certificateholders, the depositor, the paying agent, the underwriters, the
master servicer, the controlling class representative and each Rating Agency.
The trustee will use the form of monthly distribution statement included as
Exhibit C to this prospectus supplement. The information will include the
following:
o For each class of certificates and for each $1,000 of initial principal
balance or notional amount of the class:
1. the Principal Distribution Amount and the amount of Available Funds
allocable thereto;
2. Distributable Certificate Interest and the amount of Available Funds
allocable thereto;
3. any Class Interest Shortfall allocable to the class; 4. the principal
balance after giving effect to the distribution of
amounts in respect of the Principal Distribution Amount on the
distribution date; and
5. the amount of any prepayment premiums received during the related
Collection Period and distributed to the class;
o The pass-through rate applicable to each class of offered
certificates for the distribution date, other than the [class A-1A]
certificates;
o The amount of any P&I Advances by the master servicer or the trustee
included in the amounts distributed to the certificateholders;
o Realized Losses and Expense Losses and their allocation to the
principal balance of any class of certificates;
o The Stated Principal Balance of the Mortgage Loans as of the due
date preceding the distribution date;
o The number and aggregate principal balance of Mortgage Loans:
1. delinquent 30-59 days,
2. delinquent 60-89 days,
3. delinquent 90 or more days, and
4. as to which foreclosure proceedings have been commenced;
o For each delinquent Mortgage Loan:
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1. the amount of the P&I Advances made on the distribution date; and
2. the aggregate amount of unreimbursed Servicing Advances and P&I
Advances for such loan;
o For any Mortgage Loan that became an REO Mortgage Loan during the preceding
calendar month, the principal balance of such Mortgage Loan as of the date
it became an REO Mortgage Loan;
o For any REO Property sold during the related Collection Period:
1. the date on which the special servicer determined that it has
collected all amounts that it expects to recover on the REO Property;
2. the amount of the proceeds of such sale deposited into the
Collection Account; and
3. the aggregate amount of REO Proceeds and Net REO Proceeds (in each
case other than liquidation proceeds) and other revenues collected by
the special servicer for each REO Property during the related
Collection Period and credited to the Collection Account;
o The outstanding principal balance of each REO Mortgage Loan as of
the close of business on the preceding due date;
o The appraised value of each REO Property as shown on the most recent
appraisal;
o The amount of the servicing compensation and additional servicing
compensation paid to the master servicer for the distribution date;
o The amount of any special servicing fee, disposition fee or workout
fee paid to the special servicer for the distribution date;
o The amount of default interest received during the related
Collection Period;
o The amount of any Appraisal Reductions effected during the related
Collection Period on a loan-by-loan basis and the total Appraisal
Reductions as of the distribution date; and
o Any other information required under the pooling and servicing
agreement.
The master servicer will provide the trustee with the following Commercial
Mortgage Securities Association Standard Investor Package reports for inclusion
in the monthly distribution statement:
o Property File,
o Watch List Report,
o Delinquent Loan Status Report,
o REO Status Report,
o Comparative Financial Status Report,
o Historical Loan Modification Report,
o Historical Loss Estimate Report,
o Operating Statement Analysis Report, and
o NOI Adjustment Worksheet.
Due to the time required to collect all the necessary data and enter it
onto the master servicer's computer system, the master servicer is not required
to provide these reports before the distribution date in _________________,
200_.
Within a reasonable period of time after the end of each calendar year, the
trustee will furnish to each person who at any time during the calendar year
owned an offered certificate a statement listing the amount of principal and
interest paid to the person during the year. The Trustee may satisfy this
obligation by delivering substantially comparable information pursuant to any
requirements of the Internal Revenue Code of 1986.
In addition, the trustee will forward or make available to each
certificateholder any additional information regarding the Mortgage Loans that
the master servicer or the special servicer, in its sole discretion, delivers to
the trustee for distribution to the certificateholders, which information the
trustee may attach to the monthly distribution statement.
The distribution date statements referred to above may be obtained
electronically from the trustee as follows:
1. by facsimile through the trustee's fax-on-demand service by calling
__________; or
2. on the Internet at ____________________.
For assistance with the above mentioned services, you may call ___________.
The Trustee may require registration and the acceptance of a disclaimer in
connection with providing access to its internet website.
Loan Portfolio Analysis System
The master servicer maintains a computerized database that has information
on the various commercial mortgage-backed securities transactions that it
services. The master servicer commonly refers to the database as the "Loan
Portfolio Analysis System". The master servicer will provide electronic, on-line
access to the database to certificateholders, prospective transferees and other
appropriate persons. You may contact Brad Hauger at (816) 435-5175 to arrange
access.
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Other Available Information
The master servicer or special servicer will notify or report to the
trustee and the controlling class representative about any other occurrences of
which the master servicer or special servicer is aware that it determines may
materially affect a Mortgage Loan or REO Property, including all loan
extensions.
In addition to the other reports and information made available and
distributed under the pooling and servicing agreement by the trustee, the master
servicer and the special servicer will also make available any other information
relating to the Mortgage Loans, the Mortgaged Properties or the borrowers for
review by the depositor, the underwriters, the controlling class representative,
the trustee and the Rating Agencies. The master servicer and the special
servicer will also make such information available to any person that certifies
to the trustee that it is a certificateholder, an owner of a beneficial interest
in a book entry certificate, or a potential owner of a certificate or an
interest in a certificate. The master servicer and the special servicer are not
required to provide the information if doing so is prohibited by applicable law
or by any documents related to a Mortgage Loan. The master servicer and the
special servicer may adopt reasonable rules and procedures governing access to
the information, which may include a requirement that the person requesting such
information execute an agreement governing the availability, use and disclosure
of such information. The agreement may provide for the indemnification of the
master servicer or the special servicer for any liability or damage that may
arise from the use or disclosure of the information.
The following are available for your review at the trustee's offices during
normal business hours:
o the pooling and servicing agreement,
o all monthly statements to certificateholders,
o annual compliance statements, and
o annual accountants' reports.
See "Description of the Governing Document" in the prospectus.
Unless prohibited by applicable law or the Mortgage Loan documents, the
following will be available for your review at the trustee's offices during
normal business hours:
o the property inspection reports,
o all modifications, waivers and amendments of the Mortgage Loans, and
o officer's certificates and other evidence supporting a determination
that an Advance is nonrecoverable.
The master servicer, the special servicer and the trustee may impose a
reasonable charge for expenses of providing copies or access to the above
information. The Rating Agencies and the controlling class representative will
not have to pay any such charge.
Filings with the SEC
The master servicer will, on behalf of the trust fund, prepare, sign and
file with the Securities and Exchange Commission all reports, statements and
information respecting the trust fund that the master servicer or the depositor
determines are required to be filed with the SEC. The master servicer will file
each report, statement and information on or prior to the required filing date.
However, the depositor will file with the SEC, within 15 days of the closing
date, a Form 8-K together with the pooling and servicing agreement.
The trustee, the master servicer and the special servicer are not
responsible for the accuracy or completeness of any information supplied to it
by a borrower or other third party for inclusion in any notice, report or
information furnished or provided by the master servicer, the special servicer
or the trustee under the pooling and servicing agreement.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, three separate "real estate mortgage
investment conduit" ("REMIC") elections will be made with respect to respective
portions of the trust fund, creating three REMICs. Upon the issuance of the
offered certificates, Morrison & Hecker L.L.P. will deliver its opinion,
generally to the effect that, assuming compliance with all provisions of the
pooling and servicing agreement:
o each pool of assets with respect to which a REMIC election is made will
qualify as a REMIC under the Internal Revenue Code of 1986;
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o theclass [A-1A, class A-1B, class S, class A-2, class A-3, class A-4, class
B-1, class B-2, class B-3, class B-4, class B-5, class B-6, class B-7,
class B-8, class C and class D] certificates will be, or will represent
ownership of, REMIC "regular interests";
o the [class R-I, class R-II and class R-III] certificates,
respectively, will be the sole "residual interest" in the related
REMIC; and
o the [class E ]certificates will represent beneficial interests in the
portion of the trust assets consisting of Deferred Interest, which portion
will be treated as a grantor trust for federal income tax purposes.
The certificates representing regular interests generally will be treated
as newly originated debt instruments for federal income tax purposes. Holders of
those certificates will be required to include in income all interest on the
certificates in accordance with the accrual method of accounting, regardless of
a certificateholder's usual method of accounting. The [class A-1A, class A-1B,
class A-2, class A-3 and class A-4] certificates are not expected to be treated
as having been issued with original issue discount for federal income tax
reporting purposes. The [class B-1] certificates are expected to be treated as
having been issued with de minimis original issue discount for federal income
tax purposes. The [class S and class B-2] certificates are expected to be deemed
to have been issued with original issue discount.
The IRS has issued regulations under Sections 1271 to 1275 of the Internal
Revenue Code of 1986 generally addressing the treatment of debt instruments
issued with original issue discount. Holders of the offered certificates should
be aware, however, that those regulations and Section 1272(a)(6) of the Internal
Revenue Code of 1986 do not adequately address certain issues relevant to, or
are not applicable to, prepayable securities such as the offered certificates.
We recommend that holders consult with their own tax advisor concerning the tax
treatment of the offered certificates.
The trust intends to treat the [class S] certificates as having no
"qualified stated interest". Accordingly, the [class S] certificates will be
considered to be issued with original issue discount in an amount equal to the
excess of all distributions of interest expected to be received on the [class S]
certificates over their respective issue prices (including interest accrued
prior to the closing date, if any, unless the holder elects on its federal
income tax return to exclude such amount from the issue price and to recover it
on the first distribution date). Certificateholders will not be able to deduct
currently any "negative" amounts of original issue discount on the [class S]
certificates attributable to rapid prepayments on the Mortgage Loans, but they
may offset these amounts against future positive accruals of original issue
discount, if any. However, holders of a [class S] certificate may be entitled to
a loss deduction if it becomes certain that such holder will not recover a
portion of its basis in the certificate. No representation is made as to the
timing, amount or character of such loss, if any.
See "Federal Income Tax Consequences--REMICS--Taxation of Owners of REMIC
Regular Certificates--Original Issue Discount", "---Premium" and "--Realized
Losses" in the prospectus.
For the purposes of determining the rate of accrual of market discount,
original issue discount and premium for federal income tax purposes, the
Prepayment Assumption (as defined in the prospectus) is that the Mortgage Loans
will prepay at the rate of 0% CPR, except that Hyper-Amortization Loans are
assumed to pay on their Anticipated Repayment Date. No representation is made as
to whether the Mortgage Loans will prepay at that rate or any other rate.
Although it is unclear whether the [class A-1B, class A-2, class A-3, class A-4,
class B-1 and class B-2] certificates will qualify as "variable rate
instruments" under treasury regulations, the trustee will assume for purposes of
determining the original issue discount for these certificates that the
certificates so qualify. See "Federal Income Tax Consequences--REMICS--Taxation
of Owners of REMIC Regular Certificates--Original Issue Discount and "--Premium"
in the prospectus.
Certain classes of the offered certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
such a class of certificates will be treated as holding a certificate with
amortizable bond premium will depend on the certificateholder's purchase price.
Holders of such classes of certificates should consult their own tax advisors
regarding the possibility of making an election to amortize any such premium.
See "Federal Income Tax Consequences--REMICS --Taxation of Owners of REMIC
Regular Certificates" in the prospectus.
Generally, the offered certificates will be "real estate assets" within the
meaning of Section 856(c)(5)(B) of the Internal Revenue Code of 1986. In
addition, interest (including original issue
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discount, if any) on the offered certificates will be interest described in
Section 856(c)(3)(B) of the Internal Revenue Code of 1986.
As of the closing date, ____% of the Mortgage Loans are secured by real
estate used for residential or certain other purposes prescribed in Section
7701(a)(19)(C) of the Internal Revenue Code of 1986, and consequently the
offered certificates will be treated as assets qualifying under that section to
only a limited extent. Accordingly, investment in the offered certificates may
not be suitable for thrift institutions seeking to be treated as a "domestic
building and loan association" under Section 7701(a)(19)(C) of the Internal
Revenue Code of 1986. The determination as to the percentage of the REMIC's
assets that constitute assets described in the foregoing sections of the
Internal Revenue Code of 1986 will be made with respect to each calendar quarter
based on the average adjusted basis of each category of the assets held by the
REMIC during such calendar quarter. The Trustee will report those determinations
to certificateholders in the manner and at times required by applicable Treasury
regulations.
Finally, the offered certificates will be treated as "qualified mortgages"
for another REMIC under Section 860G(a)(3)(C) of the Internal Revenue Code of
1986 and "permitted assets" for a "financial asset securitization investment
trust" under Section 860L(c) of the Code.
If the trust collects a prepayment premium on a mortgage loan, it is
anticipated that the prepayment premium will be reported as ordinary income and
allocated to the class of certificates entitled to the premium. For federal
income tax reporting purposes, the premium or charge will be reported as income
upon actual receipt by the master servicer. The correct characterization of and
timing for recognition of, prepayment premiums is not entirely clear.
Certificateholders should consult their tax advisors concerning the tax
treatment of prepayment premiums.
For more information regarding the federal income tax consequences of
investing in the offered certificates, see "Federal Income Tax
Consequences--REMICS -- Taxable Income of the REMIC" in the prospectus.
Due to the complexity of these rules and the current uncertainty as to the
manner of their application to the trust fund and certificateholders, it is
particularly important that you consult your own tax advisors regarding the tax
treatment of your acquisition, ownership and disposition of the certificates.
ERISA CONSIDERATIONS
A fiduciary of any employee benefit plan or other retirement plan or
arrangement that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986
(each a "Plan") and any entity whose assets include assets of a Plan should
carefully review with its legal advisers whether the purchase or holding of
offered certificates could give rise to a transaction that is prohibited or is
not otherwise permitted either under ERISA or Section 4975 of the Internal
Revenue Code of 1986 or whether there exists any applicable statutory or
administrative exemption. Examples of the types of Plans that are subject to
these rules include:
o individual retirement accounts,
o annuity plans,
o Keogh plans, and
o collective investment funds, separate accounts and general accounts in
which such plans, accounts or arrangements are invested.
Certain employee benefit plans, such as governmental plans and church plans
(if no election has been made under section 410(d) of the Internal Revenue
Code), are not subject to the restrictions of ERISA. Accordingly, assets of such
plans may be invested in the offered certificates without regard to the ERISA
considerations described below, subject to other applicable federal and state
law. However, any such governmental or church plan which is qualified under
section 401(a) of the Internal Revenue Code of 1986 and exempt from taxation
under section 501(a) of the Internal Revenue Code of 1986 is subject to the
prohibited transaction rules set forth in Section 503 of the Internal Revenue
Code of 1986.
In accordance with ERISA's general fiduciary standards, before investing in
an offered
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certificate a Plan fiduciary should determine whether to do so is:
o permitted under the governing Plan instruments, and
o appropriate for the Plan in view of its overall investment policy
and the composition and diversification of its portfolio.
A Plan fiduciary should especially consider the ERISA requirement of
investment prudence and the sensitivity of the return on the certificates to the
rate of principal repayments (including voluntary prepayments by the borrowers
and involuntary liquidations) on the Mortgage Loans, as discussed in "Yield and
Maturity Considerations".
Certain fiduciary and prohibited transaction issues arise only if the
assets of the trust fund are "plan assets" for the purposes of Part 4 of Title I
of ERISA and Section 4975 of the Internal Revenue Code of 1986. Whether the
assets of the trust fund will be plan assets at any time will depend on a number
of factors, including the portion of any class of certificates (as discussed
below under "--Plan Asset Regulation") that is held by "benefit plan investors"
(as defined in U.S. Department of Labor Regulation Section 2510.3-101).
Plan Asset Regulation
The United States Department of Labor has issued a final regulation
determining when assets of an entity in which a Plan makes an equity investment
will be treated as assets of the investing Plan. If the certificates are treated
as debt with no substantial equity features under applicable local law, the
assets of the trust fund would not be treated as assets of the Plans that become
certificateholders. In the absence of treatment of the certificates as debt, and
unless the final regulation provides an exemption from this "plan asset"
treatment, an undivided portion of the assets of the trust fund will be treated,
for purposes of applying the fiduciary standards and prohibited transactions
rules of ERISA and Section 4975 of the Internal Revenue Code of 1986, as an
asset of each Plan that acquires and holds the offered certificates.
The final regulation provides an exemption from "plan asset" treatment for
securities issued by an entity if, immediately after the most recent acquisition
of any equity interest in the entity, less than 25% of the value of each class
of equity interests in the entity are held by "benefit plan investors". Benefit
plan investors could include Plans, governmental, foreign and other plans not
subject to ERISA and entities holding assets deemed to be "plan assets".
Interests held by any person who has discretionary authority or control with
respect to the assets of the entity or any person who provide investment advice
directly or indirectly for a fee with respect to the assets of the entity (or
any affiliate of either such person) are excluded from the calculation. Because
the availability of this exemption to the trust fund depends upon the identity
of the holders of the offered certificates at any time, there can be no
assurance that any class of the offered certificates will qualify for this
exemption.
Individual Exemption
The Department of Labor has issued to each of the underwriters an
individual prohibited transaction exemption (Prohibited Transaction Exemption
No. _____, as amended by Prohibited Transaction Exemption No. 97-34, to
________________________________________, and Prohibited Transaction Exemption
No. 98-07 to PNC Capital Markets, Inc.). These exemptions generally exempt from
the application of the prohibited transaction provisions of Section 406(a) and
(b) and 407(a) of ERISA, and the excise taxes imposed on such prohibited
transactions pursuant to Section 4975(a) and (b) of the Internal Revenue Code of
1986, certain transactions, among others, relating to:
o the servicing and operation of mortgage loans, such as the Mortgage
Loans, and
o the purchase, sale and holding of mortgage pass-through
certificates, such as the senior certificates, underwritten by an
"underwriter".
For purposes of this discussion, the term "underwriter" includes:
1. __________________________________,
2. any person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with
_______________________________, and
3. any member of the underwriting syndicate or selling group of which a person
described in (1) or (2) is a manager or co-manager with respect to the
senior certificates, including PNC Capital Markets, Inc.
Each of the individual prohibited transaction exemptions sets forth six
general conditions that must be satisfied for a transaction involving the
purchase, sale and holding of senior certificates to be covered by the
exemption:
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o First, the acquisition of the senior certificates by a Plan must be on
terms that are at least as favorable to the Plan as they would be in an
arm's-length transaction with an unrelated party.
o Second, the rights and interests evidenced by the senior certificates must
not be subordinated to the rights and interests evidenced by the other
certificates of the same trust.
o Third, at the time of acquisition by the Plan the senior certificates must
be rated in one of the three highest generic rating categories by Standard
& Poor's Ratings Services, Duff & Phelps Credit Rating Co., Moody's
Investors Service or Fitch IBCA.
o Fourth, the trustee cannot be an affiliate of any other member of the
"Restricted Group," which, in addition to the trustee, consists of:
o the underwriters,
o the depositor,
o the master servicer,
o the special servicer,
o any sub-servicer,
o any mortgagor with respect to a Mortgage Loan constituting more than
5% of the aggregate unamortized principal balance of the Mortgage
Loans as of the date of initial issuance of the senior certificates,
and
o any and all affiliates of any of the above persons.
o Fifth, the sum of all payments made to and retained by:
o the underwriters must represent not more than reasonable
compensation for underwriting the senior certificates;
o the depositor pursuant to the assignment of the Mortgage Loans to
the trust fund must represent not more than the fair market value of
those obligations; and
o the master servicer, the special servicer or any sub-servicer must
represent not more than reasonable compensation for that person's
services under the pooling and servicing agreement and reimbursement
of that person's reasonable expenses in connection therewith.
o Sixth, the investing Plan must be an accredited investor as defined in Rule
501(a)(1) of Regulation D under the Securities Act of 1933.
Because the senior certificates are not subordinated to any other class of
certificates, the second condition is satisfied for the senior certificates.
Since the senior certificates must be rated not lower than "AAA" by each of the
Rating Agencies, on the closing date, the third condition will be satisfied for
the senior certificates on the closing date. As the initial trustee is not an
affiliate of any other members of the restricted group, the fourth condition
will also be satisfied on the closing date. A Plan fiduciary contemplating
purchasing a senior certificate in the secondary market must determine that the
senior certificates continue to satisfy the third and fourth conditions on the
date of purchase. A Plan fiduciary contemplating the purchase of a senior
certificate must decide for itself whether the first, fifth and sixth conditions
will be satisfied.
Each of the individual prohibited transaction exemptions also requires that
the trust fund meet the following requirements:
o the trust fund must consist solely of assets of the type that have
been included in other investment pools;
o certificates in those other investment pools must have been rated in one of
the three highest categories of Standard & Poor's, Duff & Phelps, Moody's
or Fitch for at least one year prior to the Plan's acquisition of the
senior certificates; and
o certificates in those other investment pools must have been purchased by
investors other than Plans for at least one year prior to any Plan's
acquisition of senior certificates.
Moreover, the exemptions provide relief from certain self-dealing/conflict
of interest prohibited transactions that may occur when any person who has
discretionary authority or renders investment advice with respect to the
investment of plan assets causes a Plan to acquire senior certificates, provided
that, among other requirements:
o the person (or its affiliate) is an obligor with respect to 5% or
less of the fair market value of the obligations or receivables
contained in the trust;
o the Plan is not a plan with respect to which any member of the
Restricted Group is the "plan sponsor" (as defined in Section 3(16)(B)
of ERISA);
o in the case of an acquisition in connection with the initial issuance of a
class of senior certificates, at least 50% of that class is acquired by
persons independent of the Restricted Group and at least 50% of the
aggregate interest in the trust fund is acquired by persons independent of
the Restricted Group;
S-86
<PAGE>
o the Plan's investment in senior certificates does not exceed 25% of all
of the certificates of that class outstanding at the time of the
acquisition; and
o immediately after the acquisition, no more than 25% of the assets of the
Plan with respect to which the person has discretionary authority or
renders investment advice are invested in certificates representing an
interest in one or more trusts containing assets sold or serviced by the
same entity.
Finally, if certain specific conditions of the individual prohibited
transaction exemptions are satisfied, they may provide an exemption from the
restrictions imposed by Sections 406(a), 406(b) and 407(a) of ERISA, and the
taxes imposed by Sections 4975(a) and (b) of the Internal Revenue Code of 1986
by reason of Section 4975(c) of the Internal Revenue Code of 1986 for
transactions in connection with the servicing, management and operation of the
Mortgage Loans. The depositor expects that the specific conditions of the
exemptions required for this purpose will be satisfied with respect to the
senior certificates.
You should be aware, however, that even if the conditions specified in one
or more parts of the individual prohibited transaction exemptions are satisfied,
they may not cover all acts that may be considered prohibited transactions.
Before purchasing a senior certificate, a Plan fiduciary should itself
confirm that all of the conditions of the individual prohibited transaction
exemptions would be satisfied. The Plan fiduciary should also consider whether
any other prohibited transaction exemptions are available.
Other Exemptions
The characteristics of each class of the subordinate certificates do not
meet the requirements of the underwriters' individual prohibited transaction
exemptions. Accordingly, subordinate certificates may not be acquired by, on
behalf of or with assets of:
1. a Plan,
2. a governmental plan subject to any federal, state or local law that is, to
a material extent, similar to the provisions of ERISA or the Internal
Revenue Code of 1986 ("Other Plans"),
3. a collective investment fund in which Plans or Other Plans are invested, or
4. other persons acting on behalf of any Plan or Other Plans or using the
assets of any Plan or Other Plans or any entity whose underlying assets
include plan assets by reason of a Plan's or Other Plan's investment in the
entity (within the meaning of the Department of Labor regulations Section
2510.3-101).
Each prospective transferee of a definitive subordinate certificate must
deliver to the depositor, the certificate registrar and the trustee:
o a transferee representation letter, substantially in the form attached as
an exhibit to the pooling and servicing agreement, stating that the
prospective transferee is not a person referred to in clause 1, 2, 3, or 4
of the first paragraph of this section, or
o an opinion of counsel which establishes to the satisfaction of the
depositor, the trustee and the certificate registrar that the purchase or
holding of the certificate will not:
o constitute or result in a prohibited transaction within the meaning of
Section 406 or 407 of ERISA, Section 4975 of the Internal Revenue Code of
1986 or any similar law, and
o subject the master servicer, the special servicer, the depositor, the
trustee or the certificate registrar to any obligation or liability,
including obligations or liabilities under ERISA or Section 4975 of the
Internal Revenue Code of 1986.
If you purchase a beneficial interest in a book-entry subordinate certificate,
you will be deemed to have made the representation in the first bullet point
above.
The opinion of counsel will not be an expense of the trustee, the trust
fund, the master servicer, the special servicer, the certificate registrar or
the depositor.
Insurance Company Purchasers
Purchasers that are insurance companies should consult their legal advisers
with respect to the applicability of Section III of Prohibited Transaction Class
Exemption 95-60, regarding transactions by insurance company general accounts.
In addition, the Small Business Job Protection Act of 1996 added a new
Section 401(c) to ERISA, which provides certain exemptive relief from the
provisions of Part 4 of Title I of ERISA and Section 4975 of the Internal
Revenue Code of 1986,
S-87
<PAGE>
including the prohibited transaction restrictions imposed by ERISA and the
related excise taxes imposed by the Internal Revenue Code of 1986, for
transactions involving an insurance company general account. This exemption is
in addition to any exemption that may be available under Prohibited Transaction
Class Exemption 95-60 for the purchase and holding of offered certificates by an
insurance company general account.
Section 401(c) of ERISA required the Department of Labor to issue final
regulations no later than December 31, 1997. The Department of Labor issued
proposed regulations under Section 401(c) on December 22, 1997, but the required
final regulations have not been issued as of the date of this prospectus
supplement. The purpose of the 401(c) regulations is to provide guidance for the
purpose of determining which general account assets constitute plan assets, in
cases where insurance policies or annuity contracts supported by an insurer's
general account were issued to or for the benefit of a Plan on or before
December 31, 1998. Section 401(c) of ERISA generally provides that, until the
date that is 18 months after the 401(c) regulations become final, no person will
be subject to liability under Part 4 of Title I of ERISA and Section 4975 of the
Internal Revenue Code on the basis of a claim that the assets of an insurance
company general account constitute plan assets of any plan, unless:
o as otherwise provided by the Secretary of Labor in the 401(c)
regulations to prevent avoidance of the regulations, or
o an action is brought by the Secretary of Labor for certain breaches of
fiduciary duty which would also constitute a violation of federal or state
criminal law.
Any assets of an insurance company general account that support insurance
policies or annuity contracts issued to Plans:
o after December 31, 1998, or
o on or before December 31, 1998, for which the insurance company does
not comply with the 401(c) regulations,
may be treated as plan assets. In addition, because Section 401(c) does not
relate to insurance company separate accounts, separate account assets are still
treated as plan assets of any Plan invested in such separate account. Insurance
companies contemplating the investment of general account assets in the
certificates should consult their legal counsel with respect to the
applicability of Section 401(c) of ERISA.
LEGAL INVESTMENT
[The [class S, A-1A, A-1B and A-2] certificates will be "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984 ("SMMEA") so long as they are rated in one of the two highest rating
categories by at least one nationally recognized statistical rating
organization.] The [class A-3, A-4, B-1 and B-2] certificates will not be
"mortgage related securities" for purposes of SMMEA.
The appropriate characterization of the certificates under various legal
investment restrictions may be subject to significant interpretive
uncertainties. As a result, the depositor is unable to determine whether
investors subject to these restrictions may purchase the certificates. The
depositor makes no representations as to:
o the proper characterization of the offered certificates for legal
investment purposes, financial institution regulatory purposes or other
purposes, or
o the ability of particular investors to purchase the offered
certificates under applicable legal investment restrictions.
In addition, some states have enacted legislation overriding the legal
investment provisions of SMMEA.
All depository institutions considering investment in the offered
certificates should review the Federal Financial Institutions Examination
Council's Supervisory Policy Statement on the Selection of Securities Dealers
and Unsuitable Investment Practices (to the extent adopted by their respective
regulatory authorities), setting forth, in relevant part, certain investment
practices deemed to be unsuitable for an institution's investment portfolio, as
well as guidelines for investing in certain types of mortgage related
securities.
There may be other restrictions on the ability of certain investors to
purchase the offered certificates or to purchase offered certificates
representing more than a specified percentage of the
S-88
<PAGE>
investor's assets. All institutions whose investment activities are subject to
legal investment laws and regulations, regulatory capital requirements or review
by regulatory authorities should consult their own legal advisors in determining
whether and to what extent the certificates constitute a legal investment or are
subject to investment, capital or other restrictions.
S-89
<PAGE>
PLAN OF DISTRIBUTION
Subject to the underwriting agreement, each underwriter has agreed to
purchase the principal or notional amounts of offered certificates (expressed,
in the case of each class thereof, as a percentage of the total principal
balance or notional amount) set forth opposite its name below:
Underwriter [Class S Class A-1A Class A-1B Class A-2]
- ---------------------------- _____% ___% ___% ____%
PNC Capital Markets, Inc. - ___% ___% -
Total 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ======
Underwriter [Class A-3 Class A-4 Class B-1 Class B-2]
- ----------------------------% -----% ----% ---% -----%
PNC Capital Markets, Inc. - - - -
Total 100% 100% 100% 100%
The underwriting agreement provides that the obligation of the underwriters
to pay for and accept delivery of the offered certificates is subject to, among
other things, the receipt of certain legal opinions and to the conditions, among
others, that no stop order suspending the depositor's registration statement
shall be in effect, and that no proceeding for the purpose of obtaining a stop
order shall be pending before or threatened by the Securities and Exchange
Commission.
The underwriters have advised the depositor that they propose to offer the
offered certificates from time to time for sale in one or more negotiated
transactions or otherwise at prices to be determined at the time of sale. The
underwriters may effect such transactions by selling such classes of offered
certificates to or through dealers and such dealers may receive compensation in
the form of underwriting discounts, concessions or commissions from the
underwriters and/or from purchasers for whom they act as agent.
The offered certificates are offered by the underwriters when, as and if
issued by the depositor, delivered to and accepted by the underwriters and
subject to their right to reject orders in whole or in part.
It is expected that delivery of the offered certificates to the
underwriters will be made in book-entry form through the facilities of DTC
against payment therefor on or about ___________, 200_, which is the ____
business day following the date of pricing of the certificates. The underwriters
intend to settle with investors on __________, 200_. Under Rule 15c6-1 adopted
by the Securities and Exchange Commission under the Securities Exchange Act of
1934, trades in the secondary market generally are required to settle in three
business days, unless the parties to any trade expressly agree otherwise.
Accordingly, purchasers who wish to trade offered certificates in the secondary
market prior to such delivery should specify a longer settlement cycle, or
should refrain from specifying a shorter settlement cycle, if failing to do so
would result in a settlement date that is earlier than the delivery date of the
offered certificates.
The underwriters and any dealers that participate with the underwriters in
the distribution of the offered certificates may be deemed to be underwriters,
and any discounts or commissions received by them and any profit on the resale
of such classes of offered certificates by them may be deemed to be underwriting
discounts or commissions, under the Securities Act of 1933.
The depositor has agreed to indemnify the underwriters against civil
liabilities, including liabilities under the Securities Act of 1933 or
contribute to payments the underwriters may be required to make in respect
thereof.
The depositor also has been advised by _____________________ and PNC
Capital Markets, Inc., that they presently intend to make a market in the
offered certificates. They have no obligation to do so, however, and any market
making may be discontinued at any time.
If and to the extent required by applicable law or regulation, this
prospectus supplement and the prospectus may be used by PNC Capital Markets,
S-90
<PAGE>
Inc., in connection with market-making transactions in the Offered Certificates.
PNC Capital Markets, Inc., may act as principal or as agent in such
transactions. Sales may be made at negotiated prices determined at the time of
sale.
USE OF PROCEEDS
The depositor will use the net proceeds from the sale of the offered
certificates to pay part of the purchase price for the Mortgage Loans and to pay
the costs of structuring, issuing and underwriting the offered certificates.
LEGAL MATTERS
The legality of the offered certificates and the material federal income
tax consequences of investing in the offered certificates will be passed upon
for the depositor by Morrison & Hecker, L.L.P., Kansas City, Missouri. Certain
legal matters with respect to the offered certificates will be passed upon for
the underwriters by ________________.
RATINGS
It is a condition of the issuance of the offered certificates that they
receive the following credit ratings from _______________and
_____________________ (the "Rating Agencies"):
Class _____ _____
[Class S
Class A-1A
Class A-1B
Class A-2
Class A-3
Class A-4
Class B-1
Class B-2]
The ratings of the offered certificates address the likelihood of the
timely receipt by the holders of all payments of interest to which they are
entitled and the ultimate receipt by the holders of all payments of principal to
which they are entitled, if any, by the distribution date in __________ ____
(the "Rated Final Distribution Date"). This date is the distribution date
occurring three years after the end of the amortization term for the mortgage
loan with the longest remaining amortization term on the closing date. The
ratings take into consideration:
o the credit quality of the Mortgage Loans in the Mortgage Pool,
o structural and legal aspects associated with the certificates, and
o the extent to which the payment stream from the Mortgage Pool is
adequate to make the required payments on the certificates.
The ratings on the offered certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency.
The ratings of the certificates do not represent any assessment of:
o the tax attributes of the offered certificates or of the trust,
o the likelihood or frequency of principal prepayments on the Mortgage
Loans,
o the degree to which such prepayments might differ from those
originally anticipated,
o whether and to what extent prepayment premiums, Deferred Interest and
default interest will be received or Net Aggregate Prepayment Interest
Shortfalls will be realized,
S-91
<PAGE>
o the yield to maturity that investors may experience, or
o the possibility that the holders of the interest only certificates
might fail to recover their investment if prepayments are rapid,
including both voluntary and involuntary prepayments.
The ratings thus address credit risk and not prepayment risk.
As described in this prospectus supplement, the amounts payable on the
interest only certificates consist only of interest and prepayment premiums. If
all of the Mortgage Loans were to prepay in the initial month, then the interest
only certificateholders would receive only a single month's interest and suffer
a nearly complete loss of their investment despite having received all amounts
"due" under their certificates. This outcome is consistent with the ratings
received on the interest only certificates from ______________________ and
_______________. The total notional amount used to calculate interest on the
interest only certificates are reduced by allocations of Realized Losses,
Expense Losses and voluntary or involuntary principal prepayments. The ratings
do not address the timing or magnitude of reductions of such total notional
amount, but only the obligation to pay interest timely on whatever the proper
notional amount may be from time to time. Accordingly, potential purchasers of
the interest only certificates should evaluate the ratings of the interest only
certificates differently from similar ratings on other types of securities.
[Standard & Poor's assigns the additional symbol of "r" to highlight
classes of securities that Standard & Poor's believes may experience high
volatility or high variability in expected returns due to non-credit risks. The
absence of an "r" symbol should not be taken as an indication that a class will
exhibit no volatility or variability in total return.]
It is possible that a rating agency other than ______________________ and
_______________ could issue an unsolicited rating for one or more of the classes
of certificates. These unsolicited ratings could be lower than the ratings
issued and .
------------------------- -----------------------
S-92
<PAGE>
INDEX OF DEFINITIONS
Additional Trust Fund Expenses....................S-54
Advance Rate......................................S-68
Advances..........................................S-68
Anticipated Repayment Date........................S-32
Appraisal Reduction...............................S-52
Appraisal Reduction Estimate......................S-53
Appraisal Reduction Events".......................S-52
ARD...............................................S-32
Assumed Monthly Payment...........................S-51
Available Funds...................................S-49
Class Interest Shortfall..........................S-50
Collection Account................................S-68
Collection Period.................................S-49
Compensating Interest Payment.....................S-55
Constant Prepayment Rate..........................S-64
Controlling Class.................................S-78
Corrected Mortgage Loan...........................S-78
CPR...............................................S-64
Cross-Collateralized Loans........................S-31
Cut-off Date......................................S-30
Cut-off Date Loan-to-Value........................S-40
Cut-off Date LTV..................................S-40
Cut-off Date Principal Balance....................S-30
Debt Service Coverage Ratio.......................S-39
Defeasance Loans..................................S-34
Deferred Interest.................................S-32
Determination Date................................S-49
Discount Rate.....................................S-51
Distributable Certificate Interest................S-50
Distribution Account..............................S-69
DSCR..............................................S-39
ERISA.............................................S-84
Euroclear Operator................................S-59
Expense Losses....................................S-54
Hyper-Amortization Loans..........................S-32
Initial Interest Rate.............................S-32
Initial Pool Balance..............................S-30
Interest Reserve Account".........................S-69
Interest Reserve Amount...........................S-69
Interest Reserve Loans......................S-48, S-69
Lock-out Period...................................S-33
Maturity Assumptions..............................S-64
Maturity/ARD Balance..............................S-40
Maturity/ARD LTV..................................S-40
Maturity/ARD LTV Ratio............................S-40
Money Term........................................S-74
Monthly Payment...................................S-51
Mortgage..........................................S-30
Mortgage Loans....................................S-30
Mortgaged Property................................S-30
Mortgages.........................................S-30
Most Recent DSCR..................................S-39
Multiple Property Loans...........................S-31
Net Aggregate Prepayment Interest Shortfall.......S-55
Net Collections...................................S-78
Net Mortgage Rate.................................S-48
Net REO Proceeds..................................S-69
Other Plans.......................................S-87
P&I Advance.......................................S-67
Plan..............................................S-84
Prepayment Interest Excess........................S-54
Prepayment Interest Shortfall.....................S-55
Principal Distribution Amount.....................S-51
Principal Prepayments.............................S-49
Qualified Substitute Mortgage Loan................S-44
Rated Final Distribution Date.....................S-91
Rating Agencies...................................S-91
Realized Loss.....................................S-54
Record Date.......................................S-48
REMIC.............................................S-82
REO Account.......................................S-46
REO Mortgage Loan.................................S-52
REO Proceeds......................................S-69
REO Property......................................S-46
Repurchase Price..................................S-44
Reserve Accounts..................................S-36
Restricted Group..................................S-86
Revised Interest Rate.............................S-32
Scheduled Final Distribution Date.................S-55
Servicing Advances................................S-68
SMMEA.............................................S-88
Specially Serviced Mortgage Loan..................S-77
Stated Principal Balance..........................S-47
Treasury Rate.....................................S-52
Underwritable Cash Flow...........................S-39
Underwritable Debt Service Coverage Ratio.........S-39
Updated Appraisal.................................S-53
U/W DSCR..........................................S-39
Yield Maintenance Period..........................S-33
S-93
<PAGE>
EXHIBIT A-1
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES
See this Exhibit for tables titled:
Managers and Locations of the Mortgaged Properties
Descriptions of the Mortgaged Properties
Characteristics of the Mortgage Loans
Additional Mortgage Loan Information
Engineering Reserves and Recurring Replacement Reserves
Major Tenants of the Commercial Properties
Multifamily Schedule
A-1-1
<PAGE>
EXHIBIT A-2
MORTGAGE POOL INFORMATION
See this Exhibit for tables titled:
Mortgage Interest Rates
Cut-off Date Principal Balances
Original Amortization Terms
Original Terms to Stated Maturity
Remaining Amortization Terms
Remaining Terms to Stated Maturity
Years Built/Years Renovated
Occupancy Rates at Underwriting
U/W Debt Service Coverage Ratios
Cut-off Date Loan-to-Value Ratios
Mortgaged Properties by State
Mortgage Loans by Amortization Type
Mortgaged Properties by Property Type
Mortgaged Properties by Property Sub-Type
Prepayment Provision as of Cut-off Date
Prepayment Option
Mortgage Pool Prepayment Profile
A-2-2
<PAGE>
EXHIBIT B
SIGNIFICANT LOAN SUMMARIES
[To be provided]
B-1
<PAGE>
EXHIBIT C
FORM OF TRUSTEE REPORT
[To be provided]
C-1
<PAGE>
EXHIBIT D
D-1
<PAGE>
EXHIBIT E
E-1
<PAGE>
EXHIBIT F
SUMMARY TERM SHEET
[To be provided]
F-1
<PAGE>
The attached diskette contains one spreadsheet file (the "spreadsheet file")
that can be put on a user-specified hard drive or network drive. This file is
"PNC______.XLS". The file "PNC_______.XLS" is a Microsoft Excel(1), Version 5.0
spreadsheet. The file provides, in electronic format, certain statistical
information that appears under the caption "Description of the Mortgage Pool"
in, and on Exhibits A-1 and A-2 to, this prospectus supplement. Defined terms
used, but not otherwise defined, in the spreadsheet file will have the
respective meanings assigned to them in this prospectus supplement. All the
information contained in the spreadsheet file is subject to the same limitations
and qualifications contained in this prospectus supplement. Prospective
investors are strongly urged to read this prospectus supplement and accompanying
prospectus in its entirety prior to accessing the spreadsheet file.
- ----------------
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
===========================================================================
TABLE OF CONTENTS
Page
Prospectus Supplement
Important Notice About Information Presented
in this Prospectus Supplement and the
Accompanying Prospectus.......................S-2
Summary..........................................S-4
Risk Factors.....................................S-13
Description of the Mortgage Pool.................S-30
Master Servicer and Special Servicer.............S-45
Description of the Certificates..................S-46
Yield and Maturity Considerations................S-60
The Pooling and Servicing Agreement..............S-65
Material Federal Income Tax Consequences.........S-82
ERISA Considerations.............................S-84
Legal Investment.................................S-88
Plan of Distribution.............................S-90
Use of Proceeds..................................S-91
Legal Matters....................................S-91
Ratings..........................................S-91
Index of Definitions.............................S-93
Exhibit A-1--Certain Characteristics of the
Mortgage Loans and Mortgaged Properties....A-1-1
Exhibit A-2--Mortgage Pool Information..........A-2-1
Exhibit B--Significant Loan Summaries........... B-1
Exhibit C--Form of Trustee Report.................C-1
Exhibit D--Decrement Tables for the Certificates
of the [Class A-1A, A-1B, A-2, A-3, A-4,
B-1 and B-2 Certificates]....................D-1
Exhibit E--Price/Yield Tables for the Class S
Certificates.................................E-1
Exhibit F--Summary Term Sheet.....................F-1
Prospectus
Important Notice About The Information
Presented in this Prospectus....................1
Summary of Prospectus................................1
Risk Factors.........................................6
Description of the Trust Assets.....................29
Yield and Maturity Considerations...................34
PNC Mortgage Acceptance Corp........................38
Description of the Certificates.....................38
Description of the Governing Documents..............44
Description of Credit Support.......................51
Certain Legal Aspects of Mortgage Loans.............53
Federal Income Tax Consequences.....................62
State and Other Tax Consequences....................92
Legal Investment....................................96
Use of Proceeds.....................................97
Method of Distribution..............................98
Legal Matters.......................................99
Financial Information...............................99
Rating..............................................99
Where You Can Find More Information.................99
===========================================================================
===========================================================================
$--------------------
(Approximate)
PNC Mortgage Acceptance Corp.
(Depositor)
Midland Loan Services, Inc.
and
--------------------
(Mortgage Loan Sellers)
[Class S, Class A-1A, Class A-1B, Class A-2, Class A-3,
Class A-4, Class B-1 and Class B-2]
Commercial Mortgage Pass-Through Certificates,
Series ____-___
- ---------------------------------------------------------------------------
PROSPECTUS SUPPLEMENT
- ---------------------------------------------------------------------------
_____[Underwriter]____________
PNC Capital Markets, Inc.
_________________, 20__
===========================================================================
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, Dated January 24, 2000
PROSPECTUS SUPPLEMENT
(To Prospectus dated _________, 2000)
$678,669,000 (Approximate)
PNC Mortgage Acceptance Corp.
as Depositor
Midland Loan Services, Inc. and Column Financial, Inc.
as Mortgage Loan Sellers
and
Midland Loan Services, Inc.
as Master Servicer and Special Servicer
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-CM1
-------------------------
PNC Mortgage Acceptance Corp. is offering eight classes of its series
1999-CM1 commercial mortgage pass-through certificates, which represent
beneficial ownership interests in a trust. The trust's assets will primarily be
207 loans secured by first liens on 212 commercial and multifamily residential
properties. The offered certificates are not obligations of PNC Mortgage
Acceptance Corp. or any of its affiliates. No governmental agency or any other
person will insure or guaranty the certificates or the underlying mortgage
loans.
PNC Mortgage Acceptance Corp. will not list the offered certificates on
any national securities exchange or on any automated quotation system of any
registered securities association such as NASDAQ.
Investing in the certificates involves risks. See "Risk Factors" beginning
on page S-13 of this prospectus supplement and page 6 of the prospectus.
The following classes of the series 1999-CM1 certificates are being
offered by this prospectus supplement:
<TABLE>
<CAPTION>
Initial
Principal Approximate Description of
Balance or Pass-Through Pass-Through Scheduled Final Raings
Class Notional Amount Rate Rate Distribution Date S&P/Fitch
----- --------------- ---- ---- ----------------- ---------
<S> <C> <C> <C> <C> <C>
Class S....... $760,414,266 0.8340% Variable IO January 2020 AAAr/AAA
Class A-1A.... $123,351,000 7.1100% Fixed July 2008 AAA/AAA
Class A-1B.... $433,652,000 7.3300% WAC Cap October 2009 AAA/AAA
Class A-2..... $ 39,922,000 7.5100% WAC Cap November 2009 AA/AA
Class A-3..... $ 34,218,000 7.6600% WAC Cap November 2009 A/A
Class A-4..... $ 13,308,000 7.8500% WAC Cap November 2009 A-/A-
Class B-1 .... $ 24,713,000 8.1610% WAC November 2009 BBB/BBB
Class B-2..... $ 9,505,000 8.1610% WAC November 2009 BBB-/BBB-
</TABLE>
The Securities and Exchange Commission and state securities regulators
have not approved or disapproved the offered certificates or determined if this
prospectus supplement and the accompanying prospectus are truthful and complete.
It is unlawful to represent otherwise.
This prospectus is to be used by PNC Capital Markets, Inc. in connection
with offers and sales of the offered certificates in market-making
transactions at negotiated prices related to prevailing market prices at the
time of sale. PNC Capital Markets, Inc. may act as principal or as agent in
such transactions. PNC Mortgage Acceptance Corp. will receive no portion of
the proceeds of the sales of such offered certificates and will bear the
expenses incident to the registration thereof. If PNC Capital Markets, Inc.
conducts any market-making activities, it may be required to deliver a
"market-making prospectus" when effecting offers and sales in the offered
certificates because of the affiliation of PNC Mortgage Acceptance Corp. and
Midland Loan Services, Inc. with PNC Capital Markets, Inc. For as long as a
market-making prospectus is required to be delivered, the ability of PNC
Capital Markets, Inc. to make a market in the offered certificates may, in
part, be dependent on the ability of the trust to maintain a current
market-making prospectus.
The date of this Prospectus Supplement is ________________, 2000
<PAGE>
Important Notice about Information Presented in this Prospectus Supplement
and the Accompanying Prospectus
We provide information to you about the offered certificates in two
separate documents that progressively provide more detail:
o the accompanying prospectus, which provides general information, some of
which may not apply to the offered certificates, and
o this prospectus supplement, which describes the specific terms of the
offered certificates.
You should read both this prospectus supplement and the prospectus before
investing in any of the offered certificates.
You should rely only on the information contained in this prospectus
supplement and accompanying prospectus. If the descriptions of the offered
certificates in the prospectus and in this prospectus supplement vary, you
should rely on the information in this prospectus supplement.
We include cross-references in this prospectus supplement and the
prospectus to captions in these materials where you can find further related
discussions. Unless we tell you otherwise, all references to captions are to
sections of this prospectus supplement. The table of contents on page S-93
provides the page numbers on which these captions are located.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement and the prospectus are defined under the caption "Index of
Definitions" on page S-__ in this prospectus supplement and under the caption
"Index of Definitions" beginning on page __ in the prospectus.
Limitations on Offers or Solicitations
We do not intend this document to be an offer or solicitation:
o if used in a jurisdiction in which such offer or solicitation is not
authorized;
o if the person making such offer or solicitation is not qualified to do so;
or
o if such offer or solicitation is made to anyone to whom it is unlawful to
make such offer or solicitation.
You should rely only on the information contained in this document, the
accompanying prospectus and the related registration statement. We have not
authorized anyone to provide you with information that is different. This
document may only be used where it is legal to sell these securities. The
information in this document may only be accurate as of the date of this
document.
S-2
<PAGE>
TABLE OF CONTENTS
SUMMARY....................................S-4
RISK FACTORS..............................S-14
DESCRIPTION OF THE MORTGAGE POOL..........S-31
General................................S-31
Security for the Mortgage Loans........S-31
Underwriting Standards.................S-32
Certain Terms and Conditions of
the Mortgage Loans.....................S-33
Certain Characteristics of the
Mortgage Pool..........................S-37
Other Information......................S-39
The Sellers............................S-43
Changes in Mortgage Pool
Characteristics........................S-44
Representations and Warranties;
Repurchase.............................S-44
MASTER SERVICER AND SPECIAL SERVICE.......S-47
DESCRIPTION OF THE CERTIFICATES...........S-48
General................................S-48
Principal Balances and Notional
Amounts................................S-48
Pass-Through Rates.....................S-49
Distributions..........................S-50
Treatment of REO Properties............S-53
Appraisal Reductions of Loan
Balances...............................S-54
Application of Realized Losses
and Expense Losses to Principal
Balances...............................S-55
Prepayment Interest Excesses and
Shortfalls.............................S-56
Scheduled Final Distribution Date......S-57
Subordination..........................S-57
Optional Termination...................S-58
Voting Rights..........................S-58
Delivery, Form and Denomination........S-58
Registration and Transfer of
Definitive Certificates................S-61
YIELD AND MATURITY CONSIDERATIONS.........S-62
Rate and Timing of Principal
Payments...............................S-61
Yield Sensitivity of the Interest
Only Certificates......................S-65
Weighted Average Life..................S-66
THE POOLING AND SERVICING AGREEMENT.......S-67
Assignment of the Mortgage Loans.......S-67
Servicing of the Mortgage Loans;
Collection of Payments.................S-68
Collection Activities..................S-69
Advances...............................S-69
Accounts...............................S-70
Enforcement of "Due-on-Sale"
Clauses................................S-72
Enforcement of "Due-on-Encumbrance
"Clauses...............................S-72
Inspections............................S-73
Realization Upon Mortgage Loans........S-74
Amendments, Modifications and
Waivers................................S-76
The Trustee............................S-76
Servicing Compensation and Payment
of Expenses............................S-78
Special Servicing......................S-78
The Controlling Class
Representative.........................S-80
Sub-Servicers..........................S-82
Reports to Certificateholders;
Where You Can Find More
Information............................S-82
MATERIAL FEDERAL INCOME TAX
CONSEQUENCES..............................S-84
CERTAIN LEGAL ASPECTS OF MORTGAGE
LOANS LOCATED IN CALIFORNIA AND
TEXAS.....................................S-86
California.............................S-85
Texas..................................S-86
ERISA CONSIDERATIONS......................S-87
Plan Asset Regulation..................S-87
Individual Exemption...................S-88
Other Exemptions.......................S-89
Insurance Company Purchasers...........S-90
LEGAL INVESTMENT..........................S-91
PLAN OF DISTRIBUTION......................S-92
USE OF PROCEEDS...........................S-92
LEGAL MATTERS.............................S-92
RATINGS...................................S-92
INDEX OF DEFINITIONS......................S-94
EXHIBIT A-1 - Certain Characteristics
of the Mortgage Loans and Mortgaged
Properties................................A-1-1
EXHIBIT A-2 - Mortgage Pool
Information...............................A-2-1
EXHIBIT B - Significant Loan
Summaries.................................B-1
EXHIBIT C - Form of Trustee Report........C-1
EXHIBIT D - Decrement Tables for the
Class A-1A, Class A-1B, Class A-2, Class
A-3, Class A-4, Class B-1 and Class B-2
Certificates..............................D-1
EXHIBIT E - Price/Yield Tables for the
Class S Certificates......................E-1
EXHIBIT F - Summary Term Sheet............F-1
S-3
<PAGE>
SUMMARY
o This summary highlights selected information from this prospectus
supplement and does not contain all of the information that you need to
consider in making your investment decision. To understand the terms of the
offered certificates you must carefully read this entire document and the
accompanying prospectus.
o This summary provides an overview of certain calculations, cash flows and
other information to aid your understanding and is qualified by the full
description of these calculations, cash flows and other information in this
prospectus supplement and the accompanying prospectus.
o We provide information on the privately offered certificates in this
prospectus supplement only to enhance your understanding of the offered
certificates.
<TABLE>
<CAPTION>
Initial
Principal Approximate Approximate Weighted
Balance Percent of Percent of Average Principal Description of Approximate
or Notional Rating by Initial Pool Credit Life Window Pass-Through Initial Pass-
Class Amount S&P/Fitch Balance Support (Years) (Months/Year) Rate Through Rate
----- ------ --------- ------- ------- ------- ------------- ---- ------------
Senior Certificates
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S $760,414,266 AAAr/AAA N/A N/A 9.1 N/A Variable IO 0.8340%
A-1A $123,351,000 AAA/AAA 16.22% 26.75% 5.7 1/00-7/08 Fixed 7.1100%
A-1B $433,652,000 AAA/AAA 57.03% 26.75% 9.6 7/08-10/09 WAC Cap 7.3300%
Subordinate Certificates
A-2 $ 39,922,000 AA/AA 5.25% 21.50% 9.9 10/09-11/09 WAC Cap 7.5100%
A-3 $ 34,218,000 A/A 4.50% 17.00% 9.9 11/09-11/09 WAC Cap 7.6600%
A-4 $ 13,308,000 A-/A- 1.75% 15.25% 9.9 11/09-11/09 WAC Cap 7.8500%
B-1 $ 24,713,000 BBB/BBB 3.25% 12.00% 9.9 11/09-11/09 WAC 8.1610%
B-2 $ 9,505,000 BBB-/BBB- 1.25% 10.75% 9.9 11/09-11/09 WAC 8.1610%
B-3 to D $ 81,745,266 --- 10.75% --- --- --- --- ---
</TABLE>
[ ] Offered certificates. [ ] These certificates are not offered by
thisprospectus supplement. They
constitute "privately offered
certificates".
The total initial principal balances and notional amounts for the certificates
may vary by up to 5%.
The column entitled "Principal Window" lists the months during which
certificateholders would receive distributions of principal. The weighted
average life and principal window figures are based on the maturity assumptions
described under "Yield and Maturity Considerations" assuming no prepayments and
that the hyper-amoritization loans pay on their anticipated repayment dates.
The percentages indicated under the column "Approximate Percent of Credit
Support" with respect to the class A-1A and class A-1B certificates represent
the approximate credit support for the class A-1A and class A-1B certificates in
the aggregate.
The notional amount for the class S certificates will generally be equal to the
total principal balance of the other classes of certificates identified in the
table above.
"Variable IO" refers to a variable pass-through rate that is equal to the
excess, if any, of (1) a weighted average coupon derived from net interest rates
on the loans that will back the certificates, over (2) a weighted average of the
pass-through rates in respect of each of the other classes of certificates
identified in the table above.
"WAC Cap" refers to a variable pass-through rate that is equal to the lesser of
(1) the initial pass-through rate for the subject class of certificates and (2)
a weighted average coupon derived from net interest rates on the loans that will
back the certificates.
"WAC" refers to a variable pass-through rate that is equal to a weighted average
coupon derived from net interest rates on the loans that will back the
certificates.
The privately offered certificates will also include the following classes of
certificates that are not shown above: class E, class R-I, class R-II and class
R-III. These other privately offered certificates do not have principal
balances, notional amounts or pass-through rates. They do not provide any
material credit support for the offered certificates.
S-4
<PAGE>
Relevant Parties and Dates
Depositor
PNC Mortgage Acceptance Corp., a wholly-owned subsidiary of Midland Loan
Services, Inc. PNC Mortgage Acceptance Corp.'s principal offices are located at
210 West 10th Street, 6th Floor, Kansas City, Missouri, 64105, telephone number
(816) 435-5000. See "PNC Mortgage Acceptance Corporation" in the prospectus.
Sellers
Midland Loan Services, Inc., a wholly owned subsidiary of PNC Bank, N.A.,
is selling 143 loans (55.6%). Midland is an affiliate of PNC Capital Markets,
Inc.
Column Financial, Inc., an affiliate of Donaldson, Lufkin & Jenrette
Securities Corporation, is selling 64 loans (44.4%).
Underwriters
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets,
Inc. and Prudential Securities Incorporated. Donaldson, Lufkin & Jenrette is the
lead manager and sole bookrunner for this offering. PNC Capital Markets and
Prudential Securities are co-managers.
Master Servicer and Special Servicer
Midland Loan Services, Inc. or any successor master servicer or special
servicer. See "Master Servicer and Special Servicer".
Trustee
Norwest Bank Minnesota, National Association. See "The Pooling and
Servicing Agreement--The Trustee".
Controlling Class
The most subordinate class of principal balance certificates that has at
least 25% of its initial principal balance still outstanding. If no class has at
least 25% of its initial principal balance still outstanding, the most
subordinate class of principal balance certificates still outstanding will be
the controlling class.
Controlling Class Representative
The holder of a majority of the controlling class may appoint a
representative. The special servicer must notify the controlling class
representative before it takes certain actions and must obtain the controlling
class representative's approval on certain matters. The controlling class
representative may replace the special servicer without cause. See "The Pooling
and Servicing Agreement--General" and "--The Controlling Class Representative".
Significant Dates
Cut-off Date
December 1, 1999.
Closing Date
On or about December 2, 1999.
Distribution Date
Payments on the offered certificates are scheduled to occur monthly,
commencing in January 2000. The distribution date for each month will be the
later of:
o the 10th calendar day of that month, or if that day is not a business day,
then the next business day, and
o the fourth business day after the determination date for the month.
Scheduled Final Distribution Date
The distribution date on which a class's principal balance or notional
amount would become zero if there are:
o no defaults or delinquencies,
o no prepayments of any kind, except that it is assumed that
hyper-amortization loans will pay on their anticipated repayment dates; and
S-5
<PAGE>
o no modifications or extensions of any loans.
Please note that it is very unlikely that these assumptions will hold
true. See "Description of the Certificates--Scheduled Final Distribution Date".
Rated Final Distribution Date
The distribution date in December 2032, which is the distribution date
occurring three years after the end of the amortization term of the loan with
the longest remaining amortization term on the closing date. See "Ratings".
Record Date
For each distribution date, the close of business on the last business day
of the prior calendar month.
Interest Accrual Period
For each distribution date, the prior calendar month.
Collection Period
For each distribution date, the period beginning the day after the
determination date in the preceding month and ending on the related
determination date. For the first distribution date, the collection period
begins the day after the cut-off date.
Determination Date
For each distribution date, the fourth calendar day of the month or, if
that day is not a business day, the first business day before that day.
Due Date
The date scheduled payments come due under each mortgage loan
(disregarding grace periods). The due date for all the mortgage loans is the
first day of the month.
Information About the Certificates
Offered Certificates
We are offering the following classes of PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates, Series 1999-CM1.
Class S
Class A-1A
Class A-1B
Class A-2
Class A-3
Class A-4
Class B-1
Class B-2
We have not registered the other classes of certificates under the
Securities Act of 1933 and are not offering them to you.
The approximate initial class principal balance, initial pass-through rate
and interest type of each class of the offered certificates will be as listed on
the chart on page S-4.
Certificate Designations
In this prospectus supplement, we will refer to the following groups of
certificates by the indicated designations:
Designation Related Classes
- ----------- ---------------
Offered certificates Classes S, A-1A, A-1B, A-2, A-3, A-4, B-1 and B-2
Privately offered Classes B-3, B-4, B-5, B-6, B-7, B-8, C, D, E, R-I,
certificates R-II and R-III
Senior certificates Classes S, A-1A and A-1B
Principal balance Classes A-1A, A-1B, A-2, A-3, A-4, B-1, B-2, B-3,
certificates B-4, B-5, B-6, B-7, B-8, C and D
Interest only Class S
certificates
Subordinate Classes A-2, A-3, A-4, B-1, B-2, B-3, B-4, B-5, B-6,
certificates B-7, B-8, C and D
Deferred interest Class E
certificates
Residual certificates Classes R-I, R-II and R-III
S-6
<PAGE>
Accrual of Interest
Each class of offered certificates will bear interest. In each case, that
interest will accrue during each interest accrual period based upon--
o the pass-through rate applicable for the particular class for that interest
accrual period,
o the aggregate principal balance or notional amount, as the case may be, of
the particular class outstanding immediately prior to the related
distribution date, and
o the assumption that each year consists of 12 30-day months.
Distributions
Distributions to Senior Certificates
On each distribution date, funds available for distribution from the
mortgage loans, net of prepayment premiums and deferred interest, will be
distributed to the holders of the senior certificates in the following order:
Interest on Senior Certificates: to pay interest to the holders of the
senior certificates in an amount equal to their interest entitlement.
Principal on Class A-1A and Class A-1B Certificates: to pay principal from
the funds available for principal distributions to the holders of the class A-1A
and class A-1B certificates, in that order, until reduced to zero. If the
principal amount of each class of principal balance certificates other than
class A-1A and class A-1B certificates has been reduced to zero, funds available
for principal distributions will be distributed to the holders of the class A-1A
and class A-1B certificates, pro rata, rather than sequentially.
Reimbursement of Class A-1A and Class A-1B Losses: to reimburse the
holders of the class A-1A and class A-1B certificates, pro rata, for any losses
on the mortgage loans that resulted in an unreimbursed reduction of the
principal balances of such certificates, plus interest on such amounts.
Distributions to Subordinate Certificates
On each distribution date, following the above distributions on the senior
certificates, the trustee will distribute the remaining portion of the funds
available for distribution to the holders of each class of subordinate
certificates in alphabetical and numerical order of class designation. In the
case of each class of subordinate certificates, those payments will be as
follows:
o first, distributions of interest in an amount equal to the class' interest
entitlement;
o second, to pay principal from the funds available for principal
distributions, if the principal balance of the class A-1A and class A-1B
certificates and each other class of subordinate certificates, if any, with
an earlier alphabetical and numerical class designation, has been reduced
to zero; and
o third, to reimburse the class for any losses on the mortgage loans that
resulted in an unreimbursed reduction of the principal balance of such
class of certificates, plus interest on such amounts.
Each class of subordinate certificates will receive distributions only
after all required distributions have been made on the senior certificates and
each other class of subordinate certificates, if any, with an earlier
alphabetical and numerical class designation.
In this prospectus supplement, "alphabetical and numerical order" is
determined first by alphabetical order, and then if the alphabetical
designations are the same, by numerical order.
Distribution of Prepayment Premiums
Any prepayment premium collected on a mortgage loan during a collection
period will be distributed to the holders of the offered certificates on the
next distribution date as set forth in "Description of the
Certificates--Distributions--Distributions of Prepayment Premiums".
Subordination
The rights of the subordinate certificates to receive payments of
principal and interest will be subordinated to the rights of the senior
certificates. Each class of subordinate certificates is also subordinate to the
rights of holders of each other class of subordinate certificates with an
earlier alphabetical and numerical class designation.
Such subordination results from:
o applying the funds available from the loans in the order described above;
and
o allocating losses on the loans and certain default-related and
unanticipated expenses of the trust to
S-7
<PAGE>
the certificates in reverse order of their alphabetical and numerical class
designations.
After the balances of all subordinate certificates have been reduced to
zero, losses are allocated to the class A-1A and A-1B certificates in proportion
to their class principal balances.
The class S certificates receive no such allocations but do incur
reductions of their notional amount whenever the principal balance is reduced on
any class.
The certificates have no other form of credit enhancement.
Prepayment Interest Shortfalls and Excesses
If a borrower prepays a loan before the determination date in any calendar
month and pays interest which accrued on the prepayment from the beginning of
the calendar month, then that interest, net of master servicer fees, is a
"prepayment interest excess".
If a borrower prepays a loan after the determination date in a calendar
month and does not pay interest on the prepayment through the end of the
calendar month, then this interest shortfall, net of master servicer fees, is a
"prepayment interest shortfall".
Prepayment interest excesses collected during a collection period will
first offset prepayment interest shortfalls during the collection period. The
master servicer retains any remaining amount as additional servicing
compensation. The master servicer must cover prepayment interest shortfalls not
offset by prepayment interest excesses from its own funds up to certain maximum
amounts.
If and to the extent there are prepayment interest shortfalls not offset
by prepayment interest excesses or covered by the master servicer from its own
funds, then those prepayment interest shortfalls will be allocated among the
certificates in proportion to the interest accrued on each certificate during
the corresponding interest accrual period. Such net interest shortfalls
allocated to a class will reduce the distributable certificate interest on the
class. See "The Pooling and Servicing Agreement--Servicing Compensation and
Payment of Expenses".
Advances
The master servicer must make advances for delinquent payments of
principal (except for delinquent balloon payments) and/or interest on the loans
and to cover certain servicing expenses.
If the master servicer fails to make a required advance and the trustee is
aware of the failure, the trustee must make it.
Advances are required only if the advancing party determines in its
reasonable discretion that they are ultimately recoverable from future
collections on the related loan or mortgaged property.
All advances will accrue interest at the "prime rate".
To the extent not offset by collected late payment charges on the related
loan or default interest on any loan, payments of advance interest will reduce
the cash available to pay interest on the most subordinate class of certificates
then outstanding. See "The Pooling and Servicing Agreement--Advances".
Appraisal Reductions
If certain adverse events or circumstances occur or exist with respect to
a loan or the related mortgaged property, the master servicer or the special
servicer must obtain a new appraisal of the mortgaged property. If the principal
balance of the loan, plus certain other amounts due under the loan, is more than
90% of the new appraised value plus the amount of any escrows or reserves for
the loan that are not related to taxes or insurance, the amount of interest that
the master servicer is required to advance will be reduced. Due to the payment
priorities, this reduction in advances will reduce the cash available to pay
interest on the most subordinate class of certificates then outstanding. See
"Description of the Certificates--Appraisal Reductions."
Information About the Mortgage Loans
The certificates will represent beneficial ownership interests in a trust
fund created by the depositor. The trust fund will consist primarily of a pool
of 207 fixed-rate loans with a total cut-off date principal balance of
approximately $760,414,266, plus or minus 5%. We frequently refer to the total
cut-off date principal balance of the loans as the "initial pool balance".
S-8
<PAGE>
We include in this prospectus supplement a variety of information
regarding the loans and mortgaged properties. In reviewing this information, you
should be aware that:
o All numerical information provided with respect to the loans is provided on
an approximate basis.
o All weighted average information provided with respect to the loans or any
sub-group of loans reflects the weighting of those loans by their
respective cut-off date principal balances. The "cut-off date principal
balance" of any loan is its unpaid principal balance on December 1, 1999,
after application of all payments of principal due with respect to the loan
on or before that date, whether or not those payments are received.
o In the presenting the cut-off date principal balances of the loans, we have
assumed that:
(i) all scheduled payments of principal and/or interest due on the loans
on or before December 1, 1999 are timely made, and,
(ii) there are no prepayments or other unscheduled collections of principal
with respect to any of the loans during the period from November 1,
1999 up to and including December 1, 1999.
o When information with respect to the loans or the properties is expressed
as a percentage, the percentage is based upon the cut-off date principal
balances of the related loans and not the number of loans.
o Some of the loans provide that they are cross-collateralized and
cross-defaulted with one or more other loans. Except as otherwise
indicated, when a loan is cross-collateralized and cross-defaulted with
another loan, we have presented the information regarding those loans as if
each of them was secured only by a lien on the corresponding property
identified on Exhibit A-1 to this prospectus supplement. One such exception
is that each and every loan in any particular group of cross-collateralized
and cross-defaulted loans is treated as having the combined loan-to-value
ratio and the combined debt service coverage ratio for that entire group.
None of the loans is cross-collateralized with any loan that will not be
included in the trust.
o In making the count of loans in the trust fund, any single loan evidenced
by one or more notes and secured by mortgages over multiple properties was
counted as one loan. In some cases, for purposes of providing certain
property-specific information with respect to such multiple property loans
we have allocated each such loan among its related properties based upon:
(i) relative appraised values;
(ii) relative underwritable cash flow; or
(iii) prior allocations reflected in the related loan documents.
The loan-to-value ratios and debt service coverage ratios shown for each of
the separate properties securing a multiple property loan are the ratios
for that loan based upon all of those properties.
o In some cases, when multiple parcels of property secure a single
indebtedness, we have treated those parcels as a single "property" because
of their proximity to each other, the interrelationship of their operations
or for other reasons deemed appropriate by us.
o Whenever we refer to a particular property by name, we mean the property
identified by that name on Exhibit A-1 to this prospectus supplement.
o Statistical information regarding the loans may change prior to the date of
initial issuance of the certificates due to changes in the composition of
the mortgage pool prior to that date.
A first lien on a fee simple or leasehold estate in a mortgaged property
secures each loan.
o Fee - 206 properties (97.8%).
o Leasehold - 4 properties (1.3%).
o Fee/Leasehold - 2 properties (0.9%).
The mortgage pool includes 5 separate sets of cross-collateralized loans.
The largest of these sets is 1.2% of the initial pool balance.
You should consider all of the loans to be non-recourse. You should also
consider them not to be insured or guaranteed by any person or entity.
One hundred ninety-two loans (89.7%) are "balloon loans" that are expected
to have more than 10% of their original principal balance remaining unpaid at
their maturity date.
Ten of the loans (9.3%) are hyper-amortization loans and provide for an
increase in
S-9
<PAGE>
their interest rate and/or principal amortization prior to maturity.
Five Mortgage Loans (1.0%) have remaining amortization terms that are
substantially the same as their remaining terms to maturity.
The loans generally grant the related borrower a right to transfer its
loan under certain conditions, including the lender's prior consent. Some of the
loans may provide that the lender cannot unreasonably withhold its consent to
the proposed transferee.
Property types included in the mortgage pool include:
o multifamily - 84 properties (38.9%).
o retail - 43 properties (26.5%).
o office - 37 properties (17.7%).
o industrial - 17 properties (5.2%).
o hospitality - 6 properties (4.2%).
o mixed use - 7 properties (3.4%).
o manufactured housing - 6 properties (2.4%).
o self storage - 11 properties (1.4%).
o credit tenant lease - 1 property (0.3%).
Properties located in each of California and Texas secure at least 10% of
the initial pool balance. Also, properties located in each of New York, Florida,
Michigan, Oklahoma and Massachusetts secure at least 5%, but less than 10%, of
the initial pool balance. None of the remaining 28 jurisdictions has mortgaged
properties securing 5% or more of the initial pool balance.
No set of loans to a single borrower or to a single group of affiliated
borrowers constitutes more than 6.0% of the initial pool balance.
Forty-four properties (16.4%) are at least 50% occupied by a major tenant
or the borrower.
One hundred fifty-three loans (75.0%) permit the borrower to defease its
loan, subject to certain conditions.
Other than loans allowing defeasance, the loans generally permit voluntary
prepayments after any lock-out period if a prepayment premium is also paid.
Prepayment premiums are generally calculated based on a yield maintenance
formula or a specified percentage of the amount prepaid. The prepayment premium
percentage will remain constant over time. The tables included in Exhibit A-2
analyze the percentage of the declining balance of the mortgage pool that will
be within a lock-out period or in which principal prepayments must be
accompanied by the indicated prepayment premium, for each of the time periods
indicated.
As of the cut-off date, the loans have the following characteristics:
o mortgage rates range from 6.320% to 9.280% per annum, with a weighted
average mortgage rate of 7.982% per annum;
o remaining terms to stated maturity range from 38 months to 241 months, with
a weighted average remaining term to stated maturity of 116 months;
o cut-off date principal balances range from $399,636 to $44,973,184, with an
average cut-off date principal balance of $3,673,499;
o a weighted average underwritable debt service coverage ratio of 1.32x (see
"Description of the Mortgage Pool--Other Information"); and
o a weighted average cut-off date loan-to-value ratio of 72.6% (see
"Description of the Mortgage Pool--Other Information").
Any weighted average loan-to-value and debt service coverage ratio
calculations in this prospectus supplement exclude the 1 loan (0.3%) secured by
a mortgaged property subject to a credit tenant lease.
The characteristics of the loans are more fully described under
"Description of the Mortgage Pool" and in the Exhibits.
Yield and Prepayment Considerations
The yield on an offered certificate will depend on many factors,
including:
o the pass-through rate for the certificate in effect from time to time;
o whether the certificate is purchased at a discount or premium;
o the timing of principal distributions that reduce the principal balance or
notional amount of the certificate;
o appraisal reductions;
o expense losses; and
S-10
<PAGE>
o realized losses.
See "Description of the Certificates--Distributions--Application of
Available Funds" and "--Distributions--Principal Distribution Amount".
We cannot predict the actual rate of principal prepayments. You should
independently estimate prepayment rates to use in evaluating an investment in
the offered certificates. See "Yield and Maturity Considerations".
A different rate of principal payments than you anticipate will cause the
actual yield to vary, perhaps significantly, from your expected yield.
You may be unable to reinvest principal distributions in an alternative
investment with a comparable yield.
The class S certificates are interest-only certificates and receive no
distributions of principal. The yield to maturity of class S certificates will
be very sensitive to the prepayment, repurchase, extension, default and recovery
experience on the mortgage loans. These may fluctuate significantly from time to
time. A rate of principal payments, liquidations, unreimbursed expense or losses
on the mortgage loans that is more rapid than you expect will significantly
reduce your expected yield to maturity on these certificates. See "Yield and
Maturity Considerations--Yield Sensitivity of the Interest Only Certificates".
Additional Information About the Certificates
Tax Status of the Certificates
An election will be made to treat the trust as three separate "real estate
mortgage investment conduits" - REMIC I, REMIC II and REMIC III - for federal
income tax purposes. In the opinion of counsel, the trust will qualify for this
treatment.
Pertinent federal income tax consequences of an investment in the offered
certificates include:
o Each class of offered certificates will constitute a "regular interest" in
REMIC III.
o The regular interests will be treated as newly originated debt instruments
for federal income tax purposes.
o You will be required to report income on the offered certificates in
accordance with the accrual method of accounting.
o The class S and class B-2 certificates will be, and the other classes of
the offered certificates will not be, issued with original issue discount.
See "Material Federal Income Tax Consequences" in this prospectus
supplement and in the accompanying prospectus.
Optional Termination
If the total stated principal balance of all outstanding principal balance
certificates is less than 1% of the initial pool balance on any distribution
date, then each of the following in this order has an option to purchase all
loans and property in the trust fund at a specified price:
o the majority holders of the controlling class,
o the master servicer,
o the special servicer, and
o any holder of more than 50% of the class R-I certificates.
Such a purchase will terminate the trust fund and cause early retirement
of the then outstanding certificates. See "Description of the
Certificates--Optional Termination".
Denominations
You may purchase offered certificates in minimum denominations of $5,000
initial principal balance or notional amount, as applicable, and in any higher
whole-dollar denomination.
Clearance and Settlement
You must hold your certificates in book-entry form. In the United States,
we will deliver through the facilities of The Depository Trust Company. In
Europe, we may deliver through the facilities of Cedelbank or the Euroclear
System. DTC, Cedelbank or Euroclear rules and operating procedures govern
transfers within the system. Crossmarket transfers between persons holding
directly or indirectly through DTC, on the one hand, and counterparties holding
directly or indirectly through Cedelbank or Euroclear, on the other, will be
effected in DTC through Citibank, N.A., the depositary for Cedelbank, or the
Brussels, Belgium
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office of Morgan Guaranty Trust Company of New York, the depositary for
Euroclear.
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ERISA Considerations
Subject to important considerations described under "ERISA Considerations"
in this prospectus supplement and in the accompanying prospectus, the class S,
class A-1A and class A-1B certificates are eligible for purchase by persons
investing assets of employee benefit plans or individual retirement accounts.
The class A-2, class A-3, class A-4, class B-1 and class B-2 certificates
may not be purchased by, or transferred to, any employee benefit plan or other
retirement arrangement subject to the Employee Retirement Income Security Act of
1974, or Section 4975 of the Internal Revenue Code of 1986, or any person
investing the assets of any such employee benefit plan or other retirement
arrangement. This prohibition does not apply to an insurance company investing
assets of its general account under circumstances that would qualify for an
exemption under Sections I and III of prohibited transaction class exemption
95-60.
If you are a fiduciary of any retirement plan or other employee benefit
plan or arrangement subject to ERISA or section 4975 of the Internal Revenue
Code of 1986, you should review carefully with your legal advisors whether the
purchase or holding of the offered certificates could give rise to a transaction
that is prohibited under ERISA or Section 4975 of the Internal Revenue Code of
1986. See "ERISA Considerations" in this prospectus supplement and in the
prospectus.
Ratings
It is a condition of the issuance of the offered certificates that they
receive credit ratings no lower than the ratings indicated on the cover of this
prospectus supplement from Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. and Fitch IBCA, Inc.
A credit rating is not a recommendation to buy, sell or hold securities
and may be revised or withdrawn at any time by the assigning rating agency.
See "Ratings" in this prospectus supplement and in the prospectus for a
discussion of the basis upon which ratings are given, the limitations of and
restrictions on the ratings, and the conclusions that should not be drawn from a
rating.
Legal Investment
The class S, A-1A, A-1B and A-2 certificates will be "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984 so long as they are rated in one of the two highest rating categories by at
least one nationally recognized statistical rating organization.
If your investment authority is restricted by law, then you should consult
your own legal advisors to determine whether and to what extent the offered
certificates constitute legal investments for you. See "Legal Investment" in
this prospectus supplement and in the prospectus.
Reports To Certificateholders
The trustee will make monthly reports available to certificateholders of
record.
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RISK FACTORS
You should carefully consider the risks before making an investment
decision. In particular, the timing and amount of distributions on your
certificates will depend on payments received on and other recoveries with
respect to the loans. Therefore, you should carefully consider the risk factors
relating to the loans and the mortgaged properties.
The risks and uncertainties described below are not the only ones relating
to the offered certificates. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair your
investment.
If any of the following risks actually occur, your investment could be
materially and adversely affected.
This prospectus supplement also contains forward-looking statements that
involve risks and uncertainties. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of a variety
of factors, including the risks described below and elsewhere in this prospectus
supplement and the prospectus.
Your Investment Is Not Insured or Guaranteed and Your Source for Repayment Is
Limited
You should consider all of the loans to be nonrecourse loans. You should
also consider them not to be insured or guaranteed by any person or entity. If a
default occurs, the lender's remedies generally are limited to foreclosing
against the specific real property and other assets pledged to secure the
defaulted loan. Such remedies may be insufficient to provide a full return on
your investment. Payment of amounts due under a loan prior to maturity is
dependent primarily on the sufficiency of the net operating income of the
mortgaged property. Payment of a loan at maturity is primarily dependent upon
the borrower's ability to sell or refinance the property for an amount
sufficient to repay the loan.
The offered certificates will represent interests solely in the assets of
the trust and will not represent an interest in or an obligation of any other
person. Distributions on any class of the offered certificates will depend
solely on the amount and timing of payments on the loans.
One hundred sixty-eight of the loans (83.9%) were originated within 12
months prior to the cut-off date. Consequently, these loans do not have a
long-standing payment history.
The Repayment of a Multifamily or Commercial Loan Is Dependent on the Cash Flow
Produced by the Property, Which Can Be Volatile and Insufficient to Allow Timely
Payment on Your Certificates
The loans are secured by various types of income-producing commercial
properties. Because, among other things, commercial lending typically involves
larger loans, it is generally thought to expose a lender to greater risk than
one-to-four family residential lending.
The repayment of a commercial loan is typically dependent upon the ability
of the applicable property to produce cash flow. Even the liquidation value of a
commercial property is determined, in substantial part, by the amount of the
property's cash flow or its potential to generate cash flow. However, net
operating income and cash flow can be volatile and may be insufficient to cover
debt service on the loan at any given time.
A large number of factors may adversely affect the net operating income,
cash flow and property value of the mortgaged properties. Some of these factors
relate to the property itself, such as:
o the age, design and construction quality of the property;
o perceptions regarding the safety, convenience and attractiveness of the
property;
o the proximity and attractiveness of competing properties;
o the adequacy of the property's management and maintenance;
o increases in operating expenses at the property and in relation to
competing properties;
o an increase in the capital expenditures needed to maintain the property or
make improvements;
o the dependence upon a single tenant, or a concentration of tenants in a
particular business or industry;
o a decline in the financial condition of a major tenant;
o an increase in vacancy rates; and o
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o a decline in rental rates as leases are renewed or entered into with new
tenants.
Others factors are more general in nature, such as:
o national, regional or local economic conditions, including plant closings,
military base closings, industry slowdowns and unemployment rates;
o local real estate conditions, such as an oversupply of competing
properties, space or housing;
o demographic factors;
o decreases in consumer confidence;
o changes in consumer tastes and preferences; and
o retroactive changes in building codes.
The volatility of net operating income will be influenced by many of the
foregoing factors, as well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
o tenant defaults;
o in the case of rental properties, the rate at which new rentals occur; and
o the property's "operating leverage" (i.e., the percentage of total property
expenses in relation to revenue, the ratio of fixed operating expenses to
those that vary with revenues, and the level of capital expenditures
required to maintain the property and to retain or replace tenants).
A decline in the real estate market or in the financial condition of a
major tenant will tend to have a more immediate effect on the net operating
income of properties with short-term revenue sources and may lead to higher
rates of delinquency or defaults under loans.
Converting Commercial Properties to Alternative Uses May Require Significant
Expenditures Which Could Reduce Payments on Your Certificates
Some of the mortgaged properties may not be readily convertible to
alternative uses if the current use of those properties were to become
unprofitable for any reason. Converting commercial properties to alternate uses
generally requires substantial capital expenditures. In addition, zoning or
other restrictions also may prevent alternative uses. The liquidation value of
any such mortgaged property consequently may be substantially less than the
liquidation value of a property that the owner could readily adapt to other
uses.
Property Value May Be Adversely Affected Even When There Is No Change in Current
Operating Income
Various factors may adversely affect the value of the mortgaged properties
without affecting the properties' current net operating income. These factors
include, among others:
o changes in governmental regulations, fiscal policy, zoning or tax laws;
o potential environmental legislation or liabilities or other legal
liabilities;
o the availability of refinancing; and
o changes in interest rate levels.
Tenant Concentration Increases the Risk That Cash Flow Will Be Interrupted,
Which May Have an Adverse Effect on the Payment of Your Certificates
A deterioration in the financial condition of a tenant can be particularly
significant if a mortgaged property is leased to a single tenant or a small
number of tenants, or if the lease payments of such tenant or tenants account
for a significant portion of the property's gross revenue. Such properties are
more susceptible to interruptions of cash flow if a tenant fails to renew its
lease or defaults under its lease. This is so because the owner may:
o suffer severe financial effects from the absence of all or a significant
portion of the property's rental income;
o require more time to re-lease the space; and
o incur substantial capital costs to make the space appropriate for
replacement tenants.
For 44 properties (16.4%), a single tenant or the borrower occupies more
than 50% of the related mortgaged property.
One loan (0.3%) is secured by a mortgaged property subject to a credit
tenant lease. This loan has a lower debt service coverage ratio and a higher
loan-to-value ratio than would have been acceptable if the property had been
leased to a less creditworthy tenant. The tenant for this property has a
long-term local issuer credit rating of "A" from Standard & Poor's. This loan is
fully amortizing over the lease term of the related credit tenant.
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A concentration of particular tenants among the mortgaged properties or of
tenants in a particular business or industry may also adversely affect retail
and office properties.
Leasing Mortgaged Properties to Multiple Tenants May Result in Higher Re-Leasing
Expenditures, Which May Have an Adverse Effect on the Payment of Your
Certificates
If a mortgaged property has multiple tenants, re-leasing expenditures may
be more frequent than in the case of mortgaged properties with fewer tenants.
These additional expenses will reduce the cash flow available for debt service
payments. Mortgaged properties with multiple tenants also may experience higher
continuing vacancy rates and greater volatility in rental income and expenses.
The Presence of Large Loans or a Large Concentration of Loans Among Related
Borrowers Increases the Possibility of Losses on the Loans Which May Have an
Adverse Effect on Your Certificates
The effect of mortgage pool loan losses will be more severe if:
o the pool is comprised of a small number of loans, each with a relatively
large principal amount; or
o the losses relate to loans that account for a disproportionately large
percentage of the pool's aggregate principal balance.
The 5 largest loans, or groups of cross-collateralized loans, represent
19.6% of the initial pool balance. The potential loss on any of these loans may
have a more adverse effect on the offered certificates than a loss on a smaller
loan. Each of the other loans represents less than 1.7% of the initial pool
balance.
A concentration of loans with the same borrower or related borrowers also
can pose increased risks. Several groups of loans are made to the same borrower
or to borrowers related through common ownership and where, in general, the
related mortgaged properties are commonly managed. The three largest of these
groups represent 5.9%, 4.8% and 4.3%, respectively, of the initial pool balance.
The mortgaged properties for 5 loans (5.7%) are owned by affiliated borrowers
and are also commonly managed by the same property management company. This
property management company is also related to each of the separate borrowers
through common ownership.
The bankruptcy or insolvency of any borrower in any such group could have
an adverse effect on the operation of all of the related mortgaged properties
and on the ability of such related mortgaged properties to produce sufficient
cash flow to make required payments on the related loans. For example, if a
person that owns or controls several mortgaged properties experiences financial
difficulty at one such property, it could:
o defer maintenance at one or more other mortgaged properties in order to
satisfy current expenses with respect to the mortgaged property
experiencing financial difficulty, or
o attempt to avert foreclosure by filing a bankruptcy petition that might
have the effect of interrupting monthly payments for an indefinite period
on all the related loans.
Large Geographic Concentrations of Mortgaged Properties May Have an Adverse
Effect on the Payment of Your Certificates
Concentrations of mortgaged properties in geographic areas may increase
the risk that adverse economic or other developments or a natural disaster
affecting a particular region of the country could increase the frequency and
severity of losses on loans secured by the properties. In recent periods,
several regions of the United States have experienced significant real estate
downturns. Regional economic declines or adverse conditions in regional real
estate markets could adversely affect the income from, and market value of, the
mortgaged properties located in such region. Other regional factors such as
earthquakes, floods or hurricanes or changes in governmental rules or fiscal
policies also may adversely affect the mortgaged properties located in such
region. For example, mortgaged properties located in California may be more
susceptible to certain hazards (such as earthquakes) than properties in other
parts of the country.
The mortgaged properties are located in 35 jurisdictions. Mortgaged
properties located in each of California and Texas secure at least 10% of the
initial pool balance. Also, mortgaged properties located in each of New York,
Florida, Michigan, Oklahoma and Massachusetts secure at least 5%, but less than
10%, of the initial pool balance. None of the remaining 28 jurisdictions has
mortgaged properties securing 5% or more of the initial pool balance. See
"Description of the Mortgage Pool".
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Large Concentrations of Multifamily Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Multifamily properties secure 38.9% of the initial pool balance.
A large number of factors may affect the value and successful operation of
a multifamily property, including:
o the physical attributes of the property, such as its age, appearance and
construction quality;
o the location of the property;
o the characteristics of the surrounding neighborhood;
o the ability of management to provide adequate maintenance and insurance;
o the types of services and amenities provided at the property;
o the property's reputation;
o the tenant mix, such as a tenant population that is dependent upon
students, workers from a particular business or personnel from a local
military base;
o the level of mortgage interest rates, which may encourage tenants to
purchase rather than rent housing;
o the presence of competing properties;
o local or national economic conditions;
o the extent to which a property is subject to covenants that require rental
to low income tenants;
o state and local regulations, such as rent control regulations and
regulations that govern eviction; and
o government assistance/rent subsidy programs.
Two multifamily properties (0.7%) are residential condominium projects.
These properties are subject to the governing documents of the owners'
association, local laws applicable to condominiums and other special
considerations. Consequently, realizing upon any such property following a
default under the related loan could expose the trust to greater delay, expense
and risk than a loan secured by a property that is not a condominium.
Large Concentrations of Retail Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Retail properties secure 26.5% of the initial pool balance. The quality
and success of a retail property's tenants significantly affect the property's
value. For example, if the sales of retail tenants were to decline, rents tied
to a percentage of gross sales may decline and those tenants may be unable to
pay their rent or other occupancy costs.
The success of tenants at a retail property will be affected by:
o competition from other retail properties;
o perceptions regarding the safety, convenience and attractiveness of the
property;
o demographics of the surrounding area;
o traffic patterns and access to major thoroughfares;
o availability of parking;
o customer tastes and preferences; and
o the drawing power of other tenants.
The presence or absence of an "anchor store" at a retail property also can
be important. Anchors play a key role in generating customer traffic and making
a retail property desirable for other tenants. Consequently, the economic
performance of an anchored retail property will be adversely affected by:
o an anchor store's failure to renew its lease;
o termination of an anchor store's lease;
o the bankruptcy or economic decline of an anchor store or self-owned anchor;
or
o an anchor store closing its business, even if, as a tenant, it continues to
pay rent.
If an anchor store at a mortgaged property were to close, the related
borrower may be unable to replace the anchor in a timely manner or without
suffering adverse economic consequences. Furthermore, some anchor stores have
co-tenancy clauses in their leases that permit them to cease operating if
certain other stores are not operated at the mortgaged property or if certain
other covenants are breached. Some non-anchor tenants may also be permitted to
terminate their leases if certain other stores are not operated or if those
tenants fail to meet certain business objectives.
Retail properties also face competition from sources outside a given real
estate market. For example, all of the following compete with more traditional
retail properties for consumer dollars:
o factory outlet centers;
o discount shopping centers and clubs;
o catalogue retailers;
o home shopping networks;
o internet web sites; and
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o telemarketing.
These alternative retail outlets often have lower operating costs than
traditional retail properties. Continued growth of these alternative retail
outlets could adversely affect the rents, income and market value of the retail
properties in the mortgage pool.
Moreover, additional competing retail properties may be built in the areas
where the retail properties are located.
Large Concentrations of Office Properties Securing Loans Will Subject Your
Investment to the Special Risks of These Properties
Office properties secure 17.7% of the initial pool balance.
A large number of factors may adversely affect the value of office
properties, including:
o the quality of an office property's tenants;
o the diversity of an office property's tenants or reliance on a single or
dominant tenant;
o the physical attributes of the property in relation to competing office
properties, such as age, condition, design, location, access to
transportation and ability to offer certain amenities, such as
sophisticated building systems;
o the desirability of the area as a business location; and
o the strength and nature of the local economy, including labor costs and
quality, tax environment and quality of life for employees.
Moreover, the cost of refitting office space for a new tenant is often
higher than the cost of refitting other types of property.
Large Concentrations of Industrial Properties Securing Loans Will Subject Your
Investment to the Special Risks of Such Properties
Industrial properties secure 5.2% of the initial pool balance. Various
factors may adversely affect the economic performance of an industrial property,
including:
o reduced demand for industrial space because of a decline in a particular
industry segment;
o a property becoming functionally obsolete;
o strikes or the unavailability of labor sources;
o changes in energy prices;
o relocation of highways and the construction of additional highways or other
changes in access;
o a change in the proximity of supply sources; and
o environmental hazards.
Large Concentrations of Hospitality Properties Securing Loans Will Subject Your
Investment to the Special Risks of Such Properties
Hospitality properties secure 4.2% of the initial pool balance. Various
factors may adversely affect the economic performance of a hospitality property,
including:
o adverse local, regional, national or international economic and social
conditions, which may limit the amount that can be charged for a room and
reduce occupancy levels;
o the construction of competing hospitality properties;
o continuing expenditures for modernizing, refurbishing and maintaining
existing facilities prior to the expiration of their anticipated useful
lives;
o a deterioration in the financial strength or managerial capabilities of the
owner and operator of a hospitality property; and
o changes in travel patterns, changes in access, increases in energy prices,
strikes, relocation of highways or the construction of additional highways.
Because rooms at hospitality properties generally are rented for short
periods of time, the financial performance of those properties tend to be
affected by adverse economic conditions and competition more quickly than other
types of commercial properties.
Moreover, the hospitality industry is generally seasonal in nature. This
seasonality can be expected to cause periodic fluctuations in a hospitality
property's revenues, occupancy levels, room rates and operating expenses.
Further, in the event of a foreclosure, the trustee or a purchaser of a
hospitality property probably would not be entitled to the rights under any
liquor license for that property. Such party would be required to apply for a
new license in its own name. The inability to obtain a new liquor license may
have an adverse effect on the value of a hospitality property.
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The Affiliation of Some of the Properties with a Franchise or Hotel Management
Company May Have an Adverse Effect on the Payment of Your Certificates
Five of the hospitality properties (2.9%) are operated as franchises of
national hotel chains or managed by a hotel management company. The performance
of a hospitality property operated as a franchise or by a hotel management
company depends in part on:
o the continued existence and financial strength of the franchisor or hotel
management company;
o the public perception of the franchise or hotel chain service mark; and
o the duration of the franchise license or management agreements.
The transferability of a franchise license agreement may be restricted. In
the event of a foreclosure, the lender or its agent may not have the right to
use the franchise license without the franchisor's consent. Conversely, in some
instances, the lender may be unable to remove a franchisor or a hotel management
company that it desires to replace following a foreclosure.
The adverse effect of an economic decline in a particular hotel chain will
be more significant if there is a concentration of hotels operated by that chain
among the properties securing loans in the mortgage pool. In this regard, the
largest concentration consists of 2 hospitality properties (1.6%) that are
operated as Marriott franchises.
Certain Additional Risks Relating to Tenants
The income from, and market value of, the mortgaged properties leased to
various tenants would be adversely affected if:
o space in the mortgaged properties could not be leased or re-leased;
o tenants were unable to meet their lease obligations;
o a significant tenant were to become a debtor in a bankruptcy case; or
o rental payments could not be collected for any other reason.
Even if vacated space is successfully relet, the costs associated with
reletting, including tenant improvements and leasing commissions, could be
substantial and could reduce cash flow from the mortgaged properties. Moreover,
if a tenant defaults in its obligations to a borrower, the borrower may incur
substantial costs and experience significant delays associated with enforcing
its rights and protecting its investment, including costs incurred in renovating
and reletting the property.
Tenant Bankruptcy May Adversely Affect the Income Produced by the Property and
May Have an Adverse Effect on the Payment of Your Certificates
The bankruptcy or insolvency of a major tenant, or a number of smaller
tenants, in retail and office properties may adversely affect the income
produced by a mortgaged property. Under federal bankruptcy law, a tenant/debtor
has the option of affirming or rejecting any unexpired lease. If the tenant
rejects the lease, the landlord's claim for breach of the lease would be a
general unsecured claim against the tenant, absent collateral securing the
claim. The claim would be limited to:
o the unpaid rent under the lease for the periods prior to the bankruptcy
petition or the earlier surrender of the leased premises, plus
o the rent under the lease for the greater of one year or 15%, not to exceed
3 years, of the remaining term of the lease.
Federal or State Environmental Laws May Affect the Value of a Mortgaged Property
or the Ability of a Borrower to Make Required Loan Payments and May Have an
Adverse Effect on the Payment of Your Certificates
Various environmental laws may make a current or previous owner or
operator of real property liable for the costs of removal or remediation of
hazardous or toxic substances on, under, adjacent to, or in the property. Those
laws often impose liability whether or not the owner or operator knew of, or was
responsible for, the presence of the hazardous or toxic substances. For example,
certain laws impose liability for release of asbestos-containing materials into
the air or require the removal or containment of these materials. In some
states, contamination of a property may give rise to a lien on the property to
assure payment of the costs of cleanup. In some states, this lien has priority
over the lien of a pre-existing mortgage. Additionally, third parties may seek
recovery from owners or operators of real properties for personal injury
associated with exposure to asbestos, lead-based paint or other hazardous
substances.
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The owner's liability for any required remediation generally is not
limited by law and could exceed the value of the property and/or the aggregate
assets of the owner. The presence of hazardous or toxic substances also may
adversely affect the owner's ability to refinance the property or to sell the
property to a third party. The presence of, or strong potential for
contamination by, hazardous substances consequently can materially adversely
affect the value of the property and a borrower's ability to repay its loan.
In addition, under certain circumstances, a lender (such as the trust)
could be liable for the costs of responding to an environmental hazard. See
"Certain Legal Aspects of the Mortgage Loans" in the prospectus.
Environmental Issues Relating to Specific Properties May Have an Adverse Effect
on the Payment of Your Certificates
Environmental site assessments were obtained for 193 of the mortgaged
properties (97.5%) during the 24-month period ending on September 20, 1999. The
assessments for 12 of those mortgaged properties (5.0%) were obtained more than
18 months prior to the cut-off date. The assessments for 3 of those mortgaged
properties (0.4%) did not satisfy all of the requirements necessary to be
considered "Phase I" environmental site assessments.
Environmental consultants have detected asbestos or lead-based paint at
several mortgaged properties by sampling. The environmental consultants suspect
that asbestos or lead-based paint may be located at other mortgaged properties.
In some cases, the asbestos or lead-based paint is in poor condition. The
asbestos or lead-based paint found or suspected is not expected to present a
significant risk as long as the related mortgaged property is properly managed
or, when recommended by the consultant, the problem is remedied or abated.
Nonetheless, the value of a mortgaged property as collateral for the related
loan could be adversely affected, and claims for damages could arise from
parties injured by such asbestos or lead-based paint.
In certain cases, an assessment disclosed other known or potential adverse
environmental conditions, such as underground storage tanks or soil or
groundwater contamination. We cannot assure you, however, that the environmental
assessments revealed all existing or potential environmental risks or that all
adverse environmental conditions have been completely remediated.
Except as described herein, where an assessment disclosed a known or
potential material and adverse environmental condition, the originator required
the borrower to:
o escrow funds deemed sufficient to ensure remediation of or to monitor the
environmental issue;
o obtain an environmental insurance policy that covers the environmental
issue; or
o establish an operations and maintenance plan that, if implemented, would
prevent any material and adverse consequences resulting from the
environmental issue.
Set forth below are some of the known or potential material and adverse
environmental conditions for which an escrow has been established to cover
remediation costs or an environmental insurance policy has been obtained to
cover potential clean-up costs:
o 5 mortgaged properties (1.7%) - potential or existing contamination arising
from the operation of dry cleaning facilities upon or near such properties;
o 4 mortgaged properties (1.2%) - potential or existing contamination arising
from the operation of gas stations or automobile/marine repair facilities
upon or near such properties;
o 1 mortgaged property (0.2%) - by the former use of this property as part of
an oil production field;
o 1 mortgaged property (1.5%) - by the presence of underground storage tanks
upon this property; or
o 7 mortgaged properties (3.5%) - by the presence of leaking underground
storage tanks or other adverse environmental conditions on or near such
properties.
In some cases, the environmental consultant did not recommend that any
action be taken with respect to a known or potential adverse environmental
condition at a mortgaged property or a nearby property because:
o a remediation, under the supervision of an environmental regulatory agency,
had been completed or was currently underway;
o an environmental regulatory agency had issued a "no further action" letter
regarding the condition; or
o a responsible party with respect to the condition had already been
identified.
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No environmental site assessments were obtained for 19 mortgaged
properties (2.5%). For 6 mortgaged properties (2.0%) a "Phase II" environmental
site assessment was recommended but not performed. In general, the decision not
to take the foregoing actions with respect to any of those mortgaged properties
was based upon the borrower or the lender obtaining an environmental insurance
policy with respect to the mortgaged property.
For 14 of the mortgaged properties (6.1%), the depositor will obtain a
separate secured creditor impaired property group policy covering certain
environmental matters with respect to such properties. For each of 19 other
mortgaged properties (2.5%), Column Financial, Inc. obtained a separate secured
creditor impaired property policy covering certain environmental matters with
respect to such properties. See "Description of the Mortgage Pool--Environmental
Insurance" for a more detailed description of these secured creditor impaired
property policies.
Each environmental insurance policy obtained with respect to a mortgaged
property contains certain coverage limits. In addition, the policies do not
provide coverage for adverse environmental conditions at levels below legal
limits or for conditions involving asbestos and lead-based paint. There is no
assurance that any escrowed funds will be sufficient to complete remediation of
any environmental conditions affecting the related mortgaged property.
The environmental assessments, when obtained, have not revealed any
environmental liability that the depositor believes would have a material
adverse effect on the borrowers' businesses, assets or results of operations
taken as a whole. Nevertheless, there may be material environmental liabilities
of which the depositor is unaware. Moreover, there is no assurance that:
o future laws, ordinances or regulations will not impose any material
environmental liability; or
o the current environmental condition of the mortgaged properties will not be
adversely affected by tenants or by the condition of land or operations in
the vicinity of the mortgaged properties, such as underground storage
tanks.
Before the special servicer acquires title to a property on behalf of the
trust or assumes operation of the mortgaged property, it must obtain an
environmental assessment of the mortgaged property. This requirement will
decrease the likelihood that the trust will become liable under any
environmental law. However, this requirement may effectively preclude
foreclosure until a satisfactory environmental assessment is obtained or any
required remedial action is completed. There is accordingly some risk that the
mortgaged property will decline in value while this assessment is being obtained
or the remedial work completed. Moreover, there is no assurance this requirement
will protect the trust from liability under environmental laws.
Borrower May Be Unable to Repay the Remaining Principal Balance on Its Maturity
Date or Anticipated Repayment Date, Which May Have an Adverse Effect on the
Payment of Your Certificates
Two hundred two of the loans (99.4%) are expected to have more than 10% of
the original principal balance remaining unpaid on their stated maturity date
or, in the case of hyper-amortization loans, on their anticipated repayment
date. We cannot assure you that each borrower will have the ability to repay the
remaining principal balance on the pertinent date. Additionally, a borrower in a
hyper-amortization loan is not obligated to repay its loan on the anticipated
repayment date. Loans with substantial remaining principal balances at their
stated or anticipated maturity involve greater risk than fully amortizing loans.
A borrower's ability to repay a loan on its maturity date or anticipated
repayment date typically will depend upon its ability either to refinance the
loan or to sell the mortgaged property at a price sufficient to permit
repayment. A borrower's ability to achieve either of these goals will be
affected by a number of factors, including:
o the availability of, and competition for, credit for commercial and
multifamily properties;
o prevailing interest rates;
o the fair market value of the related properties;
o the borrower's equity in the related properties;
o the borrower's financial condition;
o the operating history and occupancy level of the property;
o tax laws; and
o prevailing general and regional economic conditions.
The availability of funds in the credit markets fluctuates over time.
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See "Description of the Mortgage Pool - Certain Terms and Conditions of
the Mortgage Loans".
Borrowers That Are Not Special-Purpose Entities May be More Likely to Pursue a
Bankruptcy
The organizational documents of the borrowers for 73 loans (19.9%) do not
limit the borrowers' business activities to owning their respective properties.
Most of the borrowers (and any special-purpose entity having an interest
in any of the borrowers) do not have an independent director whose consent would
be required to file a voluntary bankruptcy petition on behalf of the borrower.
One of the purposes of an independent director (or of a special-purpose entity
having an interest in the borrower) is to reduce the likelihood of a bankruptcy
petition filing intended solely to benefit an affiliate and not justified by the
borrower's own economic circumstances.
The Borrower's Ability to Effect Other Borrowings May Reduce the Cash Flow
Available to the Property, Which May Have an Adverse Effect on the Payment of
Your Certificates
The loans generally do not permit the borrower to incur additional
indebtedness using the mortgaged property as collateral. However, 1 property
(0.5%) is known to be encumbered by a subordinate mortgage securing other debt
of the related borrower. The borrower for 1 other loan (0.7%) is also known to
have, and other borrowers may have, other unsecured debt, including debt
incurred in the ordinary course of business.
When a borrower (or its constituent members) also has one or more other
outstanding loans (even if subordinated, unsecured or mezzanine loans), the
trust is subjected to additional risk. The borrower and/or its constituent
members may have difficulty servicing and repaying multiple loans. The existence
of another loan generally will make it more difficult for the borrower to obtain
refinancing of the loan, which may jeopardize repayment of the loan. Moreover,
the need to service additional debt may reduce the cash flow available to the
borrower to operate and maintain the mortgaged property.
Additionally, if the borrower (or its constituent members) defaults on its
loan and/or any other loan, actions taken by other lenders could impair the
security available to the trust. If a junior lender files an involuntary
petition for bankruptcy against the borrower or the borrower files a voluntary
petition to stay enforcement by a junior lender, the trust's ability to
foreclose on the property will be automatically stayed, and principal and
interest payments might not be made during the course of the bankruptcy case.
The bankruptcy of another lender also may operate to stay foreclosure by the
trust.
Further, if another loan secured by the mortgaged property is in default,
the other lender may foreclose on the mortgaged property, unless the other
lender has agreed not to foreclose. A foreclosure by the other lender may cause
a delay in payments and/or an involuntary repayment of the loan prior to
maturity. The trust may also be subject to the costs and administrative burdens
of involvement in foreclosure proceedings or related litigation.
Bankruptcy Proceedings Relating to a Borrower May Result in a Restructuring of
the Loan
Under federal bankruptcy law, the filing of a petition in bankruptcy by or
against a borrower will stay the sale of the real property that the borrower
owns, as well as the commencement or continuation of a foreclosure action. In
addition, if a court determines that the value of the mortgaged property is less
than the principal balance of the loan it secures, the court may prevent a
lender from foreclosing on the mortgaged property, subject to certain
protections available to the lender. As part of a restructuring plan, a court
also may reduce the amount of secured indebtedness to the current value of the
mortgaged property. Such an action would make the lender a general unsecured
creditor for the difference between the current value of the property and the
amount of its loan. A bankruptcy court also may:
o grant a debtor a reasonable time to cure a payment default on a loan;
o reduce monthly payments due under a loan; o change the rate of interest due
on a loan; or
o otherwise alter the loan's repayment schedule.
Moreover, the filing of a petition in bankruptcy by, or on behalf of, a
junior lienholder may stay the senior lienholder from taking action to foreclose
on the junior lien. Additionally, the borrower's trustee or the borrower, as
debtor-in-possession, has certain special powers to avoid, subordinate or
disallow debts. In certain circumstances, the claims of the trustee may be
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subordinated to financing obtained by a debtor-in-possession subsequent to its
bankruptcy.
Under federal bankruptcy law, the lender will be stayed from enforcing a
borrower's assignment of rents and leases. Federal bankruptcy law also may
interfere with a lender's ability to enforce any lockbox requirements. The legal
proceedings necessary to resolve these issues can be time-consuming and may
significantly delay the lender's receipt of rents. Rents also may escape an
assignment if the borrower uses the rents to maintain the mortgaged property or
for other court authorized expenses.
Thus, the trustee's recovery from borrowers in bankruptcy proceedings may
be significantly delayed, and the total amount ultimately collected may be
substantially less than the amount owed.
The Operation of Commercial Properties Is Dependent upon Successful Management
The successful operation of a real estate project depends upon the
property manager's performance and viability. The property manager is generally
responsible for:
o responding to changes in the local market;
o planning and implementing a rental structure for the property;
o operating the property and providing building services;
o managing operating expenses; and
o assuring that maintenance and capital improvements are completed in a
timely fashion.
Properties deriving revenues primarily from short-term sources are
generally more management intensive than properties leased to creditworthy
tenants under long-term leases.
A good property manager can improve cash flow, reduce vacancy, leasing and
repair costs and preserve building value if it:
o controls costs;
o provides appropriate service to tenants; and
o maintains the improvements.
On the other hand, management errors can, in some cases, impair short-term
cash flow and the long-term viability of an income-producing property.
The depositor makes no representation or warranty as to the skills of any
present or future managers. Additionally, the depositor cannot assure you that
the property managers will be in a financial condition to fulfill their
management responsibilities throughout the terms of their respective management
agreements.
Property Inspections Performed on the Mortgaged Properties May Not Reflect All
Conditions That Require Repair on the Property
Licensed engineers or consultants inspected all of the mortgaged
properties in connection with the origination of the loans to assess items such
as:
o structure;
o exterior walls;
o roofing;
o interior construction;
o mechanical and electrical systems; and
o general condition of the site, buildings and other improvements.
However, there is no assurance that the inspectors identified all
conditions requiring repair or replacement.
The Absence of or Inadequacy of Insurance Coverage on the Mortgaged Properties
May Have an Adverse Effect on the Payment of Your Certificates
The mortgaged properties may suffer casualty losses due to risks that
insurance does not cover or for which insurance coverage is inadequate. There is
also no assurance borrowers will be able to maintain adequate insurance.
Moreover, changes in laws may materially affect the borrower's ability to
reconstruct the property or make major repairs or may materially increase the
cost of such reconstruction or repairs.
Certain of the mortgaged properties are located in California, Texas and
along the southeastern coastal areas of the United States. These areas have
historically been at greater risk regarding acts of nature (such as hurricanes,
floods and earthquakes) than other areas. The loans generally do not
specifically require the borrowers to maintain earthquake or hurricane
insurance.
As a result of any of the foregoing, the amount available to make
distributions on the certificates could be reduced.
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Appraisals May Inaccurately Reflect the Value of the Mortgaged Properties
The originators obtained an appraisal or other market analysis of each
mortgaged property in connection with the origination or acquisition of the
related loan. The resulting estimates of value were used to calculate the
Cut-off Date LTV Ratios referred to in this prospectus supplement. Those
estimates represent the analysis and opinion of the person performing the
appraisal or market analysis and are not guarantees of present or future values.
Moreover, the values of the mortgaged properties may have changed significantly
since the appraisal or market valuation was performed. In addition, appraisals
seek to establish the amount a typically motivated buyer would pay a typically
motivated seller. Such amount could be significantly higher than the amount
obtained from the sale of a mortgaged property under a distress or liquidation
sale. Information regarding the values of mortgaged properties available to the
depositor is presented in Exhibits A-1, A-2 and B for illustrative purposes
only.
The Timing of Loan Amortization May Have an Adverse Effect on the Payment of
Your Certificates
As principal payments or prepayments are made on loans in the mortgage
pool, the remaining certificateholders may be subject to more risk because of
the decreased:
o number of mortgaged properties;
o diversity of mortgaged property types;
o diversity of geographic locations; and
o number of borrowers and affiliated borrowers.
Classes of the certificates that have a later alphabetical or numerical
designation or a lower payment priority are more likely to be exposed to this
concentration risk than are classes with an earlier alphabetical or numerical
designation or higher priority. This is because principal on the certificates is
generally payable in sequential order, and no class entitled to distribution of
principal generally receives principal until the principal amount of the
preceding class or classes entitled to receive principal has been reduced to
zero.
Subordination of Subordinate Certificates Will Affect the Timing of Payments and
the Application of Losses on Your Certificates
As described in this prospectus supplement, unless your certificates are
class S, class A-1A or class A-1B certificates, your rights to receive
distributions of amounts collected or advanced on or in respect of the loans
will be subordinated to those of the holders of the certificates with an earlier
alphabetical or numerical designation. See "Description of the Certificates
Distributions" and "-Subordination; Allocation of Losses and Certain Expenses"
in this prospectus supplement and "Risk Factors - Any Credit Support for Your
Certificates May be Insufficient to Protect You Against All Potential
Losses--Disproportionate Benefits to Certain Classes and Series" in the
prospectus.
The Operation of a Mortgaged Property upon Foreclosure of the Loan May Affect
the Tax Status of the Trust and May Have an Adverse Effect on the Payment of
Your Certificates
If the trust acquires a mortgaged property pursuant to a foreclosure or
deed in lieu of foreclosure, the special servicer will generally retain an
independent contractor to operate the property. Any net income from such
operation (other than qualifying "rents from real property"), or any rental
income based on the net profits of a tenant or sub-tenant or allocable to a
non-customary service, will subject the trust to a federal tax on such income at
the highest marginal corporate tax rate (currently 35%), and in addition, to
possible state or local tax. In such event, the net proceeds available for
distribution to certificateholders will be reduced. The special servicer may
permit the trust to earn "net income from foreclosure property" that is subject
to tax if it determines that the net after-tax benefit to certificateholders is
greater than under another method of operating or leasing the mortgaged
property. If the mortgaged property did not qualify as foreclosure property
because of certain disqualifying events, any income realized from operation or
disposition of the property would be subject to a 100% prohibited transaction
tax. It is not anticipated that the trust will receive any income from
prohibited transactions.
State Laws Applicable to the Enforcement of Lender Remedies May Affect the
Timing of Payments on Your Certificates and May Have an Adverse Effect on the
Payment of Your Certificates
All of the loans permit the lender to accelerate the debt upon default by
the borrower. The courts of all states will enforce acceleration clauses in the
event of a material payment default. State equity courts, however, may refuse to
permit foreclosure or acceleration if a default is deemed
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immaterial or the exercise of those remedies would be unjust or unconscionable.
If a mortgaged property has tenants, the borrower assigns its income as
landlord to the lender as further security, while retaining a license to collect
rents as long as there is no default. If the borrower defaults, the license
terminates and the lender is entitled to collect rents. In certain
jurisdictions, such assignments may not be perfected as security interests until
the lender takes actual possession of the property's cash flow. In some
jurisdictions, the lender may not be entitled to collect rents until the lender
takes possession of the mortgaged property, secures the appointment of a
receiver or otherwise acts to enforce its remedies. In addition, as previously
discussed, a bankruptcy or similar proceeding commenced by or for the borrower
could adversely affect the lender's ability to collect the rents.
The laws of some states, including California, prohibit more than one
"judicial action" to enforce a mortgage obligation. Some courts have construed
the term "judicial action" broadly. In the case of a loan secured by mortgaged
properties located in multiple states, the master servicer or special servicer
may be required to foreclose first on mortgaged properties located in states
where such "one action" rules apply (and where non-judicial foreclosure is
permitted) before foreclosing on properties located in states where judicial
foreclosure is the only permitted method of foreclosure. As a result, state laws
may limit the trust's ability to realize upon the loans. Foreclosure actions may
also, in certain circumstances, subject the trust to liability as a
"lender-in-possession" or result in the equitable subordination of the claims of
the trustee to the claims of other creditors of the borrower. The master
servicer or the special servicer may take these state laws into consideration in
deciding which remedy to choose following a default by a borrower.
Loans Secured by Mortgages on a Leasehold Interest Will Subject Your Investment
to a Risk of Loss Upon a Lease Default
Four of the mortgaged properties (1.3%) are encumbered by mortgages on a
borrower's leasehold interest under ground leases. Two other mortgaged
properties (0.9%) are encumbered by mortgages on a borrower's leasehold interest
under ground leases and the fee interest of the owner of the property.
Leasehold loans are subject to risks not associated with loans secured by
a lien on the fee estate of the borrower. The most significant of these risks is
that if the landlord terminates the borrower's leasehold interest upon a lease
default, the leasehold mortgagee would lose its security. The ground lease loans
may require the master servicer to give notices or to take actions in addition
to those required for a fee loan in order for the trust to avail itself of its
rights under the related loan. Generally, the related ground lease:
o requires the landlord to give the leasehold mortgagee notice of tenant
defaults and an opportunity to cure them prior to enforcing its remedies;
o prohibits any amendment of the ground lease without the lender's prior
consent;
o permits the leasehold estate to be assigned to the leasehold mortgagee or
the purchaser at a foreclosure sale; and
o contains certain other protective provisions typically included in a
"mortgageable" ground lease.
Upon the bankruptcy of a landlord or tenant under a ground lease, the
debtor entity has the right to assume or reject the lease. If a debtor landlord
rejects the lease, the tenant has the right to remain in possession of its
leased premises for the term of the lease including renewals, at the same rent.
If a debtor tenant/borrower rejects any or all of its leases, the leasehold
lender could succeed to the tenant/ borrower's position under the lease only if
the landlord specifically grants the lender such right. As a result, the lender
may lose its security. If both the landlord and the tenant/borrower are involved
in bankruptcy proceedings, the trustee may be unable to enforce the bankrupt
tenant/borrower's obligation to not terminate a ground lease rejected by a
bankrupt landlord. In such circumstances, a ground lease could be terminated
notwithstanding lender protection agreements.
Ground leases securing the mortgaged properties may provide that the
ground rent payable under the lease increases during the lease term. These
increases may adversely affect the cash flow and net income of the borrower from
the mortgaged property.
The execution of a mortgage over its fee interest by an owner/landlord to
secure the debt of a borrower/tenant may be subject to challenge as a fraudulent
conveyance. Among other things, a legal challenge to the granting of the liens
may focus on the benefits realized by the owner/landlord from the loan. If a
court concluded that the granting of the mortgage was an avoidable fraudulent
conveyance, it
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might take actions detrimental to the holders of the certificates, including,
under certain circumstances, invalidating the mortgage over the fee interest of
the owner/landlord.
Cross-Collateralization of Groups of Loans Could Have an Adverse Effect on the
Payment of Your Certificates
Cross-collateralization arrangements involving more than one borrower
could be challenged as fraudulent conveyances:
o by creditors of the related borrower in an action brought outside a
bankruptcy case; or
o if the borrower were to become a debtor in a bankruptcy case, by the
borrower or its representative.
A lien granted by a borrower for the benefit of another borrower in a
cross-collateralization arrangement could be avoided if a court were to
determine that:
1. such borrower was:
o insolvent when it granted the lien;
o rendered insolvent by the granting of the lien;
o left with inadequate capital by granting the lien; or
o not able to pay its debts as they matured; and
2. such borrower did not receive fair consideration or reasonably equivalent
value when it allowed its mortgaged property or properties to be encumbered
by a lien securing the indebtedness of the other borrower.
Among other things, a legal challenge to the granting of the liens may
focus on the benefits realized by such borrower from the respective loan
proceeds, as well as the overall cross-collateralization. If a court were to
conclude that the granting of the liens was an avoidable fraudulent conveyance,
that court could subordinate all or part of the loan to existing or future
indebtedness of that borrower. The court also could recover payments made under
that loan or take other actions detrimental to the holders of the certificates,
including, under certain circumstances, invalidating the loan or the mortgages
securing the cross-collateralized loans.
The Trust May Not Control the Termination of Leases Upon Foreclosure
In some jurisdictions, a lease may terminate upon the transfer of a
mortgaged property to a foreclosing lender or purchaser at foreclosure if the
tenant lease is:
o subordinate to the lien created by the mortgage, and
o does not contain provisions requiring the tenant to recognize a successor
owner following foreclosure as landlord under the lease (also known as
attornment provisions).
The depositor has not reviewed all the leases to determine if they have
these provisions. Accordingly, if a mortgaged property is located in one of
these jurisdictions and is leased to one or more desirable tenants under leases
that are subordinate to the mortgage but do not contain attornment provisions,
the mortgaged property could experience a further decline in value if such
tenants' leases were terminated. This is particularly likely if the tenants were
paying above-market rents or could not be replaced.
If a lease is not subordinate to a mortgage, the trust will not have the
right to remove the tenant upon foreclosure of the mortgaged property, unless it
has otherwise agreed with the tenant. If a non-subordinate lease contains
provisions inconsistent with the mortgage or that could affect the enforcement
of the lender's rights, the provisions of the lease will take precedence over
the provisions of the mortgage. Many anchor tenant leases may not be
subordinate, or, if subordinate, may provide that the lease terms control in
certain matters, such as the application of insurance proceeds. Some non-anchor
leases may also not be subordinate to the related mortgage.
Litigation Arising Out of Ordinary Business May Have an Adverse Effect on Your
Certificates
There may be pending or threatened legal proceedings against the borrowers
and/or managers of the mortgaged properties and their affiliates arising out of
the ordinary business of the borrowers, managers and affiliates. We cannot
assure you that any such litigation would not have a material adverse effect on
the distributions on the certificates.
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The Cash Flow From Mortgaged Properties Not in Compliance With the Americans
with Disabilities Act May be Affected, Which May Have an Adverse Effect on the
Payment of Your Certificates
Under the Americans with Disabilities Act of 1990, all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. Borrowers may incur costs complying with the
ADA. In addition, noncompliance could result in the imposition of fines by the
federal government or an award of damages to private litigants.
Various Conflicts of Interest May Have an Adverse Effect on Your Certificates
Conflicts Between Various Classes of Certificateholders. The special
servicer is given considerable latitude in determining when and how to liquidate
or modify defaulted loans. The controlling class representative has the right to
replace the special servicer. At any given time, the holders of the most
subordinate class of principal balance certificates that has at least 25% of its
initial principal balance still outstanding will control the controlling class
representative. If no class has at least 25% of its initial principal balance
still outstanding, the most subordinate class of principal balance certificates
still outstanding will be the controlling class. These holders may have
interests in conflict with those of the holders of the other certificates. For
instance, these holders might desire to mitigate the potential for loss to their
certificates from a troubled loan by deferring enforcement in the hope of
maximizing future proceeds. However, the interests of the trust may be better
served by prompt action, since delay followed by a market downturn could result
in less proceeds to the trust than would have been realized if earlier action
had been taken.
It is anticipated that an entity managed by an affiliate of Midland Loan
Services, Inc., the initial special servicer, will acquire most of the privately
offered certificates, including those that have the right to appoint the initial
controlling class representative. Under such circumstances, the special servicer
may have interests that conflict with the interests of the other holders of the
certificates.
Conflicts Between the Trust and Affiliates of the Sellers. Conflicts of
interest may arise between the trust and affiliates of each of the sellers that
engage in the acquisition, development, operation, financing and disposition of
real estate.
Those conflicts may arise because affiliates of each of the sellers intend
to continue to actively acquire, develop, operate, finance and dispose of real
estate-related assets in the ordinary course of their business. During the
course of their business activities, those affiliates may acquire or sell
properties, or finance loans secured by properties which may include the
mortgaged properties or properties that are in the same markets as the mortgaged
properties. In such case, the interests of those affiliates may differ from, and
compete with, the interests of the trust. Decisions made with respect to those
assets may adversely affect the amount and timing of distributions on the
certificates. Midland Loan Services, Inc., one of the sellers, is also the
initial master servicer and special servicer.
Conflicts Between Managers and the Loan Borrowers. Substantially all of
the property managers for the mortgaged properties or their affiliates manage
additional properties, including properties that may compete with the mortgaged
properties. Affiliates of the managers, and certain of the managers themselves,
also may own other properties, including competing properties. The managers of
the mortgaged properties may accordingly experience conflicts of interest in the
management of the mortgaged properties.
Conflicts Between Sellers of Loans and Classes of Certificateholders.
Affiliates of the sellers could acquire the certificates entitled to appoint the
controlling class representative. Decisions made by the controlling class
representative may favor the interests of affiliates of such certificateholders
in a manner that could adversely affect the amount and timing of distributions
on the other certificates.
Midland Loan Services, Inc. May Have Conflicts as a Seller and as Master
Servicer. Each seller is obligated to substitute a qualified substitute loan or
to repurchase a loan if:
o there is a defect with respect to the documents relating to the loan, or
o one or more of its representations or warranties concerning the loan in the
related loan purchase agreement are breached,
provided that such defect or breach materially and adversely affects the
interests of the certificateholders and such defect or breach is not cured as
required. The ability of Midland to perform its obligations as master servicer
and special servicer under the pooling and servicing agreement may be
jeopardized if it incurs significant liabilities for the repurchase or
substitution of loans. In addition, since the pooling and servicing
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agreement requires the master servicer to enforce on behalf of the trust the
sellers' obligations to repurchase or substitute loans, Midland may experience a
conflict of interest to the extent that Midland is obligated to repurchase or
substitute a loan as a seller.
Prepayments May Reduce the Yield on Your Certificates
The yield to maturity on your certificates may depend, in significant
part, upon the rate and timing of principal payments on the loans. For this
purpose, principal payments include:
o voluntary prepayments, if permitted, and
o involuntary prepayments resulting from:
1. casualty or condemnation of mortgaged properties,
2. defaults and liquidations by borrowers, or
3. repurchases upon a seller's breach of a representation or warranty.
Because the notional amount of the class S certificates is based upon the
principal balance of the certificates with principal amounts, the yield to
maturity on the class S certificates will be extremely sensitive to the rate and
timing of prepayments of principal.
The investment performance of your certificates may vary materially and
adversely from your expectations if the actual rate of prepayment is higher or
lower than you anticipate.
Voluntary prepayments under certain of the loans require payment of a
prepayment premium unless the loan is within a specified number of days of the
anticipated repayment date or stated maturity date, as the case may be. See
"Description of the Mortgage Pool - Certain Terms and Conditions of the Mortgage
Loans - Prepayment Provisions". Nevertheless, we cannot assure you that the
related borrowers will refrain from prepaying their loans due to the existence
of a prepayment premium. We also cannot assure you that involuntary prepayments
will not occur. The rate at which voluntary prepayments occur on the loans will
be affected by a variety of factors, including:
o the terms of the loans;
o the length of any prepayment lockout period;
o the level of prevailing interest rates;
o the availability of mortgage credit;
o the applicable yield maintenance charges or percentage premiums;
o the master servicer's or special servicer's ability to enforce those
charges or premiums;
o the occurrence of casualties or natural disasters; and
o economic, demographic, tax, legal or other factors.
Generally, the loan documents do not require the borrower to pay a
prepayment premium for prepayments in connection with a casualty or
condemnation, unless an event of default has occurred and is continuing. In
addition, if a seller repurchases any mortgage from the trust due to breaches of
representations or warranties, the repurchase price paid will be passed through
to the holders of the certificates with the same effect as if the loan had been
prepaid, except that no prepayment premium would be payable. Such a repurchase
may therefore adversely affect the yield to maturity on your certificates.
The Effect of State Laws Upon the Enforceability of Prepayment Premiums May
Affect the Payment and Yield of Your Certificates
Provisions requiring prepayment premiums and lock-out periods may not be
enforceable in some states and under federal bankruptcy law. Those provisions
for charges and premiums also may constitute interest under applicable usury
laws. Accordingly, we cannot assure you that the obligation to pay a prepayment
premium or to prohibit prepayments will be enforceable. We also cannot assure
you that any foreclosure proceeds will be sufficient to pay an enforceable
prepayment premium. Additionally, although the collateral substitution
provisions related to defeasance do not have the same effect on the
certificateholders as prepayment, we cannot assure you that a court would not
interpret those provisions as requiring a prepayment premium. In certain
jurisdictions, those collateral substitution provisions might therefore be
deemed unenforceable under applicable law, or usurious.
The Yield on Your Certificate Will Be Affected by the Price at Which the
Certificate Was Purchased and the Rate, Timing and Amount of Distributions on
the Certificate
The yield on any certificate will depend on (1) the price at which the
certificate is purchased by an investor and (2) the rate, timing and amount of
distributions on the certificate. The rate, timing and amount of distributions
on any certificate will, in turn, depend on, among other things:
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o the interest rate for the certificate;
o the rate and timing of principal payments, including prepayments, and other
principal collections on or in respect of the loans;
o the extent to which principal collections are applied to or otherwise
result in a reduction of the principal balance or notional amount of the
certificate;
o the rate, timing and severity of losses on or in respect of the loans or
unanticipated expenses of the trust;
o the timing and severity of any interest shortfalls resulting from
prepayments;
o the timing and severity of any reductions in advances as described under
"Description of the Certificates--Appraisal Reductions of Loan Balances";
and
o the extent to which prepayment premiums are collected and, in turn,
distributed on the certificate.
You Bear the Risk of Borrower Defaults
The rate and timing of delinquencies or defaults on the loans will affect
the following aspects of the certificates:
o the aggregate amount of distributions on them;
o their yield to maturity;
o their rates of principal payments; and
o their weighted average lives.
The rights of holders of each class of subordinate certificates to receive
certain payments of principal and interest otherwise payable on their
certificates will be subordinated to the rights of the holders of the more
senior certificates having an earlier alphabetical and numerical class
designation. See "Description of the Certificates - Distributions." Losses on
the loans will be allocated to the class D, class C, class B-8, class B-7, class
B-6, class B-5, class B-4, class B-3, class B-2, class B-1, class A-4, class A-3
and class A-2 certificates, in that order, reducing amounts otherwise payable to
each class. Any remaining losses would then be allocated to the class A-1A and
class A-1B certificates, pro rata, based on their then-outstanding class
principal balances.
If losses on the loans exceed the aggregate principal amount of the
classes of certificates subordinated to a particular class, that class will
suffer a loss equal to the full amount of the excess (up to the outstanding
principal amount of the class).
If you calculate your anticipated yield based on assumed rates of default
and losses that are lower than the default rate and losses actually experienced
and such losses are allocable to your certificates, your actual yield to
maturity will be lower than your assumed yield. Under certain extreme scenarios,
your yield could be negative. In general, the earlier a loss borne by your
certificates occurs, the greater the effect on your yield to maturity.
Additionally, delinquencies and defaults on the loans may significantly
delay the receipt of distributions by you on your certificates, unless:
o the master servicer makes advances to cover delinquent payments, or
o the subordination of another class of certificates fully offsets the
effects of any such delinquency or default.
Also, if the related borrower does not repay a loan with a
hyper-amortization feature by its anticipated repayment date, the effect will be
to increase the weighted average life of your certificates and, if your
certificate was purchased at a discount, may reduce your yield to maturity.
Compensation and Other Payments to the Master Servicer, the Special Servicer and
the Trustee May Have an Adverse Effect on the Payment of Your Certificates
To the extent described in this prospectus supplement, the master
servicer, the special servicer and the trustee will each be entitled to receive
interest on unreimbursed advances made by it. This interest will generally
accrue from the date on which the related advance is made or the related expense
is incurred through the date of reimbursement. In addition, under certain
circumstances, including delinquencies in the payment of principal and interest,
a loan will be specially serviced, and the special servicer is entitled to
compensation for special servicing activities. The right to receive interest on
advances or special servicing compensation is senior to the rights of
certificateholders to receive distributions.
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A Number of Factors That Affect the Liquidity of Your Certificates May Have an
Adverse Effect on the Value of Your Certificates
Your certificates will not be listed on any securities exchange, and there
is currently no secondary market for the offered certificates. While Donaldson,
Lufkin & Jenrette and Prudential Securities each currently intends to make a
secondary market in the offered certificates, it is not obligated to do so.
Accordingly, you may not have an active or liquid secondary market for your
certificates. Lack of liquidity could result in a substantial decrease in the
market value of your certificates. Furthermore, you should be aware that the
market for securities of the same type as the certificates has recently been
volatile and offered very limited liquidity. Finally, affiliates of the sellers
may acquire certain classes of offered certificates in which case the market for
those classes of offered certificates may not be as liquid as if third parties
had acquired such certificates.
Risk of Pass-Through Rate Variability
The interest rates of the class S, class B-1 and class B-2 certificates
are based on a weighted average of certain net mortgage rates of the loans.
Loans with relatively high interest rates are more likely to prepay than loans
with relatively low interest rates. Higher rates of principal payments on loans
having mortgage interest rates above the weighted average interest rate of the
loans will have the effect of reducing the interest rate of such certificates.
In addition, the pass-through rates on the class A-1B, class A-2, class A-3 and
class A-4 certificates may not exceed the weighted average of the net mortgage
rates of the loans.
Computer Programming Problems Related to the Year 2000 May Have Adverse Effects
on the Payment of Your Certificates
We are aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The "year 2000 problem"
is pervasive and complex; virtually every computer operation will be affected in
some way by the rollover of the two-digit year value to 00. The issue is whether
computer systems will properly recognize date-sensitive information when the
year changes to 2000. Systems that do not properly recognize such information
could generate erroneous data or otherwise fail.
We have been advised by each of the master servicer, the special servicer
and the trustee that they either:
o are implementing modifications to their respective existing systems to the
extent required to cause them to be year 2000 compliant, or
o will acquire computer systems that are year 2000 compliant.
However, we have not made any independent investigation of the computer
systems of the master servicer, the special servicer or the trustee. In the
event that the computer systems of the master servicer, the special servicer or
the trustee are not fully year 2000 compliant, the resulting disruptions in the
collection or distribution of receipts on the loans could materially adversely
affect your investment.
Additionally, we have not made any independent investigation of the
computer systems of any borrower or any tenant of a mortgaged property. The
operation of a borrower or a tenant at a mortgaged property may be dependent
upon computer systems that are not fully year 2000 compliant. In such case,
disruptions could occur in the borrower's collection of rents and other income
from such mortgaged property, potentially resulting in disruptions in the
borrower's required payments due in connection with such loan.
Other Risks
See "Risk Factors" in the prospectus for a description of certain other
risks and special considerations that may be applicable to your certificates.
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DESCRIPTION OF THE MORTGAGE POOL
General
The mortgage pool will consist of 207 multifamily and commercial "whole"
loans, with an aggregate Cut-off Date Principal Balance of $760,414,266 (the
"Initial Pool Balance"), subject to a variance of plus or minus 5%. In making
this count, each Multiple Property Loan was counted as one loan. The Multiple
Property Loans and all other loans in the mortgage pool are collectively
referred to as the "Mortgage Loans". All numerical information concerning the
Mortgage Loans is approximate.
The "Cut-off Date Principal Balance" of each Mortgage Loan is its unpaid
principal balance as of December 1, 1999 (the "Cut-off Date"), after application
of all principal payments due on or before such date, whether or not received.
The description of the Mortgage Loans in this prospectus supplement is a
generalized description of the Mortgage Loans in the aggregate. Many of the
individual Mortgage Loans have special terms and provisions that are different
from the generalized, aggregated description.
A brief summary of some of the terms of the 5 largest Mortgage Loans, or
groups of Cross-Collateralized Loans, is set forth in Exhibit B. Additionally,
certain information regarding Mortgage Loans secured by Mortgages encumbering
multifamily properties is set forth in Exhibit A-1.
Each Mortgage Loan is evidenced by one or more separate promissory notes.
Each Mortgage Loan is secured by a mortgage, deed of trust, deed to secure debt
or other similar security instrument (all of the foregoing are individually a
"Mortgage" and collectively the "Mortgages"), which creates a lien on one or
more of a fee simple estate or a leasehold estate in one or more parcels of real
property (a "Mortgaged Property") improved for multifamily or commercial use.
See Exhibit A-2 for information as to the percentage of the Initial Pool Balance
represented by each type of Mortgaged Property.
None of the Mortgage Loans is insured or guaranteed by the United States
of America, by any governmental agency or instrumentality, by any private
mortgage insurer or by the depositor, the sellers, the master servicer, the
special servicer, the trustee, the underwriters or any of their respective
affiliates.
All of the Mortgage Loans should be considered non-recourse loans. This
means that if the loan is in default, the lender's remedies are limited to
foreclosing or acquiring the related Mortgaged Property and any other assets
pledged to secure the loan. For those Mortgage Loans that permit recourse
against any person or entity, the depositor has not evaluated the financial
condition of those persons or entities. In many cases, the only assets such
entities may have are those pledged to secure the loan.
The depositor will purchase the Mortgage Loans on or before the closing
date from the sellers, in each case pursuant to separate mortgage loan purchase
and sale agreements entered into between the depositor and the particular
seller. As described under "Description of the Mortgage Pool--Representations
and Warranties; Repurchase", each seller must generally repurchase a Mortgage
Loan or substitute a Qualified Substitute Mortgage Loan if a representation or
warranty made by the seller in its mortgage loan purchase agreement about the
Mortgage Loan was incorrect at the time it was made, if the breach materially
and adversely affects the interests of the certificateholders and is not cured.
There can be no assurance that any seller has or will have sufficient assets
with which to fulfill any repurchase or substitution obligations that may arise.
The depositor will not have any obligation to fulfill any repurchase obligation
if a seller fails to do so. The depositor will assign the Mortgage Loans,
together with the depositor's rights and remedies against the sellers in respect
of breaches of representations or warranties regarding the Mortgage Loans, to
the trustee pursuant to the pooling and servicing agreement.
Security for the Mortgage Loans
All of the Mortgage Loans are secured by a first lien encumbering one or
more of a fee simple estate or a leasehold estate in the related Mortgaged
Property, subject generally only to:
o liens for real estate and other taxes and special assessments not yet
delinquent or accruing interest or penalties,
o rights of tenants, as tenants only, under third party leases which were not
required to be subordinated,
o covenants, conditions, restrictions, rights of way, easements and other
matters of public record as of the date of recording of the Mortgage or
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otherwise specified in the applicable lender's title insurance policy,
o purchase money security interests,
o other exceptions and encumbrances on the Mortgaged Property that are
reflected in the related title insurance policies, and
o other matters to which like properties are commonly subject.
Ground Leases
The Mortgages for 4 Mortgaged Properties (1.3%) encumber the related
borrower's leasehold interest in the related Mortgaged Property. For each ground
lease, the related ground lessors have agreed to afford the mortgagee certain
notices and rights, including without limitation, cure rights with respect to
breaches of the related ground lease by the related borrower. The Mortgages for
2 other Mortgaged Properties (0.9%) encumber both the related borrower's
leasehold interest and the fee interest of the owner/landlord in the related
Mortgaged Property.
Cross-Collateralized Loans
The mortgage pool includes 5 separate sets of Mortgage Loans (the
"Cross-Collateralized Loans") that are cross-collateralized and cross-defaulted
with one or more related Cross-Collateralized Loans. None of the Mortgage Loans
are cross-collateralized or cross-defaulted with any mortgage loan not included
in the mortgage pool. No set of related Cross-Collateralized Loans constitutes
more than 1.2% of the Initial Pool Balance. See Exhibit A-1 for more information
regarding the Cross-Collateralized Loans.
Multiple Property Loans
For purposes of the statistical information contained in this prospectus
supplement and the Exhibits, a single indebtedness secured by separate Mortgages
encumbering separate Mortgaged Properties is considered as one Mortgage Loan
(collectively, the "Multiple Property Loans").
However, for purposes of providing certain property-specific information
for the Multiple Property Loans, each such Mortgage Loan has been allocated
among its respective Mortgaged Properties based upon:
o relative appraised value;
o relative underwritable cash flow; or
o prior allocations reflected in the related loan documents.
Underwriting Standards
The following is a discussion of the customary underwriting policies and
procedures used to originate the Mortgage Loans. Such policies and procedures
involved an evaluation of both the prospective borrower and the proposed real
estate collateral.
Factors typically analyzed in connection with a Mortgaged Property
include:
Physical Characteristics:
o age and condition;
o appraised value;
o gross square footage, net rentable area and gross land area;
o number of units, rooms or beds; and
o property interest to be mortgaged (fee or leasehold).
Tenants:
o current tenants' size and identity;
o termination or purchase option rights;
o term, expiration and rental rates under current leases;
o leasing commissions; and
o tenant improvements and concessions.
Financial Information:
o historical cash flow;
o applicable market rentals for similar properties;
o historical vacancy rate and credit loss rate;
o debt service coverage ratio; and
o loan-to-value ratio.
A site inspection of the related Mortgaged Property was also typically
performed, and third party appraisals and engineering reports were generally
obtained. Environmental site assessments were obtained in connection with 193
Mortgaged Properties (97.5%), and environmental insurance policies were obtained
for the remaining Mortgaged Properties.
Factors typically analyzed in connection with a prospective borrower
include:
o credit history;
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o capitalization and overall financial resources; and
o management skill and experience in the applicable property type.
The above information has been provided by the sellers and has not been
independently verified by the depositor, the master servicer, the special
servicer, the underwriters or the trustee.
Certain Terms and Conditions of the Mortgage Loans
Due Dates
Monthly Payments are due on the first day of each month.
Mortgage Rates; Calculations of Interest
Two hundred six of the Mortgage Loans (98.9%) accrue interest on the basis
of the actual number of days elapsed each month in an assumed 360-day year. The
remainder of the Mortgage Loans accrue interest on the basis of an assumed
360-day year with twelve 30-day months. Except with respect to the
Hyper-Amortization Loans, each Mortgage Loan generally accrues interest at an
annualized rate that is fixed for the entire term of such Mortgage Loan and does
not permit any negative amortization or the deferral of fixed interest.
Amortization of Principal
Many of the Mortgage Loans provide for monthly payments of principal based
on amortization schedules substantially longer than their remaining terms. One
hundred ninety-two Mortgage Loans (89.7%) are "balloon loans" that are expected
to have more than 10% of their original principal balance remaining unpaid at
their maturity date. Ten of the Mortgage Loans (9.3%) are hyper-amortization
loans that will have substantial balloon payments on their Anticipated Repayment
Date. Such hyper-amortization loans also provide for an increase in their
interest rate and/or principal amortization prior to maturity. Five Mortgage
Loans (1.0%) have remaining amortization terms that are substantially the same
as their remaining terms to maturity. However, if the Monthly Payment for any
Mortgage Loan (including any Hyper-Amortization Loan) is calculated on an
assumed 30/360 basis but interest accrues on an actual/360 basis, there will be
a remaining balance or a larger balloon payment due upon maturity.
The weighted average Maturity/ARD LTV Ratio of the mortgage pool is 64.0%.
See "Description of the Mortgage Pool--Other Information".
Ten of the Mortgage Loans (9.3%) (the "Hyper-Amortization Loans") have the
following characteristics:
o each bears interest until its Anticipated Repayment Date at its Initial
Interest Rate;
o each bears interest on and after its Anticipated Repayment Date at its
Revised Interest Rate, and
o each requires that all gross revenue from the Mortgaged Property from and
after its Anticipated Repayment Date be deposited into a lockbox account
controlled by the lender and generally applied in the following order
(although individual loans may have exceptions):
o to tax and insurance reserves;
o to interest at the Initial Interest Rate;
o to all other amounts owed the lender not set forth below;
o to all principal due under the original amortization;
o to all other reserves;
o to all approved operating or capital expenses;
o to all other principal then outstanding;
o to all outstanding Deferred Interest; and
o to the borrower.
To the extent not paid from gross revenues, the payment of interest
accrued at the excess of the Revised Interest Rate over the Initial Interest
Rate is deferred until the maturity date or when the principal is prepaid in
full. The deferred interest may also bear interest at the Revised Interest Rate.
The accrued and deferred interest, and interest thereon, is referred to as
"Deferred Interest").
"Anticipated Repayment Date" or "ARD" means for any Hyper-Amortization
Loan the date on and after which the Revised Interest Rate applies and the
lockbox is activated.
"Initial Interest Rate" means for any Hyper-Amortization Loan the rate at
which such Hyper-Amortization Loan accrues interest from its origination until
its Anticipated Repayment Date.
"Revised Interest Rate" means for any Hyper-Amortization Loan the
increased rate at which the Hyper-Amortization Loan bears interest from and
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after its Anticipated Repayment Date. The Revised Interest Rate is typically
equal to the greater of:
o its Initial Interest Rate plus 2%, or
o the yield rate on the U.S. Treasury obligation that matures in the month or
succeeding month in which the original maturity date of the
Hyper-Amortization Loan occurs plus 2%.
The Revised Interest Rate may also be subject to a cap equal to its
Initial Interest Rate plus a percentage specified in the related note.
However, for 2 Hyper-Amortization Loans (6.3%), the Revised Interest Rate
is equal to the Initial Interest Rate plus 2.0% and 2.5%, respectively.
Prepayment Provisions
Two hundred six of the Mortgage Loans (99.4%) are subject to specified
periods following origination during which no voluntary prepayments are allowed
(a "Lock-out Period").
The Mortgage Loans (other than the Defeasance Loans) generally permit the
borrower to voluntarily prepay the Mortgage Loan after the Lock-out Period if it
pays a prepayment premium. The Mortgage Loan documents generally provide for a
specified period prior to maturity during which a prepayment may be made without
a prepayment premium. Other than as described below or during any such "open
period", the Mortgage Loans prohibit any borrower from making a partial
prepayment.
A borrower does not have to pay a prepayment premium if it pays a
Hyper-Amortization Loan on or after its Anticipated Repayment Date.
With respect to Mortgage Loans other than the Defeasance Loans, the
applicable prepayment premium is generally calculated:
o for 52 Mortgage Loans, for a certain period (a "Yield Maintenance Period")
after the origination of the related Mortgage Loan or the expiration of the
applicable Lock-out Period, if any, on the basis of a yield maintenance
formula or, for some Mortgage Loans, a specified percentage of the amount
prepaid if the percentage is greater than the yield maintenance amount,
o for 1 Mortgage Loan, after the expiration of the applicable Yield
Maintenance Period, a specified percentage of the amount prepaid, which
percentage will remain constant over time, and
o for 1 Mortgage Loan, no prepayment premium is required after the expiration
of the applicable Lock-out Period.
Exhibit A-1 contains more specific information about the prepayment
premiums for each Mortgage Loan.
Each Mortgage Loan providing for the payment of a yield maintenance amount
in connection with a permitted principal prepayment provides that the amount
will be calculated by one of the following methods:
o subtracting the amount of principal being prepaid from the discounted
present value (using a discount rate determined in accordance with the
note), as of the prepayment date, of the remaining scheduled payments of
principal and interest on that Mortgage Loan from the prepayment date
through its maturity date (including any balloon payment); or
o multiplying:
1. the amount of principal being prepaid; times
2. the difference obtained by subtracting a United States Treasury
Security yield rate (determined in accordance with the note) from the
interest rate applicable to the related Mortgage Loan; times
3. a present value factor calculated using the following formula:
1 - (1+r)-n
-----------
r
r = the specified yield rate (per item 2. above)
n = number of years, and any fraction thereof, remaining between the
prepayment date and the maturity date of the Mortgage Loan, or
Anticipated Repayment Date for Hyper-Amortization Loans.
The Mortgage Loans typically:
o provide that a borrower has to pay a prepayment premium in connection with
any involuntary prepayment resulting from a casualty or condemnation only
if the loan is in default;
o require the payment of the applicable prepayment premium for any prepayment
after an event of default (but prior to the sale by the mortgagee of the
Mortgaged Property through foreclosure or otherwise); and
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o permit the borrower to transfer the Mortgaged Property to a third party
without prepaying the Mortgage Loan if certain conditions are satisfied,
including, without limitation, an assumption by the transferee of all of
the borrower's obligations under the Mortgage Loan.
The depositor makes no representation as to the enforceability of the
provisions of any Mortgage Loan requiring the payment of a prepayment premium or
as to the collectability of any prepayment premium.
The tables included in Exhibit A-2 set forth an analysis of the percentage
of the declining balance of the mortgage pool that, for each of the time periods
indicated, will be within a Lock-out Period or in which Principal Prepayments
must be accompanied by the indicated prepayment premium.
Defeasance
For 153 of the Mortgage Loans (75.0%) (the "Defeasance Loans"), even
though a voluntary prepayment may be generally prohibited, the borrower may,
after the expiration of a specified period during which defeasance is
prohibited, obtain a release of the related Mortgaged Property by pledging
certain substitute collateral to the holder of the Mortgage Loan. No defeasance
may occur before the second anniversary of the closing date. This substitute
collateral consists of direct, non-callable United States Treasury obligations
that provide for payments prior, but as close as possible, to all dates on which
a Monthly Payment or final balloon payment is due. Each of the payments on the
substitute collateral must be equal to or greater than the Monthly Payment or
final balloon payment due on such date. For Hyper-Amortization Loans, the
payments on the substitute collateral must be sufficient to pay-off the loan on
its Anticipated Repayment Date. Any excess amounts will be returned to the
borrower.
The master servicer will require the cost, if any, of a defeasance to be
paid by the borrower and not by the trust.
"Due-on-Encumbrance" and "Due-on-Sale" Provisions
The Mortgages contain "due-on-encumbrance" clauses that permit the holder
of the Mortgage to accelerate the maturity of the related Mortgage Loan if the
borrower encumbers the related Mortgaged Property without the consent of the
mortgagee. The master servicer or special servicer, as applicable, will
determine, in a manner consistent with the servicing standard described under
"The Pooling and Servicing Agreement--Servicing of the Mortgage Loans;
Collection of Payments", whether to exercise any right the mortgagee may have
under any such clause to accelerate payment of a Mortgage Loan upon, or to
withhold its consent to, any additional encumbrance of the related Mortgaged
Property.
The Mortgages generally prohibit the borrower from transferring any
material interest in the Mortgaged Property or allowing a material change in the
ownership or control of the related borrower without the mortgagee's prior
consent. However, a transfer or change generally will be permitted if certain
conditions specified in the related Mortgage Loan documents are satisfied. These
conditions may include one or more of the following:
o no event of default exists;
o the proposed transferee meets the mortgagee's customary underwriting
criteria;
o the Mortgaged Property continues to meet the mortgagee's customary
underwriting criteria; and
o an acceptable assumption agreement is executed.
The related Mortgages may also allow changes in the ownership or control
of the related borrower between partners, members or shareholders as of the
closing of the Mortgage Loan, family members, affiliated companies and certain
specified individuals, or for estate planning purposes.
The master servicer or the special servicer, as applicable, will
determine, in a manner consistent with the servicing standard described under
"The Pooling and Servicing Agreement--Servicing of the Mortgage Loans;
Collection of Payments", whether to exercise any right the mortgagee may have to
accelerate payment of a Mortgage Loan upon, or to withhold its consent to, any
transfer of all or any of a Mortgaged Property or any transfer or change in
ownership or control of the related borrower. The depositor makes no
representation as to the enforceability of any due-on-sale or due-on-encumbrance
provision in any Mortgage Loan that is the subject of a proceeding under federal
bankruptcy law. See "Certain Legal Aspects of Mortgage Loans--Due-on-Sale and
Due-on-Encumbrance Provisions" in the prospectus.
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Hazard, Liability and Other Insurance
Generally, each Mortgage Loan requires that the Mortgaged Property be
insured against loss or damage by fire or other risks and hazards covered by a
standard extended coverage insurance policy. The minimum amount of such
insurance is usually the lesser of the full replacement cost of the Mortgaged
Property or the outstanding principal balance of the loan, but in any event in
an amount sufficient to ensure that the insurer would not deem the borrower a
co-insurer. Generally, each Mortgage Loan also requires that the related
borrower maintain the following insurance during the term of the Mortgage Loan:
o comprehensive public liability insurance, typically with a minimum limit of
$1,000,000 per occurrence;
o if any part of the Mortgaged Property upon which a material improvement is
located lies in a special flood hazard area and for which flood insurance
has been made available, a flood insurance policy in an amount equal to the
least of the outstanding principal balance of the loan, full replacement
cost of the Mortgaged Property and the maximum limit of coverage available
from governmental sources;
o if deemed advisable by the originator, rent loss and/or business
interruption insurance in an amount equal to all net operating income from
the operation of the Mortgaged Property for a period as required by the
Mortgage; and
o if applicable, insurance against loss or damage from explosion of steam
boilers, air conditioning equipment, high pressure piping, machinery and
equipment, pressure vessels or similar apparatus.
The Mortgage Loans generally do not require the borrower to maintain
earthquake insurance.
With respect to many of the Mortgage Loans, the borrower has satisfied the
applicable insurance requirements by obtaining blanket insurance policies. The
mortgagee generally has the right to review and approval the blanket insurance
policy, including the amount of insurance and the number of properties covered
by the policy.
Casualty and Condemnation
Subject to the rights of the lessor under any ground lease, the Mortgage
Loan documents typically provide that all material insurance proceeds or
condemnation awards will be paid to the mortgagee if:
o the Mortgaged Property is damaged by fire or another casualty; or
o any taking or exercise of the power of eminent domain occurs with respect
to a Mortgaged Property.
In general, the mortgagee then has the option to either apply the proceeds or
awards to the outstanding indebtedness of the Mortgage Loan, or allow the
borrower to use the proceeds to restore the Mortgaged Property. However, if
certain specified conditions are satisfied, the mortgagee may be required to pay
the proceeds or awards to the borrower for restoration of the Mortgaged
Property. In certain of the Mortgage Loans, the lease between the borrower and a
tenant of all or part of the Mortgaged Property may require the borrower or the
tenant to restore the Mortgaged Property if a casualty or condemnation occurs.
In this case, the Mortgage Loan documents may permit the application of all
applicable proceeds or awards to satisfy the requirement.
Financial Reporting
The Mortgages generally contain a covenant that requires the borrower to
provide the mortgagee with certain financial reports at least once a year about
the borrower's operations at the Mortgaged Property. Such reports typically
include information about income and expenses for the property for the period
covered by such reports, and/or current tenancy information. However, in the
case of owner-occupied properties, the borrower typically provides financial
information for itself instead of the Mortgaged Property.
Delinquencies
No Mortgage Loan was 30 or more days delinquent in respect of any Monthly
Payment as of the Cut-off Date, or during the 12 months immediately preceding
the Cut-off Date.
Prior Bankruptcies
Some of the borrowers under the Mortgage Loans or their affiliates have
been parties to, and/or
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some of the underlying real properties have been the subject of, prior
bankruptcy proceedings.
Borrower Escrows and Reserve Accounts
In many of the Mortgage Loans, the borrower was required, or may under
certain circumstances in the future be required, to establish one or more
reserve or escrow accounts (such accounts, "Reserve Accounts") for those matters
and in such amounts deemed necessary by the originator of the loan. These
matters may include one or more of the following:
o necessary repairs and replacements,
o tenant improvements and leasing commissions,
o real estate taxes and assessments,
o water and sewer charges,
o insurance premiums,
o environmental remediation,
o improvements mandated under the Americans with Disabilities Act of 1990, or
o deferred maintenance and/or scheduled capital improvements.
Exhibit A-1 contains more specific information about the Reserve Accounts
for each Mortgage Loan.
Certain Characteristics of the Mortgage Pool
Concentration of Mortgage Loans and Borrowers
The largest single Mortgage Loan has a Cut-off Date Principal Balance that
represents 5.9% of the Initial Pool Balance. The 5 largest individual Mortgage
Loans (or sets of Cross-Collateralized Loans) represent in the aggregate 19.6%
of the Initial Pool Balance. No set of Mortgage Loans made to a single borrower
or to a single group of affiliated borrowers constitutes more than 6.0% of the
Initial Pool Balance. See Exhibit A-1 for further information regarding these
Mortgage Loans.
Environmental Risks
Environmental site assessments were obtained for 193 of the Mortgaged
Properties (97.5%) during the 24-month period ending on September 20, 1999. The
assessments for 12 of those Mortgaged Properties (5.0%) were obtained more than
18 months prior to the Cut-off Date. The assessments for 3 of those Mortgaged
Properties (0.4%) did not satisfy all of the requirements necessary to be
considered "Phase I" environmental site assessments.
No environmental site assessments were obtained for 19 Mortgaged
Properties (2.5%). For each of 6 Mortgaged Properties (2.0%), a "Phase II"
environmental site assessment was recommended but not performed. In general, the
decision not to take either of the foregoing actions with respect to any of
those Mortgaged Properties was based upon the borrower or the lender obtaining
an environmental insurance policy with respect to the Mortgaged Property.
Except as described herein, where an environmental site assessment
disclosed a known or potential material and adverse environmental condition, the
originator required the borrower to:
o escrow funds deemed sufficient to ensure remediation of or to monitor the
environmental issue;
o obtain an environmental insurance policy that covers the environmental
issue; or
o establish an operations and maintenance plan that, if implemented, would
prevent any material and adverse consequences resulting from the
environmental issue.
In some cases, the environmental consultant did not recommend that any
action be taken with respect to a known or potential adverse environmental
condition at a Mortgaged Property or a nearby property because:
o a remediation, under the supervision of an environmental regulatory agency,
had been completed or was currently underway;
o an environmental regulatory agency had issued a "no further action" letter
regarding the condition; or
o a responsible party with respect to the condition had already been
identified.
See "Risk Factors--Environmental Issues Relating to Specific Properties
May Have an Adverse Effect on the Payment of Your Certificates" for more
information about the environmental condition of certain Mortgaged Properties.
Some of the Mortgaged Properties are in areas of known groundwater
contamination or in the vicinity of sites containing "leaking underground
storage tanks" or other potential sources of groundwater contamination. The
environmental site
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assessments mentioned above generally do not anticipate that the borrower will
have to undertake remedial investigations or actions at these sites. Further,
the federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980 and certain state environmental laws provide for a third-party defense
that generally would preclude liability for a party whose property is
contaminated by off-site sources. In addition, in its final "Policy Toward
Owners of Property Containing Contaminated Aquifers," dated May 24, 1995, the
United States Environmental Protection Agency stated that it would not take
enforcement actions against the owner of such property to require the
performance of remediation actions or the payment of remediation costs. This
policy statement is subject to certain conditions and applies only if the
hazardous substances have come to be located on or in a property solely as a
result of subsurface migration in an aquifer from a source or sources outside
the property.
Even if the owners of these Mortgaged Properties and the trust fund are
not liable for such contamination, enforcement of the borrower's or the trust
fund's rights against third parties may result in additional transaction costs.
In addition, the presence of such contamination or potential contamination may
affect the borrower's ability to:
o refinance the Mortgage Loan using the Mortgaged Property as collateral, or
o sell the Mortgaged Property to a third party.
It may also affect the value of the Mortgaged Property that may be realized upon
any foreclosure.
You should understand that the results of the environmental site
assessments do not constitute an assurance or guaranty by the underwriters, the
depositor, the originators, the sellers, the borrowers, any environmental
consultants or any other person as to the absence or extent of the existence of
any environmental condition on the Mortgaged Properties that could result in
environmental liability. Given the scope of the environmental site assessments,
an environmental condition that affects a Mortgaged Property may not be
discovered or its severity revealed during the course of the assessment.
Further, no assurance can be given that future changes in applicable
environmental laws, the development or discovery of presently unknown
environmental conditions at the Mortgaged Properties or the deterioration of
existing conditions will not require material expenses for remediation or other
material liabilities. There can be no assurance that any hold-back or other
escrow of funds to pay the cost of completing any clean-up, remediation or
compliance actions with respect to a Mortgaged Property will be sufficient to
complete such actions.
Environmental Insurance
Depositor Group Policy.
In connection with the issuance of the certificates, the depositor will
obtain a secured creditor impaired property group policy covering environmental
matters with respect to 14 Mortgaged Properties (6.1%). In general, that group
policy provides coverage for the following losses, subject to no deductibles
and, further, to the coverage limits discussed below:
o if during the term of the policy, adverse environmental conditions exist at
levels above legal limits on an insured Mortgaged Property and the borrower
defaults under the related Mortgage Loan, the insurer will indemnify the
trust for the outstanding principal balance of the related Mortgage Loan on
the date of the default, together with accrued interest;
o if the trust becomes legally obligated to pay as a result of a claim first
made against the trust and reported to the insurer during the term of the
policy, for bodily injury, property damage or clean-up costs resulting from
adverse environmental conditions on, under or emerging from an insured
Mortgaged Property, the insurer will cover that claim; and
o if the trust enforces the related mortgage and the related insured
Mortgaged Property is acquired by the trust, the insurer will thereafter
pay clean-up costs for adverse environmental conditions at levels above
legal limits which exist on or under that Mortgaged Property.
The coverage limits for this secured creditor impaired property group
policy are as follows:
o the per occurrence limit will equal 125% of the principal balance of the
related Mortgage Loan, and
o the aggregate limit will equal 40% of the aggregate principal balance of
all the covered Mortgage Loans.
Column Individual Policies.
Additionally, with respect to 19 Mortgage Loans (2.5%) to be acquired by
the depositor from
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Column Financial, Inc., secured creditor impaired property policies were
obtained covering environmental matters with respect to the related Mortgaged
Properties. In general, each of these policies provide coverage for the
following losses, subject to the exclusions from coverage discussed under
"--Environmental Insurance--General Information" below:
o if during the term of the policy, adverse environmental conditions exist at
levels above legal limits on the related insured Mortgaged Property and the
borrower defaults under the related Mortgage Loan, the insurer will
indemnify the trust for the outstanding principal balance of the related
Mortgage Loan on the date of the default, together with accrued interest;
o if the trust becomes legally obligated to pay as a result of a claim first
made against the trust and reported to the insurer during the term of the
policy, for bodily injury, property damage or clean-up costs resulting from
adverse environmental conditions on, under or emerging from the related
insured Mortgaged Property, the insurer will cover that claim; and
o if the trust enforces the related mortgage and the related insured
Mortgaged Property is acquired by the trust, the insurer will thereafter
pay clean-up costs for adverse environmental conditions at levels above
legal limits which exist on or under that Mortgaged Property;
provided that the trustee, the master servicer and/or the special servicer first
became aware of those adverse environmental conditions during the term of the
policy and the appropriate party reported those conditions to the government in
accordance with applicable law.
General Information.
Each of the secured creditor impaired property policies described above,
including the group policy, require that the appropriate party associated with
the trust report a claim during the term of the related policy. None of those
policies includes coverage for asbestos and lead-based paint. Furthermore, none
of those policies pays for unreimbursed servicing advances.
The premium for each of the secured creditor impaired policies described
above, including the group policy, has been or, as of the date of initial
issuance of the certificates, will be paid in full. The insurer under each of
those policies is either American International Specialty Lines Insurance
Company or Commerce and Industry Insurance Co. Both of those insurers are member
companies of the American Insurance Group, Inc.
Geographic Concentration
Mortgaged Properties located in California and Texas secure approximately
15.0% and 11.6%, respectively, of the Initial Pool Balance. Additionally,
Mortgaged Properties located in each of New York, Florida, Michigan, Oklahoma
and Massachusetts secure at least 5%, but less than 10%, of the Initial Pool
Balance. The occurrence of adverse economic conditions in any such jurisdiction
may affect repayments of the related Mortgage Loans or the value of such
Mortgaged Properties. Such Mortgaged Properties may be more susceptible to
certain special hazard losses than properties located in other areas of the
country. No more than 5% of the Initial Pool Balance is secured by Mortgaged
Properties located in any other jurisdiction. See "Risk Factors--Increased
Geographic Concentrations of Mortgaged Properties May Have an Adverse Effect on
the Payment of Your Certificates" and Exhibit A-2.
Zoning Compliance
The originator for each Mortgage Loan generally received assurances that
all of the improvements located upon each respective Mortgaged Property complied
with all zoning laws in all respects material to the continued use of the
related Mortgaged Property, or that the improvements qualified as permitted
non-conforming uses. Where a Mortgaged Property is operated as a permitted
non-conforming use, an analysis was generally conducted as to whether existing
replacement cost hazard insurance or, if necessary, supplemental "law and
ordinance coverage" would, in the event of a material casualty, be sufficient to
satisfy the entire Mortgage Loan or, taking into account the cost of the repair,
be sufficient to pay down that Mortgage Loan to a level that the remaining
collateral would be adequate security for the remaining loan amount.
Tenant Matters
Certain additional information regarding Mortgaged Properties that are
owner occupied or leased in whole or in large part to a single tenant is listed
in Exhibit A-2. Generally, these owners or major tenants do not have
investment-grade credit ratings. The major tenants generally occupy their
premises pursuant to leases which may require them to pay all applicable real
property taxes, maintain
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insurance over the improvements thereon and maintain the physical condition of
such improvements. For 44 of the Mortgaged Properties (16.4%), the owner or
major tenant occupies 50% or more of the Mortgaged Property.
Other Information
Each of the tables in Exhibit A-2 lists certain characteristics of the
mortgage pool presented, where applicable, as of the Cut-off Date. The sum in
any column of any of the tables in Exhibit A-2 may not add to 100% and may not
equal the indicated total due to rounding. For a detailed presentation of
certain of the characteristics of the Mortgage Loans and the Mortgaged
Properties, on an individual basis, see Exhibit A-1. For a brief summary of
certain of the terms of the 5 largest Mortgage Loans, or groups of
Cross-Collateralized Loans, see Exhibit B. Certain information regarding
Mortgage Loans secured by Mortgages encumbering multifamily properties is listed
in Exhibit A-1. Finally, certain information regarding the Reserve Accounts for
each Mortgage Loan is set forth in Exhibit A-1.
For purposes of the tables in Exhibit A-2 and for the information included
in this prospectus supplement and in Exhibits A-1 and B the following
definitions and assumptions apply:
Debt Service Coverage Ratio
In general, income property lenders use debt service coverage ratios
(DSCR) to measure the ratio of (a) cash currently generated by a property that
is available for debt service to (b) required debt service payments. However,
debt service coverage ratios only measure the current, or recent, ability of a
property to service mortgage debt. If a property does not possess a stable
operating expectancy (for instance, if it is subject to material leases that are
scheduled to expire during the loan term and that provide for above-market rents
and/or that may be difficult to replace), a debt service coverage ratio may not
be a reliable indicator of a property's ability to service the mortgage debt
over the entire remaining loan term.
For purposes of this prospectus supplement, including for the tables in
Exhibit A-2 and the information in Exhibits A-1 and B, the "Debt Service
Coverage Ratio" or "DSCR" for any Mortgage Loan (or group of
Cross-Collateralized Loans) is the ratio of either the "Underwritable Cash Flow"
estimated to be produced by the related Mortgaged Property or Properties or the
Most Recent Net Operating Income, as described below, to the annualized amount
of debt service payable under that Mortgage Loan (or that group of
Cross-Collateralized Loans). All debt service coverage ratio information
included in this prospectus supplement excludes the 1 Mortgaged Property subject
to a credit tenant lease.
"Most Recent DSCR" for a Mortgage Loan (or group of Cross-Collateralized
Loans) is the ratio of its Most Recent Net Operating Income to the annualized
amount of debt service payable under that Mortgage Loan (or group of
Cross-Collateralized Loans).
"U/W DSCR" or "Underwritable Debt Service Coverage Ratio" for a Mortgage
Loan (or group of Cross-Collateralized Loans) is the ratio of its Underwritable
Cash Flow calculated in connection with the underwriting of the Mortgage Loan to
the annualized amount of debt service payable under that Mortgage Loan (or group
of Cross-Collateralized Loans).
"Underwritable Cash Flow" in each case is an estimate of stabilized cash
flow available for debt service. In general, it is the estimated stabilized
revenue derived from the use and operation of a Mortgaged Property (consisting
primarily of rental income) less the sum of:
o estimated stabilized operating expenses (such as utilities, administrative
expenses, repairs and maintenance, management fees and advertising),
o fixed expenses (such as insurance, real estate taxes and, if applicable,
ground lease payments), and
o recurring capital expenditures and reserves for capital expenditures,
including tenant improvement costs and leasing commissions.
Underwritable Cash Flow generally does not reflect interest expenses and
non-cash items such as depreciation and amortization.
In determining Underwritable Cash Flow for a Mortgaged Property, the
seller relied on rent rolls and other generally unaudited financial information
provided by the borrowers and calculated stabilized estimates of cash flow that
took into consideration historical financial statements, material changes in the
operating position of the Mortgaged Property of which the seller was aware
(e.g., new signed leases or end of "free rent" periods and market data), and
estimated recurring capital expenditures and reserves for leasing commission and
tenant improvements. The seller made certain adjustments to particular
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items in the operating statements and operating information obtained from the
borrowers, resulting in either an increase or decrease in the estimate of
Underwritable Cash Flow derived therefrom. These adjustments were based upon the
seller's evaluation of such operating statements and operating information and
the assumptions applied by the borrowers in preparing such statements and
information. Such adjustments may not have been consistent with generally
accepted accounting principles. In certain cases, partial year operating income
data was annualized, with certain adjustments for items deemed not appropriate
to be annualized, or borrower supplied "trailing-12 months" income and/or
expense information was utilized. In certain instances, historical expenses were
inflated. For purposes of calculating Underwritable Cash Flow for Mortgage Loans
where leases have been executed by one or more affiliates of the borrower, the
rents under some of such leases have been adjusted to reflect market rents for
similar properties. In some instances, lease rentals were adjusted to take into
account rent increases scheduled to occur within the next 12 months. Several
Mortgage Loans are secured by Mortgaged Properties with newly constructed
improvements and, accordingly, there were no historical operating results or
financial statements available with respect to such Mortgaged Properties. In
such cases, items of revenue and expense used in calculating Underwritable Cash
Flow were generally derived from rent rolls, estimates set forth in the related
appraisal or from borrower-supplied information.
The amount of any underwritten or contractual recurring replacement
reserve amounts and/or underwritten or contractual leasing commissions and
tenant improvements for each of the Mortgaged Properties is shown in the table
titled "Engineering Reserves and Recurring Replacement Reserves" on Exhibit A-1.
The underwritten or contractual recurring replacement reserve amounts shown on
Exhibit A-1 are expressed as dollars per unit in the case of multifamily rental
properties and manufactured housing communities, a percentage of total
departmental revenues in the case of hospitality properties and dollars per
leasable square footage in the case of other commercial properties.
No assurance can be given with respect to the accuracy of the information
provided by any borrowers, or the adequacy of the procedures used by the seller
in determining the presented operating information.
The Debt Service Coverage Ratios are presented for illustrative purposes
only and, as discussed above, are limited in their usefulness in assessing the
current, or predicting the future, ability of a Mortgaged Property to generate
sufficient cash flow to repay the Mortgage Loan. Accordingly, no assurance can
be given, and no representation is made that the Debt Service Coverage Ratios
accurately reflect that ability.
Loan-to-Value
References in the tables to "Cut-off Date Loan-to-Value" or "Cut-off Date
LTV" are references to the ratio, expressed as a percentage, of the Cut-off Date
Principal Balance of a Mortgage Loan (or the aggregate Cut-off Date Principal
Balance of a group of Cross-Collateralized Loans) to the value of the related
Mortgaged Property or Properties as determined by the most recent appraisal or
market valuation of such Mortgaged Property, as described below. All
loan-to-value ratio information included in this prospectus supplement does not
include the 1 Mortgaged Property subject to a credit tenant lease.
References to "Maturity/ARD Balance" is the principal balance of a
Mortgage Loan (or the aggregate principal balance of a group of
Cross-Collaterialized Loans) anticipated to be outstanding at its maturity date,
or for a Hyper-Amortization Loan, at its Anticipated Repayment Date (calculated
based on the Maturity Assumptions and a 0% CPR).
References to "Maturity/ARD LTV" or "Maturity/ARD LTV Ratio" are
references to the ratio, expressed as a percentage, of the Maturity/ARD Balance
of a Mortgage Loan (excluding the Mortgage Loans expected to fully amortize over
their remaining term) to the value of the related Mortgaged Property or
Properties as determined by the most recent appraisal or market valuation of
such Mortgaged Property or Properties available to the depositor.
Each Mortgaged Property was appraised at the request of the originator of
the Mortgage Loan by a state certified appraiser or an appraiser belonging to
the Appraisal Institute. The purpose of each appraisal was to provide an opinion
of the fair market value of the Mortgaged Property. None of the depositor, the
sellers, the master servicer, the special servicer, the underwriters or the
trustee or any other entity has prepared or obtained a separate independent
appraisal or reappraisal, unless such person was the originator of the Mortgage
Loan. There can be no assurance that another appraiser would have arrived at the
same
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opinion of value. No representation is made that any appraised value would
approximate either the value that would be determined in a current appraisal of
the Mortgaged Property or the amount that would be realized upon a sale.
Accordingly, you should not place undue reliance on the loan-to-value ratios set
forth in this prospectus supplement.
Year Built/Renovated
References to "years built/renovated" are references to the later of the
year in which a Mortgaged Property was originally constructed or the most recent
year in which the Mortgaged Property was substantially renovated.
Weighted Averages
References to "weighted averages" are references to averages weighted on
the basis of the Cut-off Date Principal Balances of the Mortgage Loans.
Most Recent Appraised Value
References to "Most Recent Appraised Value" for each of the Mortgaged
Properties is the "as is" or, if provided, the "as cured" value estimate
reflected in the most recent appraisal or market valuation obtained by or
otherwise in the possession of the related seller. The "cured value" is
generally calculated as the sum of:
o the "as is" value set forth in the related appraisal or market valuation,
plus
o the estimated costs (as of the date of the appraisal or market valuation),
if any, of implementing any deferred maintenance required to be undertaken
immediately or in the short term under the terms of the related Mortgage
Loan.
In general, the amount of these estimated costs is based on:
o an estimate by the individual preparing the appraisal or market valuation,
o an estimate by the related borrower,
o the estimate set forth in the property condition assessment conducted in
connection with the origination of the related Mortgage Loan, or
o a combination of these estimates.
Leasable Square Footage
References to "S.F." or "Sq.Ft." means, in the case of any Mortgaged
Property that is a commercial property (other than a hospitality property), the
estimated square footage of its gross leasable area, as reflected in information
provided by the related borrower or in the appraisal or market valuation on
which the Most Recent Appraised Value of the Mortgaged Property is based.
Units
References to (1) in the case of any Mortgaged Property that is a
multifamily rental property, its estimated number of apartments, regardless of
the number or size of rooms in the apartments, and (2) in the case of any
Mortgaged Property that is a manufactured housing community, its estimated
number of pads to which a mobile home can be hooked up, in each case, as
reflected in information provided by the related borrower or in the appraisal or
market valuation on which the Most Recent Appraised Value is based.
Rooms
References to "Rooms" means, in the case of any Mortgaged Property that is
a hospitality property, its estimated number of rooms and/or suites, without
regard to the size of the rooms or the number or size of the rooms in the
suites, as reflected in information provided by the related borrower or in the
appraisal or market valuation on which the Most Recent Appraised Value of the
property is based.
Occupancy Rate At Underwriting
References to "Occupancy Rate at Underwriting" or "Occupancy Rate at U/W"
generally mean the percentage of leasable square footage, in the case of
Mortgaged Properties that are commercial properties (other than hospitality
properties), or units, in the case of Mortgaged Properties that are multifamily
rental properties and manufactured housing communities, of the subject Mortgaged
Properties that were occupied or leased as of the approximate date of the
original underwriting of the related Mortgage Loan or such later date as we
considered appropriate, in any event as reflected in information provided by the
related borrower or in the appraisal or market valuation on which the Most
Recent Appraised Value of the Mortgaged Property is based. Information shown in
this prospectus supplement with respect to any weighted average of
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occupancy rates at underwriting excludes hospitality properties from the
relevant calculations.
Major Tenant
References to "Major Tenant" means any one of the top three tenants (based
on the net rentable area of its space) of a commercial property that leases at
least 10% or more of the net rentable area of the Mortgaged Property.
Most Recent Operating Statement Date
References to "Most Recent Operating Statement Date" means, with respect
to each of the Mortgage Loans, the date indicated on Exhibit A-1 as the "most
recent operating statement date" with respect to the Mortgage Loan. In general,
this date is the end date of the period covered by the latest available annual
or, in some cases, partial-year operating statement for the related Mortgaged
Property.
Most Recent Net Operating Income
References to "Most Recent Net Operating Income" means, with respect to
each of the Mortgaged Properties, its total cash flow that was available for
annual debt service on the related Mortgage Loan, calculated as the most recent
revenues less most recent expenses for that Mortgaged Property. For purposes of
calculating the most recent net operating income for each of the Mortgaged
Properties:
o "most recent revenues" are the revenues received, or annualized or
estimated in certain cases, in respect of a Mortgaged Property for the
12-month period ended as of the most recent operating statement date, based
upon the latest available annual or, in some cases, partial-year operating
statement and other information furnished by the related borrower, and
o "most recent expenses" are the expenses incurred, or annualized or
estimated in certain cases, for a Mortgaged Property for the 12-month
period ended as of the most recent operating statement end date, based upon
the latest available annual or, in some cases, partial-year operating
statement and other information furnished by the related borrower.
The Sellers
Midland Loan Services, Inc.
Midland Loan Services, L.P., was organized under the laws of the State of
Missouri in 1992 as a limited partnership. On April 3, 1998, Midland Loan
Services, Inc., a newly formed, wholly owned subsidiary of PNC Bank, National
Association, acquired substantially all of the assets of Midland Loan Services,
L.P. Since 1994, Midland has been originating commercial and multifamily
mortgage loans for the purpose of securitization. Midland is an affiliate of PNC
Capital Markets, Inc. See "Master Servicer and Special Servicer".
Seventy-three of the Mortgage Loans (30.5%) were originated by Midland and
sold to the Midland Commercial Mortgage Loan Owner Trust II, a business trust
organized under the laws of the State of Delaware. The holders of the Midland
Owner Trust certificates will sell their certificates to an affiliate of
Donaldson, Lufkin & Jenrette Securities Corporation on or before the closing
date. On or before the closing date, that affiliate of Donaldson, Lufkin &
Jenrette Securities Corporation will terminate the Midland Owner Trust and
transfer to the depositor the Mortgage Loans that were in the Midland Owner
Trust. Since Midland will be the only person responsible to the trust for
breaches of the representations and warranties that relate to these Mortgage
Loans and for defects in documentation related to these Mortgage Loans, it is
referred to in this prospectus supplement as the seller of these Mortgage Loans.
An additional 70 Mortgage Loans (25.1%) were also originated by Midland.
Midland will sell these Mortgage Loans directly to the depositor on the closing
date.
Column Financial, Inc.
Column is a corporation organized under the laws of Delaware, and its
principal offices are in Atlanta, Georgia. Column underwrites and closes
multifamily rental and commercial mortgage loans through its own origination
offices and various correspondents in local markets across the country. Loan
underwriting and quality control procedures are undertaken principally in
regional offices located in:
o Bethesda, Maryland;
o Chicago, Illinois;
o Cleveland, Ohio;
o Dallas, Texas;
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O Denver, Colorado;
o Hollywood, Florida;
o Houston, Texas
o Los Angeles, California;
o Nashville, Tennessee;
o New York, New York;
o Newport Beach, California
o Norwalk, Connecticut;
o Philadelphia, Pennsylvania;
o San Francisco, California;
o Seattle, Washington; and
o Tampa, Florida
Column has closed more than $7.5 billion of commercial and multifamily
mortgage loans since beginning operations in 1993. Column is a wholly-owned
subsidiary of DLJ Mortgage Capital, Inc., which in turn is a wholly-owned
subsidiary of Donaldson, Lufkin & Jenrette, Inc., the parent of Donaldson,
Lufkin & Jenrette Securities Corporation.
Column Financial, Inc. originated 58 of the Mortgage Loans (43.7%). Column
acquired an additional 6 Mortgage Loans (0.7%) from Union Capital Investments,
LLC.
Union Capital Investments, LLC is a limited liability company, with its
principal offices in Atlanta, Georgia. Union Capital is primarily involved in
conduit lending, and it originates, underwrites and closes first mortgage loans
secured by all types of multifamily rental and commercial real estate throughout
the United States. The principals of Union Capital have been involved in the
conduit lending field since January 1993.
Changes in Mortgage Pool Characteristics
The description in this prospectus supplement of the mortgage pool and the
Mortgaged Properties is based upon the mortgage pool as expected to be
constituted at the close of business on the Cut-off Date, as adjusted for
scheduled principal payments due on the Mortgage Loans on or before the Cut-off
Date. Prior to the issuance of the certificates, one or more Mortgage Loans may
be removed from the mortgage pool if:
o the depositor deems such removal necessary or appropriate, or
o the loan is prepaid.
A limited number of other mortgage loans may be included in the mortgage
pool prior to the issuance of the certificates, unless including such mortgage
loans would materially alter the characteristics of the mortgage pool as
described in this prospectus supplement. Accordingly, the range of interest
rates and maturities, as well as the other characteristics of the Mortgage Loans
constituting the mortgage pool at the time the certificates are issued may vary
from those described in this prospectus supplement.
A Current Report on Form 8-K will be filed, together with the pooling and
servicing agreement, with the Securities and Exchange Commission within 15 days
after the closing date. If Mortgage Loans are removed from or added to the
mortgage pool as set forth in the preceding paragraph, the removal or addition
will be noted in the Form 8-K.
Representations and Warranties; Repurchase
The following is a summary of certain of the representations and
warranties to be made by each seller with respect to each of its Mortgage Loans.
Other representations and warranties may also be required by the Rating Agencies
or the purchasers of the privately offered certificates. The representations
will be made as of the closing date or as of another date specifically stated in
the representation or warranty. There may be exceptions to some of the
representations and warranties.
1. The information in the schedule of the Mortgage Loans attached to the
related mortgage loan purchase agreement is true and correct in all
material respects as of the Cut-off Date.
2. The seller owns the Mortgage Loans and is conveying them free and clear of
any pledge, lien or security interest.
3. No scheduled payment of principal and interest under any Mortgage Loan is
30 days or more past due nor has been during the preceding 12-month period.
4. The related Mortgage constitutes a valid and enforceable first lien upon
the related Mortgaged Property, subject to:
o creditors' rights and general principles of equity,
o liens for current real estate taxes and assessments not yet delinquent
or accruing interest or penalties,
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o exceptions and exclusions specifically referred to in the lender's
title insurance policy,
o purchase money security interests,
o other matters to which like properties are commonly subject,
o the rights of tenants to remain at the related Mortgaged Property
following foreclosure, and
o the lien for another Mortgage Loan which is cross-collateralized with
such Mortgage Loan.
5. The related Mortgage has not been satisfied, cancelled, rescinded or
subordinated in whole or in material part.
6. The seller is not aware of any proceeding pending for the total or partial
condemnation of or affecting the related Mortgaged Property.
7. The related Mortgaged Property is or will be covered by an American Land
Title Association (or an equivalent or state-approved form) lender's title
insurance policy that insures that the related Mortgage is a valid, first
priority lien on such Mortgaged Property, subject only to the exceptions
stated in the policy.
8. The proceeds of the Mortgage Loan have been fully disbursed (subject to
funds being held back pending the satisfaction of certain leasing, repair
or other conditions), and there is no obligation for future advances with
respect to such Mortgage Loan.
9. Each note, Mortgage and other agreement of the borrower with respect to the
Mortgage Loan is its legal, valid and binding obligation, enforceable in
accordance with its terms, subject to:
o the non-recourse provisions of the loan;
o applicable state anti-deficiency or market value limit deficiency
legislation;
o bankruptcy, insolvency, reorganization and state laws related to
creditors' rights; and
o general principles of equity.
With respect to each Mortgage Loan originated by Union Capital, Union
Capital made certain representations and warranties in connection with the sale
of the Mortgage Loan to Column. These representations and warranties and the
related obligations of Union Capital for breach are being assigned by Column to
the depositor and by the depositor to the trustee under the pooling and
servicing agreement. The representations and warranties made by Union Capital
will not be identical to those made by the sellers. The representations and
warranties made by Union Capital are in addition to the representations and
warranties made by Column with respect to the Mortgage Loans it acquired from
Union Capital.
The pooling and servicing agreement will require that the custodian, the
master servicer, the special servicer or the trustee notify the applicable
seller upon its becoming aware:
o of any breach of certain representations or warranties made by that seller
in its mortgage loan purchase agreement, or
o that any document required to be included in the mortgage file does not
conform to the requirements of the pooling and servicing agreement. See
"The Pooling and Servicing Agreement--Assignment of the Mortgage Loans".
Subject to the discussion below, the applicable mortgage loan purchase agreement
provides that, if a breach or default that materially and adversely affects the
interests of the trustee or the certificateholders is not cured within 90 days
after discovery of the breach or defect by the applicable seller, the depositor,
the custodian, the master servicer, the special servicer or the trustee, the
applicable seller will either:
1. repurchase the affected Mortgage Loan for a purchase price (the "Repurchase
Price") equal to the sum of:
o outstanding principal balance,
o unpaid accrued interest at the applicable rate (in absence of a
default and excluding any Deferred Interest) to, but not including,
the date of repurchase,
o the amount of any unreimbursed Servicing Advances relating to such
Mortgage Loan,
o accrued interest on Advances (including P&I Advances) at the Advance
Rate,
o the amount of any unpaid servicing compensation (other than master
servicing fees) and trust fund expenses allocable to the Mortgage
Loan, and
o the amount of any expenses reasonably incurred by the master servicer,
the special servicer or the trustee in respect of the repurchase
obligation, including any
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expenses arising out of the enforcement of the repurchase obligation,
or
2. substitute a Qualified Substitute Mortgage Loan for the affected Mortgage
Loan and pay the trustee a shortfall amount equal to the difference between
the Repurchase Price of the affected Mortgage Loan calculated as of the
date of substitution and the Stated Principal Balance of the Qualified
Substitute Mortgage Loan as of the date of substitution.
If the Mortgage Loan continues to be a "qualified mortgage" within the
meaning of the REMIC provisions of the Code, the 90-day period will not commence
until the seller receives notice of or discovers that the Mortgage Loan is a
defective Mortgage Loan. If the breach or defect cannot be cured within the
90-day period, then so long as the seller has commenced and is diligently
proceeding with the cure of the breach or defect, the 90-day period will be
extended for an additional 90 days. However, the seller will be entitled to an
extension only if it delivers to the depositor an officer's certificate:
o describing the measures being taken to cure the breach or defect,
o stating that it is possible to cure the breach or defect cured within the
90 day period, and
o stating that the breach or defect does not cause the Mortgage Loan to fail
to be a "qualified mortgage" within the meaning of the REMIC provisions of
the Internal Revenue Code of 1986.
However, if there is a breach of representations and warranties with
respect to a Mortgage Loan by both Union Capital and Column, then:
o Column will have an obligation to effect a cure, repurchase or replacement
(if applicable) only if Union Capital fails to cure the breaches or
repurchase or replace the affected Mortgage Loan within the time allowed
under its loan purchase agreement, and
o Column's time period to effect a cure, repurchase or replacement will be
limited to 90 days following the end of Union Capital's time period to cure
the breach or repurchase or replace the Mortgage Loan.
This extension of the period within which Column is obligated to effect a
cure, repurchase or replacement does not apply if the breach would cause the
Mortgage Loan to not be a "qualified mortgage" within the meaning of the REMIC
provisions of the Internal Revenue Code of 1986. If Union Capital repurchases or
replaces a Mortgage Loan and the price or additional cash amount which Union
Capital is required to pay is less than the applicable Repurchase Price or
shortfall amount, Column is required to pay the deficiency out of its own funds.
A "Qualified Substitute Mortgage Loan" is a mortgage loan which must, on
the date of substitution:
1. have an outstanding principal balance, after application of all scheduled
payments of principal and interest due during or prior to the month of
substitution, not in excess of the Stated Principal Balance of the deleted
Mortgage Loan as of the due date in the calendar month during which the
substitution occurs;
2. have a mortgage rate not less than the Mortgage Rate of the deleted
Mortgage Loan;
3. have the same due date as the deleted Mortgage Loan;
4. accrue interest on the same basis as the deleted Mortgage Loan (for
example, on the basis of a 360-day year consisting of twelve 30-day
months);
5. have a remaining term to stated maturity not greater than, and not more
than two years less than, the remaining term to stated maturity of the
deleted Mortgage Loan;
6. have an original loan to-value-ratio not higher than that of the deleted
Mortgage Loan and a current loan-to-value ratio not higher than the then
current loan-to-value ratio of the deleted Mortgage Loan;
7. comply as of the date of substitution with all of the representations and
warranties listed in the applicable mortgage loan purchase agreement;
8. have an environmental report for the related Mortgaged Property, which will
be part of the related mortgage file;
9. have an original debt service coverage ratio not less than the original
debt service coverage ratio of the deleted Mortgage Loan and a current debt
service coverage ratio not less than the then current debt service coverage
ratio of the deleted Mortgage Loan;
10. be determined by an opinion of counsel to be a "qualified replacement
mortgage" within the meaning of Section 860G(a)(4) of the Internal Revenue
Code of 1986;
11. not have a maturity date after the date three years prior to the Rated
Final Distribution Date;
12. not be substituted for a deleted Mortgage Loan unless the trustee has
received prior confirmation
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in writing by each Rating Agency that the substitution will not result in
the withdrawal, downgrade, or qualification of the rating assigned by the
Rating Agency to any class of the certificates then rated by the Rating
Agency. The seller will pay the cost, if any, of obtaining the
confirmation;
13. not be substituted for a deleted Mortgage Loan if it would result in the
termination of the REMIC status of REMIC I, REMIC II or REMIC III or the
imposition of tax on REMIC I, REMIC II or REMIC III other than a tax on
income expressly permitted or contemplated to be received by the terms of
the pooling and servicing agreement; and
14. not be substituted for a deleted Mortgage Loan unless the controlling class
representative has approved the substitution in its reasonable discretion.
If one or more mortgage loans are substituted for one or more deleted
Mortgage Loans, then:
o the amounts described in clause (1) will be determined on the basis of
total principal balances,
o the rates described in clause (2) above will be determined on a weighted
average basis, and
o the remaining term to stated maturity referred to in clause (5) above will
be determined on a weighted average basis.
When a Qualified Substitute Mortgage Loan is substituted for a deleted
Mortgage Loan, the applicable seller will certify that the Qualified Substitute
Mortgage Loan meets all of the requirements of the above definition and shall
send the certification to the trustee and the controlling class representative.
The obligations of the sellers to substitute, repurchase or cure
constitute the sole remedies available to the trustee for the benefit of the
holders of certificates for:
o a breach of a representation or warranty with regard to a Mortgage Loan by
a seller, or
o missing or defective Mortgage Loan documentation.
In addition to the above remedies for breach of representations and
warranties, the controlling class representative may require a seller to
establish a cash reserve or provide a letter of credit in the amount of 20% of
the principal balance of any Mortgage Loan if the related Mortgage, assignment
of leases, certain financing statements or certain assignments in favor of the
trustee remain missing, unrecorded or unfiled 18 months or more after the
closing because such document was never provided in the proper form, was lost or
was returned unrecorded or unfiled as a result of a defect, but only if such
omission would materially and adversely affect the enforcement of the related
lien or security interest or the value of the Mortgage Loan at such time. If the
seller fails to cure such defects or repurchase or replace the related Mortgage
Loan when required by the related loan purchase agreement, the cash reserve or
letter of credit for the related Mortgage Loan may under certain circumstances
be applied to reimburse the trust for any expenses directly incurred as a result
of such document defects, including the costs of enforcing the seller's
obligations or curing such document defects.
If a seller defaults on its obligation to substitute, repurchase, cure or
provide a cash reserve or letter of credit, no other person will have an
obligation to fulfill the seller's obligations. No assurance can be given that
any seller will fulfill its obligations. If such obligations are not met, as to
a Mortgage Loan that is not a "qualified mortgage" within the meaning of the
REMIC provision of the Internal Revenue Code of 1986, REMIC I, REMIC II and
REMIC III may be disqualified.
MASTER SERVICER AND SPEICAL SERVICER
Background
Midland Loan Services, L.P., was organized under the laws of the State of
Missouri in 1992 as a limited partnership. On April 3, 1998, Midland Loan
Services, Inc., a newly-formed, wholly-owned subsidiary of PNC Bank, National
Association, acquired substantially all of the assets of Midland Loan Services,
L.P. Midland is a real estate financial services company that provides loan
servicing and asset management for large pools of commercial and multifamily
real estate assets and that originates commercial real estate loans. Midland's
address is:
210 West 10th Street
6th Floor
Kansas City, Missouri 64105.
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Midland will serve as the master servicer for the trust fund. In addition,
Midland and its affiliates are the seller with respect to 143 of the Mortgage
Loans (55.6%). See "Description of the Mortgage Pool--The Sellers".
Standard & Poor's Ratings Services and Fitch IBCA, Inc. have approved
Midland as a master and special servicer for investment grade-rated commercial
and multifamily mortgage-backed securities. Midland is also a HUD/FHA-approved
mortgagee and a FannieMae-approved multifamily loan servicer.
DESCRIPTION OF THE CERTIFICATES
General
The certificates are issued under the pooling and servicing agreement and
will consist of 20 classes:
o Class S Certificates
o Class A-1A Certificates
o Class A-1B Certificates
o Class A-2 Certificates
o Class A-3 Certificates
o Class A-4 Certificates
o Class B-1 Certificates
o Class B-2 Certificates
o Class B-3 Certificates
o Class B-4 Certificates
o Class B-5 Certificates
o Class B-6 Certificates
o Class B-7 Certificates
o Class B-8 Certificates
o Class C Certificates
o Class D Certificates
o Class E Certificates
o Class R-I Certificates
o Class R-II Certificates
o Class R-III Certificates
We are only offering the class S, A-1A, A-1B, A-2, A-3, A-4, B-1 and B-2
certificates to you. See "The Pooling and Servicing Agreement" in this
prospectus supplement and "Description of the Certificates" and "Description of
the Governing Document" in the prospectus for additional important information
regarding the terms of the pooling and servicing agreement and the certificates.
The pooling and servicing agreement will be filed with the Securities and
Exchange Commission on Form 8-K within 15 days after the closing date.
The certificates represent the entire beneficial ownership interest in a
trust fund consisting primarily of:
o the Mortgage Loans and principal and interest due after the Cut-off Date
and all payments under and proceeds of the Mortgage Loans received after
the Cut-off Date (exclusive of Principal Prepayments received prior to the
Cut-off Date and scheduled payments of principal and interest due on or
before the Cut-off Date),
o any Mortgaged Property acquired on behalf of the trust fund through
foreclosure, deed-in-lieu of foreclosure or otherwise (upon acquisition, an
"REO Property"),
o funds or assets from time to time deposited in the Collection Account, the
Distribution Account, the Interest Reserve Account and any account
established in connection with REO Properties (an "REO Account"),
o the rights of the mortgagee under all insurance policies with respect to
the Mortgage Loans, and
o the depositor's rights and remedies under the applicable mortgage loan
purchase agreement, and all of the mortgagee's right, title and interest in
the Reserve Accounts.
The class E certificates will evidence undivided interests in a grantor
trust consisting of collections of Deferred Interest on the Mortgage Loans. The
principal balance certificates and the interest only certificates will not
receive any Deferred Interest collected on the Mortgage Loans.
As described under "Material Federal Income Tax Consequences", the class
R-I, R-II and R-III certificates will constitute "residual interests" in a
REMIC. We do not anticipate that the residual certificates will receive any
distributions of cash from the trust.
Principal Balances and Notional Amounts
Upon initial issuance, the respective classes of principal balance
certificates will have the class principal balances set forth in the table on
page S-4, which may in the aggregate vary by up to 5%.
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The principal balance of any class of principal balance certificates
outstanding at any time represents the maximum amount that holders are entitled
to receive as distributions allocable to principal. The principal balance of
each class will be reduced by:
o amounts distributed to the class as principal, and
o any Realized Losses and Expense Losses allocated to the class.
The class S certificates are interest-only certificates, have no principal
balances and are not entitled to distributions of principal. The total notional
amount of the class S certificates as of any date is equal to 100% of the total
principal balance of the Principal Balance Certificates.
The "Stated Principal Balance" of each Mortgage Loan will generally equal
its unpaid principal balance as of the Cut-off Date (or in the case of a
Qualified Substitute Mortgage Loan as of the date of substitution), after
applying payments due on or before that date (whether or not received), reduced
(to not less than zero) on each subsequent distribution date by:
o any payments or other collections (or advances for such amounts) of
principal of such Mortgage Loan that have been distributed on the
certificates on such date or would have been distributed on such date if
they had not been applied to cover Additional Trust Fund Expenses, and
o the principal portion of any Realized Loss allocable to such Mortgage Loan
during the related Collection Period.
However, except as stated in the discussion under
"--Distributions--Treatment of REO Properties", if any Mortgage Loan is paid in
full, liquidated or otherwise removed from the trust fund, the Stated Principal
Balance of the Mortgage Loan will be zero beginning on the first distribution
date following the Collection Period during which the event occurred.
Pass-Through Rates
The rate per annum at which any class of offered certificates accrues
interest from time to time is its "pass-through rate".
The pass-through rate for the class A-1A certificates is fixed at 7.1100%
per annum.
The pass-through rates for the class A-1B, class A-2, class A-3 and class
A-4 certificates for each interest accrual period will equal the lesser of (1)
the initial pass-through rate for that class, and (2) the weighted average of
the Net Mortgage Rates for the related distribution date, weighted on the basis
of the Mortgage Loans' respective Stated Principal Balances immediately before
the distribution date.
The pass-through rates for the class B-1 and class B-2 certificates for
each interest accrual period will equal the weighted average of the Net Mortgage
Rates for the related distribution date, weighted on the basis of the Mortgage
Loans' respective Stated Principal Balances immediately before the distribution
date.
The pass-through rates for the class B-3, class B-4 and class B-5
certificates for each interest accrual period will equal the lesser of (1)
7.1000% and (2) the weighted average of the Net Mortgage Rates for the related
distribution date, weighted on the basis of the Mortgage Loans' respective
Stated Principal Balances immediately before the distribution date. The
pass-through rates for the class B-6, class B-7, class B-8, class C and class D
certificates for each interest accrual period will equal the lesser of (1)
6.8500% and (2) the weighted average of the Net Mortgage Rates for the related
distribution date, weighted on the basis of the Mortgage Loans' respective
Stated Principal Balances immediately before the distribution date.
The pass-through rate on the class S certificates for the initial interest
accrual period will equal 0.8340%. For each subsequent interest accrual period,
the pass-through rate on the class S certificates will generally be a per annum
rate equal to the excess of:
o the weighted average of the Net Mortgage Rates for the related distribution
date, weighted on the basis of the Mortgage Loans' respective Stated
Principal Balances immediately before the distribution date, over
o the weighted average of the pass-through rates for the principal balance
certificates for that interest accrual period, weighted on the basis of the
respective principal balances thereof immediately before the distribution
date.
The "Net Mortgage Rate" for each Mortgage Loan is the interest rate for the
Mortgage Loan minus the master servicer fee and the trustee fee. This
calculation is made without giving effect to any Revised Interest Rate or any
default rate. The
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Net Mortgage Rate for any Mortgage Loan will be determined without regard to any
post-closing date modification, waiver or amendment of the Mortgage Loan's terms
for purposes of calculating pass-through rates.
The certificates accrue interest on the basis of a 360-day year consisting
of twelve 30-day months. Therefore, when calculating the pass-through rate for
each class of certificates for a distribution date, the Net Mortgage Rate of a
Mortgage Loan that accrues interest on an actual/360 basis (the "Interest
Reserve Loans") will be adjusted to an annual rate generally equal to:
o a fraction, expressed as a percentage, the numerator of which is, subject
to adjustment as described below, 12 times the amount of interest that
accrued or would have accrued with respect to that Mortgage Loan on an
actual/360 basis during the related interest accrual period, based on its
Stated Principal Balance immediately preceding that distribution date and
its mortgage interest rate in effect as of December 1, 1999, and the
denominator of which is the Stated Principal Balance of the Mortgage Loan
immediately prior to that distribution date, minus
o the related master servicer fee and the trustee fee.
Notwithstanding the foregoing, if the subject distribution date occurs
during January (except during a leap year) or February, then, in the case of any
particular Interest Reserve Loan, the numerator of the fraction described in the
first bullet point of the preceding paragraph will be decreased by any Interest
Reserve Amount with respect to that Mortgage Loan that is transferred from the
Collection Account to the Interest Reserve Account during that month.
Furthermore, if the subject distribution date occurs during March, then, in the
case of any particular Interest Reserve Loan, the numerator of the fraction
described in the first bullet point of the preceding paragraph will be increased
by any Interest Reserve Amounts with respect to that Mortgage Loan that are
transferred from the Interest Reserve Account to the Distribution Account during
that month.
See "The Pooling and Servicing Agreement--Servicing Compensation and
Payment of Expenses".
Distributions
Method, Timing and Amount
Payments on the offered certificates are scheduled to occur monthly,
commencing in January 2000. The distribution date for each month will be the
later of:
o the 10th calendar day of that month, or if that day is not a business day,
then the next business day, and
o the fourth business day after the determination date for the month.
The "Record Date" for each distribution date is the last business day of
the month preceding the month in which the distribution date occurs. Except for
the final distribution, all distributions will be made by the trustee to the
persons in whose names the certificates are registered at the close of business
on the Record Date.
The distributions will be made:
o by wire transfer of immediately available funds if the certificateholder
provides the trustee with wiring instructions on or before the Record Date,
or
o otherwise by check mailed to the certificateholder.
The final distribution on a certificate will be made only upon presentment
or surrender of the certificate as specified in the notice of final
distribution.
The final distribution on any certificate will be determined without
regard to possible future reimbursement of any Realized Loss or Expense Loss
previously allocated to the certificate. Any distribution after the final
distribution to reimburse a previously-allocated Realized Loss or Expense Loss
will be made by check mailed to the certificateholder that surrendered the
certificate. Such a distribution is possible, but unlikely.
Distributions on a class of certificates are allocated among the
outstanding certificates of the class based on their principal or notional
balances.
Determining Available Funds
The total distribution on the certificates will equal the Available Funds.
The "Available Funds" for a distribution date in general will equal:
o amounts on deposit in the Collection Account at close of business on the
Determination Date, excluding:
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1. Monthly Payments collected but due on a due date after the related
Collection Period,
2. prepayment premiums and Deferred Interest (which are distributed
separately),
3. amounts payable or reimbursable to any person other than the
certificateholders (including amounts payable to the master servicer,
the special servicer or the trustee as compensation or to reimburse
outstanding Advances, and amounts payable as Additional Trust Fund
Expenses),
4. amounts deposited in the Collection Account in error,
5. if the distribution date occurs during January of any year that is not
a leap year or February of any year, the Interest Reserve Amounts for
the Interest Reserve Loans to be deposited into the Interest Reserve
Account; plus
o any P&I Advances and Compensating Interest Payments made for the
distribution date and not already included; plus
o if the distribution date occurs during March of any year, the Interest
Reserve Amounts in the Interest Reserve Account.
"Principal Prepayments" are payments of principal on a Mortgage Loan that:
o are received before the scheduled due date, and
o are not accompanied by interest representing the full amount of scheduled
interest due in any month after the month of payment.
The "Collection Period" for a distribution date:
o begins on the day after the Determination Date in the preceding month (or,
in the case of the January 2000 distribution date, on the day after the
Cut-off Date), and
o ends on the Determination Date in the month in which the distribution date
occurs.
The "Determination Date" for a distribution date is the fourth calendar
day of the month or, if that day is not a business day, the first business day
before that day.
Applying Available Funds
On each distribution date, the trustee will first apply Available Funds
to make distributions to the holders of the senior certificates in the following
order:
1. to pay interest to the holders of the classes of senior certificates, up to
an amount equal to, and pro rata as among those classes in accordance with,
the Distributable Certificate Interest for that class for that distribution
date;
2. to pay principal from the Principal Distribution Amount for that
distribution date:
o first to the holders of the class A-1A certificates; and
o second to the holders of the class A-1B certificates;
in each case, up to an amount equal to the lesser of:
(a) the then-outstanding principal balance of the class; and
(b) the remaining portion of the Principal Distribution Amount.
However, principal payments will be made to the class A-1A and class A-1B
certificates up to an amount equal to, and pro rata based on, their
outstanding class principal balances:
o if the principal balance of the subordinate certificates has been
reduced to zero; or
o on the final distribution date, if the trust fund is terminated as
discussed under "--Optional Termination" below; and
3. to reimburse the holders of the class A-1A and class A-1B certificates, up
to an amount equal to, and pro rata as among those classes in accordance
with the amount of Realized Losses and Expense Losses, if any, previously
allocated to the class A-1A and class A-1B certificates and for which no
reimbursement has previously been paid; plus all unpaid interest on such
amounts (compounded monthly) at the pass-through rates for those classes.
On each distribution date, the holders of each class of subordinate
certificates will be entitled to the following distributions, to the extent of
the Available Funds remaining after all required distributions have been made on
the senior certificates and each other class of subordinate
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certificates, if any, with an earlier alphabetical and numerical class
designation:
1. distributions of interest, up to an amount equal to the Distributable
Certificate Interest in respect of such class of certificates for that
distribution date;
2. if the principal balance of the class A-1A and class A-1B certificates and
each other class of subordinate certificates, if any, with an earlier
alphabetical and numerical class designation has been reduced to zero,
distributions of principal, up to an amount equal to the lesser of:
(a) the then-outstanding principal balance of that class, and
(b) the remaining Principal Distribution Amount (or, on the final
distribution date in connection with the termination of the trust
fund, up to an amount equal to the then-outstanding principal balance
of the class); and
3. distributions for the purpose of reimbursement, up to an amount equal to
all Realized Losses and Expense Losses, if any, previously allocated to
such class and for which no reimbursement has previously been paid; plus
all unpaid interest on such amounts (compounded monthly) at the
pass-through rates for those classes.
"Alphabetical and numerical order" is determined first by alphabetical
order, and then if the alphabetical designations are the same, by numerical
order.
The trustee will pay any remaining Available Funds to the holders of the
class R-I certificates.
Reimbursement of previously allocated Realized Losses and Expense Losses
will not constitute distributions of principal for any purpose and will not
reduce the principal balances of the reimbursed certificates.
Distributable Certificate Interest
The "Distributable Certificate Interest" for each class of certificates
will equal:
o the interest accrued for the prior calendar month, at the applicable
pass-through rate on the principal balance or notional amount of the class
at the close of the preceding distribution date (or in the case of the
first distribution date, the Cut-off Date),
o reduced (to not less than zero) by the class's allocable share of any Net
Aggregate Prepayment Interest Shortfall for the distribution date, and
o increased by the class's Class Interest Shortfall, if any, for the
distribution date.
See "--Prepayment Interest Shortfalls" below.
The "Class Interest Shortfall" for a class of certificates for a
distribution date equals:
o zero on the initial distribution date; and
o for subsequent distribution dates, the sum of:
1. the excess, if any, of:
o all Distributable Certificate Interest for the class on the
preceding distribution date,
over
o all distributions of interest made for the class on the preceding
distribution date, plus
2. to the extent permitted by law, one month's interest on such excess at
the pass-through rate for the class (or, in the case of the class S
certificates, at a rate equal to the weighted average of the
pass-through rates for the principal balance certificates, weighted on
the basis of their respective principal balances).
Principal Distribution Amount
The "Principal Distribution Amount " for any distribution date will, in
general, equal the following:
o the principal portions of all Monthly Payments (other than balloon
payments) and Assumed Monthly Payments due or deemed due, as the case may
be, on the Mortgage Loans on the due dates occurring during the related
Collection Period; plus
o all payments (including voluntary principal prepayments and balloon
payments) and other collections received on the Mortgage Loans during the
related Collection Period that were identified and applied by the master
servicer as recoveries of principal, in each case net of any portion of
such amounts that represents a payment or other recovery of the principal
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portion of any Monthly Payment (other than a balloon payment) due, or the
principal portion of any Assumed Monthly Payment deemed due, on a Mortgage
Loan on a due date during or prior to the related Collection Period and not
previously paid or recovered.
If on any distribution date the aggregate amount of distributions of
principal made on the principal balance certificates is less than the Principal
Distribution Amount, then the amount of the shortfall will be included in the
Principal Distribution Amount for the next distribution date.
The "Monthly Payment" for any Mortgage Loan (other than any REO Mortgage
Loan) will, in general, be the scheduled payment of principal and/or interest
(excluding balloon payments, default interest and Deferred Interest) due from
time to time. The Monthly Payment will be adjusted for any waiver, modification
or amendment of the terms of the Mortgage Loan whether agreed to by the master
servicer or special servicer, or resulting from a bankruptcy or similar
proceeding.
The "Assumed Monthly Payment":
o for a balloon loan that is delinquent as to all or any portion of its
balloon payment beyond the end of the Collection Period in which its
original maturity date occurs, is an amount that is deemed due on its
original maturity date and on each successive due date that it remains or
is deemed to remain outstanding. This amount is equal to the Monthly
Payment that would have been due if the balloon payment had not become due,
and the loan had continued to amortize under the amortization schedule, if
any, in effect immediately prior to maturity and had continued to accrue
interest in accordance with its terms in effect immediately prior to
maturity.
o for a Mortgage Loan as to which the related Mortgaged Property has become
an REO Property, is an amount that is deemed due on each due date while the
REO Property remains part of the trust fund. This amount is equal to the
Monthly Payment (or, in the case of a balloon loan described in the
preceding bullet point, the Assumed Monthly Payment) due on the last due
date before acquisition of the REO Property.
Distributions of Prepayment Premiums
Any prepayment premium collected during a Collection Period will be
distributed on the next distribution date. Prepayment premiums distributed to
the holders of a class of certificates may be insufficient to compensate them
fully for any loss in yield attributable to the related Principal Prepayments.
Any prepayment premium will be distributed as follows. The holders of each
class of offered certificates receiving principal distributions on a
distribution date will be entitled to an amount equal to the product of:
o the prepayment premium available for distribution, multiplied by
o a fraction (not more than one or less than zero):
1. the numerator of which equals the excess, if any, of the pass-through
rate applicable to that class of offered certificates, over the
Discount Rate, and
2. the denominator of which equals the excess, if any, of the interest
rate for the prepaid Mortgage Loan, over the Discount Rate, multiplied
by
o a fraction (not more than one or less than zero):
1. the numerator of which is equal to the aggregate distributions of
principal to be made with respect to that class of offered
certificates on that distribution date, and
2. the denominator of which is equal to the Principal Distribution Amount
for that distribution date.
The "Discount Rate" is the rate which, when compounded monthly, is
equivalent to the Treasury Rate when compounded semi-annually.
The "Treasury Rate" is the yield calculated by the linear interpolation of
the yields of U.S. Treasury constant maturities with a maturity date (one longer
and one shorter) most nearly approximating the maturity date (or
Hyper-Amortization Date, if applicable) of the Mortgage Loan prepaid. The
trustee will use the yields reported in Federal Reserve Statistical Release H.15
- - Selected Interest Rates under the heading "U.S. government securities/Treasury
constant maturities" for the calendar week before the Principal Prepayment. If
Release H.15 is no longer published, the trustee will select a comparable
publication to determine the Treasury Rate.
All prepayment premiums not distributed to holders of offered principal
balance certificates will be distributed to the holders of the interest only
certificates.
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Treatment of REO Properties
If the trust fund acquires a Mortgaged Property through foreclosure, deed
in lieu of foreclosure or otherwise, then, until the REO Property is liquidated,
the related Mortgage Loan (an "REO Mortgage Loan") will be treated as
outstanding for several purposes, including:
o determining distributions on the certificates,
o allocations of Realized Losses and Expense Losses to the certificates,
o computing master servicing fees, special servicing fees and trustee fees,
and
o determining pass-through rates and the Principal Distribution Amount.
Net operating revenues and other net proceeds derived from such REO
Property will be "applied" by the master servicer as principal, interest and
other amounts "due" on the Mortgage Loan. With some exceptions, the master
servicer and the trustee are required to make P&I Advances on the REO Mortgage
Loan, if proceeds received from the REO Property are less than the Assumed
Monthly Payment for the REO Mortgage Loan. See "The Pooling and Servicing
Agreement--Advances".
Appraisal Reductions of Loan Balances
An Appraisal Reduction will be calculated following the earliest of any of
the following "Appraisal Reduction Events" affecting a Mortgage Loan:
o the third anniversary of the effective date of a modification agreed to by
the special servicer that extends a Mortgage Loan's maturity date without
changing the amount of the Monthly Payment,
o 120 days after an uncured delinquency occurs on a Mortgage Loan,
o 45 days after the effective date of a modification agreed to by the special
servicer that reduces the amount of the Monthly Payment, or changes any
other material economic term of the Mortgage Loan,
o 60 days after a receiver is appointed or an involuntary bankruptcy
proceeding commences,
o immediately after a borrower declares bankruptcy, and
o immediately after a Mortgage Loan becomes an REO Mortgage Loan.
The "Appraisal Reduction" for any Mortgage Loan as to which any Appraisal
Reduction Event has occurred will be an amount equal to:
o the outstanding Stated Principal Balance of such Mortgage Loan as of the
last day of the related Collection Period, less
o the excess, if any, of:
1. 90% of the appraised or otherwise estimated value of the related
Mortgaged Property or Properties, plus the amount of any escrows or
reserves for the Mortgage Loan that are not related to taxes or
insurance,
over
2. the sum of:
(a) all unpaid interest on the principal balance of the Mortgage Loan
(without giving effect to any default rates or Revised Interest
Rates), but only if not previously advanced by the master
servicer or the trustee,
(b) all unreimbursed Advances for the Mortgage Loan, plus interest at
the Advance Rate, and
(c) all currently due and unpaid real estate taxes and assessments
and insurance premiums and all other amounts, including, if
applicable, ground rents, due and unpaid under the Mortgage Loan
(which taxes, premiums and other amounts have not been escrowed
and are not the subject of an Advance).
Within 60 days after the special servicer becomes aware of an Appraisal
Reduction Event, the special servicer must:
o obtain a fair market value appraisal of the related Mortgaged Property or
REO Property from an independent appraiser who is a member of the Appraisal
Institute, with at least five years experience in the related property type
and in the jurisdiction in which the Mortgaged Property or REO Property is
located, or
o at its discretion, conduct an internal property valuation in accordance
with the servicing standard if the Mortgage Loan has an outstanding
principal balance equal to or less than $1,000,000.
Each of the above is referred to as an "Updated Appraisal". If the special
servicer has completed or obtained an appraisal or internal valuation during the
prior 12 months, the special servicer may use that appraisal or valuation as the
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"Updated Appraisal" for purposes of calculating the Appraisal Reduction, if
using such appraisal or valuation is consistent with the servicing standard. The
master servicer will pay the cost of any Updated Appraisal as a Servicing
Advance, unless the Updated Appraisal is an internal valuation performed by the
special servicer or if the Advance would be a nonrecoverable Advance.
If the special servicer is not using a previously obtained appraisal or
internal valuation to calculate the Appraisal Reduction, the special servicer
must estimate the value of the related Mortgaged Property or REO Property (the
"Appraisal Reduction Estimate"). This estimate will be used to calculate the
Appraisal Reduction until the Updated Appraisal is completed.
The master servicer will calculate the Appraisal Reduction based on the
Updated Appraisal or the special servicer's Appraisal Reduction Estimate. If the
Appraisal Reduction is calculated using the Appraisal Reduction Estimate, then
on the first distribution date after the delivery of the Updated Appraisal, the
master servicer will adjust the Appraisal Reduction to take into account the
Updated Appraisal.
The special servicer will obtain annual updates of the Updated Appraisal
during the continuance of an Appraisal Reduction Event. The master servicer will
pay the cost of such annual updates as a Servicing Advance, unless the Advance
would be nonrecoverable. In addition, the controlling class representative may
at any time request the special servicer to obtain (at the controlling class
representative's expense) an Updated Appraisal. The master servicer will
recalculate the Appraisal Reduction each time an Updated Appraisal is obtained.
The master servicer will deliver a copy of each Updated Appraisal to the trustee
and the controlling class representative within 15 days after it receives the
Updated Appraisal from the special servicer. Upon request, the trustee will
provide each Updated Appraisal to any holder of the privately offered
certificates.
The Appraisal Reduction will be eliminated upon full payment or
liquidation of the Mortgage Loan or if the Mortgage Loan becomes a Corrected
Mortgage Loan and the borrower makes three consecutive monthly debt service
payments.
An Appraisal Reduction:
o will reduce the master servicer's and the trustee's obligation to advance
delinquent interest on the Mortgage Loan;
o may reduce current distributions to one or more of the then most
subordinate classes of principal balance certificates; and
o may cause an Expense Loss to be allocated to one or more of the then most
subordinate classes of principal balance certificates.
See "The Pooling and Servicing Agreement--Advances".
Application of Realized Losses and Expense Losses to Principal Balances
If immediately following distributions on any distribution date the Stated
Principal Balance of the Mortgage Pool is less than the total principal balance
of the principal balance certificates, then the principal balances of the
various classes of the principal balance certificates will be reduced as
follows:
o First, the principal balances of the various classes of the subordinate
certificates will be reduced, sequentially in reverse alphabetical and
numerical order beginning with the class D certificates. The principal
balance of the lowest class will be reduced until:
o the deficit is reduced to zero; or
o the principal balance of that class is reduced to zero.
o Any deficit remaining after reducing the principal balance of the most
subordinate class to zero will be applied to reduce the principal balance
of the next lowest class, and so forth until the deficit is eliminated or
until the total principal balance on all the subordinate certificates is
reduced to zero.
If any portion of the deficit remains after the total principal balance of
all the subordinate certificates is reduced to zero, then the class principal
balances of the class A-1A and class A-1B certificates will be reduced, in
proportion to their remaining class principal balances, until:
o the deficit is reduced to zero; or
o the principal balance of the class A-1A and A-1B certificates is reduced to
zero.
In general, any such deficit will result from Realized Losses and/or
Expense Losses on the Mortgage Loans. Accordingly, these reductions in
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the principal balances allocate Realized Losses and Expense Losses among the
certificates.
Any reduction in the principal balance of any class of principal balance
certificates also reduces the notional amount of the interest only certificates.
Within a given class of principal balance certificates, Realized Losses
and Expense Losses will be allocated to holders in proportion to their
percentage interests in the class.
Realized Losses arise when the master servicer becomes unable to collect
all amounts due and owing under a Mortgage Loan for any reason, including:
o fraud;
o bankruptcy; or
o an uninsured casualty loss.
If the Mortgage Loan and any related REO Property have been fully
liquidated, the "Realized Loss" would equal:
o the sum of:
1. the outstanding principal balance;
2. accrued and unpaid interest on the loan to but not including the due
date in the Collection Period when the liquidation occurs, excluding
Deferred Interest and default interest in excess of the mortgage
interest rate;
3. all unreimbursed Servicing Advances; and
4. all outstanding liquidation expenses;
minus
o the total liquidation proceeds received, if any.
If any part of the debt due under a Mortgage Loan is forgiven, then the
amount forgiven would also be a Realized Loss.
The trust fund incurs "Expense Losses" when it pays Additional Trust Fund
Expenses that are not of the type typically subject to a Servicing Advance or
are of such type but were the subject of a determination that such Servicing
Advance, if made, would be nonrecoverable.
"Additional Trust Fund Expenses" include, among other things:
o special servicing fees, workout fees and disposition fees,
o interest on Advances not paid from default interest and late payment
charges,
o the cost of legal opinions obtained as part of servicing the loans and
administering the trust fund, if these costs are not covered by a Servicing
Advance or paid by a borrower,
o certain unanticipated, non-Mortgage Loan specific expenses of the Trust
Fund, including:
1. indemnities and reimbursements to the trustee, the master servicer,
the special servicer and the depositor, and
2. certain federal, state and local taxes, and related expenses payable
out of the trust fund,
o expenses to remedy an environmental condition on a Mortgaged Property
securing a defaulted Mortgage Loan (see "The Pooling and Servicing
Agreement - Realization Upon Mortgage Loans - Standards for Conduct
Generally in Effecting Foreclosure or the Sale of Defaulted Loans"), if
these costs are not covered by a Servicing Advance, and
o other trust fund expenses not included in the calculation of Realized Loss
for which there is no corresponding collection from a borrower.
Prepayment Interest Excesses and Shortfalls
If a borrower prepays all or part of a Mortgage Loan on or before the
Determination Date in any calendar month and pays interest which accrued on the
prepayment from the beginning of the calendar month through the day preceding
the prepayment date, then such interest (less related master servicer fees) is a
"Prepayment Interest Excess".
If a borrower prepays all or part of a Mortgage Loan after the
Determination Date in a calendar month and does not pay interest on the
prepayment through the end of the calendar month, then this shortfall in a full
month's interest on the prepayment (less related master servicer fees) is a
"Prepayment Interest Shortfall".
Prepayment Interest Excesses collected during a Collection Period will be
used to offset Prepayment Interest Shortfalls during the Collection Period. The
master servicer will retain any remaining amount as additional servicing
compensation.
The master servicer must pay out of its own funds, without right of
reimbursement, any Prepayment Interest Shortfalls in respect of the Mortgage
Loans that are not offset by Prepayment Interest Excesses. However, the maximum
amount
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that the master servicer must pay is the Stated Principal Balance of the
Mortgage Loans on which it has received its master servicing fee for such
distribution date multiplied by 0.015% per annum. Any payment that the master
servicer makes to cover such shortfalls will be a "Compensating Interest
Payment."
The total of all Prepayment Interest Shortfalls remaining in a Collection
Period after offsetting Prepayment Interest Excesses and applying Compensating
Interest Payments, is the "Net Aggregate Prepayment Interest Shortfall" for the
distribution date.
The trustee will allocate any Net Aggregate Prepayment Interest Shortfall
among the certificates in proportion to the interest accrued on each class for
the distribution date. Such an allocation will reduce the Distributable
Certificate Interest for each class.
See "The Pooling and Servicing Agreement--Servicing Compensation and
Payment of Expenses".
Scheduled Final Distribution Date
The "Scheduled Final Distribution Date" for a class of certificates is the
distribution date on which its principal balance or notional amount would become
zero if there is no:
o early termination of the trust,
o repurchase of any loan,
o default or delinquency on any loan,
o prepayment of any kind, except that Hyper-Amortization Loans are assumed to
pay on their Anticipated Repayment Dates, or
o modification or extension of any loan.
It is very unlikely that these assumptions will hold true.
The Scheduled Final Distribution Date for each class of the offered
certificates is the distribution date in the month and year listed for such
class in the "Scheduled Final Distribution Date" column in the table on the
cover page. These Scheduled Final Distribution Dates were calculated without
regard to any delays in the collection of balloon payments and without regard to
a reasonable liquidation time with respect to any Mortgage Loans that may be
delinquent. Accordingly, if there are defaults on the Mortgage Loans, the actual
final distribution date for one or more classes may be later, and could be
substantially later, than the related Scheduled Final Distribution Date(s).
Since the rate of payment (including voluntary and involuntary
prepayments) of the Mortgage Loans may exceed the scheduled rate of payments,
and may exceed such scheduled rate by a substantial amount, the actual final
distribution date for one or more classes may be earlier, and could be
substantially earlier, than the related Scheduled Final Distribution Date(s).
The rate of payments (including prepayments) on the Mortgage Loans will depend
on the characteristics of the Mortgage Loans, as well as on the prevailing level
of interest rates and other economic factors. No assurance can be given as to
actual payment experience.
Subordination
The right of each class of subordinate certificates to receive principal
and interest distributions is subordinated to the rights of:
o the senior certificates, and
o each other class of subordinate certificates with an earlier alphabetical
and numerical class designation.
This subordination is intended to:
o protect the senior certificates against losses associated with delinquent
and defaulted Mortgage Loans, and
o enhance the likelihood of timely receipt by senior certificateholders of
the full amount of Distributable Certificate Interest payable to them, and
the ultimate receipt by the class A-1A and class A-1B certificateholders of
principal equal to the initial class principal balance of those classes.
Similarly, but to decreasing degrees, this subordination is also intended
to increase the likelihood that the holders of the other classes of offered
certificates will timely receive all of the Distributable Certificate Interest
payable on their certificates on each distribution date, and that they will
eventually be paid all of their principal.
The subordination will be accomplished by:
o applying Available Funds as described above under "--Distributions", and
o allocating Realized Losses and Expense Losses to the principal balance
certificates in reverse alphabetical and numerical order.
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Realized Losses and Expense Losses are allocated to the class A-1A and
class A-1B certificates in proportion to their principal balances.
No losses are allocated to the class S certificates, but any reduction in
the principal balance of a class of principal balance certificates will reduce
the notional amount of the class S certificates.
No other form of credit enhancement is provided.
Optional Termination
If on any distribution date the total Stated Principal Balance of the
Mortgage Loans is less than 1% of the Initial Pool Balance, then each of the
following (in this order) has an option to terminate the trust:
o the majority holders of the Controlling Class,
o the master servicer,
o the special servicer, and
o the holder of the majority of the class R-I certificate interests.
The termination is effected by purchasing all the Mortgage Loans and all
property acquired in respect of any Mortgage Loan then remaining in the trust
fund. Termination would cause early retirement of all then-outstanding
certificates.
The option exercise price equals the sum of:
o 100% of the total unpaid principal balance of the remaining Mortgage Loans
other than:
1. loans as to which the special servicer has determined all payments or
recoveries have been made, and
2. loans as to which the Mortgaged Property has become an REO Property,
o accrued and unpaid interest on those Mortgage Loans to the due date in the
Collection Period when the termination occurs,
o unreimbursed Servicing Advances plus interest at the Advance Rate, and
o the fair market value of any other property (including REO Property)
remaining in the trust fund.
The option exercise price, net of amounts payable to persons other than
certificateholders, will constitute Available Funds for the final distribution
date.
Voting Rights
At all times during the term of the pooling and servicing agreement the
voting rights for the certificates will be allocated as follows:
o 98% to the holders of the classes of principal balance certificates in
proportion to the principal balances of these classes, and
o 2% to the holders of the interest only certificates.
Each certificateholder of a class will share in the voting rights of that
class in proportion to the certificateholder's percentage interest in the class.
Delivery, Form and Denomination
Book-Entry Certificates
Initially, the offered certificates will be registered in the name of a
nominee of The Depository Trust Company. Investors will hold their beneficial
interests in the offered certificates through the book-entry facilities of DTC.
Investors will not receive physical certificates except in the limited
circumstances described below.
DTC has informed the depositor that its nominee will be Cede & Co.
Accordingly, Cede & Co. is expected to be the holder of record of the offered
certificates. Certificateholders may also hold certificates through Cedelbank or
Euroclear (in Europe), if they are participants in those systems or indirectly
through organizations that are participants in those systems. Cedelbank and
Euroclear will hold omnibus positions on behalf of their participants through
customers' certificates accounts in Cedelbank's and Euroclear's names on the
books of their respective depositaries, which in turn will hold such positions
in customers' certificates accounts in the depositaries' names on the books of
DTC. Citibank, N.A. will act as depositary for Cedelbank and the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York will act as
depositary for Euroclear.
Transfers between DTC participants will occur in accordance with DTC
rules. Transfers between Cedelbank participants and Euroclear participants will
occur in accordance with their rules.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank or
Euroclear, on the other, will be effected
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in DTC in accordance with DTC rules through Cedelbank's or Euroclear's
depositary. Cedelbank participants and Euroclear participants may not deliver
instructions directly to these depositaries.
Because of time-zone differences, credits of certificates received in
Cedelbank or Euroclear as a result of a transaction with a DTC participant will
be made during subsequent certificates settlement processing and dated the
business day following the DTC settlement date. Such credits or any transactions
in such certificates settled during such processing will be reported to the
relevant Cedelbank or Euroclear participant on such business day. Cash received
in Cedelbank or Euroclear as a result of sales of certificates by or through a
Cedelbank participant or a Euroclear participant to a DTC participant will be
received with value on the DTC settlement date, but will be available in the
relevant Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
The trustee will not be responsible for monitoring or restricting transfer
of ownership interests in offered certificates through the book-entry facilities
of DTC.
In DTC's book-entry system, a purchaser purchases through, or as, a direct
participant. The direct participant receives credit for the certificates on
DTC's records. The ownership interest of each beneficial owner is ultimately
reflected on the records of one of DTC's direct or indirect participants.
Beneficial owners are expected to receive written confirmations detailing the
transaction and periodic statements of their holdings, from the direct or
indirect DTC participant with whom the beneficial owner dealt. Neither the
depositor, the trustee, the master servicer, the special servicer nor any paying
agent is responsible for records of ultimate beneficial ownership or for
payments to ultimate beneficial owners.
So long as any class of offered certificates are held in book-entry form:
o actions by certificateholders will be taken by DTC upon instructions from
its participants, who in turn receive instructions directly or indirectly
from the beneficial owners of those certificates, and
o distributions, notices, reports and statements to certificateholders will
be sent to DTC or its nominee as the registered holder of those
certificates for ultimate distribution to beneficial owners of those
certificates in accordance with DTC procedures and applicable law.
Neither DTC nor its nominee will consent or vote with respect to the
offered certificates. Instead, DTC and its nominee take steps to facilitate
consent or voting in accordance with instructions from participants, who in turn
are expected to follow instructions issued by the beneficial owners of those
certificates.
Because DTC can only act on behalf of its participants, who in turn act on
behalf of indirect participants and certain banks, a beneficial owner may be
able to pledge or otherwise deal in offered certificates only with persons that
participate in the DTC system.
Under a book-entry format, beneficial owners may experience delays in their
receipt of payments, since distributions by the trustee or a paying agent on
behalf of the trustee will be paid directly to DTC's nominee.
Definitive Certificates
The trustee will issue definitive physical certificates to
certificateholders only if:
o the depositor elects to terminate the book-entry system, or
o DTC is no longer willing or able to act as depositary and the depositor
cannot locate a qualified successor to DTC.
The trustee would then issue definitive physical certificates upon
surrender of the physical certificates held by DTC with instructions from DTC
for registering definitive physical certificates in the names of the beneficial
owners. Upon becoming registered holders of certificates, those beneficial
owners will then be entitled directly to:
o receive payments,
o exercise voting rights, and
o transfer and exchange their certificates.
Definitive certificates will be transferable and exchangeable at the
offices of the trustee, the certificate registrar or another transfer agent.
The Depository Trust Company
DTC is:
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o a limited purpose trust company organized under New York law,
o a "banking corporation" within the meaning of the New York Banking Law,
o a member of the Federal Reserve System,
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and
o a "clearing agency" registered pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended.
DTC was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions among participants
through electronic computerized book-entry changes in participants' securities
and cash accounts. This greatly reduces the need for physical movement of
certificates and cash in securities transactions. Participants that maintain
accounts with DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. The rules
applicable to DTC and its participants are on file with the Securities and
Exchange Commission. Indirect access to the DTC system is available to banks,
brokers, dealers, trust companies and other institutions who maintain a clearing
or custodial relationship with a direct participant. DTC is owned by a number of
its participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc.
To facilitate transfers, all offered certificates deposited with DTC are
registered in the name of DTC's nominee, Cede & Co. The deposit of offered
certificates with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership.
DTC does not know who are the ultimate beneficial owners of the offered
certificates. DTC's records reflect only the identity of the direct participants
to whose account offered certificates are credited on DTC's records. The
participants are responsible for keeping account of the certificates that they
hold for their customers.
If DTC or a direct or indirect participant becomes insolvent, then the
ability of ultimate beneficial owners to obtain timely payment may be impaired.
If an insolvency causes a loss that exceeds the limits of applicable Securities
Investor Protection Corporation insurance or if such coverage is unavailable,
the ultimate payment of amounts distributable on offered certificates may be
impaired.
DTC management is aware that some computer applications, systems, and the
like for processing data that are dependent upon calendar dates, including dates
before, on, and after January 1, 2000, may encounter "Year 2000 problems." DTC
has informed its participants and other members of the financial community that
it has developed and is implementing a program so that DTC's systems, as the
same relate to the timely payment of distributions (including principal and
income payments) to securityholders, book-entry deliveries, and settlement of
trades within DTC, continue to function appropriately on or after January 1,
2000. This program includes a technical assessment and a remediation plan, each
of which is complete. Additionally, DTC's plan includes a testing phase, which
is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to its participants, issuers and
their agents, as well as third party vendors from whom DTC licenses software and
hardware, and third party vendors on whom DTC relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. DTC has informed its participants and other
members of the financial community that it is contacting (and will continue to
contact) third party vendors from whom DTC acquires services to:
o impress upon them the importance of such services being Year 2000
compliant; and
o determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their services.
In addition, DTC is in the process of developing such contingency plans as
it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to its participants and other members of the financial community for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.
Cedelbank
Cedelbank is incorporated under the laws of Luxembourg as a professional
depository. Cedelbank holds securities for its participants and facilitates the
clearance and settlement of securities through
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electronic book-entry changes in their cash and securities accounts.
Transactions can settle in Cedelbank in any of 28 currencies, including United
States dollars. Cedelbank provides safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing to its participants. Cedelbank interfaces with domestic markets in
several countries. The Luxembourg Monetary Institute regulates Cedelbank as a
professional depository. Cedelbank participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to Cedelbank is also available to others, such as
banks, brokers, dealers, and trust companies that maintain a clearing or
custodial relationship with a Cedelbank participant.
Euroclear
The Euroclear System was created in 1968 to hold securities for
participants and to clear and settle transactions between participants through
simultaneous electronic book-entry delivery against payment. Transactions may
now be settled in any of 40 currencies, including United States dollars. The
Euroclear System includes various other services, including securities lending
and borrowing, and interfaces with domestic markets in several countries. The
Euroclear System is operated by the Brussels, Belgium office of Morgan Guaranty
Trust Company of New York (the "Euroclear Operator"), under a contract with
Euroclear Clearance System S.C., a Belgian cooperative corporation. All
operations are conducted by the Euroclear Operator, and all Euroclear securities
clearance accounts and Euroclear cash accounts are accounts with the Euroclear
Operator. Euroclear participants include banks (including central banks),
securities brokers and dealers. Indirect access to Euroclear is also available
to other firms that maintain a clearing or custodial relationship with a
Euroclear participant.
The Euroclear Operator is the Belgian branch of a New York banking
corporation that is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
The Euroclear Operator acts only on behalf of Euroclear participants, and
has no record of or relationship with persons holding through participants.
Denominations
The trust will issue the offered certificates in minimum denominations of
$5,000 initial principal balance or notional amount (or in any whole dollar
amount in excess of $5,000). However, the trust may issue one certificate for
each class in a lower denomination to make up the difference between certificate
interests sold and the total amount offered.
Registration and Transfer of Definitive Certificates
Subject to the restrictions in the pooling and servicing agreement,
holders may transfer or exchange any definitive physical certificate in whole or
in part. No transfer or exchange can be of an amount smaller than the
denominations specified under "--Delivery, Form and Denomination
- --Denominations" above. The registered holder or his attorney-in-fact must
surrender the definitive certificate at the corporate trust office of the
certificate registrar appointed under the pooling and servicing agreement or at
the office of any transfer agent. The certificate must be accompanied by:
o an executed instrument of assignment and transfer, in the case of transfer,
or
o a written request for exchange, in the case of exchange.
The certificate registrar will cancel the old certificate and execute and
deliver (or mail) a new definitive certificate to the appropriate person within
a reasonable period of time.
New certificates sent by first class mail will be sent at the risk of the
transferee or holder to the address specified by the person presenting the old
certificates for transfer or exchange and requesting such mailing.
The certificate registrar may decline to register an exchange or transfer
during the 15 days preceding any distribution date.
The certificate registrar will not charge a fee for registering a transfer
or exchange. However, the certificate registrar may require the transferor of a
privately offered certificate to reimburse it for any
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tax, expense or other governmental charge it incurs in effecting the transfer.
For a discussion of certain transfer restrictions, see "ERISA
Considerations".
YIELD AND MATURITY CONSIDERATIONS
The yield on any offered certificate will depend on:
o the pass-through rate in effect from time to time for the certificate;
o the price paid for the certificate, plus accrued interest;
o the rate and timing of payments of principal on the certificate; and
o the aggregate amount of distributions on the certificate.
Rate and Timing of Principal Payments
The yield to holders of the class S certificates and any other offered
certificates purchased at a discount or premium will be affected by the rate and
timing of principal payments made in reduction of the principal balance or
notional amount of those certificates. As described in this prospectus
supplement, the Principal Distribution Amount for each distribution date
generally will be distributed to the holders of the class A-1A and/or class A-1B
certificates until their principal balance is reduced to zero, and then will be
distributed to the holders of each remaining class of principal balance
certificates, sequentially in alphabetical and numerical order of class
designation, in each case until the principal balance of each class of
certificates is, in turn, reduced to zero.
Reductions in the principal balance of the principal balance certificates
will reduce the notional amount of the class S certificates.
The rate and timing of principal payments made in reduction of the
principal balance of the offered certificates will be directly related to the
rate and timing of principal payments on the Mortgage Loans, which will in turn
be affected by:
o the amortization schedules of the loans, including any hyper-amortization
of a Hyper-Amortization Loan following its Anticipated Repayment Date,
o the dates on which balloon payments are due, and
o the rate and timing of Principal Prepayments and other unscheduled
collections on the loans, including:
1. liquidations of Mortgage Loans due to defaults, casualties or
condemnations affecting the Mortgaged Properties, or
2. repurchases of Mortgage Loans out of the trust fund in the manner
described under "Description of the Mortgage Pool--Representations and
Warranties; Repurchase" and "Description of the Certificates--Optional
Termination".
Prepayments, liquidations and repurchases of the Mortgage Loans will
result in distributions on the principal balance certificates of amounts that
would otherwise have been distributed over the remaining terms of the Mortgage
Loans. Conversely, defaults on the Mortgage Loans, particularly at or near their
stated maturity dates, may result in significant delays in payments of principal
on the Mortgage Loans (and, accordingly, on the principal balance certificates)
while work-outs are negotiated, foreclosures are completed or bankruptcy
proceedings are resolved. The yield to investors in the subordinate certificates
will be very sensitive to the timing and magnitude of losses on the Mortgage
Loans due to liquidations following a default, and will also be very sensitive
to delinquencies in payment. In addition, the special servicer has the option,
subject to certain limitations, to extend the maturity of Mortgage Loans
following a default in the payment of a balloon payment. See "The Pooling and
Servicing Agreement--Servicing of the Mortgage Loans; Collection of Payments"
and "--Realization Upon Mortgage Loans" in this prospectus supplement and
"Certain Legal Aspects of the Mortgage Loans--Foreclosure" in the prospectus.
The rate and timing of principal payments and defaults and the severity of
losses on the Mortgage Loans may be affected by a number of factors, including,
without limitation:
o the terms of the Mortgage Loans (for example, the provisions requiring the
payment of prepayment premiums and amortization terms that require balloon
payments),
o prevailing interest rates,
o the market value of the Mortgaged Properties,
o the demographics and relative economic vitality of the areas in which the
Mortgaged Properties are located,
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o the general supply and demand for such facilities (and their uses) in the
areas in which the Mortgaged Properties are located,
o the quality of management of the Mortgaged Properties,
o the servicing of the Mortgage Loans,
o federal and state tax laws (which are subject to change), and
o other opportunities for investment.
The rate of prepayment on the mortgage pool is likely to be affected by the
amount of any required prepayment premiums and the borrowers' ability to
refinance their related Mortgage Loans. If prevailing market interest rates for
mortgage loans of a comparable type, term and risk level have decreased enough
to offset any required prepayment premium, a borrower may have an increased
incentive to refinance its Mortgage Loan for purposes of converting to another
fixed rate loan with a lower interest rate.
However, the ability of a borrower to refinance its Mortgage Loan will be
affected not only by prevailing market rates, but also by the current market
value of the Mortgaged Property. See "Risk Factors--Yield Considerations" in
this prospectus supplement and "Certain Legal Aspects of the Mortgage Loans" in
the prospectus.
You should consider the risk that rapid rates of prepayments on the
Mortgage Loans, and corresponding increased payments of principal on the
principal balance certificates, may coincide with periods of low prevailing
interest rates. During these periods, the effective interest rates on securities
in which you may choose to reinvest amounts paid to you as principal may be
lower than the yield on your certificate. Conversely, slower rates of
prepayments on the Mortgage Loans, and corresponding decreased payments of
principal on the principal balance certificates, may coincide with periods of
high prevailing interest rates. During these periods, the amount of principal
payments available to you for reinvestment at such high prevailing interest
rates may be relatively small. In addition, some borrowers may sell Mortgaged
Properties in order to realize their equity therein, to meet cash flow needs or
to make other investments. Some borrowers may also be motivated by federal and
state tax laws (which are subject to change) to sell Mortgaged Properties prior
to the exhaustion of tax depreciation benefits.
If the markets for commercial and multifamily real estate experience an
overall decline in property values, the outstanding balance of a Mortgage Loan
could exceed the value of the Mortgaged Property. A borrower under a
non-recourse loan would then have a decreased incentive to fund operating cash
flow deficits and, as a result, actual losses could be higher than you
originally anticipated.
Neither the depositor nor the sellers make any representation as to:
o the particular factors that will affect the rate and timing of prepayments
and defaults on the Mortgage Loans,
o the relative importance of such factors,
o the percentage of the Mortgage Loans that will default or be prepaid, or
o the overall rate of prepayment, default or principal payment on the
Mortgage Loans.
The extent to which the yield to maturity of any class of offered
certificates may vary from your anticipated yield will depend upon the degree to
which they are purchased at a discount or premium and when, and to what degree,
payments of principal on the Mortgage Loans are in turn distributed on or
otherwise result in the reduction of the principal balance or notional amount of
your certificates. You should consider the risk that your actual yield may be
lower than anticipated if:
o in the case of any principal balance certificate purchased at a discount,
principal payments on the Mortgage Loans are slower than you anticipated,
and
o in the case of any principal balance certificate purchased at a premium (or
the interest only certificates, which have no principal balances),
principal payments on the Mortgage Loans are faster than you anticipated.
In general, the earlier a payment of principal on the Mortgage Loans is
distributed in reduction of the principal balance of any principal balance
certificate purchased at a discount or premium (or, in the case of an interest
only certificate, applied in reduction of its notional amount), the greater will
be the effect on your yield to maturity. As a result, the effect on your yield
of principal payments on the Mortgage Loans occurring at a rate higher (or
lower) than the rate you anticipated during any particular period would not be
fully offset by a subsequent like reduction (or increase) in the rate of such
principal payments.
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The yield to maturity of the interest only certificates will be highly
sensitive to the rate and timing of principal payments (including by reason of
prepayments, repurchases, extensions, defaults and liquidations) on the Mortgage
Loans. If you intend to purchase the interest only certificates, you should
fully consider the risk that if there is an extremely rapid rate of amortization
and prepayment on the principal balance certificates, you may not recover your
initial investment. Because the rate of principal payments on the Mortgage Loans
will depend on future events and a variety of factors (as described more fully
below), the depositor can give you no assurance as to such rate or the rate of
Principal Prepayments in particular. The depositor is not aware of any relevant
publicly available or authoritative statistics with respect to the historical
prepayment experience of a large group of commercial and/or multifamily loans
comparable to the Mortgage Loans. See "Risk Factors--Yield Considerations".
Balloon Payments and Anticipated Repayment Date Payments
Most of the Mortgage Loans are either balloon loans that will have
substantial balloon payments due at their stated maturities or are
Hyper-Amortization Loans that will have a substantial balance still owing on
their Anticipated Repayment Dates. A borrower's ability to pay a balloon
payment, or pay-off a loan on its Anticipated Repayment Date, may depend on its
ability to sell or refinance the property. Factors beyond the borrower's control
may affect this ability, including:
o the level of interest rates and general economic conditions at the time,
and
o changes in federal, state or local laws, including tax, environmental and
safety laws.
A failure to make a balloon payment on time, or to pay-off an
Hyper-Amortization Loan on its Anticipated Repayment Date, will lengthen the
average life of the certificates. See the Remaining Terms to Stated Maturity
Table in Exhibit A-2 for additional information regarding the maturity dates of
the Mortgage Loans.
Losses and Shortfalls
The yield to holders of the offered certificates will also depend on the
extent to which such holders are required to bear the effects of losses or
shortfalls on the Mortgage Loans.
Shortfalls in Available Funds may result from:
o shortfalls in collections of amounts payable on the Mortgage Loans (unless
advanced),
o additional master servicer or special servicer compensation,
o Additional Trust Fund Expenses, including interest on Advances, or
o other similar items.
Shortfalls in Available Funds (other than Net Aggregate Prepayment
Interest Shortfalls) will generally be borne by holders of each class of
principal balance certificates in reverse alphabetical and numerical order in
each case to the extent of amounts otherwise payable to the class. Any such
shortfalls will be allocated to the holders of the class A-1A and class A-1B
certificates on a pro rata basis.
Realized Losses and Expense Losses will be:
o allocated to the principal balance certificates in reverse alphabetical and
numerical order of their class designation, and
o applied to reduce the principal balance of each affected class and the
notional amount of the interest only certificates.
As a result, a loss on any one of the Mortgage Loans could cause a
significant loss of an investor's investment in any class, but especially the
subordinate certificates with the latest alphabetic and numeric designations.
You should make your own estimate of the expected timing and severity of
Realized Losses and Expense Losses before investing in any subordinate
certificate.
Pass-Through Rates
The pass-through rate for the class S certificates is sensitive to changes
in:
o the weighted average of the Net Mortgage Rates, and
o the weighted average of the pass-through rates for the principal balance
certificates.
The pass-through rates for the offered certificates (other than the class
A-1A certificates) are sensitive to changes in the weighted average of the Net
Mortgage Rates.
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The weighted average of the pass-through rates for the principal balance
certificates will fluctuate based on the relative sizes of the principal
balances of those classes.
The weighted average of the Net Mortgage Rates will fluctuate over the
lives of the offered certificates as a result of scheduled amortization,
voluntary prepayments, liquidations and repurchases of loans.
If principal reductions occur on loans with higher than average Net
Mortgage Rates at a rate proportionally faster than principal reductions on the
mortgage pool as a whole, the pass-through rates for the class S, class B-1 and
class B-2 certificates will be adversely affected.
In addition, the pass-through rates for the class A-1B, class A-2, class
A-3 and class A-4 certificates may not exceed the weighted average of the Net
Mortgage Rates.
Delay in Payment of Distributions
Monthly distributions will be made no earlier than the 10th day of the
month following the month in which the interest accrued on the certificates. You
should take this delay into account in determining how much to pay for the
offered certificates.
Yield Sensitivity of the Interest Only Certificates
The yield to maturity of the interest only certificates will be especially
sensitive to the prepayment, repurchase, default and loss experience on the
Mortgage Loans, which may fluctuate significantly from time to time. A rapid
rate of principal payments (including prepayments resulting from liquidations
and repurchases) will have a material negative effect on the yield to maturity
of the interest only certificates. There can be no assurance that the Mortgage
Loans will prepay at any particular rate. If you intend to purchase interest
only certificates, you should fully consider the risk that a rapid rate of
prepayments on the Mortgage Loans could result in your receiving total
distributions that are less than the amount you paid for the interest only
certificates.
The table in Exhibit E indicates the sensitivity of the pre-tax yield to
maturity on the interest only certificates to various constant rates of
prepayment on the Mortgage Loans. That table projects the monthly total payments
of interest on the interest only certificates and computes the corresponding
pre-tax yields to maturity on a corporate bond equivalent basis, based on the
following assumptions:
o the Maturity Assumptions described under "- Weighted Average Life" below,
o that the total purchase prices of the interest only certificates are:
o expressed in 32nds (e.g. 4-03 means 4.09375%) as a percentage of the
initial aggregate notional amount of the class S certificates, and
o exclusive of accrued interest, and
o that the initial pass-through rate and the initial notional amount for the
interest only certificates are as set forth in this prospectus supplement.
Any differences between these assumptions and the actual characteristics
and performance of the Mortgage Loans and the interest only certificates will
likely result in yields differing from those shown in the table in Exhibit E.
Discrepancies between assumed and actual characteristics and performance
underscore the hypothetical nature of that table. The depositor has provided
that table to give you a general sense of the sensitivity of yields in varying
prepayment scenarios.
The pre-tax yields in the table in Exhibit E were calculated by
determining the monthly discount rates that, when applied to the assumed stream
of cash flows to be paid on the interest only certificates, would cause the
discounted present value of such assumed stream of cash flows to equal the
assumed purchase price of those certificates, including accrued interest. These
monthly rates were then converted to semi-annual corporate bond equivalent
rates. Such calculation does not take into account:
o Prepayment Interest Shortfalls, or
o the interest rates at which you may be able to reinvest distributions on
the interest only certificates.
Accordingly, the table in Exhibit E does not reflect the return on an
investment in the interest only certificates when such reinvestment rates are
considered.
Notwithstanding the assumed prepayment rates reflected in the table in
Exhibit E, it is highly unlikely that the Mortgage Loans will be prepaid
according to one particular pattern. For this reason, and because the timing of
cash flows is critical to
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determining yields, the pre-tax yield to maturity on the interest only
certificates is likely to differ from those shown in that table, even if all of
the Mortgage Loans prepay at the indicated CPRs over any given time period or
over the entire life of the interest only certificates.
You should make your investment decision based on your assessment of the
anticipated rates of prepayment under a variety of scenarios.
Weighted Average Life
Weighted average life refers to the average amount of time that will
elapse from the date a security is issued to the date each dollar is distributed
in reduction of the principal balance of the security. The weighted average life
of each class of principal balance certificates is determined by:
o multiplying the amount of each distribution in reduction of the principal
balance of that class by the number of years from the date of purchase to
the related distribution date,
o adding the results, and
o dividing the sum by the total distributions in reduction of the principal
balance of that class.
The weighted average life of any principal balance certificate will be
influenced by, among other things:
o the rate at which principal of the Mortgage Loans is paid or otherwise
collected or advanced, and
o the extent that payments, collections and/or advances of principal are
applied to reduce the certificate's principal balance.
Prepayments on Mortgage Loans may be measured by a prepayment standard or
model. The model used in this prospectus supplement is the "Constant Prepayment
Rate" or "CPR" model. The CPR model represents an assumed constant rate of
prepayment each month, expressed as an annual rate, relative to the then
outstanding principal balance of a pool of mortgage loans for the life of those
loans. As used in each of the tables in Exhibit D, the column headed "0%"
assumes that none of the Mortgage Loans is prepaid before maturity, except that
each Hyper-Amortization Loan is assumed to pay on its Anticipated Repayment
Date. The columns headed "25%", "50%", "75%"and"100%" assume that no prepayments
are made on any Mortgage Loan during the Mortgage Loan's Lock-out Period or
Yield Maintenance Period, if any, and are otherwise made on each of the Mortgage
Loans at the indicated CPRs. The tables and assumptions are intended to
illustrate the sensitivity of the weighted average life of a class of offered
certificates (other than the interest only certificates) to various prepayment
rates and are not intended to predict or to provide information that will enable
you to predict the actual weighted average life of any class of offered
certificates. Consequently, no assurance can be given and no representation is
made that:
o prepayments of the Mortgage Loans (whether or not in a Lock-out Period or a
Yield Maintenance Period) will conform to any particular CPR,
o all the Mortgage Loans will prepay in accordance with the assumptions at
the same rate, or
o Mortgage Loans that are in a Lock-out Period or Yield Maintenance Period
will not prepay.
The tables in Exhibit D and E have been prepared on the basis of the
following assumptions (collectively, the "Maturity Assumptions"):
o the Initial Pool Balance is approximately $760,414,266,
o the initial principal balance or notional amount for each class of offered
certificates is the amount on the cover page,
o the pass-through rate for each class of certificates is as described in
this prospectus supplement,
o the scheduled Monthly Payments for each Mortgage Loan are the amounts
listed in Exhibit A-1,
o all Monthly Payments are due and timely received on the first day of each
month,
o there are no delinquencies or losses on the Mortgage Loans,
o there are no extensions of maturity of the Mortgage Loans,
o there are no Appraisal Reductions for the Mortgage Loans,
o there are no casualties or condemnations affecting the Mortgaged
Properties,
o prepayments are made on each of the Mortgage Loans at the indicated CPRs,
except that:
1. no prepayments are received for any Mortgage Loan during a Lock-out
Period or Yield Maintenance Period, and
2. Hyper-Amortization Loans are paid in full on their Anticipated
Repayment Dates,
o no one exercises its right to terminate the trust fund as described under
"Description of the Certificates--Optional Termination",
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o no Mortgage Loan is required to be repurchased or replaced by a seller or
other party,
o no Prepayment Interest Shortfalls are incurred,
o there are no Additional Trust Fund Expenses,
o distributions on the certificates are made on the 10th day of each month,
commencing in January 2000,
o the certificates are settled with investors on December 7, 1999,
o the only expenses payable out of the trust are the master servicer and the
trustee fees, and
o the prepayment provisions for each Mortgage Loan are assumed to begin on
the first payment date of such Mortgage Loan and any resulting prepayment
premiums are allocated as described under "Description of the
Certificates--Distributions--Distributions of Prepayment Premiums".
To the extent that the Mortgage Loans have characteristics that differ
from those assumed in preparing the tables in Exhibit D, the offered
certificates (other than the interest only certificates) may mature earlier or
later than indicated by the tables.
It is highly unlikely that the Mortgage Loans will prepay in accordance
with the Maturity Assumptions at any constant rate or that all the Mortgage
Loans will prepay in accordance with the Maturity Assumptions at the same rate.
In addition, variations in the actual prepayment experience and the balance of
the Mortgage Loans that prepay may increase or decrease the percentages of
initial class principal balances (and weighted average lives) shown in the
tables in Exhibit D. These variations may occur even if the average prepayment
experience of the Mortgage Loans were to reflect the Maturity Assumptions and
any of the specified CPR percentages.
You should conduct your own analyses of the rates at which the Mortgage
Loans may be expected to prepay.
Subject to the above discussion and assumptions, the tables in Exhibit D
indicate:
o the weighted average life of each class of the offered certificates (other
than the interest only certificates), and
o the percentages of the initial principal balance of each class of the
offered certificates (other than the interest only certificates) that would
be outstanding after each of the listed distribution dates at various CPRs,
starting after the expiration of lockout, defeasance and yield maintenance
periods.
THE POOLING AND SERVICING AGREEMENT
The certificates will be issued under a pooling and servicing agreement to
be dated as of December 1, 1999, among the depositor, the master servicer, the
special servicer and the trustee.
You may obtain a free copy of the pooling and servicing agreement (without
exhibits) by writing to:
PNC Mortgage Acceptance Corp.
210 West 10th Street, 6th Floor
Kansas City, Missouri 64105
Attention: Lawrence D. Ashley
You may also request a copy by telephone at (816) 435-5000.
Assignment of the Mortgage Loans
By the closing date, the sellers must assign the Mortgage Loans to the
trustee for the benefit of the certificateholders. The assignments will be
without recourse. Each seller must also deliver the following documents, among
others, for each of its Mortgage Loans:
o the original note, endorsed (without recourse) to the order of the trustee;
o the original or a copy of the related mortgage(s), together with originals
or copies of any intervening assignments of such document(s), in each case
(unless the particular document has not been returned from the applicable
recording office) with evidence of recording noted on the document;
o the original or a copy of any related assignment(s) of leases and rents (if
any such item is a document separate from the mortgage), together with
originals or copies of any intervening assignments of any such document(s),
in each case (unless the particular document has not been returned from the
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applicable recording office) with evidence of recording noted on the
document;
o an assignment of each related mortgage in favor of the trustee in
recordable form;
o an assignment of any related assignment(s) of leases and rents (if any such
item is a document separate from the mortgage) in favor of the trustee, in
recordable form;
o an original or copy of the related lender's title insurance policy (or, if
a title insurance policy has not yet been issued, a commitment for title
insurance "marked-up" at the closing of such Mortgage Loan or other binding
commitment to issue title insurance);
o originals or copies of all assumptions, modifications and substitution
agreements in those instances where the terms or provisions of the mortgage
have been modified or the Mortgage Loan assumed; and
o a copy of each assignment in favor of the trustee of each effective UCC
financing statement.
If a seller cannot deliver any original recorded document described above
or a copy of such document showing evidence of having been recorded on the
closing date, the seller will deliver it promptly after receipt from the
recording office, and in any case shall use best efforts to deliver such
documents not later than 180 days after the closing date.
The trustee is obligated to review the documents delivered to it for each
Mortgage Loan within 45 days after the later of delivery or the closing date and
report any missing documents or certain types of defects to the depositor and
the controlling class representative. Ninety days after the closing date, the
sellers will make an inquiry with each appropriate recording office regarding
the status of each unreturned assignment and will notify the trustee of the
results of their inquires. The scope of the trustee's review of each mortgage
file is, in general, limited solely to confirming that certain of the documents
listed above have been received in the manner specified. None of the trustee,
the master servicer, the special servicer or the custodian is under any duty or
obligation to inspect, review or examine any of the documents relating to the
Mortgage Loans to determine whether such document is valid, effective,
enforceable, in recordable form or otherwise appropriate for the represented
purpose.
Servicing of the Mortgage Loans; Collection of Payments
The pooling and servicing agreement will require:
o the master servicer to service and administer the Mortgage Loans; and
o the special servicer to service and administer the Specially Serviced
Mortgage Loans and REO Mortgage Loans;
on behalf of the trust fund solely in the best interests of and for the benefit
of all of the certificateholders and the trustee in accordance with the mortgage
loan documents and the pooling and servicing agreement.
Unless the pooling and servicing agreement requires a contrary specific
course of action, the master servicer and the special servicer must each act in
accordance with the higher of the following standards:
o in the same manner, and with the same care, skill, prudence and diligence,
with which it services and administers similar mortgage loans for other
third-party portfolios, giving due consideration to customary and usual
standards of practice that prudent institutional commercial mortgage loan
servicers use for comparable mortgage loans, or
o in the same manner in which, and with the same care, skill, prudence and
diligence with which, it services and administers similar mortgage loans
that it owns.
In observing this standard, the master servicer and special servicer may
take into account their other obligations under the pooling and servicing
agreement. However, they must disregard:
o any other relationship that the master servicer, the special servicer, any
sub-servicer or any of their affiliates have with any borrower or its
affiliates;
o the ownership of any certificate by the master servicer, the special
servicer or their affiliates;
o their obligation to make Advances or incur servicing expenses;
o the master servicer's, the special servicer's or any sub-servicer's right
to receive compensation for its services;
o the ownership, servicing or management for others by the master servicer,
the special servicer or any sub-servicer of any other mortgage loans or
property; and
o any obligation of the master servicer, the special servicer, any
sub-servicer or any of their affiliates to replace or repurchase any
Mortgage Loan that it sold to the trust fund.
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However, neither the master servicer nor the special servicer, nor any of
their directors, members, managers, officers, employees or agents, will have any
liability to the trust fund or the certificateholders for:
o taking any action or refraining from taking any action in good faith; or
o for errors in judgment.
The master servicer, the special servicer and such persons are not
protected against liability for:
o breaching their representations or warranties in the pooling and servicing
agreement,
o breaching the servicing standards in the pooling and servicing agreement,
o willful misfeasance, misrepresentation, bad faith, fraud or negligence in
performing its duties under the pooling and servicing agreement, or
o negligent disregard of its obligations or duties under the pooling and
servicing agreement.
The master servicer and the special servicer must make reasonable efforts
to collect amounts due under the Mortgage Loans, and must follow collection
procedures consistent with the servicing standard under the pooling and
servicing agreement. The special servicer may waive late payment charges or
penalty fees on delinquent Monthly Payments or balloon payments on Specially
Serviced Mortgage Loans. The master servicer may waive such amounts on all other
Mortgage Loans.
Collection Activities
The master servicer monitors the performance of all loans. It tracks the
status of outstanding payments due, grace periods and due dates. It calculates
and assesses late fees. The master servicer has created a customized collection
system that:
o downloads all current loan information from the servicing system on a daily
basis,
o prepares several regular delinquency reports,
o generates and mails a series of delinquency notice letters, including
payment-reminder letters to borrowers at 10 days past due, and more
strongly worded collection letters at 30 and 60 days past due, and
o flags higher-risk Mortgage Loans, such as those with a large principal
balance or chronic delinquency, so that the borrower receives a telephone
call rather than a letter.
A delinquent Mortgage Loan will be transferred to the special servicer
when the loan becomes a Specially Serviced Mortgage Loan. See "--Special
Servicing".
Advances
Except as noted below, if a loan is delinquent at the close of business on
the Determination Date for a distribution date, the master servicer will advance
an amount equal to the Monthly Payment or the Assumed Monthly Payment, as
applicable (each such amount, a "P&I Advance").
The master servicer must make the P&I Advance on the business day before
each distribution date.
The amount of interest to be advanced for a Mortgage Loan for which an
Appraisal Reduction has been calculated will equal the product of:
1. the amount of interest that would otherwise be required to be advanced, and
2. a fraction,
o whose numerator equals the Stated Principal Balance of the loan at the
close of the preceding distribution date less the Appraisal Reduction,
and
o whose denominator is such Stated Principal Balance.
In addition to P&I Advances, the master servicer will also be obligated to
make cash advances ("Servicing Advances," and together with P&I Advances,
"Advances") to pay:
o certain costs and expenses incurred in connection with defaulted Mortgage
Loans, acquiring or managing REO Property or selling defaulted Mortgage
Loans or REO Properties,
o delinquent real estate taxes, assessments and hazard insurance premiums,
and
o other similar costs and expenses necessary to protect and preserve the
security of a Mortgage.
If the master servicer fails to make a required Advance and the trustee is
aware of the failure, the trustee must make the Advance.
However, each of the master servicer and the trustee only has to make an
Advance if it determines that it will be recoverable from late payments,
insurance proceeds, liquidation proceeds or other collections on the Mortgage
Loan. Neither
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the master servicer nor the trustee is required to make any Advance that it
determines is not so recoverable. If the master servicer makes such a
nonrecoverability determination, it must deliver to the trustee an officer's
certificate explaining the procedures and basis for the determination and
supplying documentation which supports the determination, which will include a
copy of the Updated Appraisal and any other information or reports obtained by
the master servicer or the trustee, such as:
o property operating statements,
o rent rolls,
o property inspection reports, and
o engineering reports.
The trustee will be entitled to rely conclusively on a nonrecoverability
determination by the master servicer.
Unless there is a nonrecoverability determination, the obligation to make
Advances on a Mortgage Loan continues until foreclosure and liquidation of the
loan and related properties. Advances are intended to provide a limited amount
of liquidity, not to guarantee or insure against losses.
If the special servicer agrees to a modification of a Mortgage Loan that
forgives loan payments or other amounts that the master servicer or the trustee
previously advanced, and the master servicer or the trustee determines that no
other source of payment or reimbursement for such Advances is available to it,
such Advances will be deemed to be nonrecoverable.
The master servicer and the trustee will each be entitled to recover any
P&I Advances made by it, out of its own funds, from collections on the Mortgage
Loan as to which the Advance was made. If the master servicer or the trustee
determines that an Advance previously made is not so recoverable, that Advance,
plus interest, will be repaid from amounts on deposit in the Collection Account
before further distributions on the certificates.
Interest is payable on Advances at a floating rate (the "Advance Rate")
equal to the prime rate as published in The Wall Street Journal. Advance
interest will be paid first from default interest on any Mortgage Loan and late
payment charges collected on the related Mortgage Loan. If those collections are
insufficient, any remaining Advance interest will be paid from general
collections on all Mortgage Loans at the time that the Advance is repaid.
However, no interest will accrue for any P&I Advance until after the grace
period for the related Mortgage Loan has expired. In addition, no interest will
accrue for a P&I Advance if the borrower pays the delinquent Monthly Payment on
or before the business day before the related distribution date.
If interest on Advances is not offset by default interest or other
amounts, the shortfall will reduce amounts payable on the certificates. Hence,
it is possible that the making of Advances (and the charging of interest on
Advances while they are outstanding) could reduce total amounts payable to
certificateholders even if all amounts due from borrowers are eventually
received.
Accounts
Collection Account
The master servicer will establish and maintain a segregated account or
accounts (the "Collection Account") into which it must deposit the following
amounts relating to the Mortgage Loans:
o all principal payments;
o all payments of interest, including default interest and Deferred Interest,
and any prepayment premiums, late fees and late payment charges;
o any amounts required to be deposited by the master servicer for:
1. losses realized on permitted investments of funds in the Collection
Account, and
2. Prepayment Interest Shortfalls;
o all Net REO Proceeds transferred from an REO Account;
o all condemnation proceeds, insurance proceeds and net liquidation proceeds
not required to be applied to restore or repair the Mortgaged Property;
o any amounts received from borrowers as recoveries of Servicing Advances;
o proceeds of any purchase or repurchase of a Mortgage Loan by the applicable
seller; and
o other amounts that the pooling and servicing agreement requires the master
servicer to deposit into the Collection Account.
The master servicer will deposit these amounts into the Collection Account
within one day after receipt. The Collection Account will be held by the master
servicer for the benefit of the trustee and the certificateholders.
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See "Description of the Mortgage Pool--Representations and Warranties;
Repurchase", "The Pooling and Servicing Agreement--Realization Upon Mortgage
Loans" and "Description of the Certificates--Optional Termination".
"REO Proceeds" for any REO Property and the related Mortgage Loan are all
revenues received by the special servicer on the REO Property or REO Mortgage
Loan other than liquidation proceeds.
"Net REO Proceeds" for any REO Property and the related Mortgage Loan are
REO Proceeds less any insurance premiums, taxes, assessments and other costs and
expenses permitted to be paid from the related REO Account.
The master servicer need not deposit into the Collection Account any
payments in the nature of NSF check charges, assumption fees, loan modification
fees, loan service transaction fees, extension fees, demand fees, beneficiary
statement charges and similar fees. To the extent permitted by applicable law
and as provided in the pooling and servicing agreement, the master servicer or
the special servicer may retain such amounts as additional servicing
compensation. If the master servicer mistakenly deposits any amount into the
Collection Account, it may withdraw the mistaken deposit from the Collection
Account at any time.
Interest Reserve Account
The master servicer will establish and maintain an "Interest Reserve
Account" for the benefit of the holders of the certificates. For the
distribution date in each January (other than a leap year) and each February,
the master servicer will deposit into the Interest Reserve Account for each
Mortgage Loan bearing interest computed on an actual/360 basis (the "Interest
Reserve Loans") an amount equal to one day's interest at the related Mortgage
Rate on its Stated Principal Balance as of the due date in the month in which
the distribution date occurs (the "Interest Reserve Amount"). The master
servicer will not make the deposit if the applicable Monthly Payment has not
been paid or advanced. The master servicer will calculate the Interest Reserve
Amount without regard to the adjustments to the Net Mortgage Rates for Interest
Reserve Loans described under "Description of the Certificates--Pass-Through
Rates". For distribution dates in March of each year, the master servicer will
deposit the Interest Reserve Amounts into the Distribution Account and include
these amounts as part of the Available Funds for the distribution date.
Distribution Account
The trustee will establish a segregated account or accounts (the
"Distribution Account") into which the master servicer must deposit the
following amounts:
o a total amount equal to the Available Funds (to the extent included in the
Collection Account or the Interest Reserve Account);
o any prepayment premiums and Deferred Interest received during the
Collection Period; and
o all P&I Advances required for the distribution date and not already
included in the Available Funds.
The master servicer will deposit these amounts into the Distribution
Account on the business day before each distribution date. The Distribution
Account will be held by the trustee for the benefit of the certificateholders.
See "Description of the Certificates--Distributions".
Where Accounts May be Maintained
The Collection Account and the Distribution Account must each be either:
o for funds that will be held for more than 30 days, an account or accounts
maintained with a depository institution or trust company the long-term
unsecured debt obligations of which are related "AA" or better by Fitch
(or, if not so rated by Fitch, then otherwise approved by Fitch), and "AA-"
or better by Standard & Poor's (or, if not so rated by Standard & Poor's,
then otherwise approved by Standard & Poor's); or
o for funds that will be held for 30 days or less, an account or accounts
maintained with a depository institution or trust company, the short-term
unsecured debt obligations of which are rated "F-1+" or better by Fitch
(or, if not so rated by Fitch, then otherwise approved by Fitch), and "A-1"
or better by Standard & Poor's (or, if not so rated by Standard & Poor's,
then otherwise approved by Standard & Poor's); or
o a segregated trust account or accounts maintained with a federal- or
state-chartered depository institution or trust company acting in its
fiduciary capacity:
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1. having a combined capital and surplus of at least $50,000,000,
2. subject to supervision or examination by a federal or state authority,
and
3. for state-chartered institutions, subject to regulations regarding
fiduciary funds on deposit substantially similar to 12 CFR 9.10(b); or
o an account which each of the Rating Agencies confirms will not, in and of
itself, result in a downgrading, withdrawal or qualification of the rating
then assigned by such Rating Agency to any class of certificates.
Investment of Funds in the Accounts
Amounts on deposit in such accounts may be invested in United States
government securities and other investments specified in the pooling and
servicing agreement. See "Description of the Governing Document--Collection and
Other Servicing Procedures With Respect to Mortgage Loans--Accounts" in the
prospectus for a listing of permitted investments.
Withdrawals from the Collection Account
The master servicer may withdraw funds from the Collection Account for the
following purposes:
o to remit Available Funds, Deferred Interest and prepayment premiums to the
Distribution Account,
o to pay or reimburse itself or the trustee for Advances and interest on
Advances, that payment or reimbursement to be made from the sources
described under "--Advances" above,
o to pay the unpaid portion of the master servicing fee and special servicing
fee (in the case of the master servicing fee, from interest received on the
related Mortgage Loan),
o to pay the trustee fee to the trustee,
o to pay to itself any investment income earned on funds deposited in the
Collection Account,
o to pay any Prepayment Interest Excess received in the preceding Collection
Period to itself as additional servicing compensation,
o to pay to itself or the special servicer other amounts constituting
additional servicing compensation,
o to pay to the depositor, the applicable seller or other purchaser with
respect to each Mortgage Loan or REO Property that has been purchased or
repurchased by it, all amounts received on such loan or property during the
related Collection Period and subsequent to the date as of which the amount
required to effect the purchase or repurchase was determined,
o to reimburse or pay itself, the special servicer, the trustee and/or the
depositor for other unreimbursed expenses that are reimbursable under the
pooling and servicing agreement,
o to satisfy any indemnification obligations of the trust fund under the
pooling and servicing agreement,
o to pay to the trustee amounts requested by it to pay taxes on certain net
income with respect to REO Properties,
o to withdraw any amount mistakenly deposited into the Collection Account,
and
o to clear and terminate the Collection Account upon termination and
liquidation of the trust fund.
Enforcement of "Due-on-Sale" Clauses
The master servicer or the special servicer will exercise or waive
"due-on-sale" clauses in Mortgage Loan documents in accordance with the
servicing standard. However, the master servicer or the special servicer, as
applicable, may waive a "due-on-sale" clause only if it first obtains written
confirmation from:
o Standard & Poor's, with respect to any Mortgage Loan, group of
cross-collateralized Mortgage Loans or group of Mortgage Loans with
affiliated borrowers that has a then outstanding principal balance equal to
or greater than the lesser of $20 million and 5% of the then outstanding
principal balance of all of the Mortgage Loans, and
o Fitch, with respect to any Mortgage Loan that at such time is one of the 10
largest loans in the trust,
that the waiver will not result in a qualification, downgrade or withdrawal of
the rating then assigned by that Rating Agency to any class of certificates. The
master servicer or the special servicer must use reasonable efforts to require
the new borrower to pay the cost of the Rating Agency confirmation. The master
servicer will advance any costs not paid by the new borrower as a Servicing
Advance (unless the Advance would be nonrecoverable).
See "--The Controlling Class Representative" for additional limitations on
the
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ability of the master servicer and the special servicer to waive "due-on-sale"
clauses.
If the master servicer or the special servicer waives the "due-on-sale"
clause it may either:
o release the original borrower from liability under the Mortgage Loan and
substitute the new owner as the borrower, or
o enter into an assumption agreement with the new owner of the Mortgaged
Property.
To the extent permitted by law, the master servicer or the special
servicer, as applicable, will enter into an assumption or substitution agreement
only if the credit status of the prospective new owner is in compliance with:
o the master servicer's or the special servicer's, as applicable, regular
commercial mortgage origination or servicing standards and criteria,
o the terms of the Mortgage Loan, and
o any other standards set by the master servicer or the special servicer, as
applicable, consistent with the servicing standard.
If a Mortgage Loan is assumed, the only permitted modifications that may
be made as part of the assumption are those described below under "--Amendments,
Modifications and Waivers."
The master servicer or special servicer may retain as additional servicing
compensation any assumption fees paid by the borrower or the new owner. See
"Certain Legal Aspects of the Mortgage Loans--Due-on-Sale and Due-on-Encumbrance
Provisions" in the prospectus.
In a bankruptcy or similar proceeding involving a Mortgaged Property, a
court may substitute a new owner or impose a junior or senior lien on the
Mortgaged Property, without the consent of the master servicer, the special
servicer or the trustee.
Enforcement of "Due-on-Encumbrance" Clauses
The Mortgage Loans contain a "due-on-encumbrance" clause, which generally
either:
o provides that the Mortgage Loan will (or may at the related mortgagee's
option) become due and payable upon the creation of any lien or other
encumbrance on the Mortgaged Property, or
o requires the consent of the related mortgagee to the creation of any lien
or other encumbrance on the Mortgaged Property.
Such clauses usually permit the owner of the Mortgage Loan to either:
o accelerate the payments due on the Mortgage Loan, or
o withhold its consent to the creation of any such lien or other encumbrance.
The master servicer or the special servicer, as applicable, may in
accordance with the servicing standard either exercise or waive the trust fund's
rights under the "due-on-encumbrance" clause. However, the master servicer or
the special servicer, as applicable, may consent to the creation of any lien or
encumbrance only if it first obtains written confirmation from each of the
Rating Agencies that such consent will not result in a qualification, downgrade
or withdrawal of the rating then assigned by that Rating Agency to any class of
certificates.
The master servicer or the special servicer must use reasonable efforts to
require the borrower to pay the cost of such Rating Agency confirmation. The
master servicer will advance any costs not paid by the borrower as a Servicing
Advance (unless the Advance would be nonrecoverable).
See "--The Controlling Class Representative" for additional limitations on
the ability of the master servicer and the special servicer to waive
"due-on-encumbrance" clauses.
The master servicer or the special servicer may forbear from enforcing any
"due-on-encumbrance" provision in connection with any junior or senior lien on a
Mortgaged Property imposed in a bankruptcy proceeding involving the Mortgaged
Property without obtaining a Rating Agency confirmation.
Inspections
The special servicer is responsible for inspecting the Mortgaged
Properties securing Specially Serviced Mortgage Loans and REO Properties. The
master servicer is responsible for inspecting the other Mortgaged Properties.
The special servicer may at its option assume the master servicer's obligation
to inspect some or all of the Mortgaged Properties. Each Mortgaged Property and
REO Property will be inspected at least once every two years. If a Mortgage Loan
has a then current principal balance of at least $2 million or is a
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Specially Serviced Mortgaged Loan, the related Mortgaged Property will be
inspected at least once every year. The annual inspections described above will
be done at the expense of the servicer performing the inspection. In addition,
the special servicer will inspect any Mortgaged Property if the related borrower
is 60 or more days delinquent in the payment of a Monthly Payment or other
obligation. If the last annual inspection was performed more than nine months
ago, the special servicer will perform the inspection at its expense. Otherwise,
the master servicer will advance the cost of any such inspection as a Servicing
Advance (unless the Advance would be nonrecoverable). The master servicer and
the special servicer will cause a written inspection report to be prepared as
soon as reasonably possible after completing the inspection. A copy of each
inspection report must be delivered to the trustee and the controlling class
representative within 15 days after its preparation.
Realization Upon Mortgage Loans
Standards for Conduct Generally in Effecting Foreclosure or the Sale of
Defaulted Loans
The master servicer will advance costs and expenses of a foreclosure or
other acquisition as a Servicing Advance, unless the Advance would be
nonrecoverable.
The special servicer may proceed with a non-judicial foreclosure under the
laws of the state where the property is located. The special servicer need not
pursue a deficiency judgment against the borrower or any other party if the laws
of the state do not permit a deficiency judgment after a non-judicial
foreclosure. The special servicer may also refrain from seeking a deficiency
judgment if it determines that the likely recovery would not warrant the cost,
time, expense and/or exposure of pursuing the deficiency judgment and delivers
an officer's certificate to the trustee to that effect.
Until the conditions listed in the next sentence are satisfied, the
special servicer may not obtain title or possession or take any other action
regarding a Mortgaged Property on behalf of the trust fund, if as a result the
trustee or the trust fund would be considered to hold title, to be a
"mortgagee-in-possession", or to be an "owner" or "operator" within the meaning
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980 or any comparable law. The special servicer may proceed with such steps if
it has determined, based on an updated environmental assessment report prepared
by an independent person who regularly conducts environmental audits, that:
o the Mortgaged Property complies with applicable environmental laws or, if
not, after consultation with an environmental consultant, that it would be
in the trust fund's best economic interest to take necessary corrective
measures, and
o there are no circumstances present at the Mortgaged Property relating to
the use, management or disposal of hazardous materials for which
investigation, testing, monitoring, containment, clean-up or remediation
could be required under current federal, state or local law or regulation
or, if any such hazardous materials are present for which such action could
be required, after consultation with an environmental consultant, that it
would be in the trust fund's best economic interest to take such actions.
The cost of any environmental assessments, as well as the cost of any
remedial, corrective or other further action contemplated by the prior paragraph
will be advanced as a Servicing Advance, unless the advance would not be
recoverable.
If title to any Mortgaged Property is acquired in foreclosure or by
deed-in-lieu of foreclosure, the deed or certificate of sale will be issued to
the trustee, or to its nominee (which will not include the master servicer or
the special servicer) or to a separate trustee or co-trustee on behalf of the
trustee. Notwithstanding any such acquisition of title and cancellation of the
related Mortgage Loan, the Mortgage Loan will be considered to be a Mortgage
Loan held in the trust fund until the related REO Property is sold by the trust
fund, which must occur before the close of the third taxable year following the
taxable year in which the trust acquired the property. The Internal Revenue
Service has the authority to grant a three year extension of this period. The
principal balance of the loan will be reduced by Net REO Proceeds allocated to
it as a recovery of principal.
If the trust fund acquires a Mortgaged Property by foreclosure or
deed-in-lieu of foreclosure upon a default of a Mortgage Loan, the special
servicer must administer the Mortgaged Property so that it qualifies at all
times as "foreclosure property" within the meaning of section 860G(a)(8) of the
Internal Revenue Code. An "independent contractor," within the meaning of
applicable Treasury regulations, must manage and operate any
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Mortgaged Property, unless the special servicer provides the trustee with an
opinion of counsel that the operation and management of the property other than
through an independent contractor will not cause the property to fail to qualify
as "foreclosure property". The expense of the legal opinion will be covered by a
Servicing Advance, unless the advance would not be recoverable. Generally, REMIC
I will not be taxed on income received on Mortgaged Property which constitutes
"rents from real property," under section 856(c)(3)(A) of the Internal Revenue
Code and the related Treasury regulations.
"Rents from real property" do not include the portion of any rental based
on the net income or gain of any tenant or sub-tenant. No determination has been
made whether rent on any of the Mortgaged Properties meets this requirement.
"Rents from real property" include charges for services customarily
furnished or rendered in connection with the rental of real property, whether or
not the charges are separately stated. Services furnished to the tenants of a
particular building will be considered customary if, in the geographic market in
which the building is located, tenants in buildings that are of a similar class
are customarily provided with the service. The depositor has not determined
whether the services furnished to the tenants of the Mortgaged Properties are
"customary" within the meaning of applicable regulations. It is therefore
possible that a portion of the rental income from a Mortgaged Property owned by
the trust fund would not constitute "rents from real property."
Net income from a trade or business operated or managed by an independent
contractor on a Mortgaged Property owned by REMIC I does not constitute "rents
from real property." Finally, any income from the sale of REO Property that is
held by REMIC I as a dealer in property is not considered "rent from real
property."
If the REO Property remains "foreclosure property", any income that is not
"rent from real property" is subject to tax at the highest corporate rate
(currently 35%). REMIC I may also be subject to state and local taxes on such
amounts. In addition, certain income from REO Property may be subject to a
"prohibited transactions" tax. Any such income would be subject to a 100% tax;
however, REMIC I does not expect any income from any REO Property to be subject
to this 100% tax. See "Federal Income Tax Consequences--Prohibited Transactions
Tax and Other Taxes" in the prospectus.
Any such taxes would be chargeable against the related income for purposes
of determining the Net REO Proceeds available for distribution to holders of
certificates. The pooling and servicing agreement allows the special servicer to
cause the trust fund to earn "net income from foreclosure property" that is
subject to tax, if it determines that the net after-tax benefit to
certificateholders is greater than what would be realized under another method
of operating or leasing the Mortgaged Property. See "Federal Income Tax
Consequences--Taxation of Owners of REMIC Regular Certificates", "--Taxation of
Holders of REMIC Residual Certificates" in the prospectus.
Sale of Specially Serviced Mortgage Loans and REO Properties
The special servicer may offer to sell a Specially Serviced Mortgage Loan
or an REO Property, if it determines that:
o no satisfactory arrangements can be made to collect delinquent payments,
and
o the sale would be in the best economic interests of the trust fund.
The special servicer must give the trustee and the controlling class
representative written notice that it is contemplating a sale at least 10
business days before considering any further action. The controlling class
representative may purchase the loan or property, directly or through an
affiliate, for cash equal to the Repurchase Price.
If the controlling class representative (or a designated affiliate) fails
to purchase the loan or property within 30 days after the controlling class
representative receives notice, either the special servicer or the master
servicer, in that order of priority, may purchase the loan or property, directly
or through an affiliate, for cash equal to the Repurchase Price.
If none of the forgoing purchases the loan or property, the special
servicer may then offer to sell the loan or property if and when the special
servicer determines that the sale would be in the best economic interests of the
trust fund. The special servicer must sell the loan or property within the
period specified in the pooling and servicing agreement, including extensions.
The controlling class representative, the master servicer and the special
servicer may offer to purchase any such loan or property. The special
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servicer will accept any offer received from any person:
o that it determines to be a fair price, unless the highest offeror is the
special servicer or one of its affiliates, or
o that the trustee determines to be a fair price, if the highest offeror is
the special servicer or one of its affiliates.
In making such a fairness determination, the special servicer or trustee
may rely upon an updated independent appraisal. Any offer from the depositor,
the master servicer, the special servicer, any borrower, the manager of a
Mortgaged Property or any of their affiliates in the amount of the Repurchase
Price shall be deemed to be a fair price.
Neither the trustee (in its individual capacity) nor any of its affiliates
may purchase or offer to purchase the loan or property.
The special servicer may accept an offer other than the highest offer if
it determines that accepting the offer would be in the best interests of the
certificateholders. For example, the person making the lower offer could be more
likely to perform its obligations or the lower offer may have more favorable
terms.
Amendments, Modifications and Waivers
Subject to any restrictions applicable to REMICs, and to limitations under
the pooling and servicing agreement, the master servicer may amend any term that
does not affect the maturity date, interest rate, principal balance,
amortization term or payment frequency (each, a "Money Term") of, or materially
impair the collateral securing, any loan that is not a Specially Serviced
Mortgage Loan.
Subject to restrictions applicable to REMICs and to limitations in the
pooling and servicing agreement, the special servicer may agree to a
modification, waiver or amendment of the terms of any Specially Serviced
Mortgage Loan if, in the special servicer's reasonable judgment:
o the related borrower is in default or default is reasonably foreseeable,
and
o the modification, waiver or amendment would increase the recovery to
certificateholders on a net present value basis.
See, however, "--The Controlling Class Representative".
Examples of the types of modifications, waivers or amendments to which the
special servicer may agree include:
o reducing the amounts owing under the loan by forgiving principal, accrued
interest and/or any prepayment premium,
o reducing the amount of the monthly payment on the loan, including a
reduction in the interest rate,
o not enforcing any right granted under any note or mortgage relating to the
loan,
o extending the maturity date of the loan, and/or
o accepting a principal prepayment during a Lock-out Period.
However, the special servicer may not permit a borrower to extend the
maturity date to a date later than:
o two years before the Rated Final Distribution Date,
o 20 years before any ground lease that secures the loan expires, or
o 60 months after the original maturity date for the Mortgage Loan.
Modifications of a Mortgage Loan that forgive principal or interest (other
than Deferred Interest and, in some cases, default interest) will cause Realized
Losses on the loan. Such Realized Losses will be allocated among the classes of
certificates as described under "Description of the Certificates--Realized
Losses and Allocations of Certain Expenses".
The Trustee
Norwest Bank Minnesota, National Association will act as trustee. The
address of the trustee's corporate trust office is:
11000 Broken Land Parkway
Columbia, Maryland 21044-3562
Attn: Corporate Trust Services
(CMBS) --PNC Mortgage Acceptance Corp. Commercial Mortgage Pass-Through
Certificates, 1999-CM1
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All requests relating to the transfer of certificates should be delivered
to the trustee at:
Norwest Center
Sixth and Marquette-MAC#N9303-121
Minneapolis, Minnesota 55479-0113
Attn: Corporate Trust Services
(CMBS) -PNC Mortgage Acceptance Corp. Commercial Mortgage Pass-Through
Certificates Series 1999-CM1
Resignation and Removal of Trustee
The trustee may resign at any time by notifying the depositor, the master
servicer, the special servicer and the Rating Agencies in writing. The master
servicer will appoint the successor trustee. Before appointing a successor
trustee, the master servicer must obtain confirmation from Fitch that the
successor trustee's appointment will not adversely affect the rating then
assigned by Fitch to any of the certificates. The resigning trustee must pay any
cost of obtaining the confirmation from Fitch. However, if the
certificateholders remove the trustee without cause, the costs and expenses of
the trustee incurred in connection with the removal and the cost of obtaining
the confirmation from Fitch will be paid as an Additional Trust Fund Expense. If
the successor trustee is not appointed within 30 days after the notice of
resignation, the resigning trustee may petition a court of competent
jurisdiction to appoint a successor trustee.
The depositor or the master servicer may remove the trustee if, among
other things:
o the trustee becomes ineligible to continue as such under the pooling and
servicing agreement,
o the trustee becomes incapable of acting,
o the trustee is adjudged bankrupt or insolvent,
o a receiver is appointed for the trustee or its property, or
o any public officer takes charge or control of the trustee or its property.
The holders of certificates evidencing a majority of the total voting
rights may remove the trustee upon written notice to the master servicer, the
special servicer, the depositor and the trustee.
Resignation or removal of the trustee is effective only when the successor
trustee accepts the appointment.
Trustee Fee
The pooling and servicing agreement entitles the trustee to a monthly fee
from amounts in the Collection Account. The fee is equal to .0023% of the then
outstanding principal balance of each Mortgage Loan calculated on the basis of a
360-day year consisting of twelve 30-day months.
Indemnification of Trustee
The trust will indemnify the trustee and its directors, officers,
employees, agents and affiliates against any and all losses, liabilities,
damages, claims or expenses (including reasonable attorneys' fees) arising under
the pooling and servicing agreement or the certificates (but only to the extent
that they are expressly reimbursable under the pooling and servicing agreement
or are unanticipated expenses incurred by the REMIC). However, the
indemnification will not apply to matters resulting from the negligence,
misrepresentation, fraud, bad faith or willful misconduct of the indemnified
person or for any expense or liability specifically required to be borne by the
trustee in the pooling and servicing agreement. The trustee need not expend or
risk its own funds or otherwise incur financial liability in performing its
duties under the pooling and servicing agreement, or in exercising its rights or
powers, if in the trustee's opinion the repayment of such funds or adequate
indemnity against the risk of liability is not reasonably assured.
The master servicer and the special servicer will each indemnify the
trustee and its directors, officers, employees, agents and affiliates for
similar losses related to the willful misconduct, fraud, misrepresentation, bad
faith and/or negligence in the performance or negligent disregard by the master
servicer or the special servicer, as the case may be, of its duties under the
pooling and servicing agreement.
Duties of the Trustee
If no event of default has occurred of which the trustee has actual
knowledge and after the curing of all events of default that may have occurred,
the trustee must perform only those duties specifically imposed under the
pooling and servicing agreement. If an event of default has occurred and has not
been cured, the trustee will be required to use the same degree of skill and
care in exercising its rights and powers under the pooling and servicing
agreement that a prudent person would use in its own personal affairs under
similar circumstances. Upon receipt of the various certificates, reports or
other documents
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required to be furnished to it, the trustee must examine the documents and
determine whether they conform on their face to the requirements of the pooling
and servicing agreement.
If the master servicer fails to make a required Advance and the trustee is
aware of the failure, the trustee must make the Advance unless it deems the
Advance nonrecoverable. See "--Advances".
Except for funds held by the trustee, the trustee will not be accountable
for:
o the use or application by the depositor of any certificates or the proceeds
of the certificates,
o the use or application of funds paid to the depositor, the master servicer
or the special servicer relating to the Mortgage Loans, or
o the use or application of funds deposited in or withdrawn from the
Collection Account or the Distribution Account by the depositor, the master
servicer or the special servicer.
The trustee, the special servicer and master servicer will make no
representation as to:
o the validity or sufficiency of the pooling and servicing agreement, the
certificates, this prospectus supplement or the prospectus, or
o the validity, enforceability or sufficiency of the Mortgage Loans or
related documents.
Servicing Compensation and Payment of Expenses
The master servicer will be entitled to a monthly servicing fee for each
Mortgage Loan. The fee is calculated at the per annum rate listed in Exhibit A-1
based on the then outstanding principal balance of the loan. The master
servicing fee is calculated on a 30/360 basis.
The master servicing fee for each loan will be retained by the master
servicer from payments and collections (including insurance proceeds and
liquidation proceeds) on the loan. The master servicer may also retain as
additional servicing compensation:
o all investment income earned on amounts in the Reserve Accounts (to the
extent consistent with applicable law and the related Mortgage Loan
documents) and the Collection Account,
o all amounts collected on the Mortgage Loans (except Specially Serviced
Mortgage Loans) in the nature of late payment charges or late fees (to the
extent not offset against advance interest on the related Mortgage Loan),
loan service transaction fees, extension fees, demand fees, modification
fees, assumption fees, beneficiary statement charges and similar fees and
charges (but excluding prepayment premiums or default interest),
o all insufficient funds check charges (including insufficient funds check
charges arising from Specially Serviced Mortgage Loans), and
o any Prepayment Interest Excess (to the extent not offset against any
Prepayment Interest Shortfall).
If Midland resigns or is terminated as the master servicer and the
successor master servicer agrees to perform the services of the master servicer
for an amount less than the master servicing fee, the certificateholders will
not receive any portion of the excess master servicing fee.
The master servicer will pay all expenses incurred by it in connection
with its responsibilities under the pooling and servicing agreement (subject to
reimbursement as provided in the agreement), including all fees of any
sub-servicers retained by it.
Special Servicing
Ability of Controlling Class Representative to Remove Special Servicer
Midland will be the initial special servicer. The controlling class
representative may at any time remove the special servicer without cause and
appoint a successor special servicer. The removal of the special servicer and
appointment of a successor special servicer will be effective only when:
o the successor special servicer has assumed in writing all of the
responsibilities, duties and liabilities of the special servicer under the
pooling and servicing agreement, and
o each Rating Agency confirms to the trustee in writing that such appointment
and assumption will not result, in and of itself, in a downgrading,
withdrawal or qualification of the rating then assigned by the Rating
Agency to any class of certificates.
The controlling class representative must pay the cost of obtaining such
Rating Agency confirmation. The removed special servicer may receive all amounts
accrued and owing to it on or prior to the effective date of the removal.
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Duties of Special Servicer
The duties of the special servicer relate primarily to Specially Serviced
Mortgage Loans and to any REO Property. A "Specially Serviced Mortgage Loan" is
any Mortgage Loan for which at least one of the following conditions exist:
Loans with Monetary Defaults
o The borrower is at least 60 days delinquent in paying principal and
interest or other obligation(regardless of whether P&I Advances have been
reimbursed), or
o the borrower has failed to make a balloon payment (except where the master
servicer and the special servicer agree in writing that the loan is likely
to be paid in full within 30 days after such default);
however, such loans cease to be Specially Serviced Mortgage Loans when:
o the borrower brings the loan current (under workout terms agreed to by the
special servicer for a balloon payment default),
o the borrower makes three consecutive full and timely monthly payments, and
o no other circumstances exist that would cause the loan to be characterized
as a Specially Serviced Mortgage Loan.
Loans that are likely to have Monetary Defaults
o The borrower has expressed to the master servicer an inability to pay or a
hardship in paying the loan in accordance with its terms,
o the master servicer has received notice of a foreclosure or threatened
foreclosure of any lien on the property securing the loan,
o the master servicer or special servicer has received notice that the
borrower has:
1. become the subject of any bankruptcy, insolvency or similar
proceeding,
2. admitted in writing the inability to pay its debts as they come due,
or
3. made an assignment for the benefit of creditors, or
o the master servicer proposes to commence foreclosure or other workout
arrangements;
however, such loans cease to be Specially Serviced Mortgage Loans when:
o the above circumstances cease to exist in the good faith judgment of the
special servicer, and
o no other circumstances exist that would cause the loan to be characterized
as a Specially Serviced Mortgage Loan.
Loans with Nonmonetary Defaults
o The master servicer or the special servicer has notice that a nonmonetary
default that materially and adversely affects the interests of the
certificateholders has occurred and the default remains uncured after the
specified grace period (or, if no grace period is specified, after 60
days);
however, such loans cease to be Specially Serviced Mortgage Loans when:
o the default is cured, and
o no other circumstances exist that would cause the loan to be characterized
as a Specially Serviced Mortgage Loan.
A default requiring a Servicing Advance will be deemed to materially and
adversely affect the interests of certificateholders.
The special servicer will prepare an asset status report within 30 days
after a loan becomes a Specially Serviced Mortgage Loan. The asset status report
will be delivered to the controlling class representative and each Rating
Agency.
Special Servicer Compensation
The special servicer is entitled to a monthly special servicing fee. The
special servicing fee is an amount equal to 1/12th of 0.25% of the Stated
Principal Balance of each Specially Serviced Mortgage Loan. The special servicer
will also receive a disposition fee on any Specially Serviced Mortgage Loan or
REO Property sold, transferred or otherwise liquidated equal to 1% of:
o the proceeds of the sale or liquidation of any Specially Serviced Mortgage
Loan or REO Property
less
o any broker's commission and related brokerage referral fees.
No disposition fee will be paid in connection with:
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o the repurchase of a Mortgage Loan as described under "Description of the
Mortgage Pool--Representations and Warranties; Repurchase",
o the termination of the trust as described under "Description of the
Certificates--Optional Termination", or
o the purchase of any defaulted Mortgage Loan by the controlling class
representative, the master servicer or special servicer as described under
"The Pooling and Servicing Agreement--Realization Upon Mortgage Loans--Sale
of Specially Serviced Mortgage Loans and REO Properties".
Each of these fees, plus certain special servicing expenses, will be paid
from funds that would otherwise be used to pay principal and interest on the
certificates.
The special servicer is also entitled to a workout fee equal to 1.0% of
the Net Collections received by the master servicer or the special servicer on
each Corrected Mortgage Loan. "Net Collections" means all payments of interest
and principal and all prepayment premiums.
A loan which has ceased to be a Specially Serviced Mortgage Loan by virtue
of a cure resulting from a modification, restructuring or workout negotiated by
the special servicer evidenced by a signed writing is a "Corrected Mortgage
Loan".
If any Corrected Mortgage Loan again becomes a Specially Serviced Mortgage
Loan, any right to the workout fee terminates for the initial modification,
restructuring or workout. However, the special servicer will receive a new
workout fee for the loan upon resolution or workout of a subsequent event of
default under the loan. If the special servicer is terminated for any reason, it
will retain the right to receive any workout fees payable on Mortgage Loans that
became Corrected Mortgage Loans while it acted as special servicer. The
successor special servicer will not be entitled to any portion of such workout
fees.
The special servicer may also retain as additional servicing compensation:
o all investment income earned on amounts on deposit in any REO Account, and
o if permitted under the Mortgage Loan, late payment charges or late fees (to
the extent not offset against advance interest on the related Mortgage
Loan), assumption fees, loan modification fees, extension fees, loan
service transaction fees, beneficiary statement charges or similar items
that are collected on Specially Serviced Mortgage Loans.
Additional special servicing compensation does not include default
interest or prepayment premiums or any other amount required to be deposited or
retained in the Collection Account.
The Controlling Class Representative
Selection
Holders of more than 50% of the principal balance of the Controlling Class
may appoint a controlling class representative to represent their interests. If
at any time the holders of the Controlling Class have not appointed a
controlling class representative, the holder owning the largest percentage of
the principal balance of the Controlling Class will be the controlling class
representative.
The "Controlling Class" is the most subordinate class of principal balance
certificates that still has at least 25% of its original principal balance
outstanding. If no class has at least 25% of its initial principal balance still
outstanding, the most subordinate class of principal balance certificates still
outstanding will be the controlling class.
Rights and Powers
The controlling class representative has the right to direct the special
servicer (and the master servicer solely with respect to clause 2 below) about
the following matters:
1. foreclosure or similar conversion of the ownership of properties securing
Specially Serviced Mortgage Loans that are in default, including acquiring
an REO Property,
2. any material amendment, waiver or modification of any Mortgage Loan and any
amendment, waiver or modification of a Specially Serviced Mortgage Loan,
3. proposed sale of a defaulted Mortgage Loan or REO Property, except upon
termination of the trust fund as described under "Description of the
Certificates--Optional Termination",
4. acceptance of a discounted payoff,
5. determination to bring an REO Property into compliance with environmental
laws or to address hazardous materials located at an REO Property,
6. release of collateral, other than in accordance with the terms or upon
satisfaction of a loan,
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7. acceptance of substitute or additional collateral, other than in accordance
with the terms of a loan,
8. any waiver of a "due-on-sale" or "due-on-encumbrance" clause, and
9. acceptance of an assumption agreement releasing a borrower from liability
under a loan.
The special servicer or the master servicer, as applicable, may not take
any of the above actions unless the controlling class representative has
approved such action in writing within 10 business days after being notified of
the proposed action and provided with all reasonably requested information. The
controlling class representative will be considered to have approved any such
action if the controlling class representative does not notify the special
servicer or the master servicer, as applicable, within 10 business days.
In addition, except as otherwise described below, the controlling class
representative may direct the special servicer to take, or refrain from taking,
such actions as the controlling class representative may consider advisable or
as to which provision is otherwise made in the pooling and servicing agreement.
Notwithstanding the foregoing, no advice, direction or objection given or
made by the controlling class representative, as contemplated by either of the
two preceding paragraphs, may:
o require or cause the special servicer or the master servicer to violate
applicable law, the terms of any Mortgage Loan or any other provision of
the pooling and servicing agreement including the special servicer's or the
master servicer's obligation to act in accordance with the servicing
standard described in this prospectus supplement;
o a result in certain adverse tax consequences for the trust;
o expose the trust, the depositor, the master servicer, the special servicer,
the trustee or any of their respective affiliates, directors, officers,
employees or agents, to any material claim, suit or liability; or
o materially expand the scope of the master servicer's or special servicer's
responsibilities under the pooling and servicing agreement.
The special servicer and the master servicer are to disregard any such advice,
direction or objection that does so. In addition, unless the pooling and
servicing agreement provides otherwise, the special servicer will not be
required to seek approval from the controlling class representative for any
actions listed in clauses 1, 2 (but only for a waiver, modification or amendment
involving a Money Term) and 3 above that it seeks to take with respect to any
particular Specially Serviced Mortgage Loan if:
o the special servicer has, as described above, notified the controlling
class representative in writing of various actions that the special
servicer proposes to take with respect to the workout or liquidation of
that Mortgage Loan, and
o for 60 days following the first notice, the controlling class
representative has objected to all of those proposed actions and has failed
to suggest any alternative actions that the special servicer reasonably
considers to be consistent with the servicing standard.
You should consider the effects that the rights and powers of the
controlling class representative discussed above could have on the actions of
the special servicer.
Limitation on Liability of Controlling Class Representative
The controlling class representative and its officers, directors,
employees and owners will have no liability to certificateholders for any action
taken, or for refraining from the taking of any action, in good faith or for
errors in judgment. By accepting certificates, each certificateholder agrees
that the controlling class representative:
o may have special relationships and interests that conflict with those of
holders of one or more classes of certificates,
o may act solely in the interests of the holders of the Controlling Class,
o has no duties to certificateholders, except for holders of the Controlling
Class,
o may act to favor the interests of the Controlling Class over the interests
of other classes, and
o will violate no duty and incur no liability by acting solely in the
interests of the Controlling Class.
No certificateholder may take legal action against the controlling class
representative because it acted solely in the interests of the Controlling
Class. The special servicer generally must keep confidential all advice,
directions, recommendations and/or
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objections received from the controlling class representative.
Sub-Servicers
The master servicer and special servicer may each delegate its servicing
obligations to one or more third-party sub-servicers. However, the special
servicer must obtain the approval of Fitch before it may retain sub-servicers
for Mortgage Loans with outstanding principal balances greater than or equal to
25% or more of the then outstanding principal balance of all the Mortgage Loans.
Despite any such delegation, the master servicer or special servicer remains
directly responsible for the delegated duties and for the acts and omissions of
any sub-servicer. The master servicer or the special servicer must monitor the
performance of any sub-servicer that it uses. On the closing date, only one
Mortgage Loan (1.1%) will be serviced by a sub-servicer. Except for the
sub-servicing agreement related to this Mortgage Loan, each sub-servicing
agreement must provide that if the master servicer or the special servicer is no
longer acting in such capacity under the pooling and servicing agreement, the
trustee or any successor to the master servicer or special servicer may:
o assume the master servicer's or special servicer's rights under the
sub-servicing agreement, and/or
o terminate the sub-servicer without payment of a termination fee.
The sub-servicing agreement for the one Mortgage Loan that will be
sub-serviced on the closing date provides that the sub-servicer may only be
terminated if it is in default under the sub-servicing agreement.
The master servicer and special servicer are solely responsible for the
fees owed to any sub-servicer they retain, even if those fees are more than the
fees they are receiving under the pooling and servicing agreement. Generally,
each sub-servicer will be reimbursed for any expenses for which the master
servicer or special servicer would be reimbursed under the pooling and servicing
agreement. See "-- Servicing Compensation and Payment of Expenses".
Reports to Certificateholders; Where You Can Find More Information
Monthly Reports
On each distribution date, the trustee will issue a statement based on
information that the master servicer furnishes. The trustee will mail upon
request and otherwise make available electronically the statement to the
certificateholders, the depositor, the paying agent, the underwriters, the
master servicer, the controlling class representative and each Rating Agency.
The trustee will use the form of monthly distribution statement included as
Exhibit C to this prospectus supplement. The information will include the
following:
o For each class of certificates and for each $1,000 of initial principal
balance or notional amount of the class:
1. the Principal Distribution Amount and the amount of Available Funds
allocable thereto;
2. Distributable Certificate Interest and the amount of Available Funds
allocable thereto;
3. any Class Interest Shortfall allocable to the class;
4. the principal balance after giving effect to the distribution of
amounts in respect of the Principal Distribution Amount on the
distribution date; and
5. the amount of any prepayment premiums received during the related
Collection Period and distributed to the class;
o The pass-through rate applicable to each class of offered certificates for
the distribution date, other than the class A-1A certificates;
o The amount of any P&I Advances by the master servicer or the trustee
included in the amounts distributed to the certificateholders;
o Realized Losses and Expense Losses and their allocation to the principal
balance of any class of certificates;
o The Stated Principal Balance of the Mortgage Loans as of the due date
preceding the distribution date;
o The number and aggregate principal balance of Mortgage Loans:
1. delinquent 30-59 days,
2. delinquent 60-89 days,
3. delinquent 90 or more days, and
4. as to which foreclosure proceedings have been commenced;
o For each delinquent Mortgage Loan:
1. the amount of the P&I Advances made on the distribution date; and
2. the aggregate amount of unreimbursed Servicing Advances and P&I
Advances for such loan;
o For any Mortgage Loan that became an REO Mortgage Loan during the preceding
calendar
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month, the principal balance of such Mortgage Loan as of the date it became
an REO Mortgage Loan;
o For any REO Property sold during the related Collection Period:
1. the date on which the special servicer determined that it has
collected all amounts that it expects to recover on the REO Property;
2. the amount of the proceeds of such sale deposited into the Collection
Account; and
3. the aggregate amount of REO Proceeds and Net REO Proceeds (in each
case other than liquidation proceeds) and other revenues collected by
the special servicer for each REO Property during the related
Collection Period and credited to the Collection Account;
o The outstanding principal balance of each REO Mortgage Loan as of the close
of business on the preceding due date;
o The appraised value of each REO Property as shown on the most recent
appraisal;
o The amount of the servicing compensation and additional servicing
compensation paid to the master servicer for the distribution date;
o The amount of any special servicing fee, disposition fee or workout fee
paid to the special servicer for the distribution date;
o The amount of default interest received during the related Collection
Period;
o The amount of any Appraisal Reductions effected during the related
Collection Period on a loan-by-loan basis and the total Appraisal
Reductions as of the distribution date; and
o Any other information required under the pooling and servicing agreement.
The master servicer will provide the trustee with the following Commercial
Mortgage Securities Association Standard Investor Package reports for inclusion
in the monthly distribution statement:
o Property File,
o Watch List Report,
o Delinquent Loan Status Report,
o REO Status Report,
o Comparative Financial Status Report,
o Historical Loan Modification Report,
o Historical Loss Estimate Report,
o Operating Statement Analysis Report, and
o NOI Adjustment Worksheet.
Due to the time required to collect all the necessary data and enter it
onto the master servicer's computer system, the master servicer is not required
to provide these reports before the distribution date in March 2000.
Within a reasonable period of time after the end of each calendar year,
the trustee will furnish to each person who at any time during the calendar year
owned an offered certificate a statement listing the amount of principal and
interest paid to the person during the year. The Trustee may satisfy this
obligation by delivering substantially comparable information pursuant to any
requirements of the Internal Revenue Code of 1986.
In addition, the trustee will forward or make available to each
certificateholder any additional information regarding the Mortgage Loans that
the master servicer or the special servicer, in its sole discretion, delivers to
the trustee for distribution to the certificateholders, which information the
trustee may attach to the monthly distribution statement.
The distribution date statements referred to above may be obtained
electronically from the trustee as follows:
1. by facsimile through the trustee's fax-on-demand service by calling (301)
815-6610; or
2. on the Internet at www.ctslink.com/cmbs.
For assistance with the above mentioned services, you may call (301)
815-6600. The Trustee may require registration and the acceptance of a
disclaimer in connection with providing access to its internet website.
Loan Portfolio Analysis System
The master servicer maintains a computerized database that has information
on the various commercial mortgage-backed securities transactions that it
services. The master servicer commonly refers to the database as the "Loan
Portfolio Analysis System". The master servicer will provide electronic, on-line
access to the database to certificateholders, prospective transferees and other
appropriate persons. You may contact Brad Hauger at (816) 435-5175 to arrange
access.
Other Available Information
The master servicer or special servicer will notify or report to the
trustee and the controlling class representative about any other occurrences of
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which the master servicer or special servicer is aware that it determines may
materially affect a Mortgage Loan or REO Property, including all loan
extensions.
In addition to the other reports and information made available and
distributed under the pooling and servicing agreement by the trustee, the master
servicer and the special servicer will also make available any other information
relating to the Mortgage Loans, the Mortgaged Properties or the borrowers for
review by the depositor, the underwriters, the controlling class representative,
the trustee and the Rating Agencies. The master servicer and the special
servicer will also make such information available to any person that certifies
to the trustee that it is a certificateholder, an owner of a beneficial interest
in a book entry certificate, or a potential owner of a certificate or an
interest in a certificate. The master servicer and the special servicer are not
required to provide the information if doing so is prohibited by applicable law
or by any documents related to a Mortgage Loan. The master servicer and the
special servicer may adopt reasonable rules and procedures governing access to
the information, which may include a requirement that the person requesting such
information execute an agreement governing the availability, use and disclosure
of such information. The agreement may provide for the indemnification of the
master servicer or the special servicer for any liability or damage that may
arise from the use or disclosure of the information.
The following are available for your review at the trustee's offices
during normal business hours:
o the pooling and servicing agreement,
o all monthly statements to certificateholders,
o annual compliance statements, and
o annual accountants' reports.
See "Description of the Governing Document" in the prospectus.
Unless prohibited by applicable law or the Mortgage Loan documents, the
following will be available for your review at the trustee's offices during
normal business hours:
o the property inspection reports,
o all modifications, waivers and amendments of the Mortgage Loans, and
o officer's certificates and other evidence supporting a determination that
an Advance is nonrecoverable.
The master servicer, the special servicer and the trustee may impose a
reasonable charge for expenses of providing copies or access to the above
information. The Rating Agencies and the controlling class representative will
not have to pay any such charge.
Filings with the SEC
Within 15 days after each distribution date, the trustee will file with
the Securities and Exchange Commission, a Form 8-K with a copy of the related
distribution date statement. Before January 30, 2000, the trustee will file a
Form 15 Suspension Notification for the trust, if applicable. Before March 30,
2000, the trustee will file a Form 10-K for the trust, in substance conforming
to industry standards.
The depositor will file with the SEC, within 15 days of the closing date,
a Form 8-K together with the pooling and servicing agreement.
The trustee, the master servicer and the special servicer are not
responsible for the accuracy or completeness of any information supplied to it
by a borrower or other third party for inclusion in any notice, report or
information furnished or provided by the master servicer, the special servicer
or the trustee under the pooling and servicing agreement.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, three separate "real estate mortgage
investment conduit" ("REMIC") elections will be made with respect to respective
portions of the trust fund, creating three REMICs. Upon the issuance of the
offered certificates, Morrison & Hecker L.L.P. will deliver its opinion,
generally to the effect that, assuming compliance with all provisions of the
pooling and servicing agreement:
o each pool of assets with respect to which a REMIC election is made will
qualify as a REMIC under the Internal Revenue Code of 1986;
o the class A-1A, class A-1B, class S, class A-2, class A-3, class A-4, class
B-1, class B-2, class B-3, class B-4, class B-5, class B-6, class B-7,
class B-8, class C and class D certificates will be,
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or will represent ownership of, REMIC "regular interests";
o the class R-I, class R-II and class R-III certificates, respectively, will
be the sole "residual interest" in the related REMIC; and
o the class E certificates will represent beneficial interests in the portion
of the trust assets consisting of Deferred Interest, which portion will be
treated as a grantor trust for federal income tax purposes.
The certificates representing regular interests generally will be treated
as newly originated debt instruments for federal income tax purposes. Holders of
those certificates will be required to include in income all interest on the
certificates in accordance with the accrual method of accounting, regardless of
a certificateholder's usual method of accounting. The class A-1A, class A-1B,
class A-2, class A-3 and class A-4 certificates are not expected to be treated
as having been issued with original issue discount for federal income tax
reporting purposes. The class B-1 certificates are expected to be treated as
having been issued with de minimis original issue discount for federal income
tax purposes. The class S and class B-2 certificates are expected to be deemed
to have been issued with original issue discount.
The IRS has issued regulations under Sections 1271 to 1275 of the Internal
Revenue Code of 1986 generally addressing the treatment of debt instruments
issued with original issue discount. Holders of the offered certificates should
be aware, however, that those regulations and Section 1272(a)(6) of the Internal
Revenue Code of 1986 do not adequately address certain issues relevant to, or
are not applicable to, prepayable securities such as the offered certificates.
We recommend that holders consult with their own tax advisor concerning the tax
treatment of the offered certificates.
The trust intends to treat the class S certificates as having no
"qualified stated interest". Accordingly, the class S certificates will be
considered to be issued with original issue discount in an amount equal to the
excess of all distributions of interest expected to be received on the class S
certificates over their respective issue prices (including interest accrued
prior to the closing date, if any, unless the holder elects on its federal
income tax return to exclude such amount from the issue price and to recover it
on the first distribution date). Certificateholders will not be able to deduct
currently any "negative" amounts of original issue discount on the class S
certificates attributable to rapid prepayments on the Mortgage Loans, but they
may offset these amounts against future positive accruals of original issue
discount, if any. However, holders of a class S certificate may be entitled to a
loss deduction if it becomes certain that such holder will not recover a portion
of its basis in the certificate. No representation is made as to the timing,
amount or character of such loss, if any.
See "Federal Income Tax Consequences--REMICS--Taxation of Owners of REMIC
Regular Certificates--Original Issue Discount", "---Premium" and "--Realized
Losses" in the prospectus.
For the purposes of determining the rate of accrual of market discount,
original issue discount and premium for federal income tax purposes, the
Prepayment Assumption (as defined in the prospectus) is that the Mortgage Loans
will prepay at the rate of 0% CPR, except that Hyper-Amortization Loans are
assumed to pay on their Anticipated Repayment Date. No representation is made as
to whether the Mortgage Loans will prepay at that rate or any other rate.
Although it is unclear whether the class A-1B, class A-2, class A-3, class A-4,
class B-1 and class B-2 certificates will qualify as "variable rate instruments"
under treasury regulations, the trustee will assume for purposes of determining
the original issue discount for these certificates that the certificates so
qualify. See "Federal Income Tax Consequences--REMICS--Taxation of Owners of
REMIC Regular Certificates--Original Issue Discount and "--Premium" in the
prospectus.
Certain classes of the offered certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
such a class of certificates will be treated as holding a certificate with
amortizable bond premium will depend on the certificateholder's purchase price.
Holders of such classes of certificates should consult their own tax advisors
regarding the possibility of making an election to amortize any such premium.
See "Federal Income Tax Consequences--REMICS--Taxation of Holders of REMIC
Regular Certificates" in the prospectus.
Generally, the offered certificates will be "real estate assets" within
the meaning of Section 856(c)(5)(B) of the Internal Revenue Code of 1986. In
addition, interest (including original issue discount, if any) on the offered
certificates will be interest described in Section 856(c)(3)(B) of the Internal
Revenue Code of 1986.
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As of the closing date, 41.3% of the Mortgage Loans are secured by real
estate used for residential or certain other purposes prescribed in Section
7701(a)(19)(C) of the Internal Revenue Code of 1986, and consequently the
offered certificates will be treated as assets qualifying under that section to
only a limited extent. Accordingly, investment in the offered certificates may
not be suitable for thrift institutions seeking to be treated as a "domestic
building and loan association" under Section 7701(a)(19)(C) of the Internal
Revenue Code of 1986. The determination as to the percentage of the REMIC's
assets that constitute assets described in the foregoing sections of the
Internal Revenue Code of 1986 will be made with respect to each calendar quarter
based on the average adjusted basis of each category of the assets held by the
REMIC during such calendar quarter. The Trustee will report those determinations
to certificateholders in the manner and at times required by applicable Treasury
regulations.
Finally, the offered certificates will be treated as "qualified mortgages"
for another REMIC under Section 860G(a)(3)(C) of the Internal Revenue Code of
1986 and "permitted assets" for a "financial asset securitization investment
trust" under Section 860L(c) of the Code.
If the trust collects a prepayment premium on a mortgage loan, it is
anticipated that the prepayment premium will be reported as ordinary income and
allocated to the class of certificates entitled to the premium. For federal
income tax reporting purposes, the premium or charge will be reported as income
upon actual receipt by the master servicer. The correct characterization of and
timing for recognition of, prepayment premiums is not entirely clear.
Certificateholders should consult their tax advisors concerning the tax
treatment of prepayment premiums.
For more information regarding the federal income tax consequences of
investing in the offered certificates, see "Federal Income Tax
Consequences--REMICS -- Taxable Income of the REMIC" in the prospectus.
Due to the complexity of these rules and the current uncertainty as to the
manner of their application to the trust fund and certificateholders, it is
particularly important that you consult your own tax advisors regarding the tax
treatment of your acquisition, ownership and disposition of the certificates.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS LOCATED
IN california AND TEXAS
The following discussion summarizes certain legal aspects of Mortgage
Loans secured by real property in California (15.0%) and Texas (11.6%) which are
general in nature. These summaries do not purport to be complete and are
qualified in their entirety by reference to the applicable federal and state
laws governing the Mortgage Loans.
California
Under California law a foreclosure may be accomplished either judicially
or non-judicially. Generally, no deficiency judgment is permitted under
California law following a nonjudicial sale under a deed of trust. Other
California statutes, except in certain cases involving environmentally impaired
real property, require the lender to attempt to satisfy the full debt through a
foreclosure against the property before bringing a personal action (if otherwise
permitted) against the borrower for recovery of the debt. California case law
has held that acts such as an offset of an unpledged account or the application
of rents from secured property prior to foreclosure, under some circumstances,
constitute violations of such statutes. Violations of such statutes may result
in the loss of some or all of the security under the loan. Finally, other
statutory provisions in California limit any deficiency judgment (if otherwise
permitted) against the borrower, and possibly any guarantor, following a
judicial sale to the excess of the outstanding debt over the greater of (i) the
fair market value of the property at the time of the public sale or (ii) the
amount of the winning bid in the foreclosure. Borrowers also are allowed a
one-year period within which to redeem the property.
Texas
Under Texas law, deed of trusts are customarily foreclosed by non-judicial
process; judicial process is generally not used. A mortgagee does not preclude
its ability to sue on a recourse note by instituting foreclosure proceedings.
Unless a longer period or other curative rights are provided by
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the loan documents, at least 21 days notice prior to foreclosure is required and
foreclosure sales must be held on the first Tuesday of a calendar month. Absent
contrary provisions in the loan documents, deficiency judgments are obtainable
under Texas law. To determine the amount of any deficiency judgment, a borrower
is given credit for the greater of the actual sale price (excluding trustee's
and other allowable costs) or the fair market value of the property.
ERISA CONSIDERATIONS
A fiduciary of any employee benefit plan or other retirement plan or
arrangement that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986
(each a "Plan") and any entity whose assets include assets of a Plan should
carefully review with its legal advisers whether the purchase or holding of
offered certificates could give rise to a transaction that is prohibited or is
not otherwise permitted either under ERISA or Section 4975 of the Internal
Revenue Code of 1986 or whether there exists any applicable statutory or
administrative exemption. Examples of the types of Plans that are subject to
these rules include:
o individual retirement accounts,
o annuity plans,
o Keogh plans, and
o collective investment funds, separate accounts and general accounts in
which such plans, accounts or arrangements are invested.
Certain employee benefit plans, such as governmental plans and church
plans (if no election has been made under section 410(d) of the Internal Revenue
Code), are not subject to the restrictions of ERISA. Accordingly, assets of such
plans may be invested in the offered certificates without regard to the ERISA
considerations described below, subject to other applicable federal and state
law. However, any such governmental or church plan which is qualified under
section 401(a) of the Internal Revenue Code of 1986 and exempt from taxation
under section 501(a) of the Internal Revenue Code of 1986 is subject to the
prohibited transaction rules set forth in Section 503 of the Internal Revenue
Code of 1986.
In accordance with ERISA's general fiduciary standards, before investing
in an offered certificate a Plan fiduciary should determine whether to do so is:
o permitted under the governing Plan instruments, and
o appropriate for the Plan in view of its overall investment policy and the
composition and diversification of its portfolio.
A Plan fiduciary should especially consider the ERISA requirement of
investment prudence and the sensitivity of the return on the certificates to the
rate of principal repayments (including voluntary prepayments by the borrowers
and involuntary liquidations) on the Mortgage Loans, as discussed in "Yield and
Maturity Considerations".
Certain fiduciary and prohibited transaction issues arise only if the
assets of the trust fund are "plan assets" for the purposes of Part 4 of Title I
of ERISA and Section 4975 of the Internal Revenue Code of 1986. Whether the
assets of the trust fund will be plan assets at any time will depend on a number
of factors, including the portion of any class of certificates (as discussed
below under "--Plan Asset Regulation") that is held by "benefit plan investors"
(as defined in U.S. Department of Labor Regulation Section 2510.3-101).
Plan Asset Regulation
The United States Department of Labor has issued a final regulation
determining when assets of an entity in which a Plan makes an equity investment
will be treated as assets of the investing Plan. If the certificates are treated
as debt with no substantial equity features under applicable local law, the
assets of the trust fund would not be treated as assets of the Plans that become
certificateholders. In the absence of treatment of the certificates as debt, and
unless the final regulation provides an exemption from this "plan asset"
treatment, an undivided portion of the assets of the trust fund will be treated,
for purposes of applying the fiduciary standards and prohibited transactions
rules of ERISA and Section 4975 of the Internal Revenue Code of 1986, as an
asset of each Plan that acquires and holds the offered certificates.
The final regulation provides an exemption from "plan asset" treatment for
securities issued by an entity if, immediately after the most recent acquisition
of any equity interest in the entity, less
S-87
<PAGE>
than 25% of the value of each class of equity interests in the entity are held
by "benefit plan investors". Benefit plan investors could include Plans,
governmental, foreign and other plans not subject to ERISA and entities holding
assets deemed to be "plan assets". Interests held by any person who has
discretionary authority or control with respect to the assets of the entity or
any person who provide investment advice directly or indirectly for a fee with
respect to the assets of the entity (or any affiliate of either such person) are
excluded from the calculation. Because the availability of this exemption to the
trust fund depends upon the identity of the holders of the offered certificates
at any time, there can be no assurance that any class of the offered
certificates will qualify for this exemption.
Individual Exemption
The Department of Labor has issued to each of the underwriters an
individual prohibited transaction exemption (Prohibited Transaction Exemption
No. 90-83, as amended by Prohibited Transaction Exemption No. 97-34, to
Donaldson, Lufkin & Jenrette Securities Corporation, Prohibited Transaction
Exemption No. 90-32, as amended by Prohibited Transaction Exemption No. 97-34,
to Prudential Securities Incorporated, and Prohibited Transaction Exemption No.
98-07 to PNC Capital Markets, Inc.). These exemptions generally exempt from the
application of the prohibited transaction provisions of Section 406(a) and (b)
and 407(a) of ERISA, and the excise taxes imposed on such prohibited
transactions pursuant to Section 4975(a) and (b) of the Internal Revenue Code of
1986, certain transactions, among others, relating to:
o the servicing and operation of mortgage loans, such as the Mortgage Loans,
and
o the purchase, sale and holding of mortgage pass-through certificates, such
as the senior certificates, underwritten by an "underwriter".
For purposes of this discussion, the term "underwriter" includes:
1. Donaldson, Lufkin & Jenrette Securities Corporation,
2. any person directly or indirectly, through one or more intermediaries,
controlling, controlled by or under common control with Donaldson, Lufkin &
Jenrette Securities Corporation, and
3. any member of the underwriting syndicate or selling group of which a person
described in (1) or (2) is a manager or co-manager with respect to the
senior certificates, including PNC Capital Markets, Inc. and Prudential
Securities Incorporated.
Each of the individual prohibited transaction exemptions sets forth six
general conditions that must be satisfied for a transaction involving the
purchase, sale and holding of senior certificates to be covered by the
exemption:
o First, the acquisition of the senior certificates by a Plan must be on
terms that are at least as favorable to the Plan as they would be in an
arm's-length transaction with an unrelated party.
o Second, the rights and interests evidenced by the senior certificates must
not be subordinated to the rights and interests evidenced by the other
certificates of the same trust.
o Third, at the time of acquisition by the Plan the senior certificates must
be rated in one of the three highest generic rating categories by Standard
& Poor's Ratings Services, Duff & Phelps Credit Rating Co., Moody's
Investors Service or Fitch IBCA.
o Fourth, the trustee cannot be an affiliate of any other member of the
"Restricted Group," which, in addition to the trustee, consists of:
o the underwriters,
o the depositor,
o the master servicer,
o the special servicer,
o any sub-servicer,
o any mortgagor with respect to a Mortgage Loan constituting more than
5% of the aggregate unamortized principal balance of the Mortgage
Loans as of the date of initial issuance of the senior certificates,
and
o any and all affiliates of any of the above persons.
o Fifth, the sum of all payments made to and retained by:
o the underwriters must represent not more than reasonable compensation
for underwriting the senior certificates;
o the depositor pursuant to the assignment of the Mortgage Loans to the
trust fund must represent not more than the fair market value of those
obligations; and
o the master servicer, the special servicer or any sub-servicer must
represent not more than reasonable compensation for that person's
services under the pooling and servicing agreement and reimbursement
of that person's reasonable expenses in connection therewith.
S-88
<PAGE>
o Sixth, the investing Plan must be an accredited investor as defined in Rule
501(a)(1) of Regulation D under the Securities Act of 1933.
Because the senior certificates are not subordinated to any other class of
certificates, the second condition is satisfied for the senior certificates.
Since the senior certificates must be rated not lower than "AAA" by each of the
Rating Agencies, on the closing date, the third condition will be satisfied for
the senior certificates on the closing date. As the initial trustee is not an
affiliate of any other members of the restricted group, the fourth condition
will also be satisfied on the closing date. A Plan fiduciary contemplating
purchasing a senior certificate in the secondary market must determine that the
senior certificates continue to satisfy the third and fourth conditions on the
date of purchase. A Plan fiduciary contemplating the purchase of a senior
certificate must decide for itself whether the first, fifth and sixth conditions
will be satisfied.
Each of the individual prohibited transaction exemptions also requires
that the trust fund meet the following requirements:
o the trust fund must consist solely of assets of the type that have been
included in other investment pools;
o certificates in those other investment pools must have been rated in one of
the three highest categories of Standard & Poor's, Duff & Phelps, Moody's
or Fitch for at least one year prior to the Plan's acquisition of the
senior certificates; and
o certificates in those other investment pools must have been purchased by
investors other than Plans for at least one year prior to any Plan's
acquisition of senior certificates.
Moreover, the exemptions provide relief from certain self-dealing/conflict
of interest prohibited transactions that may occur when any person who has
discretionary authority or renders investment advice with respect to the
investment of plan assets causes a Plan to acquire senior certificates, provided
that, among other requirements:
o the person (or its affiliate) is an obligor with respect to 5% or less of
the fair market value of the obligations or receivables contained in the
trust;
o the Plan is not a plan with respect to which any member of the Restricted
Group is the "plan sponsor" (as defined in Section 3(16)(B) of ERISA);
o in the case of an acquisition in connection with the initial issuance of a
class of senior certificates, at least 50% of that class is acquired by
persons independent of the Restricted Group and at least 50% of the
aggregate interest in the trust fund is acquired by persons independent of
the Restricted Group;
o the Plan's investment in senior certificates does not exceed 25% of all of
the certificates of that class outstanding at the time of the acquisition;
and
o immediately after the acquisition, no more than 25% of the assets of the
Plan with respect to which the person has discretionary authority or
renders investment advice are invested in certificates representing an
interest in one or more trusts containing assets sold or serviced by the
same entity.
Finally, if certain specific conditions of the individual prohibited
transaction exemptions are satisfied, they may provide an exemption from the
restrictions imposed by Sections 406(a), 406(b) and 407(a) of ERISA, and the
taxes imposed by Sections 4975(a) and (b) of the Internal Revenue Code of 1986
by reason of Section 4975(c) of the Internal Revenue Code of 1986 for
transactions in connection with the servicing, management and operation of the
Mortgage Loans. The depositor expects that the specific conditions of the
exemptions required for this purpose will be satisfied with respect to the
senior certificates.
You should be aware, however, that even if the conditions specified in one
or more parts of the individual prohibited transaction exemptions are satisfied,
they may not cover all acts that may be considered prohibited transactions.
Before purchasing a senior certificate, a Plan fiduciary should itself
confirm that all of the conditions of the individual prohibited transaction
exemptions would be satisfied. The Plan fiduciary should also consider whether
any other prohibited transaction exemptions are available.
Other Exemptions
The characteristics of each class of the subordinate certificates do not
meet the requirements of the underwriters' individual prohibited transaction
exemptions. Accordingly, subordinate certificates may not be acquired by, on
behalf of or with assets of:
S-89
<PAGE>
1. a Plan,
2. a governmental plan subject to any federal, state or local law that is, to
a material extent, similar to the provisions of ERISA or the Internal
Revenue Code of 1986 ("Other Plans"),
3. a collective investment fund in which Plans or Other Plans are invested, or
4. other persons acting on behalf of any Plan or Other Plans or using the
assets of any Plan or Other Plans or any entity whose underlying assets
include plan assets by reason of a Plan's or Other Plan's investment in the
entity (within the meaning of the Department of Labor regulations Section
2510.3-101).
Each prospective transferee of a definitive subordinate certificate must
deliver to the depositor, the certificate registrar and the trustee:
o a transferee representation letter, substantially in the form attached as
an exhibit to the pooling and servicing agreement, stating that the
prospective transferee is not a person referred to in clause 1, 2, 3, or 4
of the first paragraph of this section, or
o an opinion of counsel which establishes to the satisfaction of the
depositor, the trustee and the certificate registrar that the purchase or
holding of the certificate will not:
o constitute or result in a prohibited transaction within the meaning of
Section 406 or 407 of ERISA, Section 4975 of the Internal Revenue Code
of 1986 or any similar law, and
o subject the master servicer, the special servicer, the depositor, the
trustee or the certificate registrar to any obligation or liability,
including obligations or liabilities under ERISA or Section 4975 of
the Internal Revenue Code of 1986.
If you purchase a beneficial interest in a book-entry subordinate certificate,
you will be deemed to have made the representation in the first bullet point
above.
The opinion of counsel will not be an expense of the trustee, the trust
fund, the master servicer, the special servicer, the certificate registrar or
the depositor.
Insurance Company Purchasers
Purchasers that are insurance companies should consult their legal
advisers with respect to the applicability of Section III of Prohibited
Transaction Class Exemption 95-60, regarding transactions by insurance company
general accounts.
In addition, the Small Business Job Protection Act of 1996 added a new
Section 401(c) to ERISA, which provides certain exemptive relief from the
provisions of Part 4 of Title I of ERISA and Section 4975 of the Internal
Revenue Code of 1986, including the prohibited transaction restrictions imposed
by ERISA and the related excise taxes imposed by the Internal Revenue Code of
1986, for transactions involving an insurance company general account. This
exemption is in addition to any exemption that may be available under Prohibited
Transaction Class Exemption 95-60 for the purchase and holding of offered
certificates by an insurance company general account.
Section 401(c) of ERISA required the Department of Labor to issue final
regulations no later than December 31, 1997. The Department of Labor issued
proposed regulations under Section 401(c) on December 22, 1997, but the required
final regulations have not been issued as of the date of this prospectus
supplement. The purpose of the 401(c) regulations is to provide guidance for the
purpose of determining which general account assets constitute plan assets, in
cases where insurance policies or annuity contracts supported by an insurer's
general account were issued to or for the benefit of a Plan on or before
December 31, 1998. Section 401(c) of ERISA generally provides that, until the
date that is 18 months after the 401(c) regulations become final, no person will
be subject to liability under Part 4 of Title I of ERISA and Section 4975 of the
Internal Revenue Code on the basis of a claim that the assets of an insurance
company general account constitute plan assets of any plan, unless:
o as otherwise provided by the Secretary of Labor in the 401(c) regulations
to prevent avoidance of the regulations, or
o an action is brought by the Secretary of Labor for certain breaches of
fiduciary duty which would also constitute a violation of federal or state
criminal law.
Any assets of an insurance company general account that support insurance
policies or annuity contracts issued to Plans:
o after December 31, 1998, or
o on or before December 31, 1998, for which the insurance company does not
comply with the 401(c) regulations,
S-90
<PAGE>
may be treated as plan assets. In addition, because Section 401(c) does not
relate to insurance company separate accounts, separate account assets are still
treated as plan assets of any Plan invested in such separate account. Insurance
companies contemplating the investment of general account assets in the
certificates should consult their legal counsel with respect to the
applicability of Section 401(c) of ERISA.
LEGAL INVESTMENT
The class S, A-1A, A-1B and A-2 certificates will be "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984 ("SMMEA") so long as they are rated in one of the two highest rating
categories by at least one nationally recognized statistical rating
organization. The class A-3, A-4, B-1 and B-2 certificates will not be "mortgage
related securities" for purposes of SMMEA.
The appropriate characterization of the certificates under various legal
investment restrictions may be subject to significant interpretive
uncertainties. As a result, the depositor is unable to determine whether
investors subject to these restrictions may purchase the certificates. The
depositor makes no representations as to:
o the proper characterization of the offered certificates for legal
investment purposes, financial institution regulatory purposes or other
purposes, or
o the ability of particular investors to purchase the offered certificates
under applicable legal investment restrictions.
In addition, some states have enacted legislation overriding the legal
investment provisions of SMMEA.
All depository institutions considering investment in the offered
certificates should review the Federal Financial Institutions Examination
Council's Supervisory Policy Statement on the Selection of Securities Dealers
and Unsuitable Investment Practices (to the extent adopted by their respective
regulatory authorities), setting forth, in relevant part, certain investment
practices deemed to be unsuitable for an institution's investment portfolio, as
well as guidelines for investing in certain types of mortgage related
securities.
There may be other restrictions on the ability of certain investors to
purchase the offered certificates or to purchase offered certificates
representing more than a specified percentage of the investor's assets. All
institutions whose investment activities are subject to legal investment laws
and regulations, regulatory capital requirements or review by regulatory
authorities should consult their own legal advisors in determining whether and
to what extent the certificates constitute a legal investment or are subject to
investment, capital or other restrictions.
S-91
<PAGE>
PLAN OF DISTRIBUTION
This prospectus is to be used by PNC Capital Markets, Inc. in connection
with offers and sales of the offered certificates in market-making transactions
at negotiated prices relating to prevailing market prices at the time of sale.
PNC Capital Markets, Inc. may act as principal or agent in such transactions.
PNC Capital Markets, Inc. has no obligation to make a market in the offered
certificates, and may discontinue its market-making activities at any time
without notice, at its sole discretion.
PNC Capital Markets, Inc. was one of the underwriters in connection with
the original issuance of the offered certificates. PNC Capital Markets, Inc. is
affiliated with the depositor and the master servicer.
PNC Capital Markets, Inc., as well as others, may act as broker or dealer
in connection with the sale of offered certificates contemplated by this
prospectus and may receive fees or commissions in connection therewith.
The depositor has agreed to indemnify PNC Capital Markets, Inc., as well
as Donaldson, Lufkin & Jenrette Securities Corporation and Prudential Securities
Incorporated (the other underwriters in the initial sale of the offered
securities) against certain liabilities under the Securities Act of 1933 or
contribute to payments that PNC Capital Markets, inc. may be required to make in
respect of such liabilities.
USE OF PROCEEDS
The depositor will use the net proceeds from the sale of the offered
certificates to pay part of the purchase price for the Mortgage Loans and to pay
the costs of structuring, issuing and underwriting the offered certificates.
LEGAL MATTERS
The legality of the offered certificates and the material federal income
tax consequences of investing in the offered certificates will be passed upon
for the depositor by Morrison & Hecker, L.L.P., Kansas City, Missouri. Certain
legal matters with respect to the offered certificates will be passed upon for
the underwriters by Sidley & Austin, New York, New York.
RATINGS
It is a condition of the issuance of the offered certificates that they
receive the following credit ratings from Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. and Fitch IBCA, Inc. (the "Rating
Agencies"):
Class S&P Fitch
Class S AAAr AAA
Class A-1A AAA AAA
Class A-1B AAA AAA
Class A-2 AA AA
Class A-3 A A
Class A-4 A- A-
Class B-1 BBB BBB
Class B-2 BBB- BBB-
The ratings of the offered certificates address the likelihood of the
timely receipt by the holders of all payments of interest to which they are
entitled and the ultimate receipt by the holders of all payments of principal to
which they are entitled, if any, by the distribution date in December 2032 (the
"Rated Final Distribution Date"). This date is the distribution date occurring
three years after the end of
S-92
<PAGE>
the amortization term for the mortgage loan with the longest remaining
amortization term on the closing date. The ratings take into consideration:
o the credit quality of the Mortgage Loans in the Mortgage Pool,
o structural and legal aspects associated with the certificates, and
o the extent to which the payment stream from the Mortgage Pool is adequate
to make the required payments on the certificates.
The ratings on the offered certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency.
The ratings of the certificates do not represent any assessment of:
o the tax attributes of the offered certificates or of the trust,
o the likelihood or frequency of principal prepayments on the Mortgage Loans,
o the degree to which such prepayments might differ from those originally
anticipated,
o whether and to what extent prepayment premiums, Deferred Interest and
default interest will be received or Net Aggregate Prepayment Interest
Shortfalls will be realized,
o the yield to maturity that investors may experience, or
o the possibility that the holders of the interest only certificates might
fail to recover their investment if prepayments are rapid, including both
voluntary and involuntary prepayments.
The ratings thus address credit risk and not prepayment risk.
As described in this prospectus supplement, the amounts payable on the
interest only certificates consist only of interest and prepayment premiums. If
all of the Mortgage Loans were to prepay in the initial month, then the interest
only certificateholders would receive only a single month's interest and suffer
a nearly complete loss of their investment despite having received all amounts
"due" under their certificates. This outcome is consistent with the ratings
received on the interest only certificates from Standard & Poor's and Fitch. The
total notional amount used to calculate interest on the interest only
certificates are reduced by allocations of Realized Losses, Expense Losses and
voluntary or involuntary principal prepayments. The ratings do not address the
timing or magnitude of reductions of such total notional amount, but only the
obligation to pay interest timely on whatever the proper notional amount may be
from time to time. Accordingly, potential purchasers of the interest only
certificates should evaluate the ratings of the interest only certificates
differently from similar ratings on other types of securities.
Standard & Poor's assigns the additional symbol of "r" to highlight
classes of securities that Standard & Poor's believes may experience high
volatility or high variability in expected returns due to non-credit risks. The
absence of an "r" symbol should not be taken as an indication that a class will
exhibit no volatility or variability in total return.
It is possible that a rating agency other than Standard & Poor's and Fitch
could issue an unsolicited rating for one or more of the classes of
certificates. These unsolicited ratings could be lower than the ratings issued
by Standard & Poor's and Fitch.
S-93
<PAGE>
INDEX OF DEFINITIONS
Additional Trust Fund Expenses.....................S-55
Advance Rate.......................................S-69
Advances...........................................S-68
Anticipated Repayment Date.........................S-32
Appraisal Reduction................................S-53
Appraisal Reduction Estimate.......................S-54
Appraisal Reduction Events"........................S-53
ARD................................................S-32
Assumed Monthly Payment............................S-52
Available Funds....................................S-49
Class Interest Shortfall...........................S-51
Collection Account.................................S-69
Collection Period..................................S-50
Compensating Interest Payment......................S-56
Constant Prepayment Rate...........................S-65
Controlling Class..................................S-79
Corrected Mortgage Loan............................S-79
CPR................................................S-65
Cross-Collateralized Loans.........................S-31
Cut-off Date.......................................S-30
Cut-off Date Loan-to-Value.........................S-40
Cut-off Date LTV...................................S-40
Cut-off Date Principal Balance.....................S-30
Debt Service Coverage Ratio........................S-39
Defeasance Loans...................................S-34
Deferred Interest..................................S-32
Determination Date.................................S-50
Discount Rate......................................S-52
Distributable Certificate Interest.................S-51
Distribution Account...............................S-70
DSCR...............................................S-39
ERISA..............................................S-86
Euroclear Operator.................................S-60
Expense Losses.....................................S-55
Hyper-Amortization Loans...........................S-32
Initial Interest Rate..............................S-32
Initial Pool Balance...............................S-30
Interest Reserve Account"..........................S-70
Interest Reserve Amount............................S-70
Interest Reserve Loans........................S-49,S-70
Lock-out Period....................................S-33
Maturity Assumptions...............................S-65
Maturity/ARD Balance...............................S-40
Maturity/ARD LTV...................................S-40
Maturity/ARD LTV Ratio.............................S-40
Money Term.........................................S-75
Monthly Payment....................................S-52
Mortgage...........................................S-30
Mortgage Loans.....................................S-30
Mortgaged Property.................................S-30
Mortgages..........................................S-30
Most Recent DSCR...................................S-39
Multiple Property Loans............................S-31
Net Aggregate Prepayment Interest Shortfall........S-56
Net Collections....................................S-79
Net Mortgage Rate..................................S-48
Net REO Proceeds...................................S-70
Other Plans........................................S-89
P&I Advance........................................S-68
Plan...............................................S-86
Prepayment Interest Excess.........................S-55
Prepayment Interest Shortfall......................S-55
Principal Distribution Amount......................S-51
Principal Prepayments..............................S-50
Qualified Substitute Mortgage Loan.................S-45
Rated Final Distribution Date......................S-91
Rating Agencies....................................S-91
Realized Loss......................................S-55
Record Date........................................S-50
REMIC..............................................S-83
REO Account........................................S-47
REO Mortgage Loan..................................S-53
REO Proceeds.......................................S-70
REO Property.......................................S-47
Repurchase Price...................................S-44
Reserve Accounts...................................S-36
Restricted Group...................................S-87
Revised Interest Rate..............................S-32
Scheduled Final Distribution Date..................S-56
Servicing Advances.................................S-68
SMMEA..............................................S-90
Specially Serviced Mortgage Loan...................S-78
Stated Principal Balance...........................S-48
Treasury Rate......................................S-52
Underwritable Cash Flow............................S-39
Underwritable Debt Service Coverage Ratio..........S-39
Updated Appraisal..................................S-53
U/W DSCR...........................................S-39
Yield Maintenance Period...........................S-33
S-94
<PAGE>
The attached diskette contains one spreadsheet file (the "spreadsheet
file") that can be put on a user-specified hard drive or network drive. This
file is "PNC99CM1.XLS". The file "PNC99CM1.XLS" is a Microsoft Excel(1), Version
5.0 spreadsheet. The file provides, in electronic format, certain statistical
information that appears under the caption "Description of the Mortgage Pool"
in, and on Exhibits A-1 and A-2 to, this prospectus supplement. Defined terms
used, but not otherwise defined, in the spreadsheet file will have the
respective meanings assigned to them in this prospectus supplement. All the
information contained in the spreadsheet file is subject to the same limitations
and qualifications contained in this prospectus supplement. Prospective
investors are strongly urged to read this prospectus supplement and accompanying
prospectus in its entirety prior to accessing the spreadsheet file.
----------------
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
================================================================================
TABLE OF CONTENTS
Page
Prospectus Supplement
Important Notice About Information Presented in
this Prospectus Supplement and the
Accompanying Prospectus..........................................S-2
Summary............................................................S-4
Risk Factors......................................................S-13
Description of the Mortgage Pool..................................S-30
Master Servicer and Special Servicer..............................S-46
Description of the Certificates...................................S-49
Yield and Maturity Considerations.................................S-61
The Pooling and Servicing Agreement...............................S-66
Material Federal Income Tax Consequences..........................S-83
Certain Legal Aspects of Mortgage Loans Located
in California and Texas.........................................S-85
ERISA Considerations..............................................S-86
Legal Investment..................................................S-90
Plan of Distribution..............................................S-91
Use of Proceeds...................................................S-91
Legal Matters.....................................................S-91
Ratings...........................................................S-91
Index of Definitions..............................................S-93
Exhibit A-1--Certain Characteristics of the
Mortgage Loans and Mortgaged Properties....................... A-1-1
Exhibit A-2--Mortgage Pool Information...........................A-2-1
Exhibit B--Significant Loan Summaries..............................B-1
Exhibit C--Form of Trustee Report..................................C-1
Exhibit D--Decrement Tables for the Certificates
of the Class A-1A, A-1B, A-2, A-3, A-4, B-1
and B-2 Certificates.............................................D-1
Exhibit E--Price/Yield Tables for the Class S
Certificates.....................................................E-1
Exhibit F--Summary Term Sheet......................................F-1
Prospectus
Important Notice About The Information
Presented in this Prospectus.......................................1
Summary of Prospectus................................................1
Risk Factors.........................................................6
Description of the Trust Assets.....................................29
Yield and Maturity Considerations...................................34
PNC Mortgage Acceptance Corp........................................38
Description of the Certificates.....................................38
Description of the Governing Documents..............................44
Description of Credit Support.......................................51
Certain Legal Aspects of Mortgage Loans.............................53
Federal Income Tax Consequences.....................................62
State and Other Tax Consequences....................................92
Legal Investment....................................................96
Use of Proceeds.....................................................97
Method of Distribution..............................................98
Legal Matters.......................................................99
Financial Information...............................................99
Rating..............................................................99
Where You Can Find More Information.................................99
================================================================================
================================================================================
$678,669,000
(Approximate)
PNC Mortgage Acceptance Corp.
(Depositor)
Midland Loan Services, Inc.
and
Column Financial, Inc.
(Mortgage Loan Sellers)
Class S, Class A-1A, Class A-1B,
Class A-2, Class A-3, Class A-4,
Class B-1 and Class B-2
Commercial Mortgage Pass-Through Certificates,
Series 1999-CM1
------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------
____________, 2000
================================================================================
<PAGE>
EXHIBIT A-1
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES
See this Exhibit for tables titled:
Managers and Locations of the Mortgaged Properties
Descriptions of the Mortgaged Properties
Characteristics of the Mortgage Loans
Additional Mortgage Loan Information
Engineering Reserves and Recurring Replacement Reserves
Major Tenants of the Commercial Properties
Multifamily Schedule
A-1-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
A-1-2
<PAGE>
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates Series 1999-CM1
Preliminary Information - November 19, 1999
<TABLE>
<CAPTION>
# Property Name Management Company
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 The Wilton Mall Genessee Management, Inc.
2 Frandor Mall The Frandorson Corporation
3 The Alliance Loan
3a Hampton Court Apartments Alliance Residential Management, L.L.C.
3b Lake of the Woods Apartments Alliance Residential Management, L.L.C.
3c Holly Tree Apartments Alliance Residential Management, L.L.C.
4 Stanford Square Stanford Square Management Co. and Tarlton Properties, Inc.
5 Woodscape Apartments Case & Associates Properties, Inc.
6 Westminster Apartments Intervest Management
7 Sycamore Square Office Center Brookhill Management Corporation
8 Inner Tech Park Pinnacle Properties Mgmt. Inc.
9 40 West 55th Street Manhattan Pacific Management Co., Inc.
10 Mill Creek Mobile Home Park Investment Realty Management, Inc.
11 The Villas Apartments I.D.M. Management, Inc.
12 Vista Plaza Shopping Center Peter D. Cummings & Associates, Inc.
13 Shadow Ridge Apartments Case & Associates Properties, Inc.
14 Beverly Plaza Hotel P & K, Inc.
15 The Woodland Hills Village Apartments MBS Management Services, Inc.
16 Lakewood House Apartments (1A) General Properties, Inc.
17 Vali Hi Shopping Center (1A) General Properties, Inc.
18 Somers Plaza Shopping Center (1A) General Properties, Inc.
19 Apple Valley Shopping Center (1A) General Properties, Inc.
20 Lakewood Shopping Center (1A) General Properties, Inc.
21 North Side Plaza The MEG Companies
22 Orchard Square Shopping Center Broder & Sachse Real Estate Services, Inc.
23 Hacienda San Dieguito Corporate Center Silverado Management Company
24 New Wave Entertainment Building Owner Managed
25 Copperfield Apartments Case & Associates Properties, Inc.
26 Bachman Oaks Apartments Flagship Management Corporation
27 The Grove Apartments MBS Management Services, Inc.
<CAPTION>
# Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 The Wilton Mall 3065 Route 50 Saratoga Springs
2 Frandor Mall 300 Frandor Avenue Lansing
3 The Alliance Loan
3a Hampton Court Apartments 441 North Armistead Street Alexandria
3b Lake of the Woods Apartments 746 Garden Walk Boulevard College Park
3c Holly Tree Apartments 2481 Lake Drive Waldorf
4 Stanford Square 100 Hamilton Avenue Palo Alto
5 Woodscape Apartments 4401 Northwest 39th Street Oklahoma City
6 Westminster Apartments 4858 South 78th East Place Tulsa
7 Sycamore Square Office Center 1699-1733 Sycamore View Road Memphis
8 Inner Tech Park 52-56 Roland Street Boston
9 40 West 55th Street 40 West 55th Street New York
10 Mill Creek Mobile Home Park Camp Betty Washington Road & Allen Road York
11 The Villas Apartments 2360 Northwest 56th Avenue Lauderhill
12 Vista Plaza Shopping Center 2550 Northwest Federal Highway Jensen Beach
13 Shadow Ridge Apartments 9375 Viscount Boulevard El Paso
14 Beverly Plaza Hotel 8384 West Third Street Los Angeles
15 The Woodland Hills Village Apartments 2139 Lake Hills Drive Kingwood
16 Lakewood House Apartments (1A) 4801 North Hills Boulevard North Little Rock
17 Vali Hi Shopping Center (1A) 4600, 4602-4622 & 4540-4560 John F. Kennedy Boulevard North Little Rock
18 Somers Plaza Shopping Center (1A) 5111 Warden Road North Little Rock
19 Apple Valley Shopping Center (1A) 8000 State Highway 107 Sherwood
20 Lakewood Shopping Center (1A) 2513 Mccain Boulevard and 4501 Fairway Avenue North Little Rock
21 North Side Plaza 1050 Bicentennial Drive Manchester/Hooksett
22 Orchard Square Shopping Center 64660-64980 Van Dyke Road Washington Township
23 Hacienda San Dieguito Corporate Center 12625 High Bluff Drive San Diego
24 New Wave Entertainment Building 2660 West Olive Avenue Burbank
25 Copperfield Apartments 2400 Northwest 30th Street Oklahoma City
26 Bachman Oaks Apartments 2501 Webb Chapel Extension Dallas
27 The Grove Apartments 2320 South Conway Road Orlando
<CAPTION>
Zip
# Property Name County State Code Property Type
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 The Wilton Mall Saratoga NY 12866 Retail
2 Frandor Mall Ingham MI 48912 Retail
3 The Alliance Loan
3a Hampton Court Apartments Alexandria City VA 22312 Multifamily
3b Lake of the Woods Apartments Clayton GA 30349 Multifamily
3c Holly Tree Apartments Charles MD 20601 Multifamily
4 Stanford Square Santa Clara CA 94301 Office
5 Woodscape Apartments Oklahoma OK 73112 Multifamily
6 Westminster Apartments Tulsa OK 74145 Multifamily
7 Sycamore Square Office Center Shelby TN 38134 Office
8 Inner Tech Park Suffolk MA 02118 Mixed Use
9 40 West 55th Street New York NY 10019 Multifamily
10 Mill Creek Mobile Home Park York PA 17402 Manufactured Housing
11 The Villas Apartments Broward FL 33313 Multifamily
12 Vista Plaza Shopping Center Martin FL 34994 Retail
13 Shadow Ridge Apartments El Paso TX 79925 Multifamily
14 Beverly Plaza Hotel Los Angeles CA 90048 Hotel
15 The Woodland Hills Village Apartments Harris TX 77339 Multifamily
16 Lakewood House Apartments (1A) Pulaski AR 72116 Multifamily
17 Vali Hi Shopping Center (1A) Pulaski AR 72116 Retail
18 Somers Plaza Shopping Center (1A) Pulaski AR 72116 Retail
19 Apple Valley Shopping Center (1A) Pulaski AR 72120 Retail
20 Lakewood Shopping Center (1A) Pulaski AR 72114 Retail
21 North Side Plaza Hillsborough NH 03104 Retail
22 Orchard Square Shopping Center Macomb MI 48094 Retail
23 Hacienda San Dieguito Corporate Center San Diego CA 92130 Office
24 New Wave Entertainment Building Los Angeles CA 91505 Office
25 Copperfield Apartments Oklahoma OK 73112 Multifamily
26 Bachman Oaks Apartments Dallas TX 75220 Multifamily
27 The Grove Apartments Orange FL 32812 Multifamily
<CAPTION>
Units/
Sq. Ft./
Mortgage Rooms/
# Property Name Property Sub-type Loan Seller Pads
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 The Wilton Mall Anchored Column 540,021
2 Frandor Mall Anchored Column 457,978
3 The Alliance Loan Column
3a Hampton Court Apartments 307
3b Lake of the Woods Apartments 216
3c Holly Tree Apartments 143
4 Stanford Square Column 70,816
5 Woodscape Apartments Midland 498
6 Westminster Apartments Column 467
7 Sycamore Square Office Center Column 127,484
8 Inner Tech Park Office/Industrial Midland 154,550
9 40 West 55th Street Column 36
10 Mill Creek Mobile Home Park Midland 587
11 The Villas Apartments Column 405
12 Vista Plaza Shopping Center Anchored Column 109,255
13 Shadow Ridge Apartments Midland 352
14 Beverly Plaza Hotel Full Service Midland 98
15 The Woodland Hills Village Apartments Midland 260
16 Lakewood House Apartments (1A) Midland 107
17 Vali Hi Shopping Center (1A) Unanchored Midland 39,900
18 Somers Plaza Shopping Center (1A) Unanchored Midland 30,400
19 Apple Valley Shopping Center (1A) Unanchored Midland 23,450
20 Lakewood Shopping Center (1A) Shadow Anchored Midland 12,000
21 North Side Plaza Anchored Midland 115,187
22 Orchard Square Shopping Center Anchored Column 92,450
23 Hacienda San Dieguito Corporate Center Midland 67,132
24 New Wave Entertainment Building Column 39,967
25 Copperfield Apartments Midland 262
26 Bachman Oaks Apartments Column 208
27 The Grove Apartments Midland 232
<CAPTION>
Occupancy
Fee Simple/ Year Year Rate at
# Property Name Leasehold Built Renovated U/W (3)
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 The Wilton Mall Fee 1990 1991 91%
2 Frandor Mall Fee 1950 1999 95%
3 The Alliance Loan
3a Hampton Court Apartments Fee 1965 1992 98%
3b Lake of the Woods Apartments Fee 1988 1989 95%
3c Holly Tree Apartments Fee 1974 1994 95%
4 Stanford Square Fee 1983 N/A 100%
5 Woodscape Apartments Fee 1984 N/A 94%
6 Westminster Apartments Fee 1973 1992 95%
7 Sycamore Square Office Center Fee 1984 1998 100%
8 Inner Tech Park Fee 1900 1989 98%
9 40 West 55th Street Fee 1920 1998 100%
10 Mill Creek Mobile Home Park Fee 1972 1989 95%
11 The Villas Apartments Fee 1988 N/A 95%
12 Vista Plaza Shopping Center Fee 1998 1999 100%
13 Shadow Ridge Apartments Fee 1985 N/A 100%
14 Beverly Plaza Hotel Fee 1984 1996 N/A
15 The Woodland Hills Village Apartments Fee 1977 1993 93%
16 Lakewood House Apartments (1A) Fee 1967 N/A 98%
17 Vali Hi Shopping Center (1A) Fee 1984 1986 96%
18 Somers Plaza Shopping Center (1A) Fee 1986 N/A 100%
19 Apple Valley Shopping Center (1A) Fee 1986 N/A 100%
20 Lakewood Shopping Center (1A) Fee 1987 N/A 100%
21 North Side Plaza Fee 1983 N/A 95%
22 Orchard Square Shopping Center Fee 1998 N/A 99%
23 Hacienda San Dieguito Corporate Center Fee 1985 N/A 100%
24 New Wave Entertainment Building Fee 1946 1999 100%
25 Copperfield Apartments Fee 1985 N/A 99%
26 Bachman Oaks Apartments Fee 1979 1998 91%
27 The Grove Apartments Fee 1973 1990 97%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity/
Date of Cut-off ARD
Occupancy Appraised Date LTV Date LTV Underwritable
# Property Name Rate Value Ratio (4) Ratio (4) (5) NOI
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall 6/30/99 $ 64,500,000 69.7% 63.2% $ 5,609,129
2 Frandor Mall 7/1/99 50,000,000 72.9% 65.3% 4,379,082
3 The Alliance Loan 42,450,000 77.2% 68.9% 3,657,754
3a Hampton Court Apartments 9/23/99 19,800,000
3b Lake of the Woods Apartments 9/24/99 12,850,000
3c Holly Tree Apartments 9/23/99 9,800,000
4 Stanford Square 8/1/99 35,000,000 60.0% 53.7% 3,033,682
5 Woodscape Apartments 8/3/99 17,500,000 77.6% 68.5% 1,589,529
6 Westminster Apartments 8/24/99 16,500,000 75.7% 67.4% 1,709,968
7 Sycamore Square Office Center 8/1/99 16,500,000 73.9% 69.8% 1,631,906
8 Inner Tech Park 6/15/99 16,300,000 71.6% 64.5% 1,578,952
9 40 West 55th Street 10/1/99 17,400,000 65.5% 59.0% 1,261,932
10 Mill Creek Mobile Home Park 8/17/99 15,175,000 74.9% 64.9% 1,356,837
11 The Villas Apartments 9/20/99 13,800,000 79.6% 71.6% 1,491,163
12 Vista Plaza Shopping Center 7/1/99 13,800,000 79.6% 71.5% 1,249,144
13 Shadow Ridge Apartments 8/22/99 13,200,000 77.7% 68.0% 1,243,773
14 Beverly Plaza Hotel N/A 18,600,000 53.6% 45.1% 1,574,039
15 The Woodland Hills Village Apartments 6/30/99 11,875,000 79.7% 70.7% 1,061,291
16 Lakewood House Apartments (1A) 8/25/99 5,925,000 71.4% 64.5% 544,980
17 Vali Hi Shopping Center (1A) 8/25/99 2,400,000 71.4% 64.5% 255,792
18 Somers Plaza Shopping Center (1A) 8/25/99 1,700,000 71.4% 64.5% 168,591
19 Apple Valley Shopping Center (1A) 8/25/99 1,400,000 71.4% 64.5% 126,737
20 Lakewood Shopping Center (1A) 8/25/99 1,000,000 71.4% 64.5% 101,883
21 North Side Plaza 7/20/99 10,800,000 78.9% 68.5% 955,897
22 Orchard Square Shopping Center 9/27/99 10,600,000 79.9% 71.6% 993,683
23 Hacienda San Dieguito Corporate Center 8/5/99 11,540,000 68.3% 61.2% 1,063,013
24 New Wave Entertainment Building 9/13/99 10,250,000 72.9% 65.2% 859,519
25 Copperfield Apartments 8/3/99 9,300,000 77.3% 68.3% 850,522
26 Bachman Oaks Apartments 8/25/99 8,950,000 80.0% 72.5% 916,821
27 The Grove Apartments 9/13/99 8,900,000 79.7% 70.6% 782,325
<CAPTION>
Contractual
Engineering Recurring Contractual
Underwritable Reserve at Replacement Recurring
# Property Name NCF (6) DSCR (7) Origination Reserve LC&TI
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall $ 5,286,893 1.26x $14,338 $98,340 $99,996
2 Frandor Mall 4,051,315 1.26 $62,037 N/A N/A
3 The Alliance Loan 3,491,254 1.24 $591,313 $166,500 N/A
3a Hampton Court Apartments $492,000 $76,750 N/A
3b Lake of the Woods Apartments $68,813 $54,000 N/A
3c Holly Tree Apartments $30,500 $35,750 N/A
4 Stanford Square 2,913,281 1.57 $208,938 N/A N/A
5 Woodscape Apartments 1,465,029 1.29 $30,415 N/A N/A
6 Westminster Apartments 1,593,218 1.48 $76,499 $91,752 N/A
7 Sycamore Square Office Center 1,472,120 1.30 $7,606 $25,497 $150,000
8 Inner Tech Park 1,369,687 1.31 N/A $23,182 N/A
9 40 West 55th Street 1,252,617 1.21 $1,863 $9,315 N/A
10 Mill Creek Mobile Home Park 1,317,787 1.54 N/A $48,000 N/A
11 The Villas Apartments 1,363,183 1.38 $67,625 $127,980 N/A
12 Vista Plaza Shopping Center 1,183,590 1.21 N/A N/A N/A
13 Shadow Ridge Apartments 1,155,773 1.44 $165,000 N/A N/A
14 Beverly Plaza Hotel 1,376,276 1.41 N/A 4.00% N/A
15 The Woodland Hills Village Apartments 996,291 1.25 $260,000 $65,000 N/A
16 Lakewood House Apartments (1A) 497,621 1.28 N/A $34,668 $6,000
17 Vali Hi Shopping Center (1A) 214,656 1.28 N/A $10,776 $24,000
18 Somers Plaza Shopping Center (1A) 133,446 1.28 N/A $4,560 $20,004
19 Apple Valley Shopping Center (1A) 104,867 1.28 N/A $3,528 $12,000
20 Lakewood Shopping Center (1A) 85,708 1.28 N/A $2,400 $12,708
21 North Side Plaza 869,512 1.27 N/A $15,528 $35,232
22 Orchard Square Shopping Center 940,293 1.25 N/A N/A $15,000
23 Hacienda San Dieguito Corporate Center 934,165 1.34 N/A $13,431 N/A
24 New Wave Entertainment Building 795,066 1.22 N/A $5,995 $10,000
25 Copperfield Apartments 785,022 1.31 $47,080 N/A N/A
26 Bachman Oaks Apartments 864,821 1.30 $5,250 $52,000 N/A
27 The Grove Apartments 724,325 1.21 $175,000 $58,000 N/A
<CAPTION>
Underwritable
Recurring Percentage of
Replacement Underwritable Original Cut-off Initial
# Property Name Reserve LC&TI Balance Balance (8) Pool Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall $81,003 $241,233 $ 45,000,000 $ 44,973,184 5.9%
2 Frandor Mall $68,697 $259,070 36,500,000 36,434,197 4.8%
3 The Alliance Loan $166,500 N/A 32,874,000 32,777,802 4.3%
3a Hampton Court Apartments $76,750 N/A
3b Lake of the Woods Apartments $54,000 N/A
3c Holly Tree Apartments $35,750 N/A
4 Stanford Square $14,163 $106,238 21,000,000 20,986,080 2.8%
5 Woodscape Apartments $124,500 N/A 13,600,000 13,571,925 1.8%
6 Westminster Apartments $116,750 N/A 12,500,000 12,485,046 1.6%
7 Sycamore Square Office Center $25,497 $134,289 12,200,000 12,188,403 1.6%
8 Inner Tech Park $27,510 $181,755 11,700,000 11,669,757 1.5%
9 40 West 55th Street $9,315 N/A 11,400,000 11,392,819 1.5%
10 Mill Creek Mobile Home Park $39,050 N/A 11,500,000 11,365,842 1.5%
11 The Villas Apartments $127,980 N/A 11,000,000 10,988,270 1.4%
12 Vista Plaza Shopping Center $10,926 $54,628 11,000,000 10,987,946 1.4%
13 Shadow Ridge Apartments $88,000 N/A 10,380,000 10,251,140 1.3%
14 Beverly Plaza Hotel 5.00% N/A 10,000,000 9,966,650 1.3%
15 The Woodland Hills Village Apartments $65,000 N/A 9,500,000 9,462,872 1.2%
16 Lakewood House Apartments (1A) $34,668 $12,691 4,478,000 4,473,106 0.6%
17 Vali Hi Shopping Center (1A) $10,773 $30,362 1,757,000 1,755,378 0.2%
18 Somers Plaza Shopping Center (1A) $4,560 $30,587 1,089,000 1,087,994 0.1%
19 Apple Valley Shopping Center (1A) $3,518 $18,351 856,000 855,210 0.1%
20 Lakewood Shopping Center (1A) $2,400 $13,775 699,000 698,355 0.1%
21 North Side Plaza $17,278 $69,107 8,640,000 8,519,081 1.1%
22 Orchard Square Shopping Center $13,868 $39,522 8,480,000 8,474,356 1.1%
23 Hacienda San Dieguito Corporate Center $13,387 $115,461 7,900,000 7,885,723 1.0%
24 New Wave Entertainment Building $7,993 $56,460 7,485,000 7,476,346 1.0%
25 Copperfield Apartments $65,500 N/A 7,200,000 7,185,137 0.9%
26 Bachman Oaks Apartments $52,000 N/A 7,160,000 7,155,725 0.9%
27 The Grove Apartments $58,000 N/A 7,100,000 7,091,078 0.9%
<CAPTION>
Orig Rem. Orig Rem.
Maturity Amort. Amort. Term to Term to Interest
# Property Name Balance Term Term Maturity (9) Maturity (9) Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall $ 40,791,671 360 359 120 119 8.580%
2 Frandor Mall 32,646,771 360 357 120 117 8.000%
3 The Alliance Loan 29,229,389 360 355 120 115 7.740%
3a Hampton Court Apartments
3b Lake of the Woods Apartments
3c Holly Tree Apartments
4 Stanford Square 18,809,149 360 359 120 119 8.060%
5 Woodscape Apartments 11,994,954 360 357 120 117 7.430%
6 Westminster Apartments 11,117,291 360 358 120 118 7.760%
7 Sycamore Square Office Center 11,514,430 360 358 84 82 8.600%
8 Inner Tech Park 10,513,568 360 355 120 115 8.180%
9 40 West 55th Street 10,270,568 360 359 120 119 8.310%
10 Mill Creek Mobile Home Park 9,843,688 360 347 120 107 6.320%
11 The Villas Apartments 9,884,546 360 358 120 118 8.190%
12 Vista Plaza Shopping Center 9,861,295 360 358 120 118 8.090%
13 Shadow Ridge Apartments 8,979,958 360 345 120 105 6.700%
14 Beverly Plaza Hotel 8,397,516 300 296 120 116 8.650%
15 The Woodland Hills Village Apartments 8,391,062 360 354 120 114 7.480%
16 Lakewood House Apartments (1A) 4,015,393 360 358 120 118 8.100%
17 Vali Hi Shopping Center (1A) 1,597,312 360 358 120 118 8.700%
18 Somers Plaza Shopping Center (1A) 990,024 360 358 120 118 8.700%
19 Apple Valley Shopping Center (1A) 778,201 360 358 120 118 8.700%
20 Lakewood Shopping Center (1A) 635,471 360 358 120 118 8.700%
21 North Side Plaza 7,394,893 360 344 120 104 6.890%
22 Orchard Square Shopping Center 7,591,710 360 359 120 119 8.040%
23 Hacienda San Dieguito Corporate Center 7,064,327 360 357 120 117 7.990%
24 New Wave Entertainment Building 6,678,133 360 358 120 118 7.890%
25 Copperfield Apartments 6,350,270 360 357 120 117 7.430%
26 Bachman Oaks Apartments 6,488,951 360 359 120 119 8.570%
27 The Grove Apartments 6,284,994 360 358 120 118 7.570%
<CAPTION>
First
Interest Calculation Monthly Payment Maturity
# Property Name (30/360 / Actual/360) Payment Date Date ARD (10) Seasoning
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall Actual/360 $ 348,565.63 12/1/99 11/1/29 11/1/09 1
2 Frandor Mall Actual/360 267,824.07 10/1/99 9/1/09 3
3 The Alliance Loan Actual/360 235,286.23 8/1/99 7/1/09 5
3a Hampton Court Apartments
3b Lake of the Woods Apartments
3c Holly Tree Apartments
4 Stanford Square Actual/360 154,969.83 12/1/99 11/1/09 1
5 Woodscape Apartments Actual/360 94,442.14 10/1/99 9/1/09 3
6 Westminster Apartments Actual/360 89,637.93 11/1/99 10/1/09 2
7 Sycamore Square Office Center Actual/360 94,673.43 11/1/99 10/1/06 2
8 Inner Tech Park Actual/360 87,323.09 8/1/99 7/1/09 5
9 40 West 55th Street Actual/360 86,125.73 12/1/99 11/1/09 1
10 Mill Creek Mobile Home Park Actual/360 71,331.87 12/1/98 11/1/08 13
11 The Villas Apartments Actual/360 82,175.80 11/1/99 10/1/09 2
12 Vista Plaza Shopping Center Actual/360 81,405.31 11/1/99 10/1/09 2
13 Shadow Ridge Apartments Actual/360 66,979.86 10/1/98 9/1/08 15
14 Beverly Plaza Hotel Actual/360 81,536.05 9/1/99 8/1/09 4
15 The Woodland Hills Village Apartments Actual/360 66,295.32 7/1/99 6/1/09 6
16 Lakewood House Apartments (1A) Actual/360 33,170.68 11/1/99 10/1/09 2
17 Vali Hi Shopping Center (1A) Actual/360 13,759.63 11/1/99 10/1/09 2
18 Somers Plaza Shopping Center (1A) Actual/360 8,528.31 11/1/99 10/1/09 2
19 Apple Valley Shopping Center (1A) Actual/360 6,703.61 11/1/99 10/1/09 2
20 Lakewood Shopping Center (1A) Actual/360 5,474.09 11/1/99 10/1/09 2
21 North Side Plaza 30/360 56,845.27 9/1/98 8/1/28 8/1/08 16
22 Orchard Square Shopping Center Actual/360 62,459.86 12/1/99 11/1/09 1
23 Hacienda San Dieguito Corporate Center Actual/360 57,912.34 10/1/99 9/1/09 3
24 New Wave Entertainment Building Actual/360 54,349.39 11/1/99 10/1/09 2
25 Copperfield Apartments Actual/360 49,998.78 10/1/99 9/1/09 3
26 Bachman Oaks Apartments Actual/360 55,409.80 12/1/99 11/1/09 1
27 The Grove Apartments Actual/360 49,984.99 11/1/99 10/1/09 2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original
Lockout
Servicing and Prepayment Provision Period
# Property Name Trustee Fees as of Origination (11) (Months)
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 The Wilton Mall 0.0523% L (9.5), O (0.5) 114
2 Frandor Mall 0.0523% L (9.5), O (0.5) 114
3 The Alliance Loan 0.0523% L (9.5), O (0.5) 114
3a Hampton Court Apartments
3b Lake of the Woods Apartments
3c Holly Tree Apartments
4 Stanford Square 0.0523% L (9.5), O (0.5) 114
5 Woodscape Apartments 0.1153% L (4.92), YM 1% (4.75), O (0.33) 59
6 Westminster Apartments 0.0523% L (9.5), O (0.5) 114
7 Sycamore Square Office Center 0.0523% L (6.5), O (0.5) 78
8 Inner Tech Park 0.0823% L (9.67), O (0.33) 116
9 40 West 55th Street 0.0523% L (9.5), O (0.5) 114
10 Mill Creek Mobile Home Park 0.0823% L (2.92), YM 1% (6.75), O (0.33) 35
11 The Villas Apartments 0.0523% L (9.5), O (0.5) 114
12 Vista Plaza Shopping Center 0.0523% L (9.5), O (0.5) 114
13 Shadow Ridge Apartments 0.0823% L (4.92), YM 1% (4.75), O (0.33) 59
14 Beverly Plaza Hotel 0.0823% L (9.67), O (0.33) 116
15 The Woodland Hills Village Apartments 0.0823% L (2.92), YM 1% (6.75), O (0.33) 35
16 Lakewood House Apartments (1A) 0.0823% L (9.67), O (0.33) 116
17 Vali Hi Shopping Center (1A) 0.0823% L (9.67), O (0.33) 116
18 Somers Plaza Shopping Center (1A) 0.0823% L (9.67), O (0.33) 116
19 Apple Valley Shopping Center (1A) 0.0823% L (9.67), O (0.33) 116
20 Lakewood Shopping Center (1A) 0.0823% L (9.67), O (0.33) 116
21 North Side Plaza 0.1214% L (3.92), YM 1% (5.5), O (0.58) 47
22 Orchard Square Shopping Center 0.0523% L (9.5), O (0.5) 114
23 Hacienda San Dieguito Corporate Center 0.1723% L (9.67), O (0.33) 116
24 New Wave Entertainment Building 0.0523% L (9.5), O (0.5) 114
25 Copperfield Apartments 0.1453% L (4.92), YM 1% (4.75), O (0.33) 59
26 Bachman Oaks Apartments 0.0523% L (9.5), O (0.5) 114
27 The Grove Apartments 0.0823% L (3), YM 1% (6.67), O (0.33) 36
<CAPTION>
Original Original
Yield Prepayment Original Yield
Maintenance Premium Open Lockout Maintenance
Period Period Period Expiration Expiration
# Property Name (Months) (Months) (Months) Defeasance (12) Date Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall 0 0 6 Yes 5/1/09 N/A
2 Frandor Mall 0 0 6 Yes 3/1/09 N/A
3 The Alliance Loan 0 0 6 Yes 1/1/09 N/A
3a Hampton Court Apartments
3b Lake of the Woods Apartments
3c Holly Tree Apartments
4 Stanford Square 0 0 6 Yes 5/1/09 N/A
5 Woodscape Apartments 57 0 4 No 8/1/04 5/1/09
6 Westminster Apartments 0 0 6 Yes 4/1/09 N/A
7 Sycamore Square Office Center 0 0 6 Yes 4/1/06 N/A
8 Inner Tech Park 0 0 4 Yes 3/1/09 N/A
9 40 West 55th Street 0 0 6 Yes 5/1/09 N/A
10 Mill Creek Mobile Home Park 81 0 4 No 10/1/01 7/1/08
11 The Villas Apartments 0 0 6 Yes 4/1/09 N/A
12 Vista Plaza Shopping Center 0 0 6 Yes 4/1/09 N/A
13 Shadow Ridge Apartments 57 0 4 No 8/1/03 5/1/08
14 Beverly Plaza Hotel 0 0 4 Yes 4/1/09 N/A
15 The Woodland Hills Village Apartments 81 0 4 No 5/1/02 2/1/09
16 Lakewood House Apartments (1A) 0 0 4 Yes 6/1/09 N/A
17 Vali Hi Shopping Center (1A) 0 0 4 Yes 6/1/09 N/A
18 Somers Plaza Shopping Center (1A) 0 0 4 Yes 6/1/09 N/A
19 Apple Valley Shopping Center (1A) 0 0 4 Yes 6/1/09 N/A
20 Lakewood Shopping Center (1A) 0 0 4 Yes 6/1/09 N/A
21 North Side Plaza 66 0 7 No 7/1/02 1/1/08
22 Orchard Square Shopping Center 0 0 6 Yes 5/1/09 N/A
23 Hacienda San Dieguito Corporate Center 0 0 4 Yes 5/1/09 N/A
24 New Wave Entertainment Building 0 0 6 Yes 4/1/09 N/A
25 Copperfield Apartments 57 0 4 No 8/1/04 5/1/09
26 Bachman Oaks Apartments 0 0 6 Yes 5/1/09 N/A
27 The Grove Apartments 80 0 4 No 10/1/02 6/1/09
<CAPTION>
Prepayment
Premium Utilities Subject
Expiration Hotel Multifamily Tenant Multifamily Studio
# Property Name Date Franchise Pays Elevators Units
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall N/A N/A N/A N/A N/A
2 Frandor Mall N/A N/A N/A N/A N/A
3 The Alliance Loan N/A
3a Hampton Court Apartments N/A Electric/Gas 0 N/A
3b Lake of the Woods Apartments N/A Electric 0 N/A
3c Holly Tree Apartments N/A Electric/Gas/Water/Sewer 0 N/A
4 Stanford Square N/A N/A N/A N/A N/A
5 Woodscape Apartments N/A N/A Electric 0 N/A
6 Westminster Apartments N/A N/A Electric 0 N/A
7 Sycamore Square Office Center N/A N/A N/A N/A N/A
8 Inner Tech Park N/A N/A N/A N/A N/A
9 40 West 55th Street N/A N/A Electric 2 N/A
10 Mill Creek Mobile Home Park N/A N/A N/A N/A N/A
11 The Villas Apartments N/A N/A Electric 0 N/A
12 Vista Plaza Shopping Center N/A N/A N/A N/A N/A
13 Shadow Ridge Apartments N/A N/A Electric/Gas/Water/Sewer 0 20
14 Beverly Plaza Hotel N/A None N/A N/A N/A
15 The Woodland Hills Village Apartments N/A N/A Electric 0 N/A
16 Lakewood House Apartments (1A) N/A N/A None 2 N/A
17 Vali Hi Shopping Center (1A) N/A N/A N/A N/A N/A
18 Somers Plaza Shopping Center (1A) N/A N/A N/A N/A N/A
19 Apple Valley Shopping Center (1A) N/A N/A N/A N/A N/A
20 Lakewood Shopping Center (1A) N/A N/A N/A N/A N/A
21 North Side Plaza N/A N/A N/A N/A N/A
22 Orchard Square Shopping Center N/A N/A N/A N/A N/A
23 Hacienda San Dieguito Corporate Center N/A N/A N/A N/A N/A
24 New Wave Entertainment Building N/A N/A N/A N/A N/A
25 Copperfield Apartments N/A N/A Electric 0 N/A
26 Bachman Oaks Apartments N/A N/A Electric 0 N/A
27 The Grove Apartments N/A N/A Electric/Water/Sewer 0 40
<CAPTION>
Subject Subject Subject Subject Subject
Studio Studio 1 BR 1 BR 1 BR
# Property Name Avg. Rent Max. Rent Units Avg. Rent Max. Rent
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall N/A N/A N/A N/A N/A
2 Frandor Mall N/A N/A N/A N/A N/A
3 The Alliance Loan
3a Hampton Court Apartments N/A N/A 83 $659 $745
3b Lake of the Woods Apartments N/A N/A 72 $581 $600
3c Holly Tree Apartments N/A N/A 43 $718 $766
4 Stanford Square N/A N/A N/A N/A N/A
5 Woodscape Apartments N/A N/A 384 $435 $574
6 Westminster Apartments N/A N/A 30 $349 $379
7 Sycamore Square Office Center N/A N/A N/A N/A N/A
8 Inner Tech Park N/A N/A N/A N/A N/A
9 40 West 55th Street N/A N/A 1 $4,400 $4,400
10 Mill Creek Mobile Home Park N/A N/A N/A N/A N/A
11 The Villas Apartments N/A N/A 96 $538 $570
12 Vista Plaza Shopping Center N/A N/A N/A N/A N/A
13 Shadow Ridge Apartments $425 $459 156 $430 $559
14 Beverly Plaza Hotel N/A N/A N/A N/A N/A
15 The Woodland Hills Village Apartments N/A N/A 120 $548 $569
16 Lakewood House Apartments (1A) N/A N/A 42 $731 $850
17 Vali Hi Shopping Center (1A) N/A N/A N/A N/A N/A
18 Somers Plaza Shopping Center (1A) N/A N/A N/A N/A N/A
19 Apple Valley Shopping Center (1A) N/A N/A N/A N/A N/A
20 Lakewood Shopping Center (1A) N/A N/A N/A N/A N/A
21 North Side Plaza N/A N/A N/A N/A N/A
22 Orchard Square Shopping Center N/A N/A N/A N/A N/A
23 Hacienda San Dieguito Corporate Center N/A N/A N/A N/A N/A
24 New Wave Entertainment Building N/A N/A N/A N/A N/A
25 Copperfield Apartments N/A N/A 214 $437 $530
26 Bachman Oaks Apartments N/A N/A 132 $564 $665
27 The Grove Apartments $437 $455 116 $496 $520
<CAPTION>
Subject Subject Subject Subject Subject
2 BR 2 BR 2 BR 3 BR 3 BR
# Property Name Units Avg. Rent Max. Rent Units Avg. Rent
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall N/A N/A N/A N/A N/A
2 Frandor Mall N/A N/A N/A N/A N/A
3 The Alliance Loan
3a Hampton Court Apartments 168 $797 $901 56 $924
3b Lake of the Woods Apartments 144 $684 $802 N/A N/A
3c Holly Tree Apartments 100 $769 $927 N/A N/A
4 Stanford Square N/A N/A N/A N/A N/A
5 Woodscape Apartments 114 $643 $715 N/A N/A
6 Westminster Apartments 393 $537 $649 44 $670
7 Sycamore Square Office Center N/A N/A N/A N/A N/A
8 Inner Tech Park N/A N/A N/A N/A N/A
9 40 West 55th Street 35 $3,968 $6,000 N/A N/A
10 Mill Creek Mobile Home Park N/A N/A N/A N/A N/A
11 The Villas Apartments 260 $647 $685 49 $758
12 Vista Plaza Shopping Center N/A N/A N/A N/A N/A
13 Shadow Ridge Apartments 152 $608 $689 24 $687
14 Beverly Plaza Hotel N/A N/A N/A N/A N/A
15 The Woodland Hills Village Apartments 124 $721 $853 16 $933
16 Lakewood House Apartments (1A) 45 $912 $1,070 20 $1,009
17 Vali Hi Shopping Center (1A) N/A N/A N/A N/A N/A
18 Somers Plaza Shopping Center (1A) N/A N/A N/A N/A N/A
19 Apple Valley Shopping Center (1A) N/A N/A N/A N/A N/A
20 Lakewood Shopping Center (1A) N/A N/A N/A N/A N/A
21 North Side Plaza N/A N/A N/A N/A N/A
22 Orchard Square Shopping Center N/A N/A N/A N/A N/A
23 Hacienda San Dieguito Corporate Center N/A N/A N/A N/A N/A
24 New Wave Entertainment Building N/A N/A N/A N/A N/A
25 Copperfield Apartments 48 $628 $710 N/A N/A
26 Bachman Oaks Apartments 76 $691 $710 N/A N/A
27 The Grove Apartments 66 $627 $715 10 $720
<CAPTION>
Subject Subject Subject Subject
3 BR 4 BR 4 BR 4 BR
# Property Name Max. Rent Units Avg. Rent Max. Rent
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 The Wilton Mall N/A N/A N/A N/A
2 Frandor Mall N/A N/A N/A N/A
3 The Alliance Loan
3a Hampton Court Apartments $935 N/A N/A N/A
3b Lake of the Woods Apartments N/A N/A N/A N/A
3c Holly Tree Apartments N/A N/A N/A N/A
4 Stanford Square N/A N/A N/A N/A
5 Woodscape Apartments N/A N/A N/A N/A
6 Westminster Apartments $759 N/A N/A N/A
7 Sycamore Square Office Center N/A N/A N/A N/A
8 Inner Tech Park N/A N/A N/A N/A
9 40 West 55th Street N/A N/A N/A N/A
10 Mill Creek Mobile Home Park N/A N/A N/A N/A
11 The Villas Apartments $785 N/A N/A N/A
12 Vista Plaza Shopping Center N/A N/A N/A N/A
13 Shadow Ridge Apartments $735 N/A N/A N/A
14 Beverly Plaza Hotel N/A N/A N/A N/A
15 The Woodland Hills Village Apartments $995 N/A N/A N/A
16 Lakewood House Apartments (1A) $1,585 N/A N/A N/A
17 Vali Hi Shopping Center (1A) N/A N/A N/A N/A
18 Somers Plaza Shopping Center (1A) N/A N/A N/A N/A
19 Apple Valley Shopping Center (1A) N/A N/A N/A N/A
20 Lakewood Shopping Center (1A) N/A N/A N/A N/A
21 North Side Plaza N/A N/A N/A N/A
22 Orchard Square Shopping Center N/A N/A N/A N/A
23 Hacienda San Dieguito Corporate Center N/A N/A N/A N/A
24 New Wave Entertainment Building N/A N/A N/A N/A
25 Copperfield Apartments N/A N/A N/A N/A
26 Bachman Oaks Apartments N/A N/A N/A N/A
27 The Grove Apartments $735 N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Major Major Major
Tenant #1 Tenant #1 Tenant #1 Lease
# Property Name Name Sq. Ft. Expiration Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 The Wilton Mall Sears 82,352 7/17/05
2 Frandor Mall N/A N/A N/A
3 The Alliance Loan
3a Hampton Court Apartments N/A N/A N/A
3b Lake of the Woods Apartments N/A N/A N/A
3c Holly Tree Apartments N/A N/A N/A
4 Stanford Square PHB Hagler Bailey 18,331 8/1/02
5 Woodscape Apartments N/A N/A N/A
6 Westminster Apartments N/A N/A N/A
7 Sycamore Square Office Center SITEL Corporation 81,850 11/1/07
8 Inner Tech Park Bay State Computer Group 33,873 3/31/01
9 40 West 55th Street N/A N/A N/A
10 Mill Creek Mobile Home Park N/A N/A N/A
11 The Villas Apartments N/A N/A N/A
12 Vista Plaza Shopping Center Bed, Bath & Beyond Inc. 34,900 6/1/13
13 Shadow Ridge Apartments N/A N/A N/A
14 Beverly Plaza Hotel N/A N/A N/A
15 The Woodland Hills Village Apartments N/A N/A N/A
16 Lakewood House Apartments (1A) N/A N/A N/A
17 Vali Hi Shopping Center (1A) The Crafters' Village, Inc. 5,600 12/31/00
18 Somers Plaza Shopping Center (1A) Tops Shoes 8,800 8/31/03
19 Apple Valley Shopping Center (1A) Chinese Pavilion 5,700 12/31/02
20 Lakewood Shopping Center (1A) Jeri Nevins 2,000 1/31/00
21 North Side Plaza Alexander's Shop N' Save 64,160 12/31/10
22 Orchard Square Shopping Center Farmer Jack 48,750 1/1/19
23 Hacienda San Dieguito Corporate Center Landgrant Development 8,587 4/30/01
24 New Wave Entertainment Building NW Entertainment, Inc. 39,967 9/6/09
25 Copperfield Apartments N/A N/A N/A
26 Bachman Oaks Apartments N/A N/A N/A
27 The Grove Apartments N/A N/A N/A
<CAPTION>
Major Major Major
Tenant #2 Tenant #2 Tenant #2 Lease
# Property Name Name Sq. Ft. Expiration Date
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 The Wilton Mall Bon Ton 71,222 1/1/04
2 Frandor Mall N/A N/A N/A
3 The Alliance Loan
3a Hampton Court Apartments N/A N/A N/A
3b Lake of the Woods Apartments N/A N/A N/A
3c Holly Tree Apartments N/A N/A N/A
4 Stanford Square Bon Appetit Mgmt. Co. 17,825 7/1/09
5 Woodscape Apartments N/A N/A N/A
6 Westminster Apartments N/A N/A N/A
7 Sycamore Square Office Center Telecorp Realty LLC 45,634 12/1/08
8 Inner Tech Park Virtual Ink Corp. 20,402 8/30/04
9 40 West 55th Street N/A N/A N/A
10 Mill Creek Mobile Home Park N/A N/A N/A
11 The Villas Apartments N/A N/A N/A
12 Vista Plaza Shopping Center Circuit City Stores Inc. 28,190 1/1/19
13 Shadow Ridge Apartments N/A N/A N/A
14 Beverly Plaza Hotel N/A N/A N/A
15 The Woodland Hills Village Apartments N/A N/A N/A
16 Lakewood House Apartments (1A) N/A N/A N/A
17 Vali Hi Shopping Center (1A) Clean Threads of Little Rock 3,700 5/31/03
18 Somers Plaza Shopping Center (1A) Sport Four, Inc. 4,770 2/28/02
19 Apple Valley Shopping Center (1A) Social Security Admin. 4,800 12/31/02
20 Lakewood Shopping Center (1A) Lakewood Foods, Inc. 2,000 9/30/01
21 North Side Plaza M.G.A., Inc. (Attn: RE Dept) 7,200 2/28/01
22 Orchard Square Shopping Center N/A N/A N/A
23 Hacienda San Dieguito Corporate Center Jason Associates 4,710 3/31/00
24 New Wave Entertainment Building N/A N/A N/A
25 Copperfield Apartments N/A N/A N/A
26 Bachman Oaks Apartments N/A N/A N/A
27 The Grove Apartments N/A N/A N/A
<CAPTION>
Major Major Major
Tenant #3 Tenant #3 Tenant #3 Lease
# Property Name Name Sq. Ft. Expiration Date
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 The Wilton Mall N/A N/A N/A
2 Frandor Mall N/A N/A N/A
3 The Alliance Loan
3a Hampton Court Apartments N/A N/A N/A
3b Lake of the Woods Apartments N/A N/A N/A
3c Holly Tree Apartments N/A N/A N/A
4 Stanford Square N/A N/A N/A
5 Woodscape Apartments N/A N/A N/A
6 Westminster Apartments N/A N/A N/A
7 Sycamore Square Office Center N/A N/A N/A
8 Inner Tech Park ChiRex Technology Ctr. 14,859 10/31/03
9 40 West 55th Street N/A N/A N/A
10 Mill Creek Mobile Home Park N/A N/A N/A
11 The Villas Apartments N/A N/A N/A
12 Vista Plaza Shopping Center Michaels Stores, Inc. 23,725 2/1/09
13 Shadow Ridge Apartments N/A N/A N/A
14 Beverly Plaza Hotel N/A N/A N/A
15 The Woodland Hills Village Apartments N/A N/A N/A
16 Lakewood House Apartments (1A) N/A N/A N/A
17 Vali Hi Shopping Center (1A) Armstrong's Furniture Sales 3,700 9/30/00
18 Somers Plaza Shopping Center (1A) John Brown University 4,200 10/31/00
19 Apple Valley Shopping Center (1A) Partners Jewelry & Loan 2,400 3/31/01
20 Lakewood Shopping Center (1A) Dr. Richard Rankin 2,000 12/31/00
21 North Side Plaza Shorty's Mexican Roadhouse Inn 6,000 9/1/01
22 Orchard Square Shopping Center N/A N/A N/A
23 Hacienda San Dieguito Corporate Center Dialpro 4,513 12/31/00
24 New Wave Entertainment Building N/A N/A N/A
25 Copperfield Apartments N/A N/A N/A
26 Bachman Oaks Apartments N/A N/A N/A
27 The Grove Apartments N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
# Property Name Management Company
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
28 Selma Square Shopping Center Owner Managed
29 Holmdel Corporate Plaza/One Misco Plaza JGT Management
30 Commons on Sanger Apartments Brothers Management Company
31 The Marbrisa Apartments MBS Management Services, Inc.
32 Point of Pines Apartments Heritage Management Company, Inc.
33 Tammaron Village Apartments Case & Associates Properties, Inc.
34 TownePlace Suites by Marriott - Brookfield CSM Lodging Services Incorporated
35 Pittsfield Plaza Atlantic Retail Properties
36 Hurstbourne Office Park Jefferson Development Group, Inc.
37 Trails East Apartments Case & Associates Properties, Inc.
38 TownePlace Suites by Marriott - Eden Prairie CSM Lodging Services Incorporated
39 Brookside Plaza Shopping Center Rosen Associates Management Corp.
40 The Sun City Shopping Center Tapley Commercial Real Estate
41 The Judson House SHP Management
42 Long Lake Office Center Stern Management Services, Inc.
43 Copper Beech Townhomes II McWhirter Property Management, Inc.
44 Town & Country Business Park AmeriCo Realty Services, Inc.
45 Four Winds Apartments The Barrington Group Incorporated
46 Allora Way Apartments Flagship Management Corporation
47 Sycamore Park Apartments HSC California, Inc.
48 Promotions Distributor Services Corp. (1B) Bernard Gainey
49 Production Distribution Services Corp. (1B) PDS
50 Alltel Office Building RealVest Partners, Inc.
51 Winn Medical Center Meadows & Ohly
52 56-62 Canal Street North Star Management Company
53 16 Herbert Street Owner Managed
54 Beau Rivage Apartments Rudeen Development
55 Tierra Corners Shopping Center C. W. Clark, Inc.
56 Two Technology Way Wiggin Properties, Inc.
57 Crossroads Shopping Center Westar Management, Inc.
58 County Mall Greenwich-American Operating Company
59 The Radisson Graystone Castle Hotel Doramar Hotels, Inc.
60 Palms East Apartments Strong Properties, Inc
61 North Creek Condominiums Oakwood Property Company
62 Fallbrook Office Park The Simay Company, Inc.
63 Miami One Office Building Savitar Realty Advisors
64 Huntington Place Apartments Chase National Management Corporation
65 Comfort Inn-South Burlington-VT KW Companies
66 City Centre Building The Rudolph Company
67 Country Village Apartments MBS Management Services, Inc.
68 185 Commerce Drive Keystone Real Estate
69 The South Point Apartments MBS Management Services, Inc.
70 Copper Beech Townhomes I McWhirter Property Management, Inc.
71 Southbridge Office Buildings Owner Managed
72 Pro-Met, Inc. Wolfe Investment Company
73 Super Food Town Plaza National Realty & Development Corporation
74 The Hamptons at Central Apartments DMJ Management, Inc.
75 Southwest Plaza Colliers & Co.
76 The Basin Street Complex John J. Albarano, P.E.
77 Waterford Plaza Atlantic Retail Properties
78 Cerritos State Road Industrial Park Kenski Properties, Inc.
79 Chambers Center Shopping Center Trammell Crow Company
80 Hackettstown Commerce Park Building I B&W Associates LLP
81 Nationsbank Service Center Gihls Properties, Inc.
82 Freeport Self Storage Rhumbline Realty Management Co.
83 The Virginia Highland Loan
83a 842 North Highland Avenue The Simpson Organization, Inc.
83b 1052-1062 St. Charles Avenue The Simpson Organization, Inc.
83c 784-792 North Highland Avenue The Simpson Organization, Inc.
83d 776-778 North Highland Avenue The Simpson Organization, Inc.
84 Dolphin Self Storage (1C) Accountable Management & Realty, Inc.
85 Kangaroom Mini-Storage (1C) Accountable Management & Realty, Inc.
86 Airport Self Storage (1C) Accountable Management & Realty, Inc.
87 Stonehurst Court Apartments Woodward Properties, Inc.
88 The River Meadows Mobile Home Park Newport Pacific Capital Company
89 Maplewood Apartments (1D) C & R Realty
90 Columbus Village Apartments (1D) C & R Realty
91 Dominion Center CDC Management Group, Inc.
92 The Argyle Apartments Hicks King Investments
93 Guthrie Medical Center L&S Development
94 The Hope Group Corporate Headquarters The Hope Group Corporation
95 SavMax Foods Charles Dunn Real Estate Services, Inc.
<CAPTION>
# Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
28 Selma Square Shopping Center 2803-2883 South Highland Drive Selma
29 Holmdel Corporate Plaza/One Misco Plaza 2137 and 2139 Highway 35 North Holmdel
30 Commons on Sanger Apartments 5000 Sanger Avenue Waco
31 The Marbrisa Apartments 4405 North Navarro Street Victoria
32 Point of Pines Apartments 190 North Shore Road Revere
33 Tammaron Village Apartments 11100 Roxboro Avenue Oklahoma City
34 TownePlace Suites by Marriott - Brookfield 600 North Calhoun Road Brookfield
35 Pittsfield Plaza 676-690 Merrill Road Pittsfield
36 Hurstbourne Office Park Whittington Parkway and Leesgate Road Louisville
37 Trails East Apartments 1653 East Harris Street Mesa
38 TownePlace Suites by Marriott - Eden Prairie 11576 and 11588 Leona Road Eden Prairie
39 Brookside Plaza Shopping Center 13750-13780 Millard Avenue Omaha
40 The Sun City Shopping Center 26800 Cherry Hills Boulevard Sun City
41 The Judson House 40 Welcome Street Haverhill
42 Long Lake Office Center 900 Long Lake Road New Brighton
43 Copper Beech Townhomes II 1003 West Aaron Drive State College
44 Town & Country Business Park 3990-3998 and 4030-4052 East Bijou Street Colorado Springs
45 Four Winds Apartments 2601 Morning Star Lane Anderson
46 Allora Way Apartments 4101 East Rancier Avenue Killeen
47 Sycamore Park Apartments 1151 West Arrow Highway Azusa
48 Promotions Distributor Services Corp. (1B) 10303 Norris Avenue Pacoima
49 Production Distribution Services Corp. (1B) 12760 Foothill Boulevard Sylmar
50 Alltel Office Building 2200 Lucien Way Maitland
51 Winn Medical Center 497 Winn Way Decatur
52 56-62 Canal Street 56-62 Canal Street Boston
53 16 Herbert Street 16 Herbert Street Newark
54 Beau Rivage Apartments 4707 East Upriver Drive Spokane
55 Tierra Corners Shopping Center 1000-1020 Tierra Del Rey Chula Vista
56 Two Technology Way Two Technology Way Norwood
57 Crossroads Shopping Center SWQ Betteravia Road & Highway 101 Santa Maria
58 County Mall 250 Westport Avenue Norwalk
59 The Radisson Graystone Castle Hotel 83 East 120th Avenue Thornton
60 Palms East Apartments 211 Caroline Street Cape Canaveral
61 North Creek Condominiums 9351 Pinyon Tree Lane Dallas
62 Fallbrook Office Park 6700 Fallbrook Avenue Los Angeles
63 Miami One Office Building 8725 Northwest 18th Terrace Miami
64 Huntington Place Apartments 1401 North Midwest Boulevard Midwest City
65 Comfort Inn-South Burlington-VT 1285 Williston Road South Burlington
66 City Centre Building One South Nevada Avenue Colorado Springs
67 Country Village Apartments 2551 Loop 35 South Alvin
68 185 Commerce Drive 185 Commerce Drive Upper Dublin Township
69 The South Point Apartments 1021 Pecan Crossing Drive Desoto
70 Copper Beech Townhomes I 1100 West Aaron Drive State College
71 Southbridge Office Buildings 1030 Main Street St. Helena
72 Pro-Met, Inc. 950 Bridgeview Street North Zilwaukee
73 Super Food Town Plaza 1080 South Main Street Bowling Green
74 The Hamptons at Central Apartments 805 Central Drive Bedford
75 Southwest Plaza 115 North El Camino Real Oceanside
76 The Basin Street Complex 201 Basin Street Williamsport
77 Waterford Plaza 825-829 Hartford Turnpike Route 85 Waterford
78 Cerritos State Road Industrial Park 20014-20210 State Road Cerritos
79 Chambers Center Shopping Center 15200-15290 East 6th Avenue Aurora
80 Hackettstown Commerce Park Building I 101 Bilby Road Hackettstown
81 Nationsbank Service Center 2901 West Cypress Creek Road Ft Lauderdale
82 Freeport Self Storage 73 East Merrick Road Freeport
83 The Virginia Highland Loan
83a 842 North Highland Avenue 842 North Highland Avenue Atlanta
83b 1052-1062 St. Charles Avenue 1052-1062 St. Charles Avenue Atlanta
83c 784-792 North Highland Avenue 784-792 North Highland Avenue Atlanta
83d 776-778 North Highland Avenue 776-778 North Highland Avenue Atlanta
84 Dolphin Self Storage (1C) 6350 Babcock Street Southeast Palm Bay
85 Kangaroom Mini-Storage (1C) 5717 14th Street West Bradenton
86 Airport Self Storage (1C) 6953 Nasa Boulevard West Melbourne
87 Stonehurst Court Apartments 7250 Walnut Street Upper Darby Township
88 The River Meadows Mobile Home Park 62880 West Lasalle Road Montrose
89 Maplewood Apartments (1D) 2161-95 Maplewood Drive Salem
90 Columbus Village Apartments (1D) 1794 Southwest Fellows Street Mcminnville
91 Dominion Center 13540, 13550 and 13598 Minnieville Road Woodbridge
92 The Argyle Apartments 3721 North Hall Street Dallas
93 Guthrie Medical Center 31 Arnot Road Big Flats
94 The Hope Group Corporate Headquarters 70 Bearfoot Road Northborough
95 SavMax Foods 563 Lewelling Boulevard San Leandro
<CAPTION>
Zip
# Property Name County State Code Property Type
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center Fresno CA 93662 Retail
29 Holmdel Corporate Plaza/One Misco Plaza Monmouth NJ 07733 Office
30 Commons on Sanger Apartments McLennan TX 76710 Multifamily
31 The Marbrisa Apartments Victoria TX 77904 Multifamily
32 Point of Pines Apartments Suffolk MA 02151 Multifamily
33 Tammaron Village Apartments Oklahoma OK 73162 Multifamily
34 TownePlace Suites by Marriott - Brookfield Waukesha WI 53005 Hotel
35 Pittsfield Plaza Berkshire MA 01201 Retail
36 Hurstbourne Office Park Jefferson KY 40222 Office
37 Trails East Apartments Maricopa AZ 85204 Multifamily
38 TownePlace Suites by Marriott - Eden Prairie Hennepin MN 55344 Hotel
39 Brookside Plaza Shopping Center Douglas NE 68137 Retail
40 The Sun City Shopping Center Riverside CA 92586 Retail
41 The Judson House Essex MA 01830 Multifamily
42 Long Lake Office Center Ramsey MN 55112 Office
43 Copper Beech Townhomes II Centre PA 16803 Multifamily
44 Town & Country Business Park El Paso CO 80918 Office
45 Four Winds Apartments Madison IN 46011 Multifamily
46 Allora Way Apartments Bell TX 76543 Multifamily
47 Sycamore Park Apartments Los Angeles CA 91702 Multifamily
48 Promotions Distributor Services Corp. (1B) Los Angeles CA 91331 Industrial
49 Production Distribution Services Corp. (1B) Los Angeles CA 91342 Industrial
50 Alltel Office Building Orange FL 32751 Office
51 Winn Medical Center DeKalb GA 30030 Office
52 56-62 Canal Street Suffolk MA 02111 Mixed Use
53 16 Herbert Street Essex NJ 07105 Industrial
54 Beau Rivage Apartments Spokane WA 99217 Multifamily
55 Tierra Corners Shopping Center San Diego CA 91910 Retail
56 Two Technology Way Norfolk MA 02062 Industrial
57 Crossroads Shopping Center Santa Barbara CA 93454 Retail
58 County Mall Fairfield CT 06851 Retail
59 The Radisson Graystone Castle Hotel Adams CO 80233 Hotel
60 Palms East Apartments Brevard FL 32920 Multifamily
61 North Creek Condominiums Dallas TX 75243 Multifamily
62 Fallbrook Office Park Los Angeles CA 91307 Office
63 Miami One Office Building Miami-Dade FL 33172 Office
64 Huntington Place Apartments Oklahoma OK 73110 Multifamily
65 Comfort Inn-South Burlington-VT Chittenden VT 05403 Hotel
66 City Centre Building El Paso CO 80903 Office
67 Country Village Apartments Brazoria TX 77511 Multifamily
68 185 Commerce Drive Montgomery PA 19034 Office
69 The South Point Apartments Dallas TX 75115 Multifamily
70 Copper Beech Townhomes I Centre PA 16803 Multifamily
71 Southbridge Office Buildings Napa CA 94574 Office
72 Pro-Met, Inc. Saginaw MI 48604 Industrial
73 Super Food Town Plaza Wood OH 43402 Retail
74 The Hamptons at Central Apartments Tarrant TX 76022 Multifamily
75 Southwest Plaza San Diego CA 92054 Retail
76 The Basin Street Complex Lycoming PA 17701 Mixed Use
77 Waterford Plaza New London CT 06785 Retail
78 Cerritos State Road Industrial Park Los Angeles CA 90703 Industrial
79 Chambers Center Shopping Center Arapahoe CO 80011 Office
80 Hackettstown Commerce Park Building I Warren NJ 07840 Industrial
81 Nationsbank Service Center Broward FL 33309 Office
82 Freeport Self Storage Nassau NY 11520 Mixed Use
83 The Virginia Highland Loan
83a 842 North Highland Avenue Fulton GA 30306 Retail
83b 1052-1062 St. Charles Avenue Fulton GA 30306 Retail
83c 784-792 North Highland Avenue Fulton GA 30306 Retail
83d 776-778 North Highland Avenue Fulton GA 30306 Retail
84 Dolphin Self Storage (1C) Brevard FL 32909 Self Storage
85 Kangaroom Mini-Storage (1C) Manatee FL 34207 Self Storage
86 Airport Self Storage (1C) Brevard FL 32904 Self Storage
87 Stonehurst Court Apartments Delaware PA 19082 Multifamily
88 The River Meadows Mobile Home Park Montrose CO 81401 Manufactured Housing
89 Maplewood Apartments (1D) Marion OR 97306 Multifamily
90 Columbus Village Apartments (1D) Yamhill OR 97128 Multifamily
91 Dominion Center Prince William VA 22192 Retail
92 The Argyle Apartments Dallas TX 75219 Multifamily
93 Guthrie Medical Center Chemung NY 14845 Office
94 The Hope Group Corporate Headquarters Worcester MA 01532 Industrial
95 SavMax Foods Alameda CA 94579 Retail
<CAPTION>
Units/
Sq. Ft./
Mortgage Rooms/
# Property Name Property Sub-type Loan Seller Pads
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28 Selma Square Shopping Center Anchored Column 77,383
29 Holmdel Corporate Plaza/One Misco Plaza Midland 120,160
30 Commons on Sanger Apartments Column 327
31 The Marbrisa Apartments Midland 288
32 Point of Pines Apartments Midland 72
33 Tammaron Village Apartments Midland 400
34 TownePlace Suites by Marriott - Brookfield Limited Service Column 112
35 Pittsfield Plaza Anchored Midland 127,402
36 Hurstbourne Office Park Midland 105,116
37 Trails East Apartments Midland 209
38 TownePlace Suites by Marriott - Eden Prairie Limited Service Column 103
39 Brookside Plaza Shopping Center Anchored Column 90,420
40 The Sun City Shopping Center Shadow Anchored Midland 83,513
41 The Judson House Midland 117
42 Long Lake Office Center Midland 68,043
43 Copper Beech Townhomes II Midland 86
44 Town & Country Business Park Midland 79,645
45 Four Winds Apartments Column 168
46 Allora Way Apartments Column 200
47 Sycamore Park Apartments Midland 122
48 Promotions Distributor Services Corp. (1B) Midland 68,403
49 Production Distribution Services Corp. (1B) Midland 43,850
50 Alltel Office Building Midland 59,997
51 Winn Medical Center Midland 61,028
52 56-62 Canal Street Office/Industrial Midland 44,985
53 16 Herbert Street Column 304,696
54 Beau Rivage Apartments Midland 132
55 Tierra Corners Shopping Center Anchored Midland 38,966
56 Two Technology Way Midland 76,376
57 Crossroads Shopping Center Shadow Anchored Midland 25,788
58 County Mall Unanchored Column 44,247
59 The Radisson Graystone Castle Hotel Full Service Column 135
60 Palms East Apartments Midland 216
61 North Creek Condominiums Column 158
62 Fallbrook Office Park Column 52,723
63 Miami One Office Building Column 57,244
64 Huntington Place Apartments Midland 287
65 Comfort Inn-South Burlington-VT Limited Service Midland 105
66 City Centre Building Midland 36,061
67 Country Village Apartments Midland 152
68 185 Commerce Drive Midland 41,744
69 The South Point Apartments Midland 128
70 Copper Beech Townhomes I Midland 59
71 Southbridge Office Buildings Column 26,398
72 Pro-Met, Inc. Midland 92,052
73 Super Food Town Plaza Anchored Midland 91,325
74 The Hamptons at Central Apartments Column 136
75 Southwest Plaza Unanchored Midland 35,368
76 The Basin Street Complex Office/Retail Column 90,258
77 Waterford Plaza Unanchored Midland 20,531
78 Cerritos State Road Industrial Park Column 78,614
79 Chambers Center Shopping Center Midland 81,308
80 Hackettstown Commerce Park Building I Midland 65,671
81 Nationsbank Service Center Midland 39,978
82 Freeport Self Storage Self Storage/Industrial Midland 48,313
83 The Virginia Highland Loan Column
83a 842 North Highland Avenue Unanchored 15,411
83b 1052-1062 St. Charles Avenue Unanchored 8,556
83c 784-792 North Highland Avenue Unanchored 5,688
83d 776-778 North Highland Avenue Unanchored 3,812
84 Dolphin Self Storage (1C) Column 34,813
85 Kangaroom Mini-Storage (1C) Column 35,252
86 Airport Self Storage (1C) Column 21,630
87 Stonehurst Court Apartments Midland 144
88 The River Meadows Mobile Home Park Midland 195
89 Maplewood Apartments (1D) Midland 33
90 Columbus Village Apartments (1D) Midland 66
91 Dominion Center Unanchored Column 27,977
92 The Argyle Apartments Midland 48
93 Guthrie Medical Center Midland 35,000
94 The Hope Group Corporate Headquarters Midland 61,280
95 SavMax Foods Unanchored Column 49,050
<CAPTION>
Occupancy
Fee Simple/ Year Year Rate at
# Property Name Leasehold Built Renovated U/W (3)
- - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center Fee 1999 N/A 88%
29 Holmdel Corporate Plaza/One Misco Plaza Fee 1990 N/A 96%
30 Commons on Sanger Apartments Fee 1978 1997 94%
31 The Marbrisa Apartments Fee 1982 N/A 91%
32 Point of Pines Apartments Fee 1987 N/A 100%
33 Tammaron Village Apartments Fee 1983 N/A 97%
34 TownePlace Suites by Marriott - Brookfield Fee 1997 1998 N/A
35 Pittsfield Plaza Fee 1970 1998 87%
36 Hurstbourne Office Park Fee 1975 1997 95%
37 Trails East Apartments Fee 1983 N/A 95%
38 TownePlace Suites by Marriott - Eden Prairie Fee 1997 1998 N/A
39 Brookside Plaza Shopping Center Fee 1990 1991 99%
40 The Sun City Shopping Center Fee 1965 N/A 91%
41 The Judson House Fee 1979 N/A 97%
42 Long Lake Office Center Fee 1990 N/A 100%
43 Copper Beech Townhomes II Fee/Leasehold 1998 N/A 100%
44 Town & Country Business Park Fee 1983 1997 100%
45 Four Winds Apartments Fee 1970 1998 89%
46 Allora Way Apartments Fee 1974 1994 94%
47 Sycamore Park Apartments Fee 1987 N/A 99%
48 Promotions Distributor Services Corp. (1B) Fee 1990 1996 100%
49 Production Distribution Services Corp. (1B) Fee 1982 N/A 100%
50 Alltel Office Building Fee 1984 N/A 100%
51 Winn Medical Center Fee 1976 N/A 94%
52 56-62 Canal Street Fee 1899 1997 100%
53 16 Herbert Street Fee 1930 1970 100%
54 Beau Rivage Apartments Fee 1997 N/A 98%
55 Tierra Corners Shopping Center Fee 1998 N/A 100%
56 Two Technology Way Fee 1979 N/A 100%
57 Crossroads Shopping Center Fee 1999 N/A 89%
58 County Mall Fee 1974 1998 100%
59 The Radisson Graystone Castle Hotel Fee 1984 1999 N/A
60 Palms East Apartments Fee 1966 1990 94%
61 North Creek Condominiums Fee 1969 1999 93%
62 Fallbrook Office Park Fee 1981 1993 100%
63 Miami One Office Building Fee 1983 1999 87%
64 Huntington Place Apartments Fee 1974 1997 97%
65 Comfort Inn-South Burlington-VT Leasehold 1988 N/A N/A
66 City Centre Building Fee 1999 N/A 100%
67 Country Village Apartments Fee 1977 N/A 93%
68 185 Commerce Drive Fee 1958 1998 100%
69 The South Point Apartments Fee 1984 N/A 98%
70 Copper Beech Townhomes I Fee 1996 N/A 100%
71 Southbridge Office Buildings Fee 1912 1997 100%
72 Pro-Met, Inc. Fee 1996 N/A 100%
73 Super Food Town Plaza Fee 1970 1991 100%
74 The Hamptons at Central Apartments Fee 1969 1993 94%
75 Southwest Plaza Fee 1980 N/A 93%
76 The Basin Street Complex Fee 1934 1998 96%
77 Waterford Plaza Fee 1986 1995 100%
78 Cerritos State Road Industrial Park Fee 1972 N/A 100%
79 Chambers Center Shopping Center Fee 1980 N/A 83%
80 Hackettstown Commerce Park Building I Fee 1988 N/A 100%
81 Nationsbank Service Center Fee 1982 1994 100%
82 Freeport Self Storage Fee 1969 1997 94%
83 The Virginia Highland Loan
83a 842 North Highland Avenue Fee 1960 1992 100%
83b 1052-1062 St. Charles Avenue Fee 1940 1992 100%
83c 784-792 North Highland Avenue Fee 1927 1992 100%
83d 776-778 North Highland Avenue Fee 1920 1992 100%
84 Dolphin Self Storage (1C) Fee 1986 1999 98%
85 Kangaroom Mini-Storage (1C) Fee 1986 N/A 85%
86 Airport Self Storage (1C) Fee 1979 1994 98%
87 Stonehurst Court Apartments Fee 1927 1998 92%
88 The River Meadows Mobile Home Park Fee 1979 N/A 99%
89 Maplewood Apartments (1D) Fee 1997 N/A 100%
90 Columbus Village Apartments (1D) Fee 1995 N/A 99%
91 Dominion Center Fee 1988 1989 98%
92 The Argyle Apartments Fee 1926 1991 96%
93 Guthrie Medical Center Fee 1968 1995 100%
94 The Hope Group Corporate Headquarters Fee 1984 N/A 100%
95 SavMax Foods Fee 1986 1992 100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity/
Date of Cut-off ARD
Occupancy Appraised Date LTV Date LTV Underwritable
# Property Name Rate Value Ratio (4) Ratio (4) (5) NOI
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center 5/1/99 8,855,000 79.0% 71.3% 817,944
29 Holmdel Corporate Plaza/One Misco Plaza 7/9/99 9,500,000 72.5% 64.9% 900,602
30 Commons on Sanger Apartments 7/26/99 9,590,000 69.3% 62.2% 813,817
31 The Marbrisa Apartments 6/24/99 8,400,000 78.9% 70.6% 778,222
32 Point of Pines Apartments 8/10/99 8,310,000 78.1% 69.8% 744,058
33 Tammaron Village Apartments 7/15/99 8,300,000 77.9% 68.6% 749,203
34 TownePlace Suites by Marriott - Brookfield N/A 9,200,000 69.0% 57.5% 977,861
35 Pittsfield Plaza 8/9/99 10,400,000 59.8% 49.6% 781,329
36 Hurstbourne Office Park 8/10/99 7,300,000 78.3% 70.4% 767,195
37 Trails East Apartments 6/20/99 7,388,000 77.2% 68.8% 638,946
38 TownePlace Suites by Marriott - Eden Prairie N/A 8,600,000 65.6% 54.7% 901,936
39 Brookside Plaza Shopping Center 5/1/99 7,000,000 80.0% 72.2% 657,904
40 The Sun City Shopping Center 8/1/99 7,530,000 73.8% 61.1% 826,399
41 The Judson House 9/13/99 7,000,000 77.7% 70.1% 674,354
42 Long Lake Office Center 8/31/99 7,600,000 71.4% 64.4% 717,153
43 Copper Beech Townhomes II 7/28/99 7,271,000 74.1% 66.1% 675,673
44 Town & Country Business Park 8/31/99 7,000,000 74.7% 66.7% 657,312
45 Four Winds Apartments 9/3/99 6,560,000 78.5% 70.1% 595,951
46 Allora Way Apartments 8/25/99 6,250,000 80.0% 72.5% 655,324
47 Sycamore Park Apartments 6/25/99 6,400,000 77.6% 61.5% 640,506
48 Promotions Distributor Services Corp. (1B) 9/7/99 4,400,000 73.8% 64.6% 391,596
49 Production Distribution Services Corp. (1B) 8/2/99 2,300,000 73.8% 64.6% 214,711
50 Alltel Office Building 5/1/99 6,520,000 71.1% 63.7% 620,638
51 Winn Medical Center 6/30/99 6,275,000 72.4% 65.2% 665,276
52 56-62 Canal Street 7/31/99 6,250,000 72.2% 56.9% 806,951
53 16 Herbert Street 9/1/99 6,400,000 70.2% 58.9% 671,158
54 Beau Rivage Apartments 9/16/99 5,300,000 83.6% 74.4% 510,441
55 Tierra Corners Shopping Center 9/7/99 5,600,000 78.3% 69.5% 502,890
56 Two Technology Way 6/30/99 5,600,000 77.8% 62.6% 533,722
57 Crossroads Shopping Center 4/9/99 6,300,000 68.0% 60.7% 510,585
58 County Mall 2/1/99 6,850,000 61.3% 54.0% 563,001
59 The Radisson Graystone Castle Hotel N/A 8,275,000 49.5% 41.6% 802,297
60 Palms East Apartments 9/1/99 5,300,000 75.5% 68.3% 582,096
61 North Creek Condominiums 6/8/99 5,050,000 79.0% 71.1% 486,308
62 Fallbrook Office Park 7/1/99 5,700,000 68.4% 61.6% 524,644
63 Miami One Office Building 9/1/99 5,200,000 75.0% 67.2% 481,119
64 Huntington Place Apartments 10/29/99 5,265,000 73.2% 64.5% 541,479
65 Comfort Inn-South Burlington-VT N/A 5,335,000 71.5% 58.6% 652,564
66 City Centre Building 7/19/99 4,800,000 74.9% 67.5% 461,542
67 Country Village Apartments 6/8/99 4,500,000 79.7% 70.3% 424,034
68 185 Commerce Drive 8/1/99 4,500,000 76.5% 69.0% 444,017
69 The South Point Apartments 6/30/99 4,280,000 78.0% 69.8% 384,513
70 Copper Beech Townhomes I 7/28/99 4,850,000 68.3% 60.1% 471,911
71 Southbridge Office Buildings 9/1/99 4,800,000 68.7% 61.7% 416,305
72 Pro-Met, Inc. 9/22/99 4,200,000 78.5% 70.5% 418,468
73 Super Food Town Plaza 9/3/99 4,150,000 79.2% 69.6% 407,630
74 The Hamptons at Central Apartments 5/3/99 4,450,000 72.9% 68.7% 436,033
75 Southwest Plaza 6/11/99 4,375,000 73.0% 65.9% 419,077
76 The Basin Street Complex 6/1/99 4,500,000 70.9% 60.5% 531,848
77 Waterford Plaza 7/27/99 4,200,000 74.7% 62.2% 401,355
78 Cerritos State Road Industrial Park 4/1/99 4,430,000 68.2% 60.4% 436,202
79 Chambers Center Shopping Center 9/13/99 4,840,000 61.8% 51.9% 494,058
80 Hackettstown Commerce Park Building I 7/23/99 4,000,000 74.8% 62.0% 390,489
81 Nationsbank Service Center 4/15/99 3,900,000 74.7% 67.0% 379,414
82 Freeport Self Storage 6/9/99 4,250,000 68.4% 57.5% 387,821
83 The Virginia Highland Loan 4,185,000 68.6% 57.4% 406,105
83a 842 North Highland Avenue 7/1/99 1,760,000
83b 1052-1062 St. Charles Avenue 7/1/99 1,110,000
83c 784-792 North Highland Avenue 7/1/99 800,000
83d 776-778 North Highland Avenue 7/1/99 515,000
84 Dolphin Self Storage (1C) 7/31/99 1,850,000 63.6% 53.8% 199,565
85 Kangaroom Mini-Storage (1C) 7/31/99 1,900,000 63.6% 53.8% 142,999
86 Airport Self Storage (1C) 7/31/99 650,000 63.6% 53.8% 67,666
87 Stonehurst Court Apartments 7/26/99 3,900,000 71.6% 63.9% 352,009
88 The River Meadows Mobile Home Park 6/18/99 3,420,000 78.7% 75.7% 313,510
89 Maplewood Apartments (1D) 6/29/99 1,400,000 67.5% 59.7% 113,369
90 Columbus Village Apartments (1D) 6/29/99 2,550,000 67.5% 59.7% 216,358
91 Dominion Center 8/1/99 3,600,000 73.0% 65.9% 347,783
92 The Argyle Apartments 8/26/99 3,400,000 75.0% 66.3% 279,257
93 Guthrie Medical Center 8/12/99 4,000,000 63.3% 1.7% 395,596
94 The Hope Group Corporate Headquarters 7/6/99 3,350,000 75.5% 54.0% 359,377
95 SavMax Foods 6/30/99 4,210,000 59.3% 48.7% 378,063
<CAPTION>
Contractual
Engineering Recurring Contractual
Underwritable Reserve at Replacement Recurring
# Property Name NCF (6) DSCR (7) Origination Reserve LC&TI
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center 788,334 1.24 N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza 762,802 1.26 $20,938 $18,024 $100,000
30 Commons on Sanger Apartments 732,067 1.24 $65,000 $81,750 N/A
31 The Marbrisa Apartments 706,222 1.22 $550,000 $72,000 N/A
32 Point of Pines Apartments 726,058 1.28 N/A $14,400 N/A
33 Tammaron Village Apartments 649,203 1.26 $105,000 N/A N/A
34 TownePlace Suites by Marriott - Brookfield 877,465 1.45 $20,000 4.00% N/A
35 Pittsfield Plaza 722,341 1.25 N/A $19,140 $24,000
36 Hurstbourne Office Park 640,816 1.25 $100,000 $21,021 $50,000
37 Trails East Apartments 586,696 1.24 $275,000 N/A N/A
38 TownePlace Suites by Marriott - Eden Prairie 803,922 1.49 N/A 4.00% N/A
39 Brookside Plaza Shopping Center 619,242 1.21 $4,313 $13,563 $18,000
40 The Sun City Shopping Center 715,964 1.43 N/A $16,704 $64,404
41 The Judson House 645,354 1.30 N/A $102,560 N/A
42 Long Lake Office Center 615,067 1.25 $20,000 $13,609 $60,000
43 Copper Beech Townhomes II 645,573 1.39 N/A $25,800 N/A
44 Town & Country Business Park 589,184 1.31 N/A $12,000 $24,000
45 Four Winds Apartments 553,951 1.23 N/A $25,200 N/A
46 Allora Way Apartments 605,324 1.30 $14,875 $50,000 N/A
47 Sycamore Park Apartments 610,006 1.45 N/A $30,500 N/A
48 Promotions Distributor Services Corp. (1B) 367,765 1.25 N/A $6,840 N/A
49 Production Distribution Services Corp. (1B) 194,090 1.25 N/A $9,209 N/A
50 Alltel Office Building 535,461 1.31 N/A $11,948 N/A
51 Winn Medical Center 568,804 1.39 N/A $13,426 $36,000
52 56-62 Canal Street 754,472 1.75 N/A N/A N/A
53 16 Herbert Street 549,574 1.26 $66,500 $30,500 $99,996
54 Beau Rivage Apartments 477,441 1.31 N/A N/A N/A
55 Tierra Corners Shopping Center 483,281 1.30 N/A $3,032 $35,000
56 Two Technology Way 480,257 1.32 $340,825 $11,456 $25,800
57 Crossroads Shopping Center 483,043 1.31 N/A $2,579 $12,000
58 County Mall 519,336 1.28 $4,540 N/A $40,800
59 The Radisson Graystone Castle Hotel 604,232 1.50 $171,250 4.00% N/A
60 Palms East Apartments 528,096 1.49 N/A $54,000 N/A
61 North Creek Condominiums 446,808 1.25 $24,125 $39,500 N/A
62 Fallbrook Office Park 450,848 1.28 N/A N/A $52,723
63 Miami One Office Building 417,987 1.21 N/A $11,449 N/A
64 Huntington Place Apartments 469,479 1.52 N/A N/A N/A
65 Comfort Inn-South Burlington-VT 555,283 1.65 N/A 4.00% N/A
66 City Centre Building 412,254 1.27 N/A $5,500 $15,000
67 Country Village Apartments 386,034 1.30 $150,000 $38,000 N/A
68 185 Commerce Drive 394,945 1.27 $24,438 $8,350 $45,000
69 The South Point Apartments 352,513 1.21 N/A $32,000 N/A
70 Copper Beech Townhomes I 454,211 1.72 N/A $12,957 N/A
71 Southbridge Office Buildings 371,428 1.26 N/A N/A N/A
72 Pro-Met, Inc. 389,879 1.33 N/A $9,000 $15,000
73 Super Food Town Plaza 358,749 1.37 $4,375 $8,830 $15,000
74 The Hamptons at Central Apartments 402,033 1.36 N/A $34,000 N/A
75 Southwest Plaza 382,081 1.32 N/A $5,065 N/A
76 The Basin Street Complex 444,784 1.37 $2,500 $13,539 N/A
77 Waterford Plaza 380,775 1.28 N/A $3,080 $15,000
78 Cerritos State Road Industrial Park 382,169 1.33 $7,500 N/A N/A
79 Chambers Center Shopping Center 413,101 1.42 N/A $12,026 $50,004
80 Hackettstown Commerce Park Building I 352,102 1.26 N/A $7,350 N/A
81 Nationsbank Service Center 337,974 1.32 N/A $8,000 $32,000
82 Freeport Self Storage 369,684 1.30 $99,063 $7,198 $11,303
83 The Virginia Highland Loan 368,274 1.33 N/A N/A $24,924
83a 842 North Highland Avenue N/A N/A $10,483
83b 1052-1062 St. Charles Avenue N/A N/A $6,610
83c 784-792 North Highland Avenue N/A N/A $4,764
83d 776-778 North Highland Avenue N/A N/A $3,067
84 Dolphin Self Storage (1C) 194,343 1.42 N/A $6,960 N/A
85 Kangaroom Mini-Storage (1C) 137,711 1.42 N/A $7,050 N/A
86 Airport Self Storage (1C) 64,421 1.42 N/A $4,376 N/A
87 Stonehurst Court Apartments 316,009 1.31 $300,000 $36,000 N/A
88 The River Meadows Mobile Home Park 303,760 1.27 N/A $9,750 N/A
89 Maplewood Apartments (1D) 105,119 1.41 N/A N/A N/A
90 Columbus Village Apartments (1D) 199,858 1.41 N/A N/A N/A
91 Dominion Center 310,644 1.30 $12,500 N/A $47,568
92 The Argyle Apartments 262,954 1.27 N/A $12,735 N/A
93 Guthrie Medical Center 362,313 1.20 N/A $7,000 N/A
94 The Hope Group Corporate Headquarters 341,067 1.32 N/A $6,132 N/A
95 SavMax Foods 346,113 1.52 N/A N/A N/A
<CAPTION>
Underwritable
Recurring Percentage of
Replacement Underwritable Original Cut-off Initial
# Property Name Reserve LC&TI Balance Balance (8) Pool Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center $8,500 $21,110 7,000,000 6,995,600 0.9%
29 Holmdel Corporate Plaza/One Misco Plaza $18,024 $119,776 6,900,000 6,884,317 0.9%
30 Commons on Sanger Apartments $81,750 N/A 6,650,000 6,642,732 0.9%
31 The Marbrisa Apartments $72,000 N/A 6,650,000 6,631,331 0.9%
32 Point of Pines Apartments $18,000 N/A 6,500,000 6,488,024 0.9%
33 Tammaron Village Apartments $100,000 N/A 6,550,000 6,462,194 0.8%
34 TownePlace Suites by Marriott - Brookfield 5.00% N/A 6,350,000 6,343,714 0.8%
35 Pittsfield Plaza $19,139 $39,849 6,260,000 6,223,800 0.8%
36 Hurstbourne Office Park $21,021 $105,358 5,725,000 5,715,099 0.8%
37 Trails East Apartments $52,250 N/A 5,800,000 5,702,303 0.7%
38 TownePlace Suites by Marriott - Eden Prairie 5.00% N/A 5,645,000 5,639,412 0.7%
39 Brookside Plaza Shopping Center $13,563 $25,099 5,600,000 5,596,509 0.7%
40 The Sun City Shopping Center $16,703 $93,732 5,675,000 5,560,431 0.7%
41 The Judson House $29,000 N/A 5,440,000 5,436,622 0.7%
42 Long Lake Office Center $13,609 $88,477 5,432,000 5,426,380 0.7%
43 Copper Beech Townhomes II $30,100 N/A 5,400,000 5,389,711 0.7%
44 Town & Country Business Park $12,743 $55,385 5,250,000 5,230,800 0.7%
45 Four Winds Apartments $42,000 N/A 5,150,000 5,146,502 0.7%
46 Allora Way Apartments $50,000 N/A 5,000,000 4,997,014 0.7%
47 Sycamore Park Apartments $30,500 N/A 5,050,000 4,966,433 0.7%
48 Promotions Distributor Services Corp. (1B) $6,840 $16,991 3,300,000 3,296,423 0.4%
49 Production Distribution Services Corp. (1B) $9,542 $11,079 1,650,000 1,645,244 0.2%
50 Alltel Office Building $11,948 $73,229 4,646,000 4,637,624 0.6%
51 Winn Medical Center $13,426 $83,046 4,550,000 4,545,201 0.6%
52 56-62 Canal Street $6,748 $45,731 4,600,000 4,514,716 0.6%
53 16 Herbert Street $30,470 $91,114 4,500,000 4,492,412 0.6%
54 Beau Rivage Apartments $33,000 N/A 4,500,000 4,433,118 0.6%
55 Tierra Corners Shopping Center $3,032 $16,577 4,400,000 4,383,106 0.6%
56 Two Technology Way $11,456 $42,009 4,430,000 4,356,373 0.6%
57 Crossroads Shopping Center $2,579 $24,963 4,299,000 4,281,174 0.6%
58 County Mall $8,048 $35,617 4,200,000 4,196,959 0.6%
59 The Radisson Graystone Castle Hotel 4.00% N/A 4,100,000 4,096,137 0.5%
60 Palms East Apartments $54,000 N/A 4,050,000 4,003,157 0.5%
61 North Creek Condominiums $39,500 N/A 4,000,000 3,989,600 0.5%
62 Fallbrook Office Park $10,933 $62,863 3,900,000 3,897,518 0.5%
63 Miami One Office Building $8,587 $54,545 3,900,000 3,897,425 0.5%
64 Huntington Place Apartments $72,000 N/A 3,900,000 3,854,115 0.5%
65 Comfort Inn-South Burlington-VT 5.00% N/A 3,875,000 3,812,987 0.5%
66 City Centre Building $7,212 $42,076 3,600,000 3,593,911 0.5%
67 Country Village Apartments $38,000 N/A 3,600,000 3,588,151 0.5%
68 185 Commerce Drive $7,515 $41,557 3,450,000 3,444,136 0.5%
69 The South Point Apartments $32,000 N/A 3,350,000 3,340,464 0.4%
70 Copper Beech Townhomes I $17,700 N/A 3,350,000 3,310,140 0.4%
71 Southbridge Office Buildings $5,280 $39,597 3,300,000 3,297,857 0.4%
72 Pro-Met, Inc. $9,200 $19,389 3,300,000 3,296,413 0.4%
73 Super Food Town Plaza $13,699 $35,182 3,320,000 3,285,903 0.4%
74 The Hamptons at Central Apartments $34,000 N/A 3,250,000 3,242,008 0.4%
75 Southwest Plaza $5,305 $31,691 3,202,500 3,194,436 0.4%
76 The Basin Street Complex $13,538 $73,526 3,200,000 3,192,374 0.4%
77 Waterford Plaza $3,080 $17,500 3,150,000 3,138,520 0.4%
78 Cerritos State Road Industrial Park $11,792 $42,241 3,025,000 3,021,393 0.4%
79 Chambers Center Shopping Center $14,338 $66,619 3,000,000 2,991,961 0.4%
80 Hackettstown Commerce Park Building I $7,350 $31,037 3,000,000 2,991,257 0.4%
81 Nationsbank Service Center $8,000 $33,440 2,925,000 2,914,768 0.4%
82 Freeport Self Storage $7,198 $10,939 2,911,000 2,906,161 0.4%
83 The Virginia Highland Loan $5,020 $32,811 2,875,000 2,870,042 0.4%
83a 842 North Highland Avenue $2,312 $15,109
83b 1052-1062 St. Charles Avenue $1,283 $8,388
83c 784-792 North Highland Avenue $853 $5,577
83d 776-778 North Highland Avenue $572 $3,737
84 Dolphin Self Storage (1C) $5,222 N/A 1,300,000 1,298,817 0.2%
85 Kangaroom Mini-Storage (1C) $5,288 N/A 1,100,000 1,098,999 0.1%
86 Airport Self Storage (1C) $3,245 N/A 400,000 399,636 0.1%
87 Stonehurst Court Apartments $36,000 N/A 2,800,000 2,793,344 0.4%
88 The River Meadows Mobile Home Park $9,750 N/A 2,700,000 2,692,755 0.4%
89 Maplewood Apartments (1D) $8,250 N/A 860,000 849,504 0.1%
90 Columbus Village Apartments (1D) $16,500 N/A 1,840,000 1,817,543 0.2%
91 Dominion Center $9,232 $27,907 2,630,000 2,627,309 0.3%
92 The Argyle Apartments $12,735 $3,568 2,580,000 2,550,393 0.3%
93 Guthrie Medical Center $7,000 $26,284 2,553,000 2,532,305 0.3%
94 The Hope Group Corporate Headquarters $6,128 $12,182 2,546,000 2,530,113 0.3%
95 SavMax Foods $7,358 $24,592 2,500,000 2,497,302 0.3%
<CAPTION>
Orig Rem. Orig Rem.
Maturity Amort. Amort. Term to Term to Interest
# Property Name Balance Term Term Maturity (9) Maturity (9) Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center 6,315,631 360 359 119 118 8.320%
29 Holmdel Corporate Plaza/One Misco Plaza 6,169,779 360 356 120 116 7.980%
30 Commons on Sanger Apartments 5,963,012 360 358 120 118 8.100%
31 The Marbrisa Apartments 5,934,439 360 355 120 115 7.890%
32 Point of Pines Apartments 5,801,277 360 357 120 117 7.910%
33 Tammaron Village Apartments 5,692,762 360 343 120 103 6.860%
34 TownePlace Suites by Marriott - Brookfield 5,289,686 300 299 120 119 8.370%
35 Pittsfield Plaza 5,155,807 300 294 120 114 7.960%
36 Hurstbourne Office Park 5,141,252 360 357 120 117 8.170%
37 Trails East Apartments 5,081,143 360 338 120 98 7.190%
38 TownePlace Suites by Marriott - Eden Prairie 4,702,406 300 299 120 119 8.370%
39 Brookside Plaza Shopping Center 5,051,003 360 359 120 119 8.360%
40 The Sun City Shopping Center 4,599,452 300 282 120 102 7.420%
41 The Judson House 4,908,942 360 359 120 119 8.380%
42 Long Lake Office Center 4,893,691 360 358 120 118 8.300%
43 Copper Beech Townhomes II 4,803,177 360 357 120 117 7.770%
44 Town & Country Business Park 4,667,302 360 354 120 114 7.740%
45 Four Winds Apartments 4,599,536 360 359 120 119 7.940%
46 Allora Way Apartments 4,531,389 360 359 120 119 8.570%
47 Sycamore Park Apartments 3,938,685 360 337 180 157 7.440%
48 Promotions Distributor Services Corp. (1B) 2,961,185 360 358 120 118 8.130%
49 Production Distribution Services Corp. (1B) 1,365,264 300 297 120 117 8.130%
50 Alltel Office Building 4,155,532 360 357 120 117 8.000%
51 Winn Medical Center 4,092,432 360 358 120 118 8.230%
52 56-62 Canal Street 3,558,310 300 281 144 125 8.160%
53 16 Herbert Street 3,769,340 300 298 120 118 8.560%
54 Beau Rivage Apartments 3,944,036 360 340 120 100 7.180%
55 Tierra Corners Shopping Center 3,893,239 360 354 120 114 7.550%
56 Two Technology Way 3,503,474 300 287 120 107 6.640%
57 Crossroads Shopping Center 3,824,396 360 353 120 113 7.760%
58 County Mall 3,700,839 330 329 120 119 8.790%
59 The Radisson Graystone Castle Hotel 3,443,830 300 299 120 119 8.670%
60 Palms East Apartments 3,619,225 360 341 120 101 7.950%
61 North Creek Condominiums 3,592,690 360 355 120 115 8.160%
62 Fallbrook Office Park 3,509,551 360 359 120 119 8.260%
63 Miami One Office Building 3,494,782 360 359 120 119 8.080%
64 Huntington Place Apartments 3,395,914 360 345 120 105 6.940%
65 Comfort Inn-South Burlington-VT 3,125,128 300 286 120 106 7.260%
66 City Centre Building 3,239,722 360 357 120 117 8.260%
67 Country Village Apartments 3,165,605 360 355 120 115 7.300%
68 185 Commerce Drive 3,103,290 360 357 120 117 8.240%
69 The South Point Apartments 2,985,901 360 355 120 115 7.840%
70 Copper Beech Townhomes I 2,913,106 360 345 120 105 6.890%
71 Southbridge Office Buildings 2,962,701 360 359 120 119 8.160%
72 Pro-Met, Inc. 2,960,486 360 358 120 118 8.120%
73 Super Food Town Plaza 2,887,705 360 347 120 107 6.900%
74 The Hamptons at Central Apartments 3,056,794 360 355 84 79 8.350%
75 Southwest Plaza 2,883,819 360 355 120 115 8.270%
76 The Basin Street Complex 2,721,408 300 297 120 117 9.130%
77 Waterford Plaza 2,612,933 300 296 120 116 8.210%
78 Cerritos State Road Industrial Park 2,674,251 336 334 120 118 8.610%
79 Chambers Center Shopping Center 2,509,637 300 297 120 117 8.520%
80 Hackettstown Commerce Park Building I 2,478,045 300 297 120 117 8.070%
81 Nationsbank Service Center 2,611,145 360 354 120 114 7.910%
82 Freeport Self Storage 2,443,049 300 298 120 118 8.630%
83 The Virginia Highland Loan 2,400,854 300 298 120 118 8.450%
83a 842 North Highland Avenue
83b 1052-1062 St. Charles Avenue
83c 784-792 North Highland Avenue
83d 776-778 North Highland Avenue
84 Dolphin Self Storage (1C) 1,098,176 300 299 120 119 8.880%
85 Kangaroom Mini-Storage (1C) 929,226 300 299 120 119 8.880%
86 Airport Self Storage (1C) 337,900 300 299 120 119 8.880%
87 Stonehurst Court Apartments 2,493,412 360 356 120 116 7.810%
88 The River Meadows Mobile Home Park 2,587,919 360 355 60 55 8.050%
89 Maplewood Apartments (1D) 750,742 360 344 120 104 7.030%
90 Columbus Village Apartments (1D) 1,606,239 360 344 120 104 7.030%
91 Dominion Center 2,371,560 360 358 120 118 8.340%
92 The Argyle Apartments 2,253,088 360 345 120 105 7.050%
93 Guthrie Medical Center 68,041 180 177 180 177 8.510%
94 The Hope Group Corporate Headquarters 1,808,086 240 236 120 116 8.190%
95 SavMax Foods 2,051,259 300 299 120 119 7.840%
<CAPTION>
First
Interest Calculation Monthly Payment Maturity
# Property Name (30/360 / Actual/360) Payment Date Date ARD (10) Seasoning
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center Actual/360 52,933.53 12/1/99 10/1/09 1
29 Holmdel Corporate Plaza/One Misco Plaza Actual/360 50,533.59 9/1/99 8/1/09 4
30 Commons on Sanger Apartments Actual/360 49,259.72 11/1/99 10/1/09 2
31 The Marbrisa Apartments Actual/360 48,286.37 8/1/99 7/1/09 5
32 Point of Pines Apartments Actual/360 47,287.52 10/1/99 9/1/09 3
33 Tammaron Village Apartments Actual/360 42,963.21 8/1/98 7/1/08 17
34 TownePlace Suites by Marriott - Brookfield Actual/360 50,576.82 12/1/99 11/1/09 1
35 Pittsfield Plaza Actual/360 48,149.94 7/1/99 6/1/09 6
36 Hurstbourne Office Park Actual/360 42,688.46 10/1/99 9/1/09 3
37 Trails East Apartments Actual/360 39,330.46 3/1/98 2/1/08 22
38 TownePlace Suites by Marriott - Eden Prairie Actual/360 44,961.60 12/1/99 11/1/09 1
39 Brookside Plaza Shopping Center Actual/360 42,504.77 12/1/99 11/1/09 1
40 The Sun City Shopping Center Actual/360 41,642.89 7/1/98 6/1/08 18
41 The Judson House Actual/360 41,367.13 12/1/99 11/1/09 1
42 Long Lake Office Center Actual/360 40,999.90 11/1/99 10/1/09 2
43 Copper Beech Townhomes II Actual/360 38,760.92 10/1/99 9/1/09 3
44 Town & Country Business Park Actual/360 37,575.37 7/1/99 6/1/09 6
45 Four Winds Apartments Actual/360 37,573.69 12/1/99 11/1/09 1
46 Allora Way Apartments Actual/360 38,694.00 12/1/99 11/1/09 1
47 Sycamore Park Apartments Actual/360 35,103.09 2/1/98 1/1/13 23
48 Promotions Distributor Services Corp. (1B) Actual/360 24,513.96 11/1/99 10/1/09 2
49 Production Distribution Services Corp. (1B) Actual/360 12,877.39 10/1/99 9/1/09 3
50 Alltel Office Building Actual/360 34,090.70 10/1/99 9/1/09 3
51 Winn Medical Center Actual/360 34,118.68 11/1/99 10/1/09 2
52 56-62 Canal Street Actual/360 35,992.48 6/1/98 5/1/10 19
53 16 Herbert Street Actual/360 36,417.35 11/1/99 10/1/09 2
54 Beau Rivage Apartments Actual/360 30,484.57 5/1/98 4/1/08 20
55 Tierra Corners Shopping Center Actual/360 30,916.22 7/1/99 6/1/09 6
56 Two Technology Way Actual/360 30,300.37 12/1/98 11/1/08 13
57 Crossroads Shopping Center Actual/360 30,828.28 6/1/99 5/1/09 7
58 County Mall Actual/360 33,806.04 12/1/99 11/1/09 1
59 The Radisson Graystone Castle Hotel Actual/360 33,485.33 12/1/99 11/1/09 1
60 Palms East Apartments Actual/360 29,576.42 6/1/98 5/1/08 19
61 North Creek Condominiums Actual/360 29,797.96 8/1/99 7/1/09 5
62 Fallbrook Office Park Actual/360 29,326.82 12/1/99 11/1/09 1
63 Miami One Office Building Actual/360 28,834.62 12/1/99 11/1/09 1
64 Huntington Place Apartments Actual/360 25,789.83 10/1/98 9/1/08 15
65 Comfort Inn-South Burlington-VT Actual/360 28,033.74 11/1/98 10/1/08 14
66 City Centre Building Actual/360 27,070.91 10/1/99 9/1/09 3
67 Country Village Apartments Actual/360 24,680.55 8/1/99 7/1/09 5
68 185 Commerce Drive Actual/360 25,894.45 10/1/99 9/1/09 3
69 The South Point Apartments Actual/360 24,208.49 8/1/99 7/1/09 5
70 Copper Beech Townhomes I Actual/360 22,040.70 10/1/98 9/1/28 9/1/08 15
71 Southbridge Office Buildings Actual/360 24,583.31 12/1/99 11/1/09 1
72 Pro-Met, Inc. Actual/360 24,490.86 11/1/99 10/1/09 2
73 Super Food Town Plaza Actual/360 21,865.52 12/1/98 11/1/28 11/1/08 13
74 The Hamptons at Central Apartments Actual/360 24,645.02 8/1/99 7/1/06 5
75 Southwest Plaza Actual/360 24,104.36 8/1/99 7/1/09 5
76 The Basin Street Complex Actual/360 27,139.73 10/1/99 9/1/24 9/1/09 3
77 Waterford Plaza Actual/360 24,752.04 9/1/99 8/1/09 4
78 Cerritos State Road Industrial Park Actual/360 23,864.58 11/1/99 10/1/09 2
79 Chambers Center Shopping Center Actual/360 24,197.26 10/1/99 9/1/09 3
80 Hackettstown Commerce Park Building I Actual/360 23,293.77 10/1/99 9/1/09 3
81 Nationsbank Service Center Actual/360 21,279.38 7/1/99 6/1/09 6
82 Freeport Self Storage Actual/360 23,695.73 11/1/99 10/1/09 2
83 The Virginia Highland Loan Actual/360 23,053.49 11/1/99 10/1/09 2
83a 842 North Highland Avenue
83b 1052-1062 St. Charles Avenue
83c 784-792 North Highland Avenue
83d 776-778 North Highland Avenue
84 Dolphin Self Storage (1C) Actual/360 10,802.93 12/1/99 11/1/09 1
85 Kangaroom Mini-Storage (1C) Actual/360 9,140.94 12/1/99 11/1/09 1
86 Airport Self Storage (1C) Actual/360 3,323.98 12/1/99 11/1/09 1
87 Stonehurst Court Apartments Actual/360 20,175.76 9/1/99 8/1/09 4
88 The River Meadows Mobile Home Park Actual/360 19,905.84 8/1/99 7/1/04 5
89 Maplewood Apartments (1D) Actual/360 5,738.94 9/1/98 8/1/08 16
90 Columbus Village Apartments (1D) Actual/360 12,278.66 9/1/98 8/1/08 16
91 Dominion Center Actual/360 19,924.96 11/1/99 10/1/09 2
92 The Argyle Apartments Actual/360 17,251.53 10/1/98 9/1/08 15
93 Guthrie Medical Center Actual/360 25,155.37 10/1/99 9/1/14 3
94 The Hope Group Corporate Headquarters Actual/360 21,597.80 9/1/99 8/1/09 4
95 SavMax Foods Actual/360 19,031.18 12/1/99 11/1/09 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original
Lockout
Servicing and Prepayment Provision Period
# Property Name Trustee Fees as of Origination (11) (Months)
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28 Selma Square Shopping Center 0.0523% L (9.42), O (0.5) 113
29 Holmdel Corporate Plaza/One Misco Plaza 0.0823% L (9.67), O (0.33) 116
30 Commons on Sanger Apartments 0.0523% L (9.5), O (0.5) 114
31 The Marbrisa Apartments 0.0823% L (2.92), YM 1% (6.75), O (0.33) 35
32 Point of Pines Apartments 0.0823% L (9.42), O (0.58) 113
33 Tammaron Village Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
34 TownePlace Suites by Marriott - Brookfield 0.0523% L (9.25), O (0.75) 111
35 Pittsfield Plaza 0.1543% L (9.67), O (0.33) 116
36 Hurstbourne Office Park 0.1323% L (9.67), O (0.33) 116
37 Trails East Apartments 0.1323% L (4), YM 1% (5.5), O (0.5) 48
38 TownePlace Suites by Marriott - Eden Prairie 0.0523% L (9.25), O (0.75) 111
39 Brookside Plaza Shopping Center 0.0523% L (9.5), O (0.5) 114
40 The Sun City Shopping Center 0.1616% L (4.92), YM 1% (4.5), O (0.58) 59
41 The Judson House 0.0823% L (9.67), O (0.33) 116
42 Long Lake Office Center 0.0823% L (9.67), O (0.33) 116
43 Copper Beech Townhomes II 0.0823% L (9.67), O (0.33) 116
44 Town & Country Business Park 0.0823% L (9.42), O (0.58) 113
45 Four Winds Apartments 0.0523% L (9.5), O (0.5) 114
46 Allora Way Apartments 0.0523% L (9.5), O (0.5) 114
47 Sycamore Park Apartments 0.1714% L (8), YM 1% (6.5), O (0.5) 96
48 Promotions Distributor Services Corp. (1B) 0.0823% L (9.67), O (0.33) 116
49 Production Distribution Services Corp. (1B) 0.0823% L (9.67), O (0.33) 116
50 Alltel Office Building 0.1793% L (9.67), O (0.33) 116
51 Winn Medical Center 0.1823% L (9.67), O (0.33) 116
52 56-62 Canal Street 0.0823% YM 5% (9.92), 5% (1), O (1.08) 0
53 16 Herbert Street 0.0523% L (9.5), O (0.5) 114
54 Beau Rivage Apartments 0.1823% L (4.92), YM 1% (4.5), O (0.58) 59
55 Tierra Corners Shopping Center 0.0823% L (9.67), O (0.33) 116
56 Two Technology Way 0.1823% L (4.92), YM 1% (4.75), O (0.33) 59
57 Crossroads Shopping Center 0.1323% L (9.67), O (0.33) 116
58 County Mall 0.0523% L (9.5), O (0.5) 114
59 The Radisson Graystone Castle Hotel 0.0523% L (9.5), O (0.5) 114
60 Palms East Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
61 North Creek Condominiums 0.0523% L (9.5), O (0.5) 114
62 Fallbrook Office Park 0.0523% L (9.5), O (0.5) 114
63 Miami One Office Building 0.0523% L (9.5), O (0.5) 114
64 Huntington Place Apartments 0.1823% L (4.92), YM 5% (4.5), O (0.58) 59
65 Comfort Inn-South Burlington-VT 0.1823% L (1.92), YM 1% (7.5), O (0.58) 23
66 City Centre Building 0.0823% L (9.67), O (0.33) 116
67 Country Village Apartments 0.0823% L (2.92), YM 1% (6.75), O (0.33) 35
68 185 Commerce Drive 0.1573% L (9.67), O (0.33) 116
69 The South Point Apartments 0.0823% L (2.92), YM 1% (6.75), O (0.33) 35
70 Copper Beech Townhomes I 0.0823% L (3.92), YM 1% (5.5), O (0.58) 47
71 Southbridge Office Buildings 0.0523% L (9.5), O (0.5) 114
72 Pro-Met, Inc. 0.0823% L (9.67), O (0.33) 116
73 Super Food Town Plaza 0.0823% L (3.92), YM 1% (5.5), O (0.58) 47
74 The Hamptons at Central Apartments 0.0523% L (6.5), O (0.5) 78
75 Southwest Plaza 0.1823% L (9.67), O (0.33) 116
76 The Basin Street Complex 0.0523% L (9.5), O (0.5) 114
77 Waterford Plaza 0.0823% L (9.67), O (0.33) 116
78 Cerritos State Road Industrial Park 0.0523% L (9.5), O (0.5) 114
79 Chambers Center Shopping Center 0.0823% L (9.42), O (0.58) 113
80 Hackettstown Commerce Park Building I 0.0823% L (9.67), O (0.33) 116
81 Nationsbank Service Center 0.1823% L (9.67), O (0.33) 116
82 Freeport Self Storage 0.0823% L (9.67), O (0.33) 116
83 The Virginia Highland Loan 0.0523% L (9.5), O (0.5) 114
83a 842 North Highland Avenue
83b 1052-1062 St. Charles Avenue
83c 784-792 North Highland Avenue
83d 776-778 North Highland Avenue
84 Dolphin Self Storage (1C) 0.0523% L (9.5), O (0.5) 114
85 Kangaroom Mini-Storage (1C) 0.0523% L (9.5), O (0.5) 114
86 Airport Self Storage (1C) 0.0523% L (9.5), O (0.5) 114
87 Stonehurst Court Apartments 0.1573% L (9.67), O (0.33) 116
88 The River Meadows Mobile Home Park 0.0823% L (4.67), O (0.33) 56
89 Maplewood Apartments (1D) 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
90 Columbus Village Apartments (1D) 0.1823% L (4.92), YM 1% (4.5), O (0.58) 59
91 Dominion Center 0.0523% L (9.5), O (0.5) 114
92 The Argyle Apartments 0.0823% L (4.92), YM 1% (4.75), O (0.33) 59
93 Guthrie Medical Center 0.1823% L (14.67), O (0.33) 176
94 The Hope Group Corporate Headquarters 0.1823% L (9.67), O (0.33) 116
95 SavMax Foods 0.0523% L (9.5), O (0.5) 114
<CAPTION>
Original Original
Yield Prepayment Original Yield
Maintenance Premium Open Lockout Maintenance
Period Period Period Expiration Expiration
# Property Name (Months) (Months) (Months) Defeasance (12) Date Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center 0 0 6 Yes 4/1/09 N/A
29 Holmdel Corporate Plaza/One Misco Plaza 0 0 4 Yes 4/1/09 N/A
30 Commons on Sanger Apartments 0 0 6 Yes 4/1/09 N/A
31 The Marbrisa Apartments 81 0 4 No 6/1/02 3/1/09
32 Point of Pines Apartments 0 0 7 Yes 2/1/09 N/A
33 Tammaron Village Apartments 54 0 7 No 6/1/03 12/1/07
34 TownePlace Suites by Marriott - Brookfield 0 0 9 Yes 2/1/09 N/A
35 Pittsfield Plaza 0 0 4 Yes 2/1/09 N/A
36 Hurstbourne Office Park 0 0 4 Yes 5/1/09 N/A
37 Trails East Apartments 66 0 6 No 2/1/02 8/1/07
38 TownePlace Suites by Marriott - Eden Prairie 0 0 9 Yes 2/1/09 N/A
39 Brookside Plaza Shopping Center 0 0 6 Yes 5/1/09 N/A
40 The Sun City Shopping Center 54 0 7 No 5/1/03 11/1/07
41 The Judson House 0 0 4 Yes 7/1/09 N/A
42 Long Lake Office Center 0 0 4 Yes 6/1/09 N/A
43 Copper Beech Townhomes II 0 0 4 Yes 5/1/09 N/A
44 Town & Country Business Park 0 0 7 Yes 11/1/08 N/A
45 Four Winds Apartments 0 0 6 Yes 5/1/09 N/A
46 Allora Way Apartments 0 0 6 Yes 5/1/09 N/A
47 Sycamore Park Apartments 78 0 6 No 1/1/06 7/1/12
48 Promotions Distributor Services Corp. (1B) 0 0 4 Yes 6/1/09 N/A
49 Production Distribution Services Corp. (1B) 0 0 4 Yes 5/1/09 N/A
50 Alltel Office Building 0 0 4 Yes 5/1/09 N/A
51 Winn Medical Center 0 0 4 Yes 6/1/09 N/A
52 56-62 Canal Street 119 12 13 No 5/1/98 4/1/08
53 16 Herbert Street 0 0 6 Yes 4/1/09 N/A
54 Beau Rivage Apartments 54 0 7 No 3/1/03 9/1/07
55 Tierra Corners Shopping Center 0 0 4 Yes 2/1/09 N/A
56 Two Technology Way 57 0 4 No 10/1/03 7/1/08
57 Crossroads Shopping Center 0 0 4 Yes 1/1/09 N/A
58 County Mall 0 0 6 Yes 5/1/09 N/A
59 The Radisson Graystone Castle Hotel 0 0 6 Yes 5/1/09 N/A
60 Palms East Apartments 54 0 7 No 4/1/03 10/1/07
61 North Creek Condominiums 0 0 6 Yes 1/1/09 N/A
62 Fallbrook Office Park 0 0 6 Yes 5/1/09 N/A
63 Miami One Office Building 0 0 6 Yes 5/1/09 N/A
64 Huntington Place Apartments 54 0 7 No 8/1/03 2/1/08
65 Comfort Inn-South Burlington-VT 90 0 7 No 9/1/00 3/1/08
66 City Centre Building 0 0 4 Yes 5/1/09 N/A
67 Country Village Apartments 81 0 4 No 6/1/02 3/1/09
68 185 Commerce Drive 0 0 4 Yes 5/1/09 N/A
69 The South Point Apartments 81 0 4 No 6/1/02 3/1/09
70 Copper Beech Townhomes I 66 0 7 No 8/1/02 2/1/08
71 Southbridge Office Buildings 0 0 6 Yes 5/1/09 N/A
72 Pro-Met, Inc. 0 0 4 Yes 6/1/09 N/A
73 Super Food Town Plaza 66 0 7 No 10/1/02 4/1/08
74 The Hamptons at Central Apartments 0 0 6 Yes 1/1/06 N/A
75 Southwest Plaza 0 0 4 Yes 3/1/09 N/A
76 The Basin Street Complex 0 0 6 Yes 3/1/09 N/A
77 Waterford Plaza 0 0 4 Yes 4/1/09 N/A
78 Cerritos State Road Industrial Park 0 0 6 Yes 4/1/09 N/A
79 Chambers Center Shopping Center 0 0 7 Yes 2/1/09 N/A
80 Hackettstown Commerce Park Building I 0 0 4 Yes 5/1/09 N/A
81 Nationsbank Service Center 0 0 4 Yes 2/1/09 N/A
82 Freeport Self Storage 0 0 4 Yes 6/1/09 N/A
83 The Virginia Highland Loan 0 0 6 Yes 4/1/09 N/A
83a 842 North Highland Avenue
83b 1052-1062 St. Charles Avenue
83c 784-792 North Highland Avenue
83d 776-778 North Highland Avenue
84 Dolphin Self Storage (1C) 0 0 6 Yes 5/1/09 N/A
85 Kangaroom Mini-Storage (1C) 0 0 6 Yes 5/1/09 N/A
86 Airport Self Storage (1C) 0 0 6 Yes 5/1/09 N/A
87 Stonehurst Court Apartments 0 0 4 Yes 4/1/09 N/A
88 The River Meadows Mobile Home Park 0 0 4 No 3/1/04 N/A
89 Maplewood Apartments (1D) 54 0 7 No 7/1/03 1/1/08
90 Columbus Village Apartments (1D) 54 0 7 No 7/1/03 1/1/08
91 Dominion Center 0 0 6 Yes 4/1/09 N/A
92 The Argyle Apartments 57 0 4 No 8/1/03 5/1/08
93 Guthrie Medical Center 0 0 4 Yes 5/1/14 N/A
94 The Hope Group Corporate Headquarters 0 0 4 Yes 4/1/09 N/A
95 SavMax Foods 0 0 6 Yes 5/1/09 N/A
<CAPTION>
Prepayment
Premium Utilities Subject
Expiration Hotel Multifamily Tenant Multifamily Studio
# Property Name Date Franchise Pays Elevators Units
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center N/A N/A N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza N/A N/A N/A N/A N/A
30 Commons on Sanger Apartments N/A N/A Electric 0 N/A
31 The Marbrisa Apartments N/A N/A Electric 0 N/A
32 Point of Pines Apartments N/A N/A Electric/Gas/Water/Sewer 1 N/A
33 Tammaron Village Apartments N/A N/A Electric 0 100
34 TownePlace Suites by Marriott - Brookfield N/A Marriott N/A N/A N/A
35 Pittsfield Plaza N/A N/A N/A N/A N/A
36 Hurstbourne Office Park N/A N/A N/A N/A N/A
37 Trails East Apartments N/A N/A Electric 0 N/A
38 TownePlace Suites by Marriott - Eden Prairie N/A Marriott N/A N/A N/A
39 Brookside Plaza Shopping Center N/A N/A N/A N/A N/A
40 The Sun City Shopping Center N/A N/A N/A N/A N/A
41 The Judson House N/A N/A None 2 N/A
42 Long Lake Office Center N/A N/A N/A N/A N/A
43 Copper Beech Townhomes II N/A N/A Electric/Water/Sewer 0 N/A
44 Town & Country Business Park N/A N/A N/A N/A N/A
45 Four Winds Apartments N/A N/A Electric/Gas 0 N/A
46 Allora Way Apartments N/A N/A Electric 0 N/A
47 Sycamore Park Apartments N/A N/A Electric 0 N/A
48 Promotions Distributor Services Corp. (1B) N/A N/A N/A N/A N/A
49 Production Distribution Services Corp. (1B) N/A N/A N/A N/A N/A
50 Alltel Office Building N/A N/A N/A N/A N/A
51 Winn Medical Center N/A N/A N/A N/A N/A
52 56-62 Canal Street 4/1/09 N/A N/A N/A N/A
53 16 Herbert Street N/A N/A N/A N/A N/A
54 Beau Rivage Apartments N/A N/A Electric 0 N/A
55 Tierra Corners Shopping Center N/A N/A N/A N/A N/A
56 Two Technology Way N/A N/A N/A N/A N/A
57 Crossroads Shopping Center N/A N/A N/A N/A N/A
58 County Mall N/A N/A N/A N/A N/A
59 The Radisson Graystone Castle Hotel N/A Radisson N/A N/A N/A
60 Palms East Apartments N/A N/A Electric/Gas 0 24
61 North Creek Condominiums N/A N/A Electric 0 N/A
62 Fallbrook Office Park N/A N/A N/A N/A N/A
63 Miami One Office Building N/A N/A N/A N/A N/A
64 Huntington Place Apartments N/A N/A Electric 0 N/A
65 Comfort Inn-South Burlington-VT N/A Comfort Inn N/A N/A N/A
66 City Centre Building N/A N/A N/A N/A N/A
67 Country Village Apartments N/A N/A Electric 0 N/A
68 185 Commerce Drive N/A N/A N/A N/A N/A
69 The South Point Apartments N/A N/A Electric/Gas 0 N/A
70 Copper Beech Townhomes I N/A N/A Electric/Water/Sewer 0 N/A
71 Southbridge Office Buildings N/A N/A N/A N/A N/A
72 Pro-Met, Inc. N/A N/A N/A N/A N/A
73 Super Food Town Plaza N/A N/A N/A N/A N/A
74 The Hamptons at Central Apartments N/A N/A Electric 0 N/A
75 Southwest Plaza N/A N/A N/A N/A N/A
76 The Basin Street Complex N/A N/A N/A N/A N/A
77 Waterford Plaza N/A N/A N/A N/A N/A
78 Cerritos State Road Industrial Park N/A N/A N/A N/A N/A
79 Chambers Center Shopping Center N/A N/A N/A N/A N/A
80 Hackettstown Commerce Park Building I N/A N/A N/A N/A N/A
81 Nationsbank Service Center N/A N/A N/A N/A N/A
82 Freeport Self Storage N/A N/A N/A N/A N/A
83 The Virginia Highland Loan N/A
83a 842 North Highland Avenue N/A N/A N/A N/A
83b 1052-1062 St. Charles Avenue N/A N/A N/A N/A
83c 784-792 North Highland Avenue N/A N/A N/A N/A
83d 776-778 North Highland Avenue N/A N/A N/A N/A
84 Dolphin Self Storage (1C) N/A N/A N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A N/A N/A
87 Stonehurst Court Apartments N/A N/A Electric 4 14
88 The River Meadows Mobile Home Park N/A N/A N/A N/A N/A
89 Maplewood Apartments (1D) N/A N/A Electric 0 N/A
90 Columbus Village Apartments (1D) N/A N/A Electric 0 N/A
91 Dominion Center N/A N/A N/A N/A N/A
92 The Argyle Apartments N/A N/A None 4 12
93 Guthrie Medical Center N/A N/A N/A N/A N/A
94 The Hope Group Corporate Headquarters N/A N/A N/A N/A N/A
95 SavMax Foods N/A N/A N/A N/A N/A
<CAPTION>
Subject Subject Subject Subject Subject
Studio Studio 1 BR 1 BR 1 BR
# Property Name Avg. Rent Max. Rent Units Avg. Rent Max. Rent
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center N/A N/A N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza N/A N/A N/A N/A N/A
30 Commons on Sanger Apartments N/A N/A 215 $389 $455
31 The Marbrisa Apartments N/A N/A 168 $395 $465
32 Point of Pines Apartments N/A N/A 1 $925 $925
33 Tammaron Village Apartments $282 $309 200 $311 $339
34 TownePlace Suites by Marriott - Brookfield N/A N/A N/A N/A N/A
35 Pittsfield Plaza N/A N/A N/A N/A N/A
36 Hurstbourne Office Park N/A N/A N/A N/A N/A
37 Trails East Apartments N/A N/A 112 $492 $599
38 TownePlace Suites by Marriott - Eden Prairie N/A N/A N/A N/A N/A
39 Brookside Plaza Shopping Center N/A N/A N/A N/A N/A
40 The Sun City Shopping Center N/A N/A N/A N/A N/A
41 The Judson House N/A N/A 104 $861 $861
42 Long Lake Office Center N/A N/A N/A N/A N/A
43 Copper Beech Townhomes II N/A N/A N/A N/A N/A
44 Town & Country Business Park N/A N/A N/A N/A N/A
45 Four Winds Apartments N/A N/A 22 $422 $440
46 Allora Way Apartments N/A N/A 120 $441 $875
47 Sycamore Park Apartments N/A N/A 61 $673 $725
48 Promotions Distributor Services Corp. (1B) N/A N/A N/A N/A N/A
49 Production Distribution Services Corp. (1B) N/A N/A N/A N/A N/A
50 Alltel Office Building N/A N/A N/A N/A N/A
51 Winn Medical Center N/A N/A N/A N/A N/A
52 56-62 Canal Street N/A N/A N/A N/A N/A
53 16 Herbert Street N/A N/A N/A N/A N/A
54 Beau Rivage Apartments N/A N/A 44 $493 $495
55 Tierra Corners Shopping Center N/A N/A N/A N/A N/A
56 Two Technology Way N/A N/A N/A N/A N/A
57 Crossroads Shopping Center N/A N/A N/A N/A N/A
58 County Mall N/A N/A N/A N/A N/A
59 The Radisson Graystone Castle Hotel N/A N/A N/A N/A N/A
60 Palms East Apartments $375 $420 80 $423 $470
61 North Creek Condominiums N/A N/A 94 $442 $530
62 Fallbrook Office Park N/A N/A N/A N/A N/A
63 Miami One Office Building N/A N/A N/A N/A N/A
64 Huntington Place Apartments N/A N/A 176 $288 $340
65 Comfort Inn-South Burlington-VT N/A N/A N/A N/A N/A
66 City Centre Building N/A N/A N/A N/A N/A
67 Country Village Apartments N/A N/A 84 $446 $895
68 185 Commerce Drive N/A N/A N/A N/A N/A
69 The South Point Apartments N/A N/A 104 $498 $635
70 Copper Beech Townhomes I N/A N/A N/A N/A N/A
71 Southbridge Office Buildings N/A N/A N/A N/A N/A
72 Pro-Met, Inc. N/A N/A N/A N/A N/A
73 Super Food Town Plaza N/A N/A N/A N/A N/A
74 The Hamptons at Central Apartments N/A N/A 64 $485 $555
75 Southwest Plaza N/A N/A N/A N/A N/A
76 The Basin Street Complex N/A N/A N/A N/A N/A
77 Waterford Plaza N/A N/A N/A N/A N/A
78 Cerritos State Road Industrial Park N/A N/A N/A N/A N/A
79 Chambers Center Shopping Center N/A N/A N/A N/A N/A
80 Hackettstown Commerce Park Building I N/A N/A N/A N/A N/A
81 Nationsbank Service Center N/A N/A N/A N/A N/A
82 Freeport Self Storage N/A N/A N/A N/A N/A
83 The Virginia Highland Loan
83a 842 North Highland Avenue N/A N/A N/A N/A N/A
83b 1052-1062 St. Charles Avenue N/A N/A N/A N/A N/A
83c 784-792 North Highland Avenue N/A N/A N/A N/A N/A
83d 776-778 North Highland Avenue N/A N/A N/A N/A N/A
84 Dolphin Self Storage (1C) N/A N/A N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A N/A N/A
87 Stonehurst Court Apartments $400 $480 117 $520 $570
88 The River Meadows Mobile Home Park N/A N/A N/A N/A N/A
89 Maplewood Apartments (1D) N/A N/A N/A N/A N/A
90 Columbus Village Apartments (1D) N/A N/A N/A N/A N/A
91 Dominion Center N/A N/A N/A N/A N/A
92 The Argyle Apartments $475 $475 18 $957 $957
93 Guthrie Medical Center N/A N/A N/A N/A N/A
94 The Hope Group Corporate Headquarters N/A N/A N/A N/A N/A
95 SavMax Foods N/A N/A N/A N/A N/A
<CAPTION>
Subject Subject Subject Subject Subject
2 BR 2 BR 2 BR 3 BR 3 BR
# Property Name Units Avg. Rent Max. Rent Units Avg. Rent
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center N/A N/A N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza N/A N/A N/A N/A N/A
30 Commons on Sanger Apartments 112 $496 $545 N/A N/A
31 The Marbrisa Apartments 96 $518 $1,200 24 $650
32 Point of Pines Apartments 71 $1,239 $1,500 N/A N/A
33 Tammaron Village Apartments 100 $407 $449 N/A N/A
34 TownePlace Suites by Marriott - Brookfield N/A N/A N/A N/A N/A
35 Pittsfield Plaza N/A N/A N/A N/A N/A
36 Hurstbourne Office Park N/A N/A N/A N/A N/A
37 Trails East Apartments 97 $600 $629 N/A N/A
38 TownePlace Suites by Marriott - Eden Prairie N/A N/A N/A N/A N/A
39 Brookside Plaza Shopping Center N/A N/A N/A N/A N/A
40 The Sun City Shopping Center N/A N/A N/A N/A N/A
41 The Judson House 13 $990 $990 N/A N/A
42 Long Lake Office Center N/A N/A N/A N/A N/A
43 Copper Beech Townhomes II 2 $788 $825 84 $938
44 Town & Country Business Park N/A N/A N/A N/A N/A
45 Four Winds Apartments 98 $532 $575 48 $571
46 Allora Way Apartments 80 $540 $620 N/A N/A
47 Sycamore Park Apartments 61 $785 $850 N/A N/A
48 Promotions Distributor Services Corp. (1B) N/A N/A N/A N/A N/A
49 Production Distribution Services Corp. (1B) N/A N/A N/A N/A N/A
50 Alltel Office Building N/A N/A N/A N/A N/A
51 Winn Medical Center N/A N/A N/A N/A N/A
52 56-62 Canal Street N/A N/A N/A N/A N/A
53 16 Herbert Street N/A N/A N/A N/A N/A
54 Beau Rivage Apartments 88 $568 $595 N/A N/A
55 Tierra Corners Shopping Center N/A N/A N/A N/A N/A
56 Two Technology Way N/A N/A N/A N/A N/A
57 Crossroads Shopping Center N/A N/A N/A N/A N/A
58 County Mall N/A N/A N/A N/A N/A
59 The Radisson Graystone Castle Hotel N/A N/A N/A N/A N/A
60 Palms East Apartments 112 $521 $570 N/A N/A
61 North Creek Condominiums 64 $550 $650 N/A N/A
62 Fallbrook Office Park N/A N/A N/A N/A N/A
63 Miami One Office Building N/A N/A N/A N/A N/A
64 Huntington Place Apartments 79 $381 $420 32 $447
65 Comfort Inn-South Burlington-VT N/A N/A N/A N/A N/A
66 City Centre Building N/A N/A N/A N/A N/A
67 Country Village Apartments 60 $570 $605 8 $700
68 185 Commerce Drive N/A N/A N/A N/A N/A
69 The South Point Apartments 24 $631 $750 N/A N/A
70 Copper Beech Townhomes I N/A N/A N/A 59 $941
71 Southbridge Office Buildings N/A N/A N/A N/A N/A
72 Pro-Met, Inc. N/A N/A N/A N/A N/A
73 Super Food Town Plaza N/A N/A N/A N/A N/A
74 The Hamptons at Central Apartments 60 $596 $760 12 $883
75 Southwest Plaza N/A N/A N/A N/A N/A
76 The Basin Street Complex N/A N/A N/A N/A N/A
77 Waterford Plaza N/A N/A N/A N/A N/A
78 Cerritos State Road Industrial Park N/A N/A N/A N/A N/A
79 Chambers Center Shopping Center N/A N/A N/A N/A N/A
80 Hackettstown Commerce Park Building I N/A N/A N/A N/A N/A
81 Nationsbank Service Center N/A N/A N/A N/A N/A
82 Freeport Self Storage N/A N/A N/A N/A N/A
83 The Virginia Highland Loan
83a 842 North Highland Avenue N/A N/A N/A N/A N/A
83b 1052-1062 St. Charles Avenue N/A N/A N/A N/A N/A
83c 784-792 North Highland Avenue N/A N/A N/A N/A N/A
83d 776-778 North Highland Avenue N/A N/A N/A N/A N/A
84 Dolphin Self Storage (1C) N/A N/A N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A N/A N/A
87 Stonehurst Court Apartments 13 $670 $700 N/A N/A
88 The River Meadows Mobile Home Park N/A N/A N/A N/A N/A
89 Maplewood Apartments (1D) 33 $532 $545 N/A N/A
90 Columbus Village Apartments (1D) 66 $519 $520 N/A N/A
91 Dominion Center N/A N/A N/A N/A N/A
92 The Argyle Apartments 18 $1,135 $1,135 N/A N/A
93 Guthrie Medical Center N/A N/A N/A N/A N/A
94 The Hope Group Corporate Headquarters N/A N/A N/A N/A N/A
95 SavMax Foods N/A N/A N/A N/A N/A
<CAPTION>
Subject Subject Subject Subject
3 BR 4 BR 4 BR 4 BR
# Property Name Max. Rent Units Avg. Rent Max. Rent
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
28 Selma Square Shopping Center N/A N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza N/A N/A N/A N/A
30 Commons on Sanger Apartments N/A N/A N/A N/A
31 The Marbrisa Apartments $1,450 N/A N/A N/A
32 Point of Pines Apartments N/A N/A N/A N/A
33 Tammaron Village Apartments N/A N/A N/A N/A
34 TownePlace Suites by Marriott - Brookfield N/A N/A N/A N/A
35 Pittsfield Plaza N/A N/A N/A N/A
36 Hurstbourne Office Park N/A N/A N/A N/A
37 Trails East Apartments N/A N/A N/A N/A
38 TownePlace Suites by Marriott - Eden Prairie N/A N/A N/A N/A
39 Brookside Plaza Shopping Center N/A N/A N/A N/A
40 The Sun City Shopping Center N/A N/A N/A N/A
41 The Judson House N/A N/A N/A N/A
42 Long Lake Office Center N/A N/A N/A N/A
43 Copper Beech Townhomes II $1,035 N/A N/A N/A
44 Town & Country Business Park N/A N/A N/A N/A
45 Four Winds Apartments $625 N/A N/A N/A
46 Allora Way Apartments N/A N/A N/A N/A
47 Sycamore Park Apartments N/A N/A N/A N/A
48 Promotions Distributor Services Corp. (1B) N/A N/A N/A N/A
49 Production Distribution Services Corp. (1B) N/A N/A N/A N/A
50 Alltel Office Building N/A N/A N/A N/A
51 Winn Medical Center N/A N/A N/A N/A
52 56-62 Canal Street N/A N/A N/A N/A
53 16 Herbert Street N/A N/A N/A N/A
54 Beau Rivage Apartments N/A N/A N/A N/A
55 Tierra Corners Shopping Center N/A N/A N/A N/A
56 Two Technology Way N/A N/A N/A N/A
57 Crossroads Shopping Center N/A N/A N/A N/A
58 County Mall N/A N/A N/A N/A
59 The Radisson Graystone Castle Hotel N/A N/A N/A N/A
60 Palms East Apartments N/A N/A N/A N/A
61 North Creek Condominiums N/A N/A N/A N/A
62 Fallbrook Office Park N/A N/A N/A N/A
63 Miami One Office Building N/A N/A N/A N/A
64 Huntington Place Apartments $470 N/A N/A N/A
65 Comfort Inn-South Burlington-VT N/A N/A N/A N/A
66 City Centre Building N/A N/A N/A N/A
67 Country Village Apartments $705 N/A N/A N/A
68 185 Commerce Drive N/A N/A N/A N/A
69 The South Point Apartments N/A N/A N/A N/A
70 Copper Beech Townhomes I $1,060 N/A N/A N/A
71 Southbridge Office Buildings N/A N/A N/A N/A
72 Pro-Met, Inc. N/A N/A N/A N/A
73 Super Food Town Plaza N/A N/A N/A N/A
74 The Hamptons at Central Apartments $930 N/A N/A N/A
75 Southwest Plaza N/A N/A N/A N/A
76 The Basin Street Complex N/A N/A N/A N/A
77 Waterford Plaza N/A N/A N/A N/A
78 Cerritos State Road Industrial Park N/A N/A N/A N/A
79 Chambers Center Shopping Center N/A N/A N/A N/A
80 Hackettstown Commerce Park Building I N/A N/A N/A N/A
81 Nationsbank Service Center N/A N/A N/A N/A
82 Freeport Self Storage N/A N/A N/A N/A
83 The Virginia Highland Loan
83a 842 North Highland Avenue N/A N/A N/A N/A
83b 1052-1062 St. Charles Avenue N/A N/A N/A N/A
83c 784-792 North Highland Avenue N/A N/A N/A N/A
83d 776-778 North Highland Avenue N/A N/A N/A N/A
84 Dolphin Self Storage (1C) N/A N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A N/A
87 Stonehurst Court Apartments N/A N/A N/A N/A
88 The River Meadows Mobile Home Park N/A N/A N/A N/A
89 Maplewood Apartments (1D) N/A N/A N/A N/A
90 Columbus Village Apartments (1D) N/A N/A N/A N/A
91 Dominion Center N/A N/A N/A N/A
92 The Argyle Apartments N/A N/A N/A N/A
93 Guthrie Medical Center N/A N/A N/A N/A
94 The Hope Group Corporate Headquarters N/A N/A N/A N/A
95 SavMax Foods N/A N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Major Major Major
Tenant #1 Tenant #1 Tenant #1 Lease
# Property Name Name Sq. Ft. Expiration Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28 Selma Square Shopping Center Fleming 49,950 4/1/14
29 Holmdel Corporate Plaza/One Misco Plaza Misco America, Inc. 51,269 2/28/02
30 Commons on Sanger Apartments N/A N/A N/A
31 The Marbrisa Apartments N/A N/A N/A
32 Point of Pines Apartments N/A N/A N/A
33 Tammaron Village Apartments N/A N/A N/A
34 TownePlace Suites by Marriott - Brookfield N/A N/A N/A
35 Pittsfield Plaza TJX Companies, Inc. 35,000 11/30/07
36 Hurstbourne Office Park The Kroger Co. 23,799 3/31/04
37 Trails East Apartments N/A N/A N/A
38 TownePlace Suites by Marriott - Eden Prairie N/A N/A N/A
39 Brookside Plaza Shopping Center No Frills Supermarket 79,220 2/4/11
40 The Sun City Shopping Center Sun City Gift & Hardware Inc. 6,650 5/31/00
41 The Judson House N/A N/A N/A
42 Long Lake Office Center American Express 30,803 4/30/02
43 Copper Beech Townhomes II N/A N/A N/A
44 Town & Country Business Park System Technology Assoc. Inc. 59,892 11/7/05
45 Four Winds Apartments N/A N/A N/A
46 Allora Way Apartments N/A N/A N/A
47 Sycamore Park Apartments N/A N/A N/A
48 Promotions Distributor Services Corp. (1B) Promotions Distributor Services Corp. 68,403 5/31/14
49 Production Distribution Services Corp. (1B) Promotions Distributor Services Corp. 43,850 5/31/14
50 Alltel Office Building Alltel 20,920 10/31/02
51 Winn Medical Center Bio-Medical Application 13,433 11/30/05
52 56-62 Canal Street Advantage School 21,360 1/31/08
53 16 Herbert Street General Business 141,529 4/1/05
54 Beau Rivage Apartments N/A N/A N/A
55 Tierra Corners Shopping Center Pep Boys (Manny, Moe, Jack) 18,560 12/31/19
56 Two Technology Way Advanced Instruments, Inc. 46,701 6/30/07
57 Crossroads Shopping Center Kinko's, Inc. 5,000 2/7/09
58 County Mall TSI Norwalk 17,587 5/1/14
59 The Radisson Graystone Castle Hotel N/A N/A N/A
60 Palms East Apartments N/A N/A N/A
61 North Creek Condominiums N/A N/A N/A
62 Fallbrook Office Park Fallbrook Mortgage Corp. 9,871 11/1/03
63 Miami One Office Building Tradco, LTD., Inc. 10,271 3/31/06
64 Huntington Place Apartments N/A N/A N/A
65 Comfort Inn-South Burlington-VT N/A N/A N/A
66 City Centre Building Colorado Information Technologies, Inc. 5,450 6/30/04
67 Country Village Apartments N/A N/A N/A
68 185 Commerce Drive Decision Data 11,754 6/14/03
69 The South Point Apartments N/A N/A N/A
70 Copper Beech Townhomes I N/A N/A N/A
71 Southbridge Office Buildings St. Helena Club Spa Associates, LP 7,495 9/1/07
72 Pro-Met, Inc. Promet 92,000 2/28/08
73 Super Food Town Plaza Seaway Food Town, Inc. 61,600 5/31/06
74 The Hamptons at Central Apartments N/A N/A N/A
75 Southwest Plaza Hollywood Video 7,910 5/31/06
76 The Basin Street Complex Lycoming-Clinton Joinder Board 38,042 6/1/01
77 Waterford Plaza Petco Animal Supplies, Inc. 13,498 1/31/10
78 Cerritos State Road Industrial Park N/A N/A N/A
79 Chambers Center Shopping Center It's All 99 Cents 10,246 11/30/03
80 Hackettstown Commerce Park Building I Andrex, Inc. 18,200 3/31/02
81 Nationsbank Service Center Nationsbank 39,978 4/15/04
82 Freeport Self Storage Dentaco Corp. 12,900 3/31/06
83 The Virginia Highland Loan
83a 842 North Highland Avenue Virginia Highland Primary Care 7,390 2/1/00
83b 1052-1062 St. Charles Avenue Ten Thousand Village 2,016 9/1/04
83c 784-792 North Highland Avenue Chameleon Trading, Inc. 3,559 6/1/04
83d 776-778 North Highland Avenue Van Michael Salon 2,340 7/1/02
84 Dolphin Self Storage (1C) N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A
87 Stonehurst Court Apartments N/A N/A N/A
88 The River Meadows Mobile Home Park N/A N/A N/A
89 Maplewood Apartments (1D) N/A N/A N/A
90 Columbus Village Apartments (1D) N/A N/A N/A
91 Dominion Center American Transportation 9,000 7/1/03
92 The Argyle Apartments N/A N/A N/A
93 Guthrie Medical Center Guthrie Clinic Ltd - Family Practice 17,500 9/30/10
94 The Hope Group Corporate Headquarters The Hope Group Corporation 61,280 3/31/19
95 SavMax Foods SavMax Foods, Inc. 49,050 8/14/12
<CAPTION>
Major Major Major
Tenant #2 Tenant #2 Tenant #2 Lease
# Property Name Name Sq. Ft. Expiration Date
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28 Selma Square Shopping Center N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza Lucent Technologies, Inc. 20,599 8/31/01
30 Commons on Sanger Apartments N/A N/A N/A
31 The Marbrisa Apartments N/A N/A N/A
32 Point of Pines Apartments N/A N/A N/A
33 Tammaron Village Apartments N/A N/A N/A
34 TownePlace Suites by Marriott - Brookfield N/A N/A N/A
35 Pittsfield Plaza Home Goods, Inc. 24,808 1/31/09
36 Hurstbourne Office Park Dept. Of Corrections 17,308 6/30/04
37 Trails East Apartments N/A N/A N/A
38 TownePlace Suites by Marriott - Eden Prairie N/A N/A N/A
39 Brookside Plaza Shopping Center N/A N/A N/A
40 The Sun City Shopping Center Boston Billie's Restaurant 6,019 9/30/02
41 The Judson House N/A N/A N/A
42 Long Lake Office Center Control Corporation 11,887 3/31/01
43 Copper Beech Townhomes II N/A N/A N/A
44 Town & Country Business Park United States Of America 8,050 6/29/05
45 Four Winds Apartments N/A N/A N/A
46 Allora Way Apartments N/A N/A N/A
47 Sycamore Park Apartments N/A N/A N/A
48 Promotions Distributor Services Corp. (1B) N/A N/A N/A
49 Production Distribution Services Corp. (1B) N/A N/A N/A
50 Alltel Office Building RVP 12,059 12/31/01
51 Winn Medical Center Eye Physicians & Surgeons 13,295 1/31/04
52 56-62 Canal Street AIDS Action 9,385 2/28/06
53 16 Herbert Street Tile & Stone 47,115 9/1/01
54 Beau Rivage Apartments N/A N/A N/A
55 Tierra Corners Shopping Center Krauses Furniture 10,600 3/31/09
56 Two Technology Way Analog Devices, Inc. 29,675 6/30/07
57 Crossroads Shopping Center Shoe Factory 2,960 2/25/04
58 County Mall Big M 10,000 1/1/04
59 The Radisson Graystone Castle Hotel N/A N/A N/A
60 Palms East Apartments N/A N/A N/A
61 North Creek Condominiums N/A N/A N/A
62 Fallbrook Office Park N/A N/A N/A
63 Miami One Office Building Systeam of Florida 6,417 4/30/03
64 Huntington Place Apartments N/A N/A N/A
65 Comfort Inn-South Burlington-VT N/A N/A N/A
66 City Centre Building Commonwealth Title 3,953 8/14/03
67 Country Village Apartments N/A N/A N/A
68 185 Commerce Drive Decision Data 9,579 6/14/03
69 The South Point Apartments N/A N/A N/A
70 Copper Beech Townhomes I N/A N/A N/A
71 Southbridge Office Buildings St. Helena Hospital 3,639 9/1/02
72 Pro-Met, Inc. N/A N/A N/A
73 Super Food Town Plaza Staples Superstore East, Inc 23,925 5/31/13
74 The Hamptons at Central Apartments N/A N/A N/A
75 Southwest Plaza Great Western 3,520 7/24/01
76 The Basin Street Complex N/A N/A N/A
77 Waterford Plaza Ritz Camera Center, Inc. 7,033 6/30/03
78 Cerritos State Road Industrial Park N/A N/A N/A
79 Chambers Center Shopping Center Blockbuster Video #08081 8,000 12/31/01
80 Hackettstown Commerce Park Building I Union Stove Works, Inc. 15,800 6/30/03
81 Nationsbank Service Center N/A N/A N/A
82 Freeport Self Storage N/A N/A N/A
83 The Virginia Highland Loan
83a 842 North Highland Avenue American Roadhouse 3,494 3/1/06
83b 1052-1062 St. Charles Avenue Bill and Laraine Devenie 1,904 7/1/01
83c 784-792 North Highland Avenue Bill Hallman Boutique 1,178 10/1/03
83d 776-778 North Highland Avenue Hallman Shoes 1,472 9/1/03
84 Dolphin Self Storage (1C) N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A
87 Stonehurst Court Apartments N/A N/A N/A
88 The River Meadows Mobile Home Park N/A N/A N/A
89 Maplewood Apartments (1D) N/A N/A N/A
90 Columbus Village Apartments (1D) N/A N/A N/A
91 Dominion Center Dance Etc. 5,377 12/1/02
92 The Argyle Apartments N/A N/A N/A
93 Guthrie Medical Center Guthrie Clinic-Ophthamology 11,000 7/1/19
94 The Hope Group Corporate Headquarters N/A N/A N/A
95 SavMax Foods N/A N/A N/A
<CAPTION>
Major Major Major
Tenant #3 Tenant #3 Tenant #3 Lease
# Property Name Name Sq. Ft. Expiration Date
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28 Selma Square Shopping Center N/A N/A N/A
29 Holmdel Corporate Plaza/One Misco Plaza Linden Trading Company 11,653 3/31/03
30 Commons on Sanger Apartments N/A N/A N/A
31 The Marbrisa Apartments N/A N/A N/A
32 Point of Pines Apartments N/A N/A N/A
33 Tammaron Village Apartments N/A N/A N/A
34 TownePlace Suites by Marriott - Brookfield N/A N/A N/A
35 Pittsfield Plaza Pep Boys 22,990 8/31/18
36 Hurstbourne Office Park Board Of Nursing 11,284 6/30/02
37 Trails East Apartments N/A N/A N/A
38 TownePlace Suites by Marriott - Eden Prairie N/A N/A N/A
39 Brookside Plaza Shopping Center N/A N/A N/A
40 The Sun City Shopping Center Sun City Medical-Dental Center 5,482 5/31/04
41 The Judson House N/A N/A N/A
42 Long Lake Office Center Health Dimensions 6,101 9/14/03
43 Copper Beech Townhomes II N/A N/A N/A
44 Town & Country Business Park AFBA Industrial Bank 6,303 3/31/03
45 Four Winds Apartments N/A N/A N/A
46 Allora Way Apartments N/A N/A N/A
47 Sycamore Park Apartments N/A N/A N/A
48 Promotions Distributor Services Corp. (1B) N/A N/A N/A
49 Production Distribution Services Corp. (1B) N/A N/A N/A
50 Alltel Office Building TWC 6,570 1/31/02
51 Winn Medical Center Central Home Health 10,794 8/31/01
52 56-62 Canal Street Landauer Assoc. 7,120 1/31/04
53 16 Herbert Street Tru Mask 38,627 MTM
54 Beau Rivage Apartments N/A N/A N/A
55 Tierra Corners Shopping Center Simmons Beautyrest 2,500 2/28/09
56 Two Technology Way N/A N/A N/A
57 Crossroads Shopping Center Payless Shoes #3442 2,934 2/10/09
58 County Mall Chinese Buffett 4,440 9/1/01
59 The Radisson Graystone Castle Hotel N/A N/A N/A
60 Palms East Apartments N/A N/A N/A
61 North Creek Condominiums N/A N/A N/A
62 Fallbrook Office Park N/A N/A N/A
63 Miami One Office Building N/A N/A N/A
64 Huntington Place Apartments N/A N/A N/A
65 Comfort Inn-South Burlington-VT N/A N/A N/A
66 City Centre Building Burger King Corporate 3,640 3/31/04
67 Country Village Apartments N/A N/A N/A
68 185 Commerce Drive Kinko's 8,911 6/30/03
69 The South Point Apartments N/A N/A N/A
70 Copper Beech Townhomes I N/A N/A N/A
71 Southbridge Office Buildings California Medical Foundation, Inc. 2,756 12/1/02
72 Pro-Met, Inc. N/A N/A N/A
73 Super Food Town Plaza Shastar, Inc. 4,900 4/30/04
74 The Hamptons at Central Apartments N/A N/A N/A
75 Southwest Plaza National Petcare 3,200 1/31/00
76 The Basin Street Complex N/A N/A N/A
77 Waterford Plaza N/A N/A N/A
78 Cerritos State Road Industrial Park N/A N/A N/A
79 Chambers Center Shopping Center Imagination Plus 6,400 1/31/00
80 Hackettstown Commerce Park Building I Yamakazi Tableware, Inc. 7,800 5/31/00
81 Nationsbank Service Center N/A N/A N/A
82 Freeport Self Storage N/A N/A N/A
83 The Virginia Highland Loan
83a 842 North Highland Avenue Harper's Bazar Trading Company 2,227 9/1/01
83b 1052-1062 St. Charles Avenue Fox Glove & Ivy, LLC 1,800 4/1/09
83c 784-792 North Highland Avenue Khamit Kinks 951 6/1/00
83d 776-778 North Highland Avenue N/A N/A N/A
84 Dolphin Self Storage (1C) N/A N/A N/A
85 Kangaroom Mini-Storage (1C) N/A N/A N/A
86 Airport Self Storage (1C) N/A N/A N/A
87 Stonehurst Court Apartments N/A N/A N/A
88 The River Meadows Mobile Home Park N/A N/A N/A
89 Maplewood Apartments (1D) N/A N/A N/A
90 Columbus Village Apartments (1D) N/A N/A N/A
91 Dominion Center Southern Financial Bank 3,060 12/1/03
92 The Argyle Apartments N/A N/A N/A
93 Guthrie Medical Center Guthrie Clinic-Ambulatory 6,500 12/31/20
94 The Hope Group Corporate Headquarters N/A N/A N/A
95 SavMax Foods N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
# Property Name Management Company
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
96 Sweetbriar Apartments Century 21 Nachman Realty
97 Dobbin Square K & M Development Corp.
98 Bayside Village Apartments East Suburban Management I
99 Wickshire On Lane Apartments Strong Properties, Inc
100 Sun City Plaza H.S. Brown Associates
101 Village Green Apartments Irwin R. Rose & Company
102 Lot 1 of Silver Creek Business Park Ronald J. Sharp & Associates, Inc.
103 The Continental House Apartments John Holmes & Company
104 West End Shopping Center Vannland LTD
105 Wyle Laboratories Owner Managed
106 Thunderbird Professional Center Plaza del Rio Property Management
107 Petsmart at the Crossroads Center Westar Management, Inc.
108 Meadow Estates Apartments Holste & Associates, Inc.
109 Comfort Inn-Weeki Wachee-FL Maya Motels, Inc.
110 Springfield Place Office Building The Simpson Companies
111 Okatibbee Ridge Apartments The Pueblo Group, Inc.
112 The Center Place Apartments Wells Asset Management
113 Thompson Executive Center Commercial Realty of Pinellas, Inc.
114 CVS Pharmacy - Atlanta, GA (2) Owner Managed
115 Staples at Tri-County Plaza Glimcher Group, Inc.
116 Valley-Grove Apartments SMC Management Corporation
117 Palm Ridge Shopping Center Business Real Estate Management Company
118 Simtec Building Chalmers Property Company
119 Eckerd's Drug Store-Salina-NY Eckerd Drug Store
120 Hawthorn Duplexes First Management Company
121 Village Square Apartments Income Property Management Co.
122 Pine Terrace Apartments RAS Management
123 Pentagon Garden Apartments Patricia Jordan
124 Menlo Townhomes Top City Management
125 Heritage House II Apartments Chase National Management Corporation
126 General Power Warehouse Owner Managed
127 Century Hills Shopping Center CSM Corporation
128 Cayuga Lake Estates (1E) Owner Managed
129 Erin Estates (1E) Owner Managed
130 River Park Village Westwood Financial Corp.
131 Eckerd's Drug Store-Clay-NY Leroy Cowen
132 Granada Apartments Western Management Associates
133 Hampton Garden Apartments The Galman Group
134 Berkley Flats Nolan Real Estate
135 King's Court Apartments Castlegate Apartments, LLC
136 Legacy Business Park Medical Office Bldg. Priority One Commercial
137 Bel Air Square MacKenzie Management Company
138 The Roussos Office Building Realty Management, Inc.
139 The Brookwood Apartments WTA Management
140 CVS Drugstore Lee & Urbahns Company
141 Castlegate II Sycamore Group, LLC
142 Eagle - Vail Commercial Service Center Southwestern Investment Group, LLC
143 Martins Crossing Apartments Billy Pettit
144 Smithville Self Storage Long Property Management Co.
145 The Oak Grove Apartments Ui Rivera
146 Ashford Hill Apartments First Phillips, Inc.
147 Half Moon Bay Office Building Marcus & Millichap
148 University Park Retail Center RBI Management Services, LLC
149 2650 Franklin Apartments Owner Managed
150 Salomon Smith Barney Arnold Gewirtz
151 Meadow Glen Townhomes Hurt & Stell Management
152 3100 Building Clarkson Management
153 Brookhollow Apartments Leinbach Company
154 Tropical Isle Mayport Repair, Inc.
155 1001 Pacific Buidling NW Real Estate Property Management
156 Action Wear USA/Peerless Maintenance Damavandi Capital
157 Rockville Plaza Lee & Urbahns Company
158 Existing Shopping Center Landmark Properties, Inc.
159 Silverthorn Court Brown & Associates, Ltd.
160 Campus View Apartments Premier Properties
161 State Street Industrial Park Anndon Company
162 DeWolfe Plaza First Phillips Inc.
163 Midland Self Storage Midland Self-Storage, LTD
164 Lake Pointe Condominiums Owner Managed
165 Sandalfoot Pointe Apartments Real Estate Property Management
166 Canterberry Apartments Chamberlain & Associates
167 Lakeshore Villa Apartments Owner Managed
<CAPTION>
# Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
96 Sweetbriar Apartments 1585 Briarfield Road Hampton
97 Dobbin Square 6480 Dobbin Center Way Columbia
98 Bayside Village Apartments 8855 North Port Washington Road Bayside
99 Wickshire On Lane Apartments 1570 Lane Avenue South Jacksonville
100 Sun City Plaza 26100 Newport Road Sun City
101 Village Green Apartments 201 South First Street San Marcos
102 Lot 1 of Silver Creek Business Park 6400 and 6410 Business Park Loop Road Park City
103 The Continental House Apartments 4848 Alcott Street Dallas
104 West End Shopping Center 124 B West End Avenue Farragut
105 Wyle Laboratories 3200 Magruder Boulevard Hampton
106 Thunderbird Professional Center 13760 North 93rd Avenue Peoria
107 Petsmart at the Crossroads Center 2306 Bradley Road Santa Maria
108 Meadow Estates Apartments 8515 Hammerly Boulevard Houston
109 Comfort Inn-Weeki Wachee-FL 9373 Cortez Boulevard Weeki Wachee
110 Springfield Place Office Building 6506 Loisdale Road Springfield
111 Okatibbee Ridge Apartments 1719 Highway 19 North Meridian
112 The Center Place Apartments 3005 South Center Street Arlington
113 Thompson Executive Center 120 South Myrtle Avenue Clearwater
114 CVS Pharmacy - Atlanta, GA (2) 3615 Clairmont Road Atlanta
115 Staples at Tri-County Plaza 796 Tri-County Plaza Rostraver Township
116 Valley-Grove Apartments 722-744 Valley Street & 733-739 Grove Street Manchester
117 Palm Ridge Shopping Center 4350, 4370 and 4380 Palm Avenue San Diego
118 Simtec Building 10356-10376 Battleview Parkway Manassas
119 Eckerd's Drug Store-Salina-NY 701-707 Old Liverpool Road Salina
120 Hawthorn Duplexes 2300 Hawthorn Lawrence
121 Village Square Apartments 1625 Southeast Roberts Avenue Gresham
122 Pine Terrace Apartments 1912 North Seventh Street West Monroe
123 Pentagon Garden Apartments 46 West New Haven Avenue Melbourne
124 Menlo Townhomes 2726-2816 Menlo Avenue Los Angeles
125 Heritage House II Apartments 1307 North Meridian Avenue Oklahoma City
126 General Power Warehouse 2625 International Street Columbus
127 Century Hills Shopping Center 2670-2730 County Road E East White Bear Lake
128 Cayuga Lake Estates (1E) Tollgate Hill Road & State Highway 38 Locke and Moravia
129 Erin Estates (1E) 1356 Breesport Road Erin
130 River Park Village 5075 and 5095 North La Canada Road Tuscon
131 Eckerd's Drug Store-Clay-NY 4975-4977 Bear Road Clay
132 Granada Apartments 1731-1759 Bowling Avenue Taylorsville
133 Hampton Garden Apartments 13451 Philmont Avenue Philadelphia
134 Berkley Flats 1101-1127 Indiana/1100-1124 Mississippi Lawrence
135 King's Court Apartments 2888 Dougherty Drive Baton Rouge
136 Legacy Business Park Medical Office Bldg. 1701-2 and 1701-3 Green Valley Parkway Henderson
137 Bel Air Square 260 Gateway Drive Bel Air
138 The Roussos Office Building 5115 South Decatur Boulevard Las Vegas
139 The Brookwood Apartments 1601 Valley View College Station
140 CVS Drugstore 2419 Nichol Avenue Anderson
141 Castlegate II 9231-9273 Castlegate Drive Indianapolis
142 Eagle - Vail Commercial Service Center 4078 US Highway 6/24 Eagle-Vail
143 Martins Crossing Apartments 10144 Henderson Drive Covington
144 Smithville Self Storage 36 New York Road Smithville
145 The Oak Grove Apartments 3625 South First Street Austin
146 Ashford Hill Apartments 95 Varga Road Ashford
147 Half Moon Bay Office Building 248 Main Street Half Moon Bay
148 University Park Retail Center 960 West University Drive Tempe
149 2650 Franklin Apartments 2650 Franklin Street San Francisco
150 Salomon Smith Barney 290-296 Merrick Road Rockville Centre
151 Meadow Glen Townhomes 5534 and 5569 93rd Street Lubbock
152 3100 Building 3100 South University Boulevard Jacksonville
153 Brookhollow Apartments 965 Biloxi Drive Norman
154 Tropical Isle 15175 Stringfellow Road Bokeelia
155 1001 Pacific Buidling 1001 Pacific Avenue Tacoma
156 Action Wear USA/Peerless Maintenance 10537 Glenoaks Boulevard Pacoima
157 Rockville Plaza 50-150 (except 118) South Girls School Road Indianapolis
158 Existing Shopping Center 4848 Route 8, William Flynn Highway Hampton Township
159 Silverthorn Court 167 Meraly Way Silverthorne
160 Campus View Apartments 2030 South Dmacc Boulevard Ankeny
161 State Street Industrial Park 1750 East State Street Eagle
162 DeWolfe Plaza 337 Amherst Street Nashua
163 Midland Self Storage 3600 and 3610 Big Spring Street Midland
164 Lake Pointe Condominiums 2181-2255 Piccardo Circle Stockton
165 Sandalfoot Pointe Apartments 9410 Southwest 8th Street Boca Raton
166 Canterberry Apartments 2433 West Campbell Avenue Phoenix
167 Lakeshore Villa Apartments 206 Curve Drive Monroe
<CAPTION>
Zip
# Property Name County State Code Property Type
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments Hampton VA 23666 Multifamily
97 Dobbin Square Howard MD 21045 Retail
98 Bayside Village Apartments Milwaukee WI 53211 Multifamily
99 Wickshire On Lane Apartments Duval FL 32210 Multifamily
100 Sun City Plaza Riverside CA 92586 Retail
101 Village Green Apartments Hays TX 78666 Multifamily
102 Lot 1 of Silver Creek Business Park Summit UT 84060 Industrial
103 The Continental House Apartments Dallas TX 75204 Multifamily
104 West End Shopping Center Knox TN 37922 Retail
105 Wyle Laboratories Hampton City VA 23666 Industrial
106 Thunderbird Professional Center Maricopa AZ 85381 Office
107 Petsmart at the Crossroads Center Santa Barbara CA 93458 Retail
108 Meadow Estates Apartments Harris TX 77055 Multifamily
109 Comfort Inn-Weeki Wachee-FL Hernando FL 34613 Hotel
110 Springfield Place Office Building Fairfax VA 22150 Office
111 Okatibbee Ridge Apartments Lauderdale MS 39302 Multifamily
112 The Center Place Apartments Tarrant TX 76014 Multifamily
113 Thompson Executive Center Pinellas FL 33756 Office
114 CVS Pharmacy - Atlanta, GA (2) DeKalb GA 30319 CTL
115 Staples at Tri-County Plaza Westmoreland PA 15012 Retail
116 Valley-Grove Apartments Hillsborough NH 03103 Multifamily
117 Palm Ridge Shopping Center San Diego CA 92154 Retail
118 Simtec Building Prince William VA 22110 Office
119 Eckerd's Drug Store-Salina-NY Onondaga NY 13088 Retail
120 Hawthorn Duplexes Douglas KS 66049 Multifamily
121 Village Square Apartments Multnomah OR 97080 Multifamily
122 Pine Terrace Apartments Ouachita Parish LA 71291 Multifamily
123 Pentagon Garden Apartments Brevard FL 32901 Multifamily
124 Menlo Townhomes Los Angeles CA 90007 Multifamily
125 Heritage House II Apartments Oklahoma OK 73107 Multifamily
126 General Power Warehouse Franklin OH 43228 Industrial
127 Century Hills Shopping Center Ramsey MN 55110 Retail
128 Cayuga Lake Estates (1E) Cayuga NY 13118 Manufactured Housing
129 Erin Estates (1E) Chemung NY 14838 Manufactured Housing
130 River Park Village Pima AZ 85704 Retail
131 Eckerd's Drug Store-Clay-NY Onondaga NY 13088 Retail
132 Granada Apartments Salt Lake UT 84119 Multifamily
133 Hampton Garden Apartments Philadelphia PA 19116 Multifamily
134 Berkley Flats Douglas KS 66044 Multifamily
135 King's Court Apartments East Baton Rouge Parish LA 70805 Multifamily
136 Legacy Business Park Medical Office Bldg. Clark NV 89014 Office
137 Bel Air Square Harford MD 21014 Office
138 The Roussos Office Building Clark NV 89118 Office
139 The Brookwood Apartments Brazos TX 77840 Multifamily
140 CVS Drugstore Madison IN 46016 Retail
141 Castlegate II Marion IN 46256 Industrial
142 Eagle - Vail Commercial Service Center Eagle CO 81620 Retail
143 Martins Crossing Apartments Newton GA 30015 Multifamily
144 Smithville Self Storage Atlantic NJ 08201 Self Storage
145 The Oak Grove Apartments Travis TX 78704 Multifamily
146 Ashford Hill Apartments Windham CT 06278 Multifamily
147 Half Moon Bay Office Building San Mateo CA 94019 Office
148 University Park Retail Center Maricopa AZ 85281 Retail
149 2650 Franklin Apartments San Francisco CA 94123 Multifamily
150 Salomon Smith Barney Nassau NY 11570 Office
151 Meadow Glen Townhomes Lubbock TX 79424 Multifamily
152 3100 Building Duval FL 32207 Office
153 Brookhollow Apartments Cleveland OK 73071 Multifamily
154 Tropical Isle Lee FL 33922 Manufactured Housing
155 1001 Pacific Buidling Pierce WA 98402 Office
156 Action Wear USA/Peerless Maintenance Los Angeles CA 91331 Industrial
157 Rockville Plaza Marion IN 46231 Retail
158 Existing Shopping Center Allegheny PA 15101 Retail
159 Silverthorn Court Summit CO 80498 Retail
160 Campus View Apartments Polk IA 50021 Multifamily
161 State Street Industrial Park Ada ID 83616 Industrial
162 DeWolfe Plaza Hillsborough NH 03063 Mixed Use
163 Midland Self Storage Midland TX 79705 Self Storage
164 Lake Pointe Condominiums San Joaquin CA 95207 Multifamily
165 Sandalfoot Pointe Apartments Palm Beach FL 33428 Multifamily
166 Canterberry Apartments Maricopa AZ 85015 Multifamily
167 Lakeshore Villa Apartments Ouachita LA 71203 Multifamily
<CAPTION>
Units/
Sq. Ft./
Mortgage Rooms/
# Property Name Property Sub-type Loan Seller Pads
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
96 Sweetbriar Apartments Midland 180
97 Dobbin Square Unanchored Midland 24,295
98 Bayside Village Apartments Midland 48
99 Wickshire On Lane Apartments Midland 123
100 Sun City Plaza Shadow Anchored Midland 14,200
101 Village Green Apartments Midland 125
102 Lot 1 of Silver Creek Business Park Midland 29,704
103 The Continental House Apartments Midland 170
104 West End Shopping Center Unanchored Midland 54,822
105 Wyle Laboratories Column 59,125
106 Thunderbird Professional Center Midland 25,801
107 Petsmart at the Crossroads Center Shadow Anchored Midland 26,120
108 Meadow Estates Apartments Midland 188
109 Comfort Inn-Weeki Wachee-FL Limited Service Midland 68
110 Springfield Place Office Building Midland 40,663
111 Okatibbee Ridge Apartments Midland 104
112 The Center Place Apartments Midland 100
113 Thompson Executive Center Midland 38,305
114 CVS Pharmacy - Atlanta, GA (2) Column 10,125
115 Staples at Tri-County Plaza Anchored Midland 24,049
116 Valley-Grove Apartments Midland 96
117 Palm Ridge Shopping Center Unanchored Midland 27,600
118 Simtec Building Midland 39,091
119 Eckerd's Drug Store-Salina-NY Anchored Midland 11,317
120 Hawthorn Duplexes Midland 38
121 Village Square Apartments Midland 72
122 Pine Terrace Apartments Midland 120
123 Pentagon Garden Apartments Midland 120
124 Menlo Townhomes Midland 25
125 Heritage House II Apartments Midland 110
126 General Power Warehouse Midland 72,000
127 Century Hills Shopping Center Unanchored Column 54,165
128 Cayuga Lake Estates (1E) Column 149
129 Erin Estates (1E) Column 67
130 River Park Village Shadow Anchored Column 16,650
131 Eckerd's Drug Store-Clay-NY Anchored Midland 11,347
132 Granada Apartments Midland 57
133 Hampton Garden Apartments Midland 72
134 Berkley Flats Midland 100
135 King's Court Apartments Midland 183
136 Legacy Business Park Medical Office Bldg. Midland 13,800
137 Bel Air Square Midland 38,016
138 The Roussos Office Building Midland 11,991
139 The Brookwood Apartments Midland 80
140 CVS Drugstore Anchored Midland 10,125
141 Castlegate II Column 45,200
142 Eagle - Vail Commercial Service Center Unanchored Midland 14,350
143 Martins Crossing Apartments Midland 64
144 Smithville Self Storage Midland 50,000
145 The Oak Grove Apartments Midland 62
146 Ashford Hill Apartments Midland 52
147 Half Moon Bay Office Building Midland 8,365
148 University Park Retail Center Unanchored Midland 22,525
149 2650 Franklin Apartments Column 27
150 Salomon Smith Barney Midland 12,290
151 Meadow Glen Townhomes Midland 36
152 3100 Building Midland 42,564
153 Brookhollow Apartments Midland 121
154 Tropical Isle Midland 146
155 1001 Pacific Buidling Midland 34,156
156 Action Wear USA/Peerless Maintenance Midland 36,516
157 Rockville Plaza Unanchored Midland 59,124
158 Existing Shopping Center Unanchored Midland 53,247
159 Silverthorn Court Unanchored Midland 10,030
160 Campus View Apartments Midland 51
161 State Street Industrial Park Midland 52,080
162 DeWolfe Plaza Retail/Office Midland 19,563
163 Midland Self Storage Midland 57,160
164 Lake Pointe Condominiums Column 28
165 Sandalfoot Pointe Apartments Midland 36
166 Canterberry Apartments Midland 76
167 Lakeshore Villa Apartments Column 81
<CAPTION>
Occupancy
Fee Simple/ Year Year Rate at
# Property Name Leasehold Built Renovated U/W (3)
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments Fee 1971 N/A 89%
97 Dobbin Square Fee 1987 N/A 89%
98 Bayside Village Apartments Fee 1973 1995 100%
99 Wickshire On Lane Apartments Fee 1973 N/A 96%
100 Sun City Plaza Fee 1998 N/A 100%
101 Village Green Apartments Fee 1985 1997 98%
102 Lot 1 of Silver Creek Business Park Fee 1997 N/A 91%
103 The Continental House Apartments Fee 1960 1995 98%
104 West End Shopping Center Fee 1984 N/A 100%
105 Wyle Laboratories Fee 1968 1994 100%
106 Thunderbird Professional Center Fee 1990 N/A 100%
107 Petsmart at the Crossroads Center Fee 1999 N/A 100%
108 Meadow Estates Apartments Fee 1970 1991 99%
109 Comfort Inn-Weeki Wachee-FL Fee 1993 N/A N/A
110 Springfield Place Office Building Leasehold 1982 1995 100%
111 Okatibbee Ridge Apartments Fee 1976 N/A 89%
112 The Center Place Apartments Fee 1984 N/A 99%
113 Thompson Executive Center Fee 1983 1998 93%
114 CVS Pharmacy - Atlanta, GA (2) Fee 1998 N/A 100%
115 Staples at Tri-County Plaza Leasehold 1999 N/A 100%
116 Valley-Grove Apartments Fee 1980 N/A 99%
117 Palm Ridge Shopping Center Fee 1980 N/A 91%
118 Simtec Building Fee 1987 N/A 100%
119 Eckerd's Drug Store-Salina-NY Fee 1999 N/A 100%
120 Hawthorn Duplexes Fee 1982 1997 100%
121 Village Square Apartments Fee 1992 N/A 94%
122 Pine Terrace Apartments Fee 1973 1997 99%
123 Pentagon Garden Apartments Fee 1965 1993 98%
124 Menlo Townhomes Fee 1989 N/A 100%
125 Heritage House II Apartments Fee 1972 1995 96%
126 General Power Warehouse Fee 1998 N/A 100%
127 Century Hills Shopping Center Fee 1974 1998 97%
128 Cayuga Lake Estates (1E) Fee 1970 N/A 80%
129 Erin Estates (1E) Fee 1970 N/A 94%
130 River Park Village Fee 1998 N/A 81%
131 Eckerd's Drug Store-Clay-NY Fee 1998 N/A 100%
132 Granada Apartments Fee 1968 1996 93%
133 Hampton Garden Apartments Fee 1962 1992 94%
134 Berkley Flats Fee 1962 1985 95%
135 King's Court Apartments Fee 1968 1987 99%
136 Legacy Business Park Medical Office Bldg. Fee 1996 N/A 100%
137 Bel Air Square Fee 1989 N/A 89%
138 The Roussos Office Building Fee 1998 N/A 100%
139 The Brookwood Apartments Fee 1982 N/A 98%
140 CVS Drugstore Fee 1998 N/A 100%
141 Castlegate II Fee 1986 N/A 100%
142 Eagle - Vail Commercial Service Center Fee 1975 1997 100%
143 Martins Crossing Apartments Fee 1985 1996 95%
144 Smithville Self Storage Fee 1988 N/A 84%
145 The Oak Grove Apartments Fee 1979 N/A 100%
146 Ashford Hill Apartments Fee 1969 1999 100%
147 Half Moon Bay Office Building Fee 1998 N/A 100%
148 University Park Retail Center Fee 1987 N/A 100%
149 2650 Franklin Apartments Fee 1920 1997 100%
150 Salomon Smith Barney Fee/Leasehold 1949 1999 97%
151 Meadow Glen Townhomes Fee 1984 1985 92%
152 3100 Building Fee 1975 N/A 97%
153 Brookhollow Apartments Fee 1972 1990 92%
154 Tropical Isle Fee 1982 N/A 88%
155 1001 Pacific Buidling Fee 1942 1998 100%
156 Action Wear USA/Peerless Maintenance Fee 1987 1998 100%
157 Rockville Plaza Fee 1976 1997 96%
158 Existing Shopping Center Fee 1981 1991 100%
159 Silverthorn Court Fee 1992 1997 100%
160 Campus View Apartments Leasehold 1989 1996 79%
161 State Street Industrial Park Fee 1990 1995 100%
162 DeWolfe Plaza Fee 1982 N/A 100%
163 Midland Self Storage Fee 1975 1992 94%
164 Lake Pointe Condominiums Fee 1984 1999 100%
165 Sandalfoot Pointe Apartments Fee 1986 N/A 100%
166 Canterberry Apartments Fee 1972 N/A 93%
167 Lakeshore Villa Apartments Fee 1974 1999 98%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maturity/
Date of Cut-off ARD
Occupancy Appraised Date LTV Date LTV Underwritable
# Property Name Rate Value Ratio (4) Ratio (4) (5) NOI
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments 8/30/99 3,150,000 79.3% 71.2% 340,601
97 Dobbin Square 8/24/99 3,700,000 67.5% 60.9% 362,619
98 Bayside Village Apartments 7/31/99 3,300,000 74.9% 65.8% 253,416
99 Wickshire On Lane Apartments 10/1/99 2,850,000 86.4% 77.9% 305,414
100 Sun City Plaza 9/1/99 3,420,000 71.6% 64.3% 294,327
101 Village Green Apartments 5/12/99 3,500,000 69.2% 55.5% 306,000
102 Lot 1 of Silver Creek Business Park 8/19/99 3,494,000 68.6% 62.0% 302,656
103 The Continental House Apartments 9/1/99 3,775,000 63.2% 51.6% 327,270
104 West End Shopping Center 6/16/99 3,400,000 69.8% 62.7% 299,116
105 Wyle Laboratories 10/13/99 3,150,000 73.8% 61.8% 315,210
106 Thunderbird Professional Center 8/4/99 2,925,000 79.4% 71.5% 331,730
107 Petsmart at the Crossroads Center 8/1/99 3,600,000 64.5% 58.1% 277,217
108 Meadow Estates Apartments 8/16/99 3,100,000 74.8% 62.1% 349,516
109 Comfort Inn-Weeki Wachee-FL N/A 3,100,000 70.9% 60.6% 455,356
110 Springfield Place Office Building 7/20/99 3,400,000 64.5% 53.2% 389,132
111 Okatibbee Ridge Apartments 6/11/99 2,745,000 78.7% 70.8% 266,744
112 The Center Place Apartments 7/20/99 3,830,000 56.1% 46.2% 326,683
113 Thompson Executive Center 8/24/99 2,890,000 73.6% 66.3% 287,478
114 CVS Pharmacy - Atlanta, GA (2) 6/29/99 2,400,000 87.2% 22.6% 195,311
115 Staples at Tri-County Plaza 9/22/99 2,665,000 78.4% 70.5% 237,701
116 Valley-Grove Apartments 7/1/99 2,700,000 76.3% 62.0% 251,288
117 Palm Ridge Shopping Center 7/12/99 2,625,000 78.3% 65.6% 299,165
118 Simtec Building 8/6/99 2,700,000 74.0% 66.9% 263,563
119 Eckerd's Drug Store-Salina-NY 8/20/99 2,475,000 79.6% 70.9% 205,285
120 Hawthorn Duplexes 6/24/99 2,500,000 78.8% 76.3% 232,354
121 Village Square Apartments 9/7/99 3,770,000 51.0% 45.8% 232,474
122 Pine Terrace Apartments 6/30/99 2,825,000 67.8% 55.2% 267,157
123 Pentagon Garden Apartments 9/20/99 2,900,000 65.4% 54.0% 251,759
124 Menlo Townhomes 9/24/99 2,350,000 79.9% 71.8% 224,127
125 Heritage House II Apartments 6/21/99 2,550,000 73.6% 60.6% 242,965
126 General Power Warehouse 4/2/99 2,500,000 73.7% 60.6% 238,539
127 Century Hills Shopping Center 9/1/99 3,000,000 60.0% 54.7% 301,600
128 Cayuga Lake Estates (1E) 8/1/99 1,450,000 80.0% 72.4% 152,742
129 Erin Estates (1E) 8/1/99 800,000 80.0% 72.4% 79,590
130 River Park Village 9/1/99 2,750,000 65.4% 59.2% 234,624
131 Eckerd's Drug Store-Clay-NY 8/25/99 2,430,000 73.9% 66.0% 201,732
132 Granada Apartments 6/30/99 2,310,000 77.5% 64.0% 221,740
133 Hampton Garden Apartments 6/30/99 2,300,000 77.2% 68.2% 236,089
134 Berkley Flats 6/25/99 2,250,000 78.6% 63.8% 250,152
135 King's Court Apartments 6/22/99 2,365,000 74.7% 62.4% 294,381
136 Legacy Business Park Medical Office Bldg. 4/9/99 2,380,000 74.1% 66.3% 217,930
137 Bel Air Square 6/28/99 2,350,000 74.2% 61.8% 292,706
138 The Roussos Office Building 6/15/99 2,200,000 76.0% 68.6% 219,455
139 The Brookwood Apartments 9/7/99 2,200,000 75.9% 50.2% 224,952
140 CVS Drugstore 9/24/99 2,080,000 79.5% 3.4% 176,743
141 Castlegate II 7/15/99 2,310,000 71.4% 64.4% 221,277
142 Eagle - Vail Commercial Service Center 9/7/99 2,530,000 65.1% 54.6% 216,936
143 Martins Crossing Apartments 7/26/99 2,150,000 76.5% 63.5% 232,698
144 Smithville Self Storage 9/14/99 2,200,000 74.5% 61.7% 210,265
145 The Oak Grove Apartments 9/7/99 2,100,000 78.0% 70.0% 200,497
146 Ashford Hill Apartments 9/2/99 2,100,000 76.7% 68.9% 192,958
147 Half Moon Bay Office Building 6/29/99 2,515,000 63.5% 57.1% 195,846
148 University Park Retail Center 6/1/99 2,100,000 74.7% 62.6% 232,969
149 2650 Franklin Apartments 9/1/99 3,000,000 51.6% 46.5% 193,541
150 Salomon Smith Barney 9/9/99 2,000,000 77.4% 69.5% 176,124
151 Meadow Glen Townhomes 7/30/99 1,980,000 78.1% 70.2% 183,831
152 3100 Building 7/20/99 2,240,000 68.1% 56.8% 226,152
153 Brookhollow Apartments 9/30/99 2,200,000 69.2% 56.8% 275,687
154 Tropical Isle 9/13/99 2,100,000 71.3% 59.9% 196,095
155 1001 Pacific Buidling 8/27/99 2,775,000 54.0% 44.8% 256,792
156 Action Wear USA/Peerless Maintenance 3/1/99 2,150,000 69.6% 62.7% 188,275
157 Rockville Plaza 6/17/99 3,200,000 46.7% 33.4% 228,897
158 Existing Shopping Center 7/14/99 2,300,000 64.1% 52.5% 219,699
159 Silverthorn Court 3/1/99 2,050,000 71.0% 64.0% 186,390
160 Campus View Apartments 4/6/99 2,160,000 66.6% 29.7% 213,719
161 State Street Industrial Park 6/15/99 2,200,000 64.3% 2.1% 198,537
162 DeWolfe Plaza 5/20/99 2,100,000 67.1% 56.2% 202,818
163 Midland Self Storage 7/28/99 2,000,000 69.8% 58.4% 186,227
164 Lake Pointe Condominiums 7/21/99 1,770,000 76.1% 68.7% 161,376
165 Sandalfoot Pointe Apartments 7/14/99 1,850,000 72.4% 64.9% 156,191
166 Canterberry Apartments 8/31/99 1,825,000 71.1% 59.1% 174,873
167 Lakeshore Villa Apartments 7/30/99 1,700,000 76.3% 63.4% 178,160
<CAPTION>
Contractual
Engineering Recurring Contractual
Underwritable Reserve at Replacement Recurring
# Property Name NCF (6) DSCR (7) Origination Reserve LC&TI
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments 295,601 1.33 $69,120 $45,000 N/A
97 Dobbin Square 332,538 1.46 N/A $5,102 N/A
98 Bayside Village Apartments 240,456 1.22 $4,125 $12,960 N/A
99 Wickshire On Lane Apartments 274,664 1.28 N/A $27,675 N/A
100 Sun City Plaza 280,361 1.28 N/A $2,130 N/A
101 Village Green Apartments 274,750 1.29 N/A $31,250 N/A
102 Lot 1 of Silver Creek Business Park 281,367 1.28 N/A $2,976 $12,000
103 The Continental House Apartments 284,770 1.37 $161,780 $42,492 N/A
104 West End Shopping Center 263,483 1.25 N/A $10,964 $25,000
105 Wyle Laboratories 281,886 1.25 N/A N/A N/A
106 Thunderbird Professional Center 286,743 1.37 N/A $5,160 $18,000
107 Petsmart at the Crossroads Center 261,924 1.25 N/A $2,612 N/A
108 Meadow Estates Apartments 302,516 1.39 $140,000 $47,000 N/A
109 Comfort Inn-Weeki Wachee-FL 400,727 1.77 $30,000 4.00% N/A
110 Springfield Place Office Building 321,284 1.59 $25,000 $15,200 N/A
111 Okatibbee Ridge Apartments 240,744 1.25 N/A $26,000 N/A
112 The Center Place Apartments 301,683 1.52 N/A N/A N/A
113 Thompson Executive Center 240,515 1.25 N/A $7,661 $12,000
114 CVS Pharmacy - Atlanta, GA (2) 194,088 1.01 N/A $3,443 N/A
115 Staples at Tri-County Plaza 234,094 1.25 N/A $3,607 N/A
116 Valley-Grove Apartments 227,538 1.29 N/A $23,750 N/A
117 Palm Ridge Shopping Center 271,656 1.41 $175,000 $4,200 $20,400
118 Simtec Building 234,826 1.29 N/A $7,036 $24,000
119 Eckerd's Drug Store-Salina-NY 203,649 1.20 N/A N/A N/A
120 Hawthorn Duplexes 220,954 1.30 N/A N/A N/A
121 Village Square Apartments 214,474 1.25 $49,781 $18,000 N/A
122 Pine Terrace Apartments 236,385 1.43 N/A $30,772 N/A
123 Pentagon Garden Apartments 221,759 1.26 N/A N/A N/A
124 Menlo Townhomes 216,627 1.29 N/A $7,500 N/A
125 Heritage House II Apartments 215,215 1.25 $33,000 N/A N/A
126 General Power Warehouse 209,893 1.25 N/A $7,200 N/A
127 Century Hills Shopping Center 249,796 1.46 N/A N/A $12,000
128 Cayuga Lake Estates (1E) 145,292 1.34 N/A N/A N/A
129 Erin Estates (1E) 76,240 1.34 N/A N/A N/A
130 River Park Village 215,523 1.30 N/A $2,498 N/A
131 Eckerd's Drug Store-Clay-NY 200,096 1.28 N/A $1,636 N/A
132 Granada Apartments 207,409 1.26 $8,750 $14,331 N/A
133 Hampton Garden Apartments 218,089 1.53 N/A $17,320 N/A
134 Berkley Flats 220,152 1.46 N/A $30,000 N/A
135 King's Court Apartments 248,631 1.47 N/A $45,768 N/A
136 Legacy Business Park Medical Office Bldg. 192,875 1.25 N/A $2,760 $12,000
137 Bel Air Square 223,041 1.35 N/A $8,550 $20,000
138 The Roussos Office Building 198,741 1.31 N/A $2,398 $12,000
139 The Brookwood Apartments 200,952 1.33 N/A $24,000 N/A
140 CVS Drugstore 174,718 1.06 N/A $2,025 N/A
141 Castlegate II 192,190 1.28 $500 N/A N/A
142 Eagle - Vail Commercial Service Center 200,893 1.25 N/A $2,153 $10,000
143 Martins Crossing Apartments 216,698 1.40 N/A $16,000 N/A
144 Smithville Self Storage 202,765 1.32 N/A $7,500 N/A
145 The Oak Grove Apartments 184,997 1.27 N/A $15,500 N/A
146 Ashford Hill Apartments 179,958 1.25 N/A $13,000 N/A
147 Half Moon Bay Office Building 181,729 1.27 N/A N/A $9,000
148 University Park Retail Center 208,436 1.38 N/A $3,384 $9,996
149 2650 Franklin Apartments 186,791 1.34 N/A $6,750 N/A
150 Salomon Smith Barney 172,526 1.25 N/A $3,073 N/A
151 Meadow Glen Townhomes 174,831 1.27 N/A $9,000 N/A
152 3100 Building 181,694 1.25 $24,921 $8,513 $24,600
153 Brookhollow Apartments 239,387 1.78 N/A N/A N/A
154 Tropical Isle 186,015 1.27 N/A $10,080 N/A
155 1001 Pacific Buidling 202,052 1.43 N/A $6,889 $25,000
156 Action Wear USA/Peerless Maintenance 168,195 1.25 N/A $3,652 $30,000
157 Rockville Plaza 196,064 1.27 N/A $9,600 $20,000
158 Existing Shopping Center 186,654 1.44 N/A N/A N/A
159 Silverthorn Court 173,325 1.32 N/A $1,505 $11,430
160 Campus View Apartments 198,419 1.36 N/A $15,000 N/A
161 State Street Industrial Park 176,079 1.31 N/A $5,328 N/A
162 DeWolfe Plaza 176,356 1.30 N/A $8,412 $12,000
163 Midland Self Storage 177,257 1.32 N/A $8,574 N/A
164 Lake Pointe Condominiums 154,376 1.26 $82,684 $7,000 N/A
165 Sandalfoot Pointe Apartments 147,191 1.25 N/A $9,000 N/A
166 Canterberry Apartments 155,873 1.27 $48,750 $19,000 N/A
167 Lakeshore Villa Apartments 157,910 1.29 $2,125 $20,250 N/A
<CAPTION>
Underwritable
Recurring Percentage of
Replacement Underwritable Original Cut-off Initial
# Property Name Reserve LC&TI Balance Balance (8) Pool Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments $45,000 N/A 2,500,000 2,497,297 0.3%
97 Dobbin Square $5,102 $24,979 2,500,000 2,495,876 0.3%
98 Bayside Village Apartments $12,960 N/A 2,500,000 2,470,119 0.3%
99 Wickshire On Lane Apartments $30,750 N/A 2,500,000 2,462,845 0.3%
100 Sun City Plaza $2,130 $11,836 2,450,000 2,447,351 0.3%
101 Village Green Apartments $31,250 N/A 2,432,000 2,423,648 0.3%
102 Lot 1 of Silver Creek Business Park $3,267 $18,022 2,400,000 2,397,592 0.3%
103 The Continental House Apartments $42,500 N/A 2,425,000 2,385,151 0.3%
104 West End Shopping Center $8,223 $27,410 2,380,000 2,374,705 0.3%
105 Wyle Laboratories $11,825 $21,499 2,327,900 2,325,656 0.3%
106 Thunderbird Professional Center $5,160 $39,827 2,325,000 2,321,048 0.3%
107 Petsmart at the Crossroads Center $2,612 $12,681 2,325,000 2,321,048 0.3%
108 Meadow Estates Apartments $47,000 N/A 2,325,000 2,318,323 0.3%
109 Comfort Inn-Weeki Wachee-FL 5.00% N/A 2,200,000 2,196,812 0.3%
110 Springfield Place Office Building $15,200 $52,648 2,200,000 2,191,463 0.3%
111 Okatibbee Ridge Apartments $26,000 N/A 2,166,000 2,160,270 0.3%
112 The Center Place Apartments $25,000 N/A 2,150,000 2,147,721 0.3%
113 Thompson Executive Center $7,661 $39,302 2,128,000 2,125,786 0.3%
114 CVS Pharmacy - Atlanta, GA (2) $1,223 N/A 2,095,726 2,092,645 0.3%
115 Staples at Tri-County Plaza $3,607 N/A 2,092,000 2,090,644 0.3%
116 Valley-Grove Apartments $23,750 N/A 2,100,000 2,061,214 0.3%
117 Palm Ridge Shopping Center $4,140 $23,369 2,090,000 2,054,356 0.3%
118 Simtec Building $7,980 $20,757 2,000,000 1,996,725 0.3%
119 Eckerd's Drug Store-Salina-NY $1,636 N/A 1,972,000 1,969,641 0.3%
120 Hawthorn Duplexes $11,400 N/A 2,000,000 1,969,368 0.3%
121 Village Square Apartments $18,000 N/A 1,926,000 1,923,907 0.3%
122 Pine Terrace Apartments $30,772 N/A 1,950,000 1,914,597 0.3%
123 Pentagon Garden Apartments $30,000 N/A 1,900,000 1,897,996 0.2%
124 Menlo Townhomes $7,500 N/A 1,880,000 1,877,979 0.2%
125 Heritage House II Apartments $27,750 N/A 1,883,000 1,875,636 0.2%
126 General Power Warehouse $7,200 $21,446 1,852,000 1,842,944 0.2%
127 Century Hills Shopping Center $8,125 $43,679 1,800,000 1,798,979 0.2%
128 Cayuga Lake Estates (1E) $7,450 N/A 1,170,000 1,169,290 0.2%
129 Erin Estates (1E) $3,350 N/A 630,000 629,618 0.1%
130 River Park Village $2,498 $16,603 1,800,000 1,798,224 0.2%
131 Eckerd's Drug Store-Clay-NY $1,636 N/A 1,800,000 1,796,627 0.2%
132 Granada Apartments $14,331 N/A 1,800,000 1,789,429 0.2%
133 Hampton Garden Apartments $18,000 N/A 1,800,000 1,776,313 0.2%
134 Berkley Flats $30,000 N/A 1,800,000 1,769,317 0.2%
135 King's Court Apartments $45,750 N/A 1,773,750 1,767,438 0.2%
136 Legacy Business Park Medical Office Bldg. $2,760 $22,295 1,769,000 1,762,795 0.2%
137 Bel Air Square $8,550 $61,115 1,750,000 1,743,610 0.2%
138 The Roussos Office Building $2,398 $18,316 1,675,000 1,671,490 0.2%
139 The Brookwood Apartments $24,000 N/A 1,700,000 1,670,131 0.2%
140 CVS Drugstore $2,025 N/A 1,659,000 1,653,637 0.2%
141 Castlegate II $6,780 $22,307 1,650,000 1,648,302 0.2%
142 Eagle - Vail Commercial Service Center $2,156 $13,886 1,650,000 1,647,212 0.2%
143 Martins Crossing Apartments $16,000 N/A 1,650,000 1,645,235 0.2%
144 Smithville Self Storage $7,500 N/A 1,640,000 1,638,312 0.2%
145 The Oak Grove Apartments $15,500 N/A 1,640,000 1,638,203 0.2%
146 Ashford Hill Apartments $13,000 N/A 1,613,000 1,611,256 0.2%
147 Half Moon Bay Office Building $1,673 $12,444 1,600,000 1,596,517 0.2%
148 University Park Retail Center $5,181 $19,352 1,575,000 1,568,326 0.2%
149 2650 Franklin Apartments $6,750 N/A 1,550,000 1,548,361 0.2%
150 Salomon Smith Barney $2,383 $1,215 1,550,000 1,548,297 0.2%
151 Meadow Glen Townhomes $9,000 N/A 1,550,000 1,547,280 0.2%
152 3100 Building $8,513 $35,945 1,529,000 1,524,730 0.2%
153 Brookhollow Apartments $36,300 N/A 1,550,000 1,523,242 0.2%
154 Tropical Isle $10,080 N/A 1,500,000 1,497,486 0.2%
155 1001 Pacific Buidling $6,889 $47,851 1,500,000 1,497,269 0.2%
156 Action Wear USA/Peerless Maintenance $3,652 $16,428 1,500,000 1,496,779 0.2%
157 Rockville Plaza $8,869 $23,964 1,500,000 1,495,425 0.2%
158 Existing Shopping Center $8,258 $24,787 1,500,000 1,473,694 0.2%
159 Silverthorn Court $1,505 $11,634 1,460,000 1,455,274 0.2%
160 Campus View Apartments $15,300 N/A 1,450,000 1,438,558 0.2%
161 State Street Industrial Park $5,112 $17,346 1,450,000 1,413,723 0.2%
162 DeWolfe Plaza $8,412 $18,050 1,415,500 1,409,439 0.2%
163 Midland Self Storage $8,970 N/A 1,400,000 1,396,184 0.2%
164 Lake Pointe Condominiums $7,000 N/A 1,350,000 1,347,734 0.2%
165 Sandalfoot Pointe Apartments $9,000 N/A 1,343,000 1,339,923 0.2%
166 Canterberry Apartments $19,000 N/A 1,300,000 1,297,662 0.2%
167 Lakeshore Villa Apartments $20,250 N/A 1,300,000 1,297,643 0.2%
<CAPTION>
Orig Rem. Orig Rem.
Maturity Amort. Amort. Term to Term to Interest
# Property Name Balance Term Term Maturity (9) Maturity (9) Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments 2,243,851 360 358 120 118 8.140%
97 Dobbin Square 2,255,010 360 357 120 117 8.360%
98 Bayside Village Apartments 2,172,793 360 345 120 105 6.870%
99 Wickshire On Lane Apartments 2,220,610 360 338 120 98 7.740%
100 Sun City Plaza 2,198,973 360 358 120 118 8.140%
101 Village Green Apartments 1,943,433 360 354 180 174 7.980%
102 Lot 1 of Silver Creek Business Park 2,167,646 360 358 120 118 8.410%
103 The Continental House Apartments 1,946,726 300 286 120 106 7.110%
104 West End Shopping Center 2,132,192 360 356 120 116 8.060%
105 Wyle Laboratories 1,947,834 300 299 120 119 8.530%
106 Thunderbird Professional Center 2,091,347 360 357 120 117 8.240%
107 Petsmart at the Crossroads Center 2,091,347 360 357 120 117 8.240%
108 Meadow Estates Apartments 1,924,878 300 297 120 117 8.150%
109 Comfort Inn-Weeki Wachee-FL 1,878,764 300 298 120 118 9.280%
110 Springfield Place Office Building 1,808,191 300 296 120 116 7.890%
111 Okatibbee Ridge Apartments 1,942,684 360 355 120 115 8.100%
112 The Center Place Apartments 1,769,728 300 299 120 119 7.950%
113 Thompson Executive Center 1,916,227 360 358 120 118 8.280%
114 CVS Pharmacy - Atlanta, GA (2) 542,365 276 274 243 241 8.140%
115 Staples at Tri-County Plaza 1,878,612 360 359 120 119 8.170%
116 Valley-Grove Apartments 1,673,554 300 285 120 105 6.880%
117 Palm Ridge Shopping Center 1,722,440 300 283 120 103 7.980%
118 Simtec Building 1,805,249 360 357 120 117 8.390%
119 Eckerd's Drug Store-Salina-NY 1,753,864 360 358 120 118 7.760%
120 Hawthorn Duplexes 1,907,171 360 338 60 38 7.610%
121 Village Square Apartments 1,727,849 360 358 120 118 8.120%
122 Pine Terrace Apartments 1,558,891 300 285 120 105 6.980%
123 Pentagon Garden Apartments 1,565,302 300 299 120 119 7.980%
124 Menlo Townhomes 1,688,170 360 358 120 118 8.160%
125 Heritage House II Apartments 1,545,844 300 296 120 116 7.850%
126 General Power Warehouse 1,516,245 300 295 120 115 7.750%
127 Century Hills Shopping Center 1,640,372 360 359 120 119 8.820%
128 Cayuga Lake Estates (1E) 1,058,433 360 359 120 119 8.490%
129 Erin Estates (1E) 569,926 360 359 120 119 8.490%
130 River Park Village 1,627,962 360 358 120 118 8.470%
131 Eckerd's Drug Store-Clay-NY 1,603,791 360 357 120 117 7.840%
132 Granada Apartments 1,479,058 300 294 120 114 7.880%
133 Hampton Garden Apartments 1,567,788 360 343 120 103 6.940%
134 Berkley Flats 1,435,560 300 286 120 106 6.900%
135 King's Court Apartments 1,476,328 300 296 120 116 8.330%
136 Legacy Business Park Medical Office Bldg. 1,578,803 360 354 120 114 7.900%
137 Bel Air Square 1,451,217 300 296 120 116 8.200%
138 The Roussos Office Building 1,508,372 360 356 120 116 8.280%
139 The Brookwood Apartments 1,104,792 300 284 180 164 7.510%
140 CVS Drugstore 70,561 240 238 240 238 7.890%
141 Castlegate II 1,487,174 360 358 120 118 8.320%
142 Eagle - Vail Commercial Service Center 1,381,709 300 298 120 118 8.550%
143 Martins Crossing Apartments 1,364,875 300 297 120 117 8.120%
144 Smithville Self Storage 1,356,928 300 299 120 119 8.130%
145 The Oak Grove Apartments 1,470,230 360 358 120 118 8.090%
146 Ashford Hill Apartments 1,447,733 360 358 120 118 8.140%
147 Half Moon Bay Office Building 1,436,123 360 356 120 116 8.140%
148 University Park Retail Center 1,315,625 300 295 120 115 8.450%
149 2650 Franklin Apartments 1,393,800 360 358 120 118 8.220%
150 Salomon Smith Barney 1,389,217 360 358 120 118 8.080%
151 Meadow Glen Townhomes 1,389,993 360 357 120 117 8.110%
152 3100 Building 1,271,253 300 297 120 117 8.300%
153 Brookhollow Apartments 1,250,257 300 285 120 105 7.270%
154 Tropical Isle 1,257,486 300 298 120 118 8.590%
155 1001 Pacific Buidling 1,243,136 300 298 120 118 8.180%
156 Action Wear USA/Peerless Maintenance 1,347,948 360 356 120 116 8.190%
157 Rockville Plaza 1,069,199 240 238 120 118 8.300%
158 Existing Shopping Center 1,206,597 300 285 120 105 7.180%
159 Silverthorn Court 1,312,359 360 354 120 114 8.200%
160 Campus View Apartments 640,824 240 235 180 175 8.030%
161 State Street Industrial Park 45,722 240 227 240 227 6.950%
162 DeWolfe Plaza 1,180,739 300 295 120 115 8.400%
163 Midland Self Storage 1,168,243 300 297 120 117 8.430%
164 Lake Pointe Condominiums 1,215,740 360 357 120 117 8.290%
165 Sandalfoot Pointe Apartments 1,200,007 360 356 120 116 7.950%
166 Canterberry Apartments 1,079,220 300 298 120 118 8.240%
167 Lakeshore Villa Apartments 1,077,997 300 298 120 118 8.200%
<CAPTION>
First
Interest Calculation Monthly Payment Maturity
# Property Name (30/360 / Actual/360) Payment Date Date ARD (10) Seasoning
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments Actual/360 18,588.69 11/1/99 10/1/09 2
97 Dobbin Square Actual/360 18,975.34 10/1/99 9/1/09 3
98 Bayside Village Apartments Actual/360 16,414.87 10/1/98 9/1/28 9/1/08 15
99 Wickshire On Lane Apartments Actual/360 17,893.03 3/1/98 2/1/08 22
100 Sun City Plaza Actual/360 18,216.92 11/1/99 10/1/09 2
101 Village Green Apartments Actual/360 17,811.26 7/1/99 6/1/14 6
102 Lot 1 of Silver Creek Business Park Actual/360 18,301.06 11/1/99 10/1/09 2
103 The Continental House Apartments Actual/360 17,309.94 11/1/98 10/1/08 14
104 West End Shopping Center Actual/360 17,563.25 9/1/99 8/1/09 4
105 Wyle Laboratories Actual/360 18,791.97 12/1/99 11/1/09 1
106 Thunderbird Professional Center Actual/360 17,450.61 10/1/99 9/1/09 3
107 Petsmart at the Crossroads Center Actual/360 17,450.61 10/1/99 9/1/09 3
108 Meadow Estates Apartments Actual/360 18,176.37 10/1/99 9/1/09 3
109 Comfort Inn-Weeki Wachee-FL Actual/360 18,885.96 11/1/99 10/1/09 2
110 Springfield Place Office Building Actual/360 16,819.96 9/1/99 8/1/09 4
111 Okatibbee Ridge Apartments Actual/360 16,044.60 8/1/99 7/1/09 5
112 The Center Place Apartments Actual/360 16,522.90 12/1/99 11/1/09 1
113 Thompson Executive Center Actual/360 16,031.86 11/1/99 10/1/09 2
114 CVS Pharmacy - Atlanta, GA (2) Actual/360 15,989.06 11/1/99 1/1/20 2
115 Staples at Tri-County Plaza Actual/360 15,599.00 12/1/99 11/1/09 1
116 Valley-Grove Apartments Actual/360 14,681.99 10/1/98 9/1/08 15
117 Palm Ridge Shopping Center Actual/360 16,103.28 8/1/98 7/1/08 17
118 Simtec Building Actual/360 15,222.63 10/1/99 9/1/09 3
119 Eckerd's Drug Store-Salina-NY Actual/360 14,141.28 11/1/99 10/1/09 2
120 Hawthorn Duplexes Actual/360 14,135.24 3/1/98 2/1/03 22
121 Village Square Apartments Actual/360 14,293.75 11/1/99 10/1/09 2
122 Pine Terrace Apartments Actual/360 13,757.33 10/1/98 9/1/08 15
123 Pentagon Garden Apartments Actual/360 14,639.34 12/1/99 11/1/09 1
124 Menlo Townhomes Actual/360 14,005.04 11/1/99 10/1/09 2
125 Heritage House II Apartments Actual/360 14,346.69 9/1/99 8/1/09 4
126 General Power Warehouse Actual/360 13,988.69 8/1/99 7/1/09 5
127 Century Hills Shopping Center Actual/360 14,250.69 12/1/99 11/1/09 1
128 Cayuga Lake Estates (1E) Actual/360 8,988.00 12/1/99 11/1/09 1
129 Erin Estates (1E) Actual/360 4,839.69 12/1/99 11/1/09 1
130 River Park Village Actual/360 13,802.19 11/1/99 10/1/09 2
131 Eckerd's Drug Store-Clay-NY Actual/360 13,007.55 10/1/99 9/1/09 3
132 Granada Apartments Actual/360 13,749.91 7/1/99 6/1/09 6
133 Hampton Garden Apartments Actual/360 11,903.00 8/1/98 7/1/28 7/1/08 17
134 Berkley Flats Actual/360 12,607.43 11/1/98 10/1/08 14
135 King's Court Apartments Actual/360 14,080.09 9/1/99 8/1/09 4
136 Legacy Business Park Medical Office Bldg. Actual/360 12,857.19 7/1/99 6/1/09 6
137 Bel Air Square Actual/360 13,739.46 9/1/99 8/1/09 4
138 The Roussos Office Building Actual/360 12,619.06 9/1/99 8/1/09 4
139 The Brookwood Apartments Actual/360 12,573.91 9/1/98 8/1/13 16
140 CVS Drugstore Actual/360 13,763.18 11/1/99 10/1/19 2
141 Castlegate II Actual/360 12,477.19 11/1/99 10/1/09 2
142 Eagle - Vail Commercial Service Center Actual/360 13,341.89 11/1/99 10/1/09 2
143 Martins Crossing Apartments Actual/360 12,866.41 10/1/99 9/1/09 3
144 Smithville Self Storage Actual/360 12,799.34 12/1/99 11/1/09 1
145 The Oak Grove Apartments Actual/360 12,136.79 11/1/99 10/1/09 2
146 Ashford Hill Apartments Actual/360 11,993.42 11/1/99 10/1/09 2
147 Half Moon Bay Office Building Actual/360 11,896.76 9/1/99 8/1/09 4
148 University Park Retail Center Actual/360 12,629.30 8/1/99 7/1/09 5
149 2650 Franklin Apartments Actual/360 11,611.96 11/1/99 10/1/09 2
150 Salomon Smith Barney Actual/360 11,459.91 11/1/99 10/1/09 2
151 Meadow Glen Townhomes Actual/360 11,492.43 10/1/99 9/1/09 3
152 3100 Building Actual/360 12,106.53 10/1/99 9/1/09 3
153 Brookhollow Apartments Actual/360 11,223.49 10/1/98 9/1/08 15
154 Tropical Isle Actual/360 12,169.52 11/1/99 10/1/09 2
155 1001 Pacific Buidling Actual/360 11,756.67 11/1/99 10/1/09 2
156 Action Wear USA/Peerless Maintenance Actual/360 11,205.79 9/1/99 8/1/09 4
157 Rockville Plaza Actual/360 12,828.10 11/1/99 10/1/09 2
158 Existing Shopping Center Actual/360 10,774.55 10/1/98 9/1/23 9/1/08 15
159 Silverthorn Court Actual/360 10,917.22 7/1/99 6/1/09 6
160 Campus View Apartments Actual/360 12,155.47 8/1/99 7/1/14 5
161 State Street Industrial Park Actual/360 11,198.36 12/1/98 11/1/18 13
162 DeWolfe Plaza Actual/360 11,302.76 8/1/99 7/1/09 5
163 Midland Self Storage Actual/360 11,207.21 10/1/99 9/1/09 3
164 Lake Pointe Condominiums Actual/360 10,180.09 10/1/99 9/1/09 3
165 Sandalfoot Pointe Apartments Actual/360 9,807.69 9/1/99 8/1/09 4
166 Canterberry Apartments Actual/360 10,241.17 11/1/99 10/1/09 2
167 Lakeshore Villa Apartments Actual/360 10,206.45 11/1/99 10/1/09 2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original
Lockout
Servicing and Prepayment Provision Period
# Property Name Trustee Fees as of Origination (11) (Months)
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
96 Sweetbriar Apartments 0.1623% L (9.67), O (0.33) 116
97 Dobbin Square 0.0823% L (9.67), O (0.33) 116
98 Bayside Village Apartments 0.0823% L (4.92), YM 1% (4.75), O (0.33) 59
99 Wickshire On Lane Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
100 Sun City Plaza 0.0823% L (9.67), O (0.33) 116
101 Village Green Apartments 0.1823% L (4.92), YM 1% (9.75), O (0.33) 59
102 Lot 1 of Silver Creek Business Park 0.0823% L (9.67), O (0.33) 116
103 The Continental House Apartments 0.0823% L (4.92), YM 1% (4.75), O (0.33) 59
104 West End Shopping Center 0.1323% L (9.67), O (0.33) 116
105 Wyle Laboratories 0.0523% L (9.5), O (0.5) 114
106 Thunderbird Professional Center 0.1323% L (4.92), YM 1% (4.75), O (0.33) 59
107 Petsmart at the Crossroads Center 0.0823% L (9.67), O (0.33) 116
108 Meadow Estates Apartments 0.1823% L (9.67), O (0.33) 116
109 Comfort Inn-Weeki Wachee-FL 0.1623% L (5), YM (4.75), O (0.25) 60
110 Springfield Place Office Building 0.1823% L (9.67), O (0.33) 116
111 Okatibbee Ridge Apartments 0.0823% L (9.67), O (0.33) 116
112 The Center Place Apartments 0.1823% L (4.92), YM 1% (4.5), O (0.58) 59
113 Thompson Executive Center 0.1623% L (9.58), O (0.42) 115
114 CVS Pharmacy - Atlanta, GA (2) 0.0523% L (19.75), O (0.5) 237
115 Staples at Tri-County Plaza 0.0823% L (9.67), O (0.33) 116
116 Valley-Grove Apartments 0.0823% L (5), YM 1% (4.5), O (0.5) 60
117 Palm Ridge Shopping Center 0.1823% L (4.92), YM 1% (4.5), O (0.58) 59
118 Simtec Building 0.0823% L (9.42), O (0.58) 113
119 Eckerd's Drug Store-Salina-NY 0.0823% L (9.42), O (0.58) 113
120 Hawthorn Duplexes 0.0823% L (2.5), YM 1% (2), O (0.5) 30
121 Village Square Apartments 0.0823% L (9.67), O (0.33) 116
122 Pine Terrace Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
123 Pentagon Garden Apartments 0.0823% L (2.92), YM 1% (6.5), O (0.58) 35
124 Menlo Townhomes 0.0823% L (9.67), O (0.33) 116
125 Heritage House II Apartments 0.0823% L (9.67), O (0.33) 116
126 General Power Warehouse 0.0823% L (9.67), O (0.33) 116
127 Century Hills Shopping Center 0.0523% L (9.25), O (0.75) 111
128 Cayuga Lake Estates (1E) 0.0523% L (9.5), O (0.5) 114
129 Erin Estates (1E) 0.0523% L (9.5), O (0.5) 114
130 River Park Village 0.0523% L (9.5), O (0.5) 114
131 Eckerd's Drug Store-Clay-NY 0.0823% L (9.67), O (0.33) 116
132 Granada Apartments 0.0823% L (9.67), O (0.33) 116
133 Hampton Garden Apartments 0.1573% L (3.92), YM 1% (5.5), O (0.58) 47
134 Berkley Flats 0.0823% L (2.92), YM 1% (6.5), O (0.58) 35
135 King's Court Apartments 0.0823% L (9.67), O (0.33) 116
136 Legacy Business Park Medical Office Bldg. 0.1823% L (4.92), YM 1% (4.58), O (0.5) 59
137 Bel Air Square 0.0823% L (3.92), YM 1% (5.75), O (0.33) 47
138 The Roussos Office Building 0.0823% L (9.67), O (0.33) 116
139 The Brookwood Apartments 0.0823% L (7.42), YM 1% (7), O (0.58) 89
140 CVS Drugstore 0.0823% L (19.67), O (0.33) 236
141 Castlegate II 0.0523% L (9.5), O (0.5) 114
142 Eagle - Vail Commercial Service Center 0.0823% L (9.67), O (0.33) 116
143 Martins Crossing Apartments 0.0823% L (9.67), O (0.33) 116
144 Smithville Self Storage 0.0823% L (9.67), O (0.33) 116
145 The Oak Grove Apartments 0.0823% L (9.67), O (0.33) 116
146 Ashford Hill Apartments 0.1823% L (9.67), O (0.33) 116
147 Half Moon Bay Office Building 0.0823% L (9.67), O (0.33) 116
148 University Park Retail Center 0.0823% L (9.67), O (0.33) 116
149 2650 Franklin Apartments 0.0523% L (9.5), O (0.5) 114
150 Salomon Smith Barney 0.0823% L (9.67), O (0.33) 116
151 Meadow Glen Townhomes 0.1823% L (9.67), O (0.33) 116
152 3100 Building 0.1823% L (9.42), O (0.58) 113
153 Brookhollow Apartments 0.1823% L (4.92), YM 1% (4.5), O (0.58) 59
154 Tropical Isle 0.1823% L (9.67), O (0.33) 116
155 1001 Pacific Buidling 0.1823% L (9.58), O (0.42) 115
156 Action Wear USA/Peerless Maintenance 0.0823% L (9.67), O (0.33) 116
157 Rockville Plaza 0.0823% L (9.67), O (0.33) 116
158 Existing Shopping Center 0.0823% L (3.92), YM 1% (5.5), O (0.58) 47
159 Silverthorn Court 0.0823% L (9.67), O (0.33) 116
160 Campus View Apartments 0.0823% L (14.67), O (0.33) 176
161 State Street Industrial Park 0.1823% L (9.92), YM 1% (9.75), O (0.33) 119
162 DeWolfe Plaza 0.1823% L (9.67), O (0.33) 116
163 Midland Self Storage 0.0823% L (9.67), O (0.33) 116
164 Lake Pointe Condominiums 0.0523% L (9.5), O (0.5) 114
165 Sandalfoot Pointe Apartments 0.0823% L (9.67), O (0.33) 116
166 Canterberry Apartments 0.0823% L (9.67), O (0.33) 116
167 Lakeshore Villa Apartments 0.0523% L (9.5), O (0.5) 114
<CAPTION>
Original Original
Yield Prepayment Original Yield
Maintenance Premium Open Lockout Maintenance
Period Period Period Expiration Expiration
# Property Name (Months) (Months) (Months) Defeasance (12) Date Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments 0 0 4 Yes 6/1/09 N/A
97 Dobbin Square 0 0 4 Yes 5/1/09 N/A
98 Bayside Village Apartments 57 0 4 No 8/1/03 5/1/08
99 Wickshire On Lane Apartments 54 0 7 No 1/1/03 7/1/07
100 Sun City Plaza 0 0 4 Yes 6/1/09 N/A
101 Village Green Apartments 117 0 4 No 5/1/04 2/1/14
102 Lot 1 of Silver Creek Business Park 0 0 4 Yes 6/1/09 N/A
103 The Continental House Apartments 57 0 4 No 9/1/03 6/1/08
104 West End Shopping Center 0 0 4 Yes 4/1/09 N/A
105 Wyle Laboratories 0 0 6 Yes 5/1/09 N/A
106 Thunderbird Professional Center 57 0 4 No 8/1/04 5/1/09
107 Petsmart at the Crossroads Center 0 0 4 Yes 5/1/09 N/A
108 Meadow Estates Apartments 0 0 4 Yes 5/1/09 N/A
109 Comfort Inn-Weeki Wachee-FL 57 0 3 No 10/1/04 7/1/09
110 Springfield Place Office Building 0 0 4 Yes 4/1/09 N/A
111 Okatibbee Ridge Apartments 0 0 4 Yes 3/1/09 N/A
112 The Center Place Apartments 54 0 7 No 10/1/04 4/1/09
113 Thompson Executive Center 0 0 5 Yes 5/1/09 N/A
114 CVS Pharmacy - Atlanta, GA (2) 0 0 6 Yes 7/1/19 N/A
115 Staples at Tri-County Plaza 0 0 4 Yes 7/1/09 N/A
116 Valley-Grove Apartments 54 0 6 No 9/1/03 3/1/08
117 Palm Ridge Shopping Center 54 0 7 No 6/1/03 12/1/07
118 Simtec Building 0 0 7 Yes 2/1/09 N/A
119 Eckerd's Drug Store-Salina-NY 0 0 7 Yes 3/1/09 N/A
120 Hawthorn Duplexes 24 0 6 No 8/1/00 8/1/02
121 Village Square Apartments 0 0 4 Yes 6/1/09 N/A
122 Pine Terrace Apartments 54 0 7 No 8/1/03 2/1/08
123 Pentagon Garden Apartments 78 0 7 No 10/1/02 4/1/09
124 Menlo Townhomes 0 0 4 Yes 6/1/09 N/A
125 Heritage House II Apartments 0 0 4 Yes 4/1/09 N/A
126 General Power Warehouse 0 0 4 Yes 3/1/09 N/A
127 Century Hills Shopping Center 0 0 9 Yes 2/1/09 N/A
128 Cayuga Lake Estates (1E) 0 0 6 Yes 5/1/09 N/A
129 Erin Estates (1E) 0 0 6 Yes 5/1/09 N/A
130 River Park Village 0 0 6 Yes 4/1/09 N/A
131 Eckerd's Drug Store-Clay-NY 0 0 4 Yes 5/1/09 N/A
132 Granada Apartments 0 0 4 Yes 2/1/09 N/A
133 Hampton Garden Apartments 66 0 7 No 6/1/02 12/1/07
134 Berkley Flats 78 0 7 No 9/1/01 3/1/08
135 King's Court Apartments 0 0 4 Yes 4/1/09 N/A
136 Legacy Business Park Medical Office Bldg. 55 0 6 No 5/1/04 12/1/08
137 Bel Air Square 69 0 4 No 7/1/03 4/1/09
138 The Roussos Office Building 0 0 4 Yes 4/1/09 N/A
139 The Brookwood Apartments 84 0 7 No 1/1/06 1/1/13
140 CVS Drugstore 0 0 4 Yes 6/1/19 N/A
141 Castlegate II 0 0 6 Yes 4/1/09 N/A
142 Eagle - Vail Commercial Service Center 0 0 4 Yes 6/1/09 N/A
143 Martins Crossing Apartments 0 0 4 Yes 5/1/09 N/A
144 Smithville Self Storage 0 0 4 Yes 7/1/09 N/A
145 The Oak Grove Apartments 0 0 4 Yes 6/1/09 N/A
146 Ashford Hill Apartments 0 0 4 Yes 6/1/09 N/A
147 Half Moon Bay Office Building 0 0 4 Yes 4/1/09 N/A
148 University Park Retail Center 0 0 4 Yes 3/1/09 N/A
149 2650 Franklin Apartments 0 0 6 Yes 4/1/09 N/A
150 Salomon Smith Barney 0 0 4 Yes 6/1/09 N/A
151 Meadow Glen Townhomes 0 0 4 Yes 5/1/09 N/A
152 3100 Building 0 0 7 Yes 2/1/09 N/A
153 Brookhollow Apartments 54 0 7 No 8/1/03 2/1/08
154 Tropical Isle 0 0 4 Yes 6/1/09 N/A
155 1001 Pacific Buidling 0 0 5 Yes 5/1/09 N/A
156 Action Wear USA/Peerless Maintenance 0 0 4 Yes 4/1/09 N/A
157 Rockville Plaza 0 0 4 Yes 6/1/09 N/A
158 Existing Shopping Center 66 0 7 No 8/1/02 2/1/08
159 Silverthorn Court 0 0 4 Yes 2/1/09 N/A
160 Campus View Apartments 0 0 4 Yes 3/1/14 N/A
161 State Street Industrial Park 117 0 4 No 10/1/08 7/1/18
162 DeWolfe Plaza 0 0 4 Yes 3/1/09 N/A
163 Midland Self Storage 0 0 4 Yes 5/1/09 N/A
164 Lake Pointe Condominiums 0 0 6 Yes 3/1/09 N/A
165 Sandalfoot Pointe Apartments 0 0 4 Yes 4/1/09 N/A
166 Canterberry Apartments 0 0 4 Yes 6/1/09 N/A
167 Lakeshore Villa Apartments 0 0 6 Yes 4/1/09 N/A
<CAPTION>
Prepayment
Premium Utilities Subject
Expiration Hotel Multifamily Tenant Multifamily Studio
# Property Name Date Franchise Pays Elevators Units
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments N/A N/A Electric 0 N/A
97 Dobbin Square N/A N/A N/A N/A N/A
98 Bayside Village Apartments N/A N/A Electric/Gas 1 N/A
99 Wickshire On Lane Apartments N/A N/A Electric/Gas 0 N/A
100 Sun City Plaza N/A N/A N/A N/A N/A
101 Village Green Apartments N/A N/A Electric 0 N/A
102 Lot 1 of Silver Creek Business Park N/A N/A N/A N/A N/A
103 The Continental House Apartments N/A N/A None 0 16
104 West End Shopping Center N/A N/A N/A N/A N/A
105 Wyle Laboratories N/A N/A N/A N/A N/A
106 Thunderbird Professional Center N/A N/A N/A N/A N/A
107 Petsmart at the Crossroads Center N/A N/A N/A N/A N/A
108 Meadow Estates Apartments N/A N/A Electric 0 N/A
109 Comfort Inn-Weeki Wachee-FL N/A Comfort Inn N/A N/A N/A
110 Springfield Place Office Building N/A N/A N/A N/A N/A
111 Okatibbee Ridge Apartments N/A N/A Electric 0 N/A
112 The Center Place Apartments N/A N/A Electric 0 N/A
113 Thompson Executive Center N/A N/A N/A N/A N/A
114 CVS Pharmacy - Atlanta, GA (2) N/A N/A N/A N/A N/A
115 Staples at Tri-County Plaza N/A N/A N/A N/A N/A
116 Valley-Grove Apartments N/A N/A None 0 4
117 Palm Ridge Shopping Center N/A N/A N/A N/A N/A
118 Simtec Building N/A N/A N/A N/A N/A
119 Eckerd's Drug Store-Salina-NY N/A N/A N/A N/A N/A
120 Hawthorn Duplexes N/A N/A Electric/Gas/Water/Sewer 0 N/A
121 Village Square Apartments N/A N/A Electric 0 N/A
122 Pine Terrace Apartments N/A N/A Electric 0 N/A
123 Pentagon Garden Apartments N/A N/A Electric 0 N/A
124 Menlo Townhomes N/A N/A Electric 0 N/A
125 Heritage House II Apartments N/A N/A Electric 0 N/A
126 General Power Warehouse N/A N/A N/A N/A N/A
127 Century Hills Shopping Center N/A N/A N/A N/A N/A
128 Cayuga Lake Estates (1E) N/A N/A N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A N/A N/A
130 River Park Village N/A N/A N/A N/A N/A
131 Eckerd's Drug Store-Clay-NY N/A N/A N/A N/A N/A
132 Granada Apartments N/A N/A Electric 0 N/A
133 Hampton Garden Apartments N/A N/A Electric/Gas 0 N/A
134 Berkley Flats N/A N/A Electric/Gas 0 28
135 King's Court Apartments N/A N/A Electric 0 N/A
136 Legacy Business Park Medical Office Bldg. N/A N/A N/A N/A N/A
137 Bel Air Square N/A N/A N/A N/A N/A
138 The Roussos Office Building N/A N/A N/A N/A N/A
139 The Brookwood Apartments N/A N/A Electric 0 N/A
140 CVS Drugstore N/A N/A N/A N/A N/A
141 Castlegate II N/A N/A N/A N/A N/A
142 Eagle - Vail Commercial Service Center N/A N/A N/A N/A N/A
143 Martins Crossing Apartments N/A N/A Electric/Water/Sewer 0 N/A
144 Smithville Self Storage N/A N/A N/A N/A N/A
145 The Oak Grove Apartments N/A N/A Electric/Water/Sewer 0 N/A
146 Ashford Hill Apartments N/A N/A Electric 1 N/A
147 Half Moon Bay Office Building N/A N/A N/A N/A N/A
148 University Park Retail Center N/A N/A N/A N/A N/A
149 2650 Franklin Apartments N/A N/A Electric/Gas 1 26
150 Salomon Smith Barney N/A N/A N/A N/A N/A
151 Meadow Glen Townhomes N/A N/A Electric/Gas/Water/Sewer 0 N/A
152 3100 Building N/A N/A N/A N/A N/A
153 Brookhollow Apartments N/A N/A Electric 0 11
154 Tropical Isle N/A N/A N/A N/A N/A
155 1001 Pacific Buidling N/A N/A N/A N/A N/A
156 Action Wear USA/Peerless Maintenance N/A N/A N/A N/A N/A
157 Rockville Plaza N/A N/A N/A N/A N/A
158 Existing Shopping Center N/A N/A N/A N/A N/A
159 Silverthorn Court N/A N/A N/A N/A N/A
160 Campus View Apartments N/A N/A None 0 N/A
161 State Street Industrial Park N/A N/A N/A N/A N/A
162 DeWolfe Plaza N/A N/A N/A N/A N/A
163 Midland Self Storage N/A N/A N/A N/A N/A
164 Lake Pointe Condominiums N/A N/A Electric/Gas 0 N/A
165 Sandalfoot Pointe Apartments N/A N/A Electric 0 N/A
166 Canterberry Apartments N/A N/A Electric 0 N/A
167 Lakeshore Villa Apartments N/A N/A Electric 0 N/A
<CAPTION>
Subject Subject Subject Subject Subject
Studio Studio 1 BR 1 BR 1 BR
# Property Name Avg. Rent Max. Rent Units Avg. Rent Max. Rent
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments N/A N/A N/A N/A N/A
97 Dobbin Square N/A N/A N/A N/A N/A
98 Bayside Village Apartments N/A N/A 36 $728 $795
99 Wickshire On Lane Apartments N/A N/A 60 $404 $430
100 Sun City Plaza N/A N/A N/A N/A N/A
101 Village Green Apartments N/A N/A 80 $461 $490
102 Lot 1 of Silver Creek Business Park N/A N/A N/A N/A N/A
103 The Continental House Apartments $392 $450 31 $542 $575
104 West End Shopping Center N/A N/A N/A N/A N/A
105 Wyle Laboratories N/A N/A N/A N/A N/A
106 Thunderbird Professional Center N/A N/A N/A N/A N/A
107 Petsmart at the Crossroads Center N/A N/A N/A N/A N/A
108 Meadow Estates Apartments N/A N/A 66 $325 $345
109 Comfort Inn-Weeki Wachee-FL N/A N/A N/A N/A N/A
110 Springfield Place Office Building N/A N/A N/A N/A N/A
111 Okatibbee Ridge Apartments N/A N/A 24 $429 $440
112 The Center Place Apartments N/A N/A 48 $500 $515
113 Thompson Executive Center N/A N/A N/A N/A N/A
114 CVS Pharmacy - Atlanta, GA (2) N/A N/A N/A N/A N/A
115 Staples at Tri-County Plaza N/A N/A N/A N/A N/A
116 Valley-Grove Apartments $367 $425 44 $479 $525
117 Palm Ridge Shopping Center N/A N/A N/A N/A N/A
118 Simtec Building N/A N/A N/A N/A N/A
119 Eckerd's Drug Store-Salina-NY N/A N/A N/A N/A N/A
120 Hawthorn Duplexes N/A N/A N/A N/A N/A
121 Village Square Apartments N/A N/A N/A N/A N/A
122 Pine Terrace Apartments N/A N/A 32 $366 $385
123 Pentagon Garden Apartments N/A N/A 40 $399 $410
124 Menlo Townhomes N/A N/A N/A N/A N/A
125 Heritage House II Apartments N/A N/A 48 $268 $295
126 General Power Warehouse N/A N/A N/A N/A N/A
127 Century Hills Shopping Center N/A N/A N/A N/A N/A
128 Cayuga Lake Estates (1E) N/A N/A N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A N/A N/A
130 River Park Village N/A N/A N/A N/A N/A
131 Eckerd's Drug Store-Clay-NY N/A N/A N/A N/A N/A
132 Granada Apartments N/A N/A 12 $485 $510
133 Hampton Garden Apartments N/A N/A 24 $453 $490
134 Berkley Flats $174 $440 56 $392 $485
135 King's Court Apartments N/A N/A 112 $300 $300
136 Legacy Business Park Medical Office Bldg. N/A N/A N/A N/A N/A
137 Bel Air Square N/A N/A N/A N/A N/A
138 The Roussos Office Building N/A N/A N/A N/A N/A
139 The Brookwood Apartments N/A N/A N/A N/A N/A
140 CVS Drugstore N/A N/A N/A N/A N/A
141 Castlegate II N/A N/A N/A N/A N/A
142 Eagle - Vail Commercial Service Center N/A N/A N/A N/A N/A
143 Martins Crossing Apartments N/A N/A N/A N/A N/A
144 Smithville Self Storage N/A N/A N/A N/A N/A
145 The Oak Grove Apartments N/A N/A 40 $515 $560
146 Ashford Hill Apartments N/A N/A 28 $419 $450
147 Half Moon Bay Office Building N/A N/A N/A N/A N/A
148 University Park Retail Center N/A N/A N/A N/A N/A
149 2650 Franklin Apartments $809 $1,375 1 N/A N/A
150 Salomon Smith Barney N/A N/A N/A N/A N/A
151 Meadow Glen Townhomes N/A N/A N/A N/A N/A
152 3100 Building N/A N/A N/A N/A N/A
153 Brookhollow Apartments $343 $359 52 $382 $409
154 Tropical Isle N/A N/A N/A N/A N/A
155 1001 Pacific Buidling N/A N/A N/A N/A N/A
156 Action Wear USA/Peerless Maintenance N/A N/A N/A N/A N/A
157 Rockville Plaza N/A N/A N/A N/A N/A
158 Existing Shopping Center N/A N/A N/A N/A N/A
159 Silverthorn Court N/A N/A N/A N/A N/A
160 Campus View Apartments N/A N/A N/A N/A N/A
161 State Street Industrial Park N/A N/A N/A N/A N/A
162 DeWolfe Plaza N/A N/A N/A N/A N/A
163 Midland Self Storage N/A N/A N/A N/A N/A
164 Lake Pointe Condominiums N/A N/A N/A N/A N/A
165 Sandalfoot Pointe Apartments N/A N/A N/A N/A N/A
166 Canterberry Apartments N/A N/A N/A N/A N/A
167 Lakeshore Villa Apartments N/A N/A 24 $356 $375
<CAPTION>
Subject Subject Subject Subject Subject
2 BR 2 BR 2 BR 3 BR 3 BR
# Property Name Units Avg. Rent Max. Rent Units Avg. Rent
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments 180 $383 $385 N/A N/A
97 Dobbin Square N/A N/A N/A N/A N/A
98 Bayside Village Apartments 12 $889 $910 N/A N/A
99 Wickshire On Lane Apartments 51 $486 $535 12 $540
100 Sun City Plaza N/A N/A N/A N/A N/A
101 Village Green Apartments 35 $674 $685 10 $801
102 Lot 1 of Silver Creek Business Park N/A N/A N/A N/A N/A
103 The Continental House Apartments 123 $650 $750 N/A N/A
104 West End Shopping Center N/A N/A N/A N/A N/A
105 Wyle Laboratories N/A N/A N/A N/A N/A
106 Thunderbird Professional Center N/A N/A N/A N/A N/A
107 Petsmart at the Crossroads Center N/A N/A N/A N/A N/A
108 Meadow Estates Apartments 104 $394 $445 18 $483
109 Comfort Inn-Weeki Wachee-FL N/A N/A N/A N/A N/A
110 Springfield Place Office Building N/A N/A N/A N/A N/A
111 Okatibbee Ridge Apartments 52 $523 $610 28 $590
112 The Center Place Apartments 52 $623 $655 N/A N/A
113 Thompson Executive Center N/A N/A N/A N/A N/A
114 CVS Pharmacy - Atlanta, GA (2) N/A N/A N/A N/A N/A
115 Staples at Tri-County Plaza N/A N/A N/A N/A N/A
116 Valley-Grove Apartments 48 $577 $615 N/A N/A
117 Palm Ridge Shopping Center N/A N/A N/A N/A N/A
118 Simtec Building N/A N/A N/A N/A N/A
119 Eckerd's Drug Store-Salina-NY N/A N/A N/A N/A N/A
120 Hawthorn Duplexes 13 $688 $710 25 $795
121 Village Square Apartments 62 $567 $627 10 $689
122 Pine Terrace Apartments 64 $427 $460 24 $490
123 Pentagon Garden Apartments 80 $470 $530 N/A N/A
124 Menlo Townhomes 15 $1,377 $1,400 10 $1,448
125 Heritage House II Apartments 62 $436 $475 N/A N/A
126 General Power Warehouse N/A N/A N/A N/A N/A
127 Century Hills Shopping Center N/A N/A N/A N/A N/A
128 Cayuga Lake Estates (1E) N/A N/A N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A N/A N/A
130 River Park Village N/A N/A N/A N/A N/A
131 Eckerd's Drug Store-Clay-NY N/A N/A N/A N/A N/A
132 Granada Apartments 44 $537 $600 1 $650
133 Hampton Garden Apartments 48 $565 $620 N/A N/A
134 Berkley Flats 16 $470 $595 N/A N/A
135 King's Court Apartments 70 $340 $340 1 $465
136 Legacy Business Park Medical Office Bldg. N/A N/A N/A N/A N/A
137 Bel Air Square N/A N/A N/A N/A N/A
138 The Roussos Office Building N/A N/A N/A N/A N/A
139 The Brookwood Apartments 80 $539 $550 N/A N/A
140 CVS Drugstore N/A N/A N/A N/A N/A
141 Castlegate II N/A N/A N/A N/A N/A
142 Eagle - Vail Commercial Service Center N/A N/A N/A N/A N/A
143 Martins Crossing Apartments 64 $480 $495 N/A N/A
144 Smithville Self Storage N/A N/A N/A N/A N/A
145 The Oak Grove Apartments 22 $644 $690 N/A N/A
146 Ashford Hill Apartments 20 $517 $550 4 $625
147 Half Moon Bay Office Building N/A N/A N/A N/A N/A
148 University Park Retail Center N/A N/A N/A N/A N/A
149 2650 Franklin Apartments N/A N/A N/A N/A N/A
150 Salomon Smith Barney N/A N/A N/A N/A N/A
151 Meadow Glen Townhomes 18 $703 $810 18 $778
152 3100 Building N/A N/A N/A N/A N/A
153 Brookhollow Apartments 46 $491 $509 12 $644
154 Tropical Isle N/A N/A N/A N/A N/A
155 1001 Pacific Buidling N/A N/A N/A N/A N/A
156 Action Wear USA/Peerless Maintenance N/A N/A N/A N/A N/A
157 Rockville Plaza N/A N/A N/A N/A N/A
158 Existing Shopping Center N/A N/A N/A N/A N/A
159 Silverthorn Court N/A N/A N/A N/A N/A
160 Campus View Apartments 51 $1,039 $2,000 N/A N/A
161 State Street Industrial Park N/A N/A N/A N/A N/A
162 DeWolfe Plaza N/A N/A N/A N/A N/A
163 Midland Self Storage N/A N/A N/A N/A N/A
164 Lake Pointe Condominiums 8 $804 $830 20 $876
165 Sandalfoot Pointe Apartments 36 $762 $800 N/A N/A
166 Canterberry Apartments 76 $475 $525 N/A N/A
167 Lakeshore Villa Apartments 57 $381 $425 N/A N/A
<CAPTION>
Subject Subject Subject Subject
3 BR 4 BR 4 BR 4 BR
# Property Name Max. Rent Units Avg. Rent Max. Rent
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
96 Sweetbriar Apartments N/A N/A N/A N/A
97 Dobbin Square N/A N/A N/A N/A
98 Bayside Village Apartments N/A N/A N/A N/A
99 Wickshire On Lane Apartments $620 N/A N/A N/A
100 Sun City Plaza N/A N/A N/A N/A
101 Village Green Apartments $850 N/A N/A N/A
102 Lot 1 of Silver Creek Business Park N/A N/A N/A N/A
103 The Continental House Apartments N/A N/A N/A N/A
104 West End Shopping Center N/A N/A N/A N/A
105 Wyle Laboratories N/A N/A N/A N/A
106 Thunderbird Professional Center N/A N/A N/A N/A
107 Petsmart at the Crossroads Center N/A N/A N/A N/A
108 Meadow Estates Apartments $565 N/A N/A N/A
109 Comfort Inn-Weeki Wachee-FL N/A N/A N/A N/A
110 Springfield Place Office Building N/A N/A N/A N/A
111 Okatibbee Ridge Apartments $630 N/A N/A N/A
112 The Center Place Apartments N/A N/A N/A N/A
113 Thompson Executive Center N/A N/A N/A N/A
114 CVS Pharmacy - Atlanta, GA (2) N/A N/A N/A N/A
115 Staples at Tri-County Plaza N/A N/A N/A N/A
116 Valley-Grove Apartments N/A N/A N/A N/A
117 Palm Ridge Shopping Center N/A N/A N/A N/A
118 Simtec Building N/A N/A N/A N/A
119 Eckerd's Drug Store-Salina-NY N/A N/A N/A N/A
120 Hawthorn Duplexes $825 N/A N/A N/A
121 Village Square Apartments $713 N/A N/A N/A
122 Pine Terrace Apartments $525 N/A N/A N/A
123 Pentagon Garden Apartments N/A N/A N/A N/A
124 Menlo Townhomes $1,600 N/A N/A N/A
125 Heritage House II Apartments N/A N/A N/A N/A
126 General Power Warehouse N/A N/A N/A N/A
127 Century Hills Shopping Center N/A N/A N/A N/A
128 Cayuga Lake Estates (1E) N/A N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A N/A
130 River Park Village N/A N/A N/A N/A
131 Eckerd's Drug Store-Clay-NY N/A N/A N/A N/A
132 Granada Apartments $720 N/A N/A N/A
133 Hampton Garden Apartments N/A N/A N/A N/A
134 Berkley Flats N/A N/A N/A N/A
135 King's Court Apartments $465 N/A N/A N/A
136 Legacy Business Park Medical Office Bldg. N/A N/A N/A N/A
137 Bel Air Square N/A N/A N/A N/A
138 The Roussos Office Building N/A N/A N/A N/A
139 The Brookwood Apartments N/A N/A N/A N/A
140 CVS Drugstore N/A N/A N/A N/A
141 Castlegate II N/A N/A N/A N/A
142 Eagle - Vail Commercial Service Center N/A N/A N/A N/A
143 Martins Crossing Apartments N/A N/A N/A N/A
144 Smithville Self Storage N/A N/A N/A N/A
145 The Oak Grove Apartments N/A N/A N/A N/A
146 Ashford Hill Apartments $650 N/A N/A N/A
147 Half Moon Bay Office Building N/A N/A N/A N/A
148 University Park Retail Center N/A N/A N/A N/A
149 2650 Franklin Apartments N/A N/A N/A N/A
150 Salomon Smith Barney N/A N/A N/A N/A
151 Meadow Glen Townhomes $920 N/A N/A N/A
152 3100 Building N/A N/A N/A N/A
153 Brookhollow Apartments $689 N/A N/A N/A
154 Tropical Isle N/A N/A N/A N/A
155 1001 Pacific Buidling N/A N/A N/A N/A
156 Action Wear USA/Peerless Maintenance N/A N/A N/A N/A
157 Rockville Plaza N/A N/A N/A N/A
158 Existing Shopping Center N/A N/A N/A N/A
159 Silverthorn Court N/A N/A N/A N/A
160 Campus View Apartments N/A N/A N/A N/A
161 State Street Industrial Park N/A N/A N/A N/A
162 DeWolfe Plaza N/A N/A N/A N/A
163 Midland Self Storage N/A N/A N/A N/A
164 Lake Pointe Condominiums $1,000 N/A N/A N/A
165 Sandalfoot Pointe Apartments N/A N/A N/A N/A
166 Canterberry Apartments N/A N/A N/A N/A
167 Lakeshore Villa Apartments N/A N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Major Major Major
Tenant #1 Tenant #1 Tenant #1 Lease
# Property Name Name Sq. Ft. Expiration Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
96 Sweetbriar Apartments N/A N/A N/A
97 Dobbin Square Rocky Run Tap & Grill 8,703 12/31/06
98 Bayside Village Apartments N/A N/A N/A
99 Wickshire On Lane Apartments N/A N/A N/A
100 Sun City Plaza Tarbell Financial 3,664 1/4/04
101 Village Green Apartments N/A N/A N/A
102 Lot 1 of Silver Creek Business Park Black Diamond Gymnastics 5,148 3/31/04
103 The Continental House Apartments N/A N/A N/A
104 West End Shopping Center Food Lion 30,302 6/30/04
105 Wyle Laboratories Wyle Laboratories, Inc. 59,000 10/31/14
106 Thunderbird Professional Center Arizona Medical Clinic 16,751 8/11/05
107 Petsmart at the Crossroads Center PetsMart 26,120 5/31/14
108 Meadow Estates Apartments N/A N/A N/A
109 Comfort Inn-Weeki Wachee-FL N/A N/A N/A
110 Springfield Place Office Building Chesapeake Center, Inc. 8,949 7/14/06
111 Okatibbee Ridge Apartments N/A N/A N/A
112 The Center Place Apartments N/A N/A N/A
113 Thompson Executive Center Bennett, Johnson & Savel, M.D.s 4,544 4/30/05
114 CVS Pharmacy - Atlanta, GA (2) Big B Drugs, Inc. 10,125 1/31/2020
115 Staples at Tri-County Plaza Staples #533 24,049 4/30/14
116 Valley-Grove Apartments N/A N/A N/A
117 Palm Ridge Shopping Center San Diego County Superintendent of Schools 5,400 4/30/04
118 Simtec Building Simtec, Inc. 32,877 2/29/04
119 Eckerd's Drug Store-Salina-NY Eckerds Drug 11,317 1/6/19
120 Hawthorn Duplexes N/A N/A N/A
121 Village Square Apartments N/A N/A N/A
122 Pine Terrace Apartments N/A N/A N/A
123 Pentagon Garden Apartments N/A N/A N/A
124 Menlo Townhomes N/A N/A N/A
125 Heritage House II Apartments N/A N/A N/A
126 General Power Warehouse General Powerhouse Equipment Company 36,000 1/31/14
127 Century Hills Shopping Center Gold's Gym 22,400 3/31/07
128 Cayuga Lake Estates (1E) N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A
130 River Park Village Blockbuster Video 5,980 11/1/08
131 Eckerd's Drug Store-Clay-NY Eckerds 11,347 8/19/18
132 Granada Apartments N/A N/A N/A
133 Hampton Garden Apartments N/A N/A N/A
134 Berkley Flats N/A N/A N/A
135 King's Court Apartments N/A N/A N/A
136 Legacy Business Park Medical Office Bldg. Robert A. Gatlin, MD 2,850 4/30/04
137 Bel Air Square C.E.M. Inc. 2,304 6/30/01
138 The Roussos Office Building Interior Motives 6,311 12/31/10
139 The Brookwood Apartments N/A N/A N/A
140 CVS Drugstore Hook-SupeRX, Inc. 10,125 10/11/18
141 Castlegate II Offset Printing 7,500 6/30/00
142 Eagle - Vail Commercial Service Center Pine Factory Furniture 7,200 10/31/01
143 Martins Crossing Apartments N/A N/A N/A
144 Smithville Self Storage N/A N/A N/A
145 The Oak Grove Apartments N/A N/A N/A
146 Ashford Hill Apartments N/A N/A N/A
147 Half Moon Bay Office Building Coldwell Banker 4,620 7/9/08
148 University Park Retail Center Crisis Pregnancy Center 7,020 12/31/01
149 2650 Franklin Apartments N/A N/A N/A
150 Salomon Smith Barney Smith Barney, Inc. 10,450 9/30/13
151 Meadow Glen Townhomes N/A N/A N/A
152 3100 Building The Clarkson Co. 6,743 7/31/00
153 Brookhollow Apartments N/A N/A N/A
154 Tropical Isle N/A N/A N/A
155 1001 Pacific Buidling Wynwood Agency 10,807 12/31/01
156 Action Wear USA/Peerless Maintenance Action Wear USA 27,407 12/31/01
157 Rockville Plaza Ladies Only 30,975 5/31/07
158 Existing Shopping Center The Salvation Army 13,524 5/31/01
159 Silverthorn Court Specialty Sports 7,200 8/31/06
160 Campus View Apartments N/A N/A N/A
161 State Street Industrial Park Bledsoe Construction 5,760 5/31/99
162 DeWolfe Plaza Chen Yang Li 6,356 6/30/08
163 Midland Self Storage N/A N/A N/A
164 Lake Pointe Condominiums N/A N/A N/A
165 Sandalfoot Pointe Apartments N/A N/A N/A
166 Canterberry Apartments N/A N/A N/A
167 Lakeshore Villa Apartments N/A N/A N/A
<CAPTION>
Major Major Major
Tenant #2 Tenant #2 Tenant #2 Lease
# Property Name Name Sq. Ft. Expiration Date
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
96 Sweetbriar Apartments N/A N/A N/A
97 Dobbin Square Mattress Discounters 3,000 1/31/04
98 Bayside Village Apartments N/A N/A N/A
99 Wickshire On Lane Apartments N/A N/A N/A
100 Sun City Plaza Donut Star 2,000 12/14/04
101 Village Green Apartments N/A N/A N/A
102 Lot 1 of Silver Creek Business Park High Mountain Properties, Inc. 3,328 3/30/04
103 The Continental House Apartments N/A N/A N/A
104 West End Shopping Center Publishers 8,640 6/30/04
105 Wyle Laboratories N/A N/A N/A
106 Thunderbird Professional Center Arizona Medical Clinic 5,592 8/11/01
107 Petsmart at the Crossroads Center N/A N/A N/A
108 Meadow Estates Apartments N/A N/A N/A
109 Comfort Inn-Weeki Wachee-FL N/A N/A N/A
110 Springfield Place Office Building Remtech Services 6,792 10/31/00
111 Okatibbee Ridge Apartments N/A N/A N/A
112 The Center Place Apartments N/A N/A N/A
113 Thompson Executive Center William M. Golson 4,296 8/31/00
114 CVS Pharmacy - Atlanta, GA (2) N/A N/A N/A
115 Staples at Tri-County Plaza N/A N/A N/A
116 Valley-Grove Apartments N/A N/A N/A
117 Palm Ridge Shopping Center Fawzi Zaiya Liquor 3,000 12/31/99
118 Simtec Building Aeronautical Systems 3,358 2/29/04
119 Eckerd's Drug Store-Salina-NY N/A N/A N/A
120 Hawthorn Duplexes N/A N/A N/A
121 Village Square Apartments N/A N/A N/A
122 Pine Terrace Apartments N/A N/A N/A
123 Pentagon Garden Apartments N/A N/A N/A
124 Menlo Townhomes N/A N/A N/A
125 Heritage House II Apartments N/A N/A N/A
126 General Power Warehouse Gardner, Inc. 36,000 1/31/14
127 Century Hills Shopping Center Hardware Hank 8,000 4/30/08
128 Cayuga Lake Estates (1E) N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A
130 River Park Village N/A N/A N/A
131 Eckerd's Drug Store-Clay-NY N/A N/A N/A
132 Granada Apartments N/A N/A N/A
133 Hampton Garden Apartments N/A N/A N/A
134 Berkley Flats N/A N/A N/A
135 King's Court Apartments N/A N/A N/A
136 Legacy Business Park Medical Office Bldg. Gerorge E. Bonn, LTD. 2,200 10/31/03
137 Bel Air Square Harford County 1,728 6/30/00
138 The Roussos Office Building Epic Westpark Resorts 5,680 1/22/02
139 The Brookwood Apartments N/A N/A N/A
140 CVS Drugstore N/A N/A N/A
141 Castlegate II Computers & Networks, Inc. 7,500 8/31/04
142 Eagle - Vail Commercial Service Center Golden Sky Systems, Inc. 2,220 6/4/02
143 Martins Crossing Apartments N/A N/A N/A
144 Smithville Self Storage N/A N/A N/A
145 The Oak Grove Apartments N/A N/A N/A
146 Ashford Hill Apartments N/A N/A N/A
147 Half Moon Bay Office Building North American Title 2,258 10/31/03
148 University Park Retail Center Rosita's Fine Mexican Food 5,100 3/30/03
149 2650 Franklin Apartments N/A N/A N/A
150 Salomon Smith Barney Gerwitz & Co., Inc. 1,500 11/30/14
151 Meadow Glen Townhomes N/A N/A N/A
152 3100 Building Big Bros, Big Sisters 5,583 12/1/03
153 Brookhollow Apartments N/A N/A N/A
154 Tropical Isle N/A N/A N/A
155 1001 Pacific Buidling Wynwood Services & Technology 8,020 1/31/07
156 Action Wear USA/Peerless Maintenance Tuttle Family Enterprises 9,109 4/30/02
157 Rockville Plaza T.R.L.T. 10,125 7/31/04
158 Existing Shopping Center Schwebel's Baking Company Inc 11,760 1/31/03
159 Silverthorn Court Cal Spas 2,830 5/31/05
160 Campus View Apartments N/A N/A N/A
161 State Street Industrial Park Delta Plastics 5,760 10/1/00
162 DeWolfe Plaza Dewolfe Real Estate 3,427 4/30/03
163 Midland Self Storage N/A N/A N/A
164 Lake Pointe Condominiums N/A N/A N/A
165 Sandalfoot Pointe Apartments N/A N/A N/A
166 Canterberry Apartments N/A N/A N/A
167 Lakeshore Villa Apartments N/A N/A N/A
<CAPTION>
Major Major Major
Tenant #3 Tenant #3 Tenant #3 Lease
# Property Name Name Sq. Ft. Expiration Date
- - ----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
96 Sweetbriar Apartments N/A N/A N/A
97 Dobbin Square TechLab 2000, Inc. 2,534 12/31/02
98 Bayside Village Apartments N/A N/A N/A
99 Wickshire On Lane Apartments N/A N/A N/A
100 Sun City Plaza The Gift Shop 1,500 11/30/03
101 Village Green Apartments N/A N/A N/A
102 Lot 1 of Silver Creek Business Park Resort Property Management 2,952 10/31/03
103 The Continental House Apartments N/A N/A N/A
104 West End Shopping Center Kalamata Kitchen 5,000 12/2/03
105 Wyle Laboratories N/A N/A N/A
106 Thunderbird Professional Center Oral & Mazillofacial 1,921 5/31/05
107 Petsmart at the Crossroads Center N/A N/A N/A
108 Meadow Estates Apartments N/A N/A N/A
109 Comfort Inn-Weeki Wachee-FL N/A N/A N/A
110 Springfield Place Office Building Newlink Global Engineering 5,093 12/31/00
111 Okatibbee Ridge Apartments N/A N/A N/A
112 The Center Place Apartments N/A N/A N/A
113 Thompson Executive Center Kast Orthotics & Prosthetics 2,790 1/31/01
114 CVS Pharmacy - Atlanta, GA (2) N/A N/A N/A
115 Staples at Tri-County Plaza N/A N/A N/A
116 Valley-Grove Apartments N/A N/A N/A
117 Palm Ridge Shopping Center Cabrillo Federal Credit Union 2,400 9/30/03
118 Simtec Building Galaxy Computer Services, Inc. 2,856 12/31/03
119 Eckerd's Drug Store-Salina-NY N/A N/A N/A
120 Hawthorn Duplexes N/A N/A N/A
121 Village Square Apartments N/A N/A N/A
122 Pine Terrace Apartments N/A N/A N/A
123 Pentagon Garden Apartments N/A N/A N/A
124 Menlo Townhomes N/A N/A N/A
125 Heritage House II Apartments N/A N/A N/A
126 General Power Warehouse N/A N/A N/A
127 Century Hills Shopping Center N/A N/A N/A
128 Cayuga Lake Estates (1E) N/A N/A N/A
129 Erin Estates (1E) N/A N/A N/A
130 River Park Village N/A N/A N/A
131 Eckerd's Drug Store-Clay-NY N/A N/A N/A
132 Granada Apartments N/A N/A N/A
133 Hampton Garden Apartments N/A N/A N/A
134 Berkley Flats N/A N/A N/A
135 King's Court Apartments N/A N/A N/A
136 Legacy Business Park Medical Office Bldg. ANPS 2,020 11/30/03
137 Bel Air Square Liberty Trust 1,152 11/30/03
138 The Roussos Office Building N/A N/A N/A
139 The Brookwood Apartments N/A N/A N/A
140 CVS Drugstore N/A N/A N/A
141 Castlegate II Lucent Technologies 5,000 12/31/03
142 Eagle - Vail Commercial Service Center Custom Pack Shipping 1,800 6/30/02
143 Martins Crossing Apartments N/A N/A N/A
144 Smithville Self Storage N/A N/A N/A
145 The Oak Grove Apartments N/A N/A N/A
146 Ashford Hill Apartments N/A N/A N/A
147 Half Moon Bay Office Building Catalyst Equity 1,487 6/30/03
148 University Park Retail Center Arizona Public Service 2,280 11/30/99
149 2650 Franklin Apartments N/A N/A N/A
150 Salomon Smith Barney N/A N/A N/A
151 Meadow Glen Townhomes N/A N/A N/A
152 3100 Building Amtrak 3,485 6/30/01
153 Brookhollow Apartments N/A N/A N/A
154 Tropical Isle N/A N/A N/A
155 1001 Pacific Buidling T/P.C. Visitor & Convention 4,734 3/31/02
156 Action Wear USA/Peerless Maintenance N/A N/A N/A
157 Rockville Plaza Curtain Call 4,000 12/28/02
158 Existing Shopping Center A & S Carpet Collection, Inc. 6,804 5/31/00
159 Silverthorn Court N/A N/A N/A
160 Campus View Apartments N/A N/A N/A
161 State Street Industrial Park High Desert Hardwood 5,040 9/30/03
162 DeWolfe Plaza John Hancock 2,494 9/30/03
163 Midland Self Storage N/A N/A N/A
164 Lake Pointe Condominiums N/A N/A N/A
165 Sandalfoot Pointe Apartments N/A N/A N/A
166 Canterberry Apartments N/A N/A N/A
167 Lakeshore Villa Apartments N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
# Property Name Management Company
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
168 College Station Apartments First Management Company
169 CoMax Realty Building Co/Max Realty
170 Guardian Self Storage Roy and Anne Connard
171 Villas Of Loiret Goehausen & Company
172 West Marine Center Owner Managed
173 33 St. Mark's Place Tri-Star Equities
174 The Space Place Alliance Financial Investment Services
175 University of Phoenix Building UPX II L & M Asset Management, Inc.
176 The Chevelle Apartments G & G Properties
177 Foxborough Office Park Foxborough Office Building Partnership
178 Tree Tops Apartments Durr Property Management
179 Existing Industral Building Thomas Nickols
180 14255 North 79th Street B & H Enterprises of Arizona
181 Beverly Boulevard Retail Owner Managed
182 Littlefield Apartments The Gallagher Group, Inc.
183 The Woods of Old West Lawrence Roberts Realty Advisors, Inc.
184 Villa Fortuna Apartments Medina Properties
185 Clinton Heights Apartments Owner Managed
186 Green Acres Mobile Estates Owner Managed
187 University of Phoenix Building UPX III L & M Asset Management, Inc.
188 The Cedars Apartments Leinbach Company
189 Parkview Apartments CP Management, Inc.
190 Highland Arms Apartments Owner Managed
191 Central CA Health Services Owner Managed
192 Panorama Place First Flatiron, Inc.
193 Lone Oak Apartments RAS Management
194 Rio Mesa Self Storage Avilight Real Estate Development
195 Yorktown Apartments Coastline Equity Management
196 Crossings Center I Center Equities, Inc.
197 The Willow Woods Apartments Franks Real Estate, Inc.
198 409-415 Main Street Owner Managed
199 A-1 Mini-Storage E.R. Bishop
200 1740 Lynnwood Road Franklin Services Corporation
201 Williamsburg Apartments Owner Managed
202 3-5 Dana Drive Owner Managed
203 Lamar Place Apartments The Chelsea Group
204 218-14 and 218-22 Jamaica Avenue Owner Managed
205 Hines Plaza Apartments RAS Management
206 A-1 Self & Boat Storage Owner Managed
207 Valley Mini Storage Don Briggs
Total/Weighted Average (13):
<CAPTION>
# Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
168 College Station Apartments 2541-2566 Redbud Lane Lawrence
169 CoMax Realty Building 6223 Richmond Avenue Houston
170 Guardian Self Storage 2961 Fruitridge Road Sacramento
171 Villas Of Loiret 9153-9227 Boehm Drive Lenexa
172 West Marine Center 6148 East County Line Road Highlands Ranch
173 33 St. Mark's Place 33 St. Mark's Place New York
174 The Space Place 2370 East Mulberry Angleton
175 University of Phoenix Building UPX II 1290 Country Club Road Sunland Park
176 The Chevelle Apartments 2607-15 Throckmorton Street Dallas
177 Foxborough Office Park 700 East Southlake Boulevard Southlake
178 Tree Tops Apartments 3601 Manchaca Road Austin
179 Existing Industral Building 12304 Mccann Drive Santa Fe Springs
180 14255 North 79th Street 14255 North 79th Street Scottsdale
181 Beverly Boulevard Retail 7366-7386 Beverly Boulevard & 176-178 North Martel Avenue Los Angeles
182 Littlefield Apartments 2606 Rio Grande Street Austin
183 The Woods of Old West Lawrence 630 Michigan Street Lawrence
184 Villa Fortuna Apartments 1233 North 35th Street Phoenix
185 Clinton Heights Apartments 3668 Cleveland Avenue Columbus
186 Green Acres Mobile Estates 3051 North Mosswood Drive Fresno
187 University of Phoenix Building UPX III 1270 Country Club Road Sunland Park
188 The Cedars Apartments 218 Bull Run Norman
189 Parkview Apartments 502 South Street Bristol
190 Highland Arms Apartments 43 Granite Street New London
191 Central CA Health Services 3567 East Mount Whitney Avenue Laton
192 Panorama Place 500 & 502 Carroll Avenue Southlake
193 Lone Oak Apartments 3303 Lone Oak Drive Baton Rouge
194 Rio Mesa Self Storage 112 Rio Flor Place El Paso
195 Yorktown Apartments 417 Yorktown Avenue Huntington Beach
196 Crossings Center I 3040 Holcomb Bridge Road Norcross
197 The Willow Woods Apartments 812 North Center Street Arlington
198 409-415 Main Street 409-415 Main Street Little Falls
199 A-1 Mini-Storage 17536 Stuebner-Airline Road Spring
200 1740 Lynnwood Road 1740 Lynnwood Road Allentown
201 Williamsburg Apartments 722-746 Williamsburg Drive Caro
202 3-5 Dana Drive 3-5 Dana Drive Hudson
203 Lamar Place Apartments 709 Lamar Place Austin
204 218-14 and 218-22 Jamaica Avenue 218-14 and 218-22 Jamaica Avenue Queens Village
205 Hines Plaza Apartments 3629 Cypress Street West Monroe
206 A-1 Self & Boat Storage 9021 Ruland Road & 1611 Oak Tree Drive Houston
207 Valley Mini Storage 64 Mulberry Avenue Red Bluff
Total/Weighted Average (13):
<CAPTION>
Zip
# Property Name County State Code Property Type
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
168 College Station Apartments Douglas KS 66046 Multifamily
169 CoMax Realty Building Harris TX 77057 Office
170 Guardian Self Storage Sacramento CA 95820 Self Storage
171 Villas Of Loiret Johnson KS 66219 Multifamily
172 West Marine Center Douglas CO 80126 Retail
173 33 St. Mark's Place New York NY 10003 Mixed Use
174 The Space Place Brazoria TX 77516 Self Storage
175 University of Phoenix Building UPX II Dona Ana NM 88008 Office
176 The Chevelle Apartments Dallas TX 75219 Multifamily
177 Foxborough Office Park Tarrant TX 76092 Office
178 Tree Tops Apartments Travis TX 78704 Multifamily
179 Existing Industral Building Los Angeles CA 90670 Industrial
180 14255 North 79th Street Maricopa AZ 85260 Industrial
181 Beverly Boulevard Retail Los Angeles CA 90036 Retail
182 Littlefield Apartments Travis TX 78705 Multifamily
183 The Woods of Old West Lawrence Douglas KS 66044 Multifamily
184 Villa Fortuna Apartments Maricopa AZ 85008 Multifamily
185 Clinton Heights Apartments Franklin OH 43224 Multifamily
186 Green Acres Mobile Estates Fresno CA 93722 Manufactured Housing
187 University of Phoenix Building UPX III Dona Ana NM 88008 Office
188 The Cedars Apartments Cleveland OK 73071 Multifamily
189 Parkview Apartments Hartford CT 06010 Multifamily
190 Highland Arms Apartments New London CT 06320 Multifamily
191 Central CA Health Services Fresno CA 93242 Office
192 Panorama Place Tarrant TX 76092 Office
193 Lone Oak Apartments East Baton Rouge Parish LA 70814 Multifamily
194 Rio Mesa Self Storage El Paso TX 79912 Self Storage
195 Yorktown Apartments Orange CA 92648 Multifamily
196 Crossings Center I Gwinnett GA 30071 Office
197 The Willow Woods Apartments Tarrant TX 76011 Multifamily
198 409-415 Main Street Passaic NJ 07424 Industrial
199 A-1 Mini-Storage Harris TX 77379 Self Storage
200 1740 Lynnwood Road Lehigh PA 18103 Office
201 Williamsburg Apartments Tuscola MI 48723 Multifamily
202 3-5 Dana Drive Hillsborough NH 03051 Multifamily
203 Lamar Place Apartments Travis TX 78752 Multifamily
204 218-14 and 218-22 Jamaica Avenue Queens NY 11428 Mixed Use
205 Hines Plaza Apartments Ouachita Parish LA 71291 Multifamily
206 A-1 Self & Boat Storage Harris TX 77055 Self Storage
207 Valley Mini Storage Tehama CA 96080 Self Storage
Total/Weighted Average (13):
<CAPTION>
Units/
Sq. Ft./
Mortgage Rooms/
# Property Name Property Sub-type Loan Seller Pads
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
168 College Station Apartments Midland 64
169 CoMax Realty Building Column 39,450
170 Guardian Self Storage Midland 35,035
171 Villas Of Loiret Midland 12
172 West Marine Center Unanchored Column 11,042
173 33 St. Mark's Place Retail/Multifamily Midland 2,912
174 The Space Place Midland 51,614
175 University of Phoenix Building UPX II Midland 13,200
176 The Chevelle Apartments Midland 64
177 Foxborough Office Park Midland 9,986
178 Tree Tops Apartments Column 32
179 Existing Industral Building Midland 24,823
180 14255 North 79th Street Midland 16,757
181 Beverly Boulevard Retail Unanchored Column 13,764
182 Littlefield Apartments Column 16
183 The Woods of Old West Lawrence Column 40
184 Villa Fortuna Apartments Midland 32
185 Clinton Heights Apartments Column 68
186 Green Acres Mobile Estates Column 112
187 University of Phoenix Building UPX III Midland 10,815
188 The Cedars Apartments Midland 96
189 Parkview Apartments Midland 48
190 Highland Arms Apartments Column 31
191 Central CA Health Services Column 9,400
192 Panorama Place Midland 10,623
193 Lone Oak Apartments Midland 60
194 Rio Mesa Self Storage Midland 50,560
195 Yorktown Apartments Column 17
196 Crossings Center I Column 15,106
197 The Willow Woods Apartments Midland 32
198 409-415 Main Street Column 27,000
199 A-1 Mini-Storage Midland 17,260
200 1740 Lynnwood Road Column 11,450
201 Williamsburg Apartments Column 34
202 3-5 Dana Drive Column 24
203 Lamar Place Apartments Column 30
204 218-14 and 218-22 Jamaica Avenue Office/Retail Column 8,075
205 Hines Plaza Apartments Midland 40
206 A-1 Self & Boat Storage Column 62,940
207 Valley Mini Storage Midland 30,360
Total/Weighted Average (13):
<CAPTION>
Occupancy
Fee Simple/ Year Year Rate at
# Property Name Leasehold Built Renovated U/W (3)
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
168 College Station Apartments Fee 1961 1987 95%
169 CoMax Realty Building Fee 1975 1998 100%
170 Guardian Self Storage Fee 1976 N/A 97%
171 Villas Of Loiret Fee 1998 N/A 100%
172 West Marine Center Fee 1998 N/A 100%
173 33 St. Mark's Place Fee 1890 1995 100%
174 The Space Place Fee 1995 1999 99%
175 University of Phoenix Building UPX II Fee 1999 N/A 100%
176 The Chevelle Apartments Fee 1964 N/A 100%
177 Foxborough Office Park Fee 1998 N/A 100%
178 Tree Tops Apartments Fee 1974 N/A 97%
179 Existing Industral Building Fee 1988 N/A 100%
180 14255 North 79th Street Fee 1985 N/A 100%
181 Beverly Boulevard Retail Fee 1946 1984 100%
182 Littlefield Apartments Fee 1984 N/A 100%
183 The Woods of Old West Lawrence Fee 1984 1998 98%
184 Villa Fortuna Apartments Fee 1985 1998 100%
185 Clinton Heights Apartments Fee 1948 1989 99%
186 Green Acres Mobile Estates Fee 1963 N/A 97%
187 University of Phoenix Building UPX III Fee 1999 N/A 100%
188 The Cedars Apartments Fee 1981 N/A 91%
189 Parkview Apartments Fee 1965 N/A 92%
190 Highland Arms Apartments Fee 1920 1991 97%
191 Central CA Health Services Fee 1997 N/A 100%
192 Panorama Place Fee 1998 N/A 100%
193 Lone Oak Apartments Fee 1970 1997 98%
194 Rio Mesa Self Storage Fee 1993 N/A 88%
195 Yorktown Apartments Fee 1973 1999 94%
196 Crossings Center I Fee 1981 1996 100%
197 The Willow Woods Apartments Fee 1986 N/A 100%
198 409-415 Main Street Fee 1950 1973 100%
199 A-1 Mini-Storage Fee 1994 N/A 79%
200 1740 Lynnwood Road Fee 1969 1987 100%
201 Williamsburg Apartments Fee 1972 1997 88%
202 3-5 Dana Drive Fee 1968 1998 100%
203 Lamar Place Apartments Fee 1969 1997 100%
204 218-14 and 218-22 Jamaica Avenue Fee 1931 1996 100%
205 Hines Plaza Apartments Fee 1971 1998 100%
206 A-1 Self & Boat Storage Fee 1971 1977 94%
207 Valley Mini Storage Fee 1975 N/A 92%
-----------------------------------------
Total/Weighted Average (13): 1976 1994 96%
=========================================
</TABLE>
(1A) The Mortgage Loans secured by Lakewood House Apartments, Vali Hi Shopping
Center, Somers Plaza Shopping Center, Apple Valley Shopping Center and
Lakewood Shopping Center are cross-collateralized and cross-defaulted,
respectively.
(1B) The Mortgage Loans secured by Promotions Distributor Services Corp. and
Production Distribution Services Corp. are cross-collateralized and
cross-defaulted, respectively.
(1C) The Mortgage Loans secured by Dolphin Self Storage, Kangaroom Self Storage
and Airport Self Storage are cross-collateralized and cross-defaulted,
respectively.
(1D) The Mortgage Loans secured by Maplewood Apartments and Columbus Village
Apartments are cross-collateralized and cross-defaulted, respectively.
(1E) The Mortgage Loans secured by Cayuga Lake Estates and Erin Estates are
cross-collateralized and cross-defaulted, respectively.
(2) The Mortgage Loan secured by CVS Pharmacy - Atlanta, GA provides for the
increase in monthly payment as follows: $16,799.06 in April 2004,
$17,668.12 in April 2009 and $18,562.50 in April 2014.
(3) Does not include any hotel properties.
(4) In the case of cross-collateralized and cross-defaulted Mortgage Loans,
the combined LTV is presented for each and every related Mortgage Loan.
(5) At maturity with respect to Balloon Loans and Fully Amortizing Loans or at
the ARD in the case of ARD Loans. There can be no assurance that the value
of any particular Mortgaged Property will not have declined from the
original appraisal value. Weighted Average, Maximum and Minimum presented
are calculated without regard to any Fully Amortizing Loans.
(6) Underwritable NCF reflects the Net Cash Flow after Underwritable
Replacement Reserves, Underwritable LC's and TI's and Underwritable FF&E.
(7) DSCR is based on the amount of the monthly payments presented. In the case
of cross-collateralized and cross-defaulted Mortgage Loans the combined
DSCR is presented for each and every related Mortgage Loan.
(8) Assumes a Cut-off Date of December 1, 1999.
(9) In the case of the Anticipated Repayment Date loans, the Anticipated
Repayment Date is assumed to be the maturity date for the purposes of the
indicated column.
(10) Anticipated Repayment Date.
(11) Prepayment Provision as of Origination:
L (x) = Lockout or Defeasance for x years
YM A% (x) = Greater of Yield Maintenance Premium and A% Prepayment for x
years
A% (x) = A% Prepayment for x years
O (x) = Prepayable at par for x years
(12) "Yes" means that defeasance is permitted notwithstanding the Lockout
Period.
(13) For the purpose of Weighted Average as it relates to DSCR and LTV, the CTL
Loan has been excluded.
<PAGE>
<TABLE>
<CAPTION>
Maturitywr
/
Date of Cut-off ARD
Occupancy Appraised Date LTV Date LTV Underwritable
# Property Name Rate Value Ratio (4) Ratio (4) (5) NOI
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
168 College Station Apartments 9/1/99 1,575,000 78.5% 64.3% 168,666
169 CoMax Realty Building 9/1/99 1,900,000 64.5% 59.1% 189,878
170 Guardian Self Storage 7/27/99 1,700,000 70.5% 59.1% 157,266
171 Villas Of Loiret 8/17/99 1,500,000 79.8% 63.3% 135,498
172 West Marine Center 9/1/99 1,600,000 74.2% 67.6% 151,994
173 33 St. Mark's Place 7/31/99 1,665,000 71.0% 58.5% 168,924
174 The Space Place 9/21/99 1,650,000 71.1% 59.3% 157,254
175 University of Phoenix Building UPX II 10/6/99 2,025,000 54.0% 45.2% 154,205
176 The Chevelle Apartments 7/20/99 1,515,000 71.3% 58.5% 160,597
177 Foxborough Office Park 5/10/99 1,425,000 74.7% 67.5% 142,810
178 Tree Tops Apartments 6/8/99 1,300,000 80.0% 72.6% 128,551
179 Existing Industral Building 10/20/99 1,450,000 70.3% 67.4% 117,711
180 14255 North 79th Street 7/21/99 1,425,000 70.9% 63.7% 126,559
181 Beverly Boulevard Retail 7/29/99 2,495,000 40.5% 1.1% 227,506
182 Littlefield Apartments 8/1/99 1,470,000 68.5% 61.4% 116,533
183 The Woods of Old West Lawrence 9/28/99 1,275,000 78.4% 71.4% 129,190
184 Villa Fortuna Apartments 7/30/99 1,285,000 77.7% 69.9% 126,942
185 Clinton Heights Apartments 9/1/99 1,200,000 80.0% 72.8% 127,760
186 Green Acres Mobile Estates 5/1/99 1,600,000 56.2% 50.7% 149,602
187 University of Phoenix Building UPX III 7/15/99 1,600,000 55.9% 46.8% 125,798
188 The Cedars Apartments 9/30/99 1,325,000 66.8% 54.8% 176,211
189 Parkview Apartments 6/30/99 1,100,000 78.7% 64.0% 111,748
190 Highland Arms Apartments 10/7/99 1,200,000 70.7% 63.9% 103,844
191 Central CA Health Services 2/12/99 1,250,000 67.7% 57.6% 129,541
192 Panorama Place 6/7/99 1,310,000 63.2% 57.4% 120,223
193 Lone Oak Apartments 7/31/99 1,210,000 66.9% 54.5% 125,133
194 Rio Mesa Self Storage 7/12/99 1,400,000 56.7% 1.4% 149,645
195 Yorktown Apartments 8/1/99 1,550,000 50.3% 45.5% 94,900
196 Crossings Center I 9/1/99 975,000 77.9% 70.9% 112,171
197 The Willow Woods Apartments 7/6/99 1,035,000 72.3% 64.7% 90,156
198 409-415 Main Street 1/1/98 1,400,000 53.3% 26.8% 125,579
199 A-1 Mini-Storage 9/14/99 1,075,000 67.4% 56.4% 90,189
200 1740 Lynnwood Road 8/27/99 955,000 74.9% 63.3% 106,730
201 Williamsburg Apartments 8/24/99 915,000 73.1% 66.3% 83,075
202 3-5 Dana Drive 7/1/99 1,020,000 64.9% 47.2% 92,319
203 Lamar Place Apartments 10/26/99 900,000 72.8% 69.2% 85,849
204 218-14 and 218-22 Jamaica Avenue 7/1/99 1,055,000 60.6% 55.7% 89,659
205 Hines Plaza Apartments 7/31/99 835,000 73.5% 59.8% 80,293
206 A-1 Self & Boat Storage 6/15/99 920,000 60.7% 44.2% 93,913
207 Valley Mini Storage 7/28/99 715,000 75.8% 63.6% 73,094
------------------------------------------------------------------
Total/Weighted Average (13): $ 1,057,738,000 72.6% 64.0% $ 98,598,438
==================================================================
<CAPTION>
Contractual
Engineering Recurring Contractual
Underwritable Reserve at Replacement Recurring
# Property Name NCF (6) DSCR (7) Origination Reserve LC&TI
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
168 College Station Apartments 152,666 1.40 $40,000 $16,008 N/A
169 CoMax Realty Building 154,303 1.30 $55,250 N/A N/A
170 Guardian Self Storage 150,609 1.30 $26,969 $6,657 N/A
171 Villas Of Loiret 132,498 1.28 N/A $3,000 N/A
172 West Marine Center 139,897 1.25 N/A N/A N/A
173 33 St. Mark's Place 157,706 1.49 $11,063 $2,978 $8,263
174 The Space Place 150,739 1.34 N/A $6,515 N/A
175 University of Phoenix Building UPX II 138,942 1.33 N/A $2,640 $12,000
176 The Chevelle Apartments 144,597 1.52 N/A $16,020 N/A
177 Foxborough Office Park 127,299 1.31 N/A N/A $10,000
178 Tree Tops Apartments 120,551 1.24 $75,000 $8,000 N/A
179 Existing Industral Building 105,518 1.26 N/A $2,496 $18,000
180 14255 North 79th Street 112,389 1.25 N/A $1,676 $5,000
181 Beverly Boulevard Retail 211,677 1.75 N/A $2,065 N/A
182 Littlefield Apartments 111,733 1.25 N/A $4,800 N/A
183 The Woods of Old West Lawrence 119,190 1.26 N/A $10,000 N/A
184 Villa Fortuna Apartments 118,942 1.33 N/A $8,000 N/A
185 Clinton Heights Apartments 110,760 1.22 $313 $17,000 N/A
186 Green Acres Mobile Estates 144,002 1.76 N/A $5,600 N/A
187 University of Phoenix Building UPX III 113,293 1.33 N/A $2,163 $12,000
188 The Cedars Apartments 147,411 1.88 N/A N/A N/A
189 Parkview Apartments 99,028 1.33 $28,000 $12,720 N/A
190 Highland Arms Apartments 96,094 1.24 $4,688 $7,750 N/A
191 Central CA Health Services 118,261 1.38 N/A N/A N/A
192 Panorama Place 103,316 1.35 N/A $2,125 $16,000
193 Lone Oak Apartments 110,133 1.58 N/A $15,000 N/A
194 Rio Mesa Self Storage 142,061 1.53 N/A N/A N/A
195 Yorktown Apartments 90,042 1.25 N/A N/A N/A
196 Crossings Center I 89,814 1.26 $188 $6,042 N/A
197 The Willow Woods Apartments 81,196 1.24 N/A $8,000 N/A
198 409-415 Main Street 108,179 1.20 N/A $5,400 N/A
199 A-1 Mini-Storage 87,600 1.25 N/A $2,589 N/A
200 1740 Lynnwood Road 89,674 1.26 $2,000 N/A $21,000
201 Williamsburg Apartments 74,575 1.21 $4,813 $8,500 N/A
202 3-5 Dana Drive 86,319 1.22 $16,975 $6,000 N/A
203 Lamar Place Apartments 78,349 1.23 $12,000 $7,500 N/A
204 218-14 and 218-22 Jamaica Avenue 78,595 1.25 $16,250 $2,347 N/A
205 Hines Plaza Apartments 70,293 1.33 N/A $10,000 N/A
206 A-1 Self & Boat Storage 84,472 1.41 $10,000 $9,441 N/A
207 Valley Mini Storage 68,540 1.30 N/A $4,554 N/A
-----------------
Total/Weighted Average (13): $ 90,055,615
=================
<CAPTION>
Underwritable
Recurring Percentage of
Replacement Underwritable Original Cut-off Initial
# Property Name Reserve LC&TI Balance Balance (8) Pool Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
168 College Station Apartments $16,000 N/A 1,255,000 1,236,284 0.2%
169 CoMax Realty Building $11,835 $23,740 1,227,000 1,226,331 0.2%
170 Guardian Self Storage $6,657 N/A 1,202,000 1,198,742 0.2%
171 Villas Of Loiret $3,000 N/A 1,200,000 1,197,703 0.2%
172 West Marine Center $1,104 $10,993 1,187,700 1,187,020 0.2%
173 33 St. Mark's Place $2,978 $8,240 1,200,000 1,181,502 0.2%
174 The Space Place $6,515 N/A 1,173,750 1,172,594 0.2%
175 University of Phoenix Building UPX II $2,640 $12,623 1,100,000 1,094,026 0.1%
176 The Chevelle Apartments $16,000 N/A 1,100,000 1,080,843 0.1%
177 Foxborough Office Park $1,997 $13,514 1,068,000 1,064,646 0.1%
178 Tree Tops Apartments $8,000 N/A 1,040,000 1,039,385 0.1%
179 Existing Industral Building $2,482 $9,711 1,029,000 1,019,082 0.1%
180 14255 North 79th Street $4,357 $9,813 1,012,000 1,010,215 0.1%
181 Beverly Boulevard Retail $2,065 $13,764 1,015,000 1,009,695 0.1%
182 Littlefield Apartments $4,800 N/A 1,007,000 1,006,338 0.1%
183 The Woods of Old West Lawrence $10,000 N/A 1,000,000 999,427 0.1%
184 Villa Fortuna Apartments $8,000 N/A 1,000,000 998,279 0.1%
185 Clinton Heights Apartments $17,000 N/A 960,000 959,450 0.1%
186 Green Acres Mobile Estates $5,600 N/A 900,000 899,440 0.1%
187 University of Phoenix Building UPX III $2,163 $10,342 900,000 895,112 0.1%
188 The Cedars Apartments $28,800 N/A 900,000 884,463 0.1%
189 Parkview Apartments $12,720 N/A 880,000 865,284 0.1%
190 Highland Arms Apartments $7,750 N/A 850,000 848,591 0.1%
191 Central CA Health Services $1,880 $9,400 850,000 846,014 0.1%
192 Panorama Place $2,125 $14,782 830,000 828,374 0.1%
193 Lone Oak Apartments $15,000 N/A 825,000 809,970 0.1%
194 Rio Mesa Self Storage $7,584 N/A 800,000 793,354 0.1%
195 Yorktown Apartments $4,858 N/A 780,000 779,528 0.1%
196 Crossings Center I $7,251 $15,106 760,000 759,300 0.1%
197 The Willow Woods Apartments $8,960 N/A 750,000 748,277 0.1%
198 409-415 Main Street $5,400 $12,000 750,000 746,107 0.1%
199 A-1 Mini-Storage $2,589 N/A 725,000 724,296 0.1%
200 1740 Lynnwood Road $2,843 $14,213 716,250 715,115 0.1%
201 Williamsburg Apartments $8,500 N/A 670,000 668,933 0.1%
202 3-5 Dana Drive $6,000 N/A 663,000 661,993 0.1%
203 Lamar Place Apartments $7,500 N/A 656,000 655,646 0.1%
204 218-14 and 218-22 Jamaica Avenue $2,372 $8,692 640,000 639,661 0.1%
205 Hines Plaza Apartments $10,000 N/A 625,000 613,653 0.1%
206 A-1 Self & Boat Storage $9,441 N/A 560,000 558,423 0.1%
207 Valley Mini Storage $4,554 N/A 543,750 542,290 0.1%
---------------------------------------------
Total/Weighted Average (13): $ 763,409,826 $760,414,266 100.0%
=============================================
<CAPTION>
Orig Rem. Orig Rem.
Maturity Amort. Amort. Term to Term to Interest
# Property Name Balance Term Term Maturity (9) Maturity (9) Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
168 College Station Apartments 1,012,267 300 287 120 107 7.270%
169 CoMax Realty Building 1,122,802 360 359 120 119 9.010%
170 Guardian Self Storage 1,003,857 300 297 120 117 8.460%
171 Villas Of Loiret 949,107 360 357 180 177 7.750%
172 West Marine Center 1,081,184 360 359 120 119 8.770%
173 33 St. Mark's Place 973,962 300 286 120 106 7.470%
174 The Space Place 978,578 300 299 120 119 8.400%
175 University of Phoenix Building UPX II 914,304 300 294 120 114 8.280%
176 The Chevelle Apartments 885,924 300 285 120 105 7.220%
177 Foxborough Office Park 962,463 360 354 120 114 8.310%
178 Tree Tops Apartments 943,587 360 359 120 119 8.620%
179 Existing Industral Building 976,671 360 347 60 47 7.180%
180 14255 North 79th Street 907,102 360 357 120 117 8.090%
181 Beverly Boulevard Retail 28,426 180 178 180 178 8.660%
182 Littlefield Apartments 902,797 360 359 120 119 8.100%
183 The Woods of Old West Lawrence 910,318 360 359 120 119 8.770%
184 Villa Fortuna Apartments 898,455 360 357 120 117 8.190%
185 Clinton Heights Apartments 873,905 360 359 120 119 8.770%
186 Green Acres Mobile Estates 811,956 360 359 120 119 8.370%
187 University of Phoenix Building UPX III 748,067 300 294 120 114 8.280%
188 The Cedars Apartments 725,957 300 285 120 105 7.270%
189 Parkview Apartments 704,251 300 286 120 106 7.010%
190 Highland Arms Apartments 766,350 360 357 120 117 8.340%
191 Central CA Health Services 720,619 300 294 120 114 9.000%
192 Panorama Place 751,557 360 356 120 116 8.520%
193 Lone Oak Apartments 659,120 300 285 120 105 6.960%
194 Rio Mesa Self Storage 20,031 180 177 180 177 8.250%
195 Yorktown Apartments 705,942 360 359 120 119 8.510%
196 Crossings Center I 691,080 360 358 120 118 8.710%
197 The Willow Woods Apartments 669,984 360 356 120 116 7.940%
198 409-415 Main Street 375,631 180 178 120 118 8.730%
199 A-1 Mini-Storage 605,962 300 299 120 119 8.490%
200 1740 Lynnwood Road 604,885 300 298 120 118 8.860%
201 Williamsburg Apartments 606,276 360 357 120 117 8.500%
202 3-5 Dana Drive 481,875 240 239 120 119 8.890%
203 Lamar Place Apartments 622,984 360 359 84 83 9.060%
204 218-14 and 218-22 Jamaica Avenue 587,400 360 359 120 119 9.150%
205 Hines Plaza Apartments 499,645 300 285 120 105 6.980%
206 A-1 Self & Boat Storage 406,609 240 238 120 118 8.850%
207 Valley Mini Storage 454,745 300 297 120 117 8.510%
----------------------------------------------------------------------------
Total/Wghted Average (13): $ 661,528,692 345 340 121 116 7.982%
============================================================================
<CAPTION>
First
Interest Calculation Monthly Payment Maturity
# Property Name (30/360 / Actual/360) Payment Date Date ARD (10) Seasoning
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
168 College Station Apartments Actual/360 9,087.40 12/1/98 11/1/08 13
169 CoMax Realty Building Actual/360 9,881.55 12/1/99 11/1/09 1
170 Guardian Self Storage Actual/360 9,646.45 10/1/99 9/1/09 3
171 Villas Of Loiret Actual/360 8,596.95 10/1/99 9/1/14 3
172 West Marine Center Actual/360 9,360.61 12/1/99 11/1/09 1
173 33 St. Mark's Place Actual/360 8,844.49 11/1/98 10/1/23 10/1/08 14
174 The Space Place Actual/360 9,372.39 12/1/99 11/1/09 1
175 University of Phoenix Building UPX II Actual/360 8,695.01 7/1/99 6/1/09 6
176 The Chevelle Apartments Actual/360 7,929.63 10/1/98 9/1/08 15
177 Foxborough Office Park Actual/360 8,068.62 7/1/99 6/1/09 6
178 Tree Tops Apartments Actual/360 8,085.31 12/1/99 11/1/09 1
179 Existing Industral Building Actual/360 6,970.80 12/1/98 11/1/03 13
180 14255 North 79th Street Actual/360 7,489.29 10/1/99 9/1/09 3
181 Beverly Boulevard Retail Actual/360 10,090.53 11/1/99 10/1/14 2
182 Littlefield Apartments Actual/360 7,459.33 12/1/99 11/1/09 1
183 The Woods of Old West Lawrence Actual/360 7,881.29 12/1/99 11/1/09 1
184 Villa Fortuna Apartments Actual/360 7,470.53 10/1/99 9/1/09 3
185 Clinton Heights Apartments Actual/360 7,566.04 12/1/99 11/1/09 1
186 Green Acres Mobile Estates Actual/360 6,837.47 12/1/99 11/1/09 1
187 University of Phoenix Building UPX III Actual/360 7,114.10 7/1/99 6/1/09 6
188 The Cedars Apartments Actual/360 6,516.86 10/1/98 9/1/08 15
189 Parkview Apartments Actual/360 6,225.27 11/1/98 10/1/23 10/1/08 14
190 Highland Arms Apartments Actual/360 6,439.63 10/1/99 9/1/09 3
191 Central CA Health Services Actual/360 7,133.17 7/1/99 6/1/09 6
192 Panorama Place Actual/360 6,393.75 9/1/99 8/1/09 4
193 Lone Oak Apartments Actual/360 5,809.89 10/1/98 9/1/08 15
194 Rio Mesa Self Storage Actual/360 7,761.12 10/1/99 9/1/14 3
195 Yorktown Apartments Actual/360 6,003.05 12/1/99 11/1/09 1
196 Crossings Center I Actual/360 5,957.22 11/1/99 10/1/09 2
197 The Willow Woods Apartments Actual/360 5,471.90 9/1/99 8/1/09 4
198 409-415 Main Street Actual/360 7,487.01 11/1/99 10/1/09 2
199 A-1 Mini-Storage Actual/360 5,833.01 12/1/99 11/1/09 1
200 1740 Lynnwood Road Actual/360 5,942.23 11/1/99 10/1/09 2
201 Williamsburg Apartments Actual/360 5,151.72 10/1/99 9/1/09 3
202 3-5 Dana Drive Actual/360 5,918.36 12/1/99 11/1/09 1
203 Lamar Place Apartments Actual/360 5,306.67 12/1/99 11/1/06 1
204 218-14 and 218-22 Jamaica Avenue Actual/360 5,218.81 12/1/99 11/1/09 1
205 Hines Plaza Apartments Actual/360 4,409.40 10/1/98 9/1/08 15
206 A-1 Self & Boat Storage Actual/360 4,984.57 11/1/99 10/1/09 2
207 Valley Mini Storage Actual/360 4,382.09 10/1/99 9/1/09 3
---------------- ----------
Total/Weighted Average (13): $ 5,672,454.68 5
================ ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Original
Lockout
Servicing and Prepayment Provision Period
# Property Name Trustee Fees as of Origination (11) (Months)
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
168 College Station Apartments 0.0823% L (4.92), YM 1% (4.75), O (0.33) 59
169 CoMax Realty Building 0.0523% L (9.5), O (0.5) 114
170 Guardian Self Storage 0.0823% L (9.67), O (0.33) 116
171 Villas Of Loiret 0.0823% L (14.67), O (0.33) 176
172 West Marine Center 0.0523% L (9.5), O (0.5) 114
173 33 St. Mark's Place 0.0823% L (3.92), YM 1% (5.5), O (0.58) 47
174 The Space Place 0.0823% L (9.67), O (0.33) 116
175 University of Phoenix Building UPX II 0.1823% L (9.67), O (0.33) 116
176 The Chevelle Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
177 Foxborough Office Park 0.0823% L (9.67), O (0.33) 116
178 Tree Tops Apartments 0.0523% L (9.5), O (0.5) 114
179 Existing Industral Building 0.0823% L (2.42), YM 1% (2.25), O (0.33) 29
180 14255 North 79th Street 0.1823% L (9.67), O (0.33) 116
181 Beverly Boulevard Retail 0.0523% L (14.5), O (0.5) 174
182 Littlefield Apartments 0.0523% L (9.5), O (0.5) 114
183 The Woods of Old West Lawrence 0.0523% L (9.5), O (0.5) 114
184 Villa Fortuna Apartments 0.0823% L (9.67), O (0.33) 116
185 Clinton Heights Apartments 0.0523% L (9.5), O (0.5) 114
186 Green Acres Mobile Estates 0.0523% L (9.5), O (0.5) 114
187 University of Phoenix Building UPX III 0.0823% L (9.67), O (0.33) 116
188 The Cedars Apartments 0.1823% L (4.92), YM 1% (4.5), O (0.58) 59
189 Parkview Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
190 Highland Arms Apartments 0.0523% L (9.5), O (0.5) 114
191 Central CA Health Services 0.0523% L (9.5), O (0.5) 114
192 Panorama Place 0.0823% L (9.67), O (0.33) 116
193 Lone Oak Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
194 Rio Mesa Self Storage 0.0823% L (14.67), O (0.33) 176
195 Yorktown Apartments 0.0523% L (9.5), O (0.5) 114
196 Crossings Center I 0.0523% L (9.5), O (0.5) 114
197 The Willow Woods Apartments 0.0823% L (9.67), O (0.33) 116
198 409-415 Main Street 0.0523% L (9.5), O (0.5) 114
199 A-1 Mini-Storage 0.0823% L (9.67), O (0.33) 116
200 1740 Lynnwood Road 0.0523% L (9.5), O (0.5) 114
201 Williamsburg Apartments 0.0523% L (9.5), O (0.5) 114
202 3-5 Dana Drive 0.0523% L (9.5), O (0.5) 114
203 Lamar Place Apartments 0.0523% L (6.5), O (0.5) 78
204 218-14 and 218-22 Jamaica Avenue 0.0523% L (9.5), O (0.5) 114
205 Hines Plaza Apartments 0.0823% L (4.92), YM 1% (4.5), O (0.58) 59
206 A-1 Self & Boat Storage 0.0523% L (9.5), O (0.5) 114
207 Valley Mini Storage 0.0823% L (9.67), O (0.33) 116
-----------------
Total/Weighted Average (13): 0.0849%
=================
<CAPTION>
Original Original
Yield Prepayment Original Yield
Maintenance Premium Open Lockout Maintenance
Period Period Period Expiration Expiration
# Property Name (Months) (Months) (Months) Defeasance (12) Date Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
168 College Station Apartments 57 0 4 No 10/1/03 7/1/08
169 CoMax Realty Building 0 0 6 Yes 5/1/09 N/A
170 Guardian Self Storage 0 0 4 Yes 5/1/09 N/A
171 Villas Of Loiret 0 0 4 Yes 5/1/14 N/A
172 West Marine Center 0 0 6 Yes 5/1/09 N/A
173 33 St. Mark's Place 66 0 7 No 9/1/02 3/1/08
174 The Space Place 0 0 4 Yes 7/1/09 N/A
175 University of Phoenix Building UPX II 0 0 4 Yes 2/1/09 N/A
176 The Chevelle Apartments 54 0 7 No 8/1/03 2/1/08
177 Foxborough Office Park 0 0 4 Yes 2/1/09 N/A
178 Tree Tops Apartments 0 0 6 Yes 5/1/09 N/A
179 Existing Industral Building 27 0 4 No 4/1/01 7/1/03
180 14255 North 79th Street 0 0 4 Yes 5/1/09 N/A
181 Beverly Boulevard Retail 0 0 6 Yes 4/1/14 N/A
182 Littlefield Apartments 0 0 6 Yes 5/1/09 N/A
183 The Woods of Old West Lawrence 0 0 6 Yes 5/1/09 N/A
184 Villa Fortuna Apartments 0 0 4 Yes 5/1/09 N/A
185 Clinton Heights Apartments 0 0 6 Yes 5/1/09 N/A
186 Green Acres Mobile Estates 0 0 6 Yes 5/1/09 N/A
187 University of Phoenix Building UPX III 0 0 4 Yes 2/1/09 N/A
188 The Cedars Apartments 54 0 7 No 8/1/03 2/1/08
189 Parkview Apartments 54 0 7 No 9/1/03 3/1/08
190 Highland Arms Apartments 0 0 6 Yes 3/1/09 N/A
191 Central CA Health Services 0 0 6 Yes 12/1/08 N/A
192 Panorama Place 0 0 4 Yes 4/1/09 N/A
193 Lone Oak Apartments 54 0 7 No 8/1/03 2/1/08
194 Rio Mesa Self Storage 0 0 4 Yes 5/1/14 N/A
195 Yorktown Apartments 0 0 6 Yes 5/1/09 N/A
196 Crossings Center I 0 0 6 Yes 4/1/09 N/A
197 The Willow Woods Apartments 0 0 4 Yes 4/1/09 N/A
198 409-415 Main Street 0 0 6 Yes 4/1/09 N/A
199 A-1 Mini-Storage 0 0 4 Yes 7/1/09 N/A
200 1740 Lynnwood Road 0 0 6 Yes 4/1/09 N/A
201 Williamsburg Apartments 0 0 6 Yes 3/1/09 N/A
202 3-5 Dana Drive 0 0 6 Yes 5/1/09 N/A
203 Lamar Place Apartments 0 0 6 Yes 5/1/06 N/A
204 218-14 and 218-22 Jamaica Avenue 0 0 6 Yes 5/1/09 N/A
205 Hines Plaza Apartments 54 0 7 No 8/1/03 2/1/08
206 A-1 Self & Boat Storage 0 0 6 Yes 4/1/09 N/A
207 Valley Mini Storage 0 0 4 Yes 5/1/09 N/A
Total/Weighted Average (13):
<CAPTION>
Prepayment
Premium Utilities Subject
Expiration Hotel Multifamily Tenant Multifamily Studio
# Property Name Date Franchise Pays Elevators Units
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
168 College Station Apartments N/A N/A Electric/Gas/Water/Sewer 0 N/A
169 CoMax Realty Building N/A N/A N/A N/A N/A
170 Guardian Self Storage N/A N/A N/A N/A N/A
171 Villas Of Loiret N/A N/A Electric/Water/Sewer 0 N/A
172 West Marine Center N/A N/A N/A N/A N/A
173 33 St. Mark's Place N/A N/A N/A N/A N/A
174 The Space Place N/A N/A N/A N/A N/A
175 University of Phoenix Building UPX II N/A N/A N/A N/A N/A
176 The Chevelle Apartments N/A N/A None 0 26
177 Foxborough Office Park N/A N/A N/A N/A N/A
178 Tree Tops Apartments N/A N/A Electric 0 1
179 Existing Industral Building N/A N/A N/A N/A N/A
180 14255 North 79th Street N/A N/A N/A N/A N/A
181 Beverly Boulevard Retail N/A N/A N/A N/A N/A
182 Littlefield Apartments N/A N/A Electric 0 N/A
183 The Woods of Old West Lawrence N/A N/A Electric 0 1
184 Villa Fortuna Apartments N/A N/A Electric/Water/Sewer 0 N/A
185 Clinton Heights Apartments N/A N/A Electric/Gas/Water 0 N/A
186 Green Acres Mobile Estates N/A N/A N/A N/A N/A
187 University of Phoenix Building UPX III N/A N/A N/A N/A N/A
188 The Cedars Apartments N/A N/A Electric/Water/Sewer 0 N/A
189 Parkview Apartments N/A N/A Electric 1 4
190 Highland Arms Apartments N/A N/A Electric 1 3
191 Central CA Health Services N/A N/A N/A N/A N/A
192 Panorama Place N/A N/A N/A N/A N/A
193 Lone Oak Apartments N/A N/A Electric 0 N/A
194 Rio Mesa Self Storage N/A N/A N/A N/A N/A
195 Yorktown Apartments N/A N/A Electric 0 N/A
196 Crossings Center I N/A N/A N/A N/A N/A
197 The Willow Woods Apartments N/A N/A Electric 0 N/A
198 409-415 Main Street N/A N/A N/A N/A N/A
199 A-1 Mini-Storage N/A N/A N/A N/A N/A
200 1740 Lynnwood Road N/A N/A N/A N/A N/A
201 Williamsburg Apartments N/A N/A Electric/Gas 0 N/A
202 3-5 Dana Drive N/A N/A Electric/Water/Sewer 0 N/A
203 Lamar Place Apartments N/A N/A Electric 0 N/A
204 218-14 and 218-22 Jamaica Avenue N/A N/A N/A N/A N/A
205 Hines Plaza Apartments N/A N/A Electric 0 N/A
206 A-1 Self & Boat Storage N/A N/A N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A N/A N/A
Total/Weighted Average (13):
<CAPTION>
Subject Subject Subject Subject Subject
Studio Studio 1 BR 1 BR 1 BR
# Property Name Avg. Rent Max. Rent Units Avg. Rent Max. Rent
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
168 College Station Apartments N/A N/A 16 $371 $395
169 CoMax Realty Building N/A N/A N/A N/A N/A
170 Guardian Self Storage N/A N/A N/A N/A N/A
171 Villas Of Loiret N/A N/A N/A N/A N/A
172 West Marine Center N/A N/A N/A N/A N/A
173 33 St. Mark's Place N/A N/A N/A N/A N/A
174 The Space Place N/A N/A N/A N/A N/A
175 University of Phoenix Building UPX II N/A N/A N/A N/A N/A
176 The Chevelle Apartments $394 $415 17 $500 $595
177 Foxborough Office Park N/A N/A N/A N/A N/A
178 Tree Tops Apartments $325 $325 16 $528 $625
179 Existing Industral Building N/A N/A N/A N/A N/A
180 14255 North 79th Street N/A N/A N/A N/A N/A
181 Beverly Boulevard Retail N/A N/A N/A N/A N/A
182 Littlefield Apartments N/A N/A N/A N/A N/A
183 The Woods of Old West Lawrence $465 $465 N/A N/A N/A
184 Villa Fortuna Apartments N/A N/A N/A N/A N/A
185 Clinton Heights Apartments N/A N/A 68 $324 $335
186 Green Acres Mobile Estates N/A N/A N/A N/A N/A
187 University of Phoenix Building UPX III N/A N/A N/A N/A N/A
188 The Cedars Apartments N/A N/A 88 $298 $399
189 Parkview Apartments $437 $440 28 $505 $555
190 Highland Arms Apartments $422 $425 10 $523 $530
191 Central CA Health Services N/A N/A N/A N/A N/A
192 Panorama Place N/A N/A N/A N/A N/A
193 Lone Oak Apartments N/A N/A 14 $355 $360
194 Rio Mesa Self Storage N/A N/A N/A N/A N/A
195 Yorktown Apartments N/A N/A N/A N/A N/A
196 Crossings Center I N/A N/A N/A N/A N/A
197 The Willow Woods Apartments N/A N/A 1 $495 $495
198 409-415 Main Street N/A N/A N/A N/A N/A
199 A-1 Mini-Storage N/A N/A N/A N/A N/A
200 1740 Lynnwood Road N/A N/A N/A N/A N/A
201 Williamsburg Apartments N/A N/A 12 $349 $350
202 3-5 Dana Drive N/A N/A 3 $525 $550
203 Lamar Place Apartments N/A N/A 22 $430 $505
204 218-14 and 218-22 Jamaica Avenue N/A N/A N/A N/A N/A
205 Hines Plaza Apartments N/A N/A 8 $365 $370
206 A-1 Self & Boat Storage N/A N/A N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A N/A N/A
Total/Weighted Average (13):
<CAPTION>
Subject Subject Subject Subject Subject
2 BR 2 BR 2 BR 3 BR 3 BR
# Property Name Units Avg. Rent Max. Rent Units Avg. Rent
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
168 College Station Apartments 48 $421 $450 N/A N/A
169 CoMax Realty Building N/A N/A N/A N/A N/A
170 Guardian Self Storage N/A N/A N/A N/A N/A
171 Villas Of Loiret N/A N/A N/A 12 $1,254
172 West Marine Center N/A N/A N/A N/A N/A
173 33 St. Mark's Place N/A N/A N/A N/A N/A
174 The Space Place N/A N/A N/A N/A N/A
175 University of Phoenix Building UPX II N/A N/A N/A N/A N/A
176 The Chevelle Apartments 21 $623 $725 N/A N/A
177 Foxborough Office Park N/A N/A N/A N/A N/A
178 Tree Tops Apartments 15 $631 $650 N/A N/A
179 Existing Industral Building N/A N/A N/A N/A N/A
180 14255 North 79th Street N/A N/A N/A N/A N/A
181 Beverly Boulevard Retail N/A N/A N/A N/A N/A
182 Littlefield Apartments 16 $1,152 $1,400 N/A N/A
183 The Woods of Old West Lawrence 39 $485 $490 N/A N/A
184 Villa Fortuna Apartments 32 $530 $535 N/A N/A
185 Clinton Heights Apartments N/A N/A N/A N/A N/A
186 Green Acres Mobile Estates N/A N/A N/A N/A N/A
187 University of Phoenix Building UPX III N/A N/A N/A N/A N/A
188 The Cedars Apartments 8 $396 $429 N/A N/A
189 Parkview Apartments 16 $553 $575 N/A N/A
190 Highland Arms Apartments 11 $593 $610 7 $666
191 Central CA Health Services N/A N/A N/A N/A N/A
192 Panorama Place N/A N/A N/A N/A N/A
193 Lone Oak Apartments 38 $419 $425 8 $468
194 Rio Mesa Self Storage N/A N/A N/A N/A N/A
195 Yorktown Apartments 17 $815 $875 N/A N/A
196 Crossings Center I N/A N/A N/A N/A N/A
197 The Willow Woods Apartments 31 $525 $550 N/A N/A
198 409-415 Main Street N/A N/A N/A N/A N/A
199 A-1 Mini-Storage N/A N/A N/A N/A N/A
200 1740 Lynnwood Road N/A N/A N/A N/A N/A
201 Williamsburg Apartments 22 $424 $425 N/A N/A
202 3-5 Dana Drive 21 $631 $675 N/A N/A
203 Lamar Place Apartments 8 $553 $635 N/A N/A
204 218-14 and 218-22 Jamaica Avenue N/A N/A N/A N/A N/A
205 Hines Plaza Apartments 24 $420 $430 8 $461
206 A-1 Self & Boat Storage N/A N/A N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A N/A N/A
Total/Weighted Average (13):
<CAPTION>
Subject Subject Subject Subject
3 BR 4 BR 4 BR 4 BR
# Property Name Max. Rent Units Avg. Rent Max. Rent
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
168 College Station Apartments N/A N/A N/A N/A
169 CoMax Realty Building N/A N/A N/A N/A
170 Guardian Self Storage N/A N/A N/A N/A
171 Villas Of Loiret $1,350 N/A N/A N/A
172 West Marine Center N/A N/A N/A N/A
173 33 St. Mark's Place N/A N/A N/A N/A
174 The Space Place N/A N/A N/A N/A
175 University of Phoenix Building UPX II N/A N/A N/A N/A
176 The Chevelle Apartments N/A N/A N/A N/A
177 Foxborough Office Park N/A N/A N/A N/A
178 Tree Tops Apartments N/A N/A N/A N/A
179 Existing Industral Building N/A N/A N/A N/A
180 14255 North 79th Street N/A N/A N/A N/A
181 Beverly Boulevard Retail N/A N/A N/A N/A
182 Littlefield Apartments N/A N/A N/A N/A
183 The Woods of Old West Lawrence N/A N/A N/A N/A
184 Villa Fortuna Apartments N/A N/A N/A N/A
185 Clinton Heights Apartments N/A N/A N/A N/A
186 Green Acres Mobile Estates N/A N/A N/A N/A
187 University of Phoenix Building UPX III N/A N/A N/A N/A
188 The Cedars Apartments N/A N/A N/A N/A
189 Parkview Apartments N/A N/A N/A N/A
190 Highland Arms Apartments $685 N/A N/A N/A
191 Central CA Health Services N/A N/A N/A N/A
192 Panorama Place N/A N/A N/A N/A
193 Lone Oak Apartments $475 N/A N/A N/A
194 Rio Mesa Self Storage N/A N/A N/A N/A
195 Yorktown Apartments N/A N/A N/A N/A
196 Crossings Center I N/A N/A N/A N/A
197 The Willow Woods Apartments N/A N/A N/A N/A
198 409-415 Main Street N/A N/A N/A N/A
199 A-1 Mini-Storage N/A N/A N/A N/A
200 1740 Lynnwood Road N/A N/A N/A N/A
201 Williamsburg Apartments N/A N/A N/A N/A
202 3-5 Dana Drive N/A N/A N/A N/A
203 Lamar Place Apartments N/A N/A N/A N/A
204 218-14 and 218-22 Jamaica Avenue N/A N/A N/A N/A
205 Hines Plaza Apartments $475 N/A N/A N/A
206 A-1 Self & Boat Storage N/A N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A N/A
Total/Weighted Average (13):
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Major Major Major
Tenant #1 Tenant #1 Tenant #1 Lease
# Property Name Name Sq. Ft. Expiration Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
168 College Station Apartments N/A N/A N/A
169 CoMax Realty Building Greenberg, Grant & Associates 12,950 1/1/02
170 Guardian Self Storage N/A N/A N/A
171 Villas Of Loiret N/A N/A N/A
172 West Marine Center West Marine Products Inc. 5,521 7/28/13
173 33 St. Mark's Place Smash Compact Discs 728 12/31/99
174 The Space Place N/A N/A N/A
175 University of Phoenix Building UPX II University of Phoenix 13,200 2/28/06
176 The Chevelle Apartments N/A N/A N/A
177 Foxborough Office Park Century 21 Worldwide/Johnston 3,438 4/30/03
178 Tree Tops Apartments N/A N/A N/A
179 Existing Industral Building Flex Metal Components 24,823 5/31/02
180 14255 North 79th Street Southwest Flexo 3,350 11/30/99
181 Beverly Boulevard Retail Modernica Inc. 3,662 3/31/02
182 Littlefield Apartments N/A N/A N/A
183 The Woods of Old West Lawrence N/A N/A N/A
184 Villa Fortuna Apartments N/A N/A N/A
185 Clinton Heights Apartments N/A N/A N/A
186 Green Acres Mobile Estates N/A N/A N/A
187 University of Phoenix Building UPX III University of Phoenix 10,815 2/28/06
188 The Cedars Apartments N/A N/A N/A
189 Parkview Apartments N/A N/A N/A
190 Highland Arms Apartments N/A N/A N/A
191 Central CA Health Services Central Valley Health 9,400 12/31/11
192 Panorama Place Coldwell Banker 3,035 2/28/02
193 Lone Oak Apartments N/A N/A N/A
194 Rio Mesa Self Storage N/A N/A N/A
195 Yorktown Apartments N/A N/A N/A
196 Crossings Center I B.O.S.S., Inc. 3,089 1/1/01
197 The Willow Woods Apartments N/A N/A N/A
198 409-415 Main Street Falls Metal Works, Inc. 27,000 12/31/09
199 A-1 Mini-Storage N/A N/A N/A
200 1740 Lynnwood Road Mack Truck, Inc. 11,450 8/26/05
201 Williamsburg Apartments N/A N/A N/A
202 3-5 Dana Drive N/A N/A N/A
203 Lamar Place Apartments N/A N/A N/A
204 218-14 and 218-22 Jamaica Avenue Genolyn Day Care 2,710 6/30/08
205 Hines Plaza Apartments N/A N/A N/A
206 A-1 Self & Boat Storage N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A
Total/Weighted Average (13):
<CAPTION>
Major Major Major
Tenant #2 Tenant #2 Tenant #2 Lease
# Property Name Name Sq. Ft. Expiration Date
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
168 College Station Apartments N/A N/A N/A
169 CoMax Realty Building N/A N/A N/A
170 Guardian Self Storage N/A N/A N/A
171 Villas Of Loiret N/A N/A N/A
172 West Marine Center All About Fitness Inc 5,521 7/14/09
173 33 St. Mark's Place Dilara, Inc. 728 12/31/99
174 The Space Place N/A N/A N/A
175 University of Phoenix Building UPX II N/A N/A N/A
176 The Chevelle Apartments N/A N/A N/A
177 Foxborough Office Park Flynn & Campbell, LLP/Larry D. Flynn 2,902 4/30/14
178 Tree Tops Apartments N/A N/A N/A
179 Existing Industral Building N/A N/A N/A
180 14255 North 79th Street CBH Enterprises 2,687 6/30/01
181 Beverly Boulevard Retail In House 1,962 5/31/03
182 Littlefield Apartments N/A N/A N/A
183 The Woods of Old West Lawrence N/A N/A N/A
184 Villa Fortuna Apartments N/A N/A N/A
185 Clinton Heights Apartments N/A N/A N/A
186 Green Acres Mobile Estates N/A N/A N/A
187 University of Phoenix Building UPX III N/A N/A N/A
188 The Cedars Apartments N/A N/A N/A
189 Parkview Apartments N/A N/A N/A
190 Highland Arms Apartments N/A N/A N/A
191 Central CA Health Services N/A N/A N/A
192 Panorama Place Partners For Growth 1,538 2/28/02
193 Lone Oak Apartments N/A N/A N/A
194 Rio Mesa Self Storage N/A N/A N/A
195 Yorktown Apartments N/A N/A N/A
196 Crossings Center I e-Tech, Inc. 2,402 1/1/00
197 The Willow Woods Apartments N/A N/A N/A
198 409-415 Main Street N/A N/A N/A
199 A-1 Mini-Storage N/A N/A N/A
200 1740 Lynnwood Road N/A N/A N/A
201 Williamsburg Apartments N/A N/A N/A
202 3-5 Dana Drive N/A N/A N/A
203 Lamar Place Apartments N/A N/A N/A
204 218-14 and 218-22 Jamaica Avenue Popeye's 1,800 4/30/08
205 Hines Plaza Apartments N/A N/A N/A
206 A-1 Self & Boat Storage N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A
Total/Weighted Average (13):
<CAPTION>
Major Major Major
Tenant #3 Tenant #3 Tenant #3 Lease
# Property Name Name Sq. Ft. Expiration Date
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
168 College Station Apartments N/A N/A N/A
169 CoMax Realty Building N/A N/A N/A
170 Guardian Self Storage N/A N/A N/A
171 Villas Of Loiret N/A N/A N/A
172 West Marine Center N/A N/A N/A
173 33 St. Mark's Place Perseus Body, Inc. 728 9/30/99
174 The Space Place N/A N/A N/A
175 University of Phoenix Building UPX II N/A N/A N/A
176 The Chevelle Apartments N/A N/A N/A
177 Foxborough Office Park Al Suarez and Associates 1,686 6/30/03
178 Tree Tops Apartments N/A N/A N/A
179 Existing Industral Building N/A N/A N/A
180 14255 North 79th Street Accents By Masters 1,675 2/28/00
181 Beverly Boulevard Retail Eduardo Lucero 1,820 5/14/02
182 Littlefield Apartments N/A N/A N/A
183 The Woods of Old West Lawrence N/A N/A N/A
184 Villa Fortuna Apartments N/A N/A N/A
185 Clinton Heights Apartments N/A N/A N/A
186 Green Acres Mobile Estates N/A N/A N/A
187 University of Phoenix Building UPX III N/A N/A N/A
188 The Cedars Apartments N/A N/A N/A
189 Parkview Apartments N/A N/A N/A
190 Highland Arms Apartments N/A N/A N/A
191 Central CA Health Services N/A N/A N/A
192 Panorama Place Jerrod Wright, D.C. 1,055 9/30/01
193 Lone Oak Apartments N/A N/A N/A
194 Rio Mesa Self Storage N/A N/A N/A
195 Yorktown Apartments N/A N/A N/A
196 Crossings Center I Dr. Joh's Tutoring 1,805 1/1/01
197 The Willow Woods Apartments N/A N/A N/A
198 409-415 Main Street N/A N/A N/A
199 A-1 Mini-Storage N/A N/A N/A
200 1740 Lynnwood Road N/A N/A N/A
201 Williamsburg Apartments N/A N/A N/A
202 3-5 Dana Drive N/A N/A N/A
203 Lamar Place Apartments N/A N/A N/A
204 218-14 and 218-22 Jamaica Avenue The Associates 1,250 2/28/01
205 Hines Plaza Apartments N/A N/A N/A
206 A-1 Self & Boat Storage N/A N/A N/A
207 Valley Mini Storage N/A N/A N/A
Total/Weighted Average (13):
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
EXHIBIT A-2
MORTGAGE POOL INFORMATION
See this Exhibit for tables titled:
Mortgage Interest Rates
Cut-off Date Principal Balances
Original Amortization Terms
Original Terms to Stated Maturity
Remaining Amortization Terms
Remaining Terms to Stated Maturity
Years Built/Years Renovated
Occupancy Rates at Underwriting
U/W Debt Service Coverage Ratios
Cut-off Date Loan-to-Value Ratios
Mortgaged Properties by State
Mortgage Loans by Amortization Type
Mortgaged Properties by Property Type
Mortgaged Properties by Property Sub-Type
Prepayment Provision as of Cut-off Date
Prepayment Option
Mortgage Pool Prepayment Profile
A-2-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
A-2-2
<PAGE>
Mortgage Interest Rates
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Mortgage Interest Rates Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6.320% - 7.000% 16 $ 64,233,696 8.4% 6.749% 1.41x 75.8%
7.001% - 7.250% 10 22,176,915 2.9% 7.137% 1.32 74.1%
7.251% - 7.500% 11 52,973,427 7.0% 7.408% 1.37 76.7%
7.501% - 7.750% 9 58,625,776 7.7% 7.695% 1.25 77.7%
7.751% - 8.000% 30 149,163,978 19.6% 7.918% 1.31 72.6%
8.001% - 8.250% 51 174,450,663 22.9% 8.133% 1.33 72.5%
8.251% - 8.500% 38 101,264,841 13.3% 8.346% 1.31 70.9%
8.501% - 8.750% 25 114,893,314 15.1% 8.593% 1.30 68.5%
8.751% - 9.000% 12 14,720,832 1.9% 8.829% 1.33 66.2%
9.001% - 9.280% 5 7,910,824 1.0% 9.149% 1.45 69.2%
--------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
==================================================================================================
</TABLE>
Maximum Wtd. Avg. Mortgage Interest Rate: 9.280%
Minimum Wtd. Avg. Mortgage Interest Rate: 6.320%
Wtd. Avg. Mortgage Interest Rate: 7.982%
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Cut-off Date Principal Balances
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Cut-off Date Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Principal Balances Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 399,636 - 500,000 1 $ 399,636 0.1% 8.880% 1.42x 63.6%
500,001 - 750,000 13 8,602,367 1.1% 8.552% 1.27 69.2%
750,001 - 1,000,000 16 13,871,300 1.8% 8.174% 1.40 68.2%
1,000,001 - 1,250,000 18 20,080,689 2.6% 8.205% 1.35 69.9%
1,250,001 - 1,500,000 15 21,155,610 2.8% 8.129% 1.32 66.7%
1,500,001 - 1,750,000 18 29,069,384 3.8% 8.109% 1.31 72.5%
1,750,001 - 2,000,000 19 35,100,836 4.6% 7.863% 1.33 71.8%
2,000,001 - 3,000,000 34 83,259,280 10.9% 8.066% 1.34 71.6%
3,000,001 - 4,000,000 19 65,693,774 8.6% 7.938% 1.35 74.0%
4,000,001 - 5,000,000 14 62,376,529 8.2% 7.970% 1.37 72.3%
5,000,001 - 6,000,000 10 54,843,770 7.2% 7.964% 1.31 75.1%
6,000,001 - 7,000,000 8 52,671,714 6.9% 7.928% 1.27 73.2%
7,000,001 - 8,000,000 5 36,794,009 4.8% 7.892% 1.28 75.5%
8,000,001 - 9,000,000 2 16,993,437 2.2% 7.463% 1.26 79.4%
9,000,001 - 11,500,000 7 74,415,539 9.8% 7.674% 1.35 73.0%
11,500,001 - 15,500,000 4 49,915,131 6.6% 7.974% 1.34 74.8%
15,500,001 - 34,500,000 2 53,763,882 7.1% 7.865% 1.37 70.5%
34,500,001 - $ 44,973,184 2 81,407,381 10.7% 8.320% 1.26 71.1%
---------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
=============================================================================================
</TABLE>
Maximum Cut-off Date Scheduled Principal Balance: $ 44,973,184
Minimum Cut-off Date Scheduled Principal Balance: $ 399,636
Average Cut-off Date Scheduled Principal Balance: $ 3,673,499
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
<PAGE>
Original Amortization Terms
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Original Amortization Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Terms (Months) Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
180 - 239 4 $ 5,081,460 0.7% 8.532% 1.36x 56.3%
240 - 299 8 11,844,518 1.6% 8.056% 1.27 67.3%
300 - 313 66 147,265,364 19.4% 8.083% 1.40 68.1%
314 - 360 129 596,222,924 78.4% 7.951% 1.31 73.9%
------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
================================================================================================
</TABLE>
Maximum Original Amortization Term (Months): 360
Minimum Original Amortization Term (Months): 180
Wtd. Avg. Original Amortization Term (Months): 345
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Original Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Original Terms Mortgage Principal Mortgage Pool Interest Average Cut-off Date
to Stated Maturity (Months) Loans Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
60 - 115 6 $ 21,767,262 2.9% 8.353% 1.30x 74.6%
116 - 120 189 712,940,458 93.8% 7.974% 1.32 72.6%
121 - 200 9 20,546,541 2.7% 7.950% 1.46 70.2%
201 - 243 3 5,160,005 0.7% 7.734% 1.18 72.5%
------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
================================================================================================
</TABLE>
Maximum Original Term to Stated Maturity (Months): 243
Minimum Original Term to Stated Maturity (Months): 60
Wtd. Avg. Original Term to Stated Maturity (Months): 121
(1) In the case of hyper-amortization loans, the Anticipated Repayment Date is
assumed to be the maturity date for the purposes of the table.
(2) Assumes a Cut-off Date of December 1, 1999.
(3) Excluding the CTL Loan.
<PAGE>
Remaining Amortization Terms
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Remaining Amortization Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Terms (Months) Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
177 - 238 10 $ 14,171,340 1.9% 8.175% 1.31x 63.4%
239 - 298 55 118,739,410 15.6% 8.015% 1.39 69.1%
299 - 312 13 31,280,592 4.1% 8.363% 1.43 64.2%
313 - 359 129 596,222,924 78.4% 7.951% 1.31 73.9%
----------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
====================================================================================================
</TABLE>
Maximum Remaining Amortization Term (Months): 359
Minimum Remaining Amortization Term (Months): 177
Wtd. Avg. Remaining Amortization Term (Months): 340
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Remaining Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Remaining Terms Mortgage Principal Mortgage Pool Interest Average Cut-off Date
to Stated Maturity (Months) Loans Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
38 - 114 52 $ 169,868,149 22.3% 7.365% 1.37x 74.6%
115 - 119 143 564,839,571 74.3% 8.171% 1.31 72.1%
120 - 199 9 20,546,541 2.7% 7.950% 1.46 70.2%
200 - 241 3 5,160,005 0.7% 7.734% 1.18 72.5%
----------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
====================================================================================================
</TABLE>
Maximum Remaining Term to Stated Maturity (Months): 241
Minimum Remaining Term to Stated Maturity (Months): 38
Wtd. Avg. Remaining Term to Stated Maturity (Months): 116
(1) In the case of hyper-amortization loans, the Anticipated Repayment Date is
assumed to be the maturity date for the purposes of the table.
(2) Assumes a Cut-off Date of December 1, 1999.
(3) Excluding the CTL Loan.
<PAGE>
Years Built/Years Renovated (1)
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Years Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Built/Renovated Properties Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1963 - 1970 8 $ 19,170,424 2.5% 7.961% 1.36x 72.2%
1971 - 1980 21 49,608,416 6.5% 8.001% 1.32 74.9%
1981 - 1990 58 234,026,071 30.8% 7.727% 1.36 73.6%
1991 - 1999 125 457,609,356 60.2% 8.112% 1.31 71.8%
---------------------------------------------------------------------------------------------------
Total/Weighted Average: 212 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
===================================================================================================
</TABLE>
Maximum Year Built/Renovated: 1999
Minimum Year Built/Renovated: 1963
Wtd. Avg. Year Built/Renovated: 1991
(1) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
(2) Assumes a Cut-off Date of December 1, 1999.
(3) Excluding the CTL Loan.
Occupancy Rates at Underwriting
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Occupancy Rates at U/W Properties (1) Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
79.0% - 79.9% 2 $ 2,162,854 0.3% 8.184% 1.32x 66.9%
80.0% - 89.9% 17 47,098,113 6.2% 8.177% 1.29 71.5%
90.0% - 94.9% 32 149,348,629 19.6% 8.127% 1.30 73.5%
95.0% - 97.4% 30 165,317,792 21.7% 7.715% 1.32 75.3%
97.5% - 100.0% 125 364,431,166 47.9% 7.979% 1.32 72.1%
---------------------------------------------------------------------------------------------------
Total/Weighted Average: 206 $ 728,358,554 95.8% 7.963% 1.32x 73.1%
===================================================================================================
</TABLE>
Maximum Occupancy Rate at U/W: 100.0%
Minimum Occupancy Rate at U/W: 79.0%
Wtd. Avg. Occupancy Rate at U/W: 96.3%
(1) Does not include any hotel properties.
(2) Assumes a Cut-off Date of December 1, 1999.
(3) Excluding the CTL Loan.
<PAGE>
U/W Debt Service Coverage Ratios
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average Cut-off Date
U/W DSCRs Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CTL 1 $ 2,092,645 0.3% 8.140% N/A N/A
1.06x - 1.19 1 1,653,637 0.2% 7.890% 1.06x 79.5%
1.20 - 1.21 10 48,223,226 6.3% 8.103% 1.21 74.5%
1.22 - 1.29 90 364,015,466 47.9% 8.025% 1.26 73.6%
1.30 - 1.34 46 143,520,375 18.9% 8.057% 1.31 73.8%
1.35 - 1.39 14 44,092,870 5.8% 8.095% 1.38 74.5%
1.40 - 1.88x 45 156,816,048 20.6% 7.745% 1.51 67.8%
------------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
======================================================================================================
</TABLE>
Maximum U/W DSCR (2): 1.88x
Minimum U/W DSCR (2): 1.06x
Wtd. Avg. U/W DSCR (2): 1.32x
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Cut-off Date Loan-to-Value Ratios
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Cut-off Date Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Loan-to-Value Ratios Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CTL 1 $ 2,092,645 0.3% 8.140% N/A N/A
40.50% - 55.00% 10 24,157,104 3.2% 8.514% 1.40x 51.5%
55.10% - 65.00% 25 64,056,845 8.4% 8.165% 1.43 61.0%
65.10% - 67.50% 13 32,805,312 4.3% 8.156% 1.34 66.0%
67.60% - 70.00% 21 106,333,468 14.0% 8.293% 1.31 69.1%
70.10% - 72.50% 30 80,981,811 10.6% 8.195% 1.35 71.5%
72.60% - 75.00% 38 150,728,851 19.8% 7.891% 1.31 73.8%
75.10% - 77.50% 18 85,088,725 11.2% 7.737% 1.31 76.7%
77.60% - 78.50% 20 84,738,068 11.1% 7.577% 1.31 78.0%
78.60% - 79.50% 13 45,350,492 6.0% 7.704% 1.27 79.0%
79.60% - 80.00% 16 77,184,985 10.2% 8.048% 1.27 79.8%
80.10% - 86.40% 2 6,895,962 0.9% 7.380% 1.30 84.6%
---------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
===================================================================================================
</TABLE>
Maximum Cut-off Date LTV Ratio (2): 86.4%
Minimum Cut-off Date LTV Ratio (2): 40.5%
Wtd. Avg. Cut-off Date LTV Ratio (2): 72.6%
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
<PAGE>
Mortgaged Properties by State
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
State Properties Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
California 31 $ 114,336,631 15.0% 8.080% 1.38x 67.5%
Texas 31 88,276,580 11.6% 7.854% 1.31 75.2%
New York 11 70,739,105 9.3% 8.468% 1.26 69.5%
Florida 17 60,363,296 7.9% 8.105% 1.31 76.1%
Michigan 4 48,873,899 6.4% 8.022% 1.26 74.5%
Oklahoma 8 47,841,758 6.3% 7.408% 1.38 76.1%
Massachusetts 7 41,219,405 5.4% 7.966% 1.34 72.6%
Pennsylvania 10 35,551,312 4.7% 7.375% 1.45 73.6%
Virginia 6 26,877,675 3.5% 7.965% 1.29 75.4%
Colorado 8 22,895,070 3.0% 8.267% 1.34 68.1%
Georgia 9 21,853,610 2.9% 8.036% 1.30 74.8%
New Jersey 5 16,752,405 2.2% 8.200% 1.26 71.6%
Arizona 7 14,696,058 1.9% 7.869% 1.29 74.9%
Tennessee 2 14,563,109 1.9% 8.512% 1.29 73.2%
Minnesota 3 12,864,772 1.7% 8.403% 1.38 67.3%
New Hampshire 4 12,651,727 1.7% 7.161% 1.27 76.4%
Maryland 3 11,836,875 1.6% 7.938% 1.30 74.7%
Connecticut 5 10,660,610 1.4% 8.341% 1.28 69.7%
Indiana 4 9,943,866 1.3% 8.049% 1.22 72.7%
Arkansas 5 8,870,042 1.2% 8.397% 1.28 71.4%
Wisconsin 2 8,813,834 1.2% 7.950% 1.39 70.7%
Kansas 5 7,172,099 0.9% 7.561% 1.35 78.8%
Louisiana 5 6,403,302 0.8% 7.597% 1.42 71.9%
Ohio 3 6,088,297 0.8% 7.452% 1.31 77.7%
Washington 2 5,930,387 0.8% 7.432% 1.34 76.1%
Kentucky 1 5,715,099 0.8% 8.170% 1.25 78.3%
Nebraska 1 5,596,509 0.7% 8.360% 1.21 80.0%
Oregon 3 4,590,953 0.6% 7.487% 1.34 60.6%
Utah 2 4,187,021 0.6% 8.183% 1.27 72.4%
Vermont 1 3,812,987 0.5% 7.260% 1.65 71.5%
Nevada 2 3,434,286 0.5% 8.085% 1.28 75.0%
Mississippi 1 2,160,270 0.3% 8.100% 1.25 78.7%
New Mexico 2 1,989,138 0.3% 8.280% 1.33 54.9%
Iowa 1 1,438,558 0.2% 8.030% 1.36 66.6%
Idaho 1 1,413,723 0.2% 6.950% 1.31 64.3%
-----------------------------------------------------------------------------------------------
Total/Weighted Average: 212 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
===============================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Mortgage Loans by Amortization Type
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Loan Type Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balloon 192 $ 681,963,958 89.7% 7.971% 1.33x 72.8%
Hyper-Amortizing 10 71,047,595 9.3% 8.079% 1.31 71.6%
Fully Amortizing 5 7,402,714 1.0% 8.066% 1.30 63.3%
----------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
==============================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
<PAGE>
Mortgaged Properties by Property Type
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Property Type Properties Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Multifamily 84 $ 295,917,163 38.9% 7.736% 1.32x 75.5%
Retail 43 201,274,526 26.5% 8.140% 1.28 72.1%
Office 37 134,954,503 17.7% 8.178% 1.34 69.8%
Industrial 17 39,530,029 5.2% 8.026% 1.28 72.5%
Hotel 6 32,055,712 4.2% 8.426% 1.50 61.5%
Mixed Use 7 25,513,610 3.4% 8.350% 1.40 70.7%
Manufactured Housing 6 18,254,431 2.4% 7.076% 1.47 74.7%
Self Storage 11 10,821,648 1.4% 8.517% 1.36 67.8%
CTL 1 2,092,645 0.3% 8.140% N/A N/A
---------------------------------------------------------------------------------------------
Total/Weighted Average: 212 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
=============================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Mortgaged Properties by Property Sub-Type
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Property Type Property Sub-Type Properties Balance (1) Balance Rates U/W DSCR LTV Ratio
- - ------------------------------------------------------------------------------------------------------------------------------
Retail
<S> <C> <C> <C> <C> <C> <C> <C>
Anchored (2) 20 $ 160,490,813 21.1% 8.086% 1.26x 73.3%
Unanchored 23 40,783,713 5.4% 8.353% 1.35 67.4%
---------------------------------------------------------------------------------------
Total/Weighted Average: 43 $ 201,274,526 26.5% 8.140% 1.28x 72.1%
=======================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Includes shadow anchored properties.
<PAGE>
Prepayment Provision as of Cut-off Date (1)
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
Percentage of Remaining Remaining Remaining Weighted
Range of Number of Cut-off Date Initial Lockout Lockout Lockout Plus Average
Remaining Terms to Mortgage Principal Mortgage Pool Period Plus YM Period Premium Period Maturity
Stated Maturity (Years)(2) Loans Balance (1) Balance (Years) (Years) (Years) (Years)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3.0 - 3.9 2 $ 2,988,450 0.4% 0.9 3.0 3.0 3.4
4.0 - 4.9 1 2,692,755 0.4% 4.3 4.3 4.3 4.6
6.0 - 6.9 3 16,086,057 2.1% 6.3 6.3 6.3 6.8
8.0 - 8.9 33 106,697,071 14.0% 3.0 8.2 8.2 8.7
9.0 - 9.9 156 606,243,387 79.7% 8.7 9.3 9.3 9.8
10.0 - 10.9 1 4,514,716 0.6% 0.0 8.3 9.3 10.4
13.0 - 13.9 2 6,636,564 0.9% 6.1 12.7 12.7 13.2
14.0 - 14.9 6 9,395,262 1.2% 11.8 14.3 14.3 14.7
18.0 - 18.9 1 1,413,723 0.2% 8.8 18.6 18.6 18.9
19.0 - 19.9 1 1,653,637 0.2% 19.5 19.5 19.5 19.8
20.0 - 20.9 1 2,092,645 0.3% 19.6 19.6 19.6 20.1
-----------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.9 9.2 9.2 9.7
=====================================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) In the case of the hyper-amortization loans, the Anticipated Repayment
Date is assumed to be the maturity date for the purposes of the indicated
column.
Prepayment Option
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
Percentage of Remaining Remaining Remaining Weighted
Number of Cut-off Date Initial Lockout Lockout Lockout Plus Average
Mortgage Principal Mortgage Pool Period Plus YM Period Premium Period Maturity
Prepayment Option Loans Balance (1) Balance (Years) (Years) (Years) (Years)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance 153 $ 570,106,400 75.0% 9.4 9.4 9.4 9.8
Lockout/Yield Maintenance 52 183,100,396 24.1% 3.3 8.8 8.8 9.3
Yield Maintenance/Prepayment Premium 1 4,514,716 0.6% 0.0 8.3 9.3 10.4
Lockout 1 2,692,755 0.4% 4.3 4.3 4.3 4.6
-----------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.9 9.2 9.2 9.7
===============================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) In the case of the hyper-amortization loans, the Anticipated Repayment
Date is assumed to be the maturity date for the purposes of the indicated
column.
<PAGE>
Mortgage Pool Prepayment Profile (1)
<TABLE>
<CAPTION>
Number of
Months Since Mortgage Outstanding % of Pool Yield Prepayment % of Pool
Date Cut-off Date (2) Loans Balance (mm) Lockout Maintenance Premium Open Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dec-99 0 207 $ 760.4 99.41% 0.59% 0.00% 0.00% 100.0%
Dec-00 12 207 $ 753.8 98.65% 1.35% 0.00% 0.00% 100.0%
Dec-01 24 207 $ 746.5 96.81% 3.19% 0.00% 0.00% 100.0%
Dec-02 36 207 $ 738.5 89.31% 10.43% 0.00% 0.26% 100.0%
Dec-03 48 205 $ 727.1 81.07% 18.93% 0.00% 0.00% 100.0%
Dec-04 60 204 $ 715.3 76.86% 23.14% 0.00% 0.00% 100.0%
Dec-05 72 204 $ 705.3 76.92% 23.08% 0.00% 0.00% 100.0%
Dec-06 84 201 $ 679.3 75.59% 24.41% 0.00% 0.00% 100.0%
Dec-07 96 201 $ 667.7 75.66% 21.40% 0.00% 2.94% 100.0%
Dec-08 108 168 $ 564.2 86.96% 11.54% 0.66% 0.83% 100.0%
Dec-09 120 12 $ 19.3 36.38% 44.88% 0.00% 18.73% 100.0%
Dec-10 132 11 $ 14.8 43.40% 56.60% 0.00% 0.00% 100.0%
Dec-11 144 11 $ 13.9 41.71% 58.29% 0.00% 0.00% 100.0%
Dec-12 156 11 $ 12.9 39.58% 29.83% 0.00% 30.59% 100.0%
Dec-13 168 9 $ 6.9 62.98% 37.02% 0.00% 0.00% 100.0%
Dec-14 180 3 $ 2.5 80.11% 19.89% 0.00% 0.00% 100.0%
Dec-15 192 3 $ 2.1 81.78% 18.22% 0.00% 0.00% 100.0%
Dec-16 204 3 $ 1.8 84.25% 15.75% 0.00% 0.00% 100.0%
Dec-17 216 3 $ 1.4 88.32% 11.68% 0.00% 0.00% 100.0%
Dec-18 228 2 $ 0.9 100.00% 0.00% 0.00% 0.00% 100.0%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated assuming that no Mortgage Loan prepays, defaults or is
repurchased prior to stated maturity, except that the hyper-amortization
loans are assumed to pay in full on their respective Anticipated Repayment
Dates. Otherwise calculated based on Maturity Assumptions to be set forth
in the final prospectus supplement.
(2) Assumes a Cut-off Date of December 1, 1999.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT B
SIGNIFICANT LOAN SUMMARIES
Loan Number 1 - The Wilton Mall Loan
General. The "Wilton Mall Loan" has a Cut-off Date Principal Balance of
$44,973,184, representing 5.9% of the Initial Pool Balance. Column Financial,
Inc. originated the Wilton Mall Loan. The borrower under the Wilton Mall Loan
(the "Wilton Mall Borrower") is a limited liability company organized under the
laws of Delaware. The Wilton Mall Loan is secured by a mortgage (the "Wilton
Mall Mortgage") on the fee simple interest of the Wilton Mall Borrower in
540,021 square feet of a 655,682 square foot regional mall (the "Wilton Mall
Property") located at Routes 50 and I-87 in Saratoga Springs, New York.
Certain Payment Terms. The Wilton Mall Loan is a Hyper-Amortization Loan.
It has an Anticipated Repayment Date of November 1, 2009 and a final maturity
date of November 1, 2029. The Wilton Mall Loan amortizes on a 30-year schedule.
The Wilton Mall Loan accrues interest at a fixed mortgage interest rate of 8.58%
on the basis of the actual number of days elapsed each month in a year assumed
to consist of 360 days. If the Wilton Mall Borrower does not prepay the Wilton
Mall Loan in full by the related Anticipated Repayment Date, the Wilton Mall
Loan will accrue interest at a Revised Interest Rate equal to the initial
mortgage interest rate plus 2.5%.
The Wilton Mall Borrower may not voluntarily prepay the Wilton Mall Loan
until six months prior to the related Anticipated Repayment Date. Partial
prepayments of the Wilton Mall Loan are not permitted except in connection with
a casualty or condemnation or the hyper-amortization of the Wilton Mall Loan
following its Anticipated Repayment Date. No prepayment consideration is payable
in connection with:
o the lender's application of insurance proceeds or condemnation
proceeds to pay down the principal balance of the Wilton Mall Loan,
or
o any principal prepayment following the end of the lock-out period.
If the Wilton Mall Loan is partially prepaid through the application of
insurance proceeds or condemnation proceeds, then the Monthly Payment will be
recalculated. If the Wilton Mall Borrower fails to deliver to the lender, prior
to November 1, 2000, executed leases providing for an aggregate minimum base
rent of $50,000 per year, a $225,000 reserve can be applied to prepay The Wilton
Mall Loan and the Wilton Mall Borrower would be required to pay a yield
maintenance payment in connection therewith.
Defeasance. At any time following the second anniversary of the date of
the initial issuance of the offered certificates, the Wilton Mall Property may
be released from the lien of the Wilton Mall Mortgage through a defeasance of
the Wilton Mall Loan. Defeasance is only permitted upon the satisfaction of
certain conditions, including delivery of certain legal opinions and other
documentation.
The Wilton Mall Property. The Wilton Mall Property includes 540,021 square
feet of a 655,682 square foot regional mall having the characteristics described
in the table below.
<TABLE>
<CAPTION>
Property Name City State No. of Yr. Built/ Occupancy Most Recent Underwritable
Sq. Ft. Renovated at Appraised Cash Flow
Underwriting Value
<S> <C> <C> <C> <C> <C> <C> <C>
The Wilton Mall Saratoga Springs New York 540,021 1990/1991 91% $64,500,000 $5,286,893
</TABLE>
B-1
<PAGE>
The major tenants of the Wilton Mall Property are described in the table
below.
<TABLE>
<CAPTION>
Tenant Month and Square Feet of Annual % of Total Annual
Year of Lease Leased Space Base Rent Annual Base Rent
Expiration Base Rent Per
Square Foot
<S> <C> <C> <C> <C> <C>
Sears 7/2005 82,352 $247,056 3.9% $3.00
J.C. Penney 8/2006 49,843 $193,670 3.1% $3.89
Bon-Ton 1/2004 71,222 $212,500 3.4% $2.98
Dick's Sporting 11/2013 51,004 $501,889 8.0% $9.84
Goods
Hoyt's Cinema 2/2011 26,689 $306,923 4.9% $11.50
</TABLE>
BJ's Wholesale Club is also a tenant at the Wilton Mall, but its space is
not included in the collateral.
Property Management. The Wilton Mall Property is subject to a management
agreement between the Wilton Mall Borrower and Genesee Management, Inc. (the
"Wilton Mall Property Manager"), an affiliate of the Wilton Mall Borrower. The
holder of the Wilton Mall Loan may replace the Wilton Mall Property Manager only
upon:
o gross negligence, wilful misconduct or fraud on the part of the
Wilton Mall Property Manager under the management agreement, or
o any change in control of the ownership of the Wilton Mall Property
Manager, or
o a default by the Wilton Mall Borrower under the loan documents for
the Wilton Mall Loan, or
o the holder's taking title to the Wilton Mall Property.
Cash Management. The Wilton Mall Borrower must cause all rents from the
Wilton Mall Property to be deposited into a "rent account" within one day of
receipt. Unless and until an event of default occurs under the Wilton Mall Loan,
the Wilton Mall Borrower will have access to that rent account.
Appraised Value. The Wilton Mall Loan has a Cut-off Date Loan-to-Value
Ratio of 69.7%, based on an appraised value of the Wilton Mall Property of
$64,500,000 (as derived from an appraisal conducted on September 1, 1999).
Underwritable Debt Service Coverage Ratio. The U/W DSCR of the Wilton Mall
Loan is 1.26x, based on an annual debt service of approximately $4,182,788 and
an annual Underwritable Cash Flow of $5,286,893.
Additional Indebtedness Prohibited. The Wilton Mall Borrower may not
encumber the Wilton Mall Property with subordinate financing without the consent
of the holder of the Wilton Mall Loan.
Transfer of Ownership Interests. In general, the Wilton Mall Mortgage
prohibits the transfer of interests in the Wilton Mall Property or ownership
interests in the Wilton Mall Borrower without the consent of the holder of the
Wilton Mall Loan, except in limited circumstances. However, the Wilton Mall
Borrower has the right to transfer the Wilton Mall Property to a real estate
investment trust ("REIT") or the operating partnership of such REIT upon
satisfaction of certain underwriting criteria. In addition, the holder of the
Wilton Mall Loan must consent to transfers of the Wilton Mall Property upon
satisfaction of certain underwriting criteria, including:
o payment of a non-refundable assumption fee equal to 0.5% of the
outstanding principal balance of the Wilton Mall Loan;
o execution of such documents and agreements as the Lender may
reasonably require to affirm the Wilton Mall Borrower's continued
liability under the Wilton Mall Loan documents; and
B-2
<PAGE>
o if required under the Pooling and Servicing Agreement, confirmation
in writing from the Rating Agencies that the proposed transfer will
not result in a requalification, reduction, downgrade or withdrawal
of any of the ratings on the certificates.
B-3
<PAGE>
Loan Number 2 - The Frandor Mall Loan
General. The "Frandor Mall Loan" has a Cut-off Date Principal Balance of
$36,434,197, representing 4.8% of the Initial Pool Balance. Column Financial,
Inc. originated the Frandor Mall Loan. The borrower under the Frandor Mall Loan
(the "Frandor Mall Borrower") is a limited liability company organized under the
laws of Michigan. The Frandor Mall Loan is secured by a mortgage (the "Frandor
Mall Mortgage") on the fee simple interest of the Frandor Mall Borrower in a
457,978 square foot retail power center located in Lansing, Michigan (the
"Frandor Mall Property").
Certain Payment Terms. The Frandor Mall is a balloon loan which matures on
September 1, 2009 and amortizes on a 30-year schedule. The Frandor Mall Loan
accrues interest at a fixed mortgage interest rate of 8.00% per annum on the
basis of the actual number of days elapsed each month in a year assumed to
consist of 360 days.
The Frandor Mall Borrower may not voluntarily prepay the Frandor Mall Loan
until six months prior to maturity, except in connection with a major casualty
or taking. If, following a major casualty or taking, the lender applies the
insurance proceeds or condemnation proceeds to pay down the principal balance of
the Frandor Mall Loan, the Frandor Mall Borrower is permitted to make an
additional prepayment to pay off the Frandor Mall Loan. Partial prepayments of
the Frandor Mall Loan are not permitted except in connection with the lender's
application of insurance proceeds or condemnation proceeds to pay down the
principal balance of the Frandor Mall Loan. No prepayment consideration is
payable in connection with:
o the lender's application of insurance proceeds or condemnation
proceeds to pay down the principal balance of the Frandor Mall Loan,
o any additional prepayment made by the Frandor Mall Borrower to pay
off the Frandor Mall Loan following a major casualty or taking,
assuming the insurance proceeds or condemnation proceeds, as the
case may be, were insufficient, or
o any principal prepayment following the lock-out period.
If the Frandor Mall Loan is partially prepaid through the application of
insurance proceeds or condemnation proceeds, then the Monthly Payment will be
recalculated.
Defeasance. After the second anniversary of the date of initial issuance
of the offered certificates, the Frandor Mall Borrower may obtain a release of
the Frandor Mall Property from the lien of the Frandor Mall Mortgage through a
defeasance of the Frandor Mall Loan. Defeasance is only permitted upon the
satisfaction of certain conditions, including delivery of certain legal opinions
and other documentation.
The Frandor Mall Property. The Frandor Mall Property is a retail power
center having the characteristics described in the table below.
<TABLE>
<CAPTION>
Property Name City State No. of Yr. Built/ Occupancy Most Recent Underwritable
Sq. Ft. Renovated at Appraised Cash Flow
Underwriting Value
<S> <C> <C> <C> <C> <C> <C> <C>
Frandor Mall Lansing Michigan 457,978 1950/1999 95% $50,000,000 $4,051,315
</TABLE>
The Frandor Mall Property is anchored by the tenants described in the
table below.
<TABLE>
<CAPTION>
Tenant Month and Year of Sq. Ft. of Annual % of Annual Base
Lease Expiration Leased Space Base Rent Total Annual Rent Per
Base Rent Square Foot
<S> <C> <C> <C> <C> <C>
Kroger 6/2001 36,234 $136,608 3.0% $3.77
Office Depot 5/2014 30,077 $391,001 8.5% $13.00
Comp USA 8/2014 28,000 $357,000 7.8% $12.75
</TABLE>
B-4
<PAGE>
Property Management. The Frandor Mall Property is subject to a management
agreement between the Frandor Mall Borrower and The Frandorson Corporation (the
"Frandor Mall Property Manager"), an affiliate of the Frandor Mall Borrower. The
holder of the Frandor Mall Loan may replace the Frandor Mall Property Manager
only upon:
o a default by the Frandor Mall Property Manager under the management
agreement, which default remains unremedied for 30 days, or
o the Frandor Mall Property Manager's filing a petition of bankruptcy,
making an assignment for the benefit of creditors or taking
advantage of an insolvency act, or
o the taking of the Frandor Mall Property through condemnation for
public or quasi-public use.
Cash Management. The Frandor Mall Borrower must cause all rents from the
Frandor Mall Property to be deposited into a "rent account" within one day of
receipt. Unless and until an event of default occurs under the Frandor Mall
Loan, the Frandor Mall Borrower will have access to that rent account.
Appraised Value. The Frandor Mall Loan has a Cut-off Date Loan-to-Value
Ratio of 72.9%, based on an appraised value of the Frandor Mall Property of
$50,000,000 (as derived from an appraisal conducted on August 13, 1999).
Underwritable Debt Service Coverage Ratio. The U/W DSCR of the Frandor
Mall Loan is 1.26x, based on an annual debt service of approximately $3,213,889
and an annual Underwritable Cash Flow of $4,051,315.
Additional Indebtedness Prohibited. The Frandor Mall Borrower may not
encumber the Frandor Mall Property with subordinate financing without the
consent of the holder of the Frandor Mall Loan.
Transfer of Ownership Interests. In general, the Frandor Mall Mortgage
prohibits the transfer of interests in the Frandor Mall Property or ownership
interests in the Frandor Mall Borrower without the consent of the holder of the
Frandor Mall Loan, except in limited circumstances. However, the holder of the
Frandor Mall Loan must consent to a transfer of the Frandor Mall Property upon
satisfaction of certain underwriting criteria, including:
o payment of a non-refundable assumption fee equal to 0.5% of the
outstanding principal balance of the Frandor Mall Loan;
o execution of such documents and agreements as the Lender may
reasonably require to affirm the Frandor Mall Borrower's continued
liability under the Frandor Mall Loan documents; and
o if required under the Pooling and Servicing Agreement, confirmation
in writing from the Rating Agencies that the proposed transfer will
not result in a requalification, reduction, downgrade or withdrawal
of any of the ratings on the certificates.
B-5
<PAGE>
Loan Number 3 - The Alliance Loan
General. The "Alliance Loan" has a Cut-off Date Principal Balance of
$32,777,802, representing 4.3% of the Initial Pool Balance. Column Financial,
Inc. originated the Alliance Loan. The borrower under the Alliance Loan (the
"Alliance Borrower") is a limited liability company organized under the laws of
Delaware. The Alliance Loan is secured by mortgages (the "Alliance Mortgages")
on the fee simple interests of the Alliance Borrower in three multifamily rental
properties (the "Alliance Properties"), which are located in College Park,
Georgia, Waldorf, Maryland and Alexandria, Virginia.
Certain Payment Terms. The Alliance Loan is a balloon loan which matures
on July 1, 2009 and amortizes on a 30-year schedule. The Alliance Loan accrues
interest at a fixed mortgage interest rate of 7.74% per annum on the basis of
the actual number of days elapsed each month in a year assumed to consist of 360
days.
The Alliance Borrower may not voluntarily prepay the Alliance Loan until
six months prior to maturity. Partial prepayments of the Alliance Loan are not
permitted except in connection with a casualty or condemnation. If a substantial
portion of the leasable square footage of any of the Alliance Properties is
taken or destroyed, the lender may elect, in its absolute discretion and without
regard to the adequacy of its security, to either accelerate the Alliance Loan
or make insurance or condemnation proceeds available to the Alliance Borrower
for repair or restoration of such Alliance Property. However, the lender cannot
accelerate the Alliance Loan if the taken or destroyed Alliance Property is
released from the lien of the Alliance Mortgages in connection with the
defeasance of all or part of the Alliance Loan.
No prepayment consideration is payable in connection with:
o the lender's application of insurance proceeds or condemnation
proceeds to pay down the principal balance of the Alliance Loan, or
o any principal prepayment following the lock-out period.
If the Alliance Loan is partially prepaid through the application of
insurance proceeds or condemnation proceeds, then the Monthly Payment will be
recalculated.
Defeasance. After the second anniversary of the date of initial issuance
of the offered certificates, the Alliance Borrower may obtain a release of any
of the Alliance Properties from the lien of the Alliance Mortgages through a
defeasance of the Alliance Loan (or, if fewer than all of the Alliance
Properties are to be released, through a defeasance of such portion of the
Alliance Loan as is equal to 125% of the allocated loan amount for each Alliance
Property to be released). Defeasance is only permitted upon the satisfaction of
certain conditions, including:
o delivery of certain legal opinions and other documentation,
o if less than the entire aggregate amount of the Alliance Loan is
defeased, the debt service coverage ratio for the non-defeased
portion of the Alliance Loan (based on the Alliance Properties then
remaining subject to the liens of the Alliance Mortgages) must be at
least equal to the greater of (i) the debt service coverage ratio
for the Alliance Loan (based on all the Alliance Properties,
including those that are being released) immediately prior to the
defeasance and (ii) the debt service coverage ratio for the Alliance
Loan (based on all the Alliance Properties, including those that are
being released) at origination, and
o if less than the entire aggregate amount of the Alliance Loan is
defeased, the loan-to-value ratio for the non-defeased portion of
the Alliance Loan (based on all the Alliance Properties then
remaining subject to the liens of the Alliance Mortgages) is not
greater than 80%.
B-6
<PAGE>
The Alliance Properties. The Alliance Properties consist of three
multifamily rental properties having the characteristics described in the table
below.
<TABLE>
<CAPTION>
Property Name City State No. of Yr. Built/ Occupancy at Most Recent Underwritable
Units Renovated Underwriting Appraised Cash Flow
Value
<S> <C> <C> <C> <C> <C> <C> <C>
Hampton Court Alexandria Virginia 307 1965/1992 98% $ 19,800,000 $ 1,641,733
Apartments
Lake of the Woods College Park Georgia 216 1988/1989 95% $ 12,850,000 $ 1,029,641
Apartments
Holly Tree Waldorf Maryland 143 1974/1994 95% $ 9,800,000 $ 819,880
Apartments ------- -------- --- --------- --- ------------ ------------
Total/Wtd. Avg. 666 96% $ 42,450,000 $ 3,491,254
</TABLE>
Property Management. The Alliance Properties are subject to management
agreements between the Alliance Borrower and Alliance Residential Management,
L.L.C. (the "Alliance Property Manager"), an affiliate of the Alliance Borrower.
The holder of the Alliance Loan may replace the Alliance Property Manager only
upon:
o a default by the Alliance Property Manager under the management
agreement or otherwise for cause, or
o the holder's acquiring title to the related Alliance Property by
foreclosure or otherwise, or
o if the Alliance Loan represents 2% or more of the Initial Pool
Balance, a 50% or greater change in control of the ownership of the
Alliance Property Manager, unless S&P and Fitch have confirmed that
the change in control would not result in a downgrade of any of the
ratings on the certificates, or
o a default by the Alliance Borrower under the loan documents for the
Alliance Loan.
Cash Management. The Alliance Borrower must cause all rents from the
Alliance Properties to be deposited into a "rent account" within one day of
receipt. Unless and until an event of default occurs under the Alliance Loan,
the Alliance Borrower will have access to that rent account.
Appraised Value. The Alliance Loan has a Cut-off Date Loan-to-Value Ratio
of 77.2%, based on an aggregate appraised value of the Alliance Properties of
$42,450,000 (as derived from appraisals conducted between June 13, 1999 and
September 13, 1999).
Underwritable Debt Service Coverage Ratio. The U/W DSCR of the Alliance
Loan is 1.24x, based on an aggregate annual debt service of approximately
$2,823,435 and an aggregate annual Underwritable Cash Flow of $3,491,254.
Additional Indebtedness Prohibited. The Alliance Borrower may not encumber
the Alliance Properties with subordinate financing without the consent of the
holder of the Alliance Loan.
Transfer of Ownership Interests. In general, the Alliance Mortgages
prohibit the transfer of interests in the Alliance Properties or ownership
interests in the Alliance Borrower without the consent of the holder of the
Alliance Loan, except in limited circumstances. However, transfer to Virginia
Associates I and Virginia Associates II of the 39% ownership interest in the
Alliance Borrower currently held by Alliance Holdings Investment LLC is
permitted. In addition, the holder of the Alliance Loan must consent to
transfers of the Alliance Properties upon satisfaction of certain underwriting
criteria, including:
o payment of a non-refundable assumption fee equal to 1% of the
outstanding principal balance of the Alliance Loan;
o execution of such documents and agreements as the Lender may
reasonably require to affirm the Alliance Borrower's continued
liability under the Alliance Loan documents; and
B-7
<PAGE>
o if required under the Pooling and Servicing Agreement, confirmation
in writing from the Rating Agencies that the proposed transfer will
not result in a requalification, reduction, downgrade or withdrawal
of any of the ratings on the certificates.
B-8
<PAGE>
Loan Number 4 - The Stanford Square Loan
General. The "Stanford Square Loan" has a Cut-off Date Principal Balance
of $20,986,080, representing 2.8% of the Initial Pool Balance. Column Financial,
Inc. originated the Stanford Square Loan. The borrower under the Stanford Square
Loan (the "Stanford Square Borrower") consists of a limited liability company
organized under the laws of California and a limited liability company organized
under the laws of Colorado, which companies hold the property as
tenants-in-common. The Stanford Square Loan is secured by a mortgage (the
"Stanford Square Mortgage") on the fee simple interests of the Stanford Square
Borrower in a 70,816 square foot, four-story, Class A, office building with two
levels of underground parking (the "Stanford Square Property"), located in the
central business district of Palo Alto, California.
Certain Payment Terms. The Stanford Square Loan is a balloon loan which
matures on November 1, 2009 and amortizes on a 30-year schedule. The Stanford
Square Loan accrues interest at a fixed mortgage interest rate of 8.06% per
annum on the basis of the actual number of days elapsed each month in a year
assumed to consist of 360 days.
The Stanford Square Borrower may not voluntarily prepay the Stanford
Square Loan until six months prior to maturity. Partial prepayments of the
Stanford Square Loan are not permitted except in connection with a casualty or
condemnation. No prepayment consideration is payable in connection with:
o the lender's application of insurance proceeds or condemnation
proceeds to pay down the principal balance of the Stanford Square
Loan, or
o any principal prepayment following the lockout period.
If the Stanford Square Loan is partially prepaid through the application
of insurance proceeds or condemnation proceeds, then the Monthly Payment will be
recalculated.
Defeasance. After the second anniversary of the date of initial issuance
of the offered certificates, the Stanford Square Borrower may obtain a release
of the Stanford Square Property from the lien of the Stanford Square Mortgage
through a defeasance of the Stanford Square Loan. Defeasance is only permitted
upon the satisfaction of certain conditions, including delivery of certain legal
opinions and other documentation.
The Stanford Square Property. The Stanford Square Property is a 70,816
square foot, four-story, Class A office building located in the central business
district of Palo Alto, California, having the characteristics described in the
table below.
<TABLE>
<CAPTION>
Property Name City State No. of Yr. Built/ Occupancy Most Recent Underwritable
Sq. Ft. Renovated at Appraised Cash Flow
Underwriting Value
<S> <C> <C> <C> <C> <C> <C> <C>
Stanford Square Palo Alto California 70,816 1983 100% $35,000,000 $2,913,281
</TABLE>
The major tenants of the Stanford Square Property are described in the
table below.
<TABLE>
<CAPTION>
Tenant Month and Square Feet Annual % of Annual Base
Year of of Base Rent Total Annual Rent Per
Lease Leased Space Base Rent Square Foot
Expiration
<S> <C> <C> <C> <C> <C>
PHB Hagler Bailey 8/2002 18,331 $659,916 20.3% $36.00
Bon Appetit Management 7/2009 17,825 $887,685 27.3% $49.80
Company
</TABLE>
Property Management. The Stanford Square Property is subject to a
management and operating agreement between the Stanford Square Borrower and
Stanford Square Management Co. (the "Stanford Square Operator") and a property
management agreement with Tarlton Properties, Inc. (the "Stanford Square
Property Manager"), both of
B-9
<PAGE>
which are affiliates of the Stanford Square Borrower. The holder of the Stanford
Square Loan may replace the Stanford Square Operator only upon:
o the sale or condemnation of the Stanford Square Property or
destruction of 25% or more of the Stanford Square Property, or
o the filing of a petition in bankruptcy or the making of an
assignment for the benefit of creditors by the Stanford Square
Operator, or if the Stanford Square Operator takes advantage of any
insolvency act, or
o a default by the Stanford Square Operator under the management and
operating agreement, which default continues unremedied for 30 days,
or
o the holder's taking title to the Stanford Square Property.
The holder of the Stanford Square Loan may replace the Stanford Square
Property Manager only upon:
o the breach of any of the covenants of the management agreement,
including, the failure of the Stanford Square Property Manager to
use due diligence in managing the Stanford Square Property, which
breach continues unremedied for 30 days, or
o by providing notice in writing as provided in the management
agreement, or
o the holder's taking title to the Stanford Square Property.
Cash Management. The Stanford Square Borrower must cause all rents from
the Stanford Square Property to be deposited into a "rent account" within one
day of receipt. Unless and until an event of default occurs under the Stanford
Square Loan, the Stanford Square Borrower will have access to that rent account.
Appraised Value. The Stanford Square Loan has a Cut-off Date Loan-to-Value
Ratio of 60.0%, based on an appraised value of the Stanford Square Property of
$35,000,000 (as derived from an appraisal conducted August 17, 1999).
Underwritable Debt Service Coverage Ratio. The U/W DSCR of the Stanford
Square Loan is 1.57x, based on an annual debt service of approximately
$1,859,638 and an annual Underwritable Cash Flow of $2,913,281.
Additional Indebtedness Prohibited. The Stanford Square Borrower may not
encumber the Stanford Square Property with subordinate financing without the
consent of the holder of the Stanford Square Loan.
Transfer of Ownership Interests. In general, the Stanford Square Mortgage
prohibits the transfer of interests in the Stanford Square Property or ownership
interests in the Stanford Square Borrower without the consent of the holder of
the Stanford Square Loan, except in limited circumstances. However, the holder
of the Stanford Square Loan must consent to transfers of the Stanford Square
Property upon satisfaction of certain underwriting criteria, including:
o payment of a non-refundable assumption fee equal to 1% of the
outstanding principal balance of the Stanford Square Loan;
o execution of such documents and agreements as the Lender may
reasonably require to affirm the Stanford Square Borrower's
continued liability under the Stanford Square Loan documents; and
o if required under the Pooling and Servicing Agreement, confirmation
in writing from the Rating Agencies that the proposed transfer will
not result in a requalification, reduction, downgrade or withdrawal
of any of the ratings on the certificates.
Litigation. ARMAX, Inc., the builder/developer of the Stanford Square
Property, claims to have retained a "participatory interest" in the Stanford
Square Property equal to 15% of any proceeds of a future resale or refinancing
of the Stanford Square Property in excess of $21,500,000. The "participatory
interest" is secured by a deed of trust and is subordinated to the Stanford
Square Mortgage. ARMAX, Inc. and an assignee of the deed of trust have commenced
proceedings to enforce the terms of the deed of trust. The Stanford Square
Borrower has counterclaimed to extinguish the "participartory interest".
B-10
<PAGE>
Loan Number 5 - Woodscape Loan
General. The "Woodscape Loan" has a Cut-off Date Principal Balance of
$13,571,925, representing 1.8% of the Initial Pool Balance. Midland Loan
Services, Inc. originated the Woodscape Loan. The borrower under the Woodscape
Loan (the "Woodscape Borrower") is a limited liability company organized under
the laws of Oklahoma. The Woodscape Loan is secured by a mortgage (the
"Woodscape Mortgage") on the fee simple interest of the Woodscape Borrower in a
multifamily rental property (the "Woodscape Property") located in the northwest
quadrant of Oklahoma City, Oklahoma.
Certain Payment Terms. The Woodscape Loan is a balloon loan which matures
on September 1, 2009 and amortizes on a 30-year schedule. The Woodscape Loan
accrues interest at a fixed mortgage interest rate of 7.43% per annum on the
basis of the actual number of days elapsed each month in a year assumed to
consist of 360 days.
No voluntary prepayments are permitted until the scheduled date of the
60th scheduled payment under the Woodscape Loan. Thereafter, prior to June 1,
2009, prepayments may be made upon the payment of a prepayment premium equal to
the greater of a yield maintenance amount or 1% of the principal prepaid. No
prepayment premium is required for any prepayment on or after June 1, 2009.
Partial prepayments of the Woodscape Loan are not permitted except in connection
with a casualty or condemnation. No prepayment consideration is payable in
connection with the lender's application of insurance proceeds or condemnation
proceeds to pay down the principal balance of the Woodscape Loan.
The Woodscape Property. The Woodscape Property is a 498 unit multifamily
rental property contained in 22 buildings. It has the characteristics described
in the table below.
<TABLE>
<CAPTION>
Property Name City State No. of Yr. Built/ Occupancy at Most Recent Underwritable
Units Renovated Underwriting Appraised Cash Flow
Value
<S> <C> <C> <C> <C> <C> <C> <C>
Woodscape Oklahoma Oklahoma 498 1984 94% $17,500,000 $ 1,465,029
Apartments City
</TABLE>
Property Management. The Woodscape Property is subject to a management
agreement between the Woodscape Borrower and Case & Associates Properties, Inc.
(the "Woodscape Property Manager"), an affiliate of the Woodscape Borrower. The
holder of the Woodscape Loan may replace the Woodscape Property Manager only
upon the holder's acquiring title to the Woodscape Property by foreclosure or
otherwise.
Appraised Value. The Woodscape Loan has a Cut-off Date Loan-to-Value Ratio
of 77.6%, based on an appraised value of $17,500,000 (as derived from an
appraisal dated July 10, 1999).
Underwritable Debt Service Coverage Ratio. The U/W DSCR of the Woodscape
Loan is 1.29x, based on an aggregate annual debt service of approximately
$1,133,306 and an annual Underwritable Cash Flow of $1,465,029.
Additional Indebtedness Prohibited. The Woodscape Borrower may not
encumber the Woodscape Property with subordinate financing without the consent
of the holder of the Woodscape Loan.
Transfer of Ownership Interests. Except as described below, the holder of
the Woodscape Loan will have the option to declare the Woodscape Loan
immediately due and payable upon the transfer of the Woodscape Property or any
ownership interest in the Woodscape Borrower. The Woodscape Loan documents
contemplate a potential waiver of such prohibition by the holder if (i) the
holder has expressly approved the proposed transfer in writing, (ii) no event of
default then exists, (iii) the proposed transferee and the Woodscape Property
reasonably satisfy the holder's underwriting standards, and (iv) the holder
receives a 1% assumption fee and reimbursement for all of costs and expenses.
The Woodscape Loan documents allow transfers of membership interest in the
Woodscape Borrower which: (a) do not amount, in the aggregate, to a transfer of
49% or more of such membership interests to a third party; or (b) are the result
of a death or physical or mental disability.
B-11
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT C
FORM OF TRUSTEE REPORT
C-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
DISTRIBUTION DATE STATEMENT
Table of Contents
STATEMENT SECTIONS PAGE(s)
------------------ -------
Certificate Distribution Detail 2
Certificate Factor Detail 3
Reconciliation Detail 4
Other Required Information 5
Ratings Detail 6
Current Mortgage Loan and Property Stratification Tables 7 - 9
Mortgage Loan Detail 10
Principal Prepayment Detail 11
Historical Detail 12
Delinquency Loan Detail 13
Specially Serviced Loan Detail 14 - 15
Modified Loan Detail 16
Liquidated Loan Detail 17
<TABLE>
<CAPTION>
Underwriter Underwriter
----------- -----------
<S> <C>
Donaldson, Lufkin & Jenrette Prudential Securities Incorporated
Securities Corporation One New York Plaza
277 Park Avenue New York, NY 10292
New York, NY 10172
Contact: N. Dante LaRocca Contact: John Mulligan
Phone Number: (212) 892-3000 Phone Number: (212) 778-4365
Underwriter Master and Special Servicer
----------- ---------------------------
PNC Capital Markets Midland Loan Services, Inc.
One PNC Plaza, 26th Floor 210 West 10th Street
249 Fifth Avenue Kansas City, MO 64105
Pittsburgh, PA 15222-2707
Contact: Tim Martin Contact: Brad Hauger
Phone Number: (412) 762-4256 Phone Number: (816) 292-8629
</TABLE>
This report has been compiled from information provided to Norwest by various
third parties, which may include the Servicer, Master Servicer, Special Servicer
and others. Norwest has not independently confirmed the accuracy of information
received from these third parties and assumes no duty to do so. Norwest
expressly disclaims any responsibility for the accuracy or completeness of
information furnished by third parties.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 1 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Certificate Distribution Detail
<TABLE>
<CAPTION>
Realized Loss/
Pass-Through Original Beginning Principal Interest Prepayment Additional Trust
Class CUSIP Rate Balance Balance Distribution Distribution Penalties Fund Expenses
----- ----- --------- ------- ------- ------------ ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A-1A 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-1B 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-2 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-3 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-4 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-1 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-2 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-3 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-4 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-5 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-6 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-7 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B-8 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
C 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
D 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
E 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
R-I 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
R-II 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
R-III 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
====== ==== ==== ==== ==== ==== ====
Totals 0.00 0.00 0.00 0.00 0.00 0.00
<CAPTION>
Current
Total Ending Subordination
Class Distribution Balance Level (1)
----- ------------ ------- ---------
<S> <C> <C> <C>
A-1A 0.00 0.00 0.00%
A-1B 0.00 0.00 0.00%
A-2 0.00 0.00 0.00%
A-3 0.00 0.00 0.00%
A-4 0.00 0.00 0.00%
B-1 0.00 0.00 0.00%
B-2 0.00 0.00 0.00%
B-3 0.00 0.00 0.00%
B-4 0.00 0.00 0.00%
B-5 0.00 0.00 0.00%
B-6 0.00 0.00 0.00%
B-7 0.00 0.00 0.00%
B-8 0.00 0.00 0.00%
C 0.00 0.00 0.00%
D 0.00 0.00 0.00%
E 0.00 0.00 0.00%
R-I 0.00 0.00 0.00%
R-II 0.00 0.00 0.00%
R-III 0.00 0.00 0.00%
====== ==== ====
Totals 0.00 0.00
<CAPTION>
Original Beginning Ending
Pass-Through Notional Notional Interest Prepayment Total Notional
Class CUSIP Rate Amount Amount Distribution Penalties Distribution Amount
----- ----- --------- -------- -------- ------------ ---------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
- - - ----------
(1) Calculated by taking (A) the sum of the ending certificate balance of all
classes less (B) the sum of (i) the ending certificate balance of the
designated class and (ii) the ending certificate balance of all classes
which are not subordinate to the designated class and dividing the result
by (A).
Copyright 1997, Norwest Bank Minnesota, N.A. Page 2 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Certificate Factor Detail
<TABLE>
<CAPTION>
Realized Loss/
Beginning Principal Interest Prepayment Additional Trust Ending
Class CUSIP Balance Distribution Distribution Penalties Fund Expenses Balance
----- ----- ------- ------------ ------------ --------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1A 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-1B 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-3 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-4 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-1 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-3 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-4 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-5 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-6 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-7 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B-8 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
C 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
D 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
E 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-I 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-II 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-III 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
<CAPTION>
Beginning Ending
Notional Interest Prepayment Notional
Class CUSIP Balance Distribution Penalties Amount
----- ----- ------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
S 0.00000000 0.00000000 0.00000000 0.00000000
Copyright 1997, Norwest Bank Minnesota, N.A. Page 3 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Reconciliation Detail
</TABLE>
<TABLE>
<CAPTION>
Advance Summary Master Servicing Fee Summary
<S> <C> <C> <C>
P & I Advances Outstanding 0.00 Current Period Accrued Master Servicing Fees 0.00
Servicing Advances Outstanding 0.00 Less Master Servicing Fees on Delinquent Payments 0.00
Reimbursement for Interest on P & I Advances 0.00 Less Reductions to Master Servicing Fees 0.00
paid from general collections Plus Master Servicing Fees for Delinquent Payments Received 0.00
Reimbursement for Interest on Servicing 0.00 Plus Adjustments for Prior Master Servicing Calculation 0.00
Advances paid from general collections 0.00 Total Master Servicing Fees Collected 0.00
<CAPTION>
Certificate Interest Reconciliation
- - -------------------------------------
Remaining
Net Aggregate Distributable Unpaid
Accrued Prepayment Distributable Certificate Additional Distributable
Certificate Interest Certificate Interest Trust Fund Interest Certificate
Class Interest Shortfall Interest Adjustment Expenses Distribution Interest
- - ----- ----------- -------- ----------- ---------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
S 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-1A 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-1B 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-3 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-4 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-1 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-3 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-4 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-5 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-6 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-7 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B-8 0.00 0.00 0.00 0.00 0.00 0.00 0.00
C 0.00 0.00 0.00 0.00 0.00 0.00 0.00
D 0.00 0.00 0.00 0.00 0.00 0.00 0.00
E 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- - ----- ---- ---- ---- ---- ---- ---- ----
Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 4 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Other Required Information
--------------------------
Available Distribution Amount 0.00
Aggregate Number of Outstanding Loans 0.00
Aggregate Unpaid Principal Balance of Loans 0.00
Aggregate Stated Principal Balance of Loans 0.00
Aggregate Amount of Servicing Fee 0.00
Aggregate Amount of Special Servicing Fee 0.00
Aggregate Amount of Trustee Fee 0.00
Aggregate Stand-by Fee 0.00
Aggregate Trust Fund Expenses 0.00
Specially Serviced Loans not Delinquent
Number of Outstanding Loans 0
Aggregate Unpaid Principal Balance 0.00
Appraisal Reduction Amount
--------------------------
Appraisal Date Appraisal
Loan Reduction Reduction
Number Effected Effected
------ --------- --------
None
-----
Total
Copyright 1997, Norwest Bank Minnesota, N.A. Page 5 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Ratings Detail
<TABLE>
<CAPTION>
Original Ratings Current Ratings (1)
----------------------------------- ---------------------------------
Class CUSIP DCR Fitch Moody's S & P DCR Fitch Moody's S & P
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
S
A-1A
A-1B
A-2
A-3
A-4
B-1
B-2
B-3
B-4
B-5
B-6
B-7
B-8
C
D
E
</TABLE>
NR - Designates that the class was not rated by the above agency at the time
of original issuance.
X - Designates that the above rating agency did not rate any classes in
this transaction at the time of original issuance.
N/A - Data not available this period.
1) For any class not rated at the time of original issuance by any particular
rating agency, no request has been made subsequent to issuance to obtain
rating information, if any, from such rating agency. The current ratings
were obtained directly from the applicable rating agency within 30 days of
the payment date listed above. The ratings may have changed since they were
obtained. Because the ratings may have changed, you may want to obtain
current ratings directly from the rating agencies.
<TABLE>
<S> <C> <C> <C>
Duff & Phelps Credit Rating Co. Fitch IBCA, Inc. Moody's Investors Service Standard & Poor's Rating Services
55 East Monroe Street One State Street Plaza 99 Church Street 26 Broadway
Chicago, Illinois 60603 New York, New York 10004 New York, New York 10007 New York, New York 10004
(312) 368-3100 (212) 908-0500 (212) 553-0300 (212) 208-8000
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 6 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Current Mortgage Loan and Property Stratification Tables
Scheduled Balance
-----------------
% of
Scheduled # of Scheduled Agg. WAM Weighted
Balance Loans Balance Bal. (2) WAC Avg DSCR(1)
------- ----- ------- ----- --- --- -----------
======
Totals
State (3)
---------
% of
# of Scheduled Agg. WAM Weighted
State Props. Balance Bal. (2) WAC Avg DSCR (1)
----- ------ ------- ----- --- --- ------------
======
Totals
See footnotes on last page of this section.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 7 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Current Mortgage Loan and Property Stratification Tables
Debt Service Coverage Ratio
---------------------------
% of
Debt Service # of Scheduled Agg. WAM Weighted
Coverage Ratio Loans Balance Bal. (2) WAC Avg DSCR (1)
- --------------- ----- ------- ----- --- --- -----------
======
Totals
Property Type (3)
-----------------
% of
Property # of Scheduled Agg. WAM Weighted
Type Props. Balance Bal. (2) WAC Avg DSCR (1)
---- ------ ------- ----- --- --- ------------
======
Totals
Note Rate
---------
% of
Note # of Scheduled Agg. WAM Weighted
Rate Loans Balance Bal. (2) WAC Avg DSCR (1)
---- ----- ------- ----- --- --- -----------
======
Totals
Seasoning
---------
% of
# of Scheduled Agg. WAM Weighted
Seasoning Loans Balance Bal. (2) WAC Avg DSCR (1)
- ---------- ------ -------- ----- --- --- ------------
======
Totals
See footnotes on last page of this section.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 8 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Current Mortgage Loan and Property Stratification Tables
Anticipated Remaining Term (ARD and Balloon Loans)
--------------------------------------------------
Anticipated % of
Remaining # of Scheduled Agg. WAM Weighted
Term (2) Loans Balance Bal. (2) WAC Avg DSCR(1)
- ------------ ----- ------- ----- --- --- -----------
======
Totals
Remaining Stated Term (Fully Amortizing Loans)
----------------------------------------------
Remaining % of
Stated # of Scheduled Agg. WAM Weighted
Term Loans Balance Bal. (2) WAC Avg DSCR (1)
---- ------ -------- ----- --- --- ------------
======
Totals
Remaining Amortization Term (ARD and Balloon Loans)
---------------------------------------------------
Remaining % of
Amortization # of Scheduled Agg. WAM Weighted
Term Loans Balance Bal. (2) WAC Avg DSCR(1)
---- ----- ------- ----- --- --- -----------
======
Totals
Age of Most Recent NOI
----------------------
% of
Age of Most # of Scheduled Agg. WAM Weighted
Recent NOI Loans Balance Bal. (2) WAC Avg DSCR (1)
- ---------- ------ ------- ----- --- --- ------------
======
Totals
- - - ----------
(1) Debt Service Coverage Ratios are updated periodically as new NOI figures
become available from borrowers on an asset level. In all cases the most
current DSCR provided by the Servicer is used. To the extent that no DSCR
is provided by the Servicer, information from the offering document is
used. The Trustee makes no representations as to the accuracy of the data
provided by the borrower for this calculation.
(2) Anticipated Remaining Term and WAM are each calculated based upon the term
from the current month to the earlier of the Anticipated Repayment Date,
if applicable, and the maturity date.
(3) Data in this table was calculated by allocating pro-rata the current loan
information to the properties based upon the Cut-off Date Balance of the
related mortgage loan as disclosed in the offering document.
Note: (i) "Scheduled Balance" has the meaning assigned thereto in the CMSA
Standard Information Package.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 9 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Mortgage Loan Detail
--------------------
<TABLE>
<CAPTION>
Anticipated Neg. Beginning Ending
Loan Property Interest Principal Gross Repayment Maturity Amort Scheduled Scheduled
Number ODCR Type (1) City State Payment Payment Coupon Date Date (Y/N) Balance Balance
- - ------ ---- -------- ---- ----- ------- ------- ------ ---- ---- ----- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
======
Totals
<CAPTION>
Paid Appraisal Appraisal Res. Mod.
Loan Thru Reduction Reduction Strat. Code
Number Date Date Amount (2) (3)
- - ------ ---- ---- ------ --- ---
<S> <C> <C> <C> <C> <C>
======
Totals
<CAPTION>
(1) Property Type Code (2) Resolution Strategy Code
---------------------- ----------------------------
<S> <C> <C> <C> <C>
MF - Multi-Family OF - Office 1 - Modification 6 - DPO 10 - Deed In Lieu Of
RT - Retail MU - Mixed Use 2 - Foreclosure 7 - REO Foreclosure
HC - Health Care LO - Lodging 3 - Bankruptcy 8 - Resolved 11 - Full Payoff
IN - Industrial SS - Self Storage 4 - Extension 9 - Pending Return 12 - Reps and Warranties
WH - Warehouse OT - Other 5 - Note Sale to Master Servicer 13 - Other or TBD
MH - Mobile Home Park
</TABLE>
(3) Modification Code
---------------------
1 - Maturity Date Extension
2 - Amortization Change
3 - Principal Write-Off
4 - Combination
Copyright 1997, Norwest Bank Minnesota, N.A. Page 10 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Principal Prepayment Detail
<TABLE>
<CAPTION>
Principal Prepayment Amount Prepayment Penalties
Offering Document ------------------------------------ ----------------------------------------------
Loan Number Cross-Reference Payoff Amount Curtailment Amount Prepayment Premium Yield Maintenance Premium
----------- --------------- ------------- ------------------ ------------------ -------------------------
<S> <C> <C> <C> <C> <C>
Totals
======
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 11 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Historical Detail
<TABLE>
<CAPTION>
Delinquencies Prepayments
---------------------------------------------------------------------------------------------------- -------------------------
Distribution 30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications Curtailments Payoff
Date # Balance # Balance # Balance # Balance # Balance # Balance # Amount # Amount
---- ---------- ---------- ------------- ----------- ----------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Rate and Maturities
---------------------------------------
Distribution Next Weighted Avg.
Date Coupon Remit WAM
---- ------ ----- ---
<S> <C> <C> <C>
</TABLE>
Note: Foreclosure and REO Totals are excluded from the delinquencies aging
categories.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 12 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Delinquency Loan Detail
<TABLE>
<CAPTION>
Offering # of Current Outstanding Status of Resolution
Document Months Paid Through P & I P & I Mortgage Strategy Servicing
Loan Number Cross-Reference Delinq. Date Advances Advances(**) Loan (1) Code (2) Transfer Date
- - ----------- --------------- ------- ---- -------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Totals
======
<CAPTION>
Current Outstanding
Foreclosure Servicing Servicing REO
Loan Number Date Advances Advances Bankruptcy Date Date
- - ----------- ----------- --------- ---------- --------------- ----
<S> <C> <C> <C> <C> <C>
Totals
======
</TABLE>
(1) Status of Mortgage Loan
---------------------------
1 - Modification 6 - DPO 10 - Deed In Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
(2) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed In Lieu Of
6 - DPO Foreclosure
(**) Outstanding P & I Advances include the current period advance
Copyright 1997, Norwest Bank Minnesota, N.A. Page 13 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Specially Serviced Loan Detail - Part 1
<TABLE>
<CAPTION>
Offering Servicing Resolution
Distribution Loan Document Transfer Strategy Scheduled Property Interest Actual
Date Number Cross-Reference Date Code (1) Balance Type (2) State Rate Balance
- - ------------ ------ --------------- -------- ---------- --------- -------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Net Remaining
Distribution Operating NOI Note Maturity Amortization
Date Income Date DSCR Date Date Term
- - ------------ -------- ---- ---- ---- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
(1) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed In Lieu Of
6 - DPO Foreclosure
(2) Property Type Code
----------------------
MF - Multi-Family OF - Office
RT - Retail MU - Mixed Use
HC - Health Care LO - Lodging
IN - Industrial SS - Self Storage
WH - Warehouse OT - Other
MH - Mobile Home Park
Copyright 1997, Norwest Bank Minnesota, N.A. Page 14 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Specially Serviced Loan Detail - Part 2
<TABLE>
<CAPTION>
Offering Resolution Site
Distribution Loan Document Strategy Inspection Appraisal Appraisal Other REO
Date Number Cross-Reference Code (1) Date Phase 1 Date Date Value Property Revenue Comment
- ------------ ------ --------------- -------- ---------- ------------ -------- -------- ---------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(1) Resolution Strategy Code
----------------------------
1 - Modification 6 - DPO 10 - Deed In Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
Copyright 1997, Norwest Bank Minnesota, N.A. Page 15 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Modified Loan Detail
<TABLE>
<CAPTION>
Offering
Loan Document Pre-Modification
Number Cross-Reference Balance Modification Date Modification Description
- - ------ --------------- ---------------- ----------------- ------------------------
<S> <C> <C> <C> <C>
Total
=====
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 16 of 17
<PAGE>
[LOGO] Norwest Banks
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates
Series 1999-CM1
------------------------------------------
For Additional Information, please contact
CTSLink Customer Service
(301) 816-6600
Reports Available on the World Wide Web
@ www.ctslink.com/cmbs
------------------------------------------
Norwest Bank Minnesota, N.A.
Corporate Trust Services
3 New York Plaza, 15th Floor Payment Date: 01/10/2000
New York, NY 10004 Record Date: 12/31/1999
Liquidated Loan Detail
<TABLE>
<CAPTION>
Final Recovery Offering Gross Proceeds
Loan Determination Document Appraisal Appraisal Actual Gross as a % of
Number Date Cross-Reference Date Value Balance Proceeds Actual Balance
- - ---------------- -------------- --------------- --------- --------- ------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Aggregate Net Net Proceeds Repurchased
Loan Liquidation Liquidation as a % of Realized by Seller
Number Expenses (*) Proceeds Actual Balance Loss (Y/N)
- - ---------------- ------------ ----------- -------------- -------- -----------
<S> <C> <C> <C> <C> <C>
Current Total
Cumulative Total
- - - ----------
(*) Aggregate liquidation expenses also include outstanding P & I advances and
unpaid fees (servicing, trustee, etc.).
Copyright 1997, Norwest Bank Minnesota, N.A. Page 17 of 17
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT D
DECREMENT TABLES FOR THE CLASS A-1A, CLASS A-1B, CLASS A-2, CLASS A-3,
CLASS A-4, CLASS B-1 AND CLASS B-2 CERTIFICATES
Percentage of Initial Principal Balance
of the Class A-1A Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 95 95 95 95 95
December, 2001 .............. 89 89 89 89 89
December, 2002 .............. 82 82 82 82 81
December, 2003 .............. 73 73 73 73 73
December, 2004 .............. 63 63 63 63 63
December, 2005 .............. 55 55 55 55 55
December, 2006 .............. 34 34 34 34 34
December, 2007 .............. 25 24 22 21 9
December, 2008 .............. 0 0 0 0 0
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December, 2013 .............. 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 5.7 5.7 5.7 5.6 5.5
D-1
<PAGE>
Percentage of Initial Principal Balance
of the Class A-1B Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 100 100 100 100 100
December, 2001 .............. 100 100 100 100 100
December, 2002 .............. 100 100 100 100 100
December, 2003 .............. 100 100 100 100 100
December, 2004 .............. 100 100 100 100 100
December, 2005 .............. 100 100 100 100 100
December, 2006 .............. 100 100 100 100 100
December, 2007 .............. 100 100 100 100 100
December, 2008 .............. 83 83 83 83 81
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December 2013 ............... 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 9.6 9.5 9.5 9.4 9.2
D-2
<PAGE>
Percentage of Initial Principal Balance
of the Class A-2 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 100 100 100 100 100
December, 2001 .............. 100 100 100 100 100
December, 2002 .............. 100 100 100 100 100
December, 2003 .............. 100 100 100 100 100
December, 2004 .............. 100 100 100 100 100
December, 2005 .............. 100 100 100 100 100
December, 2006 .............. 100 100 100 100 100
December, 2007 .............. 100 100 100 100 100
December, 2008 .............. 100 100 100 100 100
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December, 2013 .............. 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 9.9 9.8 9.8 9.8 9.5
D-3
<PAGE>
Percentage of Initial Principal Balance
of the Class A-3 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 100 100 100 100 100
December, 2001 .............. 100 100 100 100 100
December, 2002 .............. 100 100 100 100 100
December, 2003 .............. 100 100 100 100 100
December, 2004 .............. 100 100 100 100 100
December, 2005 .............. 100 100 100 100 100
December, 2006 .............. 100 100 100 100 100
December, 2007 .............. 100 100 100 100 100
December, 2008 .............. 100 100 100 100 100
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December, 2013 .............. 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 9.9 9.9 9.9 9.8 9.5
D-4
<PAGE>
Percentage of Initial Principal
Balance of the Class A-4 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 100 100 100 100 100
December, 2001 .............. 100 100 100 100 100
December, 2002 .............. 100 100 100 100 100
December, 2003 .............. 100 100 100 100 100
December, 2004 .............. 100 100 100 100 100
December, 2005 .............. 100 100 100 100 100
December, 2006 .............. 100 100 100 100 100
December, 2007 .............. 100 100 100 100 100
December, 2008 .............. 100 100 100 100 100
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December, 2013 .............. 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 9.9 9.9 9.9 9.8 9.5
D-5
<PAGE>
Percentage of Initial Principal Balance
of the Class B-1 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 100 100 100 100 100
December, 2001 .............. 100 100 100 100 100
December, 2002 .............. 100 100 100 100 100
December, 2003 .............. 100 100 100 100 100
December, 2004 .............. 100 100 100 100 100
December, 2005 .............. 100 100 100 100 100
December, 2006 .............. 100 100 100 100 100
December, 2007 .............. 100 100 100 100 100
December, 2008 .............. 100 100 100 100 100
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December, 2013 .............. 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 9.9 9.9 9.9 9.9 9.5
D-6
<PAGE>
Percentage of Initial Principal Balance
of the Class B-2 Certificates
at the Specified CPRs
Prepayment Assumption (CPR)
Distribution Date 0% 25% 50% 75% 100%
--- --- --- --- ----
Closing Date ................ 100% 100% 100% 100% 100%
December, 2000 .............. 100 100 100 100 100
December, 2001 .............. 100 100 100 100 100
December, 2002 .............. 100 100 100 100 100
December, 2003 .............. 100 100 100 100 100
December, 2004 .............. 100 100 100 100 100
December, 2005 .............. 100 100 100 100 100
December, 2006 .............. 100 100 100 100 100
December, 2007 .............. 100 100 100 100 100
December, 2008 .............. 100 100 100 100 100
December, 2009 .............. 0 0 0 0 0
December, 2010 .............. 0 0 0 0 0
December, 2011 .............. 0 0 0 0 0
December, 2012 .............. 0 0 0 0 0
December, 2013 .............. 0 0 0 0 0
December, 2014 .............. 0 0 0 0 0
December, 2015 .............. 0 0 0 0 0
December, 2016 .............. 0 0 0 0 0
December, 2017 .............. 0 0 0 0 0
December, 2018 .............. 0 0 0 0 0
December, 2019 and thereafter 0 0 0 0 0
----------------------------------------------
Weighted average life (years) 9.9 9.9 9.9 9.9 9.5
D-7
<PAGE>
EXHIBIT E
PRICE/YIELD TABLES FOR THE CLASS S CERTIFICATES
Corporate Bond Equivalent (CBE) Yield of the Class S Certificates
at Various CPRs 0.8340% Initial Pass-Through Rate
$760,414,266 Initial Aggregate Notional Amount
</TABLE>
<TABLE>
<CAPTION>
Price (32nds)* 0% CPR 25% CPR 50% CPR 75% CPR 100% CPR
- - ---------------------------------------------------------------------------------------------------
CBE Yield % CBE Yield % CBE Yield % CBE Yield % CBE Yield %
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4-00 10.53% 10.49% 10.44% 10.38% 9.98%
4-01 10.33 10.29 10.24 10.18 9.78
4-02 10.13 10.09 10.04 9.98 9.57
4-03 9.93 9.89 9.85 9.78 9.37
4-04 9.74 9.70 9.65 9.58 9.17
4-05 9.55 9.51 9.46 9.39 8.98
4-06 9.36 9.32 9.27 9.20 8.79
</TABLE>
* Exclusive of accrued interest.
E-1
<PAGE>
EXHIBIT F
SUMMARY TERM SHEET
F-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
F-2
PNC Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates,
Series 1999-CM1
$678,669,000
(Approximate)
Offered Certificates
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
MIDLAND A DONALDSON, LUFKIN & JENRETTE COMPANY
LOAN SERVICES, INC.
Donaldson, Lufkin & Jenrette
PNC Capital Markets
Prudential Securities
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Transaction Offering:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Percentage
Initial of Initial Pass-
Aggregate Mortgage Initial Through
Principal Pool Credit Pass-Through Rate
Class Ratings(1) Balance Balance Support Rate Description
- ----- ---------- ------- ------- ------- ---- -----------
<S> <C> <C> <C> <C> <C> <C>
Publicly Offered Certificates:
S AAAr/AAA $760,414,266(2) -- -- -- --
A-1A AAA/AAA 123,351,000 16.22% 26.75% -- --
A-1B AAA/AAA 433,652,000 57.03% 26.75% -- --
A-2 AA/AA 39,922,000 5.25% 21.50% -- --
A-3 A/A 34,218,000 4.50% 17.00% -- --
A-4 A-/A- 13,308,000 1.75% 15.25% -- --
B-1 BBB/BBB 24,713,000 3.25% 12.00% -- --
B-2 BBB-/BBB- 9,505,000 1.25% 10.75% -- --
Privately Offered Certificates(5):
B-3 -- -- -- -- -- --
B-4 -- -- -- -- -- --
B-5 -- -- -- -- -- --
B-6 -- -- -- -- -- --
B-7 -- -- -- -- -- --
B-8 -- -- -- -- -- --
C -- -- -- -- -- --
D -- -- -- -- -- --
- --------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------
Wtd.
Avg. Principal Legal
Class Life(3) Maturity(3) Window(3) Status SMMEA/ERISA(4)
- ----- ------- ----------- --------- ------ --------------
<S> <C> <C> <C> <C> <C>
Publicly Offered Certificates:
S 9.1 1/20 -- Public Yes/Yes
A-1A 5.7 7/08 1/00-7/08 Public Yes/Yes
A-1B 9.6 10/09 7/08-10/09 Public Yes/Yes
A-2 9.9 11/09 10/09-11/09 Public Yes/No
A-3 9.9 11/09 11/09-11/09 Public No/No
A-4 9.9 11/09 11/09-11/09 Public No/No
B-1 9.9 11/09 11/09-11/09 Public No/No
B-2 9.9 11/09 11/09-11/09 Public No/No
Privately Offered Certificates(5):
B-3 -- -- -- Private-144A --
B-4 -- -- -- Private-144A --
B-5 -- -- -- Private-144A --
B-6 -- -- -- Private-144A --
B-7 -- -- -- Private-144A --
B-8 -- -- -- Private-144A --
C -- -- -- Private-144A --
D -- -- -- Private-144A --
- --------------------------------------------------------------------------------------------
</TABLE>
(1) Standard & Poor's Ratings Services/Fitch IBCA, Inc.
(2) Notional amount. The Class S certificates will be interest only and will
not entitle their holders to distributions of principal.
(3) Assumes 0% CPR, no defaults, no extensions and each mortgage loan with an
anticipated repayment date pays in full on that date. Otherwise based on
"maturity assumptions" set forth under "Yield and Maturity Considerations"
in the Prospectus Supplement.
(4) Expected to be eligible for each of the underwriters' individual
prohibited transaction exemptions under ERISA.
(5) This term sheet was prepared solely in connection with a proposed offering
of the publicly offered certificates.
- --------------------------------------------------------------------------------
Originator Profile:
The mortgage loans were originated or acquired primarily by (i) Midland Loan
Services, Inc. ("Midland") and (ii) Column Financial, Inc. ("Column").
Approximately 55.6 % of the mortgage loans by balance are being contributed by
Midland and 44.4% are being contributed by Column. All of the mortgage loans
were originated either in 1998 or 1999.
Midland, organized in 1992 and acquired by PNC Bank in 1998, has originated over
1,200 loans totaling $3.79 billion since its inception. Midland is a vertically
integrated real estate financial services firm specializing in the origination,
securitization and servicing of commercial real estate assets.
Column, an indirect wholly owned subsidiary of Donaldson, Lufkin & Jenrette,
Inc., was established in August 1993. Column has originated over 1,900
commercial mortgage loans totaling $8.0 billion since its inception. Column
sources, underwrites and closes various mortgage loan products through 17
production offices located throughout the country.
- --------------------------------------------------------------------------------
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 2
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Collateral Overview:
o Total Cut-off Date
Principal Balance: $760,414,266
o Avg. Cut-off Date
Principal Balance: $3,673,499
o Loans/Properties: 207 Loans/212 Properties
o Property Type: Multifamily (38.9%), Retail (26.5%),
Office (17.7%), Other (16.9%)
o Geographic Distribution: 35 States. CA (15.0%), TX (11.6%), NY
(9.3%), Other (64.1%)
o Amortization Types: Balloon (89.7%), Hyper-Amortizing
(9.3%), Fully Amortizing (1.0%)
o Wtd. Avg. U/W
DSCR (1): 1.32x
o Wtd. Avg. Cut-off Date
LTV Ratio (1): 72.6%
o Appraisals: 100% of the appraisals state that they
follow the guidelines set forth in
Title XI of FIRREA.
o Largest Loan: 5.9%
o Five Largest Loans: 19.6%
o Ten Largest Loans: 27.3%
o Wtd. Avg. Remaining
Term to Maturity: 116 months
o Wtd. Avg. Seasoning: 5 months
o Gross WAC: 7.982%
o Call Protection: In general, the Mortgage Loans provide
for a prepayment lockout period
("Lockout"), a defeasance period
("Defeasance"), a yield maintenance
premium ("YMP") period, or a
combination thereof. The remaining
weighted average lockout and
defeasance period for all loans is 7.9
years.
o Defeasance: 75.0%
o Credit Tenant Lease: 0.3%
(1) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 3
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Collateral Overview (continued):
o Participation Loans: None
o Secured Subordinate Debt: 0.5%
o Leasehold: 1.3%
o Delinquency: No loan delinquent 30 days or more as
of the Cut-off Date.
Transaction Overview:
o Structure: Senior/subordinated, sequential pay
pass-through bonds.
o Lead Manager: Donaldson, Lufkin & Jenrette
Securities Corporation
o Co-Managers: PNC Capital Markets, Inc. and
Prudential Securities
o Mortgage Loan Sellers: Midland Loan Services, Inc. and Column
Financial, Inc.
o Rating Agencies: Standard & Poor's Ratings Services/
Fitch IBCA, Inc.
o Master Servicer: Midland Loan Services, Inc.
o Special Servicer: Midland Loan Services, Inc.
o Trustee: Norwest Bank Minnesota, National
Association
o Cut-off Date: December 1, 1999
o Settlement Date: December 7, 1999
o Determination Date: The 4th calendar day of the month, but
if that day is not a business day,
then the 1st business day before that
day.
o Distribution Date: The 10th day of the month, or if such
day is not a business day, the
following business day, but no sooner
than the 4th business day after the
Determination Date
o Delivery: The Depository Trust Company ("DTC")
through Cede & Co. (in the United
States) or Cedel Bank, Societe Anonyme
("Cedel") or The Euroclear System
("Euroclear") (in Europe).
o ERISA: Classes A-1A, A-1B and S are expected
to be eligible for each of the
underwriters' individual prohibited
transaction exemptions with respect to
ERISA, subject to certain conditions
of eligibility.
o SMMEA: Classes A-1A, A-1B, A-2 and S are
expected to be SMMEA eligible.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 4
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Transaction Overview (continued):
o Tax Treatment: REMIC
o Optional Right to Terminate
Trust: 1%
o Analytics:
Cashflows are expected to be available
through Bloomberg, the Trepp Group,
Intex Solutions and Charter Research.
o Extensions: The Special Servicer will be
responsible for performing certain
servicing functions with respect to
Mortgage Loans that, in general, are
in default or as to which default is
imminent, and for administering any
REO properties. The Pooling and
Servicing Agreement will generally
permit the Special Servicer to modify,
waive or amend any term of any
Mortgage Loan if it determines, in
accordance with the servicing
standard, that it is appropriate to do
so. The Special Servicer will not be
permitted to grant any extension of
the maturity of a Mortgage Loan beyond
60 months after its stated maturity
date.
o Controlling Class: The Controlling Class of
Certificateholders may appoint an
operating advisor that may advise or
replace the Special Servicer. In
general, the Controlling Class will be
the most subordinate Class of
Principal Balance Certificates (as
defined below) which has a current
aggregate certificate principal amount
no less than 25% of its original
aggregate certificate principal
balance.
o Advances: The Master Servicer will be obligated
to make advances of scheduled
principal and interest payments,
excluding balloon payments, subject to
recoverability determination and
appraisal reductions. If the Master
Servicer fails to make a required P &
I Advance and the Trustee is aware of
the failure, the Trustee will be
obligated to make that Advance.
o Appraisal Reductions: An appraisal reduction generally will
be created in the amount, if any, by
which the unpaid principal balance of
a Specially Serviced Mortgage Loan
(plus other amounts overdue in
connection with such loan) exceeds 90%
of the appraised value of the related
Mortgaged Property, plus reserves and
escrows other than for taxes and
insurance. The Appraisal Reduction
Amount will reduce proportionately the
interest portion (but not the
principal portion) of any amount of
P&I Advances for the loan, which
reduction will result, in general, in
a reduction of interest distributable
to the most subordinate Class of
Principal Balance Certificates
outstanding. An appraisal reduction
will be reduced to zero as of the date
the related Mortgage Loan has been
brought current for at least six
consecutive months, or has been paid
in full, liquidated, repurchased, or
otherwise disposed of. Appraisal
reductions will not effect class sizes
for the purposes of determining the
Controlling Class.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 5
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Structure Description:
[BAR GRAPH]
Based on the "maturity assumptions" set forth under the "Yield and Maturity
Considerations" in the Prospectus Supplement and a 0% CPR (except each mortgage
loan with an anticipated repayment date is assumed to be paid in full on that
date).
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 6
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Interest Distributions:
The holders of each Class of Principal Balance Certificates will be entitled on
each distribution date to interest accrued at the Pass-Through Rate for that
Class on the aggregate principal balance of that Class outstanding immediately
prior to the related distribution date. The Class S Certificates will be
entitled on each distribution date to the aggregate interest accrued on the
aggregate principal balance of the Principal Balance Certificates at an annual
rate equal to the difference between a weighted average of certain net mortgage
interest rates on the mortgage loans and the weighted average coupon of the
Principal Balance Certificates. All Classes will pay interest on a 30/360 basis.
Principal Distributions:
Available principal will be paid on each distribution date to the outstanding
Classes of Principal Balance Certificates in the following sequential order:
Class A-1A, A-1B, A-2, A-3, A-4, B-1, B-2, B-3, B-4, B-5, B-6, B-7, B-8, C and D
(the "Principal Balance Certificates"). However, if Classes A-2 through D have
been retired as a result of losses and additional trust fund expenses, Classes
A-1A and A-1B will receive principal on a pro-rata basis.
Realized Losses and Expenses:
Realized losses from any mortgage loan and additional trust fund expenses will
be allocated to the outstanding classes of Principal Balance Certificates in the
following sequential order: Class D, C, B-8, B-7, B-6, B-5, B-4, B-3, B-2, B-1,
A-4, A-3 and A-2. If Classes A-2 through D have been retired as a result of
losses and additional trust fund expenses, future losses and additional trust
fund expenses shall be applied to Classes A-1A and A-1B pro-rata.
Credit Enhancements:
Credit enhancement for each Class of publicly registered Certificates will be
provided by the Classes of Certificates which are subordinate in priority with
respect to payments of interest and principal.
Allocation of Yield Maintenance and Percentage Prepayment Premiums:
The certificate yield maintenance amount ("CYMA") and certificate percentage
prepayment premium amount ("CPPPA") for the Class A-1A, A-1B, A-2, A-3, A-4, B-1
and B-2 Certificates (collectively, the "Yield Maintenance Certificates") equals
the total yield maintenance premium or percentage prepayment premium collected,
multiplied by a fraction (not greater than one or less than zero) which is based
upon a formula involving the relationship between the Pass-Through Rate for each
Class currently receiving principal, the mortgage rate of the mortgage loan that
has prepaid, and current interest rates. In general, the CYMA and CPPPA for any
distribution date will be calculated in respect of and payable to the Class(es)
of Yield Maintenance Certificates entitled to receive payments of principal on
such distribution date.
- --------------------------------------------------------------------------------
CYMA & CPPPA = (Pass-Through Rate - Discount Rate)
Allocation -----------------------------------
to Yield Maintenance Certificates (Mortgage Rate - Discount Rate)
- --------------------------------------------------------------------------------
The portion of any yield maintenance or percentage prepayment premium payable to
the Class S (interest only) Certificates, will equal the total yield maintenance
or percentage prepayment premium, as the case may be, less the CYMA or CPPPA, as
applicable, for the Yield Maintenance Certificates as defined above.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 7
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Allocation of Yield Maintenance and Percentage Prepayment Premiums (continued):
Allocation of Yield Maintenance and Percentage Prepayment Premiums Example:
Discount Rate Fraction Methodology:
Mortgage Rate = 8%
P & I Class Coupon = 6%
Discount Rate (Based on a Treasury Rate) = 5%
% of Principal Distributed to Class = 100%
P & I Class Allocation: Class S Allocation:
- ----------------------- -------------------
6% - 5% x 100% = 33 1/3% 100% - P & I Class(es) Allocation = 66 2/3%
- ------
8% - 5%
In general, this formula provides for an increase in the allocation of yield
maintenance and percentage prepayment premiums to the Yield Maintenance
Certificates as interest rates decrease and a decrease in the allocation to such
Classes as interest rates rise.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 8
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Stratification:
[MAP]
Mortgaged Properties by State
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
State Properties Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
California 31 $114,336,631 15.0% 8.080% 1.38x 67.5%
Texas 31 88,276,580 11.6% 7.854% 1.31 75.2%
New York 11 70,739,105 9.3% 8.468% 1.26 69.5%
Florida 17 60,363,296 7.9% 8.105% 1.31 76.1%
Michigan 4 48,873,899 6.4% 8.022% 1.26 74.5%
Oklahoma 8 47,841,758 6.3% 7.408% 1.38 76.1%
Massachusetts 7 41,219,405 5.4% 7.966% 1.34 72.6%
Pennsylvania 10 35,551,312 4.7% 7.375% 1.45 73.6%
Virginia 6 26,877,675 3.5% 7.965% 1.29 75.4%
Colorado 8 22,895,070 3.0% 8.267% 1.34 68.1%
Georgia 9 21,853,610 2.9% 8.036% 1.30 74.8%
New Jersey 5 16,752,405 2.2% 8.200% 1.26 71.6%
Arizona 7 14,696,058 1.9% 7.869% 1.29 74.9%
Tennessee 2 14,563,109 1.9% 8.512% 1.29 73.2%
Minnesota 3 12,864,772 1.7% 8.403% 1.38 67.3%
New Hampshire 4 12,651,727 1.7% 7.161% 1.27 76.4%
Maryland 3 11,836,875 1.6% 7.938% 1.30 74.7%
Connecticut 5 10,660,610 1.4% 8.341% 1.28 69.7%
Indiana 4 9,943,866 1.3% 8.049% 1.22 72.7%
Arkansas 5 8,870,042 1.2% 8.397% 1.28 71.4%
Wisconsin 2 8,813,834 1.2% 7.950% 1.39 70.7%
Kansas 5 7,172,099 0.9% 7.561% 1.35 78.8%
Louisiana 5 6,403,302 0.8% 7.597% 1.42 71.9%
Ohio 3 6,088,297 0.8% 7.452% 1.31 77.7%
Washington 2 5,930,387 0.8% 7.432% 1.34 76.1%
Kentucky 1 5,715,099 0.8% 8.170% 1.25 78.3%
Nebraska 1 5,596,509 0.7% 8.360% 1.21 80.0%
Oregon 3 4,590,953 0.6% 7.487% 1.34 60.6%
Utah 2 4,187,021 0.6% 8.183% 1.27 72.4%
Vermont 1 3,812,987 0.5% 7.260% 1.65 71.5%
Nevada 2 3,434,286 0.5% 8.085% 1.28 75.0%
Mississippi 1 2,160,270 0.3% 8.100% 1.25 78.7%
New Mexico 2 1,989,138 0.3% 8.280% 1.33 54.9%
Iowa 1 1,438,558 0.2% 8.030% 1.36 66.6%
Idaho 1 1,413,723 0.2% 6.950% 1.31 64.3%
----------------------------------------------------------------------------------------------
Total/Weighted Average: 212 $760,414,266 100.0% 7.982% 1.32x 72.6%
==============================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 9
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
[PIE CHART]
Self Storage 1.4%
Manufactured Housing 2.4%
CTL 0.3%
Mixed Use 3.4%
Hotel 4.2%
Industrial 5.2%
Multifamily 38.9%
Office 17.7%
Retail 26.5%
Mortgaged Properties by Property Type
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Property Type Properties Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Multifamily 84 $295,917,163 38.9% 7.736% 1.32x 75.5%
Retail 43 201,274,526 26.5% 8.140% 1.28 72.1%
Office 37 134,954,503 17.7% 8.178% 1.34 69.8%
Industrial 17 39,530,029 5.2% 8.026% 1.28 72.5%
Hotel 6 32,055,712 4.2% 8.426% 1.50 61.5%
Mixed Use 7 25,513,610 3.4% 8.350% 1.40 70.7%
Manufactured Housing 6 18,254,431 2.4% 7.076% 1.47 74.7%
Self Storage 11 10,821,648 1.4% 8.517% 1.36 67.8%
CTL 1 2,092,645 0.3% 8.140% N/A N/A
-------------------------------------------------------------------------------------
Total/Weighted Average: 212 $760,414,266 100.0% 7.982% 1.32x 72.6%
=====================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 10
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Original Amortization Terms
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Original Amortization Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Terms (Months) Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
180 - 239 4 $ 5,081,460 0.7% 8.532% 1.36x 56.3%
240 - 299 8 11,844,518 1.6% 8.056% 1.27 67.3%
300 - 313 66 147,265,364 19.4% 8.083% 1.40 68.1%
314 - 360 129 596,222,924 78.4% 7.951% 1.31 73.9%
------------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
====================================================================================
</TABLE>
Maximum Original Amortization Term (Months): 360
Minimum Original Amortization Term (Months): 180
Wtd. Avg. Original Amortization Term (Months): 345
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Original Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Original Amortization Mortgage Principal Mortgage Pool Interest Average Cut-off Date
to Stated Maturity (Months) Loans Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
60 - 115 6 $ 21,767,262 2.9% 8.353% 1.30x 74.6%
116 - 120 189 712,940,458 93.8% 7.974% 1.32 72.6%
121 - 200 9 20,546,541 2.7% 7.950% 1.46 70.2%
201 - 243 3 5,160,005 0.7% 7.734% 1.18 72.5%
-------------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
=====================================================================================
</TABLE>
Maximum Original Term to Stated Maturity (Months): 243
Minimum Original Term to Stated Maturity (Months): 60
Wtd. Avg. Original Term to Stated Maturity (Months): 121
(1) In the case of hyper-amortization loans, the Anticipated Repayment Date is
assumed to be the maturity date for the purposes of the table.
(2) Assumes a Cut-off Date of December 1, 1999. (3) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 11
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Remaining Amortization Terms
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Remaining Amortization Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Terms (Months) Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
177 - 238 10 $ 14,171,340 1.9% 8.175% 1.31x 63.4%
239 - 298 55 118,739,410 15.6% 8.015% 1.39 69.1%
299 - 312 13 31,280,592 4.1% 8.363% 1.43 64.2%
313 - 359 129 596,222,924 78.4% 7.951% 1.31 73.9%
----------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
==================================================================================
</TABLE>
Maximum Remaining Amortization Term (Months): 359
Minimum Remaining Amortization Term (Months): 177
Wtd. Avg. Remaining Amortization Term (Months): 340
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Remaining Terms to Stated Maturity (1)
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Range of Number of Cut-off Date Initial Mortgage Weighted Average
Remaining Terms Mortgage Principal Mortgage Pool Interest Average Cut-off Date
to Stated Maturity (Months) Loans Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
38 - 114 52 $169,868,149 22.3% 7.365% 1.37x 74.6%
115 - 119 143 564,839,571 74.3% 8.171% 1.31 72.1%
120 - 199 9 20,546,541 2.7% 7.950% 1.46 70.2%
200 - 241 3 5,160,005 0.7% 7.734% 1.18 72.5%
-----------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
===================================================================================
</TABLE>
Maximum Remaining Term to Stated Maturity (Months): 241
Minimum Remaining Term to Stated Maturity (Months): 38
Wtd. Avg. Remaining Term to Stated Maturity (Months): 116
(1) In the case of hyper-amortization loans, the Anticipated Repayment Date is
assumed to be the maturity date for the purposes of the table.
(2) Assumes a Cut-off Date of December 1, 1999. (3) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or terms sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 12
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
U/W Debt Service Coverage Ratios
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average Cut-off Date
U/W DSCRs Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CTL 1 $ 2,092,645 0.3% 8.140% N/A N/A
1.06x - 1.19 1 1,653,637 0.2% 7.890% 1.06x 79.5%
1.20 - 1.21 10 48,223,226 6.3% 8.103% 1.21 74.5%
1.22 - 1.29 90 364,015,466 47.9% 8.025% 1.26 73.6%
1.30 - 1.34 46 143,520,375 18.9% 8.057% 1.31 73.8%
1.35 - 1.39 14 44,092,870 5.8% 8.095% 1.38 74.5%
1.40 - 1.88x 45 156,816,048 20.6% 7.745% 1.51 67.8%
--------------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
======================================================================================
</TABLE>
Maximum U/W DSCR (2): 1.88x
Minimum U/W DSCR (2): 1.06x
Wtd. Avg. U/W DSCR (2): 1.32x
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Cut-off Date Loan-to-Value Ratios
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Cut-off Date Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Loan-to-Value Ratios Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CTL 1 $ 2,092,645 0.3% 8.140% N/A N/A
40.50% - 55.00% 10 24,157,104 3.2% 8.514% 1.40x 51.5%
55.10% - 65.00% 25 64,056,845 8.4% 8.165% 1.43 61.0%
65.10% - 67.50% 13 32,805,312 4.3% 8.156% 1.34 66.0%
67.60% - 70.00% 21 106,333,468 14.0% 8.293% 1.31 69.1%
70.10% - 72.50% 30 80,981,811 10.6% 8.195% 1.35 71.5%
72.60% - 75.00% 38 150,728,851 19.8% 7.891% 1.31 73.8%
75.10% - 77.50% 18 85,088,725 11.2% 7.737% 1.31 76.7%
77.60% - 78.50% 20 84,738,068 11.1% 7.577% 1.31 78.0%
78.60% - 79.50% 13 45,350,492 6.0% 7.704% 1.27 79.0%
79.60% - 80.00% 16 77,184,985 10.2% 8.048% 1.27 79.8%
80.10% - 86.40% 2 6,895,962 0.9% 7.380% 1.30 84.6%
--------------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
======================================================================================
</TABLE>
Maximum Cut-off Date LTV Ratio (2): 86.4%
Minimum Cut-off Date LTV Ratio (2): 40.5%
Wtd. Avg. Cut-off Date LTV Ratio (2): 72.6%
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 13
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Cut-off Date Principal Balances
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Cut-off Date Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Principal Balances Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$ 399,636 - 500,000 1 $ 399,636 0.1% 8.880% 1.42x 63.6%
500,001 - 750,000 13 8,602,367 1.1% 8.552% 1.27 69.2%
750,001 - 1,000,000 16 13,871,300 1.8% 8.174% 1.40 68.2%
1,000,001 - 1,250,000 18 20,080,689 2.6% 8.205% 1.35 69.9%
1,250,001 - 1,500,000 15 21,155,610 2.8% 8.129% 1.32 66.7%
1,500,001 - 1,750,000 18 29,069,384 3.8% 8.109% 1.31 72.5%
1,750,001 - 2,000,000 19 35,100,836 4.6% 7.863% 1.33 71.8%
2,000,001 - 3,000,000 34 83,259,280 10.9% 8.066% 1.34 71.6%
3,000,001 - 4,000,000 19 65,693,774 8.6% 7.938% 1.35 74.0%
4,000,001 - 5,000,000 14 62,376,529 8.2% 7.970% 1.37 72.3%
5,000,001 - 6,000,000 10 54,843,770 7.2% 7.964% 1.31 75.1%
6,000,001 - 7,000,000 8 52,671,714 6.9% 7.928% 1.27 73.2%
7,000,001 - 8,000,000 5 36,794,009 4.8% 7.892% 1.28 75.5%
8,000,001 - 9,000,000 2 16,993,437 2.2% 7.463% 1.26 79.4%
9,000,001 - 11,500,000 7 74,415,539 9.8% 7.674% 1.35 73.0%
11,500,001 - 15,500,000 4 49,915,131 6.6% 7.974% 1.34 74.8%
15,500,001 - 34,500,000 2 53,763,882 7.1% 7.865% 1.37 70.5%
34,500,001 - $ 44,973,184 2 81,407,381 10.7% 8.320% 1.26 71.1%
--------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
================================================================================
</TABLE>
Maximum Cut-off Date Scheduled Principal Balance: $44,973,184
Minimum Cut-off Date Scheduled Principal Balance: $ 399,636
Average Cut-off Date Scheduled Principal Balance: $ 3,673,499
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Mortgage Loans by Amortization Type
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Loan Type Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balloon 192 $681,963,958 89.7% 7.971% 1.33x 72.8%
Hyper-Amortizing 10 71,047,595 9.3% 8.079% 1.31 71.6%
Fully Amortizing 5 7,402,714 1.0% 8.066% 1.30 63.3%
----------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
==================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 14
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Mortgage Interest Rates
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Mortgage Principal Mortgage Pool Interest Average Cut-off Date
Mortgage Interest Rates Loans Balance (1) Balance Rates U/W DSCR (2) LTV Ratio (2)
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
6.320% - 7.000% 16 $ 64,233,696 8.4% 6.749% 1.41x 75.8%
7.001% - 7.250% 10 22,176,915 2.9% 7.137% 1.32 74.1%
7.251% - 7.500% 11 52,973,427 7.0% 7.408% 1.37 76.7%
7.501% - 7.750% 9 58,625,776 7.7% 7.695% 1.25 77.7%
7.751% - 8.000% 30 149,163,978 19.6% 7.918% 1.31 72.6%
8.001% - 8.250% 51 174,450,663 22.9% 8.133% 1.33 72.5%
8.251% - 8.500% 38 101,264,841 13.3% 8.346% 1.31 70.9%
8.501% - 8.750% 25 114,893,314 15.1% 8.593% 1.30 68.5%
8.751% - 9.000% 12 14,720,832 1.9% 8.829% 1.33 66.2%
9.001% - 9.280% 5 7,910,824 1.0% 9.149% 1.45 69.2%
------------------------------------------------------------------------------------
Total/Weighted Average: 207 $760,414,266 100.0% 7.982% 1.32x 72.6%
====================================================================================
</TABLE>
Maximum Wtd. Avg. Mortgage Interest Rate: 9.280%
Minimum Wtd. Avg. Mortgage Interest Rate: 6.320%
Wtd. Avg. Mortgage Interest Rate: 7.982%
(1) Assumes a Cut-off Date of December 1, 1999.
(2) Excluding the CTL Loan.
Occupancy Rates at Underwriting
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Occupancy Rates at U/W Properties (1) Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
79.0% - 79.9% 2 $ 2,162,854 0.3% 8.184% 1.32x 66.9%
80.0% - 89.9% 17 47,098,113 6.2% 8.177% 1.29 71.5%
90.0% - 94.9% 32 149,348,629 19.6% 8.127% 1.30 73.5%
95.0% - 97.4% 30 165,317,792 21.7% 7.715% 1.32 75.3%
97.5% - 100.0% 125 364,431,166 47.9% 7.979% 1.32 72.1%
---------------------------------------------------------------------------------------
Total/Weighted Average: 206 $ 728,358,554 95.8% 7.963% 1.32x 73.1%
=======================================================================================
</TABLE>
Maximum Occupancy Rate at U/W: 100.0%
Minimum Occupancy Rate at U/W: 79.0%
Wtd. Avg. Occupancy Rate at U/W: 96.3%
(1) Does not include any hotel properties.
(2) Assumes a Cut-off Date of December 1, 1999.
(3) Excluding the CTL Loan.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 15
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Years Built/Years Renovated (1)
<TABLE>
<CAPTION>
Weighted
Percentage of Average Weighted
Number of Cut-off Date Initial Mortgage Weighted Average
Range of Years Mortgaged Principal Mortgage Pool Interest Average Cut-off Date
Built/Renovated Properties Balance (2) Balance Rates U/W DSCR (3) LTV Ratio (3)
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1963 - 1970 8 $ 19,170,424 2.5% 7.961% 1.36x 72.2%
1971 - 1980 21 49,608,416 6.5% 8.001% 1.32 74.9%
1981 - 1990 58 234,026,071 30.8% 7.727% 1.36 73.6%
1991 - 1999 125 457,609,356 60.2% 8.112% 1.31 71.8%
----------------------------------------------------------------------------------------
Total/Weighted Average: 212 $ 760,414,266 100.0% 7.982% 1.32x 72.6%
========================================================================================
</TABLE>
Maximum Year Built/Renovated: 1999
Minimum Year Built/Renovated: 1963
Wtd. Avg. Year Built/Renovated: 1991
(1) Year Built/Renovated reflects the later of the Year Built or the Year
Renovated.
(2) Assumes a Cut-off Date of December 1, 1999. (3) Excluding the CTL Loan.
Mortgage Pool Prepayment Profile (1)
<TABLE>
<CAPTION>
Number of
Months Since Mortgage Outstanding % of Pool Yield Prepayment % of Pool
Date Cut-off Date (2) Loans Balance (mm) Lockout Maintenance Premium Open Total
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dec-99 0 207 $ 760.4 99.41% 0.59% 0.00% 0.00% 100.0%
Dec-00 12 207 $ 753.8 98.65% 1.35% 0.00% 0.00% 100.0%
Dec-01 24 207 $ 746.5 96.81% 3.19% 0.00% 0.00% 100.0%
Dec-02 36 207 $ 738.5 89.31% 10.43% 0.00% 0.26% 100.0%
Dec-03 48 205 $ 727.1 81.07% 18.93% 0.00% 0.00% 100.0%
Dec-04 60 204 $ 715.3 76.86% 23.14% 0.00% 0.00% 100.0%
Dec-05 72 204 $ 705.3 76.92% 23.08% 0.00% 0.00% 100.0%
Dec-06 84 201 $ 679.3 75.59% 24.41% 0.00% 0.00% 100.0%
Dec-07 96 201 $ 667.7 75.66% 21.40% 0.00% 2.94% 100.0%
Dec-08 108 168 $ 564.2 86.96% 11.54% 0.66% 0.83% 100.0%
Dec-09 120 12 $ 19.3 36.38% 44.88% 0.00% 18.73% 100.0%
Dec-10 132 11 $ 14.8 43.40% 56.60% 0.00% 0.00% 100.0%
Dec-11 144 11 $ 13.9 41.71% 58.29% 0.00% 0.00% 100.0%
Dec-12 156 11 $ 12.9 39.58% 29.83% 0.00% 30.59% 100.0%
Dec-13 168 9 $ 6.9 62.98% 37.02% 0.00% 0.00% 100.0%
Dec-14 180 3 $ 2.5 80.11% 19.89% 0.00% 0.00% 100.0%
Dec-15 192 3 $ 2.1 81.78% 18.22% 0.00% 0.00% 100.0%
Dec-16 204 3 $ 1.8 84.25% 15.75% 0.00% 0.00% 100.0%
Dec-17 216 3 $ 1.4 88.32% 11.68% 0.00% 0.00% 100.0%
Dec-18 228 2 $ 0.9 100.00% 0.00% 0.00% 0.00% 100.0%
- - -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated assuming that no Mortgage Loan prepays, defaults or is
repurchased prior to stated maturity, except that the hyper-amortization
loans are assumed to pay in full on their respective Anticipated Repayment
Dates. Otherwise calculated based on Maturity Assumptions to be set forth in
the final prospectus supplement.
(2) Assumes a Cut-off Date of December 1, 1999.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 16
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Prepayment Provision as of Cut-off Date (1)
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
Percentage of Remaining Remaining Remaining Weighted
Range of Number of Cut-off Date Initial Lockout Lockout Lockout Plus Average
Remaining Terms to Mortgage Principal Mortgage Pool Period Plus YM Period Premium Period Maturity
Stated Maturity (Years) (2) Loans Balance (1) Balance (Years) (Years) (Years) (Years) (2)
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
3.0 - 3.9 2 $ 2,988,450 0.4% 0.9 3.0 3.0 3.4
4.0 - 4.9 1 2,692,755 0.4% 4.3 4.3 4.3 4.6
6.0 - 6.9 3 16,086,057 2.1% 6.3 6.3 6.3 6.8
8.0 - 8.9 33 106,697,071 14.0% 3.0 8.2 8.2 8.7
9.0 - 9.9 156 606,243,387 79.7% 8.7 9.3 9.3 9.8
10.0 - 10.9 1 4,514,716 0.6% 0.0 8.3 9.3 10.4
13.0 - 13.9 2 6,636,564 0.9% 6.1 12.7 12.7 13.2
14.0 - 14.9 6 9,395,262 1.2% 11.8 14.3 14.3 14.7
18.0 - 18.9 1 1,413,723 0.2% 8.8 18.6 18.6 18.9
19.0 - 19.9 1 1,653,637 0.2% 19.5 19.5 19.5 19.8
20.0 - 20.9 1 2,092,645 0.3% 19.6 19.6 19.6 20.1
----------------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.9 9.2 9.2 9.7
====================================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) In the case of the hyper-amortization loans, the Anticipated Repayment Date
is assumed to be the maturity date for the purposes of the indicated column.
Prepayment Option
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
Percentage of Remaining Remaining Remaining Weighted
Number of Cut-off Date Initial Lockout Lockout Lockout Plus Average
Mortgage Principal Mortgage Pool Period Plus YM Period Premium Period Maturity
Prepayment Option Loans Balance (1) Balance (Years) (Years) (Years) (Years) (2)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Lockout / Defeasance 153 $ 570,106,400 75.0% 9.4 9.4 9.4 9.8
Lockout / Yield Maintenance 52 183,100,396 24.1% 3.3 8.8 8.8 9.3
Yield Maintenance / Prepayment Premium 1 4,514,716 0.6% 0.0 8.3 9.3 10.4
Lockout 1 2,692,755 0.4% 4.3 4.3 4.3 4.6
---------------------------------------------------------------------------------------------
Total/Weighted Average: 207 $ 760,414,266 100.0% 7.9 9.2 9.2 9.7
=============================================================================================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
(2) In the case of the hyper-amortization loans, the Anticipated Repayment Date
is assumed to be the maturity date for the purposes of the indicated column.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 17
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Significant Mortgage Loans
<TABLE>
<CAPTION>
Percentage of
Property Units/ Cut-off Date Initial Mortgage Appraised Mortgage Interest
# Property Name Type Square Feet Principal Balance (1) Pool Balance Value Rate
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1 The Wilton Mall Retail 540,021 SF $ 44,973,184 5.9% $ 64,500,000 8.580%
- ------------------------------------------------------------------------------------------------------------------------------------
2 Frandor Mall Retail 457,978 SF 36,434,197 4.8% 50,000,000 8.000%
- ------------------------------------------------------------------------------------------------------------------------------------
3 The Alliance Loan Multifamily 666 Units 32,777,802 4.3% 42,450,000 7.740%
- ------------------------------------------------------------------------------------------------------------------------------------
4 Stanford Square Office 70,816 SF 20,986,080 2.8% 35,000,000 8.060%
- ------------------------------------------------------------------------------------------------------------------------------------
5 Woodscape Apartments Multifamily 498 Units 13,571,925 1.8% 17,500,000 7.430%
- ------------------------------------------------------------------------------------------------------------------------------------
Total/Weighted Average: $ 148,743,188 19.6% $ 209,450,000 8.075%
=========================================================================
<CAPTION>
Cut-off Date
# Property Name U/W DSCR LTV
===================================================
<S> <C> <C>
1 The Wilton Mall 1.26x 69.7%
- ---------------------------------------------------
2 Frandor Mall 1.26 72.9%
- ---------------------------------------------------
3 The Alliance Loan 1.24 77.2%
- ---------------------------------------------------
4 Stanford Square 1.57 60.0%
- ---------------------------------------------------
5 Woodscape Apartments 1.29 77.6%
- ---------------------------------------------------
Total/Weighted Average: 1.30x 71.5%
===========================
</TABLE>
(1) Assumes a Cut-off Date of December 1, 1999.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 18
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
The Wilton Mall
LOAN INFORMATION
- --------------------------------------------------------------------------------
Cut-off Date Principal Balance: $44,973,184
% of Initial Mortgage Pool
Balance: 5.9%
Mortgage Loan Seller: Column Financial, Inc.
Mortgage Interest Rate: 8.580%
Term to ARD: 10 years
Amortization Term: 30 years
Call Protection: Prepayment Lockout; U.S. Treasury
defeasance permitted as of the 2
year anniversary of the Closing Date.
Cut-off Date LTV: 69.7%
Maturity/ARD LTV: 63.2%
U/W DSCR: 1.26x
Cross Collateralization/Default: No/No
Special Provisions: Hyper-Amortization Loan; Cash
Management
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single Asset/Portfolio: Single Asset
Property Type: Retail
Location: Saratoga Springs, New York
Years Built/Renovated: 1990/1991
Collateral: 540,021 square feet of a 655,682
square foot regional mall located in
Saratoga Springs
Property Manager: Genessee Management, Inc.
Underwritable Cash Flow: $5,286,893
Appraised Value: $64,500,000
Appraisal Date: September 1, 1999
Occupancy Rate at U/W: 91%
- --------------------------------------------------------------------------------
Additional Information:
Subject Property includes 540,021 square feet of a 655,682 square foot regional
mall located at 3065 Route 50 in Saratoga Springs, New York. The center was
constructed in 1990 and was subsequently expanded in 1991. The Property is a
one-level, enclosed regional shopping mall. Major tenants include Sears (S&P
rated A-) and Bon Ton; other tenants include J.C. Penney (S&P rated BBB+),
Dick's Sporting Goods and an eight screen Hoyt's movie theatre. The property
also contains a BJ's Wholesale Club as a freestanding outparcel (not included in
collateral). In addition to the existing three anchor tenants, a separate parcel
exists which potentially could serve as a fourth anchor tenant site (not to be
included within the collateral).
Sarwil Associates, L.P., a New York limited partnership, is the owner/developer
of Wilton Mall. The property is managed by Genessee Management, Inc. Both
companies are affiliates of Wilmorite, Inc. ("Wilmorite"), which is a leading
owner and operator of regional malls in the United States. Wilmorite manages 16
regional malls and 5 power centers comprising 17.1 million square feet.
Wilmorite has been in business since the late 1940's and since that time has
been a family owned and operated real estate development company. Wilmorite has
been involved in the development of many different property types including
retail, office, residential and hotel, but in the last 15 years, the company has
narrowed its focus on retail property development and in particular, on regional
shopping malls.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 19
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Frandor Mall
LOAN INFORMATION
- --------------------------------------------------------------------------------
Cut-off Date Principal Balance: $36,434,197
% of Initial Mortgage Pool Balance: 4.8%
Mortgage Loan Seller: Column Financial, Inc.
Mortgage Interest Rate: 8.000%
Balloon Term: 10 years
Amortization Term: 30 years
Call Protection: Prepayment Lockout; U.S. Treasury
defeasance permitted as of the 2
year anniversary of the Closing Date.
Cut-off Date LTV: 72.9%
Maturity LTV: 65.3%
U/W DSCR: 1.26x
Cross Collateralization/Default: No/No
Special Provisions: Cash Management
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single Asset/Portfolio: Single Asset
Property Type: Retail
Location: Lansing, Michigan
Years Built/Renovated: 1950/1999
Collateral: 457,978 square foot retail power
center located in Lansing
Property Management: The Frandorson Coporation
Underwritable Cash Flow: $4,051,315
Appraised Value: $50,000,000
Appraisal Date: August 13, 1999
Occupancy Rate at U/W: 95%
- --------------------------------------------------------------------------------
Additional Information:
Subject property is a 457,978 square foot retail power center anchored by Kroger
(S&P rated BBB-), Office Depot (S&P rated BBB) and CompUSA, located in Lansing,
Michigan.
Frandor Mall was originally constructed in phases beginning in 1950 by
Frandorson Properties. In March of 1998, Lomax Stern Development Company and
Frandorson Properties formed a Joint Venture in which Lomax acquired 50%
ownership of the property. The newly formed ownership commenced a $17.5 million
redevelopment program. The redevelopment program, which was completed during the
summer of 1999, included the razing of an existing enclosed mall area and
existing structures, plus construction of 150,000 square feet of additional
space. The property is currently 95% leased. Many of the existing leases are
long-term leases with terms exceeding the term of the loan.
The development partner, Lomax Stern Development Company, has extensive
experience in both construction and leasing. The principals, Chris Brochert and
David Stern, have been partners in over 30 retail centers ranging in size from
31,000 square feet to 550,000 square feet.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 20
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
The Alliance Loan
LOAN INFORMATION
- --------------------------------------------------------------------------------
Cut-off Date Principal Balance: $32,777,802
% of Initial Mortgage Pool
Balance: 4.3%
Mortgage Loan Seller: Column Financial, Inc.
Mortgage Interest Rate: 7.740%
Balloon Term: 10 years
Amortization Term: 30 years
Call Protection: Prepayment Lockout; U.S.
Treasury defeasance permitted as of
the 2 year anniversary of the Closing
Date.
Cut-off Date LTV: 77.2%
Maturity LTV: 68.9%
U/W DSCR: 1.24x
Cross Collateralization/
Default: Yes/Yes
Special Provisions:
Release Provision available if
(i) DSCR not less than 1.20x and (ii)
LTV not greater than 80%; Cash
Management.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single
Asset/Portfolio: Portfolio
Property Type: Multifamily
Location: Virginia, Georgia and Maryland
Years Built/Renovated: 1965 to 1994
Collateral: 3 Multifamily properties with 666
total units
Property Management: Alliance Residential Management,
L.L.C.
Underwritable Cash
Flow: $3,491,254
Appraised Value: $42,450,000
Appraisal Date: June 13, 1999 to September 13,
1999
Wtd. Avg. Occupancy
Rate at U/W: 96%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Built/ Underwritable
Property Name City State Units Occupancy Renovated Appraised Value Cash Flow
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Hampton Court Apartments Alexandria VA 307 98% 1965/1992 $ 19,800,000 $ 1,641,733
Lake of the Woods Apartments College Park GA 216 95% 1988/1989 12,850,000 1,029,641
Holly Tree Apartments Waldorf MD 143 95% 1974/1994 9,800,000 819,880
=====================================================================================================================
</TABLE>
Additional Information:
Subject properties include three multifamily housing complexes including Hampton
Court Apartments, Lake of the Woods Apartments and Holly Tree Apartments.
Hampton Court Apartments is a 307-unit multifamily complex contained in 7 brick,
three and four-story walk-up apartment buildings located in Alexandria, VA. Unit
mix at the subject is 83 1BR/1BA units, 72 2BR/1BA units, 96 2BR/1.5BA and 56
3BR/2BA units. Lake of The Woods Apartments is a 216-unit multifamily complex
contained in 14 walk-up, two and three-story garden-style apartment buildings,
located in College Park, GA. Unit mix at the subject is 72 1BR/1BA and 144
2BR/2BA units. Holly Tree Apartments is a 143-unit multifamily complex contained
in 6 walk-up, three-story apartment buildings located in Waldorf, MD. Unit mix
at the subject is 43 1BR/1BA units, 99 2BR/1.5BA and 1 2BR/2BA units.
The subject multifamily properties' amenities include swimming pools, fitness
centers, laundry facilities, tennis and volleyball courts, surface parking,
extensive landscaping and on-site management offices.
The three subject properties secure a single Mortgage Note. The borrower is a
single purpose entity. Principals of the borrower include Andrew Schor and
Steven Ivankovich. The borrower is affiliated with Alliance Holdings, Inc.
("Alliance"), a privately owned real estate investment, development and finance
firm concentrated in the multifamily housing business. Alliance and its
affiliates own interests in and manage more than 31,000 units throughout Texas,
in the Midwest and along the eastern seaboard from Virginia to Florida.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 21
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Stanford Square
LOAN INFORMATION
- --------------------------------------------------------------------------------
Cut-off Date Principal Balance: $20,986,080
% of Initial Mortgage Pool
Balance: 2.8%
Mortgage Loan Seller: Column Financial, Inc.
Mortgage Interest Rate: 8.060%
Balloon Term: 10 years
Amortization Term: 30 years
Call Protection: Prepayment Lockout; U.S.
Treasury defeasance permitted as of
the 2 year anniversary of the Closing
Date.
Cut-off Date LTV: 60.0%
Maturity LTV: 53.7%
U/W DSCR: 1.57x
Cross Collateralization/
Default: No/No
Special Provisions: Cash Management
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single
Asset/Portfolio: Single Asset
Property Type: Office
Location: Palo Alto, California
Years Built/Renovated: 1983
Collateral: 70,816 square foot Class A,
multi-tenanted office building
located in California
Property Management: Stanford Square Management Co. and
Tarlton Properties, Inc.
Underwritable Cash
Flow: $2,913,281
Appraised Value: $35,000,000
Appraisal Date: August 17, 1999
Occupancy Rate at U/W: 100%
- --------------------------------------------------------------------------------
Additional Information:
Subject property is a 70,816 square foot, Class A office building located in the
Central Business District of Palo Alto, California, constructed in 1983.
Improvements consist of one four-story structure, and two levels of underground
parking. Amenities include two elevators, a central atrium/courtyard, private
balconies and landscaping. Major tenants include PHB Hagler Bailey (18,331
square feet), an international management and economic consulting firm, and Bon
Appetit Management Company (17,825 square feet), a food service management
company that contracts its services to corporations, institutions and
universities.
The borrowing entity consists of two Tenants-In-Common SPE's including Stanford
Square, LLC ("SSLP") (94.87% ownership) and Sea Biscuit, LLC (5.13% ownership).
Joan Rounds, the Managing Member of SSLP, became involved in the partnership in
1986 through an entity she controls, JGR Ventures ("JGR"), which made the
investment in SSLP. Through JGR and its ownership of several entities and
affiliates, Joan Rounds manages commercial real estate in excess of $35 million.
The property is managed by Stanford Square Management Co. and Tarlton
Properties, Inc. ("Tarlton"), which manages several office and industrial
buildings within the subject area. Tarlton Managing Partner, Tig Tarlton, has
more than 30 years of real estate development, construction, and property
management experience. During that period, he has personally managed, developed
or remodeled over 2,500,000 square feet of commercial property.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 22
<PAGE>
PNCMAC Series 1999-CM1 November 19, 1999
Collateral and Structural Term Sheet
Woodscape Apartments
LOAN INFORMATION
- --------------------------------------------------------------------------------
Cut-off Date Principal Balance: $13,571,925
% of Initial Mortgage Pool
Balance: 1.8%
Mortgage Loan Seller: Midland Loan Services, Inc.
Mortgage Interest Rate: 7.430%
Balloon Term: 10 years
Amortization Term: 30 years
Call Protection: Prepayment Lockout; Yield
Maintenance.
Cut-off Date LTV: 77.6%
Maturity LTV: 68.5%
U/W DSCR: 1.29x
Cross Collateralization/Default: No/No
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
Single Asset/Portfolio: Single Asset
Property Type: Multifamily
Location: Oklahoma City, Oklahoma
Years Built/Renovated: 1984
Collateral: A Multifamily complex with 498
units in Oklahoma.
Property Management: Case & Associates Properties,
Inc.
Underwritable Cash Flow: $1,465,029
Appraised Value: $17,500,000
Appraisal Date: July 10, 1999
Occupancy Rate at U/W: 94%
- --------------------------------------------------------------------------------
Additional Information:
Subject property is a 498-unit, garden-style multifamily apartment complex
contained in 22 one, two and three-story apartment buildings, located in the
northwest quadrant of Oklahoma City, Oklahoma. Unit mix at the subject is 384
1BR/1BA and 114 2BR/2BA. Apartments range in size between 525-1,078 square feet.
Amenities include two in-ground swimming pools, two heated spas, a fitness
center, a clubhouse facility, three central laundry facilities a dual tennis
court and on-site management office.
The Borrower is Woodscape Apartments limited partnership, a single asset entity.
Mr. Michael D. Case owns the controlling interest in the partnership. Michael
Case of Tulsa, Oklahoma and his related entities are active investors in
multifamily ownership, all of which is managed by Mr. Case through Case &
Associates Properties, Inc. of Tulsa, Oklahoma. The related partnerships
together control and operate over 20,000 units throughout the southwest. Mr.
Case has a net worth in excess of $80 million with a strong liquid asset
position.
This investment summary is prepared solely for informational purposes and no
offer to sell or solicitation of any offer to purchase securities is being made
hereby. This summary is for use by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc. and Prudential Securities Incorporated
personnel to assist them in determining whether potential investors wish to
proceed with an in-depth investigation of the proposed offering. While the
information contained herein is from sources believed to be reliable, it has not
been independently verified by Donaldson, Lufkin & Jenrette Securities
Corporation, PNC Capital Markets, Inc., Prudential Securities Incorporated, or
any of their respective affiliates, and such entities make no representations or
warranties with respect to the information contained herein or as to the
appropriateness, usefulness or completeness of these materials. Any
computational information set forth herein (including without limitation any
computations of yields and weighted average life) is hypothetical and based on
certain assumptions (including without limitation assumptions regarding the
absence of voluntary and involuntary prepayments, or the timing of such
occurrences). The actual characteristics and performance of the mortgage loans
will differ from such assumptions and such differences may be material. This
document is subject to errors, omissions and changes in information and is
subject to modification or withdrawal at any time with or without notice. The
contents hereof are not to be reproduced without the express written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated. The information contained herein
supersedes any and all information contained in any previously furnished
summaries or term sheets and shall be superseded by any subsequently furnished
similar materials. The information contained herein shall be superseded by a
final prospectus and prospectus supplement and by subsequent summary memoranda.
No purchase of any securities may be made unless and until a final prospectus
and prospectus supplement has been received by a potential investor and such
investor has complied with all additional related offering requirements. Each of
Donaldson, Lufkin & Jenrette Securities Corporation, PNC Capital Markets, Inc.
and Prudential Securities Incorporated expressly reserves the right, at its sole
discretion, to reject any or all proposals or expressions of interest in the
subject proposed offering and to terminate discussions with any party at any
time with or without notice.
Page 23
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered (assuming three take-downs of
approximately $600 million each), other than underwriting compensation, are as
set forth below. All such expenses, except for the SEC registration and filing
fees, are estimated:
SEC Registration Fee...................................$482,486
NASD Filing Fee........................................ N/A
Legal Fees and Expenses................................$700,000
Accounting Fees and Expenses...........................$210,000
Trustee's Fees and Expenses (including counsel fees)...$180,000
Blue Sky Qualification Fees and Expenses............... $15,000
Printing and Engraving Fees............................$270,000
Rating Agency Fees...................................$3,600,000
Miscellaneous..........................................$300,000
----------
Total................................................$5,757,486
Item 15. Indemnification of Directors and Officers
Section 355 of the General and Business Corporation Law of Missouri
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he or she is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise.
Depending on the character of the proceeding, a corporation may indemnify
against expenses, costs and fees (including attorney's fees), judgements, fines
and amounts paid in settlement actually and reasonably incurred in connection
with such action, suit or proceeding if the person indemnified acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. If the person indemnified is not wholly successful in such action,
suit or proceeding, but is successful, on the merits or otherwise, in one or
more but less than all claims, issues or matters in such proceeding, he or she
may be indemnified against expenses actually and reasonably incurred in
connection with each successfully resolved claim, issue or matter. In the case
of an action or suit by or in the right of the corporation, no indemnification
may be made in respect to any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the court in which such action or suit was brought shall determine
that despite the adjudication of liability such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
Section 355 provides that to the extent a director, officer, employee or agent
of a corporation has been successful in the defense of any action, suit or
proceeding referred to above or in the defense of any claim, issue or matter
therein, he or she shall be indemnified against expenses (including attorney's
fees) actually and reasonably incurred by him or her in connection therewith.
Section 355 of the General and Business Corporation Law of Missouri
further provides that a corporation may give any further indemnity, in addition
to the indemnity set forth above to any person who is or was a director,
officer, employee or agent, or to any person who is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, provided
such further indemnity is either (i) authorized, directed, or provided for in
the articles of incorporation of the corporation or any duly adopted amendment
thereof or (ii) is authorized, directed, or provided for in any bylaw or
agreement of the corporation which has been adopted by a vote of the
shareholders of the corporation, and provided further that no such indemnity
shall indemnify any person from or on account of such person's conduct which was
finally adjudged to have been knowingly fraudulent, deliberately dishonest or
willful misconduct. The Articles of Incorporation of the registrant contain a
provision requiring the registrant to indemnify each such person to the extent
his or her conduct is not adjudged to have been knowingly fraudulent,
deliberately dishonest or willful misconduct.
The registrant is authorized to purchase liability insurance for its
directors and officers if it has not currently obtained such a policy.
II-1
<PAGE>
Reference is made to the form of underwriting Agreement filed as Exhibit
1.1 hereto for provisions relating to the indemnification of directors, officers
and controlling persons against certain liabilities including liabilities under
the Securities Act of 1933, as amended. Pursuant to the Underwriting Agreement,
the underwriters will indemnify and hold harmless the registrant and each
person, if any, who controls the registrant within the meaning of Section 15 of
the Securities Act of 1933, as amended, or Section 20 of the Securities Act of
1934, as amended, against any and all losses, claims, damages or liabilities,
joint or several, to which they may become liable under the Securities Act of
1933, as amended, the Securities Act of 1934, as amended, or other federal or
state law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the prospectus or prospectus supplement or in any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in light of the
circumstances under which they were made, but only with reference to written
information furnished to the registrant by or on behalf of the underwriters
specifically for use in connection with the preparation of the documents
referred to in the foregoing indemnity.
Unless otherwise specified, the Governing Documents relating to each
series will provide that neither the registrant nor any director, officer,
employee or agent of the registrant will be liable to the trust fund or the
certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to the Governing Documents, or for errors in
judgment, provided, however, that neither the registrant nor any such person
will be protected against liability for a breach of its representations and
warranties under the Government Documents or that would otherwise be imposed by
reason of willful misfeasance, bad faith, fraud, misrepresentation or negligence
in the performance of its duties or by reason of negligent disregard of its
obligations and duties thereunder. The Governing Documents relating to each
series will further provide that the registrant and any director, officer,
employee or agent of the registrant will be entitled to indemnification by the
trust fund for any loss, liability or expense incurred in connection with any
legal action relating to the Governing Documents or the certificates, other than
loss, liability or expense incurred by reason of its respective willful
misfeasance, bad faith, fraud, misrepresentation or negligence in the
performance of duties thereunder or by reason of negligent disregard of its
respective obligations and duties thereunder.
Item 16. Exhibits and Financial Statements
(a) Exhibit
1.1 Form of Underwriting Agreement.
3.1 Restated Articles of Incorporation of the registrant.
3.2 Restated bylaws of the registrant.
4.1 Form of Pooling and Servicing Agreement.
5.1 Opinion of Morrison & Hecker L.L.P. as to legality.
8.1 Opinion of Morrison & Hecker L.L.P. as to certain tax matters.
23.1 Consent of Morrison & Hecker L.L.P. (included in Exhibits 5.1 and
8.1).
24.1 Power of Attorney (included on signature page).
(b) Financial Statements
All financial statements, schedules and historical financial information have
been omitted as they are not applicable.
Item 17. Undertakings
A. Undertaking pursuant to Rule 415.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
II-2
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
B. Undertaking Concerning Filings Incorporating Subsequent Exchange
Act Documents by Reference.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Undertaking in Respect of Indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 (including that the security rating
requirement will be met by the time of sale of any securities registered
hereunder) and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Kansas
City, State of Missouri, on January 24, 2000.
PNC MORTGAGE ACCEPTANCE CORP.
By: /s/Douglas D. Danforth, Jr.
----------------------------
Douglas D. Danforth, Jr.
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Douglas D. Danforth, Jr., Charles Sipple and
Lawrence D. Ashley, and each of them, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign and file (i) any or all amendments (including post-effective
amendments) to this Registration Statement and any and all other documents in
connection therewith, with all exhibits thereto, and (ii) a registration
statement, and any and all amendments thereto, relating to any offering covered
hereby filed pursuant to Rule 462(b) under the Securities Act, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as might or could be done in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
Signature Position Date
/s/Douglas D. Danforth, Jr. Director and President January 24, 2000
- --------------------------- (Principal Executive Officer)
Douglas D. Danforth, Jr.
/s/Vince Beckett Chief Financial Officer January 24, 2000
- --------------------------- (Principal Financial and
Vince Beckett Accounting Officer)
/s/Catherine Nix Director January 24, 2000
- ---------------------------
Catherine Nix
/s/Jeffrey E. Johnson Director January 24, 2000
- ---------------------------
Jeffrey E. Johnson
S-1
PNC MORTGAGE ACCEPTANCE CORP.
Commercial Mortgage Pass-Through Certificates
Series ________
UNDERWRITING AGREEMENT
-----------,-----
[Underwriter #1]
[Address]
[Underwriter #2]
[Address]
[Underwriter #3]
[Address]
Ladies and Gentlemen:
PNC Mortgage Acceptance Corp., a Missouri corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to sell
to ___________________ ("[Underwriter #1]"), ___________________ ("[Underwriter
#2]") and ___________________ ("[Underwriter #3]"; and, collectively with
[Underwriter #1] and [Underwriter #2], the "Underwriters"), their respective
allocations, as set forth in Schedule I hereto, of those classes (each, a
"Class") of the Company's Commercial Mortgage Pass-Through Certificates, Series
________, specified in Schedule II hereto (the "Offered Certificates"). The
Offered Certificates, together with the other commercial mortgage pass-through
certificates of the same series (the "Private Certificates"; and, collectively
with the Offered Certificates, the "Certificates"), will be issued pursuant to a
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") to be
dated as of ____________,_____ (the "Cut-off Date"), among the Company, as
depositor, Midland Loan Services Inc., as master servicer (the "Master
Servicer"), and ______________as special servicer (the "Special Servicer"), and
_______________, as trustee (the "Trustee"). The Certificates will evidence the
entire beneficial ownership of a trust fund (the "Trust Fund") to be established
by the Company pursuant to the Pooling and Servicing Agreement. The Trust Fund
will consist primarily of a pool (the "Mortgage Pool") of monthly pay,
commercial and multifamily mortgage loans (the "Mortgage Loans") transferred by
the Company to the Trust Fund and listed in an attachment to the Pooling and
Servicing Agreement. Multiple real estate mortgage investment conduit ("REMIC")
elections are to be made with respect to the Trust Fund with the resulting
REMICs being referred to as "REMIC I", "REMIC II" and "REMIC III", respectively.
The Private Certificates will be sold by the Company to
[Underwriter #1] pursuant to a certificate purchase agreement of even date
herewith (the "Certificate Purchase Agreement").
<PAGE>
The Mortgage Loans will be acquired by the Company as follows:
(1) Certain of the Mortgage Loans (the "Midland Loans") will
be acquired by the Company from Midland Loan Services, Inc. ("MLS"),
pursuant to a mortgage loan purchase agreement dated
______________,_____ (the "MLS Loan Purchase Agreement"), between the
Company and MLS.
(2) Certain of the Mortgage Loans (the "[Other Seller] Loans")
will be acquired by the Company from ___________________ ("[Other
Seller]"), pursuant to a mortgage loan purchase agreement dated
______________,_____ (the "[Other Seller] Loan Purchase Agreement"),
between the Company and [Other Seller].
MLS and [Other Seller] collectively constitute the "Mortgage
Loan Sellers. The [Other Seller] Loan Purchase Agreement and the MLS Loan
Purchase Agreement collectively constitute the "Mortgage Loan Purchase
Agreements".
The Offered Certificates and the Mortgage Loans are described
more fully in the Basic Prospectus and the Prospectus Supplement (each of which
terms is defined below) which the Company is furnishing to the Underwriters.
Capitalized terms used but not otherwise defined herein will have the respective
meanings assigned thereto in the Prospectus Supplement.
1. Representations and Warranties. The Company represents
and warrants to, and agrees with, each Underwriter that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (No.
___________) on Form S-3, pursuant to which the offer and sale of the
Offered Certificates will and can be registered under the Securities
Act of 1933, as amended (the "Act"). Such registration statement has
become effective. No stop order suspending the effectiveness of such
registration statement has been issued or is in effect, and no
proceedings for such purpose are pending or, to the Company's
knowledge, threatened by the Commission. Such registration statement
meets the requirements set forth in Rule 415(a)(1) under the Act and
complies in all other material respects with such Rule. The Company
proposes to file with the Commission pursuant to Rule 424 under the Act
a supplement, dated the date specified in Schedule II hereto, to the
prospectus, dated the date specified in Schedule II hereto, relating to
the Offered Certificates and the method of distribution thereof and has
previously advised the Underwriters of all further information
(financial and other) with respect to the Offered Certificates set
forth therein. Such registration statement, including the exhibits
thereto, as amended at the date hereof, is hereinafter called the
"Registration Statement"; such prospectus, in the form in which it will
be filed with the Commission pursuant to Rule 424 under the Act, is
hereinafter called the "Basic Prospectus"; such supplement to the Basic
Prospectus, in the form in which it will be filed with the Commission
pursuant to Rule 424 under the Act, is hereinafter called the
"Prospectus Supplement"; and the Basic Prospectus and the Prospectus
Supplement together are hereinafter called the "Prospectus". Any
preliminary form of the Prospectus Supplement which has heretofore been
filed pursuant to Rule 402(a) or Rule 424 under the Act is
-2-
<PAGE>
hereinafter called a "Preliminary Prospectus Supplement"; and any such
Preliminary Prospectus Supplement and the form of prospectus that
accompanied it are hereinafter together called a "Preliminary
Prospectus". References herein to the Prospectus or Prospectus
Supplement shall exclude information incorporated therein by reference
pursuant to a filing made in accordance with Section 9 hereof, but
shall include any ABS Term Sheet (as defined in Section 9) actually
included therein other than by incorporation by reference (and
regardless of whether such ABS Term Sheet is also incorporated therein
by reference). The Company, as depositor with respect to the Trust
Fund, will file with the Commission within 15 days of the issuance of
the Offered Certificates a report on Form 8-K setting forth specific
information concerning the Offered Certificates.
(b) As of the date hereof, when the Registration Statement became
effective, when the Prospectus Supplement is first filed pursuant to
Rule 424 under the Act, when, prior to the Closing Date (as defined in
Section 3), any other amendment to the Registration Statement becomes
effective, when, prior to the Closing Date, any supplement to the
Prospectus Supplement is filed with the Commission, and at the Closing
Date, (A) the Registration Statement, as amended as of any such time,
and the Prospectus, as amended or supplemented as of any such time,
complied or will comply in all material respects with the applicable
requirements of the Act and the rules thereunder, (B) the Registration
Statement, as amended as of any such time, did not and will not
contain any untrue statement of a material fact and did not and will
not omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (C) the
Prospectus, as amended or supplemented as of any such time, did not
and will not contain an untrue statement of a material fact and did
not and will not omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, that the Company makes
no representations or warranties as to (X) the information contained
in or omitted from the Registration Statement or the Prospectus, or
any amendment thereof or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter, directly for use therein, or (Y) the information
contained in or omitted from any Computational Materials (as defined
in Section 9 hereof) or ABS Term Sheets (also as defined in Section
9), or any amendment thereof or supplement thereto, incorporated by
reference in the Registration Statement, any Preliminary Prospectus or
the Prospectus (or any amendment thereof or supplement thereto) by
reason of a filing made in accordance with Section 9.
(c) The Company is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Missouri,
with full power and authority (corporate and other) to own its
properties and conduct its business, as described in the Prospectus,
and to enter into and perform its obligations under this Agreement,
the Mortgage Loan Purchase Agreements and the Pooling and Servicing
Agreement. The Company is conducting its business so as to comply with
all applicable statutes, ordinances, rules and regulations of the
jurisdictions in which it is conducting business, except where such
non-compliance would not materially and adversely affect the business,
operations, financial condition, properties or assets of the Company.
-3-
<PAGE>
(d) The Commission has not made any request for any further
amendment of the Registration Statement or the Prospectus or for any
additional information, regarding the Offered Certificates, and the
Company has not receive any notification with respect to the
suspension of the qualification of the Offered Certificates for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose.
(e) The Company has entered into the Mortgage Loan Purchase
Agreements and, at or prior to the Closing Date, the Company will have
entered into the Pooling and Servicing Agreement; this Agreement and
the Mortgage Loan Purchase Agreements have been duly authorized,
executed and delivered by the Company, and the Pooling and Servicing
Agreement, when delivered by the Company, will have been duly
authorized, executed and delivered by the Company; and this Agreement
constitutes, the Mortgage Loan Purchase Agreements constitute and the
Pooling and Servicing Agreement, when delivered by the Company, will
constitute, valid and binding agreements of the Company, enforceable
against the Company in accordance with their respective terms, except
as such enforceability may be limited by (A) bankruptcy, insolvency,
liquidation, moratorium, receivership, reorganization or similar laws
affecting the rights of creditors generally, (B) general principles of
equity, whether enforcement is sought in a proceeding in equity or at
law, and (C) public policy considerations underlying the securities
laws, to the extent that such public policy considerations limit the
enforceability of any provisions of this Agreement, any Mortgage Loan
Purchase Agreement or the Pooling and Servicing Agreement which
purport or are construed to provide indemnification from securities
law liabilities.
(f) The Offered Certificates and the Pooling and Servicing
Agreement conform in all material respects to the descriptions thereof
contained in the Prospectus. The issuance and sale of the Certificates
have been duly and validly authorized by the Company, and the
Certificates, when duly and validly executed, authenticated and
delivered by the Trustee in accordance with the Pooling and Servicing
Agreement and paid for in accordance with this Agreement and the
Certificate Purchase Agreement, will be entitled to the benefits of
the Pooling and Servicing Agreement.
(g) Neither the sale of the Offered Certificates to the
Underwriters pursuant hereto, nor the consummation of any other of the
transactions contemplated in, nor the fulfillment of any of the terms
of this Agreement, any Mortgage Loan Purchase Agreement or the Pooling
and Servicing Agreement, will result in the breach of any term or
provision of the certificate of incorporation or by-laws of the
Company or conflict with, result in a material breach, violation or
acceleration of or constitute a default under, the terms of any
indenture or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which it is bound, or any
statute, order or regulation applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries is a
party to, bound by or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute,
order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it, which
materially and adversely affects the ability of the
-4-
<PAGE>
Company to perform its obligations under this Agreement, any Mortgage
Loan Purchase Agreement or the Pooling and Servicing Agreement.
(h) There are no actions or proceedings against the Company
pending, or, to the knowledge of the Company, threatened, before any
court, administrative agency or other tribunal (A) asserting the
invalidity of this Agreement, any Mortgage Loan Purchase Agreement,
the Pooling and Servicing Agreement or the Offered Certificates, (B)
seeking to prevent the issuance of the Offered Certificates or the
consummation of any of the transactions contemplated by this
Agreement, any Mortgage Loan Purchase Agreement or the Pooling and
Servicing Agreement, (C) which might materially and adversely affect
the performance by the Company of its obligations under, or the
validity or enforceability of, this Agreement, any Mortgage Loan
Purchase Agreement, the Pooling and Servicing Agreement or the Offered
Certificates or (D) seeking to affect adversely the federal income tax
attributes of the Offered Certificates described in the Prospectus.
(i) There has not been any material adverse change in the
business, operations, financial condition, properties or assets of the
Company since the date of its latest audited financial statements
which would have a material adverse effect on the ability of the
Company to perform its obligations under this Agreement, any Mortgage
Loan Purchase Agreement or the Pooling and Servicing Agreement.
(j) Except for the Pooling and Servicing Agreement and the
Mortgage Loan Purchase Agreements which will be filed with the
Commission within 15 days of the issuance of the Offered Certificates
as exhibits to a Current Report on Form 8-K, there are no contracts,
indentures or other documents of a character required by the Act or by
the rules and regulations thereunder to be described or referred to in
the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement which have not been so
described or referred to therein or so filed or incorporated by
reference as exhibits thereto.
(k) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
offering, issuance or sale of the Offered Certificates pursuant to
this Agreement, any Mortgage Loan Purchase Agreement and the Pooling
and Servicing Agreement, except such as have been, or as of the
Closing Date will have been, obtained or such as may otherwise be
required under applicable state securities laws in connection with the
purchase and offer and sale of the Offered Certificates by the
Underwriters and any recordation of the respective assignments of the
Mortgage Loan documents to the Trustee pursuant to the Pooling and
Servicing Agreement, that have not been completed.
(l) The Company possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct the
business now operated by it, and the Company has not received any
notice of proceedings relating to the revocation or modification of
any such license, certificate, authority or permit which, singly or in
the aggregate, if the subject of any unfavorable decision, ruling or
finding, would materially and adversely affect business, operations,
financial condition, properties or assets of the Company.
-5-
<PAGE>
(m) Any taxes, fees and other governmental charges payable by the
Company in connection with the execution and delivery of this
Agreement and the Pooling and Servicing Agreement or the issuance and
sale of the Offered Certificates (other than such federal, state and
local taxes as may be payable on the income or gain recognized
therefrom) have been or will be paid at or prior to the Closing Date.
(n) At the time of the execution and delivery of the Pooling and
Servicing Agreement, the Company (A) will convey, or cause to be
conveyed, to the Trustee all of the Company's right, title and
interest in and to the Mortgage Loans free and clear of any lien,
mortgage, pledge, charge, encumbrance, adverse claim or other security
interest (collectively, "Liens") granted by or imposed upon the
Company, and (B) will have the power and authority to transfer or
cause the transfer of the Mortgage Loans to the Trustee and to sell
the Offered Certificates to the Underwriters. Upon execution and
delivery of the Pooling and Servicing Agreement by the Trustee, the
Trustee will have acquired ownership of all of the Company's right,
title and interest in and to the Mortgage Loans, and upon delivery to
the Underwriters of the Offered Certificates pursuant hereto, each
Underwriter will have good title to the Offered Certificates purchased
by such Underwriter, in each case free of any Liens granted by or
imposed upon the Company.
(o) The Company is not, and the issuance and sale of the Offered
Certificates in the manner contemplated by the Prospectus will not
cause the Company or the Trust Fund to be, subject to registration or
regulation as an "investment company" under the Investment Company Act
of 1940, as amended (the "Investment Company Act").
(p) Under generally accepted accounting principles ("GAAP") and
for federal income tax purposes, the Company will report the transfer
of the Mortgage Loans to the Trustee in exchange for the Offered
Certificates and the sale of the Offered Certificates to the
Underwriters pursuant to this Agreement as a sale of the interest in
the Mortgage Loans evidenced by the Offered Certificates. The
consideration received by the Company upon the sale of the Offered
Certificates to the Underwriters will constitute reasonably equivalent
value and fair consideration for the Offered Certificates. The Company
will be solvent at all relevant times prior to, and will not be
rendered insolvent by, the sale of the Offered Certificates to the
Underwriters. The Company is not selling the Offered Certificates to
the Underwriters with any intent to hinder, delay or defraud any of
the creditors of the Company.
(q) At the Closing Date, the respective classes of Offered
Certificates shall have been assigned ratings no lower than those set
forth in Schedule II hereto by the nationally recognized statistical
rating organizations identified in Schedule II hereto (the "Rating
Agencies").
(r) The Trust Fund will qualify as three separate real estate
mortgage investment conduits (each, a "REMIC") for federal income tax
purposes pursuant to Section 860D of the Internal Revenue Code of
1986, as amended (the "Code"); the Class [S], Class [A-1A], Class
[A-1B], Class [A-2], Class [A-3], Class [A-4], Class [B-1], Class
[B-2], Class [B-3],
-6-
<PAGE>
Class [B-4], Class [B-5], Class [B-6], Class [B-7], Class [B-8], Class
[C] and Class [D] Certificates (collectively, the "REMIC III Regular
Certificates") will constitute "regular interests" in REMIC III; and
the Class [R-I], Class [R-II] and Class [R-III] Certificates will, in
the case of each such Class, constitute the sole class of "residual
interests" in the related REMIC.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, the principal or
notional amount of each Class of the Offered Certificates set forth opposite
each such Underwriter's name in Schedule I hereto.
The purchase price for each Class of the Offered Certificates
as a percentage of the aggregate principal or notional amount thereof as of the
Closing Date is set forth in Schedule II hereto. There will be added to the
purchase price of the Offered Certificates interest in respect of each Class of
the Offered Certificates at the interest rate applicable to such Class from the
Cut-off Date to but not including the Closing Date.
3. Delivery and Payment. The closing for the purchase and sale
of the Offered Certificates contemplated hereby (the "Closing"), shall be made
at the date, location and time of delivery set forth in Schedule II hereto, or
such later date as shall be mutually acceptable to the Underwriters and the
Company (such date and time of purchase and sale of the Offered Certificates
being herein called the "Closing Date"). Delivery of the Offered Certificates
will be made in book-entry form through the facilities of The Depository Trust
Company ("DTC"). Each Class of Offered Certificates will be represented by one
or more definitive global Certificates to be deposited by or on behalf of the
Company with DTC. Delivery of the Offered Certificates shall be made to the
Underwriters against payment by the Underwriters of the purchase price thereof
to or upon the order of the Company by wire transfer of immediately available
funds or by such other method as may be acceptable to the Company.
The Company agrees to have the Offered Certificates available
for inspection and checking by the Underwriters in ____________, ________, not
later than _________ (_________ time) on the business day prior to the Closing
Date.
4. Offering by Underwriters. It is understood that each
Underwriter proposes to offer its allocable share of the Offered Certificates
for sale to the public as set forth in the Prospectus. It is further understood
that the Company in reliance upon Policy Statement 105, has not filed and will
not file an offering statement pursuant to Section 352-e of the General Business
Law of the State of New York with respect to the Offered Certificates. As
required by Policy Statement 105, each Underwriter therefore covenants and
agrees with the Company that sales of the Offered Certificates made by such
Underwriter in the State of New York will be made only to institutional
investors within the meaning of Policy Statement 105.
5. Agreements. The Company agrees with each Underwriter that:
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<PAGE>
(a) The Company will promptly advise the Underwriters (i)
when, during any period that a prospectus relating to the Offered Certificates
is required to be delivered under the Act, any amendment to the Registration
Statement affecting the Offered Certificates shall have become effective, (ii)
of any request by the Commission for any amendment to the Registration Statement
or the Prospectus or for any additional information relating to the Offered
Certificates, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Offered Certificates for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company will not file any
amendment to the Registration Statement affecting the Offered Certificates or
any supplement to the Prospectus affecting the Offered Certificates unless the
Company has furnished the Underwriters with a copy for their review prior to
filing, and will not file any such proposed amendment or supplement to which the
Underwriters may reasonably object (provided that the foregoing does not apply
to periodic reports filed pursuant to the Exchange Act of 1934, as amended (the
"Exchange Act") and incorporated by reference into the Prospectus). Subject to
the foregoing sentence, the Company will cause the Prospectus Supplement to be
transmitted to the Commission for filing pursuant to Rule 424 under the Act by
means reasonably calculated to result in filing with the Commission pursuant to
said Rule. The Company will use its best efforts to prevent the issuance of any
stop order suspending the effectiveness of the Registration Statement affecting
the Offered Certificates and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) The Company will cause any Computational Materials and
Structural Term Sheets (as defined in Section 9 below) with respect to the
Offered Certificates that are delivered by an Underwriter to the Company
pursuant to Section 9 to be filed with the Commission on a Current Report on
Form 8-K (a "Current Report") pursuant to Rule 13a-11 under the Exchange Act, on
the business day immediately following the later of (i) the day on which such
Computational Materials and Structural Term Sheets are delivered to counsel for
the Company by an Underwriter prior to 3:00 p.m. (New York City time) and (ii)
the date on which this Agreement is executed and delivered. The Company will
cause one Collateral Term Sheet (as defined in Section 9 below) with respect to
the Offered Certificates that is delivered by the Underwriters to the Company in
accordance with the provisions of Section 9 to be filed with the Commission on a
Current Report pursuant to Rule 13a-11 under the Exchange Act on the business
day immediately following the day on which such Collateral Term Sheet is
delivered to counsel for the Company by the Underwriters prior to 3:00 p.m. (New
York City time). In addition, if at any time prior to the availability of the
Prospectus Supplement, the Underwriters have delivered to any prospective
investor a subsequent Collateral Term Sheet that reflects, in the reasonable
judgment of the Underwriters and the Company, a material change in the
characteristics of the Mortgage Loans from those on which a Collateral Term
Sheet with respect to the Offered Certificates previously filed with the
Commission was based, the Company will cause any such Collateral Term Sheet that
is delivered by the Underwriters to the Company in accordance with the
provisions of Section 9 to be filed with the Commission on a Current Report on
the business day immediately following the day on which such Collateral Term
Sheet is delivered to counsel for the Company by the Underwriters prior to 3:00
p.m. (New York City time). In each case, the Company will promptly advise the
Underwriters when such Current Report has been so filed. Each such Current
Report shall be incorporated by reference in the Prospectus and the Registration
Statement. Notwithstanding the foregoing provisions of this
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<PAGE>
Section 5(b), the Company shall have no obligation to file any materials
provided by any Underwriter pursuant to Section 9 which, in the reasonable
determination of the Company, contain erroneous information or contain any
untrue statement of a material fact or, when read in conjunction with the
Prospectus, omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that, at the
request of the related Underwriter, the Company will file Computational
Materials or ABS Term Sheets that contain a material error or omission if
clearly marked "superseded by materials dated _____________" and accompanied by
corrected Computational Materials or ABS Terms Sheets that are marked, "material
previously dated _____________ as corrected". The Company shall give notice to
the Underwriters of its determination not to file any materials pursuant to the
preceding sentence and agrees to file such materials if the Underwriters
reasonably object to such determination within one business day after receipt of
such notice.
(c) If, at any time when a prospectus relating to the Offered
Certificates is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under which
they were made not misleading, or if it shall be necessary to amend or
supplement the Prospectus to comply with the Act or the rules under the Act, the
Company promptly will prepare and file with the Commission, subject to paragraph
(a) of this Section 5, an amendment or supplement that will correct such
statement or omission or an amendment that will effect such compliance and, if
such amendment or supplement is required to be contained in a post-effective
amendment to the Registration Statement, will use its best efforts to cause such
amendment of the Registration Statement to be made effective as soon as
possible; provided, however, that the Company will not be required to file any
such amendment or supplement with respect to any Computational Materials or ABS
Term Sheets incorporated by reference in the Prospectus other than as provided
in Section 9.
(d) The Company will furnish to each Underwriter and counsel
for the Underwriters, without charge, for so long as delivery of a prospectus
relating to the Offered Certificates may be required by the Act, as many copies
of the Prospectus, the Preliminary Prospectus, if any, and any amendments and
supplements thereto as the respective Underwriters may reasonably request.
(e) The Company will furnish such information, execute such
instruments and take such action, if any, as may be required to qualify the
Offered Certificates for sale under the laws of such jurisdictions as any
Underwriter may designate and will maintain such qualification in effect so long
as required for the distribution of the Offered Certificates; provided, however,
that the Company shall not be required to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would
subject it to general or unlimited service of process in any jurisdiction where
it is not now so subject.
(f) The Company will use the net proceeds received by it from
the sale of the Offered Certificates in the manner specified in the Prospectus
under "Use of Proceeds".
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<PAGE>
(g) Whether or not the transactions contemplated in the
Pooling and Servicing Agreement are consummated or this Agreement is terminated,
the Company will pay or cause the payment of all expenses incident to the
performance of the obligations of the Company under this Agreement, including,
without limitation, (i) the fees, disbursements and expenses of the Company's
counsel in connection with the purchase of the Mortgage Loans and the issuance
and sale of the Offered Certificates, (ii) all fees and expenses incurred in
connection with the registration and delivery of the Offered Certificates under
the Act, and all other fees or expenses in connection with the preparation and
filing of the Registration Statement, any Preliminary Prospectus, the Prospectus
and amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies thereof to
the Underwriters and dealers, in the quantities hereinabove specified, (iii) all
costs and expenses related to the transfer and delivery of the Offered
Certificates to the Underwriters, including any transfer or other taxes payable
thereon, (iv) the costs of printing or producing any "blue sky" memorandum in
connection with the offer and sale of the Offered Certificates under state
securities laws and all expenses in connection with the qualification of the
Offered Certificates for the offer and sale under state securities laws as
provided in Section 5(e), including, without limitation, filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such qualification and in connection with the "blue sky" memorandum, (v)
the cost of printing the Offered Certificates, (vi) the costs and charges of any
transfer agent, registrar or depository, (vii) the fees and expenses of the
Rating Agencies incurred in connection with the issuance and sale of the Offered
Certificates and (vii) all other costs and expenses incident to the performance
of the obligations of the Company hereunder for which provision is not otherwise
made in this Section.
The Company shall also be responsible for the payment of all
out-of-pocket costs and expenses incurred by the Underwriters, including,
without limitation, (i) the fees and disbursements of counsel for the
Underwriters and (ii) such additional costs arising out of any Computational
Materials and ABS Term Sheets prepared and/or distributed by the Underwriters,
in connection with the purchase and sale of the Offered Certificates; provided,
however, that if the Underwriters terminate this Agreement other than pursuant
to Section 7 or 10(b) hereof, the Underwriters shall be responsible for their
out-of-pocket costs and expenses.
(h) So long as any Offered Certificates are outstanding, the
Company will, or will cause the Master Servicer or Special Servicer to, furnish
or make available to each Underwriter a copy of (i) the annual statement of
compliance delivered by each of the Master Servicer and the Special Servicer to
the Trustee under the Pooling and Servicing Agreement, (ii) the annual
independent public accountants' servicing report furnished to the Trustee in
respect of each of the Master Servicer and the Special Servicer pursuant to the
Pooling and Servicing Agreement, (iii) each report of the Company, the Trustee,
the Master Servicer or the Special Servicer regarding the Offered Certificates
filed with the Commission under the Exchange Act or mailed to the holders of the
Offered Certificates and (iv) from time to time, upon request of such
Underwriter, such other information concerning the Offered Certificates which
may be furnished by the Company, the Trustee, the Master Servicer or the Special
Servicer without undue expense and without violation of applicable law or the
Pooling and Servicing Agreement.
(i) The Company shall deliver to each Underwriter a copy of
the Prospectus (exclusive of information incorporated therein and further
exclusive of the exhibits and annexes to
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the Prospectus Supplement) at or prior to the printing thereof, marked to show
changes from the Preliminary Prospectus.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Offered Certificates as provided
in this Agreement shall be subject to the accuracy in all material respects of
the representations and warranties on the part of the Company contained herein
as of the date hereof and as of the Closing Date, to the accuracy in all
material respects of the statements the Company made in any certificates
delivered pursuant to the provisions hereof, to the performance in all material
respects by the Company of its obligations hereunder and to the following
additional conditions with respect to the Offered Certificates:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the parties hereto,
threatened; and the Prospectus Supplement shall have been filed with the
Commission within the time period prescribed by the Commission.
(b) The Underwriters shall have received from the Company a
certificate, dated the Closing Date and executed by an executive officer of the
Company, to the effect that: (i) the representations and warranties of the
Company in this Agreement are true and correct in all material respects at and
as of the Closing Date with the same effect as if made on the Closing Date; and
(ii) the Company has in all material respects complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing Date.
(c) The Underwriters shall have received with respect to the
Company a good standing certificate from the Secretary of State of the State of
Missouri, dated not earlier than ten days prior to the Closing Date.
(d) The Underwriters shall have received from the Secretary or
an assistant secretary of the Company, in his or her individual capacity, a
certificate, dated the Closing Date, to the effect that: (i) each individual
who, as an officer or representative of the Company, signed this Agreement, a
Mortgage Loan Purchase Agreement, the Pooling and Servicing Agreement or any
other document or certificate delivered on or before the Closing Date in
connection with the transactions contemplated herein, in any Mortgage Loan
Purchase Agreement or in the Pooling and Servicing Agreement, was at the
respective times of such signing and delivery, and is as of the Closing Date,
duly elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such documents
and certificates are their genuine signatures; and (ii) no event (including,
without limitation, any act or omission on the part of the Company) has occurred
since the date of the good standing certificate referred to in paragraph (c)
above which has affected the good standing of the Company under the laws of the
State of Missouri. Such certificate shall be accompanied by true and complete
copies (certified as such by the Secretary or an assistant secretary of the
Company) of the certificate of incorporation and by-laws of the Company, as in
effect on the Closing Date, and of the resolutions of the Company and any
required shareholder consent relating to the transactions contemplated in this
Agreement and the Pooling and Servicing Agreement.
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(e) The Underwriters shall have received from Morrison & Hecker L.L.P.,
counsel for the Company, a favorable opinion, dated the Closing Date and
reasonably satisfactory in form and substance to counsel for the Underwriters,
to the effect that:
(i) The Registration Statement and any amendments thereto have
become effective under the Act.
(ii) To such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceedings for that purpose have been instituted or threatened.
(iii) The Registration Statement, each amendment thereto (if
any), the Basic Prospectus and the Prospectus Supplement, as of their
respective effective or issue dates (other than the financial
statements, schedules and other financial and statistical information
contained therein or omitted therefrom, as to which such counsel need
express no opinion), complied as to form in all material respects with
the applicable requirements of the Act and the rules and regulations
thereunder.
(iv) To such counsel's knowledge, there are no material
contracts, indentures or other documents relating to the Offered
Certificates of a character required to be described or referred to in
the Registration Statement or the Prospectus Supplement or to be filed
as exhibits to the Registration Statement, other than those described
or referred to therein or filed or incorporated by reference as
exhibits thereto and other than any documents required to be filed as
exhibits to a Current Report on Form 8-K within 15 days after the
Closing Date.
(v) The Company is duly incorporated and validly existing as a
corporation in good standing under the laws of the State of Missouri
and has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement, the Mortgage Loan
Purchase Agreements and the Pooling and Servicing Agreement.
(vi) Each of this Agreement, the Mortgage Loan Purchase
Agreements and the Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Company.
(vii) Each of the Mortgage Loan Purchase Agreements and the
Pooling and Servicing Agreement constitutes a valid, legal and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by (A)
bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the rights of creditors
generally, (B) general principles of equity, regardless of whether
considered in a proceeding in equity or at law, and (C) public policy
considerations underlying the securities laws, to the extent that such
public policy considerations limit the enforceability of any provision
of any such agreement which purports or is construed to provide
indemnification with respect to securities law violations.
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<PAGE>
(viii) The Certificates, when duly and validly executed,
authenticated and delivered in accordance with the Pooling and
Servicing Agreement and paid for in accordance with this Agreement and
the Certificate Purchase Agreement, will be entitled to the benefits of
the Pooling and Servicing Agreement.
(ix) Neither the sale of the Offered Certificates to the
Underwriters pursuant to this Agreement nor the consummation of any of
the other transactions contemplated by, or the fulfillment by the
Company of the terms of, this Agreement, the Mortgage Loan Purchase
Agreements and the Pooling and Servicing Agreement, will conflict with
or result in a breach or violation of any term or provision of, or
constitute a default (or an event which with the passing of time or
notification or both, would constitute a default) under, (A) the
certificate of incorporation or by-laws of the Company, or (B) to the
knowledge of such counsel, any indenture or other agreement or
instrument to which the Company is a party or by which it is bound, or
(C) any New York, Missouri or federal statute or regulation applicable
to the Company, or (D) to the knowledge of such counsel, any order of
any New York, Missouri or federal court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Company, except, in the case of any of (B), (C) or (D), for any
conflict, breach, violation or default that, in the judgment of such
counsel, is not reasonably likely to materially and adversely affect
the Company's ability to perform its obligations under this Agreement,
any Mortgage Loan Purchase Agreement or the Pooling and Servicing
Agreement.
(x) No consent, approval, authorization or order of any
federal, State of Missouri or State of New York court, agency or other
governmental body is required for the consummation by the Company of
the transactions contemplated by the terms of this Agreement, the
Mortgage Loan Purchase Agreements and the Pooling and Servicing
Agreement, except such as may be required under the securities laws of
the State of Missouri, the State of New York and other particular
States in connection with the purchase and the offer and sale of the
Offered Certificates by the Underwriters as to which such counsel need
express no opinion, except such as have been obtained and except for
any recordation of the respective assignments of the Mortgage Loan
documents to the Trustee pursuant to the Pooling and Servicing
Agreement that have not been completed.
(xi) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended. The Trust
Fund is not required to be registered under the Investment Company Act.
(xii) The statements set forth in the Prospectus Supplement
under the headings "Description of the Certificates" and "The Pooling
and Servicing Agreement" and in the Basic Prospectus under the headings
"Description of the Certificates" and "Servicing of the Mortgage
Loans", insofar as such statements purport to summarize certain
material provisions of the Offered Certificates and the Pooling and
Servicing Agreement, provide a fair and accurate summary of such
provisions.
(xiii) The statements set forth in each of the Basic
Prospectus and the Prospectus Supplement under the headings "ERISA
Considerations", "Material Federal Income Tax
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Consequences" and "Legal Investment", to the extent that they purport
to describe certain matters of federal law or legal conclusions with
respect thereto, while not discussing all possible consequences of an
investment in the Offered Certificates to all investors, provide in all
material respects a fair and accurate summary of such matters and
conclusions set forth under such headings.
(xiv) As described in the Prospectus Supplement, and assuming
compliance with all the provisions of the Pooling and Servicing
Agreement, (A) REMIC I will qualify as a REMIC within the meaning of
Sections 860A through 860G of the Internal Revenue Code of 1986 in
effect on the date hereof (the "REMIC Provisions") and the REMIC I
Regular Interests (as defined in the Pooling and Servicing Agreement)
will be "regular interests" and the Class [R-I] Certificates will
evidence the sole class of "residual interests" in REMIC I (as both
terms are defined in the REMIC Provisions in effect on the Closing
Date), (B) REMIC II will qualify as a REMIC within the meaning of the
REMIC Provisions, and the REMIC II Regular Interests (as defined in the
Pooling and Servicing Agreement) will be "regular interests" and the
Class [R-II] Certificates will evidence the sole class of "residual
interests" in REMIC II, and (C) REMIC III will qualify as a REMIC
within the meaning of the REMIC Provisions, and the REMIC III Regular
Certificates will evidence "regular interests" and the Class [R-III]
Certificates will evidence the sole class of "residual interests" in
REMIC III.
(xv) The portion of the Trust Fund consisting of the Grantor
Trust (as defined in the Pooling and Servicing Agreement) will be
classified as a grantor trust under subpart E, part I of subchapter J
of the Internal Revenue Code of 1986.
Such opinion (x) may express its reliance as to factual
matters on certificates of government and agency officials and the
representations and warranties made by, and on certificates or other documents
furnished by officers of, the parties to this Agreement, the Mortgage Loan
Purchase Agreements and the Pooling and Servicing Agreement, (y) may assume the
due authorization, execution and delivery of the instruments and documents
referred to therein by the parties thereto (other than the Company) and may
otherwise be based on such assumptions as may be reasonably acceptable to
counsel for the Underwriters, and (z) may be qualified as an opinion only on the
law of the State of Missouri, the law of the State of New York and the federal
laws of the United States of America.
Based on such counsel's participation in conferences with
officers and other representatives of the Company and of the Master Servicer,
the Special Servicer, the Trustee, the Underwriters, the Mortgage Loan Sellers,
and their respective counsel, at which the contents of the Registration
Statement and the Prospectus were discussed, and relying as to facts necessary
to the determination of materiality to the extent such counsel may do so in the
exercise of its professional responsibility upon the certificates and statements
of officers and other representatives of the Company, the Mortgage Loan Sellers
and others, and, although such counsel need not pass upon or assume
responsibility for the actual accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (except as
stated in paragraphs (xii) and (xiii) above) and need not make an independent
check or verification thereof, and (with limited exception) such counsel did not
review any documents relating to the Mortgage Loans other than loan summaries
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<PAGE>
prepared by MLS and [Other Seller], on the basis of the foregoing, such counsel
shall also confirm that nothing has come to the attention of such counsel that
would lead such counsel to believe that the Registration Statement or any
amendment thereof (other than (x) financial statements, schedules and other
numerical, financial and statistical data included therein or omitted therefrom
and (y) the documents incorporated therein, as to which such counsel need
express no opinion), as of its effective date, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
Prospectus (other than (x) financial statements, schedules and other numerical,
financial and statistical data included therein or omitted therefrom and (y) the
documents incorporated therein, as to which such counsel need express no
opinion), as of the date of the Prospectus Supplement and at the Closing Date,
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(f) The Underwriters shall have received from their counsel an
opinion, dated the Closing Date, in form and substance reasonably satisfactory
to the Underwriters.
(g) The Underwriters shall have received, with respect to each
of the Trustee, the Master Servicer and the Special Servicer a favorable opinion
of counsel, dated the Closing Date and satisfactory to counsel for the
Underwriters, addressing the valid existence of such party under the laws of the
jurisdiction of its organization, the due authorization, execution and delivery
of the Pooling and Servicing Agreement by such party and, subject to the same
limitations as set forth in Section 6(e)(vii), the enforceability of the Pooling
and Servicing Agreement against such party. Such opinion may express its
reliance as to factual matters on representations and warranties made by, and on
certificates or other documents furnished by officers and/or authorized
representatives of parties to, this Agreement and the Pooling and Servicing
Agreement and on certificates furnished by public officials. Such opinion may
assume the due authorization, execution and delivery of the instruments and
documents referred to therein by the parties thereto (other than such party) and
may be based upon such other assumptions as may be reasonably acceptable to
counsel for the Underwriters. Such opinion may be qualified as an opinion only
on the laws of the jurisdiction wherein such party is organized, the laws of the
State of New York and the federal laws of the United States of America.
(h) The Underwriters shall have received from ____________,
certified public accountants, a letter dated ______________,_____ and
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters, stating in effect that, using the assumptions and methodology
described in such letter, they have compared such numbers and percentages set
forth in the electronic database prepared by MLS with respect to the Midland
Loans to the corresponding information in the loan documents identified in such
letter relating to the Midland Loans, respectively, and found each such number
and percentage set forth in such database to be in agreement with the
corresponding information in such loan documents.
(i) The Underwriters shall have received from ___________,
certified public accountants, a letter dated ______________,_____ and
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters, stating in effect that, using the assumptions and methodology
described in such letter, they have compared such numbers and percentages set
forth
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<PAGE>
in the electronic database prepared by [Other Seller] with respect to the [Other
Seller] Loans to the corresponding information in the loan documents identified
in such letter relating to the [Other Seller] Loans, and found each such number
and percentage set forth in such database to be in agreement with the
corresponding information in such loan documents.
(j) The Underwriters shall have received from ____________,
certified public accountants, letters dated the date of the Preliminary
Prospectus Supplement and the Prospectus Supplement, respectively, and
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters, stating in effect that, using the assumptions and methodology used
by the Company, all of which shall be described in such letters, they have
(based on the Mortgage Loan databases referred to in paragraphs (h) and (i)
above) recalculated such numbers and percentages set forth in the Preliminary
Prospectus Supplement and the Prospectus Supplement as the Underwriters may
reasonably request and as are agreed to by ____________, compared the results of
their calculations to the corresponding items in the Preliminary Prospectus
Supplement and the Prospectus Supplement, respectively, and found each such
number and percentage set forth in the Preliminary Prospectus Supplement and the
Prospectus Supplement, respectively, to be in agreement with the results of such
calculations.
(k) The Underwriters shall have received all opinions,
certificates and other documents required under the Mortgage Loan Purchase
Agreements to be delivered by the respective Mortgage Loan Sellers and their
counsel in connection with their sales of Mortgage Loans to the Company, and
each such opinion shall be dated the Closing Date and addressed to the
Underwriters.
(l) The Underwriters shall have received all opinions rendered
to the rating agency or agencies identified on Schedule II hereto, by counsel to
the Company and the Mortgage Loan Sellers, and each such opinion shall be dated
the Closing Date and addressed to the Underwriters.
(m) The Offered Certificates shall have been assigned the
ratings indicated on Schedule II hereto by the Rating Agencies.
(n) The Mortgage Loan Sellers shall have sold the Mortgage
Loans to the Company pursuant to the Mortgage Loan Purchase Agreements.
(o) The Company and the Mortgage Loan Sellers shall have
furnished the Underwriters with such further information, certificates and
documents as the Underwriters may reasonably have requested, and all proceedings
in connection with the transactions contemplated by this Agreement and all
documents incident hereto shall be in all material respects reasonably
satisfactory in form and substance to the Underwriters and their counsel.
(p) Subsequent to the date hereof, there shall not have
occurred any change, or development including a prospective change, in or
affecting the business or properties of the Company or a Mortgage Loan Seller
which, in the judgment of the Underwriters after consultation with the Company,
materially impairs the investment quality of the Offered Certificates so as to
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make it impractical or inadvisable to proceed with the public offering or the
delivery of the Offered Certificates as contemplated in the Prospectus.
7. Cancellation for Failure to Perform. If any of the
conditions specified in Section 6 shall not have been fulfilled in all material
respects when and as provided by this Agreement, or if any of the opinions and
certificates mentioned in Section 6 or elsewhere in this Agreement shall not be
in all material respects reasonably satisfactory in form and substance to the
Underwriters and counsel for the Underwriters, this Agreement and all
obligations of the Underwriters hereunder may be canceled at, or at any time
prior to, the Closing Date by the Underwriters. Notice of such cancellation
shall be given to the Company in writing, or by telephone or by either telegraph
or telecopier confirmed in writing.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person who controls such Underwriter within the meaning of
the Act or the Exchange Act, against any and all losses, claims, damages,
liabilities, costs and expenses, joint or several, to which such Underwriter or
any such controlling person may become subject, under the Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities, costs and
expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment of or supplement to any such document, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
will reimburse each Underwriter and each such controlling person for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending against such loss, claim, damage, liability, cost, expense or
action; provided, however, that the Company shall not be liable to any
Underwriter (or any such person controlling such Underwriter) in any such case
to the extent that any such loss, claim, damage, liability, cost or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement, any
Preliminary Prospectus Supplement or the Prospectus Supplement (or any amendment
thereof or supplement thereto) as to which such Underwriter has agreed to
indemnify the Company pursuant to Section 8(b); and provided, further, that such
indemnity with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter (or any person controlling an Underwriter) from whom
the person asserting any such loss, claim, damage, liability, cost or expense
purchased the Offered Certificates which are the subject thereof if (i) such
Underwriter did not give or send to such person a copy of the Prospectus (or the
Prospectus as most recently amended or supplemented) at or prior to the
confirmation of the sale of such Offered Certificates to such person in any case
where such delivery is required by the Act, (ii) the Company has furnished to
such Underwriter copies of the Prospectus (or the Prospectus as most recently
amended or supplemented) in sufficient quantity at least one business day prior
to such Underwriter's confirmation of the sale of such Offered Certificates to
such person, and (iii) the untrue statement or omission of a material fact
contained in such Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as most recently amended or supplemented). This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
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(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, against any
and all losses, claims, damages, liabilities, costs and expenses to which the
Company or any such director, officer or controlling person may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities, costs and expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus Supplement or the
Prospectus Supplement (or any amendment thereof or supplement thereto), or arise
out of or are based upon the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; but only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information relating to such Underwriter furnished to the Company by such
Underwriter specifically for use in such document. In addition, each Underwriter
agrees, severally and not jointly, to indemnify and hold harmless the Company,
each of its directors, each of its officers who signed the Registration
Statement, and each person who controls the Company within the meaning of either
the Act or the Exchange Act, against any and all losses, claims, damages,
liabilities, costs and expenses to which the Company or any such director,
officer or controlling person may become subject under the Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities, costs and
expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Computational Materials or ABS Term Sheets (or amendments thereof or supplements
thereto) delivered to prospective investors by such Underwriter, which were also
furnished to the Company by such Underwriter pursuant to or as contemplated by
Section 9 and made a part of, or incorporated by reference in, the Registration
Statement or in any Preliminary Prospectus Supplement or the Prospectus (or any
amendment thereof or supplement thereto) by reason of a filing made pursuant to
Section 9, or arise out of or are based on the omission or alleged omission to
state in any such document a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made
(and when read in conjunction with the Prospectus), not misleading; provided,
however, that no Underwriter shall be liable to the extent that any loss, claim,
damage, liability, cost or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission in any
Computational Materials or ABS Term Sheets (or any amendment thereof or
supplement thereto) made in reliance upon and in conformity with (A) the
representations and warranties of any Mortgage Loan Seller set forth in or made
pursuant to the related Mortgage Loan Purchase and Sale Agreement or (B) any
other information concerning the nature and characteristics of the Mortgage
Loans, the Mortgaged Properties or the Borrowers furnished to the Underwriters
by the Company or any Mortgage Loan Seller (the error in any such other
information concerning the characteristics of the Mortgage Loans, the Mortgaged
Properties or the Borrowers or the breach in such representations and warranties
that gave rise to such untrue statement or omission, a "Collateral Error"),
except to the extent that the related Mortgage Loan Seller or the Company
notified such Underwriter in writing of such Collateral Error or provided in
written or electronic form information superseding or correcting such Collateral
Error (in any case, a "Corrected Collateral Error") prior to the time of
confirmation of sale to the person that purchased the Offered Certificates that
are the subject of any such loss, claim, damage, liability, cost or expense, or
action in respect thereof, and such Underwriter failed to deliver to such person
corrected
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<PAGE>
Computational Materials or ABS Term Sheets (or, if the superseding or correcting
information was contained in the Prospectus, failed to deliver to such person
the Prospectus as amended or supplemented) at or prior to confirmation of such
sale to such person. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. Any Computational Materials
or ABS Term Sheets (or amendments thereof or supplements thereto) so furnished
to the Company by any particular Underwriter shall relate exclusively to and be,
to the extent provided herein, the several responsibility of such Underwriter
and no other Underwriter.
(c) Promptly after receipt by an indemnified party under
paragraph (a) or (b) of this Section 8 of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under paragraph (a) or (b) of this Section 8,
notify the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve the indemnifying
party from the liability under such paragraph, except to the extent that the
indemnifying party was prejudiced by such failure, and the omission so to notify
the indemnifying party will not relieve the indemnifying party from any
liability which it may have to any indemnified party otherwise than under
paragraph (a) or (b), as applicable, of this Section 8. In case any such action
is brought against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent that it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party (who shall not, except with
the consent of the indemnified party, be counsel to the indemnifying party);
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, approved by [Underwriter #1] in the case of
paragraph (a) of this Section 8 and by the Company in the case of paragraph (b)
of this Section 8, representing the indemnified parties under such paragraph (a)
or (b), as the case may be, who are parties to such action), (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party; and except that, if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel referred to
in such clause (i) or (iii).
An indemnifying party shall not be liable for any settlement
of any proceeding effected without its consent. If any proceeding is settled
with such consent or if there is a final
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judgment for the plaintiff, however, the indemnifying party shall indemnify the
indemnified party from and against any loss, claim, damage, liability, cost or
expense by reason of such settlement or judgment. Notwithstanding the foregoing,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel for which the indemnifying
party is obligated under this Section 8, (ii) such settlement is entered into
more than 30 days after receipt by such indemnifying party of the aforesaid
request and (iii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement.
No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 8 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) above in respect of any losses, claims, damages,
liabilities, costs or expenses referred to in and intended to be covered under
such paragraph (a) or (b), as the case may be, then the indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities, costs or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other from the offer and
sale of the Offered Certificates pursuant hereto or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other in connection with the statements or
omissions which resulted in the such losses, claims, damages, liabilities, costs
or expenses, as well as any other relevant equitable considerations; provided,
however, that in no case shall any Underwriter (except as may be provided in
Section 8(e) or in any agreement among underwriters relating to the offering of
the Offered Certificates) be responsible under this Section 8(d) for any amount
in excess of the underwriting discount applicable to the Offered Certificates
purchased by such Underwriter hereunder. The relative benefits received by the
Company on the one hand, and the Underwriters on the other, in connection with
the offering of the Offered Certificates shall be deemed to be in the same
respective proportions that the total net proceeds from the sale of the Offered
Certificates (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters in
connection with the offering of the Offered Certificates, bear to the aggregate
offering price of the Offered Certificates. The relative fault of the Company on
the one hand and of any Underwriter on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company
-20-
<PAGE>
or by such Underwriter, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities, costs or expenses (or actions in respect thereof) referred to above
in this Section 8 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim, which expenses the indemnifying party
shall pay as and when incurred, at the request of the indemnified party, to the
extent that the indemnifying party will be ultimately obligated to pay such
expenses. If any expenses so paid by the indemnifying party are subsequently
determined to not be required to be borne by the indemnifying party hereunder,
the indemnified party that received such payment shall promptly refund the
amount so paid to the indemnifying party.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8(d), each person who controls an Underwriter within the meaning of
the Act or the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
preceding sentence of this Section 8(d). Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 8(d), notify such
party or parties from whom contribution may be sought, but the omission to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any liability it or they may have under this
Section 8(d), except to the extent that it or they were prejudiced by such
failure, and the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any liability it
or they may have otherwise than under this Section 8(d).
(e) The Underwriters further agree as follows:
(i) [Underwriter #1] will indemnify and hold harmless each of
[Underwriter #2] and [Underwriter #3]against any losses, claims,
damages, liabilities, costs or expenses to which either [Underwriter
#2] or [Underwriter #3], as the case may be, may become subject, under
the Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities, costs or expenses arise out of or are based upon
any untrue statements or alleged untrue statements or omissions or
alleged omissions made in (i) any ABS Term Sheets and/or Computational
Materials relating to the Offered Certificates (or any amendments
thereof or supplements thereto) developed, mailed or otherwise
transmitted by [Underwriter #1], or (ii) any Preliminary Prospectus
Supplement or the Prospectus Supplement (or any amendments thereof or
supplements thereto) in reliance upon and in conformity with written
information furnished to the Company by [Underwriter #1] for use in
such document; and
-21-
<PAGE>
[Underwriter #1] will reimburse [Underwriter #2] and [Underwriter #3],
as applicable, for any legal or other expenses reasonably incurred
thereby in connection with investigating or defending any such action
or claim as such expenses are incurred.
(ii) [Underwriter #2] will indemnify and hold harmless each of
[Underwriter #1] and [Underwriter #3]against any losses, claims,
damages, liabilities, costs or expenses to which either [Underwriter
#1] and [Underwriter #3], as the case may be, may become subject,
under the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities, costs or expenses arise out of or are
based upon any untrue statements or alleged untrue statements or
omissions or alleged omissions made in (i) any ABS Term Sheets and/or
any Computational Materials (or any amendments thereof or supplements
thereto) developed, mailed or otherwise transmitted by [Underwriter
#2], or (ii) any Preliminary Prospectus Supplement or the Prospectus
Supplement (or any amendment thereof or supplement thereto) in
reliance upon and in conformity with written information furnished to
the Company by [Underwriter #2] for use in such document; and
[Underwriter #2] will reimburse [Underwriter #1] and [Underwriter #3],
as applicable, for any legal or other expenses reasonably incurred
thereby in connection with investigating or defending any such action
or claim as such expenses are incurred.
(iii) [Underwriter #3]will indemnify and hold harmless each of
[Underwriter #1] and [Underwriter #2] against any losses, claims,
damages, liabilities, costs or expenses to which either [Underwriter
#1] and [Underwriter #2], as the case may be, may become subject,
under the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities, costs or expenses arise out of or are
based upon any untrue statements or alleged untrue statements or
omissions or alleged omissions made in (i) any ABS Term Sheets and/or
Computational Materials (or any amendments thereof or supplements
thereto) developed, mailed or otherwise transmitted by [Underwriter
#3], or (ii) any Preliminary Prospectus Supplement or the Prospectus
Supplement (or any amendment thereof or supplement thereto) in
reliance upon and in conformity with written information furnished to
the Company by [Underwriter #3]for use in such document; and
[Underwriter #3]will reimburse [Underwriter #1] and [Underwriter #2],
as applicable, for any legal or other expenses reasonably incurred
thereby in connection with investigating or defending any such action
or claim as such expenses are incurred.
(iv) Each Underwriter agrees to pay its proportionate share
(based on its underwriting proportion as set forth in this Agreement)
of any losses, claims, damages, liabilities, costs or expenses, joint
or several, under the Act, the Exchange Act or otherwise, paid by any
other Underwriter to any person or entity (other than to the
contributing Underwriter), arising out of or based upon any untrue
statement or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the
Prospectus, any Computational Materials or ABS Term Sheets relating to
the Offered Certificates, or any amendment of or supplement to any
such document, or arising out of or based upon the omission or alleged
omission to state in any such document a material fact necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading (provided that the payment
contemplated by this clause (iv) shall not cover any losses, claims,
damages, liabilities, costs or expenses referred to in and
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<PAGE>
intended to be covered by clause (i), (ii) or (iii) of this Section
8(e)); and each Underwriter will pay such proportionate share of any
legal or other expenses reasonably incurred by another Underwriter in
connection with investigating or defending any such loss, claim,
damage, liability, cost or expense (or any action in respect thereof).
Notwithstanding the foregoing, this clause (iv) is not intended to
cover any losses, claims, damages, liabilities, costs or expenses
referred to in the preceding sentence to the extent that they have
otherwise been covered by any indemnification by or contribution from
the Company or a Mortgage Loan Seller.
(v) The provisions of Section 8(c) shall apply as between the
Underwriters with respect to indemnities and payments under this
Section 8(e), except a contributing Underwriter under clause (iv) of
this Section 8(e) cannot assume the defense of any action.
(vi) If the indemnities or payments provided in clauses (i),
(ii), (iii) or (iv) of this Section 8(e), as the case may be, are
unavailable to or, except in the case of clause (iv) of this Section
8(e), insufficient to hold harmless an indemnified party under such
clause in respect of any losses, claims, damages, liabilities, costs
or expenses (or actions in respect thereof) referred to therein and
intended to be covered thereby, then the indemnifying or contributing
party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities, costs or expenses (or actions in respect thereof) in such
proportion as is appropriate to reflect both the relative benefits
received by such indemnified party on the one hand and the
indemnifying or contributing party on the other, in each case as
Underwriter, from the offering of the Offered Certificates, and the
relative fault of such indemnified party on the one hand and the
indemnifying or contributing party on the other in connection with the
statements or omissions which resulted in such losses, claims,
damages, liabilities, costs or expenses (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by an indemnified party on the one hand and
indemnifying or contributing party on the other shall be deemed to be
in the same proportion to the amount of Offered Certificates
underwritten by each such party. The relative fault of an indemnified
party or beneficiary on the one hand and the indemnifying or
contributing party on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement or
omission or alleged omission relates to information supplied by such
indemnified party on the one hand or the indemnifying or contributing
party on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities, costs or expenses
(or actions in respect thereof) referred to above in this clause (vi)
shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this clause (vi), neither the indemnified party nor the indemnifying
or contributing party shall be required to contribute any amount in
excess of the amount by which the total price at which the Offered
Certificates underwritten by it and distributed to the public, were
sold, exceeds the amount of any damages which such party has otherwise
been required to pay by reason of such untrue statement or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be
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<PAGE>
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(vii) The obligations of [Underwriter #1] under clauses (i), (iv)
and (vi) above shall be in addition to any liability which
[Underwriter #1] may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls
[Underwriter #2] or [Underwriter #3], as applicable, within the
meaning of the Act or the Exchange Act; the obligations of
[Underwriter #2] under clauses (ii), (iv) and (vi) above shall be in
addition to any liability which [Underwriter #2] may otherwise have
and shall extend, upon the same terms and conditions, to each person,
if any, who controls [Underwriter #1] or [Underwriter #3], as
applicable, within the meaning of the Act or the Exchange Act; and the
obligations of [Underwriter #3]under clauses (iii), (iv) and (vi)
above shall be in addition to any liability which [Underwriter #3]may
otherwise have and shall extend, upon the same terms and conditions,
to each person, if any, who controls [Underwriter #1] or [Underwriter
#2], as applicable, within the meaning of the Act or the Exchange Act.
9. Computational Materials and ABS Term Sheets. (a) Not later
than 3:00 p.m., New York City time, on the date hereof, the Underwriters shall
deliver to the Company and its counsel, as provided below, a complete copy of
all materials provided by the Underwriters to prospective investors in the
Offered Certificates which constitute either (i) "Computational Materials"
within the meaning of the no-action letter dated May 20, 1994 issued by the
Division of Corporation Finance of the Commission to Kidder, Peabody Acceptance
Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder Structured Asset
Corporation and the no-action letter dated May 27, 1994 issued by the Division
of Corporation Finance of the Commission to the Public Securities Association
(together, the "Kidder/PSA Letters") or (ii) "ABS Term Sheets" within the
meaning of the no-action letter dated February 17, 1995 issued by the Division
of Corporation Finance of the Commission to the Public Securities Association
(the "PSA Letter" and, together with the Kidder/PSA Letters, the "No-Action
Letters"), if the filing of such materials with the Commission is a condition of
the relief granted in such letters and, in the case of any such materials that
constitute "Collateral Term Sheets" within the meaning of the PSA Letter, such
Collateral Term Sheets have not previously been delivered to the Company as
contemplated by Section 9(b)(i) below. For purposes of this Agreement,
"Structural Term Sheets" shall have the meaning set forth in the PSA Letter.
Each delivery of Computational Materials and/or ABS Term Sheets to the Company
and its counsel pursuant to this paragraph (a) shall be made in paper form and,
in the case of ABS Term Sheets, electronic format suitable for filing with the
Commission.
(b) Each Underwriter represents and warrants to and agrees
with the Company, as of the date hereof and as of the Closing Date, as
applicable, that:
(i) if such Underwriter has provided any Collateral Term Sheets
to potential investors in the Offered Certificates prior to the date
hereof and if the filing of such materials with the Commission is a
condition of the relief granted in the PSA Letter, then in each such
case such Underwriter delivered to the Company and its counsel, in the
manner contemplated by Section 9(a), a copy of such materials no later
than 3:00 p.m., New York
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<PAGE>
City time, on the first business day following the date on which such
materials were initially provided to a potential investor;
(ii) the Computational Materials (either in original, aggregated
or consolidated form) and ABS Term Sheets furnished to the Company
pursuant to Section 9(a) or as contemplated in Section 9(b)(i)
constitute all of the materials relating to the Offered Certificates
furnished by such Underwriter (whether in written, electronic or other
format) to prospective investors in the Offered Certificates prior to
the date hereof, except for any Preliminary Prospectus and any
Computational Materials and ABS Term Sheets with respect to the
Offered Certificates which are not required to be filed with the
Commission in accordance with the No-Action Letters, and all
Computational Materials and ABS Term Sheets provided by such
Underwriter to potential investors in the Offered Certificates comply
with the requirements of the No-Action Letters;
(iii) such Underwriter did not furnish to any prospective
investor any Computational Materials and/or ABS Term Sheets with
respect to the Offered Certificates that such Underwriter actually
knew at the time of delivery to include any untrue statement of a
material fact or, when read in conjunction with the Prospectus, to
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(iv) all Collateral Term Sheets with respect to the Offered
Certificates furnished by such Underwriter to prospective investors
contained and will contain a legend, prominently displayed on the
first page thereof, indicating that the information contained therein
will be superseded by information contained in the Prospectus and,
except in the case of the initial Collateral Term Sheet, that such
information supersedes the information in all prior Collateral Term
Sheets; and
(v) on and after the date hereof, such Underwriter shall not
deliver or authorize the delivery of any Computational Materials, ABS
Term Sheets or other materials relating to the Offered Certificates
(whether in written, electronic or other format) to any potential
investor unless such potential investor has received a Prospectus
prior to or at the same time as the delivery of such Computational
Materials, ABS Term Sheets or other materials.
(c) If, at any time when a prospectus relating to the Offered
Certificates is required to be delivered under the Act, it shall be necessary in
the opinion of the Underwriters or counsel for the Underwriters to amend or
supplement the Prospectus as a result of an untrue statement of a material fact
contained in any Computational Materials or ABS Term Sheets provided by any
Underwriter pursuant to or as contemplated by this Section 9 or the omission to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made (and when read in
conjunction with the Prospectus), not misleading, or if it shall be necessary to
amend or supplement any Current Report to comply with the Act or the Exchange
Act or the rules thereunder, the Underwriters, at their expense (or, if such
amendment or supplement is necessary in order for any Current Report to comply
with the Act or the Exchange Act or the rules thereunder, at the expense of the
Company), shall prepare and furnish to the Company for filing with the
Commission an amendment or supplement which will correct such
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<PAGE>
statement or omission or an amendment which will effect such compliance and
shall distribute such amendment or supplement to each prospective investor in
the Offered Certificates that received such information being amended or
supplemented.
(d) If, at any time when a prospectus relating to the Offered
Certificates is required to be delivered under the Act, it shall be necessary in
the opinion of the Company or its counsel to amend or supplement the Prospectus
as a result of an untrue statement of a material fact contained in any
Computational Materials or ABS Term Sheets provided by any Underwriter pursuant
to or as contemplated by this Section 9 or the omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they made (and when read in conjunction with the
Prospectus), not misleading, or if it shall be necessary to amend or supplement
any Current Report to comply with the Act or the Exchange Act or the rules
thereunder, the Company promptly will notify each Underwriter of the necessity
of such amendment or supplement, and the Underwriters, at their expense (or, if
such amendment or supplement is necessary in order for any Current Report to
comply with the Act or the Exchange Act or the rules thereunder, at the expense
of the Company), shall prepare and furnish to the Company for filing with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance and shall distribute
such amendment or supplement to each prospective investor in the Offered
Certificates that received such information being amended or supplemented.
10. Substitution of Underwriters.
(a) If any Underwriter shall fail to take up and pay for the
amount of the Offered Certificates agreed by such Underwriter to be purchased
under this Agreement, upon tender of such Offered Certificates in accordance
with the terms hereof, and the amount of the Offered Certificates not purchased
does not aggregate more than 10% of the total amount of the Offered Certificates
set forth in Schedule I hereof (based on aggregate purchase price), the
remaining Underwriters shall be obligated to take up and pay for the Offered
Certificates that the withdrawing or defaulting Underwriter agreed but failed to
purchase.
(b) If any Underwriter shall fail to take up and pay for the
amount of the Offered Certificates agreed by such Underwriter to be purchased
under this Agreement (such Underwriter being a "Defaulting Underwriter"), upon
tender of such Offered Certificates in accordance with the terms hereof, and the
amount of the Offered Certificates not purchased aggregates more than ___% of
the total amount of the Offered Certificates set forth in Schedule I hereto
(based on aggregate price), and arrangements satisfactory to the remaining
Underwriter(s) and the Company for the purchase of such Certificates by other
persons are not made within 36 hours thereafter, this Agreement shall terminate.
In the event of any such termination, the Company shall not be under any
liability to any Underwriter (except to the extent provided in Section 5(g) and
Section 8 hereof) nor shall any Underwriter (other than a Defaulting
Underwriter) be under any liability to the Company (except to the extent
provided in Sections 8 and 9 hereof). Nothing herein shall be deemed to relieve
any Defaulting Underwriter from any liability it may have to the Company or to
the other Underwriters by reason of its failure to take up and pay for Offered
Certificates as agreed by such Defaulting Underwriter.
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<PAGE>
11. Termination Upon the Occurrence of Certain Events. Any
Underwriter may terminate its obligations under this Agreement in the absolute
discretion of such Underwriter, by notice given to the Company, if (a) after the
execution and delivery of this Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on or by, as
the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board
of Trade, (ii) trading of any securities of the Company, any Mortgage Loan
Seller or any of their respective affiliates shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or State of New York authorities, or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis, and (b) such event, singly or together with any other of the
events specified in clauses (a)(i) through (iv) above, makes it, in the judgment
of such Underwriter, impracticable to market the Offered Certificates on the
terms and in the manner contemplated in the Prospectus.
12. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and representatives and the Underwriters set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or the Company or
any of the officers, directors or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Offered Certificates.
The provisions of Sections 5(g), 8 and 9 hereof shall survive the termination or
cancellation of this Agreement.
13. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to any Underwriter, will be mailed,
delivered or either telegraphed or transmitted by telecopier and confirmed to it
at its address set forth on Schedule I hereto (or, at such other address as may
be furnished by such Underwriter to the Company in accordance with this Section
13); or, if sent to the Company, will be mailed, delivered or either telegraphed
or transmitted by telecopier and confirmed to it at PNC Mortgage Acceptance
Corp., 210 W. 10th Street, Kansas City, Missouri 64105, Attention: Chief
Executive Officer, Telecopy No.: (816) 435-2327 (or at such other address as may
be furnished by the Company to each Underwriter in accordance with this Section
13).
14. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in Section 8 hereof, and
their successors, heirs and legal representatives, and no other person will have
any right or obligation hereunder.
15. Miscellaneous. This Agreement will be governed by and
construed in accordance with the substantive laws of the State of New York,
without regard to conflicts of law principles. This Agreement may be executed in
any number of counterparts, each of which shall for all purposes be deemed to be
an original and all of which shall together constitute but one and the same
instrument. Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated except by a writing signed by the party against whom
enforcement of such change, waiver, discharge or termination is sought.
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<PAGE>
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Company
and the Underwriters.
Very truly yours,
PNC MORTGAGE ACCEPTANCE CORP.
By:
------------------------
Name:
Title:
Accepted at New York, New York,
as of the date first written above.
[UNDERWRITER #1]
By:
------------------------------
Name:
Title:
Accepted at New York, New York,
as of the date first written above.
[UNDERWRITER #2]
By:
------------------------------
Name:
Title:
Accepted at New York, New York,
as of the date first written above.
[UNDERWRITER #3]
By:
------------------------------
Name:
Title:
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<PAGE>
SCHEDULE I
Principal or Notional
Amount of Relevant
Class of Offered
Underwriters (and Class Certificates to be Purchased
addresses) ----- (Express as a Percentage
- ----------------- of the Total Principal or
Notional Amount of that Class)
------------------------------
[Underwriter #1] Class [S] ____%
[Address] Class [A-1A] ____%
Class [A-1B] ____%
Class [A-2] ____%
Class [A-3] ____%
Class [A-4] ____%
Class [B-1] ____%
Class [B-2] ____%
[Underwriter #2] Class [S] ____%
[Address] Class [A-1A] ____%
Class [A-1B] ____%
Class [A-2] ____%
Class [A-3] ____%
Class [A-4] ____%
Class [B-1] ____%
Class [B-2] ____%
[Underwriter #3] Class [S] ____%
[Address] Class [A-1A] ____%
Class [A-1B] ____%
Class [A-2] ____%
Class [A-3] ____%
Class [A-4] ____%
Class [B-1] ____%
Class [B-2] ____%
<PAGE>
SCHEDULE II
Registration Statement No. __________
Basic Prospectus dated ___________, ____
Prospectus Supplement dated ___________, ____
Title of Offered Certificates: Commercial Mortgage Pass-Through
Certificates, Series ________
Cut-off Date: ___________, ____
Closing: _______ on ___________, ____
at the offices of _______________
<PAGE>
<TABLE>
Schedule II (continued)
<CAPTION>
Initial
Aggregate Certificate
Class [D]esignation Principal Balance Initial Purchase Price(2) Rating (3)
- ------------------- or Notional Pass-Through Rate ----------------- ----------
Amount of Class(1)
------------------
<S> <C> <C> <C> <C>
Class [S] $_________(4) ____%
Class [A-1A] $_________ ____%
Class [A-1B] $_________ ____%
Cllass [A-2] $_________ ____%
Class [A-3] $_________ ____%
Class [A-4] $_________ ____%
Class [B-1] $_________ ____%
Class [B-2] $_________ ____%
- ------------------
(1) Plus or minus a permitted variance of __%.
(2) Expressed as a percentage of the aggregate stated or notional amount,
as applicable, of the relevant class of Offered Certificates to be
purchased. The purchase price for each class of the Offered
Certificates will include accrued interest at the initial Pass-Through
Rate therefor on the aggregate stated or notional amount, as
applicable, thereof to be purchased from the Cut-off Date to but not
including the Closing Date.
(3) By each of _________ and _________, respectively.
(4) Aggregate Notional Amount.
</TABLE>
RESTATED
ARTICLES OF INCORPORATION
OF
PNC MORTGAGE ACCEPTANCE CORP.
The undersigned, being the Senior Vice President and the Secretary of PNC
Mortgage Acceptance Corp., a corporation organized and existing under the laws
of the State of Missouri (the "Corporation"), hereby certify the following:
The following Restated Articles of Incorporation correctly set forth
without change the corresponding provisions of the Articles of Incorporation of
the Corporation as heretofore amended and shall supersede the original articles
of incorporation and all amendments thereto.
The following Restated Articles of Incorporation of the Corporation were
prepared and adopted by the Board of Directors of the Corporation in the
manner and by the vote prescribed by Mo. Rev. Stat. ss. 351.106 and amendments
thereto.
ARTICLE ONE
The name of the corporation is PNC Mortgage Acceptance Corp.
ARTICLE TWO
The address of the corporation's initial registered office in the State of
Missouri is 2600 Grand Avenue, Kansas City, Missouri 64108, and the name of its
initial registered agent at that address is M & H Agent Services, Inc.
ARTICLE THREE
The corporation is formed for only the following purposes:
(a) To acquire, own, hold, sell, transfer, assign, pledge, finance,
refinance and otherwise deal with (i) loans secured by (A) first or second
mortgages, deeds of trust or similar liens on multi-family residential,
commercial or mixed commercial and multi-family residential properties, and (B)
related assets, and (ii) any participation interest in, security (in bond or
pass-through form) or funding agreement based on, backed or collateralized by,
directly or indirectly, any of the foregoing (the loans and related assets
described in clause (a)(i) and the participation interests, securities and
funding agreements described in clause (a)(ii), collectively, "Mortgage Loans");
(b) (i) to establish and fund one or more trusts (the "Trusts") and to
authorize such Trusts to engage in one or more of the activities described in
immediately preceding clause (a) of this Article Three and to issue certificates
(the "Certificates") in one or more classes pursuant to pooling and servicing
agreements (each, a "Pooling and Servicing Agreement"), with each class having
the characteristics specified in the related Pooling and Servicing Agreement,
representing ownership interests in the Mortgage Loans;
<PAGE>
(c) to acquire, own, hold, invest in, offer, sell, transfer, assign,
pledge, finance and deal in and with any Certificates issued by a Trust
established by the corporation pursuant to clause (b) of this Article Three; and
(d) to engage in any other acts and activities and to exercise any
powers permitted to corporations under the laws of the State of Missouri which
are incidental to, or connected with the foregoing, and necessary, suitable or
convenient to accomplish any of the foregoing.
The purposes specified in this Article Three shall be construed as powers as
well as purposes of the corporation.
Except as otherwise provided in this Article Three, the corporation shall
not incur any indebtedness or undertake any obligations except in the ordinary
course of its business.
ARTICLE FOUR
The aggregate number of shares which the corporation shall have authority
to issue shall be 30,000 shares of common stock with a par value of $1.00 each,
amounting in the aggregate to $30,000.
ARTICLE FIVE
The number of directors to constitute the first Board of Directors shall
be three (3). The number of directors to constitute any succeeding Board of
Directors shall be fixed by, or in the manner provided in, the Bylaws of the
corporation. Any change in the number of directors as provided in the Bylaws of
the corporation shall be reported to the Secretary of State of Missouri within
thirty (30) calendar days of such change.
The Board of Directors shall not take action unless at the time of such
action there shall be at least one member of the Board of Directors who is an
Independent Director (as such term is defined in the Bylaws of the corporation).
ARTICLE SIX
The unanimous consent of the Board of Directors, including an Independent
Director, shall be required before the corporation may:
(a) file or consent to the filing of a bankruptcy or insolvency petition
or otherwise institute insolvency proceedings;
(b) dissolve, liquidate, consolidate, merge, or sell all or substantially
all of its assets;
(c) amend these Articles of Incorporation; or
(d) amend the Bylaws of the Corporation.
2
<PAGE>
ARTICLE SEVEN
The name and place of residence of the incorporator are:
Name Residence
William A. Hirsch 1035 W. 57th Terrace
Kansas City, Missouri 64113
ARTICLE EIGHT
The duration of the corporation is unlimited and shall be perpetual.
ARTICLE NINE
The corporation shall not, so long as any of the Certificates issued by a
Trust established by the corporation, are outstanding, dissolve, liquidate,
merge or consolidate with, or transfer substantially all of its assets to, any
entity, unless each of the nationally recognized statistical rating
organizations which is then rating any of such Certificates confirms in writing
that such action shall not result, in and of itself, in a downgrading,
withdrawal or qualification of the rating then assigned by such rating
organization to such Certificates; provided, however, that, in any event, the
corporation may dissolve, liquidate, merge or consolidate with, or transfer
substantially all of its assets to, any entity if (a) such action is for the
purpose of changing the state of incorporation of the corporation or changing
the form of organization through which the business of the corporation is
carried out, and (b) such entity has provisions in its governing instruments
identical in substance to the provisions of Articles Three, Five, Six and Nine
of these Articles of Incorporation.
ARTICLE TEN
The power to make, alter, amend, or repeal the Bylaws of the corporation
shall be vested in the Board of Directors.
ARTICLE ELEVEN
Any person, upon becoming the owner or holder of any shares of stock or
other securities issued by this corporation, does thereby consent and agree that
all rights, powers, privileges, obligations, or restrictions pertaining to such
person or such securities in any way may be altered, amended, restricted,
enlarged, or repealed by legislative enactments of the State of Missouri or of
the United States hereinafter adopted which have reference to or affect this
corporation, such securities, or such persons in any way and does further
consent and agree that the corporation reserves the right to alter, amend, or
repeal these Articles of Incorporation, or to do any other act or thing as
authorized, permitted, or allowed by such legislative enactments.
ARTICLE TWELVE
The private property of the shareholders of the corporation shall not be
subject to the payment of corporate debts, except to the extent of any unpaid
balances of subscriptions for shares.
3
<PAGE>
ARTICLE THIRTEEN
Each person who was or is made a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that, he or she is or was a director or officer of the
corporation or is or was serving at the request of the corporation as a director
or officer of another corporation or of a partnership, joint venture, trust or
other enterprises including service with respect to an employee benefit plan
(each, an "Indemnitee"), whether the basis of such proceeding is alleged action
in an official capacity as a director or officer or in any other capacity while
serving as a director or officer, shall be indemnified and held harmless by the
corporation, except where such person's conduct was finally adjudged to have
been knowingly fraudulent, deliberately dishonest or willful misconduct, to the
fullest extent authorized by "The General and Business Corporation Law of
Missouri", as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than permitted prior
thereto), against all expenses, liability and loss (including attorneys fees,
judgments, fines, excise taxes or penalties and amounts paid in settlement)
reasonably incurred or suffered by such Indemnitee in connection therewith and
such indemnification shall continue as to an Indemnitee who has ceased to be a
director or officer.
IN WITNESS WHEREOF, the undersigned have executed this instrument this
_____ day of January, 2000.
By: /s/Charles J. Sipple
---------------------------------------------
Name: Charles J. Sipple
Title: Senior Vice President
By: /s/Craig Mueller
---------------------------------------------
Name: Craig Mueller
Title: Assistant Secretary
4
<PAGE>
ACKNOWLEDGMENT
--------------
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
I, __________________________________, a Notary Public, do hereby certify
that on the ______ day of January, 2000, personally appeared before me Charles
J. Sipple, who being by me first duly sworn, declared that he is the person who
signed the foregoing document as Senior Vice President of the Corporation, and
that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal on the day and year last above written.
Notary Public
My Commission Expires:
- ---------------------
5
<PAGE>
ACKNOWLEDGMENT
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
I, __________________________________, a Notary Public, do hereby certify
that on the ______ day of January, 2000, personally appeared before me Paula
Mickelson, who being by me first duly sworn, declared that he is the person who
signed the foregoing document as Secretary of the Corporation, and that the
statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal on the day and year last above written.
Notary Public
My Commission Expires:
- ---------------------
RESTATED
BYLAWS
OF
PNC MORTGAGE ACCEPTANCE CORP.
--------------------
OFFICES
-------
Section 1. The principal office of the corporation shall be located at such
place as the Board of Directors by resolution may designate from time to time.
The corporation may have such other offices, either within or without the State
of Missouri, as the Board of Directors by resolution may designate from time to
time.
SHAREHOLDERS' MEETINGS
----------------------
Section 2. All meetings of the shareholders shall be held at any place,
either within or without the State of Missouri, as the Board of Directors may
designate from time to time. If no designation is made, or if a special meeting
be otherwise called, the place of meeting shall be at the principal office of
the corporation. Any such meeting may be adjourned to meet at such time and
place as may be designated by the holders of a majority of the shares present or
represented by proxy at any such meeting.
Section 3. An annual meeting of the shareholders shall be held for the
election of directors and for the transaction of any other proper business on
the third Tuesday in May of each year but, if a legal holiday, then on the next
business day following, at such time, between 9:00 a.m. and 5:00 p.m., as
provided in the notice therefor. If the annual meeting for the election of
directors is not held on the date designated therefor, the directors shall cause
the election to be held at a special meeting of the shareholders as soon
thereafter as convenient.
Section 4. Special meetings of the shareholders, for any purpose, may be
called by or at the direction of the President, by the Board of Directors, or by
the holders of not less than one fifth (1/5th) of all of the outstanding shares
of the corporation entitled to vote at such meeting.
Section 5. Written or printed notice of each meeting of shareholders
stating the place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called shall be
delivered or given not less than ten (10) nor more than seventy (70) days before
the date of the meeting, either personally or by mail, by or at the direction of
the President, or the Secretary, or the officer or persons calling the meeting,
to each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
with postage thereon prepaid, addressed to the shareholder at his address as it
appears an the records of the corporation.
Section 6. A majority of the outstanding shares of the corporation entitled
to vote at a meeting of shareholders, represented in person or by proxy, shall
constitute a quorum. In the absence of a quorum, the holders of a majority of
the shares present in person or by proxy shall have the power to adjourn the
meeting from time to time to a specified place and time no longer than ninety
(90) days after such adjournment, without notice other than announcement at the
meeting,
<PAGE>
until a quorum shall be present. Any business which could have been transacted
at the meeting if held as originally scheduled may be transacted at such
adjourned meeting whether or not specified in a notice of such adjourned
meeting.
Section 7. With respect to all matters, including the election of
directors, each shareholder shall be entitled to one vote for each share of
stock held by such shareholder. Cumulative voting shall not be permitted in the
election of directors.
Section 8. Any action required to he taken at a meeting of the shareholders
of the corporation, or any action which may be taken at a meeting of the
shareholders, may be taken without a meeting if consents in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof. Such consents shall have the
same force and effect as a unanimous vote of the shareholders at a meeting duly
held, and such consents shall be filed by the Secretary with the minutes of the
meetings of the shareholders.
DIRECTORS
---------
Section 9. The number of directors to constitute the Board of Directors is
as set forth in the Articles of Incorporation. At least one member of the Board
of Directors shall be an Independent Director. As used herein and in the
Articles of Incorporation, the phrase "Independent Director" shall mean a member
of the Board of Directors who is not, and has not been for a period of two years
(a) an officer or employee of the corporation or an officer, director or
employee of any affiliate thereof; (b) an owner of more than two percent (2%) of
the outstanding stock of any class of the corporation or any affiliate thereof;
(c) a customer of or supplier to the corporation or any of its affiliates having
an indebtedness outstanding of Five Thousand Dollars ($5,000.00) or more to the
corporation or any of its affiliates; (d) a person or other entity (a "Person")
controlling any such shareholder, supplier or customer described in (b) or (c)
above; or (e) a member of the immediate family of any such shareholder,
director, officer, employee supplier or customer described in (a), (b) or (c)
above. As used in this definition of "Independent Director," the term
"affiliate" means any person controlling, under common control with, or
controlled by the Person in question, and the term "controlling" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
Section 10. The property and business of the corporation shall be
controlled and managed by its Board of Directors, who shall be elected at the
annual meeting of the shareholders. Each director shall hold office for the term
for which he is elected or until his successor shall have been elected and
qualified, unless sooner removed by the directors or shareholders, disqualified
or resigned. No director need be a resident of the State of Missouri or a
shareholder of the corporation.
Section 11. An annual meeting of the Board of Directors shall held
immediately after, and at the same place as, the annual meeting of shareholders
for the purpose of electing officers and transacting such other business as may
come before the meeting. If, for any reason, such annual meeting of directors is
not or cannot be held as herein prescribed, the officers may be elected at any
meeting of the directors thereafter called for such purpose pursuant to these
Bylaws.
2
<PAGE>
Section 12. Regular meetings of the Board of Directors, other than annual
meetings, may be held at such time and place as shall from time to time be
determined by the Board of Directors. After the time and place of such regular
meetings shall have been so determined and notice thereof given to all of the
directors, no notice of such regular meetings need be given thereafter.
Section 13. Special meetings of the Board of Directors may be called by or
at the direction of the President, or any two (2) directors, to be held at such
time and place as may be designated by the person or persons authorized to call
such special meetings. Notice of any special meeting shall be given at least
three (3) days previously thereto by written notice delivered personally or
mailed to each director at his business address. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail with postage
thereon prepaid.
Section 14. A majority of the full Board of Directors as prescribed in the
Articles of Incorporation shall constitute a quorum for the transaction of
business. Subject to the restrictions upon the actions of the Board of Directors
set forth in the Articles of Incorporation, the act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 15. Members of the Board of Directors may participate in a meeting
of the Board of Directors by means of conference telephone or similar
communications equipment whereby all persons participating in the meeting can
hear each other, and participation in a meeting in this manner shall constitute
presence in person at the meeting.
Section 16. Any action which is required to be or may be taken at a meeting
of the directors may be taken without a meeting if consents in writing, setting
forth the action so taken, are signed by all of the members of the Board of
Directors. The consents shall have the same force and effect as a unanimous vote
at a meeting duly held. The Secretary shall file the consents with the minutes
of the meetings of the Board of Directors.
Section 17. Directors may be removed by the shareholders or directors of
the corporation in the manner provided by "The General Business Corporation Law
of Missouri", as amended.
Section 18. Vacancies on the Board of Directors and newly created
directorships resulting from any increase in the number of directors to
constitute the Board of Directors may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director,
until the next election of directors by the shareholders of the corporation.
When an independent Director vacates his position as an Independent Director of
the corporation, such vacancy left by the Independent Director shall be filled
by a person who qualifies as an Independent Director.
Section 19. Except for Independent Director(s), the directors as such shall
not receive any stated annual salary for their services, provided, however, that
by resolution of the Board of Directors, a fixed sum and expenses, if any, may
be allowed for attendance at any regular or special meeting of the Board of
Directors, provided that nothing herein contained shall be construed to preclude
any director from serving the corporation in any other capacity and receiving
compensation therefor.
3
<PAGE>
OFFICERS
--------
Section 20. The corporation shall have a President, one or more Vice
Presidents, a Secretary, and a Treasurer who shall be elected by the Board of
Directors. No officer need be a director. Any two or more offices may be held by
the same person.
Section 21. The corporation shall have such other officers and agents as
may be elected or appointed by the Board of Directors.
Section 22. Each officer of the corporation shall hold office until his
successor is duly elected and qualified or until his earlier resignation or
removal. Any officer may resign at any time upon written notice to the
corporation. Any of the officers of the corporation may be removed at any time
by the affirmative vote of a majority of the whole Board of Directors, with or
without cause, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
Section 23. The compensation of the officers shall be fixed by the Board of
Directors and, unless fixed for a definite Period, may be changed from time to
time whenever the Board of Directors may deem such action necessary or
advisable. The compensation of employees shall be fixed by the President or in
such manner as the Board of Directors may determine.
Section 24. The President shall be the chief executive officer and general
manager of the corporation, shall have general supervision and direction of the
business of the corporation, and shall preside at all meetings of the
shareholders at which he is present. The President shall perform such other
duties as may be prescribed by the Board of Directors.
Section 25. Any Vice President, in order of rank, in the absence or
incapacity of the President, shall perform the duties and have the authority of
that office and shall perform such other duties as may be prescribed by the
Board of Directors. Unless otherwise designated by the Board of Directors, the
order of rank between Vice Presidents shall be determined by length of service
in the office of Vice President of the corporation.
Section 26. The Secretary of the corporation shall be responsible for the
custody of the corporate seal and shall cause to be recorded all the proceedings
of the meetings of the shareholders and directors in a book to be kept for that
purpose and shall perform such other duties as may be prescribed by the Board of
Directors.
Section 27. The Treasurer of the corporation shall be responsible for
custody of the funds of the corporation and shall maintain them in an account or
accounts in such bank or other depositary as may be designated by the Board of
Directors. He shall keep accurate books of account of the business of the
corporation, shall make periodic reports thereof and shall perform such other
duties as may be prescribed by the Board of Directors.
Section 28. In the event of the absence of any officer of the corporation
or in the event that the Board of Directors shall for any reason deem such
action necessary or expedient, the Board may from time to time delegate the
powers or duties of such officer in whole or in part to any other officer or to
any directors, provided that the majority of the Board shall concur therein.
4
<PAGE>
CORPORATE STOCK
---------------
Section 29. The shares of stock of the corporation shall be represented by
certificates signed by the President or a Vice President and by the Secretary or
an Assistant Secretary or the Treasurer or an Assistant Treasurer of the
corporation and sealed with the seal of the corporation. Such seal may be
facsimile, engraved or printed. If such certificate is countersigned by a
Transfer Agent or Registrar other than the corporation or its employee, if any,
appointed by the Board of Directors of the corporation, then, in such event, the
signatures of any of the above named officers may be facsimile, engraved or
printed. In case any such officer, Transfer Agent or Registrar who has signed or
whose facsimile signature has been placed on a certificate shall have ceased to
be such officer, Transfer Agent or Registrar before such certificate is issued,
such certificate may nevertheless be issued by the corporation with the same
effect as if such person were such officer, Transfer Agent or Registrar at the
date of issue.
Section 30. A certificate representing shares of stock of the corporation
may be transferred only:
(a) by delivery of the certificate endorsed, either in blank or to a
specified person, by the person appearing by the certificate to be the
owner of the shares represented thereby; or
(b) by delivery of the certificates and a separate document containing
a written assignment of the certificate or a power of attorney to sell,
assign, or transfer the same or the shares represented thereby, signed by
the person appearing by the certificate to be the owner of the shares
represented thereby, and such assignment or power of attorney may be either
in blank or to a specified person; or
(c) by delivery of the certificate with assignment endorsed thereon or
in a separate instrument signed by the trustee in bankruptcy, receiver,
guardian, executor, administrator, or other person duly authorized by law
to transfer the certificate on behalf of the person appearing by the
certificate to be the owner of the shares represented thereby.
The corporation or its agents may require reasonable proof of the
authenticity of the signatures appearing upon instruments provided for the
purpose of effecting transfer of such certificate.
Section 31. The Board of Directors may close the transfer books of the
corporation in their discretion for a period not exceeding seventy (70) days
preceding (1) the date of any meeting, either annual or special, of the
shareholders, (2) the date of payment of any dividend, (3) the date for the
allotment of rights, or (4) the date when any change, conversion or exchange of
the shares shall go into effect; provided, however, that in lieu of closing the
stock transfer books, the Board of Directors may fix in advance a date, not
exceeding seventy (70) days preceding the date of any meeting of shareholders,
or the date for the payment of any dividend, or the date for the allotment of
rights, or the date when any change, conversion or exchange of shares shall go
into effect, as a record date for the determination of the shareholders entitled
to notice of, and to vote at the meeting, and any adjournment thereof, or
entitled to receive payment of the dividend, or entitled to the allotment of
rights, or entitled to exercise the rights in respect of the change, conversion
or
5
<PAGE>
exchange of shares. In such case only the shareholders who are shareholders of
record on the date of closing the transfer books or on the record date so fixed
shall be entitled to notice of, and to vote at, the meeting, and any adjournment
thereof, or to receive payment of the dividend, or to receive the allotment of
rights, or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the date of closing
of the transfer books or the record date fixed as aforesaid.
Section 32. The corporation shall be entitled to treat the holder of record
of any share or shares of stock as the owner in fact thereof, and the Board of
Directors may, in its discretion, hold such owner of record to be entitled to
notice of meetings of shareholders and to receive dividends and to vote as such
owner. The corporation shall not be bound to recognize any equitable or other
claim to, or interest in, such share an the part of any other person whether or
not it shall have express or other notice thereof, save as expressly provided by
law.
GENERAL PROVISIONS
------------------
Section 33. During its existence, the corporation may engage employees,
equipment, and accounting and other services from its shareholders or
affiliates, but the corporation will:
(a) hold itself out as a separate entity;
(b) conduct its own business in its own name;
(c) own and maintain all of its assets in its own name and at all
times segregate its assets from the assets of any person or entity;
(d) pay its own liabilities out of its own funds;
(e) maintain books and records separate from any other person or
entity, except that entities owning an interest in the corporation may
include the financial data of the corporation in consolidated financial
statements and tax returns, which statements and returns shall indicate the
corporation's separate existence;
(f) maintain financial statements separate from any other person or
entity;
(g) observe all corporate procedures required by its Articles of
Incorporation, these Bylaws and the laws of the State of Missouri;
(h) pay the salaries of its own employees as well as pay that portion
of any compensation for services rendered by employees of any of its
affiliates which has been fairly and reasonably allocated to the
corporation;
(i) not guarantee or become obligated for the debts of any other
entity or hold out its credit as being available to satisfy the obligations
of others;
(j) not pledge its assets for the benefit of any other entity;
6
<PAGE>
(k) pay that portion of any overhead for shared office space or any
other shared services which has been fairly and reasonably allocated to the
corporation;
(l) use its own stationery, invoices and checks; and
(m) not engage in purchase or sale of mortgage loans from or to its
shareholders or affiliates except as may be approved by an Independent
Director.
Section 34. Pertinent provisions of the law of the State of Missouri, where
applicable, shall take precedence over these Bylaws.
Section 35. The corporation shall neither guarantee the debts of its
Parent, if any, or any Affiliate thereof, nor seek to have its Parent, if any,
or any Affiliate thereof, guarantee its debts.
Section 36. The corporation will not acquire the debt instruments of, the
securities, issued by, or make loans or advances to, its Parent, if any, or any
Affiliate thereof.
Section 37. The corporation shall not commingle its money or other assets
with the money or other assets of its Parent, if any, or any Affiliate thereof.
Section 38. The power to make, alter, amend, or repeal the Bylaws of the
corporation is vested in the directors of the corporation pursuant to the
Articles of Incorporation.
Section 39. Any defects in the manner in which any meeting required by law
or by these Bylaws is called, convened or conducted shall be deemed waived by
any shareholder or director who attends such meeting, either in person or by
proxy, and who fails to object to such meeting. Whenever any notice is required
to be given under the provisions of these Bylaws, the Articles of Incorporation
of the corporation or any law, a waiver thereof in writing signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed the equivalent to the giving of such notice.
Section 40. The corporation shall have a seal which shall be circular in
form and contain the name of the corporation and the words "MISSOURI" and
"CORPORATE SEAL".
Section 41. The fiscal year of the corporation shall commence on the first
day of January and shall terminate on the 31st day of December of each year.
Section 42. Pronouns of the masculine gender shall be deemed to include the
feminine with respect to these Bylaws.
7
PNC MORTGAGE ACCEPTANCE CORP.,
DEPOSITOR
MIDLAND LOAN SERVICES, INC.,
MASTER SERVICER
-------------------------,
SPECIAL SERVICER
AND
-------------------------,
TRUSTEE
POOLING AND SERVICING AGREEMENT
Dated as of _____________,____
Commercial Mortgage Pass-Through Certificates
Series _________
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms................................................4
SECTION 1.2. Certain Calculations........................................52
SECTION 1.3. Certain Constructions.......................................52
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.1. Conveyance and Assignment of Mortgage Loans.................53
SECTION 2.2. Acceptance by the Custodian and the Trustee.................58
SECTION 2.3. Seller's Repurchase of Mortgage Loans for Document
Defaults and Breaches of Representations and Warranties.....59
SECTION 2.4. Representations and Warranties of the Depositor.............62
SECTION 2.5. Representations, Warranties and Covenants of the Master
Servicer and the Special Servicer...........................65
SECTION 2.6. Execution and Delivery of Certificates; Issuance of
REMIC I Regular Interests and REMIC II Regular Interests....68
SECTION 2.7. Documents Not Delivered to Custodian........................68
ARTICLE III
ADMINISTRATION AND SERVICING
SECTION 3.1. Master Servicer to Act as Master Servicer; Special
Servicer to Act as Special Servicer; Administration of
the Mortgage Loans..........................................69
SECTION 3.2. Sub-Servicing...............................................71
SECTION 3.3. Collection of Certain Mortgage Loan Payments................72
SECTION 3.4. Collection of Taxes, Assessments and Similar Items..........73
SECTION 3.5. Collection Account; Distribution Account; Grantor Trust
Collection
Account; Grantor Trust Distribution Account and Excess
Liquidation Proceeds Account................................74
SECTION 3.6. Permitted Withdrawals from the Collection Account and
Grantor Trust Collection Account............................76
SECTION 3.7. Investment of Funds in Accounts.............................79
i
<PAGE>
SECTION 3.8. Maintenance of Insurance Policies and Errors and
Omissions and Fidelity Coverage.............................81
SECTION 3.9. Enforcement of Due-On-Sale Clauses; Assumption Agreements...84
SECTION 3.10.Realization Upon Mortgage Loans.............................86
SECTION 3.11.Trustee to Cooperate; Release of Mortgage Files.............89
SECTION 3.12.Servicing Compensation......................................90
SECTION 3.13.Reports to the Trustee; Collection Account Statements.......92
SECTION 3.14.Annual Statement as to Compliance...........................93
SECTION 3.15.Annual Independent Public Accountants' Servicing Report.....93
SECTION 3.16.Access to Certain Documentation.............................94
SECTION 3.17.Title and Management of REO Properties......................94
SECTION 3.18.Sale of Specially Serviced Mortgage Loans and REO
Properties..................................................98
SECTION 3.19.Inspections................................................101
SECTION 3.20.Available Information and Notices..........................102
SECTION 3.21.Reserve Accounts; Letters of Credit........................103
SECTION 3.22.Servicing Advances.........................................104
SECTION 3.23.Appraisal Reductions.......................................104
SECTION 3.24.Transfer of Servicing Between Master Servicer and
Special Servicer; Record Keeping...........................105
SECTION 3.25.Adjustment of Servicing Compensation in Respect of
Prepayment Interest Shortfalls.............................107
SECTION 3.26.Controlling Class Representative; Elections................108
SECTION 3.27.Appointment of Special Servicer; Duties of Controlling
Class Representative.......................................109
SECTION 3.28.Modifications, Waivers, Amendments, Extensions and
Consents, Defeasance.......................................111
SECTION 3.29.Interest Reserve Account...................................115
ARTICLE IV
DISTRIBUTIONS TO CERTIFICATEHOLDERS
SECTION 4.1. Distributions of REMIC I...................................115
SECTION 4.2. Distributions of REMIC II..................................116
SECTION 4.3. Distributions of REMIC III.................................123
SECTION 4.4. Statements to Rating Agencies and Certificateholders;
Available Information......................................129
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SECTION 4.5. Remittances; P&I Advances..................................133
SECTION 4.6. Allocation of Realized Losses and Expense Losses...........134
SECTION 4.7. Distributions on the Grantor Trust.........................135
SECTION 4.7. Distributions in General...................................135
SECTION 4.8. Compliance with Withholding Requirements...................136
ARTICLE V
THE CERTIFICATES
SECTION 5.1. The Certificates...........................................137
SECTION 5.2. Registration, Transfer and Exchange of Certificates........138
SECTION 5.3. Book-Entry Certificates....................................142
SECTION 5.4. Mutilated, Destroyed, Lost or Stolen Certificates..........144
SECTION 5.5. Appointment of Paying Agent................................145
SECTION 5.6. Access to Certificateholders' Names and Addresses..........145
SECTION 5.7. Actions of Certificateholders..............................146
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER AND THE SPECIAL SERVICER
SECTION 6.1. Liability of the Depositor, the Master Servicer and the
Special Servicer...........................................146
SECTION 6.2. Merger or Consolidation of the Master Servicer and
Special Servicer...........................................146
SECTION 6.3. Limitation on Liability of the Depositor, the Master
Servicer and Others........................................147
SECTION 6.4. Limitation on Resignation of the Master Servicer and of
the Special Servicer.......................................148
SECTION 6.5. Rights of the Depositor and the Trustee in Respect of
the Master Servicer and the Special Servicer...............149
ARTICLE VII
DEFAULT
SECTION 7.1. Events of Default..........................................150
SECTION 7.2. Trustee to Act; Appointment of Successor...................152
SECTION 7.3. Notification to Certificateholders.........................154
SECTION 7.4. Other Remedies of Trustee..................................154
SECTION 7.5. Waiver of Past Events of Default; Termination..............154
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.1. Duties of Trustee..........................................155
SECTION 8.2. Certain Matters Affecting the Trustee......................156
SECTION 8.3. Trustee Not Liable for Certificates or Mortgage Loans......158
SECTION 8.4. Trustee May Own Certificates...............................160
SECTION 8.5. Payment of Trustee Fees and Expenses; Indemnification......160
SECTION 8.6. Eligibility Requirements for Trustee.......................161
SECTION 8.7. Resignation and Removal of the Trustee.....................162
SECTION 8.8. Successor Trustee..........................................163
SECTION 8.9. Merger or Consolidation of Trustee.........................163
SECTION 8.10.Appointment of Co-Trustee or Separate Trustee..............164
SECTION 8.11.Authenticating Agent.......................................165
SECTION 8.12.Appointment of Custodians..................................166
SECTION 8.13.Representations and Warranties of the Trustee..............166
ARTICLE IX
TERMINATION
SECTION 9.1. Termination of Trust.......................................168
SECTION 9.2. Procedure Upon Termination of Trust........................170
SECTION 9.3. Additional Trust Termination Requirements..................170
ARTICLE X
REMIC ADMINISTRATION; GRANTOR TRUST
SECTION 10.1.REMIC Election.............................................171
SECTION 10.2.REMIC Compliance...........................................172
SECTION 10.3.Imposition of Tax on the Trust Fund........................174
SECTION 10.4.Prohibited Transactions and Activities.....................175
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1.Counterparts...............................................176
SECTION 11.2.Limitation on Rights of Certificateholders.................176
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SECTION 11.3.Governing Law..............................................177
SECTION 11.4.Notices....................................................177
SECTION 11.5.Severability of Provisions.................................179
SECTION 11.6.Notice to the Depositor, the Controlling Class
Representative and Each Rating Agency......................179
SECTION 11.7.Amendment..................................................181
SECTION 11.8.Confirmation of Intent.....................................183
SECTION 11.9.Successors and Assigns; Beneficiaries......................184
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EXHIBITS
Exhibit A-1 Form of Class [[A-1A]] Certificate
Exhibit A-2 Form of Class [A-1B] Certificate
Exhibit A-3 Form of Class [S] Certificate
Exhibit A-4 Form of Class [A-2] Certificate
Exhibit A-5 Form of Class [A-3] Certificate
Exhibit A-6 Form of Class [A-4] Certificate
Exhibit A-7 Form of Class [B-1] Certificate
Exhibit A-8 Form of Class [B-2] Certificate
Exhibit A-9 Form of Class [B-3] Certificate
Exhibit A-10 Form of Class [B-4] Certificate
Exhibit A-11 Form of Class [B-5] Certificate
Exhibit A-12 Form of Class [B-6] Certificate
Exhibit A-13 Form of Class [B-7] Certificate
Exhibit A-14 Form of Class [B-8] Certificate
Exhibit A-15 Form of Class [C] Certificate
Exhibit A-16 Form of Class [D] Certificate
Exhibit A-17 Form of Class [E] Certificate
Exhibit A-18 Form of Class [R-I] Certificate
Exhibit A-19 Form of Class [R-II] Certificate
Exhibit A-20 Form of Class [R-III] Certificate
Exhibit B-1 Mortgage Loan Schedule
Exhibit B-2 Form of Initial Custodian Certification
Exhibit B-3 Form of Final Custodian Certification
Exhibit C-1 Form of Transferee Affidavit
Exhibit C-2 Form of Transferor Letter
Exhibit D-1 Form of Investment Representation Letter
Exhibit D-2 Form of ERISA Representation Letter
Exhibit E Form of Request for Release
Exhibit F Form of Custodial Agreement
Exhibit G Privately Placed Securities Legend
Exhibit H Form of Monthly Distribution Statement
Exhibit I-1 Form of Information Request/Investor Certification for Website
Access from Certificate Owner
Exhibit I-2 Form of Information Request/Investor Certification for Website
Access from Prospective Investor
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Pooling and Servicing Agreement, dated as of __________,____ among
PNC Mortgage Acceptance Corp., as Depositor, Midland Loan Services, Inc., as
Master Servicer, ____________________, as Special Servicer, and
____________________, as Trustee.
PRELIMINARY STATEMENT:
Terms used but not defined in this Preliminary Statement shall have
the meanings specified in Article I.
The Depositor intends to sell pass-through certificates to be issued
hereunder in multiple classes which in the aggregate will evidence the entire
beneficial ownership interest in the Trust Fund consisting primarily of the
Mortgage Loans. On the Closing Date, the Depositor will acquire (i) the REMIC I
Regular Interests and the Class [R-I] Certificates as consideration for its
transfer to the Trust Fund of the Mortgage Loans and the other property
constituting the Trust Fund (excluding Deferred Interest, the Grantor Trust
Collection Account and the Grantor Trust Distribution Account) described in the
definition of "REMIC I"; (ii) the REMIC II Regular Interests and the Class
[R-II] Certificates as consideration for its transfer of the REMIC I Regular
Interests to the Trust Fund; (iii) the REMIC III Certificates as consideration
for its transfer of the REMIC II Regular Interests to the Trust Fund; and (iv)
the Class [E] Certificates as consideration for its transfer of the Deferred
Interest to the Trust Fund. The Depositor has duly authorized the execution and
delivery of this Agreement to provide for the foregoing and the issuance of (a)
the REMIC I Regular Interests and the Class [R-I] Certificates representing in
the aggregate the entire beneficial ownership of REMIC I, (b) the REMIC II
Regular Interests and the Class [R-II] Certificates representing in the
aggregate the entire beneficial ownership of REMIC II and (c) the REMIC III
Certificates representing in the aggregate the entire beneficial ownership of
REMIC III, and (ii) the creation of the Grantor Trust and the issuance of the
Class [E] Certificates.
REMIC I
As provided herein, the Trustee will make the election described in
Section 10.1 hereof for the segregated pool of assets consisting of the Mortgage
Loans and certain related assets (excluding the Deferred Interest, the Grantor
Trust Collection Account and the Grantor Trust Distribution Account) to be
treated for federal income tax purposes as a real estate mortgage investment
conduit (a "REMIC" and, such particular segregated pool of assets, "REMIC I").
The REMIC I Regular Interests will be designated as the "regular interests" in
REMIC I and the Class [R-I] Certificates will be designated as the sole class of
"residual interests" in REMIC I.
A separate uncertificated REMIC I Regular Interest will be issued
with respect to each Mortgage Loan. Each REMIC I Regular Interest will represent
the right to receive principal corresponding to the initial Stated Principal
Balance of a related Mortgage Loan and interest thereon at a remittance rate
calculated as described herein in the definition of "REMIC I Remittance Rate".
For purposes of Treasury Regulation Section 1.860G-1(a)(4)(iii), the "latest
possible maturity date" for each REMIC I Regular Interest shall be the Rated
Final Distribution Date. The Class [R-I] Certificates will have no principal
balances and no remittance rate, but
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will be entitled to receive on each Distribution Date any portion of the
Available Funds for such Distribution Date not otherwise deemed distributed on
the REMIC I Regular Interests.
REMIC II
As provided herein, the Trustee will make the election described in
Section 10.1 hereof for the segregated pool of assets consisting of the REMIC I
Regular Interests to be treated for federal income tax purposes as a separate
REMIC (such particular pool of assets, "REMIC II"). The REMIC II Regular
Interests will be designated as representing the "regular interests" in REMIC II
and the Class [R-II] Certificates will be designated as representing the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions.
_______ separate uncertificated classes of REMIC II Regular
Interests will be issued and are designated as the "regular interests" in REMIC
II. The following table irrevocably sets forth the designation and initial
Uncertificated Principal Balance for each REMIC II Regular Interest.
REMIC II Regular Interests
--------------------------------------------------------
Initial Uncertificated
Designation Principal Balance
--------------------------------------------------------
Class [[A-1A]]-II Interest $__________
--------------------------------------------------------
Class [A-1B]-II Interest $__________
--------------------------------------------------------
Class [A-2]-II Interest $__________
--------------------------------------------------------
Class [A-3]-II Interest $__________
--------------------------------------------------------
Class [A-4]-II Interest $__________
--------------------------------------------------------
Class [B-1]-II Interest $__________
--------------------------------------------------------
Class [B-2]-II Interest $__________
--------------------------------------------------------
Class [B-3]-II Interest $__________
--------------------------------------------------------
Class [B-4]-II Interest $__________
--------------------------------------------------------
Class [B-5]-II Interest $__________
--------------------------------------------------------
Class [B-6]-II Interest $__________
--------------------------------------------------------
Class [B-7]-II Interest $__________
--------------------------------------------------------
Class [B-8]-II Interest $__________
--------------------------------------------------------
Class [C]-II Interest $__________
--------------------------------------------------------
Class [D]-II Interest $__________
--------------------------------------------------------
For purposes of Treasury Regulation Section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" of each REMIC II Regular Interest shall be the
Rated Final Distribution Date. The Class [R-II] Certificate will be designated
as the sole class of residual interests in REMIC II and will have no scheduled
principal balance and no pass-through rate, but will be entitled to receive on
each Distribution Date any portion of the REMIC II Distribution Amount for such
Distribution Date not otherwise deemed distributed on the REMIC II Regular
Interests.
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REMIC III
As provided herein, the Trustee will make the election described in
Section 10.1 for the segregated pool of assets hereof consisting of the REMIC II
Regular Interests to be treated for federal income tax purposes as a separate
REMIC (such particular pool of assets, "REMIC III"). The REMIC III Regular
Certificates will be designated as representing the "regular interests" in REMIC
III and the Class [R-III] Certificates will be designated as representing the
sole class of "residual interests" in REMIC III for purposes of the REMIC
Provisions.
________ separate Classes of REMIC III Regular Certificates will be
issued. The following table irrevocably sets forth the designation, the initial
pass-through rate (the "Pass-Through Rate"), and the initial aggregate
certificate principal balance or notional amount for each Class of REMIC III
Regular Certificates.
REMIC III Regular Certificates
Initial Aggregate
Designation Initial Pass-Through Certificate Balance or
Rate(1) Notional Amount
Class [A-1A] _____% $__________
Class [A-1B] _____% $__________
Class [A-2] _____% $__________
Class [A-3] _____% $__________
Class [A-4] _____% $__________
Class [B-1] _____% $__________
Class [B-2] _____% $__________
Class [B-3] _____% $__________
Class [B-4] _____% $__________
Class [B-5] _____% $__________
Class [B-6] _____% $__________
Class [B-7] _____% $__________
Class [B-8] _____% $__________
Class [C] _____% $__________
Class [D] _____% $__________
Class [S] _____% $__________(2)
(1) On each Distribution Date after the initial Distribution Date, the
Pass-Through Rate for each Class of REMIC III Regular Certificates will be
determined as described herein under the definition of "Pass-Through Rate."
(2) Notional Amount.
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For purposes of Treasury Regulation Section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" of each Class of REMIC III Regular Certificates
shall be the Rated Final Distribution Date. The Class [R-III] Certificates will
have no principal balances and no pass-through rate, but will be entitled to
receive on each Distribution Date any portion of the Available Funds for REMIC
III for such Distribution Date not otherwise deemed distributed on the REMIC III
Regular Certificates.
The Certificate Balance of any Class of Certificates outstanding at
any time represents the maximum amount which holders thereof are entitled to
receive as distributions allocable to principal from the cash flow on the
Mortgage Loans and the other assets in the Trust Fund.
As of the Cut-off Date, the Mortgage Loans have an aggregate Stated
Principal Balance equal to approximately $_____________.
GRANTOR TRUST
The parties intend that the Deferred Interest, the Grantor Trust
Collection Account and the Grantor Trust Distribution Account will be treated as
a grantor trust under Subpart E of Part 1 of Subchapter J of the Code (the
"Grantor Trust"), and that the Class [E] Certificates represent undivided
beneficial interests in specified portions of the Deferred Interest, the Grantor
Trust Collection Account and the Grantor Trust Distribution Account. The assets
of the Grantor Trust are excluded from the REMICs.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Special Servicer and the Trustee agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in this
Article.
"Accrued Certificate Interest": With respect to any Class of REMIC
III Regular Certificates (other than the Class [S] Certificates) for any
Distribution Date, the amount of interest for the applicable Interest Accrual
Period accrued at the applicable Pass-Through Rate on the aggregate Certificate
Balance of such Class of Certificates as of the close of business on the
preceding Distribution Date (or, in the case of the first Distribution Date, as
of the Closing Date). Accrued Certificate Interest on the Class [S] Certificates
for each Distribution Date will equal the Class [S] Interest Amount. The Accrued
Certificate Interest in respect of each Class of REMIC III Regular Certificates
for each Distribution Date shall accrue on the basis of a 360-day year
consisting of twelve 30-day months.
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"Actual/360 Basis": The accrual of interest calculated on the basis
of the actual number of days elapsed during any calendar month in a year assumed
to consist of 360 days.
"Additional Trust Fund Expense": Any of the following items: (a)
Special Servicing Fees, Disposition Fees and Workout Fees; (b) Advance Interest
Amounts not paid out of Default Interest or late payment charges as and to the
extent provided herein; (c) amounts paid by the Trust to indemnify the
Depositor, the Master Servicer, the Special Servicer or the Trustee or any other
Person pursuant to the terms of this Agreement; (d) to the extent not covered by
indemnification by one of the parties hereto or paid by a source other than the
Trust Fund, any federal, state or local taxes imposed on the Trust Fund or any
of its assets or transactions; (e) the cost of all Opinions of Counsel required
or permitted hereunder to be obtained in connection with the servicing of the
Mortgage Loans and the administration of the Trust Fund and not otherwise
required hereunder to be paid by a source other than the Trust Fund or Advanced
as a Servicing Advance; and (f) to the extent not included in the calculation of
a Realized Loss and not covered by indemnification by one of the parties hereto
or otherwise, any other unanticipated cost, liability, or expense of the Trust
which the Trust has not recovered, and in the judgment of the Master Servicer
(or, in the case of a Specially Serviced Mortgage Loan, the Special Servicer)
will not recover, from the related Borrower or Mortgaged Property or otherwise.
"Adjusted REMIC II Remittance Rate": With respect to the Class
[A-1A]-II Interests, for any Distribution Date, ____% per annum; with respect to
each of the Class [B-1]-II Interests and the Class [B-2]-II Interests, for any
Distribution Date, a rate per annum equal to the related REMIC II Remittance
Rate for such Distribution Date; and, with respect to each of the other REMIC II
Regular Interests, for any Distribution Date, a rate per annum equal to the
lesser of (i) the related REMIC II Remittance Rate for such Distribution Date
and (ii) the related "Fixed Cap Rate" specified below:
REMIC II Regular Interest Fixed Cap Rate
------------------------- --------------
Class [A-IB]-II Interests ____% per annum
Class [A-2]-II Interests ____% per annum
Class [A-3]-II Interests ____% per annum
Class [A-4]-II Interests ____% per annum
Class [B-3]-II Interests ____% per annum
Class [B-4]-II Interests ____% per annum
Class [B-5]-II Interests ____% per annum
Class [B-6]-II Interests ____% per annum
Class [B-7]-II Interests ____% per annum
Class [B-8]-II Interests ____% per annum
Class [C]-II Interests ____% per annum
Class [D]-II Interests ____% per annum
"Advance": Any P&I Advance or Servicing Advance.
"Advance Interest Amount": The sum, for all Mortgage Loans as to
which any Advance remains unreimbursed, of all interest at the related Advance
Rate on the amount of each and every P&I Advance and Servicing Advance for which
the Master Servicer or the Trustee, as
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applicable, has not been paid or reimbursed for the number of days from the date
on which each such Advance was made or, if interest has been previously paid on
such Advance, from the date on which interest was last paid, through the date of
payment or reimbursement of the related Advance (which in no event shall be
later than the Determination Date following the date on which funds are
available to reimburse such Advance with interest thereon at the Advance Rate).
"Advance Rate": A per annum rate equal to the Prime Rate (as
published in The Wall Street Journal, or, if The Wall Street Journal is no
longer published, such other publication determined by the Trustee (with the
concurrence of the Master Servicer) in its reasonable discretion from time to
time).
"Adverse Grantor Trust Event": Either (i) any impairment of the
status of the Grantor Trust as a grantor trust or (ii) the imposition of a tax
upon the Grantor Trust or any of its assets or transactions.
"Adverse REMIC Event": As defined in Section 10.2(d).
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. The Trustee may obtain
and rely on an Officer's Certificate of the Master Servicer or the Special
Servicer or a certificate from an officer of the Depositor to determine whether
any Person is an Affiliate of such party.
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
"Applicable Monthly Payment": As defined in Section 4.5(a).
"Applicant": As defined in Section 5.6(a).
"Appraisal Reduction Event": With respect to each Mortgage Loan, the
occurrence of the earliest of the following dates: (i) the third anniversary of
the date on which an extension of the maturity date of a Mortgage Loan becomes
effective as a result of a modification of such Mortgage Loan by the Special
Servicer, which extension does not change the amount of Monthly Payments on the
Mortgage Loan, (ii) 120 days after an uncured delinquency occurs in respect of a
Mortgage Loan, (iii) 45 days after the date on which a reduction in the amount
of Monthly Payments on a Mortgage Loan, or a change in any other material
economic term of the Mortgage Loan, becomes effective as a result of a
modification of such Mortgage Loan by the Special Servicer, (iv) 60 days after a
receiver has been appointed or after the commencement of an involuntary
bankruptcy proceeding, (v) immediately after a borrower declares bankruptcy, and
(vi) immediately after a Mortgage Loan becomes an REO Mortgage Loan. The Special
Servicer shall notify the Master Servicer and the Master Servicer
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<PAGE>
shall notify the Special Servicer, as applicable, promptly upon receiving notice
of the occurrence of any of the foregoing events.
"Appraisal Reduction": For any Mortgage Loan as to which any
Appraisal Reduction Event has occurred, an amount equal to (a) the outstanding
Stated Principal Balance of such Mortgage Loan as of the last day of the related
Collection Period less (b) the excess, if any, of (i) 90% of the sum of (x) the
appraised or otherwise estimated value of the related Mortgaged Property or
Properties as determined in accordance with Section 3.23 (the costs of which
shall be paid by the Master Servicer as an Advance), plus (y) the amount of all
reserves and escrows (other than those for taxes and insurance) over (ii) the
sum of (A) to the extent not previously advanced by the Master Servicer or the
Trustee, all unpaid interest on the principal balance of such Mortgage Loan at a
per annum rate equal to the Mortgage Rate, (B) all unreimbursed Advances and
interest thereon at the Advance Rate in respect of such Mortgage Loan, and (C)
all currently due and unpaid real estate taxes and assessments and insurance
premiums and all other amounts, including, if applicable, ground rents, due and
unpaid under the Mortgage Loan (which taxes, premiums and other amounts have not
been escrowed or the subject of an Advance). An Appraisal Reduction will be
eliminated (i) upon payment in full or liquidation of any Mortgage Loan for
which an Appraisal Reduction has been determined or (ii) if the Mortgage Loan
becomes a Corrected Mortgage Loan and the Borrower makes three consecutive
Monthly Payments thereafter.
"Asset Status Report": As defined in Section 3.24(e).
"Assignment of Leases, Rents and Profits": With respect to any
Mortgaged Property, any assignment of leases, rents and profits or similar
agreement executed by the Borrower, assigning to the mortgagee all of the
income, rents and profits derived from the ownership, operation, leasing or
disposition of all or a portion of such Mortgaged Property, in the form which
was duly executed, acknowledged and delivered by the Borrower, as amended,
modified, renewed or extended through the date hereof and from time to time
hereafter.
"Assignment of Mortgage": An assignment of mortgage without
recourse, notice of transfer or equivalent instrument, in recordable form, which
is sufficient under the laws of the jurisdiction in which the related Mortgaged
Property is located to reflect of record the sale of the related Mortgage, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering Mortgages encumbering Mortgaged
Properties located in the same jurisdiction, if permitted by law and acceptable
for recording; provided, however, that none of the Trustee, the Custodian, the
Special Servicer or the Master Servicer shall be responsible for determining
whether any assignment is legally sufficient or in recordable form.
"Assumed Monthly Payment": (a) With respect to any Balloon Mortgage
Loan (other than a Balloon Mortgage Loan that has become a REO Mortgage Loan)
for its Maturity Date (provided that such Mortgage Loan has not been paid in
full, and no other Liquidation Event has occurred in respect thereof, on or
before the end of the Collection Period in which such Maturity Date occurs) and
for any subsequent Due Date therefor as of which such Mortgage Loan remains
outstanding and part of the Trust Fund, if no Monthly Payment (other than the
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related delinquent Balloon Payment) is otherwise due for such Due Date, the
scheduled monthly payment of principal and/or interest deemed to be due in
respect thereof for such Due Date equal to the Monthly Payment (other than any
related delinquent Balloon Payment) that would have been due in respect of such
Mortgage Loan on such Due Date if it had been required to continue to accrue
interest in accordance with its terms, and to pay principal in accordance with
the amortization schedule (if any), in effect immediately prior to, and without
regard to the occurrence of, its most recent scheduled Maturity Date; and (b)
with respect to any REO Mortgage Loan, for any Due Date therefor as of which the
related REO Property remains part of the Trust Fund, the scheduled monthly
payment of principal and/or interest deemed to be due in respect thereof on such
Due Date equal to the Monthly Payment (or, in the case of a Balloon Mortgage
Loan described in clause (a) of this definition, the Assumed Monthly Payment)
that was due in respect of the subject Mortgage Loan for the last Due Date prior
to its becoming an REO Mortgage Loan.
"Authenticating Agent": Any authenticating agent appointed by
the Trustee pursuant to Section 8.11.
"Available Funds": Subject to Section 9.2(b), (x) With respect to
REMIC I and each Distribution Date, (a) all amounts on deposit in the Collection
Account as of the close of business on the related Determination Date, exclusive
of any portion thereof that represents one or more of the following:
(i) Monthly Payments collected, but due on a Due Date occurring
in a Collection Period subsequent to the related Collection Period;
(ii) Prepayment Premiums;
(iii) amounts that are payable or reimbursable to any Person other
than a Certificateholder pursuant to clauses (ii) through (x) of Section
3.6(a) (including amounts payable to the Master Servicer, the Special Servicer
or the Trustee as compensation or in reimbursement of outstanding Advances and
amounts payable in respect of Additional Trust Fund Expenses);
(iv) Deferred Interest;
(v) Excess Liquidation Proceeds; and
(vi) amounts deposited in the Collection Account in error, plus
(b) to the extent not already included in clause (a), any P&I Advances and
Compensating Interest Payments made with respect to such Distribution Date; plus
(c) if the Distribution Date occurs during March of any year, the Interest
Reserve Amounts in the Interest Reserve Account; less
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(d) if the Distribution Date occurs during February of any year or January of
any non-leap year, the Interest Reserve Amounts for the Interest Reserve Loans
to be deposited in the Interest Reserve Account;
(y) with respect to REMIC II and any Distribution Date, all amounts deemed
distributed on the REMIC I Regular Interests out of the Available Funds for
REMIC I for such Distribution Date; and
(z) with respect to REMIC III and any Distribution Date, all amounts deemed
distributed on the REMIC II Regular Interests out of the Available Funds for
REMIC II for such Distribution Date.
"Balloon Loan": A Mortgage Loan which provides for monthly payments
of principal based on an amortization schedule longer than its remaining term,
thereby leaving substantial principal amounts due and payable on its Maturity
Date.
"Balloon Payment": With respect to each Balloon Loan, the scheduled
payment of principal and interest due on the Maturity Date of such Balloon Loan
which, pursuant to the related Note, is equal to the entire remaining principal
balance of such Balloon Loan, plus accrued interest thereon.
"Borrower": With respect to each Mortgage Loan, any obligor on
any related Note.
"Book-Entry Certificate": Any Certificate registered in the name
of the Securities Depository or its nominee.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in the States of New York, ____________,
_____________, Pennsylvania or Missouri are authorized or obligated by law,
executive order or governmental decree to be closed.
"Cash Deposit": An amount equal to all cash payments of principal
and interest received by the applicable Seller in respect of the Mortgage Loans
two or more Business Days prior to the Closing Date which are due after the
Cut-off Date, which amount is to be deposited in the Collection Account by the
Depositor pursuant to Section 2.1.
"CEDEL": Citibank, N.A., as depositary for CEDEL Bank, S.A., or
its successor in such capacity.
"Certificate": Any Class [[A-1A]], Class [A-1B], Class [S], Class
[A-2], Class [A-3], Class [A-4], Class [B-1], Class [B-2], Class [B-3], Class
[B-4], Class [B-5], Class [B-6], Class [B-7], Class [B-8], Class [C], Class [D],
Class [E], Class [R-I], Class [R-II] or Class [R-III] Certificate issued,
authenticated and delivered hereunder.
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"Certificate Balance": With respect to: (i) all of the Certificates
of any Class of REMIC III Regular Certificates (other than the Class [S]
Certificates) (a) on or prior to the first Distribution Date, an amount equal to
the aggregate initial Certificate Balance of such Class, as specified in the
Preliminary Statement hereto, and (b) as of any date of determination after the
first Distribution Date, the Certificate Balance of such Class of Certificates
on the Distribution Date immediately prior to such date of determination, after
application of the distributions of principal made thereon, and allocation of
the Realized Losses and Expense Losses made thereto, on such prior Distribution
Date; and (ii) any particular REMIC III Regular Certificate (other than a Class
[S] Certificate), (a) on or prior to the first Distribution Date, an amount
equal to the initial Certificate Balance reflected on the face of such
Certificate, and (b) as of any date of determination after the first
Distribution Date, the Certificate Balance of such Certificate on the
Distribution Date immediately prior to such date of determination, after
application of the distributions of principal made thereon, and allocation of
the Realized Losses and Expense Losses made thereto, on such prior Distribution
Date. The Class [S] Certificates have no Certificate Balance.
"Certificate Owner": With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate as reflected on the books
of the Securities Depository or on the books of a Securities Depository
Participant or on the books of an indirect participating brokerage firm for
which a Securities Depository Participant acts as agent.
"Certificate Register" and "Certificate Registrar": The register
maintained and the registrar appointed pursuant to Section 5.2(a).
"Certificate Purchase Agreement": means the Certificate Purchase
Agreement dated __________,____ between Depositor and ___________________, as
the initial purchaser.
"Certificateholder": With respect to any Certificate, the Person in
whose name such Certificate is registered in the Certificate Register; provided,
however, that, except to the extent provided in the next proviso, solely for the
purpose of giving any consent or taking any action pursuant to this Agreement,
any Certificate beneficially owned by the Depositor, the Master Servicer, the
Special Servicer, the Trustee, a Manager of a Mortgaged Property, a Borrower or
any Person known to a Responsible Officer of the Certificate Registrar to be an
Affiliate of the Depositor, the Trustee, the Master Servicer or the Special
Servicer shall be deemed not to be outstanding and the Voting Rights to which it
is entitled shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent or take any
such action has been obtained; provided, however, that (i) for purposes of
obtaining any consent, approval, direction or waiver of Certificateholders
pursuant to this Agreement, any Certificates beneficially owned by the Master
Servicer or the Special Servicer or an Affiliate thereof shall be deemed to be
outstanding, provided, that, such consent, approval, direction or waiver does
not relate to compensation of the Master Servicer or the Special Servicer or
benefit the Master Servicer or the Special Servicer (in its capacity as such) or
any Affiliate thereof (other than solely in its capacity as Certificateholder)
in any material respect, in which case such Certificate shall be deemed not to
be outstanding; (ii) for purposes of obtaining the consent of Certificateholders
to any action proposed to be taken by the Special Servicer with respect to a
Specially Serviced Mortgage Loan, any Certificates beneficially owned by the
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Master Servicer, the Special Servicer or an Affiliate thereof shall be deemed to
be outstanding notwithstanding clause (i) above; and (iii) for any election of
the Controlling Class Representative or the appointment or removal of a Special
Servicer pursuant to Section 3.27(e), any Certificates beneficially owned by the
Master Servicer, the Special Servicer or an Affiliate thereof shall be deemed to
be outstanding. For purposes of obtaining the consent of Certificateholders to
any action with respect to a particular Mortgage Loan proposed to be taken by
the Master Servicer or Special Servicer, any Certificates beneficially owned by
the Affiliates of the related Borrower, the related Manager, or Affiliates of
the related Manager shall not be deemed to be outstanding.
The Certificate Registrar shall be entitled to request and conclusively
rely upon a certificate of the Depositor, the Master Servicer or the Special
Servicer in determining whether a Certificate is registered in the name of such
Person or is beneficially owned by such Person. All references herein to
"Certificateholders" or "Holders" shall reflect the rights of Certificate Owners
only insofar as they may indirectly exercise such rights through the Securities
Depository and the Securities Depository Participants (except as otherwise
specified herein), it being herein acknowledged and agreed that the parties
hereto shall be required to recognize as a "Certificateholder" or "Holder" only
the Person in whose name a Certificate is registered in the Certificate
Register.
Notwithstanding the foregoing, solely for purposes of providing or
distributing any reports, statements or other information required or permitted
to be provided to a Certificateholder hereunder, a Certificateholder shall
include any Certificate Owner, or any Person identified by a Certificate Owner
as a prospective transferee of a Certificate beneficially owned by such
Certificate Owner but only if the Trustee or another party hereto furnishing
such report, statement or information has been provided with the name and
address of the Certificate Owner of the related Certificate or the Person
identified as a prospective transferee thereof by the Depositor or a
Certificateholder. For purposes of the foregoing, the Depositor, the Master
Servicer, the Special Servicer, the Trustee, the Paying Agent or other such
Person may rely, without limitation, on a participant listing from the
Securities Depository or statements that on their face appear to be statements
from a participant in the Securities Depository to such Person indicating that
such Person beneficially owns Certificates.
"Class": With respect to Certificates or REMIC II Regular Interests,
all of the Certificates or REMIC II Regular Interests bearing the same
alphabetical and numerical class designation.
"Class [A-1A] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-1 hereto.
"Class [A-1A] Pass-Through Rate": With respect to any
Distribution Date, a per annum rate equal to ____%.
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"Class [A-1B] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-2 hereto.
"Class [A-1B] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
"Class [A-2] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-4 hereto.
"Class [A-2] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
"Class [A-3] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-5 hereto.
"Class [A-3] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
"Class [A-4] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-6 hereto.
"Class [A-4] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
"Class [B-1] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-7 hereto.
"Class [B-1] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
"Class [B-2] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-8 hereto.
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"Class [B-2] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
"Class [B-3] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-9 hereto.
"Class [B-3] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
"Class [B-4] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-10 hereto.
"Class [B-4] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
"Class [B-5] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-11 hereto.
"Class [B-5] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
"Class [B-6] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-12 hereto.
"Class [B-6] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
"Class [B-7] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-13 hereto.
"Class [B-7] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
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"Class [B-8] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-14 hereto.
"Class [B-8] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
"Class [C] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-15 hereto.
"Class [C] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
"Class [D] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-16 hereto.
"Class [D] Pass-Through Rate": With respect to any Distribution
Date, a per annum rate equal to [the Adjusted REMIC II Remittance Rate for the
related REMIC II Regular Interest].
"Class [E] Certificates": Any one of the Certificates executed and
authenticated by the Trustee or Authenticating Agent on behalf of the Depositor
in substantially the form set forth in Exhibit A-17 hereto and entitled to the
distributions payable thereto pursuant to Section 4.7. The Class [E]
Certificates have no Pass-Through Rate, Certificate Balance or Notional Amount.
The Class [E] Certificates represent a beneficial ownership interest in the
Grantor Trust Assets.
"Class Interest Shortfall": With respect to any Class of REMIC III
Regular Certificates and any Distribution Date (except the initial Distribution
Date, with respect to which the Class Interest Shortfall for each such Class
will equal zero), the sum of (a) the excess, if any, of (i) all Distributable
Certificate Interest in respect of such Class of Certificates for the
immediately preceding Distribution Date, over (ii) all distributions of
Distributable Certificate Interest made with respect to such Class of
Certificates on the immediately preceding Distribution Date pursuant to Section
4.3 and (b), to the extent permitted by applicable law, interest for the related
Interest Accrual Period accrued at the applicable Pass-Through Rate (or, in the
case of the Class [S] Certificates, at the weighted average of the Pass-Through
Rates for the Principal Balance Certificates, weighted on the basis of the
respective aggregate Certificate Balances of the Principal Balance Certificates
as of the close of business on the preceding Distribution Date (or, in the case
of the first Distribution Date, as of the Closing Date)) on the amount of any
such excess described in the immediately preceding clause (a). With respect to
any Class of Certificates, the interest referred to in clause (b) of the
preceding sentence shall accrue on the basis of a 360-day year consisting of
twelve 30 day months.
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"Class Prepayment Percentage": With respect to any Prepayment
Premium paid with respect to any Mortgage Loan on any Distribution Date and any
of the Class [[A-1A]], Class [A-1B], Class [A-2], Class [A-3], Class [A-4],
Class [B-1] and Class [B-2] Certificates, the percentage obtained by dividing
the portion, if any, of the Principal Distribution Amount distributed to the
Holders of the respective Class of Certificates on such Distribution Date by the
total Principal Distribution Amount distributed to the Holders of all such
Classes of Certificates on such Distribution Date.
"Class [R-I] Certificate": Any Certificate executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-18 hereto. The Class
[R-I] Certificates have no Pass-Through Rate or Certificate Balance.
"Class [R-II] Certificate": Any Certificate executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-19 hereto. The Class
[R-II] Certificates have no Pass-Through Rate or Certificate Balance.
"Class [R-III] Certificate": Any Certificate executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-20 hereto. The Class
[R-III] Certificates have no Pass-Through Rate or Certificate Balance.
"Class [S] Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-3 hereto.
"Class [S] Interest Amount": With respect to any Distribution Date
and the related Interest Accrual Period, interest equal to the product of (i)
one-twelfth of the Class [S] Pass-Through Rate for such Distribution Date, and
(ii) the Class [S] Notional Amount for such Distribution Date.
"Class [S] Pass-Through Rate": With respect to any Distribution
Date, the excess, if any, of (i) the weighted average of the respective REMIC II
Remittance Rates for such Distribution Date in respect of all of the REMIC II
Regular Interests, over (ii) the weighted average of the respective Adjusted
REMIC II Remittance Rates for such Distribution Date in respect of all of the
REMIC II Regular Interests. For purposes of the foregoing, the relevant
weighting shall be based on the Uncertificated Principal Balance of each REMIC
II Regular Interest immediately prior to the subject Distribution Date.
"Class [S] Portion": When used with respect to the Uncertificated
Accrued Interest in respect of any REMIC II Regular Interest for any
Distribution Date, the portion of such Uncertificated Accrued Interest that is
equal to the product of (a) the entire amount of such Uncertificated Accrued
Interest, multiplied by (b) a fraction (not less than zero or greater than one),
the numerator of which is the excess, if any, of the REMIC II Remittance Rate in
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respect of such REMIC II Regular Interest for such Distribution Date, over the
Adjusted REMIC II Remittance Rate in respect of such REMIC II Regular Interest
for such Distribution Date, and the denominator of which is the REMIC II
Remittance Rate in respect of such REMIC II Regular Interest for such
Distribution Date; provided that if the aggregate Class [S] Portion of the
Uncertificated Accrued Interest in respect of all the REMIC II Regular Interests
for any Distribution Date, calculated without regard to this proviso, would
exceed an amount equal to the aggregate Accrued Certificate Interest in respect
of the Class [S] Certificates for such Distribution Date, then the Class [S]
Portion of the Uncertificated Accrued Interest in respect of each REMIC II
Regular Interest for such Distribution Date shall be proportionately reduced
until the aggregate Class [S] Portion of the Uncertificated Accrued Interest in
respect of all the REMIC II Regular Interests for such Distribution Date is
equal to the aggregate Accrued Certificate Interest in respect of the Class [S]
Certificates for such Distribution Date. When used with respect to the
Uncertificated Distributable Interest in respect of any REMIC II Regular
Interest for any Distribution Date, the portion of such Uncertificated
Distributable Interest that is equal to (a) the Class [S] Portion of the
Uncertificated Accrued Interest in respect of such REMIC II Regular Interest for
such Distribution Date, reduced (to not less than zero) by (b) the product of
(i) any portion of the Net Aggregate Prepayment Interest Shortfall for such
Distribution Date that is allocable to such REMIC II Regular Interest in
accordance with the definition of "Uncertificated Distributable Interest",
multiplied by (ii) a fraction, the numerator of which is equal to the Class [S]
Portion of the Uncertificated Accrued Interest in respect of such REMIC II
Regular Interest for such Distribution Date, and the denominator of which is
equal to the entire amount of the Uncertificated Accrued Interest in respect of
such REMIC II Regular Interest for such Distribution Date, and increased by (c)
the Class [S] Portion of any Uncertificated Distributable Interest in respect of
such REMIC II Regular Interest for the immediately preceding Distribution Date
that was not deemed paid on the immediately preceding Distribution Date pursuant
to Section 4.2, together with one month's interest (calculated on the basis of a
360-day year consisting of twelve 30-day months) on such unpaid Class [S]
Portion of such Uncertificated Distributable Interest at the weighted average of
the respective Adjusted REMIC II Remittance Rates of the REMIC II Regular
Interests for the current Distribution Date, weighted on the basis of their
respective Uncertificated Principal Balances immediately prior to the current
Distribution Date.
"Closing Date": _________,____.
"CMSA": The Commercial Mortgage Securities Association, or any
association or organization that is a successor thereto.
"CMSA SIP": Shall include five electronic files ((1) Loan Set-up
File, (2) Loan Periodic Update File, (3) Property File, (4) Bond File and (5)
Collateral File) and eight surveillance reports ((1) Watch List Report, (2)
Delinquent Loan Status Report, (3) REO Status Report, (4) Comparative Financial
Status Report, (5) Historical Loan Modification Report, (6) Historical Loss
Estimate Report, (7) Operating Statement Analysis Report and (8) NOI Adjustment
Worksheet).
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"Code": The Internal Revenue Code of 1986, as amended from time to
time, any successor statute thereto, and any temporary or final regulations of
the United States Department of the Treasury promulgated pursuant thereto.
"Collection Account": The segregated account or accounts created and
maintained by the Master Servicer pursuant to Section 3.5(a), which shall be
entitled "____________________, as Trustee, in trust for Holders of PNC Mortgage
Acceptance Corp., Commercial Mortgage Pass-Through Certificates, Series
_________, Collection Account," and which shall be an Eligible Account.
"Collection Period": With respect to any Distribution Date and any
Mortgage Loan, the period beginning on the first day following the Determination
Date in the month preceding the month in which such Distribution Date occurs
(or, in the case of the Distribution Date occurring in ___________, on the day
after the Cut-off Date) and ending on and including the Determination Date in
the month in which such Distribution Date occurs.
"_______ Loans": The Mortgage Loans transferred and assigned by
_______ to the Depositor pursuant to the _______ Mortgage Loan Purchase
Agreement.
"_______ Mortgage Loan Purchase Agreement": The Mortgage Loan
Purchase and Sale Agreement dated as of __________,____ between the Depositor
and _______.
"Commission": The Securities and Exchange Commission of the
United States of America.
"Compensating Interest Payments": With respect to any Distribution
Date, any payments required to be made by the Master Servicer pursuant to
Section 3.25 to cover Prepayment Interest Shortfalls.
"Controlling Class": The most subordinate Class of Principal Balance
Certificates outstanding at any time of determination (or, if the then aggregate
Certificate Balance of such Class of Certificates is less than 25% of the
initial aggregate Certificate Balance thereof and there is a more senior Class
of Principal Balance Certificates then outstanding with an aggregate Certificate
Balance that is at least equal to 25% of the initial aggregate Certificate
Balance thereof, the next most subordinate Class of Principal Balance
Certificates). If no Class of Principal Balance Certificates has at least 25% of
its initial aggregate Certificate Balance then outstanding, the Controlling
Class will be the most subordinate Class of Principal Balance Certificates still
outstanding. For purposes of determining the Controlling Class, the Class [A-1A]
and Class [A-1B] Certificates will be treated as a single Class of Certificates,
the Subordinate Certificates will be subordinate to the Class [A-1A] and Class
[A-1B] Certificates, and each Class of Subordinate Certificates will be
subordinate to each other Class of Subordinate Certificates, if any, with an
earlier alphabetical (and, if the alphabetical designations are the same, an
earlier numerical) Class designation. The existence of an Appraisal Reduction
shall have no effect on the determination of the Controlling Class. As of the
Closing Date, the Controlling Class will be the Class [D] Certificates.
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"Controlling Class Representative": As defined in Section 3.26.
"Corrected Mortgage Loan": Any Mortgage Loan which is no longer a
Specially Serviced Mortgage Loan pursuant to the first proviso to the definition
of the term "Specially Serviced Mortgage Loan" as a result of the curing of any
event of default under such Specially Serviced Mortgage Loan through a
modification, restructuring or workout negotiated by the Special Servicer and
evidenced by a signed writing.
"CPR": An assumed constant rate of prepayment each month (which is
quoted on a per annum basis) relative to the then-outstanding principal balance
of a pool mortgage loans for the life of such mortgage loans.
"Cross-Collateralized Group": Either a group of Mortgage Loans which
are cross-defaulted or cross-collateralized with one another or an indebtedness
evidenced by a single Note and secured by two or more Mortgaged Properties,
which are identified as separate Mortgage Loans on the Mortgage Loan Schedule
and treated as separate Mortgage Loans for purposes of this Agreement.
"Cross-Collateralized Loan": Each Mortgage Loan which is
included in a certain Cross-Collateralized Group.
"Current Principal Distribution Amount": With respect to the
Mortgage Loans for any Distribution Date, an amount equal to the aggregate of:
(a) the principal portions of all Monthly Payments (other than
Balloon Payments) and any Assumed Monthly Payments due or deemed due, as the
case may be, in respect of the Mortgage Loans, including without limitation any
REO Mortgage Loans, for their respective Due Dates occurring during the related
Collection Period; and
(b) that portion of all payments (including without limitation
Principal Prepayments and Balloon Payments), Liquidation Proceeds, Insurance
Proceeds, any payments of Repurchase Price, payments of Substitution Shortfall
Amounts, Net REO Proceeds and other collections that were received on or in
respect of the Mortgage Loans (including without limitation any REO Mortgage
Loans) or received on or in respect of any related REO Properties, during the
related Collection Period and were identified and applied by the Master Servicer
in accordance with Section 1.2 as payments or other recoveries of principal of
such Mortgage Loans (including, without limitation, any REO Mortgage Loans), in
each case net of any portion of such amounts that represents (i) a payment or
other recovery of the principal portion of any Monthly Payment (other than a
Balloon Payment) due, or of the principal portion of any Assumed Monthly Payment
deemed due, in respect of any such Mortgage Loan on a Due Date during or prior
to the related Collection Period and not previously paid or recovered or (ii) an
early payment (other than in the form of a Principal Prepayment) of the
principal portion of any Monthly Payment due in respect of any such Mortgage
Loan on a Due Date subsequent to the end of the related Collection Period.
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"Custodial Agreement": The Custodial Agreement, if any, in effect
from time to time between the Custodian named therein, the Master Servicer and
the Trustee, substantially in the form of Exhibit F hereto, as the same may be
amended or modified from time to time in accordance with the terms thereof.
"Custodian": Any Custodian appointed pursuant to Section 8.12 and,
unless the Trustee is Custodian, named pursuant to any Custodial Agreement. The
Custodian may (but need not) be the Trustee or the Master Servicer or any
Affiliate of the Trustee or the Master Servicer, but may not be the Depositor.
"Cut-off Date": __________,____.
"Default Interest": With respect to any Mortgage Loan, interest
accrued on such Mortgage Loan at the excess of the Default Rate over the
Mortgage Rate, in each case excluding any portion thereof that represents
Deferred Interest.
"Default Rate": With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan following any event of default
on such Mortgage Loan, including a default in the payment of a Monthly Payment
or a Balloon Payment, as such rate is set forth in the Mortgage Loan Schedule.
"Deferred Interest": With respect to each Hyper-Amortization Loan,
interest accrued on such Hyper-Amortization Loan at the related Excess Rate plus
interest thereon to the extent permitted by applicable law at the related
Revised Interest Rate.
"Definitive Certificate": As defined in Section 5.3(a).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"Depositor": PNC Mortgage Acceptance Corp., a Missouri corporation
and its successors and assigns.
"Determination Date": With respect to each Distribution Date, the
fourth calendar day of the month in which the Distribution Date occurs or, if
that day is not a Business Day, the first Business Day immediately preceding
such day.
"Directly Operate": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof that are not customarily
provided to tenants in connection with the rental of space for occupancy only
within the meaning of Treasury Regulations Section 1.512(h)-1(c)(5), the
management or operation of such REO Property, the holding of such REO Property
primarily for sale to customers or any use of such REO Property in a trade or
business conducted by the Trust Fund other than through an Independent
Contractor; provided, however, that the Special Servicer, on behalf of the Trust
Fund, shall not be considered to Directly Operate an REO Property solely because
the Special Servicer, on behalf of the Trust Fund, establishes rental terms,
chooses tenants, enters into or renews leases,
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deals with taxes and insurance, or makes decisions as to repairs or capital
expenditures with respect to such REO Property.
"Discount Rate": The rate which, when compounded monthly, is
equivalent to the Treasury Rate when compounded semi annually. The "Treasury
Rate" is the yield calculated by the linear interpolation of the yields, as
reported in Federal Reserve Statistical Release H.15 Selected Interest Rates
under the heading "U.S. government securities/Treasury constant maturities" for
the week ending prior to the date of the relevant Principal Prepayment, of U.S.
Treasury constant maturities with a maturity date (one longer and one shorter)
most nearly approximating the maturity date (or the Hyper-Amortization Date, if
applicable) of the Mortgage Loan prepaid. If Release H.15 is no longer
published, the Trustee shall select a comparable publication to determine the
Treasury Rate.
"Disposition Fee": With respect to any Specially Serviced Mortgage
Loan or REO Property which is sold or transferred or otherwise liquidated
(except in connection with (i) a repurchase under Section 2.3, (ii) the
termination of the Trust pursuant to Section 9.1(b) or (iii) the purchase of a
Mortgage Loan by the Controlling Class Representative, the Master Servicer or
the Special Servicer pursuant to Section 3.18), an amount equal to the product
of (I) the excess, if any of (a) the Liquidation Proceeds of such Specially
Serviced Mortgage Loan or REO Property over (b) any broker's commission and
related brokerage referral fees, and (II) ___ %.
"Disqualified Non-U.S. Person": With respect to a Class [R-I], Class
[R-II] or Class [R-III] Certificate, any Non-U.S. Person or agent thereof other
than (i) a Non-U.S. Person that holds the Class [R-I], Class [R-II] or Class
[R-III] Certificate in connection with the conduct of a trade or business within
the United States and has furnished the transferor and the Certificate Registrar
with an effective IRS Form 4224 or (ii) a Non-U.S. Person that has delivered to
both the transferor and the Certificate Registrar an Opinion of Counsel to the
effect that the transfer of the Class [R-I], Class [R-II] or Class [R-III]
Certificate to it is in accordance with the requirements of the Code and the
regulations promulgated thereunder and that such transfer of the Class [R-I],
Class [R-II] or Class [R-III] Certificate will not be disregarded for federal
income tax purposes.
"Disqualified Organization": Either (a) the United States, a State
or any political subdivision thereof, any possession of the United States, or
any agency or instrumentality of any of the foregoing (other than an
instrumentality that is a corporation if all of its activities are subject to
tax and a majority of its board of directors is not selected by any such
governmental unit), (b) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (c) an organization that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by Code Section 511 on unrelated business taxable income) on any excess
inclusions (as defined in Code Section 860E(c)(1)) with respect to the Class
[R-I], Class [R-II] or Class [R-III] Certificates (except certain farmers'
cooperatives described in Code Section 521), (d) rural electric and telephone
cooperatives described in Code Section 1381(a)(2), or (e) any other Person so
designated by the Certificate Registrar based upon an Opinion of Counsel to the
effect that any Transfer to such Person may result in an Adverse REMIC Event.
The terms "United States," "State" and "International Organization" shall have
the meanings set forth in Code Section 7701 or successor provisions.
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"Distributable Certificate Interest": With respect to any Class of
REMIC III Regular Certificates for each Distribution Date, the Accrued
Certificate Interest in respect of such Class of Certificates for such
Distribution Date, reduced (to not less than zero) by that portion, if any, of
the Net Aggregate Prepayment Interest Shortfall, if any, for such Distribution
Date allocated to such Class of Certificates as set forth below, and increased
by any Class Interest Shortfall in respect of such Class of Certificates for
such Distribution Date. The Net Aggregate Prepayment Interest Shortfall, if any,
for each Distribution Date shall be allocated on such Distribution Date among
the respective Classes of REMIC III Regular Certificates, pro rata, in the ratio
that the Accrued Certificate Interest with respect to any such Class of
Certificates for such Distribution Date bears to the total Accrued Certificate
Interest with respect to all Classes of REMIC III Regular Certificates for such
Distribution Date.
"Distribution Account": The segregated account or accounts created
and maintained as a separate trust account or accounts by the Trustee pursuant
to Section 3.5(b), which shall be entitled "____________________, as Trustee, in
trust for Holders of PNC Mortgage Acceptance Corp. Commercial Mortgage
Pass-Through Certificates, Series _________, Distribution Account" and which
shall be an Eligible Account.
"Distribution Date": For any month is the later of (i) the ___
calendar day of the month or, if such day is not a Business Day, the next
succeeding Business Day and (ii) the _____ Business Day after the Determination
Date occurring in such month, commencing in _________.
"Due Date": With respect to any Collection Period and any Mortgage
Loan, the date on which scheduled payments are due on such Mortgage Loan
(without regard to grace periods), such date being for all Mortgage Loans the
____ day of each month.
"Eligible Account": means (i) an account or accounts in which funds
will be held therein for more than 30 days which are maintained with a federal
or state chartered depository institution or trust company, the long-term
unsecured debt obligations of which are rated "___" or better by _______, (or,
if not rated by _______, then "___" or better by ____ or otherwise approved by
_______) and "___" or better by ____ if rated by ____ (or, if not so rated by
____, then otherwise approved by ____), in each case, at the time of any deposit
therein; or (ii) an account or accounts in which funds will be held therein for
30 days or less which are maintained with a federal or state chartered
depository institution or trust company, the short-term unsecured debt
obligations of which are rated "___" or better by _______ (or, if not rated by
_______, then "___" or better by ____ or otherwise approved by _______) and
"___" or better by ____ (or, if not so rated by ____, then otherwise approved by
____), in each case at the time of any deposit therein; or (iii) a segregated
trust account or accounts maintained with the corporate trust department of a
federally or state chartered depository institution or trust company acting in
its fiduciary capacity, which may be the Master Servicer (or any Affiliate of
the Master Servicer) or Trustee, provided any such institution (a) has a
combined capital and surplus of at least $50,000,000, (b) is subject to
supervision or examination by a federal or state authority, and (c) if it is a
state-chartered institution, is subject to regulations regarding fiduciary funds
on deposit substantially similar to 12 C.F.R. Section 9.10(b); or (iv) any
account, the establishment and
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maintenance of which is the subject of a Rating Agency Confirmation. Eligible
Accounts may bear interest.
"Eligible Investor": (i) A Person, reasonably believed by the
transferor to be a Qualified Institutional Buyer, that is purchasing Privately
Placed Certificates for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the offer, sale or transfer is
being made in reliance on Rule 144A promulgated under the 1933 Act or (ii) with
respect to Privately Placed Certificates (other than the Class [E] Certificates
and the Residual Certificates), an Institutional Accredited Investor.
"Environmental Insurance Policy": With respect to any Mortgaged
Property or REO Property, any insurance policy covering pollution conditions
and/or other environmental conditions that is maintained from time to time in
respect of such Mortgaged Property or REO Property, as the case may be, for the
benefit of, among others, the Trustee on behalf of the Certificateholders.
"ERISA": The Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
"Escrow Account": As defined in Section 3.4(b).
"Escrow Payment": Any payment made by any Borrower to the Master
Servicer for the account of such Borrower for application toward the payment of
taxes, insurance premiums, assessments and similar items in respect of the
related Mortgaged Property.
"Euroclear": Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System, or its successor in such capacity.
"Event of Default": As defined in Section 7.1.
"Excess Liquidation Proceeds": The excess of (i) all Liquidation
Proceeds from the sale or liquidation of a Mortgage Loan or related REO
Property, net of any related Liquidation Expenses and any related Advances and
interest thereon over (ii) the amount needed to pay off the Mortgage Loan in
full.
"Excess Liquidation Proceeds Account": The segregated account or
accounts created and maintained by the Trustee pursuant to Section 3.5(f), which
shall be entitled "____________________, as Trustee, in trust for Holders of PNC
Mortgage Acceptance Corp., Commercial Mortgage Pass-Through Certificates, Series
_________, Excess Liquidation Proceeds Account," and which shall be an Eligible
Account.
"Excess Rate": With respect to each Hyper-Amortization Loan, the
excess of the related Revised Interest Rate over the related Mortgage Rate.
"Expense Loss": A loss realized upon payment by the Trust Fund of
an Additional Trust Fund Expense that was not otherwise subject to a
Servicing Advance or was the
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subject of a determination that such Servicing Advance, if made, would be a
Nonrecoverable Advance.
"FDIC": The Federal Deposit Insurance Corporation, or any
successor thereto.
"FHA": The Federal Housing Administration.
"FHLMC": The Federal Home Loan Mortgage Corporation, or any
successor thereto.
"Filing Defect": With respect to any Mortgage Loan, the occurrence
of any of the following on _______________ which remains uncured or unremedied:
(a) the Trustee Mortgage File for such Mortgage Loan does not contain each
recorded or filed document or a copy thereof as required in clause (ii), (iv) or
(vii) of the second paragraph of Section 2.1 because an original of such
document was not delivered by or on behalf of the applicable Seller either as a
recorded or filed document or in proper form for recording or filing in the
appropriate public recording or filing office, was lost, was returned unrecorded
or unfiled as a result of an actual or purported defect therein or has not been
returned from the applicable public recording or filing office; or (b) the
Trustee Mortgage File for such Mortgage Loan does not contain an original or
copy of the related lender's title insurance policy, together with all
endorsements or riders thereto that were issued with or subsequent to the
issuance of such policy, for any reason; provided that such omission, in the
case of either clause (a) or (b), would materially and adversely affect the
ability of the Trustee, the Master Servicer or the Special Servicer to enforce
the liens and security interests securing such Mortgage Loan and the priority
thereof on a prompt basis or the value of such Mortgage Loan as of the time of
determination.
"Final Recovery Determination": With respect to any REO Mortgage
Loan, Specially Serviced Mortgage Loan or Mortgage Loan subject to repurchase by
the related Seller or the Third Party Originator as contemplated by Section 2.3,
the recovery of all Insurance Proceeds, Liquidation Proceeds, the related
Repurchase Price and other payments or recoveries (including proceeds of the
final sale of any related REO Property) which the Special Servicer, in its
reasonable judgment as evidenced by a certificate of a Servicing Officer
delivered to the Trustee, the Custodian and the Controlling Class
Representative, expects to be finally recoverable. The Master Servicer shall
maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination until the earlier of (i) its termination as Master Servicer
hereunder and the transfer of such records to a successor servicer and (ii) five
years following the termination of the Trust Fund.
"FNMA": The Federal National Mortgage Association, or any
successor thereto.
"Grantor Trust": As defined in Preliminary Statement.
"Grantor Trust Assets": As defined in Section 10.5.
"Grantor Trust Collection Account": The segregated account or
accounts created and maintained as a separate trust account or accounts by
the Master Servicer pursuant to Section
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3.5(c), which shall be entitled "____________________, as Trustee, in trust for
Holders of PNC Mortgage Acceptance Corp. Commercial Mortgage Pass-Through
Certificates, Series _________, Grantor Trust Collection Account " and which
shall be an Eligible Account. The Grantor Trust Collection Account shall not be
an asset of REMIC I, REMIC II or REMIC III formed hereunder.
"Grantor Trust Distribution Account": The segregated account or
accounts created and maintained as a separate trust account or accounts by the
Trustee pursuant to Section 3.5(d), which shall be entitled
"____________________, as Trustee, in trust for Holders of PNC Mortgage
Acceptance Corp. Commercial Mortgage Pass-Through Certificates, Series
_________, Grantor Trust Distribution Account " and which shall be an Eligible
Account. The Grantor Trust Distribution Account shall not be an asset of REMIC
I, REMIC II or REMIC III formed hereunder.
"Group Environmental Insurance Policy": Each Environmental Insurance
Policy that is maintained from time to time in respect of more than one
Mortgaged Property or REO Property.
"Hazardous Materials": Any dangerous, toxic or hazardous pollutants,
chemicals, wastes, or substances, including, without limitation, those so
identified pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Section 9601 et seq., or any other environmental
laws now existing, and specifically including, without limitation, asbestos and
asbestos-containing materials, polychlorinated biphenyls, radon gas, petroleum
and petroleum products, urea formaldehyde and any substances classified as being
"in inventory", "usable work in process" or similar classification which would,
if classified as unusable, be included in the foregoing definition.
"Holder": With respect to any Certificate, a Certificateholder; with
respect to any REMIC I Regular Interest or REMIC II Regular Interest, the
Trustee.
"Hyper-Amortization Date": With respect to any Hyper-Amortization
Loan, the date specified on the related Mortgage Note, as of which Deferred
Interest shall begin to accrue on such Mortgage Loan, which date is prior to the
Stated Maturity Date for such Mortgage Loan.
"Hyper-Amortization Loan": A Mortgage Loan that provides for the
accrual of Deferred Interest thereon if such Mortgage Loan is not paid in full
on or prior to its Hyper-Amortization Date.
"Indemnified Party": As defined in Section 8.5(c).
"Independent": When used with respect to any specified Person, any
other Person who (i) does not have any direct financial interest, or any
material indirect financial interest, in any of the Manager, the Depositor, the
Master Servicer, the Special Servicer, Trustee, any Borrower or any Affiliate
thereof, and (ii) is not connected with any such specified Person as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions.
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"Independent Contractor": Either (i) any Person that would be an
"independent contractor" with respect to the Trust Fund within the meaning of
Section 856(d)(3) of the Code if the Trust Fund were a real estate investment
trust (except that the ownership tests set forth in that section shall be
considered to be met by any Person that owns, directly or indirectly, 35% or
more of any Class or 35% or more of the aggregate value of all Classes of
Certificates), provided that the Trust Fund does not receive or derive any
income from such Person and the relationship between such Person and the Trust
Fund is at arm's length, all within the meaning of Treasury Regulations Section
1.856-4(b)(5) (except that the Special Servicer shall not be considered to be an
Independent Contractor under the definition in this clause (i) unless an Opinion
of Counsel (obtained at the expense of the Special Servicer) addressed to the
Special Servicer and the Trustee has been delivered to the Trustee to the effect
that the Special Servicer meets the requirements of such definition) or (ii) any
other Person (including the Special Servicer) if the Special Servicer, on behalf
of itself and the Trustee, has received an Opinion of Counsel (obtained at the
expense of the party seeking to be deemed an Independent Contractor) to the
effect that the taking of any action in respect of any REO Property by such
Person, subject to any conditions therein specified, that is otherwise herein
contemplated to be taken by an Independent Contractor will not cause such REO
Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code) or cause any income
realized with respect of such REO Property to fail to qualify as Rents from Real
Property (provided that such income would otherwise so qualify).
"Initial Subservicer": With respect to each Mortgage Loan that is
subject to a subservicing agreement with the Master Servicer as of the Closing
Date, the subservicer under any such subservicing agreement.
"Institutional Accredited Investor": An entity meeting the
requirements of Rule 501(a)(1), (2), (3) or (7) of Regulation D promulgated
under the 1933 Act (and any entity in which all the equity owners meet such
requirements) and which is not otherwise a Qualified Institutional Buyer.
"Insurance Proceeds": Proceeds of any fire and hazard insurance
policy, title policy, Environmental Insurance Policy or other insurance policy
relating to a Mortgage Loan and/or the Mortgaged Property securing any Mortgage
Loan (including any amounts paid by the Master Servicer or the Special Servicer
pursuant to Section 3.8), to the extent such proceeds are not to be applied to
the restoration of the related Mortgaged Property or released to the Borrower in
accordance with the express requirements of the related Mortgage or Note or
other documents included in the related Mortgage File or in accordance with the
Servicing Standard.
"Insured Environmental Event": As defined in Section 3.8(a).
"Interest Accrual Period": With respect to any Distribution Date,
the calendar month preceding the month in which such Distribution Date occurs.
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"Interest Reserve Account": The segregated account or accounts
created and maintained as a separate trust account or accounts by the Master
Servicer pursuant to Section 3.29, which shall be entitled
"____________________, as Trustee, in trust for Holders of PNC Mortgage
Acceptance Corp. Commercial Mortgage Pass-Through Certificates, Series
_________, Interest Reserve Account" and which shall be an Eligible Account.
"Interest Reserve Amount": As defined in Section 3.29(a).
"Interest Reserve Loan": A Mortgage Loan that bears interest
computed on an Actual/360 Basis.
"Interested Person": As of any date of determination, the Depositor,
the Master Servicer, the Special Servicer, the Trustee, any Borrower, any
Manager of a Mortgaged Property, any Independent Contractor engaged by the
Special Servicer pursuant to Section 3.17, or any Person known to a Responsible
Officer of the Trustee to be an Affiliate of any of them.
"Investment Account": As defined in Section 3.7(a).
"Investment Representation Letter": As defined in Section
5.2(c)(i).
"IRS": The Internal Revenue Service.
"Liquidation Expenses": Expenses incurred by the Special Servicer
and the Trustee in connection with the liquidation of any Specially Serviced
Mortgage Loan or property acquired in respect thereof (including, without
limitation, legal fees and expenses, committee or referee fees, and, if
applicable, brokerage commissions, conveyance taxes and Disposition Fees).
"Liquidation Event": With respect to any Mortgage Loan (other than
an REO Mortgage Loan), any of the following events: (i) such Mortgage Loan is
paid in full; (ii) a Final Recovery Determination is made with respect to such
Mortgage Loan; (iii) such Mortgage Loan is repurchased or replaced by a Seller
or the Third Party Originator pursuant to the related Mortgage Loan Purchase
Agreement or the related Third Party Originator Agreement, as the case may be,
and Section 2.3 of this Agreement; (iv) such Mortgage Loan is sold pursuant to
Section 3.18; or (v) such Mortgage Loan is purchased by any Person entitled to
effect an optional termination of the Trust pursuant to Section 9.1. With
respect to any REO Property (and the related REO Mortgage Loan), any of the
following events: (i) a Final Recovery Determination is made with respect to
such REO Property; (ii) such REO Property is sold pursuant to Section 3.18; or
(iii) such REO Property is purchased by any Person entitled to effect an
optional termination of the Trust pursuant to Section 9.1.
"Liquidation Proceeds": All cash amounts (other than Insurance
Proceeds), including all partial and/or unscheduled collections, received in
connection with (i) the taking of a Mortgaged Property by exercise of the power
of eminent domain or condemnation, (ii) the full or partial liquidation of a
Mortgaged Property or other collateral that constituted security for a Specially
Serviced Mortgage Loan through a trustee's sale, foreclosure sale or otherwise,
(iii) the sale of a Specially Serviced Mortgage Loan or an REO Property in
accordance with Section
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3.18, (iv) the sale of all of the Mortgage Loans and any REO Properties in
accordance with Section 9.1, (v) the realization upon any deficiency judgment
obtained against a Borrower or guarantor of any Mortgage Loan or (vi) any
amounts deemed to be Liquidation Proceeds pursuant to Section 2.3(e).
"Loan Agreement": With respect to any Mortgage Loan, the loan
agreement, if any, between the Originator and the Borrower, pursuant to which
such Mortgage Loan was made.
"Loan-to-Value Ratio": With respect to any Mortgage Loan, as of any
date of determination, the fraction, expressed as a percentage, the numerator of
which is the then-unpaid principal balance of such Mortgage Loan (or, if part of
a Cross-Collateralized Group, of such group), and the denominator of which is
the appraised value of the related Mortgaged Property (or, in the case of a
Cross-Collateralized Group, of all the Mortgaged Properties securing such group)
as determined by an Updated Appraisal thereof.
"MAI": Member of the Appraisal Institute.
"Majority Certificateholder": With respect to any particular Class
or Classes of Certificates, any Certificateholder entitled to a majority of the
Voting Rights allocated to such Class or Classes, as the case may be.
"Management Agreement": With respect to any Mortgage Loan, the
Management Agreement, if any, by and between the Manager and the related
Borrower, or any successor Management Agreement between such parties.
"Manager": With respect to any Mortgage Loan, any property
manager for the related Mortgaged Property.
"Master Servicer": Midland or any successor Master Servicer
appointed as herein provided.
"Master Servicer Mortgage File": With respect to any Mortgage Loan,
all documents related to such Mortgage Loan that are not required to be
delivered to the Trustee pursuant to Section 2.1 or to be maintained as part of
the Trustee Mortgage File, including, without limitation:
(i) a copy of the Management Agreement, if any, for the related
Mortgaged Property;
(ii) copies of any and all amendments, modifications and
supplements to, and waivers related to, any of the foregoing;
(iii) copies of the related appraisals, surveys, environmental
insurance agreements, environmental reports and other similar documents; and
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(iv) any other written agreements related to such Mortgage Loan;
together with copies of all documents that are required to be maintained as a
part of the Trustee Mortgage File.
"Master Servicing Fee": With respect to each Mortgage Loan, for each
calendar month (commencing with _____________) or any applicable portion
thereof, the Master Servicing Fee shall accrue (on the basis of a 360-day year
consisting of twelve 30 day months) at the related Master Servicing Fee Rate on
the same principal amount as interest accrues from time to time during such
calendar month (or portion thereof) on such Mortgage Loan or is deemed to accrue
from time to time during such calendar month (or portion thereof) in the case of
an REO Mortgage Loan.
"Master Servicing Fee Rate": With respect to each Mortgage Loan, the
per annum rate set forth in the Mortgage Loan Schedule as the "Administrative
Cost Rate" less the Trustee Fee Rate.
"Maturity Date": With respect to any Mortgage Loan as of any date of
determination, the date on which the last payment of principal is then scheduled
to be due and payable under the related Mortgage Note.
"Midland": Midland Loan Services, Inc., a Delaware corporation, or
its successor in interest.
"Midland Loans": means MLS Loans.
"Midland Mortgage Loan Purchase Agreement": The Mortgage Loan
Purchase and Sale Agreement, dated as of __________,____, between Midland and
Depositor.
"Minimum Master Servicing Fee Rate": A rate of ____% per annum.
"MLS Loans": The Mortgage Loans transferred and assigned to
Depositor pursuant to the Midland Mortgage Loan Purchase Agreement.
"Money Term": With respect to any Mortgage Loan, the Maturity Date,
Mortgage Rate, principal balance, amortization term or payment frequency
thereof, including any provisions relating to Deferred Interest (and shall not
include late fees or Default Interest provisions).
"Monthly Payment": With respect to any Mortgage Loan (other than any
REO Mortgage Loan) and any Due Date, the scheduled monthly payment of principal
and/or interest, excluding any Balloon Payment, Default Interest and Deferred
Interest on such Mortgage Loan which is payable by the related Borrower on such
Due Date under the related Note (taking into account any waiver, modification or
amendment of the terms of such Mortgage Loan, whether agreed to by the Master
Servicer or Special Servicer or in connection with a bankruptcy or similar
proceeding involving the related Borrower).
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"Mortgage": The mortgage, deed of trust or other instrument creating
a first lien on a Mortgaged Property securing the related Note.
"Mortgage File": With respect to any Mortgage Loan, the Trustee
Mortgage File and the Master Servicer Mortgage File.
"Mortgage Loan": Each of the mortgage loans transferred and assigned
to the Trustee pursuant to Section 2.1 and from time to time held in the Trust
Fund, such mortgage loans originally so transferred, assigned and held being
identified on the Mortgage Loan Schedule as of the Cut-off Date. Such term shall
include any REO Mortgage Loan, any Qualified Substitute Mortgage Loan or
defeased Mortgage Loan.
"Mortgage Loan Documents": Any and all documents contained in the
Trustee Mortgage File and the Master Servicer Mortgage File.
"Mortgage Loan Purchase Agreement": With respect to the MLS Loans,
the Midland Mortgage Loan Purchase Agreement. With respect to the _______ Loans,
the _______ Mortgage Loan Purchase Agreement. The term "Mortgage Loan Purchase
Agreements" shall mean both of such agreements.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in the Trust Fund on such date, such list as of the Closing Date being
attached hereto as Exhibit B-1.
"Mortgage Pool": Collectively, all of the Mortgage Loans
(including without limitation REO Mortgage Loans and Qualified Substitute
Mortgage Loans, but excluding Deleted Mortgage Loans).
"Mortgage Rate": With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan (in the absence of a default and
without giving effect to any Revised Interest Rate), as set forth in the
Mortgage Loan Schedule.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of a fee simple or leasehold estate
in a parcel of land improved by a commercial or multifamily property, together
with any personal property, fixtures, leases and other property or rights
pertaining thereto.
"Net Aggregate Prepayment Interest Shortfall": With respect to any
Distribution Date, the amount, if any, by which (a) the aggregate of all
Prepayment Interest Shortfalls incurred in connection with the receipt of
Principal Prepayments on the Mortgage Loans during the related Collection
Period, exceeds (b) the sum of (i) the aggregate of all Prepayment Interest
Excesses realized in connection with the receipt of Principal Prepayments on the
Mortgage Loans during the related Collection Period, and (ii) the Compensating
Interest Payment deposited by the Master Servicer in the Distribution Account
for such Distribution Date pursuant to Section 3.25 in connection with such
Prepayment Interest Shortfalls.
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"Net Collections": With respect to any Corrected Mortgage Loan, an
amount equal to all payments on account of interest and principal on such
Mortgage Loan and all Prepayment Premiums.
"Net Liquidation Proceeds": The excess of Liquidation Proceeds
received with respect to any Mortgage Loan over the amount of Liquidation
Expenses incurred with respect thereto.
"Net Mortgage Rate": With respect to any Mortgage Loan, the
Mortgage Rate for such Mortgage Loan minus the Master Servicing Fee Rate and
the Trustee Fee Rate.
"Net REO Proceeds": With respect to each REO Property, REO Proceeds
with respect to such REO Property net of any insurance premiums, taxes,
assessments and other costs and expenses permitted to be paid therefrom pursuant
to Section 3.17(b).
"New Lease": Any lease of REO Property entered into on behalf of the
Trust Fund, including any lease renewed or extended on behalf of the Trust Fund
if the Trust Fund has the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any portion of an Advance proposed to be
made or previously made which has not been previously reimbursed to the Master
Servicer or the Trustee, as applicable, and which the Master Servicer or the
Trustee has determined (based on, among other things, an Updated Appraisal) in
its good faith business judgment will not or, in the case of a proposed Advance,
would not, be ultimately recoverable by the Master Servicer or the Trustee, as
applicable, from late payments, Insurance Proceeds, Liquidation Proceeds and
other collections on or in respect of the related Mortgage Loan or Mortgaged
Property. To the extent that any Borrower is not obligated under the related
Mortgage Loan Documents to pay or reimburse any portion of any Advances that are
outstanding with respect to the related Mortgage Loan as a result of a
modification of such Mortgage Loan by the Special Servicer which forgives unpaid
Monthly Payments or other amounts which the Master Servicer or the Trustee had
previously advanced, and the Master Servicer or the Trustee determines that no
other source of payment or reimbursement for such advances is available to it,
such Advances shall be deemed to be nonrecoverable; provided, however, that in
connection with the foregoing the Master Servicer or the Trustee, shall provide
an Officer's Certificate as described below. The determination by the Master
Servicer or the Trustee, as applicable, that it has made a Nonrecoverable
Advance or that any proposed Advance, if made, would constitute a Nonrecoverable
Advance shall be evidenced by a certificate of a Servicing Officer, Responsible
Officer or Vice President or equivalent or senior officer of the Master Servicer
or Trustee, as appropriate, delivered to the Master Servicer, Trustee, the
Special Servicer, the Controlling Class Representative and the Depositor setting
forth such determination and the procedures and considerations of the Master
Servicer or the Trustee, as applicable, forming the basis of such determination,
which shall include a copy of the Updated Appraisal and any other information or
reports obtained by the Master Servicer or the Trustee, such as property
operating statements, rent rolls, property inspection reports and engineering
reports, which may support such determinations. Notwithstanding the above, the
Trustee shall be entitled to rely upon any
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determination by the Master Servicer that any Advance previously made is a
Nonrecoverable Advance or that any proposed Advance, if made, would constitute a
Nonrecoverable Advance.
"Non-U.S. Person": A person that is not (i) a citizen or resident of
the United States; (ii) a corporation, partnership, or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof; (iii) an estate whose income is subject to United States federal income
tax regardless of its sources; or (iv) a trust as to which a court within the
United States is able to exercise primary jurisdiction over the administration
of the trust and one or more U.S. Persons have the authority to control all
substantial decisions of the trust.
"Note": With respect to any Mortgage Loan as of any date of
determination, the note or other evidence of indebtedness and/or agreements
evidencing the indebtedness of the related Borrower or obligor under such
Mortgage Loan, in each case, including any amendments or modifications, or any
renewal or substitution notes, as of such date.
"Notional Amount": With respect to: (i) all of the Class [S]
Certificates (a) on or prior to the first Distribution Date, an amount equal to
the aggregate initial Uncertificated Principal Balance of the REMIC II Regular
Interests, as specified in the Preliminary Statement hereto, and (b) as of any
date of determination after the first Distribution Date, the aggregate
Uncertificated Principal Balance of the REMIC II Regular Interests on the
Distribution Date immediately prior to such date of determination, after
application of the distributions deemed made thereon, and allocation of the
Realized Losses and Expense Losses deemed made thereto, on such prior
Distribution Date and (ii) any Class [S] Certificate, the product of the
Percentage Interest evidenced by such Certificate and the Notional Amount for
all of the Class [S] Certificates as of such date of determination.
"Officer's Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the Chief Executive Officer, the
President, a Vice President (however denominated), the Treasurer, the Secretary,
one of the Assistant Treasurers or Assistant Secretaries or any other officer of
the Master Servicer or Special Servicer customarily performing functions similar
to those performed by any of the above designated officers 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, and delivered to the Depositor, the Trustee, the Special Servicer or
the Master Servicer, as the case may be.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be counsel for the Depositor, the Special Servicer or the Master
Servicer, as the case may be, acceptable to the Trustee, except that any opinion
of counsel relating to (a) qualification of REMIC I, REMIC II or REMIC III as a
REMIC or the imposition of tax under the REMIC Provisions on any income or
property of any REMIC, (b) compliance with the REMIC Provisions (including
application of the definition of "Independent Contractor"), (c) qualification of
the Grantor Trust as a grantor trust, or (d) a resignation of the Master
Servicer or the Special Servicer pursuant to Section 6.4, must be an opinion of
counsel who is Independent of the Depositor, the Special Servicer and the Master
Servicer.
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"Optional Termination Notice Date": Any date as of which the
aggregate Stated Principal Balance of the Mortgage Loans (including, without
limitation, any REO Mortgage Loans) is less than 1% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date.
"Originator": With respect to a Mortgage Loan, the originator of
such Mortgage Loan, as identified in the Mortgage Loan Schedule.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate as the Holder thereof and any other
interest therein, whether direct or indirect, legal or beneficial, as owner or
as pledgee.
"P&I Advance": As to any Mortgage Loan, any advance made by the
Master Servicer or the Trustee pursuant to Section 4.5(b)(iii) or 4.5(d).
"Pass-Through Rate" or "Pass-Through Rates": Any one of the Class
[A-1A], Class [A-1B], Class [S], Class [A-2], Class [A-3], Class [A-4], Class
[B-1], Class [B-2], Class [B-3], Class [B-4], Class [B-5], Class [B-6], Class
[B-7], Class [B-8], Class [C] or Class [D] Pass-Through Rates as defined herein.
The Class [E] Certificates and the Residual Certificates do not have
Pass-Through Rates.
"Paying Agent": The paying agent appointed pursuant to Section 5.5.
"Percentage Interest": (i) With respect to any REMIC III Regular
Certificate, the portion of the relevant Class evidenced by such Certificate,
expressed as a percentage, the numerator of which is the Certificate Balance or
the Notional Amount, as the case may be, of such Certificate as of the Closing
Date, as specified on the face thereof, and the denominator of which is the
initial aggregate Certificate Balance or the initial aggregate Notional Amount,
as the case may be, of the relevant Class as of the Closing Date; and (ii) with
respect to the Class [E] and Residual Certificates, the percentage interest in
distributions to be made with respect to the relevant Class, as stated on the
face of such Certificate.
"Permitted Investments": Any one or more of the following
obligations or securities payable on demand or having a scheduled maturity on or
before the Business Day preceding the date on which such funds are required to
be drawn, but in any event not to exceed 365 days, regardless of whether issued
by the Depositor, the Master Servicer, the Special Servicer, the Trustee or any
of their respective Affiliates, and having at all times the required ratings, if
any, provided for in this definition (provided that no Permitted Investment, if
downgraded, shall be required to be sold at a loss, except if the remaining term
to maturity at the time of such downgrading is greater than 30 days), unless
Rating Agency Confirmation is received with respect to a lower rating:
(i) direct obligations of, or obligations guaranteed as to full and
timely payment of principal and interest by, the United States or any agency
or instrumentality thereof, provided that such obligations are backed by the
full faith and credit of the United States of America, including, without
limitation, U.S. Treasury Obligations, Farmers Home
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Administration certificates of beneficial interest, General Services
Administration participation certificates and Small Business Administration
guaranteed participation certificates or guaranteed pool certificates;
(ii) direct obligations of FHLMC (debt obligations only), FNMA
(debt obligations only), the Federal Farm Credit System (consolidated systemwide
bonds and notes only), the Federal Home Loan Banks (consolidated debt
obligations only), the Student Loan Marketing Association (debt obligations
only), the Financing Corp. (consolidated debt obligations only), and the
Resolution Funding Corp. (debt obligations only);
(iii) Federal funds, time deposits in, or unsecured certificates of
deposit of, or bankers' acceptances, or repurchase obligations, all having
maturities of not more than 365 days, issued by, any bank or trust company,
savings and loan association or savings bank, depository institution or trust
company having a short term debt obligation rating that is in the highest
short-term unsecured rating category of each Rating Agency;
(iv) commercial paper having a maturity of 365 days or less
(including (A) both non-interest-bearing discount obligations and
interest-bearing obligations payable on demand or on a specified date not more
than one year after the date of issuance thereof and (B) demand notes that
constitute vehicles for investment in commercial paper) that is rated by each
Rating Agency in its highest short-term unsecured rating category;
(v) shares of taxable money market funds or mutual funds that seek
to maintain a constant net asset value and have been rated "____" or "____" by
____ and "____" by _______;
(vi) if each of the Rating Agencies has issued a Rating Agency
Confirmation to the Trustee with respect to the holding of such demand, money
market or time deposit, demand obligation or any other obligation, security or
investment, any other demand, money market or time deposit, demand obligation or
any other obligation, security or investment, as may be acceptable to each
Rating Agency as a permitted investment of funds backing securities having
ratings equivalent to its initial rating of the Class [A-1A] and Class [A-1B]
Certificates; and
(vii) such other obligations for which a Rating Agency
Confirmation has been obtained;
provided, however, that [(a) none of such obligations or securities listed above
may have an "r" highlighter affixed to its rating if rated by S&P;] (b) except
with respect to units of money market funds pursuant to clause (v) above, each
such obligation or security shall have a fixed dollar amount of principal due at
maturity which cannot vary or change; and (c) except with respect to units of
money market funds pursuant to clause (v) above, if any such obligation or
security provides for a variable rate of interest, interest shall be tied to a
single interest rate index plus a single fixed spread (if any) and move
proportionately with that index; and provided, further, however, that such
instrument continues to qualify as a "cash flow investment" pursuant to Code
Section 860G(a)(6) earning a passive return in the nature of interest and that
no
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instrument or security shall be a Permitted Investment if (i) such instrument or
security evidences a right to receive only interest payments, (ii) the right to
receive principal and interest payments derived from the underlying investment
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment as of the date of its acquisition; or (iii) may be
purchased at a price greater than par if such investment may be prepaid or
called at a price less than its purchase price prior to stated maturity.
"Permitted Transferee": With respect to a Class [R-I], Class [R-II]
or Class [R-III] Certificate, any Person or agent thereof that is a Qualified
Institutional Buyer, other than (a) a Disqualified Organization or (b) a Person
that is a Disqualified Non-U.S. Person.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, estate,
unincorporated organization or government or any agency or political subdivision
thereof.
"Phase I Environmental Assessment": A "Phase I assessment" as
described in and meeting the criteria of Chapter 5 of Part II of the FNMA
Multifamily Guide, as amended from time to time.
"Placement Agents": ______________________, ____________________
and ____________________ or any of their successors in interest.
"Plan": As defined in Section 5.2(i).
"Prepayment Assumption": A CPR of 0% (except that each
Hyper-Amortization Loan is assumed to pay on its Hyper-Amortization Date),
applied to each Mortgage Loan during any period that the related Borrower is
permitted to make voluntary Principal Prepayments without a Prepayment Premium,
calculated on the basis of a yield maintenance formula used for determining the
accrual of original issue discount, market discount and premium, if any, on the
REMIC I Regular Interests, the REMIC II Regular Interests or the REMIC III
Regular Certificates for federal income tax purposes.
"Prepayment Interest Excess": With respect to any Distribution Date
and any Mortgage Loan as to which a Principal Prepayment was made by the related
Borrower during the related Collection Period but following the Due Date
occurring in such Collection Period in which the related Principal Prepayment
had been made, the amount of interest accrued and received from the related
Borrower (less the Master Servicing Fee) for the period following such Due Date.
"Prepayment Interest Shortfall": With respect to any Distribution
Date and any Mortgage Loan as to which a Principal Prepayment was made by the
related Borrower during the related Collection Period but prior to the Due Date
occurring in such Collection Period, the amount by which (i) one month's
interest (other than Default Interest and Deferred Interest and net of the
Master Servicing Fee) on the Stated Principal Balance of such Mortgage Loan
outstanding immediately following the Distribution Date in such Collection
Period exceeds (ii) the amount of interest (net of the Master Servicing Fee)
received from the related Borrower in
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respect of such Mortgage Loan during such Collection Period (without regard to
any Prepayment Premium, Default Interest or Deferred Interest that may have been
collected).
"Prepayment Premium": Payments received on a Mortgage Loan as the
result of a Principal Prepayment thereon, not otherwise due thereon in respect
of principal or interest, which are intended to be a disincentive to prepayment.
"Primary Servicing Fees": The monthly fee payable by the Master
Servicer from the Master Servicing Fee to each Initial Subservicer, which
monthly fee accrues at the rate per annum specified as such in the Mortgage Loan
Schedule.
"Principal Balance Certificates": All of the REMIC III Regular
Certificates, excluding the Class [S] Certificates.
"Principal Distribution Amount": For any Distribution Date, the
aggregate of (i) the Current Principal Distribution Amount for such Distribution
Date, and (ii) if such Distribution Date is subsequent to the initial
Distribution Date, the excess, if any, of the Principal Distribution Amount for
the preceding Distribution Date, over the aggregate distributions of principal
made on the Principal Balance Certificates in respect of such Principal
Distribution Amount on the preceding Distribution Date.
"Principal Prepayment": With respect to any Mortgage Loan, any
payment of principal made by the related Borrower which is received in advance
of its scheduled Due Date and which is not accompanied by an amount of interest
representing the full amount of scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
"Privately Placed Certificates": The Class [B-3] Certificates, the
Class [B-4] Certificates, the Class [B-5] Certificates, the Class [B-6]
Certificates, the Class [B-7] Certificates, the Class [B-8] Certificates, the
Class [C] Certificates, the Class [D] Certificates, the Class [E] Certificates,
the Class [R-I] Certificates, the Class [R-II] Certificates and the Class
[R-III] Certificates.
"Prospectus Supplement": The Prospectus Supplement dated _________,
____, relating to the Publicly Offered Certificates.
"Publicly Offered Certificates": The Class [A-1A] Certificates, the
Class [A-1B] Certificates, the Class [S] Certificates, the Class [A-2]
Certificates, the Class [A-3] Certificates, the Class [A-4] Certificates, the
Class [B-1] Certificates and the Class [B-2] Certificates.
"Qualified Institutional Buyer": A qualified institutional buyer
within the meaning of Rule 144A.
"Qualified Insurer" means, (i) with respect to any Mortgage Loan, an
insurance company duly qualified as such under the laws of the state in which
the related Mortgaged Property is located, duly authorized and licensed in such
state to transact the applicable insurance business and to write the insurance
provided, and that has a claim paying ability rating no lower than the higher of
(a) the rating specified in the related Mortgage Loan Documents, if any, and
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(b) "__" by ____ (or, if not so rated by ____, then ____ has issued a Rating
Agency Confirmation with respect to such insurer), and "__" by _______ (or, if
not so rated by _______, then no lower than "__" by ____ or "____" by A.M. Best
or otherwise approved by _______), and (ii) with respect to the Servicer Errors
and Omissions Insurance Policy or Servicer Fidelity Bond an insurance company
that has a claim paying ability rating of no lower than "__" by ____ (or, if not
so rated by ____, then ____ has issued a Rating Agency Confirmation with respect
to such insurer), and "__" by _______ (or, if not so rated by _______, then no
lower than "__" by ____ or "___" by A.M. Best or otherwise approved by _______),
or (iii) in either case, a company not satisfying clause (i) or (ii) but with
respect to which Rating Agency Confirmation is obtained.
"Qualified Mortgage": A Mortgage Loan that is a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code (but without regard to the
rule in Treasury Regulation Section 1.860G-2(f)(2) that treats a defective
obligation as a qualified mortgage), or any substantially similar successor
provision.
"Qualified Environmental Consultant": An Independent Person, with at
least five years of relevant experience, who regularly conducts environmental
audits for purchasers of commercial properties located in the same general area
as the Mortgaged Property with respect to which the Special Servicer is ordering
such environmental assessment, as determined by the Special Servicer in a manner
consistent with the Servicing Standard.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted
for a Deleted Mortgage Loan pursuant to the terms of this Agreement which must,
on the date of such substitution: (i) have an outstanding principal balance,
after application of all scheduled payments of principal and interest due during
or prior to the month of substitution, not in excess of the Stated Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs; (ii) have a Mortgage Rate not less than
the Mortgage Rate of the Deleted Mortgage Loan; (iii) have the same Due Date as
the Deleted Mortgage Loan; (iv) accrue interest on the same basis as the Deleted
Mortgage Loan (for example, on the basis of a 360-day year consisting of twelve
30-day months); (v) have a remaining term to stated maturity not greater than,
and not more than two years less than, the remaining term to stated maturity of
the Deleted Mortgage Loan; (vi) have an original Loan-to-Value Ratio not higher
than that of the Deleted Mortgage Loan and a current Loan-to-Value Ratio not
higher than the then-current Loan-to-Value Ratio of the Deleted Mortgage Loan;
(vii) comply as of the date of substitution with all of the representations and
warranties set forth in the applicable Mortgage Loan Purchase and Sale
Agreement, (viii) have a Phase I Environmental Assessment from a Qualified
Environmental Consultant relating to the related Mortgaged Property in its
Master Servicer Mortgage File, which evidences that there is no material adverse
environmental condition or circumstance at the related Mortgaged Property for
which further remedial action may be required under applicable law; (ix) have an
original debt service coverage ratio not lower than the original debt service
coverage ratio of the Deleted Mortgage Loan and have a then current debt service
coverage ratio not lower than the then current debt service coverage ratio of
the Deleted Mortgage Loan; and (x) be determined by an Opinion of Counsel (at
the expense of the applicable Seller) to be a "qualified replacement mortgage"
within the meaning of Section 860G(a)(4) of the Code; provided that no such
mortgage loan may have a
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maturity date after the date three years prior to the Rated Final Distribution
Date; and provided, further, that no such mortgage loan shall be substituted for
a Deleted Mortgage Loan unless the Trustee has received Rating Agency
Confirmation (the cost, if any, of obtaining such confirmation to be paid by the
applicable Seller) with respect to such substitution; and provided, further that
no such mortgage loan shall be substituted for a Deleted Mortgage Loan if it
would result in an Adverse REMIC Event in respect of REMIC I, REMIC II, or REMIC
III or an Adverse Grantor Trust Event; and provided, further that no such
mortgage loan shall be substituted for a Deleted Mortgage Loan unless the
Controlling Class Representative shall have approved of such substitution in its
reasonable discretion. In the event that one or more mortgage loans are
substituted for one or more Deleted Mortgage Loans, then the amounts described
in clause (i) shall be determined on the basis of aggregate principal balances
and the rates described in clause (ii) above and the remaining term to stated
maturity referred to in clause (v) above shall be determined on a weighted
average basis. Whenever a Qualified Substitute Mortgage Loan is substituted for
a Deleted Mortgage Loan pursuant to this Agreement, the Seller effecting such
substitution shall certify that such Mortgage Loan meets all of the requirements
of this definition and shall send such certification to the Trustee.
"Rated Final Distribution Date": The Distribution Date in _________
______.
"Rating Agency": Each of ____ and _______. References herein to the
highest long-term senior unsecured debt rating category of each Rating Agency
shall mean "____" with respect to ____ and "____" with respect to _______.
References herein to the highest short-term senior unsecured debt rating
category of each Rating Agency shall mean "____" with respect to ____ and "____"
with respect to _______.
"Rating Agency Confirmation": With respect to any matter, where
required under this Agreement, a written confirmation from each Rating Agency
that a proposed action, failure to act, or other event specified herein will not
in and of itself result in such Rating Agency's withdrawal, downgrade, or
qualification of the then-current rating assigned to any Class of Certificates
then rated by such Rating Agency (the placing of a Class of Certificates on
"watch" status shall be considered a "qualification" of a rating).
"Real Property": Land or improvements thereon such as buildings or
other inherently permanent structures (including items that are structural
components of such buildings or structures), in each such case as such terms are
used in the REMIC Provisions.
"Realized Loss": (x) With respect to each defaulted Mortgage Loan as
to which a Final Recovery Determination has been made, or with respect to any
REO Mortgage Loan as to which a Final Recovery Determination has been made as to
the related REO Property, an amount (not less than zero) equal to (i) the unpaid
principal balance of such Mortgage Loan (or, in the case of an REO Property, the
related REO Mortgage Loan) as of the commencement of the Collection Period in
which the Final Recovery Determination was made, plus (ii) all accrued but
unpaid interest on such Mortgage Loan (or, in the case of an REO Property, the
related REO Mortgage Loan) at the related Mortgage Rate to but not including the
Due Date in the Collection Period in which the Final Recovery Determination was
made, in any event determined without taking into account the amounts described
in subclause (iv) of this sentence, plus (iii) any related
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unreimbursed Servicing Advances as of the commencement of the Collection Period
in which the Final Recovery Determination was made, together with any new
related Servicing Advances made during such Collection Period, minus (iv) all
related Liquidation Proceeds (net of any related Liquidation Expenses paid
therefrom); (y) with respect to any Mortgage Loan as to which any portion of the
outstanding principal or accrued interest owed thereunder was forgiven in
connection with a bankruptcy or similar proceeding involving the related
Borrower or a modification, waiver or amendment of such Mortgage Loan granted or
agreed to by the Master Servicer or Special Servicer pursuant to Section 3.28,
the amount of such principal or interest (other than Default Interest or
Deferred Interest) so forgiven; and (z) with respect to any Mortgage Loan as to
which the Mortgage Rate thereon has been permanently reduced for any period in
connection with a bankruptcy or similar proceeding involving the related
Borrower or a modification, waiver or amendment of such Mortgage Loan granted or
agreed to by the Master Servicer or Special Servicer pursuant to Section 3.28,
the amount of the consequent reduction in the interest portion of each
successive Monthly Payment due thereon (provided, that each such Realized Loss
shall be deemed to have been incurred on the Due Date for each affected Monthly
Payment).
"Record Date": With respect to each Distribution Date, the last
Business Day of the month preceding the month in which such Distribution Date
occurs.
"Regulation D": Regulation D under the 1933 Act.
"Related Class of Certificates" and "Related REMIC II Regular
Interest": For any Class of REMIC II Regular Interest, the related Class of
Certificates set forth below and for any Class of Certificates (other than the
Class [S], Class [E], Class [R-I], Class [R-II] or Class [R-III] Certificates),
the related Class of REMIC II Regular Interests set forth below:
Related REMIC II
Related Class of Certificates Regular Interest
Class [A-1A] Class [A-1A]-II Interest
Class [A-1B] Class [A-1B]-II Interest
Class [A-2] Class [A-2]-II Interest
Class [A-3] Class [A-3]-II Interest
Class [A-4] Class [A-4]-II Interest
Class [B-1] Class [B-1]-II Interest
Class [B-2] Class [B-2]-II Interest
Class [B-3] Class [B-3]-II Interest
Class [B-4] Class [B-4]-II Interest
Class [B-5] Class [B-5]-II Interest
Class [B-6] Class [B-6]-II Interest
Class [B-7] Class [B-7]-II Interest
Class [B-8] Class [B-8]-II Interest
Class [C] Class [C]-II Interest
Class [D] Class [D]-II Interest
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"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC I": The segregated pool of assets included in the Trust Fund
created hereby and to be administered hereunder, consisting of the Mortgage
Loans, as from time to time are subject to this Agreement, the Mortgage Files
relating thereto, all proceeds of and payments under such Mortgage Loans
(excluding Deferred Interest) received after the Cut-off Date, such amounts in
respect thereof as shall from time to time be held in the Collection Account,
the Distribution Account, the Interest Reserve Account, the Excess Liquidation
Proceeds Account, the Special Reserve Account and the REO Account, and any REO
Properties acquired in respect of any Mortgage Loan, for which a REMIC election
is to be made pursuant to Section 10.1 hereof. Pursuant to Treasury Regulation
Section 1.860D-1(b)(2)(ii), the Transferable Servicing Interest is not an
interest in REMIC I.
"REMIC I Interests": Collectively, the REMIC I Regular Interests
and the Class [R-I] Certificates.
"REMIC I Regular Interest": With respect to each Mortgage Loan
(including, without limitation, each REO Mortgage Loan, but excluding any
Deferred Interest), the separate uncertificated interest in REMIC I issued in
respect of such Mortgage Loan hereunder and designated as a "regular interest"
in REMIC I. Each REMIC I Regular Interest shall represent a right to receive
interest at the related REMIC I Remittance Rate and distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance (which shall equal the initial Stated
Principal Balance of the related Mortgage Loan as of the Cut-off Date). The
designation for each REMIC I Regular Interest shall be the loan number for the
related Mortgage Loan set forth in the Mortgage Loan Schedule as of the Closing
Date. If a Qualified Substitute Mortgage Loan or Loans are substituted for any
Deleted Mortgage Loan, the REMIC I Regular Interest that related to the Deleted
Mortgage Loan shall thereafter relate to such Qualified Substitute Mortgage
Loan(s).
"REMIC I Remittance Rate": With respect to any REMIC I Regular
Interest for any Distribution Date, a rate per annum equal to the Net Mortgage
Rate for the related Mortgage Loan (including without limitation an REO Mortgage
Loan); provided, that for purposes of calculating the REMIC I Remittance Rate
for any REMIC I Regular Interest, the Net Mortgage Rate for the related Mortgage
Loan will be determined without regard to any post-Closing Date modification,
waiver or amendment of the terms of such Mortgage Loan; and provided further,
that for purposes of calculating the REMIC I Remittance Rate, if the related
Mortgage Loan is an Interest Reserve Loan, the Net Mortgage Rate of such
Interest Reserve Loan will be adjusted to an annual rate equal to: (a) a
fraction, expressed as a percentage, the numerator of which is, subject to
adjustment as described below, 12 times the amount of interest that accrued (or,
in the absence of any applicable voluntary or involuntary prepayment, would have
accrued) with respect to such Interest Reserve Loan on an Actual/360 Basis
during the related Interest Accrual Period, based on its Stated Principal
Balance immediately preceding such Distribution Date and its Mortgage Rate as in
effect on the Cut-off Date, and the denominator of which is the Stated Principal
Balance of the Interest Reserve Loan immediately prior to such Distribution
Date, minus (b) the related Master Servicing Fee Rate and the Trustee Fee Rate.
Notwithstanding the
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foregoing, if such Distribution Date occurs during January (except during a leap
year) or February, then, in the case of any particular Interest Reserve Loan,
the numerator of the fraction described in clause (a) above will be decreased by
any Interest Reserve Amount with respect to that Interest Reserve Loan that is
transferred from the Collection Account to the Interest Reserve Account during
that month. Furthermore, if such Distribution Date occurs during March, then, in
the case of any particular Interest Reserve Loan, the numerator of the fraction
described in clause (a) above will be increased by any Interest Reserve Amounts
with respect to such Interest Reserve Loan that are transferred from the
Interest Reserve Account to the Distribution Account during that month. If any
Mortgage Loan included in the Trust Fund as of the Closing Date is replaced by a
Qualified Substitute Mortgage Loan or Loans, the REMIC I Remittance Rate for the
related REMIC I Regular Interest shall still be calculated in accordance with
the preceding sentence based on the Net Mortgage Rate for the Deleted Mortgage
Loan.
"REMIC II": The segregated pool of assets consisting of the REMIC I
Regular Interests and all distributions thereon conveyed to the Trustee for the
benefit of REMIC II and for which a separate REMIC election is to be made
pursuant to Section 10.1 hereof.
"REMIC II Distribution Amount": As defined in Section 4.1(d).
"REMIC II Interests": Collectively, the REMIC II Regular Interests
and the Class [R-II] Certificates.
"REMIC II Regular Interest": Any of the 15 separate uncertificated
beneficial interests in REMIC II issued hereunder and designated as a "regular
interest" in REMIC II. Each REMIC II Regular Interest shall represent a right to
receive interest at the related REMIC II Remittance Rate in effect from time to
time and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto. The designations for the respective REMIC II Regular Interests are set
forth in the Preliminary Statement hereto.
"REMIC II Remittance Rate": With respect to each REMIC II Regular
Interest, a rate per annum equal to the Weighted Average REMIC I Remittance
Rate.
"REMIC III Certificate": Any Certificate, other than a Class [R-I]
or Class [R-II] Certificate.
"REMIC III Regular Certificate": Any REMIC III Certificate, other
than a Class [R-III] Certificate.
"REMIC Pool": Each of the three segregated pools of assets designat-
ed as a REMIC pursuant to Section 10.1 hereof.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations (including any proposed
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regulations that, by virtue of their proposed effective date could apply to the
REMIC Pools) and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.
"Remittance Date": The Business Day preceding each Distribution
Date.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code, which income,
subject to the terms and conditions of that Section of the Code in its present
form, does not include:
(i) except as provided in Section 856(d)(4) or (6) of the Code,
any amount received or accrued, directly or indirectly, with respect to such REO
Property, if the determination of such amount depends in whole or in part on the
income of profits derived by any Person from such property (unless such amount
is a fixed percentage or percentages of receipts or sales and otherwise
constitutes Rents from Real Property);
(ii) any amount received or accrued, directly or indirectly, from
any Person if the Trust Fund owns directly or indirectly (including by
attribution) a 10% or greater interest in such Person determined in accordance
with Sections 856(d)(2)(B) and (d)(5) of the Code;
(iii) any amount received or accrued, directly or indirectly, with
respect to such REO Property if any Person Directly Operates such REO Property;
(iv) any amount charged for services that are not customarily
furnished in connection with the rental of property to tenants in buildings of a
similar class in the same geographic market as such REO Property within the
meaning of Treasury Regulation Section 1.856-4(b)(1) (whether or not such
charges are separately stated); and
(v) rent attributable to personal property unless such personal
property is leased under, or in connection with, the lease of such REO Property
and, for any taxable year of the Trust Fund, such rent is no greater than 15% of
the total rent received or accrued under, or in connection with, the lease.
"REO Account": As defined in Section 3.17(b).
"REO Grace Period": As defined in Section 3.17(a).
"REO Mortgage Loan": Any Mortgage Loan as to which the related
Mortgaged Property has become an REO Property.
"REO Proceeds": With respect to any REO Property and the related REO
Mortgage Loan, all revenues received by the Master Servicer with respect to such
REO Property or REO Mortgage Loan that do not constitute Liquidation Proceeds.
"REO Property": A Mortgaged Property title to which has been
acquired by the Master Servicer on behalf of the Trust Fund through foreclosure,
deed in lieu of foreclosure or otherwise.
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"Repurchase Price": With respect to any Mortgage Loan to be
repurchased, or any Deleted Mortgage Loan to be replaced by the substitution of
one or more Qualified Substitute Mortgage Loans, pursuant to Section 2.3, or any
Specially Serviced Mortgage Loan, or the REO Mortgage Loan relating to any REO
Property, to be sold or repurchased pursuant to Section 3.18, an amount,
calculated by the Master Servicer equal to:
(i) the unpaid principal balance of such Mortgage Loan (or, in the
case of any REO Property, the related REO Mortgage Loan) (after application of
all principal payments (including prepayments) collected and other principal
amounts recovered on such Mortgage Loan) as of the date of receipt of the
Repurchase Price or the date of substitution, as the case may be, hereunder;
plus
(ii) unpaid interest accrued on such Mortgage Loan or REO Mortgage
Loan, as applicable, at the related Mortgage Rate (after application of all
interest payments collected and other amounts recovered (and applied to accrued
interest) on such Mortgage Loan) to, but not including, the Due Date in the
Collection Period during which the applicable purchase or substitution occurs,
excluding any Deferred Interest accrued on such Mortgage Loan; plus
(iii) any unreimbursed Servicing Advances, all accrued and unpaid
interest on Advances (including P&I Advances) at the Advance Rate, any unpaid
Servicing Compensation (other than Master Servicing Fees) and any unpaid or
unreimbursed expenses of the Trust Fund allocable to such Mortgage Loan or REO
Mortgage Loan, as applicable, as of the date of receipt of the Repurchase Price
or the date of substitution, as the case may be, hereunder; plus
(iv) in the event that such Mortgage Loan or REO Mortgage Loan, as
applicable, is required to be repurchased or replaced pursuant to Section 2.3,
expenses reasonably incurred or to be incurred by the Master Servicer, the
Special Servicer or the Trustee in respect of the breach or defect giving rise
to the repurchase or replacement obligation, including any expenses arising out
of the enforcement of the repurchase or replacement obligation.
"Request for Release": A request for release signed by a Servicing
Officer, substantially in the form of Exhibit E hereto.
"Required Appraisal Loan": Any Mortgage Loan (including without
limitation any REO Mortgage Loan) as to which an Appraisal Event has occurred
and is continuing.
"Reserve Accounts": With respect to any Mortgage Loan, reserve or
escrow accounts, if any, established pursuant to the related Mortgage Loan
Documents and any Escrow Account. Each Reserve Account shall be an Eligible
Account except to the extent precluded by applicable law and the related
Mortgage Loan Documents. Any Reserve Account shall be beneficially owned for
federal income tax purposes by the Person who is entitled to receive the
reinvestment income or gain thereon in accordance with the related Mortgage Loan
Documents and Section 3.7.
"Residual Certificate": A Class [R-I], Class [R-II] or Class [R-III]
Certificate.
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"Responsible Officer": When used with respect to the Trustee, the
President, the Treasurer, the Secretary, any Vice President, any Assistance Vice
President, any Trust Officer, any Assistant Secretary or any other officer of
the Trustee customarily performing functions similar to those performed by any
of the above designated officers and having direct responsibility for the
administration of this Agreement. When used with respect to any Certificate
Registrar (other than the Trustee), any officer or assistant officer thereof.
"Restricted Servicer Reports": Each of the Watch List Report, the
Operating Statement Analysis Report, the NOI Adjustment Worksheet and the
Comparative Financial Status Report, as each of such terms are used in the
definition of "CMSA SIP".
"Revised Interest Rate": Any increased Mortgage Rate after a
Hyper-Amortization Date.
"Rule 144A": Rule 144A, under the 1933 Act.
"Scheduled Final Distribution Date": With respect to any Class of
Certificates, the Distribution Date on which the aggregate Certificate Balance
or aggregate Notional Amount, as the case may be, of such Class of Certificates
would be reduced to zero based on the Prepayment Assumption. Such Distribution
Date shall in each case be as follows:
Scheduled Final
Class Designation Distribution Date
Class [A-1A] __________
Class [A-1B] __________
Class [A-2] __________
Class [A-3] __________
Class [A-4] __________
Class [B-1] __________
Class [B-2] __________
Class [B-3] __________
Class [B-4] __________
Class [B-5] __________
Class [B-6] __________
Class [B-7] __________
Class [B-8] __________
Class [C] __________
Class [D] __________
Class [S] __________
The Class [E], Class [R-I], Class [R-II] and Class [R-III] Certificates do not
have a Scheduled Final Distribution Date.
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"Securities Depository": The Depository Trust Company, or any
successor Securities Depository hereafter named. The nominee of the initial
Securities Depository, for purposes of registering those Certificates that are
to be Book-Entry Certificates, is Cede & Co. The Securities Depository shall at
all times be a "clearing corporation" as defined in Section 8-102(3) of the
Uniform Commercial Code of the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the 1934 Act.
"Securities Depository Participant": A broker, dealer, bank or other
financial institution or other Person for whom from time to time the Securities
Depository effects book-entry transfers and pledges of securities deposited with
the Securities Depository.
"Securities Legend": With respect to each Residual Certificate and
any Individual Certificate (other than a Residual Certificate) that is a
Privately Placed Certificate the legend set forth in, and substantially in the
form of, Exhibit G hereto.
"Seller": With respect to the Midland Loans, Midland; and with
respect to the _______ Loans, _______.
"Senior Certificates": The Class [A-1A], Class [A-1B] and Class
[S] Certificates.
"Servicer Remittance Report": A report prepared by the Master
Servicer in such media and in CMSA format as may be agreed upon by the Master
Servicer and the Trustee containing such information regarding the Mortgage
Loans as will permit the Trustee to calculate the amounts to be distributed
pursuant to Section 4.3 and to furnish statements to Certificateholders pursuant
to Section 4.4 and containing such additional information as the Master Servicer
and the Trustee may from time to time agree.
"Servicing Advance": As to any Mortgage Loan, any advance made by
the Master Servicer or the Trustee in respect of costs and expenses incurred
pursuant to Section 3.9, Section 3.10, Section 3.17, Section 3.23 and Section
3.28 or any expenses incurred to protect and preserve the security for such
Mortgage Loan or taxes and assessments or insurance premiums, pursuant to
Section 3.4, Section 3.8 or Section 3.22, as applicable, or any other item
designated as such hereunder.
"Servicing Compensation": With respect to each Mortgage Loan, the
Master Servicing Fee and the Special Servicing Fee which shall be due to the
Master Servicer and the Special Servicer, as applicable, and such other
compensation of the Master Servicer and Special Servicer specified in Section
3.12, as adjusted pursuant to Section 3.25.
"Servicing Officer": Any officer or employee of the Master Servicer
or the Special Servicer involved in, or responsible for, the administration and
servicing of the Mortgage Loans or this Agreement 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, and, in
the case of any certification required to be signed by a Servicing Officer, such
an officer whose name and specimen signature appears on a list of servicing
officers furnished to
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the Trustee by the Master Servicer or the Special Servicer, as applicable, as
such list may from time to time be amended.
"Servicing Standard": The standards for the conduct of the Master
Servicer and the Special Servicer in the performance of their respective
obligations under this Agreement as set forth in Section 3.1(a).
"Similar Law": As defined in Section 5.2(i).
"Single Purpose Entity": Any Person, other than an individual, whose
organizational documents provide that: (1) such Person is formed solely for the
purpose of owning and holding United States Treasury obligations required or
permitted to be pledged in lieu of prepayment in accordance with the defeasance
provisions of one or more Mortgage Loan as provided in Section 3.28(d); (2) such
Person (a) does not engage in any business unrelated to such property and the
financing thereof, (b) does not have any assets other than those related to its
interest in the United States Treasury obligations pledged as defeasance
collateral, (c) maintains its own books, records and accounts, in each case
which are separate and apart from the books, records and accounts of any other
person, (d) conducts business in its own name and uses separate stationary,
invoices and checks, (e) does not guarantee or assume the debts or obligations
of any other person, (f) does not commingle its assets or funds with those of
any other person, (g) transacts business with affiliates on an arm's length
basis pursuant to written agreements and (h) holds itself out as being a legal
entity, separate and apart from any other Person; (3) such documents may not be
amended with respect to the Single Purpose Entity requirements while it holds
any of the defeasance collateral; and (4) any dissolution or winding up or
insolvency filing for such entity requires the unanimous consent of all partners
or members, as applicable.
"Special Reserve Account": As defined in each of the Midland
Mortgage Loan Purchase Agreement and the _______ Mortgage Loan Purchase
Agreement.
"Special Servicer": ________________________, a __________
corporation, or its successor in interest, or any successor Special Servicer
appointed as herein provided.
"Special Servicing Fee": With respect to any Specially Serviced
Mortgage Loan or REO Mortgage Loan and for any Distribution Date, an amount per
calendar month equal to the product of (i) one-twelfth of the Special Servicing
Fee Rate and (ii) the Stated Principal Balance of such Specially Serviced
Mortgage Loan or REO Mortgage Loan, as applicable, as of the Due Date in the
month preceding the month in which such Distribution Date occurs.
"Special Servicing Fee Rate": A rate equal to ____%.
"Specially Serviced Mortgage Loan": Subject to Section 3.24, any
Mortgage Loan with respect to which:
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(i) the related Borrower is 60 or more days delinquent (without
giving effect to any grace period permitted by the related Note) in the payment
of a Monthly Payment or other obligation (regardless of whether, in respect
thereof, P&I Advances have been reimbursed);
(ii) such Borrower has expressed to the Master Servicer an
inability to pay or a hardship in paying such Mortgage Loan in accordance with
its terms;
(iii) the Master Servicer or the Special Servicer has received
notice that such Borrower has become the subject of any bankruptcy, insolvency
or similar proceeding, admitted in writing the inability to pay its debts as
they come due or made an assignment for the benefit of creditors;
(iv) the Master Servicer has received notice of a foreclosure or
threatened foreclosure of any lien on the related Mortgaged Property;
(v) a default, of which the Master Servicer or the Special
Servicer has notice (other than a failure by such Borrower to pay principal or
interest) and which in the judgment of the Master Servicer or the Special
Servicer, as applicable, materially and adversely affects the interests of the
Certificateholders, has occurred and remained unremedied for the applicable
grace period specified in such Mortgage Loan (or, if no grace period is
specified, 60 days); provided, however, that a default requiring a Servicing
Advance shall be deemed to materially and adversely affect the interests of the
Certificateholders;
(vi) such Borrower has failed to make a Balloon Payment as and when
due (except in the case where the Master Servicer and the Special Servicer agree
in writing that such Mortgage Loan is likely to be paid in full within 30 days
after such default); or
(vii) the Master Servicer proposes to commence foreclosure or other
workout arrangements.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan:
(a) with respect to the circumstances described in clause (i)
and (vi) above, when the related Borrower has brought such Mortgage Loan current
(with respect to the circumstances described in clause (vi), pursuant to any
workout implemented by the Special Servicer) and thereafter made three
consecutive full and timely Monthly Payments;
(b) with respect to the circumstances described in clauses
(ii) and (iv) above, when such circumstances cease to exist in the good faith
judgment of the Special Servicer, and with respect to the circumstances
described in clauses (iii) and (vii), when such circumstances cease to exist; or
(c) with respect to the circumstances described in clause (v)
above, when such default is cured; provided, however, in each case that at the
time no circumstance identified in clauses (i) through (vii) above exists that
would cause the Mortgage Loan to continue to be characterized as a Specially
Serviced Mortgage Loan.
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"Startup Day": The day designated as such pursuant to Section 10.1
(c).
"Stated Maturity Date": With respect to any Mortgage Loan, the Due
Date on which the last payment of principal is due and payable under the terms
of the related Mortgage Note as in effect on the Closing Date, without regard to
any change in or modification of such terms in connection with a bankruptcy or
similar proceeding involving the related Borrower or a modification, waiver or
amendment of such Mortgage Loan granted or agreed to by the Master Servicer or
Special Servicer pursuant to Section 3.28.
"Stated Principal Balance": As of any date of determination, with
respect to any Mortgage Loan (including without limitation any REO Mortgage
Loan), an amount equal to (a) the unpaid principal balance of such Mortgage Loan
as of the Cut-off Date (or, in the case of a Qualified Substitute Mortgage Loan,
as of the related date of substitution), after application of all payments due
on or before such date, whether or not received, reduced on a permanent basis on
each subsequent Distribution Date (to not less than zero) by (b) the sum of (i)
all payments (or P&I Advances in lieu thereof) of, and all other collections
allocated as provided in Section 1.2 to, principal of or with respect to such
Mortgage Loan that are (or, if they had not been applied to cover any Additional
Trust Fund Expense, would have been) distributed to Certificateholders on such
Distribution Date, and (ii) the principal portion of any Realized Loss incurred
in respect of such Mortgage Loan during the related Collection Period; provided
that, notwithstanding the foregoing, if a Liquidation Event occurs in respect of
such Mortgage Loan (or any related REO Property), then the "Stated Principal
Balance" of such Mortgage Loan shall be zero commencing as of the Distribution
Date in the Collection Period next following the Collection Period in which such
Liquidation Event occurred.
"Subordinate Certificates": Any one or more of the Class [A-2],
Class [A-3], Class [A-4], Class [B-1], Class [B-2], Class [B-3], Class [B-4],
Class [B-5], Class [B-6], Class [B-7], Class [B-8], Class [C] and Class [D]
Certificates.
"Sub-Servicer": Any person with which the Master Servicer or the
Special Servicer has entered into a Sub-Servicing Agreement, which shall include
any Initial Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Master
Servicer or the Special Servicer and any Sub-Servicer relating to servicing and
administration of Mortgage Loans as provided in Section 3.2, which shall include
any sub-servicing agreement with an Initial Sub-Servicer.
"Substitution Shortfall Amount": In connection with the substitution
of one or more Qualified Substitute Mortgage Loans for one or more Deleted
Mortgage Loans, the amount, if any, by which the Repurchase Price or aggregate
Repurchase Price, as the case may be, for such Deleted Mortgage Loan(s) as of
the date of substitution exceeds the Stated Principal Balance or aggregate
Stated Principal Balance, as the case may be, of such Qualified Substitute
Mortgage Loan(s) as of the date of substitution.
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"Tax Returns": The federal income tax return on IRS Form 1066, U.S.
Real Estate Mortgage Investment Conduit Income Tax Return, including Schedule Q
thereto, Quarterly Notice to Residual Interest Holders of REMIC Taxable Income
or Net Loss Allocation, or any successor forms, to be filed on behalf of each of
REMIC I, REMIC II and REMIC III under the REMIC Provisions, together with any
and all other information, reports or returns that may be required to be
furnished to the Certificateholders or filed with the IRS or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
"Termination Date": The Distribution Date on which the Trust Fund
is terminated pursuant to Section 9.1.
"Third Party Loan": Any of the _______ Loans identified on the
mortgage loan schedule attached to the _______ Mortgage Loan Purchase Agreement
as having been originated by the Third Party Originator.
"Third Party Originator": _________________, a ______________, its
successors and assigns.
"Third Party Originator Agreement": Each agreement between _______
and the Third Party Originator pertaining to the Third Party Loans identified on
Annex A.1 to the _______ Mortgage Loan Purchase Agreement.
"Transfer": Any direct or indirect transfer or other form of
assignment of any Ownership Interest in a Class [R-I], Class [R-II] or Class
[R-III] Certificate.
"Transferable Servicing Interest": Subject to reduction by the
Trustee pursuant to Section 3.12(a), the amount by which the Master Servicing
Fees otherwise payable to the Master Servicer hereunder exceed the sum of (i)
the Primary Servicing Fees and (ii) the amount of such Master Servicing Fees
calculated using the Minimum Master Servicing Fee Rate.
"Transferee Affidavit": As defined in Section 5.2(j)(ii).
"Transferor Letter": As defined in Section 5.2(j)(ii).
"Trust Fund": The corpus of the trust created hereby and to be
administered hereunder, consisting of: (i) such Mortgage Loans as from time to
time are subject to this Agreement, together with the Mortgage Files relating
thereto; (ii) all payments on or collections in respect of such Mortgage Loans
due after the Cut-off Date, or in the case of a Qualified Substitute Mortgage
Loan, after the date of substitution; (iii) any REO Property; (iv) all revenues
received in respect of REO Property; (v) the Master Servicer's, the Special
Servicer's and the Trustee's rights under the insurance policies with respect to
such Mortgage Loans required to be maintained pursuant to this Agreement and any
proceeds thereof; (vi) the Trustee's right, title and interest in and to the
Reserve Accounts, the Collection Account, the Grantor Trust Collection Account,
the Distribution Account, the Grantor Trust Distribution Account, the Interest
Reserve Account, the Excess Liquidation Proceeds Account, any Special Reserve
Accounts and the REO Account; (vii) the rights and remedies of Depositor under
each Mortgage Loan Purchase
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Agreement (other than the right to recovery or payment of certain transaction
expenses, including certain estimated expenses, to the extent provided in each
such Mortgage Loan Purchase Agreement and the right to receive indemnification
payments under the Indemnification Certificate required of the applicable Seller
under each such Mortgage Loan Purchase Agreement) and all rights and remedies of
_______ under each Third Party Originator Agreement to the extent assigned to
the Depositor under the _______ Mortgage Loan Purchase Agreement (but not
including any rights of _______ to indemnification or contribution under Section
__ of the ________________________ dated as of __________,____ from the Third
Party Originator, which is one of the Third Party Originator Agreements); (viii)
the Cash Deposit; (ix) the REMIC I Regular Interests and the REMIC II Regular
Interests; and (x) the proceeds of any of the foregoing (other than any interest
earned on deposits in any Reserve Account, to the extent such interest belongs
to the related Borrower).
"Trustee": ______________________, in its capacity as trustee, or
its successor in interest, or any successor trustee appointed as herein
provided.
"Trustee Fee": With respect to each Mortgage Loan and for any
Distribution Date, the Trustee's Fee shall accrue (on the basis of a 360-day
year consisting of twelve 30 day months) during each calendar month, commencing
with _____________, at the Trustee's Fee Rate on a principal amount equal to the
Stated Principal Balance of such Mortgage Loan immediately following the
Distribution Date in such calendar month (or, in the case of _____________, on a
principal amount equal to the Cut-off Date Balance of the particular Mortgage
Loan). The Trustee Fee shall be paid out of the Collection Account by the Master
Servicer on or before each Remittance Date.
"Trustee Fee Rate": A rate equal to ______% per annum.
"Trustee Mortgage File": With respect to any Mortgage Loan, the
documents listed in Section 2.1(i) through (xvi) pertaining to such Mortgage
Loan, the documents listed in the third paragraph of Section 2.1 and any
additional documents required to be deposited with the Trustee pursuant to the
express provisions of this Agreement; provided that whenever the term "Mortgage
File" is used to refer to documents actually received by the Trustee or by a
Custodian on its behalf such term shall not be deemed to include such documents
and instruments required to be included therein unless they are actually so
received.
"Uncertificated Accrued Interest": With respect to any class of
uncertificated REMIC I Regular Interests or REMIC II Regular Interests for any
Distribution Date, the product of the Uncertificated Principal Balance of such
class as of the close of the preceding Distribution Date (or, in the case of the
first Distribution Date, as of the Closing Date) and one-twelfth of the
applicable REMIC I Remittance Rate or REMIC II Remittance Rate. The
Uncertificated Accrued Interest in respect of each class of REMIC I Regular
Interests and REMIC II Regular Interests shall accrue on the basis of a 360-day
year consisting of twelve 30-day months.
"Uncertificated Distributable Interest": With respect to any REMIC I
Regular Interest or REMIC II Regular Interest for any Distribution Date, an
amount equal to: (a) the Uncertificated Accrued Interest in respect of such
REMIC I Regular Interest or REMIC II
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Regular Interest, as the case may be, for such Distribution Date; reduced (to
not less than zero) by (b) the portion of any Net Aggregate Prepayment Interest
Shortfall for such Distribution Date allocated to such REMIC I Regular Interest
or REMIC II Regular Interest, as the case may be, as set forth below; and
increased by (c) any Uncertificated Distributable Interest in respect of such
REMIC I Regular Interest or REMIC II Regular Interest, as the case may be, for
the immediately preceding Distribution Date that was not deemed paid on the
immediately preceding Distribution Date pursuant to Section 4.1 or 4.2, as
applicable, together with one month's interest (calculated on the basis of a
360-day year consisting of twelve 30-day months) on such unpaid Uncertificated
Distributable Interest at the related REMIC I Remittance Rate for such REMIC I
Regular Interest for the current Distribution Date or at the related Adjusted
REMIC II Remittance Rate for such REMIC II Regular Interest for the current
Distribution Date (or, insofar as the unpaid portion of such Uncertificated
Distributable Interest relates to the relevant Class [S] Portion, at the
weighted average of the respective Adjusted REMIC II Remittance Rates for all
the REMIC II Regular Interests for the current Distribution Date, weighted on
the basis of their respective Uncertificated Principal Balances immediately
prior to the current Distribution Date). The Net Aggregate Prepayment Interest
Shortfall for any Distribution Date shall be allocated: (i) among the respective
REMIC I Regular Interests, pro rata in accordance with the respective amounts of
Uncertificated Accrued Interest with respect thereto for such Distribution Date;
and (ii) among the respective REMIC II Regular Interests, pro rata in accordance
with the respective amounts of Uncertificated Accrued Interest with respect
thereto for such Distribution Date.
"Uncertificated Principal Balance": The principal amount of any
REMIC I Regular Interest or REMIC II Regular Interest outstanding as of any date
of determination. As of the Closing Date, the Uncertificated Principal Balance
of each REMIC I Regular Interest shall equal the initial Stated Principal
Balance of the related Mortgage Loan. On each Distribution Date, the
Uncertificated Principal Balance of each REMIC I Regular Interest shall be
reduced by all distributions of principal deemed to have been made thereon on
such Distribution Date pursuant to Section 4.1 and, if and to the extent
appropriate, shall be further reduced on such Distribution Date as provided in
Section 4.6. As of the Closing Date, the Uncertificated Principal Balance of
each REMIC II Regular Interest shall equal the amount set forth in the
Preliminary Statement hereto as its initial Uncertificated Principal Balance. On
each Distribution Date, the Uncertificated Principal Balance of each REMIC II
Regular Interest shall be reduced by all distributions of principal deemed to
have been made thereon on such Distribution Date pursuant to Section 4.2 and, if
and to the extent appropriate, shall be further reduced on such Distribution
Date as provided in Section 4.6.
"Underwriting Agreement": The Underwriting Agreement dated _______,
____ among the Depositor, _______________________, ________________________ and
____________________, as underwriters.
"Unrestricted Servicer Reports": Each of the Delinquent Loan Status
Report, the Historical Loan Modification Report, the Historical Loss Estimate
Report, the REO Status Report, the Loan Periodic Update File, the Property File
and the Loan Set-Up File, as each of such terms are used in the definition of
"CMSA SIP".
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"Unscheduled Payments": With respect to a Mortgage Loan and a
Collection Period, all Liquidation Proceeds and Insurance Proceeds payable under
such Mortgage Loan, the Repurchase Price of such Mortgage Loan if it is
repurchased or purchased pursuant to Sections 2.3 and the price specified in
Section 9.1 if such Mortgage Loan is purchased or repurchased pursuant thereto,
draws on any letters of credit issued with respect to such Mortgage Loan and any
other payments under or with respect to such Mortgage Loan not scheduled to be
made, including Principal Prepayments (but excluding Prepayment Premiums)
received during such Collection Period.
"Updated Appraisal": With respect to any Mortgage Loan, (i) a fair
market value appraisal of the related Mortgaged Property or REO Property from an
independent appraiser who is a member of the Appraisal Institute, which
appraisal shall be conducted in accordance with MAI standards by an appraiser
with at least 5 years experience in the related property type and in the
jurisdiction where the property is located or (ii) if the Mortgage Loan has a
then outstanding principal balance equal to or less than $______________, at the
Special Servicer's option, an internal property valuation performed by the
Special Servicer in accordance with the servicing standard set forth herein
(provided that in the case of an internal valuation "market value" shall be
determined in accordance with 12 C.F.R. ss. 225.62(g)), in each case conducted
subsequent to any appraisal performed on or prior to the Cut-off Date.
"Voting Rights": The voting rights to which the Certificateholders
are entitled hereunder. At all times during the term of this Agreement, ___% of
the Voting Rights shall be allocated among the Holders of the various
outstanding Classes of Principal Balance Certificates in proportion to the
respective aggregate Certificate Balances of their Certificates and __% of the
Voting Rights shall be allocated to the Holders of the Class [S] Certificates.
Voting Rights allocated to a Class of Certificateholders shall be allocated
among such Certificateholders in proportion to the Percentage Interests in such
Class evidenced by their respective Certificates. The existence of an Appraisal
Reduction shall have no effect on the determination of the Voting Rights of any
Class of Certificates.
"Weighted Average REMIC I Remittance Rate": With respect to each
Distribution Date, the weighted average of the REMIC I Remittance Rates for the
REMIC I Regular Interests, weighted on the basis of the respective
Uncertificated Principal Balances of the REMIC I Regular Interests as of the
close of business on the preceding Distribution Date (or, in the case of the
first Distribution Date, as of the Closing Date).
"Workout Fee": As defined in Section 3.12(b).
"1933 Act": The Securities Act of 1933, as it may be amended from
time to time.
"1934 Act": The Securities Exchange Act of 1934, as it may be
amended from time to time.
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SECTION 1.2. Certain Calculations.
Unless otherwise specified herein, the following provisions shall
apply:
(a) All calculations of interest (excluding interest on the Mortgage Loans,
which shall be calculated pursuant to the related Mortgage Loan Documents)
provided for herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months.
(b) The portion of any Insurance Proceeds, Liquidation Proceeds, Repurchase
Price, Substitution Shortfall Amounts or Net REO Proceeds in respect of a
Mortgage Loan allocable to principal and Prepayment Premiums shall equal the
total amount of such proceeds minus (a) first, any portion thereof payable to
the Master Servicer as Master Servicing Fees or the Trustee as Trustee Fees, to
the Trustee or Master Servicer as reimbursment of Servicing Advances and to the
Trustee, the Master Servicer or the Special Servicer as reimbursement of
Liquidation Expenses pursuant to the provisions of this Agreement and (b)
second, any portion thereof equal to interest on the unpaid principal balance of
such Mortgage Loan at the related Net Mortgage Rate from the Due Date as to
which interest was last paid by the related Borrower up to but not including the
Due Date in the Collection Period in which such proceeds are received.
Allocation of such amount between principal and Prepayment Premium shall be made
first to principal and second to Prepayment Premium.
(c) Any Mortgage Loan payment is deemed to be received on the date such
payment is actually received by the Master Servicer or the Special Servicer;
provided, however, that for purposes of calculating distributions on the
Certificates, partial Principal Prepayments with respect to any Mortgage Loan
are deemed to be received on the date they are applied in accordance with
Section 3.1(b) to reduce the outstanding principal balance of such Mortgage Loan
on which interest accrues.
SECTION 1.3. Certain Constructions.
(a) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.1 shall have the respective meanings given to them under United States
generally accepted accounting principles or regulatory accounting principles, as
applicable.
(b) The words "hereof," "herein" and "hereunder," and words of similar
import when used in this Agreement, shall refer to this agreement as a whole and
not to any particular provision of this Agreement, and references to Sections,
Schedules and Exhibits contained in this Agreement are references to Sections,
Schedules and Exhibits in or to this Agreement unless otherwise specified.
(c) Whenever a term is defined herein, the definition ascribed to such term
shall be equally applicable to both the singular and plural forms of such term
and to masculine, feminine and neuter genders of such term.
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(d) This Agreement is the result of arm's-length negotiations between the
parties and has been reviewed by each party hereto and its counsel. Each party
agrees that any ambiguity in this Agreement shall not be interpreted against the
party drafting the particular clause which is in question solely by reason of
their having drafted such provision.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
---------------------------------
SECTION 2.1. Conveyance and Assignment of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof,
does hereby establish a trust, appoint the Trustee to serve as trustee of such
trust and sell, transfer, assign, set over and otherwise convey to the Trustee
without recourse (except to the extent herein provided) all the right, title and
interest of the Depositor in and to the Mortgage Loans, including all rights to
payments in respect thereof, except as set forth below, and any security
interest thereunder (whether in real or personal property and whether tangible
or intangible) in favor of the Depositor, and all Reserve Accounts and all other
assets included or to be included in the Trust Fund for the benefit of the
Certificateholders. Such transfer and assignment includes all scheduled payments
of interest and principal due after the Cut-off Date (whether or not received)
and all payments of interest and principal received by the Depositor or the
Master Servicer on or with respect to the Mortgage Loans after the Cut-off Date,
other than any such payments of interest or principal which were due on or prior
to the Cut-off Date. In connection with such transfer and assignment of all
interest and principal due with respect to the Mortgage Loans after the Cut-off
Date, the Depositor shall make a cash deposit to the Collection Account on the
Closing Date in an amount equal to the Cash Deposit. The Depositor, concurrently
with the execution and delivery hereof, does also hereby sell, transfer, assign,
set over and otherwise convey to the Trustee without recourse (except to the
extent provided herein) all the right, title and interest of the Depositor in,
to and under the Mortgage Loan Purchase Agreements (other than the right to
recovery or payment of certain transaction expenses, including certain estimated
expenses, to the extent provided in each such Mortgage Loan Purchase Agreement
and the right to receive certain indemnification payments under the
Indemnification Certificate required of the applicable Seller under each such
Mortgage Loan Purchase Agreement) and all rights and remedies of _______ under
the Third Party Originator Agreements to the extent assigned to the Depositor
under the _______ Mortgage Loan Purchase Agreement (but not including any rights
of _______ to indemnification or contribution under Section __ of the
_________________ dated as of __________,____ from the Third Party Originator,
which is one of the Third Party Originator Agreements). The Depositor shall
cause the Reserve Accounts to be transferred to and held in the name of the
Master Servicer on behalf of the Trustee.
In connection with the transfer and assignment of its right, title
and interest in the Mortgage Loans, the Depositor does hereby deliver to, and
deposit with, the Custodian on behalf of the Trustee, with a copy to the Master
Servicer, the following documents or instruments with respect to each such
Mortgage Loan:
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(i) the original of the related Note, endorsed by the applicable Seller in
blank in the following form: "Pay to the order of ________________, without
recourse" which the Trustee or its designee is authorized to complete and which
Note and all endorsements thereof shall show a complete chain of endorsement
from the Originator to the applicable Seller, or in the case of a missing Note,
a lost note affidavit and indemnity in favor of the Depositor, the Trustee and
its successors and assigns;
(ii) (A) the related original recorded Mortgage, or a copy thereof
reflecting recordation, or a copy thereof certified by the related title
insurance company, public recording office, closing agent or Seller to be in the
form in which submitted for recording, together with each related original
recorded Assignment of Mortgage which, together with other such Assignments of
Mortgage, shows a complete chain of assignment of the related Mortgage from the
applicable Originator to the applicable Seller, or a copy thereof reflecting
recordation, or a copy thereof certified by the related title insurance company,
public recording office, closing agent or Seller to be in the form in which
submitted for recording and (B) the related original Assignment of Mortgage
executed by the applicable Seller in blank which the Trustee or its designee is
authorized to complete (and but for the insertion of the name of the assignee
and any related recording information which is not yet available to the
applicable Seller, is in suitable form for recordation in the jurisdiction in
which the related Mortgaged Property is located);
(iii) if the related security agreement is separate from the Mortgage, the
original security agreement or a copy thereof, and if the security agreement is
not assigned under the Assignments of Mortgage described in clause (ii) above,
the related original assignment of such security agreement to the applicable
Seller or a copy thereof and an original assignment of such security agreement
executed by the applicable Seller in blank which the Trustee or its designee is
authorized to complete;
(iv) (A) the acknowledgement copy of each Form UCC-1 financing statement
(file stamped to show the filing or recording thereof in the applicable public
filing or recording office), if any, filed or recorded with respect to personal
property or fixtures constituting a part of the related Mortgaged Property, or a
copy thereof in the form submitted for filing or recording, together with a copy
of each Form UCC-2 or UCC-3 assignment (file stamped to show the filing or
recording thereof in the applicable public filing or recording office), if any,
filed or recorded with respect to such financing statement which, together with
other such assignments, shows a complete chain of assignment of such financing
statement from the applicable Originator to the applicable Seller, or a copy
thereof in the form submitted for filing or recording, and (B) each Form UCC-2
or UCC-3 assignment, if any, of such financing statement executed by the
applicable Seller in blank which the Trustee or its designee is authorized to
complete (and but for the insertion of the name of the assignee and any related
filing or recording information which is not yet available to the applicable
Seller, is in suitable form for filing or recording in the filing or recording
office in which such financing statement was filed or recorded);
(v) the related original of the Loan Agreement, if any, relating to such
Mortgage Loan or a copy thereof;
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(vi) the related original lender's title insurance policy (or the original
pro forma or specimen title insurance policy or the original marked, redated and
recertified commitment for lender's title insurance policy issued with respect
to the related Mortgage for the purpose of closing), or a copy thereof, together
with any endorsements or riders thereto that were issued with or subsequent to
the issuance of such policy;
(vii) if any related Assignment of Leases, Rents and Profits is separate
from the Mortgage, (A) the original recorded Assignment of Leases, Rents and
Profits, or a copy thereof reflecting recordation, or a copy thereof certified
by the related title insurance company, public recording office, closing agent
or Seller to be in the form in which submitted for recording, together with each
related original recorded reassignment of such instrument, if any, which,
together with other such reassignments, shows a complete chain of assignment of
such instrument from the applicable Originator to the applicable Seller, or a
copy thereof reflecting recordation, or a copy thereof certified by the related
title insurance company, public recording office, closing agent or Seller to be
in the form in which submitted for recording, and (B) the related original
reassignment of such instrument, if any, executed by the applicable Seller in
blank which the Trustee or its designee is authorized to complete (and but for
the insertion of the name of the assignee and any related recording information
which is not yet available to the applicable Seller, is in suitable form for
recordation in the jurisdiction in which the related Mortgaged Property is
located) (any of which reassignments, however, may be included in a related
Assignment of Mortgage and need not be a separate instrument);
(viii) the original or a counterpart of each environmental warranty or
indemnity agreement, if any, with respect to such Mortgage Loan and any
Environmental Insurance Policy or Group Environmental Insurance Policy;
(ix) if any related assignment of contracts is separate from the Mortgage,
the original assignment of contracts or a copy thereof, and if the assignment of
contracts is not assigned under the Assignments of Mortgage described in clause
(ii) above, the original reassignment of such instrument to the applicable
Seller or a copy thereof and an original reassignment of such instrument
executed by the applicable Seller in blank which the Trustee or its designee is
authorized to complete;
(x) with respect to the related Reserve Accounts, if any, a copy of the
original of any separate agreement with respect thereto between the related
Borrower and the Originator (and, if the Seller is not the Originator, together
with an assignment of the agreement to the Seller);
(xi) the original of any other written agreement, instrument or document
securing such Mortgage Loan, including, without limitation, originals of any
guaranties with respect to such Mortgage Loan or the original letter of credit,
if any, with respect thereto, together with any and all amendments thereto,
including, without limitation, any amendment which entitles the Master Servicer
to draw upon such letter of credit on behalf of the Trustee for the benefit of
the Certificateholders, and the original of each instrument or other item of
personal property given as security for a Mortgage Loan possession of which by a
secured party is necessary to a secured party's valid, perfected, first priority
security interest therein,
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together with all assignments or endorsements thereof necessary to entitle the
Master Servicer to enforce a valid, perfected, first priority security interest
therein on behalf of the Trustee for the benefit of the Certificateholders;
(xii) with respect to the related Reserve Accounts, if any, (A) the
acknowledgement copy of each Form UCC-1 financing statement (file stamped to
show the filing thereof in the applicable public filing office), if any, filed
with respect to the security interest of the applicable Originator in such
Reserve Accounts and all funds contained therein, or a copy thereof in the form
submitted for filing, together with a copy of each Form UCC-2 or UCC-3
assignment (file stamped to show the filing thereof in the applicable public
filing office), if any, filed with respect to such financing statement, which
assignment, together with all other such assignments, shows a complete chain of
assignment of such financing statement from the applicable Originator to the
applicable Seller, or a copy thereof in the form submitted for filing, and (B)
each Form UCC-2 or UCC-3 assignment, if any, of such financing statement
executed by the applicable Seller in blank which the Trustee or its designee is
authorized to complete (and but for the insertion of the name of the assignee
and any related filing information which is not yet available to the applicable
Seller is in suitable form for filing in the filing office in which such
financing statement was filed);
(xiii) the original or a copy of each assumption, consolidation or
substitution agreement, if any, with evidence of recording thereon, where
appropriate (or a copy thereof certified by the related title insurance company,
public recording office, closing agent or Seller to be in the form in which
executed or submitted for recording);
(xiv) a copy of each ground lease, as amended, if any, of all or any
portion of the related Mortgaged Property;
(xv) a copy of the power of attorney in favor of the Master Servicer and
the Trustee described in Section ____ of the applicable Mortgage Loan Purchase
Agreement, and, if any document or instrument described above is signed by an
attorney in fact or similar agent on behalf of the related Borrower or another
party, the original of the applicable power of attorney or a copy thereof; and
(xvi) originals or copies of any and all amendments, modifications and
supplements to, and waivers related to, any of the foregoing;
provided, however, that if there exists with respect to any Cross-Collateralized
Group only one original of any document described in clauses (i)-(xvi) of this
paragraph which pertains to all of the Mortgage Loans in such
Cross-Collateralized Group, the inclusion of the original of such document in
the Trustee Mortgage File for any of such Mortgage Loans and the inclusion of a
copy of such original in each of the Trustee Mortgage Files for the other
Mortgage Loans in such Cross-Collateralized Group shall be deemed the inclusion
of such original in the Trustee Mortgage File for each such Mortgage Loan.
On or promptly following the Closing Date, the Master Servicer shall at the
expense of the Sellers, to the extent possession thereof has been delivered to
it, complete any
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Assignment of Mortgage delivered in blank pursuant to clause (ii)(B) above, any
assignment of security agreement delivered in blank pursuant to clause (iii)
above, any Form UCC-2 or UCC-3 assignment delivered in blank pursuant to clause
(iv)(B) or (xii)(B) above, any reassignment of Assignment of Leases, Rents and
Profits delivered in blank pursuant to clause (vii)(B) above and any
reassignment of assignment of contracts delivered in blank pursuant to clause
(ix) above, in each case, by inserting: "____________________, as trustee for
the Certificateholders of PNC Mortgage Acceptance Corp., Commercial Mortgage
Pass-Through Certificates, Series _________" as assignee and shall deliver (1)
for recordation, (a) each Assignment of Mortgage referred to in clause (ii)(B)
above which has not yet been submitted for recordation and (b) each reassignment
of Assignment of Leases, Rents and Profits referred to in clause (vii)(B) above
(if not otherwise included in the related Assignment of Mortgage) which has not
yet been submitted for recordation; and (2) for filing or recordation, each Form
UCC-2 or UCC-3 financing statement assignment referred to in clause (iv)B or
(xii)B above which has not yet been submitted for filing or recordation. On or
promptly following the Closing Date (but in no event more than 45 days after the
Closing Date), the Trustee or Custodian, as applicable, shall, to the extent
possession thereof has been delivered to it, complete the endorsement of each
Note by inserting: "____________________, as trustee for the Certificateholders
of PNC Mortgage Acceptance Corp., Commercial Mortgage Pass-Through Certificates,
Series _________" as endorsee. The Master Servicer shall, upon receipt, promptly
submit (or cause a third party contractor to promptly submit) for recording or
filing, as the case may be, in the appropriate public recording or filing
office, each such document (other than the Notes) delivered to the Master
Servicer for such purpose at the expense of the applicable Seller; provided,
however, that the applicable Seller may assume direct responsibility for the
filing or recordation of such document (and the supervision of any third party
contractor with respect thereto) pursuant to the terms of its agreement with the
Master Servicer. In the event that any such document which is required to be
recorded or filed is not delivered by or on behalf of the applicable Seller in
proper form for recording or filing in the appropriate public recording or
filling office or is lost or returned unrecorded or unfiled because of an actual
or purported defect therein, the Master Servicer shall use its best efforts to
promptly prepare (or cause the applicable Seller or a qualified third party
contractor to promptly prepare) a substitute document for signature by the
Depositor or the applicable Seller, as applicable, and thereafter the Master
Servicer (or such third party) shall cause each such document to be duly
recorded or filed at the expense of the applicable Seller. The Master Servicer
shall, promptly upon receipt of the original of each such recorded or filed
document, deliver such original to the Custodian. Notwithstanding anything to
the contrary contained in this Section 2.1, in those instances where the public
recording office retains the original Assignment of Mortgage or reassignment of
Assignment of Leases, Rents and Profits, if applicable, after any such document
has been recorded, the obligations hereunder of the Depositor shall be deemed to
have been satisfied upon delivery to the Custodian of a copy of such Assignment
of Mortgage or reassignment of Assignment of Leases, Rents and Profits certified
by the public recording office to be a true and complete copy of the recorded
original thereof. If a pro forma or specimen title insurance policy or a marked,
redated and recertified commitment for lender's title insurance policy has been
delivered to the Custodian in lieu of an original title insurance policy, the
Depositor or the Master Servicer will promptly deliver to the Custodian the
related original title insurance policy upon receipt thereof. Under the terms of
the Mortgage Loan Purchase Agreements, each Seller is required to make inquiries
of the applicable recording offices 90 days after the Closing Date as to the
status of any of the above documents
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referred to in clauses (ii) and (vii) above for which the original recorded
document (or a copy evidencing recordation thereof) has not been returned from
the recording office and to report the results of its inquiry to the Trustee.
Promptly upon receipt of such report, the Trustee shall forward the report to
the Master Servicer, the Special Servicer and the Controlling Class
Representative.
All original documents relating to the Mortgage Loans to the extent
delivered by the Depositor which are not delivered to the Trustee or a Custodian
on its behalf shall be held by the Master Servicer in trust, upon the conditions
herein set forth, for the benefit of the Certificateholders. In the event that
any such original document or a copy thereof is required pursuant to the terms
of this Section to be a part of a Trustee Mortgage File, such document shall be
delivered promptly to the Custodian.
SECTION 2.2. Acceptance by the Custodian and the Trustee.
By its execution and delivery of this Agreement, subject to the
other provisions of this Section 2.2, the Trustee acknowledges the assignment to
it of the Mortgage Loans in good faith without notice of adverse claims and
declares that it, either directly or through the Custodian, on its behalf, holds
and will hold such documents and all others delivered to it constituting the
Trustee Mortgage File (to the extent the documents constituting the Trustee
Mortgage File are actually delivered to it or the Custodian) for any Mortgage
Loan assigned to the Trustee hereunder in trust, upon the conditions herein set
forth, for the use and benefit of all present and future Certificateholders.
Subject to Section 3.21, the Trustee or the Custodian shall hold any letter of
credit included in the Mortgage Files in a custodial capacity only and shall
have no obligation to maintain, extend the term of, enforce, or otherwise pursue
any rights under such letter of credit. Upon execution and delivery of this
Agreement, the Trustee or the Custodian shall examine the Trustee Mortgage Files
in the possession of either of them, and shall deliver to the Depositor, the
Master Servicer, the Special Servicer, the applicable Seller and the Placement
Agents a certification in the Form of Exhibit B-2 to the effect that: (A) all
documents pursuant to clause (i) of the second paragraph of Section 2.1 are in
the possession of one of them for each Mortgage Loan listed on the Mortgage Loan
Schedule, (B) such documents have been reviewed by it and have not been
materially mutilated, damaged, defaced, torn or otherwise physically altered,
and such documents relate to such Mortgage Loan (including whether the original
principal balance for each Note conforms to that listed on the Mortgage Loan
Schedule for the related Mortgage Loan), and (C) each Note has been endorsed as
provided in clause (i) of the second paragraph of Section 2.1, which
certification shall be subject to any exceptions noted on any exception report
prepared by the Trustee or the Custodian, as applicable, and included with such
certification. The Trustee or the Custodian shall review each Trustee Mortgage
File within 45 days after the later of (a) the Trustee's or the Custodian's
receipt of such Trustee Mortgage File or (b) execution and delivery of this
Agreement, to ascertain that all documents referred to in clauses (i), (ii),
(iv), (vi) and (vii), and, to the extent such items are delivered to the Trustee
or the Custodian, clauses (viii), (xi) and (xiv) of the second paragraph of
Section 2.1 above to be included in a Trustee Mortgage File (including such
documents as are to be recorded or filed in a public recording or filing office
as provided in the third paragraph of Section 2.1 above) have been received,
have been executed, have been endorsed or assigned to the extent required,
appear on their face to be what they purport to be, purport to be recorded or
filed (as
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applicable) and have not been torn, mutilated or otherwise defaced, and that
such documents relate to the Mortgage Loans identified in the Mortgage Loan
Schedule. In so doing, the Trustee and the Custodian may rely on the purported
due execution and genuineness of any such document and on the purported
genuineness of any signature thereon. If, at the conclusion of such review, any
document or documents constituting a part of a Trustee Mortgage File have not
been executed or received, have not been endorsed or assigned to the extent
required, have not been recorded or filed (if applicable), are unrelated to the
Mortgage Loans identified in the Mortgage Loan Schedule, appear on their face
not to be what they purport to be or have been torn, mutilated or otherwise
defaced, the Trustee or the Custodian, as applicable, shall promptly so notify
the Depositor, the Controlling Class Representative, the Placement Agents and
the applicable Seller (with a copy to the Master Servicer and the Special
Servicer) by providing a written report, substantially in the form of Exhibit
B-3 attached hereto, setting forth, for each affected Mortgage Loan, in
sufficient detail, the nature of the defective or missing document. Neither the
Trustee nor the Custodian shall be responsible for any loss, cost, damage or
expense to the Trust Fund resulting from any failure to receive any document
constituting a portion of a Trustee Mortgage File noted on such a report.
Neither the Master Servicer nor the Special Servicer shall be responsible for
any loss, cost, damage or expense to the Trust Fund resulting from any failure
to receive any document constituting a portion of a Trustee Mortgage File,
subject to their respective obligations under Section 2.3(g) below.
In reviewing any Trustee Mortgage File pursuant to the preceding
paragraph or Section 2.1, the Trustee and the Custodian will have no
responsibility to determine whether any document or opinion is legal, valid,
effective, genuine, binding or enforceable or sufficient or appropriate for the
intended purpose or that they are other than what they purport to be on their
face, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine whether the Trustee is the
assignee or endorsee), whether any document has been recorded in accordance with
the requirements of any applicable jurisdiction, whether a blanket assignment is
permitted in any applicable jurisdiction, or whether any Person executing any
document or rendering any opinion is authorized to do so or whether any
signature thereon is genuine.
The Trustee shall hold that portion of the Trust Fund delivered to
the Trustee consisting of "instruments" (as such term is defined in Section
9-105 of the Uniform Commercial Code as in effect in Minnesota on the date
hereof) in Minnesota and, except (i) as set forth in Section 3.11, (ii) for the
purpose of performing its obligations pursuant to Section 2.1, or (iii) as
otherwise specifically provided in this Agreement, shall not remove such
instruments from Minnesota unless it receives an Opinion of Counsel (obtained
and delivered at the expense of the Person requesting the removal of such
instruments from Minnesota) that in the event the transfer of the Mortgage Loans
to the Trustee is deemed not to be a sale, after such removal, the Trustee will
possess a first priority perfected security interest in such instruments.
SECTION 2.3. Seller's Repurchase of Mortgage Loans for Document Defaults
and Breaches of Representations and Warranties.
(a) Upon discovery by the Depositor, the Custodian, the Master Servicer,
the Special Servicer or the Trustee of a breach of any representation or
warranty of Midland under
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the Midland Mortgage Loan Purchase Agreement or _______ under the _______
Mortgage Loan Purchase Agreement with respect to any Mortgage Loan, or that any
document required to be included in the Trustee Mortgage File with respect to a
Mortgage Loan is missing or does not conform to the requirements of the second
paragraph of Section 2.1, such Person shall give prompt notice thereof to the
applicable Seller, the Master Servicer, the Special Servicer, the Trustee, the
Controlling Class Representative, the Placement Agents and the Rating Agencies,
and such Seller shall (to the extent such Seller is so obligated under the terms
of the applicable Mortgage Loan Purchase Agreement) either (i) cure such breach
or defect, (ii) substitute a Qualified Substitute Mortgage Loan for the related
Deleted Mortgage Loan and deposit a cash amount equal to the applicable
Substitution Shortfall Amount into the Collection Account, subject to the terms
of the applicable Mortgage Loan Purchase Agreement and this Agreement, or (iii)
repurchase such Mortgage Loan at the Repurchase Price, in any event within 90
days after the discovery of such breach or defect (or after notice thereof is
received by the Seller, if permitted by the terms of the applicable Mortgage
Loan Purchase Agreement), as the same may be extended, all pursuant to and as
more particularly described in the applicable Mortgage Loan Purchase Agreement;
provided, that, none of the Depositor, the Custodian, the Master Servicer, the
Special Servicer and the Trustee has an obligation to conduct any investigation
with respect to such matters (except, in the case of the Trustee Mortgage Files,
to the extent provided in Sections 2.1 and 2.2).
(b) Upon receipt by the Master Servicer from the applicable Seller or Third
Party Originator, as the case may be, of the Repurchase Price for a repurchased
Mortgage Loan, the Master Servicer shall deposit such amount in the Collection
Account, and the Trustee, pursuant to Section 3.11, shall, upon receipt of a
certificate of a Servicing Officer certifying as to the receipt by the Master
Servicer of the Repurchase Price and the deposit of the Repurchase Price into
the Collection Account pursuant to this Section 2.3(b), release or cause to be
released to the applicable Seller or Third Party Originator, as the case may be,
the related Mortgage File (provided that each of the Custodian, the Master
Servicer and the Special Servicer shall be responsible for releasing any portion
of such Mortgage File in its possession) and shall, at the expense of the
applicable Seller or Third Party Originator, as the case may be, execute and
deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranty, as shall be provided to it and as shall be
necessary to vest in the applicable Seller or Third Party Originator, as the
case may be, the legal and beneficial ownership of any Mortgage Loan released
pursuant hereto, and the Trustee, the Custodian, the Special Servicer and the
Master Servicer shall have no further responsibility with regard to such
Mortgage File or the related Mortgage Loan.
(c) In connection with any substitution by a Seller or Third Party
Originator, as the case may be, of one or more Qualified Substitute Mortgage
Loans for one or more Deleted Mortgage Loans pursuant to Section 2.3(a)(ii), the
Master Servicer will determine the applicable Substitution Shortfall Amount.
Upon receipt by the Master Servicer from the applicable Seller or Third Party
Originator, as the case may be, of the Mortgage File(s) (including a Trustee
Mortgage File or Files which comply with Section 2.1) for the related Qualified
Substitute Mortgage Loan(s) and an amount equal to the applicable Substitution
Shortfall Amount, the Master Servicer shall deliver such Trustee Mortgage
File(s) to the Custodian and deposit such amount in the Collection Account, and
the Trustee, pursuant to Section 3.11, shall, upon receipt
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of a certificate of a Servicing Officer certifying as to the receipt of the
applicable Substitution Shortfall Amount, the delivery of such Trustee Mortgage
File(s) to the Custodian and the deposit of the Substitution Shortfall Amount
into the Collection Account pursuant to this Section 2.3(c), release or cause to
be released to the applicable Seller or Third Party Originator, as the case may
be, the Mortgage File(s) of the Deleted Mortgage Loan(s) (provided that each of
the Custodian, the Master Servicer and the Special Servicer shall be responsible
for releasing any portion of such Mortgage File(s) in its possession) and, at
the expense of the applicable Seller or Third Party Originator, as the case may
be, shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, representation or warranty, as shall be provided to
it and as shall be necessary to vest in the applicable Seller or Third Party
Originator, as the case may be, the legal and beneficial ownership of each
Deleted Mortgage Loan released pursuant hereto, and the Trustee, the Custodian,
the Special Servicer and the Master Servicer shall have no further
responsibility with regard to such Deleted Mortgage Loan(s) or the Mortgage
File(s) related thereto. No substitution may be made in any calendar month after
the Determination Date for such month. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans after the related date of substitution,
shall be part of the Trust Fund. Monthly Payments due with respect to Qualified
Substitute Mortgage Loans on or prior to the related date of substitution shall
not be part of the Trust Fund and will be remitted by the Master Servicer to the
applicable Seller or Third Party Originator, as the case may be, promptly
following receipt.
(d) If, with respect to any Third Party Loan, there exists a breach of any
of the related Third Party Originator's representations and warranties for which
such Third Party Originator could be required, under Third Party Originator
Agreements, to repurchase or replace such Third Party Loan with one or more
Qualified Substitute Mortgage Loans, the obligations of _______ and such Third
Party Originator with respect to the cure of such breach and the repurchase or
replacement of such Third Party Loan shall be as described in the _______
Mortgage Loan Purchase Agreement and the applicable Third Party Originator
Agreement(s), and the Master Servicer or the Special Servicer, as applicable,
shall use its best efforts consistent with the Servicing Standard to enforce
such obligations and exercise the rights of the Trustee under the _______
Mortgage Loan Purchase Agreement and the applicable Third Party Originator
Agreement(s).
(e) If the Master Servicer, the Special Servicer or the Trustee has
identified on ____________ one or more conditions that will become Filing
Defects with respect to a Mortgage Loan on ____________ if not earlier
corrected, such party shall, on ____________, provide written notification of
the conditions that could become Filing Defects to the other parties, the
Controlling Class Representative and the applicable Seller. On ____________, the
Master Servicer shall, unless the Controlling Class Representative permits the
Master Servicer to forebear from taking such action, exercise the rights
afforded to the Master Servicer under the applicable Mortgage Loan Purchase
Agreement to cause the applicable Seller to establish a Filing Reserve or Filing
Credit (each, as defined in the applicable Mortgage Loan Purchase Agreement)
with respect to each Mortgage Loan that has a Filing Defect. In furtherance, but
not in limitation, of the preceding sentence, (A) the Master Servicer shall
establish one or more Special Reserve Accounts, each of which shall be an
Eligible Account; (B) the Master Servicer shall deposit any Filing Reserve into
the Special Reserve Account(s) within one Business Day after receipt; and (C)
the Master Servicer shall administer each Special Reserve Account in
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accordance with the terms of the applicable Mortgage Loan Purchase Agreement. In
the event that the Master Servicer is entitled to withdraw any funds from a
Special Reserve Account or to draw upon a Filing Credit to cover losses or
expenses directly incurred by the Trust Fund as a result of a Filing Defect,
then prior to making a Servicing Advance or incurring an Additional Trust Fund
Expense to cover such losses or expenses, the Master Servicer shall deposit the
funds withdrawn from the Special Reserve Account or received in connection with
a draw upon the Filing Credit, as the case may be, into the Collection Account,
and such amounts shall be deemed to be "Liquidation Proceeds" for purposes of
this Agreement and shall be applied to cover such loss or expense.
(f) In the event that the applicable Seller incurs any expense in
connection with curing a breach of a representation or warranty pursuant to
Section 2.3(a) which also constitutes a default under the related Mortgage Loan,
the applicable Seller shall have a right, and the applicable Seller shall be
subrogated to the rights of the Trustee, as successor to the mortgagee, to
recover the amount of such expenses from the related Borrower, provided,
however, that the Seller's rights pursuant to this Section 2.3(f) shall be
junior, subject and subordinate to the rights of the Trust Fund to recover
amounts owed by the related Borrower under the terms of such Mortgage Loan,
including, without limitation, the rights to recover unreimbursed Advances,
accrued and unpaid interest on Advances at the Advance Rate and unpaid or
unreimbursed expenses of the Trust Fund allocable to such Mortgage Loan. The
Master Servicer or Special Servicer, as applicable, shall use reasonable efforts
in recovering, or assisting the applicable Seller in recovering, from such
Borrower the amount of any such expenses.
(g) The Master Servicer or the Special Servicer, as applicable, shall use
its best efforts, consistent with the Servicing Standard, to enforce the
obligations of each Seller to cure, substitute for or repurchase any Mortgage
Loan which is discovered to be a "Defective Mortgage Loan" (as such term is
defined in the applicable Mortgage Loan Purchase Agreement) under the terms of
the applicable Mortgage Loan Purchase Agreement and to otherwise administer the
applicable Mortgage Loan Purchase Agreement in accordance with its respective
terms.
SECTION 2.4. Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants as of the Closing Date
that:
(i) The Depositor is a corporation duly organized validly existing
and in good standing under the laws of the State of Missouri;
(ii) The Depositor has taken all necessary action to authorize the
execution, delivery and performance of this Agreement by it, and has the power
and authority to execute, deliver and perform this Agreement and all the
transactions contemplated hereby, including, but not limited to, the power and
authority to sell, assign and transfer its right, title and interest in the
Mortgage Loans in accordance with this Agreement;
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(iii) This Agreement has been duly and validly authorized, executed
and delivered by the Depositor and assuming the due authorization, execution and
delivery of this Agreement by each other party hereto, this Agreement and all of
the obligations of the Depositor hereunder are the legal, valid and binding
obligations of the Depositor, enforceable in accordance with the terms of this
Agreement, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, liquidation, receivership, moratorium or other laws relating to
or affecting creditors' rights generally, or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(iv) The execution and delivery of this Agreement and the performance
of its obligations hereunder by the Depositor will not conflict with any
provision of its articles of incorporation or bylaws, or any law or regulation
to which the Depositor is subject, or conflict with, result in a breach of or
constitute a default under (or an event which, with notice or lapse of time or
both, would constitute a default under) any of the terms, conditions or
provisions of any agreement or instrument to which the Depositor is a party or
by which it is bound, or any state or federal statute, or any order or decree
applicable to the Depositor, or result in the creation or imposition of any lien
on any of the Depositor's assets or property which, with respect to any of the
above events, would materially and adversely affect the ability of the Depositor
to carry out its obligations under this Agreement. The Depositor is not in
default in any material respect with respect to any agreement to which the
Depositor is a party;
(v) No consent, approval, authorization or order of, or registration
or filing with, or notice to any court or governmental agency or body is
required for the execution, delivery and performance by the Depositor of, or
compliance by the Depositor with, this Agreement, except (A) for those consents,
approvals, authorizations, orders, registrations or filings that previously have
been obtained, (B) such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and sale of the Certificates by the
Placement Agents, and (C) any recordation of the assignments of Mortgage Loan
documents to the Trustee pursuant to Article II, which has not yet been
completed;
(vi) The articles of incorporation of the Depositor provides that the
Depositor is permitted to engage in only the following activities:
(A) To acquire, own, hold, sell, transfer, assign, pledge,
finance, refinance and otherwise deal with (i) loans secured by (x) first or
second mortgages, deeds of trust or similar liens on multi-family residential,
commercial or mixed commercial and multi-family residential properties, and (y)
related assets, and (ii) any participation interest in, security (in bond or
pass-through form) or funding agreement based on, backed or collateralized by,
directly or indirectly, any of the foregoing (the loans and related assets
described in clause (A)(i) and the participation interests, securities and
funding agreements described in clause (A)(ii), collectively, "Mortgage Loan
Assets");
(B) To establish and fund one or more trusts (the "Series
Trusts") and to authorize such Series Trusts to engage in one or more of the
activities described in immediately preceding clause (A) and to issue
certificates ("Securities") in one or more classes pursuant to pooling and
servicing agreements (each, a "Pooling and Servicing Agreement"), with
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each class having the characteristics specified in the related Pooling and
Servicing Agreement, representing ownership interests in the Mortgage Loan
Assets; (C) To acquire, own, hold, invest in, offer, sell, transfer, assign,
pledge, finance and deal in and with any Securities issued by a Series Trust
established by the Depositor pursuant to immediately preceding clause (B); and
(D) To engage in any other acts and activities and to exercise any powers
permitted to corporations under the laws of the State of Missouri which are
incidental to, or connected with the foregoing, and necessary, suitable or
convenient to accomplish any of the foregoing; and
(vii) There is no action, suit or proceeding pending or, to the best
knowledge of the Depositor, threatened against the Depositor in any court or by
or before any other governmental agency or instrumentality which would
materially and adversely affect the ability of the Depositor to carry out its
obligations under this Agreement.
(b) The Depositor hereby represents and warrants with respect to each
Mortgage Loan as of the Closing Date that:
(i) Immediately prior to the transfer and assignment to the Trustee,
the related Note and the related Mortgage were not subject to an assignment or
pledge created by it or attributable to its ownership; and the Depositor had
full right to transfer and sell its right, title and interest in such Mortgage
Loan to the Trustee free and clear of any encumbrance, lien, pledge, charge,
claim or security interest encumbering such Mortgage Loan created by it or
attributable to its ownership;
(ii) Each related Assignment of Mortgage in favor of the Trustee
constitutes the legal, valid and binding assignment of the related Mortgage from
the related Seller to the Trustee, and each related reassignment of Assignment
of Leases, Rents and Profits in favor of the Trustee constitutes the legal,
valid and binding assignment of the related Assignment of Leases, Rents and
Profits from the related Seller to the Trustee; and
(iii) No claims have been made by the Depositor under the related
lender's title insurance policy, and the Depositor has not done, by act or
omission, anything which would impair the coverage of such lender's title
insurance policy.
(c) It is understood and agreed that the representations and warranties set
forth in this Section 2.4 shall survive delivery of the respective Trustee
Mortgage Files to the Trustee until the termination of this Agreement, and shall
inure to the benefit of the Certificateholders, the Trustee, the Master Servicer
and the Special Servicer.
(d) In the event that any litigation is commenced which alleges facts
which, in the judgment of the Depositor, could constitute a breach of any of the
Depositor's representations and warranties relating to the Mortgage Loans, the
Depositor hereby reserves the right to conduct
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the defense of such litigation at its expense, except to the extent such action
would materially and adversely affect the interests of the Certificateholders.
SECTION 2.5. Representations, Warranties and Covenants of the Master
Servicer and the Special Servicer.
(a) The Master Servicer hereby represents, warrants and covenants that as
of the Closing Date:
(i) The Master Servicer is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all licenses necessary to carry on its business as now being conducted, and is
in compliance with the laws of each state in which any Mortgaged Property is
located, to the extent necessary to ensure the enforceability of each Mortgage
Loan in accordance with the terms of this Agreement;
(ii) The Master Servicer has the full corporate power, authority and
legal right to execute and deliver this Agreement and to perform in accordance
herewith; the execution and delivery of this Agreement by the Master Servicer
and its performance and compliance with the terms of this Agreement do not
violate the Master Servicer's certificate of incorporation or by-laws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any contract,
agreement or other instrument to which the Master Servicer is a party or which
may be applicable to the Master Servicer or any of its assets, which default or
breach would have consequences that would materially and adversely affect the
financial condition or operations of the Master Servicer or its properties taken
as a whole or impair the ability of the Trust Fund to realize on the Mortgage
Loans;
(iii) This Agreement has been duly and validly authorized, executed
and delivered by the Master Servicer and, assuming due authorization, execution
and delivery by the other parties hereto, constitutes a legal, valid and binding
obligation of the Master Servicer, enforceable against it in accordance with the
terms of this Agreement, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, liquidation, receivership, moratorium or
other laws relating to or affecting creditors' rights generally, or by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law);
(iv) The Master Servicer is not in violation of, and the execution and
delivery of this Agreement by the Master Servicer and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any state or federal statute, any order or decree of any court or
any order or regulation of any federal, state, municipal or governmental agency
having jurisdiction, or result in the creation or imposition of any lien, charge
or encumbrance which, in any such event, would have consequences that would
materially and adversely affect the financial condition or operations of the
Master Servicer or its properties taken as a whole or impair the ability of the
Trust Fund to realize on the Mortgage Loans;
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(v) There are no actions, suits or proceedings pending or, to the
knowledge of the Master Servicer, threatened, against the Master Servicer which,
either in any one instance or in the aggregate, would result in any material
adverse change in the business, operations or financial condition of the Master
Servicer or would materially impair the ability of the Master Servicer to
perform under the terms of this Agreement or draw into question the validity of
this Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Master Servicer contemplated herein;
(vi) No consent, approval, authorization or order of, or registration
or filing with, or notice to any court or governmental agency or body is
required for the execution, delivery and performance by the Master Servicer of,
or compliance by the Master Servicer with, this Agreement or, if required, such
approval has been obtained prior to the Closing Date, except to the extent that
the failure of the Master Servicer to be qualified as a foreign corporation or
licensed in one or more states is not necessary for the enforcement of the
Mortgage Loans;
(vii) The Master Servicer has examined each Sub-Servicing Agreement,
will examine each future Sub-Servicing Agreement and will be familiar with the
terms thereof. Any Sub-Servicing Agreements will comply with the provisions of
Section 3.2; and
(viii) Each officer or employee of the Master Servicer that has
responsibilities concerning the servicing and administration of Mortgage Loans
is covered by errors and omissions insurance in the amounts and with the
coverage required by Section 3.8. Neither the Master Service nor, to the best of
the Master Servicer's knowledge, any of its officers or employees that is
involved in the servicing or administration of Mortgage Loans has been refused
such coverage or insurance. The Master Servicer has a fidelity bond meeting the
requirements of Section 3.8.
(b) The Special Servicer hereby represents, warrants and covenants that as
of the Closing Date:
(i) The Special Servicer is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all licenses necessary to carry on its business as now being conducted, and is
in compliance with the laws of each state in which any Mortgaged Property is
located, to the extent necessary to ensure the enforceability of each Specially
Serviced Mortgage Loan in accordance with the terms of this Agreement;
(ii) The Special Servicer has the full corporate power, authority and
legal right to execute and deliver this Agreement and to perform in accordance
herewith; the execution and delivery of this Agreement by the Special Servicer
and its performance and compliance with the terms of this Agreement do not
violate the Special Servicer's certificate of incorporation or by-laws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any contract,
agreement or other instrument to which the Special Servicer is a party or which
may be applicable to the Special Servicer or any of its assets, which default or
breach would have consequences that would materially and adversely affect the
financial condition or operations of the Special
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Servicer or its properties taken as a whole or impair the ability of the Trust
Fund to realize on the Specially Serviced Mortgage Loans;
(iii) This Agreement has been duly and validly authorized, executed
and delivered by the Special Servicer and, assuming due authorization, execution
and delivery by the other parties hereto, constitutes a legal, valid and binding
obligation of the Special Servicer, enforceable against it in accordance with
the terms of this Agreement, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, liquidation, receivership, moratorium or
other laws relating to or affecting creditors' rights generally, or by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law);
(iv) The Special Servicer is not in violation of, and the execution
and delivery of this Agreement by the Special Servicer and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any state or federal statute, any order or decree of any court or
any order or regulation of any federal, state, municipal or governmental agency
having jurisdiction, or result in the creation or imposition of any lien, charge
or encumbrance which, in any such event, would have consequences that would
materially and adversely affect the financial condition or operations of the
Special Servicer or its properties taken as a whole or impair the ability of the
Trust Fund to realize on the Specially Serviced Mortgage Loans;
(v) There are no actions, suits or proceedings pending or, to the
knowledge of the Special Servicer, threatened, against the Special Servicer
which, either in any one instance or in the aggregate, would result in any
material adverse change in the business, operations or financial condition of
the Special Servicer or would materially impair the ability of the Special
Servicer to perform under the terms of this Agreement or draw into question the
validity of this Agreement or the Specially Serviced Mortgage Loans or of any
action taken or to be taken in connection with the obligations of the Special
Servicer contemplated herein;
(vi) No consent, approval, authorization or order of, or registration
or filing with, or notice to any court or governmental agency or body is
required for the execution, delivery and performance by the Special Servicer of,
or compliance by the Special Servicer with, this Agreement or, if required, such
approval has been obtained prior to the Closing Date, except to the extent that
the failure of the Special Servicer to be qualified as a foreign corporation or
licensed in one or more states is not necessary for the enforcement of the
Specially Serviced Mortgage Loans; and
(vii) Each officer or employee of the Special Servicer that has or
will have responsibilities concerning the servicing and administration of
Mortgage Loans is covered by errors and omissions insurance in the amounts and
with the coverage required by Section 3.8. Neither the Special Servicer nor, to
the best of the Special Servicer's knowledge, any of its officers or employees
that is or will be involved in the servicing or administration of Mortgage Loans
has been refused such coverage or insurance. The Special Servicer has a fidelity
bond meeting the requirements of Section 3.8.
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(c) It is understood and agreed that the representations and warranties
set forth in this Section shall survive delivery of the Trustee Mortgage Files
to the Trustee or the Custodian on behalf of the Trustee until the termination
of this Agreement, and shall inure to the benefit of the Certificateholders, the
Trustee and the Depositor. Upon discovery by the Depositor, the Master Servicer,
the Special Servicer or a Responsible Officer of the Trustee (or upon written
notice thereof from any Certificateholder) of a breach of any of the
representations and warranties set forth in this Section which materially and
adversely affects the interests of the Certificateholders, the Master Servicer,
the Special Servicer or the Trustee, the party discovering such breach shall
give prompt written notice to the other parties hereto and to the Rating
Agencies.
SECTION 2.6. Execution and Delivery of Certificates; Issuance of REMIC
I Regular Interests and REMIC II Regular Interests.
The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery to it or a Custodian appointed by it, of the Trustee Mortgage
Files, subject to the provisions of Section 2.1 and Section 2.2 and,
concurrently with such delivery, (i) acknowledges the issuance of and hereby
declares that it holds the REMIC I Regular Interests on behalf of REMIC II and
the Holders of the Class [R-II] Certificates; (ii) acknowledges the issuance of
and hereby declares that it holds the REMIC II Regular Interests on behalf of
REMIC III and the Holders of the REMIC III Regular Certificates and the Class
[R-III] Certificates; (iii) acknowledges the issuance of the Class [E]
Certificates and hereby declares that it holds the Grantor Trust Assets on
behalf of the holders of the Class [E] Certificates; and (iv) has caused to be
executed and caused to be authenticated and delivered to or upon the order of
the Depositor, or as directed by the terms of this Agreement, Class [A-1A],
Class [A-1B], Class [S], Class [A-2], Class [A-3], Class [A-4], Class [B-1],
Class [B-2], Class [B-3], Class [B-4], Class [B-5], Class [B-6], Class [B-7],
Class [B-8], Class [C], Class [D], Class [E], Class [R-I], Class [R-II] and
Class [R-III] Certificates in authorized denominations, in each case registered
in the names set forth in such order of the Depositor or as so directed in this
Agreement and duly authenticated by the Authenticating Agent, which Certificates
(described in the preceding clause (iv)) evidence ownership of the entire Trust
Fund and the Depositor acknowledges receipt of the Certificates from the
Trustee.
SECTION 2.7. Documents Not Delivered to Custodian.
All original documents relating to the Mortgage Loans which are part
of the Master Servicer Mortgage File are and shall be held by the Master
Servicer, in trust for the benefit of the Trustee on behalf of the
Certificateholders. The legal ownership of all records and documents with
respect to each Mortgage Loan prepared by or which come into the possession of
the Master Servicer shall immediately vest in the Trustee, in trust for the
benefit of the Certificateholders.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
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SECTION 3.1. Master Servicer to Act as Master Servicer; Special Servicer
to Act as Special Servicer; Administration of the Mortgage Loans.
(a) The Master Servicer and the Special Servicer, each as an independent
contractor, shall service and administer the Mortgage Loans (or in the case of
the Special Servicer, the Specially Serviced Mortgage Loans and the REO Mortgage
Loans) on behalf of the Trust Fund solely in the best interests of, and for the
benefit of, all of the Certificateholders and the Trustee (as trustee for the
Certificateholders) in accordance with applicable law, the terms of this
Agreement and the terms of the respective Mortgage Loans. In furtherance of, and
to the extent consistent with, the foregoing, and except to the extent that this
Agreement provides for a contrary specific course of action, each of the Master
Servicer and the Special Servicer shall service and administer each Mortgage
Loan (x) 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 third-party portfolios, giving due consideration to customary and usual
standards of practice of prudent institutional commercial mortgage loan
servicers used with respect to loans comparable to the Mortgage Loans, or (y) in
the same manner in which, and with the same care, skill, prudence and diligence
with which, it services and administers similar mortgage loans which it owns,
whichever standard of care is higher, and taking into account its other
obligations hereunder, but without regard to:
(i) any other relationship that the Master Servicer, the Special
Servicer, any Sub-Servicer or any Affiliate of the Master Servicer, the Special
Servicer or any Sub-Servicer may have with the related Borrower or any Affiliate
of such Borrower;
(ii) the ownership of any Certificate by the Master Servicer, the
Special Servicer or any Affiliate of either;
(iii) the Master Servicer's or the Trustee's obligation to make P&I
Advances or Servicing Advances or to incur servicing expenses with respect to
such Mortgage Loan;
(iv) the Master Servicer's, the Special Servicer's or any Sub-
Servicer's right to receive compensation for its services hereunder or with
respect to any particular transaction;
(v) the ownership, servicing or management for others by the Master
Servicer, the Special Servicer or any Sub-Servicer, of any other mortgage loans
or property; or
(vi) any obligation of the Master Servicer, the Special Servicer,
any Sub-Servicer or any affiliate of the Master Servicer, the Special Servicer
or any Sub-Servicer to
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repurchase or replace a Mortgage Loan as a Seller if required by a Mortgage Loan
Purchase Agreement.
The standards set forth above with respect to the conduct of the
Master Servicer and the Special Servicer in the performance of their respective
obligations under this Agreement is herein referred to as the "Servicing
Standard."
The Master Servicer's or the Special Servicer's liability for
actions and omissions in its capacity as Master Servicer or Special Servicer, as
the case may be, hereunder is limited as provided herein (including, without
limitation, pursuant to Section 6.3). To the extent consistent with the
foregoing and subject to any express limitations set forth in this Agreement,
the Master Servicer and the Special Servicer shall use its best efforts to seek
to maximize the timely and complete recovery of principal and interest on the
Notes; provided, however, that nothing herein contained shall be construed as an
express or implied guarantee by the Master Servicer or the Special Servicer of
the collectability of the Mortgage Loans. Subject only to the above-described
Servicing Standard and the terms of this Agreement and of the respective
Mortgage Loans, the Master Servicer and the Special Servicer shall have full
power and authority, acting alone or through Sub-Servicers (subject to Section
3.2), to do or cause to be done any and all things in connection with such
servicing and administration which they may deem necessary or desirable. Without
limiting the generality of the foregoing, the Master Servicer and the Special
Servicer shall, and each is hereby authorized and empowered by the Trustee to,
with respect to each Mortgage Loan and the related Mortgaged Property, prepare,
execute and deliver, on behalf of the Certificateholders and the Trustee or any
of them, any and all financing statements, continuation statements and other
documents or instruments necessary to maintain the lien on the related Mortgaged
Property and related collateral; subject to Section 3.28(a), any modifications,
waivers, consents or amendments to or with respect to any Mortgage Loan or any
documents contained in the related Mortgage File; and, subject to Section
3.28(a), any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge, and all other comparable instruments, if, in its
reasonable judgment, such action is in the best interests of the
Certificateholders and is in accordance with, or is required by, this Agreement.
The Master Servicer and the Special Servicer shall service and administer the
Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Borrowers any reports required to be provided to them thereby.
Subject to Section 3.11, the Trustee shall, upon the receipt of a written
request of a Servicing Officer, execute and deliver to the Master Servicer and
the Special Servicer any powers of attorney and other documents prepared by the
Master Servicer or the Special Servicer and necessary or appropriate (as
certified in such written request) to enable the Master Servicer and the Special
Servicer to carry out their servicing and administrative duties hereunder;
provided, however, that the Trustee shall not be liable for any actions of the
Master Servicer or Special Servicer under any such powers of attorney.
(b) Unless otherwise provided in the related Note, the Master Servicer
shall apply any partial Principal Prepayment received on a Mortgage Loan on a
date other than a Due Date to the principal balance of such Mortgage Loan as of
the Due Date immediately following the date of receipt of such partial Principal
Prepayment.
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SECTION 3.2. Sub-Servicing.
(a) The Master Servicer or the Special Servicer may enter into
Sub-Servicing Agreements with third parties with respect to any of its
respective obligations hereunder, provided that (1) any such agreement shall be
consistent with the provisions of this Agreement and (2) no Sub-Servicer
retained by the Master Servicer or the Special Servicer shall grant any
modification, waiver or amendment to any Mortgage Loan without the approval of
the Master Servicer or the Special Servicer, as applicable. Any such
Sub-Servicing Agreement may permit the Sub-Servicer to delegate its duties to
agents or subcontractors so long as the related agreements or arrangements with
such agents or subcontractors are consistent with the provisions of this Section
3.2(a).
Any Sub-Servicing Agreement entered into by the Master Servicer or the
Special Servicer, shall provide that it may be assumed or terminated by the
Trustee or successor Master Servicer or Special Servicer if the Trustee or a
successor Master Servicer or Special Servicer has assumed the duties of the
Master Servicer or the Special Servicer, as applicable, without cost or
obligation to the assuming or terminating party or the Trust Fund, upon the
assumption by the Trustee or a successor Master Servicer or Special Servicer of
the obligations of the Master Servicer or the Special Servicer, as applicable,
pursuant to Section 7.2; provided, however, that the Trustee or successor Master
Servicer may not terminate any Sub-Servicing Agreement entered into by the
Master Servicer as of the Closing Date with respect to any of the _______ Loans
unless the related Sub-Servicer is in default under such Sub-Servicing
Agreement, which Sub-Servicing Agreement must provide that (i) the Sub-Servicer
is in default if it causes the Master Servicer to be in default under this
Agreement and (ii) the related Sub-Servicer is required to perform its servicing
obligations in a manner consistent with the Servicing Standard.
Any Sub-Servicing Agreement, and any other transactions or services
relating to the Mortgage Loans involving a Sub-Servicer, shall be deemed to be
between the Master Servicer or the Special Servicer, as applicable, and such
Sub-Servicer alone, and the Trustee and the Certificateholders shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Sub-Servicer, including the Depositor acting in
such capacity, except as set forth in Section 3.2(c).
(b) The Master Servicer and the Special Servicer shall each pay the
respective fees of any Sub-Servicer retained by it thereunder from its own funds
in accordance with the applicable Sub-Servicing Agreement.
(c) If the Trustee or any successor Master Servicer or Special Servicer
assumes the obligations of the Master Servicer or the Special Servicer, as
applicable, in accordance with Section 7.2, the Trustee or such successor Master
Servicer or Special Servicer, to the extent necessary to permit the Trustee or
such successor Master Servicer or Special Servicer to carry out the provisions
of Section 7.2, shall, without act or deed on the part of the Trustee or such
successor Master Servicer or Special Servicer, succeed to all of the rights and
obligations of the Master Servicer or Special Servicer under any Sub-Servicing
Agreement entered into by the Master Servicer or Special Servicer pursuant to
Section 3.2(a), subject to the right of termination by the Trustee, if any, set
forth in Section 3.2(a). In such event, the Trustee
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or such successor Master Servicer or Special Servicer shall be deemed to have
assumed all of the Master Servicer's or Special Servicer's interest therein (but
not any liabilities or obligations in respect of acts or omissions of the Master
Servicer or Special Servicer prior to such deemed assumption) and to have
replaced the Master Servicer or the Special Servicer, as applicable, as a party
to such Sub-Servicing Agreement to the same extent as if such Sub-Servicing
Agreement had been assigned to the Trustee or such successor Master Servicer,
except that the Master Servicer or the Special Servicer shall not thereby be
relieved of any liability or obligations under such Sub-Servicing Agreement that
accrued prior to the assumption of duties hereunder by the Trustee or such
successor Master Servicer or Special Servicer.
In the event that the Trustee or any successor Master Servicer or
Special Servicer assumes the servicing obligations of the Master Servicer or the
Special Servicer, as the case may be, upon request of the Trustee or such
successor Master Servicer or Special Servicer, as the case may be, the Master
Servicer or Special Servicer shall, at its own expense, deliver to the Trustee
or such successor Master Servicer or Special Servicer (as the case may be) all
documents and records relating to any Sub-Servicing Agreement and the Mortgage
Loans then being serviced thereunder and an accounting of amounts collected and
held by it, if any, and the Master Servicer will otherwise use its best efforts
to effect the orderly and efficient transfer of any Sub-Servicing Agreement to
the Trustee or such successor Master Servicer.
(d) Notwithstanding any Sub-Servicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or Special Servicer and any Person acting as Sub-Servicer (or its
agents or subcontractors) or any reference to actions taken through any Person
acting as Sub-Servicer or otherwise, the Master Servicer or the Special
Servicer, as applicable, shall remain obligated and liable to the Trustee and
Certificateholders for the servicing and administering of the Mortgage Loans in
accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue of such Sub-Servicing Agreements or
arrangements or by virtue of indemnification from the Depositor or any Person
acting as Sub-Servicer (or its agents or subcontractors) to the same extent and
under the same terms and conditions as if the Master Servicer or Special
Servicer, as applicable, were servicing and administering the Mortgage Loans
alone. The Master Servicer or the Special Servicer, as applicable, shall be
entitled to enter into an agreement with any Sub-Servicer providing for
indemnification of the Master Servicer or the Special Servicer, as applicable,
by such Sub-Servicer, and nothing contained in this Agreement shall be deemed to
limit or modify such indemnification, but no such agreement for indemnification
shall be deemed to limit or modify this Agreement.
SECTION 3.3. Collection of Certain Mortgage Loan Payments.
The Master Servicer and the Special Servicer shall make best efforts
to collect all payments called for under the terms and provisions of the
Mortgage Loans when the same shall be due and payable, and shall follow such
collection procedures as are consistent with the Servicing Standard, including
using its best efforts in accordance with the Servicing Standard to collect
income statements and rent rolls from the related Borrowers as required by the
related Mortgage Loan Documents and providing (in the case of the Master
Servicer only) reasonable advance notice to such Borrowers of Balloon Payments
due with respect to such Mortgage
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Loans. With respect to any Mortgage Loan that has a ground lease, the Master
Servicer shall send notice to the related ground lessor that the Trustee on
behalf of the Trust Fund is the mortgagee under the Mortgage Loan. Consistent
with the foregoing, the Master Servicer or the Special Servicer, as applicable,
may in its discretion waive any late payment charge, Default Interest or penalty
fees in connection with any delinquent Monthly Payment or Balloon Payment with
respect to any Mortgage Loan.
SECTION 3.4. Collection of Taxes, Assessments and Similar Items.
(a) With respect to each Mortgage Loan (other than REO Mortgage Loans), the
Master Servicer shall maintain accurate records with respect to each related
Mortgaged Property reflecting the status of taxes, assessments and other similar
items that are or may become a lien on such related Mortgaged Property, the
status of insurance premiums payable with respect thereto and the amounts of
Escrow Payments, if any, required in respect thereof. From time to time, the
Master Servicer shall (i) obtain all bills for the payment of such items
(including renewal premiums), and (ii) effect payment of all such bills with
respect to each such Mortgaged Property prior to the applicable penalty or
termination date, in each case employing for such purpose Escrow Payments as
allowed under the terms of such Mortgage Loan. If a Borrower fails to make any
such Escrow Payment on a timely basis or collections from such Borrower are
insufficient to pay any such item before the applicable penalty or termination
date, the Master Servicer shall (in accordance with Section 3.8 with respect to
the payment of insurance premiums) advance the amount necessary to effect
payment of any such item, unless the Master Servicer, in its good faith business
judgment, determines that such Advance would be a Nonrecoverable Advance. With
respect to any Mortgage Loan as to which the related Borrower is not required to
make Escrow Payments, if such Borrower fails to effect payment of any such bill,
then, the Master Servicer shall (in accordance with Section 3.8 with respect to
the payment of insurance premiums) advance the amount necessary to effect
payment of any such bill on or before the applicable penalty or termination
date; provided, that, with respect to the payment of taxes and assessments, the
Master Servicer shall make such advance within five Business Days after the
Master Servicer has received confirmation that such item has not been paid. The
Master Servicer shall be entitled to reimbursement of Servicing Advances that it
makes pursuant to the preceding sentence, with interest thereon at the Advance
Rate, from amounts received on or in respect of the Mortgage Loan respecting
which such Servicing Advance was made or if such Servicing Advance has become a
Nonrecoverable Advance, to the extent permitted by Section 3.6 of this
Agreement. No costs incurred by the Master Servicer in effecting the payment of
taxes and assessments on the Mortgaged Properties shall, for the purpose of
calculating distributions to Certificateholders, be added to the amount owing
under the related Mortgage Loans, notwithstanding that the terms of such
Mortgage Loans so permit.
(b) The Master Servicer shall segregate and hold all funds collected and
received pursuant to any Mortgage Loan constituting Escrow Payments separate and
apart from any of its own funds and general assets and shall establish and
maintain one or more segregated custodial accounts which are Eligible Accounts
(each, an "Escrow Account") into which all Escrow Payments shall be deposited
within one Business Day after receipt. The Master Servicer shall also deposit
into each Escrow Account any amounts representing losses on Permitted
Investments in which amounts on deposit in such Escrow Account have been
invested pursuant
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to Section 3.7(b) and any Insurance Proceeds, Condemnation Proceeds or
Liquidation Proceeds which are required to be applied to the restoration or
repair of the related Mortgaged Property pursuant to the related Mortgage Loan.
Escrow Accounts shall be entitled, "Midland Loan Services, Inc., as Master
Servicer, in trust for ____________________ as Trustee in trust for Holders of
PNC Mortgage Acceptance Corp. Commercial Mortgage Pass-Through Certificates,
Series _________, and Various Borrowers." Withdrawals from an Escrow Account may
be made by the Master Servicer only:
(i) to effect timely payments of items with respect to which Escrow
Payments are required pursuant to the related Mortgage;
(ii) to transfer funds to the Collection Account to reimburse the
Master Servicer or the Trustee, as applicable, for any Advance relating to
Escrow Payments, but only from amounts received with respect to the related
Mortgage Loan which represent late collections of Escrow Payments thereunder;
(iii) for application to the restoration or repair of the related
Mortgaged Property in accordance with the related Mortgage Loan and the
Servicing Standard;
(iv) to clear and terminate such Escrow Account upon the termination
of this Agreement;
(v) to pay from time to time to the Master Servicer any interest or
investment income earned on funds deposited in such Escrow Account pursuant to
Section 3.7(b) to the extent (a) permitted by law and (b) not required to be
paid to the related Borrower under the terms of the related Mortgage Loan or by
law, or to pay such interest or income to the related Borrower if such income is
required to paid to the related Borrower under law or by the terms of the
related Mortgage Loan; and
(vi) to remove any funds deposited in such Escrow Account that were
not required to be deposited therein.
SECTION 3.5. Collection Account; Distribution Account; Grantor Trust
Collection Account; Grantor Trust Distribution Account and Excess Liquidation
Proceeds Account.
(a) The Master Servicer shall establish and maintain the Collection Account
in the Trustee's name, for the benefit of the Certificateholders. The Collection
Account shall be established and maintained as an Eligible Account. The Master
Servicer shall deposit or cause to be deposited in the Collection Account within
one Business Day following receipt the following payments and collections
received or made by it on or with respect to the Mortgage Loans:
(i) all payments on account of principal on the Mortgage Loans,
including the principal component of Unscheduled Payments on the Mortgage Loans;
(ii)
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(ii) all payments on account of interest and Default Interest on the
Mortgage Loans, the interest portion of all Unscheduled Payments, all Prepayment
Premiums and all payments on account of late payment charges on the Mortgage
Loans;
(iii) any amounts required to be deposited pursuant to Section 3.7(b)
in connection with losses realized on Permitted Investments with respect to
funds held in the Collection Account and pursuant to Section 3.25 in connection
with Prepayment Interest Shortfalls;
(iv) (x) all Net REO Proceeds transferred from an REO Account pursuant
to Section 3.17(b) and (y) all Insurance Proceeds and Net Liquidation Proceeds
not required to be applied to the restoration or repair of the related Mortgaged
Property;
(v) any amounts received from Borrowers which represent recoveries of
Servicing Advances made pursuant to Section 3.4; and
(vi) any other amounts required by the provisions of this Agreement to
be deposited into the Collection Account by the Master Servicer or the Special
Servicer, including, without limitation, proceeds of any purchase or repurchase
of a Mortgage Loan pursuant to Section 2.3, Section 3.18 or Section 9.1.
In the event that the Master Servicer deposits in the Collection
Account any amount not required to be deposited therein, the Master Servicer may
at any time withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding.
(b) The Trustee shall establish and maintain the Distribution Account in
the name of the Trustee, in trust for the benefit of the Certificateholders. The
Distribution Account shall be established and maintained as an Eligible Account.
(c) Prior to the Remittance Date relating to the Collection Period, if any,
in which any Deferred Interest is received, the Master Servicer shall establish
and maintain the Grantor Trust Collection Account in the name of the Trustee, in
trust for the benefit of the Class [E] Certificateholders as set forth in
Section 10.5. The Grantor Trust Collection Account shall be established and
maintained as an Eligible Account. The Master Servicer shall transfer to the
Grantor Trust Collection Account any Deferred Interest within two Business Days
after such amounts are deposited in the Collection Account.
(d) Prior to the Remittance Date relating to the Collection Period, if any,
in which Deferred Interest is received, the Trustee shall establish and maintain
the Grantor Trust Distribution Account in the name of the Trustee, in trust for
the benefit of the Class [E] Certificateholders as set forth in Section 10.05.
The Grantor Trust Distribution Account shall be established and maintained as an
Eligible Account. On or before the Remittance Date related to the applicable
Distribution Date, the Master Servicer shall remit to the Trustee for deposit in
the Grantor Trust Distribution Account an amount equal to the Deferred Interest
received during the related Collection Period.
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(e) Following the distribution of Deferred Interest to Certificateholders
on the first Distribution Date after which there are no longer any Mortgage
Loans outstanding which pursuant to their terms could pay Deferred Interest, the
Master Servicer and the Trustee, respectively, shall terminate the Grantor Trust
Collection Account and the Grantor Trust Distribution Account.
(f) If any Excess Liquidation Proceeds are received, the Trustee shall
establish and maintain the Excess Liquidation Proceeds Account in the name of
the Trustee, in trust for the benefit of the Certificateholders. On or before
the Remittance Date related to the applicable Distribution Date, the Master
Servicer shall remit to the Trustee from the Collection Account and for deposit
into the Excess Liquidation Proceeds Account an amount equal to the Excess
Liquidation Proceeds received during the related Collection Period. The Excess
Liquidation Proceeds Account shall be established and maintained as an Eligible
Account.
(g) Funds in the Collection Account, the Distribution Account, the Grantor
Trust Collection Account and the Grantor Trust Distribution Account may be
invested in Permitted Investments in accordance with the provisions of Section
3.7. The Master Servicer shall give written notice to the Trustee of the
location and account number of the Collection Account and the Grantor Trust
Collection Account and shall notify the Trustee in writing prior to any
subsequent change thereof.
SECTION 3.6. Permitted Withdrawals from the Collection Account and
Grantor Trust Collection Account.
(a) The Master Servicer may make withdrawals from the Collection Account
(and the Grantor Trust Collection Account, with respect to Deferred Interest)
only as described below (the order set forth below not constituting an order of
priority for such withdrawals):
(i) to remit the applicable amounts to the Trustee, for deposit in the
Distribution Account, the Grantor Trust Distribution Account and the Excess
Liquidation Proceeds Account pursuant to Section 4.5, Section 3.5(d) and Section
3.5(f), respectively;
(ii) to pay or reimburse the Trustee or the Master Servicer, in that
order of priority for Advances; provided, however, the right of the Master
Servicer or the Trustee to reimburse itself pursuant to this clause (ii) being
limited to either (x) any collections on or in respect of the particular
Mortgage Loan or REO Property respecting which each such Advance was made, or
(y) any other amounts in the Collection Account in the event that such Advances
have been deemed to be Nonrecoverable Advances or are not recovered from
recoveries in respect of the related Mortgage Loan or REO Property after a Final
Recovery Determination;
(iii) to pay to the Trustee or the Master Servicer, in that order of
priority, the Advance Interest Amount first out of Default Interest actually
collected on any Mortgage Loan and late payment charges actually collected in
respect of the related Mortgage Loan and, to the extent such amounts are
insufficient, in connection with or at any time following the reimbursement of
such Advance, from any other amounts in the Collection Account;
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(iv) to pay on or before each Remittance Date to the Master Servicer,
Special Servicer and Trustee, as applicable, as compensation, the unpaid Master
Servicing Fee, Special Servicing Fee, and Trustee Fee, respectively (in the case
of the Master Servicer, reduced up to the amount of any Prepayment Interest
Shortfalls with respect to such Distribution Date, in accordance with Section
3.25), to be paid, in the case of the Master Servicing Fee, from interest
received on the related Mortgage Loans, and to pay to the Master Servicer or the
Special Servicer, as applicable, any other amounts constituting Servicing
Compensation;
(v) to pay on or before each Distribution Date to the Depositor, the
applicable Seller or the purchaser of any Specially Serviced Mortgage Loan or
REO Property, as the case may be, with respect to each Mortgage Loan, Deleted
Mortgage Loan or REO Property that has previously been repurchased, replaced or
purchased by it pursuant to Section 2.3, Section 3.18 or Section 9.1, all
amounts received thereon during the related Collection Period and subsequent to
the effective date of such purchase or repurchase.
(vi) to the extent reimbursement or payment is not provided for
pursuant to any other clause of this Section 3.6(a), to reimburse or pay the
Master Servicer, the Special Servicer, the Trustee and/or the Depositor for
unpaid items incurred by or on behalf of such Person pursuant to, as applicable,
Section 3.7(c), the last paragraph of Section 3.10(e), Section 6.3, Section 7.4,
Section 8.5(d) or Section 11.7, or any other provision of this Agreement
pursuant to which such Person is entitled to reimbursement or payment from the
Trust Fund, in each case only to the extent reimbursable under such Section, it
being acknowledged that this clause (vi) shall not be deemed to modify the
substance of any such Section, including the provisions of such Section that set
forth the extent to which one of the foregoing Persons is or is not entitled to
payment or reimbursement;
(vii) to deposit in one or more separate, non-interest bearing
accounts any amount reasonably determined by the Trustee to be necessary to pay
any applicable federal, state or local taxes imposed on REMIC I, REMIC II and
REMIC III or the Grantor Trust under the circumstances and to the extent
described in Section 10.3(c) and Section 10.5, respectively;
(viii) to deposit into the Interest Reserve Account any amounts
required to be deposited therein pursuant to Section 3.29(a);
(ix) to withdraw any amount deposited into the Collection Account and
the Grantor Trust Collection Account that was not required to be deposited
therein; and
(x) to clear and terminate the Collection Account and Grantor Trust
Collection Account pursuant to Section 9.1.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan-by-Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account or Grantor Trust Collection Account
pursuant to subclauses (ii) - (ix) above.
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(b) The Master Servicer shall pay to the Trustee or the Special Servicer
from the Collection Account (to the extent permitted by clauses (i)-(ix) above)
amounts permitted to be paid to the Trustee or the Special Servicer therefrom,
promptly upon receipt of a certificate of a Responsible Officer of the Trustee,
or a Servicing Officer of the Special Servicer, as applicable, describing the
item and amount to which the Trustee or the Special Servicer is entitled. The
foregoing sentence does not apply to the payment of the Trustee Fee. The Master
Servicer may rely conclusively on any such certificate and shall have no duty to
recalculate the amounts stated therein.
(c) The Trustee shall, from time to time, make withdrawals from the
Distribution Account for each of the following purposes (the order set forth
below not constituting an order of priority for such withdrawals):
(i) to make distributions to Certificateholders on each Distribution
Date pursuant to Article IV;
(ii) to pay itself or any of its directors, officers, employees and
agents, as the case may be, any amounts payable or reimbursable to any such
Person pursuant to Section 3.6(a), including the Trustee's Fee, but only to the
extent not previously paid by the Master Servicer pursuant to Section 3.6(b);
(iii) to withdraw any amount deposited into the Distribution Account
that was not required to be deposited therein; and
(iv) to clear and terminate the Distribution Account at the
termination of this Agreement pursuant to Section 9.01.
(d) The Trustee, the Special Servicer and the Master Servicer shall in
all cases have a right prior to the Certificateholders to any funds on deposit
in the Collection Account from time to time for the reimbursement or payment of
unpaid or unreimbursed Trustee Fees, Servicing Compensation (subject to the
limitation set forth in Section 3.6(a)(iv) for Master Servicing Fees), Advances
(subject to the limitation set forth in Section 3.6(a)(ii)) and their respective
expenses (including Advance Interest Amounts) hereunder to the extent such
expenses, fees, compensation and Advances are to be reimbursed or paid from
amounts on deposit in the Collection Account pursuant to this Agreement.
(e) The Trustee shall, upon receipt, deposit in the Distribution Account
or the Grantor Trust Distribution Account, as applicable, any and all amounts
received by the Trustee in accordance with Section 3.6(a)(i). If, as of 3:00
p.m., New York City time, on any Remittance Date or on such other date as any
amount referred to in Section 3.6(a)(i) is required to be delivered hereunder,
the Master Servicer shall not have delivered to the Trustee for deposit in the
Distribution Account or the Grantor Trust Distribution Account the amounts
required to be deposited therein pursuant to Section 3.6(a)(i), then the Trustee
shall, to the extent that a Responsible Officer of the Trustee has such
knowledge, provide notice of such failure to the Master Servicer by facsimile
transmission sent to telecopy no. (816) 435-2326 (or such alternative number
provided by the Master Servicer to the Trustee in writing) or by telephone at
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telephone no. (816) 435-5000 (or such alternative number provided by the Master
Servicer to the Trustee in writing) as soon as possible, but in any event before
5:00 p.m., New York City time, on such day.
SECTION 3.7. Investment of Funds in Accounts.
(a) The Master Servicer with respect to the Collection Account, the Grantor
Trust Collection Account, the Interest Reserve Account and any Reserve Accounts,
the Special Servicer with respect to any REO Account and the Trustee with
respect to the Distribution Account, the Excess Liquidation Proceeds Account and
the Grantor Trust Distribution Account may direct any depository institution
maintaining such account (subject, in the case of Reserve Accounts, to
applicable laws and the related Mortgage Loan Documents) (each, for purposes of
this Section 3.7, an "Investment Account") to invest the funds in such
Investment Account in one or more Permitted Investments that bear interest or
are sold at a discount, and that mature, unless payable on demand, no later than
the Business Day preceding the date on which such funds are required to be
withdrawn from such Investment Account pursuant to this Agreement; provided,
however, that all investments in the Distribution Account and Grantor Trust
Distribution Account, including those payable on demand, shall mature no later
than the Business Day prior to the next Distribution Date. Any direction by the
Master Servicer, the Special Servicer or the Trustee, as applicable, to invest
funds on deposit in an Investment Account shall be in writing and shall certify
that the requested investment is a Permitted Investment which matures at or
prior to the time required hereby or is payable on demand. In the case of any
Reserve Account, the Master Servicer shall act upon the written request of the
related Borrower or Manager to the extent the Master Servicer is required to do
so under the terms of the related Mortgage Loan, provided that in the absence of
appropriate written instructions from such Borrower or Manager meeting the
requirements of this Section 3.7, the Master Servicer shall have no obligation
to, but will be entitled to, direct the investment of funds in such Reserve
Accounts. All such Permitted Investments shall be held to maturity, unless
payable on demand. Any investment of funds in an Investment Account shall be
made in the name of the Trustee (in its capacity as such) or in the name of a
nominee of the Trustee. The Trustee shall have sole control (except with respect
to investment direction which shall be in the sole control of the Person
specified above (subject, in the case of Reserve Accounts, to the rights of the
related Borrower or Manager under the related Mortgage Loan Documents) as an
independent contractor to the Trust Fund) over each such investment and any
certificate or other instrument evidencing any such investment shall be
delivered directly to the Trustee or its nominee (which shall initially be the
Master Servicer), together with any document of transfer, if any, necessary to
transfer title to such investment to the Trustee or its nominee. The Trustee
shall have no responsibility or liability with respect to the investment
directions of the Master Servicer or the Special Servicer or any losses
resulting therefrom, whether from Permitted Investments or otherwise. In the
event amounts on deposit in an Investment Account are at any time invested in a
Permitted Investment payable on demand, the Trustee, Master Servicer or the
Special Servicer, as applicable, shall:
(x) consistent with any notice required to be given thereunder, demand
that payment thereon be made on the last day such Permitted Investment may
otherwise mature hereunder in an amount equal to the lesser of (1) all amounts
then payable thereunder and (2) the amount required to be withdrawn on such
date; and
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(y) demand payment of all amounts due thereunder promptly upon
determination by the Trustee, the Master Servicer or the Special Servicer, as
applicable, that such Permitted Investment would not constitute a Permitted
Investment in respect of funds thereafter on deposit in the related Investment
Account.
(b) All income and gain (net of losses as contemplated below) realized from
investment of funds deposited in (i) the Collection Account, Grantor Trust
Collection Account, Interest Reserve Account and any Reserve Account as to which
the related Borrower is not entitled to interest thereon, shall be for the
benefit of the Master Servicer, (ii) the Distribution Account, the Excess
Liquidation Proceeds Account and the Grantor Trust Distribution Account shall be
for the benefit of the Trustee and (iii) any REO Account shall be for the
benefit of the Special Servicer. Such income and gain (net of losses as
contemplated below) may be withdrawn by Trustee, the Master Servicer or the
Special Servicer, as applicable, from time to time. The amount of any net losses
incurred in respect of any such investments in the Collection Account, Grantor
Trust Collection Account or Interest Reserve Account, shall be for the account
of the Master Servicer which shall deposit the amount of such loss (to the
extent not offset by income from other investments) in the Collection Account,
Grantor Trust Collection Account or the Interest Reserve Account, as applicable,
out of its own funds before the related Remittance Date. The amount of any net
losses incurred in respect of any such investments in the Distribution Account,
the Excess Liquidation Proceeds Account and the Grantor Trust Distribution
Account shall be for the account of the Trustee which shall deposit the amount
of such loss (to the extent not offset by income from other investments) in the
Distribution Account, the Excess Liquidation Proceeds Account or the Grantor
Trust Distribution Account, as applicable, out of its own funds before the
related Distribution Date. The amount of any net losses incurred in respect of
any such investments in the REO Account shall be for the account of the Special
Servicer which shall deposit the amount of such loss (to the extent not offset
by income from other investments) in the REO Account out of its own funds before
the related Determination Date. The Master Servicer shall also deposit into each
Reserve Account any amounts representing net losses on Permitted Investments in
which such Reserve Accounts have been invested before the date on which such
funds are required to be withdrawn from such account, except to the extent that
amounts are invested for the benefit of the Borrower under applicable law or the
terms of the related Mortgage Loan. The income and gain realized from investment
of funds deposited in any Reserve Account shall be paid from time to time to the
related Borrower to the extent required under the Mortgage Loan or applicable
law.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may, and upon the request of Holders of Certificates
representing a majority of the aggregate Voting Rights of any Class shall, take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate proceedings. In the
event the Trustee takes any such action, the Trust Fund shall pay or reimburse
the Trustee for all reasonable out-of-pocket expenses, disbursements and
advances incurred or made by the Trustee in connection therewith. In the event
that the Trustee does not take any such action, the Master Servicer may take
such action at its own cost and expense.
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SECTION 3.8. Maintenance of Insurance Policies and Errors and Omissions
and Fidelity Coverage.
(a) The Master Servicer on behalf of the Trustee, as mortgagee, shall use
its best efforts in accordance with the Servicing Standard to cause the related
Borrower to maintain, to the extent required or permitted to be required by each
Mortgage Loan (other than REO Mortgage Loans), and if the Borrower does not so
maintain, shall itself maintain (subject to the provisions of this Agreement
concerning Nonrecoverable Advances) to the extent the Trustee as mortgagee has
an insurable interest and to the extent available at commercially reasonable
rates, (A) fire and hazard insurance from a Qualified Insurer with extended
coverage on the related Mortgaged Property in an amount which is at least equal
to the lesser of (i) 100% of the then "full replacement cost" of the
improvements and equipment (excluding foundations, footings and excavation
costs), without deduction for physical depreciation, and (ii) the outstanding
principal balance of the related Mortgage Loan or such other amount as is
necessary to prevent any reduction in such policy by reason of the application
of co-insurance and to prevent the Trustee as mortgagee thereunder from being
deemed to be a co-insurer, in each case with a replacement cost rider, (B)
insurance from a Qualified Insurer providing coverage against 18 months of rent
interruptions and (C) such other insurance as provided under the subject
Mortgage Loan (including public liability insurance) from a Qualified Insurer.
The Special Servicer shall maintain, to the extent available at commercially
reasonable rates, fire and hazard insurance from a Qualified Insurer with
extended coverage on each REO Property in an amount which is at least equal to
100% of the then "full replacement cost" of the improvements and equipment
(excluding foundations, footings and excavation costs), without deduction for
physical depreciation. The Special Servicer shall maintain, to the extent
available at commercially reasonable rates, from a Qualified Insurer, with
respect to each REO Property (A) public liability insurance providing such
coverage against such risks as the Special Servicer determines, consistent with
the related Mortgage and the Servicing Standard, to be in the best interests of
the Trust Fund, and shall cause to be maintained with respect to each REO
Property (B) insurance providing coverage against 18 months of rent
interruptions, and (C) such other insurance, in each case as required in the
related Mortgage Loan Documents. In the case of any insurance otherwise required
to be maintained pursuant to this section that is not being so maintained
because the Master Servicer or the Special Servicer, as applicable, has deemed
that it is not available at commercially reasonable rates, the Master Servicer
or the Special Servicer, as applicable, shall deliver an Officer's Certificate
to the Trustee, the Controlling Class Representative, and each of the Rating
Agencies detailing the steps that the Master Servicer or the Special Servicer,
as applicable, took in seeking such insurance and the factors which led to its
determination that such insurance is not so available. Any amounts collected by
the Master Servicer or the Special Servicer, as applicable, under any such
policies (other than amounts to be applied to the restoration or repair of the
related Mortgaged Property or amounts to be released to the Borrower in
accordance with the terms of the related Mortgage) shall be deposited into the
Collection Account pursuant to Section 3.5, subject to withdrawal pursuant to
Section 3.6. Any cost incurred by the Master Servicer in maintaining any such
insurance shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake or other additional insurance
other than flood
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insurance is to be required of any Borrower or to be maintained by the Master
Servicer or the Special Servicer other than pursuant to the terms of the related
Mortgage Loan Documents and pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance. If
the Mortgaged Property is located in a federally designated special flood hazard
area, the Master Servicer will use its best efforts in accordance with the
Servicing Standard to cause the related Borrower to maintain, or will itself
obtain (subject to the provisions of this Agreement concerning Nonrecoverable
Advances), flood insurance in respect thereof to the extent available at
commercially reasonable rates, to the extent required under the related Mortgage
Loan Documents. Such flood insurance shall be in an amount equal to the lesser
of (i) the unpaid principal balance of the related Mortgage Loan and (ii) the
maximum amount of such insurance required by the terms of the related Mortgage
and as is available for the related property under the national flood insurance
program (assuming that the area in which such property is located is
participating in such program). If an REO Property is located in a federally
designated special flood hazard area, the Special Servicer will obtain flood
insurance in respect thereof providing substantially the same coverage as
described in the preceding sentences. If at any time during the term of this
Agreement a recovery under a flood or fire and hazard insurance policy in
respect of an REO Property is not available but would have been available if
such insurance were maintained thereon in accordance with the standards applied
to Mortgaged Properties described herein, the Special Servicer shall either (i)
immediately deposit into the Collection Account from its own funds the amount
that would have been recovered or (ii) apply to the restoration and repair of
the property from its own funds the amount that would have been recovered, if
such application would be consistent with the servicing standard set forth in
Section 3.1(a); provided, however, that the Special Servicer shall not be
responsible for any shortfall in insurance proceeds resulting from an insurer's
refusal or inability to pay a claim. Costs to the Master Servicer of maintaining
insurance policies pursuant to this Section 3.8 shall be paid by the Master
Servicer as a Servicing Advance and shall be reimbursable to the Master Servicer
with interest at the Advance Rate, and costs to the Special Servicer of
maintaining insurance policies pursuant to this Section 3.8 shall be paid and
reimbursed in accordance with Section 3.17(b).
On or before the Closing Date, with respect to each of the Mortgage Loans,
the Depositor shall notify the insurer under the related Environmental Insurance
Policy and take all other action on behalf of the Trustee that is necessary for
the Trustee, for the benefit of the Certificateholders, to be an insured (and
for the Master Servicer, on behalf of the Trust, to make claims) under such
Environmental Insurance Policy. In the event that the Master Servicer has actual
knowledge of any event (an "Insured Environmental Event") giving rise to a claim
under any Environmental Insurance Policy in respect of any Mortgage Loan, the
Master Servicer shall, in accordance with the terms of such Environmental
Insurance Policy and the Servicing Standard, timely make a claim thereunder with
the appropriate insurer and shall take such other actions in accordance with the
Servicing Standard which are necessary under such Environmental Insurance Policy
in order to realize the full value thereof for the benefit of the
Certificateholders, but only if the Master Servicer determines that making a
claim or taking such other actions would be in the best interests of the
Certificateholders. With respect to each Environmental Insurance Policy in
respect of a Mortgage Loan, the Master Servicer shall review and familiarize
itself with the terms and conditions relating to enforcement of claims and shall
monitor the dates by which any claim must be made or any action must be taken
under such
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policy to realize the full value thereof for the benefit of the
Certificateholders in the event the Master Servicer has actual knowledge of an
Insured Environmental Event giving rise to a claim under such policy.
In the event that the Master Servicer receives notice of any
termination of any Environmental Insurance Policy with respect to a Mortgage
Loan, the Master Servicer shall, within five Business Days after receipt of such
notice, notify the Special Servicer, the Controlling Class Representative, the
Rating Agencies and the Trustee of such termination in writing. Upon receipt of
such notice, the Master Servicer shall address such termination in accordance
with this Section 3.8(a). Any legal fees, premiums or other out-of-pocket costs
incurred in accordance with the Servicing Standard in connection with a
resolution of such termination of an Environmental Insurance Policy shall be
paid by the Master Servicer and shall be reimbursable to it as a Servicing
Advance.
The Master Servicer (or with respect to any REO Property, the Special
Servicer) shall require that all insurance policies required hereunder shall
name the Trustee or the Master Servicer (or with respect to any REO Property,
the Special Servicer), on behalf of the Trustee as the mortgagee, as loss payee
and that all such insurance policies require that 30 days' notice be given to
the Master Servicer before termination to the extent required by the related
Mortgage Loan Documents.
(b) (i) If the Master Servicer or Special Servicer, as applicable,
obtains and maintains a blanket insurance policy with a Qualified Insurer at its
own expense insuring against fire and hazard losses, 18-month rent interruptions
or other required insurance on all of the Mortgage Loans and provides no less
coverage in scope and amount for such Mortgaged Property or REO Property than
the insurance required to be maintained pursuant to Section 3.8(a), it shall
conclusively be deemed to have satisfied its obligations concerning the
maintenance of such insurance coverage set forth in Section 3.8(a), it being
understood and agreed that such policy may contain a deductible clause, in which
case the Master Servicer or Special Servicer, as applicable, shall, in the event
that (i) there shall not have been maintained on one or more of the related
Mortgaged Properties a policy otherwise complying with the provisions of Section
3.8(a), and (ii) there shall have been one or more losses which would have been
covered by such a policy had it been maintained, immediately deposit into the
Collection Account from its own funds the amount not otherwise payable under the
blanket policy because of such deductible clause to the extent that any such
deductible exceeds the deductible limitation that pertained to the related
Mortgage Loan, or, in the absence of such deductible limitation, the deductible
limitation for an individual policy which is consistent with the Servicing
Standard. In connection with its activities as Master Servicer or Special
Servicer hereunder, as applicable, the Master Servicer and the Special Servicer
each agrees to prepare and present, on behalf of itself, the Trustee and
Certificateholders, claims under any such blanket policy which it maintains in a
timely fashion in accordance with the terms of such policy and to take such
reasonable steps as are necessary to receive payment or permit recovery
thereunder.
(ii) If the Master Servicer or the Special Servicer, as
applicable, causes any Mortgaged Property or REO Property to be covered by a
master force placed insurance policy, which policy is issued by a Qualified
Insurer and provides no less coverage in scope and amount for such Mortgaged
Property or REO Property than the insurance required to be
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maintained pursuant to Section 3.8(a), the Master Servicer or Special Servicer
shall conclusively be deemed to have satisfied its obligations to maintain
insurance pursuant to Section 3.8(a). Such policy may contain a deductible
clause, in which case the Master Servicer or Special Servicer, as applicable,
shall, in the event that (i) there shall not have been maintained on the related
Mortgaged Property or REO Property a policy otherwise complying with the
provisions of Section 3.8(a), and (ii) there shall have been one or more losses
which would have been covered by such a policy had it been maintained,
immediately deposit into the Collection Account from its own funds the amount
not otherwise payable under such policy because of such deductible to the extent
that any such deductible exceeds the deductible limitation that pertained to the
related Mortgage Loan, or, in the absence of any such deductible limitation, the
deductible limitation for an individual policy which is consistent with the
Servicing Standard.
(c) Each of the Master Servicer and the Special Servicer shall
maintain a fidelity bond in the form and amount that would meet the servicing
requirements of prudent institutional commercial mortgage loan servicers. The
Master Servicer or the Special Servicer, as applicable, shall be deemed to have
complied with this provision if one of its respective Affiliates has such
fidelity bond coverage and, by the terms of such fidelity bond, the coverage
afforded thereunder extends to the Master Servicer or the Special Servicer, as
applicable. In addition, each of the Master Servicer and the Special Servicer
shall keep in force during the term of this Agreement a policy or policies of
insurance covering loss occasioned by the errors and omissions of its officers
and employees in connection with its obligations to service the Mortgage Loans
hereunder in the form and amount that would meet the servicing requirements of
prudent institutional commercial mortgage loan servicers. All fidelity bonds and
policies of errors and omissions insurance obtained under this Section 3.8(c)
shall be issued by a Qualified Insurer. Notwithstanding the foregoing, so long
as the long-term unsecured debt obligations of the Master Servicer or Special
Servicer, as applicable, or its respective corporate parent have been rated "A"
or better by each Rating Agency (or such lower rating for which Rating Agency
Confirmation has been obtained), the Master Servicer or Special Servicer, as
applicable, shall be entitled to provide self-insurance or obtain from its
respective corporate parent adequate insurance, as applicable, with respect to
its obligation hereunder to maintain a fidelity bond or an errors and omissions
insurance policy.
SECTION 3.9. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) If any Mortgage Loan contains a provision in the nature of a
"due-on-sale" clause, which, by its terms:
(i) provides that such Mortgage Loan shall (or may at the related
mortgagee's option) become due and payable upon the sale or other transfer of an
interest in the related Mortgaged Property, or
(ii) provides that such Mortgage Loan may not be assumed without
the consent of the related mortgagee in connection with any such sale or other
transfer,
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then, for so long as such Mortgage Loan is included in the Trust Fund, the
Master Servicer or the Special Servicer, as applicable, on behalf of the Trust
Fund, shall exercise or waive (subject to Sections 3.27 and 3.28) the Trustee's
rights as mortgagee under such provision in accordance with the Servicing
Standard; provided, that the Master Servicer or the Special Servicer, as
applicable, shall have first obtained (x) Rating Agency Confirmation from (A)
____, with respect to any Mortgage Loan, group of cross-collateralized Mortgage
Loans or group of Mortgage Loans with affiliated Borrowers that has a then
outstanding Stated Principal Balance equal to or greater than the lesser of
$______________ and ___% of the then outstanding Stated Principal Balance of all
of the Mortgage Loans, and (B) _______, with respect to any Mortgage Loan that
at such time has one of the ___ largest outstanding principal balances in the
Trust Fund and (y) in the case of the Master Servicer, the prior written consent
of the Special Servicer (which consent shall be deemed given unless written
objection is received by the Master Servicer within 10 Business Days after the
Special Servicer and the Controlling Class Representative have been notified
thereof and have been provided with all reasonably requested information with
respect thereto). The Master Servicer or the Special Servicer, as applicable,
shall use its reasonable efforts to have the cost, if any, of obtaining such
confirmations paid by the Borrower; if such cost is not paid by the Borrower,
the Master Servicer shall advance such amount as a Servicing Advance, unless
such Advance would be a Nonrecoverable Advance. Subject to the foregoing, the
Master Servicer or Special Servicer, as applicable, is authorized to take or
enter into an assumption agreement from or with the Person to whom such
Mortgaged Property has been or is about to be conveyed, or to release the
original related Borrower from liability upon such Mortgage Loan and substitute
the new Borrower as obligor thereon. Subject to Section 3.27, to the extent
permitted by law, the Master Servicer or Special Servicer, as applicable, shall
enter into an assumption or substitution agreement only if the credit status of
the prospective new Borrower is in compliance with (x) the Master Servicer's or
Special Servicer's, as applicable, regular commercial mortgage origination or
servicing standards and criteria, (y) the terms of the related Mortgage Loan and
(z) the Servicing Standard. The Master Servicer or Special Servicer, as
applicable, shall notify the Trustee that any such assumption or substitution
agreement has been completed by forwarding to the Trustee the original of such
agreement, which document shall be added to the related Mortgage File and shall,
for all purposes, be considered a part of such Mortgage File to the same extent
as all other documents and instruments constituting a part thereof. In
connection with any such assumption or substitution agreement, the Mortgage
Rate, principal amount and other material payment terms (including any
cross-collateralization and cross-default provisions) of such Mortgage Loan
pursuant to the related Note and Mortgage shall not be changed, other than in
connection with a default or reasonably foreseeable default with respect to the
Mortgage Loan. Assumption fees collected by the Master Servicer or Special
Servicer, as applicable, for entering into an assumption or substitution
agreement will be retained by the Master Servicer or the Special Servicer, as
applicable, as additional servicing compensation. Notwithstanding the foregoing,
the Master Servicer or Special Servicer, as applicable, may consent to the
assumption of a Mortgage Loan by a prospective new Borrower in a bankruptcy
proceeding involving the related Mortgaged Property.
(b) If any Mortgage Loan contains a provision in the nature of a
"due-on-encumbrance" clause, which, by its terms:
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(i) provides that such Mortgage Loan shall (or may at the related
mortgagee's option) become due and payable upon the creation of any lien or
other encumbrance on such Mortgaged Property, or
(ii) requires the consent of the related mortgagee to the creation of
any such lien or other encumbrance on such Mortgaged Property,
then, for so long as such Mortgage Loan is included in the Trust Fund, the
Master Servicer or Special Servicer, as applicable, on behalf of the Trust Fund,
shall enforce (subject to Sections 3.27 and 3.28) the Trustee's rights under
such provision to (x) accelerate the payments due on such Mortgage Loan, or (y)
withhold its consent to the creation of any such lien or other encumbrance, as
applicable, except, in each case, to the extent that the Master Servicer or
Special Servicer, as applicable, acting in accordance with the Servicing
Standard, determines that such enforcement would not be in the best interests of
the Trust Fund; provided that, the Master Servicer or Special Servicer, as
applicable, will not consent to the creation of any such lien or encumbrance
unless it shall have first obtained (x) Rating Agency Confirmation from each of
the Rating Agencies and (y) in the case of the Master Servicer, the prior
written consent of the Special Servicer (which consent shall be deemed given
unless written objection is received by the Master Servicer within 10 Business
Days after the Special Servicer and the Controlling Class Representative have
been notified thereof and have been provided with all reasonably requested
information with respect thereto). The Master Servicer or Special Servicer, as
applicable, shall use its reasonable efforts to have the cost, if any, of
obtaining such confirmations paid by the Borrower; if such cost is not paid by
the Borrower, the Master Servicer shall advance such amount as a Servicing
Advance, unless such Advance would be a Nonrecoverable Advance. Notwithstanding
the foregoing, but subject to Section 3.27, the Master Servicer or Special
Servicer, as applicable, may forbear from enforcing any due-on-encumbrance
provision in connection with any junior or senior lien on the Mortgaged Property
imposed in connection with any bankruptcy proceeding involving the Mortgaged
Property.
(c) Nothing in this Section 3.9 shall constitute a waiver of the
Trustee's right, as the mortgagee of record, to receive notice of any assumption
of a Mortgage Loan, any sale or other transfer of the related Mortgaged Property
or the creation of any lien or other encumbrance with respect to such Mortgaged
Property.
(d) In connection with the taking of, or the failure to take, any
action pursuant to this Section 3.9, the Master Servicer or Special Servicer, as
applicable, shall not agree to modify, waive or amend, and no assumption or
substitution agreement entered into pursuant to Section 3.9(a) shall contain any
terms that are different from, any term of any Mortgage Loan or the related Note
or Mortgage.
SECTION 3.10. Realization Upon Mortgage Loans.
(a) Subject to Section 3.27, with respect to any Specially Serviced
Mortgage Loan, the Special Servicer shall determine, in accordance with the
Servicing Standard, whether to grant a modification, waiver or amendment of the
terms of such Specially Serviced Mortgage Loan, (subject to the limitations
contained in Section 3.28) commence foreclosure proceedings or
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attempt to sell such Specially Serviced Mortgage Loan with reference to which
course of action is reasonably likely to produce a greater recovery on a present
value basis with respect to such Specially Serviced Mortgage Loan.
(b) In connection with any foreclosure or other acquisition, the Master
Servicer shall, at the direction of the Special Servicer, pay the costs and
expenses in any such proceedings as an Advance.
If the Special Servicer elects to proceed with a non-judicial
foreclosure in accordance with the laws of the state where the related Mortgaged
Property is located, the Special Servicer shall not be required to pursue a
deficiency judgment against the related Borrower or any other liable party if
the laws of such state do not permit such a deficiency judgment after a
non-judicial foreclosure or if the Special Servicer determines, in its best
judgment, that the likely recovery if a deficiency judgment is obtained will not
be sufficient to warrant the cost, time, expense and/or exposure of pursuing
such a deficiency judgment and such determination is evidenced by an Officer's
Certificate delivered to the Trustee.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee (which shall not include the
Master Servicer or the Special Servicer) or a separate trustee or co-trustee on
behalf of the Trustee, as the holder of the REMIC I Regular Interests and as
Trustee for the Certificateholders. Notwithstanding any such acquisition of
title and cancellation of the related Mortgage Loan, such Mortgage Loan shall
(except for purposes of Section 9.1) be considered to be a Mortgage Loan held in
the Trust Fund until such time as the related REO Property shall be sold by the
Trust Fund and the Stated Principal Balance of each REO Mortgage Loan shall be
reduced by any Net REO Proceeds allocated to principal. Consistent with the
foregoing, for purposes of all calculations hereunder, so long as such Mortgage
Loan shall be considered to be an outstanding Mortgage Loan:
(i) it shall be assumed that, notwithstanding that the indebtedness
evidenced by the related Note shall have been discharged, such Note and, for
purposes of determining the Stated Principal Balance thereof, the related
amortization schedule in effect at the time of any such acquisition of title,
remain in effect; and
(ii) Net REO Proceeds received in any month shall be deemed to be
treated: first, as a recovery of any related and unreimbursed Servicing Advances
and, if applicable, unpaid Liquidation Expenses; second, as a recovery of
accrued and unpaid interest on the related REO Mortgage Loan to, but not
including, the Due Date in the Collection Period of receipt, exclusive, however,
of any portion of such accrued and unpaid interest that constitutes Default
Interest or, in the case of an REO Mortgage Loan that relates to a
Hyper-Amortization Loan after its Hyper-Amortization Date, that constitutes
Deferred Interest; third, as a recovery of principal of the related REO Mortgage
Loan to the extent of its entire unpaid principal balance; fourth, as a recovery
of any Prepayment Premium deemed to be due and owing in respect of the related
REO Mortgage Loan; fifth, as a recovery of any other amounts deemed to be due
and owing in respect of the related REO Mortgage Loan (other than, in the case
of an REO Mortgage Loan that relates to a Hyper-Amortization Loan after its
Hyper-Amortization Date, accrued and
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unpaid Deferred Interest); and sixth, in the case of an REO Mortgage Loan that
relates to a Hyper-Amortization Loan after its Hyper-Amortization Date, any
accrued and unpaid Deferred Interest.
(c) Notwithstanding any provision to the contrary, the Special Servicer
shall not acquire for the benefit of the Trust Fund any personal property
pursuant to this Section 3.10 unless either:
(i) such personal property is incident to real property (within the
meaning of Section 856(e)(1) of the Code) so acquired by the Special Servicer
for the benefit of the Trust Fund; or
(ii) the Special Servicer shall have requested and received an Opinion
of Counsel (the cost of such opinion shall be advanced as a Servicing Advance,
unless such Advance would be a Nonrecoverable Advance) to the effect that the
holding of such personal property by REMIC I will not cause the imposition of a
tax on REMIC I, REMIC II or REMIC III under the REMIC Provisions or cause REMIC
I, REMIC II or REMIC III to fail to qualify as a REMIC at any time that any
Certificate is outstanding.
(d) Notwithstanding any provision to the contrary in this Agreement, the
Special Servicer shall not, on behalf of the Trust Fund, obtain title to any
direct or indirect partnership interest or other equity interest in any Borrower
pledged pursuant to any pledge agreement unless the Special Servicer shall have
requested and received an Opinion of Counsel (the cost of such opinion shall be
advanced as a Servicing Advance, unless such Advance would be a Nonrecoverable
Advance) to the effect that the holding of such partnership or other equity
interest by the Trust Fund will not cause the imposition of a tax on REMIC I,
REMIC II or REMIC III under the REMIC Provisions or cause REMIC I, REMIC II or
REMIC III to fail to qualify as a REMIC at any time that any Certificate is
outstanding.
(e) Notwithstanding any provision to the contrary contained in this
Agreement (but subject to Section 3.27), the Special Servicer shall not, on
behalf of the Trust Fund, obtain title to a Mortgaged Property as a result of or
in lieu of foreclosure or otherwise obtain title to any direct or indirect
partnership interest or other equity interest in any Borrower pledged pursuant
to a pledge agreement and thereby be the beneficial owner of a Mortgaged
Property, and shall not otherwise acquire possession of, or take any other
action with respect to, any Mortgaged Property if, as a result of any such
action, the Trustee, for the Trust Fund or the Certificateholders, would be
considered to hold title to, to be a "mortgagee-in-possession" of, or to be an
"owner" or "operator" of such Mortgaged Property within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended from time to time, or any comparable law, unless the Special Servicer
has previously determined in accordance with the Servicing Standard, based on an
updated Phase I Environmental Assessment report prepared (not more than 12
months prior to the taking of such action) by a Qualified Environmental
Consultant, that:
(A) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, after consultation with a Qualified Environmental
Consultant, that
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it would be in the best economic interest of the Trust Fund to take such actions
as are necessary to bring such Mortgaged Property in compliance therewith, and
(A) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any Hazardous Materials for which
investigation, testing, monitoring, containment, clean-up or remediation could
be required under any currently effective federal, state or local law or
regulation, or that, if any such Hazardous Materials are present for which such
action could be required, after consultation with a Qualified Environmental
Consultant, it would be in the best economic interest of the Trust Fund to take
such actions with respect to such Mortgaged Property.
In the event that the Phase I Environmental Assessment first
obtained or updated by the Special Servicer with respect to a Mortgaged Property
indicates that such Mortgaged Property may not be in compliance with applicable
environmental laws or that Hazardous Materials may be present but does not
definitively establish such fact, the Special Servicer shall cause such further
environmental tests as the Special Servicer shall deem prudent to protect the
interests of Certificateholders to be conducted by a Qualified Environmental
Consultant. Any such tests shall be deemed part of the Phase I Environmental
Assessment obtained by the Special Servicer for purposes of this Section 3.10.
The Master Servicer shall at the direction of the Special Servicer pay for the
cost of preparation of such Phase I Environmental Assessments as well as the
cost of any remedial, corrective or other further action contemplated by clauses
(A) and/or (B) of this Section 3.10(e) as a Servicing Advance, unless such
Advance would be a Non-recoverable Advance.
(f) The Special Servicer shall report to the IRS and to the related
Borrower, in the manner required by applicable law, the information required to
be reported regarding any Mortgaged Property which is abandoned or foreclosed.
The Special Servicer shall deliver a copy of any such report to the Trustee.
SECTION 3.11. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full has been escrowed in a
manner customary for such purposes, the Master Servicer shall immediately notify
the Trustee and the Custodian by a certification (which certification shall
include a statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 3.5(a) have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Mortgage File. No
expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Trust Fund.
From time to time upon request of the Master Servicer or the Special
Servicer, and delivery to the Trustee and the Custodian of a Request for
Release, the Trustee shall promptly cause the Custodian to release the Mortgage
File (or any portion thereof) designated in such Request for Release to the
Master Servicer or the Special Servicer, as applicable. Upon receipt of (a) such
Mortgage File (or portion thereof) by the Custodian from the Master Servicer
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or the Special Servicer, as applicable, or (b) in the event of a liquidation or
conversion of the related Mortgage Loan into an REO Property, a certificate of a
Servicing Officer stating that such Mortgage Loan was liquidated and that all
amounts received or to be received in connection with such liquidation which are
required to be deposited into the Collection Account or Distribution Account
have been so deposited, or that such Mortgage Loan has become an REO Property,
the Custodian upon request by the Master Servicer or the Special Servicer, as
applicable, shall either return the Request for Release to the Master Servicer
or the Special Servicer, as applicable, or acknowledge in writing its receipt of
the Trustee Mortgage File.
Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Special Servicer any court pleadings, requests for
trustee's sale or other documents prepared by the Special Servicer, its agents
or attorneys, necessary to the foreclosure or trustee's sale in respect of the
Mortgaged Property or to any legal action brought to obtain judgment against any
Borrower on the related Note or Mortgage or to obtain a deficiency judgment, or
to enforce any other remedies or rights provided by such Note or Mortgage or
otherwise available at law or in equity. Each such certification shall include a
request that such pleadings or documents be executed by the Trustee and a
statement as to the reason such documents or pleadings are required and that the
execution and delivery thereof by the Trustee will not invalidate or otherwise
affect the lien of the related Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.
SECTION 3.12. Servicing Compensation.
(a) As compensation for its activities hereunder, the Master Servicer shall
be entitled to the Master Servicing Fee, which shall be payable solely from
receipts on the related Mortgage Loans, and may be withheld from payments on
account of interest prior to deposit in the Collection Account, or may be
withdrawn from certain amounts on deposit in the Collection Account as and to
the extent set forth in Section 3.6(a)(iv). The Master Servicer's rights to the
Master Servicing Fee may not be transferred in whole or in part except in
connection with the transfer of all of the Master Servicer's responsibilities
and obligations under this Agreement. In addition, the Master Servicer shall be
entitled to receive, as additional servicing compensation, any Prepayment
Interest Excess (to the extent not otherwise allocable to offset Prepayment
Interest Shortfalls in accordance with Section 3.25) and, to the extent
permitted by applicable law and the related Notes and Mortgages, any late
payment charges or late fees (to the extent not used to offset Advance Interest
Amounts as provided herein), NSF check charges (including with respect to
Specially Serviced Mortgage Loans), demand fees, assumption fees, loan
modification fees, loan service transaction fees, beneficiary statement charges,
or similar items (but not including any Default Interest or Prepayment
Premiums), in each case to the extent received with respect to any Mortgage Loan
that is not a Specially Serviced Mortgage Loan. The Master Servicer shall also
be entitled pursuant to, and to the extent provided in, Section 3.7(b) to
withdraw from the Collection Account, the Grantor Trust Collection Account and
the Interest Reserve Account and to receive from the Reserve Accounts (to the
extent not required to be paid to the related Borrower pursuant to the related
Mortgage Loan Documents or applicable law) any interest or other income earned
on deposits therein.
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Notwithstanding anything herein to the contrary, Midland may at its option
assign or pledge to any third party or retain for itself the Transferable
Servicing Interest; provided, however, that in the event of any resignation or
termination of the Master Servicer, all or any portion of the Transferable
Servicing Interest may be reduced by the Trustee to the extent reasonably
necessary (in the sole discretion of the Trustee) for the Trustee to obtain a
qualified successor Master Servicer (which successor may include the Trustee)
that meets the requirements of Section 6.4(b) and who requires market rate
servicing compensation that accrues at a per annum rate in excess of the Minimum
Master Servicing Fee Rate. The Master Servicer shall pay the Transferable
Servicing Interest to the holder of the Transferable Servicing Interest (i.e.,
Midland or any such third party) at such time and to the extent the Master
Servicer is entitled to receive payment of its Master Servicing Fees hereunder,
notwithstanding any resignation or termination of Midland hereunder (subject to
reduction pursuant to the preceding sentence).
Except as otherwise provided herein, the Master Servicer shall pay all
expenses incurred by it in connection with its servicing activities hereunder.
The Master Servicer shall promptly pay, when due, out of its own funds, all
surveillance fees of the Rating Agencies relating to the rating of the
Certificates.
(b) As compensation for its activities hereunder, the Special Servicer
shall be entitled to the Special Servicing Fee with respect to each Specially
Serviced Mortgage Loan, which shall be payable from amounts on deposit in the
Collection Account as set forth in Section 3.6(a)(iv). The Special Servicer's
rights to the Special Servicing Fee may not be transferred in whole or in part
except in connection with the transfer of all of the Special Servicer's
responsibilities and obligations under this Agreement. The Special Servicer
shall also be entitled pursuant to, and to the extent provided in, Section
3.7(b) to withdraw from any REO Account any interest or other income earned on
deposits therein.
In addition, the Special Servicer shall be entitled to receive, as
additional Servicing Compensation, to the extent permitted by applicable law and
the related Notes and Mortgages, any late payment charges or late fees (to the
extent not used to offset Advance Interest Amounts as provided herein), demand
fees, assumption fees, loan modification fees, extension fees, loan service
transaction fees, beneficiary statement charges, or similar items (but not
including any Default Interest or Prepayment Premiums), in each case to the
extent received with respect to any Specially Serviced Mortgage Loan.
Furthermore, the Special Servicer shall be entitled to receive, as
additional Servicing Compensation, a workout fee (the "Workout Fee") equal to
the product of ____% and the amount of Net Collections received by the Master
Servicer or the Special Servicer with respect to each Corrected Mortgage Loan.
If any Corrected Mortgage Loan again becomes a Specially Serviced Mortgage Loan,
any right to the Workout Fee with respect to such Mortgage Loan earned in
connection with the initial modification, restructuring or workout thereof shall
terminate, and the Special Servicer shall be entitled to a new Workout Fee for
such Mortgage Loan upon resolution or workout of the subsequent event of default
under such Mortgage Loan. If the Special Servicer is terminated for any reason
hereunder it shall retain the right to receive any Workout Fees payable in
respect of any Mortgage Loans which became Corrected Mortgage Loans during the
period that it acted as Special Servicer (and the successor Special Servicer
shall
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not be entitled to any portion of such Workout Fees), in each case until the
Workout Fees for any such Mortgage Loan ceases to be payable in accordance with
this paragraph.
Except as otherwise provided herein, the Special Servicer shall pay
all expenses incurred by it in connection with its servicing activities
hereunder.
(c) In addition to other Special Servicer compensation provided for in this
Agreement, and not in lieu thereof, the Special Servicer shall be entitled to
the Disposition Fee payable out of certain Liquidation Proceeds prior to the
deposit of the related Net Liquidation Proceeds in the Collection Account.
(d) If the Master Servicer, the Special Servicer or the Trustee receives a
request or inquiry from a Borrower, any Certificateholder or any other Person
the response to which would, in the Master Servicer's, the Special Servicer's or
the Trustee's good faith business judgment, require the assistance of
Independent legal counsel or other consultant to the Master Servicer, the
Special Servicer or the Trustee, the cost of which would not be an expense of
the Trust Fund hereunder, then the Master Servicer, the Special Servicer or the
Trustee, as the case may be, shall not be required to take any action in
response to such request or inquiry unless such Borrower or such
Certificateholder or such other Person, as applicable, makes arrangements for
the payment of the Master Servicer's, the Special Servicer's or Trustee's
expenses associated with such counsel or other consultant (including, without
limitation, posting an advance payment for such expenses) satisfactory to the
Master Servicer, the Special Servicer or the Trustee, as the case may be, in its
sole discretion. Unless such arrangements have been made, the Master Servicer,
the Special Servicer or the Trustee, as the case may be, shall have no liability
to any Person for the failure to respond to such request or inquiry.
SECTION 3.13. Reports to the Trustee; Collection Account Statements.
(a) The Master Servicer shall deliver to the Paying Agent (in electronic
format reasonably acceptable to the Master Servicer and the Paying Agent), with
a copy to the Trustee and each Rating Agency, (i) no later than 3:00 p.m. on the
third Business Day preceding the related Distribution Date (A) the Servicer
Remittance Report with respect to such Determination Date (which shall include,
without limitation, the amount of the Available Funds for REMIC I for the
related Distribution Date) and (B) a written statement of required P&I Advances
for the related Determination Date together with the certificate and
documentation required by the definition of Nonrecoverable Advance related to
any determination that any such P&I Advance would constitute a Nonrecoverable
Advance made as of such Determination Date. The Master Servicer shall not be
required to prepare and deliver any of the CMSA SIP files (other than the Loan
Periodic File) before the third Distribution Date after the Start-Up Date.
(b) For so long as the Master Servicer makes deposits into and withdrawals
from the Collection Account, not later than fifteen days after each Distribution
Date, the Master Servicer shall forward to the Trustee a statement prepared by
the Master Servicer setting forth the status of the Collection Account as of the
close of business on the last Business Day of the related Collection Period
showing the aggregate amount of deposits into and withdrawals from
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the Collection Account for each category of deposit specified in Section 3.5 and
each category of withdrawal specified in Section 3.6 for such Collection Period.
(c) The Trustee shall be entitled to rely conclusively on and shall not be
responsible for the content or accuracy of any information provided to it by the
Master Servicer or the Special Servicer pursuant to this Agreement.
SECTION 3.14. Annual Statement as to Compliance.
The Master Servicer and the Special Servicer shall deliver to the
Trustee, the Rating Agencies and to the Depositor on or before ________ of each
year, beginning with _________________, an Officer's Certificate stating, as to
each signatory thereof, (i) that a review of the activities of the Master
Servicer or the Special Servicer, as applicable, during the preceding calendar
year (or such shorter period from the Closing Date to the end of the related
calendar year) and of its performance under this Agreement has been made under
such officer's supervision, (ii) that, to the best of such officer's knowledge,
based on such review, it has fulfilled in all material respects all of its
obligations under this Agreement throughout such year (or such shorter period),
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer, the nature and status
thereof and what action it proposes to take with respect thereto, (iii) that, to
the best of such officer's knowledge, each Sub-Servicer has fulfilled its
obligations under its Sub-Servicing Agreement in all material respects, or, if
there has been a material default in the fulfillment of such obligations,
specifying each such default known to such officer and the nature and status
thereof, and (iv) whether it has received any notice regarding qualification, or
challenging the status, of REMIC I, REMIC II or REMIC III as a REMIC from the
IRS or any other governmental agency or body; provided, that each of the Master
Servicer and the Special Servicer shall not be required to cause the delivery of
such Officer's Certificate until April 15 in any given year so long as it has
received written confirmation from the Depositor that a Report on Form 10-K is
not required to be filed in respect of the Trust Fund for the preceding calendar
year.
SECTION 3.15. Annual Independent Public Accountants' Servicing Report.
On or before __________ of each year, beginning with
__________________, the Master Servicer and the Special Servicer at their
expense shall cause a nationally recognized firm of Independent public
accountants (who may also render other services to the Master Servicer or the
Special Servicer, as applicable) to furnish to the Trustee, the Depositor and
each Rating Agency a statement to the effect that such firm has examined certain
documents and records relating to the servicing of the Mortgage Loans under this
Agreement or the servicing of mortgage loans similar to the Mortgage Loans under
substantially similar agreements for the preceding 12 months and that the
assertion of management of the Master Servicer or Special Servicer, as
applicable, that it maintained an effective internal control system over the
servicing of such mortgage loans is fairly stated in all material respects,
based upon established criteria, which statement meets the standards applicable
to accountant's reports intended for general distribution; provided that each of
the Master Servicer and the Special Servicer shall not be required to cause the
delivery of such statement until April 15 in any given year so long as it has
received written confirmation from the Depositor (a copy which shall be provided
to the Trustee)
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that a Report on Form 10-K is not required to be filed in respect of the Trust
Fund for the preceding calendar year.
SECTION 3.16. Access to Certain Documentation.
(a) The Master Servicer and the Special Servicer shall provide to the
Trustee, any Certificateholders that are federally insured financial
institutions, the Federal Reserve Board, the FDIC and the OTS and the
supervisory agents and examiners of such boards and such corporations, and any
other governmental or regulatory body to the jurisdiction of which any
Certificateholder is subject, access to the documentation regarding the Mortgage
Loans required by applicable regulations of the Federal Reserve Board, FDIC, OTS
or any such governmental or regulatory body, such access being afforded only
upon reasonable request and during normal business hours at the offices of the
Master Servicer or the Special Servicer, as applicable.
(b) Nothing in this Section 3.16 shall detract from the obligation of the
Master Servicer or the Special Servicer to observe any applicable law or any
provisions of the Mortgage Loan Documents prohibiting disclosure of information
with respect to the Borrowers or the Mortgage Loans, and the failure of the
Master Servicer or the Special Servicer, as applicable, to provide access as
provided in this Section 3.16 as a result of such obligation shall not
constitute a breach of this Section 3.16.
SECTION 3.17. Title and Management of REO Properties.
(a) In the event that title to any Mortgaged Property is acquired for the
benefit of Certificateholders in foreclosure or by deed in lieu of foreclosure,
the deed or certificate of sale shall be taken in the name of the Trustee, or
its nominee (which shall not include the Master Servicer or the Special
Servicer), or a separate trustee or co-trustee, on behalf of the Trust Fund. The
Special Servicer shall maintain accurate records with respect to each related
REO Property reflecting the status of taxes, assessments and other similar items
that are or may become a lien on such REO Property and the status of insurance
premiums payable with respect thereto. The Special Servicer, on behalf of the
Trust Fund, shall dispose of any REO Property within three taxable years after
the close of the taxable year in which the Trust Fund acquires ownership of such
REO Property (the "REO Grace Period") for purposes of Section 860G(a)(8) of the
Code, unless (i) the Special Servicer, on behalf of REMIC I, has timely applied
for and received an extension of such REO Grace Period pursuant to Sections
856(e)(3) and 860G(a)(8)(A) of the Code, in which case the Special Servicer
shall sell such REO Property by the end of the applicable extension period or
(ii) the Special Servicer seeks and subsequently receives an Opinion of Counsel
(the cost of such opinion shall be advanced as a Servicing Advance, unless it
would be a Nonrecoverable Advance), addressed to the Special Servicer and the
Trustee, to the effect that the holding by the Trust Fund of such REO Property
for an additional specified period will not cause such REO Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code (determined without regard to the exception applicable for purposes of
Section 860D(a) of the Code) at any time that any Certificate is outstanding, in
which case the Special Servicer shall sell such REO Property by the end of such
additional period, subject to any conditions set forth in such Opinion of
Counsel. The Special Servicer, on behalf of the Trust Fund, shall dispose of any
REO Property held by the Trust Fund prior to the
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last day of the period (taking into account extensions) within which such REO
Property is required to be disposed of pursuant to the provisions of the
immediately preceding sentence in a manner provided under Section 3.18. The
Special Servicer shall manage, conserve, protect and operate each REO Property
for the Certificateholders solely for the purpose of its disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code
(determined without regard to the exception applicable for purposes of Section
860D(a)) of the Code or, except as contemplated by Section 3.17(d), result in
the receipt by REMIC I of any "income from non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event in
respect of any of the REMICs or in an Adverse Grantor Trust Event.
(b) The Special Servicer shall have full power and authority, subject only
to the specific requirements and prohibitions of this Agreement (including,
Section 3.27), to do any and all things in connection with any REO Property as
are consistent with Servicing Standard, all on such terms and for such period as
the Special Servicer deems to be in the best interests of Certificateholders,
and, in connection therewith, the Special Servicer shall agree to the payment of
management fees that are consistent with general market standards. The Special
Servicer shall segregate and hold all revenues received by it with respect to
any REO Property separate and apart from its own funds and general assets and
shall establish and maintain with respect to any REO Property a segregated
custodial account (each, an "REO Account"), each of which shall be an Eligible
Account and shall be entitled "____________________, as Trustee, in trust for
Holders of PNC Mortgage Acceptance Corp., Commercial Mortgage Pass-Through
Certificates, Series _________, REO Account." The Special Servicer shall be
entitled to any interest or investment income earned on funds deposited in an
REO Account to the extent provided in Section 3.7(b). The Special Servicer shall
deposit or cause to be deposited in the related REO Account within one Business
Day after receipt all REO Proceeds received by it with respect to any REO
Property (other than Liquidation Proceeds), and shall withdraw therefrom funds
necessary for the proper operation, management and maintenance of such REO
Property, including:
(i) all insurance premiums and ground rents, if any, due and payable
in respect of such REO Property;
(ii) all real estate taxes and assessments in respect of such REO
Property and such other Mortgaged Properties that may result in the imposition
of a lien thereon; and
(iii) all costs and expenses reasonable and necessary to protect,
maintain, manage, operate, repair and restore such REO Property and such other
Mortgaged Properties, including any property management fees.
To the extent that such REO Proceeds are insufficient for the
purposes set forth in clauses (i) through (iii) above, the Master Servicer shall
make an Advance equal to the amount of such shortfall unless the Master Servicer
determines, in its good faith judgment, that such Advance would be a
Nonrecoverable Advance. The Master Servicer shall be entitled to reimbursement
of such Advances (with interest at the Advance Rate) made pursuant to the
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preceding sentence, to the extent permitted pursuant to Section 3.6. The Special
Servicer shall remit to the Master Servicer from each REO Account for deposit in
the Collection Account on a monthly basis prior to the related Remittance Date
the Net REO Proceeds received or collected from the related REO Property, except
that in determining the amount of such Net REO Proceeds, the Special Servicer
may retain in such REO Account reasonable reserves for repairs, replacements and
necessary capital improvements and other related expenses.
Notwithstanding the foregoing, the Special Servicer shall not
(unless permitted pursuant to subsection (d) below):
(i) permit the Trust Fund to enter into, renew or extend any New
Lease if the New Lease, by its terms, will give rise to any income that does not
constitute Rents from Real Property;
(ii) permit any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
(iv) authorize or permit any construction on any REO Property,
other than the repair or maintenance thereof or the completion of a building or
other improvement thereon, and then only if more than 10% of the construction of
such building or other improvement was completed before default on the related
Mortgage Loan became imminent, all within the meaning of Section 856(e)(4)(B) of
the Code; or
(v) Directly Operate or perform any construction work on, or
allow any Person (other than an Independent Contractor) to Directly Operate or
perform any construction work on, any REO Property on, any date more than 90
days after its date of acquisition by the Trust Fund;
unless, in any such case, the Special Servicer has requested and received an
Opinion of Counsel addressed to the Special Servicer and the Trustee (the cost
of such opinion shall be advanced as a Servicing Advance unless such Advance
would be a Non-recoverable Advance) to the effect that such action will not
cause such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code) at any time
that it is held by the Trust Fund, in which case the Special Servicer may take
such actions as are specified in such Opinion of Counsel.
The Special Servicer shall be required to contract with an
Independent Contractor for the operation and management of any REO Property
within 90 days of the Trust Fund's acquisition thereof (unless the Special
Servicer shall have provided the Trustee with an Opinion of Counsel that the
operation and management of such REO Property other than through an Independent
Contractor shall not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Code Section 860G(a)(8)) (the cost of such
opinion shall be advanced as a Servicing Advance, unless such Advance would be a
Non-recoverable Advance), provided that:
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(i) the terms and conditions of any such contract shall be
reasonable and customary for the area and type of property and shall not be
inconsistent herewith;
(ii) the terms and conditions of any such contract shall
reflect an agreement reached at arm's length and shall be consistent with the
provisions of Treasury Regulation Section 1.856-4(b)(5);
(iii) any such contract shall require, or shall be
administered to require, that the Independent Contractor pay all costs and
expenses incurred in connection with the operation and management of such REO
Property, including those listed above, and remit all related revenues (net of
such costs and expenses) to the Special Servicer as soon as practicable, but in
no event later than thirty days following the receipt thereof by such
Independent Contractor but only to the extent consistent with Section 856 of the
Code and Treasury Regulation Section 1.856-4(b)(5);
(iv) none of the provisions of this Section 3.17(b) relating
to any such contract or to actions taken through any such Independent Contractor
shall be deemed to relieve the Special Servicer of any of its duties and
obligations to the Trust Fund or the Trustee on behalf of the Certificateholders
with respect to the operation and management of any such REO Property; and
(v) the Special Servicer shall be obligated with respect
thereto to the same extent as if it alone were performing all duties and
obligations in connection with the operation and management of such REO
Property.
The Special Servicer shall be entitled to enter into any agreement
with any Independent Contractor performing services for it related to its duties
and obligations hereunder for indemnification of the Special Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification.
(c) When and as necessary, the Special Servicer shall send to the Trustee a
statement prepared by the Special Servicer setting forth the amount of net
income or net loss, as determined for federal income tax purposes, resulting
from the operation and management of a trade or business on, the furnishing or
rendering of a non-customary service to the tenants of, or the receipt of any
other amount not constituting Rents from Real Property in respect of, any REO
Property in accordance with Section 3.17(b).
(d) The Special Servicer shall, prior to acquisitions of title to any
Mortgaged Property, review the operations of such property securing a defaulted
loan and determine the character of the income that the Trust would realize if
the Trust acquired title to such Mortgaged Property. The Special Servicer shall
undertake this analysis with a view to retaining the status of the REO Property
as foreclosure property under the REMIC provisions while maximizing the net
after-tax REO Income received without materially adversely affecting the Special
Servicer's ability to sell such REO Property. The Special Servicer shall, in its
good faith and reasonable judgment, and as it deems appropriate after
consultation with counsel knowledgeable in such matters (the cost of such
consultation shall be advanced as a Servicing Advance, unless such
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Advance would be a Non-recoverable Advance) determine which of the following
alternatives is preferred and commercially feasible. The Special Servicer shall
avoid subjecting the income from such Mortgaged Property to tax as either "net
income from foreclosure property" or a "prohibited transaction" within the
meaning of the REMIC Provisions (an "REO Tax") to the maximum extent possible
when evaluating the following alternative courses of action:
(i) Operate, or Directly Operate, as defined herein, the Mortgaged
Property if none of the income would be subject to an REO tax; or
(ii) Contract for operation of the Mortgaged Property through a lease
to another party, by contract with an Independent Contractor who Directly
Operates such property or such other method pursuant to which the Special
Servicer would not Directly Operate the Mortgaged Property if the income from
the Mortgaged Property could otherwise be subject to a REO tax; or
(iii) Directly Operate the mortgaged property if there are no other
commercially feasible means of operating such mortgaged property as REO Property
without the Trust potentially or actually incurring an REO Tax; provided,
however, that the Special Servicer shall consult with the Trustee regarding the
plan of operations, the estimated income (and character thereof) derived
therefrom, the estimated amount of taxes payable on such income and such other
information as is necessary to make a reasoned judgment as to whether the REO
Property will remain a foreclosure property and whether such plan is likely to
maximize the net after tax REO income to the Trust.
Neither the Special Servicer nor the Trustee shall be liable to the
Certificateholders, the Trust or the other parties to this Agreement or each
other for errors in judgment made in good faith in the exercise of their
discretion while performing their respective responsibilities under this
Section.
(e) Promptly following any acquisition by the Trust Fund of an REO
Property, the Special Servicer shall obtain (i) an update of any appraisal
performed pursuant to Section 3.23 which is more than 12 months old, or (ii) to
the extent that an appraisal has not been obtained pursuant to such Section, an
appraisal of such REO Property by an Independent appraiser familiar with the
area in which such REO Property is located in order to determine the fair market
value of such REO Property and shall notify the Depositor and the Trustee of the
results of such appraisal. Any such appraisal shall be conducted in accordance
with MAI standards by an appraiser with at least 5 years experience in the
relevant property type and in the jurisdiction in which the Mortgaged Property
is located and the cost thereof shall be reimbursable as a Servicing Advance.
SECTION 3.18. Sale of Specially Serviced Mortgage Loans and REO
Properties.
(a) With respect to any Specially Serviced Mortgage Loan or REO Property
which the Special Servicer has determined to sell in accordance with Section
3.10 or otherwise, the Special Servicer shall deliver to the Trustee, each of
the Rating Agencies and the Controlling Class Representative an Officer's
Certificate to the effect that the Special Servicer has
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determined to sell such Specially Serviced Mortgage Loan or REO Property in
accordance with this Section 3.18. The Special Servicer will give the Trustee
and the Controlling Class Representative not less than 10 Business Days' prior
written notice of its intention to sell any Specially Serviced Mortgage Loan or
REO Property. The Controlling Class Representative may, at its option, within 30
days after receipt of such notice, purchase (or designate an Affiliate to
purchase) any such Specially Serviced Mortgage Loan or REO Property out of the
Trust Fund at a cash price equal to the applicable Repurchase Price. The
Repurchase Price for any Specially Serviced Mortgage Loan or REO Property
purchased under this Section 3.18(a) shall be deposited into the Collection
Account, and the Trustee, upon receipt of an Officer's Certificate from the
Master Servicer to the effect that such deposit has been made, shall release or
cause to be released to the Controlling Class Representative (or the designated
Affiliate thereof) the related Mortgage File, and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse,
representation or warranty as shall be provided to it and are reasonably
necessary to vest in the ownership of such Mortgage Loan or REO Property. In
connection with any such purchase, the Special Servicer shall deliver the
related Servicing File to the Certificateholder effecting such purchase.
(b) If the Controlling Class Representative (or a designated Affiliate
thereof) has not purchased any Specially Serviced Mortgage Loan or REO Property
described in the first sentence of Section 3.18(a) within 30 days of its having
received notice in respect thereof pursuant to Section 3.18(a) above or has
specifically waived in writing its right to purchase such Specially Serviced
Mortgage Loan or REO Property, then either the Special Servicer or the Master
Servicer, in that order, may, at its option, within 30 days after the earlier of
the expiration of such 30 day period or receipt of the Controlling Class
Representative's written waiver of such right, purchase (or designate an
Affiliate thereof to purchase) such Mortgage Loan or REO Property out of the
Trust Fund at a cash price equal to the Repurchase Price. The Repurchase Price
for any such Mortgage Loan or REO Property purchased under this Section 3.18(b)
shall be deposited into the Collection Account, and the Trustee, upon receipt of
an Officer's Certificate from the Master Servicer to the effect that such
deposit has been made, shall release or cause to be released to the Master
Servicer or the Special Servicer (or the designated Affiliate thereof), as
applicable, the related Mortgage File, and shall execute and deliver such
instruments of transfer or assignments, in each case without recourse,
representation or warranty as shall be provided to it and are reasonably
necessary to vest in the Master Servicer or the Special Servicer (or the
designated Affiliate thereof), as applicable, the ownership of such Mortgage
Loan or REO Property. In connection with any such purchase by the Master
Servicer, the Special Servicer shall deliver the related Servicing File to the
Master Servicer.
(c) Subject to Section 3.27, the Special Servicer may offer to sell to any
Person (including the Depositor, the Master Servicer, the Special Servicer and
the Controlling Class Representative) any Specially Serviced Mortgage Loan or
REO Property not otherwise purchased pursuant to Section 3.18(a) or 3.18(b) if
and when the Special Servicer determines, consistent with the Servicing
Standard, that such a sale would be in the best economic interests of the
Certificateholders (as a collective whole). The Special Servicer shall notify
the Controlling Class Representative at least 10 Business Days before offering
to sell any Specially Serviced Mortgage Loan or REO Property pursuant to this
Section 3.18(c). Such offer shall be made in a commercially reasonable manner
(which, for purposes hereof, includes an offer to sell
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without representation or warranty other than customary warranties of title and
condition, if liability for breach thereof is limited to recourse against the
Trust), but shall, in any event, so offer to sell such Specially Serviced
Mortgage Loan or REO Property no later than the time determined by the Special
Servicer to be sufficient to result in the sale of such Specially Serviced
Mortgage Loan or REO Property within the period specified in Section 3.17(a).
The Special Servicer shall deliver such Officer's Certificate and give the
Trustee not less than ten Business Days prior written notice of its intention to
sell such Specially Serviced Mortgage Loan or REO Property, in which case the
Special Servicer shall accept any offer received from any Person that is
determined by the Special Servicer to be a fair cash price, as determined in
accordance with Section 3.18(b), for such Specially Serviced Mortgage Loan or
REO Property if the offeror is a Person other than the Special Servicer or an
Affiliate thereof, or is determined to be such a price by the Trustee if the
offeror is the Special Servicer or an Affiliate thereof; provided, however, that
the Trustee shall be entitled to engage an Independent appraiser to determine
whether the offer is a fair cash price, the cost of which shall be advanced as a
Servicing Advance, unless such Servicing Advance would be a Non-recoverable
Advance; and provided, further, that any offer by an Interested Person in the
amount of the Repurchase Price shall be deemed to be a fair cash price.
Notwithstanding anything to the contrary herein, neither the Trustee in its
individual capacity nor any of its Affiliates, may make an offer or purchase any
Specially Serviced Mortgage Loan or any REO Property pursuant hereto.
In addition, in the event that the Special Servicer receives more
than one fair offer with respect to any Specially Serviced Mortgage Loan or REO
Property, the Special Servicer may accept an offer that is not the highest fair
cash offer if it determines, in accordance with the Servicing Standard, that
acceptance of such offer would be in the best interests of the
Certificateholders (for example, if the prospective buyer making the lower offer
is more likely to perform its obligations, or the terms offered by the
prospective buyer making the lower cash offer are more favorable). In the event
that the Special Servicer determines with respect to any REO Property that the
offers being made with respect thereto are not in the best interests of the
Certificateholders and that the end of the REO Grace Period referred to in
Section 3.17(a) with respect to such REO Property is approaching, the Special
Servicer shall seek an extension of such REO Grace Period in the manner
described in Section 3.17(a); provided, however, that the Special Servicer shall
use its best efforts in accordance with the Servicing Standard, to sell any REO
Property no later than the day prior to the Determination Date immediately prior
to the Rated Final Distribution Date.
(d) In determining whether any offer received represents a fair price for
any Specially Serviced Mortgage Loan or any REO Property, the Special Servicer
or the Trustee may conclusively rely on the opinion of an Independent appraiser
or other expert in real estate matters retained by the Special Servicer or the
Trustee, the cost of which shall be advanced as a Servicing Advance, unless such
Servicing Advance would be a Non-recoverable Advance. In determining whether any
offer constitutes a fair price for any Specially Serviced Mortgage Loan or any
REO Property, the Special Servicer or the Trustee (or, if applicable, such
appraiser) shall take into account, and any appraiser or other expert in real
estate matters shall be instructed to take into account, the appraisal obtained
pursuant to Section 3.23 and, as applicable, among other factors, the period and
amount of any delinquency on such Specially Serviced Mortgage Loan, the physical
(including environmental) condition of the related Mortgaged Property or such
REO
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Property, the state of the local economy and the Trust Fund's obligation to
dispose of any REO Property within the time period specified in Section 3.17(a).
(e) Subject to the provisions of Section 3.17, the Special Servicer shall
act on behalf of the Trust Fund in negotiating and taking any other action
necessary or appropriate in connection with the sale of any Specially Serviced
Mortgage Loan or REO Property, including the collection of all amounts payable
in connection therewith. Any sale of a Specially Serviced Mortgage Loan or any
REO Property shall be without recourse to, or representation or warranty by, the
Trustee, the Depositor, the Master Servicer, the Special Servicer or the Trust
Fund (except that any contract of sale and assignment and conveyance documents
may contain customary warranties of title and condition, so long as the only
recourse for breach thereof is to the Trust Fund), and, if such sale is
consummated in accordance with the duties of the Special Servicer, the Master
Servicer, the Depositor and the Trustee pursuant to the terms of this Agreement,
no such Person who so performed shall have any liability to the Trust Fund or
any Certificateholder with respect to the purchase price therefor accepted by
the Special Servicer or the Trustee.
(f) Net Liquidation Proceeds related to any such sale shall be promptly,
and in any event within one Business Day following receipt thereof, deposited in
the Collection Account in accordance with Section 3.5(a)(iv).
SECTION 3.19. Inspections.
Commencing in _____, the Master Servicer (or, with respect to
Specially Serviced Mortgage Loans and REO Properties, the Special Servicer)
shall inspect or cause to be inspected (at its own expense) each Mortgaged
Property at least once every two years; provided, however if the related
Mortgage Loan (i) has a then current principal balance of at least
$____________, or (ii) is a Specially Serviced Mortgage Loan, then in each such
case the related Mortgaged Property will be inspected at least once every year.
The Special Servicer may elect at its option and expense to assume the
obligation to inspect any or all of the Mortgage Loans required to be inspected
by the Master Servicer. The annual inspections provided for above will be done
at the expense of the servicer performing the inspection.
In addition, the Special Servicer shall inspect any Mortgaged
Property if the related Borrower is 60 or more days delinquent (without giving
effect to any grace period permitted by the related Note) in the payment of a
Monthly Payment or other obligation. The Master Servicer shall pay the cost of
any such inspection as a Servicing Advance, unless such Advance would be a
Non-recoverable Advance.
The Master Servicer and the Special Servicer shall each prepare or
cause to be prepared as soon as reasonably possible a written report of each
such inspection and shall deliver a copy of such report to the Trustee and the
Controlling Class Representative within 15 days after the preparation thereof.
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SECTION 3.20. Available Information and Notices.
The Master Servicer or the Special Servicer, if applicable, shall
promptly give notice or report to the Controlling Class Representative, the
Trustee and each Rating Agency of any occurrence known to it with respect to a
Mortgage Loan or REO Property that the Master Servicer or the Special Servicer
determines, in accordance with the Servicing Standard, would have a material
effect on such Mortgage Loan or REO Property, which notice shall include an
explanation as to the reason for such material effect (provided that any
extension of the term of any Mortgage Loan shall be deemed to have a material
effect).
None of the Trustee, the Master Servicer and the Special Servicer
shall be responsible for the accuracy or completeness of any information
supplied to it by a Borrower or a third party for inclusion in any such notice
or in any other report or information furnished or provided by the Master
Servicer, the Special Servicer or the Trustee hereunder.
In addition to the other reports and information made available and
distributed to the Depositor, the Placement Agents, the Trustee, the Rating
Agencies, the Controlling Class Representative or the Certificateholders
pursuant to other provisions of this Agreement, the Master Servicer and the
Special Servicer shall, in accordance with such reasonable rules and procedures
as it may adopt (which may include the requirement that an agreement governing
the availability, use and disclosure of such information, and which may provide
indemnification to the Master Servicer or the Special Servicer as applicable,
for any liability or damage that may arise therefrom, be executed to the extent
the Master Servicer or the Special Servicer, as applicable, deems such action to
be necessary or appropriate), also make available any information relating to
the Mortgage Loans, the Mortgaged Properties or the Borrowers for review by the
Depositor, the Rating Agencies, the Placement Agents, the Trustee and the
Controlling Class Representative. The Master Servicer and the Special Servicer,
as the case may be, will also make such information available to any Person that
certifies it is a Certificateholder, potential Certificateholder, Certificate
Owner or potential Certificate Owner.
The Trustee shall also make available at its offices primarily
responsible for administration of the Trust Fund, upon reasonable advance notice
and during normal business hours, for review by the Depositor, the Rating
Agencies, the Controlling Class Representative, any Certificateholder or
Certificate Owner, the Placement Agents, any Person identified to the Trustee by
a Certificateholder or Certificate Owner as a prospective transferee of a
Certificate or a beneficial interest therein and any other Persons to whom the
Trustee believes such disclosure is appropriate, the following items: (i) this
Agreement, (ii) all monthly statements to Certificateholders delivered since the
Closing Date pursuant to Section 4.4(a), (iii) all annual statements as to
compliance delivered to the Trustee and the Depositor pursuant to Section 3.14,
(iv) all annual Independent accountants' reports delivered to the Trustee and
the Depositor pursuant to Section 3.15, and (v) any reports or information
relating to the Mortgage Loans, the Mortgaged Properties or the Borrowers which
the Trustee has received from the Master Servicer or the Special Servicer. The
Trustee shall make available at its offices during normal business hours, for
review by the Depositor, the Placement Agents, the Master Servicer, the Special
Servicer, the Rating Agencies, the Controlling Class Representative, any
Certificateholder or
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Certificate Owner, any Person identified to the Trustee by a Certificateholder
or Certificate Owner as a prospective transferee of a Certificate or a
beneficial interest therein and any other Persons to whom the Trustee believes
such disclosure is appropriate, the following items to the extent received from
the Master Servicer or the Special Servicer, as applicable: (i) the inspection
reports prepared by or on behalf of the Master Servicer or the Special Servicer,
as applicable, in connection with the property inspections conducted by the
Master Servicer or the Special Servicer, as applicable, pursuant to Section
3.19, (ii) any and all modifications, waivers and amendments of the terms of a
Mortgage Loan entered into by the Master Servicer or the Special Servicer and
(iii) any and all Officer's Certificates and other evidence delivered to the
Trustee and the Depositor to support the Master Servicer's determination that
any Advance was, or if made would be, a Nonrecoverable Advance, in each case
except to the extent doing so is prohibited by applicable laws or by any
documents related to a Mortgage Loan. Copies of any and all of the foregoing
items shall be available from the Master Servicer, the Special Servicer or the
Trustee, as applicable, upon request (subject to the exception in the preceding
sentence). The Master Servicer, the Special Servicer and the Trustee shall be
permitted to require payment (other than from any Rating Agency, the Placement
Agents and the Controlling Class Representative) of a sum sufficient to cover
the reasonable costs and expenses incurred by it in providing copies of or
access to any information requested in accordance with the previous sentence.
Within 15 days after each Distribution Date, the Trustee shall file
with the Commission via the Electronic Data Gathering and Retrieval System
(EDGAR), a Form 8-K with a copy of the statement to the Certificateholders for
such Distribution Date as an exhibit thereto. Prior to _____________, the
Trustee shall file a Form 15 Suspension Notification with respect to the Trust
Fund, if applicable, unless the Depositor requests the Trustee to not make such
filing. Prior to _____________, the Trustee shall file a Form 10-K, in substance
conforming to industry standards, with respect to the Trust Fund. The Depositor
hereby grants to the Trustee a limited power of attorney to execute and file
each such document on behalf of the Depositor. Such power of attorney shall
continue until either the earlier of (i) receipt by the Trustee from the
Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Depositor agrees to promptly furnish to the
Trustee, from time to time upon request, such further information, reports, and
financial statements within its control related to this Agreement and the
Mortgage Loans as the Trustee reasonable deems appropriate to prepare and file
all necessary reports with the Commission. The Trustee shall have no
responsibility to file any items other than those specified in this section
unless specifically requested and necessary for compliance with the rules and
regulations of the Commission. The Trustee shall have no responsibility to
determine whether or not any filing may be required and shall not have any
responsibility to review or confirm in any way the accuracy or the sufficiency
of the contents of any such filing. The Depositor shall have the right to file
any additional reports, statements or filings with the Commission that it deems
necessary or appropriate.
SECTION 3.21. Reserve Accounts; Letters of Credit.
The Master Servicer shall administer each Reserve Account in
accordance with the related Mortgage Loan Documents.
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The Master Servicer shall maintain, administer and enforce any
letter of credit included in the Mortgage Files in accordance with its terms and
the terms of the other related Mortgage Loan Documents. The Trustee shall
cooperate with the Master Servicer in connection with such administration of any
letter of credit.
SECTION 3.22. Servicing Advances.
(a) The Master Servicer (or, to the extent provided in Section 3.22(b), the
Trustee) shall make any Servicing Advances as and to the extent otherwise
required pursuant to the terms hereof. For purpose of calculating distributions
to the Certificateholders, Servicing Advances shall not be considered to
increase the principal balance of any Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so provide.
(b) The Master Servicer shall notify the Trustee and the Rating Agencies in
writing promptly upon, and in any event within one Business Day after, becoming
aware that it will be financially unable to make any Servicing Advance required
to be made pursuant to the terms hereof, and in connection therewith, shall set
forth in such notice the amount of such Servicing Advance, the Person to whom it
should be paid, and the circumstances and purpose of such Servicing Advance, and
shall set forth therein information and instructions for the payment of such
Servicing Advance, and, on the date specified in such notice for the payment of
such Servicing Advance, or, if no such date is specified or such date has
already occurred, then promptly (or, in any event, within three Business Days)
following such notice, the Trustee shall pay the amount of such Servicing
Advance in accordance with such information and instructions.
(c) Notwithstanding anything herein to the contrary, neither the Master
Servicer nor the Trustee shall be obligated to make a Servicing Advance as to
any Mortgage Loan or REO Property if the Master Servicer or the Trustee, as
applicable, determines that such Servicing Advance, if made, would be a
Nonrecoverable Advance. The Trustee shall be entitled to rely, conclusively, on
any determination by the Master Servicer that a Servicing Advance, if made,
would be a Nonrecoverable Advance. The Trustee, in determining whether or not a
Servicing Advance previously made is, or a proposed Servicing Advance, if made,
would be, a Nonrecoverable Advance shall make such determination in its good
faith judgment.
(d) The Master Servicer and/or the Trustee, as applicable, shall be
entitled to, and the Master Servicer hereby covenants and agrees to promptly
seek and effect, the reimbursement of Servicing Advances to the extent permitted
pursuant to Section 3.6(a)(ii) of this Agreement, together with any related
Advance Interest Amount in respect of such Servicing Advances (pursuant to
Section 3.6(a)(iii)).
SECTION 3.23. Appraisal Reductions.
(a) Within 60 days after the Special Servicer receives notice or is
otherwise aware of an Appraisal Reduction Event, the Special Servicer shall be
required to obtain an Updated Appraisal of the related Mortgaged Property or REO
Property; provided that if the Special Servicer had completed or obtained an
Updated Appraisal within the immediately preceding 12 months, the Special
Servicer may rely on such Updated Appraisal and shall have no
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duty to prepare a new Updated Appraisal, unless such reliance would not be in
accordance with the Servicing Standard. The cost of any such Updated Appraisal
if not an internal valuation performed by the Special Servicer shall be paid by
the Master Servicer as a Servicing Advance, unless such Advance would be a
Nonrecoverable Advance. If no Updated Appraisal has been obtained within 12
months prior to the first Distribution Date on or after an Appraisal Reduction
Event has occurred, the Special Servicer will be required to estimate the value
of the related Mortgaged Property or REO Property (the "Special Servicer's
Appraisal Reduction Estimate") and such estimate will be used for purposes of
determining the Appraisal Reduction.
(b) The Master Servicer, based on the Updated Appraisal or Special
Servicer's Appraisal Reduction Estimate provided to it by the Special Servicer,
shall calculate any Appraisal Reduction. If the Appraisal Reduction is
calculated using the Special Servicer's Appraisal Reduction Estimate, then on
the first Distribution Date occurring after the delivery of the Updated
Appraisal, the Master Servicer will be required to adjust the Appraisal
Reduction to take into account the Updated Appraisal (regardless of whether the
Updated Appraisal is higher or lower than the Special Servicer's Appraisal
Reduction Estimate).
(c) Annual updates of such Updated Appraisal will be obtained during the
continuance of an Appraisal Reduction Event. The cost of such annual updates
shall be paid as a Servicing Advance, unless such Advance would be a
Nonrecoverable Advance. In addition, the Controlling Class Representative may at
any time request the Special Servicer to obtain an Updated Appraisal at the
Controlling Class Representative's expense. Each time an Updated Appraisal is
obtained, the Appraisal Reduction will be adjusted by the Master Servicer based
on such Updated Appraisal. Any Updated Appraisal obtained by the Special
Servicer pursuant to this section shall be delivered by the Special Servicer to
the Master Servicer, and the Master Servicer shall deliver such Updated
Appraisal to the Trustee and the Controlling Class Representative within 15 days
of receipt by the Master Servicer of such Updated Appraisal from the Special
Servicer. Upon written request, the Trustee shall provide such Updated Appraisal
to any Holder of the Privately Offered Certificates. An Appraisal Reduction will
be eliminated (i) upon payment in full or liquidation of any Mortgage Loan for
which an Appraisal Reduction has been determined or (ii) if the Mortgage Loan
becomes a Corrected Mortgage Loan and the Borrower makes three consecutive
Monthly Payments thereafter.
SECTION 3.24 Transfer of Servicing Between Master Servicer and Special
Servicer; Record Keeping.
(a) Upon determining that any Mortgage Loan has become a Specially Serviced
Mortgage Loan, the Master Servicer shall immediately give notice thereof,
together with a copy of the related Mortgage File, to the Special Servicer (with
a copy of the notice to the Controlling Class Representative) and the Master
Servicer shall use its best efforts to provide the Special Servicer with all
information, documents (but excluding the original documents constituting such
Mortgage File) and records (including records stored electronically on computer
tapes, magnetic discs and the like) relating to such Mortgage Loan and
reasonably requested by the Special Servicer to enable it to assume its duties
hereunder with respect thereto without acting through a Sub-Servicer. The Master
Servicer shall use its best efforts to comply with the preceding sentence within
five Business Days of the date such Mortgage Loan became a
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Specially Serviced Mortgage Loan and in any event shall continue to act as
Master Servicer and administrator of such Mortgage Loan until the Special
Servicer has commenced the servicing of such Mortgage Loan, which shall occur
upon the receipt by the Special Servicer of the information, documents and
records referred to in the preceding sentence. With respect to each Mortgage
Loan that becomes a Specially Serviced Mortgage Loan, the Master Servicer shall
instruct the related Borrower to continue to remit all payments in respect of
such Mortgage Loan to the Master Servicer. If Midland ceases to be the Master
Servicer or the Special Servicer, Midland and the successor Master Servicer or
Special Servicer, as applicable, may agree that, notwithstanding the preceding
sentence, with respect to each Mortgage Loan that becomes a Specially Serviced
Mortgage Loan, the Master Servicer shall instruct the related Borrower to remit
all payments in respect of such Mortgage Loan to the Special Servicer, provided
that the payee in respect of such payments shall remain the Master Servicer.
Upon determining that no event has occurred and is continuing with
respect to a Mortgage Loan that causes such Mortgage Loan to be a Specially
Serviced Mortgage Loan, the Special Servicer shall immediately give notice
thereof to the Master Servicer and upon giving such notice, such Mortgage Loan
shall cease to be a Specially Serviced Mortgage Loan pursuant to the first
proviso to the definition of Specially Serviced Mortgage Loan, the Special
Servicer's obligation to service such Mortgage Loan shall terminate and the
obligations of the Master Servicer to service and administer such Mortgage Loan
as a Mortgage Loan that is not a Specially Serviced Mortgage Loan shall resume.
In addition, if the related Borrower has been instructed, pursuant to the last
sentence of the preceding paragraph, to make payments to the Special Servicer,
upon such determination, the Special Servicer shall instruct such Borrower to
remit all payments in respect of such Mortgage Loan that is no longer a
Specially Serviced Mortgage Loan directly to the Master Servicer.
(b) In servicing any Specially Serviced Mortgage Loan, the Special Servicer
shall provide to the Trustee originals of documents included within the
definition of "Mortgage File" for inclusion in the related Mortgage File (to the
extent such documents are in the possession of the Special Servicer) and copies
of any additional related Mortgage Loan information, including correspondence
with the related Borrower, and the Special Servicer shall provide copies of the
foregoing to the Master Servicer.
(c) Not later than the Business Day preceding each date on which the Master
Servicer is required to furnish a report under Section 3.13 to the Trustee, the
Special Servicer shall deliver to the Master Servicer a written statement
describing, on a Mortgage Loan-by-Mortgage Loan basis, the amount of all
payments on account of interest received on each Specially Serviced Mortgage
Loan; the amount of all payments on account of principal, including Principal
Prepayments, on each Specially Serviced Mortgage Loan; the amount of Insurance
Proceeds and Liquidation Proceeds received with respect to each Specially
Serviced Mortgage Loan; and the amount of net income or net loss, as determined
for management of a trade or business on, or the furnishing or rendering of a
non-customary service to the tenants of, each REO Property that previously
secured a Specially Serviced Mortgage Loan, in each case in accordance with
Section 3.17.
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(d) Notwithstanding the provisions of the preceding subsection (c), the
Master Servicer shall maintain ongoing payment records with respect to each of
the Specially Serviced Mortgage Loans and shall provide the Special Servicer
with any information reasonably required by the Special Servicer to perform its
duties under this Agreement. The Special Servicer shall provide the Master
Servicer with any information reasonably required by the Master Servicer to
perform its duties under this Agreement.
(e) No later than 30 days after a transfer of servicing described in the
preceding paragraph for a Mortgage Loan, the Special Servicer shall deliver to
each Rating Agency and the Controlling Class Representative a report (the "Asset
Status Report") with respect to such Mortgage Loan and the related Mortgaged
Property. Such Asset Status Report shall set forth the following information to
the extent reasonably determinable:
(i) summary of the status of such Specially Serviced Mortgage Loan and
any negotiations with the related Borrower;
(ii) a discussion of the legal and environmental considerations
reasonably known to the Special Servicer, consistent with the Servicing
Standard, that are applicable to the exercise of remedies as aforesaid and to
the enforcement of any related guaranties or other collateral for the related
Mortgage Loan and whether outside legal counsel has been retained;
(iii) the most current rent roll and income or operating statement
available for the related Mortgaged Property;
(iv) the Special Servicer's recommendations on how such Specially
Serviced Mortgage Loan might be returned to performing status and returned to
the Master Servicer for regular servicing or otherwise realized upon;
(v) the appraised value of the Mortgaged Property together with the
assumptions used in the calculation thereof; and
(vi) such other information as the Special Servicer deems relevant in
light of the Servicing Standard.
SECTION 3.25. Adjustment of Servicing Compensation in Respect of
Prepayment Interest Shortfalls.
The Master Servicer shall deliver to the Trustee for deposit in the
Collection Account on each Remittance Date, without any right of reimbursement
therefor, an amount equal to the lesser of (i) the excess, if any, of all
Prepayment Interest Shortfalls over all Prepayment Interest Excesses, in each
case resulting from Principal Prepayments received in respect of the Mortgage
Pool during the most recently ended Collection Period, and (ii) an amount equal
to the aggregate Stated Principal Balance of the Mortgage Loans for which the
Master Servicer has received its Master Servicing Fee for such Distribution Date
multiplied by 1/12th of the Minimum Master Servicing Fee Rate.
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SECTION 3.26. Controlling Class Representative; Elections.
(a) In accordance with Section 3.26(c), the Holders of Certificates
representing more than 50% of the aggregate Certificate Balance of the
Controlling Class shall be entitled to elect a controlling class representative
(the "Controlling Class Representative") with the rights and powers set forth in
this Agreement (including Section 3.27). An election of a Controlling Class
Representative may also be held upon the resignation or removal of any Person
acting as Controlling Class Representative. If at any time (including as of the
Closing Date), the Holders of the Controlling Class have not elected a
Controlling Class Representative, the Controlling Class Representative shall be
the Holder owning the largest Percentage Interest in the Controlling Class. No
appointment of any Person as a Controlling Class Representative (except for the
initial Controlling Class Representative) shall be effective until such Person
provides the Trustee, the Depositor, the Master Servicer and the Special
Servicer with written confirmation of its acceptance of such appointment, an
address and telecopy number for the delivery of notices and other correspondence
and a list of officers or employees of such Person with whom the parties to this
Agreement may deal (including their names, titles, work addresses and telecopy
numbers).
(b) At the request of the Holders of Certificates representing at least 50%
of the aggregate Certificate Balance of the Controlling Class, the Trustee shall
call a meeting of the Holders of the Controlling Class for purpose of electing a
Controlling Class Representative. Notice of the meeting shall be mailed or
delivered by the Trustee to each Holder of Certificates of the Controlling Class
not less than 10 nor more than 60 days prior to the meeting. The notice shall
state the place and the time of the meeting, which may be held by telephone.
Holders of Certificates representing a majority of the aggregate Certificate
Balance of the Controlling Class, present in person or represented by proxy,
shall constitute a quorum for the nomination of a Controlling Class
Representative. At the meeting, each Holder shall be entitled to nominate one
Person to act as Controlling Class Representative. The Trustee shall cause the
election of the Controlling Class Representative to be held as soon thereafter
as is reasonably practicable.
(c) Each Holder of Certificates of the Controlling Class shall be entitled
to vote in each election of the Controlling Class Representative. The voting in
each election of the Controlling Class Representative shall be in writing
mailed, telecopied, delivered or sent by courier and actually received by the
Trustee on or prior to the date of such election. Immediately upon receipt by
the Trustee of votes (which have not been rescinded) from the Holders of
Certificates representing more than 50% of the aggregate Certificate Balance of
the Controlling Class which are cast for a single Person, such Person shall be,
upon such Person's acceptance, the Controlling Class Representative. The Trustee
shall act as judge of each election and, absent manifest error, the
determination of the results of any election by the Trustee shall be conclusive.
Notwithstanding any other provisions of this Section 3.26, the Trustee may make
such reasonable regulations as it may deem advisable for any election.
(d) The Controlling Class Representative may be removed at any time by the
written vote, copies of which must be delivered to the Trustee, of the Holders
of the Certificates representing more than 50% of the aggregate Certificate
Balance of the Controlling Class.
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(e) For purposes of electing or removing a Controlling Class
Representative, Certificates of the Controlling Class held by the Depositor, the
Master Servicer or the Special Servicer or by any Affiliate of any of them shall
be taken into account with the same force and effect as if any other Person held
such Certificates.
SECTION 3.27. Appointment of Special Servicer; Duties of Controlling
Class Representative.
(a) Midland Loan Services, Inc. is hereby appointed as the initial Special
Servicer hereunder.
(b) The Controlling Class Representative shall be entitled to direct the
Special Servicer (and the Master Servicer solely with respect to clause (ii)
below) with respect to the following actions of the Special Servicer or Master
Servicer, as applicable, and subject to Section 3.27(c), the Special Servicer or
the Master Servicer, as applicable, shall not be permitted to take any of the
following actions unless the Controlling Class Representative has approved such
action in writing within 10 Business Days of having been notified thereof and
having been provided with all reasonably requested information with respect
thereto (provided that if written notice has not been received by the Special
Servicer or the Master Servicer, as applicable, within 10 Business Days, then
the Controlling Class Representative's approval shall be deemed to have been
given):
(i) any foreclosure upon or comparable conversion (which may include
acquisitions of an REO Property) of the ownership of properties securing such of
the Specially Serviced Mortgage Loans as come into and continue in default;
(ii) any material amendment, waiver or modification of any Mortgage
Loan and any amendment, waiver or modification (including, without limitation,
extensions), of any term of a Specially Serviced Mortgage Loan;
(iii) any proposed sale of a defaulted Mortgage Loan or REO Property
(other than in connection with the termination of the Trust Fund pursuant to
Section 9.1);
(iv) any acceptance of a discounted payoff;
(v) any determination to bring an REO Property into compliance with
applicable environmental laws or to otherwise address Hazardous Materials
located at an REO Property;
(vi) any release of collateral (other than in accordance with the
terms of, or upon satisfaction of, a Mortgage Loan);
(vii) any acceptance of substitute or additional collateral for a
Mortgage Loan, other than in accordance with the terms of the Mortgage Loan;
(viii) any waiver of a "due-on-sale" or "due-on-encumbrance" clause in
any Mortgage Loan; and
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(ix) any acceptance of an assumption agreement releasing a borrower
from liability under a Mortgage Loan.
In addition, subject to Section 3.27(c), the Controlling Class
Representative may direct the Special Servicer to take, or to refrain from
taking, such other actions as Controlling Class Representative may deem
advisable. Upon reasonable request, the Special Servicer shall provide the
Controlling Class Representative with any information in the Special Servicer's
possession with respect to such matters, including, without limitation, its
reasons for determining to take a proposed action; provided that such
information shall also be provided, in a written format, to the Trustee and the
Master Servicer.
(c) Notwithstanding anything herein to the contrary, (i) no advice,
direction or approval rights from or by the Controlling Class Representative, as
contemplated by Section 3.27(b), may (and the Special Servicer and the Master
Servicer shall ignore and act without regard to any such advice, direction or
approval rights that the Special Servicer or the Master Servicer, as applicable,
has determined, in its reasonable, good faith judgment, would) (A) require or
cause the Special Servicer or the Master Servicer, as applicable, to violate
applicable law, the terms of the Mortgage Loan, any provision of this Agreement
or the REMIC Provisions, including, without limitation, the Special Servicer's
or the Master Servicer's, as applicable, obligation to act in accordance with
the Servicing Standard, (B) result in an Adverse REMIC Event with respect to any
REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust,
(C) expose the Depositor, the Master Servicer, the Special Servicer, the REMIC
Administrator or the Trustee, or their respective Affiliates, officers,
directors, employees, agents or partners, or the Trust, to any material claim,
suit or liability, or (D) materially expand the scope of the Master Servicer's
or Special Servicer's responsibilities under this Agreement and (ii) the Special
Servicer and the Master Servicer are not required to seek the approval from the
Controlling Class Representative for any action specified in clauses (i), (ii)
(only with respect to a waiver, modification or amendment involving a Money
Term) or (iii) of Section 3.27(b) that it seeks to take with respect to any
particular Specially Serviced Mortgage Loan if (A) the Special Servicer has
notified the Controlling Class Representative in writing of the various actions
that the Special Servicer proposes to take with respect to the workout or
liquidation of such Specially Serviced Mortgage Loan and (B) for 60 days after
the first notice, the Controlling Class Representative has objected to all such
proposed actions and has failed to suggest any alternative actions that the
Special Servicer reasonably considers to be consistent with the Servicing
Standard.
(d) The Controlling Class Representative and its officers, directors,
employees and owners shall have no liability to the Certificateholders for any
action taken, or for refraining from the taking of any action, in good faith
pursuant to this Agreement, or for errors in judgment, but will be liable for
its own gross negligence or willful misfeasance. Each Certificateholder
acknowledges and agrees, by its acceptance of its Certificates, that, the
Controlling Class Representative may have special relationships and interests
that conflict with those of holders of one or more Classes of Certificates, that
the Controlling Class Representative may act solely in the interests of the
holders of the Controlling Class, that the Controlling Class Representative does
not have any duties to the holders of any Class of Certificates other than the
Controlling Class, that the Controlling Class Representative may take actions
that favor the interests of the holders of the Controlling Class over the
interests of the holders of one or more other Classes,
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that the Controlling Class Representative shall not be deemed to have been
negligent or reckless, or to have acted in bad faith or engaged in willful
misconduct by reason of its having acted solely in the interests of the
Controlling Class, and that the Controlling Class Representative shall have no
liability whatsoever for having so acted, and no Certificateholder may take any
action whatsoever against the Controlling Class Representative for having so
acted. The Special Servicer shall keep confidential all advice, directions,
recommendations and/or objections received from the Controlling Class
Representative; unless such advice, directions, recommendations and/or
objections (i) are of public knowledge at the time of disclosure by the Special
Servicer, (ii) become generally available to the public other than as a result
of a disclosure by the Special Servicer, (iii) relate to an objection provided
to the Special Servicer by the Controlling Class Representative pursuant to
Section 3.27(b), (iv) were disclosed pursuant to a legal requirement or (v) were
disclosed with the written consent of the Controlling Class Representative.
(e) Subject to Section 3.27(f), the Controlling Class Representative may
direct the Trustee to remove the Special Servicer at any time effective upon the
appointment and written acceptance of such appointment by a successor to the
Special Servicer appointed by the Controlling Class Representative. The existing
Special Servicer shall be deemed to have resigned simultaneously with such
designated successor becoming the Special Servicer hereunder; provided, however,
that (i) the resigning Special Servicer shall continue to be entitled to receive
all amounts accrued or owing to it under this Agreement on or prior to the
effective date of such resignation, whether in respect of Servicing Compensation
or otherwise, and (ii) it and its directors, officers, employees and agents
shall continue to be entitled to the benefits of Sections 6.1 and 6.3,
notwithstanding any such resignation. Such resigning Special Servicer shall
cooperate with the Trustee and the replacement Special Servicer in effecting the
termination of the resigning Special Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer within two Business Days
to the replacement Special Servicer for administration by it of all cash amounts
that shall at the time be or should have been deposited in any REO Account or
delivered by the Special Servicer to the Master Servicer or that are thereafter
received with respect to Specially Serviced Mortgage Loans and REO Properties.
If the termination of the Special Servicer was without cause, the reasonable
out-of-pocket costs and expenses of any such transfer shall in no event be paid
out of the Trust Fund, and instead shall be paid by the successor Special
Servicer or the Holders of the Controlling Class that voted to remove the
Special Servicer, as such parties may agree.
(f) Notwithstanding the foregoing, the removal of the Special Servicer
and the appointment of a successor Special Servicer shall not be effective until
(i) the successor Special Servicer has assumed in writing all of the
responsibilities, duties and liabilities of the Special Servicer hereunder
pursuant to an agreement satisfactory to the Trustee, and (ii) Rating Agency
Confirmation is obtained with respect to such appointment (the cost, if any, of
obtaining such confirmation to be paid by the Controlling Class Representative).
SECTION 3.28. Modifications, Waivers, Amendments, Extensions and
Consents, Defeasance.
(a) The Master Servicer, in accordance with the Servicing Standard and
subject to the terms of this Agreement (including Section 3.27), shall have the
following powers:
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(i) Other than stated herein, the Master Servicer, in accordance with
the Servicing Standard, may agree to any modification, waiver, amendment or
consent of or relating to any non-Money Term of a Mortgage Loan that is not a
Specially Serviced Mortgage Loan; provided that such modification or amendment
would not (x) cause an Adverse REMIC Event or Adverse Grantor Trust Event to
occur or (y) materially impair the collateral securing the Mortgage Loan. Other
than as set forth above in this Section 3.28(a)(i), the Master Servicer shall
not agree to any modification or amendment of a Mortgage Loan or any waiver or
consent.
(ii) The Master Servicer shall notify the Trustee, the Special
Servicer, the Controlling Class Representative and the Rating Agencies of any
modification, waiver or amendment of any term of any Mortgage Loan permitted by
it under this Section and the date thereof, and shall deliver to the Trustee
(with a copy to the Controlling Class Representative) for deposit in the related
Mortgage File, an original counterpart of the agreement relating to such
modification, waiver or amendment, promptly following the execution thereof
except to the extent such documents have been submitted to the applicable
recording office, in which event the Master Servicer shall promptly deliver
copies of such documents to the Trustee and the Controlling Class
Representative. The Trustee shall make available copies of such documents
pursuant to Section 3.20.
(b) The Special Servicer, in accordance with the Servicing Standard and
subject to the terms of this Agreement, including without limitation, Section
3.27, shall have the following powers:
(i) The Special Servicer may enter into a modification, waiver or
amendment (including, without limitation, the substitution or release of
collateral or the pledge of additional collateral) of the terms of a Specially
Serviced Mortgage Loan, including any modification, waiver or amendment to (A)
reduce the amounts owing under any Specially Serviced Mortgage Loan by forgiving
principal, accrued interest or any Prepayment Premium, (B) reduce the amount of
the Monthly Payment on any Specially Serviced Mortgage Loan, including by way of
a reduction in the related Mortgage Rate, (C) forebear in the enforcement of any
right granted under any Note or Mortgage relating to a Specially Serviced
Mortgage Loan, (D) subject to the next paragraph, extend the Maturity Date of
any Specially Serviced Mortgage Loan and/or (E) accept a principal prepayment on
any Specially Serviced Mortgage Loan during any period during which voluntary
Principal Prepayments are prohibited, provided that (1) the related Borrower is
in default with respect to the Specially Serviced Mortgage Loan or, in the
reasonable judgment of the Special Servicer, such default is reasonably
foreseeable and (2) in the reasonable judgment of the Special Servicer, such
modification would increase the recovery on the Mortgage Loan to
Certificateholders on a net present value basis (the relevant discounting of
amounts that will be distributable to Certificateholders to be performed at the
related Net Mortgage Rate).
In no event shall the Special Servicer (x) extend the Maturity Date
of a Specially Serviced Mortgage Loan beyond the date that is two years prior to
the Rated Final Distribution Date; (y) if the Specially Serviced Mortgage Loan
is secured by a ground lease, extend the Maturity Date of such Specially
Serviced Mortgage Loan beyond a date which is later than 20
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years prior to the expiration of the term of such ground lease; or (z) extend
the Maturity Date of a Specially Serviced Mortgage Loan beyond the date that is
60 months beyond its Stated Maturity Date.
The determination of the Special Servicer contemplated by clause (2)
of the proviso to the first paragraph of this Section 3.28(b)(i) shall be
evidenced by an Officer's Certificate to such effect delivered to the Trustee,
the Controlling Class Representative and the Master Servicer and describing in
reasonable detail the basis for the Special Servicer's determination. The
Special Servicer shall append to such Officer's Certificate any information,
including but not limited to income and expense statements, rent rolls, property
inspection reports and appraisals, that support such determination.
(ii) In the event the Special Servicer intends to permit a Borrower to
substitute collateral for all or any portion of a Mortgaged Property pursuant to
Section 3.28(b)(i) or pledge additional collateral for the Mortgage Loan
pursuant to Section 3.28(b)(i), if the security interest of the Trust Fund in
such collateral would be perfected by possession, or if such collateral requires
special care or protection, then prior to agreeing to such substitution or
addition of collateral, the Special Servicer shall make arrangements for such
possession, care or protection, and prior to agreeing to such substitution or
addition of collateral (or such arrangement for possession, care or protection)
shall obtain the prior written consent of the Trustee with respect thereto
(which consent shall not be unreasonably withheld, delayed or conditioned);
provided, however, that any such substitution or addition of collateral shall
require Rating Agency Confirmation (unless it meets the requirements of this
Section 3.28 with respect to defeasance) and is subject to Section 3.27;
provided further, however, that the Trustee shall not be required (but has the
option) to consent to any substitution or addition of collateral or to hold any
such collateral which will require the Trustee to undertake any additional
duties or obligations or incur any additional expense.
(iii) The Special Servicer will promptly deliver to the Master
Servicer, the Controlling Class Representative, the Rating Agencies and the
Trustee a notice, specifying any such modifications, waivers or amendments, such
notice identifying the affected Specially Serviced Mortgage Loan. Such notice
shall set forth the reasons for such waiver, modification, or amendment
(including, but not limited to, information such as related income and expense
statements, rent rolls, occupancy status, property inspections, and an internal
or external appraisal performed in accordance with MAI standards and
methodologies (and, if done externally, the cost of such appraisal shall be
recoverable as a Servicing Advance subject to the provisions of Section 3.22
hereof)). The Special Servicer shall also deliver to the Trustee, for deposit in
the related Mortgage File, an original counterpart of the agreement relating to
such modification, waiver or amendment promptly following the execution thereof.
(c) The Master Servicer and the Special Servicer, as applicable, may
require, in its discretion, as a condition to granting any request by a Borrower
for any consent, modification, waiver or amendment, that such Borrower pay to
the Master Servicer or the Special Servicer, as applicable, a reasonable and
customary modification fee to the extent permitted by law. The Master Servicer
and the Special Servicer, as applicable, may charge the Borrower for any costs
and expenses (including attorneys' fees) incurred by the Master Servicer
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or the Special Servicer, as applicable, in connection with any request for a
modification, waiver or amendment. No fee described in this Section shall be
collected by the Master Servicer or the Special Servicer, as applicable, from
the Borrower (or on behalf of the Borrower) in conjunction with any consent or
any modification, waiver or amendment of the related Mortgage Loan if the
collection of such fee would cause such consent, modification, waiver or
amendment to be a "significant modification" of the related Note within the
meaning of Treasury Regulation Section 1.860G-2(b). Subject to the foregoing,
the Master Servicer or the Special Servicer, as appropriate, shall use its
reasonable efforts, to collect any modification fees and other expenses
(including the cost of obtaining any Rating Agency Confirmation) connected with
a permitted modification, waiver or amendment of a Mortgage Loan from the
Borrower and if such amount is not paid by the Borrower, such amount shall be
Advanced as a Servicing Advance, unless such Advance would be a Nonrecoverable
Advance. The inability of the Borrower to pay any costs and expenses of a
proposed modification, waiver or amendment shall not impair the right of the
Special Servicer, the Master Servicer or the Trustee to be reimbursed by the
Trust Fund for such expenses.
(d) With respect to each Mortgage Loan that provides for defeasance, to the
extent permitted by the terms of such Mortgage Loan, the Master Servicer shall
require the related Borrower to (i) provide replacement collateral consisting of
U.S. government securities within the meaning of Treas. Reg. 1.860G-2(a)(8)(i)
in an amount sufficient to make all scheduled payments under the Mortgage Note
when due, (ii) deliver a certificate from an independent certified public
accounting firm certifying that the replacement collateral is sufficient to make
such payments, (iii) at the option of the Master Servicer, designate a Single
Purpose Entity (which may be a subsidiary of the Depositor or the Master
Servicer established for the purpose of assuming all defeased Mortgage Loans) to
assume the Mortgage Loan and own the collateral, (iv) implement such defeasance
only after the second anniversary of the Closing Date, and (v) provide an
opinion of counsel that the Trustee has a perfected, first priority security
interest in the new collateral. If the terms of the Mortgage Loan permit the
Master Servicer to impose the foregoing requirements or if the Master Servicer
satisfies such requirements on its own, a Rating Agency Confirmation is not
required. In such case, the Master Servicer shall provide the Rating Agencies
with notice that the foregoing requirements have been met. If however, the terms
of the Mortgage Loan do not permit the Master Servicer to impose such
requirements or if the Master Servicer does not satisfy such requirements on its
own, then the Master Servicer shall so notify the Rating Agencies and, if the
related loan documents so permit, obtain a Rating Agency Confirmation with
respect to such defeasance. To the extent permitted by the terms of the Mortgage
Loan, the Master Servicer shall require the related Borrower to provide an
Opinion of Counsel that such defeasance will not cause an Adverse REMIC Event.
All expenses of the defeasance shall be charged to the Borrower, and not the
Trust.
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SECTION 3.29. Interest Reserve Account.
(a) On each Distribution Date relating to any Interest Accrual Period
ending in any February and on any Distribution Date relating to any Interest
Accrual Period ending in any January which occurs in a year which is not a leap
year, the Master Servicer shall transfer from the Collection Account, in respect
of the Interest Reserve Loans, into the Interest Reserve Account, an amount
equal to one day's interest on the Stated Principal Balance of the Interest
Reserve Loans as of the Due Date occurring in the month in which such
Distribution Date occurs at the related Mortgage Rate, to the extent a full
Monthly Payment or P&I Advance is made and received in respect thereof (all
amounts so deposited in any consecutive January and February, "Interest Reserve
Amounts").
(b) On each Distribution Date occurring in March, the Master Servicer shall
withdraw from the Interest Reserve Account an amount equal to the Interest
Reserve Amounts from the preceding January and February, if any, and deposit
such amount into the Distribution Account.
ARTICLE IV
DISTRIBUTIONS TO CERTIFICATEHOLDERS
SECTION 4.1. Distributions of REMIC I.
(a) On each Distribution Date, the Trustee shall be deemed to apply the
Available Funds as is attributable to each Mortgage Loan for such date for the
following purposes and in the following order of priority:
(i) to pay interest to REMIC II in respect of each REMIC I Regular
Interest, up to an amount equal to, and pro rata in accordance with, all
Uncertificated Distributable Interest for each such REMIC I Regular Interest for
such Distribution Date;
(ii) to pay principal to REMIC II in respect of each REMIC I Regular
Interest, up to an amount equal to, and pro rata in accordance with, the excess,
if any, of the Uncertificated Principal Balance of such REMIC I Regular Interest
outstanding immediately prior to such Distribution Date, over the Stated
Principal Balance of the related Mortgage Loan (including without limitation an
REO Mortgage Loan or, if applicable, a Qualified Substitute Mortgage Loan) that
will be outstanding immediately following such Distribution Date;
(iii) to reimburse REMIC II for any Realized Losses and Expense Losses
previously deemed allocated to the various REMIC I Regular Interests (with
interest), up to an amount equal to, and pro rata in accordance with, (a) the
Realized Loses and Expense Losses, if any, previously allocated to such REMIC I
Regular Interests and for which no reimbursement has previously been paid, plus
(b) all unpaid interest on such amounts (compounded monthly) at the REMIC I
Remittance Rate for such REMIC I Regular Interest for such Distribution Date;
and
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(iv) to the Holders of the Class [R-I] Certificates that portion, if
any, of the Available Funds for such date that has not otherwise been deemed
paid to REMIC II in respect of the REMIC I Regular Interests pursuant to this
Section 4.1(a).
(b) On each Distribution Date, the Trustee shall be deemed to apply each
Prepayment Premium then on deposit in the Distribution Account and received
during or prior to the related Collection Period, to pay additional interest to
REMIC II in respect of the REMIC I Regular Interest that relates to the Mortgage
Loan (including without limitation an REO Mortgage Loan or, if applicable, a
Qualified Substitute Mortgage Loan) as to which such Prepayment Premium was
received.
(c) On each Distribution Date, after the deemed distributions pursuant to
Section 4.1(b) on that date, the Trustee shall be deemed to apply any Excess
Liquidation Proceeds received with respect to a Mortgage Loan then on deposit in
the Excess Liquidation Proceeds Account, first, to reimburse the REMIC I Regular
Interests for, and to the extent of, any unreimbursed Realized Losses or Expense
Losses previously allocated to them (with interest); second, to pay any
Servicing Advances, Advance Interest or other amounts that could constitute
Realized Losses or Expense Losses in the future; and third upon the reduction of
the aggregate Uncertificated Principal Balances of the REMIC I Regular Interests
to zero, to pay any amounts remaining on deposit in such account to the Special
Servicer as additional Special Servicer compensation.
(d) All amounts (other Prepayment Premiums and Excess Liquidation
Proceeds) deemed paid to REMIC II in respect of the REMIC I Regular Interests
pursuant to this Section 4.1 on any Distribution Date is herein referred to as
the "REMIC II Distribution Amount" for such date.
SECTION 4.2. Distributions of REMIC II.
(a) On each Distribution Date, the Trustee shall, subject to Section
4.2(b), be deemed to distribute the REMIC II Distribution Amount to holders of
the REMIC II Regular Interests, for the following purposes and in the following
order of priority:
(i) an amount equal to the Distributable Certificate Interest for the
Class [A-1A] Certificates, Class [A-1B] Certificates and Class [S] Certificates
to Class [A-1A]-II Interest, Class [A-1B]-II Interest, Class [A-2]-II Interest,
Class [A-3]-II Interest, Class [A-4]-II Interest, Class [B-1]-II Interest, Class
[B-2]-II Interest, Class [B-3]-II Interest, Class [B-4]-II Interest, Class
[B-5]-II Interest, Class [B-6]-II Interest, Class [B-7]-II Interest, Class
[B-8]-II Interest, Class [C]-II Interest and Class [D]-II Interest, divided
among such REMIC II Regular Interests in proportion to (A) in the case of the
Class [A-1A]-II Interest and Class [A-1B]-II Interest, the related
Uncertificated Distributable Interest for such Distribution Date and (B) in the
case of each of Class [A-2]-II Interest, Class [A-3]-II Interest, Class [A-4]-II
Interest, Class [B-1]-II Interest, Class [B-2]-II Interest, Class [B-3]-II
Interest, Class [B-4]-II Interest, Class [B-5]-II Interest, Class [B-6]-II
Interest, Class [B-7]-II Interest, Class [B-8]-II Interest, Class [C]-II
Interest and Class [D]-II Interest, the related Class [S] Portion of the related
Uncertificated Distributable Interest for such Distribution Date;
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(ii) to the Class [A-1A]-II Interest, the Principal Distribution
Amount for such Distribution Date, until the Uncertificated Principal Balance of
the Class [A-1A]-II Interest has been reduced to zero;
(iii) upon payment in full of the Uncertificated Principal Balance of
the Class [A-1A]-II Interest, to the Class [A-1B]-II Interest, the Principal
Distribution Amount for such Distribution Date, until the Uncertificated
Principal Balance of the Class [A-1B]-II Interest has been reduced to zero; the
Principal Distribution Amount herein will be reduced by any portion thereof
distributed to the holders of the Class [A-1A]-II Interest;
(iv) to Class [A-1A]-II Interest and Class [A-1B]-II Interest pro
rata on the basis of their respective entitlements to reimbursement described in
this clause (iv), to reimburse any unreimbursed Realized Losses and Expense
Losses previously allocated to Class [A-1A]-II Interest and Class [A-1B]-II
Interest as a result of the allocation of Realized Losses and Expense Losses to
the Class [A-1A] and Class [A-1B] Certificates, plus interest on such Realized
Losses and Expense Losses compounded monthly at the applicable respective
Adjusted REMIC II Remittance Rates of such Classes;
(v) to the Class [A-2]-II Interest, the remainder of the
Uncertificated Distributable Interest for such REMIC II Regular Interest for
such Distribution Date to the extent not distributed pursuant to clause (i)
above;
(vi) upon payment in full of the Uncertificated Principal Balances of
the Class [A-1A]-II Interest and the Class [A-1B]-II Interest, to the Class
[A-2]-II Interest, the Principal Distribution Amount for such Distribution Date,
until the Uncertificated Principal Balance of the Class [A-2]-II Interest has
been reduced to zero; the Principal Distribution Amount herein will be reduced
by any portion thereof distributed to the holders of the Class [A-1A]-II
Interest and Class [A-1B]-II Interest;
(vii) to the Class [A-2]-II Interest, to reimburse any unreimbursed
Realized Losses and Expense Losses previously allocated thereto, plus interest
on such Realized Losses and Expense Losses compounded monthly at the applicable
Adjusted REMIC II Remittance Rate for such Class;
(viii) to the Class [A-3]-II Interest, the remainder of the
Uncertificated Distributable Interest for such REMIC II Regular Interest for
such Distribution Date to the extent not distributed pursuant to clause (i)
above;
(ix) upon payment in full of the Uncertificated Principal Balance of
the Class [A-2]-II Interest, to the Class [A-3]-II Interest, the Principal
Distribution Amount for such Distribution Date, until the Uncertificated
Principal Balance of the Class [A-3]-II Interest has been reduced to zero; the
Principal Distribution Amount herein will be reduced by any portion thereof
distributed to the holders of the Class [A-1A]-II Interest, Class [A-1B]-II
Interest and Class [A-2]-II Interest;
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(x) to the Class [A-3]-II Interest, to reimburse any unreimbursed
Realized Losses and Expense Losses previously allocated thereto, plus interest
on such Realized Losses and Expense Losses compounded monthly at the applicable
Adjusted REMIC II Remittance Rate for such Class;
(xi) to the Class [A-4]-II Interest, the remainder of the
Uncertificated Distributable Interest for such REMIC II Regular Interest for
such Distribution Date to the extent not distributed pursuant to clause (i)
above;
(xii) upon payment in full of the Uncertificated Principal Balance of
the Class [A-3]-II Interest, to the Class [A-4]-II Interest, the Principal
Distribution Amount for such Distribution Date, until the Uncertificated
Principal Balance of the Class [A-4]-II Interest has been reduced to zero; the
Principal Distribution Amount herein will be reduced by any portion thereof
distributed to the holders of the Class [A-1A]-II Interest, Class [A-1B]-II
Interest, Class [A-2]-II Interest and Class [A-3]-II Interest;
(xiii) to the Class [A-4]-II Interest, to reimburse any unreimbursed
Realized Losses and Expense Losses previously allocated thereto, plus interest
on such Realized Losses and Expense Losses compounded monthly at the applicable
Adjusted REMIC II Remittance Rate for such Class;
(xiv) to the Class [B-1]-II Interest, the remainder of the
Uncertificated Distributable Interest for such REMIC II Regular Interest for
such Distribution Date to the extent not distributed pursuant to clause (i)
above;
(xv) upon payment in full of the Uncertificated Principal Balance of
the Class [A-4]-II Interest, to the Class [B-1]-II Interest, the Principal
Distribution Amount for such Distribution Date, until the Uncertificated
Principal Balance of the Class [B-1]-II Interest has been reduced to zero; the
Principal Distribution Amount herein will be reduced by any portion thereof
distributed to the holders of the Class [A-1A]-II, Class [A-1B]-II Interest,
Class [A-2]-II Interest, Class [A-3]-II Interest and Class [A-4]-II Interest;
(xvi) to the Class [B-1]-II Interest, to reimburse any unreimbursed
Realized Losses and Expense Losses previously allocated thereto, plus interest
on such Realized Losses and Expense Losses compounded monthly at the applicable
Adjusted REMIC II Remittance Rate for such Class;
(xvii) to the Class [B-2]-II Interest, the remainder of the
Uncertificated Distributable Interest for such REMIC II Regular Interest for
such Distribution Date to the extent not distributed pursuant to clause (i)
above;
(xviii) upon payment in full of the Uncertificated Principal Balance
of the Class [B-1]-II Interest, to the Class [B-2]-II Interest, the Principal
Distribution Amount for such Distribution Date, until the Uncertificated
Principal Balance of the Class [B-2]-II Interest has been reduced to zero; the
Principal Distribution Amount herein will be reduced by any portion
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thereof distributed to the holders of the Class [A-1A]-II Interest, Class
[A-1B]-II Interest, Class [A-2]-II Interest, Class [A-3]-II Interest, Class
[A-4]-II Interest and Class [B-1]-II Interest;
(xix) to the Class [B-2]-II Interest, to reimburse any unreimbursed
Realized Losses and Expense Losses previously allocated thereto, plus interest
on such Realized Losses and Expense Losses compounded monthly at the applicable
Adjusted REMIC II Remittance Rate for such Class;
(xx) to the Class [B-3]-II Interest, the remainder of the
Uncertificated Distributable Interest for such REMIC II Regular Interest for
such Distribution Date to the extent not distributed pursuant to clause (i)
above;
(xxi) upon payment in full of the Uncertificated Principal Balance of
the Class [B-2]-II Interest, to the Class [B-3]-II Interest, the Principal
Distribution Amount for such Distribution Date, until the Uncertificated
Principal Balance of the Class [B-3]-II Interest has been reduced to zero; the
Principal Distribution Amount herein will be reduced by any portion thereof
distributed to the holders of the Class [A-1A]-II Interest, Class [A-1B]-II
Interest, Class [A-2]-II Interest, Class [A-3]-II Interest, Class [A-4]-II
Interest, Class [B-1]-II Interest and Class [B-2]-II Interest;
(xxii) to the Class [B-3]-II Interest, to reimburse any unreimbursed
Realized Losses and Expense Losses previously allocated thereto, plus interest
on such Realized Losses and Expense Losses compounded monthly at the applicable
Adjusted REMIC II Remittance Rate for such Class;
(xxiii) to the Class [B-4]-II Interest, the remainder of the
Uncertificated Distributable Interest for such REMIC II Regular Interest for
such Distribution Date to the extent not distributed pursuant to clause (i)
above;
(xxiv) upon payment in full of the Uncertificated Principal Balance of
the Class [B-3]-II Interest, to the Class [B-4]-II Interest, the Principal
Distribution Amount for such Distribution Date, until the Uncertificated
Principal Balance of the Class [B-4]-II Interest has been reduced to zero; the
Principal Distribution Amount herein will be reduced by any portion thereof
distributed to the holders of the Class [A-1A]-II Interest, Class [A-1B]-II
Interest, Class [A-2]-II Interest, Class [A-3]-II Interest, Class [A-4]-II
Interest, Class [B-1]-II Interest, Class [B-2]-II Interest and Class [B-3]-II
Interest;
(xxv) to the Class [B-4]-II Interest, to reimburse any unreimbursed
Realized Losses and Expense Losses previously allocated thereto, plus interest
on such Realized Losses and Expense Losses compounded monthly at the applicable
Adjusted REMIC II Remittance Rate for such Class;
(xxvi) to the Class [B-5]-II Interest, the remainder of the
Uncertificated Distributable Interest for such REMIC II Regular Interest for
such Distribution Date to the extent not distributed pursuant to clause (i)
above;
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(xxvii) upon payment in full of the Uncertificated Principal Balance
of the Class [B-4]-II Interest, to the Class [B-5]-II Interest, the Principal
Distribution Amount for such Distribution Date, until the Uncertificated
Principal Balance of the Class [B-5]-II Interest has been reduced to zero; the
Principal Distribution Amount herein will be reduced by any portion thereof
distributed to the holders of the Class [A-1A]-II Interest, Class [A-1B]-II
Interest, Class [A-2]-II Interest, Class [A-3]-II Interest, Class [A-4]-II
Interest, Class [B-1]-II Interest, Class [B-2]-II Interest, Class [B-3]-II
Interest and Class [B-4]-II Interest;
(xxviii) to the Class [B-5]-II Interest, to reimburse any unreimbursed
Realized Losses and Expense Losses previously allocated thereto, plus interest
on such Realized Losses and Expense Losses compounded monthly at the applicable
Adjusted REMIC II Remittance Rate for such Class;
(xxix) to the Class [B-6]-II Interest, the remainder of the
Uncertificated Distributable Interest for such REMIC II Regular Interest for
such Distribution Date to the extent not distributed pursuant to clause (i)
above;
(xxx) upon payment in full of the Uncertificated Principal Balance of
the Class [B-5]-II Interest, to the Class [B-6]-II Interest, the Principal
Distribution Amount for such Distribution Date, until the Uncertificated
Principal Balance of the Class [B-6]-II Interest has been reduced to zero; the
Principal Distribution Amount herein will be reduced by any portion thereof
distributed to the holders of the Class [A-1A]-II Interest, Class [A-1B]-II
Interest, Class [A-2]-II Interest, Class [A-3]-II Interest, Class [A-4]-II
Interest, Class [B-1]-II Interest, Class [B-2]-II Interest, Class [B-3]-II
Interest, Class [B-4]-II Interest and Class [B-5]-II Interest;
(xxxi) to the Class [B-6]-II Interest, to reimburse any unreimbursed
Realized Losses and Expense Losses previously allocated thereto, plus interest
on such Realized Losses and Expense Losses compounded monthly at the applicable
Adjusted REMIC II Remittance Rate for such Class;
(xxxii) to the Class [B-7]-II Interest, the remainder of the
Uncertificated Distributable Interest for such REMIC II Regular Interest for
such Distribution Date to the extent not distributed pursuant to clause (i)
above;
(xxxiii) upon payment in full of the Uncertificated Principal Balance
of the Class [B-6]-II Interest, to the Class [B-7]-II Interest, the Principal
Distribution Amount for such Distribution Date, until the Uncertificated
Principal Balance of the Class [B-7]-II Interest has been reduced to zero; the
Principal Distribution Amount herein will be reduced by any portion thereof
distributed to the holders of the Class [A-1A]-II Interest, Class [A-1B]-II
Interest, Class [A-2]-II Interest, Class [A-3]-II Interest, Class [A-4]-II
Interest, Class [B-1]-II Interest, Class [B-2]-II Interest, Class [B-3]-II
Interest, Class [B-4]-II Interest, Class [B-5]-II Interest and Class [B-6]-II
Interest;
(xxxiv) to the Class [B-7]-II Interest, to reimburse any unreimbursed
Realized Losses and Expense Losses previously allocated thereto, plus interest
on such Realized Losses
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and Expense Losses compounded monthly at the applicable Adjusted REMIC II
Remittance Rate for such Class;
(xxxv) to the Class [B-8]-II Interest, the remainder of the
Uncertificated Distributable Interest for such REMIC II Regular Interest for
such Distribution Date to the extent not distributed pursuant to clause (i)
above;
(xxxvi) upon payment in full of the Uncertificated Principal Balance
of the Class [B-7]-II Interest, to the Class [B-8]-II Interest, the Principal
Distribution Amount for such Distribution Date, until the Uncertificated
Principal Balance of the Class [B-8]-II Interest has been reduced to zero; the
Principal Distribution Amount herein will be reduced by any portion thereof
distributed to the holders of the Class [A-1A]-II Interest, Class [A-1B]-II
Interest, Class [A-2]-II Interest, Class [A-3]-II Interest, Class [A-4]-II
Interest, Class [B-1]-II Interest, Class [B-2]-II Interest, Class [B-3]-II
Interest, Class [B-4]-II Interest, Class [B-5]-II Interest, Class [B-6]-II
Interest and Class [B-7]-II Interest;
(xxxvii) to the Class [B-8]-II Interest, to reimburse any unreimbursed
Realized Losses and Expense Losses previously allocated thereto, plus interest
on such Realized Losses and Expense Losses compounded monthly at the applicable
Adjusted REMIC II Remittance Rate for such Class;
(xxxviii) to the Class [C]-II Interest, the remainder of the
Uncertificated Distributable Interest for such REMIC II Regular Interest for
such Distribution Date to the extent not distributed pursuant to clause (i)
above;
(xxxix) upon payment in full of the Uncertificated Principal Balance
of the Class [B-8]-II Interest, to the Class [C]-II Interest, the Principal
Distribution Amount for such Distribution Date, until the Uncertificated
Principal Balance of the Class [C]-II Interest has been reduced to zero; the
Principal Distribution Amount herein will be reduced by any portion thereof
distributed to the holders of the Class [A-1A]-II Interest, Class [A-1B]-II
Interest, Class [A-2]-II Interest, Class [A-3]-II Interest, Class [A-4]-II
Interest, Class [B-1]-II Interest, Class [B-2]-II Interest, Class [B-3]-II
Interest, Class [B-4]-II Interest, Class [B-5]-II Interest, Class [B-6]-II
Interest, Class [B-7]-II Interest and Class [B-8]-II Interest;
(xl) to the Class [C]-II Interest, to reimburse any unreimbursed
Realized Losses and Expense Losses previously allocated thereto, plus interest
on such Realized Losses and Expense Losses compounded monthly at the applicable
Adjusted REMIC II Remittance Rate for such Class;
(xli) to the Class [D]-II Interest, the remainder of the
Uncertificated Distributable Interest for such REMIC II Regular Interest for
such Distribution Date to the extent not distributed pursuant to clause (i)
above;
(xlii) upon payment in full of the Uncertificated Principal Balance of
the Class [C]-II Interest, to the Class [D]-II Interest, the Principal
Distribution Amount for such Distribution Date, until the Uncertificated
Principal Balance of the Class [D]-II Interest has been
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reduced to zero; the Principal Distribution Amount herein will be reduced by any
portion thereof distributed to the holders of the Class [A-1A]-II Interest,
Class [A-1B]-II Interest, Class [A-2]-II Interest, Class [A-3]-II Interest,
Class [A-4]-II Interest, Class [B-1]-II Interest, Class [B-2]-II Interest, Class
[B-3]-II Interest, Class [B-4]-II Interest, Class [B-5]-II Interest, Class
[B-6]-II Interest, Class [B-7]-II Interest, Class [B-8]-II Interest and Class
[C]-II Interest;
(xliii) to the Class [D]-II Interest, to reimburse any unreimbursed
Realized Losses and Expense Losses previously allocated thereto, plus interest
on such Realized Losses and Expense Losses compounded monthly at the applicable
Adjusted REMIC II Remittance Rate for such Class; and
(x1iv) thereafter, to the Class [R-II] Certificateholders.
(b) On each Distribution Date after the aggregate Uncertificated Principal
Balance of each REMIC II Regular Interest other than the Class [A-1A]-II
Interest and the Class [A-1B]-II Interest has been reduced to zero, and in any
event on the final Distribution Date in connection with a termination of the
Trust Fund described in Article IX hereof, the payments of principal to be made
pursuant to Section 4.2(a)(ii) and (iii) above with respect to the Class
[A-1A]-II Interest and the Class [A-1B]-II Interest, will be so made to such
REMIC II Regular Interests, up to an amount equal to, and pro rata as between
such REMIC II Regular Interests in accordance with, the respective
then-outstanding aggregate Uncertificated Principal Balances of such REMIC II
Regular Interests.
On the final Distribution Date in connection with a termination of
the Trust Fund described in Article IX hereof, the distributions of principal to
be made pursuant to clauses (vi), (ix), (xii), (xv), (xviii), (xxi), (xxiv),
(xxvii), (xxx), (xxxiii), (xxxvi), (xxxix) and (xlii) of this Section 4.2(a)
shall, in each such case, subject to the then remaining portion of the REMIC II
Distribution Amount for such date, be made to the Holders of the relevant Class
of REMIC II Regular Interests otherwise entitled to distributions of principal
pursuant to such clause up to an amount equal to the aggregate Uncertificated
Principal Balance of such Class of REMIC II Regular Interests outstanding
immediately prior to such Distribution Date.
(c) On each Distribution Date, the Trustee shall be deemed to distribute
any Prepayment Premiums deemed distributed to the REMIC I Regular Interests, to
the REMIC II Regular Interest then entitled to distributions of principal from
the Principal Distribution Amount (or, if more than one Class of such REMIC II
Regular Interests is entitled to distributions of principal from the Principal
Distribution Amount, such Prepayment Premiums shall be deemed to be allocated
among such Classes on a pro rata basis in accordance with the relative amounts
of such deemed distributions of principal).
(d) On each Distribution Date, any Excess Liquidation Proceeds on deposit
in the Excess Liquidation Proceeds Account deemed distributed on the REMIC I
Regular Interests on such date, will in turn be deemed distributed to reimburse
the REMIC II Regular Interests (in order of alphabetical, and if the
alphabetical designations are the same, then numerical, Class designation) for,
and to the extent of, any unreimbursed Realized Losses or Expense Losses
previously allocated to them, plus interest. Distributions will be deemed made
to the holders of the Class [A-1A]-II Regular Interests and Class [A-1B]-II
Regular Interests pro rata as between
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such Classes in accordance with their respective then-outstanding aggregate
Uncertificated Principal Balances.
SECTION 4.3. Distributions of REMIC III.
(a) On each Distribution Date, the Trustee shall withdraw from the
Distribution Account the Available Funds in respect of REMIC III for such
Distribution Date and shall apply such amount for the following purposes and in
the following order of priority:
(i) to pay interest to the Holders of the respective Classes of Senior
Certificates, up to an amount equal to, and pro rata as among such Classes in
accordance with, all Distributable Certificate Interest in respect of each such
Class of Certificates for such Distribution Date,
(ii) to pay principal from the Principal Distribution Amount for such
Distribution Date, first to the Holders of the Class [A-1A] Certificates and
second to the Holders of the Class [A-1B] Certificates in each case, up to an
amount equal to the lesser of (1) the then-outstanding aggregate Certificate
Balance of such Class of Certificates and (2) the remaining portion, if any, of
such Principal Distribution Amount;
(iii) to reimburse the Holders of the Class [A-1A] and Class [A-1B]
Certificates, up to an amount equal to, and pro rata as among such Classes in
accordance with, (a) the respective amounts of Realized Losses and Expense
Losses, if any, previously allocated to such Classes of Certificates and for
which no reimbursement has previously been paid, plus (b) all unpaid interest on
such amounts (compounded monthly) at the respective Pass-Through Rates of such
Classes; and
(iv) to make payments on the Subordinate Certificates as provided
below;
provided that, on each Distribution Date after the aggregate Certificate Balance
of the Subordinate Certificates has been reduced to zero, and in any event on
the final Distribution Date in connection with a termination of the Trust Fund
described in Article IX hereof, the payments of principal to be made pursuant to
clause (ii) above with respect to the Class [A-1A] and Class [A-1B]
Certificates, will be so made to the Holders of the Class [A-1A] and Class
[A-1B] Certificates, up to an amount equal to, and pro rata as between such
Classes in accordance with, the respective then-outstanding aggregate
Certificate Balances of such Certificates;
(b) On each Distribution Date, following the foregoing distributions on the
Senior Certificates, the Trustee shall apply the remaining portion, if any, of
the Available Funds in respect of REMIC III for such date for the following
purposes and in the following order of priority:
(i) to pay interest to the Holders of the Class [A-2] Certificates, up
to an amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date;
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(ii) if the aggregate Certificate Balances of the Class [A-1A] and
Class [A-1B] Certificates have been reduced to zero, to pay principal to the
Holders of the Class [A-2] Certificates, up to an amount equal to the lesser of
(A) the then-outstanding aggregate Certificate Balance of such Class of
Certificates and (B) the remaining Principal Distribution Amount for such
Distribution Date;
(iii) to reimburse the Holders of the Class [A-2] Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(iv) to pay interest to the Holders of the Class [A-3] Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(v) if the aggregate Certificate Balances of the Class [A-1A], Class
[A-1B] and Class [A-2] Certificates have been reduced to zero, to pay principal
to the Holders of the Class [A-3] Certificates, up to an amount equal to the
lesser of (A) the then-outstanding aggregate Certificate Balance of such Class
of Certificates and (B) the remaining Principal Distribution Amount for such
Distribution Date;
(vi) to reimburse the Holders of the Class [A-3] Certificates up to an
amount equal to (a) all Realized Losses and Expense Losses, if any, previously
allocated to such Class of Certificates and for which no reimbursement has
previously been paid, plus (b) all unpaid interest on such amounts (compounded
monthly) at the Pass-Through Rate for such Class of Certificates;
(vii) to pay interest to the Holders of the Class [A-4] Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(viii) if the aggregate Certificate Balances of the Class [A-1A],
Class [A-1B], Class [A-2] and Class [A-3] Certificates have been reduced to
zero, to pay principal to the Holders of the Class [A-4] Certificates, up to an
amount equal to the lesser of (A) the then-outstanding aggregate Certificate
Balance of such Class of Certificates and (B) the remaining Principal
Distribution Amount for such Distribution Date;
(ix) to reimburse the Holders of the Class [A-4] Certificates up to an
amount equal to (a) all Realized Losses and Expense Losses, if any, previously
allocated to such Class of Certificates and for which no reimbursement has
previously been paid, plus (b) all unpaid interest on such amounts (compounded
monthly) at the Pass-Through Rate for such Class of Certificates;
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(x) to pay interest to the Holders of the Class [B-1] Certificates, up
to an amount equal to all Distributable Certificate Interest in respect of such
Class of Certificates for such Distribution Date;
(xi) if the aggregate Certificate Balances of the Class [A-1A], Class
[A-1B], Class [A-2], Class [A-3] and Class [A-4] Certificates have been reduced
to zero, to pay principal to the Holders of the Class [B-1] Certificates, up to
an amount equal to the lesser of (A) the then-outstanding aggregate Certificate
Balance of such Class of Certificates and (B) the remaining Principal
Distribution Amount for such Distribution Date;
(xii) to reimburse the Holders of the Class [B-1] Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xiii) to pay interest to the Holders of the Class [B-2] Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(xiv) if the aggregate Certificate Balances of the Class [A-1A], Class
[A-1B], Class [A-2], Class [A-3], Class [A-4] and Class [B-1] Certificates have
been reduced to zero, to pay principal to the Holders of the Class [B-2]
Certificates, up to an amount equal to the lesser of (A) the then-outstanding
aggregate Certificate Balance of such Class of Certificates and (B) the
remaining Principal Distribution Amount for such Distribution Date;
(xv) to reimburse the Holders of the Class [B-2] Certificates up to an
amount equal to (a) all Realized Losses and Expense Losses, if any, previously
allocated to such Class of Certificates and for which no reimbursement has
previously been paid, plus (b) all unpaid interest on such amounts (compounded
monthly) at the Pass-Through Rate for such Class of Certificates;
(xvi) to pay interest to the Holders of the Class [B-3] Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(xvii) if the aggregate Certificate Balances of the Class [A-1A],
Class [A-1B], Class [A-2], Class [A-3], Class [A-4], Class [B-1] and Class [B-2]
Certificates have been reduced to zero, to pay principal to the Holders of the
Class [B-3] Certificates, up to an amount equal to the lesser of (A) the
then-outstanding aggregate Certificate Balance of such Class of Certificates and
(B) the remaining Principal Distribution Amount for such Distribution Date;
(xviii) to reimburse the Holders of the Class [B-3] Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all
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unpaid interest on such amounts (compounded monthly) at the Pass-Through Rate
for such Class of Certificates;
(xix) to pay interest to the Holders of the Class [B-4] Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(xx) if the aggregate Certificate Balances of the Class [A-1A], Class
[A-1B], Class [A-2], Class [A-3], Class [A-4], Class [B-1], Class [B-2] and
Class [B-3] Certificates have been reduced to zero, to pay principal to the
Holders of the Class [B-4] Certificates, up to an amount equal to the lesser of
(A) the then-outstanding aggregate Certificate Balance of such Class of
Certificates and (B) the remaining Principal Distribution Amount for such
Distribution Date;
(xxi) to reimburse the Holders of the Class [B-4] Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xxii) to pay interest to the Holders of the Class [B-5] Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(xxiii) if the aggregate Certificate Balances of the Class [A-1A],
Class [A-1B], Class [A-2], Class [A-3], Class [A-4], Class [B-1], Class [B-2],
Class [B-3] and Class [B-4] Certificates have been reduced to zero, to pay
principal to the Holders of the Class [B-5] Certificates, up to an amount equal
to the lesser of (A) the then-outstanding aggregate Certificate Balance of such
Class of Certificates and (B) the remaining Principal Distribution Amount for
such Distribution Date;
(xxiv) to reimburse the Holders of the Class [B-5] Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xxv) to pay interest to the Holders of the Class [B-6] Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(xxvi) if the aggregate Certificate Balances of the Class [A-1A],
Class [A-1B], Class [A-2], Class [A-3], Class [A-4], Class [B-1], Class [B-2],
Class [B-3], Class [B-4] and Class [B-5] Certificates have been reduced to zero,
to pay principal to the Holders of the Class [B-6] Certificates, up to an amount
equal to the lesser of (A) the then-outstanding
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aggregate Certificate Balance of such Class of Certificates and (B) the
remaining Principal Distribution Amount for such Distribution Date;
(xxvii) to reimburse the Holders of the Class [B-6] Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xxviii) to pay interest to the Holders of the Class [B-7]
Certificates, up to an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date;
(xxix) if the aggregate Certificate Balances of the Class [A-1A],
Class [A-1B], Class [A-2], Class [A-3], Class [A-4], Class [B-1], Class [B-2],
Class [B-3], Class [B-4], Class [B-5] and Class [B-6] Certificates have been
reduced to zero, to pay principal to the Holders of the Class [B-7]
Certificates, up to an amount equal to the lesser of (A) the then-outstanding
aggregate Certificate Balance of such Class of Certificates and (B) the
remaining Principal Distribution Amount for such Distribution Date;
(xxx) to reimburse the Holders of the Class [B-7] Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xxxi) to pay interest to the Holders of the Class [B-8] Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(xxxii) if the aggregate Certificate Balances of the Class [A-1A],
Class [A-1B], Class [A-2], Class [A-3], Class [A-4], Class [B-1], Class [B-2],
Class [B-3], Class [B-4], Class [B-5], Class [B-6] and Class [B-7] Certificates
have been reduced to zero, to pay principal to the Holders of the Class [B-8]
Certificates, up to an amount equal to the lesser of (A) the then-outstanding
aggregate Certificate Balance of such Class of Certificates and (B) the
remaining Principal Distribution Amount for such Distribution Date;
(xxxiii) to reimburse the Holders of the Class [B-8] Certificates up
to an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xxxiv) to pay interest to the Holders of the Class [C] Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
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(xxxv) if the aggregate Certificate Balances of the Class [A-1A],
Class [A-1B], Class [A-2], Class [A-3], Class [A-4], Class [B-1], Class [B-2],
Class [B-3], Class [B-4], Class [B-5], Class [B-6], Class [B-7] and Class [B-8]
Certificates have been reduced to zero, to pay principal to the Holders of the
Class [C] Certificates, up to an amount equal to the lesser of (A) the
then-outstanding aggregate Certificate Balance of such Class of Certificates and
(B) the remaining Principal Distribution Amount for such Distribution Date;
(xxxvi) to reimburse the Holders of the Class [C] Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xxxvii) to pay interest to the Holders of the Class [D] Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(xxxviii) if the aggregate Certificate Balances of the Class [A-1A],
Class [A-1B], Class [A-2], Class [A-3], Class [A-4], Class [B-1], Class [B-2],
Class [B-3], Class [B-4], Class [B-5], Class [B-6], Class [B-7], Class [B-8] and
Class [C] Certificates have been reduced to zero, to pay principal to the
Holders of the Class [D] Certificates, up to an amount equal to the lesser of
(A) the then-outstanding aggregate Certificate Balance of such Class of
Certificates and (B) the remaining Principal Distribution Amount for such
Distribution Date;
(xxxix) to reimburse the Holders of the Class [D] Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates; and
(xl) to pay to the Holders of the Class [R-III] Certificates the
balance, if any, of the Available Funds in respect of REMIC III for such
Distribution Date;
provided that, on the final Distribution Date in connection with a termination
of the Trust Fund described in Article IX hereof, the distributions of principal
to be made pursuant to clauses (ii), (v), (viii), (xi), (xiv), (xvii), (xx),
(xxiii), (xxvi), (xxix), (xxxii), (xxxv) and (xxxviii) of this Section 4.3(b)
shall, in each such case, subject to the then remaining portion of the Available
Funds in respect of REMIC III for such date, be made to the Holders of the
relevant Class of Principal Balance Certificates otherwise entitled to
distributions of principal pursuant to such clause up to an amount equal to the
aggregate Certificate Balance of such Class of Certificates outstanding
immediately prior to such Distribution Date.
(c) On each Distribution Date, the Prepayment Premiums collected by the
Master Servicer with respect to the Mortgage Loans during the related Collection
Period will be distributed to the holders of the Class [A-1A], Class [A-1B],
Class [A-2], Class [A-3], Class [A-
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4], Class [B-1] and Class [B-2] Certificates as follows. The holders of each
such Class will receive an amount equal to (i) the Prepayment Premiums collected
with respect to the Mortgage Loans during the related Collection Period,
multiplied by (ii) a fraction (not more than one or less than zero), the
numerator of which equals the excess, if any, of the Pass-Through Rate
applicable to that Class of Certificates, over the Discount Rate, and the
denominator of which equals the excess, if any, of the Mortgage Rate for the
prepaid Mortgage Loan, over the Discount Rate, multiplied by (iii) a fraction
(not more than one or less than zero), the numerator of which is equal to the
aggregate distributions of principal to be made with respect to that Class of
Certificates on that Distribution Date, and the denominator of which is equal to
the Principal Distribution Amount for that Distribution Date.
Any portion of any Prepayment Premium remaining after any such
payment to the holders of such Principal Balance Certificates as described above
will be distributed to the holders of the Class [S] Certificates.
(d) On each Distribution Date, amounts on deposit in the Excess Liquidation
Proceeds Account deemed distributed on the REMIC II Regular Interests on such
date, will in turn be used to reimburse the holders of the Principal Balance
Certificates (in order of alphabetical, and if the alphabetical designations are
the same, then in numerical, Class designation ) for, and to the extent of,
unreimbursed Realized Losses or Expense Losses previously allocated to them,
plus interest thereon. Distributions will be made to the holders of the Class
A-1-A and Class [A-1B] Certificates pro rata as between such Classes in
accordance with the respective then-outstanding aggregate Certificate Balances
of such Certificates.
(e) All of the foregoing distributions to be made from the Distribution
Account on any Distribution Date with respect to the REMIC III Regular
Certificates shall be deemed made from the payments deemed made to REMIC III in
respect of the REMIC II Regular Interests on such Distribution Date pursuant to
Section 4.2.
SECTION 4.4. Statements to Rating Agencies and Certificateholders;
Available Information.
(a) On each Distribution Date, the Trustee shall prepare and make available
electronically (and upon request will mail) to each Rating Agency and each
Holder of a Certificate, with copies to the Depositor, the Controlling Class
Representative, Paying Agent, the Placement Agents, Master Servicer and Special
Servicer, a statement (the "Trustee Report") as to such distribution setting
forth the information set forth on Exhibit H hereto, and including among other
things, for each Class, as applicable:
(i) The Principal Distribution Amount and the amount allocable to
principal for such Class included in Available Funds in respect of REMIC III;
(ii) Distributable Certificate Interest for such Class and the amount
of Available Funds in respect of REMIC III allocable thereto, together with any
Class Interest Shortfall allocable to such Class;
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(iii) The amount of any P&I Advances by the Master Servicer or the
Trustee included in the amounts distributed to the Certificateholders;
(iv) The Certificate Balance of each Class of Certificates after
giving effect to the distribution of amounts in respect of the Principal
Distribution Amount on such Distribution Date;
(v) Cumulative Realized Losses and Expense Losses and their allocation
to the Certificate Balance of any Class of Certificates;
(vi) The Stated Principal Balance of the Mortgage Loans as of the Due
Date preceding such Distribution Date;
(vii) The number and aggregate principal balance of Mortgage Loans (A)
delinquent 30-59 days, (B) delinquent 60-89 days, (C) delinquent 90 or more days
and (D) as to which foreclosure proceedings have been commenced and, with
respect to each delinquent Mortgage Loan, the amount of the P&I Advance made on
such Distribution Date, the aggregate amount of Servicing Advances theretofore
made that remain unreimbursed and the aggregate amount of P&I Advances
theretofore made that remain unreimbursed;
(viii) With respect to any Mortgage Loan that became an REO Mortgage
Loan during the preceding calendar month, the principal balance of such Mortgage
Loan as of the date it became an REO Mortgage Loan;
(ix) As to any REO Property sold during the related Collection Period,
the date on which a Final Recovery Determination was made and the amount of the
proceeds of such sale deposited into the Collection Account, and the aggregate
amount of REO Proceeds and Net REO Proceeds (in each case other than Liquidation
Proceeds) and other revenues collected by the Special Servicer with respect to
each REO Property during the related Collection Period and credited to the
Collection Account, in each case identifying such REO Property by name;
(x) The outstanding principal balance of each REO Mortgage Loan as of
the close of business on the immediately preceding Due Date and the appraised
value of the related REO Property per the most recent Updated Appraisal
obtained;
(xi) The amount of the Servicing Compensation paid to the Master
Servicer with respect to such Distribution Date, and the amount of the
additional servicing compensation described in Section 3.12(a) that was paid to
the Master Servicer with respect to such Distribution Date;
(xii) The amount of any Special Servicing Fee, Disposition Fee or
Workout Fee paid to the Special Servicer with respect to such Distribution Date;
(xiii) The amount of (A) Prepayment Premiums distributed to each Class
of Certificates, (B) Deferred Interest and (C) Default Interest received during
the related Collection Period;
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(xiv) The Pass-Through Rate applicable to the REMIC III Regular
Certificates (other than the Class [A-1A] Certificates) for such Distribution
Date;
(xv) The amount of any Appraisal Reductions effected during the
related Collection Period on a Mortgage Loan-by-Mortgage Loan basis and the
total Appraisal Reductions as of such Distribution Date;
(xvi) Any prepayments made during the current Collection Period;
(xvii) The amounts, if any, actually distributed with respect to the
Class [R-I], Class [R-II] or Class [R-III] Certificates on such Distribution
Date;
(xviii) Ratings from all Rating Agencies for all applicable Classes of
Certificates; and
(xix) Any Mortgage Loan as to which bankruptcy proceedings have been
commenced against the related Borrower, but only to the extent that the Trustee
has knowledge thereof.
In the case of information furnished pursuant to subclauses (i),
(ii), (iv) and (xiii)(A) above, the amounts shall be expressed as a dollar
amount in the aggregate for all Certificates of each applicable Class and for
each Class of Certificates for a denomination of $1,000 initial Certificate
Balance or Notional Amount.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Holder of a Certificate (including holders of the Class
[R-I], Class [R-II] or Class [R-III] Certificates) and to each Rating Agency a
statement containing the information set forth in subclauses (i), (ii) and
(xiii)(A) above, aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that it provided
substantially comparable information pursuant to any requirements of the Code as
from time to time in force.
In addition to the reports required to be delivered pursuant to this
Section 4.4(a), the Trustee shall make available upon request to each Holder,
Certificate Owner and proposed transferee of a Privately Placed Certificate or
interest therein such additional information, if any, required to be delivered
under Rule 144A(d)(4) and in its possession so as to permit the proposed
transfer to be effected pursuant to Rule 144A.
(b) The Trustee shall only be obligated to deliver the statements, reports
and information contemplated by Section 4.4(a) to the extent it receives the
necessary underlying information from the Master Servicer, the Special Servicer
and the Rating Agencies, as applicable, and shall not be liable for any failure
to deliver any thereof on the prescribed due dates, to the extent such failure
is caused by the Master Servicer's or the Special Servicer's failure to deliver
such underlying information in a timely manner. Absent manifest error, the
Trustee (i)
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may conclusively rely on any such information forwarded to it by the Master
Servicer, the Special Servicer and the Rating Agencies, (ii) shall have no
obligation to verify the same and (iii) with respect to the information provided
by Section 4.4(a)(xviii), shall not be liable for the accuracy of, and may
include a disclaimer with, such information. Nothing herein shall obligate the
Trustee, the Master Servicer or the Special Servicer to violate (in the
reasonable judgment of the Master Servicer, the Special Servicer or the Trustee,
as appropriate) any applicable law or provision of any Mortgage Loan document
prohibiting disclosure of information with respect to any Borrower and the
failure of the Trustee, the Master Servicer or the Special Servicer to
disseminate information for such reason shall not be a breach hereof.
The Trustee shall make available each month, to Certificateholders,
Certificate Owners, prospective investors and any other interested party, via
the Trustee's Internet Website, in a downloadable format, all Trustee Reports
and Unrestricted Servicer Reports and, with the consent or at the direction of
the Depositor, such other information regarding the Certificates and/or the
Mortgage Loans as the Trustee may have in its possession; provided that, unless
(i) the particular report or information has been filed with the Commission
pursuant to Section 3.20 or (ii) the Depositor has notified the Trustee that the
Privately Placed Certificates have been sold to unaffiliated third parties,
access to such reports and information on the Trustee's Internet Website will be
password protected to the same extent, and limited to the same Persons, as the
Restricted Servicer Reports. After the Trustee shall have received the notice
from the Depositor regarding the sale of the Privately Placed Certificates, as
described in the preceding sentence, the Trustee shall make the Distribution
Date Statement available to any interested party via the fax-on-demand service.
The Trustee shall make the Restricted Servicer Reports available each month, via
the Trustee's Internet Website, to any Certificateholder, Certificate Owner, any
Person identified by any Certificateholder or Certificate Owner as a prospective
transferee of a Certificate or interest therein, the Placement Agents, any
Rating Agency, the Master Servicer, the Special Servicer, the Controlling Class
Representative or any party hereto, with the use of a password provided by the
Trustee to such person upon receipt by the Trustee from such Person of a
certification substantially in the form of Exhibit I-1 or Exhibit I-2, as
applicable, provided, however, that the Trustee shall provide such password to
each party hereto, the Controlling Class Representative, Placement Agents, the
Master Servicer, the Special Servicer, and each Rating Agency without requiring
such certification. In addition, the Trustee is hereby directed and authorized
to make available, as a convenience to interested parties (and not in
furtherance of the distribution of the Prospectus or the Prospectus Supplement
under the securities laws), this Agreement, the Prospectus and the Prospectus
Supplement via the Trustee's Internet Website. The Trustee will make no
representations or warranties as to the accuracy or completeness of such
documents and will assume no responsibility therefor.
The Trustee's Internet Website shall be located at
"www.ctslink.com/cmbs" or at such other address as shall be specified by the
Trustee from time to time in the Trustee Report and in one or more written
notices delivered to the other parties hereto, the Controlling Class
Representative (if any), the Certificateholders and the Rating Agencies. In
connection with providing access to the Trustee's Internet Website, the Trustee
may require registration and the acceptance of a disclaimer. The Trustee shall
not be liable for the dissemination of information in accordance with this
Agreement.
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The Trustee shall be entitled to rely on but shall not be
responsible for the content or accuracy of any information provided by third
parties for purposes of preparing the Trustee Report and may affix thereto any
disclaimer it deems appropriate in its reasonable discretion (without suggesting
liability on the part of any party hereto).
SECTION 4.5. Remittances; P&I Advances.
(a) For purposes of this Section 4.5, "Applicable Monthly Payment" shall
mean, for any Mortgage Loan with respect to any month, (A) if such Mortgage Loan
is delinquent as to its Balloon Payment or constitutes an REO Mortgage Loan, the
related Assumed Monthly Payment and (B) if such Mortgage Loan is not described
by the preceding clause, the Monthly Payment.
(b) By 2:00 p.m. central time on the Remittance Date immediately preceding
each Distribution Date, the Master Servicer shall:
(i) remit to the Trustee from the Collection Account (A) for deposit
in the Distribution Account an amount equal to the Prepayment Premiums and (B)
for deposit in the Excess Liquidation Proceeds Account an amount equal to the
Excess Liquidation Proceeds received by the Master Servicer in the Collection
Period preceding such Remittance Date;
(ii) remit to the Trustee from the Collection Account for deposit in
the Distribution Account an amount equal to the Available Funds in respect of
REMIC I for such Distribution Date (excluding P&I Advances);
(iii) subject to Section 4.5(c), make an advance (each, a "P&I
Advance"), by deposit into the Collection Account, and remit such amount to the
Distribution Account, in an amount equal to the Applicable Monthly Payment for
each Mortgage Loan (net of the Master Servicing Fee), to the extent such amount
was not received on such Mortgage Loan as of the close of business on the
related Determination Date; and
(iv) remit to the Trustee from the Grantor Trust Collection Account
for deposit in the Grantor Trust Distribution Account an amount equal to the
Deferred Interest received by the Master Servicer in the Collection Period
preceding such Remittance Date.
(c) Notwithstanding Section 4.5(b)(iii), upon determination of the
Appraisal Reduction with respect to any Required Appraisal Loan, the amount of
any delinquent interest required to be advanced with respect to such Required
Appraisal Loan shall be an amount equal to the product of (A) the amount of the
delinquent interest that would be required to be advanced in respect of such
Mortgage Loan without regard to the application of this sentence, multiplied by
(B) a fraction, the numerator of which is equal to the Stated Principal Balance
of such Mortgage Loan as of the immediately preceding Determination Date less
the Appraisal Reduction and the denominator of which is such Stated Principal
Balance.
(d) If, as of 3:00 p.m., New York City time, on any Remittance Date the
Master Servicer shall not (i) have made the P&I Advance required to have been
made on such
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date pursuant to Section 4.5(b)(iii) or (ii) delivered the certificate and
documentation related to a determination of nonrecoverability, the Trustee shall
no later than 10:00 a.m., New York City time, on such Distribution Date deposit
into the Distribution Account in immediately available funds an amount equal to
the P&I Advances otherwise required to have been made by the Master Servicer,
and such failure by the Master Servicer shall constitute an Event of Default on
the part of the Master Servicer.
(e) Anything to the contrary in this Agreement notwithstanding, none of the
Master Servicer or the Trustee shall be obligated to make a P&I Advance on any
date on which a P&I Advance is otherwise required to be made by this Section 4.5
if the Master Servicer or the Trustee, as applicable, determines that such
Advance will be a Nonrecoverable Advance. The Trustee shall be entitled to rely,
conclusively, on any determination by the Master Servicer that a P&I Advance, if
made, would be a Nonrecoverable Advance. The Trustee, in determining whether or
not a P&I Advance previously made is, or a proposed P&I Advance, if made, would
be, a Nonrecoverable Advance shall make such determination in its good faith
judgment.
(f) The Master Servicer or the Trustee, as applicable, shall be entitled
to, and the Master Servicer hereby covenants and agrees to promptly seek and
effect, the reimbursement of P&I Advances made to the extent permitted pursuant
to Section 3.6(a)(ii) of this Agreement together with any related Advance
Interest Amount in respect of such P&I Advances to the extent permitted pursuant
to Section 3.6(a)(iii).
SECTION 4.6. Allocation of Realized Losses and Expense Losses.
(a) On each Distribution Date, following the deemed distributions to be
made in respect of the REMIC I Regular Interests pursuant to Section 4.1, the
Uncertificated Principal Balance of each REMIC I Regular Interest (after taking
account of such deemed distributions) shall be reduced to equal the Stated
Principal Balance of the related Mortgage Loan (including without limitation an
REO Mortgage Loan or, if applicable, a Qualified Substitute Mortgage Loan) that
will be outstanding immediately following such Distribution Date. Such
reductions shall be deemed to be an allocation of Realized Losses and Expense
Losses.
(b) On each Distribution Date, Realized Losses and Expense Losses that are
applied to each Class of REMIC III Regular Certificates shall be allocated to
reduce the Uncertificated Principal Balance of the Related REMIC II Regular
Interest.
(c) On each Distribution Date, following the distributions to be made to
the Certificateholders on such date pursuant to Section 4.3, the Trustee shall
determine the amount, if any, by which (i) the then-aggregate Certificate
Balance of the Principal Balance Certificates, exceeds (ii) the aggregate Stated
Principal Balance of the Mortgage Pool that will be outstanding immediately
following such Distribution Date. If such excess does exist, then the respective
aggregate Certificate Balances of the Class [D], Class [C], Class [B-8], Class
[B-7], Class [B-6], Class [B-5], Class [B-4], Class [B-3], Class [B-2], Class
[B-1], Class [A-4], Class [A-3] and Class [A-2] Certificates shall be reduced
sequentially, in that order, in each case, until the first to occur of such
excess being reduced to zero or the related Class Principal Balance being
reduced to zero. If, after the foregoing reductions, the amount described in
clause (i) of the second
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preceding sentence still exceeds the amount described in clause (ii) of the
second preceding sentence, then the respective aggregate Certificate Balances of
the Class [A-1A] and Class [A-1B] Certificates shall be reduced, pro rata in
accordance with the relative sizes of the then-outstanding aggregate Certificate
Balances of such Classes of Certificates, until the first to occur of such
excess being reduced to zero or each such aggregate Certificate Balance being
reduced to zero. Such reductions in the aggregate Certificate Balances of the
respective Classes of Principal Balance Certificates shall be deemed to be
allocations of Realized Losses and Expense Losses among the Certificates of each
since Class in proportion to their respective Percentage Interests in such
Class.
SECTION 4.7. Distributions on the Grantor Trust.
On each Distribution Date, the Trustee shall withdraw the amount of any
Deferred Interest received in the related Collection Period from the Grantor
Trust Distribution Account and shall distribute such funds to the holders of the
Class [E] Certificates.
SECTION 4.8. Distributions in General.
(a) All amounts distributable to a Class of Certificates pursuant to this
Article IV on each Distribution Date shall be allocated pro rata among the
outstanding Certificates in each such Class based on their respective Percentage
Interests. Such distributions shall be made on each Distribution Date other than
the Termination Date to each Certificateholder of record on the related Record
Date by check mailed by first class mail to the address set forth therefor in
the Certificate Register or, provided that such Certificateholder shall have
provided the Paying Agent with wire instructions in writing on or before the
related Record Date (or upon standing instructions given to the Trustee or the
Paying Agent on the Closing Date or on or before any Record Date, which
instructions may be revoked at any time thereafter upon written notice to the
Trustee or the Paying Agent on or before the related Record Date), by wire
transfer of immediately available funds to the account of such Certificateholder
at a bank or other entity located in the United States and having appropriate
facilities therefor. The final distribution on each Certificate shall be made in
like manner, but only upon presentment and surrender of such Certificate
(determined without regard to any possible future reimbursement of any Realized
Losses or Expense Losses previously allocated to such Certificates) at the
offices designated by the Trustee or its agent (which may be the Paying Agent or
the Certificate Registrar acting as such agent) that is specified in the notice
to Certificateholders of such final distribution. Any distribution that is to be
made with respect to a Certificate in reimbursement of a Realized Loss or
Expense Loss previously allocated thereto, which reimbursement is to occur after
the date on which such Certificate is surrendered as contemplated by the
preceding sentence, will be made by check mailed to the Certificateholder that
surrendered such Certificate or by wire transfer if such Certificateholder has
provided the Trustee with wire transfer instructions.
(b) Except as otherwise provided in Section 9.1, the Trustee shall, no
later than the 15th day of the month in the month preceding the Distribution
Date on which the final distribution with respect to any Class of Certificates
is expected to be made or such later day as the Trustee becomes aware that the
final distribution with respect to any Class of Certificates is
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expected to be made on the succeeding Distribution Date, mail to each Holder of
such Class of Certificates and to the Rating Agencies, on such day a notice to
the effect that:
(i) the Trustee reasonably expects, based upon information previously
provided to it, that the final distribution with respect to such Class of
Certificates will be made on such Distribution Date, but only upon presentation
and surrender of such Certificates at the office of the Trustee therein
specified; and
(ii) if such final distribution is made on such Distribution Date, no
interest shall accrue on such Certificates from and after such Distribution
Date;
provided, however, that the Class [R-I], Class [R-II] and Class [R-III]
Certificates shall remain outstanding until there is no other Class of
Certificates, REMIC I Regular Interests or REMIC II Regular Interests
outstanding.
Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such Distribution Date, be set aside and
held in trust for the benefit of the appropriate non-tendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to this
Section 4.8(b) shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a second
notice to the remaining non-tendering Certificateholders, at their last
addresses shown in the Certificate Register, to surrender their Certificates for
cancellation in order to receive from such funds held the final distribution
with respect thereto. If, within one year after the second notice, any of such
Certificates shall not have been surrendered for cancellation, the Trustee may,
directly or through an agent, take appropriate steps to contact the remaining
non-tendering Certificateholders concerning surrender of their Certificates. The
costs and expenses of maintaining such funds in trust and of contacting such
Certificateholders shall be paid out of such funds. If, within two years after
the second notice, any such Certificates shall not have been surrendered for
cancellation, the Paying Agent shall pay to the Class [R-III] Certificateholders
all amounts distributable to the Holders thereof. No interest shall accrue or be
payable to any Certificateholder on any amount held in trust hereunder or by the
Trustee as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section 4.8(b).
Any such amounts transferred to the Trustee may be invested in Permitted
Investments and all income and gain realized from investment of such funds shall
be for the benefit of the Trustee. The Trustee shall deposit into the applicable
account funds in the amount of any loss incurred in respect of any such
Permitted Investment immediately upon realization of such loss.
SECTION 4.9. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Paying
Agent shall comply with all federal withholding requirements with respect to
payments to Certificateholders of interest or original issue discount that the
Paying Agent reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for any such withholding. The Paying
Agent agrees that it will not withhold with respect to payments of interest or
original issue discount in the case of a Certificateholder that is a non-U.S.
Person that
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has furnished or caused to be furnished (i) an effective Form W-8 or Form W-9 or
an acceptable substitute form or a successor form and who has informed the
Trustee in writing that it 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 the Trust Fund or the Depositor, or
(ii) an effective Form 4224 or an acceptable substitute form or a successor
form. In the event the Paying Agent or its agent withholds any amount from
interest or original issue discount payments or advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Paying Agent
shall indicate the amount withheld to such Certificateholder. Any amount so
withheld shall be treated as having been distributed to such Certificateholder
for all purposes of this Agreement.
ARTICLE V
THE CERTIFICATES
SECTION 5.1. The Certificates.
The Certificates consist of the Class [A-1A] Certificates, the Class
[A-1B] Certificates, the Class [S] Certificates, the Class [A-2] Certificates,
the Class [A-3] Certificates, the Class [A-4] Certificates, the Class [B-1]
Certificates, the Class [B-2] Certificates, the Class [B-3] Certificates, the
Class [B-4] Certificates, the Class [B-5] Certificates, the Class [B-6]
Certificates, the Class [B-7] Certificates, the Class [B-8] Certificates, the
Class [C] Certificates, the Class [D] Certificates, the Class [E] Certificates,
the Class [R-I] Certificates, the Class [R-II] Certificates and the Class
[R-III] Certificates.
The Class [A-1A], Class [A-1B], Class [S], Class [A-2], Class [A-3],
Class [A-4], Class [B-1], Class [B-2], Class [B-3], Class [B-4], Class [B-5],
Class [B-6], Class [B-7], Class [B-8], Class [C], Class [D], Class [E], Class
[R-I], Class [R-II] and Class [R-III] Certificates will be substantially in the
forms annexed hereto as Exhibits A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8, A-9,
A-10, A-11, A-12, A-13, A-14, A-15, A-16, A-17, A-18, A-19 and A-20,
respectively. The Certificates of each Class will be issuable in definitive
physical form only, registered in the name of the holders thereof; provided,
however, that in accordance with Section 5.3 beneficial ownership interests in
the REMIC III Regular Certificates shall initially be represented by Book-Entry
Certificates held and transferred through the book-entry facilities of the
Securities Depository, in minimum denominations of authorized initial
Certificate Balance or Notional Amount, as described in the succeeding table.
The Class [S], Class [A-1A], Class [A-1B], Class [A-2], Class [A-3], Class
[A-4], Class [B-1] and Class [B-2] Certificates shall be in minimum
denominations of $5,000 and multiples of $1 in excess thereof and the Class
[B-3], Class [B-4], Class [B-5], Class [B-6], Class [B-7], Class [B-8], Class
[C] and Class [D] Certificates shall be in minimum denominations of $__________
and multiples of $1 in excess thereof. The Class [E], Class [R-I], Class [R-II]
and Class [R-II] Certificates shall be in minimum denominations of __%
Percentage Interests and integral multiples of 1% Percentage Interest in excess
thereof and together aggregating the entire 100% Percentage Interest in each
such Class.
Any of the Certificates may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such
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legend or legends, not inconsistent with the provisions of this Agreement, as
may be required to comply with any law or with rules or regulations pursuant
thereto, or with the rules of any securities market in which the Certificates
are admitted to trading, or to conform to general usage.
Each Certificate may be printed or in typewritten or similar form,
and each Certificate shall, upon original issue, be executed by the Trustee and
authenticated by the Trustee or the Authenticating Agent and delivered to (or
upon the order of) the Depositor. All Certificates shall be executed by manual
or facsimile signature on behalf of the Trustee or Authenticating Agent by an
authorized officer or signatory. Certificates bearing the signature of an
individual who was at any time the proper officer or signatory of the Trustee or
Authenticating Agent shall bind the Trustee or Authenticating Agent,
notwithstanding that such individual has ceased to hold such office or position
prior to the delivery of such Certificates or did not hold such office or
position 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 in the form set
forth in Exhibits A-1 through A-20 executed by the Authenticating Agent by
manual signature, and such certificate of authentication 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.
SECTION 5.2. Registration, Transfer and Exchange of Certificates.
(a) The Trustee shall keep or cause to be kept at the offices of the
Certificate Registrar (the "Certificate Register") for the registration,
transfer and exchange of Certificates (the Trustee, in such capacity, being the
"Certificate Registrar"). The names and addresses of all Certificateholders and
the names and addresses of the transferees of any Certificates shall be
registered in the Certificate Register. The Person in whose name any Certificate
is so registered shall be deemed and treated as the sole owner and Holder
thereof for all purposes of this Agreement and the Certificate Registrar, the
Master Servicer, the Special Servicer, the Trustee, any Paying Agent and any
agent of any of them shall not be affected by any notice or knowledge to the
contrary. A Definitive Certificate is transferable or exchangeable only upon the
surrender of such Certificate to the Certificate Registrar at the offices of the
Certificate Registrar together with an assignment and transfer (executed by the
Holder or his duly authorized attorney), subject to the requirements of this
Section 5.2. Upon request of the Trustee, the Certificate Registrar shall
provide the Trustee with the names, addresses and Percentage Interests of the
Holders.
(b) Upon surrender for registration of transfer of any Definitive
Certificate, subject to the requirements of this Section 5.2, the Trustee shall
execute and the Authenticating Agent shall duly authenticate in the name of the
designated transferee or transferees, one or more new Certificates in authorized
denominations of a like aggregate Certificate Balance. Such Certificates shall
be delivered by the Certificate Registrar in accordance with this Section 5.2.
Each Certificate surrendered for registration of transfer shall be cancelled and
subsequently destroyed by the Certificate Registrar. Each new Certificate issued
pursuant to this Section 5.2 shall be registered in the name of any Person as
the transferring Holder may request, subject to the provisions of this Section
5.2.
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(c) The exchange, transfer and registration of transfer of Definitive
Certificates that are Privately Placed Certificates shall be subject to the
restrictions set forth below (in addition to the other provisions of this
Section 5.2):
(i) The Certificate Registrar shall register the transfer of a
Definitive Certificate that is a Privately Placed Certificate if the requested
transfer is being made to a transferee who has provided the Certificate
Registrar with an Investment Representation Letter substantially in the form of
Exhibit D-1 hereto (an "Investment Representation Letter"), to the effect that
the transfer is being made to a Qualified Institutional Buyer in accordance with
Rule 144A ( and in the case of the Residual Certificates, a Trustee Affidavit as
required by Section 5.2(j)(ii)); or
(ii) The Certificate Registrar shall register the transfer of a
Definitive Certificate that is a Privately Placed Certificate (other than the
Class [E] Certificates and the Residual Certificates), if prior to the transfer,
the transferee furnishes to the Certificate Registrar (1) an Investment
Representation Letter to the effect that the transfer is being made to an
Institutional Accredited Investor in accordance with an applicable exemption
under the 1933 Act, (2) an Opinion of Counsel acceptable to the Certificate
Registrar that such transfer is in compliance with the 1933 Act, and (3) a
written undertaking by the transferor to reimburse the Trust for any costs
incurred by it in connection with the proposed transfer.
(d) Subject to the restrictions on transfer and exchange set forth in this
Section 5.2, the Holder of one or more Certificates may transfer or exchange the
same in whole or in part (with a Certificate Balance or Notional Amount equal to
any authorized denomination) by surrendering such Certificate at the offices of
the Certificate Registrar or at the office of any transfer agent appointed as
provided under this Agreement, together with an instrument of assignment or
transfer (executed by the Holder or its duly authorized attorney), in the case
of transfer, and a written request for exchange in the case of exchange. Subject
to the restrictions on transfer set forth in this Section 5.2, following a
proper request for transfer or exchange, the Certificate Registrar shall, within
a reasonable time period after such request, execute and deliver to the
transferee (in the case of transfer) or the Holder (in the case of exchange) or
send by first class mail (at the risk of the transferee in the case of transfer
or the Holder in the case of exchange) to such address as the transferee or the
Holder, as applicable, may request, a Definitive Certificate or Certificates, as
the case may require, for a like aggregate Certificate Balance or Notional
Amount and in such authorized denomination or denominations as may be requested.
The presentation for transfer or exchange of any Definitive Certificate shall
not be valid unless made at the offices of the Certificate Registrar or at the
office of a transfer agent by the registered Holder in person, or by a duly
authorized attorney-in-fact. The Certificate Registrar may decline to accept any
request for an exchange or registration of transfer of any Certificate during
the period of 15 days preceding any Distribution Date.
(e) Any Certificates that are Privately Placed Certificates may only be
transferred to Eligible Investors as described herein. In the event a
Responsible Officer of the Certificate Registrar has actual knowledge that a
Definitive Certificate that is a Privately Placed Certificate is being held by
or for the benefit of a Person who is not an Eligible Investor, or that
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such holding is unlawful under the laws of a relevant jurisdiction, then the
Certificate Registrar shall void such transfer, if permitted under applicable
law, or to require the investor to sell such Definitive Certificate or
beneficial interest in such Book-Entry Certificate to an Eligible Investor
within 14 days after notice of such determination and each Certificateholder by
its acceptance of a Certificate authorizes the Certificate Registrar to take
such action. The Certificate Registrar shall be under no duty to investigate to
determine if such transferee is an Eligible Investor.
(f) No fee or service charge shall be imposed by the Certificate Registrar
for its services in respect of any registration of transfer or exchange referred
to in this Section 5.2 other than for transfers of Privately Placed Certificates
to Institutional Accredited Investors, as provided herein. In connection with
any transfer of Privately Placed Certificates to an Institutional Accredited
Investor, the transferor shall reimburse the Trust for any costs (including the
cost of the Certificate Registrar's counsel's review of the documents and any
legal opinions submitted by the transferor or transferee to the Certificate
Registrar as provided herein) incurred by the Certificate Registrar in
connection with such transfer. The Certificate Registrar may require payment by
each transferor of a sum sufficient to cover any tax, expense or other
governmental charge payable in connection with any such transfer.
(g) Subject to the other provisions of this Section 5.2, transfers of the
Class [R-I], Class [R-II] and Class [R-III] Certificates may be made only in
accordance with Section 5.2(c)(i), this Section 5.2(g) and Section 5.2(j). The
Certificate Registrar shall register the transfer of a Class [R-I], Class [R-II]
or Class [R-III] Certificate if (i) the transferor has advised the Certificate
Registrar in writing that the Certificate is being transferred to a buyer that
the transferor reasonably believes is a Qualified Institutional Buyer; and (ii)
prior to transfer the transferor furnishes to the Certificate Registrar an
Investment Representation Letter.
(h) Neither the Depositor, the Master Servicer, the Special Servicer, the
Trustee nor the Certificate Registrar is obligated to register or qualify any
Class of Privately Placed Certificates under the 1933 Act or any other
securities law or to take any action not otherwise required under this Agreement
to permit the transfer of such Certificates without registration or
qualification. Any Certificateholder desiring to effect such transfer shall, and
does hereby agree to, indemnify the Depositor, the Master Servicer, the Special
Servicer, the Trustee and the Certificate Registrar, against any loss, liability
or expense that may result if the transfer is not exempt from the registration
requirements of the 1933 Act or is not made in accordance with such federal and
state laws.
(i) No transfer of any Ownership Interest in a Subordinate Certificate
shall be made to (i) an employee benefit plan subject to the fiduciary
responsibility provisions of ERISA, or Section 4975 of the Code, or a
governmental plan subject to any federal, state or local law ("Similar Law"),
which is to a material extent, similar to the foregoing provisions of ERISA or
the Code (collectively, a "Plan") or (ii) an insurance company that is using the
assets of any insurance company separate account or general account in which the
assets of any such Plan are invested (or which are deemed pursuant to ERISA or
any Similar Law to include assets of Plans) to acquire any such Subordinate
Certificates, if such transfer or the subsequent holding of the applicable
Certificate would constitute or result in a prohibited transaction within the
meaning of Section 406 or 407 of ERISA, Section 4975 of the Code, or any Similar
Law. Each prospective
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transferee of a Definitive Certificate that is a Subordinate Certificate shall
deliver to the Depositor, the Certificate Registrar and the Trustee, (A) a
transfer or representation letter, substantially in the form of Exhibit D-2
hereto, stating that the prospective transferee is not a Person referred to in
(i) or (ii) above, or (B) an Opinion of Counsel which establishes to the
satisfaction of the Depositor, the Trustee and the Certificate Registrar that
the purchase or holding of the Subordinate Certificate will not constitute or
result in a prohibited transaction within the meaning of Section 406 or Section
407 of ERISA or Section 4975 of the Code, and will not subject the Master
Servicer, the Special Servicer, the Depositor, the Trustee or the Certificate
Registrar to any obligation or liability (including obligations or liabilities
under ERISA or Section 4975 of the Code), which Opinion of Counsel shall not be
an expense of the Trustee, the Trust Fund, the Master Servicer, the Special
Servicer, Certificate Registrar or the Depositor. None of the Trustee, the
Master Servicer, the Special Servicer, and the Certificate Registrar will
register a Class [R-I], Class [R-II] or Class [R-III] Certificate in any
Person's name unless such Person has provided the letter referred to in clause
(A) above. Any transfer of a Subordinate Certificate that would violate, or
result in a prohibited transaction under, ERISA or Section 4975 of the Code
shall be deemed absolutely null and void ab initio.
(j) Each Person who has or acquires any Ownership Interest in a Class
[R-I], Class [R-II] or a Class [R-III] Certificate shall be deemed by the
acceptance or acquisition of such Ownership Interest to have agreed to be bound
by the following provisions, and the rights of each Person acquiring any
Ownership Interest in a Class [R-I] Certificate, Class [R-II] Certificate or a
Class [R-III] Certificate are expressly subject to the following provisions:
(i) Each Person acquiring or holding any Ownership Interest in a Class
[R-I] Certificate, Class [R-II] Certificate or Class [R-III] Certificate shall
be a Permitted Transferee and shall not acquire or hold such Ownership Interest
as agent (including as a broker, nominee or other middleman) on behalf of any
Person that is not a Permitted Transferee. Any such Person shall promptly notify
the Certificate Registrar of any change or impending change in its status (or
the status of the beneficial owner of such Ownership Interest) as a Permitted
Transferee. Any acquisition described in the first sentence of this Section
5.2(j)(i) by a Person who is not a Permitted Transferee or by a Person who is
acting as an agent of a Person who is not a Permitted Transferee shall be void
and of no effect, and the immediately preceding owner who was a Permitted
Transferee shall be restored to registered and beneficial ownership of the
Ownership Interest as fully as possible.
(ii) No Ownership Interest in a Class [R-I], Class [R-II] or a Class
[R-III] Certificate may be transferred, and no such Transfer shall be registered
in the Certificate Register, without the consent of the Certificate Registrar,
and the Certificate Registrar shall not recognize a proposed Transfer, and such
proposed Transfer shall not be effective, without such consent with respect
thereto. In connection with any proposed Transfer of any Ownership Interest in a
Class [R-I], Class [R-II] or a Class [R-III] Certificate, the Certificate
Registrar shall, as a condition to such consent, (x) require delivery to it in
form and substance satisfactory to it, and the proposed transferee shall deliver
to the Certificate Registrar and to the proposed transferor, an affidavit in
substantially the form attached as Exhibit C-1 (a "Transferee Affidavit") (A)
that such proposed transferee is a Permitted Transferee and (B) stating that (I)
the proposed transferee historically has paid its debts as they have come due
and intends to do so in
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the future, (II) the proposed transferee understands that, as the holder of an
Ownership Interest in a Class [R-I], Class [R-II] or a Class [R-III]
Certificate, as applicable, it may incur liabilities in excess of cash flows
generated by the residual interest, (III) the proposed transferee intends to pay
taxes associated with holding the Ownership Interest as they become due, (IV)
the proposed transferee will not transfer the Ownership Interest to any Person
that does not provide a Transferee Affidavit or as to which the proposed
transferee has actual knowledge that such Person is not a Permitted Transferee
or is acting as an agent (including as a broker, nominee or other middleman) for
a Person that is not a Permitted Transferee, and (V) the proposed transferee
expressly agrees to be bound by and to abide by the provisions of this Section
5.2(j) and (y) other than in connection with the initial issuance of the Class
[R-I], Class [R-II] and Class [R-III] Certificates, require a statement from the
proposed transferor substantially in the form attached as Exhibit C-2 (the
"Transferor Letter"), that the proposed transferor has no actual knowledge that
the proposed transferee is not a Permitted Transferee and has no actual
knowledge or reason to know that the proposed transferee's statements in the
preceding clauses (x)(B)(I) or (III) are false.
(iii) Notwithstanding the delivery of a Transferee Affidavit by a
proposed transferee under clause (ii) above, if a Responsible Officer of the
Certificate Registrar has actual knowledge that the proposed transferee is not a
Permitted Transferee, no Transfer to such proposed transferee shall be effected
and such proposed Transfer shall not be registered on the Certificate Register;
provided, however, that the Certificate Registrar shall not be required to
conduct any independent investigation to determine whether a proposed transferee
is a Permitted Transferee.
Upon notice to the Certificate Registrar that there has occurred a
Transfer to any Person that is a Disqualified Organization or an agent thereof
(including a broker, nominee, or middleman) in contravention of the foregoing
restrictions, and in any event not later than 60 days after a request for
information from the transferor of such Ownership Interest in a Class [R-I],
Class [R-II] or a Class [R-III] Certificate, or such agent thereof, the
Certificate Registrar and the Trustee agree to furnish to the IRS and the
transferor of such Ownership Interest or such agent thereof such information
necessary to the application of Section 860E(e) of the Code as may be required
by the Code, including, but not limited to, the present value of the total
anticipated excess inclusions with respect to such Class [R-I], Class [R-II] or
Class [R-III] Certificate (or portion thereof) for periods after such Transfer.
At the election of the Certificate Registrar and the Trustee, the Certificate
Registrar and the Trustee may charge a reasonable fee for computing and
furnishing such information to the transferor or to such agent thereof referred
to above; provided, however, that such Persons shall in no event be excused from
furnishing such information.
SECTION 5.3. Book-Entry Certificates.
(a) Each Class of REMIC III Regular Certificates shall initially be issued
as one or more Book-Entry Certificates registered in the name of the Securities
Depository or its nominee and, except as provided in subsection (c) below,
transfer of such Certificates may not be registered by the Certificate Registrar
unless such transfer is to a successor Securities Depository that agrees to hold
such Certificates for the respective Certificate Owners with Ownership
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Interests therein. Such Certificate Owners shall hold and transfer their
respective Ownership Interest in and to such Certificates through the book-entry
facilities of the Securities Depository and, except as provided in subsection
(c) below, shall not be entitled to definitive, fully registered Certificates
("Definitive Certificates") in respect of such Ownership Interests. Unless the
Certificate Registrar determines otherwise in accordance with applicable law and
the rules and procedures of, or applicable to, the Depository (the "Depository
Rules"), in which case all such Certificates shall be held in book-entry form,
transfers of a beneficial interest in a Book-Entry Certificate representing an
interest in a Privately Placed Certificate to (i) an Institutional Accredited
Investor will require delivery in the form of a Definitive Certificate and the
Certificate Registrar shall register such transfer only upon compliance with the
foregoing provisions of Section 5.2 or (ii) a Qualified Institutional Buyer may
only be effectuated by means of an "SRO Rule 144A System" approved for such
purpose by the Commission. All transfers by Certificate Owners of their
respective Ownership Interests in the Book-Entry Certificates shall be made in
accordance with the procedures established by the Securities Depository
Participant or brokerage firm representing each such Certificate Owner. Each
Securities Depository Participant shall only transfer the Ownership Interests in
the Book-Entry Certificates of Certificate Owners it represents or of brokerage
firms for which it acts as agent in accordance with the Securities Depository's
normal procedures. Neither the Certificate Registrar nor the Trustee shall have
any responsibility to monitor or restrict the transfer of Ownership Interests in
Book-Entry Certificates through the book-entry facilities of the Securities
Depository.
(b) The Trustee, the Master Servicer, the Special Servicer and the
Certificate Registrar may for all purposes, including the making of payments due
on the Book-Entry Certificates, deal with the Securities Depository as the
authorized representative of the Certificate Owners with respect to such
Certificates for the purposes of exercising the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the Book-Entry
Certificates shall be limited to those established by law and agreements between
such Certificate Owners and the Securities Depository Participants and brokerage
firms representing such Certificate Owners. Multiple requests and directions
from, and votes of, the Securities Depository as Holder of the Book-Entry
Certificates with respect to any particular matter shall not be deemed
inconsistent if they are made with respect to different Certificate Owners. The
Trustee may establish a reasonable record date in connection with solicitations
of consents from or voting by Certificateholders and shall give notice to the
Securities Depository of such record date.
(c) If (i)(A) the Depositor advises the Trustee and the Certificate
Registrar in writing that the Securities Depository is no longer willing or able
to properly discharge its responsibilities with respect to any Class of the
Book-Entry Certificates, and (B) the Depositor is unable to locate a qualified
successor, or (ii) the Depositor at its option advises the Trustee and the
Certificate Registrar in writing that it elects to terminate the book-entry
system through the Securities Depository with respect to any Class of the
Book-Entry Certificates, the Certificate Registrar shall notify all affected
Certificate Owners, through the Securities Depository, of the occurrence of any
such event and of the availability of Definitive Certificates to such
Certificate Owners requesting the same. Upon surrender to the Certificate
Registrar of any Class of the Book-Entry Certificates by the Securities
Depository, accompanied by registration instructions from the Securities
Depository for registration of transfer, the Trustee shall execute, and the
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Certificate Registrar shall authenticate and deliver, the Definitive
Certificates to the Certificate Owners identified in such instructions. None of
the Depositor, the Master Servicer, the Special Servicer, the Trustee or the
Certificate Registrar 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 purposes of
evidencing ownership of any Class of the REMIC III Certificates, the registered
holders of such Definitive Certificates shall be recognized as
Certificateholders hereunder and, accordingly, shall be entitled directly to
receive payments on, to exercise Voting Rights with respect to, and to transfer
and exchange such Definitive Certificates.
(d) Upon acceptance for exchange or transfer of a beneficial interest in a
Book-Entry Certificate for a Definitive Certificate, as provided herein, the
Certificate Registrar shall endorse on a schedule affixed to the related
Book-Entry Certificate (or on a continuation of such schedule affixed to such
Book-Entry Certificate and made a part thereof) an appropriate notation
evidencing the date of such exchange or transfer and a decrease in the
Denomination of such Book-Entry Certificate equal to the Denomination of such
Definitive Certificate issued in exchange therefor or upon transfer thereof.
(e) If a Holder of a Definitive Certificate wishes at any time to transfer
such Certificate to a Person who wishes to take delivery thereof in the form of
a beneficial interest in the Book-Entry Certificate, such transfer may be
effected only in accordance with the rules of the Securities Depository and this
Section 5.3(e). Upon receipt by the Certificate Registrar at the Registrar
Office of (i) the Definitive Certificate to be transferred with an assignment
and transfer pursuant to this Section 5.3(e), (ii) written instructions given in
accordance with the rules of the Securities Depository directing the Certificate
Registrar to credit or cause to be credited to another account a beneficial
interest in the related Book-Entry Certificate, in an amount equal to the
denomination of the Definitive Certificate to be so transferred, (iii) a written
order given in accordance with the rules of the Securities Depository containing
information regarding the account to be credited with such beneficial interest
and (iv) if the affected Certificate is a Privately Placed Certificate an
Investment Representation Letter from the transferee to the effect that such
transferee is a Qualified Institutional Buyer, the Certificate Registrar shall
cancel such Definitive Certificate, execute and deliver a new Definitive
Certificate for the denomination of the Definitive Certificate not so
transferred, registered in the name of the Holder or the Holder's transferee (as
instructed by the Holder), and the Certificate Registrar shall instruct the
Securities Depository or the custodian holding such Book-Entry Certificate on
behalf of the Securities Depository to increase the denomination of the related
Book-Entry Certificate by the denomination of the Definitive Certificate to be
so transferred, and to credit or cause to be credited to the account of the
Person specified in such instructions a corresponding denomination of such
Book-Entry Certificate.
SECTION 5.4. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (ii) there is delivered
to the Certificate Registrar such security or indemnity as may be required by it
to save it, the Trustee, the Special Servicer and the Master Servicer
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harmless, then, in the absence of actual knowledge by a Responsible Officer of
the Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute and the Trustee or the Authenticating Agent
shall authenticate and the Certificate Registrar shall deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same Class and of like tenor and Percentage Interest. Upon
the issuance of any new Certificate under this Section 5.4, the Certificate
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Certificate Registrar)
connected therewith. Any replacement Certificate issued pursuant to this Section
5.4 shall constitute complete and indefeasible evidence of ownership of the
corresponding interest in the Trust Fund, as if originally issued, whether or
not the lost, stolen or destroyed Certificate shall be found at any time.
SECTION 5.5. Appointment of Paying Agent.
The Trustee may appoint a Paying Agent for the purpose of making
distributions to Certificateholders pursuant to Article IV. The Trustee shall
cause such Paying Agent, if other than the Trustee or the Master Servicer, to
execute and deliver to the Master Servicer and the Trustee an instrument in
which such Paying Agent shall agree with the Master Servicer and the Trustee
that such Paying Agent will hold all sums held by it for payment to
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums have been paid to such Certificateholders or disposed of
as otherwise provided herein. The initial Paying Agent shall be the Trustee. The
Paying Agent shall at all times be an entity having a long-term senior unsecured
debt rating of at least "___" by _______, unless and to the extent Rating Agency
Confirmation is obtained from _______ (the cost, if any, of obtaining such
confirmation to be paid by the Trustee; provided that such appointment is made
by the Trustee in its sole discretion and otherwise by the Trust Fund). The
Trustee shall pay the Paying Agent reasonable compensation from its own funds
and the Trustee shall remain liable for all actions of any Paying Agent and
shall not be relieved of any of its obligations hereunder.
SECTION 5.6. Access to Certificateholders' Names and Addresses.
(a) If any Certificateholder or the Controlling Class Representative (for
purposes of this Section 5.6, an "Applicant") applies in writing to the
Certificate Registrar, and such application states that the Applicant desires to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates and is accompanied by a copy of the
communication which such Applicant proposes to transmit, then the Certificate
Registrar shall, at the expense of such Applicant, within ten Business Days
after the receipt of such application, transmit such communication to the
Certificateholders as of the most recent Record Date; provided, however, if such
communication relates to performance by the Master Servicer, the Special
Servicer or the Trustee of its duties hereunder, the Certificate Registrar shall
furnish or cause to be furnished to such Applicant a list of the names and
addresses of the Certificateholders as of the most recent Record Date.
(b) Every Certificateholder, by receiving and holding its Certificate,
agrees with the Trustee that the Trustee and the Certificate Registrar shall not
be held accountable in
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any way by reason of the disclosure of any information as to the names and
addresses of the Certificateholders hereunder, regardless of the source from
which such information was derived.
SECTION 5.7. Actions of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
an agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, when required, to the Depositor, the Special
Servicer or the Master Servicer. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee, the Depositor, the Special
Servicer and the Master Servicer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Certificateholder of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder shall bind every Holder of every Certificate
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, or omitted to be done, by the
Trustee, the Depositor, the Special Servicer or the Master Servicer in reliance
thereon, whether or not notation of such action is made upon such Certificate.
(d) The Trustee or Certificate Registrar may require such additional proof
of any matter referred to in this Section 5.7 as it shall deem necessary.
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER AND THE SPECIAL SERVICER
SECTION 6.1. Liability of the Depositor, the Master Servicer and the
Special Servicer.
The Depositor, the Master Servicer and the Special Servicer each
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed by this Agreement.
SECTION 6.2. Merger or Consolidation of the Master Servicer and
Special Servicer.
Subject to the third paragraph of this Section 6.2, the Master
Servicer will keep in full effect its existence, rights and good standing as a
corporation under the laws of the State of
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Delaware and will not jeopardize its ability to do business in each jurisdiction
in which one or more of the Mortgaged Properties are located or to protect the
validity and enforceability of this Agreement, the Certificates or any of the
Mortgage Loans and to perform its respective duties under this Agreement.
Subject to the following paragraph, the Special Servicer will keep
in full effect its existence, rights and good standing as a corporation under
the laws of the State of Delaware and will not jeopardize its ability to do
business in each jurisdiction in which one or more of the Mortgaged Properties
are located or to protect the validity and enforceability of this Agreement, the
Certificates or any of the Specially Serviced Mortgage Loans and to perform its
respective duties under this Agreement.
Each of the Master Servicer and the Special Servicer may be merged
or consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which it shall be a party, or any Person succeeding to its
business, shall be the successor of the Master Servicer or the Special Servicer,
as applicable hereunder, and shall be deemed to have assumed all of the
liabilities of the Master Servicer or the Special Servicer, as applicable
hereunder, if Rating Agency Confirmation has been obtained with respect to such
merger, consolidation or transfer and succession (the cost, if any, of obtaining
such confirmation to be paid by the Master Servicer or Special Servicer, as
applicable).
SECTION 6.3. Limitation on Liability of the Depositor, the Master
Servicer and Others.
Neither the Depositor, the Master Servicer, the Special Servicer,
nor any of the owners, directors, managers, officers, employees or agents of the
Depositor or the Master Servicer or the Special Servicer shall be under any
liability to the Trust Fund or the Certificateholders for any action taken, or
for 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 Depositor or the Master Servicer or the Special Servicer
or any such other Person against any breach of warranties or representations
made herein, or against any specific liability imposed on the Master Servicer or
the Special Servicer for a breach of the Servicing Standard, or against any
liability which would otherwise be imposed by reason of its respective willful
misfeasance, misrepresentation, bad faith, fraud or negligence in the
performance of its duties or by reason of negligent disregard of its respective
obligations or duties hereunder. The Depositor, the Master Servicer, the Special
Servicer and any owner, director, manager, officer, employee or agent of the
Depositor, the Master Servicer or the Special Servicer may rely in good faith on
any document of any kind which, prima facie, is properly executed and submitted
by any appropriate Person with respect to any matters arising hereunder. The
Depositor, the Master Servicer, the Special Servicer and any owner, director,
officer, employee or agent of the Depositor, the Master Servicer or the Special
Servicer shall be indemnified and held harmless by the Trust Fund 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: (i) specifically required to be borne thereby pursuant to the terms
hereof, including, in the case of the Master Servicer or Special Servicer, the
prosecution of an
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enforcement action in respect of any specific Mortgage Loan or Mortgage Loans
(provided, however, that the foregoing shall not be deemed to preclude the
Master Servicer or the Special Servicer from being reimbursed for any such loss,
liability or expense otherwise reimbursable pursuant to this Agreement) or (ii)
incurred by reason of its respective willful misfeasance, misrepresentation, bad
faith, fraud or negligence or (in the case of the Master Servicer or Special
Servicer) a breach of the Servicing Standard in the performance of its
respective duties or by reason of negligent disregard of its respective
obligations or duties hereunder. Neither the Depositor nor the Master Servicer
nor the Special Servicer shall be under any obligation to appear in, prosecute
or defend any legal action unless such action is related to its respective
duties under this Agreement and in its opinion does not expose it to any
ultimate expense or liability for which reimbursement is not adequately provided
for hereunder; provided, however, that the Depositor or the Master Servicer or
the Special Servicer may in its discretion undertake any action related to its
obligations hereunder which it may deem necessary or desirable with respect to
this Agreement and the rights and duties of the parties hereto and the interests
of the Certificateholders hereunder. In such event, the legal expenses and costs
of such action and any liability resulting therefrom (except any liability
related to the Master Servicer's or the Special Servicer's obligations under
Section 3.1(a)) shall be expenses, costs and liabilities of the Trust Fund, and
the Depositor, the Master Servicer and the Special Servicer shall be entitled to
be reimbursed therefor from the Collection Account as provided in Section
3.6(a)(vi) of this Agreement.
SECTION 6.4. Resignation of Master Servicer or Special Servicer.
(a) Except as otherwise provided in Section 6.2, Section 6.4(b) and Section
6.5 hereof, neither the Master Servicer nor the Special Servicer shall resign
from the obligations and duties hereby imposed on it, unless there is a
determination that its duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it (the other activities so causing such conflict
being of a type and nature carried on by it at the date of this Agreement). Any
such determination permitting the resignation of the Master Servicer or the
Special Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee. No such resignation shall become effective until a
successor servicer designated by the Trustee, with the consent of the Depositor,
shall have assumed the responsibilities and obligations of the Master Servicer
or the Special Servicer, as the case may be, under this Agreement and Rating
Agency Confirmation shall have been obtained with respect to such servicing
transfer. Notice of such resignation shall be given promptly by the Master
Servicer or the Special Servicer, as the case may be, to the Trustee.
(b) The Master Servicer and the Special Servicer may each resign from the
obligations and duties imposed on it, upon 30 days notice to the Trustee,
provided that (i) a successor servicer (x) is available, (y) has assets of at
least $15,000,000 and (z) is willing to assume the obligations,
responsibilities, and covenants to be performed hereunder by the resigning party
on substantially the same terms and conditions, and for not more than equivalent
compensation, to that herein provided; (ii) the resigning party bears all costs
associated with its resignation and the transfer of servicing; and (iii) Rating
Agency Confirmation is obtained with respect to such servicing transfer, as
evidenced by a letter delivered to the Trustee by each Rating Agency.
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SECTION 6.5. Assignment or Delegation of Duties by Master Servicer or the
Special Servicer.
In addition to actions permitted under Section 6.2, the Master
Servicer and the Special Servicer shall each have the right without the prior
written consent of the Trustee to assign and delegate all of its duties
hereunder; provided, however, that (i) the Master Servicer or the Special
Servicer, as the case may be, gives the Depositor and the Trustee notice of such
assignment and delegation; (ii) such purchaser or transferee accepting such
assignment and delegation executes and delivers to the Depositor and the Trustee
an agreement accepting such assignment, which contains an assumption by such
Person of the rights, powers, duties, responsibilities, obligations and
liabilities of the Master Servicer or the Special Servicer, as the case may be,
with like effect as if originally named as a party to this Agreement; (iii) a
Rating Agency Confirmation shall have been obtained with respect to such
assignment and delegation; and (iv) the assignment and delegation is reasonably
satisfactory to the Trustee and the Depositor. In the case of any such
assignment and delegation in accordance with the requirements of this Section,
the Master Servicer or the Special Servicer, as the case may be, shall be
released from its obligations under this Agreement, except that the Master
Servicer or the Special Servicer, as the case may be, shall remain liable for
all liabilities and obligations incurred by it as the Master Servicer or the
Special Servicer, as the case may be, hereunder prior to the satisfaction of the
conditions to such assignment set forth in the preceding sentence.
Notwithstanding the above, each of the Master Servicer and the Special Servicer
may appoint Sub-Servicers in accordance with Section 3.2 hereof (provided that
the Master Servicer or the Special Servicer remains fully liable for their
actions), or agents or independent contractors appointed or retained to perform
select duties thereof.
SECTION 6.6. Rights of the Depositor, the Rating Agencies and the Trustee
in Respect of the Master Servicer and the Special Servicer.
Each of the Master Servicer and the Special Servicer shall afford
the Depositor, the Rating Agencies, the Placement Agents, and the Trustee, upon
reasonable notice, during normal business hours access to all records maintained
by it in respect of its rights and obligations hereunder and access to its
officers responsible for such obligations. Upon reasonable request, each of the
Master Servicer and the Special Servicer shall furnish to the Depositor, the
Rating Agencies and the Trustee its or its parent's most recent financial
statements and such other information in its possession (which it is not
prohibited by applicable law or contract from disclosing) regarding its
business, affairs, property and condition, financial or otherwise, as the party
requesting such information, in its reasonable judgment, determines to be
relevant to the performance of the obligations hereunder of the Master Servicer
or the Special Servicer. Neither the Depositor nor the Trustee shall have any
responsibility or liability for any action or failure to act by the Master
Servicer or the Special Servicer and neither such Person is obligated to
supervise the performance of the Master Servicer or the Special Servicer under
this Agreement or otherwise.
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ARTICLE VII
DEFAULT
SECTION 7.1. Events of Default.
"Event of Default," wherever used herein, with respect to the Master
Servicer and the Special Servicer, as applicable (except with respect to item
(viii) in the case of the Special Servicer) means any one of the following
events:
(i) any failure by the Master Servicer or the Special Servicer, as
applicable, to remit to the Collection Account, any failure by the Special
Servicer to remit to the REO Account or any failure by the Master Servicer to
remit to the Trustee for deposit into the Distribution Account any amount
required to be so remitted by the Master Servicer or the Special Servicer, as
applicable, pursuant to and in accordance with the terms of this Agreement; or
(ii) any failure on the part of the Master Servicer or Special
Servicer, as applicable, duly to observe or perform in any material respect any
other of the covenants or agreements, or the breach of any representations or
warranties provided herein on the part of the Master Servicer or the Special
Servicer, which, in either event, materially and adversely affects the interests
of the Certificateholders, the Master Servicer, the Special Servicer or the
Trustee with respect to any Mortgage Loan and which, in either event, continues
unremedied for a period of 30 days after the date on which written notice of
such failure or breach, requiring the same to be remedied, shall have been given
to the Master Servicer or Special Servicer by the Depositor or the Trustee, or
to the Master Servicer or Special Servicer, the Depositor and the Trustee by the
Holders of Certificates entitled to at least 25% of the aggregate Voting Rights
of any Class affected thereby; or
(iii) the Master Servicer shall no longer be rated "_____" (or its
equivalent) or higher by _______ or the Special Servicer shall no longer be
rated "_____" (or its equivalent) or higher by _______, as applicable, unless in
each case _______ has confirmed in writing that a failure to be so rated will
not result in the withdrawal, downgrade or qualification of any rating then
assigned by _______ to any Class of Certificates; or
(iv) the Master Servicer or the Special Servicer, as the case may be,
shall no longer be "approved" by ____ to act in such capacity for pools of
mortgage loans similar to the Mortgage Loans and the Master Servicer or the
Special Servicer, as the case may be, shall not have resolved all such matters
to the satisfaction of ____ so as to be restored to "approved" status within 60
days following such loss of "approved" status.
(v) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises in an involuntary case under any present or
future federal or state bankruptcy, insolvency or similar law for the
appointment of a conservator or receiver or liquidator in any 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
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the Master Servicer or Special Servicer, as applicable, and such decree or order
shall have remained in force, undischarged or unstayed, for a period of 60 days;
or
(vi) the Master Servicer or Special Servicer, as applicable, shall
consent to the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Master Servicer or the Special
Servicer, or of or relating to all or substantially all of the property of
either the Master Servicer or the Special Servicer; or
(vii) the Master Servicer or Special Servicer, as applicable, shall
admit in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations; or
(viii) the Master Servicer shall fail to make any Advance required to
be made by the Master Servicer hereunder (whether or not the Trustee makes such
Advance);
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Trustee may, and at the written direction of the Holders
of 25% of the aggregate Voting Rights of all Certificates, the Trustee shall, by
notice in writing to the Master Servicer or the Special Servicer, as the case
may be, terminate (subject to Section 7.2) all of its respective rights and
obligations (but not any liabilities for actions and omissions occurring prior
thereto) under this Agreement and in and to the Mortgage Loans and the proceeds
thereof, other than any rights it may have hereunder as a Certificateholder and
any rights or obligations that accrued prior to the date of such termination
(including the right to receive all amounts accrued or owing to it under this
Agreement, plus interest at the Advance Rate on such amounts until received to
the extent such amounts bear interest as provided in this Agreement, with
respect to periods prior to the date of such termination, and the right to the
benefits of Section 6.3 notwithstanding any such termination); provided,
however, that in the event the Master Servicer and the Special Servicer are the
same Person, the Trustee shall require that any termination of the Master
Servicer shall constitute a termination of the Special Servicer and vice versa
(unless the Event of Default is under clause (iii) or (iv) of Section 7.1). On
or after the receipt by the Master Servicer or the Special Servicer, as the case
may be, of such written notice, all of its authority and power 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 (notwithstanding any failure of the Trustee to satisfy the criterion set
forth in Section 6.4) and, without limitation, the Trustee is hereby authorized
and empowered to execute and deliver, on behalf of and at the expense of the
defaulting Master Servicer or Special Servicer, as the case may be, 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. Each of the Master Servicer and the Special Servicer, on behalf of
itself, agrees in the event it is terminated pursuant to this Section 7.1
promptly (and in any event no later than ten Business Days subsequent to such
notice) to provide, at its own expense, the Trustee or the successor Master
Servicer or Special Servicer (if other than the Trustee) with all documents and
records requested by the Trustee or the successor
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Master Servicer or Special Servicer (if other than the Trustee) to enable the
Trustee or the successor Master Servicer or Special Servicer (if other than the
Trustee) to assume its functions hereunder, and to cooperate with the Trustee
and the successor to its responsibilities hereunder in effecting the termination
of its responsibilities and rights hereunder, including, without limitation, the
transfer to the successor Master Servicer or Special Servicer or the Trustee, as
applicable, for administration by it of all cash amounts which shall at the time
be or should have been credited by the Master Servicer or the Special Servicer
to the Collection Account and any REO Account or Reserve Account or thereafter
be received with respect to the Mortgage Loans, and shall promptly provide the
Trustee or such successor Master Servicer or Special Servicer (which may include
the Trustee), as applicable, all documents and records reasonably requested by
it, such documents and records to be provided in such form as the Trustee or
such successor Master Servicer or Special Servicer shall reasonably request
(including electromagnetic form), to enable it to assume the Master Servicer's
or Special Servicer's function hereunder. All reasonable costs and expenses of
the successor Master Servicer or successor Special Servicer incurred in
connection with transferring the Mortgage Files to the successor Master Servicer
(or copies of the Mortgage Files relating to Specially Serviced Mortgage Loans
to the successor Special Servicer) and amending this Agreement to reflect such
succession as Master Servicer or successor Special Servicer pursuant to this
Section 7.1 shall be paid by the predecessor Master Servicer or Special Servicer
upon presentation of reasonable documentation of such costs and expenses;
provided, however, that if any such costs and expenses remain unpaid by the
predecessor Master Servicer or Special Servicer within a reasonable time after
presentation of such documentation, the Trustee or the successor Master Servicer
or Special Servicer (if other than the Trustee) may be reimbursed from the
Collection Account for such unpaid costs and expenses, which shall be deemed to
be expenses of the Trust Fund; however, such reimbursement shall not relieve the
predecessor Master Servicer or Special Servicer from any liability that it may
have for such costs and expenses.
SECTION 7.2. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer or the Special Servicer
receives a notice of termination pursuant to Section 7.1, the Trustee shall be
its successor in such capacity in all respects under this Agreement and the
transactions set forth or provided for herein and, except as provided herein,
shall be subject to all the responsibilities, duties, limitations on liability
and liabilities relating thereto and arising thereafter placed on the Master
Servicer or Special Servicer by the terms and provisions hereof; provided,
however, that (i) the Trustee shall have no responsibilities, duties,
liabilities or obligations with respect to any act or omission of the Master
Servicer or of the Special Servicer and (ii) any failure to perform, or delay in
performing, such duties or responsibilities caused by the terminated party's
failure to provide, or delay in providing, records, tapes, disks, information or
monies shall not be considered a default by any successor hereunder. The
appointment of a successor Master Servicer or Special Servicer shall not affect
any liability of the predecessor Master Servicer or Special Servicer, as
applicable, which may have arisen prior to its termination as Master Servicer or
Special Servicer. The Trustee shall not be liable for any of the representations
and warranties of the Master Servicer or of the Special Servicer herein or in
any related document or agreement, for any acts or omissions of the predecessor
Master Servicer or Special Servicer, as applicable, or for any losses incurred
in respect of any Permitted Investment by the Master Servicer pursuant to
Section 3.7 hereunder
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nor shall the Trustee be required to purchase any Mortgage Loan hereunder. As
compensation therefor, the Trustee as successor Master Servicer or Special
Servicer shall be entitled to all Servicing Compensation relating to the
Mortgage Loans that accrue after the date of the Trustee's succession to which
the Master Servicer or Special Servicer would have been entitled if the Master
Servicer or Special Servicer, as applicable, had continued to act hereunder
(other than Workout Fees payable to the terminated Special Servicer pursuant to
Section 3.12(b)). Unless otherwise agreed to in writing by the Master Servicer
and the Trustee, in the event any Advances made by the Master Servicer or the
Trustee shall at any time be outstanding, or any amounts of interest thereon
shall be accrued and unpaid, all amounts available to repay Advances and
interest hereunder shall be applied entirely to the Advances made by the Trustee
(and the accrued and unpaid interest thereon), until such Advances made by the
Trustee (and accrued and unpaid interest thereon) shall have been repaid in
full. In addition to the foregoing, any successor Master Servicer (which, for
the purposes of this sentence, shall not include the Trustee) shall be required
to allocate funds available for the payment of unreimbursed Advances as between
the former Master Servicer and the successor Master Servicer (with interest
thereon at the Advance Rate) on a first in, first out basis, which results in
the payment of unreimbursed Advances (with interest thereon at the Advance Rate)
first to the predecessor Master Servicer. Notwithstanding the above, the Trustee
may, if it shall be unwilling to so act, or shall, if it is unable to so act, or
if the Holders of Certificates entitled to a majority of the aggregate Voting
Rights so request in writing to the Trustee, or if the Trustee is not approved
as a master servicer or special servicer by each of the Rating Agencies,
promptly appoint, or petition a court of competent jurisdiction to appoint, any
established mortgage loan servicing institution, the appointment of which is the
subject of a Rating Agency Confirmation (the cost, if any, of obtaining such
confirmation to be paid by the terminated Master Servicer or Special Servicer,
as applicable), as the successor to the Master Servicer or Special Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer or Special Servicer hereunder. If the
resigning or terminated party is the initial Master Servicer, and if on or
before the effective date of such resignation or termination the initial Master
Servicer procures a qualified Person that is willing to act as the successor
Master Servicer, then the Trustee shall appoint such Person to act as the
successor Master Servicer; provided, however, that (i) such Person is reasonably
acceptable to the Trustee, (ii) a Rating Agency Confirmation is obtained with
respect to such appointment, (iii) the initial Master Servicer pays all costs
and expenses in connection with such transfer, and (iv) such Person accepts such
appointment on or prior to the effective date of such resignation or
termination. No appointment of a successor to the Master Servicer or Special
Servicer hereunder shall be effective until the assumption by such successor of
all the Master Servicer's or Special Servicer's responsibilities, duties and
liabilities hereunder. Pending appointment of a successor to the Master Servicer
or Special Servicer hereunder, unless the Trustee shall be prohibited by law
from so acting, the Trustee shall act in such capacity as herein above provided.
In connection with such appointment and assumption described herein, 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 be in excess of that permitted the
terminated party hereunder. The Depositor, the Trustee, the Master Servicer or
Special Servicer and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
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SECTION 7.3. Notification to Certificateholders.
(a) Upon any termination pursuant to Section 7.1 above or appointment
of a successor to the Master Servicer or the Special Servicer, the Trustee shall
give prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register, the Controlling Class
Representative and to each Rating Agency.
(b) Within 5 days after the occurrence of any Event of Default of
which a Responsible Officer of the Trustee has actual knowledge, the Trustee
shall transmit by mail to all Holders of Certificates, the Controlling Class
Representative and to each Rating Agency notice of such Event of Default, unless
such Event of Default shall have been cured or waived.
SECTION 7.4. Other Remedies of Trustee.
During the continuance of any Event of Default, so long as such
Event of Default shall not have been remedied, the Trustee, in addition to the
rights specified in Section 7.1, shall have the right, in its own name as
trustee of an express trust, to take all actions now or hereafter existing at
law, in equity or by statute to enforce its rights and remedies and to protect
the interests, and enforce the rights and remedies, of the Certificateholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filing of proofs of claim and debt in connection
therewith). In such event, the legal fees, expenses and costs of such action and
any liability resulting therefrom shall be expenses, costs and liabilities of
the Trust Fund, and the Trustee shall be entitled to be reimbursed therefor from
the Collection Account as provided in Section 3.6(a)(vi). Except as otherwise
expressly provided in this Agreement, no remedy provided for by this Agreement
shall be exclusive of any other remedy, and each and every remedy shall be
cumulative and in addition to any other remedy and no delay or omission to
exercise any right or remedy shall impair any such right or remedy or shall be
deemed to be a waiver of any Event of Default.
SECTION 7.5. Waiver of Past Events of Default; Termination.
The Holders of Certificates evidencing not less than 66-2/3% of the
aggregate Voting Rights of the Certificates may, on behalf of all Holders of
Certificates, waive any default by the Master Servicer or Special Servicer in
the performance of its obligations hereunder and its consequences, except a
default in making any required deposits to (including P&I Advances) or payments
from the Collection Account, the Distribution Account or the REO Account or in
remitting payments as received, in each case in accordance with this Agreement.
Upon any such waiver of a past default, and payment to the Trustee of all
reasonable costs and expenses incurred by the Trustee in connection with such
default and prior to its waivers (which costs shall be paid as an Additional
Trust Fund Expense) such default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon.
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.1. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee has actual knowledge and after the curing or
waiver of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this Agreement
and no permissive right of the Trustee shall be construed as a duty. During the
continuance of an Event of Default of which a Responsible Officer of the Trustee
has actual knowledge, 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
their 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 any 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
conform on their face to the requirements of this Agreement; provided, however,
that, the Trustee shall not be responsible for the accuracy or content of any
such resolution, certificate, statement, opinion, report, document, order or
other instrument provided to it hereunder by the Master Servicer, the Special
Servicer, the Depositor or the Paying Agent. If any such instrument is found not
to conform on its face to the requirements of this Agreement in a material
manner, the Trustee shall report such finding to the presenting party and
request a correction of such instrument.
(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 the foregoing
shall be subject to Section 8.2; and provided, further, that:
(i) Prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee has actual knowledge, and after the curing or
waiver of all such Events of Default which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any resolutions, certificates, statements,
reports, opinions, documents, orders or other instruments furnished to the
Trustee that conform on their face to the requirements of this Agreement without
responsibility for investigating the contents thereof;
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(ii) The Trustee shall not be personally or otherwise liable for an error
of judgment made in good faith by a Responsible Officer or Responsible Officers,
unless it shall be proven that the Trustee was negligent in ascertaining the
pertinent facts;
(iii) The Trustee shall not be personally or otherwise liable with respect
to any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Holders of Certificates entitled to a majority
of the aggregate Voting Rights (or such other percentage as is specified herein)
of each affected Class, or of the aggregate Voting Rights of the Certificates,
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising or omitting to exercise any trust
or power conferred upon the Trustee, under this Agreement;
(iv) Except as provided in the succeeding sentence, the Trustee shall not
be charged with knowledge of any failure by the Depositor to comply with the
obligations of the Depositor hereunder or any failure of the Master Servicer or
the Special Servicer to comply with the obligations of the Master Servicer or
the Special Servicer hereunder, unless a Responsible Officer of the Trustee
obtains actual knowledge of such failure, breach or occurrence. The Trustee
shall be deemed to have actual knowledge of the Master Servicer's failure to
comply with its obligations listed in clause (i) (except with respect to
remittances to the Collection Account) and (viii) of Section 7.1 (except with
respect to Servicing Advances) or to provide scheduled reports, certificates and
statements when and as required to be delivered to the Trustee pursuant to this
Agreement; and
(v) The Trustee shall not be under any obligation to appear in prosecute or
defend any legal action which is not incidental to its duties as Trustee in
accordance with this Agreement (and, if it does, all legal expenses and costs of
such action shall be expenses and costs of the Trust Fund, and the Trustee shall
be entitled to be reimbursed therefor from the Collection Account, unless such
legal action arises out of the negligence or bad faith of the Trustee, or any
breach of a representation, warranty or covenant of the Trustee contained
herein).
The Trustee, in its capacity as Trustee, shall not be required to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if in the Trustee's opinion the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it, and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Master Servicer, the Special Servicer or the
Depositor under this Agreement or during such time, if any, as the Trustee shall
be the successor to, and be vested with the rights, duties, powers and
privileges of, the Master Servicer, the Special Servicer or the Depositor in
accordance with the terms of this Agreement. The Trustee shall not be required
to post any surety or bond of any kind in connection with its performance of its
obligations under this Agreement.
SECTION 8.2. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.1:
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(i) The Trustee may request and/or 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, appraisal, bond or other paper
or document reasonably believed by it to be genuine and to have been signed or
presented by the proper party or parties and the Trustee shall have no
responsibility to ascertain or confirm the genuineness of any such party or
parties;
(ii) The Trustee may consult with counsel and any memorandum or
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 memorandum or Opinion of Counsel;
(iii) (A) The Trustee shall be under no obligation to institute,
conduct or defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Certificateholders, pursuant to the provisions
of this Agreement, unless (in the Trustee's reasonable opinion) such
Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby; (B) the right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of any such act; provided, however, that subject
to the foregoing clause (A), nothing contained herein shall relieve the Trustee
of the obligations, upon the occurrence of an Event of Default (which has not
been cured or waived) of which a Responsible Officer of the Trustee has actual
knowledge, to exercise such of the rights and powers vested in it by this
Agreement; and to use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(iv) The Trustee shall not be personally or otherwise liable for any
action taken, suffered 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;
(v) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval bond or other paper
or document, unless requested in writing to do so by Holders of Certificates
entitled to a majority (or such other percentage as is specified herein) of the
aggregate Voting Rights of any affected Class; 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 afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or liability as a condition to taking
any such action. The reasonable expense of every such investigation shall be
paid by the Master Servicer or the Special Servicer if an Event of Default shall
have occurred and be continuing relating to the Master Servicer or the Special
Servicer, respectively, and otherwise by the Certificateholders requesting the
investigation;
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(vi) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, provided that the Trustee shall not otherwise be relieved of its
duties and obligations hereunder;
(vii) Neither the Trustee nor the Certificate Registrar shall be
responsible for any act or omission of the Master Servicer or the Special
Servicer (unless the Trustee is acting as Master Servicer or Special Servicer,
as the case may be) or of the Depositor; and
(viii) Neither the Trustee nor the Certificate Registrar shall have
any obligation or duty to monitor, determine or inquire as to compliance with
any restriction on transfer imposed under this Agreement, or under applicable
law with respect to any transfer of any Certificate or any interest therein,
other than to require delivery of the certification(s), affidavits and/or
Opinions of Counsel described in Article V applicable with respect to changes in
registration or record ownership of Certificates in the Certificate Register and
to examine the same to determine substantial compliance with the express
requirements of this Agreement; and the Trustee and Certificate Registrar shall
have no liability for transfers, including transfers made through the book-entry
facilities of the Securities Depository or between or among Securities
Depository Participants or Certificate Owners, made in violation of applicable
restrictions except for its failure to perform its express duties in connection
with changes in registration or record ownership in the Certificate Register.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the repurchase of
any Mortgage Loan by the Depositor pursuant to this Agreement or the eligibility
of any Mortgage Loan for purposes of this Agreement.
SECTION 8.3. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates shall not be
taken as the statements of the Trustee, the Master Servicer or the Special
Servicer and the Trustee, the Special Servicer and the Master Servicer assume no
responsibility for their correctness. The Trustee, the Master Servicer and the
Special Servicer make no representations or warranties as to the validity or
sufficiency of this Agreement, of the Certificates, or any private placement
memorandum or prospectus used to offer the Certificates for sale or the
validity, enforceability or sufficiency of any Mortgage Loan or related
document. The Trustee shall at no time have any responsibility or liability for
or with respect to the legality, validity and enforceability of any Mortgage or
any Mortgage Loan, or the perfection and priority of any Mortgage or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Trust Fund or its ability to generate the payments to be
distributed to Certificateholders under
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this Agreement. Without limiting the foregoing, the Trustee shall not be liable
or responsible for: the existence, condition and ownership of any Mortgaged
Property; the existence of any hazard or other insurance thereon (other than,
with respect to the Trustee only, if the Trustee shall assume the duties of the
Master Servicer pursuant to Section 7.2) or the enforceability thereof; the
existence of any Mortgage Loan or the contents of the related Mortgage File on
any computer or other record thereof (other than, with respect to the Trustee
only, if the Trustee shall assume the duties of the Master Servicer or the
Special Servicer pursuant to Section 7.2); the validity of the assignment of any
Mortgage Loan to the Trust Fund or of any intervening assignment; the
completeness of any Mortgage File; the performance or enforcement of any
Mortgage Loan (other than, with respect to the Trustee only, if the Trustee
shall assume the duties of the Master Servicer or the Special Servicer pursuant
to Section 7.2); the compliance by the Depositor, the Master Servicer or the
Special Servicer with any warranty or representation made under this Agreement
or in any related document or the accuracy of any such warranty or
representation prior to the Trustee's receipt of notice or other discovery of
any non-compliance therewith or any breach thereof; any investment of monies by
or at the direction of the Master Servicer or the Special Servicer or any loss
resulting therefrom (other than, with respect to the Trustee only, if the
Trustee shall assume the duties of the Master Servicer or the Special Servicer
pursuant to Section 7.2), it being understood that the Trustee only shall remain
responsible for any Trust Fund property that it may hold in its individual
capacity; the acts or omissions of any of the Depositor, the Master Servicer or
the Special Servicer (other than, with respect to the Trustee only, if the
Trustee shall assume the duties of the Master Servicer or the Special Servicer
pursuant to Section 7.2) or any Sub-Servicer or any Borrower; any action of the
Master Servicer or the Special Servicer (other than, with respect to the Trustee
only, if the Trustee shall assume the duties of the Master Servicer or the
Special Servicer pursuant to Section 7.2) or any Sub-Servicer taken in the name
of the Trustee, except with respect to the Trustee, to the extent such action is
taken at the express written direction of the Trustee; the failure of the Master
Servicer or the Special Servicer or any Sub-Servicer to act or perform any
duties required of it on behalf of the Trust Fund or the Trustee hereunder; or
any action by or omission of the Trustee taken at the instruction of the Master
Servicer or the Special Servicer (other than in each case, with respect to the
Trustee only, if the Trustee shall assume the duties of the Master Servicer or
the Special Servicer pursuant to Section 7.2) unless the taking of such action
is not permitted by the express terms of this Agreement; provided, however, that
the foregoing shall not relieve the Trustee of its obligation to perform its
duties as specifically set forth in this Agreement. The Trustee shall not be
accountable for the use or application by the Depositor, the Master Servicer or
the Special Servicer of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the Depositor,
the Master Servicer or the Special Servicer in respect of the Mortgage Loans or
deposited in or withdrawn from the Collection Account or the Distribution
Account by the Depositor, the Master Servicer or the Special Servicer, other
than in each case, with respect to the Trustee only, any funds held by the
Trustee. The Trustee (unless the Trustee shall have become the successor Master
Servicer) shall have no responsibility for (A) filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement, (B) seeing to any insurance, (C) seeing
to the payment or discharge of any tax, assessment, or other governmental charge
or any lien or encumbrance of any kind owing with respect to, assessed or levied
against any part of the Trust Fund, or (D) confirming or verifying the contents
of any reports or certificates of the Master Servicer
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delivered to the Trustee pursuant to this Agreement believed by the Trustee to
be genuine and to have been signed or presented by the proper party or parties.
In making any calculation hereunder which includes as a component thereof the
payment or distribution of interest for a stated period at a stated rate "to the
extent permitted by applicable law," the Trustee shall assume that such payment
is so permitted unless a Responsible Officer of the Trustee has actual
knowledge, or receives an Opinion of Counsel (at the expense of the Person
asserting the impermissibility) to the effect, that such payment is not
permitted by applicable law.
SECTION 8.4. Trustee May Own Certificates.
The Trustee in its individual capacity or any other capacity may
become the owner or pledgee of Certificates, and may deal with the Depositor,
the Master Servicer and the Special Servicer in banking transactions, with the
same rights each would have if it were not Trustee.
SECTION 8.5. Payment of Trustee Fees and Expenses; Indemnification.
(a) The Master Servicer shall pay from the Collection Account to the
Trustee or any successor Trustee from time to time, and the Trustee or any
successor Trustee shall be entitled to receive from the Collection Account on
each Remittance Date the Trustee Fee (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
for all services rendered by the Trustee in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee. The Trustee shall pay the routine fees and expenses of
the Certificate Registrar, the Paying Agent, the Custodian and the
Authenticating Agent. The Trustee's rights to the Trustee Fee may not be
transferred in whole or in part except in connection with the transfer of all of
the Trustee's responsibilities and obligations under this Agreement.
(b) Except as otherwise provided herein, the Trustee shall pay all expenses
incurred by it in connection with its activities hereunder. The Master Servicer
and the Special Servicer covenant and agree to pay or reimburse the Trustee for
the reasonable expenses, disbursements and advances incurred or made by the
Trustee in connection with any transfer of the servicing responsibilities of the
Master Servicer or the Special Servicer, as applicable hereunder, pursuant to or
otherwise arising from the resignation or removal of the Master Servicer or the
Special Servicer, as applicable, in accordance with any of the provisions of
this Agreement (and including the reasonable fees and expenses and disbursements
of its counsel and all other persons not regularly in its employ), except any
such expense, disbursement or advance as may arise from the negligence or bad
faith of the Trustee.
(c) Each of the Master Servicer and the Special Servicer shall indemnify
the Trustee and each of the directors, officers, employees and agents of the
Trustee (each, an "Indemnified Party"), and hold each of them harmless against
any, and all claims, losses, damages, penalties, fines, forfeitures, reasonable
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Indemnified Party may sustain in connection with this Agreement, the
Certificates or the Mortgage Loans (including without limitation any liability,
cost or expense arising from the Master Servicer's or Special Servicer's
negligent or intentional
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misuse of any power of attorney granted pursuant to Section 3.1(a)) related to
each such party's respective willful misconduct, bad faith, fraud,
misrepresentation and/or negligence in the performance of its respective duties
hereunder or by reason of negligent disregard of its respective obligations and
duties hereunder (including in the case of the Master Servicer or the Special
Servicer, any agent of the Master Servicer or the Special Servicer).
(d) The Trust Fund shall indemnify each Indemnified Party from, and hold it
harmless against, any and all losses, liabilities, damages, claims or expenses
(including reasonable attorneys' fees) arising in respect of this Agreement or
the Certificates, in each case to the extent, and only to the extent, such
payments are "unanticipated expenses incurred by the REMIC" within the meaning
of Treasury Regulation Section 1.860G-1(b)(3)(ii), other than (i) those
resulting from the negligence, misrepresentation, fraud, bad faith or willful
misconduct of the Trustee, (ii) those specifically required to be borne thereby
pursuant to the terms hereof, including, without limitation, pursuant to Section
10.3(c) and Section 10.5 and (iii) those as to which such Indemnified Party has
received indemnification payments pursuant to Section 8.5(c) within 30 days
after the request therefor. The term "unanticipated expenses incurred by a
REMIC" shall include any fees, expenses and disbursements of any separate
trustee or co-trustee appointed hereunder, only to the extent such fees,
expenses and disbursements were not reasonably anticipated as of the Closing
Date and the losses, liabilities, damages, claims or expenses (including
reasonable attorneys' fees) incurred or advanced by an Indemnified Party in
connection with any litigation arising out of this Agreement, including, without
limitation, under Section 2.3, Section 8.11, Section 10.3 and Section 7.1. The
right of reimbursement of the Indemnified Parties under this Section 8.5(d)
shall be senior to the rights of all Certificateholders. The foregoing shall not
be deemed to preclude an Indemnified Party from being reimbursed for any such
loss, liability or expense otherwise reimbursable pursuant to this Agreement.
(e) Notwithstanding anything herein to the contrary, this Section 8.5 shall
survive the termination or maturity of this Agreement or the resignation or
removal of the Trustee as regards rights accrued prior to such resignation or
removal and (with respect to any acts or omissions during their respective
tenures) the resignation, removal or termination of the Master Servicer or the
Special Servicer.
(f) This Section 8.5 shall be expressly construed to include, but not be
limited to, such indemnities, compensation, expenses, disbursements, advances,
losses, liabilities, damages and the like, as may pertain or relate to any
environmental law or environmental matter.
SECTION 8.6. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a bank, trust company,
corporation or association organized and doing business under the laws of the
United States of America, any state thereof, or the District of Columbia
authorized under such laws to exercise corporate trust powers and to accept the
trust conferred under this Agreement, having a combined capital and surplus of
at least $100,000,000 and a rating on its unsecured senior long-term debt of at
least "____" by each of ____ (determined without regard to pluses or minuses)
and _______, unless a Rating Agency Confirmation is obtained with respect to a
lower rating (the cost, if any, of
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obtaining such confirmation to be paid by the Trustee) and subject to
supervision or examination by federal or state authority and shall not be an
Affiliate of the Master Servicer or the Special Servicer (except during any
period when the Trustee has assumed the duties of the Master Servicer or the
Special Servicer, as applicable, pursuant to Section 7.2). In addition, the
Trustee shall at all times meet the requirements of Rule 3a-7(a)(4) promulgated
under the Investment Company Act of 1940, as amended. If a corporation or
association publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for purposes of this Section 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 the event that the place
of business from which the Trustee administers the Trust Fund is a state or
local jurisdiction that imposes a tax on the Trust Fund or the net income of a
REMIC (other than a tax corresponding to a tax imposed under the REMIC
Provisions) the Trustee shall elect, at its sole discretion, either to (i)
resign immediately in the manner and with the effect specified in Section 8.7,
(ii) pay such tax and continue as Trustee or (iii) administer the Trust Fund
from a state and local jurisdiction that does not impose such a tax. In case at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 8.7.
SECTION 8.7. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor, the Master
Servicer, the Special Servicer and each Rating Agency. Upon such notice of
resignation, the Master Servicer shall promptly appoint a successor Trustee,
which appointment of successor Trustee shall be subject to a Rating Agency
Confirmation from _______. The appointment shall be by a written instrument
executed in triplicate, which instrument shall be delivered to the resigning
Trustee and the successor Trustee. The cost, if any, of obtaining the foregoing
confirmation shall be paid by the resigning Trustee. Notwithstanding the
foregoing, if no successor Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.6 and shall fail to resign after written
request therefor by the Depositor or 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 Depositor or the Master Servicer shall remove the Trustee
and shall promptly appoint a successor Trustee by written instrument, which
shall be delivered to the Trustee so removed and to the successor Trustee.
The Holders of Certificates entitled to a majority of the Voting
Rights may at any time remove the Trustee and appoint a successor Trustee
meeting the requirements of Section 8.8 by written instrument or instruments, in
six originals, signed by such Holders or their attorneys-in-fact duly
authorized, one complete set of which instruments shall be delivered to the
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Depositor, one complete set to the Master Servicer, one complete set to the
Special Servicer, one complete set to the Trustee so removed and one complete
set to the successor Trustee so appointed. Such removal of the Trustee, if
without cause, shall be effective upon the payment to the Trustee of all
reasonable costs and expenses incurred by it in connection with such removal
(which costs shall be paid as an Additional Trust Fund Expense).
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 8.7 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 8.8.
SECTION 8.8. Successor Trustee.
Any successor Trustee appointed as provided in Section 8.7 shall
execute, acknowledge and deliver to the Depositor and to the predecessor Trustee
instruments accepting its 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 the like effect as if originally named as Trustee herein,
provided that a Rating Agency Confirmation has been obtained from _______ with
respect to the appointment of such successor Trustee. The cost, if any, of
obtaining such confirmation shall be paid by the Trustee that resigned or was
removed, unless the Trustee was removed without cause by the Holders of
Certificates entitled to a majority of the Voting Rights, in which case such
costs shall be an Additional Trust Fund Expense. The predecessor Trustee shall
deliver to the successor Trustee all Mortgage Files and related documents and
statements held by it hereunder (at the expense of the Trust Fund if removal of
the predecessor Trustee was without cause), and the Depositor and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for more fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations. No successor Trustee shall accept appointment as provided in this
Section 8.8 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 8.6.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 8.8, the successor Trustee shall mail notice of the succession of
such Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register.
SECTION 8.9. Merger or Consolidation of Trustee.
Any corporation 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 all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.6 and a Rating Agency Confirmation has been obtained from _______, 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.
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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 Trust Fund or property securing the same may at the time be located, the
Depositor 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 (at the expense of the Trustee) as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity, such title to the 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 Depositor and the Trustee may consider necessary or desirable.
If the Depositor shall no longer be in existence or 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. Except as required
by applicable law, the appointment of a co-trustee or separate trustee shall not
relieve the Trustee of its responsibilities hereunder. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor Trustee under Section 8.6 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 8.8.
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 (it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any particular act or
acts are to be performed (whether as Trustee hereunder or as successor to the
Master Servicer hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed by such
separate trustee or co-trustee solely at the direction of the Trustee.
No trustee under this Agreement shall be personally liable by reason
of any act or omission of any other trustee under this Agreement. The Depositor
and the Trustee acting jointly may at any time accept the resignation of or
remove any separate trustee or co-trustee, except that if the Depositor is no
longer in existence, or if the separate trustee or co-trustee is an employee of
the Trustee, the Trustee acting alone may accept the resignation of or remove
any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Every such instrument shall be filed with the Trustee.
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
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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. In no event shall any such separate trustee or
co-trustee be entitled to any provision relating to the conduct of, affecting
the liability of, or affording protection to such separate trustee or co-trustee
that imposes a standard of conduct less stringent than that imposed on the
Trustee hereunder, affording greater protection than that afforded to the
Trustee hereunder or providing a greater limit on liability than that provided
to the Trustee hereunder.
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 trusts hereunder 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 Agent.
The Trustee may appoint an Authenticating Agent to execute and to
authenticate Certificates. The Authenticating Agent must be acceptable to the
Depositor and the Master Servicer and must be a corporation organized and doing
business under the laws of the United States of America or any state, having a
principal office and place of business in a state and city acceptable to the
Depositor and the Master Servicer, 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. The Trustee shall
pay the Authenticating Agent reasonable compensation from its own funds and the
Trustee shall remain liable for all actions of any Authenticating Agent and
shall not be relieved of any of its obligations hereunder. The Trustee shall
serve as the initial Authenticating Agent and the Trustee hereby accepts such
appointment.
Any corporation into which the 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 the Authenticating Agent
shall be party, or any corporation succeeding to the corporate agency business
of the Authenticating Agent, shall be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
The Authenticating Agent may at any time resign by giving at least
30 days' advance written notice of resignation to the Trustee, the Depositor,
the Special Servicer and the Master Servicer. The Trustee may at any time
terminate the agency of the Authenticating Agent by giving written notice of
termination to the Authenticating Agent, the Depositor, the Special Servicer and
the Master Servicer. Upon receiving a notice of resignation or upon such a
termination, or in case at any time the Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 8.11, the Trustee
promptly shall appoint a successor Authenticating Agent, which shall be
acceptable to the Master Servicer and the Depositor, and shall mail notice of
such appointment to all Certificateholders. Any successor
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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 herein. No successor Authenticating Agent shall be appointed unless
eligible under the provisions of this Section 8.11.
The Authenticating Agent shall have no responsibility or liability
for any action taken by it as such at the direction of the Trustee. The Trustee
shall pay the Authenticating Agent reasonable compensation from its own funds.
SECTION 8.12. Appointment of Custodians.
(a) The Trustee shall serve as the initial Custodian. The Trustee may
appoint one or more third party Custodians to hold all or a portion of the
Mortgage Files as agent for the Trustee, by entering into a Custodial Agreement.
The Trustee agrees to comply with the terms of each Custodial Agreement and to
enforce the terms and provisions thereof against the Custodian for the benefit
of the Certificateholders. Each Custodial Agreement may be amended only as
provided in Section 11.7. The Trustee shall pay the Custodian reasonable
compensation from its own funds and the Trustee shall remain liable for all
actions of any Custodian and shall not be relieved of any of its obligations
hereunder.
(b) Each Custodian shall be a depository institution subject to supervision
by federal or state authority, shall have a combined capital and surplus of at
least $10,000,000, shall have a long-term senior unsecured debt rating of at
least "BBB" from _______, unless a Rating Agency Confirmation has been obtained
from _______ (the cost, if any, of obtaining such confirmation to be paid by the
Trustee; provided that such appointment was made by the Trustee in its sole
discretion and otherwise by the Trust Fund), and shall be qualified to do
business in the jurisdiction in which it holds any Mortgage File.
(c) Each Custodian shall maintain a fidelity bond and shall keep in force
during the term of this Agreement a policy or policies of insurance covering
loss occasioned by the errors and omissions of its officers and employees in
connection with its obligations hereunder. All fidelity bonds and policies of
errors and omissions insurance obtained under this Section 8.12(c) shall be
issued by a Qualified Insurer. Each Custodian shall be deemed to have complied
with the requirement for a fidelity bond if one of its Affiliates has such
fidelity bond coverage and, by the terms of such fidelity bond, the coverage
afforded thereunder extends to the Custodian. Notwithstanding the foregoing, so
long as the long-term unsecured debt obligations of the Custodian or its
corporate parent have been rated "A" or better by each Rating Agency, the
Custodian shall be entitled to provide self-insurance or obtain from its
corporate parent adequate insurance, as applicable, with respect to its
obligation hereunder to maintain a fidelity bond or an errors and omissions
insurance policy.
SECTION 8.13. Representations and Warranties of the Trustee .
The Trustee hereby represents, warrants and covenants that as of the
Closing Date:
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(a) The Trustee is a national banking association, duly organized, validly
existing and in good standing under the laws of the United States of America
and, except to the extent that the laws of certain jurisdictions in which any
part of the Trust Fund may be located require that a co-trustee or separate
trustee be appointed to act with respect to such property, the Trustee has all
licenses necessary to carry on its business as now being conducted, and is in
compliance with the laws of each state in which any Mortgaged Property is
located, to the extent necessary to ensure the enforceability of each Mortgage
Loan in accordance with the terms of this Agreement;
(b) The Trustee has the full corporate power, authority and legal right to
execute and deliver this Agreement and to perform in accordance herewith; the
execution and delivery of this Agreement by the Trustee and its performance and
compliance with the terms of this Agreement do not violate the Trustee's charter
documents or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in the breach of,
any contract, agreement or other instrument to which the Trustee is a party or
which may be applicable to the Trustee or any of its assets, which default or
breach would have consequences that would materially and adversely affect the
financial condition or operations of the Trustee or its properties taken as a
whole or impair the ability of the Trust Fund to realize on the Mortgage Loans;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Trustee and, assuming due authorization, execution and delivery
by the other parties hereto, constitutes a legal, valid and binding obligation
of the Trustee, enforceable against it in accordance with the terms of this
Agreement, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, liquidation, receivership, moratorium or other laws relating to
or affecting creditors' rights generally, or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(d) The Trustee is not in violation of, and the execution and delivery of
this Agreement by the Trustee and its performance and compliance with the terms
of this Agreement will not constitute a violation with respect to, any state or
federal statute, any order or decree of any court or any order or regulation of
any federal, state, municipal or governmental agency having jurisdiction, or
result in the creation or imposition of any lien, charge or encumbrance which,
in any such event, would have consequences that would materially and adversely
affect the financial condition or operations of the Trustee or its properties
taken as a whole or impair the ability of the Trust Fund to realize on the
Mortgage Loans;
(e) There are no actions, suits or proceedings pending or, to the knowledge
of the Trustee, threatened, against the Trustee which, either in any one
instance or in the aggregate, would result in any material adverse change in the
business, operations or financial condition of the Trustee or would materially
impair the ability of the Trustee to perform under the terms of this Agreement
or draw into question the validity of this Agreement or the Mortgage Loans or of
any action taken or to be taken in connection with the obligations of the
Trustee contemplated herein;
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(f) No consent, approval, authorization or order of, or registration or
filing with, or notice to any court or governmental agency or body is required
for the execution, delivery and performance by the Trustee of, or compliance by
the Trustee with, this Agreement or, if required, such approval has been
obtained prior to the Closing Date, except to the extent that the failure of the
Trustee to be qualified as a foreign corporation or licensed in one or more
states is not necessary for the enforcement of the Mortgage Loans; and
(g) Except for the release of items in the Mortgage File contemplated by
this Agreement, including, without limitation, as necessary for the enforcement
of the holder's rights and remedies under the related Mortgage Loan, the Trustee
covenants and agrees that it shall maintain each Mortgage File in the State of
___________, and that it shall not move any Mortgage File outside the State of
___________ (other than with respect to the Trustee's responsibility to record
assignment documents pursuant to Section 2.1 or as otherwise provided in this
Agreement) unless it shall first obtain and provide, at the expense of the Trust
Fund, an Opinion of Counsel to the Depositor and the Rating Agencies to the
effect that the Trustee's first priority interest in the Notes has been duly and
fully perfected under the applicable laws and regulations of such other
jurisdiction.
ARTICLE IX
TERMINATION
SECTION 9.1. Termination of Trust.
(a) Subject to Section 9.3, the Trust Fund and the respective obligations
and responsibilities of the Depositor, the Trustee, the Master Servicer and the
Special Servicer hereunder (other than the obligation of the Trustee to make
payments to Certificateholders on the final Distribution Date pursuant to
Article IV or otherwise as set forth in Section 9.2 and other than the
obligations in the nature of information or tax reporting or tax-related
administrative or judicial contests or proceedings) shall terminate on the
earlier of (i) the later of (A) the final payment or other liquidation of the
last Mortgage Loan held by the Trust Fund and (B) the disposition of the last
REO Property held by the Trust and (ii) the sale of all Mortgage Loans and any
REO Properties held by the Trust Fund in accordance with Section 9.1(b);
provided that in no event shall the Trust Fund created hereby continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
(b) As soon as reasonably practical, the Trustee shall give the Holders of
the Controlling Class, the Master Servicer, the Special Servicer and the
Majority Certificateholder of the Class [R-I] Certificates notice of the date
when the then-current aggregate Stated Principal Balance of the Mortgage Loans
(including, without limitation, any REO Mortgage Loans) will be less than 1% of
the initial aggregate Stated Principal Balance of the Mortgage Loans as of the
Cut-off Date. The Holders of the Controlling Class representing a majority
Percentage Interest in such Class, the Master Servicer, the Special Servicer,
and the Majority Certificateholder of the Class [R-I] Certificates shall
thereafter be entitled, in that order of priority, to purchase, in whole only,
the Mortgage Loans and any REO Properties then remaining in the Trust Fund. If
any such
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party desires to exercise such option, it will notify the Trustee who will
notify any other such party with a prior right to exercise such option. If any
such party that has been so provided notice by the Trustee notifies the Trustee
within ten Business Days after receiving notice of the proposed purchase that it
wishes to purchase the assets of the Trust, then such party (or, in the event
that more than one of such parties notifies the Trustee during any Collection
Period that it wishes to purchase the assets of the Trust, the party with the
first right to purchase the assets of the Trust) may purchase the assets of the
Trust in accordance with this Agreement. The "Termination Price" shall equal the
sum of (i) the aggregate Repurchase Price of all the remaining Mortgage Loans
(other than REO Mortgage Loans and Mortgage Loans as to which a Final Recovery
Determination has been made) held by the Trust, plus (ii) the appraised value of
each remaining REO Property, if any, held by the Trust (such appraisal to be
conducted in accordance with MAI standards by an appraiser with at least ten
years experience in the related property type and in the jurisdiction in which
the REO Property is located selected by the Master Servicer and approved by the
Trustee), minus (iii) solely in the case where the Master Servicer is effecting
such purchase, the aggregate amount of unreimbursed Advances made by the Master
Servicer, together with any Advance Interest Amount accrued and payable to the
Master Servicer in respect of such Advances and any unpaid Master Servicing Fees
remaining outstanding (which items shall be deemed to have been paid or
reimbursed to the Master Servicer in connection with such purchase) (or, solely
in the case where the Special Servicer is effecting such purchase, any unpaid
Special Servicing Fees remaining outstanding, which items shall be deemed to
have been paid or reimbursed to the Special Servicer in connection with such
purchase).
In the event that the Holders of the Controlling Class representing
a majority Percentage Interest in such Class, the Master Servicer, the Special
Servicer, or the Majority Certificateholder of Class [R-I] Certificates purchase
all of the remaining Mortgage Loans and REO Properties held by the Trust in
accordance with the preceding paragraph, the party effecting such purchase (the
"Final Purchaser") shall (i) deposit in the Collection Account not later than
the Determination Date relating to the Distribution Date on which the final
distribution on the Certificates is to occur, an amount in immediately available
funds equal to the Termination Price and (ii) deliver notice (at least five
Business Days prior to the Determination Date relating to the Distribution Date
on which the final distribution on the Certificates is to occur) to the Trustee
of its intention to effect such purchase. Upon confirmation that such deposit
has been made, the Trustee shall release or cause to be released to the Final
Purchaser or its designee the Mortgage Files for the remaining Mortgage Loans
and shall execute all assignments, endorsements and other instruments furnished
to it by the Final Purchaser without recourse, representation or warranty as
shall be necessary to effectuate transfer of the remaining Mortgage Loans and
REO Properties held by the Trust, in each case without representation or
warranty by the Trustee. The Trustee and the Final Purchaser will agree upon an
appropriate allocation between them of the cost of delivering the Mortgage Files
for the remaining Mortgage Loans and REO Properties to the Final Purchaser or
its designee.
(c) As a condition to the purchase of the assets of the Trust pursuant to
Section 9.1(b), the Final Purchaser shall deliver to the Trustee an Opinion of
Counsel, which shall be at the expense of the Final Purchaser, stating that such
termination will be a "qualified
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liquidation" under Section 860F(a)(4) of the Code. Such purchase shall be
made in accordance with Section 9.3.
SECTION 9.2. Procedure Upon Termination of Trust.
(a) Notice of any termination pursuant to the provisions of Section 9.1,
specifying the Distribution Date upon which the final distribution shall be
made, shall be given promptly by the Trustee to each Rating Agency and each
Certificateholder by first class mail at least 20 days prior to the date of such
termination. Such notice shall specify (A) the Distribution Date upon which
final distribution on the Certificates will be made and (B) that the Record Date
otherwise applicable to such Distribution Date is not applicable, distribution
being made only upon presentation and surrender of the Certificates at the
office or agency of the Trustee therein specified. The Trustee shall give such
notice to the Depositor and the Certificate Registrar at the time such notice is
given to Certificateholders. Upon any such termination, the Trustee shall
terminate, or request the Master Servicer to terminate, the Collection Account,
the Grantor Trust Collection Account, the Distribution Account, the Grantor
Trust Distribution Account and any other account or fund maintained with respect
to the Certificates, subject to the Trustee's obligation hereunder to hold all
amounts payable to the nontendering Certificateholders in trust without interest
pending such payment.
(b) On the final Distribution Date, the Trustee shall distribute to each
Certificateholder that presents and surrenders its Certificates all amounts
payable on such Certificates on such final Distribution Date in accordance with
Article IV. Any amounts being held in the Collection Account or Interest Reserve
Account for distribution on a Future Distribution Date shall be included in the
Available Funds for the Final Distribution Date.
SECTION 9.3. Additional Trust Termination Requirements.
(a) In the event of a purchase of all the remaining Mortgage Loans and REO
Properties held by the Trust in accordance with Section 9.1 or any other
termination of the Trust under this Article IX, the Trust and each REMIC Pool
shall be terminated in accordance with the following additional requirements,
unless in the case of a termination under Section 9.1 hereof, the Final
Purchaser delivers to the Trustee an Opinion of Counsel at the expense of the
Final Purchaser (or, in the case of any other termination, the Trustee shall
obtain such Opinion of Counsel at the expense of the Trust Fund) addressed to
the Depositor and the Trustee to the effect that the failure of the Trust to
comply with the requirements of this Section 9.3 will not (i) result in the
imposition of taxes on "prohibited transactions" of any REMIC Pool under the
REMIC Provisions or (ii) cause any REMIC Pool to fail to qualify as a REMIC at
any time that any Certificates are outstanding:
(i) within 89 days prior to the final Distribution Date set forth in
the notice given by the Trustee under Section 9.2, the Trustee shall adopt a
plan of complete liquidation prepared by the Final Purchaser and meeting the
requirements for a qualified liquidation for each REMIC Pool under Section 860F
of the Code and any regulations thereunder;
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(ii) during such 90-day liquidation period and at or after the
adoption of the plans of complete liquidation and at or prior to the final
Distribution Date, the Trustee shall sell all of the remaining Mortgage Loans
and any REO Properties held by the Trust to the Final Purchaser for cash in an
amount equal to the Termination Price, such cash shall be deposited into the
Collection Account, shall be deemed distributed on the REMIC I Regular Interests
in retirement thereof, shall be deemed distributed on the REMIC II Regular
Interests in retirement thereof, and shall be distributed to the
Certificateholders in retirement of the Certificates;
(iii) at the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be distributed
or credited, to the Holders of the related Class of Residual Certificates all
cash on hand in each REMIC Pool after making such final deemed payment or
payments (other than cash retained to meet claims), and REMIC I, REMIC II and
REMIC III shall terminate at that time; and
(iv) in no event may the final payment on the REMIC I Interests, the
REMIC II Interests, the REMIC III Regular Certificates, or the Class [R-I],
Class [R-II] or Class [R-III] Certificates be made after the 89th day from the
date on which such plans of complete liquidation are adopted. The Trustee shall
specify the first day of the 90-day liquidation period in a statement attached
to the final Tax Return for each REMIC Pool pursuant to Treasury Regulation
Section 1.860F-1.
(b) By their acceptance of Certificates, the Holders thereof hereby agree
to authorize the Trustee to adopt a plan of complete liquidation for each of
REMIC I, REMIC II and REMIC III prepared by the Final Purchaser in accordance
with the foregoing requirements, which authorization shall be binding upon all
successor Certificateholders.
ARTICLE X
REMIC ADMINISTRATION; GRANTOR TRUST
SECTION 10.1. REMIC Election.
(a) The parties intend that each of REMIC I, REMIC II and REMIC III shall
constitute, and that the affairs of each of REMIC I, REMIC II and REMIC III
shall be conducted so as to qualify it as, a "real estate mortgage investment
conduit" as defined in, and in accordance with, the REMIC Provisions, and the
provisions hereof shall be interpreted consistently with this intention. In
furtherance of such intention, the Trustee shall, to the extent permitted by
applicable law, act as agent, and is hereby appointed to act as agent, of each
of REMIC I, REMIC II and REMIC III and shall, on behalf of each of REMIC I,
REMIC II and REMIC III, make an election to treat each of REMIC I, REMIC II and
REMIC III as a REMIC on Form 1066 for its first taxable year, in accordance with
the REMIC Provisions.
(b) The REMIC I Regular Interests are hereby designated as "regular
interests" in REMIC I within the meaning of Section 860G(a)(1) of the Code, and
the Class [R-I] Certificates are hereby designated as the sole class of
"residual interests" in REMIC I within the
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meaning of Section 860G(a)(2) of the Code. The REMIC II Regular Interests shall
be designated as "regular interests" in REMIC II within the meaning of Section
860G(a)(1) of the Code, and the Class [R-II] Certificates are hereby designated
as the sole class of "residual interests" in REMIC II within the meaning of
Section 860G(a)(2) of the Code. The Class [A-1A], Class [A-1B], Class [A-2],
Class [A-3], Class [A-4], Class [B-1], Class [B-2], Class [B-3], Class [B-4],
Class [B-5], Class [B-6], Class [B-7], Class [B-8], Class [C], Class [D] and
Class [S] Certificates are hereby designated as "regular interests" in REMIC III
within the meaning of Section 860G(a)(1) of the Code and the Class [R-III]
Certificates are hereby designated as the sole class of "residual interests" in
REMIC III within the meaning of Section 860G(a)(2) of the Code.
(c) The Closing Date is hereby designated as the "Startup Day" of REMIC I,
REMIC II and REMIC III within the meaning of Section 860G(a)(9) of the Code. The
"latest possible maturity date" of the REMIC I Regular Interests, the REMIC II
Regular Interests and the REMIC III Regular Certificates for purposes of Code
Section 860G(a)(1) is the Rated Final Distribution Date.
SECTION 10.2. REMIC Compliance.
(a) The Trustee shall cause to be prepared, signed, and timely filed with
the Internal Revenue Service, on behalf of each REMIC Pool, an application for a
taxpayer identification number for such REMIC Pool on Internal Revenue Service
Form SS-4. The Trustee shall prepare, sign and file, or cause to be prepared and
signed and filed, all required Tax Returns for each of REMIC I, REMIC II and
REMIC III, using a calendar year as the taxable year for each of REMIC I, REMIC
II and REMIC III, when and as required by the REMIC Provisions and other
applicable federal, state or local income tax laws.
The Trustee shall, within 30 days of the Closing Date, furnish or
cause to be furnished to the Internal Revenue Service, on Form 8811 or as
otherwise may be required by the Code, the name, title and address of the Person
that the holders of the Certificates may contact for tax information relating
thereto (and the Trustee shall act as the representative of each of REMIC I,
REMIC II and REMIC III for this purpose), together with such additional
information as may be required by such Form, and shall update such information
at the time or times and in the manner required by the Code (and the Depositor
agrees within 10 Business Days of the Closing Date, to provide any information
reasonably requested by the Trustee and necessary to make such filing);
(b) The Trustee shall prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and the Internal Revenue Service and
applicable state and local tax authorities all information reports as and when
required to be provided to them in accordance with the REMIC Provisions and
applicable state and local law. If the filing or distribution of any documents
of an administrative nature not addressed in Section 10.1 or Section 10.2(a) is
then required by the REMIC Provisions in order to maintain the status of REMIC
I, REMIC II or REMIC III as a REMIC or is otherwise required by the Code or
applicable state or local law, the Trustee shall prepare, sign and file or
distribute, or cause to be prepared, signed and filed or distributed, such
documents with or to such Persons when and as required by the REMIC Provisions
or the Code or comparable provisions of state and local law.
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(c) The Holder of the largest Percentage Interest in the Class [R-I], Class
[R-II] or Class [R-III] Certificates shall be the tax matters person of REMIC I,
REMIC II or REMIC III, respectively, pursuant to Treasury Regulation Section
1.860F-4(d); provided, however, that any amendment to such Regulation which
requires that another Person be designated the tax matters person shall be
followed from and after the effective date of such amendment. If more than one
Holder should hold an equal Percentage Interest in the Class [R-I], Class [R-II]
or Class [R-III] Certificates larger than that held by any other Holder, the
first such Holder to have acquired such Class [R-I], Class [R-II] or Class
[R-III] Certificates shall be such tax matters person. The Trustee shall act as
attorney-in-fact and agent for the tax matters person of each of REMIC I, REMIC
II and REMIC III, and each Holder of a Percentage Interest in the Class [R-I],
Class [R-II] or Class [R-III] Certificates, by acceptance thereof, is deemed to
have consented to the Trustee's appointment in such capacity and agrees to
execute any documents required to give effect thereto, and any fees and expenses
incurred by the Trustee in connection with any audit or administrative or
judicial proceeding shall be paid by the Trust Fund.
(d) The Trustee shall not intentionally take any action or intentionally
omit to take any action if, in taking or omitting to take such action, the
Trustee knows that such action or omission (as the case may be) would cause the
termination of the REMIC status of REMIC I, REMIC II or REMIC III or the
imposition of tax on REMIC I, REMIC II or REMIC III other than a tax on income
expressly permitted or contemplated to be incurred under the terms of this
Agreement (any of the foregoing, an "Adverse REMIC Event"). In this regard, the
Trustee shall not permit the creation of any "interests" (within the meaning of
Treasury Regulation Section 1.860D-1(b)(1)) in any of the REMIC Pools other than
the REMIC I Regular Interests, the REMIC II Regular Interests and the interests
evidenced by the Certificates. Notwithstanding any provision of this paragraph
to the contrary, the Trustee shall not be required to take any action that the
Trustee in good faith believes to be inconsistent with any other provision of
this Agreement, nor shall the Trustee be deemed in violation of this paragraph
if it takes any action expressly required or authorized by any other provision
of this Agreement, and the Trustee shall have no responsibility or liability
with respect to any act or omission of the Depositor or the Master Servicer or
the Special Servicer which causes the Trustee to be unable to comply with any of
Sections 10.1(a), 10.2(a), 10.2(b), 10.2(e) or which results in any action
contemplated by the next succeeding paragraph.
None of the Master Servicer, the Special Servicer and the Depositor
shall be responsible or liable (except in connection with any act or omission
referred to in the two preceding sentences) for any failure by the Trustee to
comply with the provisions of this Section 10.2.
(e) The Trustee shall maintain such records relating to each of REMIC I,
REMIC II and REMIC III as may be necessary to demonstrate that each REMIC has
complied with the REMIC provisions and to prepare the foregoing returns,
schedules, statements or information, such records, for federal income tax
purposes, to be maintained on a calendar year and on an accrual basis.
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(f) The Depositor, the Special Servicer and the Master Servicer shall
cooperate in a timely manner with the Trustee in supplying any information
within the Depositor's, the Special Servicer's or the Master Servicer's control
(other than any confidential information) that is reasonably necessary to enable
the Trustee to perform its duties under this Section 10.2.
(g) None of the Depositor, Trustee, Special Servicer or Master Servicer
shall enter into any arrangement by which the Trust Fund will receive a fee or
other compensation for services other than as specifically contemplated herein.
SECTION 10.3. Imposition of Tax on the Trust Fund.
(a) Subject to Section 10.3(c), in the event that any tax, including
interest, penalties or assessments, additional amounts or additions to tax
(collectively "Taxes"), is imposed on REMIC I, REMIC II or REMIC III, such tax
shall be charged against amounts otherwise distributable to the Holders of the
Certificates; provided, that any taxes imposed on any net income from
foreclosure property pursuant to Code Section 860G(d) or any similar tax imposed
by a state or local jurisdiction shall instead be treated as an expense of the
related REO Property in determining Net REO Proceeds with respect to such REO
Property (and until such Taxes are paid, the Master Servicer from time to time
shall withdraw from the Collection Account amounts reasonably determined by the
Special Servicer to be necessary to pay such Taxes, which the Master Servicer
shall maintain in a separate, non-interest-bearing account, and the Master
Servicer shall deposit in the Collection Account the excess determined by the
Master Servicer from time to time of the amount in such account over the amount
necessary to pay such Taxes) and shall be paid therefrom. Except as provided in
the preceding sentence, the Trustee is hereby authorized to and shall retain or
cause to be retained from Available Funds sufficient funds to pay or provide for
the payment of, and to actually pay, such Taxes as are legally owed by REMIC I,
REMIC II and REMIC III (but such authorization shall not prevent the Trustee
from contesting, at the expense of the Trust Fund, any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings).
(b) The Trustee is hereby authorized to and shall segregate or cause to be
segregated, in a separate non-interest bearing account, (i) the net income from
any "prohibited transaction" under Code Section 860F(a) or (ii) the amount of
any contribution to REMIC I, REMIC II or REMIC III after the Startup Day that is
subject to tax under Code Section 860G(d) and use such income or amount, to the
extent necessary, to pay such tax, such amounts to be segregated from the
Collection Account with respect to any such net income of or contribution to
REMIC I and REMIC II and from the Distribution Account with respect to any such
net income of or contribution to REMIC III (and return the balance thereof, if
any, to the Collection Account or the Distribution Account, as the case may be).
(c) If any tax is imposed on any REMIC Pool, including "prohibited
transactions" taxes as defined in Section 860F(a)(2) of the Code, any tax on
"net income from foreclosure property" as defined in Section 860G(c) of the
Code, any taxes on contributions to any REMIC Pool after the Start-up Day
pursuant to Section 860G(d) of the Code, and any other
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tax imposed by the Code or any applicable provisions of state or local tax laws
(other than any tax permitted to be incurred by the Special Servicer on behalf
of the Trust pursuant to Section 3.17(d)), such tax, together with all
incidental costs and expenses (including penalties and reasonable attorneys'
fees), shall be charged to and paid by: (i) the Trustee, if such tax arises out
of or results from a breach of any of its obligations under Article IV, Article
VIII or this Article X; (ii) the Master Servicer, if such tax arises out of or
results from a breach by the Master Servicer of any of its obligations under
Article III or this Article X (which breach constitutes negligence or willful
misconduct of the Master Servicer); (iii) the Special Servicer, if such tax
arises out of or results from a breach by the Special Servicer of any of its
obligations under Article III or this Article X (which breach constitutes
negligence or willful misconduct of the Special Servicer); or (iv) the Trust,
out of the Trust Fund (exclusive of Grantor Trust), in all other instances.
SECTION 10.4. Prohibited Transactions and Activities.
(a) Following the Start-up Day, the Trustee shall not, except as expressly
required by any provision of this Agreement, accept any contribution of assets
to the Trust Fund unless the Trustee shall have received an Opinion of Counsel
(the costs of obtaining such opinion to be borne by the Person requesting such
contribution) to the effect that the inclusion of such assets in the Trust Fund
will not cause REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at
any time that any Certificates are outstanding or subject REMIC I, REMIC II or
REMIC III to any tax under the REMIC Provisions or other applicable provisions
of federal, state and local law or ordinances.
SECTION 10.5. Grantor Trust Provisions.
There is hereby established a trust which shall be part of the Trust
Fund and which shall hold the Deferred Interest, the Grantor Trust Collection
Account and the Grantor Trust Distribution Account (the "Grantor Trust Assets"),
which assets shall be excluded from REMIC I, REMIC II and REMIC III. The Class
[E] Certificates represent undivided beneficial interests in the Grantor Trust
Assets, entitled to the distributions set forth in Section 4.7 hereof, and such
Certificates in the aggregate represent beneficial ownership of 100% of the
Grantor Trust Assets. The Trustee shall treat such assets as a grantor trust
under Subpart E of Part 1 of Subchapter J of the Code, shall account for such
assets separately from any other Trust Fund assets and shall perform all tax
reporting obligations with respect to the Grantor Trust. If any tax is imposed
on the Grantor Trust, such tax, together with all incidental costs and expenses
(including, without limitation, penalties and reasonable attorneys' fees), shall
be charged to and paid by: (i) the Trustee, if such tax arises out of or results
from a breach by the Trustee of any of its obligations under Article IV, Article
V, Article VIII or this Article X; (ii) the Master Servicer, if such tax arises
out of or results from a breach by the Master Servicer of any of its obligations
under Article III or this Article X (which breach constitutes negligence or
willful misconduct of the Master Servicer); (iii) the Special Servicer, if such
tax arises out of or results from a breach by the Special Servicer of any of its
obligations under Article III or this Article X (which breach constitutes
negligence or willful misconduct of the Special Servicer); or (iv) the Trust,
out of the portion of the Trust Fund constituting the Grantor Trust, in all
other instances.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Counterparts.
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 11.2. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the 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
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 (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement or the Mortgage Loans, unless, with respect to this Agreement, 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 representing a majority of the aggregate Voting Rights
allocated to each affected Class of Certificates 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 30 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. 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
of any Class shall have any right in any manner whatever by virtue 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 Holders of Certificates of such Class. For the
protection and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
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SECTION 11.3. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 11.4. Notices.
All demands, notices and communications hereunder shall be in
writing, shall be deemed to have been given upon receipt (or, in the case of
notice by telecopy, upon confirmation of receipt) as follows:
If to the Trustee, to:
......--------------------
......--------------------
......--------------------
If to the Depositor, to:
......PNC Mortgage Acceptance Corp.
......210 West 10th Street
......6th Floor
......Kansas City, Missouri 64105
......Attention: Chief Executive Officer
......Telecopy No.: (816) 435-2326
With copies to:
......Morrison & Hecker L.L.P.
......2600 Grand Avenue
......Kansas City, Missouri 64108-4606
......Attention: William A. Hirsch, Esq.
......Telecopy No.: (816) 474-4208
If to the Master Servicer, to:
......Midland Loan Services, Inc.
......210 West 10th Street
......6th Floor
......Kansas City, Missouri 64105
......Attention: Chief Executive Officer
......Telecopy No.: (816) 435-2326
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With copies to:
......Morrison & Hecker L.L.P.
......2600 Grand Avenue
......Kansas City, Missouri 64108-4606
......Attention: William A. Hirsch, Esq.
......Telecopy No.: (816) 474-4208
If to the Special Servicer, to:
......--------------------
......--------------------
......--------------------
......--------------------
If to the Seller (for the _______ Loans), to:
......--------------------
......--------------------
......--------------------
......--------------------
If to the Seller (for the Midland Loans), to:
......Midland Loan Services, Inc.
......210 West 10th Street
......Kansas City, Missouri 64105
......Attention: Chief Executive Officer
......Telecopy No.: (816) 435-2326
With copies to:
......Morrison & Hecker L.L.P.
......2600 Grand Avenue
......Kansas City, Missouri 64108-4606
......Attention: William A. Hirsch, Esq.
......Telecopy No.: (816) 474-4208
If to the initial Controlling Class Representative, to:
the address provided by the initial Controlling Class
Representative at the closing of the transactions
contemplated by this Agreement,
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If to any Certificateholder, to:
......the address set forth in the
......Certificate Register,
or, to such other address as such party shall specify by written notice to the
other parties.
SECTION 11.5. 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, to the
extent permitted by applicable law, 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 11.6. Notice to the Depositor, the Controlling Class Representative
and Each Rating Agency.
(a) The Trustee shall use its best efforts to promptly provide written
notice to the Depositor, the Controlling Class Representative, the Placement
Agents and each Rating Agency (and upon request to the Holders of any Privately
Placed Certificates that are not Affiliates of, or did not appoint, the
Controlling Class Representative) with respect to each of the following of which
a Responsible Officer of the Trustee has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Event of Default that has not been cured;
(iii) the merger, consolidation, resignation or termination of the
Master Servicer, Special Servicer or Trustee;
(iv) the repurchase or substitution of Mortgage Loans pursuant to
Section 2.3;
(v) the final payment to any Class of Certificateholders;
(vi) the assumption of, or the defeasance, release or substitution of
collateral securing, a Mortgage Loan that at such time has one of the 10 largest
outstanding principal balances of the Mortgage Loans in the Trust Fund; and
(vii) any change in the location of the Distribution Account.
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(b) The Master Servicer and the Special Servicer shall promptly furnish to
the Controlling Class Representative, each Placement Agent and each Rating
Agency (and any Holder of any Privately Placed Certificate that is not an
Affiliate of, or did not appoint, the Controlling Class Representative, upon
request and at its expense) copies of the following:
(i) the resignation or removal of the Trustee;
(ii) any change in the location of the Collection Account;
(iii) each of its annual statements as to compliance described in
Section 3.14;
(iv) each of its annual independent public accountants' servicing
reports described in Section 3.15.
(v) annual reports of each Borrower with respect to the net operating
income and occupancy rates required to be delivered by the related Mortgage and
actually received by the Master Servicer or the Special Servicer, if applicable,
pursuant thereto to the extent consistent with applicable law and the related
Mortgage Loan Documents, which shall be made available in electronic media.
(vi) any Officers' Certificates delivered by the Master Servicer or
the Special Servicer to the Trustee;
(vii) all site inspections, which shall be made available in
electronic media;
(viii) all rent rolls and sales reports to the extent they are
delivered by the related Borrower to the extent consistent with applicable law
and the related Mortgage Loan Documents, and requested by the Controlling Class
Representative or a Rating Agency (if the Master Servicer or the Special
Servicer converts this information to electronic media, it will make the
electronic files available to the Rating Agencies and the Controlling Class
Representative);
(ix) any extension or modification of a maturity date; and
(x) any modifications, waiver or amendment of any term of any Mortgage
Loan.
(c) The Special Servicer, shall furnish the Controlling Class
Representative, the Master Servicer and each Rating Agency (and the Placement
Agents at their expense) with such information with respect to any Specially
Serviced Mortgage Loan as the Controlling Class Representative, the Master
Servicer, such Rating Agency or Placement Agent shall request and which the
Special Servicer can obtain to the extent consistent with applicable law and the
related Mortgage Loan Documents.
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The Trustee, the Master Servicer and the Special Servicer, as
applicable, shall furnish to each Rating Agency (and the Placement Agents at
their expense) with respect to each Mortgage Loan such information as the Rating
Agency or Placement Agent shall reasonably request and which the Trustee, Master
Servicer or Special Servicer can reasonably provide in accordance with
applicable law and without waiving any attorney-client privilege relating to
such information. The Trustee, Master Servicer and Special Servicer, as
applicable, may include any reasonable disclaimer they deem appropriate with
respect to such information.
(d) Notices to each Rating Agency shall be addressed as follows:
......--------------------
......--------------------
......--------------------
......--------------------
......--------------------
......--------------------
or in each case to such other address as any Rating Agency shall specify by
written notice to the parties hereto.
SECTION 11.7. Amendment.
This Agreement or any Custodial Agreement may be amended from time
to time by the Depositor, the Master Servicer, the Special Servicer and the
Trustee, without the consent of any of the Certificateholders, (i) to cure any
ambiguity, (ii) to correct or supplement any provisions herein or therein that
may be inconsistent with any other provisions herein or therein or in the
Prospectus Supplement (or in the Prospectus referenced in the Prospectus
Supplement), (iii) to amend any provision hereof to the extent necessary or
desirable to maintain the rating or ratings, if any, assigned to each of the
Classes of REMIC III Regular Certificates by each Rating Agency, or (iv) to make
any other provisions with respect to matters or questions arising under this
Agreement which (x) shall not be inconsistent with the provisions of this
Agreement, (y) shall not result in the downgrading, withdrawal or qualification
(if applicable) of the rating or ratings then assigned to any outstanding Class
of Certificates, as confirmed by a Rating Agency Confirmation (the cost, if any,
of obtaining such confirmation shall be paid by the Person requesting such
amendment unless such amendment is in the best interest of the Trust Fund in
which case it will be paid by the Trust Fund), and (z) shall not adversely
affect in any material respect the interests of any Certificateholder.
This Agreement or any Custodial Agreement may also be amended from
time to time by the Depositor, the Master Servicer, the Special Servicer and the
Trustee with the consent of the Holders of each of the Classes of Certificates
representing not less than 51% of the aggregate Voting Rights allocated to all
Classes of Certificates affected by the amendment for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
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provisions of this Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of each affected Certificateholder;
(ii) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in
clause (i) above without the consent of the Holders of all Certificates of such
Class;
(iii) change the percentages of Voting Rights of Holders of
Certificates which are required to consent to any action or inaction under this
Agreement, without the consent of the Holders of all Certificates then
outstanding; or
(iv) alter the obligations of the Master Servicer or the Trustee to
make a P&I Advance or Servicing Advance without the consent of the Holders of
all Certificates representing all of the Voting Rights of the Class or Classes
affected thereby.
Further, the Depositor, the Master Servicer, the Special Servicer
and the Trustee, at any time and from time to time, without the consent of the
Certificateholders, may amend this Agreement or any Custodial Agreement to
modify, eliminate or add to any of its provisions to such extent as shall be
necessary to maintain the qualification of the REMIC Pools as three separate
REMICs, or to prevent the imposition of any additional material state or local
taxes, at all times that any Certificates are outstanding; provided, however,
that such action, as evidenced by an Opinion of Counsel (obtained at the expense
of the Trust Fund), is necessary or helpful to maintain such qualification or to
prevent the imposition of any such taxes, and would not adversely affect in any
material respect the interest of any Certificateholder.
In the event that neither the Depositor nor the successor thereto,
if any, is in existence, any amendment under this Section 11.7 shall be
effective with the consent in writing of the Trustee, the Master Servicer, the
Special Servicer, and, to the extent required by this Section, the
Certificateholders and each Rating Agency.
Notwithstanding any other provision of this Agreement, for purposes
of the giving or withholding of consents pursuant to this Section 11.7,
Certificates registered in the name of the Depositor, the Master Servicer, the
Special Servicer or any of their respective Affiliates shall be entitled to the
same Voting Rights with respect to matters described above as they would if any
other Person held such Certificates to the extent permitted in the definition of
Certificateholder.
Promptly after the execution of any amendment, the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder, the Controlling Class Representative, the Placement Agents
and each Rating Agency (with a copy of such amendment to each Rating Agency).
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It shall not be necessary for the consent of Certificateholders
under this Section 11.7 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The method 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; provided, however ,
that such method shall always be by affirmation and in writing.
Notwithstanding any contrary provision of this Agreement, no
amendment shall be made to this Agreement or any Custodial Agreement unless the
Master Servicer and the Trustee shall have received an Opinion of Counsel, at
the expense of the party requesting such amendment (or, if such amendment is
required by any Rating Agency to maintain the rating issued by it or requested
by the Trustee for any purpose described in clause (i) or (ii) of the first
sentence of this Section, then at the expense of the Trust Fund), to the effect
that such amendment will not cause REMIC I, REMIC II or REMIC III to fail to
qualify as a REMIC at any time that any Certificates are outstanding or cause a
tax to be imposed on the Trust Fund under the REMIC Provisions (other than a tax
at the highest marginal corporate tax rate on net income from foreclosure
property) or cause the Grantor Trust to fail to be treated as a grantor trust
for federal income tax purposes.
Prior to the execution of any amendment to this Agreement or any
Custodial Agreement, the Trustee, the Special Servicer and the Master Servicer
shall be entitled to receive and rely conclusively upon an Opinion of Counsel,
at the expense of the party requesting such amendment (or, if such amendment is
required by any Rating Agency to maintain the rating issued by it or requested
by the Trustee for any purpose described in clause (i), (ii) or (iv) (which do
not modify or otherwise relate solely to the obligations, duties or rights of
the Trustee) of the first sentence of this Section, then at the expense of the
Trust Fund) stating that the execution of such amendment is authorized or
permitted by this Agreement. The Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement.
SECTION 11.8. Confirmation of Intent.
It is the express intent of the parties hereto that the conveyance
of the Trust Fund (including the Mortgage Loans) by the Depositor to the Trustee
on behalf of Certificateholders as contemplated by this Agreement and the sale
by the Depositor of the Certificates be, and be treated for all purposes as, a
sale by the Depositor of the undivided portion of the beneficial interest in the
Trust Fund represented by the Certificates. It is, further, not the intention of
the parties that such conveyance be deemed a pledge of the Trust Fund by the
Depositor to the Trustee to secure a debt or other obligation of the Depositor.
However, in the event that, notwithstanding the intent of the parties, the Trust
Fund is held to continue to be property of the Depositor then (a) this Agreement
shall also be deemed to be a security agreement under applicable law; (b) the
transfer of the Trust Fund provided for herein shall be deemed to be a grant by
the Depositor to the Trustee on behalf of Certificateholders of a first priority
security interest in all of the Depositor's right, title and interest in and to
the Trust Fund and all amounts payable to the holders of the Mortgage Loans in
accordance with the terms thereof and all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash, instruments,
183
<PAGE>
securities or other property, including, without limitation, all amounts from
time to time held or invested in the Collection Account, the Grantor Trust
Collection Account, the REO Accounts, the Reserve Accounts, the Interest Reserve
Accounts, the Distribution Account and the Grantor Trust Distribution Account,
whether in the form of cash, instruments, securities or other property; (c) the
possession by the Trustee (or the Custodian or any other agent on its behalf) of
Notes and such other items of property as constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" for purposes of perfecting the security interest pursuant to
Section 9-305 of the ___________ and ___________ Uniform Commercial Codes; 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, financial
intermediaries, bailees or agents (as applicable) of the Trustee for the purpose
of perfecting such security interest under applicable law. Any assignment of the
interest of the Trustee pursuant to any provision hereof shall also be deemed to
be an assignment of any security interest created hereby. The Depositor shall,
and upon the request of the Master Servicer, the Trustee shall, to the extent
consistent with this Agreement (and at the expense of the Depositor), take such
actions as may be necessary to ensure that, if this Agreement were deemed to
create a security interest in the Mortgage Loans, 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. It is
the intent of the parties that such a security interest would be effective
whether any of the Certificates are sold, pledged or assigned.
SECTION 11.9. Successors and Assigns; Beneficiaries
The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto, their respective successors and assigns and,
as third party beneficiaries, the Placement Agents, the non-parties referred to
in Sections 6.3 and 8.5 and, solely with respect to the proviso in the second
paragraph of Section 3.2(a), the initial sub-servicer referred to in such
section, and all such provisions shall inure to the benefit of the
Certificateholders. No other person, including any Borrower, shall be entitled
to any benefit or equitable right, remedy or claim under this Agreement.
[SIGNATURE PAGE FOLLOWS]
184
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IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Special
Servicer and the Trustee have caused their names to be signed to this Pooling
and Servicing Agreement by their respective officers thereunto duly authorized
as of the day and year first above written.
PNC MORTGAGE ACCEPTANCE
CORP., as Depositor
By: _______________________________
Name: _________________________
Title: ________________________
MIDLAND LOAN SERVICES, INC.,
as Master Servicer
By: _______________________________
Name: _________________________
Title: ________________________
_____________________________________,
as Special Servicer
By: _______________________________
Name: _________________________
Title: ________________________
____________________, as Trustee
By: _______________________________
Name: _________________________
Title: ________________________
185
MORRISON & HECKER L.L.P.
Attorneys at Law
2600 Grand Avenue
Kansas City, Missouri
64108-4606
Telephone (816) 691-2600
Telefax (816) 474-4208
January 24, 2000
PNC Mortgage Acceptance Corp.
210 West 10th Street, 6th Floor
Kansas City, Missouri 64105
Re: Mortgage Pass-Through Certificates
Ladies and Gentlemen:
We have acted as counsel for PNC Mortgage Acceptance Corp., a Missouri
corporation (the "Registrant"), in connection with the registration statement on
Form S-3 (the "Registration Statement") and the Prospectus and form of
Prospectus Supplement forming a part thereof (collectively, the "Prospectus")
being filed by the Registrant on or about the date hereof with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933 (the
"Act"). The Registration Statement covers Commercial Mortgage Pass-Through
Certificates ("Certificates") to be sold by the Registrant in one or more series
(each, a "Series"). Each Series of Certificates will be more particularly
described in a supplement to the Prospectus (each, a "Supplement"). Each Series
of Certificates will be issued under a pooling and servicing agreement (each, a
"Pooling and Servicing Agreement") between the Registrant and a master servicer,
a trustee and possibly a special servicer and a fiscal agent to be identified in
the Supplement for such Series of Certificates. A form of Pooling and Servicing
Agreement is included as an exhibit to the Registration Statement. Capitalized
terms used and not otherwise defined herein have the respective meanings given
them in the Registration Statement or the Accord identified in the following
paragraph.
This Opinion Letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of
Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and this Opinion
Letter should be read in conjunction therewith. The opinions expressed herein
are given only with respect to the present status of the substantive laws of the
state of New York (not including the choice-of-law rules under New York law) and
the federal laws of the United States of America. We express no opinion as to
any matter arising under the laws of any other jurisdiction.
In rendering the opinions set forth below, we have examined and relied
on the following: (1) the Registration Statement and the Prospectus and the form
of Prospectus Supplement included therein; (2) the form of Pooling and Servicing
Agreement included as an exhibit to the Registration Statement; and (3) such
other documents, materials, and authorities as we have deemed necessary in order
to enable us to render our opinions set forth below.
In rendering this opinion, we have assumed that the Pooling and
Servicing Agreement with respect to each Series of Certificates is executed and
delivered substantially in the form included as Exhibit 4.1 to the Registration
Statement and that the transactions contemplated to
Washington, D.C. / Phoenix, Arizona / Overland Park, Kansas / Wichita, Kansas
<PAGE>
PNC Mortgage Acceptance Corp.
January 24, 2000
Page 2
occur under the Registration Statement and such Pooling and Servicing Agreement
with respect to such Series of Certificates in fact occur in accordance with the
terms thereof.
Based on and subject to the foregoing and other qualifications set forth
below, we are of the opinion that:
1. when a Pooling and Servicing Agreement for a Series of Certificates has
been duly and validly authorized, executed and delivered by the Registrant
and the servicer, the trustee and, if applicable, the special servicer and
the fiscal agent for such Series, such Pooling and Servicing Agreement will
constitute a valid and legally binding agreement of the Registrant,
enforceable against the Registrant in accordance with its terms.
2. when (a) a Pooling and Servicing Agreement for a Series of Certificates has
been duly and validly authorized, executed and delivered by the Registrant
and the servicer, the trustee and, if applicable, the special servicer and
the fiscal agent for such Series, (b) the Mortgage Loans and other
consideration constituting the Trust Fund for the Series have been
deposited with the trustee, (c) the Certificates of such Series have been
duly executed, authenticated, delivered and sold as contemplated in the
Registration Statement and (d) the consideration for the sale of such
Certificates has been fully paid to the Registrant, such Certificates will
be legally and validly issued, fully paid and nonassessable, and the duly
registered holders of such Certificates will be entitled to the benefits of
such Pooling and Servicing Agreement.
The General Qualifications apply to the opinions set forth in paragraphs
1and 2 above, and in addition, such opinions are subject to the qualification
that certain remedial, waiver and other similar provisions of a Pooling and
Servicing Agreement for a Series of Certificates or of the Certificates of such
Series may be rendered unenforceable or limited by applicable laws, regulations
or judicial decisions, but such laws, regulations and judicial decisions will
not render such Pooling and Servicing Agreement or such Certificates invalid as
a whole and will not make the remedies available thereunder inadequate for the
practical realization of the principal benefits intended to be provided thereby,
except for the economic consequences of any judicial, administrative or other
delay or procedure which may be imposed by applicable law.
We hereby consent to the filing of this letter as an Exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus forming a part of the Registration Statement.
We also consent to the incorporation by reference of this letter in a
registration statement, if any, relating to the Registration Statement filed by
the Registrant pursuant to Rule 462(b) of the Act. This consent is not to be
construed as an admission that we are a person whose consent is required to be
filed with the Registration Statement under the provisions of the Act.
Very truly yours,
MORRISON & HECKER L.L.P.
/s/ Morrison & Hecker L.L.P.
MORRISON & HECKER L.L.P.
ATTORNEYS AT LAW
2600 Grand Avenue
Kansas City,
Missouri 64108-4606
Telephone (816)
691-2600
Telefax (816) 474-4208
January 24, 2000
PNC Mortgage Acceptance Corp.
210 West 10th Street, 6th Floor
Kansas City, Missouri 64105
Re: Mortgage Pass-Through Certificates
Ladies and Gentlemen:
We have acted as counsel for PNC Mortgage Acceptance Corp., a Missouri
corporation (the "Registrant"), in connection with the registration statement on
Form S-3 (the "Registration Statement") and the Prospectus and form of
Prospectus Supplement forming a part thereof (collectively, the "Prospectus")
being filed by the Registrant on or about the date hereof with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933 (the
"Act"). The Registration Statement covers Commercial Mortgage Pass-Through
Certificates ("Certificates") to be sold by the Registrant in one or more series
(each, a "Series"). Each series of Certificates will be more particularly
described in a supplement to the Prospectus (each a "Supplement"). Each Series
of Certificates will be issued under a pooling and servicing agreement ("Pooling
and Servicing Agreement") between the Registrant and a master servicer, a
trustee and possibly a special servicer and a fiscal agent to be identified in
the Supplement for such Series of Certificates. A form of Pooling and Servicing
Agreement is included as an exhibit to the Registration Statement. Capitalized
terms used and not otherwise defined herein have the respective meanings given
them in the Registration Statement or the Accord identified in the following
paragraph.
In rendering the opinion set forth below, we have examined and relied on
the following: (1) the Registration Statement and the Prospectus and (2) such
other documents, materials, and authorities as we have deemed necessary or
advisable in order to enable us to render our opinion set forth below. Each
Supplement and Pooling and Servicing Agreement pertaining to a specific series
is to be completed subsequent to the date of this opinion. Accordingly, we have
not examined any Supplement or Pooling or Servicing Agreement relating to any
series to be issued, and our opinion does not address their contents except as
and to the extent that the provisions of same may be described in the
Prospectus. We understand that each Supplement will contain a discussion of any
material federal income tax consequences pertaining to the Series to be offered
thereunder which are not addressed in the Prospectus.
The opinion set forth in this letter is based upon the applicable
provisions of the Internal Revenue Code of 1986, as amended, Treasury
regulations promulgated and proposed thereunder, current positions of the
Internal Revenue Service (the "IRS") contained in published Revenue Rulings and
Revenue Procedures, current administrative positions of the IRS and existing
Washington, D.C. / Phoenix, Arizona / Overland Park, Kansas / Wichita, Kansas
<PAGE>
PNC Mortgage Acceptance Corp.
January 24, 2000
Page 2
judicial decisions. This opinion is subject to the explanations and
qualifications set forth under the caption "Material Federal Income Tax
Consequences" in the Prospectus. No tax rulings will be sought from the IRS with
respect to any of the matters discussed herein.
Based upon the foregoing, we are of the opinion that, although it does not
discus all federal income tax consequences that may be applicable to the
individual circumstances of particular investors (some of which may be subject
to special treatment under the Internal Revenue Code of 1986), the description
set forth under the caption "Material Federal Income Tax Consequences" in the
Prospectus included as a part of the Registration Statement correctly describes
the material aspects of the federal income tax treatment of an investment in the
Certificates commonly applicable to investors that are U.S. Persons (as defined
in the Prospectus), as of the date hereof, and, where expressly indicated
therein, to investors that are not U.S. Persons. There can be no assurance,
however, that the tax conclusions presented therein will not be successfully
challenged by the IRS, or significantly altered by new legislation, changes in
IRS positions or judicial decisions, any of which challenges or alterations may
be applied retroactively with respect to completed transactions. We note,
however, that the form of Prospectus Supplement filed herewith does not relate
to a specific transaction. As the Registration Statement contemplates multiple
Series of Certificates with numerous different characteristics, the particular
characteristics of a Series of Certificates must be considered in evaluating
whether such opinion would be relevant under the circumstances. Accordingly, the
above-referenced description of the selected federal income tax consequences
may, under certain circumstances, require modification when an actual
transaction is undertaken.
This opinion is based on the facts and circumstances set forth in the
Prospectus and the form of Prospectus Supplement and in the other documents
reviewed by us. Our opinion as to the matters set forth herein could change with
respect to a particular Series of Certificates as a result of changes in facts
and circumstances, changes in the terms of the documents reviewed by us, or
changes in the law subsequent to the date hereof. Consequently, we express no
such opinion with respect to any particular Series of Certificates.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the references to our firm under the heading
"Material Federal Income Tax Consequences" in the Prospectus and the Prospectus
Supplement. We also consent to the incorporation by reference of this letter in
a registration statement, if any, relating to the Registration Statement filed
by the Company pursuant to Rule 462(b) of the Act. This consent is not to be
construed as an admission that we are a person whose consent is required to be
filed with the Registration Statement under the provisions of the Act.
Very truly yours,
MORRISON & HECKER L.L.P.
/s/ Morrison & Hecker L.L.P.
