As filed with the Securities and Exchange Commission on August 12, 1998
Registration No. 333-_________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------------
IMPERIAL CREDIT COMMERCIAL MORTGAGE ACCEPTANCE CORP.
(Exact name of Registrant as specified in its charter)
California 95-4649530
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
11601 Wilshire Boulevard
No. 2080
Los Angeles, California 90025
(310) 231-1280
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Norbert M. Seifert, Esq.
Imperial Credit Commercial Mortgage Acceptance Corp.
11601 Wilshire Boulevard
No. 2080
Los Angeles, California 90025
(310) 231-1280
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Michael S. Gambro, Esq.
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
(212) 504-6825
--------------------
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, 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, 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, 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,
please check the following box. |_|
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
==================================================================================================================
<CAPTION>
Title of Securities Amount to Be Proposed Maximum Offering Proposed Maximum Aggregate Amount of
to Be Registered Registered Price Per Unit(1) Offering Price(1) Registration Fee
- ----------------------- ------------ ------------------------- -------------------------- ----------------
<S> <C> <C> <C> <C>
Collateralized Mortgage $1,000,000 100% $1,000,000 $295
Bonds
==================================================================================================================
<FN>
(1) Estimated pursuant to Rule 457 solely for the purpose of calculating the
registration fee.
</FN>
</TABLE>
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 that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
INTRODUCTORY NOTE
This Registration Statement contains a form of Prospectus relating to the
offering of series of Collateralized Mortgage Bonds by various Owner Trusts
created from time to time by Imperial Credit Commercial Mortgage Acceptance
Corp. and a form of Prospectus Supplement relating to the offering by an Owner
Trust of the particular series of Collateralized Mortgage Bonds described
therein. The form of Prospectus Supplement relates only to the securities
described therein and is a form that may be used by Imperial Credit Commercial
Mortgage Acceptance Corp. to offer Collateralized Mortgage Bonds under this
Registration Statement.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED AUGUST __, 1998
PROSPECTUS
Collateralized Mortgage Bonds
(Issuable in Series)
IMPERIAL CREDIT COMMERCIAL MORTGAGE ACCEPTANCE CORP.
Depositor
The Collateralized Mortgage Bonds (the "Bonds") offered hereby and by
Supplements to this Prospectus (the "Offered Bonds") will be offered from time
to time in one or more series (each, a "Series"). Each Series of Bonds will be
issued pursuant to an Indenture and will represent indebtedness of an owner
trust (an "Owner Trust") established by Imperial Credit Commercial Mortgage
Acceptance Corp. (the "Depositor"). Each Series of Bonds will be secured by a
pledge of some or all of the assets of the Owner Trust (with respect to any
Series, the "Collateral") consisting of, among other things, one or more
segregated pools of various types of multifamily or commercial mortgage loans
and/or undivided ownership interests in such mortgage loans (collectively, the
"Mortgage Loans"). If so specified in the related Prospectus Supplement, some or
all of the Mortgage Loans will include assignments of the leases of the related
Mortgaged Properties (as defined herein) and/or assignments of the rental
payments due from the lessees under such leases (each type of assignment, a
"Lease Assignment"). A significant or the sole source of payments on certain
Commercial Loans (as defined herein) and, therefore, of payments on certain
Series of Bonds, will be such rental payments. If so specified in the related
Prospectus Supplement, the Collateral for a Series of Bonds may include letters
of credit, insurance policies, guarantees, reserve funds or other types of
credit support, or any combination thereof (with respect to any Series,
collectively, "Credit Support"), and currency or interest rate exchange
agreements and other financial assets, or any combination thereof (with respect
to any Series, collectively, "Cash Flow Agreements"). See "Description of the
Collateral," "Description of the Bonds" and "Description of Credit Support."
Each Series of Bonds will consist of one or more classes of Bonds that may
(i) provide for the accrual of interest thereon based on fixed, variable or
floating rates; (ii) be senior or subordinate to one or more other classes of
Bonds in respect of certain payments on the Bonds; (iii) be entitled to
principal payments, with disproportionately low, nominal or no interest
payments; (iv) be entitled to interest payments, with disproportionately low,
nominal or no principal payments; (v) provide for payments of accrued interest
thereon commencing only following the occurrence of certain events, such as the
retirement of one or more other classes of Bonds of such Series; (vi) provide
for payments of principal sequentially, based on specified payment schedules or
other methodologies; and/or (vii) provide for payments based on a combination of
two or more components thereof with one or more of the characteristics described
in this paragraph, to the extent of available funds, in each case as described
in the related Prospectus Supplement. Any such classes may include classes of
Offered Bonds. See "Description of the Bonds."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR THE RELATED PROSPECTUS SUPPLEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospective investors should consider the material risks discussed under
the caption "Risk Factors" beginning on page 23 herein and discussed under the
caption "Risk Factors" in the related Prospectus Supplement before purchasing
any Offered Bond.
Prior to issuance there will have been no market for the Bonds of any
Series and there can be no assurance that a secondary market for any Offered
Bonds will develop or that, if it does develop, it will continue. It is not
expected that any application will be made to list the Bonds of a Series on any
securities exchange or quote the Bonds in the automated quotation system of any
registered securities association. Accordingly, the liquidity of the Bonds may
be limited. This Prospectus may not be used to consummate sales of the Offered
Bonds of any Series unless accompanied by the Prospectus Supplement for such
Series.
Offers of the Offered Bonds may be made through one or more different
methods, including offerings through underwriters as more fully described herein
and in the related Prospectus Supplement.
Principal and interest with respect to Bonds will be payable monthly,
quarterly, semi-annually or at such other intervals and on the dates specified
in the related Prospectus Supplement. Payments on the Bonds of any Series will
be made only from the assets of the related Collateral.
The Bonds of each Series will not represent an obligation of or interest in
the Depositor, any Master Servicer, any Special Servicer or any of their
respective affiliates, except to the limited extent that the Bonds of each
Series will represent limited recourse obligations of one or more Owner Trusts.
The Bonds or the Mortgage Loans will be guaranteed or insured by a governmental
agency or instrumentality or by any other person if and only to the extent
expressly provided in the related Prospectus Supplement. The Collateral will be
held in trust for the benefit of the holders of the related Series of Bonds
pursuant to an Indenture, as more fully described herein.
The yield on each class of Bonds of a Series will be affected by, among
other things, the rate of payment of principal (including prepayments,
repurchase and defaults) on the related Mortgage Loans and the timing of receipt
of such payments as described under the caption "Yield Considerations" herein
and in the related Prospectus Supplement. The Bonds of any Series may be subject
to optional redemption prior to Stated Maturity (as defined herein) under the
circumstances described herein and in the related Prospectus Supplement. See
"Description of the Bonds--Optional Redemption."
<PAGE>
TABLE OF CONTENTS
Page
----
PROSPECTUS SUPPLEMENT...........................................................
AVAILABLE INFORMATION...........................................................
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE...............................
SUMMARY OF PROSPECTUS...........................................................
RISK FACTORS....................................................................
Limited Liquidity for Bonds.................................................
Limited Assets for Payment of Bonds.........................................
Rate of Prepayments on Mortgage Loans, Optional Redemption of Bonds and
Priority of Payment of Bonds May Adversely Affect Average Lives
and Yields of Bonds...................................................
Limited Nature of Ratings...................................................
Limited Issuer Events of Default............................................
Bondholders Have Limited Ability to Force Sale of Collateral following
Non-Payment of Principal or Interest.................................
Bankruptcy or Insolvency of the Issuer......................................
Factors Which May Increase the Risk of Losses on Mortgage Loans Secured by
Multifamily/Commercial Property Versus Single Family Property.........
Increased Risk of Losses in Connection with Commercial Loans and Leases.....
Risks of Loss on Balloon Payment Loan if Obligor is Unable to Refinance
or Sell Related Property..............................................
Increased Risk of Losses on Foreclosure of Junior Mortgage Loans............
Risks Associated with Obligor Default.......................................
Risks Associated with Mortgagor Type........................................
Credit Support Limitations..................................................
Risk of Unenforceability of Certain Mortgage Provisions.....................
Environmental Risks.........................................................
Increased Risk of Loss if Mortgage Loans Include Delinquent and
Non-Performing Mortgage Loans.........................................
ERISA Considerations........................................................
Risks Associated with Control of Voting Rights..............................
Owners of Book-Entry Bonds Not Entitled to Exercise Rights of
Holders of Bonds......................................................
DESCRIPTION OF THE COLLATERAL...................................................
General.....................................................................
Mortgage Loans..............................................................
Leases..................................................................
Default and Loss Considerations with Respect to the Mortgage Loans......
Loan-to-Value Ratio.....................................................
Mortgage Loan Information in Prospectus Supplements.....................
Payment Provisions of the Mortgage Loans................................
Accounts................................................................
Credit Support..........................................................
Cash Flow Agreements....................................................
USE OF PROCEEDS.................................................................
YIELD CONSIDERATIONS............................................................
General.....................................................................
Interest Rate...............................................................
Timing of Payment of Interest...............................................
Payments of Principal; Prepayments..........................................
Prepayments, Maturity and Weighted Average Life.............................
Other Factors Affecting Weighted Average Life...............................
Type of Mortgage Loan...................................................
Foreclosures and Payment Plans..........................................
Due-on-Sale and Due-on-Encumbrance Clauses..............................
Single Mortgage Loan or Single Mortgagor................................
THE DEPOSITOR...................................................................
THE OWNER TRUST.................................................................
DESCRIPTION OF THE BONDS........................................................
General.....................................................................
Payments....................................................................
Available Payment Amount....................................................
Payments of Interest on the Bonds...........................................
Payments of Principal of the Bonds..........................................
Components..................................................................
Payments on the Bonds of Prepayment Premiums or in Respect of
Equity Participations.................................................
Allocation of Losses and Shortfalls.........................................
Advances in Respect of Delinquencies........................................
Reports to Bondholders......................................................
Special Redemption of Bonds.................................................
Optional Redemption of Bonds................................................
Book-Entry Registration and Definitive Bonds................................
DESCRIPTION OF THE AGREEMENTS...................................................
Pledge of Mortgage Loans; Deposit of Release Price or Substitution..........
Representations and Warranties; Repurchases and Other Remedies..............
Accounts....................................................................
General.................................................................
Deposits................................................................
Withdrawals.............................................................
Payment Account.........................................................
Other Collection Accounts...............................................
Collection and Other Servicing Procedures...................................
Master Servicer.........................................................
Special Servicer........................................................
Hazard Insurance Policies...................................................
Rental Interruption Insurance Policy........................................
Fidelity Bonds and Errors and Omissions Insurance...........................
Due-on-Sale and Due-on-Encumbrance Provisions...............................
Retained Interest; Servicing Compensation and Payment of Expenses...........
Evidence as to Compliance...................................................
Certain Matters Regarding each Servicer and the Depositor...................
Servicer Events of Default..................................................
Rights Upon Servicer Event of Default.......................................
Amendment...................................................................
The Indenture Trustee.......................................................
Duties of the Indenture Trustee.............................................
Certain Matters Regarding the Indenture Trustee.............................
Resignation and Removal of the Indenture Trustee............................
Certain Terms of the Indenture..............................................
Issuer Events of Default................................................
Control by Bondholders..................................................
Satisfaction and Discharge of the Indenture.............................
Release of Collateral...................................................
List of Bondholders.....................................................
Meetings of Bondholders.................................................
Indenture Trustee's Annual Report.......................................
Administrator...........................................................
DESCRIPTION OF CREDIT SUPPORT...................................................
General.....................................................................
Subordinate Bonds...........................................................
Cross-Support Provisions....................................................
Insurance or Guarantees with Respect to the Mortgage Loans..................
Letter of Credit............................................................
Insurance Policies and Surety Bonds.........................................
Reserve Funds...............................................................
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS AND THE LEASES......................
General.....................................................................
Types of Mortgage Instruments...............................................
Interest in Real Property...................................................
Leases and Rents............................................................
Personalty..................................................................
Foreclosure.................................................................
General.................................................................
Judicial Foreclosure....................................................
Equitable Limitations on Enforceability of Certain Provisions...........
Non-Judicial Foreclosure/Power of Sale..................................
Public Sale.............................................................
Rights of Redemption........................................................
Anti-Deficiency Legislation.................................................
Leasehold Risks.............................................................
Bankruptcy Laws.............................................................
Environmental Legislation...................................................
Due-on-Sale and Due-on-Encumbrance..........................................
Subordinate Financing.......................................................
Default Interest, Prepayment Premiums and Lockouts..........................
Acceleration on Default.....................................................
Applicability of Usury Laws.................................................
Certain Laws and Regulations; Types of Mortgaged Properties.................
Americans With Disabilities Act.............................................
Soldiers' and Sailors' Civil Relief Act of 1940.............................
Forfeitures in Drug and RICO Proceedings....................................
FEDERAL INCOME TAX CONSEQUENCES.................................................
General.....................................................................
Status as Real Property Loans...............................................
Taxation of Bonds...........................................................
General.................................................................
Original Issue Discount.................................................
Acquisition Premium.....................................................
Variable Rate Bonds.....................................................
Market Discount.........................................................
Premium.................................................................
Election to Treat All Interest Under the Constant Yield Method..........
Sale or Exchange of Bonds...............................................
Treatment of Losses.....................................................
Taxation of Certain Foreign Investors.......................................
Backup Withholding..........................................................
STATE TAX CONSIDERATIONS........................................................
CERTAIN ERISA CONSIDERATIONS....................................................
LEGAL INVESTMENT................................................................
PLAN OF DISTRIBUTION............................................................
LEGAL MATTERS...................................................................
FINANCIAL INFORMATION...........................................................
RATING..........................................................................
INDEX OF PRINCIPAL DEFINITIONS..................................................
<PAGE>
Until 90 days after the date of each Prospectus Supplement, all dealers
effecting transactions in the Offered Bonds covered by such Prospectus
Supplement, whether or not participating in the distribution thereof, may be
required to deliver such Prospectus Supplement and this Prospectus. This is in
addition to the obligation of dealers to deliver a Prospectus and Prospectus
Supplement when acting as underwriters and with respect to their unsold
allotments or subscriptions.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and any Prospectus
Supplement with respect hereto and, if given or made, such information or
representations must not be relied upon. This Prospectus and any Prospectus
Supplement with respect hereto do not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Offered Bonds or
an offer of the Offered Bonds to any person in any state or other jurisdiction
in which such offer would be unlawful. The delivery of this Prospectus at any
time does not imply that information herein is correct as of any time subsequent
to its date; however, if any material change occurs while this Prospectus is
required by law to be delivered, this Prospectus will be amended or supplemented
accordingly.
PROSPECTUS SUPPLEMENT
As more particularly described herein, the Prospectus Supplement relating
to the Offered Bonds of each Series will, among other things, set forth with
respect to such Bonds, as appropriate: (i) a description of the class or classes
of Bonds, the payment provisions with respect to each such class and the
interest rate or method of determining the interest rate with respect to each
such class; (ii) the aggregate principal amount and payment dates relating to
such Series and, if applicable, the initial and final scheduled payment dates
for each class; (iii) information as to the assets of the Owner Trust (with
respect to the Bonds of any Series, the "Trust Assets") constituting the related
Collateral, including the general characteristics of the assets included
therein, including the Mortgage Loans and any Credit Support and Cash Flow
Agreements; (iv) the circumstances, if any, under which the Bonds may be subject
to call; (v) additional information with respect to the method of distribution
of such Bonds; (vi) information as to any Master Servicer, any Special Servicer
(or provision for the appointment thereof) and the Indenture Trustee, as
applicable; (vii) information as to the nature and extent of subordination with
respect to any class of Bonds that is subordinate in right of payment to any
other class; and (viii) whether such Bonds will be initially issued in
definitive or book-entry form.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus forms a part)
under the Securities Act of 1933, as amended, with respect to the Offered Bonds.
This Prospectus and the Prospectus Supplement relating to each Series of Bonds
contain summaries of the material terms of the documents referred to herein and
therein, but do not contain all of the information set forth in the Registration
Statement pursuant to the rules and regulations of the Commission. For further
information, reference is made to such Registration Statement and the exhibits
thereto. Such Registration Statement and exhibits can be inspected and copied at
prescribed rates at the public reference facilities maintained by the Commission
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,
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and New York
Regional Office, Seven World Trade Center, New York, New York 10048. The
Commission maintains a Web site at http://www.sec.gov containing reports, proxy
and information statements and other information regarding registrants,
including Imperial Credit Commercial Mortgage Acceptance Corp., that file
electronically with the Commission.
To the extent described in the related Prospectus Supplement, some or all
of the Mortgage Loans may be secured by an assignment of the lessors' (i.e., the
related Mortgagors') rights in one or more leases (each, a "Lease") on the
related Mortgaged Property. A Series of Bonds will represent interests in or
obligations of a lessee (each, a "Lessee") under a Lease if and only to the
extent expressly provided in the related Prospectus Supplement. If indicated,
however, in the Prospectus Supplement for a given Series, a significant or the
sole source of payments on the Mortgage Loans in such Series, and, therefore, of
payments on such Bonds, will be rental payments due from specified Lessees under
the Leases, under such circumstances prospective investors in the related Series
of Bonds may wish to consider publicly available information, if any, concerning
the Lessees. Reference should be made to the related Prospectus Supplement for
information concerning the Lessees and whether any such Lessees are subject to
the periodic reporting requirements of the Securities Exchange Act of 1934, as
amended.
The Master Servicer or the Indenture Trustee will be required to mail to
holders of Definitive Bonds (as defined herein) of each Series periodic
unaudited reports concerning such Bonds and the related Trust Assets. Unless and
until Definitive Bonds are issued, such reports will be sent on behalf of the
related Issuer to Cede & Co. ("Cede"), as nominee of The Depository Trust
Company ("DTC") and registered holder of the Offered Bonds or such other person
as specified in the related Prospectus Supplement, pursuant to the applicable
Agreement. Such reports may be available to Beneficial Owners (as defined
herein) in the Bonds upon request to their respective DTC Participants or
Indirect Participants (as defined herein). See "Description of the
Bonds--Reports to Bondholders" and "Description of the Agreements--Evidence as
to Compliance."
The Depositor will file or cause to be filed with the Commission such
periodic reports with respect to the Offered Bonds of each Series and the
related Trust Assets as are required under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations of the Commission
thereunder, for so long as such reports are required to be filed. Because of the
limited number of Bondholders expected for each Series, the Depositor
anticipates that a significant portion of such reporting requirements will be
permanently suspended following the first fiscal year for the related Issuer.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Depositor with respect to the Offered Bonds of each
Series and the related Trust Assets pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, prior to the termination of an offering of such
Offered Bonds. The Depositor will provide or cause to be provided without charge
to each person to whom this Prospectus is delivered in connection with the
offering of one or more classes of Offered Bonds, a copy of any or all documents
or reports incorporated herein by reference, in each case to the extent such
documents or reports relate to one or more of such classes of such Offered
Bonds, other than the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Requests to the
Depositor should be directed in writing to Imperial Credit Commercial Mortgage
Acceptance Corp., 11601 Wilshire Boulevard, No. 2080, Los Angeles, California
90025, Attention: Secretary. The Depositor has determined that its financial
statements are not material to the offering of any Offered Bonds.
<PAGE>
SUMMARY OF PROSPECTUS
The following summary is qualified in its entirety by reference to the more
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to each Series of Bonds contained in the Prospectus
Supplement to be prepared and delivered in connection with the offering of such
Series. An Index of Principal Definitions is included at the end of this
Prospectus beginning on page 123.
Title of Bonds................... Collateralized Mortgage Bonds (the "Bonds"),
issuable in Series.
Depositor........................ Imperial Credit Commercial Mortgage
Acceptance Corp., a direct wholly-owned
subsidiary of Imperial Credit Commercial
Mortgage Investment Corp., a Maryland
corporation ("ICCMIC"). See "The Depositor."
Issuer........................... With respect to each Series of Bonds, the
Owner Trust that will act as the issuer of
such Series of Bonds (in such capacity, the
"Issuer"), to be formed pursuant to a
deposit trust agreement.
Master Servicer.................. The master servicer (the "Master Servicer"),
if any, for each Series of Bonds, which may
be an affiliate of the Depositor, will be
named in the related Prospectus Supplement.
See "Description of the
Agreements--Collection and Other Servicing
Procedures."
Special Servicer................. The special servicer (the "Special
Servicer"), if any, for each Series of Bonds,
which may be an affiliate of the Depositor,
will be named, or the circumstances in
accordance with which a Special Servicer will
be appointed will be described, in the
related Prospectus Supplement. See
"Description of the Agreements--Special
Servicers."
Indenture Trustee................ The indenture trustee (the "Indenture
Trustee") for each Series of Bonds will be
named in the related Prospectus Supplement.
The Indenture Trustee will be a bank or trust
company qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"). See
"Description of the Agreements--The Indenture
Trustee."
Collateral....................... Each Series of Bonds will represent
indebtedness of the related Issuer and will
be secured by the Collateral which will
consist primarily of:
(a) Special Payment Provisions... The Mortgage Loans with respect to each
Series of Bonds may be subject to various
types of payment provisions as specified in
the related Prospectus Supplement, and may
include Balloon Payment Loans. See
"Description of the Collateral--Payment
Provisions of the Mortgage Loans."
(b) Mortgage Loans............... The Mortgage Loans with respect to each
Series of Bonds will consist of a pool of
multifamily and/or commercial mortgage loans
and/or undivided ownership interests in such
mortgage loans (collectively, the "Mortgage
Loans"). The Mortgage Loans will not be
guaranteed or insured by the Depositor or any
of its affiliates. The Mortgage Loans will be
guaranteed or insured by a governmental
agency or instrumentality or other person
only if and to the extent expressly provided
in the related Prospectus Supplement. As more
specifically described herein, the Mortgage
Loans will be secured by first or junior
liens on, or security interests in,
properties consisting of (i) residential
properties consisting of five or more rental
or cooperatively owned dwelling units (the
"Multifamily Properties") or (ii) office
buildings, retail stores and establishments,
hotels or motels, nursing homes, assisted
living facilities, continuum care facilities,
day care centers, schools, hospitals or other
healthcare related facilities, industrial
properties, warehouse facilities,
mini-warehouse facilities, self-storage
facilities, distribution centers,
transportation centers, parking facilities,
entertainment and/or recreation facilities,
movie theaters, restaurants, golf courses,
car washes, automobile dealerships, mobile
home parks, mixed use (including mixed
commercial uses and mixed commercial and
residential uses) and/or unimproved land (the
"Commercial Properties"). The term "Mortgaged
Properties" shall refer to Multifamily
Properties or Commercial Properties, or both.
To the extent described in the related
Prospectus Supplement, some or all of the
Mortgage Loans may also be secured by an
assignment of one or more leases (each, a
"Lease") of one or more lessees (each, a
"Lessee") of all or a portion of the related
Mortgaged Properties. A significant or the
sole source of payments on certain Commercial
Loans (as defined herein) will be the rental
payments due under specified Leases. The
Commercial Loans will have significant
sources of payments thereon other than the
rental payments due under the Leases only if
and to the extent expressly provided in the
related Prospectus Supplement. In certain
circumstances, with respect to Commercial
Properties, the material terms and conditions
of the related Leases may be set forth in the
related Prospectus Supplement. See
"Description of the Collateral--Mortgage
Loans--Leases" and "Risk Factors--Limited
Assets" herein.
The Mortgaged Properties may be located in
any one of the fifty states, the District of
Columbia, Guam, the Commonwealth of Puerto
Rico or any other territory of the United
States. If so provided in the related
Prospectus Supplement, the Collateral for a
particular Series of Bonds may include
Mortgage Loans secured by Mortgaged
Properties not located in the United States,
provided that, on the date of issuance of
such Series of Bonds, the aggregate principal
balance of the related Mortgage Loans will
not exceed 10% of the aggregate principal
balance of all the Mortgage Loans
constituting such Collateral. All Mortgage
Loans will have been originated by persons
other than the Depositor, and all Mortgage
Loans will have been purchased or otherwise
acquired, either directly or indirectly, by
the Depositor on or before the date of
initial issuance of the related Series of
Bonds. The related Prospectus Supplement will
indicate if any such persons are affiliates
of the Depositor.
Each Mortgage Loan may provide for no accrual
of interest or for accrual of interest
thereon at an interest rate (a "Mortgage
Interest Rate") that is fixed over its term
or that adjusts from time to time, or is
partially fixed and partially floating or
that may be converted from a floating to a
fixed Mortgage Interest Rate, or from a fixed
to a floating Mortgage Interest Rate, from
time to time at the Mortgagor's election, in
each case as described in the related
Prospectus Supplement. The floating Mortgage
Interest Rates on the Mortgage Loans
constituting the Collateral for a Series of
Bonds may be based on one or more indices.
Each Mortgage Loan may provide for scheduled
payments to maturity, payments that adjust
from time to time to accommodate changes in
the Mortgage Interest Rate or to reflect the
occurrence of certain events, and may provide
for negative amortization or accelerated
amortization, in each case as described in
the related Prospectus Supplement. Each
Mortgage Loan may be fully amortizing or
require a balloon payment due on its stated
maturity date, in each case as described in
the related Prospectus Supplement. Each
Mortgage Loan may contain prohibitions on
prepayment or require payment of a premium or
a yield maintenance penalty in connection
with a prepayment, in each case as described
in the related Prospectus Supplement. The
Mortgage Loans may provide for payments of
principal, interest or both, on due dates
that occur monthly, quarterly, semi-annually
or at such other interval as is specified in
the related Prospectus Supplement. See
"Description of the Collateral--Payment
Provisions of the Mortgage Loans."
(c) Collection Accounts.......... The Collateral for each Series of Bonds will
include one or more accounts established and
maintained on behalf of the Bondholders into
which the person or persons designated in the
related Prospectus Supplement will, to the
extent described herein and in such
Prospectus Supplement, deposit all payments
and collections received or advanced with
respect to the Mortgage Loans and other
Collateral. Such an account may be maintained
as an interest bearing or a non-interest
bearing account, and funds held therein may
be held as cash or invested in certain
short-term, investment grade obligations, in
each case as described in the related
Prospectus Supplement. See "Description of
the Agreements--Payment Account and Other
Collection Accounts."
(d) Credit Support............... If so provided in the related Prospectus
Supplement, partial or full protection
against certain defaults and losses on the
Mortgage Loans constituting the related
Collateral may be provided to one or more
classes of Bonds of the related Series in the
form of subordination of one or more other
classes of Bonds of such Series, which other
classes may include one or more classes of
Offered Bonds, or by one or more other types
of credit support, such as a letter of
credit, insurance policy, guarantee, reserve
fund or another type of credit support, or a
combination thereof (any such coverage with
respect to the Bonds of any Series, "Credit
Support"). The amount and types of coverage,
the identification of the entity providing
the coverage (if applicable) and related
information with respect to each type of
Credit Support, if any, will be described in
the Prospectus Supplement for a Series of
Bonds. See "Risk Factors--Credit Support
Limitations" and "Description of Credit
Support."
(e) Cash Flow Agreements......... If so provided in the related Prospectus
Supplement, the Collateral may include
guaranteed investment contracts pursuant to
which moneys held in the funds and accounts
established for the related Series will be
invested at a specified rate. The Collateral
may also include certain other agreements,
such as interest rate exchange agreements,
interest rate cap or floor agreements,
currency exchange agreements or similar
agreements provided to reduce the effects of
interest rate or currency exchange rate
fluctuations on the Mortgage Loans of one or
more classes of Bonds. The principal terms of
any such guaranteed investment contract or
other agreement (any such agreement, a "Cash
Flow Agreement"), including, without
limitation, provisions relating to the
timing, manner and amount of payments
thereunder and provisions relating to the
termination thereof, will be described in the
Prospectus Supplement for the related Series.
In addition, the related Prospectus
Supplement will provide certain information
with respect to the obligor under any such
Cash Flow Agreement. See "Description of the
Collateral--Cash Flow Agreements."
Description of Bonds............. Each Series of Bonds will be issued pursuant
to an indenture (each, an "Indenture"), will
represent indebtedness of the related Issuer
(which will be formed pursuant to a deposit
trust agreement (each, a "Deposit Trust
Agreement") between the Depositor and the
Owner Trustee specified in the Prospectus
Supplement, and will be secured by, among
other things, a pledge of Collateral that
includes Mortgage Loans (or a specified group
thereof). The Mortgage Loans shall be
serviced pursuant to a servicing agreement.
Indentures, deposit trust agreements and
servicing agreements are referred to herein
as the "Agreements".
Each Series of Bonds will include one or more
classes. Each class of Bonds (other than
Interest Only Bonds, as defined below) will
have a stated principal amount (a "Bond
Principal Amount") and (other than Principal
Only Bonds, as defined below) will accrue
interest thereon based on a fixed, variable
or floating interest rate. The related
Prospectus Supplement will specify the Bond
Principal Amount, if any, and the interest
rate, if any, for each class of Bonds or, in
the case of a variable or floating interest
rate, the method for determining the interest
rate.
Payments on Bonds................ Each Series of Bonds will consist of one or
more classes of Bonds that may (i) provide
for the accrual of interest thereon based on
fixed, variable or floating rates; (ii) be
senior (collectively, "Senior Bonds") or
subordinate (collectively, "Subordinate
Bonds") to one or more other classes of Bonds
in respect of certain payments on the Bonds;
(iii) be entitled to principal payments, with
disproportionately low, nominal or no
interest payments (collectively, "Principal
Only Bonds"); (iv) be entitled to interest
payments, with disproportionately low,
nominal or no principal payments
(collectively, "Interest Only Bonds"); (v)
provide for payments of accrued interest
thereon commencing only following the
occurrence of certain events, such as the
retirement of one or more other classes of
Bonds of such Series (collectively, "Accrual
Bonds"); (vi) provide for payments of
principal sequentially, based on specified
payment schedules or other methodologies;
and/or (vii) provide for payments based on a
combination of two or more components thereof
with one or more of the characteristics
described in this paragraph, including a
Principal Only Bond component and a Interest
Only Bond component, to the extent of
available funds, in each case as described in
the related Prospectus Supplement. With
respect to Bonds with two or more components,
references herein to Bond Principal Amount,
notional amount and interest rate refer to
the principal balance, if any, notional
amount, if any, and the interest rate, if
any, for any such component.
The Bonds or the underlying Mortgage Loans
will be guaranteed or insured by a
governmental agency or instrumentality, the
Depositor, any Servicer or any of their
affiliates only if and to the extent
expressly provided in the related Prospectus
Supplement. See "Risk Factors--Limited Assets
for Payment of Bonds" and "Description of the
Bonds."
(a) Interest..................... Interest on each class of Offered Bonds
(other than Principal Only Bonds and certain
classes of Interest Only Bonds) of each
Series will accrue at the applicable interest
rate on the outstanding Bond Principal Amount
thereof and will be paid to Bondholders as
provided in the related Prospectus Supplement
(each of the specified dates on which
payments are to be made, a "Payment Date").
Payments with respect to interest on Interest
Only Bonds may be made on each Payment Date
on the basis of a notional amount as
described in the related Prospectus
Supplement. Payments of interest with respect
to one or more classes of Bonds may be
reduced to the extent of certain
delinquencies, losses, prepayment interest
shortfalls, and other contingencies described
herein and in the related Prospectus
Supplement. Principal Only Bonds with no
stated interest rate will not accrue
interest. See "Risk Factors--Rate of
Prepayments on Mortgage Loans and Priority of
Payment of Bonds May Adversely Affect Average
Lives and Yields of Bonds," "Yield
Considerations" and "Description of the
Bonds--Payments of Interest on the Bonds."
(b) Principal.................... The Bonds of each Series initially will have
an aggregate Bond Principal Amount specified
in the related Prospectus Supplement. The
Bond Principal Amount of a Bond outstanding
from time to time represents the maximum
amount that the holder thereof is then
entitled to receive in respect of principal
from future cash flow on the related
Collateral. Payments of principal will be
made on each Payment Date or such other date
specified in the related Prospectus
Supplement to the class or classes of Bonds
entitled thereto in accordance with the
provisions described in such Prospectus
Supplement. Payments of principal of any
class of Bonds will be made on a pro rata
basis among all of the Bonds of such class or
by random selection or such other basis as
specified in the related Prospectus
Supplement, as described in the related
Prospectus Supplement or otherwise
established by the related Indenture Trustee.
Interest Only Bonds with no Bond Principal
Amount will not receive payments in respect
of principal. See "Description of the
Bonds--Payments of Principal of the Bonds."
Advances......................... If so specified in the related Prospectus
Supplement, the Master Servicer or the
Special Servicer (each, a "Servicer") will be
obligated as part of its servicing
responsibilities to make certain advances
with respect to delinquent scheduled payments
on the Mortgage Loans constituting such
Collateral. If so specified in the related
Prospectus Supplement, another entity will be
required to make such advances in the event
the Servicer fails to do so. Any such
advances will be made under and subject to
any determinations or conditions set forth in
the related Prospectus Supplement. Neither
the Depositor nor any of its affiliates will
have any responsibility to make such
advances. Advances are reimbursable generally
from subsequent recoveries in respect of such
Mortgage Loans and otherwise to the extent
described herein and in the related
Prospectus Supplement. If and to the extent
provided in the Prospectus Supplement for any
Series, each Servicer or another entity will
be entitled to receive interest on its
outstanding advances, payable from the
sources specified in such Prospectus
Supplement. See "Description of the
Bonds--Advances in Respect of Delinquencies."
Stated Maturity of the Bonds..... The "Stated Maturity" for each class of Bonds
is the date as of which all the Bonds of such
class will be required to be fully paid.
However, the actual maturity of any Bond may
occur earlier, and even significantly
earlier, than its Stated Maturity, depending,
in part, on the rate of principal payments on
the related Mortgage Loans. The rate of
principal payments (and of principal
prepayments in particular) on the Mortgage
Loans pledged as security for any Series of
Bonds will depend on a variety of factors,
including the characteristics of such
Mortgage Loans and the prevailing level of
interest rates from time to time, as well as
on a variety of economic, demographic,
geographic, tax, legal and other factors. No
assurance can be given as to the actual
prepayment experience of such Mortgage Loans.
The Stated Maturity for each class of Offered
Bonds will be set forth in the related
Prospectus Supplement. See "Yield and
Maturity Considerations".
Special Redemption of Bonds...... If so specified in the related Prospectus
Supplement, a Series of Bonds will be subject
to a special redemption (any date on which a
special redemption may and does occur, a
"Special Redemption Date"), in whole or in
part, if, as a result of prepayment
experience on the related Mortgage Loans or
low reinvestment yields or both, the
Indenture Trustee determines (based on
assumptions, if any, specified in the related
Indenture and after giving effect to the
amounts, if any, available to be withdrawn
from or under any reserve fund or instrument
constituting Credit Support or a Cash Flow
Agreement for such Series) that the amount
anticipated to be available in the Payment
Account for such Series on the date specified
in the related Prospectus Supplement, will be
insufficient to meet debt service
requirements on any portion of the Bonds. Any
such redemption would be limited to certain
collections, including the aggregate amount
of all scheduled principal payments and
prepayments, received on the related Mortgage
Loans since the last Payment Date or Special
Redemption Date, whichever is later, and may
shorten the maturity of any Bond so redeemed
by no more than the period between the date
of such special redemption and the next
Payment Date. All payments of principal
pursuant to any special redemption will be
made in the order of priority and manner
specified in the related Prospectus
Supplement. Bonds subject to special
redemption shall be redeemed on the
applicable Special Redemption Date at a price
(the "Redemption Price") equal to 100% (or
such other percentage specified in the
related Prospectus Supplement) of the
principal amount of such Bonds, or portions
thereof, so redeemed, plus accrued interest
thereon to the date specified in the related
Prospectus Supplement. To the extent
described in the related Prospectus
Supplement, a Series of Bonds may be subject
to special redemption in whole or in part
following certain defaults under an agreement
constituting Credit Support and upon the
occurrence of certain other events, at the
Redemption Price. See "Description of the
Bonds--Special Redemption of Bonds".
Optional Redemption of Bonds..... If and to the extent specified in the related
Prospectus Supplement, one or more classes of
Bonds of any Series may be redeemed in whole
or in part, at the Issuer's option, on any
Payment Date on or after the date specified
in the related Prospectus Supplement and at
the Redemption Price equal to 100% of the
principal amount of such Bonds, or portions
thereof, so redeemed, plus accrued interest
thereon to the date specified in the related
Prospectus Supplement. Any such optional
redemption may occur at a time when a
significant portion of the aggregate Bond
Principal Amount of all the classes of Bonds
that will be so redeemed, remains outstanding
(that is, a time when the aggregate Bond
Principal Amount of such classes of Bonds is
greater than 25% of the initial aggregate
Bond Principal Amount thereof). See
"Description of the Bonds--Optional
Redemption of Bonds".
Registration of Bonds............ If so provided in the related Prospectus
Supplement, one or more classes of the
Offered Bonds will initially be represented
by one or more Bonds, registered in the name
of Cede & Co., as the nominee of DTC. No
person acquiring an interest in Offered Bonds
so registered will be entitled to receive a
definitive bond, representing such person's
interest except in the event that definitive
bonds are issued under the limited
circumstances described herein. See "Risk
Factors--Owners of Book-Entry Bonds Not
Entitled to Exercise Rights of Holders of
Bonds" and "Description of the
Bonds--Book-Entry Registration and Definitive
Bonds."
Tax Status of the Bonds.......... In the opinion of Cadwalader, Wickersham &
Taft, special counsel to the Depositor, the
Bonds of each Series will constitute
evidences of indebtedness of the related
Issuer treated as debt instruments for
federal income tax purposes. For further
information regarding federal income tax
consequences of an investment in the Bonds,
see "Federal Income Tax Consequences" herein.
Certain ERISA Considerations..... A fiduciary of any retirement plan or other
employee benefit plan or arrangement subject
to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or Section
4975 of the Internal Revenue Code of 1986, as
amended (the "Code") (each, a "Plan") should
carefully review with its legal advisors
whether the purchase or holding of the Bonds
could give rise to a transaction prohibited
or not otherwise permissible under ERISA or
Section 4975 of the Code. See "Certain ERISA
Considerations" herein and in the related
Prospectus Supplement.
Legal Investment................. The related Prospectus Supplement will
specify whether the Offered Bonds will
constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market
Enhancement Act of 1984, as amended. The
appropriate characterization of the Offered
Bonds under various legal investment
restrictions, and thus the ability of
investors subject to these restrictions to
purchase the Offered Bonds, may be subject to
significant interpretive uncertainties.
Investors whose investment authority is
subject to legal restrictions should consult
their own legal advisors to determine whether
and to what extent the Offered Bonds
constitute legal investments for them. See
"Legal Investment" herein and in the related
Prospectus Supplement.
Rating........................... At the date of issuance, as to each Series,
each class of Offered Bonds will be rated in
one of the four highest rating categories by
one or more nationally recognized statistical
rating agencies (each, a "Rating Agency").
See "Rating" herein and in the related
Prospectus Supplement.
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.
Material Risks................... Prospective investors are urged to read "Risk
Factors" herein and in the applicable
Prospectus Supplement for a discussion of the
material risks associated with an investment
in the Bonds.
No Listing of Bonds.............. It is not expected that any application will
be made to list the Bonds of a Series or any
securities exchange or quote the Bonds in the
automated quotation system of any registered
securities association.
<PAGE>
RISK FACTORS
Investors should consider, in connection with the purchase of Offered
Bonds, the following factors and certain other factors as may be set forth in
"Risk Factors" in the related Prospectus Supplement.
Limited Liquidity for Bonds
There can be no assurance that a secondary market for the Bonds of any
Series will develop or, if it does develop, that it will provide holders with
liquidity of investment or will continue while Bonds of such Series remain
outstanding. Any such secondary market may provide less liquidity to investors
than any comparable market for securities evidencing interests in single family
mortgage loans. The market value of Bonds will fluctuate with changes in
prevailing rates of interest. Consequently, sale of Bonds by a holder in any
secondary market that may develop may be at a discount from 100% of their
original principal balance or from their purchase price. Furthermore, secondary
market purchasers may look only hereto, to the related Prospectus Supplement and
to the reports to Bondholders delivered pursuant to the related Agreement as
described herein under the heading "Description of the Bonds--Reports to
Bondholders," "--Book-Entry Registration and Definitive Bonds" and "Description
of the Agreements--Evidence as to Compliance" for information concerning the
Bonds. Except to the extent described herein and in the related Prospectus
Supplement, Bondholders will have no redemption rights and the Bonds are subject
to early retirement only under certain specified circumstances described herein
and in the related Prospectus Supplement. See "Description of the
Bonds--Optional Redemption of Bonds" and "Description of the Bonds--Special
Redemption of Bonds." It is not expected that any application will be made to
list the Bonds of a Series on any securities exchange or quote the Bonds in the
automated quotation system of any registered securities association.
Accordingly, the liquidity of the Bonds may be limited.
Limited Assets for Payment of Bonds
The Bonds of each Series will not represent an obligation of or interest in
the Depositor, any Master Servicer, any Special Servicer or any of their
respective affiliates, except to the limited extent that the Bonds of each
Series will represent limited recourse obligations of one or more Owner Trusts.
The only other obligations with respect to the Bonds or the Mortgage Loans will
be the obligations (if any) of the Depositor (or, if otherwise provided in the
related Prospectus Supplement, the person identified therein as the person
making certain representations and warranties with respect to the Mortgage
Loans, as applicable, the "Warrantying Party") pursuant to certain limited
representations and warranties made with respect to the Mortgage Loans. Since
certain representations and warranties with respect to the Mortgage Loans may
have been made and/or assigned in connection with transfers of such Mortgage
Loans prior to the Closing Date, the rights of the Indenture Trustee and the
Bondholders with respect to such representations or warranties will be limited
to their rights as an assignee thereof. The Depositor, any Servicer or any
affiliate thereof will have an obligation with respect to the representations
and warranties made by another entity only if and to the extent expressly
provided in the related Prospectus Supplement. The Bonds or the underlying
Mortgage Loans will be guaranteed or insured by a governmental agency or
instrumentality, the Depositor, any Servicer or any of their affiliates only if
and to the extent expressly provided in the related Prospectus Supplement.
Proceeds of the related Collateral for each Series of Bonds (including the
Mortgage Loans and any form of credit enhancement) will be the sole source of
payments on the Bonds, and there will be no recourse to the Depositor or any
other entity in the event that such proceeds are insufficient or otherwise
unavailable to make all payments provided for under the Bonds.
Bondholders of a Series will have a claim against or security interest in
the Collateral for any other Series if and only to the extent expressly provided
in the related Prospectus Supplement. If the related Trust Assets constituting
the Collateral is insufficient to make payments on such Bonds, no other assets
(including any Trust Assets not constituting the Collateral, if any) will be
available for payment of the deficiency. Additionally, certain amounts remaining
in certain funds or accounts, including the Payment Account, the Collection
Account and REO Account and any accounts maintained as Credit Support, may be
withdrawn under certain conditions, as described in the related Prospectus
Supplement. In the event of such withdrawal, such amounts will not be available
for future payment of principal of or interest on the Bonds. If so provided in
the Prospectus Supplement for a Series of Bonds consisting of one or more
classes of Subordinate Bonds, on any Payment Date in respect of which losses or
shortfalls in collections on the Collateral have been incurred, the amount of
such losses or shortfalls will be borne first by one or more classes of the
Subordinate Bonds, and, thereafter, by the remaining classes of Bonds in the
priority and manner and subject to the limitations specified in such Prospectus
Supplement.
Rate of Prepayments on Mortgage Loans, Optional Redemption of Bonds and
Priority of Payment of Bonds May Adversely Affect Average Lives and Yields
of Bonds
Prepayments (including those caused by defaults) on the Mortgage Loans
constituting the related Collateral for any Series of Bonds generally will
result in a faster rate of principal payments on one or more classes of the
related Bonds than if payments on such Mortgage Loans were made as scheduled.
Thus, the prepayment experience on the Mortgage Loans may affect the average
life of each class of related Bonds. The rate of principal payments on pools of
mortgage loans varies between pools and from time to time is influenced by a
variety of economic, demographic, geographic, social, tax, legal and other
factors. There can be no assurance as to the rate of prepayment on the related
Mortgage Loans with respect to any Series of Bonds or that the rate of payments
will conform to any model described herein or in any Prospectus Supplement. If
prevailing interest rates fall significantly below the interest rates on the
applicable Mortgage Loans, principal prepayments are likely to be higher than if
prevailing rates remain at or above the rates borne by such Mortgage Loans. As a
result, the actual maturity of any class of Bonds could occur significantly
earlier than expected. A Series of Bonds may include one or more classes of
Bonds with priorities of payment and, as a result, yields on other classes of
Bonds, including classes of Offered Bonds, of such Series may be more sensitive
to prepayments on Mortgage Loans. A Series of Bonds may include one or more
classes offered at a significant premium or discount. Yields on such classes of
Bonds will be sensitive, and in some cases extremely sensitive, to prepayments
on Mortgage Loans and, where the amount of interest payable with respect to a
class is disproportionately high, as compared to the amount of principal, as
with certain classes of Interest Only Bonds, a holder might, in some prepayment
scenarios, fail to recoup its original investment. A Series of Bonds may include
one or more classes of Bonds, including classes of Offered Bonds, that provide
for payment of principal thereof from amounts attributable to interest accrued
but not currently payable on one or more classes of Accrual Bonds and, as a
result, yields on such Bonds will be sensitive to (a) the provisions of such
Accrual Bonds relating to the timing of payments of interest thereon and (b) if
such Accrual Bonds accrue interest at a variable or floating interest rate,
changes in such rate. See "Yield Considerations" herein and, if applicable, in
the related Prospectus Supplement.
The Issuer may, at its option and if so specified in the related Prospectus
Supplement, redeem in whole or in part, one or more classes of Bonds of any
Series on any Payment Date for such Series on or after the date or dates, if
any, specified in such Prospectus Supplement. Notice of such redemption will be
given by the Issuer or Indenture Trustee for such Series prior to the expected
date thereof. The Redemption Price for any Bond so redeemed will be equal to
100% of the outstanding principal amount of such Bond, or portion thereof, so
redeemed, together with interest accrued thereon to the date specified in the
related Prospectus Supplement. Any such optional redemption may occur at a time
when a significant portion of the aggregate Bond Principal Amount of all the
classes of Bonds that will be so redeemed, remains outstanding (that is, a time
when the aggregate Bond Principal Amount of such classes of Bonds is greater
than 25% of the initial aggregate Bond Principal Amount thereof).
Limited Nature of Ratings
Any rating assigned by a Rating Agency to a class of Bonds will reflect
such Rating Agency's assessment solely of the likelihood that holders of Bonds
of such class will receive payments to which such Bondholders are entitled under
the related Agreement. Such rating will not constitute an assessment of the
likelihood that principal prepayments (including those caused by defaults) on
the related Mortgage Loans will be made, the degree to which the rate of such
prepayments might differ from that originally anticipated or the likelihood of
early optional termination of the Series of Bonds. Such rating will not address
the possibility that prepayment at higher or lower rates than anticipated by an
investor may cause such investor to experience a lower than anticipated yield or
that an investor purchasing a Bond at a significant premium might fail to recoup
its initial investment under certain prepayment scenarios. Each Prospectus
Supplement will identify any payment to which holders of Offered Bonds of the
related Series are entitled that is not covered by the applicable rating.
The amount, type and nature of credit support, if any, established with
respect to a Series of Bonds will be determined on the basis of criteria
established by each Rating Agency rating classes of such Series. Such criteria
are sometimes based upon an actuarial analysis of the behavior of mortgage loans
in a larger group. Such analysis is often the basis upon which each Rating
Agency determines the amount of credit support required with respect to each
such class. There can be no assurance that the historical data supporting any
such actuarial analysis will accurately reflect future experience nor any
assurance that the data derived from a large pool of mortgage loans accurately
predicts the delinquency, foreclosure or loss experience of any particular pool
of Mortgage Loans. No assurance can be given that values of any Mortgaged
Properties have remained or will remain at their levels on the respective dates
of origination of the related Mortgage Loans. Moreover, there is no assurance
that appreciation of real estate values generally will limit loss experiences on
the Mortgaged Properties. If the commercial or multifamily residential real
estate markets should experience an overall decline in property values such that
the outstanding principal balances of the Mortgage Loans with respect to a
particular Series of Bonds and any secondary financing on the related Mortgaged
Properties become equal to or greater than the value of the Mortgaged
Properties, the rates of delinquencies, foreclosures and losses could be higher
than those now generally experienced by institutional lenders. In addition,
adverse economic conditions (which may or may not affect real property values)
may affect the timely payment by Mortgagors of scheduled payments of principal
and interest on the Mortgage Loans and, accordingly, the rates of delinquencies,
foreclosures and losses with respect to such Mortgage Loans. To the extent that
such losses are not covered by the Credit Support, if any, described in the
related Prospectus Supplement, such losses will be borne, at least in part, by
the holders of one or more classes of the Bonds of the related Series. See
"Description of Credit Support" and "Rating."
Limited Issuer Events of Default
With certain exceptions described herein, and except to the extent
otherwise provided in the related Prospectus Supplement, the holders of Bonds of
any Series will have no independent ability to declare a default unless the
Issuer shall fail to pay such Bonds in full by their Stated Maturity. Except to
the extent otherwise specified in the Prospectus Supplement for any Series of
Bonds, interest will be payable on the respective classes of Bonds of such
Series on each Payment Date only to the extent that there are funds available
for such purpose in the related Payment Account, and the Issuer's failure to pay
interest on such Bonds on a current basis will not constitute an Issuer Event of
Default (as defined herein). In addition, except to the extent otherwise
specified in the Prospectus Supplement for any Series of Bonds, it will not be
an Issuer Event of Default if the aggregate principal amount of the related
Collateral declines below the aggregate Bond Principal Amount of such Bonds or
of any particular class or classes thereof. See "Description of the
Agreements--Issuer Events of Default".
Bondholders Have Limited Ability to Force Sale of Collateral following
Non-Payment of Principal or Interest
Except to the extent otherwise specified in the related Prospectus
Supplement, following an Issuer Event of Default in respect of any Series of
Bonds, the Indenture Trustee for such Series may (and, at the direction of a
percentage of holders of Bonds specified in the related Prospectus Supplement,
shall be required to) declare all the Bonds of such Series to be due and
payable. In addition, except to the extent otherwise specified in the related
Prospectus Supplement, following any such declaration of acceleration, the
Indenture Trustee for such Series may, generally with the consent or at the
direction of a percentage of holders of Bonds specified in the related
Prospectus Supplement, liquidate the related Mortgage Loans. Except to the
extent otherwise specified in the related Prospectus Supplement, any such
declaration of acceleration and its consequences may be rescinded and annulled
under certain circumstances by a percentage of holders of Bonds specified in the
related Prospectus Supplement. For purposes of the foregoing, Bonds held by the
Issuer or any affiliate thereof will be deemed not to be outstanding. See
"Description of the Agreements--Issuer Events of Default".
Declaration of acceleration and liquidation of Collateral pursuant to the
foregoing procedures (or any alternative procedures described in the related
Prospectus Supplement) will, in general, be the sole remedy against the Issuer
for the holders of the Offered Bonds upon an Issuer Event of Default.
Each holder of an Offered Bond will be deemed to have agreed by the
acceptance of its Bond not to file a bankruptcy petition or commence similar
proceedings in respect of the Issuer.
The market value of the Mortgage Loans pledged to secure any Series of
Bonds will fluctuate as general interest rates fluctuate, among other things.
Following an Issuer Event of Default, there is no assurance that the market
value of the Mortgage Loans pledged to secure the affected Series of Bonds will
be equal to or greater than the unpaid principal and accrued interest due on the
Bonds of such Series, together with any other expenses or liabilities payable
from the sales proceeds. The holders of certain classes of Bonds may have a
disincentive to authorize the sale of the related Mortgage Loans following an
Issuer Event of Default because the net proceeds of such sale may be
insufficient to pay in full the principal of and interest on their Bonds.
The inability of the holders of a particular class of Bonds independently
to force the sale of the related Mortgage Loans even though an Issuer Event of
Default has occurred that affects such class of Bondholders, and the inability
of Bondholders generally to force a sale of the related Mortgage Loans
regardless of a substantial decline in the aggregate principal amount of the
related Collateral and notwithstanding that interest may not have been timely
paid on a class of Bonds, may adversely affect the holders of one or more
classes of Offered Bonds.
Bankruptcy or Insolvency of the Issuer
The bankruptcy or insolvency of the Issuer of any Series of Bonds could
adversely affect payments on the Offered Bonds of such Series. The automatic
stay imposed by Title 11 of the United States Code (the "Bankruptcy Code") could
prevent enforcement of obligations of such Issuer, including under such Bonds
and the related Indenture, or actions against any such Issuer's property,
including the related Collateral, prior to modification of the stay. In
addition, the trustee in bankruptcy for such Issuer may be able to accelerate
payment of such Bonds and liquidate the related Mortgage Loans. In the event the
principal of the Bonds of such Series is declared due and payable, the holders
of any Offered Bonds of such Series issued at a discount from par ("original
issue discount") may be entitled, under applicable provisions of the Bankruptcy
Code, to receive no more than an amount equal to the unpaid principal amount
thereof less unamortized original issue discount ("accreted value"). There is no
assurance as to how such accreted value would be determined if such event
occurred. However, the Issuer of each Series of Bonds will be structured to
limit the likelihood of bankruptcy or insolvency, but there can be no assurance
that such bankruptcy or insolvency will not occur.
Factors Which May Increase the Risk of Losses on Mortgage Loans Secured by
Multifamily/Commercial Property Versus Single Family Property
Mortgage loans made with respect to multifamily or commercial property may
entail risks of delinquency and foreclosure, and risks of loss in the event
thereof, that are greater than similar risks associated with single family
property. See "Description of the Collateral--Default and Loss Considerations
with Respect to the Mortgage Loans." The ability of a Mortgagor to repay a loan
secured by an income-producing property typically is dependent primarily upon
the successful operation of such property rather than any independent income or
assets of the Mortgagor; thus, the value of an income-producing property is
directly related to the net operating income derived from such property. In
contrast, the ability of a Mortgagor to repay a single family loan typically is
dependent primarily upon the Mortgagor's household income, rather than the
capacity of the property to produce income; thus, other than in geographical
areas where employment is dependent upon a particular employer or an industry,
the Mortgagor's income tends not to reflect directly the value of such property.
A decline in the net operating income of an income-producing property will
likely affect both the performance of the related loan as well as the
liquidation value of such property, whereas a decline in the income of a
Mortgagor on a single family property will likely affect the performance of the
related loan but may not affect the liquidation value of such property.
Moreover, a decline in the value of a Mortgaged Property will increase the risk
of loss particularly with respect to any related junior Mortgage Loan. See
"--Increased Risk of Losses on Foreclosure of Junior Mortgage Loans."
The performance of a mortgage loan secured by an income-producing property
leased by the Mortgagor to tenants as well as the liquidation value of such
property may be dependent upon the business operated by such tenants in
connection with such property, the creditworthiness of such tenants or both. The
risks associated with such loans may be offset by the number of tenants or, if
applicable, a diversity of types of business operated by such tenants.
It is anticipated that a substantial portion of the Mortgage Loans with
respect to any Series of Bonds will be nonrecourse loans or loans for which
recourse may be limited, as to which, in the event of Mortgagor default,
recourse may be had only against the specific property and such other assets, if
any, as have been pledged to secure the related Mortgage Loan. With respect to
those Mortgage Loans that provide for recourse against the Mortgagor and its
assets generally, there can be no assurance that such recourse will ensure a
recovery in respect of a defaulted Mortgage Loan greater than the liquidation
value of the related Mortgaged Property.
Further, the concentration of default, foreclosure and loss risks in
individual Mortgagors or Mortgage Loans with respect to a particular Series of
Bonds or the related Mortgaged Properties will generally be greater than for
pools of single family loans both because the related Mortgage Loans will
generally consist of a smaller number of loans than would a single family pool
of comparable aggregate unpaid principal balance and because of the higher
principal balance of individual Mortgage Loans. Mortgage Loans with respect to
any Series of Bonds may consist of only a single or limited number of Mortgage
Loans and/or relate to Leases to only a single Lessee or a limited number of
Lessees.
Increased Risk of Losses in Connection with Commercial Loans and Leases
If so described in the related Prospectus Supplement, each Mortgagor under
a Commercial Loan may be an entity created by the owner or purchaser of the
related Commercial Property solely to own or purchase such property, in part to
isolate the property from the debts and liabilities of such owner or purchaser.
Except to the extent otherwise specified in the related Prospectus Supplement,
each such Commercial Loan will represent a nonrecourse obligation of the related
Mortgagor secured by the lien of the related Mortgage and the related Lease
Assignments. Whether or not such loans are recourse or nonrecourse obligations,
it is not expected that the Mortgagors will have any significant assets other
than the Commercial Properties and the related Leases, which will be pledged to
the Indenture Trustee under the related Agreement. Therefore, the payment of
amounts due on any such Commercial Loans, and, consequently, the payment of
principal of and interest on the related Bonds, will depend primarily or solely
on rental payments by the Lessees. Such rental payments will, in turn, depend on
continued occupancy by and/or the creditworthiness of such Lessees, which in
either case may be adversely affected by a general economic downturn or an
adverse change in their financial condition. Moreover, to the extent a
Commercial Property was designed for the needs of a specific type of tenant
(e.g., a nursing home, hotel or motel), the value of such property in the event
of a default by the Lessee or the early termination of such Lease may be
adversely affected because of difficulty in re-leasing the property to a
suitable substitute lessee or, if re-leasing to such a substitute is not
possible, because of the cost of altering the property for another more
marketable use. As a result, without the benefit of the Lessee's continued
support of the Commercial Property, and absent significant amortization of the
Commercial Loan, if such loan is foreclosed on and the Commercial Property
liquidated following a lease default, the net proceeds might be insufficient to
cover the outstanding principal and interest owing on such loan, thereby
increasing the risk that holders of the Bonds will suffer some loss.
Risks of Loss on Balloon Payment Loan if Obligor is Unable to Refinance
or Sell Related Property
Certain of the Mortgage Loans (the "Balloon Payment Loans") as of the close
of business on the date specified in the Prospectus Supplement as the cut-off
date (the "Cut-off Date"), may not be fully amortizing over their terms to
maturity and, thus, will require substantial principal payments (i.e., balloon
payments) at their stated maturity. Balloon Payment Loans involve a greater
degree of risk because the ability of an obligor to make a balloon payment
typically will depend upon its ability either to timely refinance the loan or to
timely sell the related property. The ability of an obligor to accomplish either
of these goals will be affected by a number of factors, including the level of
available mortgage interest rates at the time of sale or refinancing, the
obligor's equity in the related property, the financial condition and operating
history of the obligor and the related property, tax laws, rent control laws
(with respect to certain Multifamily Properties and mobile home parks),
reimbursement rates (with respect to certain nursing homes), renewability of
operating licenses, prevailing general economic conditions and the availability
of credit for commercial or multifamily real properties, as the case may be,
generally.
Increased Risk of Losses on Foreclosure of Junior Mortgage Loans
To the extent specified in the related Prospectus Supplement, certain of
the Mortgage Loans may be secured primarily by junior mortgages. In the case of
liquidation, Mortgage Loans secured by junior mortgages are entitled to
satisfaction from proceeds that remain from the sale of the related Mortgaged
Property after the mortgage loans senior to such Mortgage Loans have been
satisfied. If there are not sufficient funds to satisfy such junior Mortgage
Loans and senior mortgage loans, such Mortgage Loan would suffer a loss and,
accordingly, one or more classes of Bonds would bear such loss. Therefore, any
risks of deficiencies associated with first Mortgage Loans will be greater with
respect to junior Mortgage Loans. See "--Factors Which May Increase the Risk of
Losses on Mortgage Loans Secured by Multifamily/Commercial Property Versus
Single Family Property."
Risks Associated with Obligor Default
If so specified in the related Prospectus Supplement, in order to maximize
recoveries on defaulted Mortgage Loans, a Master Servicer or a Special Servicer
will be permitted (within prescribed parameters) to extend and modify Mortgage
Loans that are in default or as to which a payment default is imminent,
including in particular with respect to balloon payments. In addition, a Master
Servicer or a Special Servicer may receive a workout fee based on receipts from
or proceeds of such Mortgage Loans. While any such entity generally will be
required to determine that any such extension or modification is reasonably
likely to produce a greater recovery on a present value basis than liquidation,
there can be no assurance that such flexibility with respect to extensions or
modifications or payment of a workout fee will increase the present value of
receipts from or proceeds of Mortgage Loans that are in default or as to which a
payment default is imminent. Additionally, if so specified in the related
Prospectus Supplement, certain of the Mortgage Loans included in the Mortgage
Pool for a Series may have been subject to workouts or similar arrangements
following periods of delinquency and default. See "Description of the
Agreements--Collection and other Servicing Procedures--Special Servicer."
Risks Associated with Mortgagor Type
Mortgage Loans made to partnerships, corporations or other entities may
entail risks of loss from delinquency and foreclosure that are greater than
those of Mortgage Loans made to individuals. The Mortgagor's sophistication and
form of organization may increase the likelihood of protracted litigation or
bankruptcy in default situations.
Credit Support Limitations
The Prospectus Supplement for a Series of Bonds will describe any Credit
Support included in the related Collateral, which may include letters of credit,
insurance policies, guarantees, reserve funds or other types of credit support,
or combinations thereof. Use of Credit Support will be subject to the conditions
and limitations described herein and in the related Prospectus Supplement.
Moreover, such Credit Support may not cover all potential losses or risks; for
example, Credit Support may or may not cover fraud or negligence by a mortgage
loan originator or other parties.
A Series of Bonds may include one or more classes of Subordinate Bonds
(which may include Offered Bonds), if so provided in the related Prospectus
Supplement. Although subordination is intended to reduce the risk to holders of
Senior Bonds of delinquent payments or ultimate losses, the amount of
subordination will be limited and may decline under certain circumstances. In
addition, if principal payments on one or more classes of Bonds of a Series are
made in a specified order of priority, any limits with respect to the aggregate
amount of claims under any related Credit Support may be exhausted before the
principal of the lower priority classes of Bonds of such Series has been repaid.
As a result, the impact of significant losses and shortfalls on the Collateral
may fall primarily upon those classes of Bonds having a lower priority of
payment. Moreover, if a form of Credit Support covers more than one Series of
Bonds (each, a "Covered Trust"), holders of Bonds evidencing an interest in a
Covered Trust will be subject to the risk that such Credit Support will be
exhausted by the claims of other Covered Trusts.
The amount of any applicable Credit Support supporting one or more classes
of Offered Bonds, including the subordination of one or more classes of Bonds,
will be determined on the basis of criteria established by each Rating Agency
rating such classes of Bonds based on an assumed level of defaults,
delinquencies, other losses or other factors. There can, however, be no
assurance that the loss experience on the related Mortgage Loans will not exceed
such assumed levels. See "--Limited Nature of Ratings," "Description of the
Bonds" and "Description of Credit Support."
Regardless of the form of credit enhancement provided, the amount of
coverage will be limited in amount and in most cases will be subject to periodic
reduction in accordance with a schedule or formula. In certain circumstances,
the Indenture Trustee or the Master Servicer will be permitted to reduce,
terminate or substitute all or a portion of the credit enhancement for any
Series of Bonds, if the applicable Rating Agency indicates that the then-current
rating thereof will not be adversely affected. The rating of any Series of Bonds
by any applicable Rating Agency may be lowered following the initial issuance
thereof as a result of the downgrading of the obligations of any applicable
credit support provider, or as a result of losses on the related Mortgage Loans
substantially in excess of the levels contemplated by such Rating Agency at the
time of its initial rating analysis. None of the Depositor, the Indenture
Trustee, the Master Servicer or any of their affiliates will have any obligation
to replace or supplement any credit enhancement, or to take any other action to
maintain any rating of any Series of Bonds.
Risk of Unenforceability of Certain Mortgage Provisions
Mortgages may contain a due-on-sale clause, which permits the lender to
accelerate the maturity of the Mortgage Loan if the Mortgagor sells, transfers
or conveys the related Mortgaged Property or its interest in the Mortgaged
Property. Mortgages may also include a debt-acceleration clause, which permits
the lender to accelerate the debt upon a monetary or non-monetary default of the
Mortgagor. Such clauses are generally enforceable subject to certain exceptions.
The courts of all states will enforce clauses providing for acceleration in the
event of a material payment default. The equity courts of any state, however,
may refuse the foreclosure of a mortgage or deed of trust when an acceleration
of the indebtedness would be inequitable or unjust or the circumstances would
render the acceleration unconscionable.
If so specified in the related Prospectus Supplement, the Mortgage Loans
will be secured by an assignment of leases and rents pursuant to which the
Mortgagor typically assigns its right, title and interest as landlord under the
leases on the related Mortgaged Property and the income derived therefrom to the
lender as further security for the related Mortgage Loan, while retaining a
license to collect rents for so long as there is no default. In the event the
Mortgagor defaults, the license terminates and the lender is entitled to collect
rents. Such assignments are typically not perfected as security interests prior
to actual possession of the cash flows. Some state laws may require that the
lender take possession of the Mortgaged Property and obtain a judicial
appointment of a receiver before becoming entitled to collect the rents. In
addition, if bankruptcy or similar proceedings are commenced by or in respect of
the Mortgagor, the lender's ability to collect the rents may be adversely
affected. See "Certain Legal Aspects of the Mortgage Loans and the
Leases--Leases and Rents."
Environmental Risks
Real property pledged as security for a mortgage loan may be subject to
certain environmental risks. Under federal law, including the Comprehensive
Environmental, Response, and Liability Act of 1980, as amended ("CERCLA"), and
the laws of certain states, failure to perform the remediation required or
demanded by the state or federal government of any condition or circumstance
that (i) may pose an imminent or substantial endangerment to the public health
or welfare or the environment, (ii) may result in a release or threatened
release of any hazardous material, or (iii) may give rise to any environmental
claim or demand (each such condition or circumstance is defined as an
"Environmental Condition"), may give rise to a lien on the property to ensure
the reimbursement of remedial costs incurred by the federal or state government.
In several states, such a lien has priority over the lien of an existing
mortgage against such property. Of particular concern may be those mortgaged
properties which are, or have been, the site of manufacturing, industrial or
disposal activity. Such environmental risks may give rise to (a) a diminution in
value of property securing a mortgage note or the inability to foreclose against
such property or (b) in certain circumstances as more fully described below,
liability for clean-up costs or other remedial actions, which liability could
exceed the value of such property, the aggregate assets of the owner or
operator, or the principal balance of the related indebtedness.
The state of the law is currently unclear as to whether and under what
circumstances cleanup costs, or the obligation to take remedial actions, could
be imposed on a secured lender such as the Issuer. Under the laws of some states
and under CERCLA, a lender may be liable as an "owner" or an "operator" of a
contaminated mortgaged property for the costs of remediation of releases or
threatened releases of hazardous substances at the mortgaged property. Such
liability may attach if the lender or its agents or employees have participated
in the management of the operations of the borrower, even though the
environmental damage or threat was caused by a prior owner, operator, or other
third party.
Excluded from CERCLA's definition of "owner or operator" is any person "who
without participating in management of the facility, holds indicia of ownership
primarily to protect his security interest" (the "secured-creditor exemption").
This exemption for holders of a security interest such as a secured lender
applies only in circumstances when the lender seeks to protect its security
interest in the contaminated facility or property. Thus, if a lender's
activities encroach on the actual management of such facility or property, the
lender faces potential liability as an "owner or operator" under CERCLA.
Similarly, when a lender forecloses and takes title to a contaminated facility
or property (whether it holds the facility or property as an investment or
leases it to a third party), under some circumstances the lender may incur
potential CERCLA liability.
Recent amendments to CERCLA list permissible actions that may be undertaken
by a lender holding security in a contaminated facility without exceeding the
bounds of the secured-creditor exemption, subject to certain conditions and
limitations. Additionally, the recent amendments provide certain protections
from CERCLA liability as an "owner or operator" to a lender who forecloses on
contaminated property, as long as it seeks to divest itself of the facility at
the earliest practicable commercially reasonable time on commercially reasonable
terms. The protections afforded lenders under the recent amendments are subject
to terms and conditions that have not been clarified by the courts. Moreover,
the CERCLA secured-creditor exemption does not necessarily affect the potential
for liability in actions under other federal or state laws which may impose
liability on "owners or operators" but do not incorporate the secured-creditor
exemption. Furthermore, the secured-creditor exemption does not protect lenders
from other bases of CERCLA liability, such as that imposed on "generators" or
"transporters" of hazardous substances. See "Certain Legal Aspects of the
Mortgage Loans and the Leases--Environmental Legislation."
Increased Risk of Loss if Mortgage Loans Include Delinquent and
Non-Performing Mortgage Loans
If so provided in the related Prospectus Supplement, the Collateral for a
particular Series of Bonds may include Mortgage Loans that are past due or are
non-performing. The servicing of such Mortgage Loans as to which a specified
number of payments are delinquent will be performed by the Special Servicer or
another entity as specified in the related Prospectus Supplement; however, the
same entity may act as both Master Servicer and Special Servicer. Credit Support
provided with respect to a particular Series of Bonds may not cover all losses
related to such delinquent or nonperforming Mortgage Loans, and investors should
consider the risk that the inclusion of such Mortgage Loans as Collateral for a
particular Series of Bonds may adversely affect the rate of defaults and
prepayments on the related Mortgage Loans and the yield on the Bonds of such
Series.
ERISA Considerations
Generally, ERISA applies to investments made by employee benefit plans and
transactions involving the assets of such plans. Due to the complexity of
regulations which govern such plans, prospective investors that are subject to
ERISA are urged to consult their own counsel regarding consequences under ERISA
of acquisition, ownership and disposition of the Offered Bonds of any Series,
including the possibility that such an investment may be inconsistent with the
duties imposed on the Plan's fiduciary under ERISA and may give rise to
prohibited transactions under ERISA. See "Certain ERISA Considerations" herein.
Risks Associated with Control of Voting Rights
Under certain circumstances, the consent or approval of the holders of a
specified percentage of the aggregate Bond Principal Amount of all outstanding
Bonds of a Series or a similar means of allocating decision-making under the
related Agreement ("Voting Rights") will be required to direct, and will be
sufficient to bind all Bondholders of such Series to, certain actions, including
directing the Special Servicer or the Master Servicer with respect to actions to
be taken with respect to certain Mortgage Loans and REO Properties and amending
the related Agreement in certain circumstances. See "Description of the
Agreements--Servicer Events of Default," "--Rights Upon Servicer Event of
Default," "--Amendment" and "--List of Bondholders."
Owners of Book-Entry Bonds Not Entitled to Exercise Rights of Holders of Bonds
If so provided in the Prospectus Supplement, one or more classes of the
Bonds will be initially represented by one or more bonds registered in the name
of Cede, the nominee for DTC, and will not be registered in the names of the
Beneficial Owners or their nominees. Because of this, unless and until Bonds are
issued in fully registered, certificated form ("Definitive Bonds") are issued,
Beneficial Owners will not be recognized by the Indenture Trustee as
"Bondholders" (as that term is to be used in the related Agreement). Hence,
until such time, Beneficial Owners will be able to exercise the rights of
Bondholders only indirectly through DTC and its participating organizations. See
"Description of the Bonds--Book-Entry Registration and Definitive Bonds."
Risks Associated With Year 2000 Compliance
The Depositor is aware of the issues associated with the programming code
in existing computer systems as the millennium (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 cause a system to
fail. In the event that the computer systems of the Indenture Trustee, the
Master Servicer or the Special Servicer, with respect to any Series of Bonds,
are not fully year 2000 compliant, the resulting disruptions in the collection
or distribution of receipts on the related Mortgage Loans could materially
adversely affect the holders of the Offered Bonds.
DESCRIPTION OF THE COLLATERAL
General
The primary assets included as part of the Collateral for any Series of
Bonds will include one or more multifamily and/or commercial mortgage loans
and/or undivided ownership interests in such mortgage loans (collectively, the
"Mortgage Loans"). The Mortgage Loans will not be guaranteed or insured by
Imperial Credit Commercial Mortgage Acceptance Corp. (the "Depositor") or any of
its affiliates. The Mortgage Loans will be guaranteed or insured by a
governmental agency or instrumentality or other person only if and to the extent
expressly provided in the related Prospectus Supplement. Each Mortgage Loan will
be selected by the Depositor for inclusion as part of the Collateral for a
Series of Bonds from among those purchased, either directly or indirectly, from
a prior holder thereof (an "Asset Seller"), which may be an affiliate of the
Depositor and, with respect to Mortgage Loans, which prior holder may or may not
be the originator of such Mortgage Loan.
The Bonds will be entitled to payments in respect of the assets of an owner
trust established by the Depositor other than the related Owner Trust, if and
only to the extent expressly provided in the related Prospectus Supplement.
Mortgage Loans
The Mortgage Loans will be secured by liens on, or security interests in,
Mortgaged Properties consisting of (i) primarily residential properties
consisting of five or more rental or cooperatively owned dwelling units in
high-rise, mid-rise or garden apartment buildings and which may include limited
retail, office or other commercial space ("Multifamily Properties" and the
related loans, "Multifamily Loans") or (ii) office buildings, retail stores and
establishments, hotels or motels, nursing homes, assisted living facilities,
continuum care facilities, day care centers, schools, hospitals or other
healthcare related facilities, industrial properties, warehouse facilities,
mini-warehouse facilities, self-storage facilities, distribution centers,
transportation centers, parking facilities, entertainment and/or recreation
facilities, movie theaters, restaurants, golf courses, car washes, automobile
dealerships, mobile home parks, mixed use (including mixed commercial uses and
mixed commercial and residential uses) and/or unimproved land ("Commercial
Properties" and the related loans, "Commercial Loans") located in any one of the
fifty states, the District of Columbia, Guam, the Commonwealth of Puerto Rico or
any other territory of the United States. If so provided in the related
Prospectus Supplement, the Collateral for a particular Series of Bonds may
include Mortgage Loans secured by Mortgaged Properties not located in the United
States, provided that, on the date of issuance of such Series of Bonds, the
aggregate principal balance of the related Mortgage Loans do not exceed 10% of
the aggregate principal balance of all the Mortgage Loans constituting such
Collateral. To the extent specified in the related Prospectus Supplement, the
Mortgage Loans will be secured by first mortgages or deeds of trust or other
similar security instruments creating a first lien on Mortgaged Property. The
Mortgaged Properties may include leasehold interests in properties, the title to
which is held by third party lessors. The Prospectus Supplement will specify
whether the term of any such leasehold exceeds the term of the mortgage note by
at least ten years. Each Mortgage Loan will have been originated by a person
(the "Originator") other than the Depositor. The related Prospectus Supplement
will indicate if any Originator is an affiliate of the Depositor. The Mortgage
Loans will be evidenced by promissory notes (the "Mortgage Notes") secured by
mortgages or deeds of trust (the "Mortgages") creating a lien on the Mortgaged
Properties. Mortgage Loans will generally also be secured by an assignment of
leases and rents and/or operating or other cash flow guarantees relating to the
Mortgage Loan.
Leases
To the extent specified in the related Prospectus Supplement, the
Commercial Properties may be leased to Lessees that respectively occupy all or a
portion of such properties. Pursuant to a Lease Assignment, the related
Mortgagor may assign its rights, title and interest as lessor under each Lease
and the income derived therefrom to the related mortgagee, while retaining a
license to collect the rents for so long as there is no default. If the
Mortgagor defaults, the license terminates and the mortgagee or its agent is
entitled to collect the rents from the related Lessee or Lessees for application
to the monetary obligations of the Mortgagor. State law may limit or restrict
the enforcement of the Lease Assignments by a mortgagee until it takes
possession of the related Mortgaged Property and/or a receiver is appointed. See
"Certain Legal Aspects of the Mortgage Loans and the Leases--Leases and Rents."
Alternatively, to the extent specified in the related Prospectus Supplement, the
Mortgagor and the mortgagee may agree that payments under Leases are to be made
directly to a Servicer.
To the extent described in the related Prospectus Supplement, the Leases
may require the Lessees to pay rent that is sufficient in the aggregate to cover
all scheduled payments of principal and interest on the related Mortgage Loans
and, in certain cases, their pro rata share of the operating expenses, insurance
premiums and real estate taxes associated with the Mortgaged Properties. Certain
of the Leases may require the Mortgagor to bear costs associated with structural
repairs and/or the maintenance of the exterior or other portions of the
Mortgaged Property or provide for certain limits on the aggregate amount of
operating expenses, insurance premiums, taxes and other expenses that the
Lessees are required to pay. If so specified in the related Prospectus
Supplement, under certain circumstances the Lessees may be permitted to set off
their rental obligations against the obligations of the Mortgagors under the
Leases. In those cases where payments under the Leases (net of any operating
expenses payable by the Mortgagors) are insufficient to pay all of the scheduled
principal and interest on the related Mortgage Loans, the Mortgagors must rely
on other income or sources (including security deposits) generated by the
related Mortgaged Property to make payments on the related Mortgage Loan. To the
extent specified in the related Prospectus Supplement, some Commercial
Properties may be leased entirely to one Lessee. In such cases, absent the
availability of other funds, the Mortgagor must rely entirely on rent paid by
such Lessee in order for the Mortgagor to pay all of the scheduled principal and
interest on the related Commercial Loan. To the extent specified in the related
Prospectus Supplement, certain of the Leases may expire prior to the stated
maturity of the related Mortgage Loan. In such cases, upon expiration of the
Leases the Mortgagors will have to look to alternative sources of income,
including rent payment by any new Lessees or proceeds from the sale or
refinancing of the Mortgaged Property, to cover the payments of principal and
interest due on such Mortgage Loans unless the Lease is renewed. As specified in
the related Prospectus Supplement, certain of the Leases may provide that upon
the occurrence of a casualty affecting a Mortgaged Property, the Lessee will
have the right to terminate its Lease, unless the Mortgagor, as lessor, is able
to cause the Mortgaged Property to be restored within a specified period of
time. Certain Leases may provide that it is the lessor's responsibility, while
other Leases provide that it is the Lessee's responsibility, to restore the
Mortgaged Property after a casualty to its original condition. Certain Leases
may provide a right of termination to the related Lessee if a taking of a
material or specified percentage of the leased space in the Mortgaged Property
occurs, or if the ingress or egress to the leased space has been materially
impaired.
Default and Loss Considerations with Respect to the Mortgage Loans
Mortgage loans secured by commercial and multifamily properties are
markedly different from owner-occupied single family mortgage loans. The
repayment of loans secured by commercial or multifamily properties is typically
dependent upon the successful operation of such property rather than upon the
liquidation value of the real estate. The Mortgage Loans will generally be
non-recourse loans, which means that, absent special facts, the mortgagee may
look only to the Net Operating Income from the property for repayment of the
mortgage debt, and not to any other of the Mortgagor's assets, in the event of
the Mortgagor's default. The Mortgage Loans will be full recourse loans only if
and to the extent expressly provided in the related Prospectus Supplement.
Lenders typically look to the Debt Service Coverage Ratio of a loan secured by
income-producing property as an important measure of the risk of default on such
a loan. The "Debt Service Coverage Ratio" of a Mortgage Loan at any given time
is the ratio of the Net Operating Income for a twelve-month period to the
annualized scheduled payments on the Mortgage Loan. "Net Operating Income"
generally means, for any given period, the total operating revenues derived from
a Mortgaged Property during such period, minus the total operating expenses
incurred in respect of such Mortgaged Property during such period other than (i)
non-cash items such as depreciation and amortization, (ii) capital expenditures
and (iii) debt service on loans secured by the Mortgaged Property. The Net
Operating Income of a Mortgaged Property will fluctuate over time and may be
sufficient or insufficient to cover debt service on the related Mortgage Loan at
any given time.
As the primary component of Net Operating Income, rental income is subject
to the vagaries of the applicable real estate market and/or business climate.
Properties typically leased, occupied or used on a short-term basis, such as
health care-related facilities, hotels and motels, and mini-warehouse and
self-storage facilities, tend to be affected more rapidly by changes in market
or business conditions than do properties leased, occupied or used for longer
periods, such as (typically) retail centers, office buildings and industrial
properties. Commercial Loans may be secured by owner-occupied Mortgaged
Properties or Mortgaged Properties leased to a single tenant. In addition, a
decline in the financial condition of the Mortgagor or single tenant, as
applicable, may have a disproportionately greater effect on the Net Operating
Income from such Mortgaged Properties than would be the case with respect to
Mortgaged Properties with multiple tenants.
Changes in the expense components of Net Operating Income due to the
general economic climate or economic conditions in a locality or industry
segment, such as increases in interest rates, real estate and personal property
tax rates and other operating expenses, including energy costs; changes in
governmental rules, regulations and fiscal policies, including environmental
legislation; and acts of God may also affect the risk of default on the related
Mortgage Loan. As may be further described in the related Prospectus Supplement,
in some cases leases of Mortgaged Properties may provide that the Lessee rather
than the Mortgagor, is responsible for payment of some or all of these expenses;
however, because leases are subject to default risks as well when a tenant's
income is insufficient to cover its rent and operating expenses, the existence
of such "net of expense" provisions will only temper, not eliminate, the impact
of expense increases on the performance of the related Mortgage Loan. See
"--Leases" above.
While the duration of leases and the existence of any "net of expense"
provisions are often viewed as the primary considerations in evaluating the
credit risk of mortgage loans secured by certain income-producing properties,
such risk may be affected equally or to a greater extent by changes in
government regulation of the operator of the property. Examples of the latter
include mortgage loans secured by health care-related facilities, the income
from which and the operating expenses of which are subject to state and/or
federal regulations, such as Medicare and Medicaid, and multifamily properties
and mobile home parks, which may be subject to state or local rent control
regulation and, in certain cases, restrictions on changes in use of the
property. Low- and moderate-income housing in particular may be subject to legal
limitations and regulations but, because of such regulations, may also be less
sensitive to fluctuations in market rents generally.
The Debt Service Coverage Ratio should not be relied upon as the sole
measure of the risk of default of any loan, however, since other factors may
outweigh a high Debt Service Coverage Ratio. With respect to a Balloon Mortgage
Loan, for example, the risk of default as a result of the unavailability of a
source of funds to finance the related balloon payment at maturity on terms
comparable to or better than those of such Balloon Payment Loans could be
significant even though the related Debt Service Coverage Ratio is high.
The liquidation value of any Mortgaged Property may be adversely affected
by risks generally incident to interests in real property, including declines in
rental or occupancy rates. Lenders generally use the Loan-to-Value Ratio of a
mortgage loan as a measure of risk of loss if a property must be liquidated upon
a default by the Mortgagor.
Appraised values of income-producing properties may be based on the market
comparison method (recent resale value of comparable properties at the date of
the appraisal), the cost replacement method (the cost of replacing the property
at such date), the income capitalization method (a projection of value based
upon the property's projected net cash flow), or upon a selection from or
interpolation of the values derived from such methods. Each of these appraisal
methods presents analytical challenges. It is often difficult to find truly
comparable properties that have recently been sold; the replacement cost of a
property may have little to do with its current market value; and income
capitalization is inherently based on inexact projections of income and expense
and the selection of an appropriate capitalization rate. Where more than one of
these appraisal methods are used and create significantly different results, or
where a high Loan-to-Value Ratio accompanies a high Debt Service Coverage Ratio
(or vice versa), the analysis of default and loss risks is even more difficult.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish the Multifamily and Commercial
Loans from single family mortgage loans and provide insight to the risks
associated with income-producing real estate, there is no assurance that such
factors will in fact have been considered by the Originators of the Multifamily
and Commercial Loans, or that, for any of such Mortgage Loans, they are complete
or relevant. See "Risk Factors--Factors Which May Increase the Risk of Losses on
Mortgage Loans Secured By Multifamily/Commercial Property Versus Single Family
Property," "--Risks of Loss on Balloon Payment Loans if Obligor Is Unable to
Refinance or Sell Related Property," "--Increased Risk of Losses on Foreclosure
of Junior Mortgage Loans," "--Risks Associated with Obligor Default" and
"--Risks Associated with Mortgagor Type."
Loan-to-Value Ratio
The "Loan-to-Value Ratio" of a Mortgage Loan at any given time is the ratio
(expressed as a percentage) of the then outstanding principal balance of the
Mortgage Loan to the Value of the related Mortgaged Property. The "Value" of a
Mortgaged Property, other than with respect to Refinance Loans, is generally the
lesser of (a) the appraised value determined in an appraisal obtained by the
originator at origination of such loan and (b) the sales price for such
property. "Refinance Loans" are loans made to refinance existing loans. The
Value of the Mortgaged Property securing a Refinance Loan is the appraised value
thereof determined in an appraisal obtained in connection with or on or about
the time of origination of the Refinance Loan or upon some other basis as
specified in the related Prospectus Supplement. The Value of a Mortgaged
Property as of the date of initial issuance of the related Series of Bonds may
be less than the value at origination and will fluctuate from time to time based
upon changes in economic conditions and the real estate market.
Mortgage Loan Information in Prospectus Supplements
Each Prospectus Supplement will contain information, as of the date of such
Prospectus Supplement and to the extent then applicable and specifically known
to the Depositor, with respect to the Mortgage Loans, including (i) the
aggregate outstanding principal balance and the largest, smallest and average
outstanding principal balance of the Mortgage Loans as of the applicable Cut-off
Date, (ii) the type of property securing the Mortgage Loans (e.g., Multifamily
Property or Commercial Property and the type of property in each such category),
(iii) the weighted average (by principal balance) of the original and remaining
terms to maturity of the Mortgage Loans, (iv) the earliest and latest
origination date and maturity date of the Mortgage Loans, (v) the weighted
average (by principal balance) of the Loan-to-Value Ratios at origination of the
Mortgage Loans, (vi) the Mortgage Interest Rates or range of Mortgage Interest
Rates and the weighted average Mortgage Interest Rate borne by the Mortgage
Loans, (vii) the state or states in which most of the Mortgaged Properties are
located, (viii) information with respect to the prepayment provisions, if any,
of the Mortgage Loans, (ix) the weighted average Retained Interest, if any, (x)
with respect to Mortgage Loans with floating Mortgage Interest Rates ("ARM
Loans"), the index, the frequency of the adjustment dates, the highest, lowest
and weighted average note margin and pass-through margin, and the maximum
Mortgage Interest Rate or monthly payment variation at the time of any
adjustment thereof and over the life of the ARM Loan and the frequency of such
monthly payment adjustments, (xi) the Debt Service Coverage Ratio either at
origination or as of a more recent date (or both) and (xii) information
regarding the payment characteristics of the Mortgage Loans, including without
limitation balloon payment and other amortization provisions. If specific
information respecting the Mortgage Loans is not known to the Depositor at the
time Bonds are initially offered, more general information of the nature
described above will be provided in the Prospectus Supplement, and specific
information will be set forth in a report which will be available to purchasers
of the related Bonds at or before the initial issuance thereof and will be filed
as part of a Current Report on Form 8-K with the Securities and Exchange
Commission within fifteen days after such initial issuance.
Payment Provisions of the Mortgage Loans
All of the Mortgage Loans will provide for payments of principal, interest
or both, on due dates that occur monthly, quarterly or semi-annually or at such
other interval as is specified in the related Prospectus Supplement. Each
Mortgage Loan may provide for no accrual of interest or for accrual of interest
thereon at an interest rate (a "Mortgage Interest Rate") that is fixed over its
term or that adjusts from time to time, or that is partially fixed and partially
floating, or that may be converted from a floating to a fixed Mortgage Interest
Rate, or from a fixed to a floating Mortgage Interest Rate, from time to time
pursuant to an election or as otherwise specified on the related Mortgage Note,
in each case as described in the related Prospectus Supplement. Each Mortgage
Loan may provide for scheduled payments to maturity or payments that adjust from
time to time to accommodate changes in the Mortgage Interest Rate or to reflect
the occurrence of certain events, and may provide for negative amortization or
accelerated amortization, in each case as described in the related Prospectus
Supplement. Each Mortgage Loan may be fully amortizing or require a balloon
payment due on its stated maturity date, in each case as described in the
related Prospectus Supplement. Each Mortgage Loan may contain prohibitions on
prepayment (a "Lock-out Period" and the date of expiration thereof, a "Lock-out
Date") or require payment of a prepayment premium or a yield maintenance charge
(in each case, a "Prepayment Premium") in connection with a prepayment, in each
case as described in the related Prospectus Supplement. In the event that
holders of any class or classes of Offered Bonds will be entitled to all or a
portion of any Prepayment Premiums collected in respect of Mortgage Loans, the
related Prospectus Supplement will specify the method or methods by which any
such amounts will be allocated. A Mortgage Loan may also contain provisions
entitling the mortgagee to a share of profits realized from the operation or
disposition of the Mortgaged Property ("Equity Participations"), as described in
the related Prospectus Supplement. In the event that holders of any class or
classes of Offered Bonds will be entitled to all or a portion of an Equity
Participation, the related Prospectus Supplement will specify the terms and
provisions of the Equity Participation and the method or methods by which
payments in respect thereof will be allocated among such Bonds.
Accounts
The Collateral for any Series of Bonds will include one or more accounts
established and maintained on behalf of the Bondholders into which the person or
persons designated in the related Prospectus Supplement will, to the extent
described herein and in such Prospectus Supplement, deposit all payments and
collections received or advanced with respect to the Mortgage Loans and other
Collateral. Such an account may be maintained as an interest bearing or a
non-interest bearing account, and funds held therein may be held as cash or
invested in certain short-term, investment grade obligations, in each case as
described in the related Prospectus Supplement. See "Description of the
Agreement--Payment Account and Other Collection Accounts."
Credit Support
If so provided in the related Prospectus Supplement, partial or full
protection against certain defaults and losses on any Collateral may be provided
to one or more classes of Bonds in the related Series in the form of
subordination of one or more other classes of Bonds in such Series or by one or
more other types of credit support, such as a letter of credit, insurance
policy, guarantee, reserve fund or another type of credit support, or a
combination thereof (any such coverage with respect to the Bonds of any Series,
"Credit Support"). The amount and types of coverage, the identification of the
entity providing the coverage (if applicable) and related information with
respect to each type of Credit Support, if any, will be described in the
Prospectus Supplement for a Series of Bonds. See "Risk Factors--Credit Support
Limitations" and "Description of Credit Support."
Cash Flow Agreements
If so provided in the related Prospectus Supplement, the Collateral for any
Series of Bonds may include guaranteed investment contracts pursuant to which
moneys held in the funds and accounts established for the related Series will be
invested at a specified rate. The Collateral may also include certain other
agreements, such as interest rate exchange agreements, interest rate cap or
floor agreements, currency exchange agreements or similar agreements provided to
reduce the effects of interest rate or currency exchange rate fluctuations on
the Mortgage Loans or on one or more classes of Bonds. The principal terms of
any such guaranteed investment contract or other agreement (any such agreement,
a "Cash Flow Agreement"), including, without limitation, provisions relating to
the timing, manner and amount of payments thereunder and provisions relating to
the termination thereof, will be described in the Prospectus Supplement for the
related Series. In addition, the related Prospectus Supplement will provide
certain information with respect to the obligor under any such Cash Flow
Agreement.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Bonds will be applied
by the Depositor to the purchase of Trust Assets, or the repayment of the
financing incurred in such purchase, and to pay for certain expenses incurred in
connection with such purchase of Trust Assets and sale of Bonds. The Depositor
expects to sell the Bonds from time to time, but the timing and amount of
offerings of Bonds will depend on a number of factors, including the volume of
Mortgage Loans acquired by the Depositor, prevailing interest rates,
availability of funds and general market conditions.
YIELD CONSIDERATIONS
General
The yield on any Offered Bond will depend on the price paid by the
Bondholder, the interest rate of the Bond, the receipt and timing of receipt of
payments on the Bond and the weighted average life of the Mortgage Loans
constituting the related Collateral (which may be affected by prepayments,
defaults, liquidations or repurchases). See "Risk Factors."
Interest Rate
Bonds of any class within a Series may have fixed, variable or floating
interest rates, which may or may not be based upon the interest rates borne by
the Mortgage Loans constituting the related Collateral. The Prospectus
Supplement with respect to any Series of Bonds will specify the interest rate
for each class of such Bonds or, in the case of a variable or floating interest
rate, the method of determining the interest rate; the effect, if any, of the
prepayment of any Mortgage Loan on the interest rate of one or more classes of
Bonds; and whether the payments of interest on the Bonds of any class will be
dependent, in whole or in part, on the performance of any obligor under a Cash
Flow Agreement.
The effective yield to maturity to each holder of Bonds entitled to
payments of interest will be below that otherwise produced by the applicable
interest rate and purchase price of such Bond because, while interest may accrue
on each Mortgage Loan during a certain period, the payment of such interest will
be made on a day which may be several days, weeks or months following the period
of accrual.
Timing of Payment of Interest
Each payment of interest on the Bonds (or addition to the Bond Principal
Amount of a class of Accrual Bonds) on a Payment Date will include interest
accrued during the Interest Accrual Period for such Payment Date. As indicated
above under "-- Interest Rate," if the Interest Accrual Period ends on a date
other than a Payment Date for the related Series, the yield realized by the
holders of such Bonds may be lower than the yield that would result if the
Interest Accrual Period ended on such Payment Date. In addition, if so specified
in the related Prospectus Supplement, interest accrued for an Interest Accrual
Period for one or more classes of Bonds may be calculated on the assumption that
payments of principal (and additions to the Bond Principal Amount of Accrual
Bonds) and allocations of losses on the Mortgage Loans may be made on the first
day of the Interest Accrual Period for a Payment Date and not on such Payment
Date. Such method would produce a lower effective yield than if interest were
calculated on the basis of the actual principal amount outstanding during an
Interest Accrual Period. The Interest Accrual Period for any class of Offered
Bonds will be described in the related Prospectus Supplement.
Payments of Principal; Prepayments
The yield to maturity on the Bonds will be affected by the rate of
principal payments on the Mortgage Loans (including principal prepayments on
Mortgage Loans resulting from voluntary prepayments by the Mortgagors, insurance
proceeds, condemnations and involuntary liquidations). Such payments may be
directly dependent upon the payments on Leases underlying such Mortgage Loans.
The rate at which principal prepayments occur on the Mortgage Loans will be
affected by a variety of factors, including, without limitation, the terms of
the Mortgage Loans, the level of prevailing interest rates, the availability of
mortgage credit and economic, demographic, geographic, tax, legal and other
factors. In general, however, if prevailing interest rates fall significantly
below the Mortgage Interest Rates on the Mortgage Loans with respect to a
particular Series of Bonds, such Mortgage Loans are likely to be the subject of
higher principal prepayments than if prevailing rates remain at or above the
rates borne by such Mortgage Loans. In this regard, it should be noted that
certain Collateral may consist of Mortgage Loans with different Mortgage
Interest Rates. The rate of principal payments on some or all of the classes of
Bonds of a Series will correspond to the rate of principal payments on the
related Mortgage Loans and is likely to be affected by the existence of Lock-out
Periods and Prepayment Premium provisions of such Mortgage Loans, and by the
extent to which the Servicer of any such Mortgage Loan is able to enforce such
provisions. Mortgage Loans with a Lock-out Period or a Prepayment Premium
provision, to the extent enforceable, generally would be expected to experience
a lower rate of principal prepayments than otherwise identical Mortgage Loans
without such provisions, with shorter Lock-out Periods or with lower Prepayment
Premiums.
If the purchaser of a Bond offered at a discount calculates its anticipated
yield to maturity based on an assumed rate of payments of principal that is
faster than that actually experienced on the Mortgage Loans, the actual yield to
maturity will be lower than that so calculated. Conversely, if the purchaser of
a Bond offered at a premium calculates its anticipated yield to maturity based
on an assumed rate of payments of principal that is slower than that actually
experienced on the Mortgage Loans, the actual yield to maturity will be lower
than that so calculated. In either case, if so provided in the Prospectus
Supplement for a Series of Bonds, the effect on yield on one or more classes of
the Bonds of such Series of prepayments of the Mortgage Loans with respect to
such Series may be mitigated or exacerbated by any provisions for sequential or
selective payment of principal to such classes.
When a full prepayment is made on a Mortgage Loan, the Mortgagor is charged
interest on the principal amount of the Mortgage Loan so prepaid for the number
of days in the month actually elapsed up to the date of the prepayment or such
other period specified in the related Prospectus Supplement. Generally, the
effect of prepayments in full will be to reduce the amount of interest paid in
the following month to holders of Bonds entitled to payments of interest because
interest on the principal amount of any Mortgage Loan so prepaid will be paid
only to the date of prepayment rather than for a full month. A partial
prepayment of principal is applied so as to reduce the outstanding principal
balance of the related Mortgage Loan as of the Due Date in the month in which
such partial prepayment is received or such other date as is specified in the
related Prospectus Supplement. As a result, the effect of a partial prepayment
on a Mortgage Loan will be generally to reduce the amount of interest passed
through to holders of Bonds in the month following the receipt of such partial
prepayment by an amount equal to one month's interest at the applicable interest
rate on the prepaid amount.
The timing of changes in the rate of principal payments on the Mortgage
Loans may significantly affect an investor's actual yield to maturity, even if
the average rate of payments of principal is consistent with an investor's
expectation. In general, the earlier a principal payment is received on the
Mortgage Loans and paid on a Bond, the greater the effect on such investor's
yield to maturity. The effect on an investor's yield of principal payments
occurring at a rate higher (or lower) than the rate anticipated by the investor
during a given period may not be offset by a subsequent like decrease (or
increase) in the rate of principal payments.
Prepayments, Maturity and Weighted Average Life
The rates at which principal payments are received on the Mortgage Loans
with respect to a particular Series of Bonds and the rate at which payments are
made from any Credit Support or Cash Flow Agreement for such Series of Bonds may
affect the ultimate maturity and the weighted average life of each class of such
Series. Prepayments on the Mortgage Loans with respect to a particular Series of
Bonds will generally accelerate the rate at which principal is paid on some or
all of the classes of the Bonds of such Series.
If so provided in the Prospectus Supplement for a Series of Bonds, one or
more classes of Bonds may have a final scheduled Payment Date, which is the date
on or prior to which the Bond Principal Amount thereof is scheduled to be
reduced to zero, calculated on the basis of the assumptions applicable to such
Series set forth therein.
Weighted average life refers to the average amount of time that will elapse
from the date of issue of a security until each dollar of principal of such
security will be repaid to the investor. The weighted average life of a class of
Bonds of a Series will be influenced by the rate at which principal on the
Mortgage Loans with respect to such Series is paid to such class, which may be
in the form of scheduled amortization or prepayments (for this purpose, the term
"prepayment" includes prepayments, in whole or in part, and liquidations due to
default).
If any Mortgage Loans with respect to a particular Series of Bonds have
actual terms to maturity of less than those assumed in calculating final
scheduled Payment Dates for the classes of Bonds of such Series, one or more
classes of such Bonds may be fully paid prior to their respective final
scheduled Payment Dates, even in the absence of prepayments. Accordingly, the
prepayment experience of the Mortgage Loans will, to some extent, be a function
of the mix of Mortgage Interest Rates and maturities of such Mortgage Loans. See
"Description of the Collateral." Prepayments on loans are also commonly measured
relative to a prepayment standard or model, such as the Constant Prepayment Rate
("CPR") prepayment model. CPR represents a constant assumed rate of prepayment
each month relative to the then outstanding principal balance of a pool of loans
for the life of such loans.
Neither CPR nor any other prepayment model or assumption purports to be a
historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any pool of loans, including the Mortgage
Loans with respect to a particular Series of Bonds. Moreover, CPR was developed
based upon historical prepayment experience for single family loans. Thus, it is
likely that prepayment of any Mortgage Loans with respect to any Series of Bonds
will not conform to any particular level of CPR. The Depositor is not aware of
any meaningful publicly available prepayment statistics for multifamily or
commercial mortgage loans.
The Prospectus Supplement with respect to each Series of Bonds will contain
tables, if applicable, setting forth the projected weighted average life of each
class of Offered Bonds of such Series and the percentage of the initial Bond
Principal Amount of each such class that would be outstanding on specified
Payment Dates based on the assumptions stated in such Prospectus Supplement,
including assumptions that prepayments on the Mortgage Loans with respect to
such Series are made at rates corresponding to various percentages of CPR or at
such other rates specified in such Prospectus Supplement. Such tables and
assumptions are intended to illustrate the sensitivity of weighted average life
of the Bonds to various prepayment rates and will not be intended to predict or
to provide information that will enable investors to predict the actual weighted
average life of the Bonds. It is unlikely that prepayment of any Mortgage Loans
with respect to any Series of Bonds will conform to any particular level of CPR
or any other rate specified in the related Prospectus Supplement.
Other Factors Affecting Weighted Average Life
Type of Mortgage Loan. A number of Mortgage Loans may have balloon payments
due at maturity, and because the ability of a Mortgagor to make a balloon
payment typically will depend upon its ability either to refinance the loan or
to sell the related Mortgaged Property, there is a risk that a number of
Mortgage Loans having balloon payments may default at maturity, or that the
Servicer may extend the maturity of such a Mortgage Loan in connection with a
workout. In the case of defaults, recovery of proceeds may be delayed by, among
other things, bankruptcy of the Mortgagor or adverse conditions in the market
where the property is located. In order to minimize losses on defaulted Mortgage
Loans, the Servicer may, to the extent and under the circumstances set forth in
the related Prospectus Supplement be permitted to modify Mortgage Loans that are
in default or as to which a payment default is imminent. Any defaulted balloon
payment or modification that extends the maturity of a Mortgage Loan will tend
to extend the weighted average life of the Bonds, thereby lengthening the period
of time elapsed from the date of issuance of a Bond until it is retired.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans with respect to any Series of Bonds that
are foreclosed in relation to the number and principal amount of Mortgage Loans
that are repaid in accordance with their terms will affect the weighted average
life of such Mortgage Loans and that of the related Series of Bonds. Servicing
decisions made with respect to the Mortgage Loans, including the use of payment
plans prior to a demand for acceleration and the restructuring of Mortgage Loans
in bankruptcy proceedings, may also have an effect upon the payment patterns of
particular Mortgage Loans and thus the weighted average life of the Bonds.
Due-on-Sale and Due-on-Encumbrance Clauses. Acceleration of mortgage
payments as a result of certain transfers of or the creation of encumbrances
upon underlying Mortgaged Property is another factor affecting prepayment rates
that may not be reflected in the prepayment standards or models used in the
relevant Prospectus Supplement. A number of the Mortgage Loans with respect to a
particular Series of Bonds may include "due-on-sale" clauses or
"due-on-encumbrance" clauses that allow the holder of the Mortgage Loans to
demand payment in full of the remaining principal balance of the Mortgage Loans
upon sale or certain other transfers of or the creation of encumbrances upon the
related Mortgaged Property. With respect to any Mortgage Loans, the Master
Servicer or such other person specified in the related Prospectus Supplement, on
behalf of the Indenture Trustee, will be required to exercise (or waive its
right to exercise) any such right that the Indenture Trustee may have as
mortgagee to accelerate payment of the Mortgage Loan in a manner consistent with
the Servicing Standard. See "Certain Legal Aspects of the Mortgage Loans and the
Leases--Due-on-Sale and Due-on-Encumbrance" and "Description of the
Agreements--Due-on-Sale and Due-on-Encumbrance Provisions."
Single Mortgage Loan or Single Mortgagor. The Mortgage Loans with respect
to a particular Series of Bonds may consist of a single Mortgage Loan or
obligations of a single Mortgagor or related Mortgagors as specified in the
related Prospectus Supplement. Assumptions used with respect to the prepayment
standards or models based upon analysis of the behavior of mortgage loans in a
larger group will not necessarily be relevant in determining prepayment
experience on a single Mortgage Loan or with respect to a single Mortgagor.
THE DEPOSITOR
Imperial Credit Commercial Mortgage Acceptance Corp., the Depositor, is a
direct wholly-owned subsidiary of Imperial Credit Commercial Mortgage Investment
Corp. ("ICCMIC") and was incorporated in the State of California. The principal
executive offices of the Depositor are located at 11601 Wilshire Boulevard, No.
2080, Los Angeles, California 90025. Its telephone number is (310) 231-1280.
The Depositor does not have, nor is it expected in the future to have, any
significant assets.
THE OWNER TRUST
Each Owner Trust established to act as Issuer of a Series of Bonds will be
created pursuant to a Deposit Trust Agreement between the Depositor, which will
act as depositor, and a bank, trust company or other fiduciary named in the
related Prospectus Supplement, which will act solely in its fiduciary capacity
as Owner Trustee. Under the terms of each Deposit Trust Agreement, the Depositor
will convey to the Owner Trust Mortgage Loans and other Collateral to secure one
or more Series of Bonds in return for certificates or other instruments
evidencing beneficial ownership in the Owner Trust, Bonds and/or the net
proceeds from the sale of Bonds. The Depositor may in turn sell or assign the
certificates of beneficial interest and any Bonds so received to another entity
or entities, including affiliates of the Depositor.
Each Deposit Trust Agreement and/or Indenture will provide that the related
Owner Trust may not conduct any activities other than those related to the
issuance and sale of one or more Series of Bonds. The holders of the beneficial
interest in an Owner Trust which issues a Series of Bonds will not be liable for
payment of principal of or interest on such Bonds, and each holder of such Bonds
will be deemed to have released such beneficial owners from any such liability.
DESCRIPTION OF THE BONDS
General
The Bonds of each Series (including any class of Bonds not offered hereby)
will represent indebtedness of the related Issuer, will be issued pursuant to an
indenture (an "Indenture"), and will be secured by, among other things, a pledge
of the Collateral that includes Mortgage Loans. Each Series of Bonds will
consist of one or more classes of Bonds that may (i) provide for the accrual of
interest thereon based on fixed, variable or floating rates; (ii) be senior
(collectively, "Senior Bonds") or subordinate (collectively, "Subordinate
Bonds") to one or more other classes of Bonds in respect of certain payments on
the Bonds; (iii) be entitled to principal payments, with disproportionately low,
nominal or no interest payments (collectively, "Principal Only Bonds"); (iv) be
entitled to interest payments, with disproportionately low, nominal or no
principal payments (collectively, "Interest Only Bonds"); (v) provide for
payments of accrued interest thereon commencing only following the occurrence of
certain events, such as the retirement of one or more other classes of Bonds of
such Series (collectively, "Accrual Bonds"); (vi) provide for payments of
principal sequentially, based on specified payment schedules, from only a
portion of the related Collateral or based on specified calculations, to the
extent of available funds, in each case as described in the related Prospectus
Supplement; and/or (vii) provide for payments based on a combination of two or
more components thereof with one or more of the characteristics described in
this paragraph including a Principal Only Bond component and a Interest Only
Bond component. Any such classes may include classes of Offered Bonds.
Each class of Offered Bonds of a Series will be issued in minimum
denominations corresponding to the Bond Principal Amounts or, in case of
Interest Only Bonds, notional amounts specified in the related Prospectus
Supplement. The transfer of any Offered Bonds may be registered and such Bonds
may be exchanged without the payment of any service charge payable in connection
with such registration of transfer or exchange, but the Depositor or the
Indenture Trustee or any agent thereof may require payment of a sum sufficient
to cover any tax or other governmental charge. One or more classes of Bonds of a
Series may be issued as Definitive Bonds or in book-entry form ("Book-Entry
Bonds"), as provided in the related Prospectus Supplement. See "Risk
Factors--Owner of Book-Entry Bonds Not Entitled to Exercise Rights of Holders of
Bonds" and "Description of the Bonds--Book-Entry Registration and Definitive
Bonds." Definitive Bonds will be exchangeable for other Bonds of the same class
and Series of a like aggregate Bond Principal Amount or notional amount but of
different authorized denominations. See "Risk Factors--Limited Liquidity for
Bonds" and "Limited Assets for Payment of Bonds."
Payments
Payments on the Bonds of each Series will be made by or on behalf of the
Indenture Trustee on each Payment Date as specified in the related Prospectus
Supplement from the Available Payment Amount for such Series and such Payment
Date. Payments (other than the final payment) will be made to the persons in
whose names the Bonds are registered at the close of business on the last
business day of the month preceding the month in which the Payment Date occurs
or such other date specified in the applicable Prospectus Supplement (the
"Record Date"), and the amount of each payment will be determined as of the
close of business on the date specified in the related Prospectus Supplement
(the "Determination Date"). All payments with respect to each class of Bonds on
each Payment Date will be allocated pro rata among the outstanding Bonds in such
class or by random selection, as described in the related Prospectus Supplement
or otherwise established by the related Indenture Trustee. Payments will be made
either by wire transfer in immediately available funds to the account of a
Bondholder at a bank or other entity having appropriate facilities therefor, if
such Bondholder has so notified the Indenture Trustee or other person required
to make such payments no later than the date specified in the related Prospectus
Supplement (and, if so provided in the related Prospectus Supplement, holds
Bonds in the requisite amount specified therein), or by check mailed to the
address of the person entitled thereto as it appears on the bond register;
provided, however, that the final payment in retirement of the Bonds (whether
Definitive Bonds or Book-Entry Bonds) will be made only upon presentation and
surrender of the Bonds at the location specified in the notice to Bondholders of
such final payment.
Available Payment Amount
All payments on the Bonds of each Series on each Payment Date will be made
from the Available Payment Amount described below, in accordance with the terms
described in the related Prospectus Supplement. Generally, the "Available
Payment Amount" for each Payment Date equals the sum of the following amounts:
(i) the total amount of all cash on deposit in the related Payment Account
as of the corresponding Determination Date, including Servicer advances, net of
any scheduled payments due and payable after such Payment Date;
(ii) interest or investment income on amounts on deposit in the Payment
Account, including any net amounts paid under any Cash Flow Agreements; and
(iii) to the extent not on deposit in the related Payment Account as of the
corresponding Determination Date, any amounts collected under, from or in
respect of any Credit Support with respect to such Payment Date.
As described below, the entire Available Payment Amount will be paid among
the related Bonds (including any Bonds not offered hereby) on each Payment Date,
and accordingly will be released from the lien of the related Indenture and will
not be available for any future payments.
Payments of Interest on the Bonds
Each class of Bonds (other than classes of Principal Only Bonds that have
no interest rate) may have a different interest rate, which will be a fixed,
variable or floating rate at which interest will accrue on such class or a
component thereof. The related Prospectus Supplement will specify the interest
rate for each class or component or, in the case of a variable or floating
interest rate, the method for determining the interest rate. Interest on the
Bonds will be calculated on the basis of a 360-day year consisting of twelve
30-day months or on such other basis specified in the related Prospectus
Supplement.
Payments of interest in respect of the Bonds of any class will be made on
each Payment Date (other than any class of Accrual Bonds, which will be entitled
to payments of accrued interest commencing only on the Payment Date, or under
the circumstances, specified in the related Prospectus Supplement, and any class
of Principal Only Bonds that are not entitled to any payments of interest) based
on the Accrued Bond Interest for such class and such Payment Date, subject to
the sufficiency of the portion of the Available Payment Amount allocable to such
class on such Payment Date. Prior to the time interest is payable on any class
of Accrual Bonds, the amount of Accrued Bond Interest otherwise payable on such
class will be added to the Bond Principal Amount thereof on each Payment Date.
With respect to each class of Bonds and each Payment Date (other than certain
classes of Interest Only Bonds), "Accrued Bond Interest" will be equal to
interest accrued for a specified period on the outstanding Bond Principal Amount
thereof immediately prior to the Payment Date, at the applicable interest rate,
reduced as described below. Generally, Accrued Bond Interest on Interest Only
Bonds will be equal to interest accrued for a specified period on the
outstanding notional amount thereof immediately prior to each Payment Date, at
the applicable interest rate, reduced as described below. The method of
determining the notional amount for any class of Interest Only Bonds will be
described in the related Prospectus Supplement. Reference to notional amount is
solely for convenience in certain calculations and does not represent the right
to receive any payments of principal. The Accrued Bond Interest on a Series of
Bonds will be reduced in the event of prepayment interest shortfalls, which are
shortfalls in collections of interest for a full accrual period resulting from
prepayments prior to the due date in such accrual period on the Mortgage Loans
constituting the Collateral for such Series. The particular manner in which such
shortfalls are to be allocated among some or all of the classes of Bonds of that
Series will be specified in the related Prospectus Supplement.
The related Prospectus Supplement will also describe the extent to which
the amount of Accrued Bond Interest that is otherwise payable on (or, in the
case of Accrual Bonds, that may otherwise be added to the Bond Principal Amount
of) a class of Offered Bonds may be reduced as a result of any other
contingencies, including delinquencies, losses and deferred interest on or in
respect of the Mortgage Loans constituting the related Collateral. Generally,
any reduction in the amount of Accrued Bond Interest otherwise payable on a
class of Bonds by reason of the allocation to such class of a portion of any
deferred interest on the Mortgage Loans constituting the related Collateral will
result in a corresponding increase in the Bond Principal Amount of such class.
See "Risk Factors--Rate of Prepayments on Mortgage Loans and Priority of Payment
on Bonds May Adversely Affect Average Lives and Yields of Bonds; Prepayments;
Yields" and "Yield Considerations."
Payments of Principal of the Bonds
The Bonds of each Series, other than certain classes of Interest Only
Bonds, will have a "Bond Principal Amount" which, at any time, will equal the
then maximum amount that the holder will be entitled to receive in respect of
principal out of the future cash flow on the Mortgage Loans and other assets
constituting the related Collateral. The outstanding Bond Principal Amount of a
Bond will be reduced to the extent of payments of principal thereon from time to
time and, if and to the extent so provided in the related Prospectus Supplement,
by the amount of losses incurred in respect of the related Mortgage Loans, may
be increased in respect of deferred interest on the related Mortgage Loans to
the extent provided in the related Prospectus Supplement and, in the case of
Accrual Bonds prior to the Payment Date on which payments of interest are
required to commence, will be increased by any related Accrued Bond Interest. If
so specified in the related Prospectus Supplement, the initial aggregate Bond
Principal Amount of all classes of Bonds of a Series will be greater than the
outstanding aggregate principal balance of the related Mortgage Loans as of the
applicable Cut-off Date. The initial aggregate Bond Principal Amount of a Series
and each class thereof will be specified in the related Prospectus Supplement.
Payments of principal will be made on each Payment Date to the class or classes
of Bonds entitled thereto in accordance with the provisions described in such
Prospectus Supplement. Interest Only Bonds with no Bond Principal Amount are not
entitled to any payments of principal.
Components
To the extent specified in the related Prospectus Supplement, payment on a
class of Bonds may be based on a combination of two or more different components
as described under "--General" above. To such extent, the descriptions set forth
under "--Payments of Interests on the Bonds" and "--Payments of Principal of the
Bonds" above also relate to components of such a class of Bonds. In such case,
reference in such sections to Bond Principal Amount and interest rate refer to
the principal balance, if any, of any such component and the interest rate, if
any, on any such component, respectively.
Payments on the Bonds of Prepayment Premiums or in Respect
of Equity Participations
If so provided in the related Prospectus Supplement, Prepayment Premiums or
payments in respect of Equity Participations that are collected on the Mortgage
Loans with respect to such Series of Bonds will be paid on each Payment Date to
the class or classes of Bonds entitled thereto in accordance with the provisions
described in such Prospectus Supplement.
Allocation of Losses and Shortfalls
If so provided in the Prospectus Supplement for a Series of Bonds
consisting of one or more classes of Subordinate Bonds, on any Payment Date in
respect of which losses or shortfalls in collections on the Mortgage Loans have
been incurred, the amount of such losses or shortfalls will be borne first by a
class of Subordinate Bonds in the priority and manner and subject to the
limitations specified in such Prospectus Supplement. See "Description of Credit
Support" for a description of the types of protection that may be included in
shortfalls on Mortgage Loans.
Advances in Respect of Delinquencies
With respect to any Series of Bonds, if so provided in the related
Prospectus Supplement, a Servicer or another entity described therein will be
required as part of its servicing responsibilities to advance on or before each
Payment Date its own funds or funds held in the Payment Account that are not
included in the Available Payment Amount for such Payment Date, in an amount
equal to the aggregate of payments of principal (other than any balloon
payments) and interest (net of related servicing fees and Retained Interest)
that were due on the Mortgage Loans constituting the related Collateral and were
delinquent on the related Determination Date, subject to such Servicer's (or
another entity's) good faith determination that such advances will be
reimbursable from Related Proceeds (as defined below). In the case of a Series
of Bonds that includes one or more classes of Subordinate Bonds and if so
provided in the related Prospectus Supplement, each Servicer's (or another
entity's) advance obligation may be limited only to the portion of such
delinquencies necessary to make the required payments on one or more classes of
Senior Bonds and/or may be subject to such Servicer's (or another entity's) good
faith determination that such advances will be reimbursable not only from
Related Proceeds but also from collections on other Collateral otherwise payable
on one or more classes of such Subordinate Bonds. See "Description of Credit
Support."
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Bonds entitled thereto,
rather than to guarantee or insure against losses. Advances of a Servicer's (or
another entity's) funds will be reimbursable only out of related recoveries on
the Mortgage Loans (including amounts received under any form of Credit Support)
respecting which such advances were made (as to any Mortgage Loan, "Related
Proceeds") and from any other amounts specified in the related Prospectus
Supplement, including out of any amounts otherwise payable on one or more
classes of Subordinate Bonds of such Series; provided, however, that any such
advance will be reimbursable from any amounts in the Payment Account prior to
any payments being made on the Bonds to the extent that a Servicer (or such
other entity) shall determine in good faith that such advance (a "Nonrecoverable
Advance") is not ultimately recoverable from Related Proceeds or, if applicable,
from collections on other Collateral otherwise payable on such Subordinate
Bonds. If advances have been made by a Servicer from excess funds in the Payment
Account, such Servicer is required to replace such funds in the Payment Account
on any future Payment Date to the extent that funds in the Payment Account on
such Payment Date are less than payments required to be made to Bondholders on
such date. If so specified in the related Prospectus Supplement, the obligations
of a Servicer (or another entity) to make advances may be secured by a cash
advance reserve fund, a surety bond, a letter of credit or another form of
limited guaranty. If applicable, information regarding the characteristics of,
and the identity of any obligor on, any such surety bond, will be set forth in
the related Prospectus Supplement.
If and to the extent so provided in the related Prospectus Supplement, a
Servicer (or another entity) will be entitled to receive interest at the rate
specified therein on its outstanding advances and will be entitled to pay itself
such interest periodically from general collections on the Collateral prior to
any payment to Bondholders or as otherwise provided in the related Agreement and
described in such Prospectus Supplement.
Reports to Bondholders
With each payment to holders of any class of Bonds of a Series, the Master
Servicer or the Indenture Trustee, as provided in the related Prospectus
Supplement, will forward or cause to be forwarded to each such holder, to the
Depositor and to such other parties as may be specified in the related
Agreement, a statement setting forth some or all of the following items, in each
case to the extent applicable and available:
(i) the amount of such payment to holders of Bonds of such class applied to
reduce the Bond Principal Amount thereof;
(ii) the amount of such payment to holders of Bonds of such class allocable
to Accrued Bond Interest;
(iii) the amount of such payment allocable to (a) Prepayment Premiums and
(b) payments on account of Equity Participations;
(iv) the amount of related servicing compensation received by each
Servicer;
(v) the aggregate amount of advances included in such payment, and the
aggregate amount of any unreimbursed advances at the close of business on such
Payment Date;
(vi) the aggregate principal balance of the Mortgage Loans at the close of
business on such Payment Date;
(vii) the number and aggregate principal balance of Mortgage Loans in
respect of which (a) one scheduled payment is delinquent, (b) two scheduled
payments are delinquent, (c) three or more scheduled payments are delinquent and
(d) foreclosure proceedings have been commenced;
(viii) with respect to each Mortgage Loan that is delinquent two or more
months, (a) the loan number thereof, (b) the unpaid balance thereof, (c) whether
the delinquency is in respect of any balloon payment, (d) the aggregate amount
of unreimbursed servicing expenses and unreimbursed advances in respect thereof,
(e) if applicable, the aggregate amount of any interest accrued and payable on
related servicing expenses and related advances assuming such Mortgage Loan is
subsequently liquidated through foreclosure, (f) whether a notice of
acceleration has been sent to the Mortgagor and, if so, the date of such notice,
(g) whether foreclosure proceedings have been commenced and, if so, the date so
commenced and (h) if such Mortgage Loan is more than three months delinquent and
foreclosure has not been commenced, the reason therefor;
(ix) with respect to any Mortgage Loan liquidated (other than by payment in
full) during the related Due Period (unless a different period is specified in
the related Prospectus Supplement, a "Due Period" with respect to any Payment
Date will commence on the second day of the month in which the immediately
preceding Payment Date occurs, or the day after the Cut-off Date in the case of
the first Due Period, and will end on the first day of the month of the related
Payment Date), (a) the loan number thereof, (b) the manner in which it was
liquidated and (c) the aggregate amount of liquidation proceeds received;
(x) with respect to any Mortgage Loan liquidated during the related Due
Period, (a) the portion of such liquidation proceeds payable or reimbursable to
each Servicer (or any other entity) in respect of such Mortgage Loan and (b) the
amount of any loss to Bondholders;
(xi) with respect to each Mortgaged Property acquired on behalf of the
Issuer through foreclosure or deed in lieu of foreclosure (upon acquisition, an
"REO Property") relating to a Mortgage Loan and included as a Trust Asset as of
the end of the related Due Period, (a) the loan number of the related Mortgage
Loan and (b) the date of acquisition;
(xii) with respect to each REO Property relating to a Mortgage Loan and
included as a Trust Asset as of the end of the related Due Period, (a) the book
value, (b) the principal balance of the related Mortgage Loan immediately
following such Payment Date (calculated as if such Mortgage Loan were still
outstanding taking into account certain limited modifications to the terms
thereof specified in the Agreement), (c) the aggregate amount of unreimbursed
servicing expenses and unreimbursed advances in respect thereof and (d) if
applicable, the aggregate amount of interest accrued and payable on related
servicing expenses and related advances;
(xiii) with respect to any such REO Property sold during the related Due
Period (a) the loan number of the related Mortgage Loan, (b) the aggregate
amount of sale proceeds, (c) the portion of such sales proceeds payable or
reimbursable to each Servicer in respect of such REO Property or the related
Mortgage Loan and (d) the amount of any loss to Bondholders in respect of the
related Mortgage Loan;
(xiv) the aggregate Bond Principal Amount or notional amount, as the case
may be, of each class of Bonds (including any class of Bonds not offered hereby)
at the close of business on such Payment Date, separately identifying any
reduction in such Bond Principal Amount due to the allocation of any loss and
increase in the Bond Principal Amount of a class of Accrual Bonds in the event
that Accrued Bond Interest has been added to such balance;
(xv) the aggregate amount of principal prepayments made during the related
Due Period;
(xvi) the aggregate Accrued Bond Interest and unpaid Accrued Bond Interest,
if any, on each class of Bonds at the close of business on such Payment Date;
(xvii) in the case of Bonds with a variable interest rate, the interest
rate applicable to such Payment Date, and, if available, the immediately
succeeding Payment Date, as calculated in accordance with the method specified
in the related Prospectus Supplement;
(xviii) in the case of Bonds with a floating interest rate, for statements
to be distributed in any month in which an adjustment date occurs, the floating
interest rate applicable to such Payment Date and the immediately succeeding
Payment Date as calculated in accordance with the method specified in the
related Prospectus Supplement;
(xix) as to any Series which includes Credit Support, the amount of
coverage of each instrument of Credit Support included therein as of the close
of business on such Payment Date; and
(xx) the aggregate amount of payments by the Mortgagors of (a) default
interest, (b) late charges and (c) assumption and modification fees collected
during the related Due Period.
In the case of information furnished pursuant to subclauses (i)-(iv) above,
the amounts shall be expressed as a dollar amount per minimum denomination of
Bonds or for such other specified portion thereof. In addition, in the case of
information furnished pursuant to subclauses (i), (ii), (xiv), (xvi) and (xvii)
above, such amounts shall also be provided with respect to each component, if
any, of a class of Bonds. The Prospectus Supplement for each Series of Offered
Bonds will describe any additional information to be included in reports to the
holders of such Bonds.
Within a reasonable period of time after the end of each calendar year, the
Master Servicer or the Indenture Trustee, as provided in the related Prospectus
Supplement, shall furnish to each person who at any time during the calendar
year was a holder of a Bond a statement containing the information set forth in
subclauses (i)-(iv) above, aggregated for such calendar year or the applicable
portion thereof during which such person was a Bondholder. Such obligation of
the Master Servicer or the Indenture Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Master Servicer or the Indenture Trustee pursuant to any
requirements of the Code as are from time to time in force.
Unless and until Definitive Bonds are issued, such statements or reports
will be forwarded by the Master Servicer or the Indenture Trustee to Cede or
such other person specified in the related Prospectus Supplement. Such
statements or reports may be available to Beneficial Owners upon request to DTC
or their respective Participant or Indirect Participant. In addition, the
Indenture Trustee shall furnish a copy of any such statement or report to any
Beneficial Owner which requests such copy and certifies to the Indenture Trustee
or the Master Servicer, as applicable, that it is the Beneficial Owner of a
Bond. See "Description of the Bonds--Book-Entry Registration and Definitive
Bonds."
Special Redemption of Bonds
If so specified in the related Prospectus Supplement, the Bonds of any
Series may be subject to special redemption on the day of any month specified
therein if, as a result of the prepayment experience on the Mortgage Loans
securing such Bonds or the low yield available for reinvestment or both, the
Indenture Trustee determines (based on assumptions specified in the Indenture
and after giving effect to the amounts, if any, available to be withdrawn from
or under any reserve fund or instrument constituting Credit Support or a Cash
Flow Agreement for such Series) that the amount anticipated to be available in
the Payment Account for such Series on the next Payment Date, is anticipated to
be insufficient to pay debt service on the Bonds of such Series on such Payment
Date. The principal amount of Bonds of such Series required to be so redeemed
will not exceed the amount of principal otherwise required to be paid on the
next Payment Date. Therefore, the primary result of such a special redemption of
Bonds is payment of principal prior to the next scheduled Payment Date.
To the extent described in the related Prospectus Supplement, Bonds of any
Series may be subject to special redemption in whole or in part following
certain defaults under an instrument of Credit Support and in certain other
events.
All payments of principal pursuant to any special redemption will be made
in the order of priority and in the manner specified in the related Prospectus
Supplement. Notice of any special redemption will be mailed by the Issuer or the
Indenture Trustee prior to the Special Redemption Date. The Redemption Price for
any Bonds so redeemed will be equal to 100% (or such other percentage specified
in the related Prospectus Supplement) of the principal amount of such Bonds (or
portions thereof) so redeemed, together with interest accrued thereon to the
date specified in the related Prospectus Supplement.
Optional Redemption of Bonds
The Issuer may, at its option and if so specified in the related Prospectus
Supplement, redeem, in whole or in part, one or more classes of Bonds of any
Series on any Payment Date on or after the dates, if any, specified in such
Prospectus Supplement. Notice of such redemption will be given by the Issuer or
Indenture Trustee prior to the anticipated date of redemption. The Redemption
Price for any Bonds so redeemed will be equal to 100% of the principal amount of
such Bonds, or the portions thereof, so redeemed, together with interest accrued
thereon to the date specified in the related Prospectus Supplement. Any such
optional redemption may occur at a time when a significant portion of the
aggregate Bond Principal Amount of all the classes of Bonds that will be so
redeemed, remains outstanding (that is, a time when the aggregate Bond Principal
Amount of such classes of Bonds is greater than 25% of the initial aggregate
Bond Principal Amount thereof). The maximum aggregate Bond Principal Amount of
the Bonds of any Series that may be outstanding before any optional redemption
may be effected will be disclosed in the related Prospectus Supplement.
Book-Entry Registration and Definitive Bonds
If so provided in the related Prospectus Supplement, one or more classes of
the Offered Bonds of any Series will be issued as Book-Entry Bonds, and each
such class will be represented by one or more single Bonds registered in the
name of a nominee for the depository, The Depository Trust Company ("DTC").
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code ("UCC") and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC was created to hold securities
for its participating organizations ("Participants") and facilitate the
clearance and settlement of securities transactions between Participants through
electronic book-entry changes in their accounts, thereby eliminating the need
for physical movement of certificates. Participants include securities brokers
and dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Indirect access to the DTC system also is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Investors that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of, or other interests in
Book-Entry Bonds may do so only through Participants and Indirect Participants
or in such other manner as is provided for in the related Prospectus Supplement.
In addition, such investors ("Beneficial Owners") will receive all payments on
the Book-Entry Bonds through DTC and its Participants. Under a book-entry
format, Beneficial Owners will receive payments after the related Payment Date
because, while payments are required to be forwarded to Cede & Co., as nominee
for DTC ("Cede"), on each such date DTC will forward such payments to its
Participants which thereafter will be required to forward them to Indirect
Participants or Beneficial Owners. The only "Bondholder" (as such term is used
in an Agreement) will be Cede, as nominee of DTC or such other entity specified
in the related Prospectus Supplement, and the Beneficial Owners will not be
recognized by the Indenture Trustee as Bondholders under the Agreements.
Beneficial Owners will be permitted to exercise the rights of Bondholders under
the related Agreements only indirectly through the Participants who in turn will
exercise their rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Book-Entry Bonds and is required to
receive and transmit payments of principal of and interest on the Book-Entry
Bonds. Participants and Indirect Participants with which Beneficial Owners have
accounts with respect to the Book-Entry Bonds similarly are required to make
book-entry transfers and receive and transmit such payments on behalf of their
respective Beneficial Owners.
Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Beneficial
Owner to pledge its interest in the Book-Entry Bonds to persons or entities that
do not participate in the DTC system, or otherwise take actions in respect of
its interest in the Book-Entry Bonds, may be limited due to the lack of a
physical certificate evidencing such interest.
DTC will take action permitted to be taken by a Bondholder under an
Agreement only at the direction of one or more Participants to whose account
with DTC interests in the Book-Entry Bonds are credited. Under DTC's procedures,
DTC will take actions permitted to be taken by Holders of any class of
Book-Entry Bonds under an Agreement only at the direction of one or more
Participants to whose account the Book-Entry Bonds are credited and whose
aggregate holdings represent no less than any minimum amount of Voting Rights
required therefor. Therefore, Beneficial Owners will only be able to exercise
their Voting Rights to the extent permitted, and subject to the procedures
established, by their Participant and/or Indirect Participant, as applicable.
DTC may take conflicting actions with respect to any action of Bondholders of
any class to the extent that Participants authorize such actions. None of the
Servicers, the Depositor, the Indenture Trustee or any of their respective
affiliates will have any liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Book-Entry
Bonds, or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Bonds initially issued in book-entry form will be issued as Definitive
Bonds to Beneficial Owners or their nominees, rather than to DTC or its nominee
only (i) if the Depositor advises the Indenture Trustee in writing that DTC is
no longer willing or able to properly discharge its responsibilities as
depository with respect to the Bonds and the Depositor is unable to locate a
qualified successor, (ii) if the Depositor, at its option, elects to terminate
the book-entry system through DTC or (iii) in accordance with such other
provisions described in the related Prospectus Supplement.
Upon the occurrence of either of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Bonds for the Beneficial Owners. Upon
surrender by DTC of the certificate or certificates representing the Book-Entry
Bonds, together with instructions for reregistration, the Indenture Trustee will
issue (or cause to be issued) to the Beneficial Owners identified in such
instructions the Definitive Bonds to which they are entitled, and thereafter the
Indenture Trustee will recognize the holders of such Definitive Bonds as
Bondholders under the Agreement.
DESCRIPTION OF THE AGREEMENTS
The Bonds of each Series will be issued by an Owner Trust pursuant to an
indenture (the "Indenture") between the related Owner Trust and an indenture
trustee (the "Indenture Trustee") named in the related Prospectus Supplement.
The Owner Trust will be established pursuant to a deposit trust agreement (each,
a "Deposit Trust Agreement") between the Depositor and an owner trustee (the
"Owner Trustee") named in the Prospectus Supplement relating to such Series of
Bonds. The Mortgage Loans will be serviced in accordance with a servicing
agreement (a "Servicing Agreement") among the Issuer, the Indenture Trustee and
a Master Servicer and a Special Servicer named in the Prospectus Supplement
relating to such Series of Bonds. A manager or administrator will be appointed
pursuant to an administration agreement (the "Administration Agreement") to
administer certain duties of the Issuer relating to each Series of Bonds. The
provisions of each Agreement will vary depending upon the nature of the Bonds to
be issued thereunder and the nature of the related Collateral. Forms of an
Indenture, Deposit Trust Agreement, Servicing Agreement and Administration
Agreement have been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. The following summaries describe certain material
provisions that may appear in the Indenture and the Servicing Agreement. The
Prospectus Supplement for a Series of Bonds will describe any provision of the
Agreements relating to such Series that materially differs from the description
thereof contained in this Prospectus. The summaries do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all of the provisions of the Agreements relating to each Series of Bonds and
the description of such provisions in the related Prospectus Supplement. As used
herein with respect to any Series, the term "Bond" refers to all of the Bonds of
that Series, whether or not offered hereby and by the related Prospectus
Supplement, unless the context otherwise requires. The Depositor will provide a
copy of the Agreements (without exhibits) relating to any Series of Bonds
without charge upon written request of a holder of a Bond of such Series
addressed to the Indenture Trustee specified in the related Prospectus
Supplement.
Pledge of Mortgage Loans; Deposit of Release Price or Substitution
At the time of issuance of any Series of Bonds, the Issuer will grant to
the designated Indenture Trustee to secure payment of the Bonds of such Series a
security interest in, among other things, the Mortgage Loans, to be included as
part of the related Collateral, together with all principal and interest to be
received on or with respect to such Mortgage Loans after the related Cut-off
Date, other than principal and interest due on or before the related Cut-off
Date and other than any Retained Interest (as defined herein). The Indenture
Trustee will hold such Mortgage Loans as security only for that Series of Bonds,
and holders of the Bonds of such Series will be entitled to the equal and
proportionate benefits of such security, subject to the express subordination of
certain classes thereof. In addition, the Indenture Trustee will, concurrently
with such grant, deliver such Bonds to or at the direction of the Issuer. Each
Mortgage Loan to be included as part of the related Collateral will be
identified in a schedule appearing as an exhibit to the related Indenture. Such
schedule generally will include detailed information to the extent available and
relevant in respect of each Mortgage Loan included as part of the related
Collateral, including without limitation, the address of the related Mortgaged
Property and type of such property, the Mortgage Interest Rate and, if
applicable, the applicable index, margin, adjustment date and any rate cap
information, the original and remaining term to maturity, the original and
outstanding principal balance and balloon payment, if any, the Value,
Loan-to-Value Ratio and the Debt Service Coverage Ratio as of the date indicated
and payment and prepayment provisions, if applicable.
With respect to each Mortgage Loan to be included as part of the related
Collateral, the Issuer will deliver or cause to be delivered to the Indenture
Trustee (or to the custodian acting on its behalf) certain loan documents, which
will generally include the original Mortgage Note endorsed, without recourse, in
blank or to the order of the Indenture Trustee, the original Mortgage (or a
certified copy thereof) with evidence of recording indicated thereon and an
assignment of the Mortgage to the Indenture Trustee in recordable form.
Notwithstanding the foregoing, the Collateral for a Series of Bonds may include
Mortgage Loans where the original Mortgage Note is not delivered to the
Indenture Trustee if the Issuer delivers to the Indenture Trustee or the
custodian, an affidavit certifying that the original thereof has been lost or
destroyed, together with, if available, a copy or a duplicate original of the
Mortgage Note. With respect to such Mortgage Loans, the Indenture Trustee (or
its nominee) may not be able to enforce the Mortgage Note against the related
borrower. The related Agreements will generally require that the Issuer or
another party specified in the related Prospectus Supplement promptly cause each
such assignment of Mortgage to be recorded in the appropriate public office for
real property records, except in states where, in the opinion of counsel
acceptable to the Indenture Trustee, such recording is not required to protect
the Indenture Trustee's interest in the related Mortgage Loan against the claim
of any subsequent transferee or any successor to or creditor of the Issuer, the
Servicer, the relevant Asset Seller or any other prior holder of the Mortgage
Loan.
The Indenture Trustee (or a custodian) will review such Mortgage Loan
documents within a specified period of days after receipt thereof, and the
Indenture Trustee (or a custodian) will hold such documents in trust for the
benefit of the Bondholders. If any such document is found to be missing or
defective in any material respect, the Indenture Trustee (or such custodian)
shall immediately notify the Issuer or another entity specified in the related
Prospectus Supplement. If the Issuer cannot cure the omission or defect within a
specified number of days after receipt of such notice, then the Issuer or such
other entity specified in the related Prospectus Supplement will be obligated,
within a specified number of days of receipt of such notice, to remove the
related Mortgage Loan as part of the related Collateral and pay to the Indenture
Trustee a cash amount equal to the sum of the unpaid principal balance thereof,
plus unpaid accrued interest thereon at the Mortgage Interest Rate from the date
as to which interest was last paid to the due date in the Due Period in which
the relevant removal is to occur, plus certain servicing expenses that are
reimbursable to each Servicer or such other amount as specified in the related
Prospectus Supplement (the "Release Price") or substitute for such Mortgage
Loan. This deposit and removal or substitution obligation constitutes the sole
remedy available to the Bondholders or the Indenture Trustee for omission of, or
a material defect in, a constituent document. To the extent specified in the
related Prospectus Supplement, in lieu of curing any omission or defect in the
Mortgage Loan or paying the Indenture Trustee the Release Price or substituting
for such Mortgage Loan, the Issuer or other named entity may agree to cover any
losses suffered with respect to the Collateral as a result of such breach or
defect.
If so provided in the related Prospectus Supplement, the Issuer will, as to
some or all of the Mortgage Loans, deliver or cause to be delivered to the
Indenture Trustee the related Lease Assignments. In certain cases, the Indenture
Trustee, or Sub-Servicer, as applicable, may collect all moneys under the
related Leases and distribute amounts, if any, required under the Lease for the
payment of maintenance, insurance and taxes, to the extent specified in the
related Lease agreement. The Indenture Trustee, or if so specified in the
Prospectus Supplement, the Master Servicer, as agent for the Indenture Trustee,
may hold the Lease in trust for the benefit of the Bondholders.
Representations and Warranties; Repurchases and Other Remedies
To the extent provided in the related Prospectus Supplement the Issuer
will, with respect to each Mortgage Loan included as part of the related
Collateral, make or assign, or cause to be made or assigned, certain
representations and warranties, as of a specified date (the person making such
representations and warranties, the "Warranting Party") covering, by way of
example, the following types of matters: (i) the accuracy of the information set
forth for such Mortgage Loan on the schedule of Mortgage Loans appearing as an
exhibit to the related Agreement; (ii) the existence of title insurance insuring
the lien priority of the Mortgage Loan; (iii) the authority of the Warranting
Party to sell the Mortgage Loan; (iv) the payment status of the Mortgage Loan
and the status of payments of taxes, assessments and other charges affecting the
related Mortgaged Property; (v) the existence of customary provisions in the
related Mortgage Note and Mortgage to permit realization against the Mortgaged
Property of the benefit of the security of the Mortgage; and (vi) the existence
of hazard and extended perils insurance coverage on the Mortgaged Property.
Any Warranting Party, if other than the Depositor, shall be an Asset Seller
or an affiliate thereof or such other person acceptable to the Depositor and
shall be identified in the related Prospectus Supplement. Representations and
warranties made in respect of a Mortgage Loan may have been made as of a date
prior to the applicable Cut-off Date. A substantial period of time may have
elapsed between such date and the date of initial issuance of the related Series
of Bonds secured by such Mortgage Loan. In the event of a breach of any such
representation or warranty that materially and adversely affects the value of
the applicable Mortgage Loan or the interest of the Bondholders therein, the
Warranting Party will be obligated to either cure such breach or repurchase or
replace the affected Mortgage Loan as described below. Since the representations
and warranties may not address events that may occur following the date as of
which they were made, the Warranting Party will have a cure, repurchase or
substitution obligation in connection with a breach of such a representation and
warranty only if the relevant event that causes such breach occurs prior to such
date. Such party would have no such obligations if the relevant event that
causes such breach occurs after such date.
The Agreements will provide that the Master Servicer and/or Indenture
Trustee will be required to notify promptly the relevant Warranting Party of any
breach of any representation or warranty made by it in respect of a Mortgage
Loan that materially and adversely affects the value of such Mortgage Loan or
the interests therein of the Bondholders. If such Warranting Party cannot cure
such breach within a specified period following the date on which such party was
notified of such breach, then such Warranting Party will be obligated to
repurchase such Mortgage Loan from the Indenture Trustee within a specified
period from the date on which the Warranting Party was notified of such breach,
at a price equal to the sum of the unpaid principal balance thereof, plus unpaid
accrued interest thereon at the Mortgage Interest Rate from the date as to which
interest was last paid to the due date in the Due Period in which the relevant
purchase is to occur, plus certain servicing expenses that are reimbursable to
each Servicer or such other price as specified in the related Prospectus
Supplement (the "Purchase Price"), or in the case of the Issuer, remove such
Mortgage Loan as part of the Collateral and pay to the Indenture Trustee the
Release Price therefor. If so provided in the Prospectus Supplement for a
Series, a Warranting Party, rather than repurchase a Mortgage Loan as to which a
breach has occurred, will have the option, within a specified period after
initial issuance of such Series of Bonds, to cause the removal of such Mortgage
Loan as part of the related Collateral and substitute in its place one or more
other Mortgage Loans, in accordance with the standards described in the related
Prospectus Supplement. If so provided in the Prospectus Supplement for a Series,
a Warranting Party, rather than repurchase or substitute a Mortgage Loan as to
which a breach has occurred, will have the option to reimburse the Indenture
Trustee or the Bondholders for any losses caused by such breach. This
reimbursement, repurchase or substitution obligation will constitute the sole
remedy available to holders of Bonds or the Indenture Trustee for a breach of
representation by a Warranting Party.
Neither the Depositor nor the Issuer (except to the extent that either of
them is the Warranting Party) nor any Servicer will be obligated to purchase or
substitute for a Mortgage Loan if a Warranting Party defaults on its obligation
to do so, and no assurance can be given that Warranting Parties will carry out
such obligations with respect to Mortgage Loans.
Each Servicer will make certain representations and warranties regarding
its authority to enter into, and its ability to perform its obligations under,
the related Agreement. A breach of any such representation in a Servicing
Agreement of a Master Servicer or Special Servicer which materially and
adversely affects the interests of the Bondholders and which continues
unremedied for thirty days after the giving of written notice of such breach to
such Servicer by the Indenture Trustee or the Depositor, or to such Servicer,
the Depositor and the Indenture Trustee by the holders of Bonds evidencing not
less than 25% of the Voting Rights or such other percentage specified in the
related Prospectus Supplement, will constitute a Servicer Event of Default under
such Servicing Agreement.
Accounts
General. Each Servicer and/or the Indenture Trustee will, as to each Series
of Bonds, establish and maintain or cause to be established and maintained one
or more separate accounts for the collection of payments on the related Mortgage
Loans (collectively, the "Accounts"), which must be either (i) an account or
accounts the deposits in which are insured by the Bank Insurance Fund or the
Savings Association Insurance Fund of the Federal Deposit Insurance Corporation
("FDIC") (to the limits established by the FDIC) and the uninsured deposits in
which are otherwise secured such that the Bondholders have a claim with respect
to the funds an Account or a perfected first priority security interest against
any collateral securing such funds that is superior to the claims of any other
depositors or general creditors of the institution with which such Account is
maintained or (ii) otherwise maintained with a bank or trust company, and in a
manner, satisfactory to the Rating Agency or Agencies rating any class of Bonds
of such Series. The collateral eligible to secure amounts in an Account is
limited to United States government securities and other investment grade
obligations specified in the Agreement ("Permitted Investments"). An Account may
be maintained as an interest bearing or a non-interest bearing account and the
funds held therein may be invested pending each succeeding Payment Date in
certain short-term Permitted Investments. Any interest or other income earned on
funds in an Account will be paid to a Servicer or its designee as additional
servicing compensation to the extent provided in the related Prospectus
Supplement. An Account may be maintained with an institution that is an
affiliate of a Servicer provided that such institution meets the standards
imposed by the Rating Agency or Agencies. If permitted by the Rating Agency or
Agencies and so specified in the related Prospectus Supplement, an Account may
contain funds relating to more than one Series of mortgage-backed securities and
may contain other funds respecting payments on mortgage loans belonging to a
Servicer or serviced or master serviced by it on behalf of others.
Deposits. The appropriate Servicer will deposit or cause to be deposited in
an Account on a daily basis, or such other period provided in the related
Agreement, the following payments and collections received, or advances made, by
such Servicer:
(i) all payments on account of principal, including principal prepayments,
on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans, including
any default interest collected, in each case net of any portion thereof retained
by a Servicer as its servicing compensation;
(iii) all proceeds of the hazard, business interruption and general
liability insurance policies to be maintained in respect of each Mortgaged
Property securing a Mortgage Loan included as part of the Collateral (to the
extent such proceeds are not applied to the restoration of the property or
released to the Mortgagor in accordance with the normal servicing procedures of
a Servicer, subject to the terms and conditions of the related Mortgage and
Mortgage Note) and all proceeds of rental interruption policies, if any,
insuring against losses arising from the failure of Lessees under a Lease to
make timely rental payments because of certain casualty events (collectively,
"Insurance Proceeds") and all other amounts received and retained in connection
with the liquidation of defaulted Mortgage Loans included as part of the
Collateral, by foreclosure, condemnation or otherwise ("Liquidation Proceeds"),
together with the net proceeds on a monthly basis with respect to any Mortgaged
Properties acquired for the benefit of Bondholders by foreclosure or by deed in
lieu of foreclosure or otherwise;
(iv) any advances made as described under "Description of the
Bonds-Advances in Respect of Delinquencies";
(v) any amounts representing Prepayment Premiums;
(vi) any amounts received from another Servicer;
but excluding any income, rents and profits derived from the ownership,
operation or leasing of any REO Property ("REO Proceeds") and penalties or
modification fees which may be retained by such Servicer. Unless otherwise
provided in the related Agreement, REO Proceeds shall be maintained in an
Account by the Special Servicer.
Once a month the Special Servicer and any Sub-Servicer remit funds on
deposit in the Account each maintains together with any P&I Advances to the
Master Servicer for deposit in an Account maintained by the Master Servicer.
Withdrawals. A Servicer may, from time to time, make withdrawals from an
Account for each Series of Bonds for one or more of the following purposes:
(i) to reimburse a Servicer for unreimbursed amounts advanced as described
under "Description of the Bonds--Advances in Respect of Delinquencies," such
reimbursement to be made out of amounts received which were identified and
applied by such Servicer as late collections of interest on and principal of the
particular Mortgage Loans with respect to which the advances were made;
(ii) to reimburse a Servicer for unpaid servicing fees earned and certain
unreimbursed servicing expenses incurred with respect to Mortgage Loans and
properties acquired in respect thereof, such reimbursement to be made out of
amounts that represent Liquidation Proceeds and Insurance Proceeds collected on
the particular Mortgage Loans and properties, and net income collected on the
particular properties, with respect to which such fees were earned or such
expenses were incurred;
(iii) to reimburse a Servicer for any advances described in clause (i)
above and any servicing expenses described in clause (ii) above which, in the
Master Servicer's good faith judgment, will not be recoverable from the amounts
described in clauses (i) and (ii), respectively, such reimbursement to be made
from amounts collected on other Collateral or, if and to the extent so provided
by the related Agreement and described in the related Prospectus Supplement,
just from that portion of amounts collected on other Collateral that is
otherwise payable on one or more classes of Subordinate Bonds, if any, remain
outstanding, and otherwise any outstanding class of Bonds, of the related
Series;
(iv) if and to the extent described in the related Prospectus Supplement,
to pay a Servicer interest accrued on the advances described in clause (i) above
and the servicing expenses described in clause (ii) above while such remain
outstanding and unreimbursed;
(v) to pay a Servicer, as additional servicing compensation, interest and
investment income earned in respect of amounts held in the Account; and
(vi) to make any other withdrawals permitted by the related Agreement and
described in the related Prospectus Supplement.
If and to the extent specified in the Prospectus Supplement amounts may be
withdrawn from any Account to cover additional costs, expenses or liabilities
associated with: the preparation of environmental site assessments with respect
to, and for containment, clean-up or remediation of hazardous wastes and
materials, the proper operation, management and maintenance of any Mortgaged
Property acquired for the benefit of Bondholders by foreclosure or by deed in
lieu of foreclosure or otherwise, such payments to be made out of income
received on such property; retaining an independent appraiser or other expert in
real estate matters to determine a fair sale price for a defaulted Mortgage Loan
or a property acquired in respect thereof in connection with the liquidation of
such Mortgage Loan or property; and obtaining various opinions of counsel
pursuant to the related Agreement for the benefit of Bondholders.
Payment Account. To the extent specified in the related Prospectus
Supplement, the Indenture Trustee will, as to each Series of Bonds, establish
and maintain, or cause to be established and maintained, one or more separate
Accounts for the collection of payments from the Master Servicer immediately
preceding each Payment Date (the "Payment Account"). The Indenture Trustee will
also deposit or cause to be deposited in a Payment Account the following
amounts:
(i) any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related Series of Bonds as described under
"Description of Credit Support";
(ii) any amounts paid under any Cash Flow Agreement, as described under
"Description of the Collateral--Cash Flow Agreements";
(iii) all proceeds of any Trust Asset or, with respect to a Mortgage Loan,
property acquired in respect thereof purchased by the Depositor, any Asset
Seller or any other specified person, and all proceeds of any Mortgage Loan
purchased as described under "Description of the Bonds--Termination" (also,
"Liquidation Proceeds");
(iv) any other amounts required to be deposited in the Payment Account as
provided in the related Agreement and described in the related Prospectus
Supplement.
The Indenture Trustee or another paying agent may, from time to time, make
a withdrawal from a Payment Account to make payments to the Bondholders on each
Payment Date.
Other Collection Accounts. Notwithstanding the foregoing, if so specified
in the related Prospectus Supplement, the Agreements for any Series of Bonds may
provide for the establishment and maintenance of a separate collection account
into which a Servicer will deposit on a daily basis the amounts described under
"--Deposits" above for one or more Series of Bonds. Any amounts on deposit in
any such collection account will be withdrawn therefrom and deposited into the
appropriate Payment Account by a time specified in the related Prospectus
Supplement. To the extent specified in the related Prospectus Supplement, any
amounts which could be withdrawn from the Payment Account as described under
"--Withdrawals" above, may also be withdrawn from any such collection account.
The Prospectus Supplement will set forth any restrictions with respect to any
such collection account, including investment restrictions and any restrictions
with respect to financial institutions with which any such collection account
may be maintained.
Collection and Other Servicing Procedures
Master Servicer. The Master Servicer is required under the Servicing
Agreement to make reasonable efforts to collect all scheduled payments under the
Mortgage Loans and will follow or cause to be followed such collection
procedures as it would follow with respect to mortgage loans that are comparable
to the Mortgage Loans and held for its own account, provided such procedures are
consistent with (i) the terms of the Servicing Agreement, (ii) applicable law
and (iii) the general servicing standard specified in the related Prospectus
Supplement or, if no such standard is so specified, its normal servicing
practices (in either case, the "Servicing Standard").
The Master Servicer will also be required to perform other customary
functions of a servicer of comparable loans, including maintaining (or causing
the Mortgagor or Lessee on each Mortgage or Lease to maintain) hazard, business
interruption and general liability insurance policies (and, if applicable,
rental interruption policies) as described herein and in any related Prospectus
Supplement, and filing and settling claims thereunder; maintaining escrow or
impoundment accounts of Mortgagors for payment of taxes, insurance and other
items required to be paid by any Mortgagor pursuant to the Mortgage Loan;
processing assumptions or substitutions in those cases where the applicable
Servicer has determined not to enforce any applicable due-on-sale clause;
attempting to cure delinquencies; supervising foreclosures; inspecting and
managing Mortgaged Properties under certain circumstances; and maintaining
accounting records relating to the Mortgage Loans.
The Master Servicer shall monitor the actions of the Special Servicer to
confirm compliance with the Agreements.
A Master Servicer, as servicer of the Mortgage Loans, on behalf of itself,
the Indenture Trustee and the Bondholders or such other entity specified in the
related Prospectus Supplement, will present claims to the obligor under each
instrument of Credit Support, and will take such reasonable steps as are
necessary to receive payment or to permit recovery thereunder with respect to
defaulted Mortgage Loans. See "Description of Credit Support."
Special Servicer. A Mortgagor's failure to make required payments may
reflect inadequate income or the diversion of that income from the service of
payments due under the Mortgage Loan, and may call into question such
Mortgagor's ability to make timely payment of taxes and to pay for necessary
maintenance of the related Mortgaged Property. Upon the occurrence of any of the
following events or such other events as may be specified in the related
Prospectus Supplement (each a "Servicing Transfer Event") with respect to a
Mortgage Loan, servicing for such Mortgage Loan (thereafter, a "Specially
Serviced Mortgage Loan") will be transferred from the Master Servicer to the
Special Servicer:
(a) such Mortgage Loan becomes a defaulted Mortgage Loan,
(b) the occurrence of certain events indicating the possible insolvency of
the Mortgagor,
(c) the receipt by the Master Servicer of a notice of foreclosure of any
other lien on the related Mortgaged Property,
(d) the Master Servicer determines that a payment default is imminent,
(e) with respect to a Balloon Mortgage Loan, no assurances have been given
as to the ability of the Mortgagor to make the final payment thereon, or
(f) the occurrence of certain other events constituting defaults under the
terms of such Mortgage Loan.
The Special Servicer is required to monitor any Mortgage Loan which is in
default, contact the Mortgagor concerning the default, evaluate whether the
causes of the default can be cured over a reasonable period without significant
impairment of the value of the Mortgaged Property, initiate corrective action in
cooperation with the Mortgagor if cure is likely, inspect the Mortgaged Property
and take such other actions as are consistent with the Servicing Standard. A
significant period of time may elapse before the Special Servicer is able to
assess the success of such corrective action or the need for additional
initiatives.
The time within which the Special Servicer makes the initial determination
of appropriate action evaluates the success of corrective action, develops
additional initiatives, institutes foreclosure proceedings and actually
forecloses (or takes a deed to a Mortgaged Property in lieu of foreclosure) on
behalf of the Bondholders, may vary considerably depending on the particular
Mortgage Loan, the Mortgaged Property, the Mortgagor, the presence of an
acceptable party to assume the Mortgage Loan and the laws of the jurisdiction in
which the Mortgaged Property is located. Under federal bankruptcy law, the
Special Servicer in certain cases may not be permitted to accelerate a Mortgage
Loan or to foreclose on a Mortgaged Property for a considerable period of time.
See "Certain Legal Aspects of the Mortgage Loans and the Leases."
Any Agreement relating to a Series of Bonds secured by Collateral that
includes Mortgage Loans may grant to the Master Servicer and/or the holder or
holders of certain classes of Bonds a right of first refusal to purchase from
the Owner Trust at a predetermined purchase price any such Mortgage Loan as to
which a specified number of scheduled payments thereunder are delinquent. Any
such right granted to the holder of an Offered Bond will be described in the
related Prospectus Supplement. The related Prospectus Supplement will also
describe any such right granted to any person if the predetermined purchase
price is less than the Purchase Price described under "Representations and
Warranties; Repurchases and Other Remedies."
The Special Servicer may agree to modify, waive or amend any term of any
Specially Serviced Mortgage Loan in a manner consistent with the Servicing
Standard so long as the modification, waiver or amendment will not (i) affect
the amount or timing of any scheduled payments of principal or interest on the
Mortgage Loan or (ii) in its judgment, materially impair the security for the
Mortgage Loan or reduce the likelihood of timely payment of amounts due thereon.
The Special Servicer also may generally agree to any modification, waiver or
amendment that would so affect or impair the payments on, or the security for, a
Mortgage Loan if, (i) in its judgment, a material default on the Mortgage Loan
has occurred or a payment default is imminent and (ii) in its judgment, such
modification, waiver or amendment is reasonably likely to produce a greater
recovery with respect to the Mortgage Loan on a present value basis than would
liquidation. The Special Servicer is required to notify the Indenture Trustee in
the event of any modification, waiver or amendment of any Mortgage Loan.
The Special Servicer, on behalf of the Indenture Trustee, may at any time
institute foreclosure proceedings, exercise any power of sale contained in any
mortgage, obtain a deed in lieu of foreclosure, or otherwise acquire title to a
Mortgaged Property securing a Mortgage Loan by operation of law or otherwise, if
such action is consistent with the Servicing Standard and a default on such
Mortgage Loan has occurred or, in the Special Servicer's judgment, is imminent.
The Special Servicer generally may not acquire title to any related Mortgaged
Property or take any other action that would cause the Indenture Trustee, for
the benefit of Bondholders, or any other specified person to be considered to
hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or an
"operator" of such Mortgaged Property within the meaning of certain federal
environmental laws, unless the Special Servicer has previously determined, based
on a report prepared by a person who regularly conducts environmental audits
(which report will be an expense of the Issuer), that:
(i) the Mortgaged Property is in compliance with applicable environmental
laws; or if not, that taking such actions as are necessary to bring the
Mortgaged Property in compliance therewith is reasonably likely to produce a
greater recovery on a present value basis, after taking into account any risks
associated therewith, than not taking such actions; and
(ii) and there are no circumstances present at the Mortgaged Property
relating to the use, management or disposal of any hazardous substances,
hazardous materials, wastes, or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or remediation could
be required under any federal, state or local law or regulation or that, if any
such materials are present, taking such action with respect to the affected
Mortgaged Property is reasonably likely to produce a greater recovery on a
present value basis, after taking into account any risks associated therewith,
than not taking such actions.
Subject to the foregoing, the Special Servicer will be required to (i)
solicit bids for any Mortgaged Property so acquired in such a manner as will be
reasonably likely to realize a fair price for such property and (ii) accept the
first (and, if multiple bids are contemporaneously received, the highest) cash
bid received from any person that constitutes a fair price.
If the Issuer acquires title to any Mortgaged Property, the Special
Servicer, on behalf of the Issuer, may be required to retain an independent
contractor to manage and operate such property. The retention of an independent
contractor, however, will not relieve the Special Servicer of any of its
obligations with respect to the management and operation of such Mortgaged
Property. Any such property acquired by the Issuer will be managed in a manner
consistent with the management and operation of similar property by a prudent
lending institution or in such other manner as specified in the related
Prospectus Supplement.
The limitations imposed by the related Agreements on the operations and
ownership of any Mortgaged Property acquired on behalf of the Issuer may result
in the recovery of an amount less than the amount that would otherwise be
recovered. See "Certain Legal Aspects of the Mortgage Loans and the
Leases--Foreclosure."
If recovery on a defaulted Mortgage Loan under any related instrument of
Credit Support is not available, the Special Servicer nevertheless will be
obligated to follow or cause to be followed such normal practices and procedures
as it deems necessary or advisable to realize upon the defaulted Mortgage Loan.
If the proceeds of any liquidation of the property securing the defaulted
Mortgage Loan are less than the outstanding principal balance of the defaulted
Mortgage Loan plus interest accrued thereon at the Mortgage Interest Rate plus
the aggregate amount of expenses incurred by the Special Servicer in connection
with such proceedings and which are reimbursable under the Agreement, the Issuer
will realize a loss in the amount of such difference. The Special Servicer will
be entitled to withdraw or cause to be withdrawn from a related Account out of
the Liquidation Proceeds recovered on any defaulted Mortgage Loan, prior to the
payment of such Liquidation Proceeds to Bondholders, amounts representing its
normal servicing compensation on the Mortgage Loan, unreimbursed servicing
expenses incurred with respect to the Mortgage Loan and any unreimbursed
advances of delinquent payments made with respect to the Mortgage Loan.
If any property securing a defaulted Mortgage Loan is damaged and proceeds,
if any, from the related hazard insurance policy are insufficient to restore the
damaged property to a condition sufficient to permit recovery under the related
instrument of Credit Support, if any, the Special Servicer is not required to
expend its own funds to restore the damaged property unless it determines (i)
that such restoration will increase the proceeds to Bondholders on liquidation
of the Mortgage Loan after reimbursement of the Master Servicer for its expenses
and (ii) that such expenses will be recoverable by it from related Insurance
Proceeds or Liquidation Proceeds.
Hazard Insurance Policies
Generally, the Servicing Agreement with respect to a Series of Bonds
secured by Collateral that includes Mortgage Loans will require the Master
Servicer to cause the Mortgagor on each Mortgage Loan to maintain a hazard
insurance policy providing for such coverage as is required under the related
Mortgage. Such coverage will be in general in an amount equal to the amount
necessary to fully compensate for any damage or loss to the improvements on the
Mortgaged Property on a replacement cost basis or such other amount specified in
the related Prospectus Supplement, but not less than the amount necessary to
avoid the application of any co-insurance clause contained in the hazard
insurance policy. The ability of the Master Servicer to assure that hazard
insurance proceeds are appropriately applied may be dependent upon its being
named as an additional insured under any hazard insurance policy and under any
other insurance policy referred to below, or upon the extent to which
information in this regard is furnished by Mortgagors. All amounts collected by
the Master Servicer under any such policy (except for amounts to be applied to
the restoration or repair of the Mortgaged Property or released to the Mortgagor
in accordance with the Master Servicer's normal servicing procedures, subject to
the terms and conditions of the related Mortgage and Mortgage Note) will be
deposited in a related Account.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies relating to the Mortgage Loans will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, the basic terms thereof are dictated by respective state laws, and
most such policies typically do not cover any physical damage resulting from
war, revolution, governmental actions, floods and other water-related causes,
earth movement (including earthquakes, landslides and mudflows), wet or dry rot,
vermin, domestic animals and certain other kinds of uninsured risks.
The hazard insurance policies covering the Mortgaged Properties securing
the Mortgage Loans will typically contain a co-insurance clause that in effect
requires the insured at all times to carry insurance of a specified percentage
(generally 80% to 90%) of the full replacement value of the improvements on the
property in order to recover the full amount of any partial loss. If the
insured's coverage falls below this specified percentage, such clause generally
provides that the insurer's liability in the event of partial loss does not
exceed the lesser of (i) the replacement cost of the improvements less physical
depreciation and (ii) such proportion of the loss as the amount of insurance
carried bears to the specified percentage of the full replacement cost of such
improvements.
Each Servicing Agreement will require the Master Servicer to cause the
Mortgagor on each Mortgage Loan, or, in certain cases, the related Lessee, to
maintain all such other insurance coverage with respect to the related Mortgaged
Property as is consistent with the terms of the related Mortgage, which
insurance may typically include flood insurance (if the related Mortgaged
Property was located at the time of origination in a federally designated flood
area).
In addition, to the extent required by the related Mortgage, the Master
Servicer may require the Mortgagor or related Lessee to maintain other forms of
insurance including, but not limited to, loss of rent endorsements, business
interruption insurance and comprehensive public liability insurance. Any cost
incurred by the Master Servicer in maintaining any such insurance policy will be
added to the amount owing under the Mortgage Loan where the terms of the
Mortgage Loan so permit; provided, however, that the addition of such cost will
not be taken into account for purposes of calculating the payment to be made to
Bondholders. Such costs may be recovered by a Servicer from a related Account,
with interest thereon, as provided by the Agreements.
Rental Interruption Insurance Policy
If so specified in the related Prospectus Supplement, the Master Servicer
or the Mortgagors will maintain rental interruption insurance policies in full
force and effect with respect to some or all of the Leases. Although the terms
of such policies vary to some degree, a rental interruption insurance policy
typically provides that, to the extent that a Lessee fails to make timely rental
payments under the related Lease due to a casualty event, such losses will be
reimbursed to the insured. If so specified in the related Prospectus Supplement,
the Master Servicer will be required to pay from its servicing compensation the
premiums on the rental interruption policy on a timely basis. If so specified in
the Prospectus Supplement, if such rental interruption policy is canceled or
terminated for any reason (other than the exhaustion of total policy coverage),
the Master Servicer will exercise its best reasonable efforts to obtain from
another insurer a replacement policy comparable to the rental interruption
policy with a total coverage that is equal to the then existing coverage of the
terminated rental interruption policy; provided that if the cost of any such
replacement policy is greater than the cost of the terminated rental
interruption policy, the amount of coverage under the replacement policy will be
reduced to a level such that the applicable premium does not exceed, by a
percentage that may be set forth in the related Prospectus Supplement, the cost
of the rental interruption policy that was replaced or to such other level as
specified in the related Prospectus Supplement. Any amounts collected by the
Master Servicer under the rental interruption policy in the nature of insurance
proceeds will be deposited in a related Account.
Fidelity Bonds and Errors and Omissions Insurance
The Agreements will require that the Servicers 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, employees and
agents of such Servicer. The related Agreements will allow a Servicer to
self-insure against loss occasioned by the errors and omissions of the officers,
employees and agents of the Master Servicer or the Special Servicer so long as
certain criteria set forth in the Agreements are met.
Due-on-Sale and Due-on-Encumbrance Provisions
Certain of the Mortgage Loans may contain clauses requiring the consent of
the mortgagee to any sale or other transfer of the related Mortgaged Property,
or due-on-sale clauses entitling the mortgagee to accelerate payment of the
Mortgage Loan upon any sale or other transfer of the related Mortgaged Property.
Certain of the Mortgage Loans may contain clauses requiring the consent of the
mortgagee to the creation of any other lien or encumbrance on the Mortgaged
Property or due-on-encumbrance clauses entitling the mortgagee to accelerate
payment of the Mortgage Loan upon the creation of any other lien or encumbrance
upon the Mortgaged Property. The Master Servicer, on behalf of the Issuer, will
generally exercise any right the Indenture Trustee may have as mortgagee to
accelerate payment of any such Mortgage Loan or to withhold its consent to any
transfer or further encumbrance. To the extent specified in the related
Prospectus Supplement, any fee collected by or on behalf of the Master Servicer
for entering into an assumption agreement will be retained by or on behalf of
the Master Servicer as additional servicing compensation. See "Certain Legal
Aspects of the Mortgage Loans and the Leases--Due-on-Sale and
Due-on-Encumbrance."
Retained Interest; Servicing Compensation and Payment of Expenses
The Prospectus Supplement for a Series of Bonds will specify whether there
will be any Retained Interest in the Mortgage Loans, and, if so, the initial
owner thereof. If so, the Retained Interest will be established on a
loan-by-loan basis and will be specified on an exhibit to the related Agreement.
A "Retained Interest" in a Mortgage Loan represents a specified portion of the
interest payable thereon. The Retained Interest will be deducted from Mortgagor
payments as received and will not be part of the related Collateral.
Each Servicer's primary servicing compensation with respect to a Series of
Bonds will come from the periodic payment to it of a portion of the interest
payment on each Mortgage Loan or such other amount specified in the related
Prospectus Supplement. Since any Retained Interest and a Servicer's primary
compensation are percentages of the principal balance of each Mortgage Loan,
such amounts will decrease in accordance with the amortization of the Mortgage
Loans. The Prospectus Supplement with respect to a Series of Bonds secured by
Collateral that includes Mortgage Loans may provide that, as additional
compensation, a Servicer may retain all or a portion of assumption fees,
modification fees, late payment charges or Prepayment Premiums collected from
Mortgagors and any interest or other income which may be earned on funds held in
a related Account.
The Master Servicer may, to the extent provided in the related Prospectus
Supplement, pay from its servicing compensation certain expenses incurred in
connection with its servicing and managing of the Mortgage Loans, including,
without limitation, payment of the fees and disbursements of the Indenture
Trustee and independent accountants, payment of expenses incurred in connection
with payments and reports to Bondholders, and payment of any other expenses
described in the related Prospectus Supplement. Certain other expenses,
including certain expenses relating to defaults and liquidations on the Mortgage
Loans and, to the extent so provided in the related Prospectus Supplement,
interest thereon at the rate specified therein, and the fees of any Special
Servicer, may be borne by the Issuer.
If a Master Servicer or its designee recovers payments under any instrument
of Credit Support with respect to any defaulted Mortgage Loan, the Master
Servicer will be entitled to withdraw or cause to be withdrawn from the Payment
Account out of such proceeds, prior to payment thereof to Bondholders, amounts
representing its normal servicing compensation on such Mortgage Loan,
unreimbursed servicing expenses incurred with respect to the Mortgage Loan and
any unreimbursed advances of delinquent payments made with respect to the
Mortgage Loan. See "Hazard Insurance Policies" and "Description of Credit
Support."
Evidence as to Compliance
The Agreements will provide that on or before a specified date in each
year, beginning on a date specified therein, a firm of independent public
accountants will furnish a statement to the Indenture Trustee to the effect
that, on the basis of the examination by such firm conducted substantially in
compliance with either the Uniform Single Attestation Program for Mortgage
Bankers, the servicing by or on behalf of each Servicer was conducted in
compliance with the terms of such agreements except for any exceptions the
Uniform Single Attestation Program for Mortgage Bankers requires it to report.
The Agreements will also provide for delivery to the Indenture Trustee, on
or before a specified date in each year, of an annual statement signed by an
officer of each Servicer to the effect that such Servicer has fulfilled its
obligations under the applicable Agreement throughout the preceding calendar
year or other specified twelve-month period.
Copies of such annual accountants' statement and such statements of
officers will be obtainable by Bondholders and Beneficial Owners without charge
upon written request to the Master Servicer or other entity specified in the
related Prospectus Supplement at the address set forth in the related Prospectus
Supplement; provided that such Beneficial Owner shall have certified to the
Master Servicer that it is the Beneficial Owner of a Bond.
Certain Matters Regarding each Servicer and the Depositor
The Master Servicer and the Special Servicer, or a servicer for
substantially all the Mortgage Loans under a Servicing Agreement will be named
in the related Prospectus Supplement. Each entity serving as Servicer may be an
affiliate of the Depositor and may have other normal business relationships with
the Depositor or the Depositor's affiliates.
The related Servicing Agreement will provide that any Servicer may resign
from its obligations and duties thereunder only with the consent of the
Indenture Trustee, which may not be unreasonably withheld or upon a
determination that its duties under the Servicing Agreement are no longer
permissible under applicable law. No such resignation will become effective
until a successor servicer has assumed such Servicer's obligations and duties
under the related Servicing Agreement.
The Servicing Agreement will further provide that none of the Servicers, or
any officer, employee, or agent thereof will be under any liability to the
related Owner Trust or Bondholders for any action taken, or for refraining from
the taking of any action in accordance with the Servicing standards set forth in
the Servicing Agreement, in good faith pursuant to the Servicing Agreement;
provided, however, that no Servicer nor any such person will be protected
against any breach of a representation or warranty made in such Servicing
Agreement, or against any liability specifically imposed thereby, or against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of duties thereunder or by reason of
reckless disregard of obligations and duties thereunder. The Depositor shall be
liable only to the extent of its obligations specifically imposed upon and
undertaken by the Depositor. The Servicing Agreement will further provide that
each Servicer will be entitled to indemnification by the related Owner Trust
against any loss, liability or expense incurred in connection with any legal
action relating to the related Servicing Agreement or the Mortgage Loans;
provided, however, that such indemnification will not extend to any loss,
liability or expense incurred by reason of misfeasance, bad faith or negligence
in the performance of obligations or duties thereunder, or by reason of reckless
disregard of such obligations or duties. In addition, the Servicing Agreement
will provide that no Servicer will be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its
responsibilities under the Servicing Agreement and which in its opinion may
involve it in any expense or liability. Any Servicer may, however, with the
consent of the Indenture Trustee undertake any such action which it may deem
necessary or desirable with respect to the Agreement and the rights and duties
of the parties thereto and the interests of the Bondholders thereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom will be expenses, costs and liabilities of the Bondholders, and the
Servicer will be entitled to be reimbursed therefor.
Any person into which a Servicer or the Depositor may be merged or
consolidated, or any person resulting from any merger or consolidation to which
a Servicer or the Depositor is a party, or any person succeeding to the business
of a Servicer or the Depositor will be the successor of such Servicer or the
Depositor, as applicable, under the related Agreements.
Servicer Events of Default
Events of Default with respect to a Servicer under the related Agreements
(a "Servicer Event of Default") will generally include (i) any failure by such
Servicer to distribute or cause to be distributed to the Indenture Trustee,
another Servicer or the Bondholders, any required payment within one Business
Day of the date due; (ii) any failure by such Servicer to timely deliver a
report that continues unremedied for two days after receipt of notice of such
failure has been given to such Servicer by the Indenture Trustee or another
Servicer; (iii) any failure by such Servicer duly to observe or perform in any
material respect any of its other covenants or obligations under the Agreements
which continues unremedied for thirty days after written notice of such failure
has been given to such Servicer; (iv) any breach of a representation or warranty
made by such Servicer under the Agreements which materially and adversely
affects the interests of Bondholders and which continues unremedied for thirty
days after written notice of such breach has been given to such Servicer; (v)
certain events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings and certain actions by or on behalf of such
Servicer indicating its insolvency or inability to pay its obligations; and (vi)
any failure by such Servicer to maintain a required license to do business or
service the Mortgage Loans pursuant to the related Agreements. Material
variations to the foregoing Servicer Events of Default (other than to shorten
cure periods or eliminate notice requirements) will be specified in the related
Prospectus Supplement. The Indenture Trustee will, not later than the later of
60 days or such other period specified in the related Prospectus Supplement
after the occurrence of any event which constitutes or, with notice or lapse of
time or both, would constitute a Servicer Event of Default and five days after
certain officers of the Indenture Trustee become aware of the occurrence of such
an event, transmit by mail to the Depositor and all Bondholders of the
applicable Series notice of such occurrence, unless such default shall have been
cured or waived.
Rights Upon Servicer Event of Default
So long as a Servicer Event of Default remains unremedied, the Depositor or
the Indenture Trustee may, and at the direction of holders of Bonds evidencing
not less than 25% (or such other percentage specified in the related Prospectus
Supplement) of the Voting Rights, the Indenture Trustee shall be required to,
terminate all of the rights and obligations of the related Servicer under the
related Agreement and in and to the Mortgage Loans (other than as a Bondholder
or as the owner of any Retained Interest), whereupon the Master Servicer (or if
such Servicer is the Master Servicer, the Indenture Trustee) will succeed to all
of the responsibilities, duties and liabilities of such Servicer under the
related Agreement and will be entitled to similar compensation arrangements. In
the event that the Indenture Trustee is unwilling or unable so to act, it may
or, at the written request of the holders of Bonds entitled to at least 25% (or
such other percentage specified in the related Prospectus Supplement) of the
Voting Rights, it shall be required to appoint, or petition a court of competent
jurisdiction for the appointment of, a loan servicing institution acceptable to
the Rating Agency with a net worth at the time of such appointment of at least
$15,000,000 (or such other amount specified in the related Prospectus
Supplement) to act as successor to the Master Servicer under the related
Agreement. Pending such appointment, the Indenture Trustee is obligated to act
in such capacity. The Indenture Trustee and any such 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 under the related Agreement.
The holders of Bonds of a Series representing at least 66-2/3% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for each class of Bonds of such Series affected by any Servicer Event of
Default will be entitled to waive such Servicer Event of Default; provided,
however, that a Servicer Event of Default involving a failure to pay a required
payment to Bondholders described in clause (i) under "Servicer Events of
Default" may be waived only by all of the Bondholders. Upon any such waiver of a
Servicer Event of Default, such Servicer Event of Default shall cease to exist
and shall be deemed to have been remedied for every purpose under the related
Agreement.
No Bondholder will have the right under any Agreement to institute any
proceeding with respect thereto unless such holder previously has given to the
Indenture Trustee written notice of default and unless the holders of Bonds
evidencing not less than 25% (or such other percentage specified in the related
Prospectus Supplement) of the Voting Rights have made written request upon the
Indenture Trustee to institute such proceeding in its own name as Indenture
Trustee thereunder and have offered to the Indenture Trustee reasonable
indemnity, and the Indenture Trustee for sixty days (or such other number of
days specified in the related Prospectus Supplement) has neglected or refused to
institute any such proceeding. The Indenture Trustee, however, is under no
obligation to exercise any of the trusts or powers vested in it by any Agreement
or to make any investigation of matters arising thereunder or to institute,
conduct or defend any litigation thereunder or in relation thereto at the
request, order or direction of any of the holders of Bonds covered by such
Agreement, unless such Bondholders have offered to the Indenture Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby. As described under "Description of the
Bonds--Book-Entry Registration and Definitive Bonds," unless and until
Definitive Bonds are issued, Beneficial Owners may only exercise their rights as
owners of Bonds indirectly through DTC, or their respective Participants and
Indirect Participants.
Amendment
An Agreement may be amended by the parties thereto, without the consent of
any of the holders of Bonds covered by the Agreement, (i) to cure any ambiguity,
(ii) to correct, modify or supplement any provision therein which may be
inconsistent with any other provision therein, (iii) to make any other
provisions with respect to matters or questions arising under the Agreement
which are not inconsistent with the provisions thereof, or (iv) to comply with
any requirements imposed by the Code; provided that such amendment (other than
an amendment for the purpose specified in clause (iv) above) will not (as
evidenced by an opinion of counsel to such effect) adversely affect in any
material respect the interests of any holder of Bonds covered by the Agreement.
An Agreement may also be amended by the Depositor, the Master Servicer, if any,
and the Indenture Trustee, with the consent of the holders of Bonds affected
thereby evidencing not less than 51% (or such other percentage specified in the
related Prospectus Supplement) of the Voting Rights, for any purpose; provided,
however, that no such amendment may (i) reduce in any manner the amount of or
delay the timing of, payments received or advanced on Mortgage Loans which are
required to be distributed on any Bond without the consent of the holder of such
Bond, (ii) adversely affect in any material respect the interests of the holders
of any class of Bonds in a manner other than as described in clause (i), without
the consent of the holders of all Bonds of such class or (iii) modify the
provisions of such Agreement described in this paragraph without the consent of
the holders of all Bonds covered by such Agreement then outstanding.
The Indenture Trustee
The Indenture Trustee for a Series of Bonds will be named in the related
Prospectus Supplement. The commercial bank, national banking association,
banking corporation or trust company serving as Indenture Trustee may have a
banking relationship with the Depositor and its affiliates and with any Master
Servicer and its affiliates.
Duties of the Indenture Trustee
The Indenture Trustee will make no representations as to the validity or
sufficiency of any Agreement, the Bonds or any Trust Asset or related document
and is not accountable for the use or application by or on behalf of any
Servicer of any funds paid to such Servicer or its designee in respect of the
Bonds or the Collateral, or deposited into or withdrawn from any Account or any
other account by or on behalf of any Servicer. If no Issuer Event of Default or
Servicer Event of Default has occurred and is continuing, the Indenture Trustee
is required to perform only those duties specifically required under the related
Agreements. However, upon receipt of the various certificates, reports or other
instruments required to be furnished to it, the Indenture Trustee is required to
examine such documents and to determine whether they conform to the requirements
of the Agreements.
Certain Matters Regarding the Indenture Trustee
The Indenture Trustee and any director, officer, employee or agent of the
Indenture Trustee shall be entitled to indemnification out of the Payment
Account for any loss, liability or expense (including costs and expenses of
litigation, and of investigation, counsel fees, damages, judgments and amounts
paid in settlement) incurred in connection with the Indenture Trustee's (i)
enforcing its rights and remedies and protecting the interests, and enforcing
the rights and remedies, of the Bondholders during the continuance of an Issuer
Event of Default or Servicer Event of Default, (ii) defending or prosecuting any
legal action in respect of the related Agreement or Series of Bonds, (iii) being
the mortgagee of record with respect to the Mortgage Loans constituting
Collateral in respect of a Series of Bond and the owner of record with respect
to any Mortgaged Property acquired in respect thereof for the benefit of
Bondholders, or (iv) acting or refraining from acting in good faith at the
direction of the holders of the related Series of Bonds entitled to not less
than 25% (or such higher percentage as is specified in the related Agreement
with respect to any particular matter) of the Voting Rights for such Series;
provided, however, that such indemnification will not extend to any loss,
liability or expense that constitutes a specific liability of the Indenture
Trustee pursuant to the related Agreement, or to any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence on the part
of the Indenture Trustee in the performance of its obligations and duties
thereunder, or by reason of its reckless disregard of such obligations or
duties, or as may arise from a breach of any representation, warranty or
covenant of the Indenture Trustee made therein.
Resignation and Removal of the Indenture Trustee
The Indenture Trustee may at any time resign from its obligations and
duties under an Agreement by giving written notice thereof to the Depositor, the
Master Servicer, if any, and all Bondholders. Upon receiving such notice of
resignation, the Depositor is required promptly to appoint a successor indenture
trustee acceptable to the Master Servicer, if any. If no successor indenture
trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Indenture
Trustee may petition any court of competent jurisdiction for the appointment of
a successor indenture trustee. If at any time the Indenture Trustee shall cease
to be eligible to continue as such under the related Agreements, or if at any
time the Indenture Trustee shall become incapable of acting, or shall be
adjudged bankrupt or insolvent, or a receiver of the Indenture Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Indenture Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Depositor may remove the
Indenture Trustee and appoint a successor indenture trustee acceptable to the
Master Servicer, if any. Holders of the Bonds of any Series entitled to at least
51% (or such other percentage specified in the related Prospectus Supplement) of
the Voting Rights for such Series may at any time remove the Indenture Trustee
without cause and appoint a successor indenture trustee.
Any resignation or removal of the Indenture Trustee and appointment of a
successor indenture trustee shall not become effective until acceptance of
appointment by the successor indenture trustee.
Certain Terms of the Indenture
Issuer Events of Default. Except to the extent otherwise provided in the
related Prospectus Supplement, an "Issuer Event of Default" with respect to any
Series of Bonds will consist of: (i) the failure to pay all interest on and
principal of any Bond of such Series by its Stated Maturity; (ii) the impairment
of the validity or effectiveness of the related Indenture or any grant
thereunder, or the subordination or, except as permitted thereunder, the
termination or discharge of the lien of the related Indenture, or the creation
of any lien, charge, security interest, mortgage or other encumbrance (other
than the lien of the related Indenture or any other lien expressly permitted
thereby) with respect to any part of the property subject to the lien of the
related Indenture or any interest in or proceeds of such property, or the
failure of the lien of the related Indenture to constitute a valid first
priority perfected security interest in such property (subject only to those
liens expressly permitted by the related Indenture to be prior to the lien
thereof), and the continuation of any such defaults for a period of 30 days
after notice to the Issuer for such Series by the designated Indenture Trustee
or to the Issuer for such Series and the designated Indenture Trustee by the
holders of Bonds entitled to at least 25% of the Voting Rights for such Series;
(iii) any default in the observance or performance of any covenant or agreement
of the Issuer made in the related Indenture (other than a covenant or agreement,
a default in the observance or performance of which is elsewhere in this
paragraph specifically dealt with) with respect to such Series or any
representation or warranty of the Issuer made in the related Indenture, or in
any certificate or other writing delivered pursuant thereto or in connection
therewith, with respect to such Series proving to have been incorrect in any
material respect as of the time when the same shall have been made, provided
such default or the circumstance or condition in respect of which such
representation or warranty was incorrect (A) shall materially and adversely
affect the interests of holders of Bonds of such Series and (B) shall continue
or shall not have been eliminated or otherwise remedied, as the case may be, for
a period of 60 days after there shall have been given, by registered or
certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the
Indenture Trustee by the holders of Bonds representing at least 25% of the
Voting Rights for such Series, a written notice specifying such default or
inaccuracy, as the case may be, and requiring it to be remedied and stating that
such notice is a "Notice of Default" under the related Indenture; and (iv)
certain events of bankruptcy, insolvency, receivership or reorganization of the
Issuer for such Series. Notwithstanding the foregoing, if a Series of Bonds
includes a class of Subordinate Bonds, the Indenture for such a Series may
provide that certain defaults which relate only to such Subordinate Bonds shall
not constitute an Issuer Event of Default with respect to such Series, under
certain circumstances, and may limit the rights of holders of Subordinate Bonds
to direct the Indenture Trustee to pursue remedies with respect to such
defaults, or other Issuer Events of Default. Such limitations, if any, will be
specified in the related Prospectus Supplement.
Except to the extent otherwise provided in the related Prospectus
Supplement, if an Issuer Event of Default with respect to any Series of Bonds
should occur and be continuing, the Indenture Trustee for such Series may (and,
upon the written request of the holders of Bonds representing more than 50% of
the Voting Rights for each class of Bonds of such Series affected thereby,
shall) declare all Bonds of such Series to be due and payable, together with
accrued and unpaid interest thereon. Except to the extent otherwise specified in
the related Prospectus Supplement, such declaration of acceleration and its
consequences may under certain circumstances (including the remediation by the
Issuer of all existing Issuer Events of Default with respect to such Series) be
rescinded and annulled by the holders of Bonds representing more than 50% of the
Voting Rights for each class of Bonds of such Series.
The Indenture for each Series of Bonds will provide that the Indenture
Trustee for such Series shall, within 90 days after the occurrence of an Issuer
Event of Default with respect to such Series, mail to the holders of Bonds of
such Series notice of all uncured or unwaived defaults known to it; provided
that, except in the case of an Issuer Event of Default in the payment of the
principal or purchase price of or interest on any Bond, the Indenture Trustee
shall be protected in withholding such notice if it determines in good faith
that the withholding of such notice is in the interest of the Bondholders of
such Series.
An Issuer Event of Default with respect to one Series of Bonds will not
necessarily be an Issuer Event of Default with respect to any other Series of
Bonds.
Except to the extent otherwise provided in the related Prospectus
Supplement, if following an Issuer Event of Default with respect to any Series
of Bonds, the Bonds of such Series have been declared to be due and payable, the
Indenture Trustee may liquidate the related Mortgage Loans, but only if: (i)
each and every Bondholder of such Series consents thereto; (ii) the portion of
the proceeds of such sale or liquidation that is payable to the Bondholders of
such Series is sufficient to discharge in full all amounts then due and unpaid
upon the Bonds of such Series for principal and interest; or (iii) the Indenture
Trustee (A) determines that the Mortgage Loans securing such Series will not,
taking into account any Credit Support or Cash Flow Agreement with respect to
such Series, provide sufficient funds for the payment of all principal and
interest on the Bonds of such Series by their respective Stated Maturities, if
any, and (B) obtains the consent of the holders of Bonds representing at least
66-2/3% of the Voting Rights for each class of Bonds of such Series. In
addition, if following an Issuer Event of Default with respect to any Series of
Bonds, the Bonds of such Series have been declared to be due and payable, the
Indenture Trustee will be required to liquidate the related Mortgage Loans
(except to the extent otherwise provided in the related Prospectus Supplement)
if the Bondholders of such Series so direct as described under "--Control by
Bondholders" below. Except to the extent otherwise provided in the Prospectus
Supplement for the Offered Bonds of any Series of Bonds, the proceeds of a sale
of Mortgage Loans will be applied to the payment of amounts due the Indenture
Trustee for such Series and other administrative and servicing expenses
specified in the related Indenture and then distributed pro rata among the
Bondholders of each class of such Series (provided that Subordinate Bonds of
such Series will be subordinate to Senior Bonds of such Series to the extent
provided in the related Prospectus Supplement) according to the amounts due and
payable on the Bonds for principal and interest at the time such proceeds are
paid by the Indenture Trustee.
If the Bonds of any Series have been declared to be due and payable
following an Issuer Event of Default with respect to such Series and such
declaration and its consequences have not been rescinded and annulled, then
(unless the related Prospectus Supplement specifies otherwise) the Indenture
Trustee may, but need not, elect to maintain possession of the Mortgage Loans
securing such Series; provided that the holders of Bonds of such Series shall
not have directed the Indenture Trustee as described under "--Control by
Bondholders" below to sell the Mortgage Loans securing such Series. It is the
desire of the Issuer, the Indenture Trustee and the Bondholders of each Series
that there be at all times, taking into account any Credit Support or Cash Flow
Agreement with respect to a Series, sufficient funds for the payment of all
principal of and interest on the Bonds of such Series by their respective Stated
Maturities, if any, and the Indenture Trustee shall take such desire into
account when determining whether or not to maintain possession of the Mortgage
Loans securing any Series declared due and payable. In determining whether to
maintain possession of the Mortgage Loans securing any Series declared due and
payable, the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of such Mortgage Loans for such purpose. Except to the extent
otherwise provided in the related Prospectus Supplement, until the Indenture
Trustee has elected or has determined not to elect to retain the Mortgage Loans
securing any Series declared due and payable, and thereafter if the Indenture
Trustee has elected to retain the Mortgage Loans securing any Series declared
due and payable, the Indenture Trustee will continue to apply all payments,
collections, distributions and other amounts received on such Mortgage Loans
and/or paid or drawn under any Credit Support or Cash Flow Agreement for such
Series, solely to the payment of principal of and interest on the Bonds of such
Series, and to the payment of administrative and other expenses, as if there had
not been such a declaration of acceleration.
The Indenture Trustee shall not be deemed to have knowledge of any Issuer
Event of Default unless an officer in the Indenture Trustee's corporate trust
department has actual knowledge thereof. Subject to the provisions of the
related Indenture regarding the duties of the Indenture Trustee in case an
Issuer Event of Default in respect of any Series of Bonds shall occur and be
continuing, the Indenture Trustee for such Series will be under no obligation to
exercise any of the rights or powers under the related Indenture at the request
or direction of any of the Bondholders of such Series, unless such Bondholders
shall have offered to such Indenture Trustee reasonable security or indemnity.
Control by Bondholders. Except to the extent otherwise provided in the
related Prospectus Supplement, the holders of Bonds of any Series representing
more than 50% of the Voting Rights for such Series shall have the right to
direct the time, method and place of conducting any suit in equity, action at
law or other judicial or administrative proceeding (each, a "Proceeding") for
any remedy available to the Indenture Trustee, or exercising any trust or power
conferred on the Indenture Trustee; provided, that: (i) such direction may not
be in conflict with any rule of law or with the related Indenture; (ii) the
Indenture Trustee shall have been provided with indemnity reasonably
satisfactory to it; (iii) any direction to the Indenture Trustee to declare all
of the Bonds of such Series to be immediately due and payable following an
Issuer Event of Default, or to rescind any such declaration, shall be by the
holders of Bonds representing more than 50% of the Voting Rights for such
Series; (iv) any direction to the Indenture Trustee to sell or liquidate all or
any portion of the Mortgage Loans securing such Series shall be by the holders
of Bonds representing not less than 66-2/3% of the Voting Rights for each class
of such Series (except that, notwithstanding the foregoing, if the condition to
retention of the Mortgage Loans securing such Series set forth under "--Issuer
Events of Default" above has been satisfied and the Indenture Trustee elects to
retain such Mortgage Loans as described thereunder, then any direction to the
Indenture Trustee by the holders of less than all the Bonds of such Series to
sell or liquidate all or any portion of such Mortgage Loans shall be of no force
and effect); and (v) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee which is not inconsistent with such direction.
Notwithstanding the rights of Bondholders of any Series set forth above, the
Indenture Trustee need not, however, take any action which it determines might
involve it in liability or may be unjustly prejudicial to the Bondholders of
such Series not consenting.
Prior to the declaration of the acceleration of the maturity of the Bonds
of any Series as described under "--Issuer Events of Default" above, except to
the extent otherwise specified in the related Prospectus Supplement, the holders
of Bonds representing more than 50% of the Voting Rights for each class of such
Series may, on behalf of the holders of all the Bonds of such Series, waive any
past default on the part of the Issuer with respect to such Series and its
consequences, except a default: (i) in the payment of principal of or interest
on any Bond, which waiver shall require the waiver by the Holders of all of the
outstanding Bonds of such Series; or (ii) in respect of a covenant or provision
of the related Indenture which cannot be modified or amended without the consent
of the holder of each outstanding Bond of such Series, which waiver shall
require the waiver by each holder of an outstanding Bond of such Series.
Except to the extent otherwise specified in the related Prospectus
Supplement, no holder of Bonds of any Series will have the right to institute
any Proceedings with respect to the related Indenture, unless (i) such holder
previously has given to the Indenture Trustee for such Series written notice of
a continuing Issuer Event of Default with respect to such Series, (ii) the
holders of Bonds representing more than 50% of the Voting Rights for such Series
(or such other group of Bondholders of such Series as may be required for
directing the Indenture Trustee to institute particular Proceedings as described
in the first paragraph of this "--Control of Bondholders" section and as shall
hold Bonds which, in the aggregate, represent more than 50% of the Voting Rights
for such Series) shall have made written request to the Indenture Trustee to
institute Proceedings in respect of such Issuer Event of Default in its own name
as Indenture Trustee under the related Indenture; (iii) such holder or holders
of Bonds have offered to the Indenture Trustee adequate indemnity or security
satisfactory to the Indenture Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request, (iv) the Indenture
Trustee for such Series has, for 60 days after receipt of such notice, request
and offer of indemnity, failed to institute any such Proceeding and (v) no
direction inconsistent with such written request has been given to the Indenture
Trustee for such Series during such 60-day period by the holders of Bonds
representing more than 50% of the Voting Rights for such Series; provided,
however, that in the event that the Indenture Trustee receives conflicting
requests and indemnities from two or more groups of Bondholders of such Series,
each representing less than a majority, by aggregate Bond Principal Amount, of
such Series, the Indenture Trustee may in its sole discretion determine what
action with respect to the Proceeding, if any, shall be taken.
For purposes of giving the consents, waivers and directions contemplated in
this "--Control by Bondholders" section and under "--Issuer Events of Default"
above, Bonds held by the Issuer, the Depositor or any affiliate thereof will be
deemed not to be outstanding.
Satisfaction and Discharge of the Indenture. The related Indenture will be
discharged as to any Series of Bonds (except with respect to certain continuing
rights specified in such Indenture), (a)(1) upon the delivery to the related
Indenture Trustee or other Bond registrar for cancellation of all the Bonds of
such Series other than Bonds which have been mutilated, lost or stolen and have
been replaced or paid and Bonds for which money has been deposited in trust for
the full payment thereof (and thereafter repaid to the Issuer for such Series or
discharged from such trust) as provided in such Indenture, or (2) at such time
as all Bonds of such Series not previously canceled by the related Indenture
Trustee or other Bond registrar have become due and payable or, within one year,
will become due and payable or be called for redemption, and the Issuer for such
Series shall have deposited with the related Indenture Trustee an amount
sufficient to repay all of the Bonds of such Series, and further, in either such
case, (b) when the Issuer for such Series shall have paid all other amounts
payable under the related Indenture and certain other conditions specified in
the related Indenture have been specified.
Release of Collateral. Mortgage Loans may be released from the lien of an
Indenture: (i) upon satisfaction and discharge of such Indenture (see
"--Satisfaction and Discharge of the Indenture" above); (ii) in connection with
the liquidation of a defaulted Mortgage Loan or REO Property; (iii) in
connection with a material breach of a representation and warranty or the
failure to deliver certain required material documentation with respect to a
Mortgage Loan (see "--Pledge of Mortgage Loans; Deposit of Release Price or
Substitution" and "--Representations and Warranties; Repurchases and Other
Remedies" above); and (iv) as otherwise specified in the related Prospectus
Supplement.
List of Bondholders. Except to the extent otherwise specified in the
related Prospectus Supplement, three or more Bondholders of any Series of Bonds
which have each owned Bonds of such Series for at least six months may, by
written application to the Indenture Trustee for such Series, request access to
the list maintained by such Indenture Trustee of all holders of the same Series
for the purpose of communicating with other Bondholders of such Series with
respect to their rights under the related Indenture; and the Indenture Trustee
will be required, with limited exception, to afford such applicants access to
the most recent form of such list in the possession of the Indenture Trustee or,
at the expense of such applicants, to mail copies of the particular
communication to such other Bondholders.
Meetings of Bondholders. Meetings of Bondholders of any Series of Bonds or
class thereof may be called at any time and from time to time in connection with
any of the following acts: (i) to give any notice to the Issuer or Indenture
Trustee for such Series, give directions to the Indenture Trustee for such
Series, consent to the waiver of any Issuer Event of Default under the related
Indenture, or to take any other action authorized to be taken by Bondholders in
connection therewith; (ii) to remove the Indenture Trustee for such Series or
appoint a successor Indenture Trustee; (iii) to consent to the execution of
supplemental indentures with respect to such Series; or (iv) to take any other
action authorized to be taken by or on behalf of such Bondholders. Such meetings
may be called by the Indenture Trustee, the Issuer or the holders of Bonds
representing (except to the extent otherwise specified in the related Prospectus
Supplement) at least 10% of the Voting Rights for such Series of Bonds.
Indenture Trustee's Annual Report. The Indenture Trustee for each Series of
Bonds will be required to mail each year to all Bondholders of such Series, a
brief report relating to its eligibility and qualification to continue as the
Indenture Trustee under the related Indenture, any amounts advanced by it under
the related Indenture which remain unpaid on the date of the report, the amount,
interest rate and maturity date of certain indebtedness owing by the Issuer (or
any other obligor on such Series) to such Indenture Trustee in its individual
capacity, the property and funds physically held by such Indenture Trustee in
its capacity as such, any release or release and substitution of property
subject to the lien of the related Indenture which has not been previously
reported, any additional issuance of Bonds of the same Issuer not previously
reported and any action taken by such Indenture Trustee which materially affects
the Bonds and which has not been previously reported.
Administrator. The Issuer may contract with other persons or entities to
assist it in performing its duties under any Indenture and any performance of
such duties (other than execution of Issuer orders, Issuer requests and
officer's certificates of the Issuer) by a person or entity identified to the
Indenture Trustee in an officer's certificate of the Issuer shall be deemed
action taken by the Issuer for all purposes under such Indenture.
Except to the extent otherwise specified in the related Prospectus
Supplement, it is expected that the Issuer for each Series of Bonds will enter
into an administration agreement with an administrator acceptable to the Rating
Agencies rating Bonds of such Series (the "Administrator") pursuant to which
advisory, administrative, accounting and clerical services will be provided to
such Issuer with respect to such Series. The Indenture Trustee or Master
Servicer may serve as the Administrator. In addition, under the related
Indenture, the Issuer for each Series of Bonds will be responsible for certain
administrative and accounting matters relating to the Bonds of such Series, and
it is intended that the Administrator will perform these services on behalf of
the Issuer.
DESCRIPTION OF CREDIT SUPPORT
General
For any Series of Bonds, Credit Support may be provided with respect to one
or more classes thereof or the related Mortgage Loans. Credit Support may be in
the form of the subordination of one or more classes of Bonds, letters of
credit, insurance policies, guarantees, the establishment of one or more reserve
funds or another method of Credit Support described in the related Prospectus
Supplement, or any combination of the foregoing. If so provided in the related
Prospectus Supplement, any form of Credit Support may be structured so as to be
drawn upon by more than one Series to the extent described therein.
The coverage provided by any Credit Support for a Series of Bonds will be
described in the related Prospectus Supplement. Generally, such coverage will
not provide protection against all risks of loss and will not guarantee
repayment of the entire Bond Principal Amount of the Bonds and interest thereon.
If losses or shortfalls occur that exceed the amount covered by Credit Support
or that are not covered by Credit Support, Bondholders will bear their allocable
share of deficiencies. Moreover, if a form of Credit Support covers more than
one Series of Bonds (each, a "Covered Trust"), holders of Bonds secured by
assets of any of such Covered Trusts will be subject to the risk that such
Credit Support will be exhausted by the claims of other Covered Trusts prior to
such Covered Trust receiving any of its intended share of such coverage.
If Credit Support is provided with respect to one or more classes of Bonds
of a Series, or the related Mortgage Loans, the related Prospectus Supplement
will include a description of (a) the nature and amount of coverage under such
Credit Support, (b) any conditions to payment thereunder not otherwise described
herein, (c) the conditions (if any) under which the amount of coverage under
such Credit Support may be reduced and under which such Credit Support may be
terminated or replaced and (d) the material provisions relating to such Credit
Support. Additionally, the related Prospectus Supplement will set forth certain
information with respect to the obligor under any instrument of Credit Support,
including (i) a brief description of its principal business activities, (ii) its
principal place of business, place of incorporation and the jurisdiction under
which it is chartered or licensed to do business, (iii) if applicable, the
identity of regulatory agencies that exercise primary jurisdiction over the
conduct of its business and (iv) its total assets, and its stockholders' or
policyholders' surplus, if applicable, as of the date specified in the
Prospectus Supplement. See "Risk Factors--Credit Support Limitations."
Subordinate Bonds
If so specified in the related Prospectus Supplement, one or more classes
of Bonds of a Series may be Subordinate Bonds. To the extent specified in the
related Prospectus Supplement, the rights of the holders of Subordinate Bonds to
receive payments of principal and interest from the Payment Account on any
Payment Date will be subordinated to such rights of the holders of Senior Bonds.
If so provided in the related Prospectus Supplement, the subordination of a
class may apply only in the event of (or may be limited to) certain types of
losses or shortfalls. The related Prospectus Supplement will set forth
information concerning the amount of subordination of a class or classes of
Subordinate Bonds in a Series, the circumstances in which such subordination
will be applicable and the manner, if any, in which the amount of subordination
will be effected.
Cross-Support Provisions
If the Mortgage Loans for a Series are divided into separate groups, each
supporting a separate class or classes of Bonds of a Series, credit support may
be provided by cross-support provisions requiring that payments be made on
Senior Bonds evidencing interests in one group of Mortgage Loans prior to
payments on Subordinate Bonds evidencing interests in a different group of
Mortgage Loans for the same Series. The Prospectus Supplement for a Series that
includes a cross-support provision will describe the manner and conditions for
applying such provisions.
Insurance or Guarantees with Respect to the Mortgage Loans
If so provided in the Prospectus Supplement for a Series of Bonds, the
Mortgage Loans included in the related Collateral will be covered for various
default risks by insurance policies or guarantees. A copy of any such material
instrument for a Series will be filed with the Commission as an exhibit to a
Current Report on Form 8-K to be filed within 15 days of issuance of the Bonds
of the related Series.
Letter of Credit
If so provided in the Prospectus Supplement for a Series of Bonds,
deficiencies in amounts otherwise payable on such Bonds or certain classes
thereof will be covered by one or more letters of credit, issued by a bank or
financial institution specified in such Prospectus Supplement (the "L/C Bank").
Under a letter of credit, the L/C Bank will be obligated to honor draws
thereunder in an aggregate fixed dollar amount, net of unreimbursed payments
thereunder, generally equal to a percentage specified in the related Prospectus
Supplement of the aggregate principal balance of the Mortgage Loans on the
related Cut-off Date or of the initial aggregate Bond Principal Amount of one or
more classes of Bonds. If so specified in the related Prospectus Supplement, the
letter of credit may permit draws in the event of only 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 thereunder and may
otherwise be reduced as described in the related Prospectus Supplement. The
obligations of the L/C Bank under the letter of credit for each Series of Bonds
will expire at the earlier of the date specified in the related Prospectus
Supplement or the payment in full of the Bonds. A copy of any such letter of
credit for a Series will be filed with the Commission as an exhibit to a Current
Report on Form 8-K to be filed within 15 days of issuance of the Bonds of the
related Series.
Insurance Policies and Surety Bonds
If so provided in the Prospectus Supplement for a Series of Bonds,
deficiencies in amounts otherwise payable on such Bonds or certain classes
thereof will be covered by insurance policies and/or surety bonds provided by
one or more insurance companies or sureties. Such instruments may cover, with
respect to one or more classes of Bonds of the related Series, timely payments
of interest and/or full payments of principal on the basis of a schedule of
principal payments set forth in or determined in the manner specified in the
related Prospectus Supplement. A copy of any such instrument for a Series will
be filed with the Commission as an exhibit to a Current Report on Form 8-K to be
filed with the Commission within 15 days of issuance of the Bonds of the related
Series.
Reserve Funds
If so provided in the Prospectus Supplement for a Series of Bonds,
deficiencies in amounts otherwise payable on such Bonds or certain classes
thereof will be covered by one or more reserve funds in which cash, a letter of
credit, Permitted Investments, a demand note or a combination thereof will be
deposited, in the amounts so specified in such Prospectus Supplement. The
reserve funds for a Series may also be funded over time by depositing therein a
specified amount of the payments received on the related Collateral as specified
in the related Prospectus Supplement.
Amounts on deposit in any reserve fund for a Series, together with the
reinvestment income thereon, if any, will be applied for the purposes, in the
manner, and to the extent specified in the related Prospectus Supplement. A
reserve fund may be provided to increase the likelihood of timely payments of
principal of and interest on the Bonds. If so specified in the related
Prospectus Supplement, reserve funds may be established to provide limited
protection against only certain types of losses and shortfalls. Following each
Payment Date amounts in a reserve fund in excess of any amount required to be
maintained therein may be released from the reserve fund under the conditions
and to the extent specified in the related Prospectus Supplement and will not be
available for further application to the Bonds.
Moneys deposited in any Reserve Funds will be invested in Permitted
Investments, or will remain uninvested or invested in other investments as
specified in the related Prospectus Supplement. To the extent specified in the
related Prospectus Supplement, any reinvestment income or other gain from such
investments will be credited to the related Reserve Fund for such Series, and
any loss resulting from such investments will be charged to such Reserve Fund.
However, such income may be payable to any related Master Servicer or another
service provider as additional compensation. The Reserve Fund for a Series of
Bonds will be a part of the Collateral if and only to the extent provided in the
related Prospectus Supplement.
Additional information concerning any Reserve Fund will be set forth in the
related Prospectus Supplement, including the initial balance of such Reserve
Fund, the balance required to be maintained in the Reserve Fund, the manner in
which such required balance will decrease over time, the manner of funding such
Reserve Fund, the purposes for which funds in the Reserve Fund may be applied to
make payments to Bondholders and use of investment earnings from the Reserve
Fund, if any.
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS AND THE LEASES
The following discussion contains general summaries of certain legal
aspects of loans secured by commercial and multifamily residential properties
that are general in nature. Because such legal aspects are governed by
applicable state law (which laws may differ substantially), the summaries do not
purport to be complete nor to reflect the laws of any particular state, nor to
encompass the laws of all states in which the security for the Mortgage Loans is
situated. The summaries are qualified in their entirety by reference to the
applicable federal and state laws governing the Mortgage Loans. See "Description
of the Collateral."
General
All of the Mortgage Loans are loans evidenced by a note or bond and secured
by instruments granting a security interest in real property which may be
mortgages, deeds of trust, security deeds or deeds to secure debt, depending
upon the prevailing practice and law in the state in which the Mortgaged
Property is located. Mortgages, deeds of trust and deeds to secure debt are
herein collectively referred to as "mortgages." Any of the foregoing types of
mortgages will create a lien upon, or grant a title interest in, the subject
property, the priority of which will depend on the terms of the particular
security instrument, as well as separate, recorded, contractual arrangements
with others holding interests in the mortgaged property, the knowledge of the
parties to such instrument as well as the order of recordation of the instrument
in the appropriate public recording office. However, recording does not
generally establish priority over governmental claims for real estate taxes and
assessments and other charges imposed under governmental police powers.
Types of Mortgage Instruments
A mortgage either creates a lien against or constitutes a conveyance of
real property between two parties: a mortgagor (the borrower and usually the
owner of the subject property) and a mortgagee (the lender). In contrast, a deed
of trust is a three-party instrument, among a trustor (the equivalent of a
mortgagor), a trustee to whom the mortgaged property is conveyed, and a
beneficiary (the lender) for whose benefit the conveyance is made. As used in
this Prospectus, unless the context otherwise requires, "Mortgagor" includes the
trustor under a deed of trust and a grantor under a security deed or a deed to
secure debt. Under a deed of trust, the Mortgagor grants the property,
irrevocably until the debt is paid, in trust, generally with a power of sale as
security for the indebtedness evidenced by the related note. A deed to secure
debt typically has two parties. By executing a deed to secure debt, the grantor
conveys title to, as opposed to merely creating a lien upon, the subject
property to the grantee until such time as the underlying debt is repaid,
generally with a power of sale as security for the indebtedness evidenced by the
related mortgage note. In case the Mortgagor under a mortgage 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 Mortgagor.
At origination of a mortgage loan involving a land trust, the Mortgagor executes
a separate undertaking to make payments on the mortgage note. 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 the express
provisions of the mortgage, the law of the state in which the real property is
located, certain federal laws (including, without limitation, the Soldiers' and
Sailors' Civil Relief Act of 1940) and, in some cases, in deed of trust
transactions, the directions of the beneficiary.
Interest in Real Property
The real property covered by a mortgage, deed of trust, security deed or
deed to secure debt is most often the fee estate in land and improvements.
However, such an instrument may encumber other interests in real property such
as a tenant's interest in a lease of land or improvements, or both, and the
leasehold estate created by such lease. An instrument covering an interest in
real property other than the fee estate requires special provisions in the
instrument creating such interest or in the mortgage, deed of trust, security
deed or deed to secure debt, to protect the mortgagee against termination of
such interest before the mortgage, deed of trust, security deed or deed to
secure debt is paid. The Warrantying Party will make certain representations and
warranties in the Agreement with respect to the Mortgage Loans which are secured
by an interest in a leasehold estate. Such representation and warranties will be
set forth in the Prospectus Supplement if applicable.
Leases and Rents
Mortgages that encumber income-producing property often contain an
assignment of rents and leases, pursuant to which the Mortgagor assigns its
right, title and interest as landlord under each lease and the income derived
therefrom to the lender, while the Mortgagor retains a revocable license to
collect the rents for so long as there is no default. Under such assignments,
the Mortgagor typically assigns its right, title and interest as lessor under
each lease and the income derived therefrom to the mortgagee, while retaining a
license to collect the rents for so long as there is no default under the
mortgage loan documentation. The manner of perfecting the mortgagee's interest
in rents may depend on whether the Mortgagor's assignment was absolute or one
granted as security for the loan. Failure to properly perfect the mortgagee's
interest in rents may result in the loss of substantial pool of funds, which
could otherwise serve as a source of repayment for such loan. If the Mortgagor
defaults, the license terminates and the lender is entitled to collect the
rents. Local law may require that the lender take possession of the property
and/or obtain a court-appointed receiver before becoming entitled to collect the
rents. In most states, hotel and motel room rates are considered accounts
receivable under the UCC; generally these rates are either assigned by the
Mortgagor, which remains entitled to collect such rates absent a default, or
pledged by the Mortgagor, as security for the loan. In general, the lender must
file financing statements in order to perfect its security interest in the rates
and must file continuation statements, generally every five years, to maintain
perfection of such security interest. Even if the lender's security interest in
room rates is perfected under the UCC, the lender will generally be required to
commence a foreclosure or otherwise take possession of the property in order to
collect the room rates after a default.
Even after a foreclosure, the potential rent payments from the property may
be less than the periodic payments that had been due under the mortgage. For
instance, the net income that would otherwise be generated from the property may
be less than the amount that would have been needed to service the mortgage debt
if the leases on the property are at below-market rents, or as the result of
excessive maintenance, repair or other obligations which a lender succeeds to as
landlord.
Lenders that actually take possession of the property, however, may incur
potentially substantial risks attendant to being a mortgagee in possession. Such
risks include liability for environmental clean-up costs and other risks
inherent in property ownership. See "Environmental Legislation" below.
Personalty
Certain types of Mortgaged Properties, such as hotels, motels and
industrial plants, are likely to derive a significant part of their value from
personal property which does not constitute "fixtures" under applicable state
real property law and, hence, would not be subject to the lien of a mortgage.
Such property is generally pledged or assigned as security to the lender under
the UCC. In order to perfect its security interest therein, the lender generally
must file UCC financing statements and, to maintain perfection of such security
interest, file continuation statements generally every five years.
Foreclosure
General. Foreclosure is a legal procedure that allows the mortgagee to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage. If the Mortgagor defaults in payment or performance of its
obligations under the note or mortgage, the mortgagee has the right to institute
foreclosure proceedings to sell the mortgaged property at public auction to
satisfy the indebtedness.
Foreclosure procedures with respect to the enforcement of a mortgage vary
from state to state. Two primary methods of foreclosing a mortgage are judicial
foreclosure and non-judicial foreclosure pursuant to a power of sale granted in
the mortgage instrument. There are several other foreclosure procedures
available in some states that are either infrequently used or available only in
certain limited circumstances, such as strict foreclosure.
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
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating defendants. When the lender's
right to foreclose is contested, the legal proceedings can be time-consuming.
Upon successful completion of a 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
which are used to satisfy the judgment. Such sales are made in accordance with
procedures that vary from state to state.
Equitable Limitations on Enforceability of Certain Provisions. United
States courts have traditionally imposed general equitable principles to limit
the remedies available to a mortgagee in connection with foreclosure. These
equitable principles are generally designed to relieve the Mortgagor from the
legal effect of mortgage defaults, to the extent that such effect is perceived
as harsh or unfair. Relying on such principles, a court may alter the specific
terms of a loan to the extent it considers necessary to prevent or remedy an
injustice, undue oppression or overreaching, or may require the lender to
undertake affirmative and expensive actions to determine the cause of the
Mortgagor's default and the likelihood that the Mortgagor will be able to
reinstate the loan. In some cases, courts have substituted their judgment for
the lender's and have required that lenders reinstate loans or recast payment
schedules in order to accommodate Mortgagors who are suffering from a temporary
financial disability. In other cases, courts have limited the right of the
lender to foreclose if the default under the mortgage is not monetary, e.g., the
Mortgagor failed to maintain the mortgaged property adequately or the Mortgagor
executed a junior mortgage on the mortgaged property. The exercise by the court
of its equity powers will depend on the individual circumstances of each case
presented to it. Finally, some courts have been faced with the issue of whether
federal or state constitutional provisions reflecting due process concerns for
adequate notice require that a Mortgagor receive notice in addition to
statutorily-prescribed minimum notice. For the most part, these cases have
upheld the reasonableness of the 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 afford constitutional protections to the Mortgagor.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses are raised or counterclaims are interposed, and sometimes
require several years to complete. Moreover, as discussed below, a
non-collusive, regularly conducted foreclosure sale may be challenged as a
fraudulent conveyance, regardless of the parties' intent, if a court determines
that the sale was for less than fair consideration and such sale occurred while
the Mortgagor was insolvent (or the Mortgagor was rendered insolvent as a result
of such sale) and within one year (or within the state statute of limitations if
the trustee in bankruptcy elects to proceed under state fraudulent conveyance
law) of the filing of bankruptcy.
Non-Judicial Foreclosure/Power of Sale. Foreclosure of a deed of trust is
generally accomplished by a non-judicial trustee's sale pursuant to the power of
sale granted in the deed of trust. A power of sale is typically granted in a
deed of trust. It may also be contained in any other type of mortgage
instrument. A power of sale allows a non-judicial public sale to be conducted
generally following a request from the beneficiary/lender to the trustee to sell
the property upon any default by the Mortgagor under the terms of the mortgage
note or the mortgage instrument and after notice of sale is given in accordance
with the terms of the mortgage instrument, as well as applicable state law. In
some states, prior to such sale, the trustee under a deed of trust must record a
notice of default and notice of sale and send a copy to the Mortgagor 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 Mortgagor 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 acceleration) plus the expenses
incurred in enforcing the obligation. In other states, the Mortgagor 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,
the procedure for public sale, the parties entitled to notice, the method of
giving notice and the applicable time periods are governed by state law and vary
among the states. Foreclosure of a deed to secure debt is also generally
accomplished by a non-judicial sale similar to that required by a deed of trust,
except that the lender or its agent, rather than a trustee, is typically
empowered to perform the sale in accordance with the terms of the deed to secure
debt and applicable law.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the value of
such property at the time of sale, due to, among other things, redemption rights
which may exist and the possibility of physical deterioration of the property
during the foreclosure proceedings. For these reasons, it is common for the
lender to purchase the mortgaged property for an amount equal to or less than
the underlying debt and accrued and unpaid interest plus the expenses of
foreclosure. Generally, state law controls the amount of foreclosure costs and
expenses which may be recovered by a lender. Thereafter, subject to the
Mortgagor's right in some states to remain in possession during a redemption
period, if applicable, the lender will become the owner of the property and have
both the benefits and burdens of ownership of the mortgaged property. For
example, the lender will have the obligation to pay debt service on any senior
mortgages, to pay taxes, obtain casualty insurance and to make such repairs at
its own expense as are necessary to render the property suitable for sale.
Frequently, the lender employs a third party management company to manage and
operate the property. 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 costs of management and operation of
those mortgaged properties which are hotels, motels, restaurants, golf courses,
automobile dealerships, nursing or convalescent homes or hospitals may be
particularly significant because of the expertise, knowledge and, with respect
to nursing or convalescent homes or hospitals, regulatory compliance, required
to run such operations and the effect which foreclosure and a change in
ownership may have on the public's and the industry's (including franchisors')
perception of the quality of such operations. The lender will commonly obtain
the services of a real estate broker and pay the broker's commission in
connection with the sale of the property. Depending upon market conditions, the
ultimate proceeds of the sale of the property may not equal the lender's
investment in the property. Moreover, a lender commonly incurs substantial legal
fees and court costs in acquiring a mortgaged property through contested
foreclosure and/or bankruptcy proceedings. Furthermore, a few states require
that any environmental contamination at certain types of properties be cleaned
up before a property may be resold. In addition, a lender may be responsible
under federal or state law for the cost of cleaning up a mortgaged property that
is environmentally contaminated. See "Environmental Legislation." Generally
state law controls the amount of foreclosure expenses and costs, including
attorneys' fees, that may be recovered by a lender.
A junior mortgagee may not foreclose on the property securing the junior
mortgage unless it forecloses subject to senior mortgages and any other prior
liens, in which case it may be obliged to make payments on the senior mortgages
to avoid their foreclosure. In addition, in the event that the foreclosure of a
junior mortgage triggers the enforcement of a "due-on-sale" clause contained in
a senior mortgage, the junior mortgagee may be required to pay the full amount
of the senior mortgage to avoid its foreclosure. Accordingly, with respect to
those Mortgage Loans which are junior mortgage loans, if the lender purchases
the property the lender's title will be subject to all senior mortgages, prior
liens and certain governmental liens.
The proceeds received by the referee or trustee from the sale are applied
first to the costs, fees and expenses of sale and then in satisfaction of the
indebtedness secured by the mortgage under which the sale was conducted. Any
proceeds remaining after satisfaction of senior mortgage debt are generally
payable to the holders of junior mortgages and other liens and claims in order
of their priority, whether or not the Mortgagor is in default. Any additional
proceeds are generally payable to the Mortgagor. The payment of the proceeds to
the holders of junior mortgages may occur in the foreclosure action of the
senior mortgage or a subsequent ancillary proceeding or may require the
institution of separate legal proceedings by such holders.
Rights of Redemption
The purposes of a foreclosure action are to enable the mortgagee to realize
upon its security and to bar the Mortgagor, and all persons who have an interest
in the property which is subordinate to the mortgage being foreclosed, from
exercise of their "equity of redemption." The doctrine of equity of redemption
provides that, until the property covered by a mortgage has been sold in
accordance with a properly conducted foreclosure and foreclosure sale, those
having an interest which is subordinate to that of the foreclosing mortgagee
have an equity of redemption and may redeem the property by paying the entire
debt with interest. In addition, in some states, when a foreclosure action has
been commenced, the redeeming party must pay certain costs of such action. 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 cut off and
terminated.
The equity of redemption is a common-law (non-statutory) right which exists
prior to completion of the foreclosure, is not waivable by the Mortgagor, must
be exercised prior to foreclosure sale and should be distinguished from the
post-sale statutory rights of redemption. In some states, after sale pursuant to
a deed of trust or foreclosure of a mortgage, the Mortgagor and foreclosed
junior lienors are given a statutory period in which to redeem the property from
the foreclosure sale. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
authorized if the former Mortgagor pays only a portion of the sums due. The
effect of a statutory right of redemption is to diminish the ability of the
lender to sell the foreclosed property. The exercise of a right of redemption
would defeat the title of any purchaser from a foreclosure sale or sale under a
deed of trust. Consequently, the practical effect of the redemption right is to
force the lender to maintain the property and pay the expenses of ownership
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 nonrecourse loans, as to which
recourse may be had only against the specific property securing the related
Mortgage Loan and a personal money judgment may not be obtained against the
Mortgagor. Even if a mortgage loan by its terms provides for recourse to the
Mortgagor, some states impose prohibitions or limitations on such recourse. For
example, statutes in some states limit the right of the lender to obtain a
deficiency judgment against the Mortgagor following foreclosure or sale under a
deed of trust. A deficiency judgment would be a personal judgment against the
former Mortgagor equal to the difference between the net amount realized upon
the public sale of the real property and the amount due to the lender.
Some states require the lender to exhaust the security afforded under a
mortgage by foreclosure in an attempt to satisfy the full debt before bringing a
personal action against the Mortgagor. In certain other states, the lender has
the option of bringing a personal action against the Mortgagor on the debt
without first exhausting such security; however, in some of these states, the
lender, following judgment on such personal action, may be deemed to have
elected a remedy and may be precluded from exercising remedies with respect to
the security. In some cases, a lender will be precluded from exercising any
additional rights under the note or mortgage if it has taken any prior
enforcement action. Consequently, the practical effect of the election
requirement, in those states permitting such election, is that lenders will
usually proceed against the security first rather than bringing a personal
action against the Mortgagor. Finally, other statutory provisions limit any
deficiency judgment against the former Mortgagor following a judicial sale to
the excess of the outstanding debt over the fair market value of the property at
the time of the public sale. The purpose of these statutes is generally to
prevent a lender from obtaining a large deficiency judgment against the former
Mortgagor as a result of low or no bids at the judicial sale.
Leasehold Risks
Mortgage Loans may be secured by a mortgage on a ground lease. Leasehold
mortgages are subject to certain risks not associated with mortgage loans
secured by the fee estate of the Mortgagor. The most significant of these risks
is that the ground lease creating the leasehold estate could terminate, leaving
the leasehold mortgagee without its security. The ground lease may terminate if,
among other reasons, the ground lessee breaches or defaults in its obligations
under the ground lease or there is a bankruptcy of the ground lessee or the
ground lessor. This risk may be minimized if the ground lease contains certain
provisions protective of the mortgagee, but the ground leases that secure
Mortgage Loans may not contain some of these protective provisions, and
mortgages may not contain the other protections discussed in the next paragraph.
Protective ground lease provisions include the right of the leasehold mortgagee
to receive notices from the ground lessor of any defaults by the Mortgagor; the
right to cure such defaults, with adequate cure periods; if a default is not
susceptible of cure by the leasehold mortgagee, the right to acquire the
leasehold estate through foreclosure or otherwise; the ability of the ground
lease to be assigned to and by the leasehold mortgagee or purchaser at a
foreclosure sale and for the concomitant release of the ground lessee's
liabilities thereunder; and the right of the leasehold mortgagee to enter into a
new ground lease with the ground lessor on the same terms and conditions as the
old ground lease in the event of a termination thereof.
In addition to the foregoing protections, a leasehold mortgagee may require
that the ground lease or leasehold mortgage prohibit the ground lessee from
treating the ground lease as terminated in the event of the ground lessor's
bankruptcy and rejection of the ground lease by the trustee for the
debtor-ground lessor. As further protection, a leasehold mortgage may provide
for the assignment of the debtor-ground lessee's right to reject a lease
pursuant to Section 365 of the Bankruptcy Reform Act of 1978, as amended (Title
11 of the United States Code) (the "Bankruptcy Code"), although the
enforceability of such clause has not been established. Without the protections
described above, a leasehold mortgagee may lose the collateral securing its
leasehold mortgage. In addition, terms and conditions of a leasehold mortgage
are subject to the terms and conditions of the ground lease. Although certain
rights given to a ground lessee can be limited by the terms of a leasehold
mortgage, the rights of a ground lessee or a leasehold mortgagee with respect
to, among other things, insurance, casualty and condemnation will be governed by
the provisions of the ground lease.
Bankruptcy Laws
The Bankruptcy Code and related state laws may interfere with or affect the
ability of a lender to realize upon collateral and/or to enforce a deficiency
judgment. For example, under the Bankruptcy Code, virtually all actions
(including foreclosure actions and deficiency judgment proceedings) are
automatically stayed upon the filing of the bankruptcy petition, and, usually,
no interest or principal payments are made during the course of the bankruptcy
case. The delay and the consequences thereof caused by such automatic stay can
be significant. Also, under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a junior lienor may stay the senior lender from
taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards for the lender are met, the amount and terms of a mortgage secured by
property of the debtor may be modified under certain circumstances. In many
jurisdictions, the outstanding amount of the loan secured by the real property
may be reduced to the then-current value of the property (with a corresponding
partial reduction of the amount of lender's security interest) pursuant to a
confirmed plan or lien avoidance proceeding, thus leaving the lender a general
unsecured creditor for the difference between such value and the outstanding
balance of the loan. Other modifications may include the reduction in the amount
of each scheduled payment, which reduction may result from a reduction in the
rate of interest and/or the alteration of the repayment schedule (with or
without affecting the unpaid principal balance of the loan), and/or an extension
(or reduction) of the final maturity date. Some courts with federal bankruptcy
jurisdiction have approved plans, based on the particular facts of the
reorganization case, that effected the curing of a mortgage loan default by
paying arrearages over a number of years. Also, under federal bankruptcy law, a
bankruptcy court may permit a debtor through its rehabilitative plan to
de-accelerate a secured loan and to reinstate the loan even though the lender
accelerated the mortgage loan and final judgment of foreclosure had been entered
in state court (provided no sale of the property had yet occurred) prior to the
filing of the debtor's petition. This may be done even if the full amount due
under the original loan is never repaid.
The Bankruptcy Code has been amended to provide that a lender's perfected
pre-petition security interest in leases, rents and hotel revenues continues in
the post-petition leases, rents and hotel revenues, unless a bankruptcy court
orders to the contrary "based on the equities of the case." Thus, unless a court
orders otherwise, revenues from a Mortgaged Property generated after the date
the bankruptcy petition is filed will constitute "cash collateral" under the
Bankruptcy Code. Debtors may only use cash collateral upon obtaining the
lender's consent or a prior court order finding that the lender's interest in
the Mortgaged Properties and the cash collateral is "adequately protected" as
such term is defined and interpreted under the Bankruptcy Code. It should be
noted, however, that the court may find that the lender has no security interest
in either pre-petition or post-petition revenues if the court finds that the
loan documents do not contain language covering accounts, room rents, or other
forms of personalty necessary for a security interest to attach to hotel
revenues.
Federal bankruptcy law provides generally that rights and obligation under
an unexpired lease of the debtor/lessee may not be terminated or modified at any
time after the commencement of a case under the Bankruptcy Code solely on the
basis of a provision in the lease to such effect or because of certain other
similar events. This prohibition on so-called "ipso facto clauses" could limit
the ability of the Indenture Trustee for a Series of Bonds to exercise certain
contractual remedies with respect to the Leases. In addition, Section 362 of the
Bankruptcy Code operates as an automatic stay of, among other things, any act to
obtain possession of property from a debtor's estate, which may delay a
Indenture Trustee's exercise of such remedies for a related Series of Bonds in
the event that a related Lessee or a related Mortgagor becomes the subject of a
proceeding under the Bankruptcy Code. For example, a mortgagee would be stayed
from enforcing a Lease Assignment by a Mortgagor related to a Mortgaged Property
if the related Mortgagor was in a bankruptcy proceeding. The legal proceedings
necessary to resolve the issues could be time-consuming and might result in
significant delays in the receipt of the assigned rents. Similarly, the filing
of a petition in bankruptcy by or on behalf of a Lessee of a Mortgaged Property
would result in a stay 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 Lessee's petition. Rents and other proceeds of a
Mortgage Loan may also escape an assignment thereof if the assignment is not
fully perfected under state law prior to commencement of the bankruptcy
proceeding. See "--Leases and Rents" above.
In addition, the Bankruptcy Code generally provides that a trustee or
debtor-in-possession may, subject to approval of the court, (a) assume the lease
and retain it or assign it to a third party or (b) reject the lease. If the
lease is assumed, the trustee in bankruptcy on behalf of the lessee, or the
lessee as debtor-in-possession, or the 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. Such remedies may be
insufficient, however, as the lessor may be forced to continue under the lease
with a lessee that is a poor credit risk or an unfamiliar tenant if the lease
was assigned, and any assurances provided to the lessor may, in fact, be
inadequate. If the lease is rejected, such rejection generally constitutes a
breach of the executory contract or unexpired lease immediately before the date
of filing the petition. As a consequence, the other party or parties to such
lease, such as the Mortgagor, as lessor under a Lease, would have only an
unsecured claim against the debtor for damages resulting from such breach, which
could adversely affect the security for the related Mortgage Loan. In addition,
pursuant to Section 502(b)(6) of the Bankruptcy Code, a lessor's damages for
lease rejection in respect of future rent installments are limited to the rent
reserved by the lease, without acceleration, for the greater of one year or 15%,
not to exceed three years, of the remaining term of the lease.
If a trustee in bankruptcy on behalf of a lessor, or a lessor as
debtor-in-possession, rejects an unexpired lease of real property, the lessee
may treat such lease as terminated by such rejection or, in the alternative, the
lessee may remain in possession of the leasehold for the balance of such term
and for any renewal or extension of such term that is enforceable by the lessee
under applicable nonbankruptcy law. The Bankruptcy Code provides that if a
lessee elects to remain in possession after such a rejection of a lease, the
lessee may offset against rents reserved under the lease for the balance of the
term after the date of rejection of the lease, and any such renewal or extension
thereof, any damages occurring after such date caused by the nonperformance of
any obligation of the lessor under the lease after such date. To the extent
provided in the related Prospectus Supplement, the Lessee will agree under
certain Leases to pay all amounts owing thereunder the Master Servicer without
offset. To the extent that such a contractual obligation remains enforceable
against the Lessee, the Lessee would not be able to avail itself of the rights
of offset generally afforded to lessees of real property under the Bankruptcy
Code.
In a bankruptcy or similar proceeding of a Mortgagor, action may be taken
seeking the recovery, as a preferential transfer or on other grounds, of any
payments made by the Mortgagor, or made directly by the related Lessee, under
the related Mortgage Loan to the Issuer. Payments on long-term debt may be
protected from recovery as preferences if they are payments in the ordinary
course of business made on debts incurred in the ordinary course of business.
Whether any particular payment would be protected depends upon the facts
specific to a particular transaction.
A trustee in bankruptcy, in some cases, may be entitled to collect its
costs and expenses in preserving or selling the mortgaged property ahead of
payment to the lender. In certain circumstances, a debtor in bankruptcy may have
the power to grant liens senior to the lien of a mortgage, and analogous state
statutes and general principles of equity may also provide a Mortgagor with
means to halt a foreclosure proceeding or sale and to force a restructuring of a
mortgage loan on terms a lender would not otherwise accept. Moreover, the laws
of certain states also give priority to certain tax liens over the lien of a
mortgage or deed of trust. Under the Bankruptcy Code, if the court finds that
actions of the mortgagee have been unreasonable, the lien of the related
mortgage may be subordinated to the claims of unsecured creditors.
To the extent described in the related Prospectus Supplement, certain of
the Mortgagors may be partnerships. The laws governing limited partnerships in
certain states provide that the commencement of a case under the Bankruptcy Code
with respect to a general partner will cause a person to cease to be a general
partner of the limited partnership, unless otherwise provided in writing in the
limited partnership agreement. This provision may be construed as an "ipso
facto" clause and, in the event of the general partner's bankruptcy, may not be
enforceable. To the extent described in the related Prospectus Supplement,
certain limited partnership agreements of the Mortgagors may provide that the
commencement of a case under the Bankruptcy Code with respect to the related
general partner constitutes an event of withdrawal (assuming the enforceability
of the clause is not challenged in bankruptcy proceedings or, if challenged, is
upheld) that might trigger the dissolution of the limited partnership, the
winding up of its affairs and the payment of its assets, unless (i) at the time
there was at least one other general partner and the written provisions of the
limited partnership permit the business of the limited partnership to be carried
on by the remaining general partner and that general partner does so or (ii) the
written provisions of the limited partnership agreement permit the limited
partners to agree within a specified time frame (often 60 days) after such
withdrawal to continue the business of the limited partnership and to the
appointment of one or more general partners and the limited partners do so. In
addition, the laws governing general partnerships in certain states provide that
the commencement of a case under the Bankruptcy Code or state bankruptcy laws
with respect to a general partner of such partnerships triggers the dissolution
of such partnership, the winding up of its affairs and the payment of its
assets. Such state laws, however, may not be enforceable or effective in a
bankruptcy case. The dissolution of a Mortgagor, the winding up of its affairs
and the payment of its assets could result in an acceleration of its payment
obligation under a related Mortgage Loan, which may reduce the yield on the
related Series of Bonds in the same manner as a principal prepayment.
In addition, the bankruptcy of the general or limited partner of a
mortgagor that is a partnership, or the bankruptcy of a member of a mortgagor
that is a limited liability company or the bankruptcy of a shareholder of a
mortgagor that is a corporation may provide the opportunity in the bankruptcy
case of such partner, member or shareholder to obtain an order from a court
consolidating the assets and liabilities of the partner, member or shareholder
with those of the mortgagor pursuant to the doctrines of substantive
consolidation or piercing the corporate veil. In such a case, the respective
Mortgaged Property, for example, would become property of the estate of such
bankrupt partner, member or shareholder. Not only would the Mortgaged Property
be available to satisfy the claims of creditors of such partner, member or
shareholder, but an automatic stay would apply to any attempt by the Indenture
Trustee to exercise remedies with respect to such Mortgaged Property. However,
such an occurrence should not affect the Indenture Trustee's status as a secured
creditor with respect to the mortgagor or its security interest in the Mortgaged
Property.
Environmental Legislation
Real property pledged as security to a lender may be subject to unforeseen
environmental liabilities. Of particular concern may be those Mortgaged
Properties which are, or have been, the site of manufacturing, industrial, or
disposal activity. Such environmental liabilities may give rise to (i) a
diminution in value of property securing any Mortgage Loan, (ii) limitation on
the ability to foreclose against such property or (iii) in certain circumstances
as more fully described below, liability for cleanup costs or other remedial
activities, which liability could exceed the value of the principal balance of
the related Mortgage Loan or of such Mortgaged Property. Under the laws of many
states, contamination on a property may give rise to a lien on the property for
cleanup costs. In several states, such a lien has priority over all existing
liens (a "superlien") including those of existing mortgages; in these states,
the lien of a mortgage contemplated by this transaction may lose its priority to
such a superlien.
The presence of hazardous or toxic substances, or the failure to remediate
such property properly, may adversely affect the market value of the property,
as well as the owner's ability to sell or use the real estate or to borrow using
the real estate as collateral. In addition, certain environmental laws and
common law principles govern the responsibility for the removal, encapsulation
or disturbance of asbestos containing materials ("ACMs") when these ACMs are in
poor condition or when a property with ACMs is undergoing repair, renovation or
demolition. Such laws could also be used to impose liability upon owners and
operators of real properties for release of ACMs into the air that cause
personal injury or other damage. In addition to cleanup and natural resource
damages actions brought by federal, state, and local agencies and private
parties, the presence of hazardous substances on a property may lead to claims
of personal injury, property damage, or other claims by private plaintiffs.
Under the federal Comprehensive Environmental Response, Compensation, and
Liability Act, as amended, ("CERCLA"), and under state law in certain states, a
secured party which takes a deed-in-lieu of foreclosure, purchases a mortgaged
property at a foreclosure sale, or operates a mortgaged property may become
liable in certain circumstances for the costs of cleaning up hazardous
substances regardless of whether or not that secured party contaminated the
property. Liability under some federal or state statutes may not be limited to
the original or unamortized principal balance of a loan or to the value of the
property securing a loan. CERCLA imposes strict, as well as joint and several,
liability on several classes of potentially responsible parties, including
current owners and operators of the property, regardless of whether they caused
or contributed to the contamination. Many states have laws similar to CERCLA.
Lenders may be held liable under CERCLA as owners or operators of a
contaminated property unless they qualify for the secured-creditor exemption of
CERCLA. This exemption for holders of a security interest such as a secured
lender applies only in circumstances where the lender acts to protect its
security interest in the contaminated facility or property. Thus, if a lender's
activities encroach on the actual management of such facility or property, the
lender faces potential liability as an "owner or operator" under CERCLA.
Similarly, when a lender forecloses and takes title to a contaminated facility
or property (whether it holds the facility or property as an investment or
leases it to a third party), the lender may incur potential CERCLA liability.
The scope of the secured creditor exemption was clarified in part by the
enactment of the Asset Conservation, Lender Liability and Deposit Insurance
Protection Act of 1996 (the "Asset Conservation Act"), which took effect on
September 30, 1996. The Asset Conservation Act provides that in order to be
deemed to have participated in the management of a secured property, a lender
must actually participate in the operational affairs of the property or the
borrower. The Asset Conservation Act also provides that participation in the
management of the property does not include "merely having the capacity to
influence, or unexercised right to control" operations. Rather, a lender will
lose the protection of the secured creditor exclusion only if it exercises
decision-making control over the borrower's environmental compliance and
hazardous substance handling and disposal practices, or assumes day-to-day
management of all or substantially all operational functions of the secured
property.
Other federal and state laws in certain circumstances may impose liability
on a secured party which takes a deed-in-lieu of foreclosure, purchases a
mortgaged property at a foreclosure sale, or operates a mortgaged property on
which contaminants other than CERCLA hazardous substances are present. Moreover,
certain federal and state statutes impose a lien for any cleanup costs incurred
by the applicable governmental agency on the property that is the subject of
such cleanup costs (an "environmental lien"). All subsequent liens on such
property generally are subordinated to such environmental liens and, in some
states, even prior recorded liens are subordinated to environmental liens.
It should be noted that the secured creditor exclusion does not govern
liability for cleanup costs under other federal environmental statutes. CERCLA's
jurisdiction extends to the investigation and remediation of releases of
"hazardous substances." The definition of "hazardous substances" under CERCLA
specifically excludes petroleum products. Under federal law, the operation and
management of underground petroleum storage tanks (excluding heating oil) is
governed by Subtitle I of the Resource Conservation and Recovery Act ("RCRA").
The Asset Conservation Act amended RCRA to accord the holders of security
interests in underground storage tanks similar protections provided to secured
creditors under CERCLA. However, liability for cleanup of petroleum
contamination will most likely be governed by state law, which may not provide
any specific protection for secured creditors.
If a lender is or becomes liable, it may bring an action for contribution
against the owner or operator who created the environmental hazard, but that
person or entity may be bankrupt or otherwise judgment proof. It is possible
that cleanup costs could become a liability of the Issuer and occasion a loss to
Bondholders in certain circumstances described above if such remedial costs were
incurred.
The related Agreements will provide that the Special Servicer, acting on
behalf of the Indenture Trustee, may not acquire title to a Mortgaged Property
or take over its operation unless the Special Servicer has previously
determined, based on a report prepared by a person who regularly conducts
environmental assessments, that: (i) such Mortgaged Property is in compliance
with applicable environmental laws, or, if not, that taking such actions as are
necessary to bring the Mortgaged Property in compliance therewith is likely to
produce a greater recovery on a present value basis, after taking into account
any risks associated therewith, than not taking such actions and (ii) there are
no circumstances present at the 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 federal, state or local law or regulation. This requirement
effectively precludes enforcement of the security for the related Mortgage Note
until a satisfactory environmental inquiry is undertaken, or that, if any
Hazardous Materials are present for which such action could be required, taking
such actions with respect to the affected Mortgaged Property is reasonably
likely to produce a greater recovery on a present value basis, after taking into
account any risks associated therewith, than not taking such actions, reducing
the likelihood that a given Issuer will become liable for any condition or
circumstance that may give rise to any environmental claim (an "Environmental
Hazard Condition") affecting a Mortgaged Property, but making it more difficult
to realize on the security for the Mortgage Loan. However, there can be no
assurance that any environmental assessment obtained by the Special Servicer
will detect all possible Environmental Hazard Conditions, that any estimate of
the costs of effecting compliance at any Mortgaged Property and the recovery
thereon will be correct, or that the other requirements of the Agreement, even
if fully observed by the Master Servicer or Special Servicer, as the case may
be, will in fact insulate a given Issuer from liability for Environmental Hazard
Conditions. Any additional restrictions on acquiring titles to a Mortgaged
Property may be set forth in the related Prospectus Supplement. See "Description
of the Agreements--Collection and Other Servicing Procedures--Special Servicer."
The Depositor generally will not have determined whether environmental
assessments have been conducted with respect to the Mortgaged Properties
relating to the Mortgage Loans included in the Mortgage Pool for a Series, and
it is likely that any environmental assessments which would have been conducted
with respect to any of the Mortgaged Properties would have been conducted at the
time of the origination of the related Mortgage Loans and not thereafter. If
specified in the related Prospectus Supplement, a Warranting Party will
represent and warrant that based on an environmental audit commissioned by
Warranting Party, as of the date of the origination of a Mortgage Loan, the
related Mortgaged Property is not affected by a Disqualifying Condition (as
defined below). No such person will however, be responsible for any
Disqualifying Condition which may arise on a Mortgaged Property after the date
of origination of the related Mortgage Loan, whether due to actions of the
Mortgagor, the Master Servicer, the Special Servicer or any other person. It may
not always be possible to determine whether a Disqualifying Condition arose
prior or subsequent to the date of the origination of the related Mortgage Loan.
A "Disqualifying Condition" is defined generally as a condition which would
reasonably be expected to (1) constitute or result in a violation of applicable
environmental laws, (2) require any expenditure material in relation to the
principal balance of the related Mortgage Loan to achieve or maintain compliance
in all material respects with any applicable environmental laws, or (3) require
substantial cleanup, remedial action or other extraordinary response under any
applicable environmental laws in excess of a specified escrowed amount.
"Hazardous Materials" are generally defined under several federal and state
statutes, and include dangerous toxic or hazardous pollutants, chemicals, wastes
or substances, including, without limitation, those so identified pursuant to
CERCLA, and specifically including, asbestos and asbestos containing materials,
polychlorinated biphenyls, radon gas, petroleum and petroleum products and urea
formaldehyde.
Due-on-Sale and Due-on-Encumbrance
Certain of the Mortgage Loans may contain due-on-sale and
due-on-encumbrance clauses. These clauses generally provide that the lender may
accelerate the maturity of the loan if the Mortgagor sells or otherwise
transfers or encumbers the mortgaged property. Certain of these clauses may
provide that, upon an attempted breach thereof by the Mortgagor of an otherwise
non-recourse loan, the Mortgagor becomes personally liable for the mortgage
debt. The enforceability of due-on-sale clauses has been the subject of
legislation or litigation in many states and, in some cases, the enforceability
of these clauses was limited or denied. However, with respect to certain loans
the Garn-St. Germain Depository Institutions Act of 1982 preempts state
constitutional, statutory and case law that prohibits the enforcement of
due-on-sale clauses and permits lenders to enforce these clauses in accordance
with their terms subject to certain limited exceptions. A Master Servicer or
another person specified in the related Prospectus Supplement, on behalf of the
Issuer, will determine whether to exercise any right the Indenture Trustee may
have as mortgagee to accelerate payment of any such Mortgage Loan or to withhold
its consent to any transfer or further encumbrance in a manner consistent with
the Servicing Standard.
In addition, under federal bankruptcy laws, due-on-sale clauses may not be
enforceable in bankruptcy proceedings and may, under certain circumstances, be
eliminated in any modified mortgage resulting from such bankruptcy proceeding.
Subordinate Financing
Where the Mortgagor encumbers mortgaged property with one or more junior
liens, the senior lender is subjected to additional risk. First, the Mortgagor
may have difficulty servicing and repaying multiple loans. In addition, if the
junior loan permits recourse to the Mortgagor (as junior loans often do) and the
senior loan does not, a Mortgagor may be more likely to repay sums due on the
junior loan than those on the senior loan. Second, acts of the senior lender
that prejudice the junior lender or impair the junior lender's security may
create a superior equity in favor of the junior lender. For example, if the
Mortgagor and the senior lender agree to an increase in the principal amount of
or the interest rate payable on the senior loan, the senior lender may lose its
priority to the extent any existing junior lender is harmed or the Mortgagor is
additionally burdened. Third, if the Mortgagor 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. Moreover, the
bankruptcy of a junior lender may operate to stay foreclosure or similar
proceedings by the senior lender.
Default Interest, Prepayment Premiums and Lockouts
Forms of notes and mortgages used by lenders may contain provisions
obligating the Mortgagor to pay a late charge or additional interest if payments
are not timely made, and in some circumstances may provide for Prepayment
Premiums if the obligation is paid prior to maturity or prohibit such prepayment
for a specified period. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a Mortgagor
for delinquent payments. Certain states also limit the amounts that a lender may
collect from a Mortgagor as an additional charge if the loan is prepaid. The
enforceability, under the laws of a number of states of provisions providing for
Prepayment Premiums, or prohibition of, an involuntary prepayment is unclear,
and no assurance can be given that, at the time a Prepayment Premium is required
to be made on a Mortgage Loan in connection with an involuntary prepayment, the
obligation to make such payment, or the provisions of any such prohibition, will
be enforceable under applicable state law. The absence of a restraint on
prepayment, particularly with respect to Mortgage Loans having higher Mortgage
Interest Rates, may increase the likelihood of refinancing or other early
retirements of the Mortgage Loans.
Acceleration on Default
The Mortgage Loans included in the Mortgage Pool for a Series will
generally include a "debt-acceleration" clause, which permits the lender to
accelerate the full debt upon a monetary or nonmonetary default of the
Mortgagor. The courts of all states will enforce clauses providing for
acceleration in the event of a material payment default after giving effect to
any appropriate notices. The equity courts of the state, however, may refuse to
foreclose a mortgage or deed of trust when an acceleration of the indebtedness
would be inequitable or unjust or the circumstances would render the
acceleration unconscionable. Furthermore, in some states, the Mortgagor may
avoid foreclosure and reinstate an accelerated loan by paying only the defaulted
amounts and the costs and attorneys' fees incurred by the lender in collecting
such defaulted payments.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, enacted in March 1980 ("Title V"), provides that state usury
limitations shall not apply to certain types of residential (including
multifamily but not other commercial) first mortgage loans originated by certain
lenders after March 31, 1980. A similar federal statute was in effect with
respect to mortgage loans made during the first three months of 1980. The
statute authorized any state to reimpose 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 so
rejected, any state is authorized by the law to adopt a provision limiting
discount points or other charges on mortgage loans covered by Title V. Certain
states have taken action to reimpose interest rate limits and/or to limit
discount points or other charges.
In any state in which application of Title V has been expressly rejected or
a provision limiting discount points or other charges is adopted, no Mortgage
Loan originated after the date of such state action will be eligible for
inclusion as part of the Collateral unless (i) such Mortgage Loan provides for
such interest rate, discount points and charges as are permitted in such state
or (ii) such Mortgage Loan provides that the terms thereof shall be construed in
accordance with the laws of another state under which such interest rate,
discount points and charges would not be usurious and the Mortgagor's counsel
has rendered an opinion that such choice of law provision would be given effect.
Statutes differ in their provisions as to the consequences of a usurious
loan. One group of statutes requires the lender to forfeit the interest due
above the applicable limit or impose a specified penalty. Under this statutory
scheme, the borrower may cancel the recorded mortgage or deed of trust upon
paying its debt with lawful interest, and the lender may foreclose, but only for
the debt plus lawful interest. A second group of statutes is more severe. A
violation of this type of usury law results in the invalidation of the
transaction, thereby permitting the borrower to cancel the recorded mortgage or
deed of trust without any payment or prohibiting the lender from foreclosing.
Certain Laws and Regulations; Types of Mortgaged Properties
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in material
diminution in the value of a Mortgaged Property which could, together with the
possibility of limited alternative uses for a particular Mortgaged Property
(e.g., a nursing or convalescent home or hospital), result in a failure to
realize the full principal amount of the related Mortgage Loan. Mortgages on
Mortgaged Properties which are owned by the Mortgagor under a condominium form
of ownership are subject to the declaration, by-laws and other rules and
regulations of the condominium association. Mortgaged Properties which are
hotels or motels, golf courses, restaurants, movie theaters, car washes and
automobile dealerships may present additional risk in that such Mortgaged
Properties are typically operated pursuant to franchise, management and
operating agreements which may be terminable by the operator, and with respect
to hotels and restaurants, the transferability of operating, liquor and other
licenses to the entity acquiring the hotel or restaurant either through
purchases or foreclosure is subject to the vagaries of local law requirements.
In addition, Mortgaged Properties which are multifamily residential properties
may be subject to rent control laws, which could impact the future cash flows of
such properties.
Americans With Disabilities Act
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, movie theaters, shopping centers, hospitals, schools and social
service center establishments) must remove architectural and communication
barriers which 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, such 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 Mortgagor in its
capacity as owner or landlord, the ADA may also impose such requirements on a
foreclosing lender who succeeds to the interest of the Mortgagor as owner of
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 Mortgagor of complying with the
requirements of the ADA may be subject to more stringent requirements than those
to which the Mortgagor is subject.
Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a Mortgagor who enters military service after the
origination of such Mortgagor's Mortgage Loan (including a Mortgagor 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 such Mortgagor's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
Mortgagors 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 Relief Act applies to Mortgagors
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 that may be affected by the Relief Act. Application of
the Relief Act would adversely affect, for an indeterminate period of time, the
ability of any servicer to collect full amounts of interest on certain of the
Mortgage Loans. Any shortfalls in interest collections resulting from the
application of the Relief Act would result in a reduction of the amounts payable
to the holders of the related Series of Bonds, and would not be covered by
advances. Such shortfalls will be covered by the Credit Support provided in
connection with such Bonds only to the extent provided in the related Prospectus
Supplement. In addition, the Relief Act imposes limitations that would impair
the ability of the servicer to foreclose on an affected Mortgage Loan during the
Mortgagor's period of active duty status, and, under certain circumstances,
during an additional three month period thereafter. Thus, in the event that such
a Mortgage Loan goes into default, there may be delays and losses occasioned
thereby.
Forfeitures in Drug and RICO Proceedings
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations ("RICO") statute can be seized by the government if the
property was used in, or purchased with the proceeds of, such crimes. Under
procedures contained in the Comprehensive Crime Control Act of 1984 (the "Crime
Control Act"), the government may seize the property even before conviction. The
government must publish notice of the forfeiture proceeding and may 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: (i) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based, or (ii) 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
General
The following discussion represents the opinion of Cadwalader, Wickersham &
Taft, special counsel to the Depositor, as to the anticipated material federal
income tax consequences of the purchase, ownership and disposition of Bonds.
This discussion is directed solely to Bondholders that hold Offered Bonds as
capital assets within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended (the "Code") and does not purport to discuss all federal
income tax consequences that may be applicable to particular categories of
investors, some of which (such as banks, insurance companies and foreign
investors) may be subject to special rules. Further, the authorities on which
this discussion, and the opinion referred to below, are based are subject to
change or differing interpretations, which could apply retroactively.
Prospective investors should note that no rulings have been or will be sought
from the Internal Revenue Service (the "Service") with respect to any of the
federal income tax consequences discussed below, and no assurance can be given
that the Service will not take contrary positions. In addition to the federal
income tax consequences described herein, potential investors should consider
the foreign, state and local tax consequences, if any, of the purchase,
ownership and disposition of Bonds. See "State Tax Considerations" herein.
Bondholders are advised to consult their tax advisors concerning the federal,
state, local, foreign or other tax consequences to them of the purchase,
ownership and disposition of Bonds.
Upon the issuance of each series of Offered Bonds, Cadwalader, Wickersham &
Taft, special counsel to the Depositor, will deliver its opinion generally to
the effect that, for federal income tax purposes, assuming compliance with all
provisions of the related Indenture and certain related documents, and based in
part on the facts set forth in the related Prospectus Supplement and additional
information and representations, such series of Offered Bonds will be treated as
indebtedness. For purposes of this tax discussion, references to a "Bondholder"
or a "holder" are to the Beneficial Owner of a Bond.
Taxable mortgage pool ("TMP") rules enacted as part of the Tax Reform Act
of 1986 treat certain arrangements in which debt obligations are secured or
backed by real estate mortgage loans as taxable corporations. An entity (or a
portion thereof) will be characterized as a TMP if (i) substantially all of its
assets are debt obligations and more than 50 percent of such debt obligations
consist of real estate mortgage loans or interests therein, (ii) the entity is
the obligor under debt obligations with two or more maturities, and (iii)
payments on the debt obligations referred to in (ii) bear a relationship to
payments on the debt obligations referred to in (i). Furthermore, a group of
assets held by an entity can be treated as a separate TMP if the assets are
expected to produce significant cash flow that will support one or more of the
entity's issues of debt obligation.
It is anticipated that the Issuer will be characterized as a TMP for
federal income tax purposes. In general, a TMP is treated as a "separate"
corporation not includible with any other corporation in a consolidated income
tax return, and is subject to corporate income taxation. However, it is
anticipated that for federal income tax purposes one hundred percent of the
Issuer will at all times be owned by a "qualified REIT subsidiary" (as defined
in Section 856(i) of the Code) of ICCMIC, which is a "real estate investment
trust" (a "REIT") (as defined in Section 856(a) of the Code). So long as the
Issuer is so owned and ICCMIC and such owner qualifies as a REIT and as a
qualified REIT subsidiary, respectively, characterization of the Issuer as a TMP
will result only in the shareholders of ICCMIC being required to include in
income, as "excess inclusion" income, some or all of their allocable share of
the Issuer's net income that would be "excess inclusion" income if the Issuer
were treated as a "real estate mortgage investment conduit," within the meaning
of Section 860D of the Code. Characterization of the Issuer as an owner trust
(wholly-owned and therefore ignored) or as itself a "qualified REIT subsidiary"
would not result in entity-level, corporate income taxation with respect to the
Issuer. In the event of ICCMIC's failure to continue to qualify as a REIT or the
failure of the owner of the Issuer to continue to qualify as a "qualified REIT
subsidiary" for federal income tax purposes, or for any other reason, the net
income (after the deduction of interest and original issue discount, if any, on
the Bonds) of the Issuer would be subject to corporate income tax, reducing cash
flow of the Issuer available to make payments on the Bonds, and the Issuer would
not be permitted to be included in a consolidated income tax return of another
corporate entity. No assurance can be given with regard to the prospective
qualification of the Issuer as either an owner trust or a "qualified REIT
subsidiary" or of the Depositor as a "qualified REIT subsidiary" for federal
income tax purposes.
Status as Real Property Loans
Bonds held by a domestic building and loan association will not constitute
"loans. . . secured by an interest in real property" within the meaning of
Section 7701(a)(19)(C)(v) of the Code; Bonds held by a real estate investment
trust will not constitute "real estate assets" within the meaning of Section
856(c)(5)(A) of the Code and interest on Bonds will not be considered "interest
on obligations secured by mortgages on real property" within the meaning of
Section 856(c)(3)(B) of the Code. In addition, the Bonds will not be "qualified
mortgages" within the meaning of Section 860G(a)(3) of the Code.
Taxation of Bonds
General
In general, interest on a Bond will be treated as ordinary income to the
related Bondholder as it accrues or is paid, depending on the method of
accounting of the Bondholder, and principal payments on a Bond will be treated
as a return of capital to the extent of the Bondholder's basis in the Bond
allocable thereto. Bondholders must use the accrual method of accounting with
regard to original issue discount, if any, on the Bonds, regardless of the
method of accounting otherwise used by such Bondholders.
Original Issue Discount
Accrual Bonds and Principal Only Bonds will be, and other classes of Bonds
may be, issued with "original issue discount" within the meaning of Code Section
1273(a). Holders of any class of Bonds having original issue discount generally
must include original issue discount in ordinary income for federal income tax
purposes as it accrues, in accordance with the constant yield method that takes
into account the compounding of interest, in advance of receipt of the cash
attributable to such income. The following discussion is based in part on
temporary and final Treasury regulations issued on February 2, 1994, as amended
on June 14, 1996 (the "OID Regulations") under Code Sections 1271 through 1273
and 1275 and in part on the provisions of the 1986 Act. Bondholders should be
aware, however, that the OID Regulations do not adequately address certain
issues relevant to prepayable securities, such as the Bonds. To the extent such
issues are not addressed in such regulations, it is anticipated that the
Indenture Trustee will apply the methodology described in the Conference
Committee Report to the 1986 Act. No assurance can be provided that the Service
will not take a different position as to those matters not currently addressed
by the OID Regulations. Moreover, the OID Regulations include an anti-abuse rule
allowing the Service to apply or depart from the OID Regulations where necessary
or appropriate to ensure a reasonable tax result in light of the applicable
statutory provisions. A tax result will not be considered unreasonable under the
anti-abuse rule in the absence of a substantial effect on the present value of a
taxpayer's tax liability. Investors are advised to consult their own tax
advisors as to the discussion herein and the appropriate method for reporting
interest and original issue discount with respect to the Bonds.
Each Bond (except to the extent described below with respect to a Bond on
which principal is distributed by random lot ("Random Lot Bonds")) will be
treated as a single installment obligation for purposes of determining the
original issue discount includible in a Bondholder's income. The total amount of
original issue discount on a Bond is the excess of the "stated redemption price
at maturity" of the Bond over its "issue price." The issue price of a class of
Bonds offered pursuant to this Prospectus generally is the first price at which
a substantial amount of Bonds of that class is sold to the public (excluding
bond houses, brokers and underwriters). Although unclear under the OID
Regulations, it is anticipated that the Indenture Trustee will treat the issue
price of a class as to which there is no substantial sale by the Underwriters
within ten days of the issue date as the fair market value of that class as of
the issue date. Any class of Bonds (or portion thereof) which is retained by the
Depositor or ICCMIC will not be treated as outstanding indebtedness until sold
to an unrelated third party. The issue price of a Bond includes the amount paid
by an initial Bondholder for accrued interest that relates to a period prior to
the issue date of the Bond, unless the Bondholder elects on its federal income
tax return to exclude such amount from the issue price and to recover it on the
first Payment Date. The stated redemption price at maturity of a Bond always
includes the original principal amount of the Bond, but generally will not
include payments of stated interest if such interest payments constitute
"qualified stated interest." Under the OID Regulations, qualified stated
interest generally means interest payable at a single fixed rate or a qualified
variable rate (as described below) provided that such interest payments are
unconditionally payable at intervals of one year or less during the entire term
of the Bond. Except as provided in the following three sentences and under
"--Variable Rate Bonds" below, it is anticipated that the Indenture Trustee will
treat interest with respect to the Bonds as qualified stated interest or in such
other manner as specified in the related Prospectus Supplement. Payments of
interest on an Accrual Bond, or on other Bonds with respect to which deferred
interest will accrue, will not constitute qualified stated interest, in which
case the stated redemption price at maturity of such Bonds includes all payments
of interest as well as principal thereon. Likewise, it is anticipated that the
Indenture Trustee will treat an "interest only" class, or a class on which
interest is substantially disproportionate to its principal amount (a so-called
"super-premium" class) as having no qualified stated interest. Where the
interval between the issue date and the first Payment Date on a Bond is shorter
than the interval between subsequent Payment Dates, the interest attributable to
the additional days will be included in the stated redemption price at maturity.
Under a de minimis rule, original issue discount on a Bond will be
considered to be zero if such original issue discount is less than 0.25% of the
stated redemption price at maturity of the Bond multiplied by the weighted
average maturity of the Bond. For this purpose, the weighted average maturity of
the Bond is computed as the sum of the amounts determined by multiplying the
number of full years (i.e., rounding down partial years) from the issue date
until each payment is scheduled to be made by a fraction, the numerator of which
is the amount of each payment included in the stated redemption price at
maturity of the Bond and the denominator of which is the stated redemption price
at maturity of the Bond. The Conference Committee Report to the 1986 Act
provides that the schedule of such payments should be determined in accordance
with the assumed rate of prepayment of the Mortgage Loans (the "Prepayment
Assumption") and the anticipated reinvestment rate, if any, relating to the
Bonds. The Prepayment Assumption with respect to a Series of Bonds will be set
forth in the related Prospectus Supplement. Holders generally must report de
minimis original issue discount pro rata as principal payments are received, and
such income will be capital gain if the Bond is held as a capital asset.
However, under the OID Regulations, Bondholders may elect to accrue all de
minimis original issue discount as well as market discount and market premium
under the constant yield method. See "Election to Treat All Interest Under the
Constant Yield Method."
A Bondholder generally must include in gross income for any taxable year
the sum of the "daily portions," as defined below, of the original issue
discount on the Bond accrued during an accrual period for each day on which it
holds the Bond, including the date of purchase but excluding the date of
disposition. It is anticipated that the Indenture Trustee will treat the monthly
period ending on the day before each Payment Date as the accrual period. With
respect to each Bond, a calculation will be made of the original issue discount
that accrues during each successive full accrual period (or shorter period from
the date of original issue) that ends on the day before the related Payment Date
on the Bond. The Conference Committee Report to the 1986 Act states that the
rate of accrual of original issue discount is intended to be based on the
Prepayment Assumption. Other than as discussed below with respect to a Random
Lot Bond, the original issue discount accruing in a full accrual period would be
the excess, if any, of (i) the sum of (a) the present value of all of the
remaining payments to be made on the Bond as of the end of that accrual period
that are included in the Bond's stated redemption price at maturity and (b) the
payments made on the Bond during the accrual period that are included in the
Bond's stated redemption price at maturity, over (ii) the adjusted issue price
of the Bond at the beginning of the accrual period. The present value of the
remaining payments referred to in the preceding sentence is calculated based on
(i) the yield to maturity of the Bond at the issue date, (ii) events (including
actual prepayments) that have occurred prior to the end of the accrual period
and (iii) the Prepayment Assumption. For these purposes, the adjusted issue
price of a Bond at the beginning of any accrual period equals the issue price of
the Bond, increased by the aggregate amount of original issue discount with
respect to the Bond that accrued in all prior accrual periods and reduced by the
amount of payments included in the Bond's stated redemption price at maturity
that were made on the Bond in such prior periods. The original issue discount
accruing during any accrual period (as determined in this paragraph) will then
be divided by the number of days in the period to determine the daily portion of
original issue discount for each day in the period. With respect to an initial
accrual period shorter than a full accrual period, the daily portions of
original issue discount must be determined according to an appropriate
allocation under any reasonable method.
Under the method described above, the daily portions of original issue
discount required to be included in income by a Bondholder generally will
increase to take into account prepayments on the Bonds as a result of
prepayments on the Mortgage Loans that exceed the Prepayment Assumption, and
generally will decrease (but not below zero for any period) if the prepayments
are slower than the Prepayment Assumption. An increase in prepayments on the
Mortgage Loans with respect to a Series of Bonds can result in both a change in
the priority of principal payments with respect to certain classes of Bonds and
either an increase or decrease in the daily portions of original issue discount
with respect to such Bonds.
In the case of a Random Lot Bond, it is anticipated that the Indenture
Trustee will determine the yield to maturity of such Bond based upon the
anticipated payment characteristics of the class as a whole under the Prepayment
Assumption. In general, the original issue discount accruing on each Random Lot
Bond in a full accrual period would be its allocable share of the original issue
discount with respect to the entire class, as determined in accordance with the
preceding paragraph. However, in the case of a payment in retirement of the
entire unpaid principal balance of any Random Lot Bond (or portion of such
unpaid principal balance), (a) the remaining unaccrued original issue discount
allocable to such Bond (or to such portion) will accrue at the time of such
payment, and (b) the accrual of original issue discount allocable to each
remaining Bond of such class (or the remaining unpaid principal balance of a
partially redeemed Random Lot Bond after a payment of principal has been
received) will be adjusted by reducing the present value of the remaining
payments on such class and the adjusted issue price of such class to the extent
attributable to the portion of the unpaid principal balance thereof that was
distributed. The Depositor believes that the foregoing treatment is consistent
with the "pro rata prepayment" rules of the OID Regulations, but with the rate
of accrual of original issue discount determined based on the Prepayment
Assumption for the class as a whole. Investors are advised to consult their tax
advisors as to this treatment.
Acquisition Premium
A purchaser of a Bond at a price greater than its adjusted issue price but
less than its stated redemption price at maturity will be required to include in
gross income the daily portions of the original issue discount on the Bond
reduced pro rata by a fraction, the numerator of which is the excess of its
purchase price over such adjusted issue price and the denominator of which is
the excess of the remaining stated redemption price at maturity over the
adjusted issue price. Alternatively, such a subsequent purchaser may elect to
treat all such acquisition premium under the constant yield method, as described
below under the heading "Election to Treat All Interest Under the Constant Yield
Method."
Variable Rate Bonds
Bonds may provide for interest based on a variable rate. Under the OID
Regulations, interest is treated as payable at a variable rate if, generally,
(i) the issue price does not exceed the original principal balance by more than
a specified amount and (ii) the interest compounds or is payable at least
annually at current values of (a) one or more "qualified floating rates", (b) a
single fixed rate and one or more qualified floating rates, (c) a single
"objective rate", or (d) a single fixed rate and a single objective rate that is
a "qualified inverse floating rate". A floating rate is a qualified floating
rate if variations in the rate can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed funds, where such rate
is subject to a fixed multiple that is greater than 0.65, but not more than
1.35. Such rate may also be increased or decreased by a fixed spread or subject
to a fixed cap or floor, or a cap or floor that is not reasonably expected as of
the issue date to affect the yield of the instrument significantly. An objective
rate (other than a qualified floating rate) is a rate that is determined using a
single fixed formula and that is based on objective financial or economic
information, provided that such information is not (i) within the control of the
issuer or a related party or (ii) unique to the circumstances of the issuer or a
related party. A qualified inverse floating rate is a rate equal to a fixed rate
minus a qualified floating rate that inversely reflects contemporaneous
variations in the cost of newly borrowed funds; an inverse floating rate that is
not a qualified floating rate may nevertheless be an objective rate. A class of
Bonds may be issued under this Prospectus that does not have a variable rate
under the OID Regulations, for example, a class that bears different rates at
different times during the period it is outstanding such that it is considered
significantly "front-loaded" or "back-loaded" within the meaning of the OID
Regulations. It is possible that such a class may be considered to bear
"contingent interest" within the meaning of the OID Regulations. The OID
Regulations, as they relate to the treatment of contingent interest, are by
their terms not applicable to Bonds. However, if final regulations dealing with
contingent interest with respect to Bonds apply the same principles as the OID
Regulations, such regulations may lead to different timing of income inclusion
than would be the case under the OID Regulations. Furthermore, application of
such principles could lead to the characterization of gain on the sale of
contingent interest Bonds as ordinary income. The applicable Prospectus
Supplement will describe whether any Class of Bonds of a series may be subject
to rules similar to the "contingent interest" rule of the OID Regulations.
Investors should consult their tax advisors regarding the appropriate treatment
of any Bond that does not pay interest at a fixed rate or variable rate as
described in this paragraph.
The amount of original issue discount with respect to a Bond bearing a
variable rate of interest will accrue in the manner described above under
"Original Issue Discount" with the yield to maturity and future payments on such
Bond generally to be determined by assuming that interest will be payable for
the life of the Bond based on the initial rate (or, if different, the value of
the applicable variable rate as of the pricing date) for the relevant class. It
is anticipated that the Indenture Trustee will treat such variable interest as
qualified stated interest, other than variable interest on an interest-only or
super-premium class, which will be treated as non-qualified stated interest
includible in the stated redemption price at maturity, or that the Indenture
Trustee will treat such variable interest in such other manner as specified in
the related Prospectus Supplement. Ordinary income reportable for any period
will be adjusted based on subsequent changes in the applicable interest rate
index.
Although unclear under the OID Regulations, unless required otherwise by
applicable final regulations, it is anticipated that the Indenture Trustee will
treat Bonds bearing an interest rate that is a weighted average of the net
interest rates on Mortgage Loans having fixed or adjustable rates, as having
qualified stated interest, except to the extent that initial "teaser" rates
cause sufficiently "back-loaded" interest to create more than de minimis
original issue discount. The yield on such Bonds for purposes of accruing
original issue discount will be a hypothetical fixed rate based on the fixed
rates, in the case of fixed rate Mortgage Loans, and initial "teaser rates"
followed by fully indexed rates, in the case of adjustable rate Mortgage Loans.
In the case of adjustable rate Mortgage Loans, the applicable index used to
compute interest on the Mortgage Loans in effect on the pricing date (or
possibly the issue date) will be deemed to be in effect beginning with the
period in which the first weighted average adjustment date occurring after the
issue date occurs. Adjustments will be made in each accrual period either
increasing or decreasing the amount of ordinary income reportable to reflect the
actual interest rate on the Bonds.
Market Discount
A purchaser of a Bond also may be subject to the market discount rules of
Code Section 1276 through 1278. Under these Code sections and the principles
applied by the OID Regulations in the context of original issue discount,
"market discount" is the amount by which the purchaser's original basis in the
Bond (i) is exceeded by the then-current principal amount of the Bond or (ii) in
the case of a Bond having original issue discount, is exceeded by the adjusted
issue price of such Bond at the time of purchase. Such purchaser generally will
be required to recognize ordinary income to the extent of accrued market
discount on such Bond as payments includible in the stated redemption price at
maturity thereof are received, in an amount not exceeding any such payment. Such
market discount would accrue in a manner to be provided in Treasury regulations
and should take into account the Prepayment Assumption. The Conference Committee
Report to the 1986 Act provides that until such regulations are issued, such
market discount would accrue either (i) on the basis of a constant interest rate
or (ii) in the ratio of stated interest allocable to the relevant period to the
sum of the interest for such period plus the remaining interest as of the end of
such period, or in the case of a Bond issued with original issue discount, in
the ratio of original issue discount accrued for the relevant period to the sum
of the original issue discount accrued for such period plus the remaining
original issue discount as of the end of such period. Such purchaser also
generally will be required to treat a portion of any gain on a sale or exchange
of the Bond 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 as partial payments in
reduction of the stated redemption price at maturity were received. Such
purchaser will be required to defer deduction of a portion of the excess of the
interest paid or accrued on indebtedness incurred to purchase or carry a Bond
over the interest payable thereon. The deferred portion of such interest expense
in any taxable year generally will not exceed the accrued market discount on the
Bond for such year. Any such deferred interest expense is, in general, allowed
as a deduction not later than the year in which the related market discount
income is recognized or the Bond is disposed of. As an alternative to the
inclusion of market discount in income on the foregoing basis, the Bondholder
may elect to include market discount in income currently as it accrues on all
market discount instruments acquired by such Bondholder in that taxable year or
thereafter, in which case the interest deferral rule will not apply. See
"Election to Treat All Interest Under the Constant Yield Method" below regarding
an alternative manner in which such election may be deemed to be made.
Market discount with respect to a Bond will be considered to be zero if
such market discount is less than 0.25% of the remaining stated redemption price
at maturity of such Bond multiplied by the weighted average maturity of the Bond
(determined as described above in the third paragraph under "Original Issue
Discount") remaining after the date of purchase. It appears that de minimis
market discount would be reported in a manner similar to de minimis original
issue discount. See "Original Issue Discount" above. Treasury regulations
implementing the market discount rules have not yet been issued, and therefore
investors should consult their own tax advisors regarding the application of
these rules. Investors should also consult Revenue Procedure 92-67 concerning
the elections to include market discount in income currently and to accrue
market discount on the basis of the constant yield method.
Premium
A Bond purchased at a cost greater than its remaining stated redemption
price at maturity generally is considered to be purchased at a premium. If the
Bondholder holds such Bond as a "capital asset" within the meaning of Code
Section 1221, the Bondholder may elect under Code Section 171 to amortize such
premium under the constant yield method. Final Treasury regulations applicable
to amortizable bond premiums do not by their terms apply to prepayable
obligations such as the Bonds. However, the Conference Committee Report to the
1986 Act indicates a Congressional intent that the same rules that will apply to
the accrual of market discount on installment obligations will also apply to
amortizing bond premium under Code Section 171 on installment obligations such
as the Bonds, although it is unclear whether the alternatives to the constant
yield method described above under "Market Discount" are available. Amortizable
bond premium will be treated as an offset to interest income on a Bond rather
than as a separate deduction item. See "Election to Treat All Interest Under the
Constant Yield Method" below regarding an alternative manner in which the Code
Section 171 election may be deemed to be made.
Election to Treat All Interest Under the Constant Yield Method
A holder of a debt instrument such as a Bond may elect to treat all
interest that accrues on the instrument using the constant yield method, with
none of the interest being treated as qualified stated interest. For purposes of
applying the constant yield method to a debt instrument subject to such an
election, (i) "interest" includes stated interest, original issue discount, de
minimis original issue discount, market discount and de minimis market discount,
as adjusted by any amortizable bond premium or acquisition premium and (ii) the
debt instrument is treated as if the instrument were issued on the holder's
acquisition date in the amount of the holder's adjusted basis immediately after
acquisition. It is unclear whether, for this purpose, the initial Prepayment
Assumption would continue to apply or if a new prepayment assumption as of the
date of the holder's acquisition would apply. A holder generally may make such
an election on an instrument by instrument basis or for a class or group of debt
instruments. However, if the holder makes such an election with respect to a
debt instrument with amortizable bond premium or with market discount, the
holder is deemed to have made elections to amortize bond premium or to report
market discount income currently as it accrues under the constant yield method,
respectively, for all debt instruments acquired by the holder in the same
taxable year or thereafter. The election is made on the holder's federal income
tax return for the year in which the debt instrument is acquired and is
irrevocable except with the approval of the Service. Investors should consult
their own tax advisors regarding the advisability of making such an election.
Sale or Exchange of Bonds
If a Bondholder sells or exchanges a Bond, the Bondholder will recognize
gain or loss equal to the difference, if any, between the amount received and
its adjusted basis in the Bond. The adjusted basis of a Bond generally will
equal the cost of the Bond to the seller, increased by any original issue
discount or market discount previously included in the seller's gross income
with respect to the Bond and reduced by amounts included in the stated
redemption price at maturity of the Bond that were previously received by the
seller, by any amortized premium and by previously recognized losses.
Except as described above with respect to market discount, and except as
provided in this paragraph, any gain or loss on the sale or exchange of a Bond
realized by an investor who holds the Bond as a capital asset will be capital
gain or loss and will be long-term or short-term depending on whether the Bond
has been held for the applicable holding period (described below). Such gain
will be treated as ordinary income (i) if a Bond is held as part of a
"conversion transaction" as defined in Code Section 1258(c), up to the amount of
interest that would have accrued on the Bondholder's net investment in the
conversion transaction at 120% of the appropriate applicable Federal rate under
Code Section 1274(d) in effect at the time the taxpayer entered into the
transaction minus any amount previously treated as ordinary income with respect
to any prior payment of property that was held as a part of such transaction, or
(ii) in the case of a non-corporate taxpayer, to the extent such taxpayer has
made an election under Code Section 163(d)(4) to have net capital gains taxed as
investment income at ordinary rates. In addition, gain or loss recognized from
the sale of a Bond by certain banks or thrift institutions will be treated as
ordinary income or loss pursuant to Code Section 582(c). Long-term capital gains
of certain non-corporate taxpayers generally are subject to a lower maximum tax
rate (20%) than ordinary income of such taxpayers (39.6%) for property held for
more than one year. The maximum tax rate for corporations is the same with
respect to both ordinary income and capital gains.
Treatment of Losses
Holders of Bonds will be required to report original issue discount, if
any, and accrued method holders will be required to report interest income with
respect to Bonds as such amounts accrue, without giving effect to delays or
reductions in payments attributable to defaults or delinquencies on the Mortgage
Loans allocable to a particular class of Bonds, except to the extent it can be
established that such losses are uncollectible. Accordingly, the holder of a
Bond may have income, or may incur a diminution in cash flow as a result of a
default or delinquency, but may not be able to take a deduction (subject to the
discussion below) for the corresponding loss until a subsequent taxable year. In
this regard, investors are cautioned that while they may generally cease to
accrue interest income if it reasonably appears that the interest will be
uncollectible, the Service may take the position that original issue discount
must continue to be accrued in spite of its uncollectibility until the debt
instrument is disposed of in a taxable transaction or becomes worthless in
accordance with the rules of Code Section 166.
It appears that holders of Bonds that are corporations or that otherwise
hold the Bonds in connection with a trade or business should in general be
allowed to deduct as an ordinary loss any such loss sustained during the taxable
year on account of any such Bonds becoming wholly or partially worthless, and
that, in general, holders of Bonds that are not corporations and do not hold the
Bonds in connection with a trade or business will be allowed to deduct as a
short-term capital loss any loss with respect to principal sustained during the
taxable year on account of a portion of any class or subclass of such Bonds
becoming wholly worthless. Although the matter is not free from doubt,
non-corporate holders of Bonds should be allowed a bad debt deduction at such
time as the principal balance of any class or subclass of such Bonds is reduced
to reflect losses resulting from any liquidated Mortgage Loans. The Service,
however, could take the position that non-corporate holders will be allowed a
bad debt deduction to reflect such losses only after all Mortgage Loans
remaining as part of the Collateral have been liquidated or such class of Bonds
has been otherwise retired. The Service could also assert that losses on the
Bonds are deductible based on some other method that may defer such deductions
for all holders, such as reducing future cash flow for purposes of computing
original issue discount. This may have the effect of creating "negative"
original issue discount which would be deductible only against future positive
original issue discount or otherwise upon termination of the class. Holders of
Bonds are urged to consult their own tax advisors regarding the appropriate
timing, amount and character of any loss sustained with respect to such Bonds.
While losses attributable to interest previously reported as income should be
deductible as ordinary losses by both corporate and non-corporate holders, the
Internal Revenue Service may take the position that losses attributable to
accrued original issue discount may only be deducted as short-term capital
losses by non-corporate holders not engaged in a trade or business. Special loss
rules are applicable to banks and thrift institutions, including rules regarding
reserves for bad debts. Such taxpayers are advised to consult their tax advisors
regarding the treatment of losses on Bonds.
Taxation of Certain Foreign Investors
Interest, including original issue discount, payable to Bondholders who are
non-resident aliens, foreign corporations, or other Non-U.S. Persons (as defined
below), will be considered "portfolio interest" and, therefore, generally will
not be subject to 30% United States withholding tax, provided that such Non-U.S.
Person (i) 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 ICCMIC and (ii) provides the Indenture Trustee, or
the person who would otherwise be required to withhold tax from such payments
under Code Section 1441 or 1442, with an appropriate certification, signed under
penalties of perjury, identifying the beneficial owner and stating, among other
things, that the beneficial owner of the Bond is a Non-U.S. Person. If such
certification, or any other required statement, is not provided, 30% withholding
will apply unless reduced or eliminated pursuant to an applicable tax treaty or
unless the interest on the Bond is effectively connected with the conduct of a
trade or business within the United States by such Non-U.S. Person. In the
latter case, such Non-U.S. Person will be subject to United States federal
income tax at regular rates. Investors who are Non-U.S. Persons should consult
their own tax advisors regarding the specific tax consequences to them of owning
a Bond. The term "Non-U.S. Person" means any person who is not a U.S. Person.
The term "U.S. Person" means a citizen or resident of the United States, a
corporation, partnership (except as provided in applicable Treasury regulations)
or other entity created or organized in or under the laws of the United States
or any political subdivision thereof, an estate that is subject to United States
federal income tax regardless of the source of its income or a trust if a court
within the United States is able to exercise primary supervision over the
administration of such trust, and one or more such U.S. Persons have the
authority to control all substantial decisions of such trust (or, to the extent
provided in Treasury regulations, certain trusts in existence on August 20, 1996
which are eligible to elect to be treated as U.S. Persons).
The Service recently issued final regulations (the "New Regulations") which
would provide alternative methods of satisfying the beneficial ownership
certification requirement described above. The New Regulations are effective
January 1, 2000, although valid withholding certificates that are held on
December 31, 1999, remain valid until the earlier of December 31, 2000 or the
due date of expiration of the certificate under the rules as currently in
effect. The New Regulations would require, in the case of Bonds held by a
foreign partnership, that (x) the certification described above be provided by
the partners rather than by the foreign partnership and (y) the partnership
provide certain information, including a United States taxpayer identification
number. A look-through rule would apply in the case of tiered partnerships.
Non-U.S. Persons should consult their own tax advisors concerning the
application of the certification requirements in the New Regulations.
Backup Withholding
Payments made on the Bonds, and proceeds from the sale of the Bonds to or
through certain brokers, may be subject to a "backup" withholding tax under Code
Section 3406 of 31% on "reportable payments" (including interest payments,
original issue discount, and, under certain circumstances, principal payments)
unless the Bondholder complies with certain reporting and/or certification
procedures, including the provision of its taxpayer identification number to the
Indenture Trustee, its agent or the broker who effected the sale of the Bond, or
such Bondholder is otherwise an exempt recipient under applicable provisions of
the Code. Any amounts to be withheld from payment on the Bonds would be refunded
by the Service or allowed as a credit against the Bondholder's federal income
tax liability. The New Regulations change certain of the rules relating to
certain presumptions currently available relating to information reporting and
backup withholding. Non-U.S. Persons are urged to contact their own tax advisors
regarding the application to them of backup withholding and information
reporting.
Reporting Requirements
Reports of accrued interest, original issue discount and information
necessary to compute the accrual of market discount will be made annually to the
Service and to individuals, estates, non-exempt and non-charitable trusts, and
partnerships who are either holders of record of Bonds or beneficial owners who
own Bonds through a broker or middleman as nominee. All brokers, nominees and
all other non-exempt holders of record of Bonds (including corporations,
non-calendar year taxpayers, securities or commodities dealers, real estate
investment trusts, investment companies, common trust funds, thrift institutions
and charitable trusts) may request such information for any calendar quarter by
telephone or in writing by contacting the person designated in Internal Revenue
Service Publication 938 with respect to a particular Series of Bonds. Holders
through nominees must request such information from the nominee.
THE FEDERAL TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A BONDHOLDER'S
PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP
AND DISPOSITION OF THE BONDS, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
STATE TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "Federal
Income Tax Consequences," potential investors should consider the state income
tax consequences of the acquisition, ownership, and disposition of the Offered
Bonds. State income tax law may differ substantially from the corresponding
federal law, and this discussion does not purport to describe any aspect of the
income tax laws of any state. Therefore, potential investors should consult
their own tax advisors with respect to the various tax consequences of
investments in the Offered Bonds.
CERTAIN ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"),
impose certain restrictions on (a) employee benefit plans (as defined in Section
3(3) of ERISA), (b) plans described in Section 4975(e)(1) of the Code, including
individual retirement accounts or Keogh plans, (c) any entities whose underlying
assets include plan assets by reason of a plan's investment in such entities
(each of (a), (b) and (c), a "Plan") and (d) persons who have certain specified
relationships to such Plans ("Parties in Interest" under ERISA and "Disqualified
Persons" under the Code). Moreover, based on the reasoning of the United States
Supreme Court in John Hancock Life Ins. Co. v. Harris Trust and Sav. Bank, 114
S. Ct. 517 (1993), a life insurance company's general account may be deemed to
include assets of the Plans investing in the general account (e.g., through the
purchase of an annuity contract), and the insurance company might be treated as
a Party in Interest with respect to a Plan by virtue of such investment. ERISA
also imposes certain duties on persons who are fiduciaries of Plans subject to
ERISA and prohibits certain transactions between a Plan and Parties in Interest
or Disqualified Persons with respect to such Plans.
A fiduciary of any Plan should carefully review with its legal and other
advisors whether the purchase or holding of the Bonds could give rise to a
transaction prohibited or otherwise impermissible under ERISA or the Code, and
should refer to "Certain ERISA Considerations" in the related Prospectus
Supplement regarding any restrictions on the purchase and/or holding of the
Bonds offered thereby.
Certain employee benefit plans, such as governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA) are not subject to the prohibited transaction provisions of ERISA and
Section 4975 of the Code. Accordingly, assets of such plans may, subject to the
provisions of any other applicable federal and state law, be invested in the
Bonds of any Series without regard to the ERISA considerations described herein.
It should be noted, however, that any such plan that is qualified and exempt
from taxation under Sections 401(a) and 501(a) of the Code is subject to the
prohibited transaction rules set forth in Section 503 of the Code.
The sale of Bonds to a Plan is in no respect a representation by the
Depositor or the Underwriter that this investment meets all relevant legal
requirements with respect to investments by Plans generally or by any particular
Plan, or that this investment is appropriate for Plans generally or for any
particular Plan.
LEGAL INVESTMENT
The Offered Bonds will constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended
("SMMEA"), only if so specified in the related Prospectus Supplement. The
appropriate characterization of those Bonds not qualifying as "mortgage related
securities" ("Non-SMMEA Bonds") under various legal investment restrictions, and
thus the ability of investors subject to these restrictions to purchase such
Bonds, may be subject to significant interpretive uncertainties. Accordingly,
investors whose investment authority is subject to legal restrictions should
consult their own legal advisors to determine whether and to what extent the
Non-SMMEA Bonds constitute legal investments for them.
Generally, only classes of Offered Bonds that (i) are rated in one of the
two highest rating categories by one or more Rating Agencies and (ii) are part
of a Series secured by a pledge of Mortgage Loans of an Owner Trust, provided
the underlying Mortgage Loans are secured by first liens and were originated by
certain types of Originators as specified in SMMEA, will be "mortgage related
securities" for purposes of SMMEA. As "mortgage related securities," such
classes will constitute legal investments for persons, trusts, corporations,
partnerships, associations, business trusts and business entities (including
depository institutions, insurance companies, trustees and pension funds)
created pursuant to or existing under the laws of the United States or of any
state (including the District of Columbia and Puerto Rico) whose authorized
investments are subject to state regulation to the same extent that, under
applicable law, obligations issued by or guaranteed as to principal and interest
by the United States or any agency or instrumentality thereof constitute legal
investments for such entities. Under SMMEA, a number of states enacted
legislation on or before the October 3, 1991 cut-off established by SMMEA for
such enactments, limiting to various extents the ability of certain entities (in
particular, insurance companies) to invest in "mortgage related securities"
secured by first liens on residential, or mixed residential and commercial
properties, in most cases by requiring the affected investors to rely solely
upon existing state law, and not SMMEA. Pursuant to Section 347 of the Riegle
Community Development and Regulatory Improvement Act of 1994, which amended the
definition of "mortgage related security" (effective December 31, 1996) to
include, in relevant part, Offered Bonds satisfying the rating, first lien and
qualified originator requirements for "mortgage related securities," but secured
by a pledge of Mortgage Loans of an Owner Trust consisting, in whole or in part,
of first liens on one or more parcels of real estate upon which are located one
or more commercial structures, states were authorized to enact legislation, on
or before September 23, 2001, specifically referring to Section 347 and
prohibiting or restricting the purchase, holding or investment by state
regulated entities in such types of Bonds. Accordingly, the investors affected
by such legislation, when and if enacted, will be authorized to invest in
Offered Bonds qualifying as "mortgage related securities" only to the extent
provided in such legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage related
securities" without limitation as to the percentage of their assets represented
thereby, federal credit unions may invest in such securities, and national banks
may purchase such securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
Section 24 (Seventh), subject in each case to such regulations as the applicable
federal regulatory authority may prescribe. In this connection, the Office of
the Comptroller of the Currency (the "OCC") has 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
so 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 OCC defining the term "numerous obligors," no
representation is made as to whether any class of Offered Bonds will qualify as
"commercial mortgage-related securities," and thus as "Type IV securities," for
investment by national banks. The National Credit Union Administration ("NCUA")
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 NCUA
to participate in the "investment pilot program" described in 12 C.F.R. Section
703.140.
All depository institutions considering an investment in the Offered Bonds
should review the "Supervisory Policy Statement on Investment Securities and
End-User Derivatives Activities" (the "1998 Policy Statement") of the Federal
Financial Institutions Examination Counsel (the "FFIEC"), which has been adopted
by the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the OCC and the Office of Thrift Supervision, effective
May 26, 1998, and by the NCUA, effective October 1, 1998. The 1998 Policy
Statement sets forth general guidelines which depository institutions must
follow in managing risks (including market, credit, liquidity, operations
(transaction), and legal risks) applicable to all securities (including mortgage
pass-through securities and mortgage-derivative products) used for investment
purposes. Until October 1, 1998, federal credit unions will still be subject to
the FFIEC's now-superseded "Supervisory Policy Statement on Securities
Activities" dated January 28, 1992, as adopted by the NCUA with certain
modifications, which prohibited depository institutions from investing in
certain "high-risk mortgage securities," except under limited circumstances, and
set forth certain investment practices deemed to be unsuitable for regulated
institutions.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any class of the
Offered Bonds, as certain classes may be deemed to be unsuitable investments, or
may otherwise be restricted, under such rules, policies or guidelines (in
certain instances irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions which
may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying," and, with regard to any class of the Offered Bonds
issued in book-entry form, provisions which may restrict or prohibit investments
in securities which are issued in book-entry form identified in a Prospectus
Supplement for a Series.
Except as to the status of certain classes of Offered Bonds as "mortgage
related securities," no representations are made as to the proper
characterization of any class of Offered Bonds for legal investment purposes,
financial institution regulatory purposes, or other purposes, or as to the
ability of particular investors to purchase any class of Offered Bonds under
applicable legal investment restrictions. These uncertainties (and any
unfavorable future determinations concerning legal investment or financial
institution regulatory characteristics of the Offered Bonds) may adversely
affect the liquidity of any class of Offered Bonds.
Accordingly, all investors whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the Offered Bonds of any class constitute
legal investments or are subject to investment, capital or other restrictions
and, if applicable, whether SMMEA has been overridden in any jurisdiction
relevant to such investor.
PLAN OF DISTRIBUTION
The Offered Bonds offered hereby will be offered in Series. The payment of
the Bonds may be effected from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices to be determined at the time of sale or at the time of commitment
therefor. If so specified in the related Prospectus Supplement, the Offered
Bonds will be distributed in a firm commitment underwriting, subject to the
terms and conditions of the underwriting agreement, by an underwriter or
underwriters named therein. In such event, the Prospectus Supplement may also
specify that the underwriters will not be obligated to pay for any Offered Bonds
agreed to be purchased by purchasers pursuant to purchase agreements acceptable
to the Depositor. In connection with the sale of Offered Bonds, underwriters may
receive compensation from the Depositor or from purchasers of Offered Bonds in
the form of discounts, concessions or commissions.
Alternatively, the Prospectus Supplement may specify that Offered Bonds
will be distributed by an underwriter acting as agent or in some cases as
principal with respect to Offered Bonds that it has previously purchased or
agreed to purchase. If the underwriter acts as agent in the sale of Offered
Bonds, the underwriter will receive a selling commission with respect to such
Offered Bonds, depending on market conditions, expressed as a percentage of the
aggregate Bond Principal Amount or notional amount of such Offered Bonds as of
the Cut-off Date. The exact percentage for each Series of Bonds will be
disclosed in the related Prospectus Supplement. To the extent that the
underwriter elects to purchase Offered Bonds as principal, the underwriter may
realize losses or profits based upon the difference between its purchase price
and the sales price. The Prospectus Supplement with respect to any Series
offered other than through underwriters will contain information regarding the
nature of such offering and any agreements to be entered into between the
Depositor and purchasers of Offered Bonds of such Series.
The Depositor will indemnify any underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, or will
contribute to payments any underwriters may be required to make in respect
thereof.
In the ordinary course of business, the Depositor and any such underwriter,
agent or purchaser may engage in various securities and financing transactions,
including secured borrowings, off-balance sheet swaps or repurchase agreements
to provide interim financing of the Depositor's mortgage loans pending the sale
of such mortgage loans or interests therein, including the Bonds.
Offered Bonds will be sold primarily to institutional investors. Purchasers
of Offered Bonds, including dealers, may, depending on the facts and
circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the Securities Act of 1933 in connection with reoffers and sales by
them of Offered Bonds. Bondholders should consult with their legal advisors in
this regard prior to any such reoffer or sale.
LEGAL MATTERS
The validity of the Bonds and certain federal income tax consequences of
investing in the Bonds will be passed upon for the Depositor by Cadwalader,
Wickersham & Taft, New York, New York.
FINANCIAL INFORMATION
A new Issuer will be formed with respect to each Series of Bonds and no
Issuer will engage in any business activities or have any assets or obligations
prior to the issuance of the related Series of Bonds. Accordingly, no financial
statements with respect to any Issuer will be included in this Prospectus or in
the related Prospectus Supplement.
RATING
It is a condition to the issuance of any class of Offered Bonds that they
shall have been rated not lower than investment grade, that is, in one of the
four highest rating categories, by a Rating Agency.
Ratings on mortgage-backed securities address the likelihood of receipt by
Bondholders of all payments on the underlying mortgage loans. These ratings
address the structural, legal and issuer-related aspects associated with such
securities, the nature of the underlying mortgage loans and the credit quality
of the guarantor, if any. Ratings on mortgage-backed securities do not represent
any assessment of the likelihood of principal prepayments by Mortgagors or of
the degree by which such prepayments might differ from those originally
anticipated. As a result, Bondholders might suffer a lower than anticipated
yield, and, in addition, holders of Interest Only Bonds in extreme cases might
fail to recoup their initial investments.
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.
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
Page on which
term is first defined
Term in the Prospectus
--1--
1998 Policy Statement...........................................................
--A--
Accounts........................................................................
accreted value..................................................................
Accrual Bonds...................................................................
Accrued Bond Interest...........................................................
ACMs............................................................................
ADA.............................................................................
Administration Agreement........................................................
Administrator...................................................................
Agreements......................................................................
ARM Loans.......................................................................
Asset Conservation Act..........................................................
Asset Seller....................................................................
Available Payment Amount........................................................
--B--
Balloon Payment Loans...........................................................
Bankruptcy Code.................................................................
Beneficial Owners...............................................................
Bond............................................................................
Bond Principal Amount...........................................................
Bondholder......................................................................
Bondholders.....................................................................
Bonds...........................................................................
Book-Entry Bonds................................................................
--C--
Cash Flow Agreements............................................................
Cede............................................................................
CERCLA..........................................................................
Code............................................................................
Collateral......................................................................
Commercial Loans................................................................
Commercial Properties...........................................................
Commission......................................................................
Covered Trust...................................................................
CPR.............................................................................
Credit Support..................................................................
Crime Control Act...............................................................
Cut-off Date....................................................................
--D--
Debt Service Coverage Ratio.....................................................
Definitive Bonds................................................................
Deposit Trust Agreement.........................................................
Depositor.......................................................................
Determination Date..............................................................
Disqualified Persons............................................................
Disqualifying Condition.........................................................
DTC.............................................................................
Due Period......................................................................
--E--
Environmental Condition.........................................................
Environmental Hazard Condition..................................................
environmental lien..............................................................
Equity Participations...........................................................
ERISA...........................................................................
Exchange Act....................................................................
--F--
FDIC............................................................................
FFIEC...........................................................................
--H--
Hazardous Materials.............................................................
--I--
ICCMIC..........................................................................
Indenture.......................................................................
Indenture Trustee...............................................................
Indirect Participants...........................................................
Insurance Proceeds..............................................................
Interest Only Bonds.............................................................
Issuer..........................................................................
Issuer Event of Default.........................................................
--L--
L/C Bank........................................................................
Lease...........................................................................
Lease Assignment................................................................
Lessee..........................................................................
Liquidation Proceeds............................................................
Loan-to-Value Ratio.............................................................
Lock-out Date...................................................................
Lock-out Period.................................................................
--M--
Master Servicer.................................................................
Mortgage Interest Rate..........................................................
Mortgage Loans..................................................................
Mortgage Notes..................................................................
Mortgages.......................................................................
Mortgagor.......................................................................
Multifamily Loans...............................................................
Multifamily Properties..........................................................
--N--
NCUA............................................................................
Net Operating Income............................................................
Nonrecoverable Advance..........................................................
Non-SMMEA Bonds.................................................................
Notice of Default...............................................................
--O--
OCC.............................................................................
Offered Bonds...................................................................
OID Regulations.................................................................
original issue discount.........................................................
Originator......................................................................
Owner Trust.....................................................................
Owner Trustee...................................................................
--P--
Participants....................................................................
Parties in Interest.............................................................
Payment Account.................................................................
Payment Date....................................................................
Permitted Investments...........................................................
Plan............................................................................
Prepayment Assumption...........................................................
Prepayment Premium..............................................................
Principal Only Bonds............................................................
Proceeding......................................................................
Purchase Price..................................................................
--R--
Random Lot Bonds................................................................
Rating Agency...................................................................
RCRA............................................................................
Record Date.....................................................................
Redemption Price................................................................
Refinance Loans.................................................................
REIT............................................................................
Related Proceeds................................................................
Release Price...................................................................
Relief Act......................................................................
REO Proceeds....................................................................
REO Property....................................................................
Retained Interest...............................................................
RICO............................................................................
--S--
Senior Bonds....................................................................
Series..........................................................................
Service.........................................................................
Servicer........................................................................
Servicer Event of Default.......................................................
Servicing Standard..............................................................
Servicing Transfer Event........................................................
SMMEA...........................................................................
Special Redemption Date.........................................................
Special Servicer................................................................
Specially Serviced Mortgage Loan................................................
Stated Maturity.................................................................
Subordinate Bonds...............................................................
--T--
TIA.............................................................................
Title V.........................................................................
TMP.............................................................................
Trust Assets....................................................................
--U--
U.S. Person.....................................................................
UCC.............................................................................
--V--
Value...........................................................................
Voting Rights...................................................................
--W--
Warranting Party................................................................
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement and the prospectus to which it relates
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED AUGUST __, 1998
PROSPECTUS SUPPLEMENT
(To Prospectus dated _________, 199__)
$
(Approximate)
ICCMAC Commercial Trust [___]
(Issuer)
Collateralized Mortgage Bonds
Series 199__-____
ICCMAC Commercial Trust [____] (the "Issuer"), a trust established by
Imperial Credit Commercial Mortgage Acceptance Corp. (the "Depositor"), is
issuing approximately $_____________ aggregate Bond Principal Amount (as defined
in the accompanying Prospectus) of its Series 199_- ____ Collateralized Mortgage
Bonds (the "Bonds"). The Bonds will consist of [seven] classes (each, a "Class")
to be designated as: (i) [the Class A-1 and Class A-2 Bonds (collectively, the
"Class A Bonds" or the "Senior Bonds")]; and (ii) [the Class B, Class C, Class
D, Class E and Class F Bonds (collectively, the "Subordinate Bonds")]. Only the
[Class A, Class B, Class C and Class D Bonds] (collectively, the "Offered
Bonds") are offered hereby. The respective Classes of Offered Bonds will be
issued in the aggregate Bond Principal Amounts, and will accrue interest at the
rate (the "Bond Interest Rate"), set forth in the table below. (Continued on
page S-2)
<TABLE>
<S> <C> <C> <C> <C> <C>
Initial Rating
Class of Series 199_ Aggregate Bond ([identify
Collateralized Mortgage Principal Bond Stated Assumed Final Rating
Bonds Amount(a) Interest Rate Maturity Payment Date(b) Agencies])(c)(d)
- --------------------------- ------------------ ----------------- ------------ ------------------- --------------------
Class A-1............... $ %
Class A-2............... $ %
Class B................. $ %
Class C................. $ %
Class D................. $ %
- --------------------------------
</TABLE>
(a) The initial aggregate Bond Principal Amount of each Class of Offered Bonds
is subject to a permitted variance of plus or minus __%.
(b) The "Assumed Final Payment Date" with respect to any Class of Bonds is the
Payment Date (as defined herein) on which the final payment would occur for
such Class of Bonds based upon the assumption that no Mortgage Loan is
prepaid prior to its stated maturity and otherwise based on the Modeling
Assumptions (as described herein). The actual performance and experience of
the Mortgage Loans will likely differ from such assumptions. See "Yield and
Maturity Considerations" herein.
(c) It is a condition to their issuance that the respective Classes of Offered
Bonds be assigned ratings by _________________ ("_____") and/or
________________________ ("________"; and together with ________, the
"Rating Agencies") no less than those set forth above. The ratings on the
Offered Bonds address the timely payment thereon of interest and the
ultimate payment thereon of principal on or before Stated Maturity. See
"Ratings" herein.
(d) The ratings on the Offered Bonds do not represent any assessment of (i) the
likelihood or frequency of principal prepayments on the Mortgage Loans,
(ii) the degree to which such prepayments might differ from those
originally anticipated or (iii) whether and to what extent Prepayment
Premiums (as defined herein) will be received. Also a security rating does
not represent any assessment of the yield to maturity that investors may
experience. See "Ratings" herein.
FOR A DISCUSSION OF MATERIAL RISKS TO BE CONSIDERED IN PURCHASING THE OFFERED
BONDS, SEE "RISK FACTORS" BEGINNING ON PAGE __ HEREIN AND ON PAGE __ IN THE
PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE ATTORNEY GENERAL OF
THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
- --------------------------------------------------------------------------------
The Offered Bonds will be purchased from the [Issuer] by ________________
(the "Underwriter") and will be offered by the Underwriter from time to time in
negotiated transactions or otherwise at varying prices to be determined at the
time of sale. Proceeds to the [Issuer] from the sale of the Offered Bonds,
before deducting expenses payable by the [Issuer] estimated to be approximately
$_____________, will be ______% of the initial aggregate Bond Principal Amount
of the Offered Bonds [, plus accrued interest on the Offered Bonds from
____________, 199_]. The Offered Bonds are offered by the Underwriter subject to
prior sale, when, as and if delivered to and accepted by the Underwriter and
subject to certain other conditions. It is expected that the Offered Bonds will
be delivered in book-entry form through the Same-Day Funds Settlement System of
DTC on or about _____________, 199__ (the "Closing Date"), against payment
therefor in immediately available funds.
[Underwriter]
The date of this Prospectus Supplement is __________ , 199__.
<PAGE>
(Continued from cover page)
See "Index of Principal Definitions" herein for the location of meanings of
capitalized terms used and defined herein. See "Index of Principal Definitions"
in the accompanying Prospectus for the location of meanings of capitalized terms
used but not defined herein.
There is currently no secondary market for the Offered Bonds. The
Underwriter intends to make a secondary market in the Offered Bonds, but is not
obligated to do so. There can be no assurance that a secondary market for the
Offered Bonds will develop or, if one does develop, that it will continue. See
"Risk Factors-Limited Liquidity" herein. The Offered Bonds will not be listed on
any securities exchange.
The Bonds will be secured by a pledge of collateral (the "Collateral")
which consists primarily of a segregated pool (the "Mortgage Pool") of
approximately ___ [describe general characteristics of Mortgage Loans] mortgage
loans (the "Mortgage Loans"). As of ______________, 199_ (the "Cut-off Date"),
the Mortgage Loans had an aggregate principal balance, after taking into account
all payments of principal due on or before such date, whether or not received,
of $___________ (the "Initial Pool Balance")[, subject to a permitted variance
of plus or minus __%.]
The Bonds will be issued pursuant to an Indenture to be dated as of
___________, 199_ (the "Indenture"), between _______________________ as owner
trustee (the "Owner Trustee"), on behalf of the Issuer, and
__________________________ as indenture trustee (the "Trustee"), on behalf of
the holders of the Bonds (the "Bondholders"). Certain duties and obligations of
the Issuer under the Indenture will be performed on behalf of the Issuer by
________________________ (the "Administrator") in accordance with an
Administration Agreement, to be dated as of ____________, 199_ (the
"Administration Agreement"), between the Owner Trustee, on behalf of the Issuer,
and the Administrator.
Payments of interest on and principal of the Bonds will be made to holders
thereof, to the extent of available funds, on the ___ day of each month or, if
any such day is not a business day, then on the next succeeding business day,
commencing in ______________ 199_ (each, a "Payment Date"). As and to the extent
described herein, payments of interest accrued on each Class of Bonds will be
made on each Payment Date based on the Bond Interest Rate applicable to such
Class and the aggregate Bond Principal Amount of such Class outstanding
immediately prior to such Payment Date. To the extent there are deficiencies in
the interest payment on a Class of Bonds on any Payment Date, such deficiencies
will be deferred to succeeding Payment Dates. Principal payments on the Bonds
will be made on each Payment Date to the extent funds are available therefor in
the amounts and in accordance with the priorities described herein. See
"Description of the Bonds--Payments on the Bonds" herein.
As and to the extent set forth herein, the Issuer's Equity (as defined
herein) and the Class E and Class F Bonds (collectively, the "Private Bonds")
will be subordinate to the Offered Bonds; the Class D Bonds will be subordinate
to the Class A, Class B and Class C Bonds; the Class C Bonds will be subordinate
to the Class A and Class B Bonds; and the Class B Bonds will be subordinate to
the Class A Bonds. See "Description of the Bonds--Payments on the Bonds" and
"--Subordination" herein.
The yield to maturity of each Class of Offered Bonds will depend on, among
other things, the rate and timing of principal payments (including by reason of
prepayments, loan extensions, defaults and liquidations) and losses on the
Mortgage Loans. See "Risk Factors" and "Yield and Maturity Considerations"
herein.
No election will be made to treat the Issuer, any of its assets or the
arrangement by which the Bonds are issued as a "real estate mortgage investment
conduit" (a "REMIC") for federal income tax purposes. See "Federal Income Tax
Consequences" herein.
THE OFFERED BONDS REPRESENT NON-RECOURSE OBLIGATIONS OF THE ISSUER AND WILL
BE PAID SOLELY FROM THE COLLATERAL SECURING THE OFFERED BONDS. NEITHER THE
OFFERED BONDS NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY OTHER PERSON. ACCORDINGLY, IF
THE COLLATERAL IS INSUFFICIENT TO PROVIDE PAYMENTS ON THE OFFERED BONDS, NO
OTHER ASSETS WILL BE AVAILABLE FOR PAYMENT OF THE DEFICIENCY. PROSPECTIVE
INVESTORS SHOULD MAKE AN INVESTMENT DECISION BASED UPON AN ANALYSIS OF THE
SUFFICIENCY OF THE MORTGAGE LOANS TO MAKE PAYMENTS ON THE OFFERED BONDS.
THE BONDS OFFERED BY THIS PROSPECTUS SUPPLEMENT CONSTITUTE PART OF A
SEPARATE SERIES OF SECURITIES ISSUED BY THE ISSUER AND ARE BEING OFFERED
PURSUANT TO ITS PROSPECTUS DATED _____________, 199__ (THE "PROSPECTUS"), OF
WHICH THIS PROSPECTUS SUPPLEMENT IS A PART AND WHICH ACCOMPANIES THIS PROSPECTUS
SUPPLEMENT. THE PROSPECTUS CONTAINS IMPORTANT INFORMATION REGARDING THIS
OFFERING THAT IS NOT CONTAINED HEREIN, AND PROSPECTIVE INVESTORS ARE URGED TO
READ THE PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT IN FULL. SALES OF THE OFFERED
BONDS MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
FORWARD LOOKING STATEMENTS
IF AND WHEN INCLUDED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS OR IN THE DOCUMENTS INCORPORATED HEREIN OR THEREIN BY REFERENCE, THE
WORDS "EXPECTS," "INTENDS." "ANTICIPATES," "ESTIMATES," AND ANALOGOUS
EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. ANY SUCH
STATEMENTS, WHICH MAY INCLUDE STATEMENTS CONTAINED IN "RISK FACTORS" INHERENTLY
ARE SUBJECT OT A VARIETY OF RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED. SUCH RISKS AND UNCERTAINTIES
INCLUDE, AMONG OTHERS, GENERAL ECONOMIC AND BUSINESS CONDITIONS, COMPETITION,
CHANGES IN FOREIGN POLITICAL, SOCIAL AND ECONOMIC CONDITIONS, REGULATORY
INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, CUSTOMER PREFERENCES
AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE DEPOSITOR'S CONTROL.
THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS PROSPECTUS
SUPPLEMENT. THE DEPOSITOR EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO
RELEASE PUBLICLY ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS
CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE DEPOSITOR'S EXPECTATIONS WITH
REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY
SUCH STATEMENT IS BASED.
UNTIL ________________, 199_, ALL DEALERS EFFECTING TRANSACTIONS IN THE
OFFERED BONDS, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND THE PROSPECTUS TO WHICH IT
RELATES. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS
TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY OF PROSPECTUS SUPPLEMENT................................................
RISK FACTORS....................................................................
Certain Yield and Maturity Considerations...................................
Effect of Mortgagor Delinquencies and Defaults..............................
[Optional Redemption of Bonds...............................................
Subordination of Subordinated Bonds.........................................
Risks Associated with Certain of the Mortgage Loans and
Mortgaged Properties....................................................
[Risks Associated with Hotel Properties.....................................
[Risks Associated with Nursing Homes........................................
Limited Recourse Nature of Mortgage Loans; Recourse Generally Limited
to Mortgaged Property...................................................
Risks Associated with Concentration of Mortgage Loans.......................
Risks of Different Timing of Mortgage Loan Amortization.....................
Risks Associated with Geographic Concentration..............................
Increased Risk of Default Associated with Adjustable Rate Mortgage Loans....
Increased Risk of Default Associated with Balloon Payments..................
Extension Risk Associated With Modification of Mortgage Loans
with Balloon Payments...................................................
[Inclusion of Delinquent, Under-Performing and
Non-Performing Mortgage Loans...........................................
Potential Liability to the Trust Estate Relating to a
Materially Adverse Environmental Condition..............................
Risks Associated with Litigation............................................
Risks Associated with Other Financings......................................
[Risks Associated with Ground Leases and Other Leasehold Interests..........
Attornment Considerations...................................................
Limited Rights for Breaches of Representations and Warranties...............
[Liquor License Considerations..............................................
Conflicts Between the Special Servicer and the Depositor....................
Limited Liquidity...........................................................
Limited Assets for Payment of Offered Bonds.................................
Limited Issuer Events of Default............................................
Risks Relating to Lack of Bondholder Control Over Trust Estate..............
DESCRIPTION OF THE MORTGAGE POOL................................................
General.....................................................................
Representations and Warranties; Repurchases.................................
[Convertible Mortgage Loans.................................................
[Hybrid Rate Mortgage Loans.................................................
[The [Index] [Indices]......................................................
Certain Characteristics of the Mortgage Loans...............................
Geographic Distribution.....................................................
Borrower Concentration......................................................
Related Borrowers...........................................................
Escrows.....................................................................
Underwriting Guidelines.....................................................
Additional Information......................................................
SERVICING OF THE MORTGAGE LOANS.................................................
[Description of Master Servicer and Special Servicer to be provided
by Master Servicer].....................................................
Responsibilities of Master Servicer.........................................
Responsibilities of Special Servicer........................................
[Extension Advisor..........................................................
Servicing and Other Compensation and Payment of Expenses....................
Conflicts of Interest.......................................................
DESCRIPTION OF THE BONDS........................................................
General.....................................................................
Registration and Denominations..............................................
Payments on the Bonds.......................................................
General.................................................................
Funds Available for Payments on the Bonds...............................
Priority of Payments....................................................
Accrued Bond Interest...................................................
Principal Payment Amount................................................
[Yield Maintenance Amount...............................................
Treatment of REO Properties.............................................
Subordination...............................................................
Advances....................................................................
Reports to Bondholders; Certain Available Information.......................
[Trustee Reports; Special Servicer Reports..............................
Other Information.......................................................
Voting Rights...............................................................
The Trustee.................................................................
[Optional Redemption].......................................................
Additional Information......................................................
THE ISSUER......................................................................
THE OWNER TRUSTEE...............................................................
THE ADMINISTRATOR...............................................................
YIELD AND MATURITY CONSIDERATIONS...............................................
Yield Considerations........................................................
General.................................................................
Rate and Timing of Principal Payments...................................
Losses and Shortfalls...................................................
Certain Relevant Factors................................................
Unpaid Accrued Bond Interest............................................
Weighted Average Life.......................................................
FEDERAL INCOME TAX CONSEQUENCES.................................................
General.....................................................................
Status as Real Property Loans...............................................
Discount and Premium........................................................
Backup Withholding and Information Reporting................................
CERTAIN ERISA CONSIDERATIONS....................................................
LEGAL INVESTMENT................................................................
METHOD OF DISTRIBUTION..........................................................
LEGAL MATTERS...................................................................
RATINGS.........................................................................
INDEX OF PRINCIPAL DEFINITIONS..................................................
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Certain capitalized terms that are used in this
Summary may be defined elsewhere in this Prospectus Supplement or in the
Prospectus. An Index of Principal Definitions is included at the end of both
this Prospectus Supplement and the Prospectus. Terms that are used but not
defined in this Prospectus Supplement will have the meanings specified in the
Prospectus.
Issuer........................... ICCMAC Commercial Trust [____] (the "Issuer")
is a trust established under the laws of the
State of _________ by Imperial Credit
Commercial Mortgage Acceptance Corp. (the
"Depositor"), a California corporation,
pursuant to a Deposit Trust Agreement, to be
dated as of __________, 199_ (the "Deposit
Trust Agreement"), between the Depositor and
____________________ as owner trustee (the
"Owner Trustee"). The Depositor, is a [direct
wholly-owned subsidiary] of Imperial Credit
Commercial Mortgage Investment Corp.
("ICCMIC") The Depositor initially will own
100% of the beneficial interests in the
Issuer, but may transfer a portion of such
beneficial interests to an affiliate. None of
the Depositor, ICCMIC, or any affiliate of
either of them has guaranteed or insured the
Offered Bonds or the Mortgage Loans.
The Owner Trustee maintains its principal
corporate trust office at
________________________________, telephone
(___) ___________. See "The Issuer" and "The
Owner Trustee" herein and "The Depositor" in
the Prospectus.
Bonds............................ The Issuer is issuing approximately
$__________ aggregate Bond Principal Amount
of its Series 199_-____ Collateralized
Mortgage Bonds (the "Bonds"). The Bonds will
be issued on the Closing Date in [seven]
classes (each, a "Class") to be designated
as: [(i) the Class A-1 and Class A-2 Bonds
(collectively, the "Class A Bonds" or the
"Senior Bonds"); (ii) the Class B, Class C
and Class D Bonds (collectively with the
Class A Bonds, the "Offered Bonds"); and
(iii) the Class E and Class F Bonds
(collectively, the "Private Bonds"; and
collectively with the Class B, Class C and
Class D Bonds, the "Subordinate Bonds")].
Only the Offered Bonds are offered hereby.
The Private Bonds have not and will not be
registered under the Securities Act of 1933,
as amended (the "Securities Act") and are not
offered hereby. The Private Bonds will
initially be issued to and held by one or
more affiliates of the Issuer and are not
offered hereby. To the extent this Prospectus
Supplement contains information regarding the
Private Bonds, such information is provided
because of its potential relevance to a
prospective purchaser of an Offered Bond.
The Bonds will be issued pursuant to an
Indenture, to be dated as of _________, 199_
(the "Indenture"), between the Owner Trustee,
on behalf of the Issuer, and the Trustee, on
behalf of the holders of the Bonds (the
"Bondholders").
The Bonds will be non-recourse obligations of
the Issuer. The Bonds are not insured or
guaranteed by any governmental agency or
instrumentality or by any other person. The
respective Classes of Bonds will be issued in
the initial aggregate Bond Principal Amount
(in each case, subject to a variance of plus
or minus __%), and will accrue interest at
the Bond Interest Rates, set forth below:
Initial Aggregate Bond
Bond Principal Interest
Class Amount Rate
------------- ----------------- -----------
[Class A-1] $ %
[Class A-2] $ %
[Class B] $ %
[Class C] $ %
[Class D] $ %
[Class E] $ %
[Class F] $ %
The "Issuer's Equity" represents the right of
the Issuer or its designee (i) to receive all
payments on and proceeds of the Collateral
not otherwise allocable to pay interest,
principal and other amounts on the Bonds in
accordance with their terms or expenses of
the Trust Estate (as defined herein) and (ii)
to have the remaining Collateral returned to
it after the Indenture is satisfied and
discharged. The principal amount of the
Issuer's Equity as of any date of
determination is the amount (the
"Overcollateralization Amount"), if any, by
which the then aggregate Stated Principal
Balance (as defined herein) of the Mortgage
Pool (initially equal to the Initial Pool
Balance) exceeds the then aggregate Bond
Principal Amount of all the Bonds. As of the
Closing Date, the Overcollateralization
Amount will equal approximately
$______________.
Trustee.......................... _________________________, a ______________.
See "Description of the Bonds--The Trustee"
herein.
Administrator.................... _______________________________ (the
"Administrator") will perform certain
functions as agent on behalf of the Issuer
pursuant to an Administration Agreement, to
be dated as of ____________, 199_ (the
"Administration Agreement"), between the
Administrator and the Owner Trustee, on
behalf of the Issuer.
Master Servicer.................. _______________________, a ________
corporation ("_____"). See "Servicing--The
Master Servicer" herein.
Special Servicer................. _____ (which serves as Master Servicer) will
be the Special Servicer with respect to all
the Mortgage Loans. The Special Servicer may
be removed without cause under certain
circumstances described herein under
"Servicing--Responsibilities of Special
Servicer."
Mortgage Loan Seller............. ____________________ (the "Mortgage Loan
Seller"). See "Description of the Mortgage
Pool--General" herein.
Cut-off Date..................... ___________, 199_.
Closing Date..................... On or about ___________, 199_.
Accrual Date..................... ____________, 199_, the date as of which
interest begins to accrue on the Bonds.
Payment Date..................... The ___ day of each month or, if any such ___
day is not a business day, then the next
succeeding business day, commencing in
________, 199_.
Collection Period................ As to any Payment Date, the period commencing
immediately following the Determination Date
in the month immediately preceding the month
in which such Payment Date occurs (or, in the
case of the initial Payment Date, commencing
immediately following the Cut-off Date) and
ending on and including the related
Determination Date.
Determination Date............... As to any Payment Date, the __ day of the
month in which such Payment Date occurs, or
if such __ day is not a business day, the
immediately preceding business day.
Record Date...................... As to any Payment Date, the last business day
of the month immediately preceding the month
in which such Payment Date occurs.
Interest Accrual Period.......... As to any Payment Date, the calendar month
preceding the month in which such Payment
Date occurs.
Book-Entry Registration.......... Each Class of Offered Bonds will initially be
issued in book-entry form through the
facilities of DTC and, accordingly, will
constitute "Book-Entry Bonds" within the
meaning of the Prospectus. No person
acquiring an interest in a Book-Entry Bond
(any such person, a "Bond Owner") will be
entitled to receive a fully registered
physical security (a "Definitive Bond")
evidencing such interest, except under the
limited circumstances described in the
Prospectus. See "Risk Factors-- Owners of
Book-Entry Bonds Not Entitled to Exercise
Rights of Holders of Bonds" in the Prospectus
and "Description of the Bonds--Registration
and Denominations" herein and "Description of
the Bonds--Book-Entry Registration and
Definitive Bonds" in the Prospectus.
Denominations.................... The Offered Bonds will each be issued in
minimum denominations of $________ initial
Bond Principal Amount and in any whole dollar
in excess thereof.
Security for the Bonds........... The Bonds will be secured by a pledge of the
Trust Estate. The "Trust Estate" will consist
of all rights, money, instruments, securities
and other property, including all proceeds
thereof, which are subject to, or intended to
be subject to, the lien of the Indenture for
the benefit of the Bondholders, including
without limitation the Collateral. The
"Collateral" will consist of the Mortgage
Loans, any REO Properties (as defined herein)
acquired in respect thereof and the
Collection Account. See, "Description of the
Mortgage Pool" herein and "Description of the
Agreements--Accounts" in the Prospectus.
A. The Mortgage Pool............ The Mortgage Pool will consist of [fixed
rate] [floating rate] [partially
fixed-partially floating rate] Mortgage Loans
evidenced by a note or bond (a "Mortgage
Note") secured by first liens on [multifamily
properties] [office buildings] [retail stores
and establishments] [hotels or motels]
[nursing homes] [assisted living facilities]
[continuum care facilities] [day care
centers] [schools] [hospitals or other
healthcare related facilities] [industrial
properties] [warehouse facilities]
[mini-warehouse facilities] [self-storage
facilities] [distribution centers]
[transportation centers] [parking facilities]
[entertainment and/or recreation facilities]
[mobile home parks] [mixed use (including
mixed commercial uses and mixed commercial
and residential uses)] and/or [unimproved
land] (the "Mortgaged Properties") located in
__ different states. [The Mortgage Pool will
also include undivided ownership interests in
Mortgage Loans secured by the Mortgaged
Properties.] The Mortgage Loans will have an
aggregate principal balance as of the Cut-off
Date of $_________ [, subject to a permitted
variance of plus or minus __%] (the "Initial
Pool Balance"). The Mortgage Loans will have
terms to maturity from the date of
origination or modification of not more than
____ years, and a weighted average remaining
term to maturity of approximately _____
months as of the Cut-off Date. The Mortgage
Loans will bear interest at Mortgage Rates of
at least _____% per annum but not more than
_____% per annum, with a weighted average
Mortgage Rate of approximately ____% per
annum as of the Cut-off Date. On or prior to
the Closing Date, the Depositor will acquire
the Mortgage Loans from the Mortgage Loan
Seller pursuant to a Mortgage Loan Purchase
Agreement dated as of __________ (the
"Mortgage Loan Purchase Agreement") between
the Depositor and the Mortgage Loan Seller.
In the Mortgage Loan Purchase Agreement, the
Mortgage Loan Seller has made certain
representations and warranties to the
Depositor regarding the characteristics and
quality of the Mortgage Loans and, as more
particularly described herein, has agreed to
cure any material breach thereof or
repurchase the affected Mortgage Loan. In
connection with the creation of, and the
assignment of its interests in the Mortgage
Loans to the Issuer, the Depositor will also
assign its rights under the Mortgage Loan
Purchase Agreement insofar as they relate to
or arise out of the Mortgage Loan Seller's
representations and warranties regarding the
Mortgage Loans. The Issuer will, in turn,
pledge such rights under the Mortgage Loan
Purchase Agreement so assigned to it as part
of the Trust Estate to secure the Bonds. See
"Description of the Mortgage
Pool--Representations and Warranties;
Repurchases" herein.
[_____ of the Mortgage Loans, representing
_____% of the Mortgage Loans by aggregate
principal balance as of the Cut-off Date,
provide for scheduled payments of principal
and/or interest ("Monthly Payments") to be
due on the _____ day of each month; the
remainder of the Mortgage Loans provide for
Monthly Payments to be due on the __, __ or
__ day of each month (the date in any month
on which a Monthly Payment on a Mortgage Loan
is first due, the "Due Date"). [The rate per
annum at which interest accrues on each
Mortgage Loan (each such Mortgage Loan, an
"ARM Loan") is subject to adjustment on
specified Due Dates (each such date, an
"Interest Rate Adjustment Date") by adding a
fixed percentage amount (a "Gross Margin") to
the value of the then-applicable Index (as
described below) subject, in the case of
substantially all of the Mortgage Loans, to
maximum and minimum lifetime Mortgage Rates
as described herein. ___ of the Mortgage
Loans, representing ___% of the Mortgage
Loans by aggregate principal balance as of
the Cut-off Date, provide for Interest Rate
Adjustment Dates to occur [monthly]; the
remainder of the Mortgage Loans provide for
adjustments to the Mortgage Rate to occur
quarterly, semi-annually or annually. [Each
of the Mortgage Loans provides for an initial
fixed interest rate period;] _________ of the
Mortgage Loans, representing _____% of the
Mortgage Loans by aggregate principal balance
as of the Cut-off Date, have not yet
experienced their first Interest Rate
Adjustment Date. The latest initial Interest
Rate Adjustment Date for any Mortgage Loan is
scheduled to occur on ________.]]
[The amount of the Monthly Payment on each
Mortgage Loan is also subject to adjustment
on specified Due Dates (each such date, a
"Payment Adjustment Date") to an amount that
would amortize the outstanding principal
balance of the Mortgage Loan over its then
remaining amortization schedule and pay
interest at the applicable Mortgage Rate,
[without affecting the amount of the
originally scheduled monthly principal
payments] [subject, in the case of several
Mortgage Loans, to payment caps, which limit
the amount by which the Monthly Payment may
adjust on any Payment Adjustment Date as
described herein. _______ of the Mortgage
Loans, representing __% of the Mortgage Loans
(by aggregate principal balance as of the
Cut-off Date, provide for Payment Adjustment
Dates to occur annually, while the remainder
of the Mortgage Loans provide for adjustments
of the Monthly Payment to occur monthly,
quarterly or semi-annually.]
[Only in the case of _________ Mortgage
Loans, representing ____% of the Mortgage
Loans by aggregate principal balance as of
the Cut-off Date, does a Payment Adjustment
Date immediately follow each Interest Rate
Adjustment Date. As a result, and because the
application of payment caps may limit the
amount by which the Monthly Payments may
adjust in respect of certain Mortgage Loans,
the amount of a Monthly Payment may be more
or less than the amount necessary to amortize
the remaining principal balance of the
Mortgage Loan over its then remaining
amortization schedule and pay interest at the
then-applicable Mortgage Rate. Accordingly,
Mortgage Loans may be subject to slower
amortization (if the Monthly Payment due on a
Due Date is sufficient to pay interest
accrued to such Due Date at the
then-applicable Mortgage Rate but is not
sufficient to reduce principal in accordance
with the applicable amortization schedule),
to negative amortization (if interest accrued
to a Due Date at the applicable Mortgage Rate
is greater than the entire Monthly Payment
due on such Due Date) or to accelerated
amortization (if the Monthly Payment due on a
Due Date is greater than the amount necessary
to pay interest accrued to such Due Date at
the then-applicable Mortgage Rate and to
reduce principal in accordance with the
applicable amortization schedule).]
[__ Mortgage Loans, representing ____% of the
Mortgage Loans by aggregate principal balance
as of the Cut-off Date, permit negative
amortization. Substantially all of the
Mortgage Loans that permit negative
amortization contain provisions that limit
the extent to which the amount of their
respective original principal balances may be
exceeded as a result thereof.]
[___ of the Mortgage Loans (the "Balloon
Loans") provide for monthly payments of
principal based on amortization schedules
significantly longer than the remaining term
of such Mortgage Loans, thereby leaving
substantial outstanding principal amounts due
and payable (each such payment, a "Balloon
Payment") on their respective maturity dates,
unless prepaid prior thereto.]
For a further description of the Mortgage
Loans, see "Description of the Mortgage Pool"
herein.
As of any Interest Rate Adjustment Date, the
[Index] [Indices] used to determine the
Mortgage Rate on each Mortgage Loan will be
the ____________. See "Description of the
Mortgage Pool--The Index" herein.]
[Conversion of Mortgage Loans.... Approximately __% of the Mortgage Loans (by
aggregate principal balance as of the Cut-off
Date) (the "Convertible Mortgage Loans")
provide that, at the option of the related
mortgagor (the "Mortgagor"), the adjustable
interest rate on such Mortgage Loans may be
converted to a fixed interest rate, provided
that certain conditions have been satisfied.
Upon notification from a Mortgagor of such
Mortgagor's intent to convert from an
adjustable interest rate to a fixed interest
rate, and prior to the conversion of any such
Mortgage Loan, the related Warrantying Party
(as defined herein) will be obligated to
purchase the Converting Mortgage Loan (as
defined herein) at the Conversion Price (as
defined herein). [In the event of a failure
by a Subservicer to purchase a "Converting
Mortgage Loan"], the Master Servicer is
required to use its best efforts to purchase
such Converted Mortgage Loan (as defined
herein) from the Mortgage Pool at the
Conversion Price during the one-month period
following the date of conversion.] In the
event that neither the related Warrantying
Party nor the Master Servicer purchases a
Converting or Converted Mortgage Loan, the
Mortgage Pool will thereafter include both
fixed-rate and adjustable-rate Mortgage
Loans. See "Yield and Maturity
Considerations" herein.]
The Mortgage Loans will be serviced by the
Master Servicer and, under the circumstances
described herein, the Special Servicer
pursuant to the Servicing Agreement dated as
of _________, 199__ (the "Servicing
Agreement"), among the Owner Trustee on
behalf of the Issuer, the Trustee on behalf
of the Bondholders, the Master Servicer and
the Special Servicer. See "Servicing of the
Mortgage Loans" herein and "Description of
the Agreements--Collection and Other
Servicing Procedures" in the Prospectus.
B. The Collection Account....... All collections on or in respect of the
Mortgage Loans will be deposited in an
account (the "Collection Account") and, as
and to the extent described herein, will be
available for application to payments on the
Bonds on the related Payment Date and for
payment of certain related servicing and
administrative fees and expenses. See
"Description of the Agreements" in the
Prospectus.
Payments on the Bonds - General.. Payments will be made by or on behalf of the
Trustee on each Payment Date to the
Bondholders of record at the close of
business on the related Record Date; except
in the case of the final payment on any Class
of Bonds which will require presentation and
surrender of such Bonds. All payments made
with respect to any Class of Bonds will be
allocated pro rata among the outstanding
Bonds of such Class based on the respective
Bond Principal Amounts thereof.
Payments of Interest and
Principal on the Bonds........... [On each Payment Date, unless the Bonds have
been declared due and payable following an
event of default (as described in the
Prospectus under "Description of the
Agreements--Certain Terms of the Indenture")
and such declaration and its consequences
have not been rescinded and annulled, the
Available Payment Amount (as defined herein)
for such date, which will not include
Prepayment Premiums under such circumstances,
will be applied to make payments among the
respective Classes of Bondholders for the
following purposes and in the following order
of priority, in each case to the extent of
remaining funds:
(i) to the holders of the Class A Bonds
in respect of interest, pro rata
between the two Classes of Class A
Bondholders based on entitlement, up
to an amount equal to all Accrued
Bond Interest (as defined below) in
respect of each such Class of Bonds
for the related Interest Accrual
Period and, to the extent not
previously paid, for all prior
Interest Accrual Periods;
(ii) to the holders of the Class A Bonds
in respect of principal, allocable as
between the two Classes of Class A
Bondholders as described herein, up
to an amount equal to the lesser of
(a) the then aggregate Bond Principal
Amount of the Class A Bonds and (b)
the Principal Payment Amount (as
defined below) for such Payment Date;
(iii) to the holders of the Class B Bonds
in respect of interest, up to an
amount equal to all Accrued Bond
Interest in respect of such Class of
Bonds for the related Interest
Accrual Period and, to the extent not
previously paid, for all prior
Interest Accrual Periods;
(iv) after the aggregate Bond Principal
Amount of the Class A Bonds has been
reduced to zero, to the holders of
the Class B Bonds in respect of
principal, up to an amount equal to
the lesser of (a) the then aggregate
Bond Principal Amount of the Class B
Bonds and (b) the excess, if any, of
the Principal Payment Amount for such
Payment Date over any amounts paid on
such Payment Date in retirement of
the Class A Bonds pursuant to clause
(ii) above;
(v) to the holders of the Class C Bonds
in respect of interest, up to an
amount equal to all Accrued Bond
Interest in respect of such Class of
Bonds for the related Interest
Accrual Period and, to the extent not
previously paid, for all prior
Interest Accrual Periods;
(vi) after the aggregate Bond Principal
Amount of the Class A and Class B
Bonds has been reduced to zero, to
the holders of the Class C Bonds in
respect of principal, up to an amount
equal to the lesser of (a) the then
aggregate Bond Principal Amount of
the Class C Bonds and (b) the excess,
if any, of the Principal Payment
Amount for such Payment Date over any
amounts paid on such Payment Date in
retirement of the Class A and/or
Class B Bonds pursuant to clauses
(ii) and (iv) above;
(vii) to the holders of the Class D Bonds
in respect of interest, up to an
amount equal to all Accrued Bond
Interest in respect of such Class of
Bonds for the related Interest
Accrual Period and, to the extent not
previously paid, for all prior
Interest Accrual Periods;
(viii) after the aggregate Bond Principal
Amount of the Class A, Class B and
Class C Bonds has been reduced to
zero, to the holders of the Class D
Bonds in respect of principal, up to
an amount equal to the lesser of (a)
the then aggregate Bond Principal
Amount of the Class D Bonds and (b)
the excess, if any, of the Principal
Payment Amount for such Payment Date
over any amounts paid on such Payment
Date in retirement of the Class A,
Class B and/or Class C Bonds pursuant
to clauses (ii), (iv) and (vi) above;
(ix) to the holders of the Class E Bonds
in respect of interest, up to an
amount equal to all Accrued Bond
Interest in respect of such Class of
Bonds for the related Interest
Accrual Period and, to the extent not
previously paid, for all prior
Interest Accrual Periods;
(x) after the aggregate Bond Principal
Amount of the Class A, Class B, Class
C and Class D Bonds has been reduced
to zero, to the holders of the Class
E Bonds in respect of principal, up
to an amount equal to the lesser of
(a) the then aggregate Bond Principal
Amount of the Class E Bonds and (b)
the excess, if any, of the Principal
Payment Amount for such Payment Date
over any amounts paid on such Payment
Date in retirement of the Class A,
Class B, Class C and/or Class D Bonds
pursuant to clauses (ii), (iv), (vi)
and (viii) above;
(xi) to the holders of the Class F Bonds
in respect of interest, up to an
amount equal to all Accrued Bond
Interest in respect of such Class of
Bonds for the related Interest
Accrual Period and, to the extent not
previously paid, for all prior
Interest Accrual Periods;
(xii) after the aggregate Bond Principal
Amount of the Class A, Class B, Class
C, Class D and Class E Bonds has been
reduced to zero, to the holders of
the Class F Bonds in respect of
principal, up to an amount equal to
the lesser of (a) the then aggregate
Bond Principal Amount of the Class F
Bonds and (b) the excess, if any, of
the Principal Payment Amount for such
Payment Date over any amounts paid on
such Payment Date in retirement of
the Class A, Class B, Class C, Class
D and/or Class E Bonds pursuant to
clauses (ii), (iv), (vi), (viii) and
(x) above; and
(xiii) if, after giving effect to the
payments of principal on the Bonds
contemplated by clauses (ii), (iv),
(vi), (viii), (x) and (xii) above,
the aggregate Bond Principal Amount
of all the Bonds still exceeds the
aggregate Stated Principal Balance of
the Mortgage Pool that will be
outstanding immediately following
such Payment Date, then to the
holders of the Class A Bonds
(allocable as between the two Classes
of Class A Bondholders as described
herein), the Class B Bonds, the Class
C Bonds, the Class D Bonds, the Class
E Bonds and the Class F Bonds, in
that order, until (in the case of
each Class of Bonds on which payments
of principal are so made) such excess
(or the aggregate Bond Principal
Amount of such Class of Bonds) is
reduced to zero (whichever occurs
first).]
[Except under the limited circumstances
described herein, payments of principal on
the Class A Bonds as described above will be
paid, first, to the holders of the Class A-1
Bonds, until the aggregate Bond Principal
Amount of such Class of Bonds is reduced to
zero, and thereafter, to the holders of the
Class A-2 Bonds, until the aggregate Bond
Principal Amount of such Class of Bonds is
reduced to zero.]
[Any portion of the Available Payment Amount
for any Payment Date that is not applied to
make payments of interest and principal on
the Bonds as described above will be paid to
or at the direction of Issuer in respect of
the Issuer's Equity on such Payment Date.]
[The "Accrued Bond Interest" in respect of
any Class of Bonds for any Interest Accrual
Period will equal one month's interest at the
applicable Bond Interest Rate accrued on the
aggregate Bond Principal Amount of such Class
of Bonds outstanding immediately prior to the
related Payment Date. Accrued Bond Interest
will be calculated on the basis of a 360-day
year consisting of twelve 30-day months.]
[The "Principal Payment Amount" for any
Payment Date will, in general, equal the
aggregate of the following:
(a) the principal portions of all
Scheduled Payments (other than
Balloon Payments) and any Assumed
Scheduled Payments due or deemed due,
as the case may be, in respect of the
Mortgage Loans for their respective
Due Dates occurring during the
related Collection Period;
(b) all payments (including Principal
Prepayments and Balloon Payments) and
other collections (including
Liquidation Proceeds, Condemnation
Proceeds and Insurance Proceeds (each
as defined in the Prospectus)) that
were received on or in respect of the
Mortgage Loans during the related
Collection Period and that were
identified and applied by the Master
Servicer as recoveries of principal
thereof, in each case net of any
portion of such payment or other
collection that represents a recovery
of the principal portion of any
Scheduled Payment (other than a
Balloon Payment) due, or the
principal portion of any Assumed
Scheduled Payment deemed due, in
respect of the related Mortgage Loan
on a Due Date during or prior to the
related Collection Period and not
previously recovered; and
(c) if such Payment Date is subsequent to
the initial Payment Date, the excess,
if any, of (i) the Principal Payment
Amount for the immediately preceding
Payment Date, over (ii) the aggregate
payments of principal made in respect
of the Bonds on such immediately
preceding Payment Date.]
[The "Scheduled Payment" due in respect of
any Mortgage Loan on any related Due Date
will be the amount of the Monthly Payment
that is scheduled to be due in respect
thereof on such date in accordance with the
terms of such Mortgage Loan in effect on the
Closing Date, without regard to any waiver,
modification or amendment of such Mortgage
Loan subsequent to the Closing Date, and
assuming that each prior Scheduled Payment
has been made in a timely manner.]
[The "Assumed Scheduled Payment" is an amount
deemed due in respect of any Balloon Loan
that is delinquent in respect of its Balloon
Payment beyond the first Determination Date
that follows its original stated maturity
date. The Assumed Scheduled Payment deemed
due on any such Mortgage Loan on its original
stated maturity date and on each successive
Due Date that it remains or is deemed to
remain outstanding shall equal the Scheduled
Payment that would be due in respect thereof
on such date if the related Balloon Payment
had not come due but rather such Mortgage
Loan had continued to amortize in accordance
with such Mortgage Loan's amortization
schedule in effect as of the Closing Date.]
[Payments of Yield Maintenance
Amounts on the Bonds............. On each Payment Date, unless the Bonds have
been declared due and payable following an
Issuer Event of Default and such declaration
and its consequences have not been rescinded
and annulled, the aggregate of all Prepayment
Premiums that were received on the Mortgage
Loans during the related Collection Period
will be applied to make payments among the
respective Classes of Bondholders in
alphabetical order of Class designation (with
the Class A-1 and Class A-2 Bondholders
having a pari passu right to payment), in
each case, up to the related Yield
Maintenance Amount (if any) for their Bonds.
If and to the extent that the aggregate
Prepayment Premiums received on the Mortgage
Loans during any Collection Period exceed the
aggregate Yield Maintenance Amount in respect
of the Bonds for the related Payment Date,
then such excess will be paid on such Payment
Date to or at the direction of the Issuer in
respect of the Issuer's Equity. See
"Description of the Bonds--Payments on the
Bonds" herein.]
Subordination.................... [As and to the extent set forth herein, the
rights of the Issuer or its designee to
receive payments of amounts received on the
Mortgage Loans in respect of the Issuer's
Equity will be subordinated to the rights of
the Bondholders to receive such amounts in
respect of interest, principal and other
amounts due and owing on their Bonds from
time to time. In addition, as and to the
extent set forth herein, for purposes of
receiving payments of interest, principal and
other amounts due and owing thereon from time
to time out of collections on the Mortgage
Loans, the Private Bonds will be subordinate
to the Offered Bonds, the Class D Bonds will
be subordinate to the Class A, Class B and
Class C Bonds, the Class C Bonds will be
subordinate to the Class A and Class B Bonds,
and the Class B Bonds will be subordinate to
the Class A Bonds. See "Description of the
Bonds--Payments on the Bonds" and
"--Subordination" herein. Such subordination
will be accomplished by, among other things,
the application of the Available Payment
Amount on each Payment Date in the order
described above in this Summary under
"Payments of Interest and Principal on the
Bonds". Realized Losses (as defined herein),
Net Aggregate Prepayment Interest Shortfalls
(also as defined herein) and other shortfalls
in respect of the Mortgage Loans will, in
each case, be borne by the Issuer and the
holders of the Private Bonds (to the extent
of amounts otherwise payable in respect of
the Issuer's Equity and the Private Bonds,
respectively) prior to any such losses,
shortfalls and/or expenses being borne by the
holders of the Offered Bonds. If and to the
extent that Realized Losses, together with
any Net Aggregate Prepayment Interest
Shortfalls, exceed the sum of the initial
Overcollateralization Amount and the initial
aggregate Bond Principal Amount of the
Private Bonds, it is likely that the holders
of one or more Classes of Offered Bonds will
not receive the full Bond Principal Amount of
their Bonds. See "Description of the
Bonds--Subordination" herein.]
Treatment of REO Properties...... Notwithstanding that a Mortgaged Property
securing any Mortgage Loan may be acquired as
part of the Trust Estate through foreclosure,
deed in lieu of foreclosure or otherwise
(upon acquisition, an "REO Property"), such
Mortgage Loan will, for purposes of, among
other things, determining payments of
principal on the Bonds, as well as Servicing
Fees, Special Servicing Fees, and Trustee
Fees (each as defined herein), generally be
treated as having remained outstanding until
such REO Property is liquidated. In
connection therewith, operating revenues and
other proceeds derived from such REO Property
(exclusive of related operating costs,
including certain reimbursements payable to
the Master Servicer and/or Special Servicer
in connection with the operation and
disposition of such REO Property) will be
"applied" or treated by the Master Servicer
as principal, interest and other amounts
"due" on such Mortgage Loan; and, subject to
a recoverability determination as more fully
described herein (see "Description of the
Bonds--Advances"), each Servicer (as defined
below) will be required to make P&I Advances,
as described below, in respect of such
Mortgage Loan as if it had remained
outstanding.
P&I Advances..................... The Master Servicer and the Special Servicer
(each, a "Servicer") are required to make
advances ("P&I Advances") for delinquent
Monthly Payments on the Mortgage Loans,
subject to the limitations described herein.
None of the Servicers will be required to
advance the full amount of any Balloon
Payment not made by the related Mortgagor. To
the extent a Servicer is required to make a
P&I Advance on and after the Due Date for a
Balloon Payment, such P&I Advance shall not
exceed an amount equal to the monthly payment
calculated by the Special Servicer necessary
to fully amortize the related Mortgage Loan
over the period used for purposes of
calculating the scheduled monthly payments
thereon prior to the related Maturity Date.
As more fully described herein, each Servicer
making a P&I Advance (or any other advance)
will be entitled to reimbursement thereof and
interest thereon at the prime rate determined
in accordance with the Servicing Agreement to
the extent provided therein. See "Description
of the Bonds--Advances" herein and
"Description of the Bonds--Advances in
Respect of Delinquencies" in the Prospectus.
[Compensating Interest
Payments......................... To the extent of the aggregate of all
Servicing Fees and Prepayment Interest
Excesses paid to the Master Servicer as
servicing compensation for the related
Collection Period, the Master Servicer is
required to make a non-reimbursable payment
(a "Compensating Interest Payment") with
respect to each Payment Date to cover the
aggregate of any Prepayment Interest
Shortfalls incurred during such Collection
Period. A "Prepayment Interest Shortfall" is
a shortfall in the collection of a full
month's interest (net of related Servicing
Fees and Special Servicing Fees (as defined
herein), and without regard to any Prepayment
Premium actually collected) on any Mortgage
Loan by reason of a full or partial voluntary
principal prepayment being made and applied
to such Mortgage Loan prior to the related
Due Date in any Collection Period. A
"Prepayment Interest Excess" is a payment of
interest (net of related Servicing Fees and
Special Servicing Fees and exclusive of any
Prepayment Premium actually collected) made
in connection with any full or partial
prepayment of a Mortgage Loan being made and
applied to such Mortgage Loan after the
related Due Date in any Collection Period,
which payment of interest is intended to
cover the period from such Due Date to the
date of prepayment. The "Net Aggregate
Prepayment Interest Shortfall" for any
Payment Date will be the amount, if any, by
which (a) the aggregate of all Prepayment
Interest Shortfalls incurred during the
related Collection Period exceeds (b) any
Compensating Interest Payment made by the
Master Servicer with respect to such Payment
Date. See "Servicing of the Mortgage
Loans--Servicing and Other Compensation and
Payment of Expenses" herein.]
[Optional Redemption............. The Issuer may, at its option, redeem any
Class of Offered Bonds, in whole but not in
part, on any Payment Date, if the then
aggregate Bond Principal Amount of such Class
of Offered Bonds is less than __% of the
initial aggregate Bond Principal Amount
thereof and no Issuer Event of Default has
occurred and is continuing. Such redemption
will be at a price (calculated after taking
into account payments made on the Bonds out
of the Available Payment Amount for the
applicable Payment Date) equal to 100% of the
aggregate unpaid Bond Principal Amount of the
Bonds redeemed, plus accrued and unpaid
interest through the end of the related
Interest Accrual Period. Notice of any such
optional redemption must be mailed by the
Issuer or the Trustee at least __ days prior
to the date set for optional redemption. No
Yield Maintenance Amount will be payable in
connection with such optional redemption. See
"Description of the Bonds--Optional
Redemption" herein.]
Certain Investment
Considerations................... The yield on any Offered Bond will depend on
(a) the price at which such Bond is purchased
by an investor and (b) the rate, timing and
amount of payments on such Bond. The rate,
timing and amount of payments on any Offered
Bond will in turn depend on, among other
things, (i) the Bond Interest Rate for such
Bond, (ii) the rate and timing of principal
payments (including principal prepayments)
and other principal collections on the
Mortgage Loans, (iii) the rate, timing and
severity of Realized Losses and Net Aggregate
Prepayment Interest Shortfalls and (iv) the
priority of such Bond to receive payments.
The yield to maturity on any Offered Bond
purchased at a discount or premium will be
affected by the rate and timing of principal
payments thereon. Principal payments on the
Offered Bonds will, in turn, be affected by
payments and other collections of principal
on or in respect of the Mortgage Loans. An
investor should consider, in the case of any
Offered Bond purchased at a discount, the
risk that a slower than anticipated rate of
principal payments thereon could result in a
lower than anticipated yield and, in the case
of any Offered Bond purchased at a premium,
the risk that a faster than anticipated rate
of principal payments thereon could result in
a lower than anticipated yield. See "Yield
and Maturity Considerations" herein and in
the Prospectus. The full or partial, as
applicable, allocation of Prepayment Premiums
actually collected on the Mortgage Loans to
make payments to the holders of any
particular Class of Bonds in respect of the
related Yield Maintenance Amount may be
insufficient to offset fully any adverse
effects on the yield of such Class of Bonds
that the related prepayments may otherwise
have.
Federal Income Tax Consequences.. In the opinion of Cadwalader, Wickersham &
Taft, special counsel to the Issuer, for
federal income tax purposes, the Offered
Bonds will be characterized as indebtedness
and not as representing an ownership interest
in the Trust Estate or an equity interest in
the Issuer or the Depositor. For further
information regarding certain federal income
tax consequences of an investment in the
Bonds, see "Federal Income Tax Consequences"
herein and "Certain Federal Income Tax
Consequences" in the Prospectus. Investors
are advised to consult their tax advisors as
to the tax consequences of an investment in
the Offered Bonds in light of investors'
individual circumstances and to review
"Federal Income Tax Consequences" herein and
"Certain Federal Income Tax Consequences" in
the Prospectus.
Certain ERISA Considerations..... A fiduciary of any employee benefit plan or
other retirement arrangement subject to the
Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975
of the Internal Revenue Code of 1986 as
amended (the "Code") (each, a "Plan") should
carefully review with its legal advisors
whether the purchase or holding of the Bonds
could give rise to a transaction prohibited
or not otherwise permissible under ERISA or
Section 4975 of the Code. See "Certain ERISA
Considerations" herein and "ERISA
Considerations" in the Prospectus.
Subject to the conditions set forth in
"Certain ERISA Considerations," the Bonds
may, in general, be purchased by or on behalf
of a Plan (including without limitation, as
applicable, an insurance company general
account) that is subject to Title I of ERISA
or Section 4975 of the Code only if, and each
fiduciary causing the Bonds to be purchased
by or on behalf of such a plan shall be
deemed to have represented that, an exemption
from the prohibited transaction rules applies
such that the purchase and holding of the
Bonds by or on behalf of such Plan does not
and will not result in a nonexempt prohibited
transaction.
Ratings.......................... It is a condition to their issuance that the
respective Classes of Offered Bonds receive
the following credit ratings from
("________") and/or ____________________
("_____"; together with _____, the "Rating
Agencies"):
[Rating [Rating
Class Agency] Agency]
------------- ------------ ------------
[Class A-1]
[Class A-2]
[Class B]
[Class C]
[Class D]
The foregoing ratings of the Offered Bonds
address the timely payment thereon of
interest and the ultimate payment thereon of
principal on or before their Stated Maturity.
The foregoing ratings of the Offered Bonds do
not address the tax attributes of the Offered
Bonds, the Issuer or the Trust Estate. The
ratings of the Offered Bonds do not address
certain other matters as described under
"Ratings" herein. There is no assurance that
any such rating will not be lowered,
qualified or withdrawn by a Rating Agency,
if, in its judgment, circumstances so
warrant. There can be no assurance whether
any other rating agency will rate any of the
Offered Bonds, or if one does, what rating
such agency would assign. 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.
Legal Investment ................ The Class __, Class __, Class __, Class __
and Class __ Bonds will [not] be "mortgage
related securities" within the meaning of the
Secondary Mortgage Market Enhancement Act of
1984, as amended ("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 __, Class ___ and Class __ Bonds
will not be "mortgage related securities"
within the meaning of SMMEA. The appropriate
characterization of the Offered Bonds under
various legal investment restrictions, and
thus the ability of investors subject to
these restrictions to purchase any Class of
Offered Bonds, may be subject to significant
interpretative uncertainties.
In addition, institutions whose investment
activities are subject to review by certain
regulatory authorities may be or may become
subject to restrictions, which may be
retroactively imposed by such regulatory
authorities, on the investment by such
institutions in certain forms of
mortgage-backed securities. Furthermore,
certain states have enacted legislation
overriding the legal investment provisions of
SMMEA. Accordingly, investors should consult
their own legal advisors to determine whether
and to what extent the Offered Bonds
constitute legal investments for them. See
"Legal Investment" herein and in the
Prospectus.
<PAGE>
RISK FACTORS
Prospective purchasers of Offered Bonds should consider, among other
things, the following risk factors (as well as the risk factors set forth under
"Risk Factors" in the Prospectus) in connection with an investment therein. [The
following risks are subject to modification to reflect the actual circumstances
relating to any series of Bonds.]
Certain Yield and Maturity Considerations
As a result of, among other things, prepayments, defaults and losses on the
Mortgage Loans, the amount and timing of payments of principal and/or interest
on the Bonds may be highly unpredictable. Prepayments on the Mortgage Loans will
result in a faster rate of principal payments on the Bonds than if payments on
such Mortgage Loans were made as scheduled. Defaults and losses on the Mortgage
Loans may delay and/or reduce the principal payments on the Bonds. Thus, the
prepayment, default and loss experience on the Mortgage Loans may affect the
aggregate payments on and the yield to maturity and average life of one or more
Classes of Bonds, including one or more Classes of the Offered Bonds. The rate
of principal payments and defaults and severity of losses on pools of
multifamily and commercial mortgage loans varies among pools and from time to
time is influenced by a variety of economic, demographic, geographic, social,
tax and legal factors, as well as acts of God. For example, if prevailing
interest rates fall significantly below the Mortgage Rates borne by the Mortgage
Loans, principal prepayments thereon are likely to be higher than if prevailing
interest rates remain at or above the rates borne by those Mortgage Loans.
Conversely, if prevailing interest rates rise significantly above the Mortgage
Rates borne by such Mortgage Loans, principal prepayments thereon are likely to
be lower than if prevailing interest rates remain at or below the rates borne by
those Mortgage Loans. The foregoing is subject, however, to, among other things,
the particular terms of the Mortgage Loans (e.g., provisions which prohibit
voluntary prepayments during specified periods or impose penalties in connection
therewith) and the ability of Mortgagors to obtain new financing. There can be
no assurance as to the actual rate of prepayment or default or the severity of
losses on the Mortgage Loans. The extent to which prepayments on Mortgage Loans
ultimately affect the yield to maturity and average life of any Class of Offered
Bonds, will depend on the terms of such Bonds.
The extent to which the yield to maturity of any Class of Offered Bonds may
vary from the anticipated yield will depend upon the degree to which they are
purchased at a discount or premium and the amount and timing of payments
thereon. An investor should consider, in the case of any Offered Bond purchased
at a discount, the risk that a slower than anticipated rate of principal
payments thereon could result in an actual yield to such investor that is lower
than the anticipated yield and, in the case of any Offered Bond purchased at a
premium, the risk that a faster than anticipated rate of principal payments
thereon could result in an actual yield to such investor that is lower than the
anticipated yield.
When considering the effects of prepayments on the average life and yield
of a Bond, an investor should also consider provisions of the Indenture that
permit the optional redemption of the Bonds. [The Issuer may, at its option,
redeem any Class of Offered Bonds, in whole but not in part, on any Payment
Date, if the then aggregate Bond Principal Amount of such Class of Bonds is less
than __% of the initial aggregate Bond Principal Amount thereof.] See "Yield and
Maturity Considerations" herein.
Effect of Mortgagor Delinquencies and Defaults
The aggregate amount of payments on the Offered Bonds, the yield to
maturity of the Offered Bonds, the rate of principal payments on the Offered
Bonds and the weighted average lives of the Offered Bonds will be affected by
the rate and the timing of delinquencies and defaults on the Mortgage Loans. If
a purchaser of a class of Offered Bonds calculates its anticipated yield based
on an assumed rate of default and amount of losses on the Mortgage Loans that is
lower than the default rate and amount of losses actually experienced and such
additional losses are allocable to such class of Bonds, such purchaser's actual
yield to maturity will be lower than that so calculated and could, under certain
extreme scenarios, be negative. The timing of any loss on a liquidated Mortgage
Loan will also affect the actual yield to maturity of the class of Offered Bonds
to which a portion of such loss is allocable, even if the rate of defaults and
severity of losses are consistent with an investor's expectations. In general,
the earlier a loss borne by an investor occurs, the greater is the effect on
such investor's yield to maturity.
As and to the extent described herein, each Servicer will be entitled to
receive interest on unreimbursed P&I Advances and unreimbursed advances of
servicing expenses until such advances (i) are recovered out of amounts received
on the Mortgage Loan as to which such advances were made pursuant to the
Servicing Agreement, which amounts are in the form of late payments, liquidation
proceeds, insurance proceeds, condemnation proceeds or amounts paid in
connection with the purchase of such Mortgage Loan from the Issuer or (ii) are
otherwise recovered following a determination that such advance is a
nonrecoverable advance. Each Servicer's right to receive such payments of
interest is prior to the rights of Bondholders to receive payments on the Bonds
and, consequently, is likely to result in losses being allocated to the Offered
Bonds that would not otherwise have resulted absent the accrual of such
interest.
The Special Servicer will be entitled to receive, with respect to each
Mortgage Loan which is or was at some time a Specially Serviced Mortgage Loan,
compensation in the form of a percentage of collections of any such Specially
Serviced Mortgage Loan prior to the right of Bondholders to receive payments on
the Bonds. Consequently, it is possible that shortfalls will be allocated to the
Offered Bonds with respect to any Mortgage Loan which is or was at some time a
Specially Serviced Mortgage Loan notwithstanding the fact that such Mortgage
Loan is returned to a performing status. See "Servicing--Servicing and Other
Compensation and Payment of Expenses" herein.
Regardless of whether losses ultimately result, delinquencies and defaults
on the Mortgage Loans may significantly delay the receipt of payments by the
holder of a class of Offered Bonds, to the extent that P&I Advances or the
subordination of another class of Bonds does not fully offset the effects of any
such delinquency or default. The Special Servicer has the ability to extend and
modify Mortgage Loans that are in default or as to which a payment default is
imminent, including the ability to extend the date on which a Balloon Payment is
due, subject to certain conditions described in the Servicing Agreement. A
Servicer's obligation to make P&I Advances in respect of a Mortgage Loan that is
delinquent as to its Balloon Payment is limited, however, to the extent
described under "Description of the Bonds--Advances." Until such time as any
Mortgage Loan delinquent in respect of its Balloon Payment is liquidated, the
entitlement of the holders of any class of Offered Bonds on each Payment Date in
respect of principal of such Mortgage Loan will be limited to any payment made
by the related Mortgagor and any related P&I Advance made by a Servicer.
Consequently, any delay in the receipt of a Balloon Payment that is payable, in
whole or in part, to holders of the Offered Bonds will extend the weighted
average life of the Offered Bonds.
As described under "Description of the Bonds--Payments" herein, if the
portion of the Available Payment Amount payable in respect of interest on any
class of Offered Bonds on any Payment Date is not sufficient to pay the Accrued
Bond Interest then payable for such class, the shortfall will be payable to
holders of such class of Bonds on subsequent Payment Dates, to the extent of
available funds.
[Optional Redemption of Bonds
The Issuer may, at its option, redeem any Class of Offered Bonds, in whole
but not in part, on any Payment Date, if the then aggregate Bond Principal
Amount of such Class of Offered Bonds is less than __% of the initial aggregate
Bond Principal Amount thereof and no Issuer Event of Default has occurred and is
continuing. No Yield Maintenance Amount will be payable in connection with such
optional redemption. See "Description of the Bonds--Optional Redemption"
herein.]
Subordination of Subordinated Bonds
As and to the extent described herein, the rights of the Issuer or its
designee to receive payments of amounts received on the Mortgage Loans in
respect of the Issuer's Equity will be subordinated to the rights of the
Bondholders to receive such amounts on their Bonds, and the rights of the
holders of the respective Classes of Subordinate Bonds, including the Class B,
Class C and Class D Bonds, to receive payments of amounts collected in respect
of the Mortgage Loans will be subordinated to those of the holders of the Class
A Bonds and to those of the holders of each other Class of Bonds with an earlier
alphabetical class designation. Although such subordination (whether of the
Issuer's Equity or Subordinate Bonds) is, in varying degrees depending on the
Class, intended to reduce the likelihood of temporary shortfalls and ultimate
losses to holders of the respective Classes of Offered Bonds, the amount of
subordination afforded to any particular Class of Offered Bonds will be limited
and may decline under certain circumstances. In addition, the impact of losses
and shortfalls experienced with respect to the Mortgage Loans may fall primarily
upon those Classes of Bonds having a later right of payment.
The amount of any applicable credit support provided by the Issuer's Equity
in the Collateral to the Bonds, by the Private Bonds to the Offered Bonds, by
the Class D Bonds to the Class A, Class B and Class C Bonds, by the Class C
Bonds to the Class A and Class B Bonds, and by the Class B Bonds to the Class A
Bonds, has been determined on the basis of criteria established by each Rating
Agency that take into account an assumed level of defaults, delinquencies and
losses on the Mortgage Loans. There can be no assurance, however, that the loss
experience on the Mortgage Loans will not exceed such assumed levels. See
"Description of the Bonds--Subordination" herein.
Risks Associated with Certain of the Mortgage Loans and Mortgaged Properties
The Mortgage Loans are secured by a fee simple or leasehold interest in
multifamily, retail, hotel, nursing home, office and other commercial
properties. Commercial and multifamily lending is generally viewed as exposing
the lender to a greater risk of loss than one- to four-family residential
lending. Commercial and multifamily lending typically involves larger loans to
single borrowers or groups of related borrowers than residential one- to
four-family mortgage loans. Further, the repayment of loans secured by income
producing properties is typically dependent upon the successful operation of the
related property. If the cash flow from the property is reduced (for example, if
leases are not obtained or renewed), the borrower's ability to repay the loan
may be impaired. Commercial and multifamily real estate can be affected
significantly by the supply and demand in the market for the type of property
securing the loan and, therefore, may be subject to adverse economic conditions.
Market values may vary as a result of economic events or governmental
regulations outside the control of the borrower or lender, such as rent control
laws in the case of multifamily mortgage loans, which impact the future cash
flow of the property. See "Limited Recourse Nature of Mortgage Loans; Recourse
Generally Limited to Mortgaged Property" below.
The successful operation of a real estate project is also dependent on the
performance and viability of the property manager of such project. The property
manager is responsible for responding to changes in the local market, planning
and implementing the rental structure, including establishing appropriate rental
rates, and advising the borrowers so that maintenance and capital improvements
can be carried out in a timely fashion. There is no assurance regarding the
performance of any operators and/or managers or persons who may become operators
and/or managers upon the expiration or termination of leases or management
agreements or following any default or foreclosure under a Mortgage Loan.
An appraisal of each of the Mortgaged Properties was made between ________
____ and _________ ____. It is possible that the market value of a Mortgaged
Property securing a Mortgage Loan has declined since the most recent appraisal
for such Mortgaged Property. Commercial and multifamily property values and net
operating income are subject to volatility. The net operating income and value
of the Mortgaged Properties may be adversely affected by a number of factors,
including but not limited to national, regional and local economic conditions
(which may be adversely impacted by plant closings, industry slowdowns and other
factors); local real estate conditions (such as an oversupply of housing,
retail, office or self-storage space, hotel rooms or nursing homes); changes or
continued weakness in specific industry segments; perceptions by prospective
tenants and, in the case of retail properties, retailers and shoppers, of the
safety, convenience, services and attractiveness of the property; the
willingness and ability of the property's owner to provide capable management
and adequate maintenance; construction quality, age and design; demographic
factors; retroactive changes to building or similar codes; and increases in
operating expenses (such as energy costs). Historical operating results of the
Mortgaged Properties may not be comparable to future operating results. In
addition, other factors may adversely affect the Mortgaged Properties' value
without affecting their current net operating income, including changes in
governmental regulations, zoning or tax laws; potential environmental or other
legal liabilities; the availability of refinancing; and changes in interest rate
levels.
The aggregate principal balance as of the Cut-off Date related to Mortgage
Loans secured by [multifamily, retail, hotel, nursing home, office and other
properties] represent approximately _____%, _____%, _____%, _____%, _____% and
_____% of the Cut-off Date aggregate principal balance of the Mortgage Pool,
respectively.
[Risks Associated with Hotel Properties
_____________ of the Mortgage Loans representing % of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date are secured by
hotel properties. Like any income producing property, the income generated by a
hotel property is subject to several factors such as local, regional and
national economic conditions and competition. However, because such income is
primarily generated by room occupancy and such occupancy is usually for short
periods of time, the level of such income may respond more quickly to conditions
such as those described above. Such sensitivity to competition may require more
frequent improvements and renovations than other properties. To the extent a
hotel is affiliated to, or associated with, a regional, national or
international chain, changes in the public perception of such chain may have an
impact on the income generated by the related property. Finally, the hotel
industry is generally seasonal. This will result in fluctuation in the income
generated by hotel properties.]
[Risks Associated with Nursing Homes
______ of the Mortgage Loans representing % of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date are secured by residential
health care facilities. Mortgage Loans secured by liens on residential health
care facilities pose risks not associated with loans secured by liens on other
types of income-producing real estate. Providers of long-term nursing care,
assisted living and other medical services are subject to federal and state laws
that relate to the adequacy of medical care, distribution of pharmaceuticals,
rate setting, equipment, personnel, operating policies and additions to
facilities and services and to the reimbursement policies of government programs
and private insurers. The failure of any of the borrowers to maintain or renew
any required license or regulatory approval could prevent it from continuing
operations (in which case no revenues would be received from the related
Mortgaged Property or the portion thereof requiring licensing) or, if
applicable, bar it from participation in certain reimbursement programs.
Furthermore, in the event of foreclosure, there can be no assurance that the
Trustee or any other purchaser at a foreclosure sale would be entitled to the
rights under such licenses and such party may have to apply in its own right for
such a license. There can be no assurance that a new license could be obtained.
In addition, to the extent any nursing home receives a significant portion of
its revenues from government reimbursement programs, primarily Medicaid and
Medicare, such revenue may be subject to statutory and regulatory changes,
retroactive rate adjustments, administrative rulings, policy interpretations,
delays by fiscal intermediaries and government funding restrictions. Moreover,
governmental payors have employed cost-containment measures that limit payments
to health care providers, and there are currently under consideration various
proposals that could materially change or curtail those payments. Accordingly,
there can be no assurances that payments under government programs will, in the
future, be sufficient to fully reimburse the cost of caring for program
beneficiaries. If not, net operating income of the Mortgaged Properties that
receive substantial revenues from those sources, and consequently the ability of
the related borrowers to meet their Mortgage Loan obligations, could be
adversely affected. Under applicable federal and state laws and regulations,
including those that govern Medicare and Medicaid programs, only the provider
who actually furnished the related medical goods and services may sue for or
enforce its rights to reimbursement. Accordingly, in the event of foreclosure,
none of the Trustee, the Master Servicer, the Special Servicer or 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 respective properties prior to such foreclosure.]
Limited Recourse Nature of Mortgage Loans; Recourse Generally Limited
to Mortgaged Property
Each Mortgage Loan is a nonrecourse loan as to which, in the event of a
default under such Mortgage Loan, recourse generally may be had only against the
related Mortgaged Property. Consequently, payment of each such Mortgage Loan
prior to maturity is dependent primarily on the sufficiency of the net operating
income of the related Mortgaged Property, and at maturity (whether at scheduled
maturity or in the event of a default upon the acceleration of such maturity
after default), upon the then market value of the related Mortgaged Property, or
the ability to refinance such Mortgage Loan. None of the Mortgage Loans is
insured or guaranteed by any governmental entity or private mortgage insurer or
by any other person. However, as more fully described under "Description of the
Mortgage Pool--Representations and Warranties; Repurchases" herein, the Mortgage
Loan Seller will be obligated to repurchase those Mortgage Loans as to which
there is a material breach of its representations and warranties, which breach
cannot be cured in a timely manner.
Risks Associated with Concentration of Mortgage Loans
The average principal balance of the Mortgage Loans as of the Cut-off Date
is approximately $_________, which is equal to _____% of the aggregate principal
balance as of the Cut-off Date of the Mortgage Loans. A mortgage pool consisting
of fewer loans each having a relatively higher outstanding principal balance may
result in losses that are more severe, relative to the size of the pool, than
would be the case if the pool consisted of a greater number of mortgage loans
each having a relatively smaller outstanding principal balance. In addition, the
concentration of any mortgage pool in one or more loans that have outstanding
principal balances that are substantially larger than the other mortgage loans
in such pool can result in losses that are substantially more severe, relative
to the size of the pool, than would be the case if the aggregate balance of the
pool were more evenly distributed among the loans in such pool. The Mortgage
Loan secured by the _____________________________________________________
represents _____% of the aggregate principal balance of the Mortgage Loans. No
other Mortgage Loan represents more than __% of the aggregate principal balance
as of the Cut-off Date of the Mortgage Loans and no other Mortgage Loans with
related Mortgagors represent in the aggregate more than ____% of the aggregate
principal balance as of the Cut-off Date of the Mortgage Loans. See "Description
of the Mortgage Pool--Certain Characteristics of the Mortgage Loans--Related
Borrowers and Other Issues" herein.
Risks of Different Timing of Mortgage Loan Amortization
If and as principal payments, property releases, or prepayments are made on
a Mortgage Loan, the remaining Mortgage Pool may be subject to more concentrated
risk with respect to the diversity of properties, types of properties and
property characteristics and with respect to the number of borrowers. See the
table entitled "Year of Scheduled Maturity" under "Description of the Mortgage
Pool--Certain Characteristics of the Mortgage Loans" for a description of the
respective maturity dates of the Mortgage Loans. Because principal on the
Offered Bonds is payable in sequential order, and no class receives principal
until the Class Balance of the preceding class or classes has been reduced to
zero, classes that have a lower sequential priority are more likely to be
exposed to the risk of concentration discussed under "--Risks Associated with
Concentration of Mortgage Loans" above than classes with a higher sequential
priority.
Risks Associated with Geographic Concentration
____, ____, ____, ____, ____, and _____ of the Mortgaged Properties,
representing approximately _____%, _____%, _____%, _____%, _____% and _____%,
respectively, of the aggregate principal balance of the Mortgage Loans as of the
Cut-off Date, are located in _________, _________, _________, _________,
________ and _________, respectively. Except as indicated in the immediately
preceding sentence, no more than _____% of the Mortgage Loans, by aggregate
principal balance of the Mortgage Loans as of the Cut-off Date are secured by
Mortgaged Properties in any one state. Repayments by borrowers and the market
value of the Mortgaged Properties could be affected by economic conditions
generally or in regions where the borrowers and the Mortgaged Properties are
located, conditions in the real estate market where the Mortgaged Properties are
located, changes in governmental rules and fiscal policies, acts of nature,
including earthquakes (which may result in uninsured losses), and other factors
which are beyond the control of the borrowers.
Increased Risk of Default Associated with Adjustable Rate Mortgage Loans
________ of the Mortgage Loans, which represent ____% of the Initial Pool
Balance, are ARM Loans. Increases in the required Monthly Payments on ARM Loans
in excess of those assumed in the original underwriting of such loans may result
in a default rate higher than that on mortgage loans with fixed mortgage rates.
Increased Risk of Default Associated with Balloon Payments
[None] [Only ___] of the Mortgage Loans [is][are] fully amortizing over
[its term] [their respective terms] to maturity. Thus, [each] [most] of the
Mortgage Loans will have a substantial payment (that is, a Balloon Payment) due
at its stated maturity unless prepaid prior thereto. Mortgage Loans with Balloon
Payments involve a greater likelihood of default than self-amortizing loans
because the ability of a borrower to make a Balloon Payment typically will
depend upon its ability either to refinance the loan or to sell the related
mortgaged property. See "Risk Factors-- Risks of Loss on Balloon Payment Asset
if Obligor is Unable to Refinance or Sell Related Property" in the Prospectus.
Extension Risk Associated With Modification of Mortgage Loans
with Balloon Payments
In order to maximize recoveries on defaulted Mortgage Loans, the Servicing
Agreement enables the Special Servicer to extend and modify Mortgage Loans that
are in material default or as to which a payment default (including the failure
to make a Balloon Payment) is reasonably foreseeable; subject, however, to the
limitations described under "Servicing of the Mortgage Loans--Responsibilities
of Special Servicer" herein. There can be no assurance, however, that any such
extension or modification will increase the present value of recoveries in a
given case. Any delay in collection of a Balloon Payment that would otherwise be
payable in respect of a Class of Offered Bonds, whether such delay is due to
borrower default or to modification of the related Mortgage Loan by the Special
Servicer, will likely extend the weighted average life of such Class of Offered
Bonds. See "Yield and Maturity Considerations" herein and in the Prospectus.
[Inclusion of Delinquent, Under-Performing and Non-Performing Mortgage Loans
The Mortgage Pool will include _____ Mortgage Loans, representing _____% of
the Initial Pool Balance, that [describe generally the characteristics of those
delinquent, under-performing and non-performing Mortgage Loans, if any, included
in the Mortgage Pool]. The amount of any applicable credit support provided to a
Class of Bonds as described under "--Subordination of Subordinated Bonds" may
not cover all losses and shortfalls related to such delinquent, under-performing
and non-performing Mortgage Loans, and investors should consider the risk that
the inclusion of such Mortgage Loans in the Mortgage Pool may adversely affect
the rate of defaults and prepayments in respect of the Mortgage Pool and the
yield on the Offered Bonds. See "Risk Factors--Increased Risk of Loss if
Mortgage Loans Include Delinquent and Non-Performing Mortgage Loans" in the
Prospectus.]
Potential Liability to the Trust Estate Relating to a Materially Adverse
Environmental Condition
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal and remediation of hazardous or toxic substances
on, under, adjacent to or in such property. Such laws often impose liability
whether or not the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. The cost of any required
remediation and the owner's liability therefor as to any property is generally
not limited under such enactments and could exceed the value of the property
and/ or the aggregate assets of the owner. In addition, the presence of
hazardous or toxic substances, or the failure to properly remediate such
property, may adversely affect the owner's or operator's ability to borrow using
such property as collateral. Persons who arrange for the disposal or treatment
of hazardous or toxic substances may also be liable for the costs of removal or
remediation of such substances at the disposal or treatment facility. Certain
laws impose liability for release of asbestos into the air and third parties may
seek recovery from owners or operators of real properties for personal injury
associated with exposure to asbestos.
Under some environmental laws, such as the federal Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
("CERCLA"), as well as certain state laws, a secured lender (such as the Issuer)
may be liable as an "owner" or "operator", for the costs of responding to a
release or threat of a release of hazardous substances on or from a borrower's
property, if agents or employees of a lender are deemed to have participated in
the management of the borrower's property, regardless of whether a previous
owner caused the environmental damage. The Issuer's potential exposure to
liability for cleanup costs pursuant to CERCLA may increase if the Issuer
actually takes possession of a borrower's property, or control of its day-to-day
operations, as for example through the appointment of a receiver.
An environmental site assessment ("ESA") of each of the Mortgaged
Properties was performed (or prior assessments were updated) in connection with
the initial underwriting and origination of the Mortgage Loans. In certain
cases, environmental testing in addition to the ESA was performed.
The following information is based on the ESAs and has not been
independently verified by the Depositor, the Servicers, the Trustee, the
Underwriter, or by any of their respective affiliates. With respect to a number
of the Mortgaged Properties, the ESAs revealed the existence or possible
existence of asbestos-containing materials, possible radon gas and other
environmental matters at the related Mortgaged Properties, none of which
constituted a material violation of any environmental law in the judgment of the
assessor. In these cases, the Mortgagors agreed to establish and maintain
operations and maintenance programs or had other remediation agreements or
escrows in place, except with respect to _____ Mortgage Loans representing
_____% of the aggregate principal balance of the Mortgage Loans as of the
Cut-off Date with respect to which the existence or possible existence of
asbestos did not create an environmental concern on the part of the related
Originator. With respect to several Mortgaged Properties, the ESAs identified
the presence of above-ground or underground storage tanks and the related
Mortgagors have agreed to make periodic visual inspections or other testing for
any petroleum releases.
It is possible that the ESAs did not reveal all environmental liabilities,
that there are material environmental liabilities of which neither the Seller
nor the Depositor are aware and that the environmental condition of the
Mortgaged Properties in the future could be affected by tenants and occupants or
by third parties unrelated to the Mortgagors.
Each Mortgagor has represented that each Mortgaged Property either was, or
to the best of its knowledge was, in compliance with applicable environmental
laws and regulations on the date of the origination of the related Mortgage
Loan; that, except as described in the environmental reports referred to above,
no actions, suits or proceedings have been commenced or are pending or, to the
best knowledge of the Mortgagor, are threatened with respect to any applicable
environmental laws and that such Mortgagor has not received notice of any
violation of a legal requirement relating to the use and occupancy of any
Mortgaged Property. The principal security for the obligations under each
Mortgage Loan consists of the Mortgaged Property and, accordingly, if any such
representations are breached, there can be no assurance that any other assets of
the Mortgagor would be available in connection with any exercise of remedies in
respect of such breach. Moreover, most Mortgagors are structured as single asset
entities and therefore have no assets other than the related Mortgaged Property.
The Servicing Agreement provides that the Special Servicer, acting on
behalf of the Issuer, may not acquire, through foreclosure or deed in lieu
thereof, title to a Mortgaged Property or take over its operation unless the
Special Servicer has previously determined, based on a report prepared by a
qualified person who regularly conducts environmental audits, that (i) the
Mortgaged Property is in compliance with applicable environmental laws or that
taking the actions necessary to comply with such laws is reasonably likely to
produce a greater recovery on a present value basis than not taking such actions
and (ii) there are no circumstances known to the Special Servicer relating to
the use of hazardous substances or petroleum-based materials which require
investigation or remediation, or that if such circumstances exist, taking such
remedial actions is reasonably likely to produce a greater recovery on a present
value basis than not taking such actions. See "Description of the
Agreements--Collection and Other Servicing Procedures--Special Servicer", "Risk
Factors--Environmental Risks" and "Certain Legal Aspects of Mortgage
Loans--Environmental Legislation" in the Prospectus.
Risks Associated with Litigation
There may be legal proceedings pending and, from time to time, threatened
against the Mortgagors and the managers of the Mortgaged Properties and their
respective affiliates arising out of the ordinary business of the Mortgagor, the
managers and such affiliates. There can be no assurance that such litigation may
not have a material adverse effect on payments to Bondholders.
Risks Associated with Other Financings
Each Mortgagor is restricted from incurring any indebtedness secured by the
related Mortgaged Property other than the related Mortgage Loan without the
consent of the mortgagee. _________ Mortgage Loans representing approximately
_____% of the Mortgage Pool by aggregate principal balance as of the Cut-off
Date were made to single-purpose entities, which are restricted from incurring
any indebtedness other than the Mortgage Loan, normal trade accounts payable and
certain purchase financing debt. The remaining Mortgage Loans were not made to
single purpose entities. _____ Mortgage Loans representing approximately _____%
of the Mortgage Pool by aggregate principal balance as of the Cut-off Date have
unsecured subordinate debt that is subject, in each case, to subordination and
standstill agreements limiting in varying degrees the rights of the holder of
such additional indebtedness including limitations on its right to commence any
enforcement or foreclosure proceeding.
In cases where one or more junior liens are imposed on a Mortgaged Property
or the Mortgagor incurs other indebtedness, the Issuer is subjected to
additional risks, including, without limitation, the risks that the Mortgagor
may have greater incentives to repay the junior or unsecured indebtedness first
and that it may be more difficult for the Mortgagor to refinance the Mortgage
Loan or to sell the Mortgaged Property for purposes of making the Balloon
Payment upon the maturity of the Mortgage Loan.
[Risks Associated with Ground Leases and Other Leasehold Interests
_____ Mortgage Loans representing _____% of the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date, are secured in part by a leasehold
interest in one Mortgaged Property. Pursuant to Section 365(h) of the Bankruptcy
Code, ground lessees are currently afforded rights not to treat a ground lease
as terminated and to remain in possession of their leased premises upon the
bankruptcy of their ground lessor and the rejection of the ground lease by the
representative of such ground lessor's bankruptcy estate. The leasehold
mortgages provide that the Mortgagor may not elect to treat the ground lease as
terminated on account of any such bankruptcy of, and rejection by, the ground
lessor without the consent of the Servicer. In the event of a bankruptcy of a
ground lessee/borrower, the ground lessee/borrower under the protection of the
Bankruptcy Code has the right to assume (continue) or reject (terminate) any or
all of its ground leases. In the event of concurrent bankruptcy proceedings
involving the ground lessor and the ground lessee/Mortgagor, the Trustee may be
unable to enforce the bankrupt ground lessee/Mortgagor's obligation to refuse to
treat a ground lease rejected by a bankrupt ground lessor as terminated. In such
circumstances, a ground lease could be terminated notwithstanding lender
protection provisions contained therein or in the mortgage.]
Attornment Considerations
Some of the tenant leases, including the anchor tenant leases, contain
certain provisions that require the tenant to attorn to (that is, recognize as
landlord under the lease) a successor owner of the property following
foreclosure. Some of the leases, including the anchor tenant leases, may be
either subordinate to the liens created by the Mortgage Loans or else contain a
provision that requires the tenant to subordinate the lease if the mortgagee
agrees to enter into a non-disturbance agreement. In some states, if tenant
leases are subordinate to the liens created by the Mortgage Loans and such
leases do not contain attornment provisions, such leases may terminate upon the
transfer of the property to a foreclosing lender or purchaser at foreclosure.
Accordingly, in the case of the foreclosure of a Mortgaged Property located in
such a state and leased to one or more desirable tenants under leases that do
not contain attornment provisions, such Mortgaged Property could experience a
further decline in value if such tenants' leases were terminated (e.g., if such
tenants were paying above-market rents). If a Mortgage is subordinate to a
lease, the lender will not (unless it has otherwise agreed with the tenant)
possess the right to dispossess the tenant upon foreclosure of the property, and
if the lease contains provisions inconsistent with the Mortgage (e.g.,
provisions relating to application of insurance proceeds or condemnation
awards), the provisions of the lease will take precedence over the provisions of
the Mortgage.
Limited Rights for Breaches of Representations and Warranties
In the Mortgage Loan Purchase Agreement, the Mortgage Loan Seller will make
certain representations and warranties that are described under "Description of
the Mortgage Pool--Representations and Warranties; Repurchases" herein. Upon the
occurrence of a breach of such representations and warranties that materially
and adversely affects the value of any Mortgage Loan or the interests of the
Bondholders therein, the Mortgage Loan Seller will be obligated under the
Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan at the
Purchase Price therefor. The obligations of the Mortgage Loan Seller to make
such payments will be the exclusive remedies of the Trustee and the Bondholders
for any breach of a representation and warranty made by the Mortgage Loan Seller
and, in particular, the Trustee and the Bondholders will not have any remedies
against the Depositor or its affiliates. There can be no assurance that in the
future the Mortgage Loan Seller will have sufficient net worth to perform its
obligations under the Mortgage Loan Purchase Agreement. Neither the Depositor
nor any of its respective subsidiaries, shareholders, partners or other
affiliates will have any obligation to provide a remedy for any breach of the
Mortgage Loan Seller's representations and warranties.
[Liquor License Considerations
_____ Mortgage Loans representing _____% of the aggregate principal balance
of the Mortgage Loans as of the Cut-off Date are secured by hotel properties.
The liquor licenses for some of such properties may be held by the property
manager rather than by the related Mortgagor. The applicable laws and
regulations relating to such licenses generally prohibit the transfer of such
licenses to any person. In the event of a foreclosure of a hotel property it is
unlikely that the Trustee (or Special Servicer) or purchaser in any such sale
would be entitled to the rights under the liquor license for such hotel property
and such party would be required to apply in its own right for such license.]
Conflicts Between the Special Servicer and the Depositor
The Issuer has been advised by the Special Servicer that it intends to
continue to service and actively manage mortgage loans for affiliates of the
Issuer and third parties, including portfolios of assets similar to the Mortgage
Loans, in the ordinary course of its business. During the course of its business
activities, the Special Servicer may service properties and mortgage loans which
are in the same markets or have common owners, obligors, participants, property
managers and/or guarantors as certain of the Mortgage Loans. Certain personnel
of the Special Servicer may perform services with respect to the Mortgage Loans
at the same time as they or other personnel of the Special Servicer are
performing services with respect to assets owned by affiliates of the Special
Servicer or other third parties in the same markets as the Mortgaged Properties.
In such a case, the interests of the Special Servicer and its other clients may
differ from and compete with the interests of the Issuer and such activities may
adversely affect the amount and timing of collections on or liquidations of the
Mortgage Loans. Moreover, since much of the Special Servicer's compensation is
payable in the form of a Special Servicing Fee, the Special Servicer may
determine to take action, such as accelerating the disposition of certain
Mortgage Loans and delaying the disposition of others, which may have the effect
of increasing the Special Servicing Fee payable to the Special Servicer while
reducing the total amounts to be received with respect to the Mortgage Loans.
Limited Liquidity
There is currently no secondary market for the Offered Bonds. The
Underwriter has indicated its intention to make a secondary market in the
Offered Bonds, but it is not obligated to do so. There can be no assurance that
a secondary market for the Offered Bonds will develop or, if one does develop,
that it will provide holders of Offered Bonds with liquidity of investment or
that it will continue for the life of the Offered Bonds. The Offered Bonds will
not be listed on any securities exchange. See "Risk Factors--Limited Liquidity
For Bonds" in the Prospectus.
Limited Assets for Payment of Offered Bonds
The Offered Bonds will not be guaranteed or insured by the Depositor, the
Issuer or any of its affiliates, by the United States or any governmental agency
or instrumentality, or by any other person. The Offered Bondholders will have no
recourse to the Issuer in the event of a default on the Offered Bonds, and each
Offered Bondholder will be deemed to have agreed by the acceptance of its
Offered Bond not to file a bankruptcy petition or commence similar proceedings
in respect of the Issuer. Accordingly, if the Collateral is insufficient to
provide payments on the Offered Bonds, no other assets will be available for
payment of the deficiency. Additionally, certain amounts on deposit from time to
time in the Collection Account may be withdrawn under certain conditions, as
described herein and the Prospectus, for purposes other than the payment of
principal of or interest on the Bonds. To the extent that Realized Losses and
Net Aggregate Prepayment Interest Shortfalls exceed the sum of the initial
Overcollateralization Amount and the aggregate Bond Principal Amount of the
Private Bonds, it is unlikely the amounts received on the remaining Mortgage
Loans will be sufficient to make full and timely payment on the Offered Bonds.
[Furthermore, notwithstanding the Mortgage Rates on the Mortgage Loans, the Bond
Interest Rate on each Class of Offered Bonds is a fixed rate set forth in the
table on the cover page hereof. In certain limited circumstances, the Mortgage
Rate on one or more of the Mortgage Loans may be less than the Bond Interest
Rate on one or more Classes of the Offered Bonds. However, holders of the
Offered Bonds would not receive the full Bond Principal Amount of their Bonds,
together with Accrued Bond Interest thereon, generally only if (i) the aggregate
Stated Principal Balance of the Mortgage Pool is less than the aggregate Bond
Principal Amount of the Offered Bonds and/or (ii) the aggregate interest
collected in respect of the Mortgage Loans (net of certain fees and expenses
payable therefrom under the Indenture and the Servicing Agreement) is less than
the aggregate interest payable on the Offered Bonds.] See "Description of the
Bonds--Subordination" herein and "Description of the Agreements--Accounts" in
the Prospectus.
Limited Issuer Events of Default
With certain exceptions described herein and in the Prospectus, the
Bondholders will have no independent ability to declare a default (an "Issuer
Event of Default") unless the Issuer shall fail to pay the Bonds in full by
their Stated Maturity, which with respect to each Class of Offered Bonds is the
Payment Date in ___________. Interest will be payable on the respective Classes
of Bonds on each Payment Date only to the extent that there are funds available
for such purpose in the Collection Account. The Issuer's failure to pay interest
on the Bonds on a current basis will not constitute an Issuer Event of Default.
In addition, it will not be an Issuer Event of Default if the Stated Principal
Balance of the Mortgage Pool declines below the aggregate Bond Principal Amount
of the Bonds or of any particular Class or Classes thereof. See "Description of
the Agreements--Certain Terms of the Indenture--Issuer Events of Default" and
"--Control By Bondholders" in the Prospectus. [Following an Issuer Event of
Default, the Trustee may (and, at the direction of the holders of Bonds
representing more than 50% of the aggregate Bond Principal Amount of each Class
of Bonds, the Trustee shall) declare all the Bonds to be due and payable. In
connection with any such declaration of acceleration, the Trustee may, as
described in the Prospectus, liquidate the Collateral generally only with the
consent or at the direction of the holders of Bonds representing an even greater
percentage of the aggregate Bond Principal Amount of each Class of Bonds. Such
declaration of acceleration and its consequences may be rescinded and annulled
under certain circumstances by the holders of Bonds representing more than 50%
of the aggregate Bond Principal Amount of each Class of Bonds. For purposes of
the foregoing, Bonds held by the Issuer, the Depositor or any affiliate thereof
will be deemed not to be outstanding. See "Description of the
Agreements--Certain Terms of the Indenture--Issuer Events of Default" in the
Prospectus.
The market value of the Mortgage Loans will fluctuate as general interest
rates fluctuate, among other things. Following an Issuer Event of Default, there
is no assurance that the market value of the Mortgage Loans will be equal to or
greater than the unpaid principal and accrued interest due on the Bonds,
together with any other expenses or liabilities payable from the sales proceeds.
Certain Classes of Bondholders may have a disincentive to authorize the sale of
Bonds following an Issuer Event of Default because the net proceeds of such sale
may be insufficient to pay in full the principal of and interest on their Bonds.
The inability of a particular Class of Bondholders independently to force
the sale of the Mortgage Loans even though an Issuer Event of Default has
occurred, and the inability of Bondholders to generally force a sale of the
Mortgage Loans regardless of a substantial decline in the aggregate Stated
Principal Balance of the Mortgage Pool and notwithstanding that interest may not
have been timely paid on a Class of Bonds, may adversely affect the holders of
one or more Classes of Offered Bonds.]
Risks Relating to Lack of Bondholder Control Over Trust Estate
Bondholders generally do not have a right to vote, except in connection
with Issuer Events of Default, Servicing Events of Default (each as defined in
the Prospectus) and certain amendments to the Indenture and the Servicing
Agreement. Furthermore, Bondholders will generally not have the right to make
decisions with respect to the administration of the Mortgage Loans. Such
decisions are generally made, subject to the express terms of the Indenture and
the Servicing Agreement, by the Master Servicer, the Special Servicer or the
Trustee, as applicable. Any decision made by one of those parties in respect of
the Mortgage Loans, even if made in the best interests of the Bondholders (as
determined by such party in its good faith and reasonable judgment), may be
contrary to the decision that would have been made by the holders of any
particular Class of Offered Bonds and may negatively affect the interests of
such holders.
DESCRIPTION OF THE MORTGAGE POOL
General
The Collateral to be pledged to the Trustee will consist primarily of a
pool of [fixed rate] Mortgage Loans with an aggregate principal balance as of
the Cut-off Date, after deducting payments of principal due on such date, of
approximately $ . Each Mortgage Loan is evidenced by a promissory note (a
"Mortgage Note") and secured by a mortgage, deed of trust or other similar
security instrument (a "Mortgage") creating a first lien on a fee simple or
leasehold interest in a [multifamily property] [office buildings] [retail stores
and establishments] [hotels or motels] [nursing homes] [assisted living
facilities] [continuum care facilities] [day care centers] [schools] [hospitals
or other healthcare related facilities] [industrial properties] [warehouse
facilities] [mini-warehouse facilities] [self-storage facilities] [distribution
centers] [transportation centers] [parking facilities] [entertainment and/or
recreation facilities] [mobile home parks] [mixed use (including mixed
commercial uses and mixed commercial and residential uses)] and/or [unimproved
land] (a "Mortgaged Property"). All of the Mortgage Loans are nonrecourse loans.
Therefore, in the event of a Mortgagor default, recourse may be had only against
the specific property and such limited other assets as have been pledged to
secure a Mortgage Loan, and not against the Mortgagor's other assets. Except as
otherwise indicated all percentages of the Mortgage Loans described herein are
approximate percentages by aggregate principal balance as of the Cut-off Date.
Of the Mortgage Loans to be included as part of the Collateral, _____% were
originated by ________________________________________, a __________
corporation; _____% by ________________________________________, a ________
corporation; _____% by __________________________________________, a
____________________________; _____% by ________________________________________
a ________ corporation; _____% by ____________________________________________,
a ____________________________; and _____% by
_____________________________________, a ____________________________. The
originators of the Mortgage Loans are referred to herein as the "Originators".
The Mortgage Loans not originated by the Mortgage Loan Seller were
originated for sale to the Mortgage Loan Seller. All the Mortgage Loans were
underwritten generally in conformity with certain guidelines provided by the
Seller. See "--Underwriting Guidelines" below. Except for the Mortgage Loans
originated by it, the Mortgage Loan Seller purchased the Mortgage Loans to be
included in the Mortgage Pool prior to the Closing Date from each Originator
pursuant to a mortgage loan purchase agreement (the "Mortgage Loan Purchase
Agreement"). On or prior to the Closing Date, the Depositor will acquire the
Mortgage Loans from the Mortgage Loan Seller pursuant to the Mortgage Loan
Purchase Agreement dated as of ________, 199__ (the "Mortgage Loan Purchase
Agreement"), between the Depositor and the Mortgage Loan Seller, and the
Depositor will thereupon assign its interests in the Mortgage Loans, without
recourse, to the Issuer. The Issuer will pledge the Mortgage Loans and the other
assets in the Trust Estate to secure the Bonds. See "Pledge of Mortgage Loans"
in the Prospectus.
Representations and Warranties; Repurchases
[Under each Mortgage Loan Purchase Agreement, _______________, as seller of
the Mortgage Loans, will make certain representations, warranties and covenants.
Pursuant to the terms of each Mortgage Loan Purchase Agreement, the [Originator]
[Mortgage Loan Seller] will be obligated to repurchase any Mortgage Loans as to
which there exists deficient documentation or an uncured material breach of any
such representation, warranty or covenant.] [In connection with the transfer of
the Mortgage Loans to the Depositor, the Originator's representations,
warranties and covenants shall be assigned to the Depositor, and from the
Depositor to the Issuer, along with the related remedies in the event of a
breach thereof. Neither the Depositor nor the Issuer will make any
representations or warranties with respect to the Mortgage Loans nor will they
have any obligation to repurchase for Mortgage Loans with deficient
documentation or which are otherwise defective.] [_____________, as seller of
the Mortgage Loans, is selling such Mortgage Loans without recourse and,
accordingly, in such capacity, will have no obligations with respect to the
Bonds other than pursuant to such representations, warranties, covenants and
repurchase obligations.] See "Description of the Agreements--Representations and
Warranties; Repurchases and Other Remedies" in the Prospectus.
[In general, [each Originator] will represent and warrant as of the date of
origination, among other things, that: [(i) such Mortgage Loan is not one month
or more delinquent in payment of principal and interest and has not been so
delinquent more than once in a twelve-month period prior to the Closing Date and
there is no payment default and no other material default under the Mortgage
Loan; (ii) such Mortgage Loan is secured by a Mortgage that is a valid and
subsisting first priority lien on the Mortgaged Property (or a leasehold
interest therein) free and clear of any liens, claims or encumbrances, subject
only to certain permitted encumbrances; (iii) such Mortgage, together with any
separate security agreements, establishes a first priority security interest in
favor of the Mortgage Loan Seller in all the related Mortgagor's personal
property used in, and reasonably necessary to operate the Mortgaged Property,
and to the extent a security interest may be created therein, the proceeds
arising from the Mortgaged Property and any other collateral securing such
Mortgage subject only to certain permitted encumbrances; (iv) there is an
assignment of leases and rents provision creating a first priority security
interest in leases and rents arising in respect of the related Mortgaged
Property, subject only to certain permitted encumbrances; (v) there are no
mechanics' or other similar liens affecting the Mortgaged Property which are or
may be prior or equal to the lien of the Mortgage, except those insured against
pursuant to the applicable title insurance policy; (vi) the related Mortgagor
has good and indefeasible title in fee simple or leasehold interest to, and no
person has any outstanding exercisable rights of record with respect to the
purchase or sale of all or a portion of, the related Mortgaged Property, except
for rights of first refusal and purchase options; (vii) the Mortgaged Property
is covered by a title insurance policy insuring that the Mortgage is a valid
first lien, subject only to certain permitted encumbrances; (viii) no claims
have been made under the related title insurance policy and such policy is in
full force and effect and will provide that the insured includes the owner of
the Mortgage Loan; (ix) at the time of the assignment of such Mortgage Loan to
the Depositor, the Mortgage Loan Seller had good title to and was the sole owner
of such Mortgage Loan free and clear of any pledge, lien or encumbrance and such
assignment validly transfers ownership of such Mortgage Loan to the Depositor
free and clear of any pledge, lien or encumbrance; (x) the related assignment of
mortgage and related assignment of the assignment of rents and leases is legal,
valid and binding and has been recorded or submitted for recording in the
applicable jurisdiction; (xi) the Mortgage Loan Seller's endorsement of the
related Mortgage Note constitutes the legal and binding assignment of such
Mortgage Note and together with an assignment of mortgage and the assignment of
the assignment of leases and rents, legally and validly conveys all right, title
and interest in such Mortgage Loan and related Mortgage Loan documents; (xii)
each Mortgage Loan document is a legal, valid and binding obligation of the
parties thereto, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by applicable state law and by bankruptcy,
insolvency, reorganization or other laws relating to creditors' rights and
general equitable principles and except that certain provisions of such Mortgage
Loan documents are or may be unenforceable in whole or in part, but the
inclusion of such provisions does not render the Mortgage Loan documents invalid
as a whole, and such Mortgage Loan documents taken as a whole are enforceable to
the extent necessary and customary for the practical realization of the rights
and benefits afforded thereby; (xiii) the Mortgage Loan Seller has not modified
the terms of such related Mortgage Loan and related Mortgage Loan documents have
not been modified or waived in any material respect except as set forth in the
Mortgage Loan Sale Agreement; (xiv) such Mortgage Loan has not been satisfied,
canceled, subordinated, released or rescinded and the related Mortgagor has not
been released from its obligations under any Mortgage Loan document; (xv) none
of the Mortgage Loan documents is subject to any right of rescission, set-off,
valid counterclaim or defense; (xvi) each Mortgage Loan document complied in all
material respects with all material applicable state or federal laws including
usury; (xvii) the related Mortgaged Property is, in all material respects, in
compliance with, and is used and occupied in accordance with applicable law;
(xviii) the related Mortgaged Property is in good repair and no condemnation
proceedings are pending; (xix) the environmental site assessment prepared in
connection with the origination thereof reveals no known circumstances or
conditions with respect to the Mortgaged Property that would constitute or
result in a material violation of any environmental laws, require any
expenditure material in relation to the principal balance of such Mortgage Loan
to achieve or maintain compliance in all material respects with any
environmental laws or require substantial cleanup or remedial action or any
other extraordinary action in excess of the amount escrowed for such purposes;
(xx) the Mortgaged Property is covered by insurance policies providing coverage
against certain losses or damage; (xxi) all amounts required to be deposited by
the borrower at origination have been deposited; (xxii) to the Mortgage Loan
Seller's knowledge, all significant leases are in full force and effect, and
there has been no material default by the related Mortgagor or lessee; and
(xxiii) to the Mortgage Loan Seller's knowledge, there are no pending or
threatened actions, suits or proceedings by or before any court or other
governmental authority against or affecting the related Mortgagor under such
Mortgage Loan or the Mortgaged Property which, if determined against such
Mortgagor or property would materially and adversely affect the value of such
property or ability of the Mortgagor to pay principal, interest and other
amounts due under such Mortgage Loan.]
[Convertible Mortgage Loans
____% of the Mortgage Loans ("Convertible Mortgage Loans") provide that, at
the option of the related Mortgagors, the adjustable interest rate on such
Mortgage Loans may be converted to a fixed interest rate. The first month in
which any of the Mortgage Loans may convert is ____________, and the last month
in which any of the Mortgage Loans may convert is _____________. Upon
conversion, the Mortgage Rate will be converted to a fixed interest rate
determined in accordance with the formula set forth in the related Mortgage Note
which formula is intended to result in a Mortgage Rate which is not less than
the then current market interest rate (subject to applicable usury laws). After
such conversion, the monthly payments of principal and interest will be adjusted
to provide for full amortization over the remaining term to scheduled maturity.
Upon notification from a Mortgagor of such Mortgagor's intent to convert from an
adjustable interest rate to a fixed interest rate and prior to the conversion of
any such Mortgage Loan (a "Converting Mortgage Loan"), the related Warrantying
Party will be obligated to purchase the Converting Mortgage Loan at a price
equal to the outstanding principal balance thereof plus accrued interest thereon
net of any subservicing fees (the "Conversion Price"). In the event of a failure
by a Warrantying Party to purchase a converting Mortgage Loan, the Master
Servicer is required to use its best efforts to purchase such Mortgage Loan
following its conversion (a "Converted Mortgage Loan") during the one-month
period following the date of conversion at the Conversion Price.
In the event that the related Warrantying Party fails to purchase a
Converting Mortgage Loan and the Master Servicer does not purchase a Converted
Mortgage Loan, neither the Depositor nor any of its affiliates nor any other
entity is obligated to purchase or arrange for the purchase of any Converted
Mortgage Loan. Any such Converted Mortgage Loan will remain in the Mortgage Pool
as a fixed-rate Mortgage Loan and will result in the Mortgage Pool's having both
fixed rate and floating rate Mortgage Loans. See "Yield and Maturity
Considerations" herein.
Following the purchase of any Converted Mortgage Loan as described above,
the purchaser will be entitled to receive an assignment from the Trustee of such
Mortgage Loan and the purchaser will thereafter own such Mortgage Loan free of
any further obligation to the Trustee or the Bondholders with respect thereto.]
[Hybrid Rate Mortgage Loans
__% of the Mortgage Loans are partially fixed-partially floating rate
Mortgage Loans (the "Hybrid Rate Mortgage Loans").]
[The [Index] [Indices]
As of any Payment Adjustment Date, the [Index] [Indices] applicable to the
determination of the related Mortgage Rate will be a per annum rate equal to
______________, as most recently available as of the date ____ days prior to the
Payment Adjustment Date (the "Index"). Such average yields reflect the yields
for the week prior to that week in which the information is reported. In the
event that [the Index] [any related Index] is no longer available, an index
reasonably acceptable to the Trustee that is based on comparable information
will be selected by the Master Servicer.
The Index is currently calculated based on information reported in
___________. Listed below are the weekly average yields on actively traded
______________ as reported in ____________ on the date that would have been
applicable to mortgage loans having the following adjustment dates for the
indicated years. Such average yields may fluctuate significantly from week to
week as well as over longer periods and may not increase or decrease in a
constant pattern from period to period. The following does not purport to be
representative of future average yields. No assurance can be given as to the
average yields on such _______________ on any Payment Adjustment Date or during
the life of any Mortgage Loan.]
<PAGE>
[name of Index]
Adjustment Date 199 199 199 200 200 200 200
- --------------- ---- ---- ---- ---- ---- ---- ----
January [ ]...........
February [ ]..........
March [ ].............
April [ ].............
May [ ]...............
June [ ]..............
July [ ]..............
August [ ]............
September [ ].........
October [ ]...........
November [ ]..........
December [ ]..........
Certain Characteristics of the Mortgage Loans
All of the Mortgage Loans have Due Dates that occur on the first day of
each month. All of the Mortgage Loans are secured by first liens on fee simple
or leasehold interests in the related Mortgaged Properties. As of the Cut-off
Date, the Mortgage Loans had characteristics set forth below. The totals in the
following tables may not add due to rounding.
<TABLE>
<CAPTION>
Mortgage Interest Rates as of the Cut-off Date
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Mortgage Rates Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
7.2501%--7.5000%................ % $ %
7.7501%--8.0000%................
8.0001%--8.2500%................
8.2501%--8.5000%................
8.5001%--8.7500%................
8.7501%--9.0000%................
9.0001%--9.2500%................
9.2501%--9.5000%................
9.5001%--9.7500%................
9.7501%-10.0000%...............
-------------- -------------- ---------------- --------------------
Total.......................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Mortgage Interest Rate: ____%
Interest with respect to the Mortgage Loans is computed on the basis of a
360-day year consisting of twelve 30-day months.
<TABLE>
<CAPTION>
Principal Balances as of the Cut-off Date
Aggregate
Percent by Principal Percent by Aggregate
Principal Balances as of the Number of Number of Balance as of Principal Balance as
Cut-off Date Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Under $........................ % $ %
$ .............................
$ .............................
$ .............................
$ .............................
$ .............................
$ .............................
$ .............................
$ .............................
$ .............................
$ .............................
$ .............................
$ .............................
$ .............................
-------------- -------------- ---------------- --------------------
Total.......................... % $ %
============== ============== ================ ====================
</TABLE>
Average Principal Balance as of the Cut-off Date: $___
<TABLE>
<CAPTION>
Original Term to Maturity in Months
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Original Term in Months Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
............................... % $ %
...............................
...............................
...............................
...............................
-------------- -------------- ---------------- --------------------
Total.......................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Original Term to Maturity in Months: ___
<TABLE>
<CAPTION>
Remaining Term to Maturity in Months
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Remaining Term in Months Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
............................... % $ %
...............................
...............................
...............................
...............................
-------------- -------------- ---------------- --------------------
Total.......................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Remaining Term to Maturity in Months: ___
<TABLE>
<CAPTION>
Month and Year of Origination
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Month/Year Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
............................... % $ %
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
-------------- -------------- ---------------- --------------------
Total.......................... % $ %
============== ============== ================ ====================
</TABLE>
<TABLE>
<CAPTION>
Year of Scheduled Maturity
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Year Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
% $ %
-------------- -------------- ---------------- --------------------
Total.......................... % $ %
============== ============== ================ ====================
</TABLE>
_____________ of the Mortgage Loans, representing _____% of the Mortgage Loans,
as a percentage of the aggregate Principal Balance as of the Cut-off Date, are
Balloon Mortgage Loans.
<TABLE>
<CAPTION>
Balloon Mortgage Loans
Original Term to Maturity in Months
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Original Term in Months Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
............................... % $ %
...............................
...............................
-------------- -------------- ---------------- --------------------
Total.......................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Original Term to Maturity in Months: _____
<TABLE>
<CAPTION>
Balloon Mortgage Loans
Remaining Term to Maturity in Months
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Remaining Term in Months Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
............................... % $ %
...............................
...............................
-------------- -------------- ---------------- --------------------
Total.......................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Remaining Term to Maturity in Months: ___
The following table sets forth the range of remaining amortization terms of
each Balloon Mortgage Loan. The remaining amortization term of a Balloon
Mortgage Loan represents the number of months required to fully amortize the
Cut-off Balance of each Balloon Mortgage Loan.
<TABLE>
<CAPTION>
Balloon Mortgage Loans
Remaining Amortization Term
Aggregate
Percent by Principal Percent by Aggregate
Remaining Amortization Number of Number of Balance as of Principal Balance as
Term in Months Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
............................... % $ %
...............................
...............................
-------------- -------------- ---------------- --------------------
Total.......................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Remaining Amortization Term in Months: _____
The following two tables set forth the range of Cut-off Date LTV Ratios and
Maturity Date LTV Ratios of the Mortgage Loans. A "Cut-off Date LTV Ratio" is a
fraction, expressed as a percentage, the numerator of which is the Cut-off Date
Balance of a Mortgage Loan, and the denominator of which is the appraised value
of the related Mortgaged Property as determined by an appraisal thereof obtained
in connection with the origination of such Mortgage Loan. A "Maturity Date LTV
Ratio" is a fraction, expressed as a percentage, the numerator of which is the
principal balance of a Mortgage Loan on the related Maturity Date assuming all
scheduled payments due prior thereto are made and there are no principal
prepayments, and the denominator of which is the appraised value of the related
Mortgaged Property as determined by an appraisal thereof obtained in connection
with the origination of such Mortgage Loan. Because the value of Mortgaged
Properties at the Maturity Date may be different than such appraisal value,
there can be no assurance that the loan-to-value ratio for any Mortgage Loan
determined at any time following origination thereof will be lower than the
Cut-off Date LTV Ratio or Maturity Date LTV Ratio, notwithstanding any positive
amortization of such Mortgage Loan. It is also possible that the market value of
a Mortgaged Property securing a Mortgage Loan may decline between the
origination thereof and the related Maturity Date.
An appraisal of each of the Mortgaged Properties was made between and . It
is possible that the market value of a Mortgaged Property securing a Mortgage
Loan has declined since the most recent appraisal for such Mortgaged Property.
All appraisals were obtained by the related Originator in accordance with the
requirements of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989, as amended ("FIRREA").
<TABLE>
<CAPTION>
Cut-off Date LTV Ratios
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Cut-Off Date LTV Ratios Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
50% or less.................... % $ %
50.01%-55.00%..................
55.01%-60.00%..................
60.01%-65.00%..................
65.01%-70.00%..................
70.01%-75.00%..................
75.01%-80.00%..................
-------------- -------------- ---------------- --------------------
Total.......................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Cut-off Date LTV Ratio: _____%
<TABLE>
<CAPTION>
Balloon Mortgage Loan
Maturity Date LTV Ratios
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Maturity Date LTV Ratios Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
50% or less.................... % $ %
50.01%-55.00%..................
55.01%-60.00%..................
60.01%-65.00%..................
65.01%-70.00%..................
-------------- -------------- ---------------- --------------------
Total.......................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Maturity Date LTV Ratio: ___%
The following table sets forth the range of partial year 199_ Debt Service
Coverage Ratios for the Mortgage Loans. The "Debt Service Coverage Ratio" or
"DSCR" for any Mortgage Loan for any period is the ratio of Net Operating Income
produced by the related Mortgaged Property for such period covered by the
operating statement for such period to the amounts of principal and interest due
under such Mortgage Loan for the same period. The DSCRs for 199_ are for periods
that range from ____ to ____ months. The DSCRs for 199_ and 199_ for each
Mortgage Loan are set forth in Annex A hereto. The DSCRs for 199_ and 199_ are
for the entire fiscal year, except for the 199_ DSCRs for ___ Mortgage Loans
which are partial year DSCRs. Generally, "Net Operating Income" for a Mortgaged
Property equals the operating revenues for such Mortgaged Property minus its
operating expenses and replacement reserves, but without giving effect to debt
service, depreciation, non-recurring capital expenditures, tenant improvements,
leasing commissions and similar items. The operating statements for the
Mortgaged Properties used in preparing the following table were obtained from
the respective Mortgagors. The information contained therein has not been
audited, and the Depositor has made no attempt to verify its accuracy. The
information derived from these sources was not uniform among the Mortgage Loans.
In addition, partial year operations may not necessarily be representative of
full year operating results. In some instances, adjustments were made to such
operating statements principally for real estate tax and insurance expenses
resulting in increases or decreases in net operating income stated therein based
upon the Depositor's evaluation that more appropriate information was available.
In addition, obvious capital expenditures were eliminated and replacement
reserve estimates were incorporated for each property based on the Mortgage Loan
Seller's standard underwriting ranges considering property age and improvements.
The following ranges were utilized (by property type) in estimating the
replacement reserve: office, $____ to $____ per net rentable square foot;
multifamily, $____ to $___ per unit; retail, $____ to $____ per net rentable
square foot; industrial, $____ to $____ per net rentable square foot; hotel,
____% to ____% of gross income; self-storage, $____ to $____ per net rentable
square foot; nursing home, $____ to $____ per bed; cooperative/vacation homes,
$____ per unit; and mobile home park, $____ per home/pad.
<TABLE>
<CAPTION>
[Partial Year] 199_ Debt Service Coverage Ratios
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Debt Service Coverage Ratio Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
1.0000x or less................. % $ %
1.0001x--1.2000x................
1.2001x--1.4000x................
1.4001x--1.6000x................
1.6001x--1.8000x................
1.8001x--2.0000x................
2.0001x--2.2000x................
2.2001x--2.4000x................
over 2.4001.....................
-------------- -------------- ---------------- --------------------
Total.......................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Debt Service Coverage Ratio: ___x
There are ___ Mortgage Loans with a [partial year] 199_ DSCR below 1.00x.
The Mortgage Loans are secured by Mortgaged Properties located in ____
different states. The table below sets forth the states in which the Mortgaged
Properties are located:
<PAGE>
<TABLE>
<CAPTION>
Geographic Distribution
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
State Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
California..................... % $ %
Texas..........................
New York.......................
Florida........................
Georgia........................
Arizona........................
Pennsylvania...................
Illinois.......................
Colorado.......................
Michigan.......................
Massachusetts..................
New Jersey.....................
North Carolina.................
Kentucky.......................
Minnesota......................
Maryland.......................
Nevada.........................
Wisconsin......................
Oklahoma.......................
Virginia.......................
Louisiana......................
South Dakota...................
Tennessee......................
South Carolina.................
-------------- -------------- ---------------- --------------------
Total.......................... % $ %
============== ============== ================ ====================
</TABLE>
<TABLE>
<CAPTION>
Property Types
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Type Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Multifamily....................... % $ %
Retail--with anchor tenant (1)....
Retail--without anchor tenant (1).
Hotel.............................
Nursing Home......................
Office............................
Self Storage......................
Industrial........................
Mobile Home Park..................
Cooperative/Vacation Homes........
-------------- -------------- ---------------- --------------------
Total........................... % $ %
============== ============== ================ ====================
</TABLE>
(1) For purposes of this table, the properties with an anchor tenant are as
designated in Annex A. The anchor tenant, if any, is set forth in Annex A.
<TABLE>
<CAPTION>
Years Since the Mortgaged Properties Were Built (1)
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Property Age in Years Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
6 or less...................... % $ %
7-11...........................
12-16..........................
17-21..........................
22-26..........................
27-31..........................
Over 31........................
-------------- -------------- ---------------- --------------------
Total........................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Property Age in Years: ___%
(1) See Annex A for the date on which the Mortgaged Property most recently
underwent some degree of capital improvements.
<TABLE>
<CAPTION>
Physical Occupancy Percentages (1)
Multifamily, Mobile Home Park and Cooperative/Vacation Homes
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Occupancy Percentages Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
80.1%-- 85.0%................... % $ %
85.1%-- 90.0%...................
90.1%-- 95.0%...................
95.1%--100.0%...................
-------------- -------------- ---------------- --------------------
Total........................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Occupancy Percentage: ___%
(1) See Annex A for dates as of which occupancy percentages were calculated for
each Mortgaged Property.
<TABLE>
<CAPTION>
Physical Occupancy Percentages (1)
Retail
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Occupancy Percentages Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
70.1%-- 75.0%................... % $ %
80.1%-- 85.0%...................
85.1%-- 90.0%...................
90.1%-- 95.0%...................
95.1%--100.0%...................
-------------- -------------- ---------------- --------------------
Total........................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Occupancy Percentage: ____%
(1) See Annex A for dates as of which occupancy percentages were calculated for
each Mortgaged Property.
<TABLE>
<CAPTION>
Physical Daily Occupancy Percentages (1)
Hotel
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Occupancy Percentages Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
60.1%--65.0%.................... % $ %
65.1%--70.0%....................
70.1%--75.0%....................
75.1%--80.0%....................
80.1%--85.0%....................
85.1%--90.0%....................
90.1%--95.0%....................
-------------- -------------- ---------------- --------------------
Total........................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Occupancy Percentage: ____%
(1) See Annex A for the period over which occupancy percentages were calculated
for each Mortgaged Property.
<TABLE>
<CAPTION>
Physical Occupancy Percentages (1)
Office
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Occupancy Percentages Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
90.1%-- 95.0%................... % $ %
95.1%--100.0%...................
-------------- -------------- ---------------- --------------------
Total........................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Occupancy Percentage: ____%
(1) See Annex A for dates as of which occupancy percentages were calculated for
each Mortgaged Property.
<TABLE>
<CAPTION>
Physical Occupancy Percentages (1)
Other
Aggregate
Percent by Principal Percent by Aggregate
Number of Number of Balance as of Principal Balance as
Occupancy Percentages Mortgage Loans Mortgage Loans the Cut-off Date of the Cut-off Date
- -------------------------------- -------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
85.1%-- 90.0%................... % $ %
90.1%-- 95.0%...................
95.1%--100.0%...................
-------------- -------------- ---------------- --------------------
Total........................... % $ %
============== ============== ================ ====================
</TABLE>
Weighted Average Occupancy Percentage: ____%
(1) See Annex A for dates as of which occupancy percentages were calculated for
each Mortgaged Property.
With certain limited exceptions relating to casualty and condemnation
proceeds, or other prepayments beyond the borrower's control, all of the
Mortgage Loans prohibit the prepayment thereof until a date specified in the
related Mortgage Note (such period, the "Lock-out Period" and the date of
expiration thereof, the "Lock-out Date") and/or provide that upon any voluntary
principal prepayment of a Mortgage Loan, the related Mortgagor will be required
to pay a prepayment premium or yield maintenance penalty (a "Prepayment
Premium"). The following table sets forth the percentage of the declining
aggregate balance of all the Mortgage Loans that on February 1 of each of the
years indicated will be within their related Lock-out Period and/or in which a
principal prepayment must be accompanied by a Prepayment Premium.
<TABLE>
<CAPTION>
Prepayment Lock-out/Prepayment Premium Analysis
Percentage of Mortgage Loans by Outstanding Principal Balance
as of the Date Indicated Assuming No Prepayments
June June June June June June June June June June
Current 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lock-out % % % % % % % % % % %
Prepayment Premium
Yield Maintenance (1)
7.00--7.99% (2)........
6.00--6.99% (2)........
5.00--5.99% (2)........
4.00--4.99% (2)........
3.00--3.99% (2)........
2.00--2.99% (2)........
1.00--1.99% (2)........
0.01--0.99% (2)........
No Prepayment Premium..
======= ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
Total.................
------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
</TABLE>
(1) The Mortgage Loans generally require the payment of a Prepayment Premium in
connection with any principal prepayment, in whole or in part. Any
Prepayment Premium will equal the present value, as of the date of
prepayment, of the remaining Monthly Payments from such date of prepayment
through the related stated maturity (including the Balloon Payment),
determined by discounting such payments at a U.S. Treasury rate specified
therein, minus the then outstanding balance, subject to a minimum
Prepayment Premium equal to __% of the principal balance of such Mortgage
Loan being prepaid.
(2) Mortgage Loan requires a Prepayment Premium equal to indicated percentage
of amount prepaid.
(3) Millions of dollars.
Borrower Concentration
[Description of Borrower Concentrations]
Related Borrowers
[Description of Related Borrowers]
Escrows
All of the Mortgage Loans provide for monthly escrows to cover property
taxes on the Mortgaged Properties. Monthly escrows to cover insurance premiums
on the Mortgaged Properties are also generally required.
_______ of the Mortgage Loans, which represent _____% of the Mortgage
Loans, also require monthly escrows to cover ongoing replacements and capital
repairs.
_______ of the Mortgage Loans, which represent _____% by principal balance
of the Mortgage Loans secured by retail, industrial or office properties, also
required upfront or monthly escrows for the full term or a portion of the term
of the related Mortgage Loan to cover anticipated re-leasing costs, including
tenant improvements and leasing commissions.
See Annex A for additional information on the monthly escrows on the
Mortgage Loans.
Underwriting Guidelines
[________________________ (the "Originator") has represented to the
Depositor that all of the Mortgage Loans were underwritten pursuant to its
[Multifamily and Commercial Lending Program]. The Originator began originating
mortgage loans in accordance with such standards in __________, 19__. Typically,
the multifamily loans are 30 year term fully amortizing loans secured by ___ to
___ unit apartment buildings and the commercial loans are 30 year term fully
amortizing loans secured by office buildings, shopping centers, mobile home
parks, industrial properties and other approved property types. Mortgage loans
underwritten pursuant to the [Multifamily and Commercial Lending Program] have
maximum loan amounts and LTV's and minimum DSCR's which are determined from time
to time by [the Loan Committee] of the Board of Directors of the Originator.
Appraisals and field inspections (performed by outside and certified inspectors)
and title insurance are required for each multifamily and commercial loan.
Under the [Multifamily and Commercial Lending Program] standards presently
in effect, the maximum loan amount is generally $__________, the maximum LTV is
__% of the appraised value of the mortgaged property for multifamily loans and
__% for commercial loans, and the minimum DSCR is ___ to 1.00, based on the
applicable level of the related index and the related Note Margin, for
multifamily loans, ___ to 1.00, based on the applicable level of the related
index and the related Note Margin for commercial loans. However, senior
management may approve a higher loan amount, a lower DSCR or a higher LTV if it
is determined that borrower has a strong financial position, good credit and
good property management skills and/or pledges additional collateral. With
respect to mortgage loans secured by seasoned multifamily properties, either __%
of the living units (or the higher level necessary to cover debt service and pay
all other expenses) must be occupied at rent levels that support the appraised
value of the mortgaged property, or an appropriate holdback of loan proceeds
must be established until the required occupancy level is met. For newly
constructed properties, a lower occupancy level may be approved by [the Loan
Committee].
The Originator's underwriting standards under [the Multifamily and
Commercial Lending Program] are primarily intended to assess the economics of
the mortgaged property and the financial capabilities, credit standing and
managerial ability of the borrower. In determining whether a loan should be
made, the Originator considers, among other things, the creditworthiness of the
mortgagor, the borrower's income, liquid assets and liabilities, the borrower's
management experience, DSCRs, the borrower's overall financial position and the
adequacy of such property as collateral for the mortgage loan. While the primary
consideration in underwriting a mortgage loan is the property securing the
mortgage loan, sufficient documentation on the borrower is required to establish
the financial strength and ability of the borrower to successfully operate the
property and meet its obligations under the note and deed of trust. The majority
of the mortgage loans originated by the Originator provide for recourse against
the related borrower.
[The Multifamily and Commercial Lending Program] requires that the property
and records regarding the property are inspected to determine the number of
units that can be rebuilt under current zoning requirements, the number of
buildings on the property, the type of construction materials used, the
proximity of the property to natural hazards, flood zones and fire stations and
whether there are any environmental factors and whether a tract map has been
recorded. The property must front on publicly dedicated and maintained streets
with provisions for adequate and safe ingress and egress. Properties that share
ingress and egress through an easement or private road must have a recorded
non-exclusive easement. Recreational facilities and amenities, if any, must be
located on site and be under the exclusive control of the owner of the premises.
If available, engineering reports concerning the condition of the major building
components of the property are reviewed as is a ground lease analysis if the
property is on leased ground. Also, the title is reviewed to determine if there
are any covenants, conditions and restrictions, easements or reservations of
mineral interests in the property. The properties are appraised by independent
appraisers approved by the Originator.
In addition to the considerations set forth above, with respect to Mortgage
Loans secured by commercial properties, the Originator's lending policies
typically require that the commercial usage is permitted under local zoning and
use ordinances and the utilization of the commercial space is compatible with
the property and neighborhood. If the commercial property is an office building,
the office building must have an excellent occupancy history, must be located in
a good office market area and in a conforming neighborhood, must have on-site
parking and must be fire sprinkler equipped according to zoning codes.
Industrial properties must be located in a conforming industrial marketplace and
may not be used for the production, storage or treatment of toxic waste. Retail
properties must be highly visible and located on a heavily traveled thoroughfare
and typically have tenants on term leases. The Originator may not make a loan
secured by a property that has any of the following characteristics: inadequate
maintenance or repairs as determined by the Originator, the property is subject
to covenants, conditions and restrictions unacceptable to the Originator,
existence of or potential for hazardous geological conditions, the property is
not to code or the cost of restoring the property to code is prohibitive or
existence of or potential for contamination by hazardous toxic materials.
The Originator analyzes the financial statements of the borrower to
determine the borrower's equity position, particularly as it relates to real
estate mortgage demands on equity. If the borrower's holdings are heavily
encumbered so that the debt service requirements consume a high percentage of
the rental income from the mortgaged property, or consist substantially of
unimproved or underimproved properties having little or no gross income, the
Originator analyzes whether the borrower will be able to meet all of the
mortgaged property's loan obligations (expenses, debt service and equity
return). In addition to DSCRs, the borrower's income and expense ratios are
calculated.
In addition to the income from the mortgaged property, the Originator also
evaluates the borrower's income as a possible secondary source of repayment for
the mortgage loan. In analyzing such income, the Originator considers, among
other factors, employment or business history of the borrower and the stability
and seasonality of the borrower's current employment or business. If the
borrower derives income from rental property, the Originator evaluates the
experience of the manager of the rental property, type of tenancy and the cash
flow generated by the borrower's real estate portfolio. The Originator also
reviews the borrower's credit history to determine the borrower's ability and
willingness to repay debts. In general, the Originator will not make a mortgage
loan to a borrower who has a history of slow payments or delinquencies,
bankruptcies, collection actions, foreclosures or judgments against the borrower
without adequate explanations and verifications.]
The Mortgage Loans selected for inclusion in the Mortgage Pool from loans
in the Depositor's portfolio were not so selected on any basis which would have
a material adverse effect on the Bondholders.
Additional Information
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 time the Offered Bonds are issued, as adjusted for the
scheduled principal payments due on or before the Cut-off Date. Prior to the
issuance of the Offered Bonds, a Mortgage Loan may be removed from the Mortgage
Pool if the Depositor deems such removal necessary or appropriate or if it is
prepaid. A limited number of other mortgage loans may be included in the
Mortgage Pool prior to the issuance of the Offered Bonds, unless including such
mortgage loans would materially alter the characteristics of the Mortgage Pool
as described herein. The Depositor believes that the information set forth
herein will be representative of the characteristics of the Mortgage Pool as it
will be constituted at the time the Offered Bonds are issued, although the range
of Mortgage Rates and maturities and certain other characteristics of the
Mortgage Loans in the Mortgage Pool may vary.
In the event the Mortgage Loans included in the Mortgage Pool vary in any
material respect from the characteristics of the Mortgage Loans described
herein, a Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Bonds and will be filed, together with the Indenture,
with the Securities and Exchange Commission within fifteen days after the
initial issuance of the Offered Bonds.
SERVICING OF THE MORTGAGE LOANS
[Description of Master Servicer and Special Servicer to be provided by Master
Servicer]
Responsibilities of Master Servicer
Under the Servicing Agreement, the Master Servicer is required to service
and administer the Mortgage Loans solely on behalf of and in the best interests
of and for the benefit of the Bondholders, in accordance with the terms of the
Servicing Agreement and the Mortgage Loans and to the extent consistent with
such terms, with the higher of (a) the standard of care, skill, prudence and
diligence with which the Master Servicer services and administers mortgage loans
that are held for other portfolios that are similar to the Mortgage Loans and
(b) the standard of care, skill, prudence and diligence with which the Master
Servicer services and administers mortgage loans for its own portfolio and are
similar to the Mortgage Loans, in either case, giving due consideration to
customary and usual standards of practice of prudent institutional multifamily
and commercial mortgage lenders, loan servicers and asset managers (with respect
to the Master Servicer, the "Servicing Standard").
The Master Servicer will also be required to perform other customary
functions of a servicer of comparable loans, including maintaining (or using its
best efforts to cause the Mortgagor under each Mortgage Loan to maintain)
hazard, business interruption and general liability insurance policies (and, if
applicable, rental interruption policies) as described herein and filing and
settling claims thereunder; maintaining escrow or impoundment accounts of
Mortgagors for payment of taxes, insurance and other items required to be paid
by any Mortgagor pursuant to the Mortgage Loan; processing assumptions or
substitutions in those cases where the Master Servicer has determined not to
enforce any applicable due-on-sale clause; demanding that the Mortgagor cure
delinquencies; inspecting and managing Mortgaged Properties under certain
circumstances; and maintaining records relating to the Mortgage Loans.
Responsibilities of Special Servicer
The servicing responsibility on a particular Mortgage Loan will be
transferred to the Special Servicer upon the occurrence of certain servicing
transfer events (each, a "Servicing Transfer Event"), including the following:
(i) the Mortgage Loan becomes a "Defaulted Mortgage Loan" because it is more
than 60 days delinquent in whole or in part in respect of any monthly payment or
is delinquent in whole or in part in respect of the related Balloon Payment;
(ii) the related Mortgagor has entered into or consented to bankruptcy,
appointment of a receiver or conservator or a similar insolvency or similar
proceeding, or the Mortgagor has become the subject of a decree or order for
such a proceeding which shall have remained in force undischarged or unstayed
for a period of 60 days; (iii) the Master Servicer shall have received notice of
the foreclosure or proposed foreclosure of any other lien on the Mortgaged
Property; (iv) the related Mortgagor admits in writing its inability to pay its
debts generally as they become due, files a petition to take advantage of any
applicable insolvency or reorganization statute, makes an assignment for the
benefit of its creditors, or voluntarily suspends payment of its obligations;
(v) any other default has occurred which has materially and adversely affected
the value of the related Mortgaged Loan and has continued unremedied for the
applicable grace period specified in the related mortgage; (vi) the related
Mortgaged Property becomes an REO Property; or (vii) if for any reason, the
Master Servicer cannot enter into an assumption agreement upon the transfer by
the related Mortgagor of the mortgage. A Mortgage Loan serviced by the Special
Servicer is referred to herein as a "Specially Serviced Mortgage Loan". The
Special Servicer will collect certain payments on such Specially Serviced
Mortgage Loans and make certain remittances to, and prepare certain reports for
the Master Servicer with respect to such Mortgage Loans. The Master Servicer
shall have no responsibility for the performance by the Special Servicer of its
duties under the Servicing Agreement provided that the Master Servicer continues
to perform certain servicing functions on such Specially Serviced Mortgage Loans
and, based on the information provided to it by the Special Servicer, prepares
certain reports to the Trustee with respect to such Specially Serviced Mortgage
Loans. To the extent that any Mortgage Loan, in accordance with its original
terms or as modified in accordance with the Servicing Agreement, becomes a
performing Mortgage Loan for a least three consecutive months, the Special
Servicer will return servicing of such Mortgage Loan to the Master Servicer.
Under the Servicing Agreement the Special Servicer is required to service,
administer and dispose of Specially Serviced Mortgage Loans solely in the best
interests of and for the benefit of the Bondholders, in accordance with the
Servicing Agreement and the Mortgage Loans and to the extent consistent with
such terms, with the higher of (a) the standard of care, skill, prudence and
diligence with which the Special Servicer services, administers and disposes of,
distressed mortgage loans and related real property that are held for other
portfolios that are similar to the Mortgage Loans, Mortgaged Property and REO
Property and (b) the standard of care, skill, prudence and diligence with which
the Special Servicer services, administers and disposes of distressed mortgage
loans and related real property for its own portfolio and are similar to the
Mortgage Loans, Mortgaged Property and REO Property, giving due consideration to
customary and usual standards of practice of prudent institutional multifamily
and commercial mortgage lenders, loan servicers and asset managers, so as to
maximize the net present value of recoveries on the Mortgage Loans (with respect
to the Special Servicer, the "Servicing Standard").
The Special Servicer, on behalf of the Trustee, may at any time institute
foreclosure proceedings, exercise any power of sale contained in any mortgage,
obtain a deed in lieu of foreclosure, or otherwise acquire, in the name of the
Issuer, title to a Mortgaged Property securing a Specially Serviced Mortgage
Loan by operation of law or otherwise, if such action is consistent with the
Servicing Standard. The Special Servicer may not acquire title to any related
Mortgaged Property or take any other action that would cause the Issuer, for the
benefit of Bondholders, or any other specified person to be considered to hold
title to, to be a "mortgagee-in-possession" of, or to be an "owner" or an
"operator" of such Mortgaged Property within the meaning of certain federal
environmental laws, unless the Special Servicer has previously determined, based
on a report prepared by a person who regularly conducts environmental audits
(which report will be paid as an expense of the Issuer), that:
(i) the Mortgaged Property is in compliance with applicable environmental
laws; or if not, that taking such actions as are necessary to bring
the Mortgaged Property in compliance therewith is reasonably likely to
produce a greater recovery on a present value basis, after taking into
account any risks associated therewith, than not taking such actions;
and
(ii) and there are no circumstances present at the Mortgaged Property
relating to the use, management or disposal of any hazardous
substances, hazardous materials, wastes, or petroleum-based materials
for which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or local law or
regulation or that, if any such materials are present, taking such
action with respect to the affected Mortgaged Property is reasonably
likely to produce a greater recovery on a present value basis, after
taking into account any risks associated therewith, than not taking
such actions.
The Special Servicer shall have full power and authority to do any and all
things in connection with servicing and administering a Mortgage Loan that it
may deem in its best judgment necessary or advisable, including, without
limitation, to execute and deliver on behalf of the Issuer any and all
instruments of satisfaction or cancellation or of partial release or full
release or discharge and all other comparable instruments, to reduce the related
Mortgage Interest Rate, and to defer or forgive payment of interest and/or
principal with respect to any Specially Serviced Mortgage Loan or any Mortgaged
Property. [The Special Servicer may not permit a modification of any Mortgage
Loan to extend the scheduled maturity date of any Specially Serviced Mortgage
Loan more than three years beyond the scheduled maturity date thereof as of the
Cut-off Date without the consent of the Extension Advisor.] [See "--Extension
Advisor" below.] Notwithstanding the forgoing, the Special Servicer may not
permit any such modification with respect to a Balloon Mortgage Loan if it
results in the extension of such maturity date beyond the amortization term of
such Balloon Mortgage Loan absent the related Balloon Payment. The Special
Servicer will prepare a report (an "Asset Strategy Report") for each Mortgage
Loan which becomes a Specially Serviced Mortgage Loan not later than thirty (30)
days after the servicing of such Mortgage Loan is transferred to the Special
Servicer. Each Asset Strategy Report will be delivered to each holder of a Class
__, Class __ and Class __ Bond upon request. The holders of the fewest number of
classes of Bonds representing the most subordinate Bonds with an aggregate Bond
Principal Amount equal to at least __% of the Bond Principal Amount of all
Classes of Bonds (the "Monitoring Bondholders") will designate one Monitoring
Bondholder pursuant to the Servicing Agreement (the "Directing Bondholder ").
Each Asset Strategy Report will be delivered to the Directing Bondholder. The
Directing Bondholder may object to any Asset Strategy Report within 10 business
days of receipt. If the Directing Bondholder does not disapprove an Asset
Strategy Report within 10 business days, the Special Servicer shall implement
the recommended action as outlined in such Asset Strategy Report. If the
Directing Bondholder disapproves such Asset Strategy Report and the Special
Servicer has not made the affirmative determination described below, the Special
Servicer will revise such Asset Strategy Report as soon as practicable. The
Special Servicer will revise such Asset Strategy Report until the Directing
Bondholder fails to disapprove such revised Asset Strategy Report as described
above, provided that the Special Servicer shall not be under any obligation to
perform any actions which are not consistent with applicable laws and the
related Mortgage Loan documents. Any Bondholder may request and obtain a copy of
any Asset Strategy Report except to the extent prohibited by applicable law or
the related Mortgage Loan documents.
[The Special Servicer may be removed without cause at any time by the
Directing Bondholder.]
[Extension Advisor
The "Extension Advisor" will be responsible for approving any proposed
Mortgage Loan modification that extends the maturity date of a Mortgage Loan by
more than three (3) years beyond the scheduled maturity date of such loan as of
the Cut-off Date. The initial Extension Advisor, acting on behalf of the holders
of the Offered Bonds, shall only grant such approvals if it shall have
determined that the decision of the Special Servicer to so modify the Mortgage
Loan is consistent with the Special Servicer standard set forth in the Servicing
Agreement. Any subsequent Extension Advisor may grant such approvals if it shall
have determined that the decision of the Special Servicer to so modify the
Mortgage Loan is in the best interest of the holders of the Offered Bonds.
The initial Extension Advisor will be ________________________. At any
time, the holders of a majority of the outstanding aggregate Bond Principal
Amount of the Offered Bonds may remove the Extension Advisor. In such event, the
Trustee will so inform such Bondholders, and a majority of Bond Principal Amount
of the holders of such Bonds shall have the right to appoint a replacement
Extension Advisor.]
Servicing and Other Compensation and Payment of Expenses
The principal compensation to be paid to the Master Servicer in respect of
its servicing activities will be the "Servicing Fee." The Servicing Fee will be
payable monthly and will accrue at the applicable "Servicing Fee Rate" and will
be computed on the basis of the same principal amount and for the same period
respecting which any related interest payment on each Mortgage Loan is computed.
The Servicing Fee Rate with respect to each Mortgage Loan equals ___% per annum.
[The Master Servicer will also be entitled to retain as additional
servicing compensation (i) all investment income earned on amounts on deposit in
the Mortgagor escrow accounts (to the extent consistent with applicable law and
the related Mortgage Loan documents) and the Collection Account, (ii) all
amounts collected with respect to the Mortgage Loans (that are not Specially
Serviced Mortgage Loans) in the nature of late payment charges, late fees, NSF
check charges (including with respect to Specially Serviced Mortgage Loans),
extension fees, modification fees, assumption fees, and similar fees and
charges, and (iii) any Prepayment Interest Excess (to the extent not offset
against any Prepayment Interest Shortfall in accordance with the provisions of
the Servicing Agreement).
The principal compensation to be paid to the Special Servicer in respect of
its special servicing activities will be the Special Servicing Fee. The Special
Servicing Fee will be payable monthly only from amounts received in respect of
each Specially Serviced Mortgage Loan. The Special Servicing Fee will equal
____% of all amounts collected with respect to any Specially Serviced Mortgage
Loans.
[The Special Servicer will also be entitled to receive with respect to any
Specially Serviced Mortgage Loan or REO Property that is sold or transferred or
otherwise liquidated, in addition to the Special Servicing Fee, a disposition
fee (the "Disposition Fee") equal to ___% of the net proceeds of the sale or
liquidation of any Specially Serviced Mortgage Loan or REO Property.]
[The Special Servicer will also be entitled to retain as additional
servicing compensation (i) all investment income earned on amounts on deposit in
any REO Account, and (ii) all amounts collected with respect to the Specially
Serviced Mortgage Loans in the nature of late payment charges, late fees,
assumption fees, modification fees, extension fees or similar items.]
Conflicts of Interest
The Special Servicer or its affiliates own and are in the business of
acquiring assets similar to the Mortgage Loans owned by the Issuer. To the
extent that any mortgage loans owned and/or serviced by the Special Servicer or
its affiliates are similar to the Mortgage Loans owned by the Issuer, the
mortgaged properties related to such mortgage loans may, depending upon certain
circumstances such as the location of the mortgaged property, compete with the
Mortgaged Properties related to the Mortgage Loans owned by the Issuer for
tenants, purchasers, financing and similar resources.
DESCRIPTION OF THE BONDS
General
The Issuer's Series 199__-__ Collateralized Mortgage Bonds (the "Bonds")
will be issued on or about ___________, 199__ (the "Closing Date") in an
aggregate Bond Principal Amount of approximately $_____________, pursuant to an
Indenture, to be dated as of ____________, 199__ (the "Indenture"), between the
Owner Trustee, on behalf of the Issuer, and the Trustee, on behalf of the
holders of the Bonds (the "Bondholders"). The Bonds will be issued in [seven]
classes (each, a "Class") to be designated as: [(i) the Class A-1 and Class A-2
Bonds (collectively, the "Class A Bonds" or the "Senior Bonds"); (ii) the Class
B, Class C and Class D Bonds (collectively with the Class A Bonds, the "Offered
Bonds"); and (iii) the Class E and Class F Bonds (collectively, the "Private
Bonds"; and, collectively with the Class B, Class C and Class D Bonds, the
"Subordinate Bonds")]. The Bonds will be secured by the Trust Estate. The "Trust
Estate" will consist of all rights, money, instruments, securities and other
property, including all proceeds thereof, which are subject to, or intended to
be subject to, the lien of the Indenture for the benefit of the Bondholders,
including without limitation the Collateral. The "Collateral" will consist of
the Mortgage Loans, any REO Properties and the Collection Account, all of which
is more specifically described under "Description of the Mortgage Pool" herein
and "Description of the Collateral" and "Description of the
Agreements--Accounts" in the Prospectus.
Only the Offered Bonds are offered hereby. The Private Bonds will initially
be issued to and held by an affiliate of the Issuer and are not offered hereby.
The Offered Bonds will be non-recourse obligations of the Issuer. The
holders and beneficial owners of the Offered Bonds will be deemed to have agreed
that they have no rights or claims against the Issuer directly and may only look
to the Collateral to satisfy the Issuer's obligations under the Indenture. Each
holder and beneficial owner of an Offered Bond will also be deemed, by the
acceptance of its Bond or interest therein, to have agreed not to file or cause
a filing against the Issuer of an involuntary petition under any bankruptcy or
receivership law.
The Offered Bonds are not insured or guaranteed by any government agency or
instrumentality or by any other person.
The respective Classes of Bonds will be issued in the initial aggregate
Bond Principal Amounts (in each case, subject to a variance of plus or minus
__%), and will accrue interest at the Bond Interest Rates set forth below:
Initial Aggregate Bond
Class Principal Amount Bond Interest Rate
- -------------------- ---------------------- ------------------
[Class A-1]......... $ %
[Class A-2]......... $ %
[Class B]........... $ %
[Class C]........... $ %
[Class D]........... $ %
[Class E]........... $ %
[Class F]........... $ %
The "Issuer's Equity" represents the right of the Issuer or its designee
(i) to receive all payments on and proceeds of the Collateral not otherwise
allocable to pay interest, principal or other amounts on the Bonds in accordance
with their terms or expenses of the Trust Estate and (ii) to have the remaining
Collateral returned to it after the Indenture is satisfied and discharged. The
principal amount of the Issuer's Equity as of any date of determination is the
amount (the "Overcollateralization Amount"), if any, by which the then aggregate
Stated Principal Balance of the Mortgage Pool (initially equal to the Initial
Pool Balance) exceeds the then aggregate Bond Principal Amount of all the Bonds.
As of the Closing Date, the Overcollateralization Amount will equal
approximately $_______________.
The "Stated Principal Balance" of each Mortgage Loan will generally equal
the Cut-off Date Balance thereof, reduced (to not less than zero) on each
Payment Date by (i) any payments or other collections (or advances in lieu
thereof) of principal of such Mortgage Loan that have been applied to make
payments to Bondholders and/or the Issuer on such date and (ii) the principal
portion of any Realized Loss incurred in respect of such Mortgage Loan during
the related Collection Period.
The "Collection Period" with respect to any Payment Date will be the period
commencing immediately following the Determination Date in the month immediately
preceding the month in which such Payment Date occurs (or, in the case of the
initial Collection Period, commencing immediately following the Cut-off Date)
and ending on and including the Determination Date in the month in which such
Payment Date occurs.
The "Determination Date" with respect to any Payment Date will be the __
day of the month in which such Payment Date occurs, of if such __ day is not a
business day, the immediately preceding business day.
Registration and Denominations
The Offered Bonds will be issued in denominations of not less than $_______
initial Bond Principal Amount and in any whole dollar denomination in excess
thereof.
Each Class of Offered Bonds will initially be issued in book-entry form
through the facilities of The Depository Trust Company ("DTC") and, accordingly,
will constitute Book-Entry Bonds within the meaning of the Prospectus. In
connection therewith, each Class of Offered Bonds will initially be represented
by one or more fully registered physical securities registered in the name of
the nominee of DTC. The Depositor has been informed by DTC that DTC's nominee
will be Cede & Co. No beneficial owner of a Book-Entry Bond (each, a "Bond
Owner") will be entitled to receive a fully registered physical security (a
"Definitive Bond") representing its interest in such Bond, except under the
limited circumstances described under "Description of the Bonds--Book-Entry
Registration and Definitive Bonds" in the Prospectus. Unless and until
Definitive Bonds are issued in respect of the Offered Bonds, beneficial
ownership interests in each such Class of Bonds will be maintained and
transferred on the book-entry records of DTC and its participating organizations
(the "DTC Participants"), and all references to actions by holders of each such
Class of Bonds will refer to actions taken by DTC upon instructions received
from the related Bond Owners through the DTC Participants in accordance with DTC
procedures, and all references herein to payments, notices, reports and
statements to the holders of each such Class of Bonds will refer to payments,
notices, reports and statements to DTC or Cede & Co., as the registered holder
thereof, for payment to the related Bond Owners through the DTC Participants in
accordance with DTC procedures. The form of such payments and transfers may
result in certain delays in receipt of payments by an investor and may restrict
an investor's ability to pledge its securities. See "Description of the
Bonds--Book-Entry Registration and Definitive Bonds" and "Risk Factors--Owner of
Book-Entry Bonds Not Entitled to Exercise Rights of Holders of Bonds" in the
Prospectus.
The Trustee will initially serve as registrar (in such capacity, the "Bond
Registrar") for purposes of recording and otherwise providing for the
registration of the Offered Bonds and, if and to the extent Definitive Bonds are
issued in respect thereof, of transfers and exchanges of the Offered Bonds.
Payments on the Bonds
General. Payments on the Bonds will be made by or on behalf of the Trustee,
to the extent of available funds, on the ___ day of each month or, if any such
___ day is not a business day, then on the next succeeding business day,
commencing in ____________, 199__ (each, a "Payment Date"). Except as described
below, all such payments will be made to the Bondholders of record at the close
of business on the last business day of the month preceding the month in which
the related Payment Date occurs (each, a "Record Date"). [As to each such
Bondholder, such payments will be made by wire transfer in immediately available
funds to the account specified by the Bondholder at a bank or other entity
having appropriate facilities therefor, if such Bondholder will have provided
the Trustee with wiring instructions no less than ____ business days prior to
the related Record Date and is the registered owner of Bonds with an aggregate
initial Bond Principal Amount of at least $[5,000,000], or otherwise by check
mailed to such Bondholder.] Until Definitive Bonds are issued in respect
thereof, Cede & Co. will be the registered holder of the Offered Bonds. See
"--Registration and Denominations" above. The final payment on any Bond will be
made only upon presentation and surrender of such Bond at the location that will
be specified in a notice of the pendency of such final payment. All payments
made with respect to a Class of Bonds will be allocated pro rata among the
outstanding Bonds of such Class based on the respective Bond Principal Amounts
thereof.
Funds Available for Payments on the Bonds. With respect to any Payment
Date, payments of interest and principal on the Bonds will be made from the
Available Payment Amount for such date. [The "Available Payment Amount" for any
Payment Date will, in general, equal:
(a) all amounts on deposit in the Collection Account (see "Description of
the Agreements--Accounts" in the Prospectus) 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 subsequent to the
related Collection Period;
(ii) Prepayment Premiums (however, Prepayment Premiums will be
excluded from the Available Payment Amount only if the Bonds have not been
declared due and payable following an Issuer Event of Default or if any
such declaration and its consequences have been rescinded and annulled);
(iii) amounts that are payable or reimbursable to any person other
than the Bondholders in respect of their Bonds or the Issuer in respect of
the Issuer's Equity (including amounts payable to the Master Servicer, the
Special Servicer, any Sub-Servicers or the Trustee as compensation
(including Trustee Fees, Servicing Fees, Special Servicing Fees, Default
Interest and late payment charges (to the extent not otherwise applied to
cover interest on Advances), and assumption fees and modification fees),
amounts payable in reimbursement of outstanding Advances, together with
interest thereon); and
(iv) amounts deposited in the Collection Account in error;
plus (b) to the extent not already included in clause (a), any P&I Advances
and/or Compensating Interest Payment made in respect of such Payment Date.]
With respect to any Payment Date, payments of Yield Maintenance Amounts on
the Bonds will be made from Prepayment Premiums actually collected on the
Mortgage Loans during the related Collection Period.
Priority of Payments. On each Payment Date, unless the Bonds have been
declared due and payable following an Issuer Event of Default and such
declaration and its consequences have not been rescinded and annulled, the
Available Payment Amount for such date will be applied to make payments to the
respective Classes of Bondholders and the Issuer for the following purposes and
in the following order of priority, in each case to the extent of remaining
funds:
[(i) to the holders of the Class A Bonds in respect of
interest, pro rata as between the two Classes of Class
A Bondholders based on entitlement, up to an amount
equal to all Accrued Bond Interest (as defined below)
in respect of each such Class of Bonds for the related
Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual
Periods;
(ii) to the holders of the Class A Bonds in respect of
principal, allocable as between the two Classes of
Class A Bondholders as described below, up to an
amount equal to the lesser of (a) the then aggregate
Bond Principal Amount of the Class A Bonds and (b) the
Principal Payment Amount (as defined below) for such
Payment Date;
(iii) to the holders of the Class B Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual
Periods;
(iv) after the aggregate Bond Principal Amount of the Class
A Bonds has been reduced to zero, to the holders of
the Class B Bonds in respect of principal, up to an
amount equal to the lesser of (a) the then aggregate
Bond Principal Amount of the Class B Bonds and (b) the
excess, if any, of the Principal Payment Amount for
such Payment Date over any amounts paid on such
Payment Date in retirement of the Class A Bonds
pursuant to clause (ii) above;
(v) to the holders of the Class C Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual
Periods;
(vi) after the aggregate Bond Principal Amount of the Class
A and Class B Bonds has been reduced to zero, to the
holders of the Class C Bonds in respect of principal,
up to an amount equal to the lesser of (a) the then
aggregate Bond Principal Amount of the Class C Bonds
and (b) the excess, if any, of the Principal Payment
Amount for such Payment Date over any amounts paid on
such Payment Date in retirement of the Class A and/or
Class B Bonds pursuant to clauses (ii) and (iv) above;
(vii) to the holders of the Class D Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual
Periods;
(viii) after the aggregate Bond Principal Amount of the Class
A, Class B and Class C Bonds has been reduced to zero,
to the holders of the Class D Bonds in respect of
principal, up to an amount equal to the lesser of (a)
the then aggregate Bond Principal Amount of the Class
D Bonds and (b) the excess, if any, of the Principal
Payment Amount for such Payment Date over any amounts
paid on such Payment Date in retirement of the Class
A, Class B and/or Class C Bonds pursuant to clauses
(ii), (iv) and (vi) above;
(ix) to the holders of the Class E Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual
Periods;
(x) after the aggregate Bond Principal Amount of the Class
A, Class B, Class C and Class D Bonds has been reduced
to zero, to the holders of the Class E Bonds in
respect of principal, up to an amount equal to the
lesser of (a) the then aggregate Bond Principal Amount
of the Class E Bonds and (b) the excess, if any, of
the Principal Payment Amount for such Payment Date
over any amounts paid on such Payment Date in
retirement of the Class A, Class B, Class C and/or
Class D Bonds pursuant to clauses (ii), (iv), (vi) and
(viii) above;
(xi) to the holders of the Class F Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual
Periods;
(xii) after the aggregate Bond Principal Amount of the Class
A, Class B, Class C, Class D and Class E Bonds has
been reduced to zero, to the holders of the Class F
Bonds in respect of principal, up to an amount equal
to the lesser of (a) the then aggregate Bond Principal
Amount of the Class F Bonds and (b) the excess, if
any, of the Principal Payment Amount for such Payment
Date over any amounts paid on such Payment Date in
retirement of the Class A, Class B, Class C, Class D
and/or Class E Bonds pursuant to clauses (ii), (iv),
(vi), (viii) and (x) above;
(xiii) if, after giving effect to the payments of principal
on the Bonds contemplated by clauses (ii), (iv), (vi),
(viii), (x) and (xii) above, the aggregate Bond
Principal Amount of all the Bonds still exceeds the
aggregate Stated Principal Balance of the Mortgage
Pool that will be outstanding immediately following
such Payment Date, then to the holders of the Class A
Bonds (allocable as between the two Classes of Class A
Bondholders as described below), the Class B Bonds,
the Class C Bonds, the Class D Bonds, the Class E
Bonds and the Class F Bonds, in that order, in respect
of principal, until (in the case of each Class of
Bonds on which payments of principal are so made) such
excess (or the aggregate Bond Principal Amount of such
Class of Bonds) is reduced to zero (whichever occurs
first); and
(xiv) to or at the direction of the Issuer in respect of the
Issuer's Equity to the extent of any remaining portion
of the Available Payment Amount for such Payment
Date.]
[On each Payment Date prior to the Class A Principal Payment Cross-Over
Date, if any, all payments of principal on the Class A Bonds described above
will be paid, first, to the holders of the Class A-1 Bonds, until the aggregate
Bond Principal Amount of such Class of Bonds is reduced to zero, and thereafter,
to the holders of the Class A-2 Bonds, until the aggregate Bond Principal Amount
of such Class of Bonds is reduced to zero. On each Payment Date on and after the
Class A Principal Payment Cross-Over Date, all payments of principal on the
Class A Bonds described above will be paid to the holders of such two Classes of
Bonds, pro rata, in accordance with their respective aggregate Bond Principal
Amounts immediately prior to such Payment Date, until the aggregate Bond
Principal Amount of each such Class of Bonds is reduced to zero. Provided that
both the Class A-1 Bonds and the Class A-2 Bonds are still outstanding, the
"Class A Principal Payment Cross-Over Date" will be the first Payment Date as of
which the aggregate Bond Principal Amount of the Class A Bonds immediately prior
thereto equals or exceeds the sum of (a) the aggregate Stated Principal Balance
of the Mortgage Pool that will be outstanding immediately following such Payment
Date, plus (b) the lesser of (i) the Principal Payment Amount for such Payment
Date and (ii) the Available Payment Amount Funds for such Payment Date that will
be remaining following the payment of all Accrued Bond Interest payable on the
Class A Bonds on such Payment Date.]
[On each Payment Date, unless the Bonds have been declared due and payable
following an Issuer Event of Default and such declaration has not been rescinded
or annulled, any Prepayment Premiums actually collected during the related
Collection Period will be applied to make payments to the respective Classes of
Bondholders and the Issuer for the following purposes and in the following order
of priority, in each case to the extent of remaining funds:
(i) to the holders of the Class A Bonds in respect of additional
interest, pro rata as between the two Classes of Class A Bondholders based
on entitlement, up to an amount equal to the Yield Maintenance Amount (as
defined below) for each such Class of Bonds for such Payment Date;
(ii) to the holders of the Class B Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(iii) to the holders of the Class C Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(iv) to the holders of the Class D Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(v) to the holders of the Class E Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(vi) to the holders of the Class F Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date; and
(vii) to or at the direction of the Issuer in respect of the Issuer's
Equity to the extent of any remaining Prepayment Premiums actually
collected during the related Collection Period.]
On each Payment Date, if the Bonds have been declared due and payable
following an Issuer Event of Default and such declaration and its consequences
have not been rescinded and annulled, the Available Payment Amount (which will,
under such circumstances, include Prepayment Premiums) for such date will be
applied to make payments to the respective Classes of Bondholders and the Issuer
for the following purposes and in the following order of priority, in each case
to the extent of remaining funds:
[(i) to the holders of the Class A-1 and Class A-2 Bonds in respect of
interest, pro rata based on entitlement up to an amount equal to all
Accrued Bond Interest in respect of each such Class of Bonds for the
related Interest Accrual Period and, to the extent not previously paid, for
all prior Interest Accrual Periods;
(ii) to the holders of the Class A-1 and Class A-2 Bonds in respect of
principal, pro rata based on their respective aggregate Bond Principal
Amounts, until such Bonds are retired;
(iii) to the holders of the Class B Bonds in respect of interest, up
to an amount equal to all Accrued Bond Interest in respect of such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(iv) after the aggregate Bond Principal Amount of the Class A Bonds
has been reduced to zero, to the holders of the Class B Bonds in respect of
principal, until such Bonds are retired;
(v) to the holders of the Class C Bonds in respect of interest, up to
an amount equal to all Accrued Bond Interest in respect of such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(vi) after the aggregate Bond Principal Amount of the Class A and
Class B Bonds has been reduced to zero, to the holders of the Class C Bonds
in respect of principal, until such Bonds are retired;
(vii) to the holders of the Class D Bonds in respect of interest, up
to an amount equal to all Accrued Bond Interest in respect of such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(viii) after the aggregate Bond Principal Amount of the Class A, Class
B and Class C Bonds has been reduced to zero, to the holders of the Class D
Bonds in respect of principal, until such Bonds are retired;
(ix) to the holders of the Class E Bonds in respect of interest, up to
an amount equal to all Accrued Bond Interest in respect of such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(x) after the aggregate Bond Principal Amount of the Class A, Class B,
Class C and Class D Bonds has been reduced to zero, to the holders of the
Class E Bonds in respect of principal, until such Bonds are retired;
(xi) to the holders of the Class F Bonds in respect of interest, up to
an amount equal to all Accrued Bond Interest in respect of such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(xii) after the aggregate Bond Principal Amount of the Class A, Class
B, Class C, Class D and Class E Bonds has been reduced to zero, to the
holders of the Class F Bonds in respect of principal, until such Bonds are
retired; and
(xiii) after the aggregate Bond Principal Amount of all the Bonds has
been reduced to zero, to or at the direction of the Issuer in respect of
the Issuer's Equity to the extent of any remaining portion of the Available
Payment Amount for such Payment Date.]
Accrued Bond Interest. [The "Accrued Bond Interest" in respect of any Class
of Bonds for any Interest Accrual Period will equal one month's interest at the
applicable Bond Interest Rate accrued on the aggregate Bond Principal Amount of
such Class of Bonds outstanding immediately prior to the related Payment Date.
Accrued Bond Interest will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.]
[If the portion of the Available Payment Amount payable in respect of
interest on any Class of Offered Bonds on any Payment Date is less than the
Accrued Bond Interest then payable for such Class, the shortfall will be payable
to holders of such Class of Bonds on subsequent Payment Dates, to the extent of
available funds. Any such shortfall will not bear interest, however, and will
therefore negatively affect the yield to maturity of such Class of Bonds for so
long as it is outstanding. The failure to pay the full amount of Accrued Bond
Interest in respect of any Class of Bonds on any Payment Date will not be an
Issuer Event of Default.]
[As to each Class of Bonds for any Payment Date, the "Interest Accrual
Period" will be the calendar month preceding the month in which such Payment
Date occurs.]
Principal Payment Amount. [The "Principal Payment Amount" for any Payment
Date will, in general, equal the aggregate of the following:
(a) the principal portions of all Scheduled Payments (other than
Balloon Payments) and any Assumed Scheduled Payments due or deemed due, as
the case may be, in respect of the Mortgage Loans for their respective Due
Dates occurring during the related Collection Period;
(b) all payments (including Principal Prepayments and Balloon
Payments) and other collections (including Liquidation Proceeds,
Condemnation Proceeds and Insurance Proceeds) that were received on or in
respect of the Mortgage Loans during the related Collection Period and that
were identified and applied by the Master Servicer as recoveries of
principal thereof, in each case net of any portion of such payment or other
collection that represents a recovery of the principal portion of any
Scheduled Payment (other than a Balloon Payment) due, or the principal
portion of any Assumed Scheduled Payment deemed due, in respect of the
related Mortgage Loan on a Due Date during or prior to the related
Collection Period and not previously recovered; and
(c) if such Payment Date is subsequent to the initial Payment Date,
the excess, if any, of (i) the Principal Payment Amount for the immediately
preceding Payment Date, over (ii) the aggregate payments of principal made
in respect of the Bonds on such immediately preceding Payment Date.]
[The "Scheduled Payment" due in respect of any Mortgage Loan on any related
Due Date will be the amount of the Monthly Payment that is scheduled to be due
in respect thereof on such date in accordance with the terms of such Mortgage
Loan in effect on the Closing Date, without regard to any waiver, modification
or amendment of such Mortgage Loan subsequent to the Closing Date, and assuming
that each prior Scheduled Payment has been made in a timely manner.]
[The "Assumed Scheduled Payment" is an amount deemed due in respect of any
Balloon Loan that is delinquent in respect of its Balloon Payment beyond the
first Determination Date that follows its original stated maturity date. The
Assumed Scheduled Payment deemed due on any such Mortgage Loan on its original
stated maturity date and on each successive Due Date that it remains or is
deemed to remain outstanding shall equal the Scheduled Payment that would be due
in respect thereof on such date if the related Balloon Payment had not come due
but rather such Mortgage Loan had continued to amortize in accordance with such
Mortgage Loan's amortization schedule in effect as of the Closing Date.]
[The failure to pay the full Principal Payment Amount on the Bonds on any
Payment Date will not be an Issuer Event of Default except to the extent that
any Bond is not retired by Stated Maturity.]
[Yield Maintenance Amount. The "Yield Maintenance Amount" will equal: (a)
with respect to any Class of Bonds, for any Payment Date on which any portion of
the Principal Prepayment Amount, if any, is paid thereon on such Payment Date,
an amount equal to the present value of a series of equal monthly payments
deemed payable on each future Payment Date up to and including the Assumed Final
Payment Date for such Class of Bonds, each such monthly payment to be equal to
the related Interest Payment Adjustment and to be discounted from the applicable
future Payment Date to the then current Payment Date at a per annum rate equal
to the sum of (i) the yield per annum on United States treasury securities
having a maturity closest to the Assumed Final Payment Date for such Class of
Bonds, plus (ii) ___ basis points; and (b) with respect to any Class of Bonds
for any Payment Date on which no portion of a Principal Prepayment Amount is
paid thereon on such Payment Date, zero. For purposes of the foregoing, the
"related Interest Payment Adjustment" will equal one-twelfth of the product of
the Bond Interest Rate for the subject Class of Bonds, multiplied by the portion
of the Principal Prepayment Amount for such Payment Date payable on such Class
of Bonds. The "Principal Prepayment Amount" for any Payment Date will be that
portion of the Principal Payment Amount for such Payment Date that represents
voluntary principal prepayments and other early collections of principal on or
in respect of the Mortgage Loans received in advance of their respective stated
maturity dates as of the Closing Date.]
[Failure to pay the full Yield Maintenance Amount in respect of any Class
of Bonds on any Payment Date will not be an Issuer Event of Default and the
shortfall will not be carried forward to any subsequent Payment Date.]
Treatment of REO Properties. Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Estate through foreclosure, deed in lieu of
foreclosure or otherwise, the related Mortgage Loan will, for purposes of, among
other things, determining payments of principal on the Bonds, as well as the
amount of Servicing Fees, Special Servicing Fees and Trustee Fees payable under
the Indenture and the Servicing Agreement, be treated as having remained
outstanding until such REO Property is liquidated. In connection therewith,
operating revenues and other proceeds derived from such REO Property (exclusive
of related operating costs) will be "applied" by the Master Servicer as
principal, interest and other amounts "due" on such Mortgage Loan; and, subject
to the recoverability determination described below (see "--Advances"), the
Master Servicer will be required to make P&I Advances in respect of such
Mortgage Loan as if it had remained outstanding. References to "Mortgage Loan"
and "Mortgage Loans" in the definitions of "Principal Payment Amount" and
"Principal Prepayment Amount" are intended to include any Mortgage Loan or
Mortgage Loans as to which the related Mortgaged Property has become an REO
Property.
Subordination
[As and to the extent described herein, the rights of the Issuer or its
designee to receive payments of amounts received on the Mortgage Loans in
respect of the Issuer's Equity will be subordinated to the rights of holders of
the Bonds to receive such amounts in respect of interest, principal and other
amounts due and owing on their Bonds from time to time. In addition, as and to
the extent described herein, the rights of holders of the Subordinate Bonds
(including the Class B, Class C and Class D Bonds) to receive payments of
amounts received on the Mortgage Loans in respect of interest, principal and
other amounts due and owing on their Bonds from time to time will, in the case
of each Class thereof, be subordinated to such rights of the holders of the
Class A Bonds and the holders of each other Class of Subordinate Bonds with an
earlier alphabetical Class designation. This subordination is intended to
enhance the likelihood of timely receipt by the holders of the Class A Bonds of
the full amount of Accrued Bond Interest payable in respect of such Bonds on
each Payment Date, and the ultimate receipt by the holders of such Bonds of
principal in an amount equal to the entire aggregate Bond Principal Amount
thereof. Similarly, but to decreasing degrees, this subordination is also
intended to enhance the likelihood of timely receipt by the holders of the other
Classes of Offered Bonds of the full amount of Accrued Bond Interest payable in
respect of such Bonds on each Payment Date, and the ultimate receipt by the
holders of such Bonds of principal equal to the entire aggregate Bond Principal
Amount thereof. This subordination will be accomplished by, among other things,
the application of the Available Payment Amount on each Payment Date in
accordance with the order of priority described under "--Payments on the
Bonds--Priority of Payments" above. No other form of Credit Support will be
available for the benefit of any Class of Offered Bondholders.
Realized Losses, Net Aggregate Prepayment Interest Shortfalls and other
shortfalls in respect of the Mortgage Loans will, in each case, be borne by the
Issuer and the holders of the Private Bonds (to the extent of amounts otherwise
payable in respect of the Issuer's Equity and the Private Bonds, respectively)
prior to any such losses, shortfalls and/or expenses being borne by the Offered
Bondholders. If and to the extent that Realized Losses, together with any Net
Aggregate Prepayment Interest Shortfalls, exceed the sum of the initial
Overcollateralization Amount and the initial aggregate Bond Principal Amount of
the Private Bonds, it is likely that the holders of one or more Classes of
Offered Bonds will not receive the full Bond Principal Amount of their Bonds.
[Furthermore, notwithstanding the Mortgage Rates on the Mortgage Loans, the Bond
Interest Rate on each Class of Bonds is fixed. In certain limited circumstances,
the Mortgage Rate on one or more of the Mortgage Loans may be less than the Bond
Interest Rate on one or more Classes of the Offered Bonds. However, holders of
the Offered Bonds would not receive the full Bond Principal Amount of their
Bonds, together with Accrued Bond Interest thereon, generally only if (i) the
aggregate Stated Principal Balance of the Mortgage Pool is less than the
aggregate Bond Principal Amount of the Offered Bonds and/or (ii) aggregate
interest collected in respect of the Mortgage Loans (net of certain fees and
expenses payable therefrom under the Indenture and the Servicing Agreement) is
less than the aggregate interest payable on the Offered Bonds.]
[Within 30 days after the earliest to occur of (i) 90 days after the date
on which an uncured delinquency occurs in respect of a Mortgage Loan, (ii) 60
days after the date on which a receiver is appointed (if such appointment
remains in effect during such 60-day period) in respect of a Mortgaged Property,
(iii) as soon as reasonably practical after the date on which a Mortgaged
Property becomes an REO Property or (iv) the date on which a change in the
payment rate, Mortgage Rate, principal balance, amortization terms or Maturity
Date of any Specially Serviced Mortgage Loan becomes effective, (the earliest of
such dates, a "Required Appraisal Date") an appraisal will be obtained by the
Special Servicer from an independent MAI appraiser at the expense of the Issuer
(except if an appraisal has been conducted within the 12 month period preceding
such event). As a result of such appraisal, a Collateral Value Adjustment may
result, which Collateral Value Adjustment will be allocated, for purposes of
determining payments of interest on the Bonds, in the manner and priority
described above with respect to Realized Losses. Notwithstanding the foregoing,
a Collateral Value Adjustment will be zero with respect to such a Mortgage Loan
if (i) the event giving rise to such Collateral Value Adjustment is the
extension of the maturity of such Mortgage Loan, (ii) the payments on such
Mortgage Loan were not delinquent during the twelve month period immediately
preceding such extension and (iii) the payments on such Mortgage Loan are then
current, provided, that if at any later date there occurs a delinquency in
payment with respect to such Mortgage Loan, the Collateral Value Adjustment will
be recalculated and applied as described above. In addition, in any case, upon
the occurrence of any event giving rise to a subsequent Collateral Value
Adjustment (including the delinquency referred to in the immediately preceding
sentence) more than twelve months after an appraisal was obtained with respect
to a Collateral Value Adjustment, the Special Servicer will order a new
appraisal as described above, within 30 days of the occurrence of any such event
giving rise to a subsequent Collateral Value Adjustment and will adjust the
amount of the Collateral Value Adjustment in accordance therewith.]
[The "Collateral Value Adjustment" for any Payment Date with respect to any
Mortgage Loan will be an amount equal to the excess of (a) the principal balance
of such Mortgage Loan over (b) the excess of (i) 90% of the current appraised
value of the related Mortgaged Property as determined by an independent MAI
appraisal of such Mortgaged Property over (ii) the sum of (A) to the extent not
previously advanced by a Servicer, all unpaid interest on such Mortgage Loan at
a per annum rate equal to the Mortgage Rate, (B) all unreimbursed Advances and
interest thereon, (C) any unpaid Servicing and Trustee fees and (D) all
currently due and delinquent real estate taxes and assessments, insurance
premiums and, if applicable, ground rents in respect of such Mortgaged Property
(net of any amount escrowed or otherwise available for payment of the amount due
on such Mortgage Loan). The excess of the principal balance of any Mortgage Loan
over the related Collateral Value Adjustment is referred to herein as the
"Adjusted Collateral Value." A Collateral Value Adjustment shall result in a
reduction of the Accrued Bond Interest to be paid on one or more classes of
Bonds and shall not be a permanent reduction of the Bond Principal Amount (or
notional amount) of any class of Bonds prior to the occurrence of a Realized
Loss.]
A "Realized Loss," in the case of any Mortgage Loan described in clause (a)
or clause (b) of the succeeding sentence, is equal to the sum of (a) the Stated
Principal Balance of any Loss Mortgage Loan, (b) interest thereon not previously
paid to Bondholders through the last day of the month in which such Mortgage
Loan became a Loss Mortgage Loan, (c) any advances made by any Servicer which
remain unreimbursed and (d) any interest accrued on such advances (see
"--Advances" below) as of such time, reduced by any amounts recovered thereon as
of such time and, in the case of any Mortgage Loan described in clause (c) of
the succeeding sentence, is the amount determined to have been permanently
forgiven as described in such clause (c). A "Loss Mortgage Loan" is any Mortgage
Loan (a) which is finally liquidated, (b) with respect to which the Master
Servicer or the Special Servicer has determined that an advance which has been
made or would otherwise be required to be made, is not, or, if made, would not
be, recoverable out of proceeds on such Mortgage Loan or (c) with respect to
which a portion of the principal balance thereof has been permanently forgiven
whether pursuant to a modification or a valuation resulting from a proceeding
initiated under the Bankruptcy Code. The "Stated Principal Balance" of any
Mortgage Loan as of any date of determination is the principal balance as of the
Cut-off Date minus the sum of (i) the principal portion of each Monthly Payment
due on such Mortgage Loan after the Cut-off Date, to the extent received from
the Mortgagor or advanced and paid to Bondholders, and (ii) any unscheduled
amounts of principal received with respect to such Mortgage Loans, to the extent
paid to Bondholders.
[The Collateral Value Adjustment will be allocated on each Payment Date,
for purposes of determining payments in respect of interest on such Payment
Date, to the Bond Principal Amount of the most subordinate class of Bonds that
would otherwise receive payments of interest, up to an aggregate amount (net of
any positive adjustments) equal to the Bond Principal Amount thereof. For so
long as a more senior class of Bonds is outstanding, the amount of interest
otherwise payable on such Payment Date to each class of Bonds to which a
Collateral Value Adjustment has been allocated (to the extent not reversed) with
respect to prior Payment Dates will be reduced by interest accrued at the
related Bond Interest Rate on the portion of the Bond Principal Amount of such
class equal to the sum of the aggregate Collateral Value Adjustment allocated to
such class for such Payment Date and accrued and unpaid interest at the related
Bond Interest Rate on such Collateral Value Adjustment amount for prior Payment
Dates. Such accrued and unpaid interest (the "Collateral Value Adjustment
Capitalization Amount") will be added to the Bond Principal Amount of such class
or classes of Bonds, and an equal amount will be included in the Principal
Payment Amount to be paid to holders of the most senior classes of Bonds on such
Payment Date as described herein, to the extent actually paid by the Mortgagor
or received as interest in respect of any REO Property. [On each Payment Date on
or after the allocation of a Collateral Value Adjustment, the amount of interest
otherwise payable on such Payment Date to the Class Bonds will be reduced by an
amount equal to interest accrued on the portion of the notional amount thereof
corresponding to the sum of any Collateral Value Adjustments and Collateral
Value Adjustment Capitalization Amounts allocated to any class of Bonds for such
Payment Date or any prior Payment Date and not previously reversed.]
[The Special Servicer is required, within 30 days of each anniversary of
the Required Appraisal Date, to order an update of the prior appraisal (the cost
of which will be advanced by the Special Servicer and reimbursed thereto by the
Issuer). The Special Servicer will determine and report to the Trustee the
updated appraisal. A lower appraisal value will increase the Collateral Value
Adjustment. Such increase will be allocated as described above. A higher
appraised value will reverse the Collateral Value Adjustment by the amount of
the reported increase. Any such reversal or reduction will reduce the accrual of
the Collateral Value Adjustment Capitalization Amount and therefore reduce the
amount otherwise available to make distributions of principal on the classes of
Bonds senior to the class of Bonds to which such reversal is allocated. However,
in neither case will the Bond Principal Amount (or notional amount) of the
affected class or classes of Bonds be reduced by such reversal or reduction. In
such event, the total Collateral Value Adjustment Capitalization Amount
previously added to the related Bond Principal Amount shall be reduced in
proportion to the Collateral Class Adjustment reversal.]
Advances
On the business day immediately preceding each Payment Date, the Master
Servicer will be obligated to make advances out of its own funds or funds held
in the Collection Account that are not required to be part of the Available
Distribution Amount for such Payment Date or to remit any advances made by the
Master Servicer or the Special Servicer (each, a "P&I Advance"), in an amount
equal to the excess of all Monthly Payments (net of the Servicing Fee) due over
the amount actually received, subject to the limitations described herein. In
addition, each Servicer will be required to advance certain property related
expenses. The Servicers generally may not advance any amounts, other than P&I
Advances, unless such advance is contemplated in the related Asset Strategy
Report (as defined herein) for the related Mortgage Loan or such advance is for
one of several purposes specified in the Servicing Agreement as "Property
Protection Expenses." All such advances will be reimbursable to the related
Servicer from late payments, insurance proceeds, liquidation proceeds,
condemnation proceeds or amounts paid in connection with the purchase of such
Mortgage Loan or, as to any such advance that is deemed not otherwise
recoverable, from any amounts required to be deposited in the Collection
Account. Notwithstanding the foregoing, a Servicer will be obligated to make any
such advance only to the extent that it determines in its reasonable good faith
judgment that such advance, if made, would be recoverable out of net proceeds
(including any amounts escrowed with respect to the related Mortgage Loan net of
any reasonably anticipated expenses payable therefrom) on the related Mortgage
Loan. None of the Servicers will be required to advance the full amount of any
Balloon Payment not made by the related Mortgagor. To the extent a Servicer is
required to make a P&I Advance on and after the Due Date for such Balloon
Payment, such P&I Advance shall not exceed an amount equal to a monthly payment
calculated by the Special Servicer necessary to fully amortize the related
Mortgage Loan over the period used for purposes of calculating the scheduled
monthly payments thereon prior to the related Maturity Date. [Any failure by the
Servicer to make an advance as required under the Servicing Agreement will
constitute an event of default thereunder, in which case the Trustee will be
obligated to make any required advance, in accordance with the terms of the
Servicing Agreement.]
Each Servicer shall be entitled to interest on the aggregate amount of all
advances made by such Servicer at a per annum rate equal to the prime rate
reported in The Wall Street Journal. See "Risk Factors--Effect of Mortgagor
Delinquencies and Defaults" herein.
Reports to Bondholders; Certain Available Information
[Trustee Reports; Special Servicer Reports. Based on information provided
in monthly reports prepared by the Master Servicer and the Special Servicer and
delivered to the Trustee, the Trustee will prepare and forward on each Payment
Date to each Bondholder a statement (the "Trustee Report") substantially in the
form of Annex ___ hereto, detailing the payments on the Bonds on such Payment
Date and the performance, both in the aggregate and individually to the extent
available, of the Mortgage Loans and Mortgaged Properties. [Investors and any
other interested party may obtain Trustee Reports via the Trustee's electronic
bulletin board by dialing ___________ and selecting the applicable statement. In
addition, investors and other interested parties who have obtained approval from
the Depositor, confirmation of which approval has been furnished to the Trustee,
may obtain certain Mortgage Loan information via the Trustee's restricted
electronic bulletin board by contacting the Trustee at ------------.]
With respect to each Determination Date, the Special Servicer will be
required to prepare a report (the "Special Servicer Report") generally
containing the information described in Annex __ hereto with respect to
Specially Serviced Mortgage Loans. The Special Servicer Reports will be
delivered to the Trustee and the Master Servicer, and the Trustee will
distribute such reports to the Bondholders.
Until such time as Definitive Bonds are issued in respect of the Offered
Bonds, the foregoing information will be available to the Bond Owners through
DTC and the DTC Participants. Any Bond Owner of a Book-Entry Bond who does not
receive information through DTC or the DTC Participants may request that Trustee
Reports, Special Servicer Reports and accompanying documentation be mailed
directly to it (at its cost) by written request (accompanied by verification of
such Bond Owner's ownership interest) to the Trustee at the Trustee's corporate
trust office primarily responsible for administering the Trust Estate (the
"Corporate Trust Office"). The manner in which notices and other communications
are conveyed by DTC to DTC Participants, and by DTC Participants to the Bond
Owners of Book-Entry Bonds, will be governed by arrangements among them, subject
to any statutory or regulatory requirements as may be in effect from time to
time. The Master Servicer, the Special Servicer, the Trustee, the Depositor and
the Issuer are required to recognize as Bondholders only those persons in whose
names the Bonds are registered on the books and records of the Bond Registrar.
Other Information. [The Indenture requires that the Trustee make available
at its Corporate Trust Office, during normal business hours, upon reasonable
advance written notice, for review by any holder or Bond Owner of an Offered
Bond or any person identified to the Trustee by any such holder or Bond Owner as
a prospective transferee of an Offered Bond or any interest therein, subject to
the discussion in the following paragraph, originals or copies of, among other
things, the following items: (a) the Indenture, the Servicing Agreement and any
amendments or supplements to either of the foregoing, (b) all Trustee Reports
and Special Servicer Reports delivered to holders of the relevant Class of
Offered Bonds since the Closing Date, (c) all officer's certificates delivered
to the Trustee by the Master Servicer and/or Special Servicer since the Closing
Date as described under "Description of the Agreements--Evidence as to
Compliance" in the Prospectus, (d) all accountant's reports delivered to the
Trustee in respect of the Servicer and/or Special Servicer since the Closing
Date as described under "Description of the Agreements--Evidence as to
Compliance" in the Prospectus, and (e) [other available items to be specified].
Copies of any and all of the foregoing items will be available from the Trustee
upon request; however, the Trustee will be permitted to require payment of a sum
sufficient to cover the reasonable costs and expenses of providing such
services.]
[The Trustee will make available, upon reasonable advance written notice
and at the expense of the requesting party, originals or copies of the items
referred to in the prior paragraph that are maintained thereby, to Bondholders,
Bond Owners and prospective purchasers of Bonds and interests therein; provided
that the Trustee may require (a) in the case of a Bond Owner of an Offered Bond,
a written confirmation executed by the requesting person or entity, in a form
reasonably acceptable to the Trustee, generally to the effect that such person
or entity is a beneficial owner of Offered Bonds, is requesting the information
for use by it or another party in evaluating an investment in the Offered Bonds
and will otherwise keep such information confidential and (b) in the case of a
prospective purchaser of an Offered Bond, confirmation executed by the
requesting person or entity, in a form reasonably acceptable to the Trustee,
generally to the effect that such person or entity is a prospective purchaser of
Offered Bonds or an interest therein, is requesting the information for use in
evaluating a possible investment in the Offered Bonds and will otherwise keep
such information confidential. Bondholders, by the acceptance of their Bonds,
will be deemed to have agreed to keep such information confidential.]
Voting Rights
[At all times during the term of the Indenture, ___% of the voting rights
for the series offered hereby (the "Voting Rights") will be allocated among the
holders of the respective Classes of Bonds in proportion to the aggregate Bond
Principal Amounts of such Classes. Voting Rights allocated to a Class of
Bondholders will be allocated among such Bondholders in proportion to the
respective Bond Principal Amounts of their Bonds.]
The Trustee
______________________________________________ will be the Trustee under
the Indenture. The Trustee is at all times to be, and will be required to resign
if it fails to be, [specify eligibility requirements for Trustee, including
qualification under the Trust Indenture Act of 1939, as amended].
The Depositor, the Master Servicer, the Special Servicer and their
respective affiliates may from time to time enter into normal banking and
trustee relationships with the Trustee and its affiliates. The Trustee and any
of its respective affiliates may hold Bonds in their own names. In addition, for
purposes of meeting the legal requirements of certain local jurisdictions, the
Trustee may appoint a co-trustee or separate trustee of all or any part of the
Trust Estate. In the event of such appointment, all rights, powers, duties and
obligations conferred or imposed upon the Trustee and such separate trustee or
co-trustee jointly, or, in any jurisdiction in which the Trustee shall be
incompetent or unqualified to perform certain acts, singly upon such separate
trustee or co-trustee who shall exercise and perform such rights, powers, duties
and obligations solely at the direction of the Trustee.
[Pursuant to the Indenture, the Trustee will be entitled to receive a
monthly fee (the "Trustee Fee") generally equal to one month's interest in
respect of each Mortgage Loan (including each Mortgage Loan as to which the
related Mortgaged Property became an REO Property) accrued at _______% per annum
(the "Trustee Fee Rate") on the unpaid principal balance of such Mortgage Loan
from time to time.] See also "Description of the Bonds--The Trustee" in the
Prospectus.
[Optional Redemption]
[Any Class of Offered Bonds may be redeemed in whole but not in part, at
the Issuer's option, on any Payment Date, if the then aggregate Bond Principal
Amount of such Class of Bonds is less than ___% of the initial aggregate Bond
Principal Amount of such Class of Bonds and no Issuer Event of Default has
occurred and is continuing. Such redemption will be at a price (calculated after
taking into account payments made on the Bonds out of the Available Payment
Amount on the applicable Payment Date) equal to 100% of the unpaid aggregate
Bond Principal Amount of the Bonds to be redeemed, plus accrued and unpaid
interest thereon to the last day of the related Interest Accrual Period. Notice
of any optional redemption must be mailed by the Issuer or the Indenture Trustee
at least ___ days prior to the date set for optional redemption. No Yield
Maintenance Amount will be payable in connection with any such optional
redemption. See "Yield and Maturity Considerations" herein.]
Additional Information
Prospective investors should carefully review the Prospectus, in particular
the sections captioned "Description of the Bonds" and "Description of the
Agreements", for important additional information regarding the Bonds and the
Indenture.
THE ISSUER
ICCMAC Commercial Trust [______] (the "Issuer") is a business trust formed
under the laws of the State of ___________, pursuant to the Deposit Trust
Agreement, to be dated as of ____________, 199__ (the "Deposit Trust
Agreement"), between Imperial Credit Commercial Mortgage Acceptance Corp. (the
"Depositor") and the Owner Trustee, for the transactions described in this
Prospectus Supplement. The Deposit Trust Agreement constitutes the "governing
instrument" under the laws of the State of __________ relating to business
trusts. [Ownership of the Issuer will initially be evidenced by ______ classes
of ownership certificates (the "Ownership Certificates"). The Depositor
initially will hold all of the Ownership Certificates, but may transfer some or
all such Ownership Interests to an affiliate structured substantially similar to
the Depositor.] The Depositor, a California corporation, is a direct
wholly-owned subsidiary of Imperial Credit Commercial Mortgage Investment Corp.
("ICCMIC"). See "The Depositor" in the Prospectus.
After its formation, the Issuer will generally not engage in any activity
other than (i) acquiring, holding and, pursuant to the Indenture, pledging the
Mortgage Loans and the other assets of the Issuer and proceeds therefrom, (ii)
issuing the Bonds and the Ownership Certificates, (iii) making payments on the
Bonds and the Ownership Certificates and (iv) engaging in other activities that
are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith.
The assets of the Issuer will consist of the Mortgage Loans and certain
related assets.
The Issuer's principal offices are in _____________, in care of
_______________________, as Owner Trustee, at the address listed below.
THE OWNER TRUSTEE
________________________ is the Owner Trustee under the Deposit Trust
Agreement. The Owner Trustee is a ____________________ and its principal offices
are located at __________________________.
As compensation for the performances of its duties, the Owner Trustee will
be paid $___________ per annum (the "Owner Trustee Fee").
___________________________ will be responsible for payment of the Owner
Trustee Fee.
Neither the Owner Trustee nor any director, officer or employee of the
Owner Trustee will be under any liability to the Issuer or the Bondholders for
any action taken or for refraining from the taking of any action in good faith
pursuant to the Deposit Trust Agreement or for errors in judgment; provided that
none of the Owner Trustee and any director, officer or employee thereof will be
protected against any liability which would otherwise be imposed by reason of
gross negligence or willful misconduct in the performance of obligations and
duties under the Deposit Trust Agreement. All persons into which the Owner
Trustee may be merged or with which it may be consolidated or any person
resulting from such merger or consolidation shall be the successor of the Owner
Trustee under the Deposit Trust Agreement.
THE ADMINISTRATOR
______________________ (the "Administrator") is a
__________________________, and its principal offices are located at
_____________________________________.
The Owner Trustee, on behalf of the Issuer, and the Administrator will
enter into an Administration Agreement, to be dated as of ___________, 199__
(the "Administration Agreement"), pursuant to which the Administrator will be
required to perform (without relieving the Issuer from liability therefor)
certain duties of the Issuer set forth in the Indenture. As compensation for the
performance of its duties, the Administrator will be paid a monthly fee on each
Payment Date equal to one-twelfth of _____% of the aggregate Stated Principal
Balance of the Mortgage Pool immediately prior to such Payment Date (the
"Administration Fee"). _______________________________ will be responsible for
payment of the Administration Fee.
YIELD AND MATURITY CONSIDERATIONS
Yield Considerations
General. The yield on any Offered Bond will depend on (a) the price at
which such Bond is purchased by an investor and (b) the rate, timing and amount
of payments on such Bond. The rate, timing and amount of payments on any Offered
Bond will in turn depend on, among other things, (i) the Bond Interest Rate for
such Bond, (ii) the rate and timing of principal payments (including principal
prepayments) and other principal collections on the Mortgage Loans, and (iii)
the rate, timing and severity of Realized Losses and Net Aggregate Prepayment
Interest Shortfalls.
Rate and Timing of Principal Payments. The yield to holders of any Offered
Bonds purchased at a discount or premium will be affected by the rate and timing
of principal payments made in reduction of the Bond Principal Amounts of such
Bonds. As described herein, the Principal Payment Amount for each Payment Date
will be payable entirely in respect of the Class A-1 and/or Class A-2 Bonds
until the aggregate Bond Principal Amounts thereof are reduced to zero, and will
thereafter be payable entirely in respect of the Class B Bonds, the Class C
Bonds, the Class D Bonds, the Class E Bonds and the Class F Bonds, in that
order, in each case until the aggregate Bond Principal Amount of such Class of
Bonds is reduced to zero. In addition, except under the limited circumstances
described herein, holders of the Class A-2 Bonds will not receive any payments
of principal for so long as the Class A-1 Bonds are outstanding. Consequently,
the rate and timing of principal payments that are paid with respect to each
Class of Bonds will be directly related to the rate and timing of principal
payments on or in respect of the Mortgage Loans. The rate and timing of
principal payments of the Mortgage Loans are affected by the amortization
schedules of such Mortgage Loans, the dates on which Balloon Payments are due
and the rate and timing of principal prepayments and other unscheduled
collections thereon (including for this purpose, collections made in connection
with liquidations of Mortgage Loans due to defaults, casualties or condemnations
affecting the Mortgaged Properties, or purchases of Mortgage Loans out of the
Trust Estate). Prepayments and, assuming the respective maturity dates therefor
have not occurred, liquidations of the Mortgage Loans will result in payments on
the Bonds of amounts that would otherwise be paid over the remaining terms of
the Mortgage Loans and will tend to shorten the weighted average lives of the
Bonds. Defaults on the Mortgage Loans, particularly at or near their maturity
dates, may result in significant delays in payments of principal on the Mortgage
Loans (and, accordingly, on the Bonds) while work-outs are negotiated or
foreclosures are completed, and such delays will tend to lengthen the weighted
average lives of those Bonds. See "Servicing of the Mortgage Loans" herein.
The extent to which the yield to maturity of any Class of Offered Bonds may
vary from the anticipated yield will depend upon the degree to which such Bonds
are purchased at a discount or premium and when, and to what degree, payments of
principal are made on such Bonds. An investor should consider, in the case of
any Offered Bond purchased at a discount, the risk that a slower than
anticipated rate of principal payments on such Bond, could result in an actual
yield to such investor that is lower than the anticipated yield and, in the case
of any Offered Bond purchased at a premium, the risk that a faster than
anticipated rate of principal payments on such Bond could result in an actual
yield to such investor that is lower than the anticipated yield. In general, the
earlier a payment of principal is made on any Offered Bond purchased at a
discount or premium, the greater will be the effect on an investor's yield to
maturity. As a result, the effect on an investor's yield of principal payments
on its Offered Bonds occurring at a rate higher (or lower) than the rate
anticipated by the investor during any particular period would not be fully
offset by a subsequent like reduction (or increase) in the rate of such
principal payments. As stated above, the rate of principal payments on the
Offered Bonds are ultimately dependent on the rate of principal payments on the
Mortgage Loans. 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), no assurance can be given as to such rate or the rate of principal
prepayments in particular.
Losses and Shortfalls. The yield to holders of the Offered Bonds will also
depend on the extent to which payments on the Bonds are adversely affected by
any losses and other shortfalls on the Mortgage Loans. Realized Losses, Net
Aggregate Prepayment Interest Shortfalls and other shortfalls in respect of the
Mortgage Loans will, in each case, be borne by the Issuer and the holders of the
Private Bonds (to the extent of amounts otherwise payable on or in respect of
the Issuer's Equity and the Private Bonds, respectively) prior to any such
losses, shortfalls and/or expenses being borne by the holders of the Offered
Bonds. If and to the extent that Realized Losses, together with any Net
Aggregate Prepayment Interest Shortfalls, exceed the sum of the initial
Overcollateralization Amount and the initial aggregate Bond Principal Amount of
the Private Bonds, it is likely that the holders of one or more Classes of
Offered Bonds will not receive the full Bond Principal Amount of their Bonds.
Certain Relevant Factors. 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, prevailing interest rates, the
terms of the Mortgage Loans (for example, provisions requiring Lockout Periods,
provisions requiring the payment of Prepayment Premiums and amortization terms
that require Balloon Payments), the demographics and relative economic vitality
of the areas in which the Mortgaged Properties are located and the general
supply and demand for rental units or comparable commercial space, as
applicable, in such areas, the quality of management of the Mortgaged
Properties, the servicing of the Mortgage Loans, possible changes in tax laws
and other opportunities for investment. See "Risk Factors" herein and in the
Prospectus and "Description of the Mortgage Pool" herein.
The rate of prepayment on the Mortgage Pool is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a Mortgage
Rate, the related Mortgagor has an incentive to refinance its Mortgage Loan. A
requirement that a prepayment be accompanied by a Prepayment Premium may not
provide a sufficient economic disincentive to deter a Mortgagor from refinancing
at a more favorable interest rate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some Mortgagors may sell or
refinance Mortgaged Properties in order to realize their equity therein, to meet
cash flow needs or to make other investments. In addition, some Mortgagors may
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.
Neither the Depositor nor the Issuer makes any representation as to the
particular factors that will affect the rate and timing of prepayments and
defaults on the Mortgage Loans, as to the relative importance of such factors,
as to the percentage of the principal balance of the Mortgage Loans that will be
prepaid or as to which a default will have occurred as of any date or as to the
overall rate of prepayment or default on the Mortgage Loans.
Unpaid Accrued Bond Interest. As described under "Description of the
Bonds--Payments on the Bonds" herein, if the portion of the Available Payment
Amount payable in respect of interest on any Class of Offered Bonds on any
Payment Date is less than the Accrued Bond Interest then payable for such Class,
the shortfall will be payable to holders of such Class of Bonds on subsequent
Payment Dates, to the extent of available funds. Any such shortfall will not
bear interest, however, and will therefore negatively affect the yield to
maturity of such Class of Bonds for so long as it is outstanding.
Weighted Average Life
Weighted average life refers to the average amount of time that will elapse
from the date of issuance of a security to the date of payment to the investor
of each dollar payable in reduction of principal of such security (assuming no
losses). The weighted average life of any Offered Bonds will be influenced by,
among other things, the rate at which principal of the Mortgage Loans is paid,
which may be in the form of scheduled amortization, Balloon Payments,
prepayments or liquidations and any extensions or modifications made by the
Special Servicer with respect to Specially Serviced Mortgage Loans as described
herein. The weighted average life of any Offered Bond may also be affected to
the extent that additional payments in reduction of the Bond Principal Amount of
such Bond occur as a result of the purchase of a Mortgage Loan out of the Trust
Estate or any optional redemption of such Bond as described under "Description
of the Bonds--Optional Redemption" herein.
[The table set forth below has been prepared on the basis of the following
assumptions (the "Modeling Assumptions") regarding the characteristics of the
Bonds and the Mortgage Loans and the performance thereof: (i) as of the date of
issuance of the Bonds, the Mortgage Loans have the terms as identified in the
tables titled [identify tables]; (ii) the monthly cash flow of each Mortgage
Loan (except for the Balloon Payment) is a monthly payment of principal and
interest calculated based upon [specify applicable information], and no Mortgage
Loan is voluntarily prepaid; (iii) no Mortgage Loan is repurchased as a result
of a material breach of a representation or warranty, and there is no optional
redemption of Bonds; (iv) there are no delinquencies or Realized Losses on the
Mortgage Loans, and there is no extension of the maturity date of any Mortgage
Loan; (v) all Mortgage Loans accrue interest on the basis of a 360-day year
consisting of twelve 30-day months; (vi) payments on the Bonds will be made on
the __ day of each month, commencing in ________ 199_; (vii) payments on the
Mortgage Loans earn no reinvestment return; (viii) there are no additional
ongoing expenses payable out of the Trust Estate other than the Servicing Fee,
the Special Servicing Fee and the Trustee Fee; (ix) the respective Classes of
Offered Bonds will be issued in the initial aggregate Bond Principal Amounts and
will accrue interest at the Bond Interest Rates set forth in the table on the
cover page hereof; (x) the Offered Bonds will be settled on __________, 199_
(the "Assumed Settlement Date"); and (xi) no Prepayment Premiums are collected
on the Mortgage Loans.]
The actual characteristics and performance of the Mortgage Loans will
differ from the Modeling Assumptions used in calculating the table set forth
below, which is hypothetical in nature and is provided only to give a general
sense of how the principal cash flows might behave under the assumed prepayment
and loss scenario. Any difference between such assumptions and the actual
characteristics and performance of the Mortgage Loans, or actual prepayment or
loss experience, will affect the percentages of initial aggregate Bond Principal
Amounts outstanding over time and the weighted average lives of the respective
Classes of Offered Bonds.
Subject to the foregoing discussion and assumptions, the following table
indicates the weighted average life of each Class of the Offered Bonds, and sets
forth the percentages of the initial aggregate Bond Principal Amount of each
such Class that would be outstanding after each of the Payment Dates shown.
<TABLE>
<CAPTION>
Percent of Initial Aggregate Bond Principal Amounts Outstanding
Date Class A-1A Class A-1B Class A-2 Class A-3 Class B-1
- ------------------------------- ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Closing Date................... ___% ___% ___% ___% ___%
__________________, 1998....... ___% ___% ___% ___% ___%
__________________, 1999....... ___% ___% ___% ___% ___%
__________________, 2000....... ___% ___% ___% ___% ___%
__________________, 2001....... ___% ___% ___% ___% ___%
__________________, 2002....... ___% ___% ___% ___% ___%
__________________, 2003....... ___% ___% ___% ___% ___%
__________________, 2004....... ___% ___% ___% ___% ___%
__________________, 2005....... ___% ___% ___% ___% ___%
__________________, 2006....... ___% ___% ___% ___% ___%
__________________, 2007....... ___% ___% ___% ___% ___%
__________________, 2008....... ___% ___% ___% ___% ___%
__________________, 2009....... ___% ___% ___% ___% ___%
__________________, 2010....... ___% ___% ___% ___% ___%
__________________, 2011....... ___% ___% ___% ___% ___%
__________________, 2012....... ___% ___% ___% ___% ___%
__________________, 2013....... ___% ___% ___% ___% ___%
__________________, 2014....... ___% ___% ___% ___% ___%
__________________, 2015....... ___% ___% ___% ___% ___%
__________________, 2016....... ___% ___% ___% ___% ___%
__________________, 2017....... ___% ___% ___% ___% ___%
Weighted Average
Life (years)................ ___ ___ ___ ___ ___
</TABLE>
For purposes of the foregoing table, the weighted average life of an
Offered Bond is determined by (i) multiplying the amount of each principal
payment thereon by the number of years from [the Assumed Settlement Date] to the
related Payment Date, (ii) summing the results and (iii) dividing the sum by the
aggregate amount of the reductions in the Bond Principal Amount of such Offered
Bond.
FEDERAL INCOME TAX CONSEQUENCES
General
Upon the issuance of the Offered Bonds, Cadwalader, Wickersham & Taft,
special counsel to the Depositor, will deliver its opinion generally to the
effect that, assuming compliance with all provisions of the Indenture and
certain related documents, and based in part on the facts set forth in this
Prospectus Supplement and additional information and representations, the
Offered Bonds will be treated as indebtedness. See "Certain Federal Income Tax
Consequences" in the Prospectus.
Taxable mortgage pool ("TMP") rules enacted as part of the Tax Reform Act
of 1986 treat certain arrangements in which debt obligations are secured or
backed by real estate mortgage loans as taxable corporations. An entity (or a
portion thereof) will be characterized as a TMP if (i) substantially all of its
assets are debt obligations and more than 50 percent of such debt obligations
consist of real estate mortgage loans or interests therein, (ii) the entity is
the obligor under debt obligations with two or more maturities, and (iii)
payments on the debt obligations referred to in (ii) bear a relationship to
payments on the debt obligations referred to in (i). Furthermore, a group of
assets held by an entity can be treated as a separate TMP if the assets are
expected to produce significant cash flow that will support one or more of the
entity's issues of debt obligations.
It is anticipated that the Issuer will be characterized as a TMP for
federal income tax purposes. In general, a TMP is treated as a "separate"
corporation not includible with any other corporation in a consolidated income
tax return, and is subject to corporate income taxation. However, it is
anticipated that for federal income tax purposes one hundred percent of the
Issuer will at all times be owned by a "qualified REIT subsidiary" (as defined
in Section 856(i) of the Code) of ICCMIC, which is a "real estate investment
trust" (a "REIT") (as defined in Section 856(a) of the Code). So long as the
Issuer is so owned and ICCMIC and such owner qualify as a REIT and as a
qualified REIT subsidiary, respectively, characterization of the Issuer as a TMP
will result only in the shareholders of ICCMIC being required to include in
income, as "excess inclusion" income, some or all of their allocable share of
the Issuer's net income that would be "excess inclusion" income if the Issuer
were treated as a "real estate mortgage investment conduit," within the meaning
of Section 860D of the Code. Characterization of the Issuer as an owner trust
(wholly-owned and therefore ignored for federal income tax purposes) or as
itself a "qualified REIT subsidiary" would not result in entity-level, corporate
income taxation with respect to the Issuer. In the event of ICCMIC's failure to
continue to qualify as a REIT or the failure of the owner of the Issuer to
continue to qualify as a "qualified REIT subsidiary" for federal income tax
purposes, or for any other reason, the net income (after the deduction of
interest and original issue discount, if any, on the Bonds) of the Issuer would
be subject to corporate income tax, reducing cash flow of the Issuer available
to make payments on the Bonds, and the Issuer would not be permitted to be
included in a consolidated income tax return of another corporate entity. No
assurance can be given with regard to the prospective qualification of the
Issuer as either an owner trust or a "qualified REIT subsidiary" or of the
Depositor as a "qualified REIT subsidiary" for federal income tax purposes.
Status as Real Property Loans
Offered Bonds held by a domestic building and loan association will not
constitute "loans...secured by an interest in real property" within the meaning
of Section 7701(a)(19)(C)(v) of the Code; Offered Bonds held by a real estate
investment trust will not constitute "real estate assets" within the meaning of
Section 856(c)(5)(A) of the Code and interest on Offered Bonds will not be
considered "interest on obligations secured by mortgages on real property"
within the meaning of Section 856(c)(3)(B) of the Code. In addition, the Offered
Bonds will not be "qualified mortgages" within the meaning of Section 860G(a)(3)
of the Code.
Discount and Premium
[For federal income tax reporting purposes, it is anticipated that the
Offered Bonds will not be treated as having been issued with original issue
discount. The prepayment assumption that will be used in determining the rate of
accrual of market discount and premium, if any, for federal income tax purposes
will be based on the assumption that subsequent to the date of any determination
the Mortgage Loans will not prepay (that is, a CPR of 0%), and there will be no
extensions of maturity for any Mortgage Loan. However, no representation is made
that the Mortgage Loans will not prepay or that, if they do, they will prepay at
any particular rate. See "Federal Income Tax Consequences--Taxation of
Bonds--Original Issue Discount", "--Market Discount" and "--Acquisition Premium"
in the Prospectus.]
The Internal Revenue Service (the "IRS") has issued regulations (the "OID
Regulations") under Sections 1271 to 1275 of the Code generally addressing the
treatment of debt instruments issued with original issue discount. Purchasers of
the Offered Bonds should be aware that the OID Regulations and Section
1272(a)(6) of the Code do not adequately address certain issues relevant to, or
are not applicable to, securities such as the Offered Bonds. Prospective
purchasers of the Offered Bonds are advised to consult their tax advisors
concerning the tax treatment of such Bonds.
Certain Classes of the Offered Bonds may be treated for federal income tax
purposes as having been issued at a premium. Whether any holder of such a Class
of Bonds will be treated as holding a Bond with amortizable bond premium will
depend on such Bondholder's purchase price and the payments remaining to be made
on such Bond at the time of its acquisition by such Bondholder. Holders of such
Classes of Bonds should consult their own tax advisors regarding the possibility
of making an election to amortize such premium. See "Federal Income Tax
Consequences--Taxation of Bonds--Acquisition Premium" in the Prospectus.
Backup Withholding and Information Reporting
Payments of interest and principal, as well as payments of proceeds from
the sale of Offered Bonds, may be subject to the "backup withholding tax" under
Section 3406 of the Code at a rate of 31% if recipients of such payments fail to
furnish to the payor certain information, including their taxpayer
identification numbers, or otherwise fail to establish an exemption from such
tax. Any amounts deducted and withheld from a payment to a recipient would be
allowed as a credit against such recipient's federal income tax. Furthermore,
certain penalties may be imposed by the IRS on a recipient of payments that is
required to supply information but that does not do so in the proper manner.
The Trustee or the Administrator on behalf of the Issuer will report to
Bondholders and to the IRS for each calendar year the amount of any "reportable
payments" during such year and the amount of tax withheld, if any, with respect
to payments on the Offered Bonds.
CERTAIN ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"),
impose certain restrictions on (a) employee benefit plans (as defined in Section
3(3) of ERISA), (b) plans described in Section 4975(e)(1) of the Code, including
individual retirement accounts or Keogh plans, (c) any entities whose underlying
assets include plan assets by reason of a plan's investment in such entities
(each of (a), (b) and (c), a "Plan") and (d) persons who have certain specified
relationships to such Plans ("Parties in Interest" under ERISA and "Disqualified
Persons" under the Code). Moreover, based on the reasoning of the United States
Supreme Court in John Hancock Life Ins. Co. v. Harris Trust and Sav. Bank, 114
S. Ct. 517 (1993), (the "Harris Case") a life insurance company's general
account may be deemed to include assets of the Plans investing in the general
account (e.g., through the purchase of an annuity contract), and such insurance
company might be treated as a Party in Interest with respect to a Plan by virtue
of such investment. ERISA also imposes certain duties on persons who are
fiduciaries of Plans subject to ERISA and prohibits certain transactions between
a Plan and Parties in Interest or Disqualified Persons with respect to such
Plans.
The Depositor, the Trustee, ICCMIC, the Master Servicer and the Special
Servicer may be the sponsor of our investment advisor with respect to one or
more Plans. Because such parties may receive certain benefits in connection with
the sale of Bonds, the purchase of the Bonds using Plan assets over which any of
such parties has investment authority might be deemed to be a violation of the
prohibited transaction rules of ERISA and the Code for which no exemption may be
available. Accordingly, the Bonds should not be purchased using the assets of
any Plan if any of the Depositor, the Trustee, ICCMIC, the Master Servicer and
the Special Servicer has investment authority with respect to such assets.
In addition, the Depositor or ICCMIC, because of their activities or the
activities of their affiliates, may be deemed to be a Party in Interest or
Disqualified Person with respect to certain Plans, including but not limited to
Plans sponsored by such entities. If the Bonds are acquired by a Plan with
respect to which a the Depositor, ICCMIC or an affiliate is a Party in Interest
or Disqualified Person, such transaction could be deemed to be a direct or
indirect extension of credit in violation of the prohibited transaction rules of
ERISA and the Code unless such transaction were subject to one or more statutory
or administrative exemptions such as Prohibited Transaction Class Exemption
("PTCE") 90-1, which exempts certain transactions involving insurance company
pooled separate accounts; PTCE 95-60, which exempts certain transactions
involving insurance company general accounts; PTCE 91-38, which exempts certain
transactions involving bank collective investment funds; PTCE 84-14, which
exempts certain transactions effected on behalf of a Plan by a "qualified
professional asset manager"; or PTCE 96-23, which exempts certain transactions
effected on behalf of a Plan by certain "in-house" asset managers. It should be
noted, however, that even if the conditions specified in one or more of these
exemptions are met, the scope of relief provided by these exemptions may not
necessarily cover all acts that might be construed as prohibited transactions.
Accordingly, prior to making an investment in the Bonds, a Plan investor
must determine whether, and each fiduciary causing the Bonds to be purchased by,
on behalf of or using the assets of a Plan that is subject to the prohibited
transaction rules of Title I of ERISA or Section 4975 of the Code shall be
deemed to have represented that, an exemption from the prohibited transaction
rules applies such that the use of the assets of such Plan to purchase the Bonds
does not and will not constitute a non-exempt prohibited transaction in
violation of Section 406 of ERISA or Section 4975 of the Code, which could be
subject to a civil penalty assessed pursuant to Section 502 of ERISA or a tax
imposed under Section 4975 of the Code.
Under a regulation issued by the Department of Labor (the "Plan Asset
Regulation"), if a Plan makes an "equity" investment in a corporation,
partnership, trust or certain other entities, the underlying assets and
properties of such entity will be deemed for purposes of ERISA to be assets of
the investing Plan unless certain exceptions set forth in n the regulation
apply. The Plan Asset Regulation defines an "equity interest" as any interest in
an entity other than an instrument that is treated as indebtedness under
applicable locals law and which has no substantial equity features. If the Bonds
are treated as debt for purposes of the Plan Asset Regulation, the mortgages and
the other assets of the Trust should not be deemed to be assets of an investing
Plan. If, however, the Bonds were treated as "equity" for purposes of the Plan
Asset Regulation, a Plan purchasing such Bonds could be treated as holding the
Mortgage Loans and the other assets of the Issuer. Although there can be no
assurances in this regard, it appears that the Bonds, which are denominated as
debt, should be treated as debt and not as "equity interests" for purposes of
the Plan Asset Regulation.
It should be noted that the Small Business Job Protection Act of 1996 added
new Section 401(c) of ERISA relating to the status of the assets of insurance
company general accounts under ERISA and Section 4975 of the Code. Pursuant to
Section 401(c), the Department of Labor is required to issue final regulations
(the "General Account Regulations") not later than December 31, 1997 with
respect to insurance policies issued on or before December 31, 1998 that are
supported by an insurer's general account. On December 22, 1997, the Department
of Labor issued proposed General Account Regulations (62 FR 66908 et seq.). The
final General Account Regulations are to provide guidance on which assets held
by the insurer constitute "plan assets" for purposes of the fiduciary
responsibility provisions of ERISA and Section 4975 of the Code. Section 401(c)
also provides that, except in the case of avoidance of the General Account
Regulation and actions brought by the Secretary of labor relating to certain
breaches of fiduciary duties that also constitute breaches of state of federal
criminal law, until the date that is 18 months after the General Account
Regulations become final, no liability under the fiduciary responsibility and
prohibited transaction provisions of ERISA and Section 4975 may result on the
basis of a claim that the assets of the general account of an insurance company
constitute the plan assets of any such plan. (The plan asset status of insurance
company separate accounts unaffected by new Section 401(c) of ERISA, and
separate account assets continue to be treated as the plan assets of such Plan
invested in a separate account.) Because of the breadth of the holding in the
Harris Case, because the safe harbor of section 401(c) is terminable, and
because of uncertainties with regard to the substance of the final General
Account Regulations, insurance companies purchasing Bonds with assets of their
general account will be regarded, for purposes of the deemed representation
discussed in the immediately preceding paragraph, purchasing the Bonds with Plan
assets.
LEGAL INVESTMENT
The Class ___, Class ___, Class ___, Class ___ and Class __ Bonds will be
"mortgage related securities" within the meaning of the Secondary Mortgage
Market Enhancement Act of 1984, as amended ("SMMEA") [for 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 ___, Class ___ and Class
___ Bonds will not be "mortgage related securities" within the meaning of SMMEA.
In addition, institutions whose investment activities are subject to review
by certain regulatory authorities may be or may become subject to restrictions,
which may be retroactively imposed by such regulatory authorities, on the
investment by such institutions in certain forms of mortgage-backed securities.
Furthermore, certain states have enacted legislation overriding the legal
investment provisions of SMMEA.
[Except as to the status of certain classes of Offered Bonds as "mortgage
related securities", no] [No] representations as to the proper characterization
of any class of Offered Bonds for legal investment, financial institution
regulatory purposes, or other purposes, or as to the ability of particular
investors to purchase any class of Offered Bonds under applicable legal
investment restrictions. These uncertainties may adversely affect the liquidity
of the Offered Bonds. Accordingly, all institutions whose investment activities
are subject to legal investment laws and regulations, regulatory capital
requirements or review by regulatory authorities should consult with their own
legal advisors in determining whether and to what extent the Offered Bonds
constitute a legal investment or is subject to investment, capital or other
restrictions.
See "Legal Investment" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in an Underwriting Agreement
dated _____________, 199_ (the "Underwriting Agreement") between the [Owner
Trustee, on behalf of the Issuer,] and the Underwriter, the Underwriter has
agreed to purchase and the [Issuer] has agreed to sell to the Underwriter each
Class of the Offered Bonds. It is expected that delivery of the Offered Bonds
will be made only in book-entry form through the Same Day Funds Settlement
System of DTC on or about _____________, 199__, against payment therefor in
immediately available funds.
The Underwriting Agreement provides that the obligation of the Underwriter
to pay for and accept delivery of the Offered Bonds is subject to, among other
things, the receipt of certain legal opinions and to the conditions, among
others, that no stop order suspending the effectiveness of the Depositor's
Registration Statement shall be in effect, and that no proceedings for such
purpose shall be pending before or threatened by the Commission.
The distribution of the Offered Bonds by the Underwriter may be effected
from time to time in one or more negotiated transactions, or otherwise, at
varying prices to be determined at the time of sale. Proceeds to the [Issuer]
from the sale of the Offered Bonds, before deducting expenses payable by the
[Issuer], will be approximately ____% of the aggregate Bond Principal Amount of
the Offered Bonds plus accrued interest thereon from the Accrual Date. The
Underwriter may effect such transactions by selling the Offered Bonds to or
through dealers, and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Underwriter for whom
they act as agent. In connection with the sale of the Offered Bonds, the
Underwriter may be deemed to have received compensation from the [Issuer] in the
form of underwriting compensation. The Underwriter and any dealers that
participate with such Underwriter in the distribution of the Offered Bonds may
be deemed to be underwriters and any profit on the resale of the Offered Bonds
positioned by them may be deemed to be underwriting discounts and commissions
under the Securities Act.
The Underwriting Agreement provides that the [Issuer] will indemnify the
Underwriter, and that under limited circumstances the Underwriter will indemnify
the [Issuer], against certain civil liabilities under the Securities Act or
contribute to payments required to be made in respect thereof.
The [Issuer] has also been advised by the Underwriter that the Underwriter
presently intends to make a market in the Offered Bonds; however, the
Underwriter has no obligation to do so, any market making may be discontinued at
any time and there can be no assurance that an active public market for the
Offered Bonds will develop. See "Risk Factors--Limited Liquidity" herein and
"Risk Factors--Limited Liquidity For Bonds" in the Prospectus.
LEGAL MATTERS
The validity of the Bonds and certain federal income tax matters will be
passed upon for the Depositor by Cadwalader Wickersham & Taft. Certain legal
matters relating to the Bonds will be passed upon for the Underwriter[s] by
_____________.
RATINGS
It is a condition to the issuance of the Offered Bonds that the respective
Classes thereof receive the following credit ratings from ____________________
("______") and/or ________________ ("________"; and together with _______, the
"Rating Agencies"):
Class [Rating Agency] [Rating Agency]
---------- --------------- ---------------
Class A-1
Class A-2
Class B
Class C
Class D
The ratings on the Offered Bonds address the likelihood of the timely
receipt by holders thereof of all payments of interest to which they are
entitled on each Payment Date and the ultimate receipt by the holders thereof of
all payments of principal to which they are entitled on or before their Stated
Maturity. The ratings take into consideration the credit quality of the Mortgage
Pool, structural and legal aspects associated with the Offered Bonds, and the
extent to which the payment stream from the Mortgage Pool is adequate to make
payments of principal and interest required under the Offered Bonds. The ratings
on the respective Classes of Offered Bonds do not represent any assessment of
(i) the likelihood or frequency of principal prepayments on the Mortgage Loans,
(ii) the degree to which such prepayments might differ from those originally
anticipated or (iii) whether and to what extent Prepayment Premiums will be
received or that Yield Maintenance Amounts will be paid. Also a security rating
does not represent any assessment of the yield to maturity that investors may
experience. In general, the ratings address credit risk and not prepayment risk.
There can be no assurance as to whether any rating agency not requested to
rate the Offered Bonds will nonetheless issue a rating to any Class thereof and,
if so, what such rating would be. A rating assigned to any Class of Offered
Bonds by a rating agency that has not been requested by the Depositor to do so
may be lower than the rating assigned thereto by either Rating Agency.
The ratings on the Offered Bonds 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 organization. Each security
rating should be evaluated independently of any other security rating.
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
A
Accrued Bond Interest........................
Adjusted Collateral Value....................
Administration Agreement.....................
Administration Fee...........................
Administrator................................
ARM Loan.....................................
Asset Strategy Report........................
Assumed Final Payment Date...................
Assumed Scheduled Payment....................
Assumed Settlement Date......................
B
Balloon Loans................................
Balloon Payment..............................
Bond Interest Rate...........................
Bond Owner...................................
Bond Registrar...............................
Bondholders..................................
Bonds........................................
C
CERCLA.......................................
Class........................................
Class A Bonds................................
Closing Date.................................
Code.........................................
Collateral...................................
Collateral Value Adjustment..................
Collateral Value Adjustment
Capitalization Amount.....................
Collection Account...........................
Collection Period............................
Combined Servicing Mortgage Loans............
Compensating Interest Payment................
Conversion Price.............................
Converted Mortgage Loan......................
Convertible Mortgage Loans...................
Converting Mortgage Loan.....................
Corporate Trust Office.......................
Cut-off Date.................................
Cut-off Date LTV Ratio.......................
D
Debt Service Coverage Ratio..................
Defaulted Mortgage Loan......................
Definitive Bond..............................
Deposit Trust Agreement......................
Depositor....................................
Determination Date...........................
Directing Bondholder.........................
DSCR.........................................
DTC..........................................
DTC Participants.............................
Due Date.....................................
E
ERISA........................................
ESA..........................................
Extension Advisor............................
F
FIRREA.......................................
Form 8-K.....................................
G
General Account Regulations..................
Gross Margin.................................
H
Harris Case..................................
Hybrid Rate Mortgage Loans...................
I
ICCMIC.......................................
Indenture....................................
Index........................................
Initial Pool Balance.........................
Interest Accrual Period......................
Interest Rate Adjustment Date................
IRS..........................................
Issuer.......................................
Issuer's Equity..............................
Issuer Event of Default......................
L
Lock-out Date................................
Lock-out Period..............................
Loss Mortgage Loan...........................
M
Maturity Date LTV Ratio......................
Modeling Assumptions.........................
Monitoring Bondholder........................
Monthly Payments.............................
Mortgage.....................................
Mortgage Loan Purchase Agreement.............
Mortgage Loan Seller.........................
Mortgage Loans...............................
Mortgage Note................................
Mortgage Pool................................
Mortgaged Properties.........................
Mortgaged Property...........................
Mortgagor....................................
N
Net Aggregate Prepayment Interest Shortfall..
Net Operating Income.........................
O
Offered Bonds................................
OID Regulations..............................
Originator...................................
Overcollateralization Amount.................
Owner Trustee................................
Owner Trustee Fee............................
Ownership Certificates.......................
P
P&I Advance..................................
P&I Advances.................................
Payment Adjustment Date......................
Payment Date.................................
Plan.........................................
Plan Asset Regulation........................
Prepayment Interest Excess...................
Prepayment Interest Shortfall................
Prepayment Premium...........................
Principal Payment Amount.....................
Private Bonds................................
Prospectus...................................
PTCE.........................................
R
Rating Agencies..............................
Realized Loss................................
Record Date..................................
REIT.........................................
REMIC........................................
REO Property.................................
Replacement Special Servicer.................
Required Appraisal Date......................
S
Scheduled Payment............................
Securities Act...............................
Senior Bonds.................................
Servicer.....................................
Servicing Agreement..........................
Servicing Fee................................
Servicing Fee Rate...........................
Servicing Transfer Event.....................
SMMEA........................................
Special Servicer Report......................
Specially Serviced Mortgage Loan.............
Stated Principal Balance.....................
Subordinate Bonds............................
T
TMP..........................................
Trust Estate.................................
Trustee......................................
Trustee Fee..................................
Trustee Fee Rate.............................
Trustee Report...............................
U
Underwriter..................................
Underwriting Agreement.......................
V
Voting Rights................................
Y
Yield Maintenance Amount.....................
<PAGE>
===============================================================================
No dealer, salesman or other person has been authorized to give any information
or to make any representations not contained in this Prospectus Supplement and
the Prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company or by the
Underwriter. This Prospectus Supplement and the Prospectus do not constitute an
offer to sell, or a solicitation of an offer to buy, the securities offered
hereby to anyone in any jurisdiction in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make any such offer or solicitation. Neither the delivery of this Prospectus
Supplement and the Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that information herein or therein is
correct as of any time since the date of this Prospectus Supplement or the
Prospectus.
----------
TABLE OF CONTENTS
Prospectus Supplement...............................
Summary of Prospectus Supplement........................
Risk Factors............................................
Description Of The Mortgage Pool........................
Servicing Of The Mortgage Loans.........................
Description of the Bonds................................
The Issuer..............................................
The Owner Trustee.......................................
The Administrator.......................................
Yield and Maturity Considerations.......................
Federal Income Tax Consequences.........................
Certain ERISA Considerations............................
Legal Investment........................................
Method of Distribution..................................
Legal Matters...........................................
Ratings.................................................
Index of Principal Definitions..........................
Prospectus
Prospectus Supplement...................................
Available Information...................................
Incorporation of Certain Documents By Reference.........
Summary of Prospectus...................................
Risk Factors............................................
Description of the Trust Funds..........................
Use of Proceeds.........................................
Yield Considerations....................................
The Depositor...........................................
Description of the Bonds................................
Description of the Agreements...........................
Description of Credit Support...........................
Certain Legal Aspects of the Mortgage Loans and Leases..
Certain Federal Income Tax Consequences.................
State Tax Considerations................................
ERISA Considerations....................................
Legal Investment........................................
Plan of Distribution....................................
Legal Matters...........................................
Financial Information...................................
Ratings.................................................
Index of Principal Definitions..........................
================================================================================
$
(Approximate)
ICCMAC COMMERCIAL TRUST [__]
(Issuer)
Collateralized Mortgage Bonds
Series 199_-_
Class A-1, Class A-2, Class B,
Class C, and Class D
___________________________________
PROSPECTUS SUPPLEMENT
___________________________________
[UNDERWRITER]
Dated __________, 199_
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*+
The following table sets forth the estimated expenses in connection with
the issuance and distribution of the Bonds, other than underwriting discounts
and commissions:
SEC Registration Fee............................................. $295
Printing and Engraving Fees......................................... +
Legal Fees and Expenses............................................. +
Accounting Fees and Expenses........................................ +
Trustee Fees and Expenses........................................... +
Rating Agency Fees.................................................. +
Miscellaneous....................................................... +
Total................................................... $295
====
- --------------------
* All amounts except the SEC Registration Fee are estimates of expenses
incurred or to be incurred in connection with the issuance and distribution
of Bonds in an aggregate principal amount assumed for these purposes to be
equal to $1,000,000 of Bonds registered hereby.
+ To be provided by amendment.
Item 15. Indemnification of Directors and Officers.
Under the proposed form of Underwriting Agreement, the Underwriter is
obligated under certain circumstances to indemnify officers and directors of
Imperial Credit Commercial Mortgage Acceptance Corp. (the "Company") who sign
the Registration Statement, and certain controlling persons of the Company,
against certain liabilities, including liabilities under the Securities Act of
1933, as amended and the Securities Exchange Act of 1934, as amended.
The Company's Certificate of Incorporation provides for indemnification of
directors and officers of the Company to the full extent permitted by California
law.
Section 317 of the California General Corporation Law provides, in
substance, that California corporations shall have the power, under specified
circumstances, to indemnify their directors, officers, employees and agents in
connection with actions, suits or proceedings brought against them by a third
party or in the right of the corporation, by reason of the fact that they are or
were such directors, officers, employees or agents, against expenses incurred in
any such action, suit or proceeding. The California General Corporation Law also
provides that the Registrant may purchase insurance on behalf of any such
director, officer, employee or agent.
The Indenture will provide that no director, officer, employee or agent of
the Company will be liable to the Issuer or the Bondholders for any action taken
or for refraining from the taking of any action pursuant to the Indenture,
except for such person's own misfeasance, bad faith or gross negligence in the
performance of duties. The Indenture will provide further that, with the
exceptions stated above, any director, officer, employee or agent of the Company
will be indemnified and held harmless by the Issuer against any loss, liability
or expense incurred in connection with any legal action relating to the
Indenture or the Bonds, other than any loss, liability or expense (i) related to
any specific Mortgage Loan or Mortgage Loans (except as any such loss, liability
or expense shall be otherwise reimbursable pursuant to the Indenture), (ii)
incurred in connection with any violation by him or her of any state or federal
securities law or (iii) imposed by any taxing authority if such loss, liability
or expense is not specifically reimbursable pursuant to the terms of the
Indenture.
<PAGE>
Item 16. Exhibits.
1.1 Form of Underwriting Agreement
3.1 Articles of Incorporation of the Company
3.2 By-laws of the Company
4.1 Form of Indenture
4.2 Form of Servicing Agreement
4.3 Form of Deposit Trust Agreement
4.4 Form of Administration Agreement
5.1 Opinion of Cadwalader, Wickersham & Taft
8.1 Opinion of Cadwalader, Wickersham & Taft as to certain tax
matters (included in Exhibit 5.1)
23.1 Consent of Cadwalader, Wickersham & Taft (included in Exhibits
5.1 and 8.1)
24.1 Powers of Attorney (included on page II-3 of the Registration
Statement)
Item 17. Undertakings.
A. Undertaking in respect of indemnification.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions described in Item 15 above, 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 against
the Registrant 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 of 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.
B. Other Undertakings.
The 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
Act;
(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;
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change of such information in the
Registration Statement;
(2) That, for the purpose of determining any liability under the Act,
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; and
(4) That, for purposes of determining any liability under the Act,
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities and Exchange Act of 1934 that is incorporated by
reference in this 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Imperial Credit Commercial Mortgage Acceptance Corp. certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form S-3, reasonably believes that the security rating requirement contained
in Transaction Requirement B.5 of Form S-3 will be met by the time of the sale
of the 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 Los Angeles, State of California, on the 12th day of
August, 1998.
IMPERIAL CREDIT COMMERCIAL MORTGAGE
ACCEPTANCE CORP.
By: /s/ Mark S. Karlan
-------------------------
Mark S. Karlan
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Mark S. Karlan, Kevin E. Villani, H.
Wayne Snavely and Norbert M. Seifert each whose signature appears below
constitutes and appoints Mark S. Karlan, Kevin E. Villani, H. Wayne Snavely and
Michael Meltzer, his or her true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him or her and his or her
name, place and stead, in any and all capacities, to sign any and all amendments
(including post- effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and any other documents in connection
therewith, 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 he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on August 12, 1998.
Signature Title
/s/ Mark S. Karlan Director and Chief Executive Officer
- -------------------------
Mark S. Karlan
/s/ Kevin E. Villani Director
- -------------------------
Kevin E. Villani
/s/ H. Wayne Snavely Director
- -------------------------
H. Wayne Snavely
/s/ Michael Meltzer Chief Financial Officer
- ------------------------- and Chief Accounting Officer
Michael Meltzer
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ----
1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of the Company
3.2 By-laws of the Company
4.1 Form of Indenture
4.2 Form of Servicing Agreement
4.3 Form of Deposit Trust Agreement
4.4 Form of Administration Agreement
5.1 Opinion of Cadwalader, Wickersham & Taft
8.1 Opinion of Cadwalader, Wickersham & Taft
as to certain tax matters (included in Exhibit 5.1)
23.1 Consent of Cadwalader, Wickersham & Taft
(included in Exhibits 5.1 and 8.1)
24.1 Powers of Attorney (included on page II-3
of the Registration Statement)
IMPERIAL CREDIT COMMERCIAL MORTGAGE ACCEPTANCE CORP.
$ __________ (Approximate)
Collateralized Mortgage Bonds
Series 199_-__
UNDERWRITING AGREEMENT
New York, New York
_________ __, 199_
[Name and Address
of
Underwriters]
Dear Sirs:
Imperial Credit Commercial Mortgage Acceptance Corp., a California
corporation (the "Company"), proposes to cause ICCMAC Commercial Trust [______],
a limited purpose [Delaware] business trust (the "Trust"), to issue and sell to
____________________, as representative of the underwriters named in Schedule I
hereto (the "Underwriters"), approximately $_______________ aggregate principal
amount of Collateralized Mortgage Bonds, Series 199_-_ (the "Bonds").
The Bonds will be issued by the Trust to be formed pursuant to a trust
agreement (the "Trust Agreement") to be entered into between the Company and
____________________, as trustee (the "Owner Trustee"). The Bonds will be issued
and secured pursuant to an indenture to be dated as of the Cut-off Date (the
"Indenture") between the Trust and _________________________________, as
indenture trustee (the "Indenture Trustee"). The beneficial ownership interest
in the Trust will be represented by certificates (the "Trust Certificates")
[which will be transferred by the Company to ______________ ("_____________"), a
limited purpose wholly-owned subsidiary of ____________________________
("___________________")].
The Bonds will be secured by a pledge of collateral (the "Collateral")
which consists primarily of a segregated pool (the "Mortgage Pool") of
approximately ___ [describe general characteristics of Mortgage Loans] mortgage
loans (the "Mortgage Loans") and related property. The Mortgage Loans will be
serviced pursuant to a servicing agreement, dated as of __________, 199_ (the
"Servicing Agreement") by and among the Issuer, the Trustee, ______________, as
master servicer (the "Master Servicer") and ____________ as special servicer
(the "Special Servicer").
The Company will acquire all the Mortgage Loans from
_______________________ pursuant to a mortgage loan purchase agreement between
the Company and _______________ (the "Mortgage Loan Purchase Agreement").
Certain administrative functions with respect to the Trust will be
performed on behalf of the Trust by ________________, as administrator (the
"Administrator"), pursuant to an administration agreement (the "Administration
Agreement") between the Trust and the Administrator.
The Bonds are described more fully in Schedule I hereto and in the
Prospectus (as defined below). The Mortgage Loans will be of the type described
and will have the aggregate principal balance set forth in Schedule I. The Bonds
will consist of the Class A-1, Class A-2, Class B, Class C, Class D, Class E and
Class F Bonds and will be issued in the denominations specified in Schedule I.
This Agreement, the Trust Agreement, the Indenture, the Servicing
Agreement, the Mortgage Loan Purchase Agreement and the Administration
Agreement, are collectively referred to herein as the "Basic Agreements."
Capitalized terms used but not defined herein shall have the meanings assigned
thereto in the Indenture.
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 on Form S-3 (the file numbers
of which are set forth in Schedule I hereto) for the registration of the
Offered Bonds, among other collateralized mortgage bonds, under the
Securities Act of 1933, as amended (the "1933 Act"), which registration
statement has become effective and copies of which have heretofore been
delivered to you. Such registration statement, as amended at the date
hereof, meets the requirements set forth in Rule 415(a)(1)(x) under the
1933 Act and complies in all other material respects with the 1933 Act and
the rules and regulations thereunder. The Company proposes to file with the
Commission pursuant to Rule 424 under the 1933 Act a supplement to the form
of prospectus included in such registration statement relating to the
Offered Bonds and the plan of distribution thereof and has previously
advised you of all further information (financial and other) with respect
to the Offered Bonds and the Mortgage Pool to be set forth therein. Such
registration statement, including the exhibits thereto, as amended at the
date hereof, and all documents incorporated by reference from time to time
pursuant to Item 12 of Form S-3 under the 1933 that were filed under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), on or before
the effective date of such registration statement, each as amended at the
date hereof, but excluding Form T-1, is hereinafter called the
"Registration Statement"; the prospectus included in the Registration
Statement, after the Registration Statement, as amended, became effective,
or as subsequently filed with the Commission pursuant to Rule 424 under the
1933 Act, is hereinafter called the "Basic Prospectus"; such form of
prospectus supplemented by the supplement to the form of prospectus
relating to the Offered Bonds, in the form in which it shall be first filed
with the Commission pursuant to Rule 424 (including the Basic Prospectus as
so supplemented) is hereinafter called the "Final Prospectus." Any
preliminary form of the Final Prospectus that has heretofore been filed
pursuant to Rule 424 or, prior to the effective date of the Registration
Statement, pursuant to Rule 402(a) or Rule 424(a) is hereinafter called a
"Preliminary Final Prospectus."
(b) (i) The Registration Statement, as of its effective date or the
effective date of any post-effective amendment thereto filed prior to the
Closing Date, and the Final Prospectus, as of the date that it is first
filed pursuant to Rule 424 under the 1933 Act or, as amended or
supplemented, as of the date such amendment or supplement is filed pursuant
to Rule 424 under the 1933 Act, complied or will comply, as applicable, in
all material respects with the applicable requirements of the 1933 Act, the
1934 Act and the Trust Indenture Act of 1934, as amended (the "Trust
Indenture Act"), as applicable, and the rules and regulations thereunder,
(ii) the Registration Statement as of its effective date and as of the date
of this Agreement, and, as amended by any such post-effective amendment, as
of the effective date of such amendment, did not and will not contain any
untrue statement of a material fact and did not omit and will not omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading and (iii) the Final Prospectus as of
its issue date and as of the Closing Date, or as amended or supplemented,
as of the issue date of such amendment or supplement and as of the Closing
Date, will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representations or
warranties as to the information contained in or omitted from the
Registration Statement or the Final Prospectus or any amendment thereof or
supplement thereto in reliance upon and in conformity with the information
furnished in writing to the Company by or on behalf of any Underwriter
specifically for use in connection with the preparation of the Registration
Statement and the Final Prospectus.
(c) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of
________________ with full power and authority (corporate and other) to own
its properties and conduct its business, as now conducted by it, and to
enter into and perform its obligations under this Agreement, the Purchase
Agreement and the Indenture; and the Company has received no notice of
proceedings relating to the revocation or modification of any license,
certificate, authority or permit applicable to its owning such properties
or conducting such business which singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the conduct of the business, operations, financial
condition or income of the Company.
(d) When the Final Prospectus is first filed pursuant to Rule 424
under the 1933 Act, when, prior to the Closing Date (as hereinafter
defined), any amendment to the Registration Statement becomes effective,
when any supplement to the Final Prospectus is filed with the Commission,
and at the Closing Date, there has not and will not have been (i) any
request by the Commission for any further amendment of the Registration
Statement or the Final Prospectus or for any additional information, (ii)
any 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 or (iii) any notification
with respect to the suspension of the qualification of the Offered Bonds
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose.
(e) This each of the Basic Agreements to which the Company is a party
have been, or will be, when executed and delivered as contemplated hereby
and thereby will have been, duly authorized, executed and delivered by the
Company, and each constitutes, or will constitute when so executed and
delivered, a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as enforceability
may be limited by (i) bankruptcy, insolvency, liquidation, receivership,
moratorium, reorganization or other similar laws affecting the enforcement
of the rights of creditors, (ii) general principles of equity, whether
enforcement is sought in a proceeding in equity or at law and (iii) public
policy considerations underlying the securities laws, to the extent that
such public policy considerations limit the enforceability of the
provisions of this Agreement that purport to provide indemnification from
securities law liabilities.
(f) The Offered Bonds and the Basic Agreements will each conform in
all material respects to the descriptions thereof contained in the Final
Prospectus, and the Offered Bonds, when duly and validly authorized,
executed, authenticated and delivered in accordance with the Indenture and
paid for by the Underwriters as provided herein, will be duly and validly
issued and will constitute legal, valid and binding obligations of the
Trust enforceable against the Trust in accordance with their terms except
as enforceability may be limited by (i) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other similar laws
affecting the enforcement of the rights of creditors and (ii) general
principles of equity, whether enforcement is sought in a proceeding in
equity or at law, and will be entitled to the benefits of the Indenture.
The Indenture has been duly authorized and duly qualified under the Trust
Indenture Act.
(g) The Trust Certificates represent undivided ownership interests in
the Trust created by the Trust Agreement. The Trust Certificates have been
duly authorized, and each of the Trust Certificates, when validly
authenticated and delivered in accordance with the Trust Agreement will be
duly and validly issued, fully paid and non-assessable and will be entitled
to the benefits of the Trust Agreement.
(h) Neither the issuance of the Bonds, nor the execution and delivery
by the Company of each of the Basic Agreements to which it is a party, nor
the consummation by the Company of any of the transactions herein or
therein contemplated, nor compliance by the Company with the provisions
hereof or thereof, will conflict with or result in a breach of any term or
provision of the certificate of incorporation or by-laws of the Company or
conflict with, result in a breach, violation or acceleration of or
constitute a default under, the terms of any indenture or other agreement
or instrument to which the Company is a party or by which it is bound, or
any statute, order or regulation applicable to the Company of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Company, which, in any such case, would materially
and adversely affect the ability of the Company to perform its obligations
under the Basic Agreements. The Company is not 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, or is
reasonably likely in the future to materially and adversely affect, the
ability of the Company to perform its obligations under the Basic
Agreements.
(i) There are no actions or proceedings against, or investigations of,
the Company pending, or, to the knowledge of the Company, threatened,
before any court, administrative agency or other tribunal (i) asserting the
invalidity of the Basic Agreements or the Bonds, (ii) seeking to prevent
the issuance of the Bonds or the consummation of any of the transactions
contemplated by the Basic Agreements, (iii) that might materially and
adversely affect the performance by the Company of its obligations under,
or the validity or enforceability of, the Basic Agreements or the Offered
Bonds or (iv) seeking to affect adversely the federal income tax attributes
of the Bonds as described in the Final Prospectus.
(j) Neither the Company nor the Trust is, and after giving effect to
the issuance of the Trust Certificates or the offering and sale of the
Bonds, will be required to be registered as an investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(k) The Trust Agreement is not required to be qualified under the
Trust Indenture Act.
(l) As of the Closing Date, the Mortgage Loans will have been duly and
validly assigned and delivered to the Trustee, and the Indenture Trustee
will have acquired a valid and perfected, first priority security interest
therein and in the assets of the Trust, subject to no prior lien, mortgage,
security interest, pledge, adverse claim, charge or other encumbrance.
(m) As of the Closing Date, the Company's representations and
warranties in the Basic Agreements to which it is a party will be true and
correct in all material respects.
(n) Any taxes, fees and other governmental charges in connection with
the execution, delivery and issuance of the Basic Agreements, the Trust
Certificates and the Bonds have been or will be paid at or prior to the
Closing Date.
(o) 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 as described in the Prospectus, and the Company has
received no 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 an unfavorable decision,
ruling or finding, would materially and adversely affect the conduct of the
business, operations, financial condition or income of the Company.
2. Purchase and Sale. Subject to the terms and conditions and in reliance
upon the representations and warranties set forth herein, the Company agrees to
sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at the applicable purchase price set
forth in Schedule I hereto, the respective portions of the Offered Bonds set
forth opposite such Underwriter's name in Schedule II hereto.
3. Delivery and Payment. Delivery of and payment for the Offered Bonds
shall be made in the manner, on the date and at the time specified in Schedule I
hereto (or such later date not later than seven business days after such
specified date as the Underwriters shall designate), which date and time may be
postponed by agreement between the Underwriters and the Company or as provided
in Section 8 hereof (such date and time of delivery and payment for the Offered
Bonds being herein called the "Closing Date"). Delivery of the Offered Bonds, as
set forth on Schedule I hereto, shall be made to the Underwriters for their
respective accounts against payment by wire transfer of immediately available
funds by the several Underwriters of the applicable purchase price. Unless
delivery is made through the facilities of The Depository Trust Company, the
Offered Bonds shall be registered in such names and in such authorized
denominations as the Underwriters may request not less than 3 full business days
in advance of the Closing Date.
The Company agrees to have the Offered Bonds available for inspection,
checking and packaging by the Underwriters in New York, New York, not later than
1:00 P.M. on the business day prior to the Closing Date.
4. Offering by Underwriters. (a) It is understood that the several
Underwriters propose to offer the Offered Bonds for sale to the public as set
forth in the Final Prospectus.
[(b) Each Underwriter agrees that any Class __ or Class __ Bonds sold by it
in the State of New York will be sold solely to institutional "accredited
investors" within the meaning of Rule 501(a)(1), (2) and (3) of Regulation D
under the 1933 Act in order to ensure compliance with the exemption from Section
352-e of the Real Estate Syndicate Act of New York.]
5. Agreements. The Company agrees with the several Underwriters that:
(a) The Company will not file, on or prior to the Closing Date, any
amendment to the Registration Statement or file any supplement to
(including the supplement relating to the Offered Bonds included in the
Final Prospectus) the Basic Prospectus unless the Company has furnished to
you a copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object. Subject to
the foregoing sentence, the Company will cause the Final Prospectus to be
transmitted to the Commission for filing pursuant to Rule 424 under the
1933 Act. The Company will promptly advise the Underwriters (i) when the
Final Prospectus shall have been filed or transmitted to the Commission for
filing pursuant to Rule 424, (ii) when any amendment to the Registration
Statement shall have become effective, (iii) of any request by the
Commission for any amendment of the Registration Statement or the Final
Prospectus or for any additional information, (iv) 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 (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Offered Bonds
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its reasonable best
efforts to prevent the issuance of any such stop order or suspension and,
if issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Offered Bonds is
required to be delivered under the 1933 Act, any event occurs as a result
of which the Final 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 Final Prospectus to comply with the 1933 Act or the
rules and regulations thereunder, the Company will promptly 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 of the
Registration Statement, will use its reasonable best efforts to cause such
amendment of the Registration Statement to be made effective as soon as
possible.
(c) The Company will (i) furnish to the Underwriters and counsel for
the Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and each amendment thereto that
shall become effective on or prior to the Closing Date and, so long as
delivery of a prospectus by an Underwriter or dealer in connection with the
Offered Bonds may be required by the 1933 Act, as many copies of any
Preliminary Final Prospectus and the Final Prospectus and any amendments
thereof and supplements thereto as the Underwriters may reasonably request,
and (ii) file promptly all reports and any information statements required
to be filed by the Company with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the 1934 Act, subsequent to the date of the Final
Prospectus and for so long as the delivery of a prospectus by an
Underwriter or dealer in connection with the Offered Bonds may be required
under the 1933 Act. The Company will file with the Commission within 15
days of the issuance of the Offered Bonds a report on Form 8-K (the "8-K")
setting forth specific information concerning the Offered Bonds and the
Mortgage Pool to the extent that such information is not set forth in the
Final Prospectus.
(d) The Company agrees that, so long as the Offered Bonds shall be
outstanding, it will make available to the Underwriters the annual
statement as to compliance delivered to the Trustee pursuant to Section
3.12 of the Indenture, as soon as such statements are furnished to the
Company. The Servicing Agreement will provide that the Master Servicer and
the Special Servicer furnish to the Underwriters all reports compiled by
either of them pursuant to the Servicing Agreement under the same terms and
conditions applicable to holders of the Offered Bonds.
(e) The Company will furnish such information, execute such
instruments and take such action, if any, as may be required to qualify the
Offered Bonds for sale under the laws of such jurisdictions as the
Underwriters may designate and will maintain such qualifications in effect
so long as required for the distribution of the Offered Bonds; 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 pay, to the extent not paid by the Mortgage Loan
Sellers pursuant to the Purchase Agreements, all costs and expenses in
connection with the transactions herein contemplated, including, but not
limited to: (i) the fees and disbursements of its counsel; (ii) the costs
and expenses of printing (or otherwise reproducing) and delivering the
Indenture and the Offered Bonds; (iii) accounting fees and disbursements
(except as set forth in Section 9(f)); (iv) the costs and expenses in
connection with the qualification or exemption of the Offered Bonds under
state securities or blue sky laws not to exceed $______, including filing
fees and reasonable fees and disbursements of counsel in connection with
the preparation of any blue sky survey and in connection with any
determination of the eligibility of the Offered Bonds for investment by
institutional investors and the preparation of any legal investment survey;
(v) the expenses of printing any such blue sky survey and legal investment
survey; (vi) the costs and expenses in connection with the preparation,
printing and filing of the Registration Statement (including exhibits
thereto), the Basic Prospectus, the Preliminary Final Prospectus and the
Final Prospectus, the preparation and printing of this Agreement and the
furnishing to the Underwriters of such copies of each Preliminary Final
Prospectus and Final Prospectus as the Underwriters may reasonably request
and (vii) the fees of each Rating Agency (as defined herein). The
Underwriters shall be responsible for paying all costs and expenses
incurred by them in connection with the offering of the Offered Bonds.
6. Conditions to the Obligations of the Underwriters. The obligations of
the Underwriters to purchase the Offered Bonds shall be subject to the accuracy
of the representations and warranties on the part of the Company contained
herein as of the date hereof, as of the date of the effectiveness of any
amendment to the Registration Statement filed after the date hereof and prior to
the Closing Date and as of the Closing Date, to the accuracy of the statements
of the Company made in any certificates pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and not
withdrawn and no proceedings for that purpose shall have been instituted or
threatened; and the Final Prospectus shall have been filed or transmitted
for filing with the Commission in accordance with Rule 424 under the 1933
Act.
(b) The Company shall have delivered to you a certificate of the
Company, signed by the Chairman, the President, a vice president or an
assistant vice president of the Company and dated the Closing Date, to the
effect that the signer of such certificate has carefully examined the
Registration Statement, the Final Prospectus and this Agreement and 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; (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; (iii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or, to the Company's knowledge, threatened and (iv)
nothing has come to the attention of such officer that would lead such
officer to believe that the Final Prospectus contains any untrue statement
of a material fact or omits to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(c) The Underwriters shall have received from Cadwalader, Wickersham &
Taft, special counsel for the Company, a favorable opinion, dated the
Closing Date and satisfactory in form and substance to counsel for the
Underwriters, to the effect that:
(i) The Company is a corporation in good standing under the laws
of the State of Delaware with corporate power to enter into and
perform its obligations under each of the Basic Agreements;
(ii) The Registration Statement and any amendments thereto have
become effective under the 1933 Act; to the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement, as amended, has been issued, and not withdrawn, no
proceedings for that purpose have been instituted or threatened, and
not terminated, and the Registration Statement, the Final Prospectus
and each amendment thereof or supplement thereto as of their
respective effective or issue dates complied as to form in all
material respects with the applicable requirements of the 1933 Act and
the rules and regulations thereunder; and such counsel does not
believe that the Registration Statement (which, for purposes of this
clause, shall not be deemed to include any exhibits thereto or any
documents or other information incorporated therein by reference), or
any amendment thereof, at the time it became effective and at the date
of this Agreement, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Final Prospectus as of its issue date and as of the Closing Date, or
as amended or supplemented, as of the issue date of such amendment or
supplement and as of the Closing Date, contains any untrue statement
of a material fact or omits 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;
(iii) Each of the Basic Agreements to which the Company is a
party have been duly authorized, executed and delivered by the Company
and each such agreement constitutes a valid, legal and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
(A) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the
rights of creditors, (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 the provisions of such agreements that purport to provide
indemnification or contribution from securities law liabilities;
(iv) The Offered Bonds, when duly and validly executed,
authenticated and delivered in accordance with the Indenture and paid
for by the Underwriters as provided herein, will be entitled to the
benefits of the Indenture;
(v) The statements in the Basic Prospectus and the Final
Prospectus, as the case may be, under the headings "Certain Federal
Income Tax Consequences" and "ERISA Considerations," to the extent
that they constitute matters of federal law or legal conclusions with
respect thereto, are correct in all material respects;
(vi) No consent, approval, authorization or order of any New York
or federal court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated herein,
except (i) such as have been or will have been obtained under the 1933
Act and the Trust Indenture Act prior to the Closing Date in
connection with the offer, sale, purchase and distribution of the
Bonds by the Underwriters, (ii) such as may be required under the blue
sky laws of any jurisdiction in connection with the purchase and
distribution of the Offered Bonds by the Underwriters, and (iii) any
recordation of the assignment of the Mortgage Loans to the Trustee
pursuant to the Indenture that have not yet been completed and such
other approvals as have been obtained;
(vii) Neither the Company, nor the Trust is, and, after giving
effect to the offering and sale of the Bonds, will be, an "investment
company" or an entity "controlled" by an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended
(the "1940 Act") that is registered or is required to be registered
under the 1940 Act;
(viii) The Trust Agreement is not required to be qualified under
the Trust Indenture Act;
(ix) As of the Closing Date, the Mortgage Loans will have been
duly and validly pledged and delivered to the Trustee, and the Trustee
will have acquired a valid and perfected, first priority security
interest therein and in the assets of the Trust including the proceeds
thereof; and
(x) Neither the issuance and sale or transfer of the Bonds, nor
the consummation of any other of the transactions herein contemplated
nor the fulfillment of the terms hereof or of the Purchase Agreements
or the Indenture 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, the certificate of incorporation or
by-laws of the Company, or, 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 any New York or federal statute or
regulation applicable to the Company or, to the knowledge of such
counsel, any order of any New York or federal court, regulatory body,
administrative agency or governmental body having jurisdiction over
the Company.
Such opinion may (x) express its reliance as to factual matters on the
representations and warranties made by, and on certificates or other
documents furnished by officers of, the parties to this Agreement, the
Purchase Agreements and the Indenture, (y) assume the due authorization,
execution and delivery of the instruments and documents referred to therein
by the parties thereto other than the Company and (z) be qualified as an
opinion only on the federal laws of the United States of America and the
laws of the State of New York. Additionally, if so rendered, Cadwalader,
Wickersham & Taft may rely on the opinion of in-house counsel for the
Company as to matters relating to the Company.
(d) The Underwriters shall have received from ____________________ and
____________________ (the "Accountants"), certified public accountants, one
or more letters, dated the date hereof and satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
(e) The Bonds have been given the rating, if any, set forth in
Schedule I hereto by ____________________ and ____________________ ("_____"
and, together with _____, the "Rating Agencies").
(f) The Underwriters shall have received from counsel for the
Underwriters, dated the Closing Date, an opinion in form and substance
satisfactory to the Underwriters.
(g) The Underwriters shall have received from counsel for the Trustee,
a favorable opinion, dated the Closing Date, and in form and substance
satisfactory to the Underwriters and counsel for the Underwriters.
(h) The Underwriters shall have received from counsel for each
Mortgage Loan Seller, a favorable opinion, dated the Closing Date, in form
and substance satisfactory to the Underwriters and counsel for the
Underwriters.
(i) The Underwriters shall have received from counsel for each of the
Master Servicer and Special Servicer, a favorable opinion, dated the
Closing Date, in form and substance satisfactory to the Underwriters and
counsel for the Underwriters.
(j) The Underwriters shall have received copies of any opinions of
counsel to the Company, each Mortgage Loan Seller or the Master Servicer
supplied to the Rating Agencies or the Trustee relating to certain matters
with respect to the Offered Bonds, the Mortgage Loan Sellers and the
Mortgage Loans. Any such opinions shall be dated the Closing Date and
addressed to the Underwriters or accompanied by the reliance letters to the
Underwriters or shall state that the Underwriters may rely upon them.
(k) All proceedings in connection with the transactions contemplated
by this Agreement and all documents incident hereto shall be satisfactory
in form and substance to the Underwriters and counsel for the Underwriters,
and the Underwriters and counsel for the Underwriters shall have received
such information, certificates and documents as they may reasonably
request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, if
the Company is in breach of any covenants or agreements contained herein or if
any of the opinions and certificates mentioned above 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
telegraph confirmed in writing.
7. Indemnification and Contribution. The Company and the several
Underwriters agree that:
(a) The Company will indemnify and hold harmless each Underwriter, and
each person who controls any Underwriter within the meaning of either the
1933 Act or the 1934 Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the 1933 Act, the 1934 Act, or other federal or state
statutory 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 Registration Statement or in
any amendment thereof, or in the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus, or in 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 required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein (a) in reliance upon and in conformity with
written information furnished to the Company as herein stated by or on
behalf of any Underwriter specifically for use in connection with the
preparation thereof or (b) arising out of or based upon the failure of any
Underwriter to comply with any provision of Section 9 hereof; provided,
further, however, that with respect to any untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement or in any amendment thereof, or in the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, the indemnity
contained in this subsection (a) shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages
or liabilities purchased the Offered Bonds (or to the benefit of any person
controlling such Underwriter), to the extent that any such loss, claim,
damage or liability of such Underwriter or controlling person results from
the fact that a copy of the Basic Prospectus or the Final Prospectus
correcting such misstatement or omission and previously delivered to such
Underwriter was not sent or given to such person at or prior to the written
confirmation of the sale of such Offered Bonds to such person or from the
fact that any amendment of or supplement to the registration statement for
the registration of the Offered Bonds, the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus correcting such
misstatement or omission and delivered to the Underwriters at least 24
hours prior to the Closing Date was not sent or given to such person prior
to the settlement of the sale of the Offered Bonds to such person (unless
the Company shall have agreed that such amendment or supplement need not be
so sent or given). This indemnity agreement will be in addition to any
liability which the Company may otherwise have; provided, however, that the
Company shall not be liable to any Underwriter for losses of anticipated
profits from the transactions covered by this Agreement.
(b) Each Underwriter severally will indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the
Registration Statement, and each person, if any, who controls the Company
within the meaning of either the 1933 Act or the 1934 Act, against any and
all losses, claims, damages or liabilities, joint or several, to which the
Company or any of them may become subject under the 1933 Act, the 1934 Act,
or other federal or state statutory 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 (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or in any amendment thereof, or in the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, or in
any amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading or (ii) the failure of such
Underwriter to comply with any provision of Section 9 hereof, and each
Underwriter agrees to reimburse each such indemnified party, as incurred,
for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action, but, in the case of clause (i) above, only with reference to
written information furnished to the Company by or on behalf of such
Underwriter specifically for use in the Registration Statement, or in any
revision or amendment thereof, or supplement thereto, or in the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, and,
in the case of clause (ii) above, only the Underwriter who failed to comply
with Section 9 hereof shall have the foregoing obligations for such
failure. This indemnity agreement will be in addition to any liability that
any Underwriter may otherwise have.
The Company and each Underwriter acknowledges and agrees that for all
purposes of this Agreement the statements set forth in the first, third and
fourth sentences of the second to last paragraph of the cover page of the
Final Prospectus, the second sentence of the third paragraph after the
footnotes on page S-__ of the Final Prospectus and the first paragraph, the
first sentence of the third paragraph and the second sentence of the
seventh paragraph commencing on page S-__ under the heading "Method of
Distribution" in the Final Prospectus, together with the Underwriter
Information (as defined in Section 9) constitute the only information
furnished in writing by or on behalf of the several Underwriters for
inclusion in the documents referred to in the foregoing indemnities, and
each Underwriter confirms that such statements are or will be, at the time
made, correct.
(c) Promptly after receipt by an indemnified party under this Section
7 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 this Section 7, 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 any liability which it may
have to any indemnified party (x) hereunder unless such failure to notify
prejudices the position of the indemnifying party or results in the loss of
one or more defenses to the related cause of action or (y) otherwise than
under this Section 7. 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; provided,
however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party or
parties shall have reasonably concluded that there may be legal defenses
available to it or them 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 (and one local counsel, if it deems so necessary) 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 any indemnified party of
counsel, the indemnifying party will not be liable to such indemnified
party for expenses incurred by the 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 next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for
the expenses of more than one separate counsel and one local counsel,
approved by the Underwriters in the case of subsection (a), representing
the indemnified parties under subsection (a) 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 in writing 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). The indemnifying party shall not be liable for any
settlement of any action effected without its prior written consent, which
consent shall not be unreasonably withheld, but if settled with such
consent, the indemnifying party shall indemnify the indemnified party from
and against any indemnifiable losses, claims, damages and liabilities by
reason of such settlement. No indemnifying party who has elected to assume
the defense of such action shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
action in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section 7 shall for
any reason be unavailable in accordance with its terms to an indemnified
party under this Section 7, then the Company and each Underwriter, to the
extent of underwriting discounts and commissions received by it, shall
individually contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages or liabilities referred to
in subsection (a) or (b) above, in such proportion as is appropriate to
reflect (i) the relative benefits received by the Company on the one hand
and each Underwriter on the other from the offering of the Offered Bonds
(taking into account the portion of the proceeds of the offering realized
by each party) and (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 to reflect the relative fault of the Company on the one hand and each
Underwriter on the other in connection with the statement or omission or
failure to comply that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations (taking
into account the parties' relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission or failure to
comply, and any other equitable consideration appropriate under the
circumstances). The relative benefits received by the Company on the one
hand and each Underwriter on the other shall be in such proportion as the
total net proceeds from the offering of the Offered Bonds (before deducting
expenses) received by the Company bear to the total underwriting discounts
and commissions received by each Underwriter with respect to such offering.
The relative fault 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 or the respective Underwriter and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission or failure to
comply. Notwithstanding anything to the contrary in this Section 7(d), if
the losses, claims, damages or liabilities (or actions in respect thereof)
referred to in this Section 7(d) arise out of an untrue statement or
alleged untrue statement of a material fact contained in any Underwriter
8-K (as such term is defined in Section 9 hereof) or the failure of any
Underwriter to comply with any provision of Section 9 hereof, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand
and the respective Underwriter on the other (determined in accordance with
the preceding sentence) in connection with the statements or omissions in
such Underwriter 8-K, or such failure to comply, which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other equitable considerations. The Company and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were to be determined by per capita
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to herein. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d) shall
be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending
against any action or claim which is the subject of this subsection (d)
subject to the limitations therein provided under subsection (c).
Notwithstanding the provisions of this subsection (d), no Underwriter shall
be required to contribute any amount in excess of the amount by which the
total price at which the Offered Bonds underwritten and distributed by it
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise paid or become liable to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) or willful failure to comply with Section 9
hereof shall be entitled to contribution from any person who was not also
guilty of such fraudulent misrepresentation or willful failure to comply.
The Underwriters' obligation in this subsection (d) to contribute shall be
several in proportion to their respective underwriting obligations and not
joint.
(e) Each Underwriter will indemnify and hold harmless any other
Underwriter and each person, if any, who controls such Underwriter within
the meaning of either the 1933 Act or the 1934 Act (collectively, the
"Non-Indemnifying Underwriter") from and against any and all losses,
claims, damages or liabilities, joint or several, to which any
Non-Indemnifying Underwriter becomes subject under the 1933 Act, the 1934
Act or other federal or state statutory law or regulation, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement of material fact contained in any computational or other written
materials developed by, mailed or otherwise transmitted by such
indemnifying Underwriter in connection with the Offered Bonds or in any
revision or amendment thereof or supplement thereto or (ii) the failure of
such indemnifying Underwriter to comply with any provision of Section 9
hereof, and agrees to reimburse each such Non-Indemnifying Underwriter, as
incurred for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in addition to any
liability that any Underwriter may otherwise have.
8. Default by an Underwriter. (a) If, on the Closing Date, any Underwriter
defaults in the performance of its obligations under this Agreement, the
non-defaulting Underwriters may make arrangements for the purchase of the
Offered Bonds which such defaulting Underwriter agreed but failed to purchase by
other persons satisfactory to the Company and the non-defaulting Underwriters,
but if no such arrangements are made within 36 hours after such default, this
Agreement shall terminate without liability on the part of the non-defaulting
Underwriters or the Company, except that the Company will continue to be liable
for the payment of expenses to the extent set forth in Section 5(f) and except
that the provisions of Sections 7 and 9 shall not terminate and shall remain in
effect. As used in this Agreement, the term "Underwriters" includes, for all
purposes of this Agreement unless the context otherwise requires, any party not
listed in Schedule 1 hereto that, pursuant to this Section 8 purchases Offered
Bonds which a defaulting Underwriter agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company or any non-defaulting Underwriter for
damages caused by its default. If other persons are obligated or agree to
purchase the Offered Bonds of a defaulting Underwriter, either the
non-defaulting Underwriters or the Company may postpone the Closing Date for up
to seven full business days in order to effect any changes that in the opinion
of the counsel for the Company or counsel for the Underwriters may be necessary
in the Registration Statement and/or the Final Prospectus or in any other
document or arrangement, and the Company agrees to promptly prepare any
amendment or supplement to the Registration Statement and/or the Final
Prospectus that effects any such changes.
9. Computational Materials and ABS Term Sheets.
(a) The parties acknowledge that, subsequent to the date on which the
Registration Statement became effective and up to and including the date on
which the Final Prospectus with respect to the Offered Bonds is first made
available to the Underwriters, the Underwriters may furnish to various
potential investors in Offered Bonds, in writing: (i) "Computational
Materials," as defined in a no-action letter (the "Kidder No-Action
Letter") issued by the staff of the Commission on May 20, 1994 to Kidder,
Peabody Acceptance Corporation I, et al., as modified by a no-action letter
(the "First PSA No-Action Letter") issued by the staff of the Commission on
May 27, 1994 to the Public Securities Association (the "PSA") and as
further modified by a no-action letter (the "Second PSA No-Action Letter,"
and together with the Kidder No-Action Letter and the First PSA No-Action
Letter, the "No-Action Letters") issued by the staff of the Commission on
February 17, 1995 to the PSA; (ii) "Structural Term Sheets," as defined in
the Second PSA No-Action Letter and/or (iii) "Collateral Term Sheets," as
defined in the Second PSA No-Action Letter.
(b) In connection with the Offered Bonds, each Underwriter shall
furnish to the Company, at least 1 business day prior to the time of filing
of the Final Prospectus pursuant to Rule 424 under the 1933 Act, all
Computational Materials used by such Underwriter and required to be filed
with the Commission in order for such Underwriter to avail itself of the
relief granted in the No-Action Letters (such Computational Materials, the
"Furnished Computational Materials").
(c) In connection with the Offered Bonds, each Underwriter shall
furnish to the Company, at least 1 business day prior to the time of filing
of the Final Prospectus pursuant to Rule 424 under the Act, all Structural
Term Sheets used by such Underwriter and required to be filed with the
Commission in order for such Underwriter to avail itself of the relief
granted in the No-Action Letters (such Structural Term Sheets, the
"Furnished Structural Term Sheets").
(d) In connection with the Offered Bonds, each Underwriter shall
furnish to the Company, within 1 business day after the first use thereof,
all Collateral Term Sheets used by such Underwriter and required to be
filed with the Commission in order for such Underwriter to avail itself of
the relief granted in the No-Action Letters (such Collateral Term Sheets,
the "Furnished Collateral Term Sheets") and shall advise the Company of the
date on which each such Collateral Term Sheet was first used.
(e) Each Underwriter shall prepare for signature by the Company and
filing and (following signature by the Company) cause to be filed with the
Commission one or more current reports on Form 8-K (collectively, together
with any amendments and supplements thereto, the "Underwriter 8-Ks," and
each an "Underwriter 8-K") with respect to all Furnished Computational
Materials, Structural Term Sheets and Collateral Term Sheets used by it
(pro rating the costs and expenses thereof on the basis of the number of
pages of each such Underwriter 8-K to the extent that more than one
Underwriter contributes such sheets to such Underwriter 8-Ks) such that
such Underwriter may avail itself of the relief granted in the No-Action
Letters. In particular, each Underwriter shall cause to be filed with the
Commission (i) all of its Furnished Computational Materials and all of its
Furnished Structural Term Sheets on an Underwriter 8-K prior to or
concurrently with the filing of the Final Prospectus with respect to the
Offered Bonds pursuant to Rule 424 under the 1933 Act; and (ii) all of its
Furnished Collateral Term Sheets on an Underwriter 8-K not later than 2
business days after the first use thereof.
(f) Each Underwriter shall, if required by the Company, reasonably
cooperate with the Company and with the Accountants in obtaining a letter
or letters, in form and substance satisfactory to the Company and such
Underwriter, of the Accountants regarding the information in any
Underwriter 8-K consisting of Furnished Computational Materials and/or
Furnished Structural Term Sheets. Any such letter shall be obtained prior
to the filing of any such Underwriter 8-K with the Commission.
(g) Each Underwriter represents and warrants to, and covenants with,
the Company that as presented in any Underwriter 8-K, the Underwriter
Information (defined below) is not misleading and not inaccurate in any
material respect and that any Pool Information (defined below) contained in
any Underwriter 8-K prepared by it which is not otherwise inaccurate in any
material respect is not presented in such Underwriter 8-K prepared by it in
a way that is either misleading or inaccurate in any material respect. Each
Underwriter further covenants with the Company that if any Computational
Materials or ABS Term Sheets (as such term is defined in the Second PSA
No-Action Letter) contained in any Underwriter 8-K are found to include any
information that is misleading or inaccurate in any material respect, such
Underwriter promptly shall inform the Company of such finding, provide the
Company with revised and/or corrected Computational Materials or ABS Term
Sheets, as the case may be, and promptly prepare for signature by the
Company and filing and (following signature by the Company) cause to be
delivered for filing to the Commission in accordance herewith, an
Underwriter 8-K containing such revised and/or corrected Computational
Materials or ABS Term Sheets, as the case may be.
(h) Each Underwriter covenants that all Computational Materials and
ABS Term Sheets used by it shall contain the following legend:
"THIS INFORMATION IS FURNISHED TO YOU SOLELY BY [THE UNDERWRITER]
AND NOT BY IMPERIAL CREDIT COMMERCIAL MORTGAGE ACCEPTANCE CORP.
("IMPERIAL CREDIT") OR ANY OF ITS AFFILIATES (OTHER THAN
____________________)."
(i) Each Underwriter covenants that all Collateral Term Sheets used by
it shall contain the following additional legend:
"THE INFORMATION CONTAINED HEREIN WILL BE SUPERSEDED BY THE
DESCRIPTION OF THE MORTGAGE LOANS CONTAINED IN THE PROSPECTUS
SUPPLEMENT."
(j) Each Underwriter covenants that all Collateral Term Sheets (other
than the initial Collateral Term Sheet) shall contain the following
additional legend:
"THE INFORMATION CONTAINED HEREIN SUPERSEDES THE INFORMATION IN
ALL PRIOR COLLATERAL TERM SHEETS, IF ANY."
(k) Each Underwriter covenants that it shall cause the following
legend to be placed in capital letters at the top of the cover page of each
group of Computational Materials:
"IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS [SPECIFY
DOCUMENT] IS BEING FILED IN PAPER PURSUANT TO A CONTINUING
HARDSHIP EXEMPTION."
(1) Each Underwriter shall deliver to the Company a copy of each
Underwriter 8-K prepared by it (including written evidence of filing)
promptly upon filing the same with the Commission (but in any event not
later than the earlier to occur of (i) the second business day after filing
and (ii) the Closing Date).
(m) For purposes of this Agreement, the term "Underwriter Information"
means such portion, if any, of the information contained in any Underwriter
8-K that is not Pool Information or Prospectus Information; provided,
however, that information contained in an Underwriter 8-K that is not Pool
Information or Prospectus Information shall not constitute Underwriter
Information to the extent such information is inaccurate or misleading in
any material respect directly as a result of it being based on Pool
Information or Prospectus Information that is inaccurate or misleading in
any material respect. "Pool Information" means the information furnished to
the Underwriters by the Company regarding the Mortgage Loans and
"Prospectus Information" means the information contained in (but not
incorporated by reference in) any Preliminary Final Prospectus, provided,
however, that if any information that would otherwise constitute Pool
Information or Prospectus Information is presented in any Underwriter 8-K
in a way that is either inaccurate or misleading in any material respect,
such information shall not be Pool Information or Prospectus Information.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Underwriters, by notice given to the Company prior to
delivery of and payment for all Bonds if prior to such time (i) trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange shall have been suspended or materially limited, (ii) a general
moratorium on commercial banking activities in New York shall have been declared
by either federal or New York State authorities or (iii) there shall have
occurred any outbreak or material escalation of hostilities, declaration by the
United States of a national emergency or war or other calamity or crisis, the
effect of which on the financial markets of the United States is such as to make
it, in the reasonable judgment of the Underwriters, impracticable to market the
Offered Bonds on the terms specified herein.
11. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers 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 7 hereof, and will
survive delivery of and payment for the Offered Bonds. The provisions of Section
7 hereof shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Underwriters, will be mailed, hand
delivered or sent by facsimile transmission and confirmed to them at, in the
case of ____________________, to it at ____________________, Attention:
____________________, fax number ____________________, and in the case of
____________________, to it at ____________________, Attention:
____________________, fax number; or, if sent to the Company, will be mailed,
hand delivered or sent by facsimile transmission and confirmed to it at Imperial
Credit Commercial Mortgage Acceptance Corp., __________________________________,
Attention: ____________________, fax number ____________________.
13. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7 hereof, and their
successors and assigns, and no other person will have any right or obligation
hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York. 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.
[Signature Page Follows]
<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
several Underwriters.
Very truly yours,
IMPERIAL CREDIT COMMERCIAL
MORTGAGE ACCEPTANCE CORP.
By:
----------------------------------
Name:
-------------------------------
Title:
-------------------------------
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
[Insert name of Underwriter]
By:
----------------------------------
Name:
-------------------------------
Title:
-------------------------------
[Insert name of Underwriter]
By:
----------------------------------
Name:
-------------------------------
Title:
-------------------------------
<PAGE>
SCHEDULE I
----------
Underwriting Agreement, dated _________ __, 199_
As used in this Agreement, the term "Registration Statement" refers to the
Company's registration statement on Form S-3 (File No. __________, __________).
Title and Description of Bonds: Collateralized Mortgage Bonds, Series 199_-__.
Initial aggregate Certificate Balance of the Offered Bonds: $____________
(Approximate)
Initial Bond
Balance or Initial Bond [ ] [ ]
Bonds Notional Amount(1) Interest Rate Rating Rating
----- ------------------ ------------- ------ ------
The aggregate purchase price for the Offered Bonds purchased from the Company by
____________________ will be equal to ____% of the aggregate initial Certificate
Balance of the Offered Bonds purchased by it, and the aggregate purchase price
for the Offered Bonds purchased from the Company by ____________________ will be
equal to ____% of the aggregate initial Certificate Balance of the Offered Bonds
purchased by it, plus, in each case, accrued interest thereon at their
respective Pass-Through Rates, if any, from the Cut-off Date.
Closing Time, Date and Location: 10:00 A.M. on _________ __, 199_ at the offices
of Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York.
Issuance and Delivery of Bonds: The Offered Bonds will be delivered in
book-entry form through the Same-Day Funds Settlement System of The Depository
Trust Company.
<PAGE>
SCHEDULE II
-----------
Class [Insert name of Underwriter] [Insert name of Underwriter]
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
IMPERIAL CREDIT COMMERCIAL MORTGAGE
SECURITIZATION CORP.
The undersigned certify that:
1. They are the president and the secretary, respectively, of Imperial
Credit Commercial Mortgage Securitization Corp., a California corporation (the
"Corporation").
2. Article I of the Articles of Incorporation of the Corporation is amended
to read as follows:
"Article I
The name of the corporation is IMPERIAL CREDIT COMMERCIAL
MORTGAGE ACCEPTANCE CORP."
3. The foregoing amendment of Articles of Incorporation has been duly
approved by the board of directors of the Corporation.
4. The foregoing amendment of Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section 902,
California Corporations Code. The total number of outstanding shares is 500 all
of which voted in favor of the amendment.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Dated: March 20, 1998.
/s/ Mark S. Karlan
-----------------------------
Mark S. Karlan, President
/s/ Norbert M. Seifert
-----------------------------
Norbert M. Seifert, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
IMPERIAL CREDIT MORTGAGE SECURITIZATION CORP.
The undersigned certify that:
1. They are all of the directors of the Imperial Credit Mortgage
Securitization Corp., a California corporation (the "Corporation").
2. Article I of the Articles of Incorporation of the Corporation is amended
to read as follows:
"Article I
The name of the corporation is IMPERIAL CREDIT COMMERCIAL
MORTGAGE SECURITIZATION CORP."
3. No shares have been issued.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Dated: October 10, 1997.
/s/ H. Wayne Snavely
-----------------------------
H. Wayne Snavely
/s/ Kevin E. Villani
-----------------------------
Kevin E. Villani
/s/ Mark S. Karlan
-----------------------------
Mark S. Karlan
<PAGE>
ARTICLES OF INCORPORATION
OF
IMPERIAL CREDIT MORTGAGE SECURITIZATION CORP.
ARTICLE 1.
NAME
The name of this corporation is Imperial Credit Mortgage Securitization
Corp.
ARTICLE II.
PURPOSE
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business, or the
practice of a profession permitted to be incorporated by the California
Corporations Code (the "Code").
ARTICLE III.
INITIAL AGENT
The name of this corporation's initial agent for service of process is:
J.A. Shafran, Esq.
Sonnenschein Nath & Rosenthal
601 S. Figueroa St.
Suite 1500
Los Angeles, CA 90017
ARTICLE IV.
INITIAL DIRECTORS
The names and addresses of the initial directors of the Corporation are
H. Wayne Snavely
c/o Imperial Credit Industries, Inc.
23550 Hawthorne Blvd., Bldg. One, Suite 110
Torrance, California 90505
Kevin E. Villani
c/o Imperial Credit Industries, Inc.
23550 Hawthorne Blvd., Bldg. One, Suite 210
Torrance, California 90505
Mark S. Karlan
11601 Wilshire Blvd., Suite 2080
Los Angeles, California 90025
ARTICLE V.
STOCK
(a) This corporation has authority to issue one hundred thousand (100,000)
shares of Common Stock ("Common Stock"). Each share of Common Stock shall
entitle the holder to one vote.
(b) The board of directors of the corporation may authorize the issuance
from time to time of shares of stock of the corporation of any class or series,
whether now or hereafter authorized, for such consideration as the board of
directors of the corporation may deem advisable. The board of directors may
determine or alter the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued class of shares or any wholly unissued
series of any class of shares.
ARTICLE VI.
LIMITATION OF LIABILITY
The personal liability of the directors of the corporation for monetary
damages in an action for breach for a director's duties to the corporation and
its shareholders (as set forth in Section 309 of the Code) shall be eliminated,
subject to the limits set forth in Section 204(a)(10) of the Code.
ARTICLE VII.
INDEMNIFICATION
The corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the Code) for breach of duty to the corporation and
its shareholders through bylaw provisions or through agreements with the agents,
or both, in excess of the indemnification otherwise permitted by Section 317 of
the Code, subject to the limits on such excess indemnification set forth in
Section 204(a)(11) of the Code.
/s/ H. Wayne Snavely
-----------------------------
H. Wayne Snavely
/s/ Kevin E. Villani
-----------------------------
Kevin E. Villani
/s/ Mark S. Karlan
-----------------------------
Mark S. Karlan
We declare that we are the persons who executed the foregoing articles of
incorporation which execution is our act and deed.
/s/ H. Wayne Snavely
-----------------------------
H. Wayne Snavely
/s/ Kevin E. Villani
-----------------------------
Kevin E. Villani
/s/ Mark S. Karlan
-----------------------------
Mark S. Karlan
IMPERIAL CREDIT COMMERCIAL MORTGAGE SECURITIZATION CORP.
BYLAWS
ARTICLE I
OFFICES
-------
Section 1. PRINCIPAL EXECUTIVE OFFICE. The principal executive office of
the Corporation shall be located initially at 11601 Wilshire Blvd., Suite 2080,
Los Angeles, California, or at such other place or places as the Board of
Directors may designate.
Section 2. ADDITIONAL OFFICES. The Corporation may have additional offices
at such places as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
------------------------
Section 1. PLACE. All meetings of shareholders shall be held at the
principal executive office of the Corporation or at such other place within the
United States as shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. The Corporation shall hold an annual meeting of
its shareholders to elect directors and transact any other business within its
powers, either at 10:00 a.m. on the lst day of April in each year if not a legal
holiday, or at such other time on such other day as shall be set by the Board of
Directors. Except as otherwise provided by the Corporation's Articles of
Incorporation or statute, any business may be, considered at an annual meeting
without the purpose of the meeting having been specified in the notice. Failure
to hold an annual meeting does not invalidate the Corporation's existence or
affect any otherwise valid corporate acts.
Section 3. SPECIAL MEETINGS. The chairman of the Board of Directors, the
president, the chief executive officer or the Board of Directors may call
special meetings of the shareholders. Special meetings of shareholders shall
also be called by the secretary of the Corporation upon the written request of
the holders of shares entitled to cast not less than ten percent of all the
votes entitled to be cast at such meeting. Such request shall state the purpose
of such meeting and the matters proposed to be acted on at such meeting. The
secretary shall inform such shareholders of the reasonably estimated cost of
preparing and mailing notice of the meeting and, upon payment to the Corporation
by such shareholders of such costs, the secretary shall give notice to each
shareholder entitled to notice of the meeting.
Section 4. NOTICE. Not less than ten nor more than 60 days before each
meeting of shareholders, the secretary shall give to each shareholder entitled
to vote at such meeting and to each shareholder not entitled to vote who is
entitled to notice of the meeting written or printed notice stating the time and
place of the meeting and, in the case of a special meeting or as otherwise may
be required by any statute, the purpose for which the meeting is called, either
by mail or by presenting it to such shareholder personally or by leaving it at
his residence or usual place of business. If mailed, such notice shall be deemed
to be given when deposited in the United States mail addressed to the
shareholder at his post office address as it appears on the records of the
Corporation, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Corporation may be
transacted at an annual meeting of shareholders without being specifically
designated in the notice, except such business as is required by any statute to
be stated in such notice. No business shall be transacted at a special meeting
of shareholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of shareholders, the chairman of
the Board of Directors, if there be one, shall conduct the meeting or, in the
case of vacancy in office or absence of the chairman of the Board of Directors,
one of the following officers present shall conduct the meeting in the order
stated: the chief executive officer, if there be one, the president, the vice
presidents in their order of rank and seniority (and if there be two or more
vice presidents of the same rank and seniority, such vice presidents in the
order designated by the president), or a chairman chosen by the shareholders
entitled to cast a majority of the votes which all shareholders present in
person or by proxy are entitled to cast, shall act as chairman, and the
secretary, or, in his absence, an assistant secretary, or in the absence of both
the secretary and assistant secretaries, a person appointed by the chairman
shall act as secretary.
Section 7. QUORUM. Unless the Corporation's Articles of Incorporation
provide otherwise, at a meeting of shareholders the presence in person or by
proxy of shareholders entitled to cast a majority of all the votes entitled to
be cast at the meeting shall constitute a quorum. Whether or not a quorum is
present, at meeting of shareholders convened on the date for which it was called
may be adjourned from time to time without further notice by a majority vote of
the shareholders present in person or by proxy to a date not more than 120 days
after the original record date. Any business which might have been transacted at
the meeting as originally notified may be deferred and transacted at any such
adjourned meeting at which a quorum shall be present.
Section 8. VOTING; PROXIES. Unless the Corporation's Articles of
Incorporation provide otherwise, each outstanding share of stock, regardless of
class, is entitled to one vote on each matter submitted to a vote at a meeting
of shareholders and majority of all the votes cast at a meeting at which a
quorum is present is sufficient to approve any matter which properly comes
before the meeting, except that a plurality of all votes cast, at a meeting at
which a quorum is present is sufficient to elect a director. In all elections
for directors, each share of stock may be voted for as many individuals as there
are directors to be elected and for whose election the share is entitled to be
voted. A shareholder may vote the stock the shareholder owns of record either in
person or by proxy. A shareholder may sign a writing authorizing another person
to act as proxy. Signing may be accomplished by the shareholder or the
shareholder's authorized agent signing the writing or causing the shareholder's
signature to be affixed to the writing by any reasonable means, including
facsimile signature. A shareholder may authorize another person to act as proxy
by transmitting, or authorizing the transmission of, a telegram, cablegram,
datagram, or other means of electronic transmission to the person authorized to
act as proxy or to a proxy solicitation firm, proxy support service
organization, or other person authorized by the person who will act as proxy to
receive the transmission. Unless a proxy provides otherwise, it is not valid
more than 11 months after its date. A proxy is revocable by a shareholder at any
time without condition or qualification unless the proxy states that it is
irrevocable and the proxy is coupled with an interest. A proxy may be made
irrevocable for so long as it is coupled with an interest. The interest with
which a proxy may be coupled includes an interest in the stock to be voted under
the proxy or another general interest in the Corporation or its assets or
liabilities.
Section 9. VOTING OF STOCK BY CERTAIN HOLDERS. The Board of Directors may
adopt by resolution a procedure by which a shareholder may certify in writing to
the Corporation that any shares of stock registered in the name of the
shareholder are held for the account of a specified person other than the
shareholder. The resolution shall set forth the class of shareholders who may
make the certification, the purpose for which the certification may be made, the
form of certification and the information to be contained in it; if the
certification is with respect to a record date or closing of the stock transfer
books, the time after the record date or closing of the stock transfer books
within which the certification must be received by the Corporation, and any
other provisions with respect to the procedure which the Board of Directors
considers necessary or desirable. On receipt of such certification, the person
specified in the certification shall be regarded as, for the purposes set forth
in the certification, the shareholder of record of the specified stock in place
of the shareholder who makes the certification.
Section 10. INSPECTORS. At any meeting of shareholders, the chairman of the
meeting may appoint one or more persons as inspectors for such meeting. Such
inspectors shall ascertain and report the number of shares represented at the
meeting based upon their determination of the validity and effect of proxies,
count all items, report the results and perform such other acts as are proper to
conduct the election and voting with impartiality and fairness to all the
shareholders.
Each report of an inspector shall be in writing and signed by him or by a
majority of them if there is more than one inspector acting at such meeting. If
there is more than one inspector, the report of a majority shall be the report
of the inspectors. The report of the inspector or inspectors on the number of
shares represented at the meeting and the results of the voting shall be prima
facie evidence thereof.
Section 11. NOMINATIONS AND PROPOSALS BY SHAREHOLDERS.
(a) ANNUAL MEETINGS OF SHAREHOLDERS. (1) Nominations of persons for
election to the Board of Directors and the proposal of business to be considered
by the shareholders may be made at an annual meeting of shareholders (i)
pursuant to the Corporation's notice of meeting, (ii) by or at the direction of
the Board of Directors or (iii) by any shareholder of the Corporation who was a
shareholder of record both at the time of giving of notice provided for in this
Section 11(a) and at the time of the annual meeting, who is entitled to vote at
the meeting and who complied with the notice procedures set forth in this
Section 11(a).
(2) For nominations or other business to be properly brought before an
annual meeting by a shareholder pursuant to clause (iii) of paragraph (a)(1) of
this Section 11, the shareholder must have given timely notice thereof in
writing to the secretary of the Corporation and such other business must
otherwise be a proper matter for action by shareholders. To be timely, a
shareholder's notice shall be delivered to the secretary at the principal
executive offices of the Corporation not later than the close of business on the
30th day nor earlier than the close of business on the 60th day prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is advanced by more than
30 days or delayed by more than 60 days from such anniversary date or if the
Corporation has not previously held an annual meeting, notice by the shareholder
to be timely must be so delivered not earlier than the close of business on the
60th day prior to such annual meeting and not later than the close of business
on the later of the 30th day prior to such annual meeting or the tenth day
following the day on which public announcement of the date of such meeting is
first made by the Corporation. In no event shall the public announcement of a
postponement or adjournment of an annual meeting to a later date or time
commence a new time period for the giving of a shareholder's notice as described
above. Such shareholder's notice shall set forth (i) as to each person whom the
shareholder proposes to nominate for election or reelection as a director all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election contest, or is
otherwise required, in each case pursuant to Regulation 14A promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including
such person's written consent to being named in the proxy statement as a nominee
and to serving as a director if elected); (ii) as to any other business that the
shareholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
shareholder and of the beneficial owner, if any, on whose behalf the proposal is
made; and (iii) as to the shareholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made, (x) the name
and address of such shareholder, as they appear on the Corporation's books, and
of such beneficial owner and (y) the number of shares of each class of stock of
the Corporation which are owned beneficially and of record by such shareholder
and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of
this Section 11 to the contrary, in the event that the number of directors to be
elected to the Board of Directors is increased and there is no public
announcement by the Corporation naming all of the nominees for director or
specifying the size of the increased Board of Directors at least 45 days prior
to the first anniversary of the preceding year's annual meeting, a shareholder's
notice required by this Section 11(a) shall also be considered timely, but only
with respect to nominees for any new positions created by such increase, if it
shall be delivered to the secretary at the principal executive offices of the
Corporation not later than the close of business on the tenth day following the
day on which such public announcement is first made by the Corporation.
(b) SPECIAL MEETINGS OF SHAREHOLDERS. Only such business shall be conducted
at a special meeting of shareholders as shall have been brought before the
meeting pursuant to the Corporation's notice of meeting. Nominations of persons
for election to the Board of Directors may be made at a special meeting of
shareholders at which directors are to be elected (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) provided that the Board of Directors has determined that
directors shall be elected at such special meeting, by any shareholder of the
Corporation who is a shareholder of record both at the time of giving of notice
provided for in this Section II(b) and at the time of the special meeting, who
is entitled to vote at the meeting and who complied with the notice procedures
set forth in this Section 11(b). In the event the Corporation calls a special
meeting of shareholders for the purpose of electing one or more directors to the
Board of Directors, any such shareholder may nominate a person or persons (as
the case may be) for election to such position as specified in the Corporation's
notice of meeting, if the shareholder's notice containing the information
required by paragraph (a)(2) of this Section 11 shall be delivered to the
secretary at the principal executive offices of the Corporation not earlier than
the close of business on the 60th day prior to such special meeting and not
later than the close of business on the later of the 30th day prior to such
special meeting or the tenth day following the day on which public announcement
is first made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting. In no event shall the
public announcement of a postponement or adjournment of a special meeting to a
later date or time commence a new time period for the giving of a shareholder's
notice as described above.
(c) GENERAL. (1) Only such persons who are nominated in accordance with the
procedures set forth in this Section 11 shall be eligible to serve as directors
and only such business shall be conducted at a meeting of shareholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Section 11. The chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made or proposed, as the case may be, in accordance with the
procedures set forth in this Section 11 and, if any proposed nomination or
business is not in compliance with this Section 11, to declare that such
nomination or proposal shall be disregarded.
(2) For purposes of this Section 11, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable news service or in a document publicly filed by the
Corporation with the Securities Exchange Commission pursuant to Section 13, 14
or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 11, a
shareholder shall also comply with all applicable requirements of state law and
of the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 11. Nothing in this Section 11 shall be deemed
to affect any rights of shareholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 promulgated under the
Exchange Act.
Section 12. VOTING BY BALLOT. Voting on any question or in any election may
be viva voce unless the presiding officer shall order or any shareholder shall
demand that voting be by ballot.
ARTICLE III
DIRECTORS
---------
Section 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed under the direction of its Board of Directors, which may
exercise all of the powers of the Corporation, except such as are by law or by
the Corporation's Articles of Incorporation or by these Bylaws conferred upon or
reserved to the shareholders.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. At each annual meeting the
shareholders shall elect directors to hold office until the next annual meeting
and until their successors are elected and qualified. At any regular meeting or
at any special meeting called for that purpose, a majority of the entire Board
of Directors may establish, increase or decrease the number of directors,
provided that the number thereof shall never be less than the minimum number
required by the California Corporations Code (the "Code"), nor more than 7, and
further provided that the tenure of office of a director shall not be affected
by any decrease in the number of directors.
Section 3. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held not less frequently than once per calendar quarter, with one such
regular meeting of the Board of Directors being held immediately after and at
the same place as the annual meeting of shareholders, no notice other than this
Bylaw being necessary for that meeting. The Board of Directors may provide, by
resolution, the time and place, either within or without the State of
California, for the holding of regular meetings of the Board of Directors
without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called by or at the request of the chairman of the Board of Directors,
president or by a majority of the directors then in office. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State of California, as the place for
holding any special meeting of the Board of Directors called by them.
Section 5. CHAIRMAN OF THE BOARD OF DIRECTORS. The chairman of the Board of
Directors shall preside, if present, at all meetings of the Board of Directors
(if the chairman of the Board of Directors is not present at a meeting, then the
chief executive officer of the Corporation shall preside at such meeting). The
chairman of the Board of Directors shall see that all orders and resolutions of
the Board of Directors are carried into effect and shall from time to time
report to the Board of Directors all matters within his or her knowledge which
the interests of the Corporation may require to be brought to their notice. The
chairman of the Board of Directors shall also perform such other duties and he
or she may exercise such other powers as from time to time may be delegated to
him or her by the Board of Directors.
Section 6. VICE CHAIRMAN OF THE BOARD OF DIRECTORS. The vice chairman of
the Board of Directors shall perform such duties and may exercise such powers as
from time to time may be delegated to him or her by the Board of Directors.
Section 7. NOTICE. Notice of any special meeting of the Board of Directors
shall be delivered personally or by telephone, including a voice messaging
system or other system or technology designed to record and communicate
messages, telegraph, facsimile, electronic mail, or other electronic means at
least forty-eight (48) hours prior to the meeting. Notice by mail shall be given
at least four (4) days prior to the meeting and shall be deemed to be given when
deposited in the United States mail properly addressed, with postage thereon
prepaid. Telephone notice shall be deemed to be given when the director is
personally given such notice in a telephone call to which he is a party.
Facsimile transmission notice shall be deemed to be given upon completion of the
transmission of the message to the number given to the Corporation by the
director and receipt of a completed answer-back indicating receipt. Neither the
business to be transacted at, nor the purpose of, any annual, regular or special
meeting of the Board of Directors need be stated in the notice, unless
specifically required by statute or these Bylaws.
Section 8. QUORUM. A majority of the entire Board of Directors shall
constitute a quorum for the transaction of business. In the absence of a quorum,
the directors present by majority vote and without notice other than by
announcement may adjourn the meeting from time to time until a quorum shall
attend. At any such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 9. VOTING. Unless applicable law, the Corporation's Articles of
Incorporation or these Bylaws requires a greater proportion, the action of a
majority of the directors present at a meeting at which a quorum is present is
the action of the Board of Directors.
Section 10. TELEPHONE MEETINGS. Directors may participate in a meeting by
means of a conference telephone, electronic video screen communication or
similar communications equipment if: (i) each director participating in the
meeting can communicate with all of the other members concurrently, (ii) each
director is provided the means of participating in all matters before the Board
of Directors, including the capacity to propose, or to interpose an objection,
to a specific action to be taken by the Corporation, and (iii) the Corporation
adopts and implements some means of verifying both of the following: (y) a
person communicating by telephone, video screen communication or similar
communications equipment is a director entitled to participate in the meeting,
and (z) all statements, questions, actions or votes were made by that director
and not by another person not permitted to participate as a director.
Participation in a meeting by these means shall constitute presence in person at
the meeting.
Section 11. ACTION BY DIRECTORS WITHOUT A MEETING. Any action required or
permitted to be taken at a meeting of the Board of Directors may be taken
without a meeting, if a unanimous written consent which sets forth the action is
signed by each member of the Board and filed with the minutes of proceedings of
the Board of Directors.
Section 12. VACANCIES. If for any reason any or all the directors cease to
be directors, such event shall not terminate the Corporation or affect these
Bylaws or the powers of the remaining directors hereunder (even if fewer than
three directors remain). Subject to the rights of the holders of any class of
stock separately entitled to elect one or more directors, the shareholders may
elect a successor to fill a vacancy on the Board of Directors which results from
the removal of a director. A director elected by the shareholders to fill a
vacancy which results from the removal of a director serves for the balance of
the term of the removed director. Subject to the rights of the holders of any
class of stock separately entitled to elect one or more directors, a majority of
the remaining directors, whether or not sufficient to constitute quorum, may
fill a vacancy on the Board of Directors which results from any cause. A
director elected by the Board of Directors to fill a vacancy serves until the
next annual meeting of shareholders and until his or her successor is elected
and qualifies. No decrease in the number of directors constituting the Board of
Directors shall affect the tenure of office of any director.
Section 13. COMPENSATION. Directors shall not receive any stated salary for
their services as directors, provided that directors may be reimbursed for
expenses of attendance, if any, at each annual, regular or special meeting of
the Board of Directors or of any committee thereof and for their expenses, if
any, in connection with each property visit and any other service or activity
they performed or engaged in as directors. Nothing herein contained shall be
construed to preclude any directors from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 14. LOSS OF DEPOSITS. No director shall be liable for any loss
which may occur by reason of the failure of the bank, trust company, savings and
loan association, or other institution with whom moneys or stock have been
deposited.
Section 15. SURETY BONDS. Unless required by law, no director shall be
obligated to give any bond or surety or other security for the performance of
any of his duties.
Section 16. RELIANCE. Each director, officer, employee and agent of the
Corporation shall, in the performance of his duties with respect to the
Corporation, be fully justified and protected with regard to any act or failure
to act in reliance in good faith upon the books of account or other records of
the Corporation, upon an opinion of counsel or upon reports made to the
Corporation by any of its officers or employees or by the adviser, accountants,
appraisers or other experts or consultants selected by the Board of Directors or
officers of the Corporation, regardless of whether such counsel or export may
also be a director.
ARTICLE IV
COMMITTEES
----------
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may
appoint from among its members an Executive Committee, an Audit Committee, a
Compensation Committee, and other committees composed of two or more directors
and delegate to these committees any of the powers of the Board of Directors,
except the power to authorize dividends on stock, fill vacancies on the Board of
Directors, amend or repeal these Bylaws or adopt new bylaws, amend or repeal any
resolution of the Board of Directors which by its express terms is not so
amendable or repealable, appoint other committees of the Board of Directors or
the members thereof, issue stock other than as provided in the next sentence or
approve any action which requires shareholder approval. If the Board of
Directors has given general authorization for the issuance of stock providing
for or establishing a method or procedure for determining the maximum number of
shares to be issued, a committee of the Board, in accordance with that general
authorization or any stock option or other plan or program adopted by the Board
of Directors, may authorize or fix the terms of stock subject to classification
or reclassification and the terms on which any stock may be issued, including
all terms and conditions required or permitted to be established or authorized
by the Board of Directors.
Section 2. MEETINGS. Notice of committee meetings shall be given in the
same manner as notice for special meetings of the Board of Directors. A majority
of the members of the committee shall constitute a quorum for the transaction of
business at any meeting of the committee. The act of a majority of the committee
members present at a meeting shall be the act of such committee. The Board of
Directors may designate a chairman of any committee, and such chairman or any
two members of any committee may fix the time and place of its meeting unless
the Board shall otherwise provide. In the absence of any member of any such
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint another director to act in the place of such
absent member. Each committee shall keep minutes of its proceedings.
Section 3. TELEPHONE MEETINGS. Members of a committee of the Board of
Directors may participate in a meeting by means of a conference telephone,
electronic video screen communication or similar communications equipment if:
(i) each member participating in the meeting can communicate with all of the
other members concurrently, (ii) each member is provided the means of
participating in all matters before the committee Board of Directors, including
the capacity to propose, or to interpose an objection, to a specific action to
be taken by the committee, and (iii) the Corporation adopts and implements some
means of verifying both of the following: (y) a person communicating by
telephone, video screen communication or similar communications equipment is a
member of the committee entitled to participate in the meeting, and (z) all
statements, questions, actions or votes were made by that member and not by
another person not permitted to participate as a member of the committee.
Participation in a meeting by these means shall constitute presence in person at
the meeting.
Section 4. INFORMAL ACTION BY COMMITTEES. Any action required or permitted
to be taken at any meeting of a committee of the Board of Directors may be taken
without a meeting, if a unanimous written consent which sets forth the action is
signed by each member of the committee and such written consent is filed with
the minutes of proceedings of such committee.
Section 5. VACANCIES. Subject to the provisions hereof, the Board of
Directors shall have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace any
absent or disqualified member or to dissolve any such committee.
ARTICLE V
OFFICERS
--------
Section 1. GENERAL PROVISIONS. The officers of the Corporation shall
include a president, a secretary and a chief financial officer and may include a
chairman of the board, a vice chairman of the board, a chief executive officer,
one or more senior vice presidents or vice presidents, a chief operating
officer, a treasurer, one or more assistant secretaries and one or more
assistant treasurers. In addition, the Board of Directors may from time to time
appoint such other officers with such powers and duties as they shall deem
necessary or desirable. The officers of the Corporation shall be chosen by the
Board of Directors and serve at the pleasure of the Board of Directors, subject
to the rights, if any, of an officer under any contract of employment, except
that the chief executive officer or president may appoint one or more vice
presidents, assistant secretaries and assistant treasurers. Any two or more
offices may be held by the same person. In its discretion, the Board of
Directors may leave unfilled any office except that of president, chief
financial officer and secretary. Appointment of an officer or agent shall not of
itself create contract rights between the Corporation and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Corporation
may be removed by the Board of Directors if in its judgment the best interests
of the Corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Any officer
of the Corporation may resign at any time by giving written notice of his
resignation to the Board of Directors, the chairman of the Board of Directors,
the president or the secretary. Any resignation shall take effect at any time
subsequent to the time specified therein or, if the time when it shall become
effective is not specified therein, immediately upon its receipts. The
acceptance of a resignation shall not be necessary to make it effective unless
otherwise stated in the resignation. Such resignation shall be without prejudice
to the contract rights, if any, of the officer, agent or Corporation.
Section 3. VACANCIES. A vacancy in any office may be filled by the Board of
Directors.
Section 4. CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a
chief executive officer. In the absence of such designation, the president shall
be the chief executive officer of the Corporation. The chief executive officer
shall have general responsibility for implementation of the policies of the
Corporation, as determined by the Board of Directors, and for the management of
the business and affairs of the Corporation. If the chairman of the Board of
Directors is not present at the meeting of the Board of Directors then the chief
executive officer of the Corporation shall act as the chairman of the Board of
Directors at such meeting and shall preside over such meeting.
Section 5. CHIEF OPERATING OFFICER. The Board of Directors may designate a
chief operating officer. The chief operating officer shall have the
responsibilities and duties as set forth by the Board of Directors or the chief
executive officer.
Section 6. CHIEF FINANCIAL OFFICER. The chief financial officer shall have
the custody of the funds and securities of the Corporation and shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. In the absence of a designation of a treasurer by the
Board of Directors, the chief financial officer shall be the treasurer of the
Corporation.
The chief financial officer shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and Board of Directors, at the
regular meetings of the Board of Directors or whenever it may so require, an
account of all his transactions as chief financial officer and of the financial
condition of the Corporation.
If required by the Board of Directors, the chief financial officer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance of
the duties of his office and for the restoration to the Corporation, in case of
his death, resignation, retirement or removal from office, of all books, papers,
vouchers, moneys and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 7. PRESIDENT. The president or chief executive officer, as the case
may be, shall in general supervise and control all of the business and affairs
of the Corporation. In the absence of a designation of a chief operating officer
by the Board of Directors, the president shall be the chief operating officer.
He may execute any deed, mortgage, bond, contract or other instrument, except in
cases where the execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the Corporation
or shall be required by law to be otherwise executed; and in general shall
perform all duties incident to the office of president and such other duties as
may be prescribed by the Board of Directors from time to time.
Section 8. VICE PRESIDENTS. In the absence of the president or in the event
of a vacancy in such office, the senior vice president (or in the event there be
more than one senior vice president, the senior vice presidents in the order
designated at the time of their appointment or election or, in the absence of
any designation, then in the order of their appointment or elections or, if
there be no senior vice presidents, the vice president or vice presidents in the
order designated at the time of their appointment or election or, in the absence
of any designation, in the order of their appointment or election) shall perform
the duties of the president and when so acting shall have all the powers of and
be subject to all the restrictions upon the president; and shall perform such
other duties as from time to time may be assigned to him by the president or by
the Board of Directors. The Board of Directors may designate one or more vice
presidents as executive vice president or as vice president for particular area
of responsibility.
Section 9. SECRETARY. The secretary shall (a) keep the minutes of the
proceedings of the shareholders, the Board of Directors and committees of the
Board of Directors in one or more books provided for that purpose; (b) see that
all notices are duly given in accordance with the provisions of these Bylaws or
as required by law; (c) be custodian of the corporate records and of the seal of
the Corporation; (d) keep a register of the post office address of each
shareholder which shall be furnished to the secretary by such shareholder; (e)
have general charge of the share transfer books of the Corporation; and (f) in
general perform such other duties as from time to time may be assigned to him by
the chief executive officer, the president or by the Board of Directors.
Section 10. TREASURER. The Board of Directors may designate a treasurer.
The treasurer shall have the responsibilities and duties as set forth by the
Board of Directors or the chief executive officer.
Section 11. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant
secretaries and assistant treasurers, in general, shall perform such duties as
shall be assigned to them by the secretary or treasurer, respectively, or by the
president or the Board of Directors. The assistant treasurers shall, if required
by the Board of Directors, give bonds for the faithful performance of their
duties in such sums and with such surety or sureties as shall be satisfactory to
the Board of Directors.
Section 12. SALARIES. The salaries and other compensation of the officers
shall be fixed from time to time by the Board of Directors and no officer shall
be prevented from receiving such salary or other compensation by reason of the
fact that he is also a director.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
-------------------------------------
Section 1. CONTRACTS. The Board of Directors may authorize any officer or
agent to enter into any contract or to execute and deliver any instrument in the
name of and on behalf of the Corporation and such authority may be general or
confined to specific instances. Any agreement, deed, mortgage, lease or other
document executed by one or more of the directors or by an authorized person
shall be valid and binding upon the Board of Directors and upon the Corporation
when authorized or ratified by action of the Board of Directors.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or agent of the Corporation in
such manner as shall from time to time be determined by the Board of Directors.
Section 3. DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors may
designate.
ARTICLE VII
STOCK
-----
Section 1. CERTIFICATES. Each shareholder is entitled to certificates which
represent and certify the shares of stock he or she holds in the Corporation.
Each stock certificate shall include on its face the name of the Corporation,
the name of the shareholder or other person to whom it is issued, and the class
of stock and number of shares it represents. It shall also include on its face
or back (a) a statement of any restrictions on transferability and (b) a
statement which provides in substance that the Corporation will furnish to any
shareholder on request and without charge a full statement of the designations
and any preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption of the stock of each class which the Corporation is authorized to
issue, of the difference in the relative rights and preferences between the
shares of each series of a preferred or special class in series which the
Corporation is authorized to issue, to the extent they have been set, and of the
authority of the Board of Directors to set the relative rights and preferences
of subsequent series of a preferred or special class of stock and any
restrictions on transferability. Such request may be made to the secretary or to
its transfer agent. It shall be in such form, not inconsistent with law or with
the Corporation's Articles of Incorporation, as shall be approved by the Board
of Directors or any officer or officers designated for such purpose by
resolution of the Board of Directors. Each stock certificate shall be signed by
the chairman of the board, the president, or a senior vice-president, and
countersigned by the secretary, an assistant secretary, the treasurer, or an
assistant treasurer. Each certificate may be sealed with the actual corporate
seal or a facsimile of it or in any other form and the signatures may be either
manual or facsimile signatures. A certificate is valid and may be issued whether
or not an officer who signed it is still an officer when it is issued. A
certificate may not be issued until the stock represented by it is fully paid.
Section 2. TRANSFERS. Upon surrender to the Corporation or the transfer
agent of the Corporation of a stock certificate duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, the
Corporation shall issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such share or
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
California.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the Board of
Directors may direct a new certificate to be issued in place of any certificate
previously issued by the Corporation alleged to have been lost, stolen or
destroyed upon the making of an affidavit of that fact by the person claiming
the certificate to be lost, stolen or destroyed. When authorizing the issuance
of a new certificate, an officer designated by the Board of Directors may, in
his discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or the owner's legal
representative to advertise the same in such manner as he shall require and/or
to give bond, with sufficient surety, to the Corporation to indemnify it against
any loss or claim which may arise as a result of the issuance of a new
certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Board of
Directors may set, in advance, a record date for the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
determining shareholders entitled to receive payment of any dividend or the
allotment of any other rights, or in order to make a determination of
shareholders for any other proper purpose. Such date, in any case, shall not be
prior to the close of business on the day the record date is fixed and shall be
not more than 60 days and, in the case of a meeting of shareholders, not less
than ten days, before the date on which the meeting or particular action
requiring such determination of shareholders of record is to be held or taken.
In lieu of fixing a record date, the Board of Directors may provide that
the stock transfer books shall be closed for a stated period but not longer than
20 days. If the stock transfer books are closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days before the date of such meeting.
If no record date is fixed and the stock transfer books are not closed for
the determination of shareholders, (a) the record date for the determination of
shareholders entitled to notice of or to vote at a meeting of shareholders shall
be at the close of business on the day on which the notice of meeting is mailed
or the 30th day before the meeting, whichever is the closer date to the meeting;
and (b) the record date for the determination of shareholders entitled to
receive payment of a dividend or an allotment of any other rights shall be the
close of business on the day on which the resolution of the directors, declaring
the dividend or allotment of rights, is adopted.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, except when (i) the determination has been
made through the closing of the transfer books and the stated period of closing
has expired or (ii) the meeting is adjourned to a date more than 120 days after
the record date fixed for the original meeting, in either of which case a new
record date shall be determined as set forth herein.
Section 5. STOCK LEDGER. The Corporation shall maintain at its principal
office or at the office of its counsel, accountants or transfer agent, an
original or duplicate share ledger containing the name and address of each
shareholder and the number of shares of each class held by such shareholder.
Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may
issue fractional stock or provide for the issuance of scrip, all on such terms
and under such conditions as they may determine. Notwithstanding any other
provision of the Corporation's Articles of Incorporation or these Bylaws, the
Board of Directors may issue units consisting of different securities of the
Corporation. Any security issued in a unit shall have the same characteristics
as any identical securities issued by the Corporation, except that the Board of
Directors may provide that for a specified period securities of the Corporation
issued in such unit may be transferred on the books of the Corporation only in
such unit.
ARTICLE VIII
ACCOUNTING YEAR
---------------
The fiscal year of the Corporation shall end on December 31st of each year.
The Board of Directors shall have the power from time to time to change the
fiscal year.
ARTICLE IX
DISTRIBUTIONS
-------------
Section 1. AUTHORIZATION. Dividends and other distributions upon the stock
of the Corporation may be authorized and declared by the Board of Directors and
may be paid in cash, property or stock of the Corporation, subject to the
provisions of law and the Corporation's Articles of Incorporation.
Section 2. CONTINGENCIES. Before payment of any dividends or other
distributions, there may be set aside out of any assets of the Corporation
available for dividends or other distributions such sum or sums as the Board of
Directors may from time to time, in its absolute discretion, think proper as a
reserve fund for contingencies, for equalizing dividends or other distributions,
for repairing or maintaining any property of the Corporation or for such other
purpose as the Board of Directors shall determine to be in the best interest of
the Corporation, and the Board of Directors may modify or abolish any such
reserve in the manner in which it was created.
ARTICLE X
INVESTMENT POLICY
-----------------
The Board of Directors may from time to time adopt, amend, revise or
terminate any policy or policies with respect to investments by the Corporation
as it shall deem appropriate in its sole discretion.
ARTICLE XI
SEAL
----
Section 1. SEAL. The Board of Directors may authorize the adoption of a
seal by the Corporation. The seal shall contain the name of the Corporation and
the year of its incorporation and the words "Incorporated in California." The
Board of Directors may authorize one or more duplicate seals and provide for the
custody thereof.
Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or required
to affix its seal to a document, it shall be sufficient to meet the requirements
of any law, rule or regulation relating to a seal to place the word "(SEAL)"
adjacent to the signature of the person authorized to execute the document on
behalf of the Corporation.
ARTICLE XII
INDEMNIFICATION AND ADVANCE OF EXPENSES
---------------------------------------
The Corporation shall indemnify and hold harmless and, without requiring a
determination of the ultimate entitlement to indemnification, pay reasonable
expenses in advance of the final disposition of any proceeding to (A) its
present and former directors, officers or employees, whether serving the
Corporation or at its request any other entity, to the full extent required or
permitted by the Code, including the advance of expenses under the procedures
and to the full extent permitted by law and (B) other agent of the Corporation
to such extent as shall be authorized by the Board of Directors or the
Corporation's Articles of Incorporation and be permitted by law. The foregoing
rights of indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. No indemnification shall be made
by the Corporation unless its agent in the matter at issue was acting in good
faith and in a manner such agent reasonably believed to be in the best interests
of the Corporation or such other entity.
Any indemnification, or payment of expenses in advance of the final
disposition of any proceeding, shall be made promptly, and in any event within
60 days after the Corporation receives a written request therefor from the
director, officer, employee or agent entitled to seek indemnification (the
"Indemnified Party"). The right to indemnification and advances hereunder shall
be enforceable by the Indemnified Party in any court of competent jurisdiction,
if (i) the Corporation denies such request, in whole or in part, or (ii) no
disposition thereof is made within 60 days. The Indemnified Party's costs and
expenses incurred in connection with successfully establishing his or her right
to indemnification, in whole or in part, in any such action shall also be
reimbursed by the Corporation. It shall be a defense to any action for advance
for expenses that (a) a determination has been made that the facts then known to
those making the determination would preclude indemnification or (b) the
Corporation has not received both (i) an undertaking as required by law to repay
such advances in the event it shall ultimately be determined that the standard
of conduct has not been met and (ii) a written affirmation by the Indemnified
Party of such Indemnified Party's good faith belief that the standard of conduct
necessary for indemnification by the Corporation has been met.
The indemnification and advance of expenses provided by the Corporation's
Articles of Incorporation and these Bylaws shall not be deemed exclusive of any
other rights to which a person seeking indemnification or advance of expenses
may be entitled under any law (common or statutory), or any agreement, vote of
shareholders or disinterested directors or other provision that is consistent
with law, both as to action in his or her official capacity and as to action in
another capacity while holding office or while employed by or acting as agent
for the Corporation, shall continue in respect of all events occurring while a
person was a director or officer after such person has ceased to be a director
or officer, and shall inure to the benefit of the estate, heirs, executors and
administrators of such person. The Corporation shall not be liable for any
payment under this Bylaw in connection with a claim made by a director or
officer to the extent such director or officer has otherwise actually received
payment under insurance policy, agreement, vote or otherwise, of the amounts
otherwise indemnifiable hereunder. All rights to indemnification and advance of
expenses under the Corporation's Articles of Incorporation and hereunder shall
be deemed to be a contract between the Corporation and each director or officer
of the Corporation who serves or served in such capacity at any time while this
Bylaw is in effect. Nothing herein shall prevent the amendment of this Bylaw,
provided that no such amendment shall diminish the rights of any person
hereunder with respect to events occurring or claims made before its adoption or
as to claims made after its adoption in respect of events occurring before its
adoption. Any repeal or modification of this Bylaw shall not in any way diminish
any rights to indemnification or advance of expenses of such director or officer
or the obligations of the Corporation arising hereunder with respect to events
occurring, or claims made, while this Bylaw or any provision hereof is in force.
Neither the amendment nor repeal of this Article XII, nor the adoption or
amendment of any other provision of these Bylaws or the Corporation's Articles
of Incorporation inconsistent with this Article XII, shall apply to or affect in
any respect the applicability of the preceding paragraph with respect to any act
or failure to act which occurred prior to such amendment, repeal or adoption.
ARTICLE XIII
WAIVER OF NOTICE
----------------
Whenever any notice is required to be given pursuant to the Corporation's
Articles of Incorporation or these Bylaws or pursuant to applicable 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
equivalent to the giving of such notice. Neither the business to be transacted
at nor the purpose of any meeting need be set forth in the waiver of notice,
unless specifically required by statute. The attendance of any person at any
meeting shall constitute a waiver of notice of such meeting, except where such
person attends a meeting for the express purpose of objecting to the transaction
of any business on the ground that the meeting is not lawfully called or
convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
-------------------
These Bylaws may be repealed, altered, amended or rescinded by the
affirmative vote of not less than a majority of all of the votes ordinarily
entitled to be cast in the election of directors, voting together as a single
class at a meeting of the shareholders called for that purpose (provided that
notice of such proposed repeal, alteration, amendment or rescission is included
in the notice of such meeting). In addition, except as otherwise provided in the
Corporation's Articles of Incorporation and in these Bylaws, the Board of
Directors may repeal, alter, amend or rescind these Bylaws by vote of a majority
of the Board of Directors at a meeting held in accordance with the provisions of
these Bylaws.
- --------------------------------------------------------------------------------
ICCMAC COMMERCIAL TRUST [_______],
a trust acting through ____________________,
not in its individual capacity but solely as Owner Trustee,
as Issuer,
and
----------------------------------------,
as Indenture Trustee
--------------------
INDENTURE
Dated as of _______, 199_
--------------------
$------------
COLLATERALIZED MORTGAGE BONDS,
SERIES 199_-_
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
PRELIMINARY STATEMENT
GRANTING CLAUSES
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. Definitions....................................................
SECTION 1.02. Incorporation by Reference of Trust Indenture Act..............
SECTION 1.03. Rules of Construction..........................................
ARTICLE II
THE BONDS
SECTION 2.01. Form. 22
SECTION 2.02. Initial Aggregate Principal Amount; Classes; Terms.............
SECTION 2.03. Denominations..................................................
SECTION 2.04. Execution, Authentication, Delivery and Dating.................
SECTION 2.05. Registration of Transfer and Exchange of Bonds.................
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Bonds.....................
SECTION 2.07. Payment of Principal and Interest..............................
SECTION 2.08. Persons Deemed Owners..........................................
SECTION 2.09. Cancellation...................................................
SECTION 2.10. Authentication and Delivery of Bonds...........................
[SECTION 2.11. Substitution of Collateral....................................
SECTION 2.12. Book-Entry Bonds...............................................
SECTION 2.13. Restrictions on Transfer of Bonds..............................
ARTICLE III
COVENANTS; WARRANTIES
SECTION 3.01. Payment of Principal, Premium (if any) and Interest............
SECTION 3.02. Maintenance of Office or Agency................................
SECTION 3.03. Money for Bond Payments to Be Held in Trust....................
SECTION 3.04. Corporate Existence of Owner Trustee...........................
SECTION 3.05. Trust Existence................................................
SECTION 3.06. Payment of Taxes and Other Claims..............................
SECTION 3.07. Protection of Trust Estate.....................................
SECTION 3.08. Opinions as to Trust Estate....................................
SECTION 3.09. Performance of Obligations.....................................
SECTION 3.10. Payment of Certain Fees........................................
SECTION 3.11. Negative Covenants.............................................
SECTION 3.12. Annual Statement as to Compliance..............................
SECTION 3.13. Issuer may Consolidate, Etc., only on Certain Terms............
SECTION 3.14. Purchase of Bonds..............................................
SECTION 3.15. Servicing Agreement............................................
SECTION 3.16. Covenants, Representations and Warranties of the Issuer........
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture........................
SECTION 4.02. Application of Trust Money.....................................
SECTION 4.03. Repayment of Monies Held by Paying Agent.......................
ARTICLE V
ISSUER EVENTS OF DEFAULT; REMEDIES
SECTION 5.01. Issuer Events of Default.......................................
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.............
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee........................................
SECTION 5.04. Remedies.......................................................
SECTION 5.05. Optional Preservation of Trust Estate..........................
SECTION 5.06. Application of Money Collected.................................
SECTION 5.07. Limitation on Suits............................................
SECTION 5.08. Unconditional Right of Bondholders to Receive Principal
and Interest................................................
SECTION 5.09. Restoration of Rights and Remedies.............................
SECTION 5.10. Rights and Remedies Cumulative.................................
SECTION 5.11. Delay or Omission Not Waiver...................................
SECTION 5.12. Control by Bondholders.........................................
SECTION 5.13. Waiver of Past Issuer Defaults.................................
SECTION 5.14. Undertaking for Costs..........................................
SECTION 5.15. Waiver of Stay or Extension Laws...............................
SECTION 5.16. Sale of Trust Estate...........................................
SECTION 5.17. Action on Bonds................................................
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Certain Duties and Responsibilities............................
SECTION 6.02. Notice of Issuer Defaults......................................
SECTION 6.03. Certain Rights of Indenture Trustee............................
SECTION 6.04. Not Responsible for Recitals or Issuance of Bonds..............
SECTION 6.05. May Hold Bonds.................................................
SECTION 6.06. Money Held in Trust............................................
SECTION 6.07. Compensation and Reimbursement.................................
SECTION 6.08. Eligibility; Disqualification..................................
SECTION 6.09. Resignation and Removal; Appointment of Successor..............
SECTION 6.10. Acceptance of Appointment by Successor.........................
SECTION 6.11. Merger, Conversion, Consolidation or Succession
to Business.................................................
SECTION 6.12. Preferential Collection of Claims against the Issuer...........
SECTION 6.13. Separate Trustees and Co-Trustees..............................
SECTION 6.14. Appointment of Custodians......................................
ARTICLE VII
BONDHOLDER LISTS AND REPORTS
SECTION 7.01. Issuer to Furnish Indenture Trustee Names and Addresses
of Bondholders..............................................
SECTION 7.02. Preservation of Information; Communications to
Bondholders.................................................
SECTION 7.03. Reports by Indenture Trustee...................................
SECTION 7.04. Reports by Issuer..............................................
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money............................................
SECTION 8.02. Bond Account...................................................
SECTION 8.03. Other Accounts.................................................
SECTION 8.04. Release of Trust Estate........................................
SECTION 8.05. Opinion of Counsel.............................................
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Bondholders.........
SECTION 9.02. Supplemental Indentures With Consent of Bondholders............
SECTION 9.03. [Reserved].....................................................
SECTION 9.04. Delivery of Supplements and Amendments.........................
SECTION 9.05. Execution of Supplemental Indentures...........................
SECTION 9.06. Effect of Supplemental Indentures..............................
SECTION 9.07. Conformity with Trust Indenture Act............................
SECTION 9.08. Reference in Bonds to Supplemental Indentures..................
ARTICLE X
PAYMENTS
SECTION 10.01. Payment of Principal, Premium (if any) and Interest...........
ARTICLE XI
OPTIONAL REDEMPTION OF BONDS BY ISSUER AND SPECIAL
REDEMPTION OF BONDS
SECTION 11.01. Optional Redemption by Issuer.................................
SECTION 11.02. Form of Optional Redemption or Special Redemption
Notice.....................................................
SECTION 11.03. Bonds Payable on Redemption Date or Special
Redemption Date............................................
[SECTION 11.04. Special Redemptions..........................................
ARTICLE XII
BONDHOLDERS' MEETING
SECTION 12.01. Purposes for Which Meetings May Be Called.....................
SECTION 12.02. Manner of Calling Meetings....................................
SECTION 12.03. Call of Meeting by Issuer or Bondholders......................
SECTION 12.04. Who May Attend and Vote at Meetings...........................
SECTION 12.05. Regulations May Be Made by Indenture Trustee..................
SECTION 12.06. Manner of Voting at Meetings and Records To Be Kept...........
SECTION 12.07. Exercise of Rights of Indenture Trustee and Bondholders
Not To Be Hindered or Delayed..............................
ARTICLE XIII
MORTGAGE COLLATERAL AND SERVICING
SECTION 13.01. Delivery of Mortgage Collateral...............................
SECTION 13.02. Servicing and Administration of the Pledged Mortgage
Loans......................................................
SECTION 13.03. Releases of Pledged Mortgage Loans and REO Properties..........
SECTION 13.04. Certain Designations of the Master Servicer and the
Special Servicer...........................................
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Compliance Certificates and Opinions, etc.....................
SECTION 14.02. Form of Documents Delivered to Indenture Trustee..............
SECTION 14.03. Acts of Bondholders...........................................
SECTION 14.04. Notice, etc., to Indenture Trustee and Issuer.................
SECTION 14.05. Notices to Bondholders; Notification Requirements
and Waiver.................................................
SECTION 14.06. Alternate Payment and Notice Provisions.......................
SECTION 14.07. Conflict with Trust Indenture Act.............................
SECTION 14.08. Effect of Headings and Table of Contents......................
SECTION 14.09. Successors and Assigns........................................
SECTION 14.10. Separability Clause...........................................
SECTION 14.11. Benefits of Indenture.........................................
SECTION 14.12. Legal Holidays................................................
SECTION 14.13. GOVERNING LAW.................................................
SECTION 14.14. Execution Counterparts........................................
SECTION 14.15. Recording of Indenture........................................
SECTION 14.16. Trust Obligation..............................................
SECTION 14.17. No Petition...................................................
SECTION 14.18. Inspection....................................................
SECTION 14.19. Usury.........................................................
SECTION 14.20. Notice to the Indenture Trustee, the Issuer and Certain
Other Persons..............................................
SECTION 14.21 Tax Treatment.................................................
<PAGE>
INDENTURE, DATED AS OF _________, 199__
RELATING TO COLLATERALIZED MORTGAGE BONDS,
Cross-reference sheet showing the location in this Indenture of the provisions
inserted pursuant to Sections 310 through 318(a) inclusive of the Trust
Indenture Act of 1939
TIA Indenture Section
--- -----------------
Section 310 (a)(1) 6.08
(a)(2) 6.08
(a)(3) 6.13(b)
(a)(4) Not Applicable
(a)(5) 6.08
(b) 6.08, 6.09(c), 6.09(g)
Section 311 (a) 6.12
(b) 6.12
Section 312 (a) 7.01, 7.02(a)
(b) 7.02(b)
(c) 7.02(c)
Section 313 (a) 6.02, 7.03(a)
(b) 7.03(a)
(c) 7.03(a)
(d) 7.03(b)
Section 314 (a) 3.12, 7.04(a)
(b) 3.08
(c)(1) 2.10(b), 4.01, 8.04(c), 14.01(a)
(c)(2) 2.10(b), 4.01, 8.04(c), 14.01(a)
(c)(3) 2.10(b), 4.01, 8.04(c), 14.01(a)
(d)(1) 8.04(c), 14.01(a)
(d)(2) 2.10(b), 8.04(c), 14.01(a)
(d)(3) 2.10(b), 8.04(c), 14.01(a)
(e) 14.01(a)
Section 315 (a) 6.01(a)
(b) 6.02
(c) 6.01(b)
(d) 6.01(c)
(e) 5.14
Section 316 (a)(1)(A) 5.02, 5.12
(a)(1)(B) 5.02, 5.13
(a)(2) Not Applicable
(b) 5.08
Section 317 (a)(1) 5.03, 5.04
(a)(2) 5.03
(b) 3.03
Section 318 (a) 14.07
Note: This cross-reference sheet shall not, for any purpose, be deemed to
constitute a part of this Indenture.
<PAGE>
RECITALS
INDENTURE dated as of __________, 199_ between ICCMAC COMMERCIAL TRUST
[________] (the "Issuer", which term includes any successor entity hereunder), a
business trust created under the laws of __________ pursuant to the Deposit
Trust Agreement referred to below and acting through _____________, not in its
individual capacity but solely as owner trustee under such Deposit Trust
Agreement (the "Owner Trustee", which term includes any successor entity
hereunder and thereunder), and _____________, a _____________, as indenture
trustee (the "Indenture Trustee", which term includes any successor entity
hereunder).
PRELIMINARY STATEMENT
The Issuer is a trust organized by the Depositor pursuant to a Deposit
Trust Agreement dated as of __________, 199_ (the "Deposit Trust Agreement"), by
and between the Owner Trustee and the Depositor. The Issuer will act at all
times through the Owner Trustee. The Issuer has duly authorized the execution
and delivery of this Indenture to provide for the issuance of $__________ in
aggregate Principal Amount of its Collateralized Mortgage Bonds, Series 199_-_
(the "Bonds"). The Bonds are issuable as provided in this Indenture, dated as of
__________, 199_, as amended or supplemented from time to time, referred to as
the "Indenture".
All covenants and agreements made by the Issuer in this Indenture are for
the benefit and security of the Holders of the Bonds. The Issuer is entering
into this Indenture, and the Indenture Trustee is accepting the trust created
hereby, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged. All things necessary to cause the Bonds, when the
Bonds are executed by the Issuer and authenticated and delivered by the
Indenture Trustee as provided herein, to constitute the valid and legally
binding obligations of the Issuer enforceable in accordance with their terms,
and to cause this Indenture to constitute a valid and legally binding agreement
of the Issuer enforceable in accordance with its terms, have been done.
GRANTING CLAUSES
The Issuer hereby Grants to the Indenture Trustee, for the exclusive
benefit of the Holders of the Bonds to secure the obligations of the Issuer
hereunder, a senior lien and security interest in all of the Issuer's right,
title and interest in and to any and all benefits accruing to the Issuer from
(a) the Mortgage Loans listed in the Schedule of Mortgage Collateral annexed to
this Indenture as Schedule I (with respect to the Bonds, the "Pledged Mortgage
Loans"), and all payments thereon from and after the Cut-off Date, together with
the related Mortgage Files and Servicing Files and the Issuer's interest in any
Mortgaged Property that secured any such Mortgage Loan but which is acquired by
foreclosure or deed in lieu of foreclosure or otherwise after the Closing Date
(collectively, with respect to the Bonds, the "Mortgage Collateral"); (b) the
rights of the Issuer to enforce remedies against the Master Servicer or the
Special Servicer under the Servicing Agreement, against the Administrator under
the Administration Agreement (provided that the Issuer retains the right to give
instructions and directions to the Administrator thereunder), against the
Depositor under the Deposit Trust Agreement and, as assignee of the Depositor,
against the Seller under the Mortgage Loan Purchase Agreement; (c) the Bond
Account; (d) the Collection Account; (e) all present and future claims, demands,
causes and choses in action in respect of the foregoing, including the rights of
the Issuer under the Pledged Mortgage Loans; and (f) all proceeds of the
foregoing of every kind and nature whatsoever, including, without limitation,
all proceeds of the conversion thereof, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind, and
other forms of obligations and receivables, instruments and other property which
at any time constitute all or part of or are included in the proceeds of any of
the foregoing (the foregoing items (a), (b), (c), (d), (e) and (f) collectively,
with respect to the Bonds, the "Trust Estate").
The Indenture Trustee acknowledges such Grant, accepts the trusts hereunder
in accordance with the provisions of this Indenture and agrees to perform the
duties herein required.
AND IT IS HEREBY COVENANTED AND DECLARED that the Bonds are to be
authenticated and delivered by the Indenture Trustee, that the Trust Estate is
to be held by or on behalf of the Indenture Trustee and that monies in the Trust
Estate are to be applied by the Indenture Trustee for the benefit of the
Bondholders, subject to the further covenants, conditions and trusts hereinafter
set forth, and the Issuer does hereby represent and warrant, and covenant and
agree, to and with the Indenture Trustee, for the equal and proportionate
benefit and security of each Bondholder, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. Definitions.
(A) The following terms have the respective meanings set forth below for
all purposes of this Indenture.
"Account": Any account or fund, including any Pledged Fund or Account
established hereunder.
"Accountants": A person engaged in the practice of accounting who (except
when this Indenture requires an Independent Accountant) may be employed by or
affiliated with the Issuer or an Affiliate of the Issuer.
"Accrual Date": __________, 199_.
"Accrual Termination Date": With respect to a Class of Compound Interest
Bonds, the first Payment Date as of which all interest accrued in respect of the
Bonds of such Class during the related Interest Accrual Period is, subject to
available funds, payable in full.
"Act": As defined in Section 14.03 hereof.
"Additional Expense": Any costs, expenses and liabilities (exclusive of
Administrative Expenses and Servicing Expenses) that are required to be borne by
the Issuer or otherwise in respect of the Trust Estate in accordance with
applicable law or the terms of this Indenture (including any federal, state and
local taxes and the cost of various opinions of and advice from counsel required
to be obtained in connection with the Indenture Trustee's performance of its
duties under this Indenture).
"Administration Agreement": The Administration Agreement, dated as of
__________, 199_, between the Administrator and the Issuer, a copy of which
agreement is attached hereto as Exhibit G.
"Administration Fee": An amount equal to ___________________.
"Administrative Expenses": The fees and expenses of the Indenture Trustee
payable thereto pursuant to Section 6.07[, the Owner Trustee Fee, the
Administration Fee, and the fees of the Rating Agencies in connection with the
Bonds, to the extent such fees of the Rating Agencies are due and payable after
the Closing Date].
"Administrator": ______________________ or its successor in interest.
"Adverse Rating Event": With respect to any Class of Rated Bonds, as of any
date determination, the qualification, downgrade or withdrawal of the rating
then assigned thereto by any Rating Agency.
"Affiliate": With respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the person specified. 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 or
other beneficial interest, by contract or otherwise; and the terms "controlling"
and "controlled" have the meanings correlative to the foregoing.
"Agent": A person authorized by or appointed by the Issuer to perform
duties with respect to the Bonds, specified in a writing signed by such Agent
and the Issuer and acknowledged by the Indenture Trustee, or by such Agent and
the Indenture Trustee and acknowledged by the Issuer, including any Paying
Agent.
"Assumed Final Payment Date": With respect to any Class of Bonds, the
Payment Date specified below, on which the final payment would occur with
respect to such Class based on the Maturity Assumptions:
Class A-1 _________________, 199_
Class A-2 _________________, 199_
Class B _________________, 199_
Class C _________________, 199_
Class D _________________, 199_
Class E _________________, 199_
Class F _________________, 199_
"Authenticating Agent": As defined in Section 2.04(c).
"Authorized Officer": With respect to the Owner Trustee, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Issuer and who is identified on the list of authorized officers delivered
by the Owner Trustee to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter); and, with respect
to any other Person, the Chairman, President, any Senior Vice President, any
Vice President or any Assistant Vice President, and the Treasurer, an Assistant
Treasurer, the Controller, an Assistant Controller, the Secretary or an
Assistant Secretary (provided that, when any provision hereof requires
signatures of two Authorized Officers of any such other Person, at least one of
such Authorized Officers shall be the Chairman, President or any Vice
President).
"Available Payment Amount": With respect to any Payment Date, the amount on
deposit in the Bond Account as of _________, New York City time, on such Payment
Date, exclusive of (i) any portion thereof that represents any Prepayment
Premiums actually collected during the related Collection Period and (ii) any
portion thereof that may be withdrawn from the Bond Account pursuant to any of
clauses (ii) through (iv) of Section 8.02.
"Bankruptcy Code": The federal Bankruptcy Code, as amended from time to
time (Title 11 of the United States Code).
"Bond": Shall mean a Class A-1 Bond, class A-2 Bond, Class B Bond, Class C
Bond, Class D Bond, Class E Bond or Class F Bond, as applicable.
"Bond Account": As defined in Section 8.02.
"Bond Factor": With respect to any Class of Bonds, as of any date of
determination, a fraction, expressed as a decimal carried to six places, the
numerator of which is the then aggregate Principal Amount of such Class, and the
denominator of which is the initial aggregate Principal Amount of such Class.
"Bond Interest Rate": With respect to any Class of Bonds, means the
applicable rate per annum specified opposite such Class below:
Class A-1: ____%
Class A-2: ____%
Class B: ____%
Class C: ____%
Class D: ____%
Class E: ____%
Class F: ____%
"Bond Owner": With respect to a Book-Entry Bond, the Person who is the
beneficial owner of such Bond as reflected on the books of the Depository or on
the books of a Depository Participant or on the books of an indirect
participating brokerage firm for which a Depository Participant acts as agent.
"Bond Register" and "Bond Registrar": The respective meanings specified in
Section 2.05.
"Bondholder": The Person in whose name a Bond is registered on the Bond
Register.
"Bonds": As defined in the Recitals to this Indenture.
"Book-Entry Bonds": Bonds for which the Indenture provides that ownership
and transfers of beneficial ownership interests in such Bonds shall be made
through book entries by the Depository, as described in Section 2.12 hereof;
provided, however, that after the occurrence of a condition whereupon book-entry
registration is no longer permitted, Definitive Bonds shall be issued to the
Bond Owners of such Bonds and such Bonds shall no longer be "Book-Entry Bonds."
"Business Day": Any day other than a Saturday, a Sunday or a day on which
banking institutions in _________________________, New York, New York or any
other city in which the Corporate Trust Office is then located, are authorized
or obligated by law or executive order to be closed.
"Cash Flow Agreement": Shall mean (i) any guaranteed investment contract
pursuant to which monies held in any Account with respect to the Bonds are
invested, (ii) any interest rate exchange agreement, interest rate cap or floor
agreement, or other agreement designed to reduce the effects of interest rate
fluctuations on the Mortgage Collateral or on one or more Classes and (iii) any
letter of credit, surety bond, insurance policy, guarantee or other agreement or
instrument intended to offset a slower than anticipated rate of principal
payments, collections and/or distributions on the Mortgage Collateral.
"Class": All Bonds having the same alphabetical and/or numerical class
designation and otherwise having the same characteristics.
"Class A Bond": Any Class A-1 Bond or Class A-2 Bond.
"Class A-1 Bond": Any of the Bonds with a "Class A-1" designation on the
face thereof, executed by the Issuer and authenticated by the Indenture Trustee
substantially in the form of Exhibit A-1 attached hereto.
["Class A Principal Payment Cross-Over Date": The first Payment Date as of
which the aggregate Principal Amount of the Class A Bonds outstanding
immediately prior thereto equals or exceeds the sum of (a) the aggregate Stated
Principal Balance of the Mortgage Pool that will be outstanding immediately
following such Payment Date, plus (b) the lesser of (i) the Principal Payment
Amount for such Payment Date and (ii) the portion of the Available Payment
Amount for such Payment Date that will remain after the payments of interest
payable on the Class A Bonds on such Payment Date.]
"Class A-2 Bond": Any of the Bonds with a "Class A-2" designation on the
face thereof, executed by the Issuer and authenticated by the Indenture Trustee
substantially in the form of Exhibit A-2 attached hereto.
"Class B Bond": Any of the Bonds with a "Class B" designation on the face
thereof, executed by the Issuer and authenticated by the Indenture Trustee
substantially in the form of Exhibit A-3 attached hereto.
"Class C Bond": Any of the Bonds with a "Class C" designation on the face
thereof, executed by the Issuer and authenticated by the Indenture Trustee
substantially in the form of Exhibit A-4 attached hereto.
"Class D Bond": Any of the Bonds with a "Class D" designation on the face
thereof, executed by the Issuer and authenticated by the Indenture Trustee
substantially in the form of Exhibit A-5 attached hereto.
"Class E Bond": Any of the Bonds with a "Class E" designation on the face
thereof, executed by the Issuer and authenticated by the Indenture Trustee
substantially in the form of Exhibit A-6 attached hereto.
"Class Exemption": A class exemption granted by the DOL, which provides
relief from some or all of the prohibited transaction provisions of Section 406
of ERISA and Section 4975 of the Code and the related excise tax provisions of
Section 4975 of the Code.
"Class F Bond": Any of the Bonds with a "Class F" designation on the face
thereof, executed by the Issuer and authenticated by the Indenture Trustee
substantially in the form of Exhibit A-7 attached hereto.
"Closing Date": _____________, 199_.
"Code": The Internal Revenue Code of 1986, as amended, and Treasury
Regulations promulgated thereunder including proposed regulations to the extent
that by reason of their effective date they could apply to the Bonds.
"Collateral": Shall mean the Trust Estate securing the Bonds. An "item" of
Collateral refers to a specific item of Mortgage Collateral or other asset,
which is Granted to the Indenture Trustee hereunder.
"Commission": The Securities and Exchange Commission or any successor.
"Compound Interest Bond": Any Bond on which interest accrues and is
periodically added (in whole or in part) to the principal of such Bond in
accordance with the terms thereof, but with respect to which no principal shall
be payable except during the period or periods specified herein and with respect
to which no interest (or only a portion of the accrued interest) is payable
until the Payment Date on or following the Accrual Termination Date.
"Controlling Class": Shall mean any Class or Classes of Bonds designated as
such, as contemplated by Section 3.15(a)(vii).
"Corporate Trust Office": The principal corporate trust office of the
Indenture Trustee at which at any particular time its corporate trust business
with respect to this Indenture shall be administered, which is located
at___________________________________.
"Credit Support Agreement": Shall mean any instrument or agreement issued
by a bank, insurance company or other financial institution, including an
instrument or agreement in the form of an irrevocable letter of credit, a
committed line of credit, a repurchase commitment, a surety bond, a financial
guaranty insurance policy, cash collateral account or an insurance contract
which assures payment of all or any part of the principal of or interest on the
Bonds, or one or more Classes of Bonds or the Mortgage Collateral, or a
servicer's or master servicer's obligation, if any, to make advances on the
Mortgage Collateral.
"Custodian": A Person who is at any time appointed by the Indenture Trustee
pursuant to Section 6.14 as a document custodian.
"Cut-off Date": _____________, 199_.
"Definitive Bond": As defined in Section 2.12(a).
"Deposit Trust Agreement": The Deposit Trust Agreement, dated as of
___________, 199_, between the Depositor and the Owner Trustee, pursuant to
which the Issuer was created.
"Depositor": As defined in the Recitals to this Indenture.
"Depository": The Depository Trust Company and any successor thereto
appointed by the Issuer as a Depository; provided that the 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 Exchange Act; and
provided, further, that no entity shall be a successor Depository unless Bonds
held through such entity or its nominees are treated for U.S. Federal income tax
purposes as being in "registered form" within the meaning of Section 163(f) of
the Code.
"Depository Participant": A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Designated Interest Accrual Date": Shall mean the date preceding a
Redemption Date or Special Redemption Date through which accrued interest is
paid upon redemption or special redemption.
"DOL": The Department of Labor or any successor in interest.
"DOL Regulations": The regulations promulgated at 29 C.F.R. ss. 2510.3-101.
"Dollar" or "$": A dollar or other equivalent unit in such coin or currency
of the United States of America as at the time shall be legal tender for the
payment of public or private debts.
["Duff & Phelps": Duff & Phelps Credit Rating Co. or its successor in
interest.]
"Eligible Account": Any of (i) an account maintained with a federal or
state chartered depository institution or trust company, the long-term deposit
or long-term unsecured debt obligations of which (or of such institution's
parent holding company) are rated at least "[___]" (or the equivalent) by each
Rating Agency (if the deposits are to be held in the account for more than 30
days), or the short-term deposit or short-term unsecured debt obligations of
which (or of such institution's parent holding company) are rated at least
"[___]" (or the equivalent) by each Rating Agency (if the deposits are to be
held in the account for 30 days or less), in any event at any time funds are on
deposit therein, or (ii) a segregated trust account maintained with a federal or
state chartered depository institution or trust company acting in its fiduciary
capacity, which, in the case of a state chartered depository institution or
trust company is subject to regulations regarding fiduciary funds on deposit
therein substantially similar to 12 CFR ss. 9.10(b), and which, in either case,
has a combined capital and surplus of at least $50,000,000 and is subject to
supervision or examination by federal or state authority, or (iii) any other
account that is acceptable to the Rating Agencies (as evidenced by written
confirmation from each Rating Agency that the use of such account would not, in
and of itself, result in an Adverse Rating Event with respect to any Class of
Bonds).
"Enhancement": Shall mean any Credit Support Agreement, Cash Flow Agreement
or Reserve Fund.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"Excess Cash Flow": Shall mean certain monies held hereunder that as of any
Payment Date are in excess of that necessary to pay in accordance herewith any
Administrative Expenses, Servicing Expenses and Additional Expenses then
remaining unpaid and principal, premium (if any) and interest then due and owing
on the Bonds.
"Exchange Act": The Securities Exchange Act of 1934, as amended, and the
rules, regulations and published interpretations of the Commission promulgated
thereunder from time to time.
"FAMC": The Federal Agricultural Mortgage Corporation or any successor
thereto.
"FDIC": The Federal Deposit Insurance Corporation or any successor thereto.
"FHA": The Federal Housing Administration or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation or any successor
thereto.
["Fitch": Fitch IBCA, Inc. and its successors in interest.]
"FNMA": The Federal National Mortgage Association or any successor thereto.
"GAAP": Generally accepted accounting principles as in effect in the United
States.
"GNMA": The Government National Mortgage Association or any successor
thereto.
"Grant": To mortgage, pledge, bargain, sell, warrant, alienate, demise,
convey, assign, transfer, create and grant a security interest in and right of
setoff against, deposit, set over and confirm. A Grant of Collateral shall
include all rights, powers and options (but none of the obligations) of the
Granting party thereunder, including the immediate and continuing right to claim
for, collect, receive and give receipt for principal and interest payments in
respect of the Collateral and all other monies and proceeds payable thereunder,
to give and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring Proceedings in the name
of the Granting party or otherwise, and generally to do and receive anything
which the Granting party is or may be entitled to do or receive thereunder or
with respect thereto.
"Highest Lawful Rate": As defined in Section 14.19.
"Holder": A Bondholder.
"Indenture Trustee": __________, a __________, in its capacity as trustee
under this Indenture, or its successor in interest, or any successor trustee
appointed as provided in this Indenture.
"Independent": When used with respect to any specified Person, any such
Person who (i) is in fact independent of the Issuer, any other obligor on the
Bonds, the Depositor and any and all Affiliates thereof, (ii) does not have any
direct financial interest in or any material indirect financial interest in any
of the Issuer, such other obligor, the Depositor or any Affiliate thereof, and
(iii) is not connected with the Issuer, such other obligor, the Depositor or any
Affiliate thereof as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions.
"Individual Bond": A Bond with an original Principal Amount of $________.
"Institutional Accredited Investor": An "accredited investor" as defined in
any of paragraphs (1), (2), (3) and (7) of Rule 501(a) under the Securities Act
or any entity in which all of the equity owners come within such paragraphs.
"Interest Accrual Period": With respect to any Payment Date, [the calendar
month preceding the month in which such Payment Date occurs].
"Interest Only Bond": A Bond entitled to receive payments only of interest
based upon the Notional Amount of the Bond and/or premium (if any) (but not
payments of principal).
"Interest Payment Adjustment": For purposes of determining the Yield
Maintenance Amount in respect of any Class of Bonds for any Payment Date, an
amount equal to one-twelfth of the product of the applicable Bond Interest Rate
multiplied by the portion of the Principal Prepayment Amount for such Payment
Date payable on such Class of Bonds. The portion of the Principal Prepayment
Amount, if any, for any Payment Date that is paid on any Class of Bonds shall
equal the product of (a) the entire Principal Prepayment Amount for such Payment
Date, multiplied by (b) a fraction, the numerator of which is the portion, if
any, of Principal Payment Amount for such Payment Date that is paid on such
Class of Bonds, and the denominator of which is the entire Principal Payment
Amount for such Payment Date.
"Investment Company Act": The Investment Company Act of 1940, as amended,
and the rules, regulations and published interpretations of the Commission
promulgated thereunder from time to time.
"IRS": The Internal Revenue Service or any successor thereto.
"Issuer": As defined in the first paragraph of this Indenture.
"Issuer Default": Any occurrence which is, or with notice or the lapse of
time or both would become, an Issuer Event of Default.
"Issuer Event of Default": As defined in Section 5.01.
"Issuer Request" or "Issuer Order": A written request or order signed in
the name of the Issuer by an Authorized Officer of the Owner Trustee and
delivered to the Indenture Trustee.
"Master Servicer": As defined in Section 13.02.
"Maturity": With respect to any Bond, the date, if any, as of which the
principal of and interest on such Bond has become due and payable as herein
provided, whether at Stated Maturity, if any, by declaration of acceleration or
otherwise.
"Maturity Assumptions": ____________________________.
["Moody's": Moody's Investors Service, Inc. or its successor in interest.]
"Mortgage Collateral": As defined in the Granting Clause.
"Mortgage Collateral Pool": Shall mean the segregated pool consisting of
all Mortgage Collateral securing the Bonds.
"Mortgage File": With respect to any Pledged Mortgage Loan, collectively,
the following documents:
(i) the original executed Mortgage Note, endorsed "Pay to the order of
______________, as trustee for the registered holders of ICCMAC
Commercial Trust [_____], Collateralized Mortgage Bonds, Series
199_-_, without recourse";
(ii) an original or copy of the Mortgage and of any intervening
assignments thereof that precede the assignment referred to in
clause (iv) of this definition, in each case (unless such document
has not yet been returned from the applicable recording office) with
evidence of recording indicated thereon;
(iii) an original or copy of any related Assignment of Leases (if such
item is a document separate from the Mortgage) and of any
intervening assignments thereof that precede the assignment referred
to in clause (v) of this definition, in each case (unless such
document has not yet been returned from the applicable recording
office) with evidence of recording indicated thereon;
(iv) an original executed assignment of the Mortgage, in favor of
_______________, as trustee for the registered holders of ICCMAC
Commercial Trust [______], Collateralized Mortgage Bonds, Series
199_-__, in recordable form;
(v) an original assignment of any related Assignment of Leases (if such
item is a document separate from the Mortgage), in favor of
________________, as trustee for the registered holders of ICCMAC
Commercial Trust [______], Collateralized Mortgage Bonds, Series
199_-__, in recordable form;
(vi) originals or copies of any written modification agreements in those
instances where the terms or provision of the Mortgage or Mortgage
Note have been modified;
(vii) the original or a copy of the policy or certificate of lender's
title insurance issued on the date of the origination of such
Pledged Mortgage Loan, or, if such policy has not been issued, an
irrevocable, binding commitment to issue such title insurance
policy; and
(viii) filed copies of any prior UCC Financing Statements in favor of the
originator of such Pledged Mortgage Loan or in favor of any assignee
prior to the Trustee (but only to the extent the Seller had
possession of such UCC Financing Statements prior to the Closing
Date) and, if there is an effective UCC Financing Statement in favor
of the Seller on record with the applicable public office for UCC
Financing Statements, an original UCC-2 or UCC-3, as appropriate, in
favor of _______________, as trustee for the registered holders of
ICCMAC Commercial Trust [______], Collateralized Mortgage Bonds,
Series 199_-_;
provided that whenever the term "Mortgage File" is used to refer to documents
actually received by the Indenture Trustee or by a Custodian on its behalf, such
term shall not be deemed to include such documents required to be included
therein unless they are actually so received, and with respect to any receipt or
certification by the Indenture Trustee or the Custodian for documents described
in clause (vi) of this definition, shall be deemed to include only such
documents to the extent the Trustee or Custodian has actual knowledge of their
existence.
"Mortgage Loan": An obligation incurred in connection with a transaction in
real property, including indebtedness evidenced by a note, bond or other written
evidence of such indebtedness and secured by a mortgage, deed of trust, deed to
secure debt or similar document or instrument creating a lien on the related
Mortgaged Property, together with all related loan documents, and including
Mortgage Loans which at the time of their Grant are subperforming or
non-performing.
"Mortgage Loan Purchase Agreement": That certain Mortgage Loan Purchase and
Sale Agreement, dated as of ____________, 199_, between the Depositor and the
Seller and relating to the transfer of the Pledged Mortgage Loans to the
Depositor, a copy of which agreement is attached hereto as Exhibit F.
"Mortgaged Property": The real multifamily or commercial property, together
with improvements thereto, securing any Mortgage Loan.
"Nominee": A person in whose name Collateral Granted to the Indenture
Trustee may be recorded, registered or issued as the designated nominee of the
Indenture Trustee in lieu of registration in the name of the Indenture Trustee,
provided that the following conditions shall be satisfied in connection with
such issuance or registration:
(a) the instruments governing the creation and operation of the nominee
provide that neither the nominee nor any owner of an interest in the nominee
(other than the Indenture Trustee) shall have any interest, beneficial or
otherwise, in any item of Collateral at any time held in the name of the
nominee, except for the purpose of transferring and holding legal title thereto;
(b) the nominee and the Trustee have entered into a binding agreement:
(i) establishing that any Collateral held in the name of the nominee
is held by the nominee as agent (other than commission agent or broker) or
nominee for the account of the Indenture Trustee, and
(ii) appointing the Indenture Trustee as the agent and attorney of the
nominee with full power and authority irrevocably to sell, assign, endorse,
transfer and deliver any item of Collateral standing in the name of the
nominee, and to execute and deliver all such instruments as may be
necessary and proper for such purpose; and
(c) in connection with the recordation or registration of any item of
Collateral in the name of the nominee all requirements under applicable law and
governmental regulations necessary to effect a valid recordation, registration,
issuance or transfer of such Collateral are complied with.
"Non-Registered Bond": Any Bond that has not been registered under the
Securities Act.
"Notional Amount": A hypothetical or notional amount on which a Bond
accrues interest from time to time.
"Officer's Certificate": A certificate signed by any one Authorized Officer
of the Person from whom said certificate is required or, in the case of an
Officer's Certificate of the Issuer, a certificate signed by any Authorized
Officer of the Owner Trustee, and, to the extent delivered to the Indenture
Trustee, complying with the applicable requirements of Section 14.01. Unless
otherwise specified, any reference in this Indenture to an Officer's Certificate
shall be to an Officer's Certificate of the Issuer.
"Opinion of Counsel": A written opinion of an attorney at law admitted to
practice before the highest court of any State and who may, except as otherwise
expressly provided in this Indenture, be counsel for the Issuer (including
in-house counsel employed full-time by the Issuer or any Affiliate); provided
that any Opinion of Counsel relating to federal income tax matters shall be an
opinion of Independent outside counsel.
"OTS": The Office of Thrift Supervision or any successor thereto.
"Outstanding": Shall mean, as of any date of determination, all Bonds
theretofore authenticated and delivered under this Indenture, except:
(i) Bonds theretofore cancelled by the Bond Registrar or delivered to
the Bond Registrar for cancellation;
(ii) Bonds or portions thereof for whose payment or redemption money
in the necessary amount has been theretofore deposited with the Indenture
Trustee or any other Paying Agent (other than the Issuer) in trust for the
Holders of such Bonds; provided, however, that if such Bonds are to be
redeemed, notice of such redemption has been duly given hereunder or
provision therefor, satisfactory to the Indenture Trustee or any other
Paying Agent, has been made; and
(iii) Bonds in exchange for or in lieu of which other Bonds have been
authenticated and delivered pursuant to this Indenture, other than any such
Bonds in respect of which there shall have been presented to the Bond
Registrar proof satisfactory to it that such Bonds are held by a bona fide
purchaser in whose hands such Bonds are valid obligations of the Issuer;
provided, however, that in determining whether the Holders of Bonds with the
requisite aggregate Principal Amount or Notional Amount, or representing the
requisite percentage of Voting Rights, have given any request, demand,
authorization, vote, direction, notice, consent or waiver hereunder, except as
otherwise expressly provided herein, Bonds owned by the Issuer, any other
obligor on Bonds or the Depositor (each of the foregoing Persons, solely for
purposes of this definition, an "Interested Person") or by any Affiliate of an
Interested Person shall be disregarded and deemed not to be Outstanding (unless
any such Person or Persons owns all the Bonds), except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Bonds
which the Bond Registrar knows to be so owned shall be so disregarded, and also
except that Bonds so owned which have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Bond
Registrar in its sole discretion the pledgee's right to act with respect to such
Bonds and that the pledgee is not an Interested Person or any Affiliate of an
Interested Person.
"Overcollateralization Amount": As of any date of determination, the
amount, if any, by which the aggregate Stated Principal Balance of the Mortgage
Pool exceeds the then aggregate Principal Amount of all the Bonds.
"Owner Trust Certificates": The owner trust certificates issued under a
Deposit Trust Agreement and evidencing the entire beneficial ownership interest
in a Trust.
"Owner Trustee": As defined in the first paragraph of this Indenture.
"Owner Trustee Fee": An annual fee of $__________.
"Ownership Interest": As to any Bond, any ownership or security interest in
such Bond as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"Paying Agent": Shall mean the Indenture Trustee or any other Person that
meets the eligibility standards for a Paying Agent specified in Section 3.03 and
is authorized and appointed pursuant to Section 3.03 by the Issuer to pay the
principal of, premium (if any) on or interest on any Bonds on behalf of the
Issuer. The principal office of the Paying Agent is
__________________________________________.
"Payment Date" Shall mean the ___ day of each calendar month (or if such
day is not a Business Day, the immediately succeeding Business Day), commencing
in _______, 199_.
"Permitted Investments": Any one or more of the following obligations or
securities:
(i) direct obligations of, or obligations fully guaranteed as to timely
payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States, have a
predetermined, fixed amount of principal due at maturity (that
cannot vary or change), do not have an "r" highlight attached to any
rating, and each obligation has a fixed interest rate or has its
interest rate tied to a single interest rate index plus a single
fixed spread;
(ii) certain obligations of agencies or instrumentalities of the United
States that are not backed by the full faith and credit of the
United States, provided such obligations have a predetermined, fixed
amount of principal due at maturity (that cannot vary or change), do
not have an "r" highlight attached to any rating, and each
obligation has a fixed interest rate or has its interest rate tied
to a single interest rate index plus a single fixed spread;
(iii) federal funds, uncertificated certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements having
maturities of not more than 365 days, of any bank or trust company
organized under the laws of the United States or any state thereof,
provided that such items are rated in the highest short-term debt
rating category of each of the Rating Agencies or, in the case of
each Rating Agency, such lower rating as will not result in a
qualification, downgrading or withdrawal of the rating then assigned
to any Class of Bonds by such Rating Agency (as evidenced in writing
by such Rating Agency), do not have an "r" highlight affixed to its
rating and its terms have a predetermined fixed amount of principal
due at maturity (that cannot vary or change), and each obligation
has a fixed interest rate or has its interest rate tied to a single
interest rate index plus a single fixed spread;
(iv) commercial paper (having original maturities of not more than 365
days) of any corporation incorporated under the laws of the United
States or any state thereof (or of any corporation not so
incorporated, provided that the commercial paper is United States
Dollar denominated and amounts payable thereunder are not subject to
any withholding imposed by any non-United States jurisdiction) which
is rated in the highest short-term debt rating category of each of
the Rating Agencies or, in the case of each Rating Agency, such
lower rating as will not result in a qualification, downgrading or
withdrawal of the rating then assigned to any Class of Bonds by such
Rating Agency (as evidenced in writing by such Rating Agency), do
not have an "r" highlight affixed to its rating and its terms have a
predetermined fixed amount of principal due at maturity (that cannot
vary or change), and each obligation has a fixed interest rate or
has its interest rate tied to a single interest rate index plus a
single fixed spread;
(v) units of money market funds which maintain a constant net asset
value and which are rated in the highest applicable rating category
of each of the Rating Agencies or, in the case of each Rating
Agency, such lower rating as will not result in a qualification,
downgrading or withdrawal of the rating then assigned to any Class
of Bonds by such Rating Agency (as evidenced in writing by such
Rating Agency); or
(vi) any other obligation or security acceptable to each Rating Agency,
which will not result in a qualification, downgrading or withdrawal
of the rating then assigned to any Class of Bonds by such Rating
Agency (as evidenced in writing by such Rating Agency);
provided that (1) no investment described hereunder shall evidence either the
right to receive (x) only interest with respect to such investment or (y) a
yield to maturity greater than 120% of the yield to maturity at par of the
underlying obligations; and (2) that no investment described hereunder 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 (that
cannot vary or change).
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, estate, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": Any employee benefit plan or other retirement arrangement,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested, including insurance company general accounts, that
is subject to ERISA or the Code.
"Pledged Fund or Account": Any fund or account, including the Bond Account
or any Reserve Fund established with respect to, and Granted as security for,
the Bonds.
"Pledged Mortgage Loan": Any one of the Mortgage Loans transferred to the
Indenture Trustee by the Issuer pursuant to the Granting Clause, as from time to
time are held as a part of the Trust Estate and as are more fully described on
Schedule I attached hereto.
"Predecessor Bond": With respect to any Bond and Class, every previous Bond
and Class evidencing all or a portion of the same debt as that evidenced by such
Bond; for the purpose of this definition, any Bond authenticated and delivered
under Section 2.06 in lieu of a mutilated, lost, destroyed or stolen Bond of the
same Class shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Bond.
"Principal Amount": The unpaid principal amount of a Bond Outstanding from
time to time (including, in the case of a Compound Interest Bond, any interest
added to such principal amount prior to the related Accrual Termination Date),
calculated as provided herein.
"Principal Only Bond": Any Bond that does not bear a stated Bond Interest
Rate and entitles the Holder thereof to payments of principal (but not payments
of interest).
"Principal Payment Amount": With respect to any Payment Date, the aggregate
of the following:
[(a) the aggregate of the principal portions of all Scheduled Payments
(other than Balloon Payments) and any Assumed Scheduled Payments due or
deemed due, as the case may be, in respect of the Pledged Mortgage Loans
for their respective Due Dates occurring during the related Collection
Period;
(b) the aggregate of all Principal Prepayments received on the Pledged
Mortgage Loans during the related Collection Period;
(c) with respect to any Pledged Mortgage Loan as to which the related
Stated Maturity Date occurred during or prior to the related Collection
Period, any payment of principal (exclusive of any amounts described in
clause (b) above or clause (d) below) made by or on behalf of the related
Mortgagor during the related Collection Period, net of any portion of such
payment that represents a recovery of the principal portion of any
Scheduled Payment (other than a Balloon Payment) due, or the principal
portion of any Assumed Scheduled Payment deemed due, in respect of such
Pledged Mortgage Loan on a Due Date during or prior to the related
Collection Period and not previously recovered;
(d) the aggregate of all Liquidation Proceeds and Insurance Proceeds
that were received on the Pledged Mortgage Loans during the related
Collection Period and that were identified and applied by the Master
Servicer as recoveries of principal of such Pledged Mortgage Loans, in each
case net of any portion of such amounts that represents a recovery of the
principal portion of any Scheduled Payment (other than a Balloon Payment)
due, or of the principal portion of any Assumed Scheduled Payment deemed
due, in respect of the related Pledged Mortgage Loan on a Due Date during
or prior to the related Collection Period and not previously recovered;
(e) with respect to any REO Properties acquired in respect of Pledged
Mortgage Loans, the aggregate of the principal portions of all Assumed
Scheduled Payments deemed due in respect of the related REO Loans for their
respective Due Dates occurring during the related Collection Period;
(f) with respect to any REO Properties acquired in respect of Pledged
Mortgage Loans, the aggregate of all Liquidation Proceeds, Insurance
Proceeds and REO Revenues that were received during the related Collection
Period in respect of such REO Properties and that were identified and
applied by the Master Servicer as recoveries of principal of the related
REO Loans, in each case net of any portion of such amounts that represents
a recovery of the principal portion of any Scheduled Payment (other than a
Balloon Payment) due, or of the principal portion of any Assumed Scheduled
Payment deemed due, in respect of the related REO Loan or the predecessor
Pledged Mortgage Loan on a Due Date during or prior to the related
Collection Period and not previously recovered; and
(g) if such Payment Date is subsequent to the initial Payment Date,
the excess, if any, of (i) the Principal Payment Amount for the immediately
preceding Payment Date, over (ii) the aggregate payments of principal made
in respect of the Bonds on such immediately preceding Payment Date.]
"Principal Prepayment Amount": With respect to any Payment Date, that
portion of the Principal Payment Amount for such Payment Date that represents
voluntary Principal Prepayments and other early collections of principal on or
in respect of the Pledged Mortgage Loans received in advance of their Stated
Maturity Dates.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"PTCE": A Prohibited Transaction Class Exemption.
"QIB": A "qualified institutional buyer" as defined in Rule 144A under the
Securities Act.
"QRS": A qualified REIT subsidiary within the meaning of Section 856(i) of
the Code.
"Rated Bond": Any Bond of a Class to which a rating has been assigned by a
Rating Agency at the request of
the Depositor or Issuer.
"Rating Agency": Each of _________________________ and _______.
"Redemption Date": The Payment Date specified by the Issuer for the
redemption of Bonds of any Class pursuant to Section 11.01.
"Redemption Price": With respect to any Bond or Class to be redeemed, in
whole or in part, pursuant to Section 11.01, the price to be paid in connection
with such redemption.
"Registered Bond": Any Bond registered under the Securities Act.
"Registered Holder": The Person whose name appears on the Bond Register on
the applicable Regular Record Date or Special Redemption Record Date, as the
case may be.
"Regular Record Date": With respect to any Payment Date, the last Business
Day of the month immediately preceding the month in which such Payment Date
occurs.
"REIT": A real estate investment trust within the meaning of Section 856(a)
of the Code.
"Release Price": With respect to any Mortgage Loan, a cash price equal to
the aggregate of: (a) the outstanding principal balance of such Mortgage Loan as
of the date of removal from the Trust Estate, (b) all accrued and unpaid
interest on such Mortgage Loan at the related Mortgage Interest Rate to but not
including the date of removal, and (c) all related and unreimbursed Servicing
Advances.
"REO Property": A Mortgaged Property acquired as part of the Trust Estate
securing the Bonds through foreclosure, deed-in-lieu of foreclosure or otherwise
in connection with a defaulted Mortgage Loan.
"Reserve Fund": Shall mean any fund or funds established, funded and
maintained hereunder for the same intended purposes as a Cash Flow Agreement or
a Credit Support Agreement.
"Resolution": A copy of a resolution certified by an Authorized Officer of
the Owner Trustee to have been duly adopted by the Owner Trustee and to be in
full force and effect on the date of such certification.
"Responsible Officer": With respect to the Indenture Trustee, any officer
within the Corporate Trust Office of the Indenture Trustee, including any Vice
President, Assistant Vice President, Treasurer, Assistant Treasurer, Secretary,
Assistant Secretary or an other officer of the Indenture Trustee 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.
"Rule 144A": Rule 144A under the Securities Act.
"Schedule of Mortgage Collateral": The description of the Mortgage
Collateral being Granted to the Trustee on the Closing Date, attached as
Schedule I hereto.
"Securities Act": The Securities Act of 1933, as amended, and the rules,
regulations and published interpretations of the Commission promulgated
thereunder from time to time.
"Seller": ___________________ or its successor in interest.
"Senior Bondholder": A Holder of a Senior Bond.
"Senior Bonds": Shall mean any Bond other than a Subordinate Bond.
"Servicing Agreement": As defined in Section 13.02.
"Servicing Event of Default": Any "Event of Default" or "Servicing Event of
Default" on the part of the Master Servicer or the Special Servicer hereunder or
under the Servicing Agreement.
"Servicing Expense": Any fees, expenses or advances payable or reimbursable
to the Master Servicer or the Special Servicer hereunder or under the Servicing
Agreement or otherwise in connection with the servicing and administration of
the Mortgage Collateral thereunder.
"Special Redemption Date": The date in each month (other than any month in
which a Payment Date occurs) on which Bonds may be redeemed pursuant to Section
11.04 hereof as part of a special redemption, which date shall be the same day
of the month as the day on which the Payment Date occurs.
"Special Redemption Price": With respect to any Bond or Class to be
redeemed, in whole or in part, pursuant to Section 11.04 as part of a special
redemption, the price to be paid in connection with such special redemption.
"Special Redemption Record Date": Shall mean the record date for a special
redemption, as specified in Section 11.04.
"Special Servicer": As defined in Section 13.02.
["Standard & Poor's": Standard & Poor's Rating Services, a Division of the
McGraw-Hill Companies, Inc. or its successor in interest.]
"State": Any one of the 50 states of the United States of America, or the
District of Columbia.
"Stated Maturity": With respect to each Class of Bonds, the Payment Date on
which the final payment of principal and interest on the Bonds of such Class
becomes finally due and payable, as set forth below:
Class A-1 _________________, 199_
Class A-2 _________________, 199_
Class B _________________, 199_
Class C _________________, 199_
Class D _________________, 199_
Class E _________________, 199_
Class F _________________, 199_
"Subordinate Bondholders": A Holder of a Subordinate Bond.
"Subordinate Bonds": Any Bonds that entitle the Holders thereof to a right
to receive timely payment of principal or interest that is subordinated in whole
or in part to the prior right of Holders of other Bonds of a different Class.
"Substitute Mortgage Collateral": Any Mortgage Collateral that is Granted
to the Indenture Trustee as security for the Bonds, as contemplated by Section
2.11, in lieu of any Mortgage Collateral previously so Granted to the Indenture
Trustee for such Bonds (or in lieu of cash deposited in any Pledged Fund or
Account on the Closing Date).
"Successor Person": As defined in Section 3.13(a).
"TMP": A taxable mortgage pool within the meaning of the Code.
"Transfer": Any direct or indirect transfer, sale, pledge, hypothecation,
or other form of assignment of any Ownership Interest in a Bond.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Bond.
"Transferor": Any Person who is disposing by Transfer any Ownership
Interest in a Bond.
"Treasury Regulations": Temporary, final or proposed regulations (to the
extent that by reason of their proposed effective date such proposed regulations
would apply to the Issuer or a Trust Estate) of the United States Department of
the Treasury.
"Trust": As defined in the Recitals to this Indenture.
"Trust Estate": As defined in the Granting Clause.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939, as
amended, and the rules, regulations and published interpretations of the
Commission promulgated thereunder from time to time.
"Trustee Report": As defined in Section 15(a) hereof.
"UCC Financing Statement": A financing statement executed and in form
sufficient for filing pursuant to the Uniform Commercial Code, as in effect in
the relevant jurisdiction.
"Uniform Commercial Code" or "UCC": The Uniform Commercial Code as in
effect in any applicable jurisdiction, as amended from time to time.
"Voting Rights": The portion of the voting rights of all of the Bonds which
is allocated to any Bond. At all times during the term of this Agreement, ____%
of all the Voting Rights shall be allocated among the Class A1, Class A2, Class
B, Class C, Class D, Class E and Class F Bonds in proportion to the respective
Class Balances. Voting Rights allocated to a Class of Bondholders shall be
allocated among such Bondholders in proportion to the Percentage Interests
evidenced by their respective Bonds. Allocation of Realized Losses and
Collateral Value Adjustments to a Class of Bonds and any other event which
changes such Class Balance will result in a corresponding change to such Class'
Voting Rights.
"Yield Maintenance Amount": With respect to any Class of Bonds, for any
Payment Date on which any portion of the Principal Prepayment Amount, if any, is
paid thereon on such Payment Date, an amount equal to the present value of a
series of equal monthly payments deemed payable on each future Payment Date up
to and including the Assumed Final Payment Date for such Class of Bonds, each
such monthly payment to be equal to the related Interest Payment Adjustment and
to be discounted from the applicable future Payment Date to the then current
Payment Date at a per annum rate equal to the sum of (i) the yield per annum on
United States treasury securities having a maturity closest to the Assumed Final
Payment Date for such Class of Bonds, plus (ii) ___ basis points; and with
respect to any Class of Bonds, for any Payment Date on which no portion of a
Principal Prepayment Amount is paid thereon on such Payment Date, the Yield
Maintenance Amount shall be zero.
(b) Whenever used in this Indenture, including in the Preliminary
Statement, terms used herein and not defined herein shall have the meanings
specified in the Servicing Agreement:
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Bonds;
"indenture security holder" means a Bondholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Indenture Trustee;
and
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used, but not expressly defined, in this Indenture that
are defined by the TIA, defined by TIA reference to another statute or defined
by Commission rule have the respective meanings assigned to them by such
definitions.
SECTION 1.03. Rules of Construction.
(a) The definition of any term in this Indenture shall be equally
applicable to the singular and plural forms of such term and to the masculine,
feminine and neuter genders of such term. The words "herein", "hereof",
"hereunder" and other words of similar import refer to this Indenture as a
whole, and not to any particular Article, Section or other subdivision.
(b) References herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Indenture (if the reference is contained in this Indenture).
(c) A reference to a Subsection without further reference to a Section is a
reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions.
(d) The word "or", as used herein, is not exclusive.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP.
(f) The words "include" and "including" shall mean without limitation by
reason of enumeration and shall be construed to be followed by the words
"without limitation".
(g) The pronouns used herein are used in the masculine and neuter genders
but shall be construed as feminine, masculine or neuter, as the context
requires.
ARTICLE II
THE BONDS
SECTION 2.01. Form.
The Bonds shall be designated as the "ICCMAC Commercial Trust [______],
Collateralized Mortgage Bonds, Series 199_-_". Each Class of Bonds shall be in
substantially the form set forth in Exhibit A hereto, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange on which the Bonds
may be listed, or as may be required by any applicable regulation (whether
proposed, temporary or final) promulgated pursuant to the Code, including any
legend required in respect of original issue discount on any Bond or Class, as
applicable, or as may, consistently herewith, be determined to otherwise be
necessary, appropriate or convenient by the Issuer, as evidenced by its
execution of the Bonds. Any portion of the text of any Bond may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Bond.
The Definitive Bonds shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders) or may be produced in any other manner permitted by the rules
of any securities exchange on which the Bonds may be listed, all as determined
by the Issuer, as evidenced by its execution of such Bonds.
The terms of the Bonds are set forth in Exhibit A hereto. The terms of each
Class of Bonds are part of the terms of this Indenture.
SECTION 2.02. Initial Aggregate Principal Amount; Classes; Terms.
(a) Each Class of Bonds shall bear interest, such interest to commence
accruing on the Accrual Date. In the case of each Class of Bonds, such interest
shall accrue during each Interest Accrual Period, in accordance with Section
2.07(b) hereof, at the applicable Bond Interest Rate on the aggregate Principal
Amount of such Class of Bonds outstanding immediately prior to the related
Payment Date. The interest accrued in respect of each Class of Bonds during any
Interest Accrual Period will be due and payable thereon on the related Payment
Date and, to the extent not paid in full on such Payment Date, on each
succeeding Payment Date until paid in full. No interest will accrue on overdue
interest in respect of any Bond.
(b) The respective Classes of Bonds will be issued on the Closing Date in
the aggregate Principal Amounts set forth in Section 2.03 hereof. The aggregate
Principal Amount of any Class of Bonds, and the Principal Amount of any
particular Bond of such Class, will be reduced only by actual payments of
principal made thereon on any Payment Date.
(c) Each Bond of a particular Class shall rank pari passu with each other
Bond of such Class and be equally and ratably secured by the Trust Estate.
(d) This Indenture shall evidence a continuing lien on and security
interest in the Trust Estate to secure the full payment of the principal,
interest and other amounts due and payable on all the Bonds from time to time,
which payments, in the case of any Class of Bonds, shall in all respects be
equally and ratably secured hereby without preference, priority or distinction
on account of the actual time or times of the authentication and delivery of the
Bonds of such Class.
(e) The Bonds shall be authenticated and delivered to or at the direction
of the Issuer by the Indenture Trustee only upon satisfaction of the conditions
set forth in Section 2.10(a) hereof, and the following additional conditions:
[Specify additional conditions, if any.]
SECTION 2.03. Denominations.
The Class A-1, Class A-2, Class B, Class C and Class D Bonds shall be
issuable only in denominations corresponding to initial Principal Amounts as of
the Closing Date of $_________ and any whole dollar denomination in excess
thereof. The Class E and Class F Bonds shall be issuable only in denominations
corresponding to initial Principal Amounts as of the Closing Date of $__________
and any whole dollar denomination in excess thereof.
[Notwithstanding the preceding paragraph, if Definitive Bonds are issued
with respect to any Class of Book-Entry Bonds, such Definitive Bonds shall be
issuable only in denominations corresponding to initial Principal Amounts as of
the Closing Date of $__________ and any whole dollar denomination in excess
thereof.]
SECTION 2.04. Execution, Authentication, Delivery and Dating.
(a) Subject to the satisfaction of the conditions set forth in Section 2.02
and 2.10 hereof, the Indenture Trustee shall upon Issuer Order authenticate and
deliver the [seven] Classes of Bonds for original issue in the following
principal amounts: Class A-1, $________________; Class A-2, $__________________;
Class B, $____________________; Class C, $____________________; Class D,
$____________________; Class E, $____________________; Class F,
$____________________. The aggregate principal amounts of such Classes of Bonds
outstanding at any time may not exceed such respective amounts. The Bonds that
are authenticated and delivered by the Indenture Trustee to or upon the order of
the Issuer on the Closing Date shall be dated _____________, 199_. All other
Bonds that are authenticated after the Closing Date for any other purpose under
the Indenture shall be dated the date of their authentication.
(b) The Bonds shall be executed by manual or facsimile signature on behalf
of the Issuer by any Authorized Officer of the Owner Trustee. Bonds bearing the
manual or facsimile signatures of individuals who were at any time the
Authorized Officers of the Owner Trustee shall bind the Issuer, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Bonds or did not hold such offices at
the date of such Bonds. No Bond shall be entitled to any benefit under this
Indenture, or be valid for any purpose, however, unless there appears on such
Bond a certificate of authentication substantially in the form provided for
herein executed by the Indenture Trustee by manual signature, and such
certificate of authentication upon any Bond shall be conclusive evidence, and
the only evidence, that such Bond has been duly authenticated and delivered
hereunder.
(c) The Indenture Trustee may, at its option, appoint one or more agents
(each an "Authenticating Agent") with power to act on its behalf and subject to
its direction in the authentication of Bonds in connection with transfers and
exchanges under Sections 2.05 and 2.06, as fully to all intents and purposes as
though each such Authenticating Agent had been expressly authorized by those
Sections to authenticate the Bonds. For all purposes of this Indenture, the
authentication of Bonds by an Authenticating Agent shall be deemed to be the
authentication of Bonds "by the Indenture Trustee".
Any corporation, bank, trust company or association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation, bank, trust company or association resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation, bank, trust company or association
succeeding to the corporate trust business of any Authenticating Agent, shall be
the successor of such Authenticating Agent hereunder, without the execution or
filing of any further act on the part of the parties hereto or such
Authenticating Agent or such successor corporation, bank, trust company or
association.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Indenture Trustee and the Issuer. The Indenture Trustee may
at any time terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and the Issuer. Upon
receiving such notice of resignation or upon such a termination, the Indenture
Trustee may, or at the direction of the Issuer shall, promptly appoint a
successor Authenticating Agent, give written notice of such appointment to the
Issuer and give notice of such appointment to the Bondholders.
Each Authenticating Agent shall, with respect to acts taken or not taken
within the scope of its permitted appointment, be entitled to all limitations on
liability, rights of reimbursement and indemnities that the Indenture Trustee is
entitled to hereunder as if it were the Indenture Trustee.
The Indenture Trustee shall be responsible for any compensation and
expenses of an Authenticating Agent appointed hereby and shall not be relieved
of responsibility for the timely performance of any of its duties and
obligations under this Indenture by reason of the appointment of an
Authenticating Agent.
SECTION 2.05. Registration of Transfer and Exchange of Bonds.
(a) The Issuer shall cause to be kept a register (the "Bond Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Bonds and of transfers and exchanges of
Bonds as herein provided. The Indenture Trustee shall serve as "Bond Registrar"
for the purpose of registering Bonds and transfers and exchanges of Bonds as
herein provided. Upon any resignation or removal of the Indenture Trustee as
provided herein, the successor trustee shall immediately succeed to its
predecessor's duties as Bond Registrar.
(b) Subject to any applicable restrictions on transfer provided for in
Section 2.13 herein, upon surrender for registration of transfer of any Bond at
the office designated by the Issuer pursuant to Section 3.02, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Bonds of the same
Class in authorized denominations representing a like aggregate Principal Amount
or Notional Amount, as applicable.
(c) At the option of any Holder, its Bonds may be exchanged for other Bonds
of the same Class in different authorized denominations representing a like
aggregate Principal Amount or Notional Amount, as applicable, upon surrender of
the Bonds to be exchanged at the office designated by the Issuer pursuant to
Section 3.02. Whenever any Bonds are so surrendered for exchange, the Issuer
shall execute and the Indenture Trustee shall authenticate and deliver the Bonds
which the Bondholder making the exchange is entitled to receive.
(d) All Bonds issued upon any registration of transfer or exchange of Bonds
shall be the valid obligations of the Issuer, evidencing the same debt and
entitled to the same benefits under this Indenture, as the Bonds surrendered
upon such registration of transfer or exchange.
(e) Every Bond presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the Holder thereof or its attorney duly authorized in
writing, with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in the City of New York or the city
in which the Corporate Trust Office is located, or by a member firm of a
national securities exchange.
(f) No service charge shall be imposed for any registration of transfer or
exchange of Bonds pursuant to this Section 2.05, but the Issuer, the Indenture
Trustee or any other Bond Registrar may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any such transfer or exchange of Bonds.
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Bonds.
If (i) any mutilated Bond is surrendered to the Issuer or the Indenture
Trustee, or the Issuer and the Indenture Trustee receive evidence to their
satisfaction of the destruction (including mutilation tantamount to
destruction), loss or theft of any Bond and the ownership thereof, and (ii)
there is delivered to the Issuer and the Indenture Trustee such security or
indemnity as may be reasonably required by them to hold each of them and any
agent of any of them harmless, then, in the absence of notice to the Issuer or
the Indenture Trustee that such Bond has been acquired by a bona fide purchaser,
the Issuer shall execute and the Indenture Trustee shall authenticate and
deliver, in lieu of any such mutilated, destroyed, lost or stolen Bond, a new
Bond of like Class, tenor and denomination registered in the same manner, dated
the date of its authentication and bearing a number not contemporaneously
outstanding. If, after the delivery of such new Bond, a bona fide purchaser of
the Predecessor Bond presents for payment or transfer such Predecessor Bond, the
Issuer and the Indenture Trustee shall be entitled to recover such new Bond from
the Person to whom it was delivered or any Person taking therefrom, except a
bona fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expenses
incurred by the Issuer or the Indenture Trustee in connection therewith. If any
such mutilated, destroyed, lost or stolen Bond shall have become, or within
seven days shall be, due and payable, or shall have been selected or called for
redemption, instead of issuing a new Bond, the Issuer may pay such Bond when so
due or payable or upon the Redemption Date or Special Redemption Date without
surrender thereof, except that any mutilated Bond shall be surrendered.
Upon the issuance of any new Bond under this Section 2.06, the Issuer, the
Indenture Trustee or any other Bond Registrar may require payment of an amount
sufficient to pay or discharge any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including the
reasonable fees and expenses of the Authenticating Agent and the Bond Registrar)
in connection therewith.
Every new Bond issued pursuant to this Section 2.06 in lieu of any
mutilated, destroyed, lost or stolen Bond shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Bond shall be at any time enforceable by any Person,
and such new Bond shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Bonds of the same Class duly
issued hereunder.
The provisions of this Section 2.06 are exclusive and shall preclude (to
the extent permitted by applicable law) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Bonds.
SECTION 2.07. Payment of Principal and Interest.
(a) Except as otherwise provided in Section 2.07(e) below, any installment
of interest or principal or any other amount payable on any Bonds on any Payment
Date, Redemption Date or Special Redemption Date (whether such installment of
interest or principal or such other amount is being punctually paid or duly
provided for by the Issuer on such date or is overdue as of such date) shall be
paid to the Person in whose name such Bond (or one or more Predecessor Bonds) is
registered on the Regular Record Date for such Payment Date or Redemption Date
or on the Special Redemption Record Date for such Special Redemption Date, as
the case may be. In the case of Bonds other than Book-Entry Bonds, such payment
shall be made by check mailed to such Person's address as it appears in the Bond
Register on such Regular Record Date or Special Redemption Record Date, or upon
written request to the Paying Agent five (5) Business Days prior to the related
Regular Record Date or Special Redemption Record Date by any Holder owning Bonds
with an aggregate Principal Amount of at least $5,000,000 or an aggregate
Notional Amount of at least $10,000,000, by wire transfer in immediately
available funds to the account of such Holder specified in the request. Any
permitted request for receipt of wire transfers shall remain effective until
modified or rescinded by the Holder that requested such wire transfers. In the
case of Book-Entry Bonds, such payment shall be made by wire transfer to the
Depository in immediately available funds.
(b) All computations of interest due with respect to any Bond shall be made
as provided in this Section 2.07(b) and on the basis of a 360-day year
consisting of 12 30-day months. Each Class that bears interest shall accrue such
interest at the applicable Bond Interest Rate specified herein on the applicable
aggregate Principal Amount or Notional Amount outstanding from time to time.
Interest due and payable on a Payment Date, other than on Compound Interest
Bonds, will be equal to the amount of unpaid interest that will have accrued
hereunder through the end of the Interest Accrual Period for such Payment Date.
The Interest Accrual Periods for any Class may, in each case, end prior to the
applicable Payment Date. For each Class of Compound Interest Bonds, interest
accrued during each Interest Accrual Period ending on or prior to the applicable
Accrual Termination Date will be added to the principal of such Class of
Compound Interest Bonds on the related Payment Date, or on such more or less
frequent basis. Interest on a Class of Compound Interest Bonds will be due and
payable on each Payment Date commencing on the Payment Date coinciding with or
next following the Accrual Termination Date for the Class. In the case of the
first Payment Date, interest on a Class will accrue from the related Accrual
Date. Any overdue payment of interest on any Bond shall bear interest (to the
extent that payment thereof shall be legally enforceable) at the applicable Bond
Interest Rate from and to _______________________________.
(c) The principal of each Bond shall be payable in installments commencing
on _____________, 199_ and ending no later than the Stated Maturity thereof, if
any, unless such Bond becomes due and payable at an earlier date by declaration
of acceleration, call for redemption or special redemption or otherwise. On each
Payment Date, payments of principal of the Bonds shall be allocated among the
respective Classes of Bonds and shall be allocated among the Bonds of each such
Class entitled to some or all of such payments of principal on a pro rata or
random lot basis as specified herein. All reductions in the principal amount of
a Bond (or one or more Predecessor Bonds) effected by payments of installments
of principal made on any Payment Date, Redemption Date or Special Redemption
Date shall be binding upon all future Holders of the Bond and of any Bond issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof, whether or not such principal payment is noted on such Bond.
(d) The Redemption Price or Special Redemption Price for any Bond, the
final installment of principal of any Bond or, in the case of an Interest Only
Bond or a Bond that continues to accrue interest after its Principal Amount has
been reduced to zero, the final installment of interest thereon payable on any
Redemption Date, Special Redemption Date or Payment Date, respectively, shall be
paid only upon presentation and surrender of such Bond on or after the related
Special Redemption Date, Redemption Date or Payment Date, as the case may be, at
the office designated by the Issuer pursuant to Section 3.02 or at the office of
any Paying Agent, in either case within the continental United States.
Whenever, on the basis of payments, collections and/or distributions on the
Mortgage Collateral securing the Bonds received during any applicable period,
the entire remaining unpaid principal amount of or, in the case of an Interest
Only Bond or a Bond that continues to accrue interest after its Principal Amount
has been reduced to zero, the final installment of interest on any Bond will
become due and payable on the next Payment Date, Redemption Date or Special
Redemption Date, the Paying Agent shall notify the Person in whose name such
Bond is registered as of the close of business on the Regular Record Date prior
to such Payment Date or Redemption Date or on the Special Redemption Record Date
prior to such Special Redemption Date that such final installment is expected to
be paid on such Payment Date, Redemption Date or Special Redemption Date, as the
case may be, and that any and all interest in respect of such Bond will cease to
accrue as of the end of the corresponding Interest Accrual Period for such
Payment Date or Redemption Date or as of the Designated Interest Accrual Date
for such Special Redemption Date, as the case may be. Such notice shall be
mailed no later than the third day prior to such Payment Date, Redemption Date
or Special Redemption Date and shall contain the information set forth in, and
be mailed in accordance with, Section 11.02.
(e) Notwithstanding any of the foregoing provisions with respect to
payments of principal of, premium, if any, on and interest on the Bonds, if the
Bonds have become or been declared due and payable following an Issuer Event of
Default pursuant to Section 5.02 and such acceleration of maturity and its
consequences have not been rescinded and annulled, and distributions on the
Trust Estate are not being applied pursuant to Section 5.05, then payments of
principal of, premium, if any, on and interest on such Bonds shall be made in
accordance with Section 5.06.
(f) The Bonds are nonrecourse obligations solely of the Issuer and will not
be insured or guaranteed by any governmental instrumentality, Imperial Credit
Commercial Mortgage Acceptance Corp. or any Affiliate thereof or any other
person or entity and will be payable only from the Grant of Collateral. Each
Bondholder and the holders of any Bonds now or in the future issued by the
Issuer will be deemed to have agreed that they have no rights or claims against
the Issuer directly and may only look to the Trust Estate related to the
issuance of such Bonds to satisfy the Issuer's obligations hereunder.
Notwithstanding the provisions of this Section 2.07(g), but subject to the third
paragraph of Section 8.01, the Issuer may at any time advance funds to the
Indenture Trustee for the purpose of allowing the Paying Agent to make required
payments on the Bonds. If the Issuer makes such an advance, it shall be entitled
to withdraw from the related Bond Account on any Payment Date the amount so
advanced.
(g) As a condition to the payment of principal, premium (if any) and
interest on any Bond that may be beneficially owned by a non-U.S. person,
without the imposition of United States withholding tax, the Issuer shall
require certification or satisfaction of such other procedures as are acceptable
to it and the Bond Registrar to enable the Issuer, the Indenture Trustee, the
Bond Registrar and any Paying Agent to determine their duties and liabilities
with respect to any taxes or other charges that they may be required to deduct
or withhold from payments in respect of such Bond under any present or future
law or regulation of the United States or any present or future law or
regulation of any political subdivision thereof or taxing authority therein or
to comply with any reporting or other requirements under any such law or
regulation.
SECTION 2.08. Persons Deemed Owners.
Prior to due presentation for registration of transfer of any Bond, the
Issuer, the Indenture Trustee and any Agent thereof shall treat the Person in
whose name any Bond is registered (a) on any Regular Record Date or Special
Redemption Record Date, for the purpose of receiving payments of principal of,
premium, if any, on and interest on such Bond (subject to Section 2.07) and (b)
on any other date for any other purpose, as the owner (whether or not such Bond
be overdue as to any payment thereon), and none of the Issuer, the Indenture
Trustee or any Agent thereof shall be affected by notice to the contrary.
SECTION 2.09. Cancellation.
All Bonds surrendered for payment, registration of transfer, exchange or
redemption shall, if surrendered to any person other than the Bond Registrar, be
delivered to and promptly cancelled by the Bond Registrar. The Issuer may at any
time deliver to the Bond Registrar for cancellation any Bonds previously
authenticated and delivered hereunder that the Issuer may have acquired in any
manner whatsoever, and all Bonds so delivered shall be promptly cancelled by the
Bond Registrar. No Bonds shall be authenticated in lieu of or in exchange for
any Bonds cancelled as provided in this Section 2.09, except as expressly
permitted by this Indenture. All cancelled Bonds shall be held by the Bond
Registrar in accordance with its standard retention policy unless the Issuer
shall direct by an Issuer Order that they be returned to it.
SECTION 2.10. Authentication and Delivery of Bonds.
(a) Bonds shall be executed by the Issuer and delivered to the Indenture
Trustee for authentication, and thereupon the same shall be authenticated and
delivered to or at the direction of the Issuer by the Indenture Trustee on the
Closing Date, but only upon satisfaction of the following conditions:
(i) Issuer Order. The Issuer shall have delivered to the Indenture
Trustee an Issuer Order authorizing the execution, authentication and
delivery of the Bonds, the Indenture and any agreements to be executed by
the Indenture Trustee with respect to such Bonds and specifying the Classes
and their respective Stated Maturities, if any, initial aggregate Principal
Amounts and/or Notional Amounts, initial Bond Interest Rates, if any, and
ratings, if any, assigned by the designated Rating Agency or Rating
Agencies.
(ii) Indenture and Servicing Agreement. The Indenture and the
Servicing Agreement shall have been executed by all parties thereto.
(iii) Rating Agency Confirmation. The Issuer shall have delivered to
the Indenture Trustee written confirmation (which need not be addressed to
the Indenture Trustee) from each designated Rating Agency that it has
assigned to the Class or Classes rated by it the ratings specified in the
Issuer Order referred to in clause (i) above.
(iv) [Additional Terms and Conditions.]
(b) In connection with the authentication and delivery of the Bonds, the
Issuer shall deliver to the Indenture Trustee an Officer's Certificate, an
Opinion of Counsel and (if required by the TIA) a certificate or opinion from an
Accountant, in accordance with TIA ss. 314(c) and meeting the applicable
requirements of Section 14.01(a).
[SECTION 2.11. Substitution of Collateral.
Subject to Section 14.01, and only if and to the extent, and under the
circumstances, expressly permitted herein, the Issuer or another specified
Person may, in substitution of any one or more items of Mortgage Collateral or
other Collateral securing the Bonds or any cash deposited in any Pledged Fund or
Account on the related Closing Date, deliver other Mortgage Loans and/or other
forms of Enhancement as new Collateral.]
SECTION 2.12. Book-Entry Bonds.
(a) The Class A-1, Class A-2, Class B, Class C and Class D Bonds will be
Book-Entry Bonds. The Bonds of each such Class shall initially be issued as one
or more Bonds registered in the name of the Depository or its nominee and,
except as provided in Section 2.12(c), transfer of such Bonds may not be
registered by the Bond Registrar unless such transfer is to a successor
Depository that agrees to hold such Bonds for the respective Bond Owners with
Ownership Interests therein. The Issuer hereby designates [The Depository Trust
Company, at 55 Water Street, New York, New York 10004], as the initial
Depository for the Book-Entry Bonds and directs the Indenture Trustee to execute
and deliver the Letter of Representations (the form of which is attached hereto
as Exhibit H). The bond certificate or certificates representing each Class of
the Book-Entry Bonds shall be registered in the name of the nominee of the
Depository designated in the Letter of Representations. Such Bond Owners shall
hold and transfer their respective Ownership Interests in and to such Bonds
through the book-entry facilities of the Depository and, except as provided in
Section 2.12(c), shall not be entitled to physical, fully registered Bonds (each
a "Definitive Bond") in respect of such Ownership Interests. All transfers by
Bond Owners of their respective Ownership Interests in the Book-Entry Bonds
shall be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing each such Bond Owner. Each Depository
Participant shall only transfer the Ownership Interests in the Book-Entry Bonds
of Bond Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures.
(b) The Issuer, the Indenture Trustee and any agent of either may for all
purposes, including the making of payments due on the Book-Entry Bonds, deal
with the Depository as the authorized representative of the Bond Owners with
respect to such Bonds for the purposes of exercising the rights of Bondholders
hereunder. The rights of Bond Owners with respect to the Book-Entry Bonds shall
be limited to those established by law and agreements between such Bond Owners
and the Depository Participants and brokerage firms representing such Bond
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of the Book-Entry Bonds with respect to any particular matter shall not
be deemed inconsistent if they are made with respect to different Bond Owners.
The Indenture Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Bondholders and shall give notice to
the Depository of such record date.
(c) If (i) the Issuer advises the Indenture Trustee and the Bond Registrar
in writing that the Depository is no longer willing or able to properly
discharge its responsibilities with respect to any Class of Book-Entry Bonds,
and the Issuer is unable to locate a qualified successor, or (ii) the Issuer at
its option advises the Indenture Trustee and the Bond Registrar in writing that
it elects to terminate the book-entry system through the Depository with respect
to any Class of Book-Entry Bonds (or any portion of any Class thereof), the Bond
Registrar shall notify all affected Bond Owners, through the Depository, of the
occurrence of any such event and of the availability of Definitive Bonds to such
Bond Owners requesting the same. Upon surrender to the Bond Registrar of any
Class of Book-Entry Bonds (or any portion of any Class thereof) by the
Depository, accompanied by registration instructions from the Depository for
registration of transfer, the Issuer shall execute, and the Indenture Trustee
shall authenticate and deliver, the Definitive Bonds in respect of such Class
(or portion thereof) to the Bond Owners identified in such instructions. None of
the Issuer, the Indenture Trustee or any Agent thereof 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
Bonds for purposes of evidencing ownership of any Book-Entry Bonds, the
registered holders of such Definitive Bonds shall be recognized as Bondholders
hereunder and, accordingly, shall be entitled directly to all benefits
associated with such Definitive Bond and to transfer and exchange such
Definitive Bonds.
SECTION 2.13.Restrictions on Transfer of Bonds.
(a) No transfer, sale, pledge or other disposition of any Non-Registered
Bond or interest therein shall be made unless that transfer, sale, pledge or
other disposition is exempt from the registration and/or qualification
requirements of the Securities Act and any applicable state securities laws, or
is otherwise made in accordance with the Securities Act and such state
securities laws. If a transfer of any Non-Registered Bond is to be made without
registration under the Securities Act (other than in connection with the initial
issuance thereof or a transfer thereof by the Issuer or one of its Affiliates),
then the Bond Registrar shall refuse to register such transfer unless it
receives (and upon receipt, it may conclusively rely upon) either: (i) a
certificate from the Bondholder desiring to effect such transfer substantially
in the form attached as Exhibit D-1A hereto; or (ii) a certificate from the
Bondholder desiring to effect such transfer substantially in the form attached
as Exhibit D-1B hereto and a certificate from such Bondholder's prospective
Transferee substantially in the form attached either as Exhibit D-2A hereto or
as Exhibit D-2B hereto; or (iii) an Opinion of Counsel satisfactory to the
Indenture Trustee to the effect that such transfer may be made without
registration under the Securities Act (which Opinion of Counsel shall not be an
expense of the Trust Estate or of the Issuer, the Administrator, the Owner
Trustee, the Indenture Trustee or the Bond Registrar in their respective
capacities as such), together with the written certification(s) as to the facts
surrounding such transfer from the Bondholder desiring to effect such transfer
and/or such Bondholder's prospective Transferee on which such Opinion of Counsel
is based. None of the Issuer, the Depositor, the Indenture Trustee, the
Administrator, the Owner Trustee or the Bond Registrar is obligated to register
or qualify any Class of Non-Registered Bonds under the Securities Act or any
other securities law or to take any action not otherwise required under this
Indenture to permit the transfer of any Non-Registered Bond or interest therein
without registration or qualification. Any Holder of a Non-Registered Bond
desiring to effect a transfer of such Non-Registered Bond or interest therein
shall, and does hereby agree to, indemnify, the Issuer, the Administrator, the
Owner Trustee, the Indenture Trustee and the Bond Registrar against any
liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
As of the Closing Date, the [Class A-1, Class A-2, Class B, Class C and
Class D Bonds] will constitute Registered Bonds and the [Class E and Class F
Bonds] will constitute Non-Registered Bonds.
(b) No transfer of any Bond or any interest therein shall be made to a Plan
or to any Person who is directly or indirectly purchasing such Bond or interest
therein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan, unless the prospective Transferee of such Bond or interest therein
provides the Bond Registrar (in the case of a Definitive Bond) or the Transferor
(in the case of a Book-Entry Bond) with (I) a certification of facts and an
Opinion of Counsel which establish to the satisfaction of the Indenture Trustee
(in the case of a Definitive Bond) or the Transferor (in the case of a
Book-Entry Bond) that the purchase and holding of such Bond or interest therein
will not constitute or result in a non-exempt prohibited transaction under ERISA
or Section 4975 of the Code or result in the imposition of an excise tax under
Section 4975 of the Code [and, in the case of the Class ___ and Class ___
Bonds,] will not subject the Issuer, the Owner Trustee, the Administrator, the
Master Servicer, the Special Servicer, the Company, the Bond Registrar or the
Indenture Trustee to any obligation in addition to those undertaken in this
Indenture] or (II) [solely in the case of the Class ___, Class ___, Class ___,
Class ___ and Class ___ Bonds,] a certification substantially to the effect that
the purchase and holding of such Bond or interest therein by or on behalf of, or
with assets of a Plan, will not constitute or result in any non-exempt
prohibited transaction under ERISA or Section 4975 of the Code or result in the
imposition of an excise tax under Section 4975 of the Code and further to the
effect of the statements in at least one of the following clauses (i) through
[(vii)]: (i) the Transferee is an insurance company and (A) the source of funds
used to purchase such Bond is an "insurance company general account" (as such
term is defined in PTCE 95-60), (B) the conditions set forth in PTCE 95-60 have
been satisfied and (C) there is no Plan with respect to which the amount of such
general account's reserves and liabilities for contracts held by or on behalf of
such Plan and all other Plans maintained by the same employer (or any
"affiliate" thereof, as defined in PTCE 95-60) or by the same employee
organization, exceeds 10% of the total of all reserves and liabilities of such
general account (as determined under PTCE 95-60) as of the date of the
acquisition of such Bonds; (ii) the Transferee is an insurance company and (A)
the source of funds used to purchase such Bonds is an insurance company general
account, (B) the requirements of Section 401(c) of ERISA and the DOL Regulations
to be promulgated thereunder have been satisfied and will continue to be
satisfied and (C) the insurance company represents that it understands that the
operation of the general account after December 31, 1998 may affect its ability
to continue to hold such Bonds after the date which is 18 months after the
401(c) Regulations become final and that unless a Class Exemption or an
exception under Section 401(c) of ERISA is then available for the continued
holding of such Bonds, it will dispose of such Bonds prior to the date which is
18 months after the 401(c) Regulations become final; (iii) the Transferee is an
insurance company and (A) the source of funds used to purchase such Bonds is an
"insurance company pooled separate account" (as such term is defined in PTCE
90-1), (B) the conditions set forth in PTCE 90-1 have been satisfied and (C)
there is no Plan, together with all other Plans maintained by the same employer
(or any "affiliate" thereof, as defined in PTCE 90-1) or by the same employee
organization, with assets which exceed 10% of the total of all assets in such
pooled separate account (as determined under PTCE 90-1) as of the date of the
acquisition of such Bonds; (iv) the Transferee is a bank and (A) the source of
funds used to purchase such Bonds is a "collective investment fund" (as defined
in PTCE 91-38), (B) the conditions set forth in PTCE 91-38 have been satisfied
and (C) there is no Plan, the interests of which, together with the interests of
any other Plans maintained by the same employer or employee organization, in the
collective investment fund exceed 10% of the total of all assets in the
collective investment fund (as determined under PTCE 91-38) as of the date of
acquisition of such Bonds; (v) the Transferee is a "qualified professional asset
manager" described in PTCE 84-14 and the conditions set forth in PTCE 84-14 have
been satisfied and will continue to be satisfied; or (vi) the Transferee is an
"in-house asset manager" described in PTCE 96-23 and the conditions set forth in
PTCE 96-23 have been satisfied and will continue to be satisfied [or (vii)
[described required statements in connection with other applicable Class
Exemptions, if any]].
Each Person who acquires any Bond or interest therein (unless it shall have
delivered to the Bond Registrar a certification of facts and an Opinion of
Counsel as described in clause (I) of the preceding paragraph or a certification
as described in clause (II) of the preceding paragraph) shall be deemed to have
represented and warranted to and for the benefit of the Issuer, the Owner
Trustee, the Administrator, the Master Servicer, the Special Servicer, the
Company, the Bond Registrar or the Indenture Trustee that either: (i) it is
neither a Plan nor any Person who is directly or indirectly purchasing such Bond
or interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan; or (ii) the purchase and holding of such Bond or any interest
therein by or on behalf of, or with assets of, such Person will not result in
any non-exempt prohibited transaction under ERISA or Section 4975 of the Code or
the imposition of an excise tax under Section 4975 of the Code (and, in the case
of the Class ___ and Class ___ Bonds, will not subject the Issuer, the Owner
Trustee, the Administrator, the Master Servicer, the Special Servicer, the
Company, the Bond Registrar or the Indenture Trustee to any obligation in
addition to those undertaken in the Indenture) and, further, the statements set
forth in at least one of clauses (i) through [(vii)] of the preceding paragraph
is correct.
(c) If a Person is acquiring any Bond or interest therein as a fiduciary or
agent for one or more accounts, such Person shall be required to deliver to the
Bond Registrar (or, in the case of an interest in a Bond that constitutes a
Book-Entry Bond, to the Bond Owner that is transferring such interest) a
certification to the effect that, and such other evidence as may be reasonably
required by the Indenture Trustee (or such Bond Owner) to confirm that, it has
(i) sole investment discretion with respect to each such account and (ii) full
power to make the foregoing acknowledgments, representations, warranties,
certifications and agreements with respect to each such account as set forth in
subsections (a) and (b), as applicable, of this Section 2.13.
ARTICLE III
COVENANTS; WARRANTIES
SECTION 3.01. Payment of Principal, Premium (if any) and Interest.
Subject to 2.07(c), the Issuer will duly and punctually pay (or will cause
to be paid duly and punctually) the principal of and interest on the Bonds in
accordance with the terms of the Bonds and this Indenture. The Issuer will cause
to be paid all amounts on deposit in the Bond Account on each Payment Date
deposited therein pursuant to Section 11.01 hereof (i) for the benefit of the
Class A-1 Bonds, to the Class A-1 Bondholders, (ii) for the benefit of the Class
A-2 Bonds, to the Class A-2 Bondholders, (iii) for the benefit of the Class B
Bonds, to the Class B Bondholders, (iv) for the benefit of the Class C Bonds, to
the Class C Bondholders, (v) for the benefit of the Class D Bonds, to the Class
D Bondholders, (vi) for the benefit of the Class E Bonds, to the Class E
Bondholders and (x) for the benefit of the Class F Bonds, to the Class F
Bondholders. Amounts properly withheld under the Code by any Person from a
payment to any Bondholder of interest and principal shall be considered as
having been paid by the Issuer to such Bondholder for all purposes of this
Indenture. The Bonds shall be non-recourse obligations of the Issuer and shall
be limited in right of payment to amounts available from the Collateral, as
provided in this Indenture. The Issuer shall not otherwise be liable for
payments on the Bonds.
SECTION 3.02. Maintenance of Office or Agency.
The Issuer shall maintain in the continental United States an office or
agency where Bonds may be presented or surrendered for payment, where Bonds my
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Issuer in respect of the Bonds and this Indenture may be
served. The Issuer will give prompt written notice to the Indenture Trustee and
the Bondholders of the location, and of any change in the location, of any such
office or agency. If at any time the Issuer shall fail to maintain any such
office or agency, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee at the Corporate Trust Office its agent to receive all such
presentations, surrenders, notices and demands.
The Issuer may also from time to time designate one or more other offices
or agencies outside the continental United States where the Bonds may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Issuer of its obligation to maintain
an office or agency in accordance with the requirements set forth in the
preceding paragraph. The Issuer shall give prompt written notice to the
Indenture Trustee and Bondholders of any such designation or rescission and of
any change in the location of such office or agency.
SECTION 3.03. Money for Bond Payments to Be Held in Trust.
All payments of amounts due and payable with respect to any Bonds which are
to be made from amounts withdrawn from the related Bond Account pursuant to
Section 8.02(b) shall be made on behalf of the Issuer by the Indenture Trustee
or another Paying Agent, and no amounts so withdrawn from a Bond Account for
payments of Bonds shall be paid over to the Issuer except as provided in this
Section 3.03 or as provided in Section 5.06 or 8.02.
Any Paying Agent other than the Indenture Trustee shall be appointed by
Issuer Order. The Issuer shall not appoint any Paying Agent that does not, at
the time of such appointment, meet the qualification and eligibility standards
for an Indenture Trustee set forth in Section 6.08. If, either (i) no other
Paying Agent shall have been so appointed and shall have executed and delivered
the instrument provided for in the second following paragraph or (iii) any such
other Paying Agent shall have resigned or been discharged without a successor
having been so appointed and having executed and delivered the instrument
provided for in the second following paragraph, then the Indenture Trustee shall
be the Paying Agent.
Whenever the Issuer shall have one or more Paying Agents, it will deliver
or contract to have delivered to such Paying Agent or Agents (subject to Section
2.07(g)), on or before the Business Day next preceding each Payment Date,
Redemption Date and Special Redemption Date, an aggregate sum sufficient to pay
the amounts then becoming due with respect to the Bonds, such sum to be
deposited in the Bond Account and held in trust for the benefit of the Persons
entitled thereto, and (unless such Paying Agent is the Indenture Trustee) the
Issuer will promptly notify the Indenture Trustee of its action or failure so to
act. Any monies deposited with a Paying Agent, other than the Indenture Trustee,
in excess of an amount sufficient to pay the amounts then becoming due and
payable on the Bonds with respect to which such deposit was made shall be
retained by such Paying Agent or Agents for application in accordance with
Article VIII.
The Issuer will cause each such Paying Agent (other than the Indenture
Trustee) to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:
(i) hold all sums received by it for the payment of Bonds in trust for
the benefit of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and will pay
such sums to such Persons as herein provided;
(ii) if such Paying Agent is not the Indenture Trustee, give the
Indenture Trustee notice of any default by the Issuer in the making of any
payment required to be made;
(iii) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, if such Paying Agent is not the
Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held
in trust by such Paying Agent;
(iv) if such Paying Agent is not the Indenture Trustee, immediately
resign as a Paying Agent and forthwith pay to the successor Paying Agent
all sums held by it in trust for the payment of Bonds if at any time it
ceases to meet the standards required to be met by a Paying Agent at the
time of its appointment; and
(v) comply with all requirements imposed upon it under the Code with
respect to the withholding from any payments made by it on any Bonds of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trust
as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Subject to the applicable requirements of abandoned property laws, any
money held by any Paying Agent in trust for the payment of any amount due with
respect to any Bond and remaining unclaimed for two years after such amount has
become due and payable shall be discharged from such trust and shall be paid to
the Issuer on Issuer Request; and the Holder of such Bond shall thereafter, as
an unsecured general creditor, look only to the Issuer for payment thereof (but
only to the extent of the amounts so paid to the Issuer), and all liability of
the Issuer or such Paying Agent with respect to such trust money shall thereupon
cease; provided however, that the Issuer or such Paying Agent shall cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the City of New
York and in the city in which the Corporate Trust Office is then located, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be paid to the Issuer (the
cost of such publication to be paid out of such unclaimed funds or, if that is
prohibited by law, by the Issuer).
SECTION 3.04. Corporate Existence of Owner Trustee.
(a) Subject to Sections 3.04(b) and 3.04(c), the Person acting as Owner
Trustee shall keep in full effect its existence as a legal entity under the laws
of the jurisdiction of its organization.
(b) Any successor to the Owner Trustee appointed pursuant to the terms of
the Deposit Trust Agreement shall be the successor Owner Trustee under and with
respect to this Indenture without the execution or filing of any paper,
instrument or further act to be done on the part of the parties hereto.
SECTION 3.05. Trust Existence.
The Issuer will keep in full effect its existence, rights and franchises as
a trust under the laws of Delaware (unless it or any successor Issuer becomes a
trust under the laws of any other State or the United States of America in which
case the Issuer shall keep in full effect its existence, rights and franchises
as a trust under the laws of such other jurisdiction), and will obtain and
preserve its qualification to do business as a foreign entity in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Indenture, the Bonds issued thereby, and any
other agreement to which it is a party; provided, however, that the Owner
Trustee shall not be required to do business as a foreign entity in any
jurisdiction for the purposes of satisfying the requirements of this Section
3.05.
SECTION 3.06. Payment of Taxes and Other Claims.
The Issuer shall pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, all taxes, assessments and governmental
charges levied or imposed upon the Issuer or upon the income, profits or
property of the Issuer, or shown to be due on the tax returns filed by the Owner
Trustee on behalf of the Issuer, except any such taxes, assessments,
governmental charges or claims which the Owner Trustee on behalf of the Issuer
is in good faith contesting in appropriate proceedings and with respect to which
reserves are established if required in accordance with GAAP, provided, however,
that such failure to pay or discharge will not cause a forfeiture of, or a lien
to encumber, any property included in the Trust Estate. The Owner Trustee, in
its individual capacity, shall not be liable for any such taxes, assessments,
governmental charges or claims. The Indenture Trustee is authorized to pay out
of the Bond Account, prior to making payments on the Bonds, any such taxes,
assessments, governmental charges or claims which, if not paid, would cause a
forfeiture of, or a lien to encumber, any property included in the Trust Estate.
SECTION 3.07. Protection of Trust Estate.
The Issuer and, if and as directed by the Issuer or by the Holders
representing more than 50% of the Voting Rights of the Bonds, the Indenture
Trustee will from time to time execute and deliver all such amendments and
supplements hereto (subject to Sections 9.01, and 9.03) and all such financing
statements, continuation statements, instruments of further assurance and other
instruments, and will from time to time take such other action necessary or
advisable to:
(i) Grant more effectively all or any portion of the Trust Estate;
(ii) maintain or preserve the lien (and the priority thereof) of
this Indenture or carry out more effectively the purposes
hereof;
(iii) perfect, publish notice of, or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any of the items of Collateral, Permitted Investments
or other instruments or agreements included in the Trust
Estate; or
(v) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee, and of the Holders of Bonds, in such
Trust Estate against the claims of all Persons and parties.
The Issuer hereby designates the Indenture Trustee, its agent and
attorney-in-fact, to execute any financing statement, continuation statement or
other instrument required pursuant to this Section 3.07; provided that, subject
to and consistent with Section 4.01, the Indenture Trustee will not be obligated
to prepare or file any such statements or instruments.
SECTION 3.08. Opinions as to Trust Estate.
(a) Promptly (and in any event within 90 days) after the Closing Date, the
Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording and filing of this Indenture as is necessary to make
effective the lien intended to be created by this Indenture with respect to the
Trust Estate, and reciting the details of such action, or stating that, in the
opinion of such counsel, no such action is necessary to make such lien
effective.
(b) On or before March 30 of each calendar year commencing more than three
months after the Closing Date, the Issuer shall furnish to the Indenture Trustee
an Opinion of Counsel either stating that, in the opinion of such counsel, such
action has been taken with respect to the recording, filing, re-recording and
refiling of this Indenture as is necessary to maintain the lien of this
Indenture with respect to the Trust Estate, and reciting the details of such
action, or stating that, in opinion of such counsel, no such action is necessary
to maintain such lien.
SECTION 3.09. Performance of Obligations.
(a) The Issuer will not take any action, and will use its best efforts not
to permit any action to be taken by others, which would release any Person from
any of such Person's covenants or obligations under any instrument included in
the Trust Estate, or which would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any such instrument, except as expressly provided in this
Indenture or such other instrument; provided, however, the Issuer may take any
such action with respect to any such instrument if such action relates solely to
rights under such instrument that are not included in the Trust Estate.
(b) The Issuer may contract with other Persons to assist it in performing
its duties hereunder and any performance of such duties (other than execution of
Issuer Orders, Issuer Requests and Officer's Certificates of the Issuer) by a
Person identified to the Indenture Trustee in an Officer's Certificate of the
Issuer shall be deemed action taken by the Issuer for all purposes hereunder.
SECTION 3.10. Payment of Certain Fees.
The Indenture Trustee is authorized and directed to pay out of the Bond
Account, prior to making payments on the Bonds, the fees and expenses of the
Owner Trustee in accordance with the Deposit Trust Agreement, the fees of any of
the Persons referred to in Section 3.09(b) assisting the Issuer with respect to
the Bonds and the fees of any Rating Agency assigning a rating to the Bonds.
[Otherwise, the Issuer or another party will be responsible for such fees.]
SECTION 3.11. Negative Covenants.
The Issuer shall not:
(i) sell, transfer, exchange or otherwise dispose of any of the Trust
Estate, except as expressly permitted by this Indenture;
(ii) claim any credit on, make any deduction from the principal,
premium, if any, or interest payable in respect of the Bonds (other than
amounts properly withheld from such payments under the Code or any
applicable state law) for or assert any claim against any present or former
Bondholder by reason of the payment of any taxes levied or assessed upon
any of the Trust Estate;
(iii) (A) permit the validity or effectiveness of this Indenture or
any Grant under this Indenture to be impaired, or permit the lien of this
Indenture with respect to the Trust Estate to be subordinated, terminated
or discharged, or permit any Person to be released from any covenants or
obligations under this Indenture, except as may be expressly permitted
hereby, (B) permit any lien, charge, adverse claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture and
any other lien expressly permitted hereby) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof, except as expressly permitted
hereby, or (C) permit the lien of this Indenture not to constitute a valid
first priority perfected security interest in the Trust Estate (subject
only to those liens expressly permitted hereby to be senior to the lien of
this Indenture);
(iv) dissolve or liquidate, in whole or in part, except as expressly
permitted by this Indenture;
(v) engage, directly or indirectly, in any business other than that
arising out of the issuance of Bonds, and the actions contemplated or
required to be performed under this Indenture or the documents constituting
part of the Trust Estate;
(vi) incur, create or assume any indebtedness for borrowed money other
than pursuant to this Indenture or any related Enhancement in connection
with the issuance of the Bonds;
(vii) make or permit to remain outstanding, any loan or advance to, or
own or acquire any stock or securities of, any Person other than the
Mortgage Collateral and any other instruments constituting part of the
Trust Estate;
(viii) voluntarily file a petition for bankruptcy, reorganization,
assignment for the benefit of creditors or similar Proceeding;
(ix) take any other action that is expressly prohibited in the
Indenture; or
(x) act in a manner that would endanger its status as a QRS.
SECTION 3.12. Annual Statement as to Compliance.
On or before March 30 in each calendar year, commencing March 30 of the
calendar year following the Closing Date, the Issuer shall deliver to the
Indenture Trustee, a written statement signed by an Authorized Officer of the
Owner Trustee, stating that:
(a) a review of the activities of the Issuer during the preceding calendar
year and of performance under this Indenture has been made under his or her
supervision; and
(b) to the best of such officer's knowledge, based on such review, the
Issuer has fulfilled all its obligations under this Indenture throughout the
preceding calendar year, or, if there has been an Issuer Default in the
fulfillment of any such obligation, specifying each such Issuer Default known to
him or her and the nature and status thereof.
SECTION 3.13. Issuer may Consolidate, Etc., only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other Person
or convey or transfer the Trust Estate to any Person without the consent of the
Holders of Bonds representing not less than 66-2/3% of the Voting Rights of the
Bonds, and unless:
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger or that acquires by conveyance or transfer the
Trust Estate (the "Successor Person"), shall be a Person organized and
existing under the laws of the United States of America or any State, and
shall have expressly assumed, by a supplemental indenture, executed and
delivered to the Indenture Trustee, (A) the obligation (to the same extent
as the Issuer was so obligated) to make payments of principal, interest and
other amounts on the Bonds and (B) the obligation to perform every covenant
of this Indenture on the part of the Issuer herein to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no Issuer
Default or Issuer Event of Default shall have occurred and be continuing;
(iii) the Issuer shall have caused the Indenture Trustee to have
received written confirmation from each Rating Agency rating any of the
Bonds, to the effect that the consummation of such transaction will not
result in an Adverse Rating Event with respect to any Class of such Bonds;
(iv) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance or transfer and such supplemental
indenture comply with and satisfy all conditions precedent relating to the
transactions set forth in this Section 3.13 and in Article IX; and
(v) the Successor Person shall have delivered to the Indenture Trustee
an Officer's Certificate and an Opinion of Counsel each stating that, with
respect to a Successor Person that is a corporation, partnership, limited
liability company or trust, such Successor Person shall be duly organized,
validly existing and in good standing in the jurisdiction in which such
Successor Person is organized; that the Successor Person has sufficient
power and authority to assume the obligations set forth in clause (i) above
and to execute and deliver an indenture supplemental hereto for the purpose
of assuming such obligations; that the Successor Person has duly authorized
the execution, delivery and performance of an indenture supplemental hereto
for the purpose of assuming such obligations and that such supplemental
indenture is a valid, legal and binding obligation of the Successor Person,
enforceable in accordance with its terms, subject only to bankruptcy,
reorganization, insolvency, moratorium, and other laws affecting the
enforcement of creditor's rights generally and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or law); and that, immediately following the event
which causes the Successor Person to become the Successor Person, (A) the
Successor Person has good and marketable title, free and clear of any lien,
security interest or charge other than the lien and security interest of
this Indenture and any other lien permitted hereby, to the Mortgage
Collateral securing the Bonds issued hereby and (B) the Indenture Trustee
continues to have a perfected first priority security interest in the
Mortgage Collateral securing, in the case of a consolidation or merger of
the Issuer, all of the Bonds issued thereby or, in the case of any
conveyance or transfer of the Trust Estate, all of the Bonds.
(b) Upon any consolidation or merger, or any conveyance or transfer of the
Trust Estate, the Successor Person shall succeed to, and be substituted for, and
may exercise every right and power of, the Issuer under this Indenture with
respect to the Bonds with the same effect as if such Successor Person had been
named as the "Issuer" in the applicable Indenture(s). In the event of any such
conveyance or transfer of the Trust Estate(s) securing all of the then
Outstanding Bonds of the Issuer permitted by this Article III, the Person named
as the "Issuer" in the applicable Indenture(s), or any successor that shall
theretofore have become such in the manner prescribed in this Article III and
that has thereafter effected such a conveyance or transfer, may be dissolved,
wound-up and liquidated at any time thereafter, and such Person thereafter shall
be released from its liabilities as obligor and maker on all of the then
Outstanding Bonds issued by it and from its obligations under this Indenture;
and, in the event of any such conveyance or transfer of the Trust Estate(s)
securing less than all of the then Outstanding Bonds of the Issuer, such Person
shall be released from its liabilities as obligor and maker on the then
Outstanding Bonds secured by such Trust Estate(s) and from its obligations with
respect thereto under this Indenture.
(c) Nothing in this Section 3.13 shall prohibit the sale or transfer of the
Owner Trust Certificates.
SECTION 3.14. Purchase of Bonds.
The Issuer may reacquire Bonds, in its discretion, by open market purchases
in privately negotiated transactions or otherwise.
SECTION 3.15. Servicing Agreement.
(a) (i) The Issuer and the Indenture Trustee shall punctually perform and
observe all of their respective obligations and agreements, if any, contained in
the Servicing Agreement.
(ii) The Issuer may, but is not obligated to, enforce the obligations
of the Master Servicer or the Special Servicer under the Servicing Agreement and
may, but is not obligated to, perform, or cause a designee to perform, any
defaulted obligation of any such party thereunder or exercise the rights of any
such party thereunder; provided, however, that the Master Servicer or the
Special Servicer under the Servicing Agreement shall not be relieved of any of
its obligations thereunder by virtue of such performance by the Issuer or its
designee. The Issuer shall not have any responsibility or liability for any
action or failure to act by the Master Servicer or the Special Servicer under
the Servicing Agreement and shall not be obligated to supervise the performance
of any such party thereunder.
(iii) Upon any resignation or termination of the Master Servicer or
the Special Servicer pursuant to the Servicing Agreement or any appointment of a
successor to any such party pursuant to the Servicing Agreement, the Indenture
Trustee shall give prompt written notice thereof to all Holders of Bonds at
their respective addresses appearing in the related Bond Register. In the event
that the Indenture Trustee is to act or is acting as successor servicer, Master
Servicer or Special Servicer under the Servicing Agreement, the Holders of Bonds
representing more than 50% of the Voting Rights of the Bonds shall be entitled
to direct the Indenture Trustee (and, upon the receipt of such direction, the
Indenture Trustee shall be required) to appoint or to petition a court of
competent jurisdiction to appoint an alternative successor that meets the
requirements of the Servicing Agreement.
(iv) Not later than the later of (i) ninety (90) days after the
occurrence of any event which constitutes or, with notice or lapse of time or
both, would constitute a Servicing Event of Default under the Servicing
Agreement and (ii) five days after a Responsible Officer of the Indenture
Trustee has notice of the occurrence of such an event, the Indenture Trustee
shall transmit by mail to the Issuer and all Holders of Bonds notice of such
occurrence, unless such default shall have been remedied. At the direction of
the Holders of Bonds representing more than 50% of the Voting Rights of the
Bonds, the Indenture Trustee shall terminate the rights and obligations of the
defaulting party under the Servicing Agreement as and to the extent permitted
thereby and shall, subject to the last sentence of Section 3.15(d)(iii), succeed
the defaulting party in whatever capacity it served under the Servicing
Agreement.
(v) The Issuer and the Indenture Trustee may, with the consent of the
Holders of Bonds representing at least 66-2/3% of the Voting Rights (or, in the
case of a Class of Interest Only Bonds, the aggregate Notional Amount) of each
Class of Bonds, waive a Servicing Event of Default under the Servicing
Agreement; provided, however, that a Servicing Event of Default relating to the
handling, holding and timely remittance of payments, collections and/or
distributions on the Mortgage Collateral or under any Enhancement may only be
waived with the consent of each and every Bondholder. Upon any such waiver of a
Servicing Event of Default, such Servicing Event of Default shall cease to exist
and shall be deemed to have been remedied for every purpose hereunder and under
the Servicing Agreement. No such waiver shall extend to any subsequent or other
Servicing Event of Default under the Servicing Agreement or impair any right
consequent thereon except to the extent expressly so waived.
(vi) During the continuance of a Servicing Event of Default under the
Servicing Agreement, so long as such Servicing Event of Default under the
Servicing Agreement shall not have been remedied, the Indenture Trustee, in
addition to the right to remove the defaulting party in the manner specified
under the Servicing Agreement, shall have the right, in its own name and 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 Bondholders (including
the institution and prosecution of all judicial, administrative and other
proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in the Servicing Agreement,
no remedy provided for by this Indenture or the Servicing Agreement with respect
to a Servicing Event of Default under the Servicing 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 such Servicing Event of Default.
[(vii) _________________________ shall be the "Controlling Class",
with such rights, powers and liabilities in respect of the Mortgage Collateral
as may be provided for in the Servicing Agreement. The Servicing Agreement may
provide that such rights and powers may be exercised directly by the Holders of
Bonds of the Controlling Class or, alternatively, indirectly through the
Indenture Trustee, the Master Servicer, the Special Servicer and/or another
representative. If the Issuer, the Depositor or any Affiliate of either holds
Bonds of the Controlling Class, then (so long as no Issuer Event of Default has
occurred and is continuing) such Bonds shall be deemed to be Outstanding for
purposes of exercising all rights and powers of the Controlling Class as such,
anything herein to the contrary notwithstanding.]
(b) The Issuer and the Indenture Trustee may enter into any amendment of
the Servicing Agreement from time to time, without the consent of any of the
Bondholders, (A) to cure any ambiguity, (B) to correct, modify or supplement any
provision therein which may be inconsistent with any other provision herein or
therein, (C) to add any other provisions with respect to matters or questions
arising thereunder which shall not be inconsistent with the provisions hereof or
thereof, or (D) for any other purpose; provided that such amendment shall not
adversely affect in any material respect the interests of any Holder of an
Outstanding Bond as evidenced by either an Opinion of Counsel to such effect or
written confirmation from each Rating Agency rating such Bonds that such
amendment shall not result in an Adverse Rating Event with respect thereto, in
any event obtained by or delivered to the Indenture Trustee.
(c) The Issuer and the Indenture Trustee also may enter into any amendment
of the Servicing Agreement from time to time, with the consent of the Holders of
Bonds representing more than 50% of the Voting Rights (or, in the case of a
Class of Interest Only Bonds, the aggregate Notional Amount) of each Class of
Bonds, for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Servicing Agreement; provided, however,
that no such amendment shall (x) reduce in any manner the amount of, or delay
the timing of, payments, collections and/or distributions received or advanced
on Mortgage Collateral which are required to be paid on any Bond without the
consent of the Holder of such Bond, or (y) adversely affect in any material
respect the interests of the Holders of any Class of Bonds in a manner other
than as described in clause (x) above without the consent of each and every
Holder of Bonds of such Class. For purposes of giving the consents contemplated
by this Section 3.15(c), Bonds held by the Issuer, the Depositor, the Master
Servicer, the Special Servicer and any Affiliate thereof will be given the same
regard as Bonds held by any other Person.
(d) Promptly after the execution and delivery of any amendment of the
Servicing Agreement by all parties thereto, the Indenture Trustee shall send a
copy thereof to each Bondholder.
(e) It shall not be necessary for the consent of Bondholders under this
Section 3.15(d) to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization, execution
and delivery thereof by Bondholders shall be to such reasonable regulations as
the Indenture Trustee may prescribe.
(f) The Indenture Trustee may but shall not be obligated to enter into any
amendment of the Servicing Agreement pursuant to this Section 3.15 that affects
its rights, duties and immunities thereunder or under this Indenture.
(g) The cost of any Opinion of Counsel to be delivered pursuant to Section
3.15(b) shall be borne by the Person seeking the related amendment, except that
if the Indenture Trustee requests any amendment of the Servicing Agreement that
it reasonably believes protects or is in furtherance of the rights and interests
of Bondholders, the cost of any Opinion of Counsel required in connection
therewith pursuant to Section 3.15(b) shall be payable by the Issuer.
SECTION 3.16. Covenants, Representations and Warranties of the Issuer.
The Issuer hereby represents and warrants to the Indenture Trustee and for
the benefit of the Bondholders that:
(i) It is duly authorized under applicable law and the Deposit Trust
Agreement to create and issue the Bonds, to execute and deliver this
Indenture, the other documents referred to herein to which it is a party
and all instruments included in the Trust Estate which it has executed and
delivered, and that all corporate action and governmental consents,
authorizations and approvals necessary or required therefor have been duly
and effectively taken or obtained. The Bonds, when issued, will be, and
this indenture and such other documents are, valid and legally binding
obligations of the Issuer enforceable in accordance with their terms.
(ii) Immediately prior to its Grant of the Trust Estate provided for
herein, it had good title to, and was the sole owner of, each item of
Mortgage Collateral, free and clear of any pledge, lien, encumbrance or
security interest.
(iii) The Indenture Trustee has a valid and enforceable first priority
security interest in the Trust Estate, subject only to exceptions permitted
hereby.
(iv) It is a QRS.
All covenants, representations and warranties of the Issuer in this
Indenture are covenants, representations and warranties solely of the Issuer and
not covenants, representations and warranties of the Owner Trustee or of the
Person acting as Owner Trustee in its individual capacity. The Owner Trustee is
entering into this Indenture solely as Owner Trustee and not in its individual
capacity, and in no case whatsoever shall the Owner Trustee be personally liable
on, or for any loss in respect of, any of the statements, representations,
warranties or obligations of the Issuer hereunder, as to all of which the
parties hereto agree to look solely to the property of the Trust Estate.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect with respect to the
Bonds except as to (i) rights of registration of transfer and exchange, (ii)
substitution of mutilated, destroyed, lost or stolen Bonds, (iii) rights of
Bondholders to receive payments of principal thereof, premium, if any, thereon
and interest thereon, (iv) the rights, obligations and immunities of the
Indenture Trustee hereunder and (v) the rights of Bondholders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them, and the Indenture Trustee, on demand of and at
the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when:
(a) either (1) all Bonds theretofore authenticated and delivered (other
than (A) Bonds which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.06, and (B) Bonds for which payment of
money has theretofore been deposited in the Bond Account by the Indenture
Trustee and thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.03) have been delivered to the Bond Registrar for
cancellation; or (2) all Bonds not theretofore delivered to the Bond Registrar
for cancellation (A) have become due and payable, (B) will become due and
payable at their Stated Maturity, if any, within one year, or (C) are to be
called for redemption within one year under arrangements satisfactory to the
Indenture Trustee for the giving of notice of redemption by the Indenture
Trustee in the name, and at the expense, of the Issuer; and the Issuer has
deposited or caused to be deposited with the Indenture Trustee or another Paying
Agent, in trust for such purpose, an amount sufficient to pay and discharge the
entire indebtedness on the Bonds not theretofore delivered to the Bond Registrar
for cancellation, for principal, premium, if any, and interest which would be
payable on their Stated Maturity, if any, or Redemption Date (if Bonds shall
have been called for redemption pursuant to Section 11.01), as the case may be,
including for any and all overdue principal, premium, if any, and interest
payable on such Bonds;
(b) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(c) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA) a certificate or
opinion from an Accountant, in accordance with TIA ss.314(c) and meeting the
applicable requirements of Section 14.01(a).
Notwithstanding the satisfaction and discharge of this Indenture with
respect to any Bonds, the obligations of the Issuer to the Indenture Trustee
under Section 6.07 and of the Indenture Trustee to the Issuer and the
Bondholders under Section 3.03, the obligations of the Indenture Trustee to the
Bondholders under Section 4.02 and the provisions of Article II with respect to
lost, stolen, destroyed or mutilated Bonds, registration of transfers of Bonds,
and rights to receive payments of principal of and interest on the Bonds shall
survive.
SECTION 4.02. Application of Trust Money.
All monies deposited with the Indenture Trustee or another Paying Agent
pursuant to Section 4.01 shall be held in trust and applied by the Indenture
Trustee or another Paying Agent, in accordance with the provisions of the Bonds
and this Indenture, to the payment, either directly or through any Paying Agent,
as the Indenture Trustee may determine, to the Persons entitled thereto, of all
sums due and to become due on or with respect to the Bonds for whose payment
such money has been deposited with the Indenture Trustee or another Paying
Agent, but such money need not be segregated from other funds except to the
extent expressly required herein or required by law.
SECTION 4.03. Repayment of Monies Held by Paying Agent.
In connection with the satisfaction and discharge of this Indenture with
respect to the Bonds, all monies with respect to such Bonds then held by any
Paying Agent other than the Indenture Trustee under this Indenture shall, upon
demand of the Issuer, be paid to the Indenture Trustee to be held and applied
according to Section 3.03 and thereupon such Paying Agent shall be released from
all further liability with respect to such monies.
ARTICLE V
ISSUER EVENTS OF DEFAULT; REMEDIES
SECTION 5.01. Issuer Events of Default.
Each of the following shall constitute an "Issuer Event of Default"
(whatever the reason for such Issuer Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) any failure to pay all interest on and principal of any Bond by
its Stated Maturity; or
(ii) any default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere
in this Section 5.01 specifically dealt with) or any representation or
warranty of the Issuer made in this Indenture, or in any certificate or
other writing delivered pursuant hereto or in connection herewith, proving
to have been incorrect in any material respect as of the time when the same
shall have been made, and such default or the circumstance or condition in
respect of which such representation or warranty was incorrect (A) shall
materially and adversely affect the interests of Holders of the Bonds and
(B) shall continue or shall not have been eliminated or otherwise remedied,
as the case may be, for a period of sixty (60) days after there shall have
been given, by registered or certified mail, to the Issuer by the Indenture
Trustee or to the Issuer and the Indenture Trustee by the Holders of Bonds
representing at least 25% of the Voting Rights of the Bonds, a written
notice specifying such default and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(iii) the entry by a court having jurisdiction over the Issuer of (A)
a decree or order for relief in respect of the Issuer in an involuntary
case or proceeding under any applicable federal or state delinquency,
bankruptcy, insolvency, reorganization or other similar law or (B) a decree
or order adjudging the Issuer as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment
or composition of or in respect of or for the Issuer under any applicable
federal or state law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Issuer or
of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order
for relief or any such other decree or order not stayed or dismissed and in
effect for a period of more than ninety (90) consecutive days; or
(iv) the commencement by the Owner Trustee on behalf of the Issuer of
a voluntary case or proceeding under any applicable federal or state
delinquency, bankruptcy, insolvency, reorganization or other similar law or
of any other case or proceeding to be adjudicated a bankrupt or insolvent,
or the consent by the Issuer to the entry of a decree or order for relief
in respect of the Issuer in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against the Issuer, or the filing by the Owner Trustee on behalf
of the Issuer of a petition or answer or consent seeking reorganization or
relief under any applicable federal or state law, or the consent by the
Owner Trustee on behalf of the Issuer to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of or for
the Issuer or of any substantial part of the Issuer's property, or the
making by the Owner Trustee on behalf of the Issuer of an assignment for
the benefit of creditors, or the admission by the Owner Trustee on behalf
of the Issuer in writing of the Issuer's inability to pay its debts
generally as they become due, or the taking of corporate action by the
Owner Trustee on behalf of the Issuer in furtherance of any such action; or
(v) the impairment of the validity or effectiveness of this Indenture
or the Grant hereunder, or the subordination or, except as permitted
hereunder, the termination or discharge of the lien of this Indenture, or
the creation of any lien, charge, security interest, mortgage or other
encumbrance (other than the lien of this Indenture or any other lien
expressly permitted hereby) with respect to any part of the Trust Estate or
any interest in or proceeds of the Trust Estate, or the failure of the lien
of this Indenture to constitute a valid first priority perfected security
interest in the Trust Estate (subject only to those liens expressly
permitted hereby to be prior to the lien hereof), provided that, if such
impairment, such subordination, the creation of such lien, or the failure
of the lien on the Trust Estate to constitute such a security interest
shall be susceptible of cure, no Issuer Event of Default shall arise until
the continuation of any such default unremedied for a period of thirty (30)
days after receipt of notice thereof; or
(vi) the Issuer ceases to be a QRS for ___ consecutive days.
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Issuer Event of Default should occur and be continuing, then and in
every such case the Indenture Trustee may, or at the direction of the Holders of
Bonds representing more than 50% of the Voting Rights of each Class of Bonds,
shall declare all of the Bonds to be immediately due and payable, by a notice in
writing to the Issuer, and upon any such declaration the aggregate unpaid
Principal Amount of the Bonds, together with accrued and unpaid interest with
respect thereto through the end of the applicable Interest Accrual Period, shall
become due and payable on the next succeeding Payment Date and on each Payment
Date thereafter, until all such principal and interest is paid in full, and
unless such declaration and its consequences are earlier rescinded and annulled
as provided in the following paragraph.
At any time after such declaration of acceleration has been made and before
a judgment or decree for payment of the money due in respect of the Bonds has
been obtained by the Indenture Trustee as hereinafter provided in this Article
V, the Holders of Bonds representing more than 50% of the Voting Rights of each
Class of Bonds that has been declared due and payable, by written notice to the
Issuer and the Indenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee or
another Paying Agent a sum sufficient to pay
(A) all payments of principal of, premium, if any, on and
interest on the Bonds that have been declared due and
payable and all other amounts which would then be due
hereunder if the Issuer Event of Default giving rise to such
acceleration had not occurred; and
(B) all Administrative Expenses and Additional Expenses
remaining unpaid with respect to the Bonds that has been
declared due and payable, together with all sums paid or
advanced by the Indenture Trustee or any other Paying Agent
hereunder and the reasonable compensation, fees, expenses,
disbursement and advances of the Indenture Trustee, any
other Paying Agents, and its agents and counsel;
(ii) all Issuer Events of Default with respect to the Bonds that have
been declared due and payable, other than the nonpayment of the principal
of or interest on such Bonds, have been cured or waived as provided in
Section 5.13; and
(iii) any other conditions to such declaration and its consequences
being rescinded and annulled have been satisfied.
Upon such rescission and annulment, the related Issuer Event of Default
shall be deemed to have been cured; however, no such rescission and annulment
shall affect any subsequent Issuer Event of Default with respect to the affected
Bonds or impair any right or remedy which arises as a consequence thereof.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) If an Issuer Event of Default has occurred and is continuing and the
Bonds have been declared due and payable pursuant to Section 5.02 and such
declaration of acceleration has not been rescinded and annulled, the Issuer
shall pay to the Paying Agent upon demand, for the benefit of the Bondholders,
but only from the Trust Estate, (i) the entire aggregate unpaid Principal Amount
of such Bonds then due and payable, (ii) all accrued and unpaid interest with
respect to such Bonds through the end of the Interest Accrual Period for the
next succeeding Payment Date (including interest on overdue interest, but only
to the extent that payment of such interest on overdue interest shall be legally
enforceable), and (iii) in addition thereto, all Administrative Expenses or
Additional Expenses with respect to such Bonds then remaining unpaid, together
with such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee, any other Paying Agent, and its agents
and counsel.
Until such demand is made by the Indenture Trustee, the Issuer may pay the
principal of, premium (if any) on and interest on the Bonds to the registered
Holders thereof in accordance with Section 2.07.
(b) If the Issuer fails to pay all amounts due upon an acceleration of the
Bonds under Section 5.02 forthwith upon demand, the Indenture Trustee, in its
capacity as Indenture Trustee and as trustee of an express trust, may institute
any Proceeding for the collection of the sums so due and unpaid, may prosecute
such Proceeding to judgment or final decree and may enforce the same against the
Issuer or any other obligor upon such Bonds and collect the monies adjudged or
decreed to be payable in the manner provided by law out of the Trust Estate or,
subject to Section 2.07(g), out of the property, wherever situated, of the
Issuer or any such other obligor upon such Bonds.
(c) If an Issuer Event of Default occurs and is continuing, the Indenture
Trustee may, in its discretion, proceed to protect and enforce its rights and
the rights of the Bondholders by such appropriate Proceedings as the Indenture
Trustee shall deem most effective to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein to enforce any
other proper remedy or legal or equitable right vested in the Indenture Trustee
by this Indenture or by law.
(d) In case (i) there shall be pending, relative to the Issuer or any other
Person having or claiming an ownership interest in the Trust Estate or obligated
to make payments on the Bonds, Proceedings under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or other
similar law, (ii) a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or shall have taken possession of the Issuer or its property or
such other Person or (iii) there shall be pending a comparable judicial
Proceeding brought by creditors of the Issuer or affecting the property of the
Issuer, the Indenture Trustee, irrespective of whether the principal of or
interest on any Bonds shall then be due and payable as provided therein or by
declaration of acceleration or otherwise, and irrespective of whether the
Indenture Trustee shall have made any demand pursuant to the provisions of this
Section 5.03, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims on behalf of the Bondholders
of any affected Bonds for the whole amount of principal and interest owing
and unpaid in respect of such Bonds and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Indenture Trustee (including any claim for reasonable compensation to
the Indenture Trustee and each predecessor Indenture Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
willful misconduct, negligence or bad faith) and of the Bondholders allowed
in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Bondholders of any affected Bonds in any election of a
trustee in bankruptcy or any other Person performing similar functions in
any such Proceedings;
(iii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Bondholders of any affected Bonds and of the
Indenture Trustee on their and its behalf; and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee or the Bondholders of any affected Bonds allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Bondholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Bondholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of willful misconduct,
negligence or bad faith of the Indenture Trustee or predecessor Indenture
Trustee.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Bondholder any plan of reorganization, arrangement, adjustment or
composition affecting any Bonds or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Bondholder in any such Proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and claims under this Indenture or any of the
Bonds may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Bonds or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Indenture Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee, its
agents and counsel, shall be for the ratable benefit of the Bondholders in
respect of which such judgment has been recovered.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture),
the Indenture Trustee shall be held to represent all the Bondholders of each
affected Bond, and it shall not be necessary to make any Bondholder a party to
any such proceedings.
SECTION 5.04. Remedies.
If an Issuer Event of Default has occurred and is continuing, and the Bonds
have been declared due and payable pursuant to Section 5.02 and such declaration
and its consequences have not been rescinded and annulled, the Indenture Trustee
may do one or more of the following:
(i) institute Proceedings in its own name and as trustee of an express
trust for the collection of all amounts then payable on or under this
Indenture with respect to the Bonds, whether by declaration of acceleration
or otherwise, enforce any judgment obtained, and collect from the Trust
Estate and, subject to Section 2.07(g), from the Issuer or any other
obligor on the Bonds monies adjudged due;
(ii) sell or cause the sale of the Trust Estate or any portion thereof
or rights or interest therein, at one or more public or private sales
called and conducted in any manner permitted by law and in accordance with
Section 5.16; provided, however, that the Indenture Trustee shall give the
Issuer written notice of any private sale called by or on behalf of the
Indenture Trustee pursuant to this Section 5.04(ii), at least 10 days prior
to the date fixed for such private sale;
(iii) institute Proceedings from time to time for the complete or
partial foreclosure with respect to the Trust Estate;
(iv) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies of the Indenture Trustee or the Holders of
the Bonds hereunder; and
(v) make any claim against any Enhancement delivered with respect to
such Bonds in accordance with its terms and the terms of this Indenture;
provided, however, that the Indenture Trustee may not, unless required by law,
sell or otherwise liquidate the Trust Estate following any Issuer Event of
Default, other than an Issuer Event of Default described in Section 5.01(i),
unless (A) each and every Bondholder consents thereto, (B) the portion of the
proceeds of such sale or liquidation that is distributable to the Holders of
Bonds is sufficient to discharge in full all amounts then due and unpaid upon
such Bonds for principal and interest or (C) the Indenture Trustee (1)
determines that the Trust Estate will not, taking into account any Enhancement,
provide sufficient funds for the payment of all principal and interest on the
Bonds by their respective Stated Maturities, if any, and (2) obtains the consent
of the Holders of Bonds representing at least 66-2/3% of the Voting Rights of
each Class of such Bonds. In determining such sufficiency or insufficiency with
respect to clauses (B) and (C) of the proviso to the preceding sentence, the
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
SECTION 5.05. Optional Preservation of Trust Estate.
(a) If the Bonds have been declared to be due and payable under Section
5.02 following an Issuer Event of Default with respect to such Bonds and such
declaration and its consequences have not been rescinded and annulled, then the
Indenture Trustee may, but need not, elect to maintain possession of the Trust
Estate; provided that the Holders of Bonds shall not have directed the Indenture
Trustee in accordance with Section 5.12 to sell the Trust Estate. It is the
desire of the Issuer, the Indenture Trustee and the Bondholders that there be at
all times, taking into account any Enhancement, sufficient funds for the payment
of all principal of and interest on the Bonds by their respective Stated
Maturities, if any, and the Indenture Trustee shall take such desire into
account when determining whether or not to maintain possession of the Trust
Estate declared due and payable. In determining whether to maintain possession
of the Trust Estate declared due and payable, the Indenture Trustee may, but
need not, obtain and rely upon an opinion of an Independent investment banking
or accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of such Trust Estate for such purpose.
Until the Indenture Trustee has elected or has determined not to elect, to
retain the Trust Estate pursuant to this Section 5.05, and thereafter if the
Indenture Trustee has elected, to retain the Trust Estate pursuant to this
Section 5.05, the Indenture Trustee shall continue to apply all payments,
collections, distributions and other amounts received on such Trust Estate
and/or paid under the Enhancement, if any, solely to the payment of principal
of, premium, if any, on and interest on the Bonds, and to the payment of
Administrative Expenses and Additional Expenses, as if there had not been such a
declaration of acceleration.
SECTION 5.06. Application of Money Collected.
If the Bonds have been declared due and payable pursuant to Section 5.02
following an Issuer Event of Default and such declaration and its consequences
have not been rescinded and annulled, and payments, collections, distributions
and other amounts received on the Trust Estate and/or paid under the
Enhancement, if any, are not being applied pursuant to Section 5.05, any monies
collected by the Indenture Trustee pursuant to this Article V or otherwise held
by the Indenture Trustee or any other Paying Agent as part of such Trust Estate
shall be applied on each Payment Date to the extent permitted by applicable law
for the following purposes and in the following order of priority, subject to
available funds and, in the case of payments on the Bonds, subject to the first
paragraph of Section 2.07(e):
FIRST: To pay all amounts due the Indenture Trustee with respect to
such Bonds pursuant to Section 6.07;
SECOND: To pay, in accordance with this Indenture or the Servicing
Agreement, as applicable, all amounts due the Master Servicer and the
Special Servicer, as applicable, thereunder, pro rata based on the
respective amounts payable to each such Person;
THIRD: To pay all other Administrative Expenses, Servicing Expenses
and Additional Expenses remaining unpaid with respect to such Bonds, in
such order as the Indenture Trustee deems necessary and appropriate (but,
in each case, only if and to the extent that the failure to pay such would
result in a lien on the Trust Estate that is prior to or of equal priority
with the lien of this Indenture or would otherwise materially and adversely
affect the interests of Bondholders);
FOURTH: To make payments on the Bonds as provided in this Indenture;
FIFTH: To pay all Administrative Expenses, Servicing Expenses and
Additional Expenses still remaining unpaid after giving effect to payments
under clauses FIRST, SECOND and THIRD above; and
SIXTH: To pay any surplus to the Issuer or any other Person legally
entitled thereto, including any Person that has provided Enhancement, if
any, with respect to such Bonds, in such order of priority as is specified
herein.
SECTION 5.07. Limitation on Suits.
No Holder of any Bond shall have any right to institute any Proceedings,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the Indenture
Trustee of a continuing Issuer Event of Default;
(ii) the Holders of Bonds representing more than 50% of the Voting
Rights of such Bonds (or such other group of Bondholders as may be required
for directing the Indenture Trustee to institute particular Proceedings
pursuant to Section 5.12 and as shall hold Bonds which, in the aggregate,
shall represent more than 50% of the Voting Rights of such Bonds) shall
have made written request to the Indenture Trustee to institute Proceedings
in respect of such Issuer Event of Default in its own name as Indenture
Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
adequate indemnity or security reasonably satisfactory to the Indenture
Trustee against the costs, expenses and liabilities to be incurred in
compliance with such request;
(iv) the Indenture Trustee has, for sixty (60) days after its receipt
of such notice, request and offer of indemnity or security, failed to
institute any such proceeding; and
(v) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 60-day period by the Holders of Bonds
representing more than 50% of the Voting Rights of such Bonds.
it being understood and intended that no one or more of the Holders of Bonds
shall have any right in any manner whatever by virtue of, or by availing itself
or themselves of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holders of the Bonds or to obtain or to seek
to obtain priority or preference over any other Holders of the Bonds or to
enforce any right under this Indenture, except in the manner herein provided
and, for the equal and ratable benefit of all the Holders of the Bonds. Subject
to the foregoing restrictions, the Bondholders may exercise their rights under
this Section 5.07 independently.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Bondholders of
the same series, each representing less than a majority, by aggregate Principal
Amount, the Indenture Trustee in its sole discretion may determine what action,
if any, shall be taken with respect to Proceedings, notwithstanding any other
provisions of this Indenture.
SECTION 5.08. Unconditional Right of Bondholders to Receive Principal
and Interest.
Notwithstanding any other provision in this Indenture (except those
specifically referenced in this Section 5.08), the Holder of any Bond shall have
the right, which is absolute and unconditional, to receive payment of the
principal of and interest on such Bond (subject to Section 2.07(g) and the
second sentence of Section 3.01) and, if the nonpayment constitutes an Issuer
Event of Default, to institute suit for the enforcement of any such payment
(subject to Section 5.07 and Section 14.17), and such rights shall not be
impaired without the consent of such Bondholder, unless a non-payment has been
cured pursuant to Section 5.02. The Issuer shall, however, be subject to only
one consolidated lawsuit by the Bondholders, or by the Indenture Trustee on
behalf of such Bondholders, for any one cause of action arising under this
Indenture or otherwise.
SECTION 5.09. Restoration of Rights and Remedies.
If the Indenture Trustee or any Bondholder has instituted any Proceeding to
enforce any right or remedy under this Indenture and such Proceeding has been
discontinued, waived, rescinded or abandoned for any reason, or has been
determined adversely to the Indenture Trustee or to such Bondholder, then and in
every such case, subject to any determination in such Proceeding, the Issuer,
the Indenture Trustee and the Bondholders shall be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Indenture Trustee and such Bondholders shall continue as though
no such Proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
If any Issuer Event of Default should occur with respect to the Bonds, no
right or remedy herein conferred upon or reserved to the Indenture Trustee or to
the Bondholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder or otherwise in respect of an Issuer Event of Default,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Indenture Trustee or any Bondholder to exercise
any right or remedy accruing upon any Issuer Event of Default shall impair any
such right or remedy or constitute a waiver of any such Issuer Event of Default
or an acquiescence therein. Every right and remedy given by this Indenture or by
law to the Indenture Trustee or to the Bondholders in respect of any Issuer
Event of Default may be exercised from time to time, and as often as may be
deemed expedient, to the extent permitted by applicable law, by the Indenture
Trustee or the Bondholders, as the case may be.
SECTION 5.12. Control by Bondholders.
The Holders of Bonds representing more than 50% of the Voting Rights of
such Bonds shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred on the Indenture Trustee; provided,
that:
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) the Indenture Trustee shall have been provided with indemnity
reasonably satisfactory to it;
(iii) any direction to the Indenture Trustee to declare all of the
Bonds to be immediately due and payable following an Issuer Event of
Default, or to rescind any such declaration, shall be by the Holders of
Bonds representing more than 50% of the Voting Rights of each Class of
Bonds;
(iv) any direction to the Indenture Trustee to sell or liquidate the
Trust Estate or any portion thereof shall be by the Holders of Bonds
representing not less than 66-2/3% of the Voting Rights (or, in the case of
a Class of Interest Only Bonds, the aggregate Notional Amount) of each
Class of the Bonds (except that, notwithstanding the foregoing, if the
condition to retention of the Trust Estate set forth in Section 5.05 has
been satisfied and the Indenture Trustee elects to retain such Trust Estate
pursuant to such section, then any direction to the Indenture Trustee by
the Holders of less than all the Bonds to sell or liquidate such Trust
Estate or any portion thereof shall be of no force and effect); and
(v) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee which is not inconsistent with such direction.
Notwithstanding the rights of Bondholders set forth in this Section 5.12,
subject to Section 6.01 hereof, the Indenture Trustee need not take any action
which it determines might involve it in liability or may be unjustly prejudicial
to the Bondholders not consenting.
SECTION 5.13. Waiver of Past Issuer Defaults.
Prior to the declaration of the acceleration of the maturity of the Bonds
as provided in Section 5.02, the Holders of Bonds representing more than 50% of
the Voting Rights of each Class of such Bonds may, on behalf of the Holders of
all the Bonds, waive any past Issuer Default hereunder and its consequences,
except an Issuer Default:
(i) in the payment of principal of or interest on any Bond, which
waiver shall require the waiver by the Holders of all of the Outstanding
Bonds; or
(ii) in respect of a covenant or provision hereof which under Article
IX cannot be modified or amended without the consent of the Holder of each
Outstanding Bond, which waiver shall require the waiver by each Holder of
an Outstanding Bond.
Upon any such waiver, such Issuer Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Issuer Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred,
for every purpose of this Indenture. In the case of any such waiver, the Issuer,
the Indenture Trustee and the Bondholders shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Issuer Default or impair any right consequent thereto.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of a Bond by its
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Indenture Trustee for any action
taken, suffered or omitted by it as Indenture Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section 5.14 shall not apply to any
suit instituted by the Indenture Trustee, or to any suit instituted by any
Bondholder, or group of Bondholders, holding Bonds that represent, in the
aggregate, more than 10% of the Voting Rights of the Outstanding Bonds or to any
suit instituted by any Bondholder for the enforcement of the payment of the
principal of or interest on, or of the Redemption Price or Special Redemption
Price for, any Bond on or after the Payment Date, Redemption Date or Special
Redemption Date, as the case may be, on which such payment was due (provided
that the failure to make such payment constitutes an Issuer Event of Default).
SECTION 5.15. Waiver of Stay or Extension Laws.
The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim to
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the exercise of any power
herein granted to the Indenture Trustee, but will suffer and permit the exercise
of every such power as though no such law had been enacted.
SECTION 5.16. Sale of Trust Estate.
(a) The power to effect any public or private sale of any portion of the
Trust Estate pursuant to Section 5.04 shall not be exhausted by any one or more
sales as to any portion of the Trust Estate remaining unsold, but shall continue
unimpaired until either the entire Trust Estate shall have been sold or all
amounts payable on the Bonds and under this Indenture with respect thereto shall
have been paid. The Indenture Trustee may from time to time postpone any sale by
public announcement made at the time and place of such sale. The Indenture
Trustee hereby expressly waives its right to any amount fixed by law as
compensation for any such sale but such waiver does not apply to any amounts to
which the Indenture Trustee is otherwise entitled under Section 6.07 of this
Indenture.
(b) The Indenture Trustee shall execute and deliver an appropriate
instrument(s) of conveyance (without recourse against the Indenture Trustee)
transferring its interest in any portion of the Trust Estate in connection with
a sale thereof pursuant to Section 5.04. In addition, the Indenture Trustee is
hereby irrevocably appointed an agent and attorney-in-fact of the Issuer to
transfer and convey the Issuer's interest in any portion of the Trust Estate in
connection with a sale thereof pursuant to Section 5.04, and to take all action
necessary to effect such sale. No purchaser or transferee at such a sale shall
have any obligation to ascertain the Indenture Trustee's authority, inquire into
the satisfaction of any conditions precedent or see to the application of any
monies.
(c) Any sale of any portion of the Trust Estate shall be made in compliance
with all applicable laws.
SECTION 5.17. Action on Bonds.
The Indenture Trustee's right to seek and recover judgment on the Bonds or
under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture. Neither
the lien of this Indenture nor any rights or remedies of the Indenture Trustee
or the Bondholders shall be impaired by the recovery of any judgment by the
Indenture Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or, subject to Section 2.07(g),
upon any other of the assets of the Issuer.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Issuer Event of Default:
(1) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(2) in the absence of negligence or bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Indenture Trustee, the Indenture Trustee shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Indenture.
(b) In case an Issuer Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that
(i) this subsection shall not be construed to limit the effect of
Subsection (a) of this Section 6.01;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the directions of the Holders of Bonds representing more than 50% of the
Voting Rights of the Bonds (unless an alternative group of Bondholders is
expressly permitted or required to authorize such action hereunder, in
which case in accordance with the directions of such alternative group)
relating to the time, method and place of conducting any Proceeding for any
remedy available to the Indenture Trustee, or exercising any trust or power
conferred upon the Indenture Trustee, under this Indenture with respect to
the Bonds.
(d) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. In determining that such repayment or indemnity is
not reasonably assured to it, the Indenture Trustee must consider not only the
likelihood of repayment or indemnity by or on behalf of the Issuer but also the
likelihood of repayment or indemnity from amounts payable to it from the Trust
Estate pursuant to Sections 5.06 and 8.02(b).
(e) The Indenture Trustee shall be under no obligation to institute any
suit, or to take any remedial Proceeding under this Indenture, or to enter any
appearance in or in any way defend any suit in which it may be made defendant,
or to take any steps in the execution of the trusts created hereby or in the
enforcement of any rights and powers hereunder until it shall be indemnified to
its reasonable satisfaction against any and all costs and expenses, outlays and
counsel fees and other reasonable disbursements and against all liability,
except liability which is adjudicated to have resulted from its negligence or
willful misconduct, in connection with any action so taken.
(f) Notwithstanding any extinguishment of all right, title and interest of
the Issuer in and to the Trust Estate following an Issuer Event of Default and a
consequent declaration of acceleration of the Maturity of the Bonds, whether
such extinguishment occurs through a foreclosure upon and sale of the Trust
Estate to another Person, the acquisition of the Trust Estate by the Indenture
Trustee or otherwise, the rights, powers and duties of the Indenture Trustee
with respect to the Trust Estate (or the proceeds thereof) and the Bondholders,
and the rights of the Bondholders, shall continue to be governed by the terms of
this Indenture.
(g) For all purposes under this Indenture, the Indenture Trustee shall not
be deemed to have notice of any Issuer Default unless a Responsible Officer of
the Indenture Trustee has actual knowledge thereof or unless written notice of
any event which is in fact such an Issuer Default is received by the Indenture
Trustee at the Corporate Trust Office, and such notice references the Bonds and
this Indenture.
(h) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Indenture Trustee shall be subject to the provisions of this
Section 6.01; and, if and for so long as this Indenture is required to be
qualified under the Trust Indenture Act, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to
the Indenture Trustee, including the provisions of this Section 6.01, shall be
subject to the provisions of the Trust Indenture Act.
SECTION 6.02. Notice of Issuer Defaults.
(a) If an Issuer Default occurs and is continuing and if it is known to a
Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail
to each Bondholder as described in TIA ss.313(c) notice of such Issuer Default
within ninety (90) days after it occurs (or, if it becomes known to a
Responsible Officer of the Indenture Trustee after the end of such 90-day
period, as soon as practicable after it becomes so known); provided that, except
in the case of a default in the payment of the principal of or interest on any
of the Bonds, the Indenture Trustee shall be protected in withholding such
notice to the Bondholders for a period of no longer than 90 days if and so long
as the board of directors, the executive committee or a trust committee composed
of directors and/or Responsible Officers of the Indenture Trustee reasonably and
in good faith determines that the withholding of such notice is in the best
interest of the Bondholders.
SECTION 6.03. Certain Rights of Indenture Trustee.
Subject to the provisions of Section 6.01, in connection with this
Indenture:
(a) the Indenture Trustee may request and rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer Order, as the case may be;
(c) whenever in the administration of this Indenture the Indenture Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Indenture Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officer's Certificate;
(d) the Indenture Trustee may consult with counsel, and the written advice
of such counsel or any Opinion of Counsel rendered thereby shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(e) the Indenture Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Bondholders pursuant to this Indenture, unless such Bondholders
shall have offered to the Indenture Trustee reasonable security or indemnity
against the costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction;
(f) the Indenture 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, direction, consent, order, bond,
debenture, note, coupon, other evidence of indebtedness or other paper or
document, but the Indenture Trustee in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Indenture Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuer, personally or by agent or attorney; provided that, if the payment
within a reasonable time to the Indenture 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 Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture, the
Indenture Trustee may require reasonable indemnity against such expense or
liability or payment of such estimated expenses as a condition to proceeding;
(g) the Indenture Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys of the Indenture Trustee; provided that it shall remain liable for the
acts of all such attorneys and agents;
(h) to the extent a Person other than the Indenture Trustee is appointed by
the Issuer to act as a Paying Agent, such Person shall be the sole agent of the
Issuer, and the Indenture Trustee shall not be liable or responsible by reason
of any act or omission of any such Person;
(i) the Indenture Trustee shall not be liable or responsible by reason of
any act or omission of the Master Servicer or the Special Servicer hereunder or
under the Servicing Agreement, in each case that is not an Affiliate of the
Indenture Trustee, unless the Indenture Trustee itself is acting in such
capacity;
(j) the Indenture Trustee shall not be liable or responsible for releases
or releases and substitutions of any item of Collateral in compliance with any
provision of this Indenture;
(k) the Indenture Trustee shall not be required to provide any surety or
bond of any kind in connection with the execution or performance of its duties
hereunder; and
(l) the Indenture Trustee shall not at any time have any responsibility or
liability other than as may be expressly set forth in this Indenture or the
Servicing Agreement for or with respect to the legality, validity or
enforceability of any item of Mortgage Collateral.
SECTION 6.04. Not Responsible for Recitals or Issuance of Bonds.
The recitals contained herein and in the Bonds, except the certificates of
authentication on the Bonds and any such recitals that constitute express
representations, warranties, certifications or acknowledgments of or on the part
of the Indenture Trustee, shall be taken as the statements of the Issuer or
other appropriate party to this Indenture, and the Indenture Trustee assumes no
responsibility for their correctness. The Indenture Trustee makes no
representation as to the validity or sufficiency of this Indenture, the Bonds or
the Trust Estate. The Indenture Trustee shall not be accountable for the use or
application by the Issuer of the Bonds or of the proceeds thereof or for the use
or application of any funds paid to the Master Servicer or the Special Servicer,
as applicable, in respect of the Mortgage Collateral (unless it is acting in
such capacity) or deposited into an Account established hereunder that is not
maintained by it.
SECTION 6.05. May Hold Bonds.
The Indenture Trustee, any Paying Agent, the Bond Registrar or any other
Agent, in its individual or any other capacity, may become the owner or pledgee
of bonds and, subject to Sections 6.08 and 6.13, may otherwise deal with the
Issuer or Owner Trustee with the same rights it would have if it were not
Indenture Trustee, Paying Agent, Bond Registrar or such other Agent.
SECTION 6.06. Money Held in Trust.
Money held by the Indenture Trustee in trust hereunder need not be
segregated from other funds except to the extent required herein or by law. The
Indenture Trustee shall be under no liability for interest on any money received
by it hereunder except as otherwise agreed with the Issuer and except to the
extent of (i) income or other gain on investments of monies held in any Account,
which investments are obligations of the Indenture Trustee, and (ii) income or
other gain actually received by the Indenture Trustee on investments of monies
held in any Account, including investments that are obligations of a third
party.
SECTION 6.07. Compensation and Reimbursement.
(a) Subject to Section 6.07(b), the Issuer hereby agrees: (1) to pay or
cause to be paid to the Indenture Trustee a monthly fee (payable out of the
Bond Account) equal to one-twelfth of ___% of the aggregate Principal
Amount of the Bonds as of the commencement of each calendar month,
beginning with ________________, 199_, for all services rendered by the
Indenture Trustee with respect to the Bonds (which compensation shall not
be limited by any provision of law in regard to the compensation of a
trustee of an express trust); and
(2) to reimburse, indemnify and hold harmless the Indenture Trustee and any
director, officer, employee or agent of the Indenture Trustee for any loss,
liability or "out-of-pocket" expense (including costs and expenses of
litigation, and of investigation, counsel fees, damages, judgments and
amounts paid in settlement) incurred in connection with any act or omission
on the part of the Indenture Trustee hereunder or under the Servicing
Agreement with respect to the Bonds or the Trust Estate (other than any
expense expressly required to be borne thereby, any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence
in the performance of duties, or as may arise from a breach of any
representation or warranty of the Indenture Trustee set forth herein or in
the Servicing Agreement, and other than allocable overhead of the Indenture
Trustee, such as costs for office space, office equipment, supplies and
related expenses, employee salaries and related expenses, and similar
internal costs and expenses).
The Indenture Trustee agrees to fully perform its duties under this
Indenture notwithstanding any failure on the part of the Issuer to make any
payments, reimbursements or indemnifications to the Indenture Trustee pursuant
to this Section 6.07(a); provided, however, that (subject to Section 6.07(b))
nothing in this Section 6.07 shall be construed to limit the exercise by the
Indenture Trustee of any right or remedy permitted under this Indenture in the
event of the Issuer's failure to pay or cause the payment of any sums due the
Indenture Trustee pursuant to this Section 6.07.
(b) The obligations of the Issuer set forth in Section 6.07(a) are
nonrecourse obligations solely of the Issuer and will be payable only from the
Trust Estate with respect to which any claim of the Indenture Trustee under this
Section 6.07 arose. In connection with the foregoing, the Indenture Trustee may
from time to time deduct (or cause to be deducted and remitted to it) payments
of all amounts due to it pursuant to Section 6.07(a) in connection with the
Bonds from monies on deposit in the Bond Account.
(c) The Indenture Trustee shall have, as security for the performance of
the Issuer under this Section 6.07, a lien ranking senior to the lien of the
Bonds with respect to which any claim of the Indenture Trustee under this
Section 6.07 arose upon all property and funds held or collected by the
Indenture Trustee in its capacity as such as part of the Trust Estate; provided
that the Indenture Trustee shall not institute any Proceeding seeking the
enforcement of such lien against the Trust Estate unless such Bonds have been
declared due and payable pursuant to Section 5.02 following an Issuer Event of
Default, such declaration of acceleration and its consequences have not been
rescinded and annulled, and monies collected by the Indenture Trustee are being
applied in accordance with Section 5.06.
SECTION 6.08. Eligibility; Disqualification.
There shall at all times be hereunder an Indenture Trustee, and such
Indenture Trustee (a) shall at all times be an institutional trustee that
satisfies the requirements of TIA ss.310(a) and (b) must have (i) a combined
capital and surplus of at least $_______________ and (ii) a long-term unsecured
debt rating of at least _____ (or the equivalent) from each Rating Agency. If
and for so long as this Indenture is required to be qualified under the Trust
Indenture Act, the Indenture Trustee shall comply with and be subject to TIA
ss.310(b); provided that there shall be excluded from the operation of TIA
ss.310(b)(1) any indenture or indentures under which other securities of the
Issuer are outstanding if the requirements for such exclusion set forth in TIA
ss.310(b)(1) are met.
SECTION 6.09. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Indenture Trustee and no appointment
of a successor Indenture Trustee pursuant to this Article VI shall become
effective until the acceptance of appointment by the successor Indenture Trustee
in accordance with the applicable requirements of Section 6.10.
(b) The Indenture Trustee may resign at any time by giving written notice
of such resignation to the Issuer and by mailing notice of such resignation by
first class mail, postage prepaid, to Holders of the Bonds, at their addresses
appearing on the Bond Register.
(c) If at any time:
(1) the Indenture Trustee shall fail to comply with, or shall cease to
be eligible under, Section 6.08, and the Indenture Trustee shall fail to
resign after written request therefor has been delivered to the Indenture
Trustee by the Issuer or has been delivered to the Indenture Trustee (with
a copy to the Issuer) by any Bondholder who has been a bona fide Holder for
at least six months, or
(2) (A) the Indenture Trustee shall become incapable of acting with
respect to their obligations hereunder, (B) there shall have been entered a
decree or order for relief by a court having jurisdiction in the premises
in respect of the Indenture Trustee in an involuntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Indenture Trustee or for any
substantial part of its property, or ordering the winding-up or liquidation
of its affairs and the continuance of any such decree or order unstayed and
in effect for a period of 60 consecutive days or (C) the Indenture Trustee
commences a voluntary case under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Indenture Trustee or of any
substantial part of its property, or the making by it of any assignment for
the benefit of creditors or the Indenture Trustee fails generally to pay
its debts as such debts become due or takes any corporate action in
furtherance of any of the foregoing,
then, in any such case, the Issuer, by an Issuer Order, may and shall remove the
Indenture Trustee.
(d) If the Indenture Trustee shall fail to comply with, or cease to be
eligible under, Section 6.08, any Bondholder that has been a bona fide Holder of
such Bonds for at least six months may, on its own behalf and on behalf of all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee.
(e) The Holders of Bonds representing more than 50% of the Voting Rights of
the Bonds may at any time remove the Indenture Trustee by delivering to the
Indenture Trustee to be removed and to the Issuer, copies of the record of the
Act taken by the Holders, as provided in Section 14.03 hereof.
(f) If the Indenture Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Indenture Trustee for
any cause, and in any such case no successor Indenture Trustee shall otherwise
have been appointed as provided herein, then the Issuer, by an Issuer Order,
shall promptly appoint a successor Indenture Trustee in accordance with the
applicable requirements of Section 6.10. If, within 60 days after such
resignation, removal or incapacity, or the occurrence of such vacancy, a
successor Indenture Trustee shall not have been appointed by the Issuer and
shall not have accepted such appointment in accordance with the applicable
requirements of Section 6.10, then a successor Indenture Trustee shall be
appointed by Act of the Holders of Bonds representing more than 50% of the
Voting Rights of the Bonds delivered to the Issuer and the retiring Indenture
Trustee, and the successor Indenture Trustee so appointed shall, forthwith upon
its acceptance of such appointment in accordance with the applicable
requirements of Section 6.10, become the successor Indenture Trustee. If, within
120 days after such resignation, removal or incapacity, or the occurrence of
such vacancy, no successor Indenture Trustee shall have been so appointed and
accepted appointment in the manner required by Section 6.10, any Bondholder that
has been a bona fide Holder for at least six months may, on its own behalf and
on behalf of all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.
(h) The Issuer shall give notice of any resignation or removal of the
Indenture Trustee by mailing notice of such event by first-class mail, postage
prepaid, to the Holders of the Bonds as their names and addresses appear in the
Bond Register. Each notice shall include the name of the successor Indenture
Trustee and the address of its Corporate Trust Office.
(i) In the event of any removal of or resignation by the Indenture Trustee,
the Indenture Trustee's entitlement under Section 6.07 for compensation and
reimbursement of costs and expenses accrued prior to the time of such
resignation or removal, and all rights pertaining thereto, shall survive,
provided, however, that if the Indenture Trustee is removed for cause, the
Indenture Trustee's right to such compensation and reimbursement may be subject
to offset for any damages relating to such removal.
SECTION 6.10. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Indenture Trustee, the
successor Indenture Trustee so appointed shall execute, acknowledge and deliver
to the Issuer and to the retiring Indenture Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Indenture
Trustee shall become effective and such successor Indenture Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Indenture Trustee; provided that on
the request of the Issuer or the successor Indenture Trustee, such retiring
Indenture Trustee shall, upon payment of its then unpaid fees and charges,
execute and deliver an instrument transferring to such successor Indenture
Trustee all the rights, powers and trusts of the retiring Indenture Trustee,
shall duly assign, transfer and deliver to such successor Indenture Trustee all
property and money held by such retiring Indenture Trustee hereunder, and shall
take such action as may be requested by the Issuer to provide for the
appropriate interest in the Trust Estate to be vested in such successor Trustee
(except that it shall not be responsible for the recording of such documents and
instruments as may be necessary to give effect to the foregoing). Upon request
of any such successor Indenture Trustee, the Issuer shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Indenture Trustee all such rights, powers and trusts referred to in
this Section 6.10.
Upon acceptance of appointment by a successor Indenture Trustee as provided
in this Section 6.10, the Issuer shall mail notice thereof by first-class mail,
postage prepaid, to the Holders of the Bonds at the Holders' addresses appearing
upon the Bond Register. If the Issuer fails to mail such notice within 10 days
after acceptance of appointment by such successor Indenture Trustee, such
successor Indenture Trustee shall cause such notice to be mailed at the expense
of the Issuer.
Any successor Indenture Trustee hereunder must, at the time of such
successor's acceptance of its appointment, meet the eligibility requirements set
forth in Section 6.08.
SECTION 6.11. Merger, Conversion, Consolidation or Succession to Business.
Any institution into which the Indenture Trustee may be merged or converted
or with which it may be consolidated, or any institution resulting from any
merger, conversion or consolidation to which the Indenture Trustee shall be a
party, or any institution succeeding to all or substantially all the corporate
trust business of the Indenture Trustee, shall be the successor of the Indenture
Trustee hereunder, provided that such institution shall be otherwise qualified
and eligible under Section 6.08, without the execution or filing of any paper or
any further act on the part of any of the parties hereto.
SECTION 6.12. Preferential Collection of Claims against the Issuer.
If and for so long as this Indenture is required to be qualified under the
Trust Indenture Act, the Indenture Trustee shall be subject to TIA ss. 311(a),
excluding any creditor relationship listed in TIA ss. 311(b), and an Indenture
Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to
the extent indicated therein.
SECTION 6.13. Separate Trustees and Co-Trustees.
(a) Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting legal requirements of the Trust Indenture Act, if applicable,
or of any jurisdiction in which any part of a Trust Estate may at the time be
located, the Indenture Trustee shall have the power to, and shall execute and
deliver all instruments to, appoint one or more Persons to act as separate
trustees or co-trustees hereunder, jointly with the Indenture Trustee, of any
portion of a Trust Estate subject to this Indenture, and any such Persons shall
be such separate trustee or co-trustee, with such powers and duties consistent
with this Indenture as shall be specified in the instrument appointing such
Person but without thereby releasing the Indenture Trustee from any of its
duties hereunder. If the Indenture Trustee shall request the Issuer to do so,
the Issuer shall join with the Indenture Trustee in the execution of such
instrument, but the Indenture Trustee shall have the power to make such
appointment without making such request. A separate trustee or co-trustee
appointed pursuant to this Section 6.13 need not meet the eligibility
requirements of Section 6.08.
(b) Every separate trustee and co-trustee shall, to the extent not
prohibited by law, be subject to the following terms and conditions:
(i) the rights, powers, duties and obligations conferred or imposed
upon such separate or co-trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee, or the Indenture Trustee
and such separate or co-trustee jointly, as shall be provided in the
appointing instrument, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed the Indenture
Trustee shall be incompetent or unqualified to perform such act, in which
event such rights, powers, duties and obligations shall be exercised and
performed by such separate trustee or co-trustee;
(ii) all powers, duties, obligations and rights conferred upon the
Indenture Trustee, in respect of the custody of all cash deposited
hereunder shall be exercised solely by the Indenture Trustee; and
(iii) the Indenture Trustee may at any time by written instrument
accept the resignation of or remove any such separate trustee or
co-trustee, and, upon the request of the Indenture Trustee, the Issuer
shall join with the Indenture Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to make
effective such resignation or removal, but the Indenture Trustee shall have
the power to accept such resignation or to make such removal without making
such request. A successor to a separate trustee or co-trustee so resigning
or removed may be appointed in the manner otherwise provided herein.
(c) Such separate trustee or co-trustee, upon acceptance of such trust,
shall be vested with the estates or property specified in such instrument,
jointly with the Indenture Trustee, and the Indenture Trustee shall take such
action as may be necessary to provide for the appropriate interest in the Trust
Estate to be vested in such separate trustee or co-trustee. Any separate trustee
or co-trustee may, at any time, by written instrument constitute the Indenture
Trustee, its agent or attorney in fact with full power and authority, to the
extent permitted by law, to do all acts and things and exercise all discretion
authorized or permitted by it, for and on behalf of it and in its name. If any
separate trustee or co-trustee shall be dissolved, become incapable of acting,
resign, be removed or die, all the estates, property, rights, powers, trusts,
duties and obligations of said separate trustee or co-trustee, so far as
permitted by law, shall vest in and be exercised by the Indenture Trustee,
without the appointment of a successor to said separate trustee or co-trustee,
until the appointment of a successor to said separate trustee or co-trustee is
necessary as provided in this Indenture. The appointment of a separate or
co-trustee shall in no way release the Indenture Trustee from any of its duties
or responsibilities hereunder.
(d) No co-trustee or separate trustee hereunder shall be liable by reason
of any act or omission of the Indenture Trustee or of any other such trustee
hereunder.
(e) Any notice, request or other writing, by or on behalf of any
Bondholder, delivered to the Indenture Trustee shall be deemed to have been
delivered to all separate trustees and co-trustees.
SECTION 6.14. Appointment of Custodians.
The Indenture Trustee may, with the consent of the Issuer, appoint at the
Trustee's own expense one or more Custodians to hold, as agent for the Indenture
Trustee, all or a portion of any documents and/or instruments relating to the
Mortgage Collateral otherwise required to be held by the Indenture Trustee
hereunder; provided that if the Custodian is an Affiliate of the Indenture
Trustee such consent of the Issuer need not be obtained and the Indenture
Trustee shall merely inform the Issuer of such appointment. Each Custodian shall
be a depository institution supervised and regulated by a Federal or State
banking authority, shall have combined capital and surplus of at least
$10,000,000, shall be qualified to do business in the jurisdiction in which it
holds any documents relating to any item of Mortgage Collateral, shall not be
the Issuer, the Depositor, a Seller or any Affiliate of any of the foregoing
Persons, and shall have in place a fidelity bond and errors and omissions
policy, which satisfies the requirements set forth in (iii) of the definition of
Qualified Insurer in Section 1.01 of the Servicing Agreement, covering such
Custodian's officers and employees in connection with its activities under this
Indenture. Each Custodian shall be subject to the same obligations, standard of
care, protection and indemnities as would be imposed on, or would protect, the
Indenture Trustee hereunder in connection with the retention of documents
relating to any item of Mortgage Collateral directly by the Indenture Trustee.
The appointment of one or more Custodians shall not relieve the Indenture
Trustee from any of its obligations hereunder, and the Indenture Trustee shall
remain responsible for all acts and omissions of any Custodians.
SECTION 6.15. Representations. The Indenture Trustee hereby represents and
warrants to the Issuer and for the benefit of the Bondholders that:
(a) As of the Closing Date, the Corporate Trust Office is located at
- -------------------------------------------.
[Set forth other representations and warranties, if any, from the Indenture
Trustee.]
ARTICLE VII
BONDHOLDER LISTS AND REPORTS
SECTION 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Bondholders.
The Bond Registrar on behalf of the Issuer will furnish or cause to be
furnished to the Indenture Trustee not more than five days after each January 1
and June 1 (commencing with the first such date that is not more than six months
after the related Closing Date), and at such other times as the Indenture
Trustee may request in writing, a list, in such form as the Indenture Trustee
may reasonably require, of the names and addresses of the Bondholders as of a
date not more than 10 days prior to the time such list is furnished; provided,
however, that so long as the Indenture Trustee is the Bond Registrar, no such
list shall be required to be furnished.
SECTION 7.02. Preservation of Information; Communications to Bondholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to the Indenture Trustee as provided in Section 7.01.
The Indenture Trustee may destroy any list furnished to it as provided in such
Section 7.01 upon receipt of a new list so furnished.
(b) Bondholders may communicate pursuant to TIA ss. 312(b) with other
Bondholders with respect to their rights under this Indenture or under the
Bonds, and the Indenture Trustee shall comply with the TIA ss.312(b).
(c) The Issuer, the Indenture Trustee and the Bond Registrar shall have the
protection of TIA ss. 312(c).
SECTION 7.03. Reports by Indenture Trustee.
(a) Within 30 days after May 15 of each year (the "reporting date"),
commencing with the first year after the Closing Date for the Bonds, the
Indenture Trustee shall mail to all Bondholders as described in TIA ss. 313(c),
a brief report, dated as of such reporting date with respect to such Bonds, that
complies with TIA ss. 313(a). The Indenture Trustee shall also mail to all such
Bondholders any reports required by TIA ss. 313(b). For purposes of the
information required to be included in such reports pursuant to TIA ss.ss.
313(a)(3) or 313(b)(2), the principal amount of "indenture securities"
outstanding on the date as of which such information is provided shall be the
aggregate Principal Amount of Outstanding Bonds covered by the report.
(b) A copy of each report required under this Section 7.03 shall, at the
time of such transmission to Holders of the Bonds covered by such report, be
filed by the Indenture Trustee with the Commission and with each securities
exchange upon which the Bonds are listed. The Issuer will notify the Indenture
Trustee when the Bonds are listed on any securities exchange.
SECTION 7.04. Reports by Issuer.
(a) The Issuer shall:
(1) file with the Indenture Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Issuer may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act; or, if the
Issuer is not required to file information, documents or reports pursuant to
either of said sections, then it shall file with the Indenture Trustee and the
Commission, in accordance with the rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;
(2) file with the Indenture Trustee and the Commission in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Issuer with the conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations;
(3) transmit or deliver to the Indenture Trustee, who shall, in turn,
transmit by mail to all Bondholders described in TIA ss. 313(c), such summaries
of any information, documents and reports required to be filed by the Issuer
pursuant to clauses (1) and (2) of this Section 7.04(a) as may be required by
rules and regulations prescribed from time to time by the Commission; and
(4) furnish to the Indenture Trustee, not less often than annually, a
certificate from the principal executive officer, principal financial officer or
principal accounting officer of the Issuer as to such officer's knowledge of the
Issuer's compliance with all conditions and covenants of this Indenture which
compliance shall be determined without regard to any period of grace or
requirement of notice provided hereunder.
(b) Unless and until changed by notice in writing from the Issuer to the
Indenture Trustee, the fiscal year of the Issuer shall end on December 31 of
each year.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money.
Except as otherwise expressly provided herein, the Indenture Trustee may
demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance from any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture, including all payments due and payable to the
Indenture Trustee on or in respect of the Mortgage Collateral in accordance with
the respective terms and conditions of the document or documents pursuant to
which it is being serviced and administered, in the case of a Pledged Mortgage
Loan or REO Property, or the respective terms and conditions of such Mortgage
Collateral and the document or documents pursuant to which it was issued, in the
case of a Pledged Mortgage-Backed Security. Except as otherwise expressly
provided herein, the Indenture Trustee shall hold all such money and property
received by it as part of the Trust Estate for which it was received and shall
apply it as provided in this Indenture.
All claims on and draws under any Enhancement shall be made by the
Indenture Trustee or other specified Person in accordance with this Indenture
and the Servicing Agreement.
In the event that in any month any Paying Agent shall not have received
when due a payment required to be made thereto with respect to any item or items
of Mortgage Collateral in accordance with the respective terms and conditions of
the document or documents pursuant to which such Mortgage Collateral is being
serviced and administered, in the case of a Pledged Mortgage Loan or REO
Property, or was issued, in the case of a Pledged Mortgage-Backed Security, such
Paying Agent shall promptly notify the Indenture Trustee (except in the case
where the Indenture Trustee is the Paying Agent), and in any event (subject to
the terms and conditions of this Indenture and the Servicing Agreement) the
Indenture Trustee shall, unless within three Business Days following the date on
which such payment was scheduled to be made, such payment shall subsequently
have been received by the Indenture Trustee or other Paying Agent or unless the
Issuer makes provisions for such payment satisfactory to the Indenture Trustee,
as soon as practicable thereafter request the designated paying agent for such
item or items of Mortgage Collateral to make such payment on the earliest day
permitted following such request. The Indenture Trustee may withdraw such
request upon subsequent receipt of such payment. Notwithstanding any other
provision hereof, the Paying Agent shall deliver to the Issuer or its designee
any payment with respect to any item of Mortgage Collateral received after the
scheduled date of receipt to the extent the Issuer or its designee previously
made provisions for such payment satisfactory to the Paying Agent in accordance
with this Section 8.01, and such payment shall not be deemed part of the Trust
Estate.
If following any request by the Indenture Trustee for payment of a late
payment in accordance with the preceding paragraph, any default occurs in the
making of such payment, or if a default occurs in any other performance required
under any Servicing Agreement, any Pledged Mortgage-Backed Security or the
document pursuant to which it was issued, any Credit Support Agreement or any
Cash Flow Agreement, the Indenture Trustee may, and upon the request of the
Issuer or the Holders of Bonds representing more than 50% of the Voting Rights
of the Bonds shall, take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any rights or
remedies with respect to an Issuer Event of Default under this Indenture as
provided in Article V hereof.
SECTION 8.02. Bond Account.
(a) On or prior to the date hereof, the Indenture Trustee shall establish
(and, at all times thereafter, the Indenture Trustee shall maintain) the Bond
Account for the Bonds. The Bond Account shall consist solely of one or more
Eligible Accounts established and maintained in the name of the Indenture
Trustee (in such capacity) and, in each case, bearing a designation clearly
indicating that such account and all funds deposited therein are held for the
exclusive benefit of the Bondholders and, subject to the lien of this Indenture,
the Issuer.
The Indenture Trustee shall deposit or cause to be deposited in the Bond
Account, upon receipt, (i) any and all amounts in respect of the Mortgage
Collateral remitted or advanced under the Servicing Agreement from time to time
and (ii) any amounts required to be deposited by the [Administrator] in
connection with losses incurred with respect to investments of funds held in the
Bond Account. Except as provided in this Indenture, the Indenture Trustee, in
accordance with the terms of this Indenture, shall have exclusive control and
sole right of withdrawal with respect to the Bond Account. Funds in the Bond
Account shall not be commingled with any other monies. All monies deposited from
time to time in the Bond Account (including any securities or instruments in
which such monies are invested) shall be held by and under the control of the
Indenture Trustee in the Bond Account for the benefit of the Bondholders and the
Issuer as herein provided; provided, however, that all income and gain, if any,
from monies or investments on deposit in the Bond Account shall constitute
additional compensation for the [Administrator] and shall be subject to
withdrawal at its direction from time to time. Any losses resulting from or
arising in connection with investments of funds in the Bond Account shall be for
the account of the [Administrator] (who shall promptly deposit into the Bond
Account the amount of any such losses).
(b) All of the funds on deposit in the Bond Account may be invested and
reinvested by the Indenture Trustee at the written direction of the
[Administrator] in one or more Permitted Investments, subject to the following
requirements:
(i) such Permitted Investments shall mature not later than one
Business Day prior to the next Payment Date;
(ii) the securities purchased with the monies in the Bond Account
shall be deemed to be funds deposited in the Bond Account;
(iii) each such Permitted Investment shall be made in the name of the
Indenture Trustee (in its capacity as such) or in the name of a nominee of
the Indenture Trustee under the Indenture Trustee's complete and exclusive
dominion and control (or, if applicable law provides for perfection of
pledges of an instrument not evidenced by a certificate or other instrument
through registration of such pledge on books maintained by or on behalf of
the issuer of such investment, a Permitted Investment may be made in such
instrument notwithstanding that such instrument is not under the dominion
and control of the Indenture Trustee, provided that such pledge is so
registered);
(iv) the Indenture Trustee shall have the sole control over such
investment, the income thereon and the proceeds thereof;
(v) other than the investments described in the second parenthetical
phrase in clause (iii) above, any certificate or other instrument
evidencing such investment shall be delivered directly to the Indenture
Trustee or its agent; and
(vi) the proceeds of each investment shall be remitted by the
purchaser thereof directly to the Indenture Trustee for deposit in the Bond
Account, subject to withdrawal by the Indenture Trustee as provided herein.
In the absence of written direction from the [Administrator], funds on
deposit in the Bond Account shall remain uninvested.
(c) Unless the Bonds have been declared due and payable pursuant to Section
5.02 and payments and other collections from the Trust Estate are being applied
pursuant to Section 5.06, the Indenture Trustee is authorized to make
withdrawals from the Bond Account (the order set forth hereafter not
constituting an order of priority for such withdrawals) (i) to make payments on
the Bonds as provided herein, (ii) to pay the [Administrator] interest and other
income earned on funds on deposit in the Bond Account, (iii) to pay
[Administrative Expenses and Additional Expenses] in respect of the Issuer or
the Trust Estate, and (iv) to withdraw any amounts deposited in the Bond Account
in error.
SECTION 8.03. Other Accounts.
As and when required by the Servicing Agreement, the Issuer, the Indenture
Trustee and the Paying Agent, as applicable, shall establish and maintain such
other Accounts (in addition to the Bond Account) in respect of the Bonds as are
specified by, and in such manner and amounts and with such depository
institutions as are specified in, the Servicing Agreement. Deposits to and
disbursements from such other Accounts, and investments of amounts held therein
from time to time, shall be made as provided in the Servicing Agreement.
SECTION 8.04. Release of Trust Estate.
(a) Subject to the payment of the Indenture Trustee's fees and expenses
pursuant to Section 6.07 and to the payment of any other Administrative
Expenses, Servicing Expenses or Additional Expenses, the Indenture Trustee may,
and when required by the provisions of this Indenture shall, execute instruments
to release property, securities or funds constituting part of the Trust Estate
from the lien of this Indenture, or convey the Indenture Trustee's interest in
the same, in a manner and under circumstances which are not inconsistent with
the provisions of this Indenture. No party relying upon an instrument executed
by the Indenture Trustee as provided in this Article VIII shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no Bonds
Outstanding, all sums due the Indenture Trustee pursuant to Section 6.07 have
been paid, release any remaining portion of the Trust Estate from the lien of
this Indenture and release any funds then on deposit in any Account.
(c) Without restricting any other provision hereof regarding the release of
property, securities or funds, the Indenture Trustee shall release property from
the lien of this Indenture pursuant to this Section 8.04 only upon receipt of an
Issuer Order accompanied by an Officer's Certificate, an Opinion of Counsel and
(if required by the TIA) a certificate or opinion from an Accountant, in
accordance with TIA ss. 314(c) and meeting the applicable requirements of
Section 14.01(a).
(d) Upon any release of property, securities or funds in accordance with
this Section 8.04, the Indenture Trustee shall automatically be released of any
obligations and responsibilities with respect to the property, securities and
funds so released (including being released from the claims of any Person
against such property, securities or funds released).
SECTION 8.05. Opinion of Counsel.
The Indenture Trustee shall receive at least seven (7) days' notice when
requested by the Issuer to take any action pursuant to Section 8.04(a),
accompanied by copies of any instruments involved, and the Indenture Trustee
shall also require, as a condition to such action, an Opinion of Counsel, in
form and substance satisfactory to the Indenture Trustee, stating the legal
effect of any such action, outlining the steps required to complete the same,
and concluding that all conditions precedent to the taking of such action have
been complied with and such action will not materially and adversely impair the
security for the Bonds or the rights of the Holders of such Bond in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Trust Estate. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Bondholders.
Without the consent of any Bondholders, the Issuer and the Indenture
Trustee, at any time and from time to time, may amend this Indenture or enter
into one or more indentures supplemental hereto, for any of the following
purposes:
(1) to correct and amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and confirm
unto the Indenture Trustee any property subject or required to be subjected to
the lien of this Indenture, or to subject to the lien of this Indenture
additional property; or
(2) to add to the conditions, limitations and restrictions on the
authorized amount, terms and purposes of the issuance, authentication and
delivery of any Bonds, as herein set forth, additional conditions, limitations
and restrictions thereafter to be observed;
(3) to evidence the succession, in compliance with the applicable
provisions herein, of another person to the Issuer, and the assumption by any
such successor of the covenants of the Issuer contained herein and in the Bonds;
or
(4) to add to the covenants of the Issuer or the Indenture Trustee, for the
benefit of the Holders, or to surrender any right or power herein conferred upon
the Issuer; or
(5) to convey, transfer, assign, mortgage or pledge any property to or with
the Indenture Trustee; or
(6) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provisions herein, or to
amend any other provisions with respect to matters or questions arising under
this Indenture, provided that such action shall not materially and adversely
affect the interests of any of the Holders of the Bonds; or
(7) to evidence and provide for the acceptance of appointment hereunder by
a successor trustee and to add to or change any of the provisions of this
Indenture as shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of Section 6.10
or 6.13; or
(8) to modify this Indenture to the extent necessary to effect the
Indenture Trustee's qualification under the Trust Indenture Act or to comply
with the requirements of the Trust Indenture Act.
The Indenture Trustee is hereby authorized to join in the execution of any
such amendment or supplemental indenture and to make any further appropriate
agreements and stipulations which may be therein contained or required. In
connection with any such amendment or supplemental indenture, the Issuer shall
furnish to the Indenture Trustee an Opinion of Counsel generally to the effect
that such amendment will not adversely affect the federal income tax status of
the Issuer or of the Trust Estate. The Indenture Trustee may, in its discretion,
elect not to join in the execution of any amendment or supplemental indenture if
it determines that any such amendment or supplemental indenture materially and
adversely affects the rights, duties, liabilities and immunities of the
Indenture Trustee.
SECTION 9.02. Supplemental Indentures With Consent of Bondholders.
With the consent of the Holders of Bonds representing more than 50% of the
Voting Rights of each Class of Bonds, the Issuer and the Indenture Trustee may
amend this Indenture or enter into one or more indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture with respect to such Bonds
or of modifying in any manner the rights of the Bondholders under this
Indenture; provided that no such amendment or supplemental indenture shall,
without the consent of the Holder of each Outstanding Bond affected thereby:
(1) change the date of payment of any installment of principal of or
interest or premium, if any, on any Bond, or reduce the Principal Amount
thereof, the Bond Interest Rate thereon or the Redemption Price with respect
thereto, change the provisions of this Indenture relating to the application of
payments, collections and/or distributions on, or the proceeds of the sale of,
the Trust Estate to payments of principal of or interest or premium, if any on
any Bonds or change any place of payment where, or the coin or currency in
which, any Bond or the interest or premium, if any, thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided in
Article V, to the payment of any such amount due on any Bond on or after the
respective due dates thereof (or, in the case of redemption, on or after the
applicable Redemption Date);
(2) reduce the percentage of the Voting Rights for or allocated to, or the
percentage of the aggregate Principal Amount or Notional Amount of, any Class,
the consent of the Holders of Bonds representing which is required for any such
supplemental indenture, or the consent of the Holders of Bonds representing
which is required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided for in
this Indenture;
(3) modify or alter the provisions of the proviso to the definition of the
term "Outstanding";
(4) reduce the percentage of the Voting Rights allocated to, or the
percentage of the aggregate Principal Amount or Notional Amount of, any Class of
Bonds, the consent or direction of the Holders of Bonds representing which is
required to allow or direct the Indenture Trustee to sell or liquidate the Trust
Estate pursuant to Section 5.04 or Section 5.12;
(5) modify any provision of this Section 9.02, except to increase any
percentage specified herein or to provide that certain additional provisions of
this Indenture cannot be modified or waived without the consent of the Holder of
each Outstanding Bond affected thereby;
(6) modify any of the provisions of this Indenture in such manner as to
affect the calculation of the amount of any payment of interest, premium (if
any) or principal due on any Bond on any Payment Date (including the calculation
of any of the individual components of such calculation) or to affect the rights
of the Holders of Bonds to the benefit of any provisions for the mandatory
redemption of the Bonds contained herein; or
(7) permit the creation of any lien ranking prior to or on a parity with
the lien of this Indenture with respect to any part of the Trust Estate or
terminate the lien of this Indenture on any property at any time subject hereto
or deprive the Holder of any Bond of the security afforded by the lien of this
Indenture, except as otherwise expressly permitted hereby.
The Indenture Trustee may in its discretion determine whether or not any
Bonds would be affected by any amendment or supplemental indenture and any such
determination shall be conclusive upon the Holders of all Bonds, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for the consent of Bondholders under this Section
9.02 to approve the particular form of any proposed amendment or supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
For purposes of giving the consents contemplated by this Section 9.02,
Bonds held by the Issuer, the Depositor and any Affiliate thereof will be given
the same regard as Bonds held by any other Person.
SECTION 9.03. [Reserved].
SECTION 9.04. Delivery of Supplements and Amendments.
Promptly after the execution by the Issuer and the Indenture Trustee of any
supplemental indenture or amendment pursuant to the provisions hereof, the
Indenture Trustee, at the expense of the Issuer payable out of the Trust Estate
pursuant to Section 6.07, shall mail, first class postage prepaid, to each
Holder of Bonds to which such supplemental indenture or amendment relates a
notice setting forth in general terms the substance of such supplemental
indenture or amendment. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture or amendment.
SECTION 9.05. Execution of Supplemental Indentures.
In executing, or permitting the additional trusts created by, any amendment
or supplemental indenture permitted by this Article IX or in accepting the
modifications thereby of the trusts created by this Indenture, the Indenture
Trustee shall be entitled to receive, at the Issuer's expense payable out of the
Trust Estate pursuant to Section 6.07, and subject to Sections 6.01 and 6.03,
shall be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such amendment or supplemental indenture is authorized or permitted
by this Indenture. The Indenture Trustee may, but shall not be obligated to,
enter into any such amendment or supplemental indenture that affects the
Indenture Trustee's own rights, duties or immunities under this Indenture or
otherwise.
SECTION 9.06. Effect of Supplemental Indentures.
Upon the execution of any amendment, supplemental indenture pursuant to the
provisions hereof, this Indenture shall be and shall be deemed to be modified
and amended in accordance therewith, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Issuer and the Holders of the Bonds shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
amendment or supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.07. Conformity with Trust Indenture Act.
Every amendment and supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be required to be qualified under
the Trust Indenture Act.
SECTION 9.08. Reference in Bonds to Supplemental Indentures.
Bonds authenticated and delivered after the execution of any amendment or
supplemental indenture pursuant to this Article IX may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such amendment or supplemental
indenture that affects such Bonds. If the Issuer or the Indenture Trustee shall
so determine, new Bonds so modified as to conform, in the opinion of the
Indenture Trustee and the Issuer, to any such amendment or supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Bonds affected by
such amendment or supplemental indenture.
ARTICLE X
PAYMENTS
SECTION 10.01. Payment of Principal, Premium (if any) and Interest.
(a) All payments of interest, principal and other amounts made with
respects to any Class of Bonds will be allocated pro rata among the Outstanding
Bonds of such Class based on the respective Principal Amounts thereof.
(b) On each Payment Date, unless the Bonds have been declared due and
payable pursuant to Section 5.02 and payments and other collections from the
Trust Estate are being applied pursuant to Section 5.06, the Indenture Trustee
shall withdraw from the Bond Account and apply the Available Payment Amount for
such Payment Date among the respective Classes of Bondholders and the Issuer for
the following purposes and in the following order of priority, in each case to
the extent of remaining funds:
[(i) to the Holders of the Class A Bonds in respect of interest, pro
rata as between the two Classes of Class A Bondholders based on
entitlement, up to an amount equal to all unpaid interest accrued in
respect of each such Class of Bonds through the end of the related Interest
Accrual Period;
(ii) to the Holders of the Class A Bonds in respect of principal,
allocable as between the two Classes of Class A Bondholders as provided
below, up to an amount equal to the lesser of (A) the then aggregate
Principal Amount of the Class A Bonds and (B) the Principal Payment Amount
for such Payment Date;
(iii) to the Holders of the Class B Bonds in respect of interest, up
to an amount equal to all unpaid interest accrued in respect of such Class
of Bonds through the end of the related Interest Accrual Period;
(iv) after the aggregate Principal Amount of the Class A Bonds has
been reduced to zero, to the Holders of the Class B Bonds in respect of
principal, up to an amount equal to the lesser of (A) the then aggregate
Principal Amount of the Class B Bonds and (B) the excess, if any, of the
Principal Payment Amount for such Payment Date over any amounts paid on
such Payment Date in retirement of the Class A Bonds pursuant to clause
(ii) above;
(v) to the Holders of the Class C Bonds in respect of interest, up to
an amount equal to all unpaid interest accrued in respect of such Class of
Bonds through the end of the related Interest Accrual Period;
(vi) after the aggregate Principal Amount of the Class A and Class B
Bonds has been reduced to zero, to the Holders of the Class C Bonds in
respect of principal, up to an amount equal to the lesser of (A) the then
aggregate Principal Amount of the Class C Bonds and (B) the excess, if any,
of the Principal Payment Amount for such Payment Date over any amounts paid
on such Payment Date in retirement of the Class A and/or Class B Bonds
pursuant to clauses (ii) and (iv) above;
(vii) to the Holders of the Class D Bonds in respect of interest, up
to an amount equal to all unpaid interest accrued in respect of such Class
of Bonds through the end of the related Interest Accrual Period;
(viii) after the aggregate Principal Amount of the Class A, Class B
and Class C Bonds has been reduced to zero, to the Holders of the Class D
Bonds in respect of principal, up to an amount equal to the lesser of (A)
the then aggregate Principal Amount of the Class D Bonds and (B) the
excess, if any, of the Principal Payment Amount for such Payment Date over
any amounts paid on such Payment Date in retirement of the Class A, Class B
and/or Class C Bonds pursuant to clauses (ii), (iv) and (vi) above;
(ix) to the Holders of the Class E Bonds in respect of interest, up to
an amount equal to all unpaid interest accrued in respect of such Class of
Bonds through the end of the related Interest Accrual Period;
(x) after the aggregate Principal Amount of the Class A, Class B,
Class C and Class D Bonds has been reduced to zero, to the Holders of the
Class E Bonds in respect of principal, up to an amount equal to the lesser
of (A) the then aggregate Principal Amount of the Class E Bonds and (B) the
excess, if any, of the Principal Payment Amount for such Payment Date over
any amounts paid on such Payment Date in retirement of the Class A, Class
B, Class C and/or Class D Bonds pursuant to clauses (ii), (iv), (vi) and
(viii) above;
(xi) to the Holders of the Class F Bonds in respect of interest, up to
an amount equal to all unpaid interest accrued in respect of such Class of
Bonds through the end of the related Interest Accrual Period;
(xii) after the aggregate Principal Amount of the Class A, Class B,
Class C, Class D and Class E Bonds has been reduced to zero, to the Holders
of the Class F Bonds in respect of principal, up to an amount equal to the
lesser of (A) the then aggregate Principal Amount of the Class F Bonds and
(B) the excess, if any, of the Principal Payment Amount for such Payment
Date over any amounts paid on such Payment Date in retirement of the Class
A, Class B, Class C, Class D and/or Class E Bonds pursuant to clauses (ii),
(iv), (vi), (viii) and (x) above;
(xiii) if, after giving effect to the payments of principal on the
Bonds contemplated by clauses (ii), (iv), (vi), (viii), (x) and (xii)
above, the aggregate Principal Amount of all the Bonds still exceeds the
then aggregate Stated Principal Balance of the Mortgage Pool, then to the
holders of the Class A Bonds (allocable as between the two Classes of Class
A Bondholders as described below), the Class B Bonds, the Class C Bonds,
the Class D Bonds, the Class E Bonds and the Class F Bonds, in that order,
in respect of principal, until (in the case of each Class of Bonds on which
payments of principal are so made) such excess (or the aggregate Principal
Amount of such Class of Bonds) is reduced to zero (whichever occurs first);
and
(xiv) to, or at the direction of, the Issuer in an amount equal to the
entire remaining portion, if any, of the Available Payment Amount for such
Payment Date.]
[On each Payment Date prior to the Class A Principal Payment Cross-Over
Date, if any, all payments of principal on the Class A Bonds pursuant to clause
(i) or clause (xiii) of this Section 10.01(b) will be paid, first, to the
Holders of the Class A-1 Bonds, until the aggregate Principal Amount of such
Class of Bonds is reduced to zero, and thereafter, to the Holders of the Class
A-2 Bonds, until the aggregate Principal Amount of such Class of Bonds is
reduced to zero. On each Payment Date on and after the Class A Principal Payment
Cross-Over Date, all payments of principal on the Class A Bonds pursuant to
clause (i) or clause (xiii) of this Section 10.01(b) will be paid to the Holders
of such two Classes of Bonds, pro rata, in accordance with their respective
aggregate Principal Amounts outstanding immediately prior to such Payment Date,
until the aggregate Principal Amount of each such Class of Bonds is reduced to
zero.]
(c) On each Payment Date, unless the Bonds have been declared due and
payable pursuant to Section 5.02 and payments and other collections from the
Trust Estate are being applied pursuant to Section 5.06, the Indenture Trustee
shall withdraw from the Bond Account and apply an amount equal to the Prepayment
Premiums collected during the related Collection Period among the respective
Classes of Bondholders and the Issuer for the following purposes and in the
following order of priority, in each case to the extent of remaining funds:
[(i) to the Holders of the Class A Bonds in respect of additional
interest, pro rata as between the two Classes of Class A Bondholders based
on entitlement, up to an amount equal to the Yield Maintenance Amount for
each such Class of Bonds for such Payment Date;
(ii) to the Holders of the Class B Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(iii) to the Holders of the Class C Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(iv) to the Holders of the Class D Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(v) to the Holders of the Class E Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(vi) to the Holders of the Class F Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date; and
(vii) to, or at the direction of, the Issuer in an amount equal to the
entire remaining portion, if any, of such Prepayment Premiums for such
Payment Date.]
(d) If the Bonds have been declared due and payable pursuant to Section
5.02 and payments and other collections from the Trust Estate are to be applied
pursuant to Section 5.06, then the portion of such payments and other
collections allocable to make payments on the Bonds on each Payment Date shall
be applied among the respective Classes of Bondholders for the following
purposes and in the following order of priority, in each case to the extent of
remaining funds:
[(i) to the Holders of the Class A Bonds in respect of interest, pro
rata as between the two Classes of Class A Bondholders based on
entitlement, up to an amount equal to all unpaid interest accrued in
respect of each such Class of Bonds through the end of the related Interest
Accrual Period;
(ii) to the Holders of the Class A Bonds in respect of principal, pro
rata as between the two Classes of Class A Bondholders based on their
respective aggregate Principal Amounts, until such Bonds are retired;
(iii) to the Holders of the Class B Bonds in respect of interest, up
to an amount equal to all unpaid interest accrued in respect of such Class
of Bonds through the end of the related Interest Accrual Period;
(iv) after the aggregate Principal Amount of the Class A Bonds has
been reduced to zero, to the Holders of the Class B Bonds in respect of
principal, until such Bonds are retired;
(v) to the Holders of the Class C Bonds in respect of interest, up to
an amount equal to all unpaid interest accrued in respect of such Class of
Bonds through the end of the related Interest Accrual Period;
(vi) after the aggregate Principal Amount of the Class A and Class B
Bonds has been reduced to zero, to the Holders of the Class C Bonds in
respect of principal, until such Bonds are retired;
(vii) to the Holders of the Class D Bonds in respect of interest, up
to an amount equal to all unpaid interest accrued in respect of such Class
of Bonds through the end of the related Interest Accrual Period;
(viii) after the aggregate Principal Amount of the Class A, Class B
and Class C Bonds has been reduced to zero, to the Holders of the Class D
Bonds in respect of principal, until such Bonds are retired;
(ix) to the Holders of the Class E Bonds in respect of interest, up to
an amount equal to unpaid interest accrued in respect of such Class of
Bonds through the end of the related Interest Accrual Period;
(x) after the aggregate Principal Amount of the Class A, Class B,
Class C and Class D Bonds has been reduced to zero, to the Holders of the
Class E Bonds in respect of principal, until such Bonds are retired;
(xi) to the Holders of the Class F Bonds in respect of interest, up to
an amount equal to all unpaid interest accrued in respect of such Class of
Bonds through the end of the related Interest Accrual Period; and
(xii) after the aggregate Principal Amount of the Class A, Class B,
Class C, Class D and Class E Bonds has been reduced to zero, to the Holders
of the Class F Bonds in respect of principal, until such Bonds are
retired.]
[(e) Until such time as the Indenture Trustee receives contrary
instructions from the Owner Trustee in writing, the Indenture Trustee is hereby
authorized and agrees to make all payments that are to be made to or at the
direction of the Issuer pursuant to either of subsections (b) or (c) of this
Section 10.01 or pursuant to Section 5.06 directly to the Depositor as the sole
holder of all the Owner Trust Certificates, by wire transfer in accordance with
written wiring instructions provided by the Depositor. This Section 10.01(e)
shall constitute a direction made by the Owner Trustee in accordance with
Section 4.2 of the Deposit Trust Agreement, and all payments made pursuant to
this Section 10.01(e) shall constitute distributions made pursuant to Section
4.2 of the Deposit Trust Agreement. The Indenture Trustee agrees to accept and
act in accordance with such alternative payment instructions with respect to
monies payable to or at the direction of the Issuer as the Owner Trustee shall
provide in writing no less than five Business Days prior to the related Payment
Date. In connection with making any payments pursuant to this Section 10.01(e),
the Indenture Trustee shall promptly provide to the Owner Trustee and the
Administrator by facsimile transmission and first-class mail, postage prepaid, a
written statement detailing the amounts so paid.]
(f) Subject to Section 2.07(g), the Issuer shall duly and punctually pay
the principal of, premium (if any) on and interest on the Bonds in accordance
with the terms of the Bonds and this Indenture. Amounts properly withheld under
the Code by any Person from a payment to any Bondholder of interest, premium (if
any) or principal shall be considered as having been paid by the Issuer to such
Bondholder for all purposes of this Indenture.
ARTICLE XI
OPTIONAL REDEMPTION OF BONDS BY ISSUER
AND SPECIAL REDEMPTION OF BONDS
SECTION 11.01. Optional Redemption by Issuer.
(a) Provided that no Issuer Event of Default has occurred and is
continuing, the Issuer may, at its option, redeem Bonds of any Class, in whole
or in part, at the applicable Redemption Price therefor, on a random lot or pro
rata basis, on any Payment Date as of which the aggregate Principal Amount of
such Class is less than or equal to ___% of the initial aggregate Principal
Amount thereof. If the Issuer shall elect to redeem Bonds pursuant to this
Section 11.01, it shall furnish notice of such election to the Indenture Trustee
not later than 30 days prior to the Redemption Date whereupon all such Bonds
shall be due and payable and the Issuer shall furnish a notice complying with
Section 11.02 to each Holder of the Class or Classes being called for redemption
pursuant to this Section 11.01. The Issuer's option to redeem Bonds shall be
evidenced by an Issuer Order directing the Indenture Trustee to redeem Bonds in
the aggregate Principal Amount or Notional Amount (as the case may be), on the
Redemption Date and at the Redemption Price specified in such Issuer Order.
(b) The Redemption Price for any Bond to be redeemed pursuant to this
Section 11.01 will be equal to 100% of the outstanding Principal Amount of such
Bond, together with accrued and unpaid interest thereon at the applicable Bond
Interest Rate through the end of the Interest Accrual Period relating to the
Payment Date that will also constitute the Redemption Date.
(c) In the case of a redemption pursuant to this Section 11.01, on or
before the Business Day next preceding the date on which notice of redemption is
to be given as provided in Section 11.02, the Issuer shall deposit with the
Paying Agent cash or Permitted Investments, in an amount sufficient (together
with any amounts then available for such purpose in the related Bond Account
and/or any other Pledged Fund or Account) to provide for payment on the
Redemption Date of the Redemption Price for the Bonds to be redeemed.
(d) On any Redemption Date, following the payments to be made on such date
pursuant to Article X, the Indenture Trustee shall withdraw from the Bond
Account and, subject to Section 2.07(e) hereof, pay to the Holders of the Bonds
to be redeemed the full Principal Amount thereof, together with any unpaid
interest thereon through the end of the related Interest Accrual Period.]
SECTION 11.02. Form of Optional Redemption or Special Redemption Notice.
Notice of redemption under Section 11.01 or of any special redemption under
Section 11.04 shall be given by the Issuer (or by the Indenture Trustee at the
Issuer's expense, if the Issuer, not less than 20 days prior to the applicable
Redemption Date or Special Redemption Date, as the case may be, requests the
Indenture Trustee to give such notice of redemption and furnishes to the
Indenture Trustee the proposed form thereof, complying with this Section 11.02)
by first-class mail, postage prepaid, mailed not less than 10 days prior to the
applicable Redemption Date, or five days prior to the applicable Special
Redemption Date, as the case may be, to each Person in whose name a Bond to be
redeemed is registered as of the close of business on the Regular Record Date
preceding the applicable Redemption Date that is also a Payment Date, or on the
Special Redemption Record Date preceding the applicable Special Redemption Date,
at such Holder's address appearing in the Bond Register; provided, however, that
no such notice of optional redemption shall be mailed by the Indenture Trustee
unless the Bond Account contains funds sufficient to pay the Redemption Price
for the Bonds to be redeemed.
(1) the Redemption Date or Special Redemption Date, as applicable;
(2) the Redemption Price or Special Redemption Price, as applicable;
(3) if Bonds of a Class are not to be paid in full on a Special
Redemption Date, that the Special Redemption Price will become due and
payable on such Special Redemption Date with respect to the principal
amount of each Individual Bond as shall be specified in such notice, that
the amount payable in respect of the principal amount of each such Bond
shall be limited to the principal portion of the Special Redemption Price
therefor, that no interest shall accrue on such principal amount to be so
redeemed for any period after the Designated Interest Accrual Date for such
Special Redemption Date and that payment of the Special Redemption Price
will be paid by check mailed to the Persons whose names appear as the
registered Holders thereof on the Bond Register as of the Special
redemption Record Date applicable to such Special Redemption Date and
identified in such notice of redemption; and
(4) if Bonds of a Class are to be paid in full on a Redemption Date or
a Special Redemption Date, the fact of such expectation of payment in full,
the place(s) where such Bonds may be surrendered for payment of the
Redemption Price or the Special Redemption Price, as the case may be (which
shall include the office or agency to be maintained as provided in Section
3.02), and that no interest shall accrue on such Bonds for any period after
either the end of the Interest Accrual Period relating to such Redemption
Date or the Designated Interest Accrual Date for such Special Redemption
Date, as the case may be.
Notice of redemption or special redemption as specified herein shall be
given by the Issuer, or by the Indenture Trustee in the name of and at the
expense of the Issuer if the Issuer requests the Indenture Trustee to do so as
provided above in this Section 11.02. Failure to give notice of redemption or
special redemption, or any defect therein, to any Holder of any Bond selected
for redemption or special redemption shall not impair or affect the validity of
the redemption or special redemption of any other Bond so selected.
SECTION 11.03. Bonds Payable on Redemption Date or Special Redemption Date.
Notice of redemption or special redemption having been given as provided in
Section 11.02, the Bonds or portions thereof to be redeemed shall, on the
applicable Redemption Date or Special Redemption Date, as the case may be,
become due and payable at the Redemption Price or Special Redemption Price, as
the case may be, and unless (a) the Issuer shall default in the payment of the
Redemption Price or Special Redemption Price, as the case may be, or (b) no
interest shall accrue on the Principal Amount of such Bonds or portions thereof
to be redeemed for any period after the end of the Interest Accrual Period
relating to such Redemption Date or after the Designated Interest Accrual Date
for such Special Redemption Date, as the case may be.
[SECTION 11.04. Special Redemptions.
(a) If the Payment Date occurs less frequently than every month, and if the
Indenture Trustee or other specified Person determines that the amount
anticipated to be on deposit in the related Bond Account and available to make
payments on the Bonds on the next succeeding Payment Date shall be insufficient
to pay interest and/or principal expected or assumed, as the case may be, to be
due and payable on the Bonds on such date, then, the Bonds of any Class may be
subject to special redemption, in whole or in part, at the applicable Special
Redemption Price therefor, on a pro rata basis, on any Special Redemption Date
in any calendar month during which the Payment Date does not also occur.
(b) There shall be no limit upon the number of times the Issuer may call
Bonds for special redemption and more than one Special Redemption Date may be
fixed by the Issuer between two succeeding Payment Dates so long as (i) the
requisite determinations contemplated by Section 11.04(a) are made, (ii) the
other requirements of this Article XI are complied with and (iii) no more than
one Special Redemption Date shall be scheduled in any calendar month.
(c) The Special Redemption Price for any Bond to be redeemed in connection
with a special redemption pursuant to this Section 11.04 will be equal to 100%
of the outstanding Principal Amount of such Bond or portion thereof to be so
redeemed, together with accrued and unpaid interest thereon at the applicable
Bond Interest Rate from the first day following the Interest Accrual Period
relating to the Payment Date immediately preceding the Special Redemption Date
(or from the Accrual Date in the case of a special redemption prior to the first
Payment Date) through the Designated Interest Accrual Date for the Special
Redemption Date.
ARTICLE XII
BONDHOLDERS' MEETING
SECTION 12.01. Purposes for Which Meetings May Be Called.
A meeting of Bondholders of any Class may be called at any time and from
time to time pursuant to the provisions of this Article XII for any of the
following purposes:
(a) to give any notice to the Issuer or to the Indenture Trustee, to
give any direction to the Indenture Trustee, to consent to the waiver of
any default hereunder and its consequences, or to take any other action
authorized to be taken by Bondholders pursuant to any of the provisions of
Article V;
(b) to remove the Indenture Trustee and appoint a successor trustee
pursuant to the provisions of Article VI;
(c) to consent to the execution of an amendment or amendments hereof
or to an indenture or indentures supplemental hereto pursuant to the
provisions of Article IX; or
(d) to take any other action authorized to be taken by or on behalf of
the Holders of any Class under any other provision of this Indenture or
under applicable law.
SECTION 12.02. Manner of Calling Meetings.
The Indenture Trustee may at any time call a meeting of Bondholders of any
Class to take any action specified in Section 12.01, to be held at such time and
at such place in the continental United States as the Indenture Trustee shall
determine. Notice of every meeting of the Bondholders of any Class, setting
forth the time and the place of such meeting, shall be mailed not less than 20
or more than 60 days prior to the date fixed for the meeting to each such
Bondholder as provided in Section 14.05. Any failure of the Indenture Trustee to
mail notice to every Bondholder of the applicable Class or any defect in mailing
the notice shall not impair or affect the validity of the meeting. The Indenture
Trustee may fix, in advance, a date as the record date for determining the
Bondholders of the applicable Class entitled to notice of or to vote at any such
meeting not less than 20 nor more than 75 days prior to the date fixed for such
meeting.
SECTION 12.03. Call of Meeting by Issuer or Bondholders.
If, at any time the issuer, pursuant to an Issuer Order, shall have
requested the Indenture Trustee to call a meeting of the Bondholders of any
Class, or the Holders of Bonds representing at least 10% of the Voting Rights of
any Class shall have requested the Indenture Trustee to call a meeting of
Bondholders of such Class, to take any action authorized in Section 12.01, by
written request setting forth in reasonable detail the action proposed to be
taken at such meeting, and the Indenture Trustee shall not have mailed notice of
such meeting within 15 days after receipt of such request, then the Issuer or
the Holders of Bonds of the applicable Class representing at least 10% of the
Voting Rights of such Class may determine the time and the place for such
meeting, the record date for determining the Bondholders entitled to notice of
or to vote at such meeting, and may call such meeting only to take any action
authorized in Section 12.01, by mailing notice thereof as provided in Section
12.02.
SECTION 12.04. Who May Attend and Vote at Meetings.
To attend and to be entitled to vote at any meeting of Bondholders a Person
shall (i) be a Holder on the applicable record date of one or more Bonds of the
Class with respect to which such meeting was called or (ii) be a Person
appointed by an instrument in writing as proxy by a Holder described in the
immediately preceding clause (i). The only Persons who shall be entitled to be
present or to speak at any meeting of Bondholders of any Class shall be the
Persons entitled to vote at such meeting and their counsel, and any
representatives of the Issuer and the Indenture Trustee and their counsel.
SECTION 12.05. Regulations May Be Made by Indenture Trustee.
Notwithstanding any other provisions of this Indenture, the Indenture
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Bondholders, in regard to proof of the appointment of proxies, and in
regard to the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any such regulations,
the holding of Bonds shall be proved in the manner specified in Section 14.03
and the appointment of any proxy shall be proved in the manner specified in such
Section 14.03; provided, however, that such regulations may provide that written
instruments appointing proxies regular on their face may be presumed valid and
genuine without the proof hereinabove or in such Section 14.03 specified.
The Indenture Trustee shall, by written instrument, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the Issuer
or by Bondholders as provided in Section 12.03, in which case the Issuer or the
Bondholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and permanent secretary of
the meeting shall be elected by majority vote (calculated in accordance with the
following paragraph) of the Persons present at the meeting and entitled to vote.
At any meeting of Holders, each Person entitled to vote at such meeting
shall be entitled to one vote for each Individual Bond of the applicable Class
held and/or represented by such Person; provided, however, that no vote shall be
cast or counted at any meeting in respect of any Bond challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding. The
chairman of the meeting shall have no right to vote other than by virtue of
Bonds held by him or instruments in writing as aforesaid duly designating such
chairperson as the proxy to vote on behalf of other Bondholders. Any meeting of
Bondholders duly called pursuant to the provisions of Section 12.02 or 12.03 may
be adjourned from time to time, and the meeting may be held as so adjourned
without further notice.
At any meeting of Holders, the presence of Persons holding or representing
Bonds of the applicable Class in Voting Rights sufficient to take action upon
the business for the transaction of which such meeting was called, shall be
necessary to constitute a quorum; but, if less than a quorum be present, the
Persons holding or representing Bonds of the applicable Class with Voting Rights
of more than 50% of the Voting Rights of all the Bonds of such Class represented
at the meeting may adjourn such meeting with the same effect, for all intents
and purposes, as though a quorum had been present.
SECTION 12.06. Manner of Voting at Meetings and Records To Be Kept.
The vote upon any matter submitted to any meeting of Bondholders shall be
by written ballots on which shall be subscribed the signatures of such Holders
or of their representatives by proxy and the serial number or numbers of the
Bonds of the applicable Class held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Bondholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more Persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 12.02. The record shall show the serial numbers of the Bonds voting in
favor of and against any resolutions. The record shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one of
the duplicates shall be delivered to the Issuer and the other to the Indenture
Trustee to be preserved by the Indenture Trustee.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
SECTION 12.07. Exercise of Rights of Indenture Trustee and Bondholders Not
To Be Hindered or Delayed.
Nothing contained in this Article XII shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Bondholders or any
rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Indenture Trustee or to the Bondholders under any of the
provisions of this Indenture or of the Bonds. Any action specified in Section
12.01 may be effected by Act of the appropriate Bondholders or in any other
manner permitted hereby, without any meeting being called pursuant to this
Article XII.
ARTICLE XIII
MORTGAGE COLLATERAL AND SERVICING
SECTION 13.01. Delivery of Mortgage Collateral.
(a) In connection with the Grant of the Trust Estate by the Issuer to
secure the Bonds, the Issuer shall deliver to and deposit with, or cause to be
delivered to and deposited with, the Indenture Trustee or a Custodian appointed
thereby (with copies to the Master Servicer), on or before the Closing Date, the
Mortgage File for each Pledged Mortgage Loan and a fully executed copy of the
Mortgage Loan Purchase Agreement.
(b) The Indenture Trustee shall deliver to the Master Servicer within ___
days after the Closing Date each assignment of Mortgage and assignment of
Assignment of Leases in favor of the Indenture Trustee referred to in clauses
(iv) and (v) of the definition of "Mortgage File" and each UCC-2 and UCC-3 in
favor of the Indenture Trustee referred to in clause (viii) of the definition of
"Mortgage File"; and, pursuant to the Servicing Agreement, the Master Servicer
shall, at the Seller's expense, as to each Pledged Mortgage Loan, be required
promptly (and in any event within ___ days following the Closing Date) to cause
each such document to be submitted for recording or filing, as the case may be,
in the appropriate public office for real property records or UCC Financing
Statements, as the Master Servicer deems appropriate. Each such assignment shall
reflect that it should be returned by the public recording office to the
Indenture Trustee following recording, and each such UCC-2 and UCC-3 shall
reflect that the file copy thereof should be returned to the Indenture Trustee
following filing; provided that in those instances where the public recording
office retains the original assignment of Mortgage or assignment of Assignment
of Leases the Master Servicer shall be required, pursuant to the Servicing
Agreement, to obtain therefrom a certified copy of the recorded original. If any
such document or instrument is lost or returned unrecorded or unfiled, as the
case may be, because of a defect therein, the Issuer shall promptly prepare or
cause to be prepared a substitute therefor or cure such defect, as the case may
be, and thereafter the Master Servicer shall upon receipt thereof cause the same
to be duly recorded or filed, as appropriate.
(c) The Issuer shall deliver to and deposit with, or cause to be delivered
to and deposited with, the Master Servicer all documents and records in the
possession of the Issuer or the Seller that relate to the Pledged Mortgage Loans
necessary for the servicing of the Mortgage Loans and that are not required to
be a part of a Mortgage File in accordance with the definition thereof, and the
Master Servicer shall hold all such documents and records on behalf of the
Indenture Trustee in trust for the benefit of the Bondholders and, subject to
the lien of this Indenture, the Issuer.
(d) The Indenture Trustee, by its execution and delivery of this Agreement,
acknowledges receipt by it or a Custodian on its behalf, subject to the proviso
in the definition of Mortgage File, to any exceptions noted on the Schedule of
Exceptions to Mortgage File Delivery attached hereto as Exhibit C, to the
provisions of Section 13.01(f) and to the further review provided for in Section
13.01(e), of (i) the Mortgage File with respect to each Pledged Mortgage Loan,
(ii) a fully executed counterpart of the Mortgage Loan Purchase Agreement, and
(iii) all other assets delivered to it and included in the Trust Estate, in good
faith and without notice of any adverse claim, and declares that it or a
Custodian on its behalf holds and will hold such documents and the other
documents received by it that constitute portions of the Mortgage Files, and
that it holds and will hold such other assets included in the Trust Estate, in
trust for the exclusive use and benefit of all present and future Bondholders
and, subject to the lien of this Indenture, the Issuer. In addition, the
Indenture Trustee hereby certifies to the Issuer, the Master Servicer and the
Special Servicer and for the benefit of the Bondholders that, as to each Pledged
Mortgage Loan listed on the Schedule of Collateral, except as specifically
identified in the Schedule of Exceptions to Mortgage File Delivery attached
hereto as Exhibit C, (i) all documents specified in clauses (i), (ii), (iv),
(vii) and (viii) of the definition of "Mortgage File" are in its possession or
the possession of a Custodian on its behalf, (ii) all documents referred to in
clause (i) of this sentence received by it or any Custodian with respect to such
Pledged Mortgage Loan have been reviewed by it or by such Custodian on its
behalf and appear regular on their face (handwritten additions, changes or
corrections shall not constitute irregularities if initialed by the Mortgagor)
and purport to relate to such Pledged Mortgage Loan, and (iii) based on such
examination and only as to the foregoing documents, the information set forth in
the Schedule of Mortgage Collateral with respect to Mortgage Rate, original
principal balance and Stated Maturity Date accurately reflects the information
set forth in the Mortgage File.
The Indenture Trustee shall not (i) transfer legal title to, or release
from the lien of this Indenture, any of the Pledged Mortgage Loans or any other
asset constituting all or a portion of the Trust Estate (except as expressly
provided herein or permitted hereby) or (ii) permit any of the Pledged Mortgage
Loans or any other asset constituting all or a portion of the Trust Estate to be
subjected to any lien, claim or encumbrance arising by, through or under the
Indenture Trustee or any Person claiming by, through or under the Indenture
Trustee.
(e) On or about the ___ day following the Closing Date (and, if any
exceptions are noted, again on or about the first anniversary of the Closing
Date), the Indenture Trustee shall, subject to Section 13.01(f), certify in
writing to the Issuer, the Master Servicer and the Special Servicer and for the
benefit of the Bondholders that, as to each Pledged Mortgage Loan listed on the
Schedule of Collateral (other than any Pledged Mortgage Loan as to which a
Liquidation Event has occurred or any Pledged Mortgage Loan specifically
identified in any exception report annexed thereto as not being covered by such
certification): (i) all documents specified in clauses (i) through (v), (vii)
and (viii) of the definition of "Mortgage File" are in its possession, (ii) all
documents received by it or any Custodian with respect to such Pledged Mortgage
Loan have been reviewed by it or by such Custodian on its behalf and appear
regular on their face (handwritten additions, changes or corrections shall not
constitute irregularities if initialed by the Mortgagor) and purport to relate
to such Pledged Mortgage Loan, and (iii) based on the examinations referred to
in Section 13.01(d) above and this Section 13.01(e) and only as to the foregoing
documents, the information set forth in the Schedule of Mortgage Collateral with
respect to the Mortgage Rate, original principal balance and Stated Maturity
Date accurately reflects the information set forth in the Mortgage File.
(f) Neither the Indenture Trustee nor any Custodian is under any duty or
obligation to inspect, review or examine any of the documents, instruments,
certificates or other papers relating to the Pledged Mortgage Loans delivered to
it to determine that the same are valid, legal, effective, genuine, enforceable,
in recordable form, sufficient or appropriate for the represented purpose or
that they are other than what they purport to be on their face.
(g) If either party hereto discovers that any document constituting a part
of a Mortgage File has not been properly executed, is missing, contains
information that does not conform in any respect with the corresponding
information set forth in the Schedule of Mortgage Collateral (and the terms of
such document have not been modified by written instrument contained in the
Mortgage File), or does not appear to be regular on its face (each, a "Document
Defect"), or if either party hereto discovers a breach of any representation or
warranty of the Seller relating to a Pledged Mortgage Loan set forth in the
Mortgage Loan Purchase Agreement (a "Breach"), such party shall give prompt
written notice thereof to the other party and to the Master Servicer and the
Special Servicer.
(h) Promptly upon its discovery or receipt of notice of any Document Defect
that materially and adversely affects the value of any Mortgage Loan or the
interests of the Bondholders therein, the Issuer shall either (i) cure such
Document Defect in all material respects within [90] days of its receipt of
notice of such Document Defect (or if such Document Defect is capable of being
cured but not within such [90-day] period, the Issuer has commenced and is
diligently proceeding with the cure of such Document Defect within such 90-day
period, and the Issuer shall have delivered to the Indenture Trustee and the
Master Servicer a certification that such Document Defect is not capable of
being cured within an initial 90-day period, specifying what actions it is
pursuing in connection with the cure thereof and stating that the Issuer
anticipates that such Document Defect will be cured within an additional period
not to exceed 90 more days, then the Issuer shall have up to an additional 90
days to complete such cure), or (ii) remove such affected Mortgage Loan from the
Trust Estate and the lien of this Indenture and pay to the Indenture Trustee for
deposit into the Bond Account an amount equal to the Release Price of the
Mortgage Loan which is the subject of the removal as of such date.
SECTION 13.02. Servicing and Administration of the Pledged Mortgage Loans.
(a) The Pledged Mortgage Loans and any REO Properties acquired in respect
thereof shall be serviced and administered pursuant to that certain Servicing
Agreement dated as of __________________, 199_ (as amended from time to time,
the "Servicing Agreement"), among the Issuer (acting through the Owner Trustee),
the Indenture Trustee, _____________________ as master servicer (the "Master
Servicer", which term includes any successor entity thereunder), and
______________________ as special servicer (the "Special Servicer", which term
includes any successor entity thereunder).
(b) The Servicing Agreement, in the form attached hereto as Exhibit E, as
such agreement may be amended from time to time in accordance with the
applicable provisions thereof and of this Indenture, is in all respects ratified
and confirmed.
SECTION 13.03 Releases of Pledged Mortgage Loans and REO Properties.
Whenever the Mortgage Loan Purchase Agreement or the Servicing Agreement
permits or requires the purchase, sale or other disposition of a Pledged
Mortgage Loan or any REO Property (including, a purchase by, the Seller, the
Master Servicer or the Special Servicer), or authorizes the release thereof to
the Issuer, the transfer of legal title to such item of Mortgage Collateral and
the release thereof from the lien of this Indenture shall be subject to Sections
8.04 and 14.01 in addition to the applicable terms and conditions of the
Mortgage Loan Purchase Agreement and/or the Servicing Agreement.
SECTION 13.04. Certain Designations of the Master Servicer and the Special
Servicer.
(a) To facilitate the servicing and administration of the Pledged Mortgage
Loans and any related REO Properties, the Master Servicer and the Special
Servicer each shall retain in accordance with the provisions of the Servicing
Agreement and this Indenture, all collections on the Mortgage Collateral prior
to the time the collections are required to be deposited into the Bond Account.
Solely for the limited purpose expressed in this Section 13.04(a), the Indenture
Trustee hereby designates each of the Master Servicer and the Special Servicer
as its agent and bailee to hold such collections of the Mortgage Collateral
until the collections are deposited into the Bond Account. By the designation
pursuant to this Section 13.04(a) and the acceptance of such designation by each
of the Master Servicer and the Special Servicer pursuant to the Servicing
Agreement, the Indenture Trustee, as secured party, is deemed to have possession
of all collections on the Mortgage for purposes of Section 9-305 of the Uniform
Commercial Code. Furthermore, possession by the Master Servicer or the Special
Servicer of a Permitted Investment in respect of such collections, which
Permitted Investment constitutes a "certificated security", shall constitute
possession by a person designated by the Indenture Trustee for purposes of
Section 8-313 of the Uniform Commercial Code. The Indenture Trustee shall have
no liability or responsibility by reason of any act or omission of any such
Person pursuant to such designation.
(b) To facilitate the servicing and administration of the Pledged Mortgage
Loans and any related REO Properties, the Master Servicer and the Special
Servicer shall each retain in accordance with the provisions of the Servicing
Agreement and this Indenture, any Mortgage File or any particular document
required to be part thereof or otherwise relating to the Pledged Mortgage Loans
that may come into its or their possession. Solely for the limited purpose
expressed in this Section 13.04(b), the Indenture Trustee hereby designates each
of the Master Servicer and the Special Servicer as its agent and bailee to hold
such Mortgage File or such particular Pledged Mortgage Loan documents. By the
designation made pursuant to this Section 13.04(b) and the acceptance of such
designation by each of the Master Servicer and the Special Servicer pursuant to
the Servicing Agreement, the Indenture Trustee, as a secured party, is deemed to
have possession of such Mortgage File or such particular Pledged Mortgage Loan
document for purposes of Section 9-305 of the Uniform Commercial Code. The
Indenture Trustee shall have no liability or responsibility by reason of any act
or omission of any such Person pursuant to such designation.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture Trustee
to take any action under any provision of this Indenture, and in any event under
the circumstances provided in Sections 2.10(b), 4.01 and 8.04(a), the Issuer
shall furnish to the Indenture Trustee (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, and (iii) (if required by the TIA) a certificate or opinion from
an Accountant stating that in the opinion of such Accountant all such conditions
precedent, if any, subject to verification by Accountants have been complied
with, and in each such case meeting the applicable requirements of this Section
14.01(a), except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished. If
and for so long as this Indenture is required to be qualified under the Trust
Indenture Act, the Accountant rendering the certificate or opinion referred to
in clause (iii) of the preceding sentence shall, as and when required by TIA ss.
314(c)(3), be an Independent Accountant selected or approved by the Indenture
Trustee in the exercise of reasonable care.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with.
(b) If this Indenture is or is to be secured by the mortgage or pledge of
property, then (in addition to any obligation imposed in Section 14.01(a) or
elsewhere in this Indenture):
(1) Whenever any property is to be released from the lien of this
Indenture, the Issuer shall furnish to the Indenture Trustee a certificate or
opinion of an engineer, appraiser or other expert in such matters (which
engineer, appraiser or other expert shall be Independent as and when required by
TIA ss. 314(d))certifying or stating the opinion of such Person as to the fair
value (within 90 days of such release) of the property or securities proposed to
be released and stating that in the opinion of such Person the proposed release
will not, in contravention of the provisions hereof, impair the security under
this Indenture.
(2) Prior to the deposit of any property (other than Bonds and securities
secured by a lien prior to the lien of this Indenture upon property subject to
the lien of this Indenture) with the Indenture Trustee which deposit is to be
made the basis for (A) the authentication and delivery of any Bonds, (B) the
withdrawal of cash or any Enhancement constituting a part of the Trust Estate or
(C) the release of any property or securities subject to the lien of this
Indenture, the Issuer shall furnish to the Indenture Trustee a certificate or
opinion of an engineer, appraiser or other expert in such matters (which
engineer, appraiser or other expert shall be Independent as and when required by
TIA ss. 314(d)) certifying or stating the opinion of such Person as to the fair
value (within 90 days of such deposit) to the Issuer of the property to be so
deposited and the fair value to the Issuer of such other property as shall be
required by TIA ss. 314(d) to be covered by such certificate or opinion.
SECTION 14.02. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Owner Trustee on
behalf of the Issuer may be based, insofar as it relates to legal matters, upon
a certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers or other individual representative of the Owner Trustee, the
Indenture Trustee, the Depositor or other appropriate Person, stating that the
information with respect to such factual matters is in the possession of the
Owner Trustee, the Indenture Trustee, the Depositor or such other appropriate
Person, unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters is erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 14.03. Acts of Bondholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Bondholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Bondholders in person or by agents 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
Indenture Trustee and, where it is hereby expressly required, to the Issuer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Bondholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section 14.03.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved in any manner that the Indenture Trustee deems
sufficient.
(c) The ownership of Bonds shall be proved by the Bond Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action of any Holder shall bind every future Holder of the same Bond
and the Holder of every Bond issued upon the transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, suffered or omitted to
be done by the Indenture Trustee or the Issuer in reliance thereon, whether or
not notation of such action is made upon such Bond.
SECTION 14.04. Notice, etc., to Indenture Trustee and Issuer.
Except as otherwise provided herein, any request, demand, authorization,
direction, notice, consent, waiver or Act of Bondholders or other communication
provided or permitted by this Indenture to be given to the Indenture Trustee or
the Issuer shall be in writing and deemed given when delivered to:
(a) the Indenture Trustee at its Corporate Trust Office, or
(b) the Issuer addressed to it in care of the Owner Trustee at the
address set forth herein and/or at such other address as may be otherwise
furnished in writing to the Indenture Trustee and each Holder of Bonds. The
Issuer shall promptly transmit any notice received by it from any
Bondholder to the Indenture Trustee.
SECTION 14.05. Notices to Bondholders; Notification Requirements and
Waiver.
Where this Indenture provides for notice to Bondholders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class, postage prepaid to each Bondholder
affected by such event, at its address as it appears on the Bond Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Bondholders is given
by mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Bondholder shall affect the sufficiency of such notice
with respect to other Bondholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Bondholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Bondholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies that have
assigned a rating to any Class of Bonds, failure to give such notice shall not
affect any other rights or obligations created hereunder, and shall not under
any circumstance constitute an Issuer Default.
SECTION 14.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or of any of the Bonds to
the contrary, the Issuer, with prior written consent of the Indenture Trustee
and any Paying Agent other than the Indenture Trustee, may enter into any
agreement with any Holder providing for a method of payment, or notice by the
Indenture Trustee or Paying Agent to such Holder, which is different from the
methods provided for in this Indenture. The Issuer will furnish to the Indenture
Trustee and the Paying Agent a copy of each such agreement and the Indenture
Trustee and the Paying Agent will cause payments to be made and notices to be
given in accordance with such agreements.
SECTION 14.07. Conflict with Trust Indenture Act.
(a) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required or deemed to be included in this Indenture by
any of the provisions of the Trust Indenture Act, such required or deemed
provision shall control if and for so long as this Indenture is required to be
qualified under the Trust Indenture Act.
(b) If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by operation of TIA ss. 318(c), the imposed duties shall
control.
SECTION 14.08. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 14.09. Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer shall bind its
successors and permitted assigns, whether so expressed or not.
SECTION 14.10. Separability Clause.
In case any provision of this Indenture or of the Bonds shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 14.11. Benefits of Indenture.
Nothing in this Indenture or in the Bonds, express or implied, shall give
to any Person, other than the parties hereto and their successors hereunder, the
Bondholders and any other party secured hereunder, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 14.12. Legal Holidays.
If any date on which principal of, premium, if any, on or interest on any
Bond is proposed to be paid hereunder, or any date on which mailing of notices
by the Indenture Trustee to any Person is required pursuant to any provision of
this Indenture, shall not be a Business Day, then (notwithstanding any other
provision of the Bonds or this Indenture) payment of such amount or mailing of
such notice need not be made on such date, but may be made or mailed on the next
succeeding Business Day with the same force and effect, and in the case of
payments, no interest shall accrue for the period from and after the date on
which such payment was due to the next succeeding Business Day when paid.
SECTION 14.13. GOVERNING LAW.
THIS INDENTURE, EACH INDENTURE SUPPLEMENTAL HERETO AND EACH BOND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
SECTION 14.14. Execution Counterparts.
This instrument may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
SECTION 14.15. Recording of Indenture.
If this Indenture is subject to recording in any appropriate public
recording offices, such recording is to be effected by and at the expense of the
Issuer upon written request of the Indenture Trustee accompanied by an Opinion
of Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee and which shall be an expense of
the Issuer) to the effect that such recording is necessary either for the
protection of the Bondholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Indenture Trustee under this
Indenture.
SECTION 14.16. Trust Obligation.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer on the Bonds or under this Indenture (other than with
respect to Permitted Investments as to which such Person is the issuer) or any
certificate or other writing delivered in connection herewith or therewith,
against (i) any owner of a beneficial interest in the Issuer, (ii) the Owner
Trustee or the Indenture Trustee in its individual capacity, (iii) any partner,
owner, beneficiary, agent, officer, director, employee or agent of the Owner
Trustee or the Indenture Trustee in its individual capacity, or (iv) any holder
of a beneficial interest in the Owner Trustee or the Indenture Trustee or of any
successor or assignee of the Owner Trustee or the Indenture Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that neither the Owner Trustee nor the Indenture Trustee has
any such obligations in its individual capacity).
SECTION 14.17. No Petition.
The Indenture Trustee, by entering into this Indenture, and each
Bondholder, by accepting a Bond, hereby covenant and agree that they will not at
any time institute against the Depositor or the Issuer, or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation Proceedings, or any other
Proceedings under any United States federal or state bankruptcy or similar law,
in connection with any obligations relating to the Bonds, this Indenture or the
Servicing Agreement.
SECTION 14.18. Inspection.
The Issuer agrees that, on reasonable prior notice, it will permit any
representative of the Indenture Trustee, during the Issuer's normal business
hours, to examine all the books of account, records, reports, and other papers
of the Issuer, to make copies and extracts therefrom, to cause such books to be
audited by Independent Accountants, and to discuss the Issuer's affairs,
finances and accounts with the Issuer's representatives, employees, and
Independent Accountants, all at such reasonable times and as often as may be
reasonably requested. The Indenture Trustee shall and shall cause its
representatives to hold in confidence all such information except to the extent
disclosure may be required by law and except to the extent that the Indenture
Trustee may reasonably determine that such disclosure is consistent with its
obligations hereunder.
SECTION 14.19. Usury.
The amount of interest payable or paid on any Bond under the terms of this
Indenture shall be limited to interest thereon at the maximum nonusurious rate
of interest permitted by the applicable laws of the State of New York (or the
laws of any other jurisdiction determined to be applicable by a court of
competent jurisdiction) or any applicable laws of the United States permitting a
higher maximum nonusurious rate that preempts such applicable New York (or
other) laws, which could lawfully be contracted for, charged or received (the
"Highest Lawful Rate"). In the event any payment of interest on any Bond is in
excess of interest thereon at the Highest Lawful Rate, the Issuer stipulates
that the excess payment of interest will be deemed to have been paid as a result
of an error on the part of both the Indenture Trustee (for which the Indenture
Trustee shall have no liability of any kind), acting on behalf of the Holder
receiving such excess payment, and the Issuer, and the Holder receiving such
excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Issuer or the Indenture Trustee, refund the amount of such
excess or, at the option of the Indenture Trustee, apply the excess to the
payment of principal of such Bond, if any, remaining unpaid. In addition, all
sums paid or agreed to be paid for the use, forbearance or detention of money
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such Bonds.
SECTION 14.20. Notice to the Indenture Trustee, the Issuer and Certain
Other Persons.
Any communication provided for or permitted hereunder shall be in writing
and, unless otherwise expressly provided herein, shall be deemed to have been
duly given when delivered to: (i) in the case of the Issuer, c/o
_________________________, Attention: _________________________, facsimile
number: ______________; (ii) in the case of the Indenture Trustee,
_________________________, facsimile number: ______________; and (iii) in the
case of the Ratings Agencies: _________________________________________________;
or as to each such Person such other address and/or facsimile number as may
hereafter be furnished by such Person to the parties hereto in writing.
SECTION 14.21 Tax Treatment.
The Issuer has entered into this Indenture, and the Bonds will be issued,
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Bonds will qualify as indebtedness of the Issuer
secured by the Trust Estate. The Issuer, by entering into this Indenture, and
each Bondholder, by its acceptance of a Bond (and each Bond Owner by its
acceptance of an interest in the applicable Book-Entry Bond), agree to treat the
Bonds for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
ICCMAC COMMERCIAL TRUST [_______],
By: _________________________, not in its
individual capacity but solely as Owner
Trustee
By: ________________________________,
Name:
Title:
___________________________________________,
as Indenture Trustee
By: ______________________________________,
Name:
Title:
<PAGE>
STATE OF )
): ss.:
COUNTY OF )
On this ___th day of _______________, 199_, before me, the undersigned
officer, personally appeared ____________________, and acknowledged himself to
me to be the ____________________________ of ________________________, and that
as such officer, being duly authorized to do so pursuant to such entity's
by-laws or a resolution of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
such entity by himself or herself as such officer as his or her free and
voluntary act and deed and the free and voluntary act and deed of said entity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
______________________________
Notary Public
NOTARIAL SEAL
<PAGE>
STATE OF )
): ss.:
COUNTY OF )
On this ___th day of _____________, 199_, before me, the undersigned
officer, personally appeared ____________________, and acknowledged himself to
me to be the ____________________________ of ______________________, and that as
such officer, being duly authorized to do so pursuant to such entity's by-laws
or a resolution of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
such entity by himself or herself as such officer as his or her free and
voluntary act and deed and the free and voluntary act and deed of said entity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
______________________________
Notary Public
NOTARIAL SEAL
<PAGE>
SCHEDULE 1
SCHEDULE OF COLLATERAL
<PAGE>
EXHIBIT A-1
CLASS A-1 BOND
ICCMAC COMMERCIAL TRUST [_______]
CLASS A-1 COLLATERALIZED MORTGAGE BOND
SERIES 199_-_
Bond Interest Rate: _____% per annum Aggregate Principal Amount of the
Class A-1 Bonds as of the Closing
Date:
$__________
Date of Indenture: As of __________, 199_ Initial Principal Amount of this
Class A-1 Bond as of the Closing
Date: $__________
Accrual Date: __________, 199_ Initial Aggregate [Stated Principal
Balance of the Mortgage Pool]:
$__________
Closing Date: __________, 199_
First Payment Date: __________, 199_
Stated Maturity: ____________
Issuer: ICCMAC Commercial Trust [______] Indenture Trustee: _______________
Owner Trustee: _______________
Bond No. A-1-__
[CUSIP No. ________]
<PAGE>
[UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
<PAGE>
This certifies that [Cede & Co.] is the registered owner of this Bond which
is one of a series of Collateralized Mortgage Bonds (collectively, the "Bonds")
issued by the Issuer referred to above in multiple classes (each, a "Class")
pursuant to a Indenture dated as of __________, 199_ (the "Indenture"), between
Owner Trustee referred to above, on behalf of the Issuer, and the Indenture
Trustee referred to above, on behalf of the holders of the Bonds (the
"Bondholders"). A summary of certain of the pertinent provisions of the
Indenture is set forth hereafter. To the extent not defined herein, capitalized
terms used herein have the respective meanings assigned in the Indenture. This
Bond is issued under and is subject to the terms, provisions and conditions of
the Indenture, to which Indenture the Holder of this Bond by virtue of the
acceptance hereof assents and by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby promises
to pay to Cede & Co. or registered assigns, the principal sum of $______________
no later than ___________.
Pursuant to the terms of the Indenture, payments will be made on the Class
of Bonds to which this Bond belongs, pro rata among the Bonds of such Class
based on their respective Principal Amounts, on the ____ of each month or, if
any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the related Record Date. All payments made under the Indenture on this Bond will
be made by the Indenture Trustee by wire transfer of immediately available funds
to the account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Bond that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.
The Bonds are limited in right of payment to certain distributions on the
Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal Amount
hereof is binding on such Holder and all future Holders of this Bond and any
Bond issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds of the same Class in
authorized denominations evidencing the same aggregate Principal Amount, as
requested by the Holder surrendering the same.
Initially, this Bond will be held in book-entry form (all such Bonds held
from time to time in such form, the "Book-Entry Bonds"). Under certain
circumstances described herein, this Bond may cease to be held in book-entry
form and will be held as fully registered, physical bond (all such Bonds held
from time to time in such form the "Definitive Bonds").
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Bond is registrable in the Bond Register upon
surrender of this Bond for registration of transfer at the offices of the Bond
Registrar, duly endorsed by, or accompanied by a written instrument of transfer
in the form satisfactory to the Bond Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer or
exchange of this Bond, but the Indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
Notwithstanding the foregoing, for so long as this Bond is registered in
the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC, transfers of interests in this Bond shall be made through
the book-entry facilities of DTC, and accordingly, this Bond shall constitute a
Book-Entry Bond.
No transfer of this Bond or any interest herein shall be made (A) to any
employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested, including, without limitation, insurance company general accounts,
that is subject to ERISA or the Code (each, a "Plan"), or (B) to any Person who
is directly or indirectly purchasing such Bond or interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, except in
accordance with the Indenture. Each Person who acquires this Bond or any
interest herein shall be deemed to have represented and warranted to and for the
benefit of the Issuer, the Owner Trustee, the Administrator, the Master
Servicer, the Special Servicer, the Depositor, the Bond Registrar or the
Indenture Trustee that either: (i) it is neither a Plan nor any Person who is
directly or indirectly purchasing such Bond or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) the
purchase and holding of such Bond or any interest therein by or on behalf of, or
with assets of, such Person will not result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code or the imposition of an
excise tax under Section 4975 of the Code.
The Depositor, the Owner Trustee, the Indenture Trustee, the Bond Registrar
and any agent thereof may treat the Person in whose name this Bond is registered
as the owner hereof for all purposes, and none of the Depositor, the Owner
Trustee, the Indenture Trustee, the Bond Registrar or any such agent shall be
affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by the
Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Estate (to the extent of its rights therein) for
payments hereunder.
This Bond shall be construed in accordance with the internal laws of the
State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
ICCMAC COMMERCIAL TRUST [______]
By: _________________________, not in its
individual capacity but solely in its
capacity as Owner Trustee
By: _____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Bonds referred to in the within-mentioned
Indenture.
Dated:
__________________________________________
as Bond Registrar
By: _____________________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(please print or typewrite name and address
including postal zip code of assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Collateralized Mortgage Bond and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new Collateralized
Mortgage Bond of a like Percentage Interest and Class to the above named
assignee and deliver such Mortgage Pass-Through Bond to the following address:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to ________________________________________________
for the account of ____________________________________________________________.
Payments made by check (such check to be made payable to
_________________________) and all applicable statements and notices should be
mailed to ______________________________________________________________________
_______________________________________________________________________________.
This information is provided by _________________________, the Assignee
named above, or _________________________, as its agent.
<PAGE>
EXHIBIT A-2
CLASS A-2 BOND
ICCMAC COMMERCIAL TRUST [_______]
CLASS A-2 COLLATERALIZED MORTGAGE BOND
SERIES 199_-_
Bond Interest Rate: _____% per annum Aggregate Principal Amount of the
Class A-2 Bonds as of the Closing
Date:
$__________
Date of Indenture: As of __________, 199_ Initial Principal Amount of this
Class A-2 Bond as of the Closing
Date:
$__________
Accrual Date: __________, 199_ Initial Aggregate [Stated Principal
Balance of the Mortgage Pool]:
$__________
Closing Date: __________, 199_
First Payment Date: __________, 199_
Stated Maturity: ____________
Issuer: ICCMAC Commercial Trust [______] Indenture Trustee: _______________
Owner Trustee: _______________
Bond No. A-2-__
[CUSIP No. ________]
<PAGE>
[UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
<PAGE>
This certifies that [Cede & Co.] is the registered owner of this Bond which
is one of a series of Collateralized Mortgage Bonds (collectively, the "Bonds")
issued by the Issuer referred to above in multiple classes (each, a "Class")
pursuant to a Indenture dated as of __________, 199_ (the "Indenture"), between
Owner Trustee referred to above, on behalf of the Issuer, and the Indenture
Trustee referred to above, on behalf of the holders of the Bonds (the
"Bondholders"). A summary of certain of the pertinent provisions of the
Indenture is set forth hereafter. To the extent not defined herein, capitalized
terms used herein have the respective meanings assigned in the Indenture. This
Bond is issued under and is subject to the terms, provisions and conditions of
the Indenture, to which Indenture the Holder of this Bond by virtue of the
acceptance hereof assents and by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby promises
to pay to Cede & Co. or registered assigns, the principal sum of
$_______________ no later than _______________.
Pursuant to the terms of the Indenture, payments will be made on the Class
of Bonds to which this Bond belongs, pro rata among the Bonds of such Class
based on their respective Principal Amounts, on the ____ of each month or, if
any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the related Record Date. All payments made under the Indenture on this Bond will
be made by the Indenture Trustee by wire transfer of immediately available funds
to the account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Bond that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.
The Bonds are limited in right of payment to certain distributions on the
Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal Amount
hereof is binding on such Holder and all future Holders of this Bond and any
Bond issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds of the same Class in
authorized denominations evidencing the same aggregate Principal Amount, as
requested by the Holder surrendering the same.
Initially, this Bond will be held in book-entry form (all such Bonds held
from time to time in such form, the "Book-Entry Bonds"). Under certain
circumstances described herein, this Bond may cease to be held in book-entry
form and will be held as fully registered, physical bond (all such Bonds held
from time to time in such form the "Definitive Bonds").
No transfer of this Bond or any interest herein shall be made (A) to any
employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested, including, without limitation, insurance company general accounts,
that is subject to ERISA or the Code (each, a "Plan"), or (B) to any Person who
is directly or indirectly purchasing such Bond or interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, except in
accordance with the Indenture. Each Person who acquires this Bond or any
interest herein shall be deemed to have represented and warranted to and for the
benefit of the Issuer, the Owner Trustee, the Administrator, the Master
Servicer, the Special Servicer, the Depositor, the Bond Registrar or the
Indenture Trustee that either: (i) it is neither a Plan nor any Person who is
directly or indirectly purchasing such Bond or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) the
purchase and holding of such Bond or any interest therein by or on behalf of, or
with assets of, such Person will not result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code or the imposition of an
excise tax under Section 4975 of the Code.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Bond is registrable in the Bond Register upon
surrender of this Bond for registration of transfer at the offices of the Bond
Registrar, duly endorsed by, or accompanied by a written instrument of transfer
in the form satisfactory to the Bond Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer or
exchange of this Bond, but the Indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
Notwithstanding the foregoing, for so long as this Bond is registered in
the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC, transfers of interests in this Bond shall be made through
the book-entry facilities of DTC, and accordingly, this Bond shall constitute a
Book-Entry Bond.
The Depositor, the Owner Trustee, the Indenture Trustee, the Bond Registrar
and any agent thereof may treat the Person in whose name this Bond is registered
as the owner hereof for all purposes, and none of the Depositor, the Owner
Trustee, the Indenture Trustee, the Bond Registrar or any such agent shall be
affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by the
Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Estate (to the extent of its rights therein) for
payments hereunder.
This Bond shall be construed in accordance with the internal laws of the
State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
ICCMAC COMMERCIAL TRUST [______]
By: _________________________, not in its
individual capacity but solely in its
capacity as Owner Trustee
By: _____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Bonds referred to in the within-mentioned
Indenture.
Dated:
__________________________________________
as Bond Registrar
By: _____________________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(please print or typewrite name and address
including postal zip code of assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Collateralized Mortgage Bond and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new Collateralized
Mortgage Bond of a like Percentage Interest and Class to the above named
assignee and deliver such Mortgage Pass-Through Bond to the following address:
______________________________________________________________________
______________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to ________________________________________________
for the account of ____________________________________________________________.
Payments made by check (such check to be made payable to
_________________________) and all applicable statements and notices should be
mailed to ______________________________________________________________________
_______________________________________________________________________________.
This information is provided by _________________________, the Assignee
named above, or _________________________, as its agent.
<PAGE>
EXHIBIT A-3
CLASS B BOND
ICCMAC COMMERCIAL TRUST [_________]
CLASS B COLLATERALIZED MORTGAGE BOND
SERIES 199_-_
Bond Interest Rate: _____% per annum Aggregate Principal Amount of
the Class B Bonds as of the
Closing Date:
$__________
Date of Indenture: As of __________, 199_ Initial Principal Amount of this
Class B Bond as of the Closing
Date:
$__________
Accrual Date: __________, 199_ Initial Aggregate [Stated
Principal Balance of the
Mortgage Pool]:
$__________
Closing Date: __________, 199_
First Payment Date: __________, 199_
Stated Maturity: ____________
Issuer: ICCMAC Commercial Trust [______] Indenture Trustee: ____________
Owner Trustee: _______________
Bond No. B-__
[CUSIP No. ________]
<PAGE>
[UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
THIS BOND IS SUBORDINATE TO OTHER BONDS OF THE SAME SERIES, AS AND TO THE EXTENT
PROVIDED IN THE INDENTURE REFERRED TO HEREIN.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
<PAGE>
This certifies that [Cede & Co.] is the registered owner of this Bond which
is one of a series of Collateralized Mortgage Bonds (collectively, the "Bonds")
issued by the Issuer referred to above in multiple classes (each, a "Class")
pursuant to a Indenture dated as of __________, 199_ (the "Indenture"), between
Owner Trustee referred to above, on behalf of the Issuer, and the Indenture
Trustee referred to above, on behalf of the holders of the Bonds (the
"Bondholders"). A summary of certain of the pertinent provisions of the
Indenture is set forth hereafter. To the extent not defined herein, capitalized
terms used herein have the respective meanings assigned in the Indenture. This
Bond is issued under and is subject to the terms, provisions and conditions of
the Indenture, to which Indenture the Holder of this Bond by virtue of the
acceptance hereof assents and by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby promises
to pay to Cede & Co. or registered assigns, the principal sum of $_____________
no later than ___________.
Pursuant to the terms of the Indenture, payments will be made on the Class
of Bonds to which this Bond belongs, pro rata among the Bonds of such Class
based on their respective Principal Amounts, on the ____ of each month or, if
any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the Record Date. All payments made under the Indenture on this Bond will be made
by the Indenture Trustee by wire transfer of immediately available funds to the
account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Bond that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.
The Bonds are limited in right of payment to certain distributions on the
Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal Amount
hereof is binding on such Holder and all future Holders of this Bond and any
Bond issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds of the same Class in
authorized denominations evidencing the same aggregate Principal Amount, as
requested by the Holder surrendering the same.
Initially, this Bond will be held in book-entry form (all such Bonds held
from time to time in such form, the "Book-Entry Bonds"). In addition, in
connection with its acquisition of an interest in any Book-Entry Bond, the
transferee will be deemed to have made to and for the benefit of the Issuer, the
Company and the Indenture Trustee each of the representations, warranties and
covenants contained in such certificate to be so delivered to the transferor.
Under certain circumstances described herein, this Bond may cease to be held in
book-entry form and will be held as fully registered, physical bond (all such
Bonds held from time to time in such form the "Definitive Bonds").
No transfer of this Bond or any interest herein shall be made (A) to any
employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested, including, without limitation, insurance company general accounts,
that is subject to ERISA or the Code (each, a "Plan"), or (B) to any Person who
is directly or indirectly purchasing such Bond or interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, except in
accordance with the Indenture. Each Person who acquires this Bond or any
interest herein shall be deemed to have represented and warranted to and for the
benefit of the Issuer, the Owner Trustee, the Administrator, the Master
Servicer, the Special Servicer, the Depositor, the Bond Registrar or the
Indenture Trustee that either: (i) it is neither a Plan nor any Person who is
directly or indirectly purchasing such Bond or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) the
purchase and holding of such Bond or any interest therein by or on behalf of, or
with assets of, such Person will not result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code or the imposition of an
excise tax under Section 4975 of the Code.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Bond is registrable in the Bond Register upon
surrender of this Bond for registration of transfer at the offices of the Bond
Registrar, duly endorsed by, or accompanied by a written instrument of transfer
in the form satisfactory to the Bond Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer or
exchange of this Bond, but the Indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
Notwithstanding the foregoing, for so long as this Bond is registered in
the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC, transfers of interests in this Bond shall be made through
the book-entry facilities of DTC, and accordingly, this Bond shall constitute a
Book-Entry Bond.
The Depositor, the Owner Trustee, the Indenture Trustee, the Bond Registrar
and any agent thereof may treat the Person in whose name this Bond is registered
as the owner hereof for all purposes, and none of the Depositor, the Owner
Trustee, the Indenture Trustee, the Bond Registrar or any such agent shall be
affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by the
Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Estate (to the extent of its rights therein) for
payments hereunder.
This Bond shall be construed in accordance with the internal laws of the
State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
ICCMAC COMMERCIAL TRUST [_______]
By: _________________________, not in its
individual capacity but solely in its
capacity as Owner Trustee
By: _____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Bonds referred to in the within-mentioned
Indenture.
Dated:
__________________________________________
as Bond Registrar
By: _____________________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(please print or typewrite name and address
including postal zip code of assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Collateralized Mortgage Bond and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new Collateralized
Mortgage Bond of a like Percentage Interest and Class to the above named
assignee and deliver such Mortgage Pass-Through Bond to the following address:
______________________________________________________________________
______________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to ________________________________________________
for the account of ____________________________________________________________.
Payments made by check (such check to be made payable to
_________________________) and all applicable statements and notices should be
mailed to ______________________________________________________________________
_______________________________________________________________________________.
This information is provided by _________________________, the Assignee
named above, or _________________________, as its agent.
<PAGE>
EXHIBIT A-4
CLASS C BOND
ICCMAC COMMERCIAL TRUST [______]
CLASS C COLLATERALIZED MORTGAGE BOND
SERIES 199_-_
Bond Interest Rate: _____% per annum Aggregate Principal Amount of the
Class C Bonds as of the Closing
Date:
$__________
Date of Indenture: As of __________, 199_ Initial Principal Amount of this
Class C Bond as of the Closing
Date:
$__________
Accrual Date: __________, 199_ Initial Aggregate [Stated Principal
Balance of the Mortgage Pool]:
$___________
Closing Date: __________, 199_
First Payment Date: __________, 199_
Stated Maturity: ____________
Issuer: ICCMAC Commercial Trust [______] Indenture Trustee: _______________
Owner Trustee: _______________
Bond No. C-__
[CUSIP No. ________]
<PAGE>
[UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS BOND. THE
ISSUE DATE OF THIS BOND IS __________, 199_. ASSUMING THAT THE MORTGAGE LOANS
ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY PREPAYMENT, THIS BOND HAS BEEN
ISSUED WITH NO MORE THAN $______ OF OID PER $1,000 OF INITIAL PRINCIPAL AMOUNT,
THE YIELD TO MATURITY IS ____% PER ANNUM, AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF INITIAL PRINCIPAL
AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT
ANY PARTICULAR RATE.
THIS BOND IS SUBORDINATE TO OTHER BONDS OF THE SAME SERIES, AS AND TO THE EXTENT
PROVIDED IN THE INDENTURE REFERRED TO HEREIN.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
<PAGE>
This certifies that Cede & Co. is the registered owner (the "Holder") of
this Bond which is one of a series of Collateralized Mortgage Bonds
(collectively, the "Bonds") issued by the Issuer referred to above in multiple
classes (each, a "Class") pursuant to a Indenture dated as of __________, 199_
(the "Indenture"), between Owner Trustee referred to above, on behalf of the
Issuer, and the Indenture Trustee referred to above, on behalf of the holders of
the Bonds (the "Bondholders"). A summary of certain of the pertinent provisions
of the Indenture is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the respective meanings assigned in the
Indenture. This Bond is issued under and is subject to the terms, provisions and
conditions of the Indenture, to which Indenture the Holder of this Bond by
virtue of the acceptance hereof assents and by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby promises
to pay to the Holder hereof the principal sum of $_____________________ no later
than __________________.
Pursuant to the terms of the Indenture, payments will be made on the Class
of Bonds to which this Bond belongs, pro rata among the Bonds of such Class
based on their respective Principal Amounts, on the ____ of each month or, if
any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the Record Date. All payments made under the Indenture on this Bond will be made
by the Indenture Trustee by wire transfer of immediately available funds to the
account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Bond that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.
The Bonds are limited in right of payment to certain distributions on the
Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal Amount
hereof is binding on such Holder and all future Holders of this Bond and any
Bond issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds of the same Class in
authorized denominations evidencing the same aggregate Principal Amount, as
requested by the Holder surrendering the same.
Initially, this Bond will be held in book-entry form (all such Bonds held
from time to time in such form, the "Book-Entry Bonds"). In addition, in
connection with its acquisition of an interest in any Book-Entry Bond, the
transferee will be deemed to have made to and for the benefit of the Issuer, the
Company and the Indenture Trustee each of the representations, warranties and
covenants contained in such certificate to be so delivered to the transferor.
Under certain circumstances described herein, this Bond may cease to be held in
book-entry form and will be held as fully registered, physical bond (all such
Bonds held from time to time in such form the "Definitive Bonds").
No transfer of this Bond or any interest herein shall be made (A) to any
employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested, including, without limitation, insurance company general accounts,
that is subject to ERISA or the Code (each, a "Plan"), or (B) to any Person who
is directly or indirectly purchasing such Bond or interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, except in
accordance with the Indenture. Each Person who acquires this Bond or any
interest herein shall be deemed to have represented and warranted to and for the
benefit of the Issuer, the Owner Trustee, the Administrator, the Master
Servicer, the Special Servicer, the Depositor, the Bond Registrar or the
Indenture Trustee that either: (i) it is neither a Plan nor any Person who is
directly or indirectly purchasing such Bond or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) the
purchase and holding of such Bond or any interest therein by or on behalf of, or
with assets of, such Person will not result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code or the imposition of an
excise tax under Section 4975 of the Code.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Bond is registerable in the Bond Register upon
surrender of this Bond for registration of transfer at the offices of the Bond
Registrar, duly endorsed by, or accompanied by a written instrument of transfer
in the form satisfactory to the Bond Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer or
exchange of this Bond, but the Indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
The Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the
Bond Registrar and any agent thereof may treat the Person in whose name this
Bond is registered as the owner hereof for all purposes, and none of the
Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by the
Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Estate (to the extent of its rights therein) for
payments hereunder.
This Bond shall be construed in accordance with the internal laws of the
State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
ICCMAC COMMERCIAL TRUST [_________]
By: _________________________, not in its
individual capacity but solely in its
capacity as Owner Trustee
By: _____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class C Bonds referred to in the within-mentioned
Indenture.
Dated:
__________________________________________
as Bond Registrar
By: _____________________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(please print or typewrite name and address
including postal zip code of assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Collateralized Mortgage Bond and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new Collateralized
Mortgage Bond of a like Percentage Interest and Class to the above named
assignee and deliver such Mortgage Pass-Through Bond to the following address:
______________________________________________________________________
______________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to ________________________________________________
for the account of ____________________________________________________________.
Payments made by check (such check to be made payable to
_________________________) and all applicable statements and notices should be
mailed to ______________________________________________________________________
_______________________________________________________________________________.
This information is provided by _________________________, the Assignee
named above, or _________________________, as its agent.
<PAGE>
EXHIBIT A-5
CLASS D BOND
ICCMAC COMMERCIAL TRUST [________]
CLASS D COLLATERALIZED MORTGAGE BOND
SERIES 199_-_
Bond Interest Rate: _____% per annum Aggregate Principal Amount of the
Class D Bonds as of the Closing
Date:
$__________
Date of Indenture: As of __________, 199_ Initial Principal Amount of this
Class D Bond as of the Closing
Date:
$__________
Accrual Date: __________, 199_ Initial Aggregate [Stated Principal
Balance of the Mortgage Pool]:
$__________
Closing Date: __________, 199_
First Payment Date: __________, 199_
Stated Maturity: ____________
Issuer: ICCMAC Commercial Trust [______] Indenture Trustee: _______________
Owner Trustee: _______________
Bond No. D-__
[CUSIP No. ________]
<PAGE>
[UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS BOND. THE
ISSUE DATE OF THIS BOND IS __________, 199_. ASSUMING THAT THE MORTGAGE LOANS
ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY PREPAYMENT, THIS BOND HAS BEEN
ISSUED WITH NO MORE THAN $______ OF OID PER $1,000 OF INITIAL PRINCIPAL AMOUNT,
THE YIELD TO MATURITY IS ____% PER ANNUM, AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF INITIAL PRINCIPAL
AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT
ANY PARTICULAR RATE.]
THIS BOND IS SUBORDINATE TO OTHER BONDS OF THE SAME SERIES, AS AND TO THE EXTENT
PROVIDED IN THE INDENTURE REFERRED TO HEREIN.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
<PAGE>
This certifies that Cede & Co. is the registered owner (the "Holder") of
this Bond which is one of a series of Collateralized Mortgage Bonds
(collectively, the "Bonds") issued by the Issuer referred to above in multiple
classes (each, a "Class") pursuant to a Indenture dated as of __________, 199_
(the "Indenture"), between Owner Trustee referred to above, on behalf of the
Issuer, and the Indenture Trustee referred to above, on behalf of the holders of
the Bonds (the "Bondholders"). A summary of certain of the pertinent provisions
of the Indenture is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the respective meanings assigned in the
Indenture. This Bond is issued under and is subject to the terms, provisions and
conditions of the Indenture, to which Indenture the Holder of this Bond by
virtue of the acceptance hereof assents and by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby promises
to pay to the Holder hereof the principal sum of $_____________________ no later
than __________________.
Pursuant to the terms of the Indenture, payments will be made on the Class
of Bonds to which this Bond belongs, pro rata among the Bonds of such Class
based on their respective Principal Amounts, on the ____ of each month or, if
any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the Record Date. All payments made under the Indenture on this Bond will be made
by the Indenture Trustee by wire transfer of immediately available funds to the
account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Bond that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.
The Bonds are limited in right of payment to certain distributions on the
Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal Amount
hereof is binding on such Holder and all future Holders of this Bond and any
Bond issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds of the same Class in
authorized denominations evidencing the same aggregate Principal Amount, as
requested by the Holder surrendering the same.
Initially, this Bond will be held in book-entry form (all such Bonds held
from time to time in such form, the "Book-Entry Bonds"). In addition, in
connection with its acquisition of an interest in any Book-Entry Bond, the
transferee will be deemed to have made to and for the benefit of the Issuer, the
Company and the Indenture Trustee each of the representations, warranties and
covenants contained in such certificate to be so delivered to the transferor.
Under certain circumstances described herein, this Bond may cease to be held in
book-entry form and will be held as fully registered, physical bond (all such
Bonds held from time to time in such form the "Definitive Bonds").
No transfer of this Bond or any interest herein shall be made (A) to any
employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested, including, without limitation, insurance company general accounts,
that is subject to ERISA or the Code (each, a "Plan"), or (B) to any Person who
is directly or indirectly purchasing such Bond or interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, except in
accordance with the Indenture. Each Person who acquires this Bond or any
interest herein shall be deemed to have represented and warranted to and for the
benefit of the Issuer, the Owner Trustee, the Administrator, the Master
Servicer, the Special Servicer, the Depositor, the Bond Registrar or the
Indenture Trustee that either: (i) it is neither a Plan nor any Person who is
directly or indirectly purchasing such Bond or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) the
purchase and holding of such Bond or any interest therein by or on behalf of, or
with assets of, such Person will not result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code or the imposition of an
excise tax under Section 4975 of the Code.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Bond is registerable in the Bond Register upon
surrender of this Bond for registration of transfer at the offices of the Bond
Registrar, duly endorsed by, or accompanied by a written instrument of transfer
in the form satisfactory to the Bond Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer or
exchange of this Bond, but the Indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
The Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the
Bond Registrar and any agent thereof may treat the Person in whose name this
Bond is registered as the owner hereof for all purposes, and none of the
Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by the
Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Estate (to the extent of its rights therein) for
payments hereunder.
This Bond shall be construed in accordance with the internal laws of the
State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
ICCMAC COMMERCIAL TRUST [______]
By: _________________________, not in its
individual capacity but solely in its
capacity as Owner Trustee
By: _____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class D Bonds referred to in the within-mentioned
Indenture.
Dated:
__________________________________________
as Bond Registrar
By: _____________________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(please print or typewrite name and address
including postal zip code of assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Collateralized Mortgage Bond and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new Collateralized
Mortgage Bond of a like Percentage Interest and Class to the above named
assignee and deliver such Mortgage Pass-Through Bond to the following address:
______________________________________________________________________
______________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to ________________________________________________
for the account of ____________________________________________________________.
Payments made by check (such check to be made payable to
_________________________) and all applicable statements and notices should be
mailed to ______________________________________________________________________
_______________________________________________________________________________.
This information is provided by _________________________, the Assignee
named above, or _________________________, as its agent.
<PAGE>
EXHIBIT A-6
CLASS E BOND
ICCMAC COMMERCIAL TRUST [_______]
CLASS E COLLATERALIZED MORTGAGE BOND
SERIES 199_-_
Bond Interest Rate: _____% per annum Aggregate Principal Amount of the
Class E Bonds as of the Closing
Date:
$__________
Date of Indenture: As of __________, 199_ Initial Principal Amount of this
Class E Bond as of the Closing
Date:
$__________
Accrual Date: __________, 199_ Initial Aggregate [Stated Principal
Balance of the Mortgage Pool]:
$__________
Closing Date: __________, 199_
First Payment Date: __________, 199_
Stated Maturity: ____________
Issuer: ICCMAC Commercial Trust [______] Indenture Trustee: _______________
Owner Trustee: _______________
Bond No. E-__
[CUSIP No. ________]
<PAGE>
THIS BOND HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE. ANY
RESALE, PLEDGE, TRANSFER OR OTHER DISPOSITION OF THIS BOND OR ANY INTEREST
HEREIN WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A
TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH
IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 13 OF THE INDENTURE REFERRED TO
HEREIN.
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS BOND. THE
ISSUE DATE OF THIS BOND IS __________, 199_. ASSUMING THAT THE MORTGAGE LOANS
ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY PREPAYMENT, THIS BOND HAS BEEN
ISSUED WITH NO MORE THAN $______ OF OID PER $1,000 OF INITIAL PRINCIPAL AMOUNT,
THE YIELD TO MATURITY IS ____% PER ANNUM, AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF INITIAL PRINCIPAL
AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT
ANY PARTICULAR RATE.]
THIS BOND IS SUBORDINATE TO OTHER BONDS OF THE SAME SERIES, AS AND TO THE EXTENT
PROVIDED IN THE INDENTURE REFERRED TO HEREIN.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
<PAGE>
This certifies that [_____________] is the registered owner (the "Holder")
of this Bond which is one of a series of Collateralized Mortgage Bonds
(collectively, the "Bonds") issued by the Issuer referred to above in multiple
classes (each, a "Class") pursuant to a Indenture dated as of __________,
199_(the "Indenture"), between Owner Trustee referred to above, on behalf of the
Issuer, and the Indenture Trustee referred to above, on behalf of the holders of
the Bonds (the "Bondholders"). A summary of certain of the pertinent provisions
of the Indenture is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the respective meanings assigned in the
Indenture. This Bond is issued under and is subject to the terms, provisions and
conditions of the Indenture, to which Indenture the Holder of this Bond by
virtue of the acceptance hereof assents and by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby promises
to pay to the Holder hereof, the principal sum of $_________________ no later
than ______________________.
Pursuant to the terms of the Indenture, payments will be made on the Class
of Bonds to which this Bond belongs, pro rata among the Bonds of such Class
based on their respective Principal Amounts, on the ____ of each month or, if
any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the Record Date. All payments made under the Indenture on this Bond will be made
by the Indenture Trustee by wire transfer of immediately available funds to the
account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Bond that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.
The Bonds are limited in right of payment to certain distributions on the
Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal Amount
hereof is binding on such Holder and all future Holders of this Bond and any
Bond issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds of the same Class in
authorized denominations evidencing the same aggregate Principal Amount, as
requested by the Holder surrendering the same.
No transfer, sale, pledge or other disposition of this Bond or interest
herein may be made by an investor unless that transfer, sale, pledge or other
disposition is exempt from the registration and/or qualification requirements of
the Securities Act and any applicable state securities laws, or is otherwise
made in accordance with the Securities Act and such state securities laws. If a
transfer of this Bond is to be made without registration under the Securities
Act, then the registrar for the Bonds (the "Bond Registrar", which shall
initially be the Indenture Trustee) is required to refuse to register such
transfer unless it receives: (i) a certificate from the Bondholder desiring to
effect such transfer substantially in the form attached to the Indenture as
Exhibit D-1A; or (ii) a certificate from such Bondholder substantially in the
form attached to the Indenture as Exhibit D-1B and a certificate from such
Bondholder's prospective transferee substantially in the form attached to the
Indenture either as Exhibit D-2A or as Exhibit D-2B; or (iii) an opinion of
counsel satisfactory to the Indenture Trustee to the effect that such transfer
may be made without registration under the Securities Act (which opinion of
counsel shall not be an expense of the Trust Estate (as defined herein) or of
the Issuer, the Owner Trustee, the Administrator, the Depositor, the Indenture
Trustee or the Bond Registrar in their respective capacities as such), together
with the written certification(s) as to the facts surrounding such transfer from
the Bondholder desiring to effect such transfer and/or such Bondholder's
prospective transferee on which such opinion of counsel is based. Any investor
desiring to effect a transfer of this Bond or any interest herein without
registration under the Securities Act and registration or qualification under
applicable state securities laws will be required to, and by acceptance of this
Bond or any interest herein will be deemed to have agreed to, indemnify the
Issuer, the Owner Trustee, the Administrator, the Depositor, the Indenture
Trustee and the Bond Registrar against any liability that may result if the
transfer is not exempt from such registration and/or qualification or is not
made in accordance with such federal and state laws.
No transfer of this Bond or any interest herein shall be made (A) to any
employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested, including, without limitation, insurance company general accounts,
that is subject to ERISA or the Code (each, a "Plan"), or (B) to any Person who
is directly or indirectly purchasing such Bond or interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, except in
accordance with the Indenture. Each Person who acquires this Bond or any
interest herein shall be deemed to have represented and warranted to and for the
benefit of the Issuer, the Owner Trustee, the Administrator, the Master
Servicer, the Special Servicer, the Depositor, the Bond Registrar or the
Indenture Trustee that either: (i) it is neither a Plan nor any Person who is
directly or indirectly purchasing such Bond or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) the
purchase and holding of such Bond or any interest therein by or on behalf of, or
with assets of, such Person will not result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code or the imposition of an
excise tax under Section 4975 of the Code.
If a Person is acquiring this Bond or interest herein as a fiduciary or
agent for one or more accounts, such Person shall be required to deliver to the
Bond Registrar a certification to the effect that, and such other evidence as
may be reasonably required by the Indenture Trustee to confirm that, it has (i)
sole investment discretion with respect to each such account and (ii) full power
to make the foregoing acknowledgments, representations, warranties,
certifications and agreements with respect to each such account as set forth
above.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Bond is registerable in the Bond Register upon
surrender of this Bond for registration of transfer at the offices of the Bond
Registrar, duly endorsed by, or accompanied by a written instrument of transfer
in the form satisfactory to the Bond Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer or
exchange of this Bond, but the Indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
The Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the
Bond Registrar and any agent thereof may treat the Person in whose name this
Bond is registered as the owner hereof for all purposes, and none of the
Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by the
Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Estate (to the extent of its rights therein) for
payments hereunder.
This Bond shall be construed in accordance with the internal laws of the
State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
ICCMAC COMMERCIAL TRUST [_______]
By: _________________________, not in its
individual capacity but solely in its
capacity as Owner Trustee
By: _____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class E Bonds referred to in the within-mentioned
Indenture.
Dated:
__________________________________________
as Bond Registrar
By: _____________________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(please print or typewrite name and address
including postal zip code of assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Collateralized Mortgage Bond and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new Collateralized
Mortgage Bond of a like Percentage Interest and Class to the above named
assignee and deliver such Mortgage Pass-Through Bond to the following address:
______________________________________________________________________
______________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to ________________________________________________
for the account of ____________________________________________________________.
Payments made by check (such check to be made payable to
_________________________) and all applicable statements and notices should be
mailed to _____________________________________________________________________.
This information is provided by _________________________, the Assignee
named above, or _________________________, as its agent.
<PAGE>
EXHIBIT A-7
CLASS F BOND
ICCMAC COMMERCIAL TRUST [_______]
CLASS F COLLATERALIZED MORTGAGE BOND
SERIES 199_-_
Bond Interest Rate: _____% per annum Aggregate Principal Amount of the
Class F Bonds as of the Closing
Date:
$__________
Date of Indenture: As of __________, 199_ Initial Principal Amount of this
Class F Bond as of the Closing
Date:
$__________
Accrual Date: __________, 199_ Initial Aggregate [Stated Principal
Balance of the Mortgage Pool]:
$__________
Closing Date: __________, 199_
First Payment Date: __________, 199_
Stated Maturity: ____________
Issuer: ICCMAC Commercial Trust [______] Indenture Trustee: _______________
Owner Trustee: _______________
Bond No. F-__
[CUSIP No. ________]
<PAGE>
THIS BOND HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE. ANY
RESALE, PLEDGE, TRANSFER OR OTHER DISPOSITION OF THIS BOND OR ANY INTEREST
HEREIN WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A
TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH
IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 9 OF THE INDENTURE REFERRED TO
HEREIN.
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS BOND. THE
ISSUE DATE OF THIS BOND IS __________, 199_. ASSUMING THAT THE MORTGAGE LOANS
ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY PREPAYMENT, THIS BOND HAS BEEN
ISSUED WITH NO MORE THAN $______ OF OID PER $1,000 OF INITIAL PRINCIPAL AMOUNT,
THE YIELD TO MATURITY IS ____% PER ANNUM, AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF INITIAL PRINCIPAL
AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT
ANY PARTICULAR RATE.]
THIS BOND IS SUBORDINATE TO OTHER BONDS OF THE SAME SERIES, AS AND TO THE EXTENT
PROVIDED IN THE INDENTURE REFERRED TO HEREIN.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
<PAGE>
This certifies that [ ] is the registered owner (the "Holder") of this Bond
which is one of a series of Collateralized Mortgage Bonds (collectively, the
"Bonds") issued by the Issuer referred to above in multiple classes (each, a
"Class") pursuant to a Indenture dated as of __________, 199_ (the "Indenture"),
between Owner Trustee referred to above, on behalf of the Issuer, and the
Indenture Trustee referred to above, on behalf of the holders of the Bonds (the
"Bondholders"). A summary of certain of the pertinent provisions of the
Indenture is set forth hereafter. To the extent not defined herein, capitalized
terms used herein have the respective meanings assigned in the Indenture. This
Bond is issued under and is subject to the terms, provisions and conditions of
the Indenture, to which Indenture the Holder of this Bond by virtue of the
acceptance hereof assents and by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby promises
to pay to the Holder hereof, the principal sum of $____________ no later than
_______________.
Pursuant to the terms of the Indenture, payments will be made on the Class
of Bonds to which this Bond belongs, pro rata among the Bonds of such Class
based on their respective Principal Amounts, on the ____ of each month or, if
any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the Record Date. All payments made under the Indenture on this Bond will be made
by the Indenture Trustee by wire transfer of immediately available funds to the
account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Bond that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.
The Bonds are limited in right of payment to certain distributions on the
Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal Amount
hereof is binding on such Holder and all future Holders of this Bond and any
Bond issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds of the same Class in
authorized denominations evidencing the same aggregate Principal Amount, as
requested by the Holder surrendering the same.
No transfer, sale, pledge or other disposition of this Bond or interest
herein may be made by an investor unless that transfer, sale, pledge or other
disposition is exempt from the registration and/or qualification requirements of
the Securities Act and any applicable state securities laws, or is otherwise
made in accordance with the Securities Act and such state securities laws. If a
transfer of this Bond is to be made without registration under the Securities
Act, then the registrar for the Bonds (the "Bond Registrar", which shall
initially be the Indenture Trustee) is required to refuse to register such
transfer unless it receives: (i) a certificate from the Bondholder desiring to
effect such transfer substantially in the form attached to the Indenture as
Exhibit D-1A; or (ii) a certificate from such Bondholder substantially in the
form attached to the Indenture as Exhibit D-1B and a certificate from such
Bondholder's prospective transferee substantially in the form attached to the
Indenture either as Exhibit D-2A or as Exhibit D-2B; or (iii) an opinion of
counsel satisfactory to the Indenture Trustee to the effect that such transfer
may be made without registration under the Securities Act (which opinion of
counsel shall not be an expense of the Trust Estate (as defined herein) or of
the Issuer, the Owner Trustee, the Administrator, the Depositor, the Indenture
Trustee or the Bond Registrar in their respective capacities as such), together
with the written certification(s) as to the facts surrounding such transfer from
the Bondholder desiring to effect such transfer and/or such Bondholder's
prospective transferee on which such opinion of counsel is based. Any investor
desiring to effect a transfer of this Bond or any interest herein without
registration under the Securities Act and registration or qualification under
applicable state securities laws will be required to, and by acceptance of this
Bond or any interest herein will be deemed to have agreed to, indemnify the
Issuer, the Owner Trustee, the Administrator, the Depositor, the Indenture
Trustee and the Bond Registrar against any liability that may result if the
transfer is not exempt from such registration and/or qualification or is not
made in accordance with such federal and state laws.
No transfer of this Bond or any interest herein shall be made (A) to any
employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested, including, without limitation, insurance company general accounts,
that is subject to ERISA or the Code (each, a "Plan"), or (B) to any Person who
is directly or indirectly purchasing such Bond or interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, except in
accordance with the Indenture. Each Person who acquires this Bond or any
interest herein shall be deemed to have represented and warranted to and for the
benefit of the Issuer, the Owner Trustee, the Administrator, the Master
Servicer, the Special Servicer, the Depositor, the Bond Registrar or the
Indenture Trustee that either: (i) it is neither a Plan nor any Person who is
directly or indirectly purchasing such Bond or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) the
purchase and holding of such Bond or any interest therein by or on behalf of, or
with assets of, such Person will not result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code or the imposition of an
excise tax under Section 4975 of the Code.
If a Person is acquiring this Bond or any interest herein as a fiduciary or
agent for one or more accounts, such Person shall be required to deliver to the
Bond Registrar a certification to the effect that, and such other evidence as
may be reasonably required by the Indenture Trustee to confirm that, it has (i)
sole investment discretion with respect to each such account and (ii) full power
to make the foregoing acknowledgments, representations, warranties,
certifications and agreements with respect to each such account as set forth
above.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Bond is registerable in the Bond Register upon
surrender of this Bond for registration of transfer at the offices of the Bond
Registrar, duly endorsed by, or accompanied by a written instrument of transfer
in the form satisfactory to the Bond Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer or
exchange of this Bond, but the Indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
The Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the
Bond Registrar and any agent thereof may treat the Person in whose name this
Bond is registered as the owner hereof for all purposes, and none of the
Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by the
Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Estate (to the extent of its rights therein) for
payments hereunder.
This Bond shall be construed in accordance with the internal laws of the
State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
ICCMAC COMMERCIAL TRUST [______]
By: _________________________, not in its
individual capacity but solely in its
capacity as Owner Trustee
By: _____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class F Bonds referred to in the within-mentioned
Indenture.
Dated:
__________________________________________
as Bond Registrar
By: _____________________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
(please print or typewrite name and address
including postal zip code of assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Collateralized Mortgage Bond and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new Collateralized
Mortgage Bond of a like Percentage Interest and Class to the above named
assignee and deliver such Mortgage Pass-Through Bond to the following address:
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to ________________________________________________
for the account of ____________________________________________________________.
Payments made by check (such check to be made payable to
_________________________) and all applicable statements and notices should be
mailed to ______________________________________________________________________
_______________________________________________________________________________.
This information is provided by _________________________, the Assignee
named above, or _________________________, as its agent.
<PAGE>
EXHIBIT B
FORM OF TRUSTEE REPORT
<PAGE>
EXHIBIT C
SCHEDULE OF EXCEPTIONS TO MORTGAGE FILE DELIVERY
<PAGE>
EXHIBIT D-1A
FORM I OF TRANSFEROR CERTIFICATE
FOR TRANSFERS OF DEFINITIVE BONDS
[Date]
[BOND REGISTRAR]
Re: ICCMAC Commercial Trust [______],
Collateralized Mortgage Bonds, Series 199_-_ (the "Bonds")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
Class ______ Bonds having an initial aggregate Principal Amount as of
__________, 199_ (the "Closing Date") of $_____________ (the "Transferred
Bonds"). The Bonds, including the Transferred Bonds, were issued pursuant to a
Indenture dated as of __________, 199_ (the "Indenture"), between ICCMAC
Commercial Trust [______], as issuer (the "Issuer"), and
_______________________, as trustee (the "Indenture Trustee"). All capitalized
terms used but not otherwise defined herein shall have the respective meanings
set forth in the Indenture. The Transferee hereby certifies, represents and
warrants to you, as Bond Registrar, and for the benefit of the Issuer, the
Indenture Trustee and the Transferee, that:
1. The Transferor is the lawful owner of the Transferred Bonds with
the full right to transfer such Bonds free from any and all claims and
encumbrances whatsoever.
2. Neither the Transferor nor anyone acting on its behalf has (a)
offered, transferred, pledged, sold or otherwise disposed of any Bond, any
interest in any Bond or any other similar security to any person in any
manner, (b) solicited any offer to buy or accept a transfer, pledge or
other disposition of any Bond, any interest in any Bond or any other
similar security from any person in any manner, (c) otherwise approached or
negotiated with respect to any Bond, any interest in any Bond or any other
similar security with any person in any manner, (d) made any general
solicitation by means of general advertising or in any other manner, or (e)
taken any other action, which (in the case of any of the acts described in
clauses (a) through (e) hereof) would constitute a distribution of any Bond
under the Securities Act of 1933, as amended (the "Securities Act"), or
would render the disposition of any Bond a violation of Section 5 of the
Securities Act or any state securities laws, or would require registration
or qualification of any Bond pursuant to the Securities Act or any state
securities laws.
3. The Transferor and any person acting on behalf of the Transferor in
this matter reasonably believe that the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A ("Rule 144A")
under the Securities Act (a "Qualified Institutional Buyer") purchasing for
its own account or for the account of a Qualified Institutional Buyer. In
determining whether the Transferee is a Qualified Institutional Buyer, the
Transferor and any person acting on behalf of the Transferor in this matter
have relied upon the following method(s) of establishing the Transferee's
ownership and discretionary investments of securities (check one or more):
___ (a) The Transferee's most recent publicly available financial
statements, which statements present the information as of a date
within 16 months preceding the date of sale of the Transferred
Bond in the case of a U.S. purchaser and within 18 months
preceding such date of sale for a foreign purchaser; or
___ (b) The most recent publicly available information appearing in
documents filed by the Transferee with the Securities and
Exchange Commission or another United States federal, state, or
local governmental agency or self-regulatory organization, or
with a foreign governmental agency or self-regulatory
organization, which information is as of a date within 16 months
preceding the date of sale of the Transferred Bond in the case of
a U.S. purchaser and within 18 months preceding such date of sale
for a foreign purchaser; or
___ (c) The most recent publicly available information appearing in a
recognized securities manual, which information is as of a date
within 16 months preceding the date of sale of the Transferred
Bond in the case of a U.S. purchaser and within 18 months
preceding such date of sale for a foreign purchaser; or
___ (d) A certification by the chief financial officer, a person
fulfilling an equivalent function, or other executive officer of
the Transferee, specifying the amount of securities owned and
invested on a discretionary basis by the Transferee as of a
specific date on or since the close of the Transferee's most
recent fiscal year, or, in the case of a Transferee that is a
member of a "family of investment companies", as that term is
defined in Rule 144A, a certification by an executive officer of
the investment adviser specifying the amount of securities owned
by the "family of investment companies" as of a specific date on
or since the close of the Transferee's most recent fiscal year.
4. The Transferor and any person acting on behalf of the Transferor
understand that in determining the aggregate amount of securities owned and
invested on a discretionary basis by an entity for purposes of establishing
whether such entity is a Qualified Institutional Buyer:
(a) the following instruments and interests shall be excluded:
securities of issuers that are affiliated with the Transferee;
securities that are part of an unsold allotment to or
subscription by the Transferee, if the Transferee is a dealer;
securities of issuers that are part of the Transferee's "family
of investment companies", if the Transferee is a registered
investment company; bank deposit notes and certificates of
deposit; loan participations; repurchase agreements; securities
owned but subject to a repurchase agreement; and currency,
interest rate and commodity swaps;
(b) the aggregate value of the securities shall be the cost of
such securities, except where the entity reports its securities
holdings in its financial statements on the basis of their market
value, and no current information with respect to the cost of
those securities has been published, in which case the securities
may be valued at market;
(c) securities owned by subsidiaries of the entity that are
consolidated with the entity in its financial statements prepared
in accordance with generally accepted accounting principles may
be included if the investments of such subsidiaries are managed
under the direction of the entity, except that, unless the entity
is a reporting company under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, securities owned by
such subsidiaries may not be included if the entity itself is a
majority-owned subsidiary that would be included in the
consolidated financial statements of another enterprise.
5. The Transferor or a person acting on its behalf has taken reasonable
steps to ensure that the Transferee is aware that the Transferor is relying on
the exemption from the provisions of Section 5 of the Securities Act provided by
Rule 144A.
6. The Transferor or a person acting on its behalf has furnished, or caused
to be furnished, to the Transferee all information regarding (a) the Transferred
Bonds and payments thereon, (b) the nature and performance of the [Mortgage
Collateral][Pledged Mortgage-Backed Securities], (c) the Indenture and the Trust
Estate, and (d) any credit enhancement mechanism associated with the Transferred
Bonds, that the Transferee has requested.
Very truly yours,
_________________________________________
(Transferor)
By: ____________________________________
Name: __________________________________
Title: _________________________________
<PAGE>
EXHIBIT D-1B
FORM II OF TRANSFEROR CERTIFICATE
FOR TRANSFERS OF DEFINITIVE BONDS
[Date]
[BOND REGISTRAR]
Re: ICCMAC Commercial Trust [______], Collateralized Mortgage Bonds,
Series 199_-_ (the "Bonds")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
Class ______ Bonds having an initial aggregate Principal Amount as of
__________, 199_ (the "Closing Date") of $_____________ (the "Transferred
Bonds"). The Bonds, including the Transferred Bonds, were issued pursuant to a
Indenture dated as of __________, 199_ (the "Indenture"), between ICCMAC
Commercial Trust [______], as issuer (the "Issuer"), and
_______________________, as trustee (the "Indenture Trustee"). All capitalized
terms used but not otherwise defined herein shall have the respective meanings
set forth in the Indenture. The Transferee hereby certifies, represents and
warrants to you, as Bond Registrar, and for the benefit of the Issuer, the
Indenture Trustee and the Transferee, that:
1. The Transferor is the lawful owner of the Transferred Bonds with
the full right to transfer such Bonds free from any and all claims and
encumbrances whatsoever.
2. Neither the Transferor nor anyone acting on its behalf has (a)
offered, transferred, pledged, sold or otherwise disposed of any Bond, any
interest in any Bond or any other similar security to any person in any
manner, (b) solicited any offer to buy or accept a transfer, pledge or
other disposition of any Bond, any interest in any Bond or any other
similar security from any person in any manner, (c) otherwise approached or
negotiated with respect to any Bond, any interest in any Bond or any other
similar security with any person in any manner, (d) made any general
solicitation by means of general advertising or in any other manner, or (e)
taken any other action, which (in the case of any of the acts described in
clauses (a) through (e) hereof) would constitute a distribution of any Bond
under the Securities Act of 1933, as amended (the "Securities Act"), or
would render the disposition of any Bond a violation of Section 5 of the
Securities Act or any state securities laws, or would require registration
or qualification of any Bond pursuant to the Securities Act or any state
securities laws.
Very truly yours,
_________________________________________
(Transferor)
By: ____________________________________
Name: __________________________________
Title: _________________________________
<PAGE>
EXHIBIT D-2A
FORM I OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF DEFINITIVE BONDS
[Date]
[BOND REGISTRAR]
Re: ICCMAC Commercial Trust [______],
Collateralized Mortgage Bonds, Series 199_-_ (the "Bonds")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
Class ___ Bonds having an initial aggregate Principal Amount as of __________,
199_ (the "Closing Date") of $______________ (the "Transferred Bonds"). The
Bonds, including the Transferred Bonds, were issued pursuant to a Indenture
dated as of __________, 199_ (the "Indenture"), between ICCMAC Commercial Trust
[______], as issuer (the "Issuer"), and _______________________, as trustee (the
"Indenture Trustee"). All capitalized terms used but not otherwise defined
herein shall have the respective meanings set forth in the Indenture. The
Transferee hereby certifies, represents and warrants to you, as Bond Registrar,
and for the benefit of the Issuer, the Indenture Trustee and the Transferor,
that:
1. The Transferee is a "qualified institutional buyer" (a "Qualified
Institutional Buyer") as that term is defined in Rule 144A ("Rule 144A") under
the Securities Act of 1933, as amended (the "Securities Act"), and has completed
one of the forms of certification to that effect attached hereto as Annex 1 and
Annex 2. The Transferee is aware that the sale to it of the Transferred Bonds is
being made in reliance on Rule 144A. The Transferee is acquiring the Transferred
Bonds for its own account or for the account of a Qualified Institutional Buyer,
and understands that such Transferred Bonds may be resold, pledged or
transferred only (i) to a person reasonably believed to be a Qualified
Institutional Buyer that purchases for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the Securities Act.
2. The Transferee has been furnished with all information regarding (a) the
Company and the Issuer, (b) the Transferred Bonds and payments thereon, (c) the
nature and performance of the Mortgage Collateral, (d) the Indenture, and (e)
all related matters, that it has requested.
<PAGE>
Very truly yours,
_________________________________________
(Transferor)
By: ____________________________________
Name: __________________________________
Title: _________________________________
<PAGE>
ANNEX 1 TO EXHIBIT D-2A
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[for Transferees other than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and [name of Bond Registrar], as Bond Registrar, with respect to
the Collateralized Mortgage Bonds being transferred (the "Transferred Bonds") as
described in the Transferee Certificate to which this certification relates and
to which this certification is an Annex:
1. As indicated below, the undersigned is the chief financial officer, a
person fulfilling an equivalent function, or other executive officer of the
entity purchasing the Transferred Bonds (the "Transferee").
2. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act of 1933, as amended ("Rule 144A"),
because (i) the Transferee owned and/or invested on a discretionary basis
$______________________(1) in securities (other than the excluded securities
referred to below) as of the end of the Transferee's most recent fiscal year
(such amount being calculated in accordance with Rule 144A) and (ii) the
Transferee satisfies the criteria in the category marked below.
___ Corporation, etc. The Transferee is a corporation (other than a bank,
savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or any organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986.
___ Bank. The Transferee (a) is a national bank or a banking institution
organized under the laws of any State, U.S. territory or the District
of Columbia, the business of which is substantially confined to
banking and is supervised by the State or territorial banking
commission or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least $25,000,000
as demonstrated in its latest annual financial statements, a copy of
which is attached hereto, as of a date not more than 16 months
preceding the date of sale of the Bond in the case of a U.S. bank, and
not more than 18 months preceding such date of sale for a foreign bank
or equivalent institution.
___ Savings and Loan. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised and
examined by a State or Federal authority having supervision over any
such institutions or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial statements,
a copy of which is attached hereto, as of a date not more than 16
months preceding the date of sale of the Bond in the case of a U.S.
savings and loan association, and not more than 18 months preceding
such date of sale for a foreign savings and loan association or
equivalent institution.
___ Broker-dealer. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended.
___ Insurance Company. The Transferee is an insurance company whose
primary and predominant business activity is the writing of insurance
or the reinsuring of risks underwritten by insurance companies and
which is subject to supervision by the insurance commissioner or a
similar official or agency of a State, U.S. territory or the District
of Columbia.
___ State or Local Plan. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Transferee is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of
1974.
___ Investment Advisor. The Transferee is an investment advisor registered
under the Investment Advisers Act of 1940, as amended.
___ Other. (Please supply a brief description of the entity and a
cross-reference to the paragraph and subparagraph under subsection
(a)(1) of Rule 144A pursuant to which it qualifies. Note that
registered investment companies should complete Annex 2 rather than
this Annex 1.) ______________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
____________________
(1) Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities.
<PAGE>
3. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Transferee, (ii) securities that are part
of an unsold allotment to or subscription by the Transferee, if the Transferee
is a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
For purposes of determining the aggregate amount of securities owned and/or
invested on a discretionary basis by the Transferee, the Transferee did not
include any of the securities referred to in this paragraph.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Transferee, the Transferee used
the cost of such securities to the Transferee, unless the Transferee reports its
securities holdings in its financial statements on the basis of their market
value, and no current information with respect to the cost of those securities
has been published, in which case the securities were valued at market. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the Transferred
Bonds are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Transferred Bonds
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no", then in each case where
the Transferee is purchasing for an account other than its own, such account
belongs to a third party that is itself a "qualified institutional buyer" within
the meaning of Rule 144A, and the "qualified institutional buyer" status of such
third party has been established by the Transferee through one or more of the
appropriate methods contemplated by Rule 144A.
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Transferee's purchase of the Transferred Bonds
will constitute a reaffirmation of this certification as of the date of such
purchase. In addition, if the Transferee is a bank or savings and loan as
provided above, the Transferee agrees that it will furnish to such parties any
updated annual financial statements that become available on or before the date
of such purchase, promptly after they become available.
Very truly yours,
_________________________________________
(Transferor)
By: ____________________________________
Name: __________________________________
Title: _________________________________
<PAGE>
ANNEX 2 TO EXHIBIT D-2A
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE
144A [for Transferees that are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and [name of Bond Registrar], as Bond Registrar, with respect to
the Collateralized Mortgage Bonds being transferred (the "Transferred Bonds") as
described in the Transferee Certificate to which this certification relates and
to which this certification is an Annex:
1. As indicated below, the undersigned is the chief financial officer, a
person fulfilling an equivalent function, or other executive officer of the
entity purchasing the Transferred Certificates (the "Transferee") or, if the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933, as amended ("Rule 144A"), because the
Transferee is part of a Family of Investment Companies (as defined below), is an
executive officer of the investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer" as defined in Rule
144A because (i) the Transferee is an investment company registered under the
Investment Company Act of 1940, as amended, and (ii) as marked below, the
Transferee alone owned and/or invested on a discretionary basis, or the
Transferee's Family of Investment Companies owned, at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used, unless the
Transferee or any member of the Transferee's Family of Investment Companies, as
the case may be, reports its securities holdings in its financial statements on
the basis of their market value, and no current information with respect to the
cost of those securities has been published, in which case the securities of
such entity were valued at market.
___ The Transferee owned and/or invested on a discretionary basis
$___________________ in securities (other than the excluded securities
referred to below) as of the end of the Transferee's most recent
fiscal year (such amount being calculated in accordance with Rule
144A).
___ The Transferee is part of a Family of Investment Companies which owned
in the aggregate $______________ in securities (other than the
excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Transferee or are part of the Transferee's
Family of Investment Companies, (ii) bank deposit notes and certificates of
deposit, (iii) loan participations, (iv) repurchase agreements, (v) securities
owned but subject to a repurchase agreement and (vi) currency, interest rate and
commodity swaps. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, or owned by
the Transferee's Family of Investment Companies, the securities referred to in
this paragraph were excluded.
5. The Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will continue
to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Transferred Bonds
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no", then in each case where
the Transferee is purchasing for an account other than its own, such account
belongs to a third party that is itself a "qualified institutional buyer" within
the meaning of Rule 144A, and the "qualified institutional buyer" status of such
third party has been established by the Transferee through one or more of the
appropriate methods contemplated by Rule 144A.
7. The undersigned will notify the parties to which this certification is
made of any changes in the information and conclusions herein. Until such
notice, the Transferee's purchase of the Transferred Bonds will constitute a
reaffirmation of this certification by the undersigned as of the date of such
purchase.
_________________________________________
Print Name of Transferee or Adviser
By: ____________________________________
Name: __________________________________
Title: _________________________________
IF AN ADVISER:
_________________________________________
Print Name of Transferee
Date: ___________________
<PAGE>
EXHIBIT D-2B
FORM II OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF DEFINITIVE BONDS
[Date]
[BOND REGISTRAR]
Re: ICCMAC Commercial Trust [______],
Collateralized Mortgage Bonds, Series 199_-_ (the "Bonds")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
Class ___ Bonds having an initial aggregate Principal Amount as of __________,
199_ (the "Closing Date") of $______________ (the "Transferred Bonds"). The
Bonds, including the Transferred Bonds, were issued pursuant to a Indenture
dated as of __________, 199_ (the "Indenture"), between ICCMAC Commercial Trust
[______], as issuer (the "Issuer") and _______________________, as trustee (the
"Indenture Trustee"). All capitalized terms used but not otherwise defined
herein shall have the respective meanings set forth in the Indenture. The
Transferee hereby certifies, represents and warrants to you, as Bond Registrar,
and for the benefit of the Issuer, the Indenture Trustee and the Transferor,
that:
1. The Transferee is acquiring the Transferred Bonds for its own account
for investment and not with a view to or for sale or transfer in connection with
any distribution thereof, in whole or in part, in any manner which would violate
the Securities Act of 1933, as amended (the "Securities Act"), or any applicable
state securities laws.
2. The Transferee understands that (a) the Class of Bonds to which the
Transferred Bonds belong has not been and will not be registered under the
Securities Act or registered or qualified under any applicable state securities
laws, (b) none of the Issuer, the Indenture Trustee or the Bond Registrar is
obligated so to register or qualify the Class of Bonds to which the Transferred
Bonds belong, and (c) no Transferred Bond may be resold or transferred unless it
is (i) registered pursuant to the Securities Act and registered or qualified
pursuant any applicable state securities laws or (ii) sold or transferred in
transactions which are exempt from such registration and qualification and the
Bond Registrar has received either: (A) a certificate from the Bondholder
desiring to effect such transfer substantially in the form attached as Exhibit
D-1A to the Indenture; (B) a certificate from such Bondholder substantially in
the form attached as Exhibit D-1B to the Indenture and a certificate from such
Bondholder's prospective transferee substantially in the form attached either as
Exhibit D-2A or as Exhibit D-2B to the Indenture; or (C) an opinion of counsel
satisfactory to the Indenture Trustee with respect to the availability of such
exemption from registration under the Securities Act, together with copies of
the written certification(s) from the transferor and/or transferee setting forth
the facts surrounding the transfer upon which such opinion is based.
3. The Transferee understands that it may not sell or otherwise transfer
any Transferred Bond except in compliance with the provisions of Section 9 of
the Indenture, which provisions it has carefully reviewed, and that each
Transferred Bond will bear the following legends:
THIS BOND HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
THE SECURITIES LAWS OF ANY STATE. ANY RESALE, TRANSFER OR
OTHER DISPOSITION OF THIS BOND OR ANY INTEREST HEREIN
WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY
IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR
QUALIFICATION AND WHICH IS IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 13 OF THE INDENTURE REFERRED TO HEREIN.
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE
(A) TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY
PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS
CERTIFICATE OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT,
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE INDENTURE
REFERRED TO HEREIN.
4. Neither the Transferee nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Bond, any interest in
any Bond or any other similar security to any person in any manner, (b)
solicited any offer to buy or accept a pledge, disposition or other transfer of
any Bond, any interest in any Bond or any other similar security from any person
in any manner, (c) otherwise approached or negotiated with respect to any Bond,
any interest in any Bond or any other similar security with any person in any
manner, (d) made any general solicitation with respect to any Bond, any interest
in any Bond or any other similar security by means of general advertising or in
any other manner, or (e) taken any other action with respect to any Bond, any
interest in any Bond or any other similar security, which (in the case of any of
the acts described in clauses (a) through (e) above) would constitute a
distribution of the Transferred Bonds under the Securities Act, would render the
disposition of the Transferred Bonds a violation of Section 5 of the Securities
Act or any state securities law or would require registration or qualification
of the Transferred Bonds pursuant thereto. The Transferee will not act, nor has
it authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Bond, any interest in any Bond or any
other similar security.
5. The Transferee has been furnished with all information regarding (a) the
Company and the Issuer, (b) the Transferred Bonds and payments thereon, (c) the
Indenture and the Trust Estate, (d) the nature and performance of the [Mortgage
Collateral][Pledged Mortgage-Backed Securities], and (e) all related matters,
that it has requested.
6. The Transferee is an "accredited investor" as defined in any of
paragraphs (1), (2), (3) and (7) of Rule 501(a) under the Securities Act or an
entity in which all of the equity owners come within such paragraphs. The
Transferee has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of an investment in the
Transferred Bonds; the Transferee has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision;
and the Transferee is able to bear the economic risks of such investment and can
afford a complete loss of such investment.
Very truly yours,
_________________________________________
(Transferor)
By: ____________________________________
Name: __________________________________
Title: _________________________________
<PAGE>
EXHIBIT E
[SERVICING AGREEMENT]
<PAGE>
EXHIBIT F
[MORTGAGE LOAN PURCHASE AGREEMENT]
<PAGE>
EXHIBIT G
[ADMINISTRATION AGREEMENT]
<PAGE>
EXHIBIT H
[LETTER OF REPRESENTATIONS]
================================================================================
ICCMAC Commercial Trust [______]
Issuer,
and
--------------------,
Master Servicer and Special Servicer
and
--------------------,
Trustee
and
--------------------------------
SERVICING AGREEMENT
Dated as of _________, __, 199__
--------------------------------
$----------
Colalteralized Mortgage Bonds
Series 199__-____
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01 Defined Terms................................................
SECTION 1.02 Certain Terms................................................
SECTION 1.03 Determination of LIBOR.......................................
SECTION 1.04 General Interpretive Principles..............................
ARTICLE II
CERTAIN MATTERS REGARDING THE MORTGAGE LOANS;................................
SECTION 2.01 Delivery of Mortgage Loan Files and Related Documents........
SECTION 2.02 Document Defects and Breaches; Repurchase....................
SECTION 2.03 Representations and Warranties of the Issuer,
the Master Servicer, and the Special
Servicer; Assignment of Rights..........................
SECTION 2.04 Repurchase of Mortgage Loans for Breaches of
Representation and Warranty.............................
ARTICLE III
GENERAL PROVISIONS APPLICABLE TO SERVICERS
SECTION 3.01 Contract for Servicing.......................................
SECTION 3.02 Notices to Mortgagors........................................
SECTION 3.03 Subservicing................................................
SECTION 3.04 Record Title to Mortgage Loans, Etc..........................
SECTION 3.05 Release of Documents and Instruments of Satisfaction.........
SECTION 3.06 Access to Certain Documentation Regarding the Mortgage
Loans and This Agreement................................
SECTION 3.07 Annual Statement As to Compliance............................
SECTION 3.08 Annual Independent Public Accountants' Servicing Report......
SECTION 3.09 Merger or Consolidation of Any Servicer......................
SECTION 3.10 Limitation on Liability of the Servicers and Others..........
SECTION 3.11 Resignation of Servicers.....................................
SECTION 3.12 Maintenance of Errors and Omissions and Fidelity Coverage....
SECTION 3.13 Indemnity ...................................................
SECTION 3.14 Information Systems..........................................
ARTICLE IV
OBLIGATIONS OF THE MASTER SERVICER
SECTION 4.01 The Master Servicer..........................................
SECTION 4.02 Collection Account; Collection of Certain Mortgage
Loan Payments...........................................
SECTION 4.03 Permitted Withdrawals from the Collection Account............
SECTION 4.04 Remittances to the Trustee...................................
SECTION 4.05 Master Servicer Advances.....................................
SECTION 4.06 Maintenance of Insurance.....................................
SECTION 4.07 Enforcement of "Due-on-Sale" Clauses; Assumption Agreements..
SECTION 4.08 Property Inspections.........................................
SECTION 4.09 Reports of Master Servicer...................................
SECTION 4.10 Confirmation of Balloon Payment..............................
SECTION 4.11 Master Servicer Compensation.................................
SECTION 4.12 Adjustment of Servicer's Compensation........................
SECTION 4.13 Implementation of Operations and Maintenance Plans...........
ARTICLE V
[RESERVED]
ARTICLE VI
OBLIGATIONS OF THE SPECIAL SERVICER
SECTION 6.01 The Special Servicer.........................................
SECTION 6.02 Transfer to Special Servicing................................
SECTION 6.03 Servicing of Specially Serviced Mortgage Loans...............
SECTION 6.04 Title to REO Property; Management of REO Property............
SECTION 6.05 Sale of REO Property and Specially Serviced Mortgage Loans...
SECTION 6.06 REO Account; Collection of REO Proceeds......................
SECTION 6.07 Remittances to Servicer......................................
SECTION 6.08 Specially Serviced Mortgage Loan Status Reports
and Other Reports.......................................
SECTION 6.09 Environmental Considerations.................................
SECTION 6.10 Restoration of Specially Serviced Mortgage Loans.............
SECTION 6.11 Removal of Special Servicer..................................
SECTION 6.12 Special Servicer Compensation................................
SECTION 6.13 Collateral Value Adjustments.................................
ARTICLE VII
OBLIGATIONS OF THE INDENTURE TRUSTEE; REPORTS
SECTION 7.01 Statements to Bondholders....................................
SECTION 7.02 Distribution of Reports to the Trustee
and the Issuer; Advances................................
SECTION 7.03 Allocations of Realized Losses and
Collateral Value Adjustments............................
ARTICLE VIII
THE ISSUER
SECTION 8.01 Liability of the Issuer......................................
SECTION 8.02 Merger, Consolidation or Conversion of the Issuer............
SECTION 8.03 Limitation on Liability of the Issuer and Others.............
ARTICLE IX
DEFAULT
SECTION 9.01 Events of Default............................................
SECTION 9.02 Trustee to Act; Appointment of Successor.....................
SECTION 9.03 Notification to Bondholders..................................
SECTION 9.04 Waiver of Events of Default..................................
SECTION 9.05 Additional Remedies of Trustee Upon Event of Default.........
ARTICLE X
[RESERVED]
ARTICLE XI
MONITORING BONDHOLDER; DIRECTING BONDHOLDER
SECTION 11.01 Monitoring Bondholders and Directing Bondholder..............
SECTION 11.02 Powers of Attorney...........................................
ARTICLE XII
TERMINATION
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01 Amendment ...................................................
SECTION 13.02 Recordation of Agreement; Counterparts.......................
SECTION 13.04 Governing Law................................................
SECTION 13.05 Notices .....................................................
SECTION 13.06 Severability of Provisions...................................
SECTION 13.08 Successors and Assigns.......................................
SECTION 13.09 Article and Section Headings.................................
SECTION 13.10 Notices and Information to Rating Agencies...................
SECTION 13.12 Successor to a Servicer......................................
EXHIBITS
Exhibit A Mortgage Loan Schedule
Exhibit G Form of Acknowledgment
Exhibit H Request for Release and Receipt of Documents
<PAGE>
This Servicing Agreement, dated and effective as of _________ __, 199__,
among ICCMAC Commercial Trust [______], a _____________Trust, as Issuer,
____________________, as Master Servicer and Special Servicer, and
____________________, as Trustee.
PRELIMINARY STATEMENT:
The Issuer is a trust established under the laws of the State of
___________ by Imperial Credit Commercial Mortgage Acceptance Corp. (the
"Company"), pursuant to a Deposit Trust Agreement, dated as of _________, l99___
(the "Deposit Trust Agreement"), between the Company and ______________ as owner
trustee (in such capacity, the "Owner Trustee"). Pursuant to the Deposit Trust
Agreement, the Company delivered to, and deposited with, the Owner Trustee, as
owner trustee, on behalf of the Issuer, certain [provide general description of
Mortgage Loans] mortgage loans (the "Mortgage Loans"), which are more
specifically identified on Exhibit A hereto and which had been acquired by the
Company from _______________ as seller (in such capacity, the "Mortgage Loan
Seller") pursuant to the Mortgage Loan Purchase Agreement, dated as of
________________, 199___ (the "Mortgage Loan Purchase Agreement"), between the
Company and the Mortgage Loan Seller.
Pursuant to an Indenture, dated as of __________, 199__ (the "Indenture"),
between the Owner Trustee, as owner trustee, on behalf of the Issuer, and the
Trustee, as indenture trustee, on behalf of the Bondholders, the Issuer issued
collateralized mortgage bonds (collectively, the "Bonds"), in multiple classes
(each, a "Class"), secured by a pledge of, among other things, the Mortgage
Loans.
The parties hereto desire to provide for, among other things, the servicing
and administration of the Mortgage Loans for so long as the Bonds are
Outstanding.
In consideration of the mutual agreements herein contained, the Issuer, the
Master Servicer, the Special Servicer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Defined Terms.
Whenever used in this Agreement, including in the Preliminary Statement,
the following words and phrases, unless the context otherwise requires, shall
have the meanings specified in this Article.
"Accepted Servicing Practices": The procedures that the Master Servicer
shall follow in the servicing and administration of mortgage loans, consistent
with the higher of (i) the standard of care, skill, prudence and diligence with
which the Master Servicer services and administers, mortgage loans that are held
for other portfolios and are similar to the Mortgage Loans and (ii) the standard
of care, skill, prudence and diligence which the Master Servicer services and
administers mortgage loans that are held for its own portfolio and are similar
to the Mortgage Loans, in either case giving due consideration to customary and
usual standards of practice of prudent institutional multifamily and commercial
mortgage loan servicers but without regard to:
(i) any relationship that the Master Servicer or any Affiliate
of the Master Servicer may have with any Mortgagor or any
Affiliate of any Mortgagor or any other party to this
Agreement;
(ii) the Master Servicer's obligations to make Advances with
respect to the Mortgage Loans;
(iii) the adequacy of the Master Servicer's compensation for its
services hereunder or with respect to any particular
transaction;
(iv) the ownership, servicing or management for others by the
Master Servicer of any other mortgage loans or property; or
(v) the ownership by the Master Servicer of any Bonds or other
securities.
To the extent consistent with the foregoing and subject to the express
limitations set forth in this Agreement, the procedures followed by the Master
Servicer shall seek to maximize the timely and complete recovery of principal
and interest on the Mortgage Loans.
"Accepted Special Servicing Practices": The procedures that the Special
Servicer shall follow in the servicing, administration and disposition of
distressed mortgage loans and related real property, consistent with the higher
of (i) the standard of care, skill, prudence and diligence with which the
Special Servicer services, administers and disposes of, distressed mortgage
loans and related real property that are held for other portfolios and are
similar to the Mortgage Loans, Mortgaged Property and REO Property and (ii) the
standard of care, skill, prudence and diligence with which the Special Servicer
services, administers and disposes of, distressed mortgage loans and related
real property that is held for its own portfolio and are similar to the Mortgage
Loans, Mortgaged Property and REO Property, giving due consideration to
customary and usual standards of practice of prudent institutional multifamily
and commercial mortgage lenders, loan servicers and asset managers, so as to
maximize the net present value of recoveries on the Mortgage Loans, but without
regard to:
(i) any relationship that Special Servicer or any Affiliate of
the Special Servicer may have with any Mortgagor or any
Affiliate of any Mortgagor or any other party to this
Agreement;
(ii) the adequacy of the Special Servicer's compensation for its
services hereunder or with respect to any particular
transaction;
(iii) the ownership, servicing or management for others by the
Special Servicer of any other mortgage loans or property; or
(iv) the ownership by the Special Servicer of any Bonds or other
securities issued in connection with any Securitization.
"Adjustable Rate Mortgage Loan": A Mortgage Loan as to which the related
Mortgage Note provides for periodic adjustments to the Mortgage Interest Rate
thereon based on changes in the related Index.
"Adjusted Available Payment Amount": With respect to any Payment Date, the
Available Payment Amount net of any Net Prepayment Premiums.
"Adjusted Collateral Value": With respect to any Payment Date, the excess
of the Stated Principal Balance of any Mortgage Loan over the related Collateral
Value Adjustment.
"Advance": A P&I Advance or Servicing Advance.
"Advance Rate": An annual rate equal to the Prime Rate in effect from time
to time.
"Affiliate": With respect to any specified Person, any other Person
controlling, 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.
"Agreement": This Servicing Agreement and all amendments hereof and
supplements hereto.
"Asset Strategy Report": The report prepared pursuant to Section 6.03(c).
"Assignment of Leases and Rents": With respect to any Mortgaged Property,
any assignment of leases, rents and profits or similar agreement executed by the
Mortgagor, 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, as amended, modified, renewed or extended through
the date hereof and from time to time hereafter.
"Assignment of Mortgage": An assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to effect the
transfer of the Mortgage to the Issuer, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the same
jurisdiction, if permitted by law.
"Assumed Final Payment Date": __________, which is the first Payment Date
following the second anniversary of the date at which the Stated Principal
Balance of all the Mortgage Loans has been reduced to zero, assuming no
prepayments and that the Balloon Mortgage Loans fully amortize according to
their amortization schedule and no Balloon Payment is made.
"Available Payment Amount": With respect to any Payment Date, the amount on
deposit in the Bond Account as of the close of business on the related
Determination Date immediately preceding such Payment Date, after giving effect
to expenses of the Issuer pursuant to this Agreement.
"Balloon Mortgage Loan": Any Mortgage Loan that by its original terms or by
virtue of any modification provides for an amortization schedule extending
beyond its Maturity Date.
"Balloon Payment": With respect to any Balloon Mortgage Loan as of any date
of determination, the amount outstanding on the Maturity Date of such Mortgage
Loan in excess of the related Monthly Payment.
"Bankruptcy Code": The federal Bankruptcy Code, as amended from time to
time (Title 11 of the United States Code).
"Book-Entry Bond": Any Bond registered in the name of the Depository or its
nominee.
"Business Day": Any day other than a Saturday, a Sunday or a day on which
banking and savings and loan institutions in the states of California, New York,
Illinois or Missouri are authorized or obligated by law or executive order to
remain closed.
"Bond": Any Class A-1, Class A-2, Class B, Class C, Class D, Class E or
Class F Bond.
"Bond Account": The segregated trust account or accounts created and
maintained by the Trustee pursuant to Section 7.05 of the Indenture.
"Bond Balance": With respect to any Class A-1, Class A-2, Class B, Class C,
Class D, Class E or Class F Bond, as of any date of determination, the then
outstanding principal amount of such Bond equal to the product of (a) the
Percentage Interest evidenced by such Bond, multiplied by (b) the then Class
Balance of the Class of Bonds to which such Bond belongs.
"Bondholder" or "Holder": The Person in whose name a Bond is registered in
the Bond Register, except that, solely for the purposes of giving any consent,
approval or waiver pursuant to this Agreement, any Bond registered in the name
of the Master Servicer, the Issuer or any Affiliate of either shall be deemed
not to be outstanding with respect to Sections 9.04 and 13.01. The Trustee shall
be entitled to request and rely upon a certificate of the Master Servicer or the
Issuer in determining whether a Bond is registered in the name of an Affiliate
of such Person.
"Bond Owner": With respect to a Book-Entry Bond, the Person who is the
beneficial owner of such Bond as reflected on the books of an indirect
participating brokerage firm for which a Depository Participant acts as agent,
if any, and otherwise on the books of a Depository Participant, if any, and
otherwise on the books of the Depository.
"Bond Register" and "Bond Registrar": The register maintained and the
registrar appointed pursuant to Section 2.05 of the Indenture.
"Class": Collectively, all of the Bonds bearing the same capital letter
designation.
"Class A-1 Bond": Any of the Bonds issued hereunder and designated as such.
"Class A-1 Bond Interest Rate": With respect to any Payment Date, the per
annum rate equal to the lesser of (a) LIBOR plus __% and (b) the Weighted
Average Remittance Rate.
"Class A-2 Bond": Any of the Bonds issued hereunder and designated as such.
"Class A-2 Bond Interest Rate": With respect to any Payment Date, the per
annum rate equal to the lesser of (a) LIBOR plus __% and (b) the Weighted
Average Remittance Rate.
"Class B Bond": Any of the Bonds issued hereunder and designated as such.
"Class B Bond Interest Rate": With respect to any Payment Date, the per
annum rate equal to the lesser of (a) LIBOR plus __% and (b) the Weighted
Average Remittance Rate.
"Class Balance": With respect to any Class, the aggregate principal amount
of such Class outstanding as of any date of determination equal to (A) the
Original Class Balance thereof plus (B) any Collateral Value Adjustment
Capitalization Amount minus (C) any amounts allocated or distributed to such
Class in reduction of its Class Balance pursuant to the terms hereof.
"Class C Bond": Any of the Bonds issued hereunder and designated as such.
"Class C Bond Interest Rate": With respect to any Payment Date, the per
annum rate equal to the lesser of (a) LIBOR plus __% and (b) the Weighted
Average Remittance Rate.
"Class D Bond": Any of the Bonds issued hereunder and designated as such.
"Class D Bond Interest Rate": With respect to any Payment Date, the per
annum rate equal to the lesser of (a) LIBOR plus __% and (b) the Weighted
Average Remittance Rate.
"Class E Bond": Any of the Bonds issued hereunder and designated as such.
"Class E Bond Interest Rate": With respect to any Payment Date, the per
annum rate equal to __% per annum.
"Class F Bond": Any of the Bonds issued hereunder and designated as such.
"Class F Bond Interest Rate": With respect to any Payment Date, the per
annum rate equal to __% per annum.
"Code": The Internal Revenue Code of 1986, as amended from time to time.
"Collateral Value Adjustment": With respect to a Mortgage Loan as to which
a Collateral Value Adjustment Event has occurred, an amount equal to the excess
of (a) the Stated Principal Balance of the Mortgage Loan as of the date of the
Collateral Value Adjustment Event over (b) the excess of (i) __% of the current
appraised value of the related Mortgaged Property as determined by an
Independent MAI appraiser conducted under MAI appraisal standards prepared in
accordance with 12 CFR ss.225.62 over (ii) the sum of (A) to the extent not
previously advanced by a Servicer, all unpaid interest on such Mortgage Loan at
a per annum rate equal to the Mortgage Interest Rate, (B) all unreimbursed
Advances and interest thereon at the Advance Rate, (C) any unpaid Servicing Fees
and Trustee Fees and (D) all currently due and delinquent real estate taxes and
assessments, insurance premiums and, if applicable, ground rents in respect of
such Mortgaged Property (net of any amount escrowed or otherwise available for
payment of any amounts due on the related Mortgage Loans with respect to such
Mortgage Loan or REO Property) and estimated liquidation expenses.
Notwithstanding the foregoing, a Collateral Value Adjustment will be zero with
respect to such Mortgage Loan if (i) the event giving rise to such Collateral
Value Adjustment is the extension of the maturity of such Mortgage Loan, (ii)
the payments on such Mortgage Loan were not delinquent during the twelve months
preceding such extension and (iii) the payments on such Mortgage Loan were then
current, provided that if at any later date there occurs a delinquency in
payment with respect to such Mortgage Loan, the Collateral Value Adjustment will
be recalculated and applied as described above.
"Collateral Value Adjustment Capitalization Amount": With respect to each
class of Bonds to which a Collateral Value Adjustment has been allocated, and to
the extent not reversed, interest accrued at the related Bond Interest Rate on
the portion of the Class Balance of such class equal to the sum of the aggregate
Collateral Value Adjustment allocated to such class for such Payment Date and
accrued and unpaid interest at the related Bond Interest Rate on such Collateral
Value Adjustment amount for prior Payment Dates.
"Collateral Value Adjustment Event": With respect to any Mortgage Loan the
earliest to occur of (i) 90 days after the date on which an uncured delinquency
occurs in respect of such Mortgage Loan, (ii) immediately after the date on
which a receiver is appointed (if such appointment remains in effect during such
60-day period) in respect of the related Mortgaged Property, (iii) the date on
which the related Mortgaged Property becomes an REO Property or (iv) the date on
which the payment rate, Mortgage Interest Rate, principal balance, amortization
terms or Maturity Date of such Mortgage Loan has been changed or otherwise
materially modified pursuant to and in accordance with the terms hereof.
"Collateral Value Adjustment Reduction Amount": With respect to the Class
__ Bonds, the portion of the Interest Accrual Amount accrued on the portion of
the related Notional Amount corresponding to any Collateral Value Adjustment or
Collateral Value Adjustment Capitalization Amount allocated, and not reversed,
to the Class Balance of any class of Bonds.
"Collection Account": The separate account, which shall be an Eligible
Account, created and maintained pursuant to Section 4.02 hereof.
"Condemnation Proceeds": With respect to each Mortgage Loan, all awards or
settlements in respect of a Mortgaged Property, whether permanent or temporary,
partial or entire, on account of the exercise of the power of eminent domain or
condemnation, held in an escrow account or a trust account, which is an Eligible
Account, pursuant to the terms of the related Mortgage Loan Documents and
applicable law, related to such Mortgaged Property and applied or to be applied
to the restoration or repair of such Mortgaged Property or required to be
released to a Mortgagor in accordance with the terms of the related Mortgage
Loan Documents or, to the extent not expressly provided therein, in accordance
with Accepted Servicing Practices or Accepted Special Servicing Practices, as
applicable, and applicable law.
"Controlling Bondholder": As defined in Section 6.11 hereof.
"Cut-off Date": __________, 199_.
"Cut-off Date Balance": With respect to any Mortgage Loan, the outstanding
principal balance of such Mortgage Loan as of the Cut-off Date, net of the
principal portion of all unpaid Monthly Payments due on or before such date.
"Defaulted Mortgage Loan": Any Mortgage Loan which is more than 60 days
delinquent in whole or in part in respect of any Monthly Payment or is
delinquent in whole or in part in respect of the related Balloon Payment, if
any; provided that for purposes of this definition, no Monthly Payment (other
than a Balloon Payment) shall be deemed delinquent if less than five dollars
($5.00) of all amounts due and payable on such Mortgage Loan has not been
received as of the most recent Due Date therefor.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding principal balance of the Mortgage Loan, or any reduction in
the amount of principal to be paid in connection with any scheduled Monthly
Payment that constitutes a permanent forgiveness of principal, which valuation
results from a proceeding initiated under the Bankruptcy Code or a state court
deficiency proceeding.
"Definitive Bond": Any certificated, fully registered certificate.
"Delivery Date": __________, 199_.
"Issuer": ICCMAC Commercial Trust [______], or its successor in interest.
"Depository": The 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 Securities Exchange Act of 1934, as amended. The initial
Depository shall be The Depository Trust Company, a nominee of which is CEDE &
Co.
"Depository Participant": A broker, dealer, bank or other financial
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited by the Depository.
"Determination Date": With respect to any Payment Date, the 10th day of the
month in which such Payment Date occurs or, if such day is not a Business Day,
the immediately succeeding Business Day.
"Directing Bondholder": The Monitoring Bondholder selected by a majority of
the Monitoring Bondholders, by Bond Balance, as certified to the Trustee by the
Bond Owners from time to time; provided, that, absent such selection, or (i)
until a Directing Bondholder is so selected, or (ii) upon receipt of notice from
a majority of the Monitoring Bondholders, by Bond Balance, that a Directing
Bondholder is no longer so designated, the Monitoring Bondholder(s) which owns
the largest aggregate Bond Balance of one or more Monitoring Classes shall be
the Directing Bondholder.
"Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the Issuer other than through
an Independent contractor; provided, however, that the Issuer (or the Master
Servicer or the Special Servicer on behalf of the Issuer) shall not be
considered to Directly Operate a REO Property solely because the Issuer (or the
Master Servicer or the Special Servicer on behalf of the Issuer) establishes
rental terms, chooses tenants, enters into or renews leases, deals with taxes
and insurance, or makes decisions as to repairs or capital expenditures with
respect to such REO Property.
"Disposition Fee": As defined in Section 6.12 hereof.
"Disqualified Organization": Any of (i) the United States, any State or
political subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality of any of the foregoing, (ii) any
organization (other than a cooperative described in Section 521 of the Code)
which is exempt from the tax imposed by Chapter 1 of the Code unless such
organization is subject to the tax imposed by Section 511 of the Code, or (iii)
any organization described in Section 1381(a)(2)(C) of the Code. A corporation
will not be treated as an instrumentality of the United States or of any State
or any political subdivision thereof if all of its activities are subject to tax
and, with the exception of the Federal Home Loan Mortgage Corporation (a
corporate instrumentality of the United States) a majority of its board of
directors is not selected by a governmental unit.
"Payment Date": The twenty fifth (25th) day (or if any such day is not a
Business Day, the Business Day immediately succeeding such twenty fifth (25th)
day) of each month, commencing in __________, 199__.
"Due Date": With respect to any Mortgage Loan, the day of the month set
forth in the related Mortgage Note on which each Monthly Payment thereon is
scheduled to be due.
"Eligible Account": Any of: _______________ an account or accounts
maintained with a federal or state chartered Depository institution or trust
company (i) to the extent funds are on deposit in such account for a period not
in excess of 30 days, the commercial paper, short-term debt obligations or other
short-term deposits of which have the Required Rating or (ii) to the extent
funds are on deposit in such account for a period in excess of 30 days, the
long-term unsecured debt obligations of which have a long term rating of at
least "AA-" by the Rating Agencies (or, if not rated by each Rating Agency, then
by [Standard & Poor's Ratings Services] and if rated by [Fitch IBCA, Inc.] or
[Duff & Phelps Credit Rating Co.], then "AA-" by [Fitch IBCA, Inc.], or [Duff &
Phelps Credit Rating Co.], as applicable, and, if not rated by [Fitch IBCA,
Inc.], is acceptable to it; a segregated trust account or accounts maintained
with the corporate trust department of a federal Depository institution or trust
company or state chartered Depository institution subject to regulations
regarding fiduciary funds on deposit similar to 12 C.F.R. ss. 9.10(b); or an
account or accounts of a Depository institution acceptable to each Rating Agency
(as evidenced in writing by each Rating Agency that use of any such account will
not result in a downgrading, qualification or withdrawal of the ratings then
assigned to the Bonds).
"Environmental Laws": Any present or future federal, state or local law,
statute, regulation or ordinance, and any judicial or administrative order or
judgment thereunder, pertaining to health, industrial hygiene, Hazardous
Materials or the environment, including, but not limited to, each of the
following, as enacted as of the date hereof or as hereafter amended:
(i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. ss.ss. 9601-9657;
(ii) the Resource Conservation and Recovery Act of 1976, 42
U.S.C. ss.ss. 6901-6991i;
(iii) the Toxic Substance Control Act, 15 U.S.C. ss.ss.
2601-2629;
(iv) the Water Pollution Control Act (also known as the Clean
Water Act), 33 U.S.C.ss.1251 et seq.;
(v) the Clean Air Act, 42 U.S.C.ss.7401 et seq.; and
(vi) the Hazardous Materials Transportation Act, 49 U.S.C.ss.
1801 et seq.
"Event of Default": One or more of the events described in Section 9.01.
"Excess Condemnation Proceeds": With respect to each Mortgage Loan, all
awards or settlements in respect of a Mortgaged Property, whether permanent or
temporary, partial or entire, on account of the exercise of the power of eminent
domain or condemnation, other than any such awards or settlements held in an
escrow account or a trust account, which shall be an Eligible Account, pursuant
to the terms of the related Mortgage Loan Documents and applicable law, related
to such Mortgaged Property and applied or to be applied to the restoration or
repair of such Mortgaged Property or required to be released to a Mortgagor in
accordance with the terms of the related Mortgage Loan Documents or, to the
extent not expressly provided therein, in accordance with Accepted Servicing
Practices or Accepted Special Servicing Practices, as applicable, and applicable
law.
"Excess Insurance Proceeds": With respect to each Mortgage Loan, proceeds
of any primary hazard insurance policy required to be maintained pursuant to
Section 4.06, title insurance policy or any other Insurance Policy covering such
Mortgage Loan or the related Mortgaged Property, other than any proceeds to be
held in an escrow account or a trust account, which shall be an Eligible
Account, pursuant to the terms of the related Mortgage Loan Documents and
applicable law, related to such Mortgage Loan and applied or to be applied to
the restoration or repair of the related Mortgaged Property or required to be
released to the related Mortgagor in accordance with the terms of the related
Mortgage Loan Documents or, to the extent not expressly provided therein, in
accordance with Accepted Servicing Practices or Accepted Special Servicing
Practices, as applicable, and applicable law.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
"Final Certification": As defined in Section 2.02(b).
"Final Recovery Determination": A determination by the Special Servicer
with respect to any Defaulted Mortgage Loan, as certified in writing by a
Servicing Officer setting forth such determination and the procedures and
considerations of the Special Servicer forming the basis of such determination,
that there has been a recovery of all REO Proceeds, Liquidation Proceeds and
other payments or recoveries that the Special Servicer, in its reasonable good
faith judgment, expects to be ultimately recoverable.
"Hazardous Materials": All materials subject to any Environmental Law,
including, without limitation, materials listed in 49 C.F.R. ss. 172.010,
materials defined as hazardous pursuant to ss. 101(14) of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
flammable, explosive or radioactive materials, hazardous or toxic wastes or
substances, lead-based materials, petroleum or petroleum distillates or asbestos
or material containing asbestos, polychlorinated biphenyls ("PCBs"), radon gas,
urea formaldehyde and any substances classified as being "in inventory", "usable
work in process" or similar classification that would, if classified as
unusable, be included in the foregoing definition.
"Independent": When used with respect to any specified Person, any such
Person who (i) is in fact independent of the Issuer, the Trustee, the Master
Servicer, the Special Servicer and any and all Affiliates thereof, (ii) does not
have any direct financial interest in or any material indirect financial
interest in any of the Issuer, the Trustee, the Master Servicer, the Special
Servicer or any Affiliate thereof, and (iii) is not connected with the Issuer,
the Master Servicer, the Special Servicer or any Affiliate thereof as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
"Index": With respect to each Adjustable Rate Mortgage Loan and each
Interest Rate Adjustment Date, the base index used to determine the new Mortgage
Interest Rate in effect thereon as specified in the related Mortgage Note.
"Insurance Policy": With respect to any Mortgage Loan, any insurance policy
required to be maintained under this Agreement or the related Mortgage Loan
Documents.
"Insurance Proceeds": With respect to each Mortgage Loan, proceeds of any
primary hazard insurance policy required to be maintained pursuant to Section
4.06 hereof, or any other Insurance Policy covering such Mortgage Loan or the
related Mortgaged Property, to be held in an escrow account or a trust account,
which is an Eligible Account, pursuant to the terms of the related Mortgage Loan
Documents, related to such Mortgage Loan and applied or to be applied to the
restoration or repair of the related Mortgaged Property or required to be
released to the related Mortgagor in accordance with the terms of the related
Mortgage Loan Documents and applicable law, or, to the extent not expressly
provided therein, in accordance with Accepted Servicing Practices or Accepted
Special Servicing Practices, as applicable, and applicable Law.
"Interest Accrual Amount": With respect to each Payment Date and any Class
of Bonds and, interest accrued during the period from and including, in the case
of the Class A-1, Class A-2, Class B, Class C and Class D Bonds, the immediately
preceding Payment Date (or the Delivery Date with respect to the initial Payment
Date) to and including the day immediately preceding the applicable Payment Date
and, in the case of the Class E and Class F, Class Bonds, the first day of the
month preceding the month of the Payment Date (or the closing Date with respect
to the initial Payment Date) to and including the last day of the month
preceding the month of the Payment Date (calculated on the basis of a 360-day
year consisting of twelve 30-day months or calculated based on the actual number
of days in such period and a 360-day year in the case of the Class A-1, Class
A-2, Class B, Class C and Class D Bonds) on the Class Balance or Notional Amount
as the case may be, outstanding immediately prior to such Payment Date at the
then applicable Bond Interest Rate applicable to such Class of Bonds.
"Interest Distribution Amount": With respect to each Payment Date and any
Class, the Interest Accrual Amount for such Payment Date plus (i) any portion of
the Interest Distribution Amount for any prior Payment Date remaining
undistributed, reduced by (ii) the product of (a) any excess of Prepayment
Interest Shortfalls for such Payment Date over any Prepayment Interest Excess
for such Payment Date and any interest not collectible pursuant to the Soldiers'
and Sailors' Civil Relief Act of 1940 and (b) the Interest Accrual Amount on
such Class divided by the Interest Accrual Amount for all such Classes of Bonds
for such Payment Date and (iii)(a) with respect to each Class of Bonds [other
than the Class X Bonds], any Collateral Value Adjustment Capitalization Amount
allocated to such Class and [(b) with respect to the Class X Bonds, any
Collateral Value Adjustment Reduction Amount]. The Interest Distribution Amount
for the Class with the lowest priority with respect to the order of payment of
interest or principal shall be reduced further by the portion of any interest
deferred with respect to any Mortgage Loans (such reduction will be based on the
same basis as distributions of interest are made to the extent allocated to
Classes which receive distributions concurrently). Such deferred amount,
together with interest at the related Bond Interest Rate, shall be payable to
the extent it is collected after such Payment Date.
"Interest Rate Adjustment Date": With respect to each Adjustable Rate
Mortgage Loan, any date on which the related Mortgage Interest Rate is subject
to adjustment pursuant to the related Mortgage Note.
"Interested Person": As of any date of determination with respect to any
Mortgage Loan, the Mortgagor, the Mortgage Loan Seller, the Issuer, the Special
Servicer or the Master Servicer.
"Law": Any judgment, order, decree, writ, injunction, award, statute, rule,
regulation or requirement of any federal, state, local or other agency,
commission, instrumentality, tribunal, governmental authority, arbitrator or
court having or asserting jurisdiction over any particular Person, property or
matter applicable to such particular Person, property or matter.
"LIBOR": With respect to any Payment Date the per annum rate for United
States deposits for one month determined in accordance with Section 1.03.
"LIBOR Business Day": Any day other than (i) Saturday or a Sunday or (ii) a
day on which banking institutions in the city of London, England are required to
or authorized by law to be closed.
"LIBOR Rate Adjustment Date": As defined in Section 1.03 hereof.
"Liquidation Event": With respect to any 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 by the Mortgage Loan Seller pursuant to Section 2.04; or
(iv) such Mortgage Loan is purchased by the Master Servicer or Special Servicer
pursuant to Section 12.01.
"Liquidation Proceeds": Cash (including any Excess Insurance Proceeds or
Excess Condemnation Proceeds, but excluding REO Proceeds) received in connection
with the liquidation of a Mortgage Loan, whether through the sale or assignment
of such Mortgage Loan, trustee's sale, foreclosure sale or otherwise.
"Loss Mortgage Loan": Any Mortgage Loan (a) as to which a Liquidation Event
has occurred, (b) with respect to which the Master Servicer or Trustee, as
applicable, has determined that an Advance previously made or proposed to be
made is a Nonrecoverable Advance or (c) with respect to which a Deficient
Valuation has been made or a portion of the principal balance thereof has been
otherwise permanently forgiven.
"Master Servicer": ______________________, its successors in interest, or
any successor servicer appointed as such as herein provided.
"Master Servicing Fee": As defined in Section 4.11 hereof.
"Master Servicing Fee Rate": ____% per annum calculated on the basis of
twelve 30-day months and a 360-day year.
"Maturity Date": With respect to any Mortgage Loan as of any date of
determination, the date on which the last payment of principal is due and
payable under the related Mortgage Note.
"Monitoring Bondholder": Each Holder (or Bond Owner, if applicable) of a
Bond of a Monitoring Class as certified to the Trustee from time to time by such
Holder or Bond Owner.
"Monitoring Class": As defined in Section 11.01(c).
"Monthly Payment": With respect to any Mortgage Loan and any Due Date, the
scheduled monthly payment with respect to such Mortgage Loan, excluding any
Balloon Payment, which is payable by a Mortgagor under the related Mortgage Note
and applicable Law and, with respect to a Balloon Mortgage Loan for which a
Balloon Payment is due and has not been made, the monthly payment with respect
to such Balloon Mortgage Loan that would be payable on and after the related
Maturity Date based on the full amortization schedule determined by the Special
Servicer.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple or leasehold interest in real property
securing a Mortgage Note, including the assignment of leases and rents related
thereto.
"Mortgage Interest Rate": With respect to any Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan in accordance with the
terms of the related Mortgage Note.
"Mortgage Loan": Each of the mortgage loans which has been granted as
Collateral pursuant to the Indenture and accepted by the Trustee pursuant to
Section 2.02 and from time to time held by the Trustee on behalf of the
Bondholders, the Mortgage Loans so held pursuant to the Idnenture and Section
2.02 being identified on the Mortgage Loan Schedule (including, any successor
REO Mortgage Loan). As used herein, the term "Mortgage Loan" includes the
related Mortgage Note, Mortgage and other security documents contained in the
related Mortgage Loan File.
"Mortgage Loan Documents": With respect to each Mortgage Loan, to the
extent applicable, the Mortgage, Mortgage Note, Assignment of Mortgage,
Assignment of Leases and Rents (if separate from Mortgage) and assignments
thereof, any security agreements, any UCC Financing Statements, the title
insurance policy, all surveys, all insurance policies, any environmental
liabilities agreements, any escrow agreements for improvements, any guaranties
related to such Mortgage Loan, any prior assignments of mortgage in the event
that the originator is not the originator of record, any collateral assignments
of property management agreements and other services agreements required by the
applicable commitment and other loan documents and all assumption, modification,
consolidation, substitution and extension agreements, any physical assessment
report of the Mortgaged Property, any environmental site assessment of the
Mortgaged Property, any lease subordination agreements and tenant estoppels, any
borrower's counsel opinions and other agreements, if any, pertaining to such
Mortgage Loan.
"Mortgage Loan File": In connection with any Mortgage Loan, all the
documents held or required to be held by the Trustee pertaining to such Mortgage
Loan, including the Mortgage Loan Documents.
"Mortgage Loan Purchase Agreement": The Mortgage Loan Purchase Agreement,
dated __________, 199_, between the Mortgage Loan Seller and the Issuer
regarding the sale, transfer and assignment of the Mortgage Loans to the Issuer.
"Mortgage Loan Schedule": The list of Mortgage Loans granted as Collateral
to secure the Bonds, attached hereto as Exhibit A.
"Mortgage Loan Seller": ____________________ or any successors thereof.
"Mortgage Note": The note or other evidence of indebtedness of a Mortgagor
under a Mortgage Loan, together with all riders thereto and amendments thereof.
"Mortgaged Property": The underlying property (including any REO Property)
that secures a Mortgage Loan, in each case consisting of a parcel or parcels of
land improved by a commercial and/or multifamily building or facility, together
with any personal property, fixtures, leases and other property or rights
pertaining thereto.
"Mortgagor": The obligor or obligors on a Mortgage Note.
"Most Subordinate Class of Bonds": At the time of determination, the Class
to which any Realized Losses would be first allocated to as of such time in
accordance with Section 7.03.
"Net Prepayment Premium": With respect to any Payment Date, the excess (but
not less than zero) of (a) any Prepayment Premium received during the related
Remittance Period and not previously distributed or applied to reimburse to the
Master Servicer with respect to its Servicing Fee over (b) the excess of any
Prepayment Interest Shortfall allocated during the related Remittance Period and
not previously allocated over any Prepayment Interest Excess (but not less than
zero).
"Nonrecoverable Advance": Any Advance previously made or proposed to be
made by the Master Servicer or the Trustee in respect of a Mortgage Loan which
together with interest thereon, in the reasonable good faith judgment of the
Master Servicer or the Trustee will not, or, in the case of a proposed Advance,
would not, be ultimately recoverable by the Master Servicer or the Trustee from
net proceeds and collections received solely with respect to such Mortgage Loan
or the related Mortgaged Property, including related Excess Insurance Proceeds,
Liquidation Proceeds, REO Proceeds, Excess Condemnation Proceeds and escrowed
amounts, which determination shall be in writing accompanied by an Officer's
Bond filed with the Trustee.
"Nonrecoverable Advance Bond": A certificate signed by a Servicing Officer
of the Master Servicer or Responsible Officer, as applicable, setting forth the
determination of a Nonrecoverable Advance and the procedures and considerations
of the Master Servicer or the Trustee forming the basis of such determination
(including but not limited to information such as related income and expense
statements, any appraisals, rent rolls, occupancy status, property inspections,
and other Servicer inquiries with respect to the value of the related Mortgaged
Property).
"Non-United States Person": Any person other than a United States Person.
"Note Margin": With respect to each Adjustable Rate Mortgage Loan, the
fixed number of basis points that is added to the related Index on each Interest
Rate Adjustment Date in accordance with the terms of the related Mortgage Note
to determine, subject to any periodic and lifetime limitations on adjustments
thereto, the related Mortgage Interest Rate.
"Officers' Bond": With respect to any Servicer, a certificate signed by a
Servicing Officer of such Servicer.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be salaried counsel for the Issuer, the Master Servicer, or Special
Servicer, acceptable and delivered to the Trustee, except that any opinion of
counsel relating to any actions or duties which can not be undertaken or are no
longer permitted under applicable law, must be an opinion of counsel who is in
fact Independent.
"Ownership Interest": As to any Bond, any ownership or security interest in
such Bond, including any interest in such Bond as the Holder thereof and any
other interest therein, whether direct or indirect, legal or beneficial, as
owner or as pledgee.
"P&I Advance": Any amounts identified in this Agreement as a P&I Advance.
"Bond Interest Rate": With respect to any Payment Date and the Class A-1,
Class A-2, Class B, Class C, Class D, Class E and Class F Bonds, the Class A-1,
Class A-2, Class B, Class C, Class D, Class E and Class F Bond Interest Rate,
respectively.
"Payment Reserve": With respect to a Mortgage Loan, the amount, if any, of
principal and interest payable thereon required, pursuant to the related
Mortgage Loan Documents, to be deposited into an escrow account to cover a
portion of the related Mortgagor's debt service obligations thereunder.
"Percentage Interest": With respect to any Class of Bonds, the portion of
the relevant Class evidenced by such Bond, expressed as a percentage, the
numerator of which is the initial Bond Balance or initial Notional Amount of
such Bond as of the Delivery Date, as specified on the face thereof, and the
denominator of which is the Original Class Balance or Notional Amount of the
relevant Class.
"Permitted Investments": Any one or more of the obligations and securities
listed below that provide for a date of maturity of not more than 30 days but in
any event not later than the date prior to the date such funds will be required
to be distributed:
(i) direct obligations of, and obligations fully guaranteed by,
the United States of America, or any agency or
instrumentality of the United States of America the
obligations of which are backed by the full faith and credit
of the United States of America;
(ii) federal funds, demand and time deposits in, certificates of
deposits of, or bankers' acceptances issued by, any
Depository institution or trust company incorporated or
organized under the laws of the United States of America or
any state thereof and subject to supervision and examination
by federal and/or state banking authorities, the commercial
paper or other short-term debt obligations of such
Depository institution or trust company (or, in the case of
a Depository institution or trust company which is the
principal subsidiary of a holding company, the commercial
paper or other short-term debt obligations of such holding
company) which has the Required Rating;
(iii) commercial or finance company paper (including both
non-interest-bearing discount obligations and
interest-bearing obligations payable on demand or on a
specified date not more than 270 days after the date of
issuance thereof) that has the Required Rating for
short-term debt;
(iv) repurchase obligations with respect to any security
described in clause (i) above entered into with a Depository
institution or trust company (acting as principal) meeting
the rating standards described in clause (ii) above and
having maturities of not more than 365 days;
(v) units of taxable money market funds, which funds seek to
maintain a constant asset value and have been rated by each
Rating Agency in its highest rating category or which have
been designated in writing by each Rating Agency as
Permitted Investments for purposes of this definition; and
(vi) any other obligation or security acceptable to each Rating
Agency, as indicated in writing that would not result in a
downgrading, qualification or withdrawal of the ratings then
assigned to the Bonds;
provided, however, that no such instrument shall be a Permitted Investment if
(v) such instrument evidences a right to receive either (A) only interest
payments with respect to the obligations underlying such instrument or (B) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations; (w) its terms do not have a
predetermined fixed dollar amount of principal due at maturity that cannot vary
or change; (x) to the extent rated, an "r" highlighter is affixed to its rating;
(y) to the extent the related interest rate is variable, interest thereon is not
tied to a single interest rate index plus a single fixed spread (if any), or
does not move proportionately with that index; or (z) such instrument is
purchased at a premium over par.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability corporation, limited liability company, limited liability partnership,
or government or any agency or political subdivision thereof.
"Prepayment Assumption": It is assumed for purposes of Section 3.15(l) that
there are no prepayments on the Mortgage Loans and that the Balloon Mortgage
Loans fully amortize according to their amortization schedule and no Balloon
Payment is made.
"Prepayment Interest Excess": With respect to any Payment Date, for each
Mortgage Loan that was subject to a Principal Prepayment in full or in part
after the Due Date occurring in the related Remittance Period, the amount of
interest accrued at the Remittance Rate for such Mortgage Loan on the amount of
such Principal Prepayment during the period from and after such Due Date, to the
extent collected.
"Prepayment Interest Shortfall": With respect to any Payment Date, for each
Mortgage Loan that was subject to a Principal Prepayment in full or in part
prior to the Due Date occurring in the related Remittance Period, the amount of
interest that would have accrued at the Remittance Rate for such Mortgage Loan
on the amount of such Principal Prepayment during the period commencing on the
date as of which such Principal Prepayment was applied to the unpaid principal
balance of the Mortgage Loan and ending on the day immediately preceding such
Due Date, inclusive.
"Prepayment Premium": Any premium, penalty or fee paid or payable, as set
forth in the related Mortgage Note, by a Mortgagor in connection with a
Principal Prepayment.
"Prime Rate": As of any day, the per annum rate reported in The Wall Street
Journal on the immediately preceding Business Day as the prime rate.
"Principal Distribution Amount": With respect to any Payment Date an amount
equal to the aggregate of (a) all scheduled payments of principal (other than
Balloon Payments) due on the Mortgage Loans on the related Due Date whether or
not received and all scheduled Balloon Payments received, (b) if the scheduled
Balloon Payment is not received, with respect to any Balloon Loans on and after
the Maturity Date thereof, the principal payment that would need to be received
in the related month in order to fully amortize such Balloon Loan with level
monthly payments by the end of the term used to derive scheduled payments of
principal due prior to the related Maturity Date, (c) to the extent not
previously advanced, any unscheduled principal recoveries received during the
related Remittance Period in respect of the Mortgage Loans, whether in the form
of liquidation proceeds, insurance proceeds, condemnation proceeds, amounts
received as a result of the purchase of any Mortgage Loan from the Issuer or
receipt of overdue payments, (d) any Collateral Value Adjustment Capitalization
Amount allocated in connection with such Payment Date, and (e) any other portion
of the Adjusted Available Payment Amount remaining undistributed after payment
of any interest payable on the Bonds pursuant to Section [__] of the Indenture
for the related or any prior Payment Date, including any Prepayment Interest
Excess not offset by any Prepayment Interest Shortfall occurring during the
related Remittance Period or otherwise required to reimburse the Master Servicer
and interest distributions on the Mortgage Loans, in excess of interest
distributions on the Bonds, resulting from the allocation of amounts described
in this clause (d) to principal distributions on the Bonds.
"Principal Prepayment": Any payment or other recovery of principal on a
Mortgage Loan that is received in advance of its scheduled Due Date which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
"Private Bonds": The [Class E and Class F] Bonds.
"Property Protection Expenses": The following costs and expenses, but, with
respect to items (b) through (n) below, only to the extent that they are paid to
third persons in arms' length arrangements, which may, to the extent expressly
approved in the related Asset Strategy Report, be Affiliates, who are generally
in the business of providing such goods and services and that such expenses are
reasonable for the types of goods or services provided in the geographical area
in which such goods or services are provided: (a) real estate taxes, assessments
and similar charges; (b) premiums for insurance; (c) utility costs; (d) payments
required under service contracts, including but not limited to service contracts
for heating, ventilation and air conditioning systems, elevators, landscape
maintenance, pest extermination, security, model furniture, swimming pool
service, trash removal, answering service, credit checks and monitoring the
satisfaction of real estate tax assessments and the designation from time to
time of special flood hazard areas; (e) payroll costs and benefits for on-site
maintenance personnel, including but not limited to housekeeping employees,
porters and general maintenance and security employees; (f) property management
fees; (g) usual and customary leasing and sales brokerage expenses and
commissions and other costs and expenses associated with marketing, selling or
otherwise disposing of Specially Serviced Mortgage Loans or REO Properties
including, without limitation, marketing brochures, auction services, reasonable
legal fees, surveys, title insurance premiums and other title company costs; (h)
permits, licenses and registration fees and costs; (i) any expense necessary in
order to prevent or cure a breach under a lease, contract or agreement, if the
consequences of failure to prevent or cure could, in the sole judgment of the
Special Servicer, have a material adverse effect with respect to the Mortgage
Loan, REO Property or Mortgaged Property; (j) any expense necessary in order to
prevent or cure a material violation of any applicable law, regulation, code or
ordinance with respect to any Mortgaged Property, including without limitation
any environmental remediation; (k) costs and expenses of appraisals, valuations,
surveys, inspections, environmental assessments, credit reports, or market
studies (including, in each case, review thereof); (l) other such reasonable
marketing, legal, accountants, expert witness fees and other fees and expenses
incurred by the Special Servicer in connection with the enforcement, collection,
foreclosure, management and operation of Specially Serviced Mortgage Loans or
REO Properties, the bankruptcy of any related Mortgagor, and the performance of
their servicing duties under this Agreement; and (m) such other expenses as are
reasonable and immediately necessary to operate the Mortgaged Property or REO
Property.
"Prospectus Supplement": The Prospectus Supplement dated _________ __, 199_
prepared in connection with the offering of the [Class A-1, Class A-2, Class B,
Class C and Class D Bonds.
"Purchase Price": With respect to any Mortgage Loan to be purchased
pursuant to Section 2.02(c), Section 2.04, Section 6.05(a) or Section 12.01, the
Stated Principal Balance thereof as of the date of purchase, together with (i)
all accrued and unpaid interest at the Mortgage Interest Rate on such Mortgage
Loan to but not including the date of purchase, (ii) all related unreimbursed
Advances, (iii) all accrued and unpaid interest on related Advances, and (iv)
any expense arising out of the enforcement of the repurchase obligation and any
costs associated with such repurchase.
"Qualified Insurer": An insurance company:
(i) duly qualified as such under the laws of the state in which
the related Mortgaged Property is located;
(ii) duly authorized and, if required, licensed in such state to
transact the applicable insurance business and to write the
insurance provided; and
(iii) whose claims paying ability is rated at least "A" by each
Rating Agency (or, if not rated by each of the Rating
Agencies, rated at least "A" by two other nationally
recognized statistical rating organizations, which shall
include [Standard & Poor's Ratings Services] and any other
Rating Agency which rates the claims paying ability of such
insurance company, and if not rated by [Fitch IBCA, Inc.],
acceptable to it); or which is acceptable to each Rating
Agency (as evidenced in writing by each Rating Agency that
use of any such Qualified Insurer will not result in a
downgrading, qualification or withdrawal of the ratings then
assigned to the Bonds).
"Rating Agency": Each of [Fitch IBCA, Inc.], [Duff & Phelps Credit Rating
Co.] [and] [Standard & Poor's Ratings Services].
"Realized Loss": With respect to each Loss Mortgage Loan (or REO Property)
as to which a Liquidation Event has occurred, an amount (not less than zero)
equal to (i) the Stated Principal Balance of the Mortgage Loan (or REO Property)
as of the date of the Liquidation Event, plus (ii) interest at the Remittance
Rate from the Due Date as to which interest was last paid or advanced to
Bondholders up to the last day of the month in which such Liquidation Event
occurred on the Stated Principal Balance of such Mortgage Loan (or REO Property)
outstanding during each Remittance Period that such interest was not paid or
advanced, plus (iii) any unreimbursed Advances and interest accrued and payable
thereon at the Advance Rate, minus (iv) the proceeds, if any, received during
the month in which such Liquidation Event occurred, to the extent applied as
recoveries of interest at the Remittance Rate and to principal of the Mortgage
Loan. With respect to each Loss Mortgage Loan with respect to which an Advance
previously made or proposed to be made has been determined to be a
Nonrecoverable Advance an amount (not less than zero) equal to (i) the Stated
Principal Balance of the Mortgage Loan (or REO Property) as of the date of such
determination, plus (ii) interest at the Remittance Rate from the Due Date as to
which interest was last paid or advanced to Bondholders up to the last day of
the month in which such determination was made on the Stated Principal Balance
of such Mortgage Loan (or REO Property) outstanding during each Remittance
Period that such interest was not paid or advanced, plus (iii) any unreimbursed
Advances and interest accrued and payable thereon at the Advance Rate, minus
(iv) the proceeds, if any, received during the month in which such determination
was made, to the extent applied as recoveries of interest at the Remittance Rate
and to principal of the Mortgage Loan. With respect to each Mortgage Loan which
has become the subject of a Deficient Valuation, the difference between the
principal balance of the Mortgage Loan outstanding immediately prior to such
Deficient Valuation and the principal balance of the Mortgage Loan as reduced by
the Deficient Valuation.
"Record Date": With respect to any Payment Date, the last Business Day of
the month immediately preceding the month in which such Payment Date occurs.
"Reference Bank Rate": As defined in Section 1.03.
"Remittance Date": With respect to each Payment Date, one Business Day
preceding such Payment Date.
"Remittance Period": For any Payment Date, the period beginning after a
Determination Date in the immediately preceding month (or the Cut-off Date, in
the case of the first Payment Date) through the related Determination Date.
"Remittance Rate": With respect to any Mortgage Loan, the per annum rate
equal to the excess (adjusted, if necessary, to reflect the actual number of
days in the related Remittance Period and a 360-day year) of the related
Mortgage Interest Rate (without giving effect to any modification or other
reduction thereof following the Cut-off Date) over the sum of the related Master
Servicing Fee Rate and the Trustee Fee Rate.
"Remittance Report": The report prepared pursuant to Section 4.09(a)
hereof.
"REO Account": One or more accounts established pursuant to Section 6.06.
"REO Account Report": The report prepared pursuant to Section 6.08(b)
hereof.
"REO Acquisition": The acquisition by the Special Servicer on behalf of the
Issuer for the benefit of the Bondholders of any Mortgaged Property.
"REO Mortgage Loan": Any Mortgage Loan as to which the related Mortgaged
Property has been acquired by the Special Servicer on behalf of the Issuer
through foreclosure or by deed in lieu of foreclosure, until the Special
Servicer has determined that all amounts that it reasonably expects to recover
from or on account of such Mortgage Loan have been recovered, whether from
Excess Condemnation Proceeds, Excess Insurance Proceeds, Condemnation Proceeds,
Insurance Proceeds, Liquidation Proceeds, REO Proceeds or otherwise (in which
case such Mortgage Loan shall no longer be an REO Mortgage Loan).
"REO Proceeds": Proceeds received in respect of any REO Property
(including, without limitation, proceeds from the rental of the related
Mortgaged Property).
"REO Property": A Mortgaged Property acquired by the Special Servicer on
behalf of the Issuer through foreclosure or by deed in lieu of foreclosure.
"Request for Release and Receipt of Documents": A written Request for
Release and Receipt of Documents, substantially in the form of Exhibit B hereto.
"Required Appraisal Date": With respect to any Mortgage Loan within 30 days
of (a) any Collateral Value Adjustment Event or (b) the occurrence of any event
giving rise to a subsequent Collateral Value Adjustment (including the
delinquency referred to in the last sentence of the definition of "Collateral
Value Adjustment Event") more than twelve months after an appraisal was obtained
with respect to a previous Collateral Value Adjustment.
"Required Rating": For purposes of the definitions of "Eligible Account"
and "Permitted Investments" the following ratings:
(a) with respect to commercial paper, short-term debt obligations or
other short-term deposits, the highest short-term rating category
of each Rating Agency (or, if such obligations are not rated
by[Fitch IBCA, Inc.] or [Duff & Phelps Credit Rating Co.], any
two nationally recognized statistical rating organization, which
shall include [Standard & Poor's Ratings Services] and any other
Rating Agency which rates such obligations or deposits and, if
not rated by [Fitch IBCA, Inc.], acceptable to it); or
(b) with respect to long-term debt obligations, the highest long-term
rating category of each Rating Agency (or, if such obligations
are not rated by [Fitch IBCA, Inc.] or [Duff & Phelps Credit
Rating Co.], any two nationally recognized statistical rating
organization, which shall include [Standard & Poor's Ratings
Services] and any other Rating Agency which rates such
obligations or deposits and, if not rated by [Fitch IBCA, Inc.],
acceptable to it).
"Responsible Officer": When used with respect to the Trustee, any officer
assigned to and working in its Corporate Trust Office with direct responsibility
for the administration of 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.
"Security Agreement": With respect to any Mortgage Loan, any security
agreement or equivalent instrument, whether contained in the related Mortgage or
executed separately, creating in favor of the holder of such Mortgage a security
interest in the personal property constituting security for repayment of such
Mortgage Loan.
"Senior Bonds": The [Class A-1, Class A-2, Class B, Class C and Class D
Bonds.
"Servicer": The Master Servicer or the Special Servicer, as applicable.
"Servicing Advance": Any expenses identified in this Agreement as a
Servicing Advance which are incurred by the Master Servicer consistent with
Accepted Servicing Practices or Accepted Special Servicing Practices, as
applicable, or, with respect to any Mortgage Loan.
"Servicing Fee": With respect to any Mortgage Loan and (a) the Master
Servicer, the Master Servicing Fee; and (b) the Special Servicer, the Special
Servicing Fee, as applicable.
"Servicing Officer": With respect to any Servicer, any Assistant Treasurer,
Assistant Secretary, Assistant Vice President, Vice President or other employee
of such Servicer or its general partner, if applicable, involved in, or
responsible for, the administration and servicing of the Mortgage Loans under
this Agreement and authorized to act on behalf of such Servicer, as designated
by inclusion on a list of such Persons furnished to the Trustee and each other
Servicer by the related Servicer, as such list may from time to time be amended
by the related Servicer.
"Servicing Transfer Date": The date after the occurrence of a Servicing
Transfer Event on which the Special Servicer receives the information, documents
and records required to be delivered thereto pursuant to Section 6.02(c).
"Servicing Transfer Event": The occurrence of any of the following with
respect to a Mortgage Loan: (i) such Mortgage Loan becomes a Defaulted Mortgage
Loan; (ii) the related Mortgagor has entered into or consented to bankruptcy,
appointment of a receiver or conservator or a similar insolvency or similar
proceeding, or the Mortgagor has become the subject of a decree or order for
such proceeding which shall have remained in force undischarged or unstayed for
a period of 60 days; (iii) the Master Servicer shall have received notice of the
foreclosure or proposed foreclosure of any other lien on the Mortgaged Property;
(iv) in the judgment of the Master Servicer, a payment default has occurred and
is not likely to be cured by the related Mortgagor within 60 days; (v) the
related Mortgagor admits in writing its inability to pay its debts generally as
they become due, files a petition to take advantage of any applicable insolvency
or reorganization statute, makes an assignment for the benefit of its creditors,
or voluntarily suspends payment of its obligations; (vi) any other material
default has, in the Master Servicer's judgment, occurred which is not reasonably
susceptible of cure within the time periods and on the terms and conditions, if
any, provided in the related Mortgage; (vii) the related Mortgaged Property
becomes REO Property; (viii) if for any reason, the Master Servicer cannot enter
into an assumption agreement upon the transfer by the related Mortgagor of the
Mortgage; or (ix) an event has occurred which, in the reasonable judgment of the
Master Servicer, has or will materially and adversely affect the value of the
Mortgaged Property.
"Special Servicer": ____________________, or its successors in interest or
any successor special servicer appointed as such as herein provided.
"Special Servicing Fee": The compensation the Special Servicer shall be
entitled to receive pursuant to Section 6.12.
"Specially Serviced Mortgage Loan": Any Mortgage Loan with respect to which
a Servicing Transfer Event has occurred and which has not ceased to be a
Specially Serviced Mortgage Loan pursuant to Section 6.10.
"Specially Serviced Mortgage Loan Status Report": With respect to any
Mortgage Loan, shall have the meaning set forth in Section 6.08.
"State Tax Laws": The laws of the states of __________, _____________,
_____________ and ________________ as well as any state the applicability of
which to the Bonds shall have been confirmed to the Trustee in writing either by
the delivery to the Trustee of an Opinion of Counsel to such effect, or by the
delivery to the Trustee of a written notification to such effect by the taxing
authority of such state.
"Stated Principal Balance": With respect to any Mortgage Loan (other than
an REO Mortgage Loan), as of any date of determination, (x) the Cut-off Date
Balance, minus (y) the sum, without duplication, of:
(i) the principal portion of each Monthly Payment and Balloon
Payment due on such Mortgage Loan after the Cut-off Date, to
the extent received from the Mortgagor or advanced (in the
case of any delinquent Monthly Payment) and distributed to
Bondholders before such date of determination;
(ii) all Principal Prepayments received with respect to such
Mortgage Loan after the Cut-off Date, to the extent
distributed to Bondholders before such date of
determination;
(iii) the principal portion of all Insurance Proceeds and
Liquidation Proceeds received with respect to such Mortgage
Loan after the Cut-off Date, to the extent distributed to
Bondholders before such date of determination; and
(iv) any reduction in the outstanding principal balance of such
Mortgage Loan resulting from a Deficient Valuation that
occurred prior to the end of the Remittance Period for the
most recently ended Payment Date.
With respect to any REO Mortgage Loan, as of any date of determination, an
amount (not less than zero) equal to (x) the Stated Principal Balance of the
related Mortgage Loan as of the date of the related REO Acquisition, minus (y)
the sum of:
(i) the principal portion of each P&I Advance made with respect
to such REO Mortgage Loan that was distributed to
Bondholders before such date of determination; and
(ii) the principal portion of all Insurance Proceeds, Liquidation
Proceeds and REO Proceeds received with respect to such REO
Mortgage Loan, to the extent distributed to Bondholders
before such date of determination.
A Mortgage Loan shall be deemed to be owned by the Issuer and pledged as
Collateral to secure the Bonds and to have an outstanding Stated Principal
Balance through and including the Payment Date on which the proceeds, if any,
received in connection with a Liquidation Event in respect thereof are to be
distributed to Bondholders.
"Trustee": ____________________, or its successor in interest in its
capacity as Trustee hereunder, or any successor trustee appointed as herein
provided.
"Trustee Fee Rate": ____% per annum calculated on the basis of twelve
30-day months and a 360-day year.
"UCC Financing Statement": A financing statement executed and filed
pursuant to the Uniform Commercial Code, as in effect in the relevant
jurisdiction, or, in the case of Louisiana or the Commonwealth of Puerto Rico,
the comparable provisions of Louisiana or Puerto Rico law, as applicable.
"Underwriter": Any of ____________________ or ____________________.
"United States Person": A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate
whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States, or
a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
trustees have authority to control all substantial decisions of the trust.
"Weighted Average Remittance Rate": With respect to any Payment Date, the
rate per annum equal to the weighted average, by Stated Principal Balance,
expressed as a percentage and rounded to eight decimal places, of the Remittance
Rates on the Mortgage Loans prior to giving effect to distributions thereon in
the Remittance Period immediately preceding such Payment Date; provided that for
purposes of calculating the Class E and Class F Bond Interest Rates, the
Weighted Average Remittance Rate will be calculated as the rate, based on a
360-day year of twelve 30-day months.
"1933 Act": The Securities Act of 1933, as amended.
SECTION 1.02 Certain Terms.
Terms used herein and not defined herein shall have the meanings given to
such terms in the Indenture.
SECTION 1.03 Determination of LIBOR.
LIBOR applicable to the calculation of the Bond Interest Rates on the Class
A-1, Class A-2, Class B, Class C and Class D Bonds for any Interest Accrual
Period will be determined on each LIBOR Rate Adjustment Date as follows:
For any Interest Accrual Period, the rate for United States dollar deposits
for one month which appears on the Telerate Screen Page 3750 as of 11:00 A.M.,
London, England time, on the second LIBOR Business Day prior to the first day of
such Interest Accrual Period (a "LIBOR Rate Adjustment Date"). If such rate does
not appear on such page (or such other page as may replace that page on that
service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be reasonably selected by the
Trustee after consultation with the Master Servicer), the rate will be the
Reference Bank Rate. The "Reference Bank Rate" will be determined on the basis
of the rates at which deposits in the U.S. dollars are offered by the reference
banks (which shall be three major banks that are engaged in transactions in the
London interbank market, selected by the Trustee after consultation with the
Master Servicer) as of 11:00 A.M., London time, on the day that is two LIBOR
Business Days prior to the immediately preceding Payment Date to prime banks in
the London interbank market for a period of one month in amounts approximately
equal to the aggregate Class Balance of the Class Balance of the Bonds then
outstanding. The Trustee will request the principal London office of each of the
reference banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate will be the arithmetic mean of the quotations.
If on such date fewer than two quotations are provided, as requested, the rate
will be the arithmetic mean of the rates quoted by one or more major banks in
New York City, selected by the Trustee after consultation with the Master
Servicer, as of 11:00 A.M., New York City time, on such date for loans in U.S.
dollars to leading European banks for a period of one month in amounts
approximately equal to the aggregate Class Balance of the Bonds then
outstanding. If no such quotations can be obtained and no Reference Bank Rate is
available, LIBOR will be LIBOR applicable to the preceding Payment Date.
The establishment of LIBOR by the Trustee on any LIBOR Rate Adjustment Date
and the Trustee's subsequent calculation of the Bond Interest Rates applicable
to the Bonds for the relevant Interest Accrual Period, in the absence of
manifest error, will be final and binding.
Promptly following each LIBOR Rate Adjustment Date the Trustee shall supply
the Master Servicer with the results of its determination of LIBOR on such date.
SECTION 1.04 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(a) The terms defined in this Agreement include the plural as well as
the singular, and the use of any gender herein shall be deemed to
include the other gender;
(b) Accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with Generally Accepted Accounting
Principles ("GAAP");
(c) References herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Agreement;
(d) References to a Subsection without further reference to a Section
is a reference to such subsection as contained in the same
Section in which the reference appears, and this rule shall also
apply to Paragraphs and other subdivisions;
(e) The words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular provision;
(f) The term "include" or "including" shall be deemed to be followed
by the phrase "without limitation";
(g) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"
and the words "to" and "until" each means "to but excluding";
(h) The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or
interpretation of this Agreement;
(i) References herein to actions to be taken shall include the
failure to take any action;
(j) Any action or delivery which is required pursuant to the terms
hereof which falls on a day which is not a Business Day will be
due on the immediately following Business Day.
ARTICLE II
CERTAIN MATTERS REGARDING THE MORTGAGE LOANS;
SECTION 2.01. Delivery of Mortgage Loan Files and Related Documents.
(a) In connection with the Grant of the Trust Estate by the Issuer to
secure the Bonds, the Issuer is required to deliver to and deposit with, or
cause to be delivered to and deposited with, the Trustee, on or before the
Closing Date, the Mortgage File for each Mortgage Loan. Also in connection
therewith, the Issuer shall deliver to and deposit with, or cause to be
delivered to and deposited with, the Master Servicer, on or before the Closing
Date: (i) copies of the Indenture and the Mortgage Loan Purchase Agreement; (ii)
copies of the documents comprising the Mortgage File for each Mortgage Loan; and
(iii) all other documents and records in the possession of the Issuer or the
Mortgage Loan Seller that relate to the Mortgage Loans, are necessary for the
servicing of the Mortgage Loans and are not required to be a part of a Mortgage
File in accordance with the definition thereof. The Master Servicer shall hold
all such documents and records delivered to it on behalf of the Trustee in trust
for the benefit of the Bondholders and, subject to the lien of the Indenture,
the Issuer.
(b) The Trustee shall deliver to the Master Servicer within 15 days after
the Closing Date each assignment of Mortgage and assignment of Assignment of
Leases in favor of the Trustee delivered to it as part of a Mortgage File and
each UCC-2 and UCC-3 in favor of the Trustee delivered to it as part of a
Mortgage File, and the Master Servicer shall, at the Mortgage Loan Seller's
expense, as to each Mortgage Loan, promptly (and in any event within 45 days
following the Closing Date) cause each such document to be submitted for
recording or filing, as the case may be, in the appropriate public office for
real property records or UCC Financing Statements, as the Master Servicer deems
appropriate. Each such assignment shall reflect that it should be returned by
the public recording office to the Trustee following recording, and each such
UCC-2 and UCC-3 shall reflect that the file copy thereof should be returned to
the Trustee following filing; provided that in those instances where the public
recording office retains the original assignment of Mortgage or assignment of
Assignment of Leases the Master Servicer shall obtain therefrom a certified copy
of the recorded original. If any such document or instrument is lost or returned
unrecorded or unfilled, as the case may be, because of a defect therein, the
Issuer shall promptly prepare or cause to be prepared a substitute therefor or
cure such defect, as the case may be, and thereafter the Master Servicer shall
upon receipt thereof cause the same to be duly recorded or filed, as
appropriate.
SECTION 2.02. Document Defects and Breaches; Repurchase.
(a) If any party hereto discovers that any document constituting a part of
a Mortgage File has not been properly executed, is missing, contains information
that does not conform in any respect with the corresponding information set
forth in the Mortgage Loan Schedule (and the terms of such document have not
been modified by written instrument contained in the Mortgage File), or does not
appear to be regular on its face (each, a "Document Defect"), or if any party
hereto discovers a breach of any representation or warranty of the Mortgage Loan
Seller relating to any Mortgage Loan set forth in the Mortgage Loan Purchase
Agreement (a "Breach"), such party shall give prompt written notice thereof to
the other parties hereto.
(b) Promptly upon its discovery or receipt of notice of any Document
Default or Breach that materially and adversely affects the value of any
Mortgage Loan or the interests of the Issuer and/or the Bondholders therein, the
Master Servicer shall request that the Mortgage Loan Seller, not later than [90]
days (or such other period as is provided in the Mortgage Loan Purchase
Agreement) from the receipt by the Mortgage Loan Seller of such request, cure
such Document Defect or Breach in all material respects or repurchase the
affected Mortgage Loan at the applicable Purchase Price as, if and to the extent
required by the Mortgage Loan Purchase Agreement; provided that if (i) such
Breach is capable of being cured but not within such 90-day (or other) period,
(ii) the Mortgage Loan Seller has commenced and is diligently proceeding with
the cure of such Breach within such 90-day (or other) period, and (iii) the
Mortgage Loan Seller shall have delivered to the Trustee and the Master Servicer
a certification executed on behalf of the Mortgage Loan Seller by an officer
thereof setting forth the reason that such Breach is not capable of being cured
within an initial 90-day (or other) period, specifying what actions the Mortgage
Loan Seller is pursuing in connection with the cure thereof and stating that the
Mortgage Loan Seller anticipates that such Breach will be cured within an
additional period not to exceed 90 more days, then the Mortgage Loan Seller
shall have up to an additional 90 days to complete such cure. If the affected
Mortgage Loan is to be repurchased, the Master Servicer shall designate the
Collection Account as the account to which funds in the amount of the Purchase
Price are to be wired, and the Master Servicer shall promptly notify the Trustee
(by delivery thereto of an Officer's Certificate) when such deposit is made. Any
such purchase of a Mortgage Loan shall be on a whole loan, servicing released
basis, and shall be subject to all applicable terms and conditions set forth in
the Indenture. In connection with any such purchase by the Mortgage Loan Seller,
each of the Master Servicer and the Special Servicer shall deliver any portion
of the related Servicing File that is in its possession to such purchaser or its
designee.
(c) If the Mortgage Loan Seller defaults on its obligations to repurchase
any Mortgage Loan as contemplated by this Section 2.02, the Master Servicer
shall promptly notify the Trustee, the Issuer and the Bondholders and shall take
such actions with respect to the enforcement of such repurchase obligations,
including, without limitation, the institution and prosecution of appropriate
legal proceedings, as the Master Servicer shall determine, in its reasonable
good faith judgment, are in the best interests of the Bondholders (taken as a
collective whole) and are not inconsistent with the Indenture. Any and all
expenses incurred by the Master Servicer with respect to the foregoing shall
constitute Servicing Advances in respect of the affected Mortgage Loan.
SECTION 2.03 Representations and Warranties of the Issuer, the Master
Servicer, and the Special Servicer; Assignment of Rights.
(a) The Issuer hereby represents and warrants to and covenants with the
Trustee, the Master Servicer, and the Special Servicer, as of the Delivery Date,
that:
(i) The Issuer is a [trust] duly organized, validly existing and in good
standing under the laws of the State of ____________.
(ii) The execution and delivery of this Agreement by the Issuer, and the
performance and compliance with the terms of this Agreement by the
Issuer, will not violate the Issuer's [Trust Agreeement] 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
material agreement or other instrument to which it is a party or which
is applicable to it or any of its assets.
(iii) The Issuer has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, the
execution, delivery and performance of this Agreement by the Issuer
has been duly authorized, and the Issuer has duly executed and
delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and delivery by
the Trustee, the Master Servicer, and the Special Servicer,
constitutes a valid, legal and binding obligation of the Issuer,
enforceable against the Issuer in accordance with the terms hereof,
subject to (A) applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors'
rights generally, and (B) general principles of equity, regardless of
whether such enforcement is considered in a proceeding in equity or at
law.
(v) The Issuer is not in violation of, and its execution and delivery of
this Agreement and its performance and compliance with the terms of
this Agreement will not constitute a violation of, any law, any order
or decree of any court or arbiter, or any order, regulation or demand
of any federal, state or local governmental or regulatory authority,
or any of the provisions of any indenture, mortgage, contract,
instrument, or other document to which such Issuer is a party or by
which it is bound, or result in the creation or imposition of any
lien, charge, or encumbrance upon any of its property pursuant to the
terms of any such indenture, mortgage, contract, instrument, or other
document which violation, in the Issuer's good faith and reasonable
judgment, is likely to affect materially and adversely either the
ability of the Issuer to perform its obligations under this Agreement
or the financial condition of the Issuer.
(vi) No litigation is pending or, to the best of the Issuer's knowledge,
threatened against the Issuer which, if determined adversely to the
Issuer, would prohibit the Issuer from entering into this Agreement
or, in the Issuer's good faith reasonable judgment, is likely to
materially and adversely affect either the ability of the Issuer to
perform its obligations under this Agreement or the financial
condition of the Issuer.
(vii) At the time of the grant of a security interest in the Mortgage Loans
from the Issuer to the Trustee on behalf of the Bondsholders in the
Indenture, the Issuer had good title to and was the sole owner of,
each Mortgage Loan, free and clear of any pledge, lien, encumbrance or
security interest (other than the rights to servicing and related
compensation) and the Mortgage Loans pledged to the Trustee on behalf
of the Holders of the Bonds free and clear of any other pledge, lien,
encumbrance or security interest.
(b) The Master Servicer and Special Servicer hereby represent, warrant and
covenant to the Trustee and the Issuer, as of the Delivery Date, that:
(A) The Master Servicer and Special Servicer is a __________ duly
organized, validly existing and in good standing under the laws of the State of
__________.
(B) The execution and delivery of this Agreement by each Servicer, and the
performance and compliance with the terms of this Agreement by each Servicer,
will not (i) violate such Servicer's certificate of limited partnership or
limited partnership agreement or (ii) constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material agreement or other instrument to which it
is a party or which is applicable to it or any of its assets, which default or
breach, in such Servicer's good faith and reasonable judgment, is likely to
affect materially and adversely either the ability of such Servicer to perform
its obligations under this Agreement or the financial condition of such
Servicer.
(C) Each Servicer has the full power and authority to enter into and
consummate all transactions of such Servicer contemplated by this Agreement, has
duly authorized the execution, delivery and performance of this Agreement, and
has duly executed and delivered this Agreement.
(D) This Agreement, assuming due authorization, execution and delivery by
the Trustee and the Issuer, constitutes a valid, legal and binding obligation of
such Servicer, enforceable against such Servicer in accordance with the terms
hereof, subject to applicable bankruptcy, insolvency, reorganization,
receivership, moratorium and other laws affecting the enforcement of creditors'
rights generally, and general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law.
(E) Neither Servicer is in violation of, and its execution and delivery of
this Agreement and its performance and compliance with the terms of this
Agreement will not constitute a violation of, any law, any order or decree of
any court or arbiter, or any order, regulation or demand of any federal, state
or local governmental or regulatory authority, or any of the provisions of any
indenture, mortgage, contract, instrument, or other document to which such
Servicer is a party or by which it is bound, or result in the creation or
imposition of any lien, charge or encumbrance upon any of its property pursuant
to the terms of any such indenture, mortgage, contract, instrument or other
document which violation, lien, charge or encumbrance in such Servicer's good
faith and reasonable judgment, is likely to affect materially and adversely
either the ability of such Servicer to perform its obligations under this
Agreement or the financial condition of such Servicer.
(F) No litigation is pending or, to such Servicer's knowledge, threatened
against such Servicer which, if determined adversely to such Servicer, would
prohibit such Servicer from entering into this Agreement or, in such Servicer's
good faith and reasonable judgment, is likely to materially and adversely affect
either the ability of such Servicer to perform its obligations under this
Agreement or the financial condition of such Servicer.
(c) It is understood and agreed that the representations and warranties set
forth in this Section 2.03 shall survive the execution and delivery of this
Agreement, and shall inure to the benefit of the Persons for whose benefit they
were made for so long as the Bonds remain Outstanding. Upon discovery by the
Issuer, the Master Servicer, the Special Servicer or the Trustee of any breach
of any of the foregoing representations and warranties, the party discovering
such breach shall give prompt written notice to the other parties.
SECTION 2.04 Repurchase of Mortgage Loans for Breaches of Representation
and Warranty.
(a) Within 90 days of the earlier of, the discovery by the Mortgage Loan
Seller of, or receipt by the Mortgage Loan Seller of written notice from the
Issuer, the Master Servicer, the Special Servicer, the Trustee or any
Bondholder, specifying in reasonable detail the existence of a breach of any
representation or warranty of the Mortgage Loan Seller in the Mortgage Loan
Purchase Agreement, which materially and adversely affects the value of any
Mortgage Loan or the interest of any Bondholder therein, the Mortgage Loan
Seller shall at its option (A) in all material respects cure such breach or (B)
purchase the affected Mortgage Loan from the Issuer at the Purchase Price.
(b) The purchase of any Mortgage Loan the Mortgage Loan Seller pursuant to
Section 2.04(a) shall be effected by delivering the Purchase Price therefor to
the Master Servicer for deposit in the Collection Account. The Trustee, upon
receipt of an Officers' Bond from the Master Servicer to the effect that such
deposit has been made, shall release or cause to be released to the Mortgage
Loan Seller or its designee, the related Mortgage Loan File and shall execute
and deliver such instruments of transfer or assignment (in recordable form if
recording is appropriate), in each case without recourse, as shall be necessary
to vest in the Mortgage Loan Seller or its designee, any Mortgage Loan released
pursuant hereto. In connection with such repurchase, the Master Servicer, and
the Special Servicer, as applicable, shall release to the Mortgage Loan Seller,
as applicable, all documents and records maintained by such Servicer and
requested by the Issuer or the Mortgage Loan Seller; provided, that such
Servicer may retain copies of such documents and records at its own expense. The
Mortgage Loan Seller, shall be responsible for the payment of all reasonable
expenses of the Trustee and the Servicers incurred in connection with such
repurchase.
(c) It is understood and agreed that the provisions set forth in Section
2.04(a) and (b) of this Agreement shall constitute the sole remedies available
to the Bondholders, or the Trustee on behalf of the Bondholders, respecting any
breach of the representations and warranties contained in the Mortgage Loan
Purchase Agreement.
ARTICLE III
GENERAL PROVISIONS APPLICABLE TO SERVICERS
SECTION 3.01 Contract for Servicing.
(a) Each Servicer, by execution and delivery of this Agreement, agrees to
service the Mortgage Loans pursuant to this Agreement and in all cases in
accordance with Accepted Servicing Practices and Accepted Special Servicing
Practices, as applicable.
(b) Any funds received on or in connection with a Mortgage Loan by a
Servicer shall be received and held by such Servicer in accordance with this
Agreement and pursuant to Accepted Servicing Practices or Accepted Special
Servicing Practices, as applicable, for the benefit of the Bondholders and the
related Mortgagor as their respective interests may appear and as provided in
this Agreement.
SECTION 3.02 Notices to Mortgagors.
The Master Servicer shall, within five (5) Business Days of the Delivery
Date for any Mortgage Loan, send by first class mail or by hand delivery written
notice to the related Mortgagor that the Master Servicer has been engaged to
service such Mortgage Loan, which notice shall direct such Mortgagor to make
further payments and to send all future notices with respect to such Mortgage
Loan directly to the Master Servicer. Notwithstanding the foregoing, the Master
Servicer shall not be required to send such notice if the Mortgage Loans shall
be subserviced by the Mortgage Loan Seller pursuant to a Subservicing Agreement
between the Master Servicer and the Mortgage Loan Seller, and there is no change
in where the Mortgagor is required to send payments under the Mortgage Loan.
SECTION 3.03 Subservicing.
The Master Servicer and the Special Servicer may enter into subservicing
agreements with one or more subservicers (including subsidiaries or affiliates
of the Servicer) for the servicing and administration of the Mortgage Loans.
References in this Agreement to actions taken or to be taken by the Master
Servicer or the Special Servicer in servicing the Mortgage Loans include actions
taken or to be taken by a subservicer on behalf of such Master Servicer.
Notwithstanding any subservicing agreement, any of the provisions of this
Agreement relating to agreements or arrangements between either Servicer and a
subservicer or reference to actions taken through such Persons or otherwise,
such Servicer shall remain obligated and liable to the Issuer and Bondholders
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 subservicing agreements or arrangements, or by virtue of
indemnification from a subservicer, and to the same extent and under the same
terms and conditions as if the such Servicer alone were servicing and
administering the Mortgage Loans. Each Servicer shall be entitled to enter into
any agreement with a subservicer for indemnification of such Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
Any subservicing agreement that may be entered into and any other
transactions or servicing arrangements relating to the Mortgage Loans involving
a subservicer shall be deemed to be between the subservicer and the related
Servicer, and none of the Trustee, the Bondholders nor the Issuer shall be
deemed parties thereto and none of such Persons shall have claims or rights
(except as specified below), nor obligations, duties or liabilities with respect
to the subservicer; provided, that the Trustee and the Bondholders may rely upon
the representations and warranties of the subservicer contained therein and each
of the Trustee and the Issuer shall be a third party beneficiary of the
covenants and other provisions setting forth obligations of the subservicer
therein.
If the Trustee or any successor Servicer assumes the obligations of the
Master Servicer or the Special Servicer, as applicable, in accordance with this
Agreement, the Trustee or such successor Servicer may, at its option, (i)
terminate any subservicing agreement entered into by the Master Servicer or
Special Servicer pursuant to this Section 3.03 or (ii) succeed to all of the
rights and obligations of the Master Servicer or Special Servicer under any
subservicing agreement, and any such subservicing agreement shall provide such
right of termination or succession to the Trustee or such successor Servicer. In
such event, the Trustee or such successor Servicer shall be deemed to have
assumed all of the interest of the Master Servicer or Special Servicer 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 subservicing agreement to the same extent as if such subservicing
agreement had been assigned to the Trustee or such successor Servicer, except
that the Master Servicer or the Special Servicer shall not thereby be relieved
of any liability or obligations under such subservicing agreement that accrued
prior to the assumption of duties hereunder by the Trustee or such successor
Servicer.
In the event that the Trustee or any successor Servicer assumes the
servicing obligations of the Master Servicer or the Special Servicer, as
applicable, upon request of the Trustee or such successor Servicer, the Master
Servicer or Special Servicer shall, at its own expense, promptly deliver to the
Trustee or such successor Servicer all documents and records relating to any
subservicing agreement and the Mortgage Loans then being serviced thereunder,
and the Servicer will otherwise use its best efforts to effect the orderly and
efficient transfer of any subservicing agreement to the Trustee or such
successor Servicer.
SECTION 3.04 Record Title to Mortgage Loans, Etc.
No Servicer shall hold record title to any Mortgage or any Mortgage Note.
SECTION 3.05 Release of Documents and Instruments of Satisfaction.
The Trustee may, subject to the terms hereof, upon receipt of a Request for
Release and Receipt of Documents provided by any Servicer substantially in the
form set forth on Exhibit B, release to such Servicer the related Mortgage Loan
File or the documents from a Mortgage Loan File set forth in such request. Each
Servicer acknowledges that during all times that any Mortgage Loan File or any
contents thereof are in the physical possession of such Servicer, such Mortgage
Loan File and the documents contained therein shall be held by the Servicer.
Subject to any state law requirement or court order, each Servicer hereby
agrees to return to the Trustee each and every document previously requested
from the Mortgage Loan File when such Servicer's need therefor in connection
with such foreclosure or servicing no longer exists, unless the related Mortgage
Loan shall be liquidated or paid in full, in which case, upon receipt of the
Request for Release and Receipt of Documents from either Servicer, the Trustee
may release the related Servicer's prior request form, together with all other
documents still retained by the Trustee with respect to such Mortgage Loan, to
such Servicer.
Upon receipt of the payment in full of any Mortgage Loan, or upon the
receipt by the Master Servicer or Special Servicer of a notification that
payment in full will be escrowed in a manner customary for such purposes, such
Servicer shall promptly deliver to the Trustee a Request for Release and Receipt
of Documents in the form set forth on Exhibit B requesting delivery to such
Servicer of the Mortgage Loan File for such Mortgage Loan. In connection
therewith, such Servicer shall deliver to the Trustee a Request for Release and
Receipt of Documents indicating that all amounts received in connection with
such payment that are required to be deposited in the Collection Account
pursuant to Section 4.02 hereof have been or will be so deposited.
The Master Servicer and the Special Servicer shall forward to the Trustee
original documents evidencing an assumption, modification, consolidation or
extension of any Mortgage Loan entered into by such Servicer in accordance with
this Agreement within ten (10) Business Days of the execution thereof and the
delivery of such instrument to such Servicer; provided, however, that such
Servicer may, in lieu thereof, provide the Trustee with a certified true copy of
any such document submitted for recordation within five (5) Business Days of its
execution, in which event such Servicer shall provide the Trustee with the
original of any document submitted for recordation or a copy of such document
certified by the appropriate public recording office to be a true and complete
copy of the recorded original within five (5) Business Days of receipt thereof
by such Servicer.
Upon any payment in full of a Mortgage Loan, the Master Servicer or Special
Servicer may execute an instrument of satisfaction regarding the related
Mortgage and any other related Mortgage Loan Documents, which instruments of
satisfaction shall be recorded by such Servicer if required by applicable law
and shall be delivered to the Person entitled thereto, it being understood and
agreed that all reasonable expenses incurred by such Servicer in connection with
such instruments of satisfaction shall be deemed a Servicing Advance, which
shall be reimbursed pursuant to the terms of this Agreement. Such Servicer shall
notify the Trustee of an instrument of satisfaction described above as soon as
practicable.
SECTION 3.06 Access to Certain Documentation Regarding the Mortgage Loans
and This Agreement.
Upon reasonable advance written notice, each Servicer shall give the
Trustee or its agents or representatives, during normal business hours at such
Servicer's offices, reasonable access to all reports, information and
documentation regarding any Mortgage Loan, this Agreement (including the right
to make copies or extracts therefrom) and access to officers of such Servicer
responsible for such obligations.
SECTION 3.07 Annual Statement As to Compliance.
Each Servicer shall deliver to the Issuer and the Trustee, on or before
April 30 of each year, beginning April 30, 199__, a statement, signed by a
Servicing Officer thereof, stating that (a) a review of the activities of such
Servicer during the preceding calendar year (or during the period from the date
of commencement of its duties hereunder until the end of such preceding calendar
year in the case of the first such certificate) and of its performance under
this Agreement has been made under such Servicing Officer's supervision; and (b)
to the best of such Servicing Officer's knowledge, based on such review, such
Servicer has fulfilled all of its material obligations under this Agreement
throughout such period, or if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such Servicing Officer
and the nature and status thereof.
SECTION 3.08 Annual Independent Public Accountants' Servicing Report.
On or before April 30 of each year, beginning April 30, 199__, each
Servicer, at its expense, shall cause a firm of independent public accountants
that is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Issuer and the Trustee to the effect that such firm
has examined such documents and records as it has deemed necessary and
appropriate relating to the servicing of the Mortgage Loans under this Agreement
for the preceding calendar year (or during the period from the date of
commencement of such servicer's duties hereunder until the end of such preceding
calendar year in the case of the first such certificate) and that, on the basis
of such examination conducted substantially in compliance with the Uniform
Single Attestation Program for Mortgage Bankers, such firm is of the opinion
that such servicing during such period has been conducted in compliance with
this Agreement except for such exceptions that, in the opinion of such firm, the
Uniform Single Attestation Program for Mortgage Bankers requires it to report,
in which case such exceptions shall be set forth in such statement.
SECTION 3.09 Merger or Consolidation of Any Servicer.
(a) Each Servicer shall keep in full force and effect its existence, rights
and franchises as an association or corporation under the laws governing its
charter or articles of incorporation and, in the case of the initial Servicer,
its good standing as a ___________ under the laws of the State of __________;
except as permitted in this Section 3.09 and shall obtain and preserve its
qualification to do business as a foreign corporation, association or limited
partnership, as applicable, in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement, or any of the Mortgage Loans and to perform its duties under this
Agreement.
(b) Any Person into which a Servicer may be merged, converted, or
consolidated, or any Person resulting from any merger, conversion or
consolidation to which a Servicer shall be a party, or any Person succeeding to
the business of a Servicer, shall be the successor of such Servicer hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person shall be an entity
whose business includes the servicing of mortgage loans, shall service
multifamily and/or commercial mortgage loans, as applicable, in accordance with
Accepted Servicing Practices or Accepted Special Servicing Practices, as
applicable, and shall satisfy the requirements of Section 13.12 hereof with
respect to the qualifications of a successor to a Servicer.
SECTION 3.10 Limitation on Liability of the Servicers and Others.
Neither the Servicers or any of the directors, officers, employees or
agents thereof shall be under any liability for any action taken or for
refraining from the taking of any action in accordance with Accepted Servicing
Practices or Accepted Special Servicing Practices, as applicable, and otherwise
in good faith pursuant to this Agreement or for errors in judgment (not
constituting negligence or willful misconduct); provided, however, that this
provision shall not protect any Servicer or such Persons of such Servicer
against any liability resulting from any breach of any representation or
warranty made herein, or from any liability specifically required to be borne by
such party without right of reimbursement pursuant to the terms hereof; and
provided, further, that this provision shall not protect any Servicer or such
Persons of such Servicer against any liability that would otherwise be imposed
by reason of the willful misfeasance, bad faith or negligence in the performance
of duties or by reason of negligent disregard of the obligations or duties
hereunder. Each Servicer and any director, officer, employee or agent thereof
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any appropriate Person respecting any matters arising
hereunder. No Servicer shall, as applicable, be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its duties to
service the Mortgage Loans in accordance with this Agreement.
SECTION 3.11 Resignation of Servicers.
Without in any way limiting the generality of this Section 3.11, neither
the Master Servicer nor the Special Servicer shall resign as such or delegate
its rights or duties hereunder or any portion thereof; provided that (i) either
Servicer may enter into a Subservicing Agreement subject to Section 3.03 and
(ii) either Servicer may resign upon determination that its duties hereunder are
no longer permissible under applicable law. Any such determination permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel
(obtained at the resigning Servicer's expense) to such effect delivered to the
Trustee and acceptable in form and substance thereto. Unless applicable law
requires the Servicer's resignation to become effective immediately, no such
resignation shall become effective until the Trustee or other successor shall
have assumed the responsibilities and obligations of the resigning party in
accordance with Section 8.02 and Section 13.12 hereof.
SECTION 3.12 Maintenance of Errors and Omissions and Fidelity Coverage.
Each Servicer shall obtain and maintain at its own expense, and keep in
full force and effect throughout the term of this Agreement, a blanket fidelity
bond and an errors and omissions insurance policy issued by a surety or insurer
which is a Qualified Insurer covering such Servicer's officers and employees in
connection with its activities under this Agreement.
The deductible on the fidelity bond or errors and omissions policy shall
not exceed the greater of $__________ and five (5) percent of the face amount of
such bond or policy. In the event that any such bond or policy ceases to be in
effect, such Servicer shall immediately obtain a comparable replacement bond or
policy. Notwithstanding the foregoing, so long as the long-term unsecured debt
obligations of such Servicer or its corporate parent have been rated "A" or
better by two or more of the Rating Agencies (one of which shall be [Standard &
Poor's Ratings Services] and, if not rated by [Fitch IBCA, Inc.], is acceptable
thereto), such Servicer shall be entitled to provide self-insurance or obtain
from its parent adequate insurance, as applicable, with respect to its
obligation to maintain a blanket fidelity bond or an errors and omissions
insurance policy.
SECTION 3.13 Indemnity.
(a) Each Servicer shall indemnify and hold harmless the Trustee and the
Issuer against any and all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel and expenses of
litigation, arising from claims or actions that were caused by or resulted from
a breach of any of such Servicer's representations and warranties contained in
this Agreement or arising out of the Servicer's willful misfeasance, bad faith
or negligence or by reason of negligent disregard of obligations or duties of
such Servicer hereunder.
(b) Each Servicer and the directors, officers and agents thereof shall be
indemnified and held harmless by the Issuer from any and all costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and expenses
of counsel and expenses of litigation, incurred in connection with any legal
action relating to any Mortgage Loans and this Agreement, other than any costs,
expense, loss, damage, claim or liability incurred by reason of willful
misfeasance, bad faith or negligence of such Servicer in the performance of
duties or by reason of negligent disregard of obligations or duties of such
Servicer hereunder.
(c) As soon as reasonably practicable after receipt by any Servicer, the
Trustee on behalf of the Bondholders, of notice of any complaint or the
commencement of any action or proceeding with respect to which indemnification
is being sought under clause (a) or (b) above (each an "Indemnified Party"),
such Indemnified Party shall notify each Servicer, the Trustee on behalf of the
Bondholders from which indemnification is sought pursuant to clause (a) or
clause (b) above (each an "Indemnifying Party") in writing of such complaint or
of the commencement of such action or proceeding, but failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
which the Indemnifying Party may have hereunder or otherwise, except to the
extent that such failure materially prejudices the rights of the Indemnifying
Party. If the Indemnifying Party so elects or is requested by such Indemnified
Party, the Indemnifying Party shall assume the defense of such action or
proceeding, including the employment of counsel reasonably satisfactory to each
Indemnified Party and the payment of the fees and disbursements of such counsel.
In the event, however, such Indemnified Party reasonably determines in its
judgment that having common counsel would present such counsel with a conflict
of interest or that having common counsel would in any other way disadvantage
such Indemnified Party or if the Indemnifying Party fails to assume the defense
of the action or proceeding in a timely manner, then such Indemnified Party may
employ separate counsel to represent or defend it in any such action or
proceeding and the Indemnifying Party shall pay the fees and disbursements of
such counsel; provided, however, that the Indemnifying Party shall not be
required to pay the fees and disbursements of more than one separate counsel for
all related Indemnified Parties in any jurisdiction in any single action or
proceeding. In any action or proceeding the defense of which the Indemnifying
Party assumes and in which an Indemnified Party is not entitled to separate
counsel pursuant to the immediately preceding sentence, such Indemnified Party
shall have the right to participate in such litigation and to retain its own
counsel at such Indemnified Party's expense.
SECTION 3.14 Information Systems.
Each Servicer shall maintain a data storage and retrieval system capable of
maintaining, updating and providing reports with respect to all relevant
information with respect to each Mortgage Loan that may be required to satisfy
the terms of this Agreement, including but not limited to all information on the
Mortgage Loan Schedule. Each Servicer shall update the data on such system to
reflect any information available thereto from time to time.
ARTICLE IV
OBLIGATIONS OF THE MASTER SERVICER
SECTION 4.01 The Master Servicer.
(a) The Master Servicer shall service and administer each Mortgage Loan
(except as such obligations may be undertaken by the Special Servicer pursuant
to Article VI hereof) on behalf of and in the best interests of and for the
benefit of the Bondholders in accordance with the terms of this Agreement and
Accepted Servicing Practices.
(b) Subject to Accepted Servicing Practices and the terms of this Agreement
and of each Mortgage Loan, the Master Servicer shall have full power and
authority to do or cause to be done any and all things in connection with such
servicing and administration that it may deem, in its best judgment, necessary
or desirable, including, without limitation, to execute and deliver any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to any Mortgage
Loan which is not a Specially Serviced Mortgage Loan. Without limiting the
generality of the foregoing, the Master Servicer shall, and is hereby authorized
and empowered to, with respect to each Mortgage Loan, prepare, execute and
deliver at the expense of the Issuer, 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. The Master
Servicer shall service and administer each Mortgage Loan in accordance with
applicable state and federal law and shall provide to each Mortgagor any
information required to be provided to it thereby. Subject to the foregoing, the
Master Servicer shall service and administer each Mortgage Loan in accordance
with the Mortgage Loan Documents, and shall enforce all provisions designated in
the Mortgage Loan Documents, including but not limited to the establishment and
administration of escrow accounts, reserve accounts, impound accounts and
operation and maintenance plans. The Master Servicer may from time to time
request in writing any powers of attorney and other documents necessary or
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties hereunder. If it shall make such written request, the
Master Servicer shall prepare for signature by the Trustee, and the Trustee
shall sign any such powers of attorney or other documents necessary or
appropriate to carry out such duties hereunder; provided, however, that the
Trustee shall not be held liable for any misuse of any such power of attorney by
the Master Servicer.
(c) The Master Servicer assumes, with respect to each Mortgage Loan (except
as otherwise set forth in Article VI), full responsibility for the timely
payment (subject to Section 4.05(b) with respect to any Nonrecoverable Advances)
of all customary, reasonable and necessary "out of pocket" costs and expenses
(including reasonable attorneys' fees and disbursements) incurred in connection
with:
(i) any enforcement, administrative or judicial proceedings, or any
necessary legal work or advice specifically related to servicing the
Mortgage Loans, including but not limited to, bankruptcies,
condemnations, drug seizures, foreclosures by subordinate lienholders,
legal costs associated with preparing powers of attorney pursuant to
Section 4.01(b) above, and other legal actions incidental to the
servicing of the Mortgage Loans (provided that such expenses are
reasonable and that the Master Servicer specifies the Mortgage Loan(s)
to which such expenses relate);
(ii) all ground rents, taxes, assessments, water rates, sewer rates and
other charges, as applicable, that are or may become a lien upon the
Mortgaged Property, and all fire, flood, hazard and other insurance
coverage (to the extent required in this Agreement, including renewal
payments); and
(iii) compliance with the servicing provisions applicable to the Master
Servicer set forth herein.
With respect to any costs described in clauses (i) and (ii) above and to
the extent the related Mortgage Loan Documents do not provide for escrow
payments or the Master Servicer determines that any such payments have not been
made by the related Mortgagor, the Master Servicer shall effect timely payment
of all such expenses before they become delinquent if the Master Servicer shall
have or should have had knowledge based on Accepted Servicing Practices of such
nonpayment by the Mortgagor before it becomes delinquent, and, otherwise, the
Master Servicer shall effect immediate payment of all such expenses which it has
knowledge or should have knowledge based on Accepted Servicing Practices have
become delinquent. The Master Servicer shall make Servicing Advances from its
own funds to effect such payments to the extent not deemed a Nonrecoverable
Advance and shall be reimbursed therefor in accordance with Section 4.03(a)
hereof; 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;
provided further that the Master Servicer shall use its best efforts to confirm
whether such items have been paid. With respect to any costs described in clause
(iii) above, the Master Servicer shall be entitled to reimbursement of such
costs as Servicing Advances only to the extent expressly provided in this
Agreement. If the Master Servicer determines with respect to any Mortgage Loan
that a Servicing Advance, if made, would constitute a Nonrecoverable Advance or
that it has made a Nonrecoverable Advance, it shall deliver to the Trustee a
Nonrecoverable Advance Bond.
(d) Upon the occurrence of a Servicing Transfer Event or upon the
resignation or termination of the Master Servicer, the Master Servicer shall
effect the timely and efficient transfer of its servicing responsibilities to
the successor Servicer.
SECTION 4.02 Collection Account; Collection of Certain Mortgage Loan
Payments.
(a) Subject to Article VI, from the date hereof until the principal and
interest on the Mortgage Loans is paid in full, the Master Servicer shall
proceed diligently to collect all payments called for under the terms and
provisions of the Mortgage Loans, and shall follow such collection procedures as
are in accordance with Accepted Servicing Practices.
(b) On or before the Delivery Date and as necessary thereafter, the Master
Servicer shall establish, and agrees to maintain for the duration of this
Agreement, the Collection Account in the name of the Trustee for the benefit of
the Bondholders. The Collection Account shall be an Eligible Account. Funds in
the Collection Account shall be held by the Master Servicer for the benefit of
the Bondholders in each case and shall not be commingled with any other moneys.
The Master Servicer shall deposit, within one Business Day following receipt,
all collections with respect to the Mortgage Loans into the Collection Account.
The Master Servicer shall, within five (5) Business Days of the establishment
thereof, notify the Trustee in writing of the location and account number of the
Collection Account established for the Mortgage Loans and shall give the Trustee
written notice of any change of such location or account number on or prior to
the date of such change. Funds in the Collection Account may be invested by, at
the risk of, and for the benefit of, the Master Servicer in Permitted
Investments which shall not be sold or disposed of prior to maturity. All such
Permitted Investments shall be registered in the name of the Master Servicer (in
its capacity as such and for the benefit of the Bondholders) or its nominee. All
income therefrom shall be the property of the Master Servicer. In addition, if
the amounts in the Collection Account are invested for the benefit of the Master
Servicer, the Master Servicer shall deposit on each Determination Date into such
account out of its own funds an amount representing any net losses realized on
Permitted Investments with respect to funds in such account for such Remittance
Period.
(c) The Master Servicer shall deposit the following amounts into the
Collection Account pursuant to clause (b) above:
(i) all payments on account of principal and Principal Prepayments, on the
related Mortgage Loans;
(ii) all payments on account of interest on the related Mortgage Loans,
including default interest net of any portion thereof retained by the
Master Servicer as its Servicing Fee;
(iii) all Liquidation Proceeds, Excess Condemnation Proceeds and Excess
Insurance Proceeds with respect to the related Mortgaged Properties;
(iv) out of the Master Servicer's own funds, an amount representing net
losses realized on Permitted Investments with respect to funds in the
Collection Account;
(v) any amounts representing Prepayment Premiums paid by the related
Mortgagors;
(vi) any amounts received from the Special Servicer pursuant to Section
6.06(d);
(vii) any other amounts received from the Mortgagor with respect to the
related Mortgage Loans; and
(viii) any amounts received from the Special Servicer under Section 6.07
hereof, other than REO Proceeds;
but excluding (1) REO Proceeds which will be remitted to the Special Servicer
for deposit into the REO Account within one Business Day after receipt and (2)
amounts representing fees payable by Mortgagors with respect to Mortgage Loans
which may be retained by the Master Servicer or remitted to the Special
Servicer, as applicable, as additional servicing compensation hereunder.
(d) Subject to Section 4.03(c), all funds deposited by the Master Servicer
in the Collection Account maintained for the benefit of the Bondholders shall be
held for the benefit of the Bondholders until disbursed or withdrawn in
accordance herewith. Except as expressly permitted or required hereunder, the
Master Servicer shall not sell, transfer or assign to any Person any interest
(including any security interest) in amounts credited or to be credited to the
Collection Account or take any action towards that end, and shall maintain such
amounts free of all liens, claims and encumbrances of any nature.
SECTION 4.03 Permitted Withdrawals from the Collection Account.
(a) The Master Servicer may make withdrawals from the Collection Account of
amounts on deposit therein attributable to the related Mortgage Loans for
(without duplication) the following purposes in the following order of priority:
(i) to recoup any amount deposited in the Collection Account and not
required to be deposited therein;
(ii) on each Remittance Date, from amounts representing payments by a
Mortgagor of interest (or advances thereof) on the related Mortgage
Loan or Liquidation Proceeds, Excess Insurance Proceeds and Excess
Condemnation Proceeds with respect to a Mortgage Loan, to pay to
itself the Master Servicing Fee;
(iii) to reimburse the Trustee and itself, in that order, for unreimbursed
P&I Advances from collections on the related Mortgage Loans, together
with interest at the Advance Rate pursuant to Section 4.05 and Section
7.02, the right to withdraw amounts pursuant to this subclause (iii)
being limited to amounts on deposit in the Collection Account in
respect of Liquidation Proceeds, Excess Insurance Proceeds and Excess
Condemnation Proceeds with respect to such Mortgaged Property, and any
other amounts received on the related Mortgage Loan that represent
late recoveries of payments with respect to which such P&I Advances
were made;
(iv) for unreimbursed Servicing Advances incurred in connection with a
Mortgage Loan or Mortgaged Property, together with interest at the
Advance Rate pursuant to Section 4.05, the right to withdraw amounts
pursuant to this subclause (iv) being limited to amounts on deposit in
such Collection Account in respect of Liquidation Proceeds, Excess
Insurance Proceeds and Excess Condemnation Proceeds with respect to
such Mortgaged Property, and any other amounts received on the related
Mortgage Loan that represent late recoveries of payments with respect
to which such Servicing Advances were made;
(v) on each Remittance Date, to pay to the Special Servicer the Special
Servicing Fee, and from time to time, to pay to the Special Servicer
the Disposition Fee;
(vi) on each Remittance Date, to reimburse the Trustee, and itself, in that
order, for accrued and unpaid interest at the Advance Rate on any
reimbursed P&I Advances pursuant to Sections 4.05 and 7.02 made with
respect to any Mortgage Loan from any amounts on deposit in the
Collection Account, to the extent not otherwise offset by default
interest collected on the related Mortgage Loan;
(vii) on each Remittance Date, to reimburse the Trustee and itself, in that
order, from any amounts on deposit in the Collection Account for (A)
any unreimbursed Nonrecoverable Advance for which a Nonrecoverable
Advance Bond has been previously delivered or (B) any unreimbursed
Servicing Advance for an expense the payment or reimbursement of which
is not an obligation of the related Mortgagor under the terms of the
related Mortgage Loan Documents, in each case, together with interest
at the Advance Rate pursuant to Section 4.05 and Section 7.02;
(viii) to the extent not reimbursed or paid pursuant to any other clause of
this Section 4.03(a), to reimburse or pay each Servicer, the Trustee,
and/or the Issuer for unpaid items incurred by or on behalf of such
Person under this Agreement pursuant to which such Person is entitled
to reimbursement or payment from the assets of the Trust;
(ix) on each Remittance Date, to pay itself any reinvestment income on
amounts on deposit in such Collection Account to which it is entitled
pursuant to Section 4.02(b);
(x) on each Remittance Date, to make remittances to the Trustee pursuant
to Section 4.04 hereof; and
(xi) to clear and terminate such Collection Account upon termination of
this Agreement.
(b) 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 and determining any shortfall or
overpayment of any amounts due from or on behalf of any Mortgagor or Mortgaged
Property. The Master Servicer shall pay to the Trustee or the Special Servicer
from the Collection Account (to the extent permitted by clause (a) 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
Servicer may rely conclusively on any such certificate and shall have no duty to
recalculate the amounts stated therein.
(c) The Trustee, the Special Servicer and the Master Servicer shall in all
cases have a right prior to the Bondholders to any funds on deposit in the
Collection Account from time to time for the reimbursement or payment of
compensation, Advances with interest thereon at the Advance Rate and their
respective expenses hereunder to the extent such items are to be reimbursed or
paid from amounts on deposit in the Collection Account pursuant to this
Agreement.
(d) Notwithstanding any other provisions contained herein to the contrary,
the reimbursement of any P&I Advances, together with interest thereon at the
Advance Rate, shall be made in the following order: first, to the Trustee,
second, to the Master Servicer.
SECTION 4.04 Remittances to the Trustee.
On each Remittance Date, the Master Servicer shall (1) withdraw from the
Collection Account and remit to the Trustee, by wire transfer of immediately
available funds to the Collection Account, all amounts on deposit in the
Collection Account as of the close of business on the Determination Date prior
to such Remittance Date, minus:
(i) any permitted charges against or withdrawals from such Collection
Account pursuant to clauses (i) through (ix) of Section 4.03(a)
hereof; and
(ii) any amounts on deposit in the Collection Account representing a
Monthly Payment due on a Due Date following the Remittance Period for
such Determination Date net of any reduction in the aggregate amount
of P&I Advances for such Determination Date pursuant to Section
4.05(a) (which amounts shall be remitted pursuant to this Agreement on
the Remittance Date immediately following the Remittance Period in
which such Monthly Payment was due),
and (2) remit to the Trustee any P&I Advances required to be made on or prior to
such Remittance Date pursuant to Section 4.05(a).
SECTION 4.05 Master Servicer Advances.
(a) To the extent that as of the Determination Date for any month, the full
amount of the Monthly Payment due in such month with respect to any Mortgage
Loan has not been received by the Master Servicer, the Master Servicer shall, on
the related Remittance Date, deposit into the Collection Account, an advance (a
"P&I Advance") in an amount equal to the excess of such Monthly Payment over the
amount received; provided, however, that notwithstanding anything herein to the
contrary, the Master Servicer shall not be required to make a Nonrecoverable
Advance and the Master Servicer shall not be required to make a P&I Advance with
respect to a Balloon Payment. For purposes of the immediately preceding
sentence, the Monthly Payment due on the Maturity Date for a Balloon Mortgage
Loan will be the amount that would be due on such day based on the full
amortization schedule used to calculate the prior Monthly Payments assuming a
later Maturity Date. If the Master Servicer determines that a P&I Advance is
required, it shall on or prior to such Remittance Date deposit in the Collection
Account out of its own funds an amount equal to the P&I Advance; provided,
however, that the aggregate amount of such P&I Advances for any Remittance Date
shall be reduced by any amounts being held for future remittance to the Master
Servicer pursuant to Section 4.04(a)(1)(ii). Any funds being held in the
Collection Account for future distribution and so used shall be replaced by the
Master Servicer from its own funds by deposit in the Collection Account on each
future Remittance Date to the extent that funds in the Collection Account on
such Remittance Date shall be less than payments to the Master Servicer required
to be made on such date. If the Master Servicer determines with respect to any
Mortgage Loan that a P&I Advance, if made, would constitute a Nonrecoverable
Advance or that it has made a Nonrecoverable Advance, it shall deliver to the
Trustee a Nonrecoverable Advance Bond.
(b) To the extent required by the terms of this Agreement, the Master
Servicer shall make Servicing Advances from time to time; provided, however,
that notwithstanding anything herein to the contrary, the Master Servicer shall
not be required to make a Nonrecoverable Advance.
(c) The Master Servicer shall determine whether amounts are available in
the Collection Account or the escrow account to reimburse the Trustee or the
Master Servicer for unreimbursed Advances made pursuant to this Agreement. The
Master Servicer shall promptly (but in any event no later than ten (10) Business
Days following receipt) withdraw all amounts necessary to make such
reimbursement to the extent such withdrawals are permitted under Section
4.03(a), and shall reimburse the Trustee or itself.
(d) The Master Servicer shall be entitled to interest on any Advance made
with respect to a Mortgage Loan. Such interest shall accrue at the Advance Rate
from the date on which such Advance was made to but not including any Business
Day on which the Master Servicer is reimbursed for such Advance pursuant to this
Agreement.
(e) The Master Servicer shall not make any Advance hereunder prior to the
time such Advance is required hereunder.
SECTION 4.06 Maintenance of Insurance.
(a) The Master Servicer shall in accordance with Accepted Servicing
Practices cause the Mortgagor to maintain for each Mortgage Loan (other than REO
Mortgage Loans), and if the Mortgagor does not so maintain, the Master Servicer
shall cause to be maintained for each Mortgaged Property all insurance required
by the terms of the related Mortgage Loan Documents; provided, however, that if
the insurance in the amount required above is not available at a commercially
reasonable cost, or the Trustee, as mortgagee, does not have an insurable
interest, as determined by the Master Servicer in accordance with Accepted
Servicing Practices, the Master Servicer shall not be required to maintain such
policy. Subject to the preceding sentence, hazard insurance shall be maintained
in the amount set forth in the related Mortgage Loan Documents but in any event
in an amount at least equal to the replacement cost of the improvements which
are a part of such property. Such insurance policies shall also provide coverage
in amounts sufficient such that the insurance carrier would not deem the
Mortgagor to be a co-insurer thereunder. All such policies shall provide for at
least thirty days' prior written notice to the Master Servicer of any
cancellation, reduction in the amount of, or material change in, the coverage
provided thereunder. If at any time the Mortgaged Property is in a federally
designated special flood hazard area, the Master Servicer shall cause the
related Mortgagor to maintain or will itself obtain flood insurance in respect
thereof to the extent available at a commercially reasonable cost. Such flood
insurance shall be in an amount equal to the lesser of (x) the unpaid principal
balance of the related Mortgage Loan and (y) the greater of (1) the maximum
amount of such insurance required by the terms of the related Mortgage Note or
Mortgage and (2) the maximum amount of such insurance that is available for the
related Mortgaged Property under the national flood insurance program (assuming
that the area in which such Mortgaged Property is located is participating in
such program). Any cost incurred in maintaining any insurance required pursuant
to this subsection (a) shall not, for the purpose of calculating monthly
distributions to the Bondholders, be added to the unpaid principal balance of
the related Mortgage Loan, notwithstanding that the terms of the Mortgage Loan
so permit but such cost shall be paid by the Master Servicer as a Servicing
Advance and shall be reimbursed as provided in this Agreement. The Master
Servicer shall arrange for the application of all such insurance proceeds (i) to
the restoration or repair of the related Mortgaged Property, (ii) to prepay in
whole or in part the outstanding principal amount of the related Mortgage Note
or (iii) to be released to the related Mortgagor, as the case may be, in all
cases in accordance with the express requirements of the applicable Mortgage
Loan Documents. To the extent the applicable Mortgage Loan Documents require the
delivery of appraisals, engineer's reports, architect's disbursement
certificates or other documents or instruments before any such insurance
proceeds are applied, the Master Servicer shall obtain and verify the same and
any costs so incurred shall be deemed to be a Servicing Advance and shall be
reimbursed as provided in this Agreement. If such insurance proceeds are to be
applied to restoration or repair of the related Mortgaged Property or are to be
released to the related Mortgagor, the Master Servicer shall deliver to the
Trustee prior to such application or release a certificate of a Servicing
Officer of the Master Servicer in reasonable detail specifying the purposes to
which such proceeds are to be applied and the account or Person to which they
are to be transferred.
(b) 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 maintained pursuant to Section 4.06(a), the
Master Servicer or Special Servicer shall conclusively be deemed to have
satisfied its obligations to maintain insurance pursuant to Section 4.06(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 4.06(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 which is consistent
with Accepted Servicing Practices or Accepted Special Servicing Practices, as
applicable. In the event that either Servicer shall cause any Mortgaged Property
or REO Property to be covered by such a master force placed insurance policy,
the incremental costs of such insurance applicable to such Mortgaged Property or
REO Property (i.e., other than any minimum or standby premium payable for such
policy whether or not any Mortgaged Property or REO Property is covered thereby)
shall be paid by the Master Servicer as a Servicing Advance.
SECTION 4.07 Enforcement of "Due-on-Sale" Clauses; Assumption Agreements.
(a) To the extent any Mortgage Loan contains an enforceable `due-on-sale'
or `due-on-encumbrance' clause, the Master Servicer shall enforce such clause
unless the Master Servicer determines in accordance with Accepted Servicing
Practices that it would be in the best interest of the Bondholders to waive any
such clause. If the Master Servicer is unable to enforce any such "due-on-sale"
clause or if no "due-on-sale" clause is applicable or the Master Servicer
determines that such clause should be waived, the Master Servicer shall enter
into an assumption agreement with the Person to whom such property has been
conveyed or is proposed to be conveyed, pursuant to which such Person becomes
liable under the Mortgage Note and, to the extent permitted by applicable state
Law and the related Mortgage, the Mortgagor remains liable thereon. The Master
Servicer is also authorized to enter into a substitution of liability agreement
with such Person, pursuant to which the original Mortgagor is released from
liability and such Person is substituted as the Mortgagor and becomes liable
under the Mortgage Note; provided, however, that such substitute Mortgagor must
satisfy the requirements set forth in the related Mortgage Loan Documents or the
underwriting requirements customarily imposed by the Master Servicer's Accepted
Servicing Practices as a condition to approval of a borrower on a new mortgage
loan substantially similar to such Mortgage Loan.
(b) To the extent any Mortgage Loan contains a clause granting a right of
assumption to a qualified substitute Mortgagor upon the sale, conveyance or
transfer of the related Mortgaged Property, the Master Servicer shall enter into
an assumption agreement with such qualified substitute Mortgagor, pursuant to
which such substitute Mortgagor becomes liable under the Mortgage Note. If any
Person other than the Mortgagor has, pursuant to the related Mortgage Loan
Documents, undertaken to indemnify the mortgagee and, in connection with an
assumption of the type referred to in the preceding sentence, the related
Mortgage Loan Documents permit a substitution of such third-party indemnitor by
a qualified substitute indemnitor, the Master Servicer shall enter into an
assumption of liability agreement with such qualified substitute indemnitor,
pursuant to which such substitute indemnitor becomes liable under the relevant
indemnification obligations. The Master Servicer is also authorized to enter
into a substitution of liability agreement with such substitute Mortgagor,
pursuant to which the original Mortgagor is released from liability and such
substitute Mortgagor is substituted as the Mortgagor and becomes liable under
the Mortgage Note; provided, however, that such substitute Mortgagor must
satisfy the requirements set forth in the related Mortgage Loan Documents or the
underwriting requirements customarily imposed by the Master Servicer's regular
commercial mortgage loan origination standards or Accepted Servicing Practices
as a condition to approval of a borrower on a new mortgage loan substantially
similar to such Mortgage Loan.
(c) The Master Servicer shall retain as additional servicing compensation
any fee collected for entering into an assumption or substitution of liability
agreement.
(d) In connection with any assumption under this Section 4.07, no material
term of the Mortgage Note (including, but not limited to, the Mortgage Interest
Rate, the amount of the Monthly Payment, any interest rate floor or cap
applicable to the calculation of the Mortgage Interest Rate and any other term
affecting the amount or timing of payment on the Mortgage Loan) may be changed.
The Master Servicer shall forward to the Trustee the original substitution or
assumption agreement.
(e) Notwithstanding the foregoing or any other provision of this Agreement,
the Master Servicer shall not be deemed to be in default, breach or any other
violation of its obligations hereunder by reason of any conveyance by a
Mortgagor of a Mortgaged Property or any assumption of a Mortgage Loan by
operation of Law that the Master Servicer in good faith determines it may be
restricted by Law from preventing.
SECTION 4.08 Property Inspections.
The Master Servicer shall inspect or cause to be inspected each Mortgaged
Property and shall verify and deliver to the Trustee a copy of a property
inspection report consistent with Accepted Servicing Practices; provided that
(i) each Mortgaged Property securing a Mortgage Loan with an outstanding
principal balance in excess of $_________ shall be inspected and such a property
inspection report shall be delivered to the Trustee at least once a year, (ii)
each Mortgaged Property securing a Mortgage Loan with a principal balance in
excess of $_________ and less than or equal to $_________ shall be inspected and
such a property inspection report shall be delivered to the Trustee at least
once every two years, and (iii) each Mortgaged Property securing a Mortgage Loan
with an outstanding principal less than or equal to $_________ shall be
inspected as necessary or upon notice of any adverse event occurring with the
property, and such a property inspection report shall be delivered to the
Trustee. The Master Servicer shall prepare a summary of such inspection reports
and deliver such summary to each Rating Agency.
SECTION 4.09 Reports of Master Servicer.
(a) The Master Servicer shall prepare, or cause to be prepared, and deliver
to the Trustee in an electronic format agreed to by the Trustee and the Master
Servicer and consistent with Accepted Servicing Practices, not later than the
fourth (4th) Business Day immediately preceding each Payment Date, a copy of a
Remittance Report. Such report shall be in respect of the related Remittance
Period on a Mortgage Loan-by-Mortgage Loan basis to the extent applicable.
(b) The Master Servicer shall prepare and deliver to the Trustee a copy of
the Collection Account reconciliation report in a form agreed to by the Master
Servicer and the Trustee on or prior to the fifteenth day of each calendar
month.
(c) [RESERVED]
(d) The Master Servicer shall prepare and distribute all information
statements relating to payments on the Mortgage Loans in accordance with all
applicable federal and state laws and regulations.
(e) The Master Servicer shall provide the Trustee with any reasonable
information needed by the Trustee which is consistent with Accepted Servicing
Practices with respect to the Mortgage Loans in order to allow the Trustee to
comply with its obligations under this Agreement and shall provide the Special
Servicer with any reasonable information needed by the Special Servicer which is
consistent with Accepted Special Servicing Practices with respect to Specially
Serviced Mortgage Loans and REO Mortgage Loans in order to allow the Special
Servicer to comply with its obligations hereunder pursuant to Article VI.
(f) The Master Servicer shall proceed diligently to collect all reports and
other information required to be prepared and delivered by the Mortgagor
pursuant to the terms of the related Mortgage Loan Documents (including, but not
limited to, rent rolls) and shall forward copies of such information to the
Trustee periodically as such information from Mortgagor is received or as
otherwise directed by the Trustee.
SECTION 4.10 Confirmation of Balloon Payment.
The Master Servicer shall send a letter by first class mail to each
Mortgagor on a Balloon Mortgage Loan at least six (6) months and at least three
(3) months prior to the related Maturity Date reminding such Mortgagor of such
Maturity Date and requesting that not later than sixty (60) days prior to such
Maturity Date such Mortgagor confirm in writing that the payment due on such
Maturity Date will be made on such date and describe in reasonable detail any
arrangements made or to be made with regard to the payment of such Balloon
Payment.
SECTION 4.11 Master Servicer Compensation.
The Master Servicer shall be entitled to a per annum fee (the "Master
Servicing Fee"), with respect to each Mortgage Loan, that shall be equal to one
twelfth of the product of (a) the Master Servicing Fee Rate and (b) the Stated
Principal Balance of such Mortgage Loan as of the Due Date in the preceding
calendar month. The Master Servicing Fee is payable to the extent permitted by
Section 4.03 hereof. The Master Servicer shall also be entitled to receive as
additional servicing compensation (i) all investment income earned on amounts on
deposit in the Mortgagor escrow, impound or reserve accounts (to the extent
consistent with applicable law and the related Mortgage Loan Documents) and the
Collection Account, (ii) all amounts collected with respect to the Mortgage
Loans (that are not Specially Serviced Mortgage Loans) in the nature of late
payment charges, late fees, NSF check charges (including with respect to
Specially Serviced Mortgage Loans), extension fees, modification fees,
assumption fees, and similar fees and charges, and (iii) any Prepayment Interest
Excess (to the extent not offset against any Prepayment Interest Shortfall in
accordance with Section 4.12).
SECTION 4.12 Adjustment of Master Servicer's Compensation.
Notwithstanding anything set forth in this Article, the Master Servicing
Fee for the period ending on a Payment Date shall be reduced (but not below
zero) by an amount equal to any excess of any Prepayment Interest Shortfall over
any Prepayment Interest Excess for such Payment Date. The Master Servicer shall
be entitled to retain on any Payment Date any excess of any Prepayment Interest
Excess for such Payment Date over any Prepayment Interest Shortfall for such
Payment Date.
SECTION 4.13 Implementation of Operations and Maintenance Plans.
To the extent an operations and maintenance plan is required
to be established and executed pursuant to the terms of the related Mortgage
Loan Documents, the Master Servicer shall use reasonable efforts to enforce any
such plans in accordance in with the terms of the Mortgage Loan Document.
ARTICLE V
[RESERVED]
ARTICLE VI
OBLIGATIONS OF THE SPECIAL SERVICER
SECTION 6.01 The Special Servicer.
The Special Servicer, as independent contract servicer, shall service and
administer the Specially Serviced Mortgage Loans and REO Property on behalf of
and in the best interests of and for the benefit of the Bondholders in
accordance with this Agreement and Accepted Special Servicing Practices. In the
event that a Mortgage Loan becomes a Specially Serviced Mortgage Loan, subject
to the provisions contained in this Article VI, the Master Servicer shall
continue to collect all Monthly Payments called for under the terms and
provisions of the Mortgage Loan in accordance with Section 4.02, except as
otherwise directed by the Special Servicer and agreed to by the Servicer in
writing.
SECTION 6.02 Transfer to Special Servicing.
(a) The Master Servicer shall notify the Special Servicer as promptly as
practicable by telephone and in an electronic format reasonably acceptable to
the Master Servicer after it becomes aware of the occurrence of a Servicing
Transfer Event.
(b) Unless the Master Servicer and the Special Servicer with respect to a
Mortgage Loan are the same Person, promptly after the occurrence of a Servicing
Transfer Event, the Master Servicer shall send a letter by first class mail
(with a copy to the Special Servicer) notifying the related Mortgagor that the
related Mortgage Loan has become a Specially Serviced Mortgage Loan and
instructing such Mortgagor to direct all future notices and communications to
the Special Servicer but to continue making Monthly Payments to the Master
Servicer unless otherwise directed by the Special Servicer in writing and agreed
by the Master Servicer.
(c) Not later than five (5) Business Days after the occurrence of a
Servicing Transfer Event, the Master Servicer shall use its best efforts to
provide the Special Servicer with copies of all information, documents and
records (including records stored electronically on computer tapes, magnetic
disks and the like) in its possession relating to each Mortgage Loan with
respect to which notice is required to be delivered pursuant to clause (a)
above. The Master Servicer and the Special Servicer shall take all other actions
necessary or appropriate to effect a transfer of servicing pursuant to this
Section 6.02 or Section 6.10, including but not limited to the preparation,
execution and delivery of any and all necessary or appropriate documents and
other instruments, and will cooperate fully with each other in effecting such
transfer as promptly as possible. Servicing of a Mortgage Loan shall be
automatically transferred to the Special Servicer on the Servicing Transfer
Date.
(d) Following the related Servicing Transfer Date, the Master Servicer
shall not have any further dealings or communications with the related Mortgagor
except as administrator of the Collection Account and the escrow, impound or
reserve accounts. The Master Servicer shall maintain up-to-date information on
each Mortgage Loan which becomes a Specially Serviced Mortgage Loan in order to
properly administer the Collection Account and the escrow, impound or reserve
accounts, to enable it to resume all servicing obligations with respect to a
Mortgage Loan which ceases to be a Specially Serviced Mortgage Loan as promptly
as possible pursuant to Section 6.10 and to provide any reports required under
Article IV. The Special Servicer shall promptly provide to the Master Servicer
all information available to the Special Servicer and not available to the
Master Servicer necessary to maintain such up-to-date information.
(e) Promptly after the Servicing Transfer Date, the Special Servicer shall
send a letter by first class mail hereto notifying the related Mortgagor that
servicing has been transferred to the Special Servicer.
(f) [RESERVED]
(g) Following the occurrence of a Servicing Transfer Date with respect to
any Mortgage Loan, the Special Servicer shall service the related Specially
Serviced Mortgage Loan and REO Property in accordance with this Agreement.
SECTION 6.03 Servicing of Specially Serviced Mortgage Loans.
(a) Following the occurrence of a Servicing Transfer Event, the Special
Servicer shall request from the Trustee the name of the current Directing
Bondholder. The Trustee shall notify the Special Servicer of the identity of the
current Directing Bondholder upon request. Upon receipt of the name of such
current Directing Bondholder from the Trustee, the Special Servicer shall notify
the Directing Bondholder of the occurrence of such Servicing Transfer Event.
Servicing Officers of the Special Servicer shall, at the request of the
Directing Bondholder, be reasonably available during regular business hours to
discuss with such Bondholder objectives and strategies with respect to the
Specially Serviced Mortgage Loans and REO Properties.
(b) Subject to Section 6.03(c) below and Accepted Special Servicing
Practices, in servicing and administering any Specially Serviced Mortgage Loan
or REO Property, the Special Servicer shall have full power and authority to do
any and all things in connection with such servicing and administration that it
may deem in its best judgment necessary or advisable including, without
limitation, to execute and deliver on behalf of the Trustee and the Bondholders
any and all instruments of satisfaction or cancellation or of partial release or
full release or discharge and all other comparable instruments with respect to
such Specially Serviced Mortgage Loan or such REO Mortgage Loan or to agree to
any modification, waiver or amendment of any term and to defer, reduce or
forgive payment of interest and/or principal of any such Specially Serviced
Mortgage Loan. The Special Servicer may not extend the scheduled maturity date
of any Specially Serviced Mortgage Loan to a date later than three years prior
to the Assumed Final Payment Date. The Special Servicer may from time to time
request in writing any powers of attorney and other documents necessary or
appropriate to enable the Special Servicer to carry out its servicing and
administrative duties hereunder. If it shall make such written request, the
Special Servicer shall prepare for signature by the Trustee, and the Trustee
shall sign any such powers of attorney or other documents necessary or
appropriate to carry out such duties hereunder; provided, however, that the
Trustee shall not be held liable for any misuse of any such power of attorney by
the Special Servicer. In addition to the duties and obligations set forth in
this Article VI, the Special Servicer shall assume the rights and obligations of
the Master Servicer set forth in (i) Section 4.07 of this Agreement with respect
to any Specially Serviced Mortgage Loan (but not any liabilities incurred by the
Master Servicer prior to the related Servicing Transfer Date) and (ii) Section
4.06 with respect to REO Properties. Any insurance required to be maintained by
the Special Servicer with respect to REO Properties pursuant to this Section and
any such Section 4.06 shall be maintained with Qualified Insurers.
(c) No later than sixty (60) days after a Servicing Transfer Date for a
Mortgage Loan, the Special Servicer shall deliver to the Trustee, the Master
Servicer, each Rating Agency and the Directing Bondholder a report (the "Asset
Strategy Report"), with respect to such Mortgage Loan and the related Mortgaged
Property. Such Asset Strategy 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 Mortgagor;
(ii) consideration of alternatives to the exercise of remedies (such as
forbearance relief, modification of the terms and conditions of such
Mortgage Loan, disposition of the Specially Serviced Mortgage Loan or
the related Mortgaged Property and application of the proceeds of such
disposition to the outstanding principal balance of such Mortgage Loan
and interest thereon, or abandonment of the related Mortgaged
Property);
(iii) a discussion of the probable time frames and estimated amount of any
related Servicing Advances applicable to each of the alternatives
referred to above;
(iv) a discussion of the legal and environmental considerations reasonably
known to the Special Servicer, consistent with the Accepted Special
Servicing Practices, 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 a recommendation as to
whether outside legal counsel should be retained;
(v) estimated budgets for any operating or capital funds expected to be
required for the related Mortgaged Property;
(vi) the most current rent roll available for and any strategy for the
leasing or releasing of the related Mortgaged Property;
(vii) the Special Servicer's analysis and recommendations (which will
include a discussion of alternative courses of action and a comparison
of the probable benefits and detriments of each alternative course of
action) on how such Specially Serviced Mortgage Loan might be returned
to performing status and returned to the Master Servicer for regular
servicing under Article IV of this Agreement or otherwise realized
upon; and
(viii) such other information as the Special Servicer deems relevant in
light of the Accepted Special Servicing Practices.
If within ten (10) Business Days of receiving an Asset Strategy Report, the
Directing Bondholder does not disapprove such Asset Strategy Report in writing,
the Special Servicer shall implement the recommended action as outlined in such
Asset Strategy Report; provided, however, that notwithstanding anything herein
to the contrary the Special Servicer may not take and shall not be required to
take any action that is contrary to applicable Law or the terms of the
applicable Mortgage Loan Documents. If the Directing Bondholder disapproves such
Asset Strategy Report, the Special Servicer will revise such Asset Strategy
Report and deliver to the Trustee, the Directing Bondholder, the Servicer and
the Rating Agencies a new Asset Strategy Report as soon as practicable. The
Special Servicer shall revise such Asset Strategy Report as described above in
this Section 6.03(c) until the Directing Bondholder shall fail to disapprove
such revised Asset Strategy Report in writing within ten (10) Business Days of
receiving such revised Asset Strategy Report. The Special Servicer may, from
time to time, modify any Asset Strategy Report it has previously delivered and
implement such report, provided such report shall have been prepared, reviewed
and not rejected pursuant to the terms of this Section. Notwithstanding the
foregoing, the Special Servicer (i) may following the occurrence of an
extraordinary event with respect to the related Mortgaged Property, take any
action set forth in such Asset Strategy Report before the expiration of a ten
(10) Business Day period if the Special Servicer has reasonably determined that
failure to take such action would materially and adversely affect the interest
of the Bondholders and it has made a reasonable effort to contact the Directing
Bondholder and (ii) in any case, shall determine whether such disapproval is not
in the best interest of all the Bondholders pursuant to Accepted Special
Servicing Practices. Upon making such determination, the Special Servicer shall
either implement the Asset Strategy Report or notify the Trustee of such
rejection and deliver to the Trustee a proposed notice to Bondholders which
shall include the Asset Strategy Report, and the Trustee shall send such notice
to all Bondholders (or, to the extent known to the Trustee, Bond Owners). If the
majority of such Bondholders (including Bond Owners), as determined by Bond
Balance, fail within five (5) days of the Trustee's sending such notice to
reject such Asset Strategy Report, the Special Servicer shall implement the
same. If the Asset Strategy Report is rejected by the Bondholders, the Special
Servicer shall revise such Asset Strategy Report as described above in this
Section 6.03(c). The Trustee shall be entitled to be reimbursed by the Issuer
for the reasonable expenses of providing such notices.
(d) The Special Servicer shall have the authority to meet with the
Mortgagor for any Specially Serviced Mortgage Loan and take such actions
consistent with Accepted Special Servicing Practices and the related Asset
Strategy Report. The Special Servicer shall not take any action inconsistent
with the related Asset Strategy Report.
(e) Upon request of any Bondholder (or any Bond Owner, if applicable, which
shall have provided the Trustee with evidence satisfactory to the Special
Servicer and the Trustee of its interest in a Bond pursuant to Section 11.04) or
any Rating Agency, the Trustee shall mail, without charge, to the address
specified in such request a copy of the most current Asset Strategy Report for
any Specially Serviced Mortgage Loan or REO Property.
SECTION 6.04 Title to REO Property; Management of REO Property.
(a) If title to any REO Property is acquired, the deed or certificate of
sale shall be issued to the Issuer on behalf of the Bondholders. In accordance
with Section 6.05, and subject to all applicable terms and conditions of the
Indenture, the Special Servicer, on behalf of the Bondholders and, subject to
the lien of the Indenture, the Issuer, shall sell any REO Property as promptly
as possible within a commercially reasonable time period. Subject to the
foregoing, the Special Servicer shall solicit offers for any REO Property in
such manner as will be reasonably likely to realize a fair price for such REO
Property.
(b) The Special Servicer's decision as to how each REO Property shall be
managed and operated shall be based in either case on the reasonable good faith
judgment of the Special Servicer as to which means would be in the best interest
of the Bondholders and the Issuer (as a collective whole) and, to the extent
consistent with the foregoing, in the same manner as would prudent mortgage loan
servicers and asset managers operating acquired mortgaged property comparable to
the respective REO Property under the same circumstances.
(c) If title to any REO Property is acquired, the Special Servicer shall
manage, conserve, protect and operate such REO Property for the benefit of the
Bondholders and, subject to the lien of the Indenture, the Issuer solely for the
purpose of its prompt disposition and sale in the same manner as would prudent
mortgage loan servicers and asset managers operating acquired mortgaged property
comparable to the respective REO Property under the same circumstances Subject
to the foregoing, however, the Special Servicer shall have full power and
authority to do any and all things in connection therewith as are consistent
with the Servicing Standard and, consistent therewith, shall withdraw from the
REO Account, to the extent of amounts on deposit therein with respect to any REO
Property, funds necessary to pay all Property Protection Expenses
To the extent that amounts on deposit in the REO Account in respect of any
REO Property are insufficient for the purposes set forth in clauses (i) through
(iv) above with respect to such REO Property, the Special Servicer shall advance
such amounts as are necessary for such purposes unless (as evidenced by an
Officer's Certificate delivered to the Trustee) the Special Servicer would not
make such advances if the Special Servicer owned such REO Property or the
Special Servicer determines, in its reasonable good faith judgment, that such
advances would be Nonrecoverable Servicing Advances; provided, however, that the
Special Servicer may make any such Servicing Advance without regard to
recoverability if it is a necessary fee or expense incurred in connection with
the defense or prosecution of legal proceedings.
[(d) The Special Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract may not be inconsistent
herewith and shall reflect an agreement reached at arm's length;
(ii) the fees of such Independent Contractor (which shall be expenses
payable out of the Trust Estate) shall be reasonable and customary in
consideration of the nature and locality of the REO Property;
(iii) any such contract shall require, or shall be administered to require,
that the Independent Contractor, in a timely manner, (A) pay all costs
and expenses incurred in connection with the operation and management
of such REO Property, including, without limitation, those listed in
Section 3.17(b) above, and (B) remit all related revenues collected
(net of its fees and such costs and expenses) to the Special Servicer
upon receipt;
(iv) none of the provisions of this Section 3.17(c) 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 hereunder with respect to the operation and management
of any such REO Property;
(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;
and
(vi) such Independent Contractor is acceptable to each Rating Agency, and
such appointment will not result in a qualification, downgrading or
withdrawal of any of the ratings then assigned to the Bonds by such
Rating Agency (as evidenced in writing by each such Rating Agency).
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. To the extent the costs of any contract with any
Independent Contractor for the operation and management of any REO Property are
greater than the revenues available from such property, such excess costs shall
be covered by, and be reimbursable as, a Servicing Advance.]
SECTION 6.05 Sale of REO Property and Specially Serviced Mortgage Loans.
Subject to terms of the related Asset Strategy Report, to the extent the
conditions, procedures or requirements set forth therein are more restrictive or
exacting than those set forth below, each Special Servicer agrees as follows:
(a) The Special Servicer may purchase any Defaulted Mortgage Loan or any
REO Property (in each case at the Purchase Price therefor). The Special Servicer
may also offer to sell to any Person any Defaulted Mortgage Loan or any REO
Property, if and when the Special Servicer determines, consistent with Accepted
Special Servicing Practices that such a sale would be in the best economic
interests of the Bondholders. The Special Servicer shall give the Trustee and
the Master Servicer not less than five Business Days' prior written notice of
the Purchase Price and its intention to (i) purchase any Defaulted Mortgage Loan
or REO Property at the Purchase Price therefor or (ii) sell any Defaulted
Mortgage Loan or REO Property, in which case the Special Servicer shall accept
the highest offer received from any Person for any Defaulted Mortgage Loan or
any REO Property in an amount at least equal to the Purchase Price therefor.
In the absence of any such offer, the Special Servicer shall accept the
highest offer received from any Person that is determined by the Special
Servicer to be a fair price for such Defaulted Mortgage Loan or REO Property, if
the highest offeror is a Person other than an Interested Person, or if such
price is determined to be such a price by the Trustee, if the highest offeror is
an Interested Person. Notwithstanding anything to the contrary herein, neither
the Trustee, in its individual capacity, nor any of its Affiliates may make an
offer for or purchase any Defaulted Mortgage Loan or any REO Property pursuant
hereto.
The Special Servicer shall not be obligated by either of the foregoing
paragraphs or otherwise to accept the highest offer if the Special Servicer
determines, in accordance with Accepted Special Servicing Practices, that
rejection of such offer would be in the best interests of the Bondholders. In
addition, the Special Servicer may accept a lower offer if it determines, in
accordance with Accepted Special Servicing Practices, that acceptance of such
offer would be in the best interests of the Bondholders (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
offer are more favorable).
(b) In determining whether any offer received from an Interested Person
represents a fair price for any Defaulted Mortgage Loan or any REO Property, the
Trustee and the Special Servicer may conclusively rely on the opinion of an
Independent appraiser or other Independent expert in real estate matters
retained by the Trustee at the expense of the Issuer. In determining whether any
offer constitutes a fair price for any Defaulted 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, as applicable, among
other factors, the period and amount of any delinquency on the affected
Defaulted Mortgage Loan, the physical condition of the related Mortgaged
Property or such REO Property and the state of the local economy.
(c) Subject to Accepted Special Servicing Practices, the Special Servicer
shall act on behalf of the Issuer in negotiating and taking any other action
necessary or appropriate in connection with the sale of any Defaulted Mortgage
Loan or REO Property, including the collection of all amounts payable in
connection therewith. Any sale of a Defaulted Mortgage Loan or any REO Property
shall be without recourse to, or representation or warranty by, the Trustee, the
Issuer, the Mortgage Loan Seller, any Servicer, or the Issuer (except that any
contract of sale and assignment and conveyance documents may contain customary
warranties of title, so long as the only recourse for breach thereof is to the
Issuer) and, if consummated in accordance with the terms of this Agreement, none
of the Servicers, the Issuer, the Mortgage Loan Seller, nor the Trustee shall
have any liability to the Issuer or any Bondholder with respect to the purchase
price therefor accepted by the Special Servicer or the Trustee.
(d) The proceeds of any sale after deduction of the expenses of such sale
incurred in connection therewith shall be promptly deposited into the Collection
Account.
SECTION 6.06 REO Account; Collection of REO Proceeds.
(a) The Special Servicer shall establish or cause to be established, and
hereby agrees to maintain or cause to be maintained for the duration of this
Agreement for each REO Mortgage Loan, an REO Account into which all related REO
Proceeds shall be deposited as and when received. Each of the Special Servicer's
REO Account shall be an Eligible Account.
(b) All funds deposited by the Special Servicer in any REO Account
maintained hereunder shall be held for the benefit of the Bondholders until
disbursed or withdrawn in accordance herewith. Funds in such REO Account shall
not be commingled with any other moneys. The Special Servicer shall, within five
(5) Business Days of the establishment thereof, notify the Master Servicer and
the Trustee in writing of the location and the account number of the REO Account
established by the Special Servicer for the Mortgage Loans and shall give the
Trustee and the Master Servicer written notice of any change of such location or
account number on or prior to the date of such change.
(c) Funds in an REO Account may be invested by, at the risk of, and for the
benefit of, the Special Servicer in Permitted Investments which shall not be
sold or disposed of prior to maturity. All such Permitted Investments shall be
registered in the name of the Special Servicer (in its capacity as such and for
the benefit of the Bondholders) or its nominee. All income therefrom shall be
the property of the Special Servicer. In addition, if the amounts in any REO
Account are invested for the benefit of the Special Servicer, the Special
Servicer shall deposit on each Determination Date into such REO Account out of
its own funds an amount representing any net losses realized on the Permitted
Investments with respect to funds in such REO Account for such Remittance
Period.
(d) The Special Servicer shall deposit or cause to be deposited any REO
Proceeds into the applicable REO Account within one Business Day after receipt.
The Special Servicer shall withdraw therefrom funds necessary for the proper
operation, management, and maintenance of any REO Property, including any
Property Protection Expenses. To the extent such REO Proceeds are insufficient
for the purposes set forth in the preceding sentence, the Master Servicer shall
make a Servicing Advance for the amount of such shortfall. The Special Servicer
shall remit to the Master Servicer for deposit into the Collection Account on a
monthly basis prior to the related Remittance Date the REO Proceeds collected
with respect to the related REO Property, net of withdrawals made by the Special
Servicer pursuant to this Section 6.06(d); provided, that for the purpose of
determining the amount of any such remittance, the Special Servicer may retain
in such REO Account reasonable reserves for Property Protection Expenses.
(e) Except as expressly permitted or required hereunder, the Special
Servicer shall not sell, transfer or assign to any Person any interest
(including any security interest) in amounts credited or to be credited to any
REO Account or take any action towards that end, and shall maintain such amounts
free of all liens, claims and encumbrances of any nature.
SECTION 6.07 Remittances to Master Servicer.
Any collections received in respect of a Mortgage Loan, other than REO
Proceeds, shall be remitted to the Master Servicer within one Business Day of
receipt for deposit into the Collection Account established and maintained by
the Master Servicer for the duration of this Agreement pursuant to Section 4.02
of this Agreement.
SECTION 6.08 Specially Serviced Mortgage Loan Status Reports and Other
Reports.
(a) The Special Servicer shall prepare, or cause to be prepared, and
deliver to the Master Servicer, the Trustee and the Rating Agencies, via
facsimile (with a hard copy sent on the same day by first-class mail and in
electronic format reasonably acceptable to the Master Servicer, the Rating
Agencies and the Trustee and consistent with Accepted Special Servicing
Practices) not later than the fourth (4th) Business Day immediately preceding
each Payment Date, a copy of a Specially Serviced Mortgage Loan and REO Property
status report in a form agreed to by the Master Servicer and the Trustee (the
"Specially Serviced Mortgage Loan Status Report"), with respect to each
Specially Serviced Mortgage Loan and REO Mortgage Loan, respectively. In
addition, upon the occurrence of a Collateral Value Adjustment Event or
Liquidation Event from which a Collateral Value Adjustment, Realized Loss or
Collateral Value Adjustment Reduction Amount has resulted, the Special Servicer
shall prepare, or cause to be prepared, and deliver to the Master Servicer, the
Trustee and each Rating Agency, via facsimile (with a hard copy sent on the same
day by first-class mail or in electronic format reasonably acceptable to the
Master Servicer and consistent with Accepted Special Servicing Practices) not
later than the fourth (4th) Business Day immediately preceding each Payment
Date, an Officers' Bond setting forth (i) the event which gave rise to such
Collateral Value Adjustment or Realized Loss and (ii) the amount of such
Collateral Value Adjustment, Realized Loss or Collateral Value Adjustment
Reduction Amount.
(b) On or prior to the fifteenth day of each calendar month the Special
Servicer shall validate and deliver to the Master Servicer a copy of the bank
statement for the prior calendar month related to each REO Account and an REO
Account reconciliation report in the form mutually agreed to by the Master
Servicer and Trustee showing for the period from the day after the second
preceding Remittance Date through the immediately preceding Remittance Date (or
since the related Servicing Transfer Date, in the case of the first of such
reports), the aggregate of deposits into and withdrawals from such funds or
accounts in accordance with this Agreement.
(c) Upon prior request of a Rating Agency or written request of the Master
Servicer, the Trustee, or the Issuer, the Special Servicer shall prepare such
other reasonable reports as may be requested in writing thereby. The Special
Servicer shall be entitled to charge a reasonable fee reflecting the internal
and external costs to the Special Servicer of preparing such other reports
(except that no charges will be assessed for costs of such reports requested by
a Rating Agency) and such fee shall be paid by the Master Servicer to the
Special Servicer as a Servicing Advance pursuant to this Agreement.
SECTION 6.09 Environmental Considerations.
(a) The Special Servicer shall not obtain title for the Issuer to a
Mortgaged Property as a result or in lieu of foreclosure or otherwise, nor shall
otherwise acquire possession of, or take other action with respect to, any
Mortgaged Property, if, as a result of any such action, the Issuer, the Trustee,
the Master Servicer, the Special Servicer or the Bondholders 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 applicable comparable federal, state or local law, or a
"discharger" or "responsible party" thereunder, unless the Special Servicer has
also previously determined, in accordance with Accepted Special Servicing
Practices, based on a "Phase I", and, if applicable, a "Phase II" environmental
site assessment report prepared by a Person who regularly conducts environmental
audits as determined by such Special Servicer in a manner consistent with
Accepted Special Servicing Practices, that:
(i) such Mortgaged Property is in compliance with applicable Environmental
Laws or, if not, that taking such actions as are necessary to bring
the Mortgaged Property in compliance therewith is reasonably likely to
produce a greater recovery on a net present value basis, after taking
into account any risks associated therewith, than not taking such
actions; and
(ii) there are no circumstances present on such Mortgaged Property relating
to the use, management, storage or disposal of any Hazardous Materials
for which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any Environmental Law, or that, if
any such Hazardous Materials are present for which such action could
be required, taking such actions with respect to the affected
Mortgaged Property is reasonably likely to produce a greater recovery
on a net present value basis, after taking into account any risks
associated therewith, than not taking such actions; and
if the Special Servicer has so determined based on satisfaction of the criteria
in clauses (i) and (ii) above that it would be in the best economic interest of
the Bondholders to take any such actions, the Special Servicer has notified the
Trustee and the Master Servicer in writing of such proposed action. The Special
Servicer shall provide a copy of the report described in the preceding sentence
to the Trustee, the Master Servicer and the Directing Bondholder. If within ten
(10) Business Days of receiving such recommendation, the Directing Bondholder
does not disapprove such recommendation in writing the Special Servicer shall
implement the recommended action. If the Directing Bondholder disapproves such
recommendation, the Special Servicer shall revise such recommendation and
deliver to the Trustee, the Directing Bondholder and the Master Servicer a new
recommendation as soon as practicable. The Special Servicer shall revise such
recommendation as described above in this Section 6.09(a) until the Directing
Bondholder shall fail to disapprove such revised recommendation in writing
within ten (10) Business Days of receiving such revised recommendation.
Notwithstanding the foregoing, the Special Servicer (i) may, following the
occurrence of an extraordinary event with respect to the related Mortgaged
Property, take any action it has recommended before the expiration of a ten (10)
Business Day period if the Special Servicer has reasonably determined that
failure to take such action would materially and adversely affect the interest
of the Bondholders and it has made a reasonable effort to contact the Directing
Bondholder and (ii) in any case, shall determine whether such disapproval is not
in the best interest of all the Bondholders pursuant to Accepted Special
Servicing Practices. Upon making such determination, the Special Servicer shall
either implement its recommendations or notify the Trustee of such rejection and
deliver to the Trustee a proposed notice to Bondholders, which shall include the
Special Servicer's recommendation, and the Trustee shall send such notice to all
Bondholders (or, to the extent known to the Trustee, Bond Owners). If the
majority of such Bondholders (including Bond Owners), as determined by Bond
Balance, fail within five (5) days of the Trustee's sending such notice to
reject such recommendation, the Special Servicer shall implement the same. If
such recommendation is rejected by the Bondholders, the Special Servicer shall
not take any action so recommended and shall prepare a new recommendation. The
cost of preparation of any environmental assessment and the cost of any
compliance, containment, clean-up or remediation shall be deemed to be a
Property Protection Expense paid by the Master Servicer as a Servicing Advance.
(b) If the Special Servicer determines, pursuant to subsection (a) above,
that taking such actions as are necessary to bring any such Mortgaged Property
into compliance with applicable Environmental Laws, or taking such actions with
respect to the containment, clean-up, removal or remediation of Hazardous
Materials affecting any such Mortgaged Property, is not reasonably likely to
produce a greater recovery on a net present value basis, after taking into
account any risks associated therewith, than not taking such actions, the
Special Servicer shall notify the Directing Bondholders, Trustee and the Master
Servicer of such determination and recommend such action as it deems in good
faith to be in the best economic interests of the Bondholders. If within ten
(10) Business Days of receiving such recommendation, the Directing Bondholder
does not disapprove such recommendation in writing the Special Servicer shall
implement the recommended action. If the Directing Bondholder disapproves such
recommendation, the Special Servicer will revise such recommendation and deliver
to the Trustee, the Directing Bondholder and the Master Servicer a new
recommendation as soon as practicable. The Special Servicer shall revise such
recommendation as described above in this Section 6.09(b) until the Directing
Bondholder shall fail to disapprove such revised recommendation in writing
within ten (10) Business Days of receiving such revised recommendation.
Notwithstanding the foregoing, the Special Servicer (i) may, following the
occurrence of an extraordinary event with respect to the related Mortgaged
Property, take any action it has recommended before the expiration of a ten (10)
Business Day period if the Special Servicer has reasonably determined that
failure to take such action would materially and adversely affect the interest
of the Bondholders and it has made a reasonable effort to contact the Directing
Bondholder and (ii) in any case, shall determine whether such disapproval is not
in the best interest of all the Bondholders pursuant to Accepted Special
Servicing Practices. Upon making such determination, the Special Servicer shall
either implement its recommendations or notify the Trustee of such rejection and
deliver to the Trustee a proposed notice to Bondholders, which shall include the
Special Servicer's recommendation, and the Trustee shall send such notice to all
Bondholders (or, to the extent known to the Trustee, Bond Owners). If the
majority of such Bondholders (including Bond Owners), as determined by Bond
Balance, fail within five (5) days of the Trustee's sending such notice to
reject such recommendation, the Special Servicer shall implement the same. If
such recommendation is rejected by the Bondholders, the Special Servicer shall
not take any action so recommended.
(c) Notwithstanding the foregoing, the Special Servicer shall not take any
action pursuant to this Section 6.09 except in connection with the
implementation of an Asset Strategy Report pursuant to Section 6.03(c).
SECTION 6.10 Restoration of Specially Serviced Mortgage Loans.
(a) Upon determining with respect to a Specially Serviced Mortgage Loan
that (i) three consecutive Monthly Payments on a Specially Serviced Mortgage
Loan have been made in accordance with the terms of the related Mortgage Note
(taking into account any grace periods contained therein), (ii) such Mortgage
Loan is current as to payments of principal and interest and (iii) no Servicing
Transfer Event is continuing, the Special Servicer shall immediately give
written notice thereof to the Master Servicer and the Trustee.
(b) Unless the Master Servicer and the Special Servicer with respect to a
Mortgage Loan are the same Person, not later than two (2) Business Days after
notice has been given pursuant to subsection (a) above, the Special Servicer
shall send a letter by first class mail, with a copy to the Master Servicer,
notifying the related Mortgagor that such Mortgage Loan has ceased being a
Specially Serviced Mortgage Loan and instructing such Mortgagor to direct all
future notices and communications to the Master Servicer.
(c) In the event that a Specially Serviced Mortgage Loan ceases to be such
pursuant to this Section 6.10, not later than five (5) Business Days after
notice has been given in (a) above, the Special Servicer shall use its best
efforts to provide the Master Servicer with copies of all information, documents
and records (including records stored electronically on computer tapes, magnetic
disks and the like) in its possession relating to such Mortgage Loan. Upon
receipt of such notice and all information, documents and records by the Master
Servicer pursuant to this Section 6.10 hereof, such Mortgage Loan shall cease to
be a Specially Serviced Mortgage Loan, the Special Servicer's obligation to
service such Mortgage Loan shall terminate, and all duties and obligations of
the Master Servicer with respect to such Mortgage Loan to the extent set forth
herein previously undertaken by the Special Servicer shall be resumed by the
Master Servicer.
SECTION 6.11 Removal of Special Servicer.
The Special Servicer may be removed without cause at any time by the
Holders of a majority of the Voting Rights in the fewest number of classes of
Bonds representing the most subordinate Class of Bonds that equal at least a
___% interest therein (the "Controlling Bondholder"). Such determination shall
be evidenced by written notice to the Trustee and each Servicer from the
Controlling Bondholders. The Special Servicer shall not be removed until a
successor shall have been appointed and shall be in the position to assume such
obligations hereunder. The Special Servicer shall cooperate in good faith with
the successor Special Servicer to minimize the number and severity of
disruptions to the servicing of the Specially Serviced Mortgage Loans as a
result of such removal. No successor Special Servicer shall be appointed until
the Trustee receives written confirmation from each of the Rating Agencies that
such appointment will not result in a withdrawal, downgrade or qualification of
the then current rating on the Bonds.
SECTION 6.12 Special Servicer Compensation.
Each Special Servicer shall be entitled to reasonable compensation for
services rendered by it hereunder on each Remittance Date from amounts in the
Collection Account in an amount (the "Special Servicing Fee") equal to
one-twelfth of the product of (a) ____% per annum calculated on the basis of
twelve 30-day months and a 360-day year and (b) the Stated Principal Balance of
each Specially Serviced Mortgage Loan or REO Mortgage Loan as of the Due Date in
the preceding calendar month. The Special Servicer will also be entitled to
receive with respect to any Specially Serviced Mortgage Loan or REO Property
that is sold or transferred or otherwise liquidated, in addition to the Special
Servicing Fee, a disposition fee (the "Disposition Fee") equal to ____% of the
net proceeds of the sale or liquidation of any Specially Serviced Mortgage Loan
or REO Property. The Special Servicer will also be entitled to retain as
additional servicing compensation (i) all investment income earned on amounts on
deposit in any REO Account, and (ii) all amounts collected with respect to the
Specially Serviced Mortgage Loans in the nature of late payment charges, late
fees, assumption fees, modification fees, extension fees or similar items (other
than default interest).
SECTION 6.13 Collateral Value Adjustments.
(a) Within 30 days of a Required Appraisal Date for any Mortgage Loan, the
Special Servicer shall obtain an appraisal for the related Mortgaged Property
from an independent MAI appraiser at the expense of the Issuer (except if an
appraisal has been conducted within the 12 month period preceding such event).
(b) Until such time as the related Collateral Value Adjustment is reduced
to zero, within 30 days of each anniversary of a Required Appraisal date for any
Mortgage Loan, the Special Servicer shall order an update of the prior appraisal
for the related Mortgaged Property (the cost of which will be a Servicing
Advance of the Special servicer).
(c) The Special Servicer shall determine and report to the Trustee and the
Master Servicer any appraisal value obtained pursuant to clause (a) or (b) above
and will adjust the amount of the Collateral Value Adjustment in accordance
therewith.
ARTICLE VII
OBLIGATIONS OF THE INDENTURE TRUSTEE; REPORTS
SECTION 7.01 Statements to Bondholders.
(a) On each Payment Date, based on and to the extent of information
provided by the Servicer, the Trustee shall furnish to each Bondholder and each
Bond Owner which shall have certified to the Trustee that it is a Bond Owner, to
the Issuer, the Servicer, and to each Rating Agency the following reports
setting forth certain information with respect to the Mortgage Loans and the
Bonds.
(1) A statement setting forth the following: (i) the amount of
distributions, if any, made on such Payment Date to the holders of each Class of
Bonds applied to reduce the respective Class Balances thereof, (ii) with respect
to each Class of Bonds, the amount of distributions allocable to interest
accrued at the respective Bond Interest Rates and the amount, if any, by which
such distribution was reduced by Prepayment Interest Shortfalls, Realized Losses
of interest, other interest shortfalls or accruals on outstanding Collateral
Value Adjustments, (iii) the number of outstanding Mortgage Loans and the
aggregate Stated Principal Balance of the Mortgage Loans at the close of
business on the last day of the related Remittance Period; (iv) the number and
aggregate Stated Principal Balance of Mortgage Loans (a) delinquent one month,
(b) delinquent two months, (c) delinquent three or more months, or (d) as to
which foreclosure proceedings have commenced; (v) with respect to any REO
Property included in the Trust Estate, details pertaining to each individual REO
Property including the loan number of the related REO Mortgage Loan, the unpaid
principal balance of the related REO Mortgage Loan (and all REO Mortgage Loans
in the aggregate), the date that such Mortgaged Property became an REO Property,
the book value of such REO Property (which will equal the unpaid principal
balance of such Mortgage Loan at the time of foreclosure) and any net income
received on such REO Property during the related Remittance Period; (vi) with
respect to any REO Property sold or otherwise disposed of during the related
Remittance Period, the amount of sale proceeds and other amounts, if any,
received in respect of such REO Property during the related Remittance Period;
(vii) as to any Mortgage Loan repurchased by the Issuer or otherwise liquidated
during the related Remittance Period, the loan number thereof and the amount of
the proceeds of such repurchase or other liquidation; (viii) the aggregate Class
Balance of each Class of Bonds before and after giving effect to the
distributions made on such Payment Date, separately identifying any reduction in
the class Balance of each such Class due to Realized Losses; (ix) the aggregate
amount of unscheduled principal collections made during the related Remittance
Period and the cumulative amount of such collections including such Remittance
Period, (x) the Bond Interest Rate applicable to each Class of Bonds for such
Payment Date, (xi) the aggregate amount of servicing compensation retained by or
paid to each Servicer during the related Remittance Period; (xii) the amount of
Realized Losses, shortfalls, and/or expenses, if any, incurred with respect to
the Mortgage Loans during the related Remittance Period; (xiii) the aggregate
amount of P&I Advances and other advances outstanding that have been made by
each of the Servicers or the Trustee, (xiv) the amount of any Collateral Value
Adjustments effected during the related Remittance Period, and the total of
Collateral Value Adjustments as of such Payment Date on a loan-by-loan basis,
and (xv) the amount of Prepayment Interest Excess and an accounting as to the
manner in which the same was allocated pursuant to this Agreement. In the case
of information pursuant to subclauses (i), (ii) and (xi) above, the amounts
shall be expressed in the aggregate for all Bonds and in amounts allocable per
$1,000 of Bond denomination.
(2) A report containing information regarding the Mortgage Loans as of the
end of the related Remittance Period, which report shall contain substantially
the categories of information regarding the Mortgage Loans set forth in the
Prospectus Supplement prepared in connection with the initial offering of the
Bonds in the tables under the caption "Description of the Mortgage Pool --
Certain Characteristics of the Mortgage Loans" (calculated where applicable on
the basis of the most recent relevant information provided by the Mortgagors to
the Servicers and by the Servicers to the Trustee) and such information shall be
presented in a tabular format substantially similar to the format utilized in
the Prospectus Supplement under such caption.
(3) Other reports containing loan-by-loan information relating to Mortgage
Loans that (i) have not made the most recent monthly payment then due, (ii) have
been classified as Specially Serviced Mortgage Loans or (iii) that have
experienced a Realized Loss.
The Trustee currently makes such reports available to the designated
parties by mail or through an automated facsimile system that can be accessed by
dialing __________ from any touch-tone telephone.
In addition, the Trustee shall make available Mortgage Loan information as
presented in the CSSA-100 format (or such other industry standard that may be in
effect from time to time) through electronic transmission by no later than the
Payment Date in __________ to each Bondholder, the Issuer, the Servicers, each
Rating Agency (and any other parties reasonably designated by the Issuer or a
Bondholder), an electronic file that includes the following information on a
loan-by-loan basis: loan number, location, Stated Principal Balance, Mortgage
Interest Rate, paid-through date, maturity date, scheduled interest due,
scheduled principal due, unscheduled principal collections, loan status and
other related information.
Upon request of any Bondholder (or any Bond Owner, if applicable, which
shall have provided the Trustee with evidence satisfactory to the Trustee of its
interest in a certificate pursuant to Section 11.04) or any Rating Agency, the
Trustee shall mail, without charge, to the address specified in such request, a
copy of the most current Asset Strategy Report for any Specially Serviced
Mortgage Loan or REO Property. In addition, upon receipt of a written request of
any Bondholder (or any Bond Owner, if applicable, which shall have provided the
Trustee with evidence satisfactory to the Trustee of its interest in a
certificate pursuant to Section 11.04) for a copy of any report required to be
prepared by the Master Servicer herein, the Trustee shall forward such written
request to the Master Servicer. To the extent such report is available to the
Master Servicer, the Master Servicer shall deliver a copy thereof to the Trustee
for delivery to the requesting Bondholder (or Bond Owner) at the address
specified in such request. The request, reproduction and delivery of such
report, shall be at the expense of the requesting Bondholder (or Bond Owner).
(b) The Trustee covenants to furnish or cause to be furnished, promptly
upon the written request of any Bondholder (or a Bond Owner which shall have
certified to the Trustee that it is a Bond Owner of any such Class pursuant to
Section 11.04) of a Class E or Class F Bond reasonably current Rule 144A
Information (as defined below) to such Bondholder or to a prospective transferee
of such a Bond (or interests in such Bond) designated by such Bondholder, as the
case may be, in connection with the resale of such Bond or such interests by
such Bondholder pursuant to Rule 144A. "Rule 144A Information" shall mean the
information specified in Rule 144A(d)(4)(i) and (ii) under the 1933 Act. The
Trustee shall advise the Master Servicer of any request by a Bondholder and
shall consult with the Master Servicer as to the information to be supplied.
Based upon such consultation and to the extent the Trustee is not in possession
of reasonably current Rule 144A Information on the date of any such request, the
Master Servicer shall, upon request from the Trustee, promptly provide the
Trustee with reasonably current Rule 144A Information to the extent reasonably
available. The Trustee and the Master Servicer may place its disclaimer on any
such Rule 144A Information to the extent it is not the source of such
information.
(c) Neither Servicer shall be responsible for the accuracy or completeness
of any information supplied to it by a Mortgagor or third party for inclusion in
any report or information furnished or provided by the Master Servicer, the
Special Servicer or the Trustee hereunder to the extent such information has
been collected and received in accordance with Accepted Servicing Practices or
Accepted Special Servicing Practices, as applicable.
In addition to the other reports and information made available and
distributed to the Issuer, the Trustee or the Bondholders pursuant to other
provisions of this Agreement, each Servicer shall, in accordance with such
reasonable rules and procedures as it may adopt (except with respect to the
Trustee, which may include the requirement that an agreement governing the
availability, use and disclosure of such information, and which may provide
indemnification to such Servicer for any liability or damage that may arise
therefrom, be executed to the extent such Servicer deems such action to be
necessary or appropriate), also make available any information relating to the
Mortgage Loans, the Mortgaged Properties or the Mortgagors for review by the
Issuer, the Trustee, the Bondholders, each Rating Agency and any other Persons
to whom such Servicer believes such disclosure is appropriate, in each case
except to the extent doing so is prohibited by applicable law or by the Mortgage
Loan Documents.
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 a Rating Agency) 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.
(d) The Trustee shall mail or otherwise provide to any Person requesting a
copy of the reports delivered to Bondholders pursuant to the first paragraph of
clause (a) above, a copy of such reports. The Trustee shall be entitled to
charge such Person a nominal fee to cover the cost of such mailing.
(e) The Trustee is hereby authorized to furnish, to Bondholders and/or to
the public any other information (such other information, collectively,
"Additional Information") with respect to the Mortgage Loans, any Mortgaged
Property or the Issuer as may be provided to it by the Issuer, the Master
Servicer or Special Servicer or gathered by it in any investigation or other
manner from time to time, provided that (A) any such Additional Information
shall only be furnished with the consent or at the request of the Issuer, (B)
the Trustee shall be entitled to indicate the source of all information
furnished by it and the Trustee may affix thereto any disclaimer it deems
appropriate in its sole discretion (including any warnings as to the
confidential nature and/or the uses of such information as it may, in its sole
discretion, determine appropriate), (C) the Trustee shall be entitled (but not
obligated) to require payment from each recipient of a reasonable fee for, and
its out-of-pocket expenses incurred in connection with, the collection assembly,
reproduction or delivery of any such Additional Information and (D) the Trustee
shall be entitled to distribute or make available such information in accordance
with such reasonable rules and procedures as it may deem necessary or
appropriate (which may include the requirement that an agreement that provides
such information shall be used solely for purposes of evaluating the investment
characteristics or valuation of the Bonds be executed by the recipient). Nothing
herein shall be construed to impose upon the Trustee any obligation or duty to
furnish or distribute any Additional Information to any Person in any instance,
and the Trustee shall neither have any liability for furnishing nor for
refraining from furnishing Additional Information in any instance. The Trustee
shall be entitled (but not required) to require that any consent, direction or
request given to it pursuant to this clause (e) be made in writing.
Furthermore, the Trustee will supply to any Bondholder so requesting by
telephone the Bond Interest Rates on any Class of Bonds for the current and the
immediately preceding Interest Accrual Periods.
SECTION 7.02 Distribution of Reports to the Trustee and the Issuer;
Advances.
On or prior to each Remittance Date, the Master Servicer shall furnish a
written statement (and an electronic data file reasonably satisfactory to the
Master Servicer and the Trustee) setting forth (i) the amounts available for
deposit into the Bond Account and (ii) the amounts of any P&I Advances required
to be made by the Master Servicer in connection with the related Payment Date.
The determination by the Master Servicer of such amounts shall, in the absence
of obvious error, be presumptively deemed to be correct for all purposes
hereunder and the Trustee shall be protected in relying upon the same without
any independent check or verification. To the extent such statement indicates
one or more delinquencies in connection with which a related P&I Advance was not
made by the Master Servicer, the Trustee shall commence an evaluation of whether
a P&I Advance by the Trustee may be required and whether it would be a
Nonrecoverable Advance; provided, however, that notwithstanding such
examination, the Trustee shall have no responsibility for reviewing or
confirming any decision made with respect to a P&I Advance by a Servicer. The
Master Servicer shall promptly upon request provide to the Trustee such
information as the Master Servicer may have to enable the Trustee to make such
determination.
In the event that the Master Servicer determines as of the Business Day
preceding the Remittance Date that it will be unable to deposit in the Bond
Account an amount equal to the P&I Advance required to be made for the
immediately succeeding Payment Date, it shall give written notice to the Trustee
of its inability to advance (such written notice may be given by telecopy), not
later than 3:00 P.M., New York City time, on such Business Day, specifying the
portion of such amount that it will be unable to deposit. Not later than 4:00
P.M., New York City time, on such Remittance Date the Trustee shall, unless by
3:00 P.M., New York City time, on such day the Trustee shall have been notified
in writing (by telecopy) that the Master Servicer shall have directly or
indirectly deposited in the Bond Account such portion of the amount of such P&I
Advance as to which the Master Servicer shall have given notice pursuant to the
preceding sentence deposit in the Bond Account on such Remittance Date an amount
equal to such P&I Advance to the extent it determines it is not a Nonrecoverable
Advance (but not Servicing Advances) for such Payment Date; provided, however,
that if the Trustee is prohibited by law or regulation from obligating itself to
make such Advances, then the Trustee shall not be obligated to make such
Advances.
Notwithstanding anything herein to the contrary, the Trustee not shall be
required to make a Nonrecoverable Advance, and shall not be required to make a
P&I Advance with respect to a Balloon Payment. The Trustee shall be entitled to
interest on any P&I Advance made with respect to a Mortgage Loan. Such interest
shall accrue at the Advance Rate from the date on which such Advance was made to
but not including any Business Day on which the Trustee is reimbursed for such
P&I Advance pursuant to this Agreement. Notwithstanding any other provisions
contained herein to the contrary, the Trustee shall be reimbursed for any P&I
Advances, together with interest thereon at the Advance rate, prior to the
Servicers.
The Trustee shall deposit all funds it receives pursuant to this Section
7.02 into the Bond Account.
SECTION 7.03 Allocations of Realized Losses and Collateral Value
Adjustments.
On or prior to the fourth Business Day immediately preceding the applicable
Payment Date, the Master Servicer shall determine and communicate to the Trustee
the total amount of Realized Losses and Collateral Value Adjustment, if any,
that resulted during the related Remittance Period. As soon as practicable
following the occurrence of a Collateral Value Adjustment Event with respect to
any Mortgage Loan (taking into account the time period necessary for the Master
Servicer to obtain the Independent MAI appraisal for such purpose), the Master
Servicer shall make a Collateral Value Adjustment determination with respect to
such Mortgage Loan. The amount of each Realized Loss or Collateral Value
Adjustment shall be evidenced by an Officers' Bond. All Realized Losses and
Collateral Value Adjustments shall be allocated by the Trustee as follows in
reduction of the related Class Balance: first, to the Class F Bonds until the
Class Balance thereof has been reduced to zero; second, to the Class E Bonds
until the Class Balance thereof has been reduced to zero; third, to the Class D
Bonds until the Class Balance thereof has been reduced to zero; fourth, to the
Class C Bonds until the Class Balance thereof has been reduced to zero; fifth,
to the Class B Bonds until the Class Balance thereof has been reduced to zero,
and the remainder of such Realized Losses and Collateral Value Adjustments to
the Class A-1 and Class A-2 Bonds, pro rata, until their respective Class
Balances have been reduced to zero. Amounts allocated to reduce the related
Class Balance shall also reduce such Class' Voting Rights in proportion to the
other Classes of Bonds.
ARTICLE VIII
THE ISSUER
SECTION 8.01 Liability of the Issuer.
The Issuer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Issuer herein.
SECTION 8.02 Merger, Consolidation or Conversion of the Issuer.
Subject to the following paragraph, the Issuer will keep in full effect its
existence, rights and franchises as a corporation under the laws of the
jurisdiction of its incorporation, and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Bonds or any of the Mortgage Loans and to
perform its respective duties under this Agreement.
The Issuer 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 the Issuer, shall be
a party, or any Person succeeding to the business of the Issuer, shall be the
successor of the Issuer hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
SECTION 8.03 Limitation on Liability of the Issuer and Others.
Neither the Issuer nor any of its directors, officers, employees or agents
shall be under any liability to the Issuer or the Bondholders 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 Issuer or any such Person against any breach of
warranties or representations made herein, or against any liability which would
otherwise be imposed by reason of misfeasance, bad faith or negligence in the
performance of duties. The Issuer and any director, officer, employee or agent
thereof may rely in good faith on any document of any kind which, prima facie,
is properly executed and submitted by any Person respecting any matters arising
hereunder. The Issuer shall not 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 involve it in any
expense or liability.
ARTICLE IX
DEFAULT
SECTION 9.01 Events of Default.
"Event of Default", wherever used herein, means with respect to any
Servicer any one of the following events:
(i) with respect to the Master Servicer, failure to remit when due to the
Trustee for deposit into the Bond Account any amount (other than a P&I
Advance) required to be remitted under the terms of this Agreement;
with respect to the Special Servicer, failure to advance or remit to
the Master Servicer or the Master Servicer, as required hereunder, any
amount required to be advanced or remitted under the terms of this
Agreement within one Business Day of the date required pursuant to the
terms of this Agreement; or
(ii) any failure on the part of such Servicer duly to observe or perform in
any respect any other of the covenants or agreements on the part of
such Servicer contained in this Agreement which materially and
adversely affects the interests of the Bondholders and which continues
unremedied for a period of 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to such Servicer by the Issuer or the Trustee, or to such
Servicer (with a copy to the Issuer, the Trustee, and the other
Servicer) by the Holders of Bonds entitled to at least 25% of the
Voting Rights of any Class affected thereby; or
(iii) any breach of the representations and warranties contained in Section
2.03(b) which materially and adversely affects the interests of the
Bondholders and which continues unremedied for a period of 30 days
after the date on which notice of such breach, requiring the same to
be remedied, shall have been given to such Servicer by the Issuer or
the Trustee or to such Servicer (with a copy to the Issuer, the
Trustee and the other Servicer) by the Holders of Bonds entitled to at
least 25% of the Voting Rights of any Class affected thereby; or
(iv) 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 or
appointing 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 such Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period of
60 days; or
(v) such Servicer 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, such Servicer or of, or relating to, all or substantially
all of the property of Servicer; or
(vi) such Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of, or
commence a voluntary case under, any applicable insolvency or
reorganization statute, make assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(vii) any notice from each Rating Agency with respect to such Servicer that
if such Servicer were to remain in such capacity, a qualification,
withdrawal or downgrade of any rating on the Bonds would result; or
(viii) any failure by the Master Servicer to make a P&I Advance required
pursuant to Sections 4.05 and 7.02 hereof;
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 Bonds entitled to, at least 25% of all of the Voting Rights, the Trustee
shall, by notice in writing to such Servicer, with a copy of such notice to the
Issuer, subject to Section 13.12, terminate all of the rights and obligations of
such Servicer as such Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof. From and after the receipt by such Servicer of
such written notice, all authority and power of the such Servicer under this
Agreement, shall pass to and be vested in the Trustee pursuant to and under this
Section, and, without limitation, the Trustee is hereby authorized and empowered
to execute and deliver, on behalf of and at the expense of the such Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. Each Servicer agrees promptly (and in any event no later than ten
Business Days subsequent to such notice) to provide the Trustee or another
successor Servicer designated by the Trustee with all documents and records
requested by it to enable it to assume such Servicer's functions hereunder, and
to cooperate with the Trustee in effecting the termination of such Servicer's
responsibilities and rights hereunder. Any cost or expenses in connection with
any actions to be taken by a Servicer that is being terminated pursuant to this
Section 9.01 shall be borne by the Servicer that is being terminated and to the
extent not paid by the Servicer that is being terminated, such expense shall be
borne by the Issuer and shall not be an expense of any successor Servicer.
Subject to Section 11.01(c)(iv), for purposes of this Section 9.01, the Trustee
shall not be deemed to have knowledge of an Event of Default unless a
Responsible Officer of the Trustee has actual knowledge thereof, or unless
notice of any event which is in fact such an Event of Default is received by the
Trustee and such notice references the Bonds, the Issuer or this Agreement.
SECTION 9.02 Trustee to Act; Appointment of Successor.
On and after the time a Servicer receives a notice of termination pursuant
to Section 9.01, the Trustee shall be the successor in all respects to such
Servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto and arising thereafter placed on such Servicer by the terms and
provisions hereof provided, further, that any failure to perform such duties or
responsibilities caused by such Servicer's failure to provide information or
monies required by this Agreement shall not be considered a default by the
Trustee hereunder. The Trustee shall not be liable for any of the
representations and warranties of such Servicer or for any losses incurred by
such Servicer hereunder nor shall the Trustee be required to purchase any
Mortgage Loan hereunder. As compensation therefor, the Trustee shall be entitled
to the servicing fees and all funds relating to the Mortgage Loans which such
Servicer would have been entitled to if such Servicer had continued to act
hereunder. 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 Bonds
entitled to at least more than 25% of all of the Voting Rights so request in
writing to the Trustee, promptly appoint, or petition a court of competent
jurisdiction for the appointment of, a loan servicing institution with (a) a net
worth at the time of such appointment of at least $15,000,000 and (b) whose
appointment will not result in a downgrade, withdrawal or qualification of the
rating on any Class of Bonds by any Rating Agency as evidenced in writing, to
act as a successor to such Servicer pursuant to Section 13.12 of this Agreement.
Pending appointment of a successor to such Servicer hereunder, the Trustee shall
act in such capacity as hereinabove provided. The Trustee and any such 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 under this
Agreement.
SECTION 9.03 Notification to Bondholders.
(a) Upon any such termination pursuant to Section 9.01 above, any
appointment of a successor to the Master Servicer pursuant to Section 9.02, or
any appointment of a successor Special Servicer pursuant to Section 13.12, the
Trustee shall give prompt written notice thereof to Bondholders and each Rating
Agency at their respective addresses appearing in the Bond Register.
(b) Not later than the later of 60 days after the occurrence of any event
which constitutes or, with notice or lapse of time or both, would constitute an
Event of Default and not more than five (5) days after a Responsible Officer
becomes aware of the occurrence of such event, the Trustee shall transmit by
mail to the Issuer and all Bondholders notice of such occurrence, unless such
default shall have been cured or waived.
SECTION 9.04 Waiver of Events of Default.
The Holders representing at least 66-2/3% of the Voting Rights exclusive of
any Bonds owned by either the Servicer or an affiliate thereof evidenced by all
Classes of Bonds affected by any Event of Default hereunder may waive such Event
of Default; provided, however, that an Event of Default under clause (i) or
clause (viii) of Section 9.01 may be waived only by all of the Bondholders. Upon
any such waiver of an Event of Default, such Event of Default shall cease to
exist and shall be deemed to have been remedied for every purpose hereunder,
except that no Event of Default under Section 9.01(viii) shall be deemed so
waived or cured unless and until the Trustee has been reimbursed in full for all
P&I Advances, together with interest thereon at the Advance Rate, which it may
have made hereunder. The Trustee shall be entitled to reimbursement from the
Issuer for any expenses incurred by the Trustee or successor Servicer in
connection with assuming the duties of a Servicer following the occurrence of an
Event of Default if following the termination of such Servicer pursuant to this
Agreement, the Bondholders elect to waive such Event of Default and reinstate
the terminated Servicer. No such waiver shall extend to any subsequent or other
Event of Default or impair any right consequent thereon except to the extent
expressly so waived. Notwithstanding any other provisions of this Agreement, for
purposes of waiving any Event of Default pursuant to this Section 9.04, Bonds
registered in the name of the Issuer or any Affiliate of the Issuer shall be
entitled to Voting Rights with respect to the matters described above.
SECTION 9.05 Additional Remedies of Trustee Upon Event of Default.
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 Sections 9.01 and 9.02, shall have the right, in its own name and
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 Bondholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filings of proofs of claim and debt in connection
therewith). 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.
ARTICLE X
[RESERVED]
ARTICLE XI
MONITORING BONDHOLDER; DIRECTING BONDHOLDER
SECTION 11.01 Monitoring Bondholders and Directing Bondholder.
(a) Each Monitoring Bondholder is hereby deemed to have agreed by virtue of
its purchase of a Bond to provide its name and address to the Trustee and to
notify the Trustee of the transfer of any Bond of a Monitoring Class the
selection of a Directing Bondholder or the resignation or removal thereof. The
Directing Bondholder is hereby deemed to have agreed by virtue of its purchase
of a Bond to notify the Trustee when such Bondholder is appointed Directing
Bondholder and when it is removed or resigns. Notwithstanding any other
provisions contained herein, the Trustee shall be required to give any notice,
direction or information with respect to any Monitoring Bondholder or Directing
Bondholder only to the extent the Trustee received the relevant information, as
set forth in this Section 11.01(a).
(b) Within thirty (30) days of the Delivery Date, the Trustee shall notify
the Monitoring Bondholders that they may select a Directing Bondholder for
purposes of Sections 6.03 and 6.11 of this Agreement. Such notice shall set
forth the process established by the Trustee in order to select a Directing
Bondholder.
(c) A "Monitoring Class" as of any time of determination shall be the
following Class or Classes of Bonds:
(i) if the Class outstanding with the most subordinate Class of Bonds
represents at least __% by Class Balance of all the Bonds, such Class
only;
(ii) otherwise, each Class, in reverse order of seniority, but only to the
extent necessary to represent, in the aggregate, at least __% by Class
Balance of all the Bonds.
(d) Once a Directing Bondholder has been selected pursuant to clause (b)
above, each of the Servicer, the Issuer, the Trustee and each other Bondholder
(or Bond Owner, if applicable) shall be entitled to rely on such selection
unless a majority of the Monitoring Bondholders, by Bond Balance, or such
Directing Bondholder shall have notified the Trustee and each other Monitoring
Bondholder, in writing, of the resignation of such Directing Bondholder or the
selection of a new Directing Bondholder. Upon the resignation of a Directing
Bondholder, the Trustee shall request the Monitoring Bondholders to select a new
Directing Bondholder.
(e) Within two (2) Business Days (or as soon thereafter as practicable if
Monitoring Bonds are held as Book-Entry Bonds) of receiving a request from the
Special Servicer pursuant to Section 6.03(a) the Trustee shall deliver to the
Special Servicer and the Master Servicer a list of each Monitoring Bondholder
and the Directing Bondholder including names and addresses. In addition to the
foregoing, within two (2) Business Days of receiving notice of the selection of
a new Directing Bondholder or the existence of a new Monitoring Bondholder, the
Trustee shall notify the Special Servicer.
(f) If at any time a Book-Entry Bond belongs to a Monitoring Class, the
Trustee shall notify the related Bondholders (through the Depository, unless the
Trustee shall have been previously provided with the name and address of the
related Bond Owner) of such event and shall request that it be informed of any
change in the identity of the related Bond Owner from time to time.
(g) Until it receives notice to the contrary each of the Servicers and the
Trustee shall be entitled to rely on the most recent notification with respect
to the identity of the Monitoring Bondholders and the Directing Bondholder.
SECTION 11.02 Powers of Attorney.
The Trustee shall execute and deliver any powers of attorney prepared and
delivered to it by each Servicer pursuant to Sections 4.01(b) and 6.03(b). Each
Servicer hereby agrees to indemnify and hold harmless the Trustee for all
liabilities, costs and expenses incurred by the Trustee in connection with the
negligent or willful misuse of any such power of attorney by such Servicer.
ARTICLE XII
TERMINATION
SECTION 12.01 Termination Upon Liquidation of All Mortgage Loans
(a) The respective obligations and responsibilities under this Agreement of
the Issuer, the Master Servicer, the Special Servicer and the Trustee shall
terminate upon the earlier of (i) payment to the Trustee of all amounts held by
or on behalf of the Master Servicer or Special Servicer and required hereunder
to be so paid on the first Master Servicer Remittance Date following the end of
the Collection Period in which occurs the final payment or other liquidation of
the last Mortgage Loan or REO Property subject hereto and (ii) satisfaction and
discharge of the Indenture and receipt by each of the Master Servicer and the
Special Servicer of all amounts then payable or reimbursable thereto hereunder.
(b) Subject to the receipt thereby of all amounts then payable or
reimbursable thereto hereunder, each of the Master Servicer and the Special
Servicer acknowledges and agrees that, upon the satisfaction and discharge of
the Indenture as described in clause (ii) above, it shall promptly (and in any
event no later than____ Business Days) following its receipt of notice of such
satisfaction and discharge from the Trustee provide the Issuer with all
documents and records in its possession and shall cooperate with the Issuer or
its designee in effecting the termination of the Master Servicer's or Special
Servicer's, as the case may be, responsibilities and rights with respect to the
Mortgage Loans, including, without limitation, the transfer within_____ Business
Days to the Issuer of all cash amounts which shall at the time be or should have
been credited by the Master Servicer to the Collection Account or any Servicing
Account or by the Special Servicer to the REO Account, the Collection Account or
any Servicing Account or thereafter be received by or on behalf of it with
respect to any Mortgage Loan or REO Property. Any costs or expenses in
connection with any actions to be taken by the Master Servicer or Special
Servicer pursuant to this paragraph shall be borne by the Master Servicer or
Special Servicer, as the case may be.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01 Amendment.
(a) This Agreement may be amended from time to time by the Issuer, the
Master Servicer, the Special Servicer and the Trustee, without the consent of
any of the Bondholders, (i) to cure any ambiguity, (ii) to correct or supplement
any provisions herein which may be inconsistent with any other provisions herein
or (iii) to make any other provisions with respect to matters or questions
arising hereunder which shall not be inconsistent with the provisions hereof,
provided that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Trustee, adversely affect in any material respect the interests
of any Bondholder; provided further, however, that an Opinion of Counsel shall
not be required if each Rating Agency then rating the Bonds shall have confirmed
in writing that immediately following such amendment such Rating Agency will not
qualify, lower or withdraw its rating on the Bonds as a result of such
amendment.
(b) This Agreement may also be amended from time to time by the Issuer, the
Master Servicer, the Special Servicer and the Trustee with the consent of the
Holders of Bonds affected thereby entitled to at least 51% of the Voting Rights
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders of Bonds; 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
Bond without the consent of the Holder of such Bond, (ii) adversely affect in
any material respect the interests of the Holders of any Class of Bonds in a
manner other than as described in (i) without the consent of the Holders of all
Bonds of such Class, or (iii) reduce the aforesaid percentages of Bonds the
Holders of which are required to consent to any such amendment without the
consent of the Holders of all Bonds then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 13.01, Bonds registered in the name of the
Issuer, the Master Servicer, the Special Servicer or any Affiliate of the
Issuer, the Master Servicer or the Special Servicer shall be entitled to Voting
Rights with respect to matters described in clauses (i) and (ii) of this
paragraph affecting such Bonds.
(c) Promptly after the execution of any such amendment, the Trustee shall
furnish a statement describing the amendment to each Bondholder and each
Underwriter and a copy of such amendment to each Rating Agency.
(d) It shall not be necessary for the consent of Bondholders under this
Section 13.01 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Bondholders shall be subject to such reasonable regulations
as the Trustee may prescribe.
(e) The Trustee may but shall not be obligated to enter into any amendment
pursuant to this Section that affects its rights, duties and immunities under
this Agreement or otherwise.
(f) The cost of any Opinion of Counsel to be delivered pursuant to Section
13.01(a) or (c) shall be borne by the Person seeking the related amendment.
(g) Prior to the execution of any amendment to this Agreement, the Issuer,
the Master Servicer, the Special Servicer and the Trustee shall be entitled to
receive and rely upon an Opinion of Counsel, at the expense of the party
requesting such amendment, stating that the execution of such amendment is
authorized or permitted by this Agreement.
SECTION 13.02 Recordation of Agreement; Counterparts.
(a) To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the expense of the Issuer on direction by the Trustee, but
only upon direction accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Bondholders; provided, however, that the Trustee shall have no obligation or
responsibility to determine whether any such recordation of this Agreement is
required.
(b) For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
SECTION 13.04 Governing Law.
This Agreement shall be construed in accordance with the internal laws of
the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
SECTION 13.05 Notices.
Any communications provided for or permitted hereunder shall be in writing
and, unless otherwise expressly provided herein, shall be deemed to have been
duly given if (a) personally delivered, (b) mailed by registered mail, postage
prepaid, return receipt requested, and received by the addressee, (c) sent by
express courier delivery service and received by the addressee, or (d)
transmitted by telex, telecopy or telegraph and confirmed by a writing delivered
by means of (a), (b) or (c), to: (i) in the case of the Issuer, Imperial Credit
Commercial Mortgage Acceptance Corp., Attention: __________, telecopy number:
__________; (ii) in the case of the Master Servicer and Special Servicer,
____________________, _____________________, Attention: __________, telephone
number: __________, telecopy number: __________; (iii) in the case of the
Trustee, ____________________, Attention: __________, telephone number:
__________, telecopy number: __________; (iv) in the case of the Mortgage Loan
Seller, to ____________________, ____________________, Attention: __________,
telecopy number: __________; and (v) in the case of the Rating Agencies, (A)
____________________, ____________________, Attention: ___________, telephone
number: ___________, telecopy number: ____________________, (B)
____________________, ____________________, Attention: __________, telephone
number: __________, telecopy number: __________, and (C) ____________________,
____________________, Attention: __________, telephone number: __________,
telecopy number: __________; or as to each such Person such other address as may
hereafter be furnished by such Person to the parties hereto in writing. Any
communication required or permitted to be delivered to a Bondholder shall be
sent to the address of such Holder as shown in the Bond Register.
SECTION 13.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Bonds or the rights of the Holders thereof.
SECTION 13.08 Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by each Servicer, the Trustee and the respective
successors and assigns thereof and shall inure to the benefit of the
Bondholders.
SECTION 13.09 Article and Section Headings.
The article and section headings herein are for convenience of reference
only, and shall not limit or otherwise affect the meaning hereof.
SECTION 13.10 Notices and Information to Rating Agencies.
(a) The Trustee shall use its best efforts promptly to provide notice to
the Rating Agencies with respect to each of the following of which it has actual
knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Event of Default;
(iii) the resignation or termination of the Master Servicer or the Special
Servicer;
(iv) the repurchase of Mortgage Loans pursuant to Section 2.04(a);
(v) the final payment to any Class of Bondholders; and
(vi) any change in the location of the Bond Account.
(b) The Master Servicer shall use its best efforts promptly to provide
notice to the Rating Agencies with respect to any determination by the Master
Servicer that an Advance with respect to a Mortgage Loan constitutes (or would,
if made, constitute) a Nonrecoverable Advance under this Agreement.
(c) The Master Servicer shall promptly furnish to the Rating Agencies
copies of the following:
(i) each of its annual statements as to compliance described in Section
3.07,
(ii) each of its annual independent public accountants' servicing reports
described in Section 3.08,
(iii) the most current rent rolls and financial statements available from
time to time with respect to any Mortgaged Property or any Mortgagor,
(iv) each report and statement pursuant to Sections 4.08 and 7.01,
(v) other information the Rating Agencies may reasonably request
consistent with the Master Servicer's servicing duties hereunder, and
(vi) notice of the resignation or termination of the Trustee.
(d) All parties shall provide such information as each Rating Agency may
reasonably require, from time to time, through an electronic medium and format
reasonably acceptable to, and reasonably requested by, each Rating Agency.
SECTION 13.12 Successor to a Servicer.
(a) The termination of any Servicer's responsibilities and duties pursuant
to Section 3.11 or Section 9.01 hereof, the Trustee shall either (i) succeed (as
of the date of such succession) to and assume all of such Servicer's
responsibilities, rights, duties and obligations under this Agreement, or (ii)
appoint a successor that shall succeed (as of the date of such succession) to
all rights and assume all of the responsibilities and duties of such Servicer
under this Agreement. In the event that any Servicer's duties and
responsibilities under this Agreement are terminated pursuant to the
aforementioned Sections, such Servicer shall discharge such duties and
responsibilities during the period from the date it acquires knowledge of such
termination until the effective date thereof (if such dates are not the same)
with the same degree of diligence and prudence that it is obligated to exercise
under this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor, any other
Servicer. The termination of a Servicer's responsibilities and duties under this
Agreement pursuant to the aforementioned Sections shall not become effective
until a successor shall be appointed pursuant to this Section 13.12 (or until
the Trustee succeeds to and assumes all of such Servicer's responsibilities
under this Agreement) and shall in no event relieve such Servicer of the
covenants, representations and warranties made herein and the remedies available
under this Agreement. The provisions of Section 3.10 hereof shall be applicable
to each Servicer, to the extent of claims against the Servicer arising out of
the Servicer's actions or failure to act prior to termination, notwithstanding
any termination of such Servicer's responsibilities and duties under this
Agreement or the termination of this Agreement. A successor Servicer shall not,
by reason of its appointment or assumption of the duties and responsibilities of
another Servicer, assume any of the liabilities of such Servicer.
(b) Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Trustee and each Servicer, an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities and obligations of the Servicer it is
succeeding, with like effect as if originally named as a party to this
Agreement. Any resignation or termination of a Servicer pursuant to Section 3.11
or Section 9.01 hereof shall not affect any rights or claims that any Servicer
may have with respect to or against the Issuer or another Servicer, in any case
arising prior to any such termination or resignation. The appointment of a
successor Servicer shall not be effective until the Trustee shall have received
written confirmation from each Rating Agency that such appointment will not
result in the withdrawal, qualification or downgrade of the rating on any Bond.
(c) Upon its termination or resignation, the terminated or resigning
Servicer shall immediately deliver to the successor the funds in any account
maintained by such Servicer pursuant to this Agreement (net of all unpaid
Servicing Fees payable to it, and, in the case of the Master Servicer,
unreimbursed Advances advanced by it and interest on such Advances at the
Advance Rate), any Mortgage Loan Documents in such Servicer's possession and
related documents and statements held by it hereunder and such Servicer shall
account for all funds. Such Servicer shall execute and deliver such instruments
and do all such other things as may reasonably be required to more fully and
definitely vest and confirm in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of such Servicer. The successor
shall promptly make arrangements to reimburse such Servicer for amounts such
Servicer actually expended, unreimbursed Advances with interest at the Advance
Rate and amounts owed to such Servicer in respect of unpaid Servicing Fees and
additional servicing compensation pursuant to this Agreement that would
otherwise have been recovered by such Servicer pursuant to this Agreement but
for the appointment of the successor servicer, net of any amounts owed by such
Servicer hereunder.
IN WITNESS WHEREOF, the parties hereto have caused their names to be signed
hereto by their respective officers thereunto duly authorized, in each case as
of the day and year first above written.
ICCMAC TRUST [______], Issuer
By: __________________________,
not in its individual capacity but solely as
Owner Trustee
By: ____________________________
Name: ____________________________
Title: ____________________________
____________________________,
Master Servicer and Special Servicer
By: ____________________________
Name: ____________________________
Title: ____________________________
____________________________,
Trustee
By: ____________________________
Name: ____________________________
Title: ____________________________
<PAGE>
STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On the ____ day of __________, 199__ before me, a notary public in and for
said State, personally appeared ____________________ known to me to be a
__________ of ________________________________, the ______________ that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said __________________, and acknowledged to me that such
_________________ executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
____________________________
Notary Public
[Notarial Seal]
<PAGE>
STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On the day of __________, 199__, before me, a notary public in and for said
State, personally appeared ___________ known to me to be ______________________
of _____________________, one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
____________________________
Notary Public
[Notarial Seal]
<PAGE>
STATE OF )
)ss.:
COUNTY OF )
On the ____ day of __________, 199__, before me, a notary public in and for
said State, personally appeared _____________________________ known to me to be
_______________________ of ___________________, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
____________________________
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT B
FORM OF REQUEST FOR RELEASE AND
RECEIPT OF DOCUMENTS
To: [Trustee Name and Address]
Re: Colalteralized Mortgage Bonds, Series __________
In connection with the administration of the Mortgage Loans held by you as
the Trustee, we request the release of the (Trustee's Mortgage File/[specify
documents]) for the Mortgage Loan described below, for the reason indicated. The
undersigned agrees to acknowledge receipt of such Mortgage Loan File promptly
upon receipt.
Mortgagor's Name, Address & Zip Code:
Mortgage Loan Number
Reason for Requesting Documents (check one)
_________ 1. Mortgage Loan paid in full. (Servicer hereby certifies that all
amounts received in connection therewith have been credited or
will be escrowed as provided in the Servicing Agreement.)
_________ 2. Mortgage Loan Liquidated. (Servicer hereby certifies that all
proceeds of foreclosure, insurance or other liquidation have been
finally received and credited to or will be escrowed pursuant to
the Servicing Agreement.)
_________ 3. Mortgage Loan in Foreclosure.
_________ Other(explain) __________________________________________________
<PAGE>
If item 1 or 2 above is checked, and if all or part of the Trustee's
Mortgage File was previously released to us, please release to us our previous
receipt on file with you, as well as any additional documents in your possession
relating to the above specified Mortgage Loan. If item 3 or 4 is checked, upon
our return of all of the above documents to you as Trustee, please acknowledge
your receipt by signing in the space indicated below, and returning this form.
[Servicer]
By: ____________________________
Name: ____________________________
Title: ____________________________
Date: ____________________________
Documents returned to Trustee:
By: ____________________________
Name: ____________________________
Title: ____________________________
Date: ____________________________
================================================================================
DEPOSIT TRUST AGREEMENT
dated as of ___________, 199_
between
IMPERIAL CREDIT COMMERCIAL
MORTGAGE ACCEPTANCE CORP.
as Depositor and Initial Holder of the Owner Trust Certificates,
and
________________________________
as Owner Trustee
ICCMAC COMMERCIAL TRUST [______]
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT
ARTICLE I
DEFINITIONS
Accrued Bond Interest..........................................................
Accrued Certificate Interest...................................................
Administration Agreement.......................................................
Administration Fee.............................................................
Administrative Expenses........................................................
Administrator..................................................................
Affiliate......................................................................
Agent..........................................................................
Aggregate Certificate Principal Balance........................................
Aggregate Stated Principal Balance.............................................
Assignment of Leases...........................................................
Available Funds................................................................
[Bank].........................................................................
Bond Account...................................................................
Bond Register..................................................................
Bondholder.....................................................................
Bonds..........................................................................
Business Day...................................................................
Business Trust Statute.........................................................
Certificate Account............................................................
Certificate of Trust...........................................................
Certificate Register...........................................................
Certificate Registrar..........................................................
Certificateholder or Holder....................................................
Certificateholder Funds........................................................
Class..........................................................................
Class A-1 Bonds................................................................
Class A-2 Bonds................................................................
Class B Bonds..................................................................
Class C Bonds..................................................................
Class D Bonds..................................................................
Class E Bonds..................................................................
Class F Bonds..................................................................
Class [P] Certificate..........................................................
Class [R] Certificate..........................................................
Class [XS] Certificate.........................................................
Closing Date...................................................................
Code...........................................................................
Collection Account.............................................................
Collection Period..............................................................
Corporate Trust Office.........................................................
Cut-off Date...................................................................
Depositor......................................................................
Deposit Trust Agreement........................................................
Depository.....................................................................
Depository Representation Letter...............................................
Eligible Trustee...............................................................
ERISA..........................................................................
Governmental Authority.........................................................
Indenture......................................................................
Indenture Trustee..............................................................
Indenture Trustee Fee..........................................................
IRS............................................................................
Lien...........................................................................
Mortgage.......................................................................
Mortgage Loan..................................................................
Mortgage Loan Documents........................................................
Mortgage Loan Purchase Agreement...............................................
Mortgage Note..................................................................
Mortgage Loan Seller...........................................................
Mortgaged Property.............................................................
Mortgagor......................................................................
1933 Act.......................................................................
1940 Act.......................................................................
Officers' Certificate..........................................................
Operative Agreements...........................................................
Opinion of Counsel.............................................................
Overcollateralization Amount...................................................
Owner Trust Certificates.......................................................
Owner Trustee..................................................................
Owner Trustee Fee..............................................................
Payment Date...................................................................
Percentage Interest............................................................
Person.........................................................................
QIB............................................................................
QRS............................................................................
Rating Agency..................................................................
Record Date....................................................................
REIT...........................................................................
REO Loan.......................................................................
REO Property...................................................................
Responsible Officer............................................................
Trust..........................................................................
Trust Estate...................................................................
UCC Financing Statement........................................................
Underwriting Agreement.........................................................
Underwriter(s).................................................................
Uniform Commercial Code........................................................
Voting Rights..................................................................
ARTICLE II
AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS;
DECLARATION OF BUSINESS TRUST
SECTION 2.1 Declaration of Business Trust...................................
SECTION 2.2 Transfer of Trust Estate to Owner Trustee.......................
SECTION 2.3 Authority to Execute and Perform Various Documents..............
SECTION 2.4 Execution and Delivery of Owner Trust Certificates..............
SECTION 2.5 Activities of the Trust.........................................
ARTICLE III
ESTABLISHMENT OF CERTIFICATE ACCOUNT
SECTION 3.1 Establishment of Certificate Account;
Deposits in Certificate Account..................... .........
SECTION 3.2 Permitted Withdrawals From the Certificate Account..............
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE
SECTION 4.1 Distribution of Payments........................................
SECTION 4.2 Payments........................................................
SECTION 4.3 Statements to Certificateholders................................
SECTION 4.4 Access to Certain Documentation and Information.................
SECTION 4.5 Compliance with Withholding Requirements........................
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.1 Notice of Certain Events; Action by the Owner Trustee...........
SECTION 5.2 Distribution of Reports.........................................
SECTION 5.3 Action Required Only if Owner Trustee is Indemnified............
SECTION 5.4 No Duties Except as Specified in Deposit Trust Agreement
or Instructions.................................................
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.1 Acceptance of Trust and Duties..................................
SECTION 6.2 Limited Representations or Warranties of the Owner Trustee......
SECTION 6.3 Trust Accounts..................................................
SECTION 6.4 Reliance; Advice of Counsel.....................................
SECTION 6.5 Not Acting in Individual Capacity...............................
SECTION 6.6 Books and Records; Tax Election.................................
ARTICLE VII
COMPENSATION, REIMBURSEMENT AND INDEMNIFICATION OF THE OWNER TRUSTEE
SECTION 7.1 Compensation of the Owner Trustee...............................
SECTION 7.2 Reimbursement and Indemnification of the Owner Trustee..........
SECTION 7.3 Not Obligations of the Trust....................................
ARTICLE VIII
TERMINATION OF DEPOSIT TRUST AGREEMENT
SECTION 8.1 Termination.....................................................
SECTION 8.2 Further Assurances by the Owner Trustee upon Termination........
SECTION 8.3 Insolvency of a Certificateholder...............................
ARTICLE IX
SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES AND SEPARATE OWNER TRUSTEES
SECTION 9.1 Resignation of the Owner Trustee; Appointment of Successor......
SECTION 9.2 Co-Trustees and Separate Trustees...............................
SECTION 9.3 Notice 34
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
SECTION 10.1 Supplements and Amendments.....................................
SECTION 10.2 Limitation on Amendments.......................................
SECTION 10.3 Additional Amendment Provisions................................
ARTICLE XI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR
SECTION 11.1 Representations and Warranties of the Depositor................
SECTION 11.2 Accrued Interest, Etc..........................................
SECTION 11.3 Additional Covenants of the Depositor..........................
ARTICLE XII
TRANSFER OF INTEREST OF THE DEPOSITOR
SECTION 12.1 Registration of Transfer and Exchange of Owner Trust
Certificates...................................................
SECTION 12.2 Mutilated, Destroyed, Lost or Stolen Owner Trust
Certificates...................................................
SECTION 12.3 Persons Deemed Owners..........................................
SECTION 12.4 Access to Names and Addresses..................................
SECTION 12.5 Actions of Certificateholders..................................
SECTION 12.6 Transferee's Agreement.........................................
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 No Legal Title to Trust Estate in the Certificateholder........
SECTION 13.2 Action by the Owner Trustee is Binding.........................
SECTION 13.3 Limitation on Rights of Others.................................
SECTION 13.4 Notices........................................................
SECTION 13.5 Severability...................................................
SECTION 13.6 Limitation on the Depositor's and the Certificateholders'
Respective Liability...........................................
SECTION 13.7 Separate Counterparts..........................................
SECTION 13.8 Successors and Assigns.........................................
SECTION 13.9 Headings.......................................................
SECTION 13.10 Governing Law.................................................
SECTION 13.11 Administration of Trust.......................................
SECTION 13.12 Performance by the Depositor or the Administrator.............
SECTION 13.13 Conflict with Indenture and Servicing and
Administration Agreement......................................
SECTION 13.14 No Implied Waiver.............................................
SECTION 13.15 Third Party Beneficiary.......................................
SECTION 13.16 References....................................................
SECTION 13.17 Streit Act....................................................
Schedule I - Mortgage Loan Schedule
Exhibit A-1 - Form of Class [P] Certificate
Exhibit A-2 - Form of Class [XS] Certificate
Exhibit A-3 - Form of Class [R] Certificate
<PAGE>
DEPOSIT TRUST AGREEMENT
DEPOSIT TRUST AGREEMENT, dated as of ________________, 199_, between
IMPERIAL CREDIT COMMERCIAL MORTGAGE ACCEPTANCE CORP., a California corporation,
as Depositor and initial holder of the Owner Trust Certificates, and
_________________________________________, a ____________________, as Owner
Trustee.
PRELIMINARY STATEMENT
The Depositor (as defined herein) desires to form the trust to be created
hereby (the "Trust") for the purpose of (i) accepting from the Depositor, and
holding for the benefit of the Holders (as defined herein) of the Owner Trust
Certificates (as defined herein), the Trust Estate (as defined herein), (ii)
issuing pursuant to the Indenture nonrecourse Collateralized Mortgage Bonds,
Series 199_-__ (the "Bonds"), in [seven] classes designated as the "Class A-1
Bonds", the "Class A-2 Bonds", the "Class B Bonds", the "Class C Bonds", the
"Class D Bonds", the "Class E Bonds" and the "Class F Bonds", respectively, and
secured by, among other things, a lien on the Mortgage Loans (as defined
herein), and distributing to the Depositor the Bonds or the proceeds from the
sale thereof, (iii) issuing Owner Trust Certificates in three classes designated
as the "Class [P] Certificates", the "Class [XS] Certificates" and the "Class
[R] Certificates", respectively, collectively evidencing the entire beneficial
ownership interest in the Trust, (iv) consummating certain transactions
contemplated by, and performing its obligations under, the Operative Agreements,
and (v) engaging in certain activities incidental to the foregoing.
_________________________, a ________________________________, is willing
to act as trustee hereunder (in its individual capacity, the "[Bank]", and
solely in its capacity as owner trustee hereunder, with its successors in
interest in such capacity and its permitted assigns, the "Owner Trustee") and to
accept the trust created hereby.
In consideration of the premises and of the mutual agreements herein
contained and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
ARTICLE I
DEFINITIONS
All capitalized terms used herein and not otherwise defined, unless the
context otherwise requires, shall have the meanings set forth below or, if not
defined below, in the Indenture. (In the event that a capitalized term used
herein is defined both in this Deposit Trust Agreement and in the Indenture, the
definition appearing herein shall control.)
"Accrued Bond Interest" shall mean interest accrued and payable on the
Bonds from time to time in accordance with the terms of the Indenture.
"Accrued Certificate Interest" shall mean: with respect to the Class [P]
Certificates for any Payment Date, one month's interest (calculated on the basis
of a 360-day year consisting of twelve 30-day months) at _____% per annum on the
Aggregate Certificate Principal Balance of the Class [P] Certificates
immediately prior to the related Payment Date; and with respect to the Class
[XS] Certificates for any Payment Date, the excess, if any, of (a) the aggregate
of all payments received on the Mortgage Loans during the related Collection
Period that are allocable to interest thereon, over (b) the aggregate of (i) all
Accrued Bond Interest payable on the Bonds and all Accrued Certificate Interest
payable on the Class [P] Certificates on such Payment Date and (ii) any unpaid
Administrative Expenses due as of such Payment Date.
"Administration Agreement" shall mean the administration agreement, dated
as of _________________, 199_, between the Owner Trustee (on behalf of the
Trust) and the Administrator, pursuant to which the Administrator is required to
perform various obligations of the Trust under the Indenture.
"Administration Fee" shall mean the monthly fee payable to the
Administrator as provided in the Administration Agreement.
"Administrative Expenses" shall mean the Indenture Trustee Fee, the Owner
Trustee Fee and the Administration Fee and the ongoing fees of the Rating
Agencies payable under the Indenture.
"Administrator" shall mean the Person acting as the "Administrator" from
time to time under the Administration Agreement, which initially shall be
___________________.
"Affiliate" shall mean, 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 meaning of "control".
"Agent" shall mean any agent or attorney of the Owner Trustee appointed by
the Owner Trustee to execute one or more of the trusts or powers hereunder.
"Aggregate Certificate Principal Balance" shall mean, with respect to the
Class [P] Certificates, as of any date of determination, the then aggregate
principal balance of all Class [P] Certificates. The initial Aggregate
Certificate Principal Balance of the Class [P] Certificates shall be
$_______________. The Aggregate Certificate Principal Balance of the Class [P]
Certificates shall be reduced on each Payment Date by the amount of any payments
of principal made thereon on such date pursuant to Section 4.2, and shall be
further reduced on each Payment Date by the amount, if any, that the Aggregate
Certificate Principal Balance of the Class [P] Certificates immediately
following the payments of principal to be made on such Owner Trust Certificates
on such Payment Date, exceeds the Overcollateralization Amount that will be
outstanding immediately following such Payment Date.
"Aggregate Stated Principal Balance" shall mean as of any date of
determination, the then aggregate scheduled unpaid principal balance of all the
Mortgage Loans (and any successor REO Loans), calculated as set forth in the
Servicing Agreement.
"Assignment of Leases" shall mean with respect to any Mortgaged Property,
any assignment of leases, rents and profits or similar document executed by the
Mortgagor in connection with the origination of the related Mortgage Loan.
"Available Funds" shall have the meaning assigned to such term in the
Indenture.
"[Bank]" shall have the meaning assigned to that term in the preliminary
statement above.
"Bond Account" shall mean the segregated trust account established in the
name of the Indenture Trustee pursuant to Section 8.02 of the Indenture.
"Bond Register" shall mean the register of Bonds maintained pursuant to the
Indenture.
"Bondholder" shall mean those Persons holding the Bonds from time to time
as shown on the Bond Register maintained under the Indenture.
"Bonds" shall have the meaning assigned to that term in the preliminary
statement above.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, _____________,
_______________ or any other city specified in the definition of Business Day in
the Indenture, are authorized or obligated by law or executive order to be
closed.
"Business Trust Statute" shall have the meaning assigned to that term in
Section 2.1.
"Certificate Account" shall mean the segregated trust account established
in the name of the Owner Trustee pursuant to Section 3.1 of this Deposit Trust
Agreement.
"Certificate of Trust" shall have the meaning assigned to that term in
Section 2.1.
"Certificate Register" and "Certificate Registrar" shall mean the register
of Owner Trust Certificates maintained, and the registrar appointed,
respectively, pursuant to Section 12.1.
"Certificateholder" or "Holder" shall mean, with respect to any Owner Trust
Certificate, the Person in whose name such Owner Trust Certificate is registered
on the Certificate Register. Initially, the Depositor shall be the sole Holder
of all the Owner Trust Certificates.
"Certificateholder Funds" shall mean, with respect to any Payment Date, an
amount equal to all amounts on deposit in the Certificate Account as of the
commencement of business on such Payment Date, net of (i) any amounts payable or
reimbursable to the Owner Trustee from the Certificate Account pursuant to
Sections 7.2 hereunder and (ii) any amounts deposited in the Certificate Account
in error.
"Class" shall mean all of the Owner Trust Certificates or Bonds, as the
case may be, having the same alphabetical and/or numerical class designation.
"Class A-1 Bonds" shall mean the Bonds so designated under the Indenture
and issued pursuant thereto.
"Class A-2 Bonds" shall mean the Bonds so designated under the Indenture
and issued pursuant thereto.
"Class B Bonds" shall mean the Bonds so designated under the Indenture and
issued pursuant thereto.
"Class C Bonds" shall mean the Bonds so designated under the Indenture and
issued pursuant thereto.
"Class D Bonds" shall mean the Bonds so designated under the Indenture and
issued pursuant thereto.
"Class E Bonds" shall mean the Bonds so designated under the Indenture and
issued pursuant thereto.
"Class F Bonds" shall mean the Bonds so designated under the Indenture and
issued pursuant thereto.
"Class [P] Certificate" shall mean any of the Owner Trust Certificates with
a "Class [P]" designation on the face thereof, executed by the Owner Trustee and
authenticated by the Certificate Registrar, substantially in the form of Exhibit
A-1 attached hereto.
"Class [R] Certificate" shall mean any of the Owner Trust Certificates with
a "Class [R]" designation on the face thereof, executed by the Owner Trustee and
authenticated by the Certificate Registrar, substantially in the form of Exhibit
A-3 attached hereto.
"Class [XS] Certificate" shall mean any of the Owner Trust Certificates
with a "Class [XS]" designation on the face thereof, executed by the Owner
Trustee and authenticated by the Certificate Registrar, substantially in the
form of Exhibit A-2 attached hereto.
"Closing Date" shall mean ___________________, 199_.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collection Account" shall have the meaning assigned to such term in the
Servicing Agreement.
"Collection Period" shall mean, with respect to any Payment Date, the
period commencing on and including the prior Payment Date (or, in the case of
the initial Payment Date, commencing on and including _________________, 199_)
and ending on the day prior to the related Payment Date.
"Corporate Trust Office" shall mean the principal corporate trust office of
the Owner Trustee at which, at any particular time, its corporate trust business
is administered, which office at the date hereof is located at the address of
the Owner Trustee set forth in Section 13.4.
"Cut-off Date" shall mean ______________, 199_.
"Depositor" shall mean Imperial Credit Commercial Mortgage Acceptance
Corp., a California corporation, and its successors in interest.
"Deposit Trust Agreement" shall mean this Deposit Trust Agreement, as the
same may be amended or supplemented from time to time.
"Depository" shall have the meaning assigned thereto in the Indenture.
"Depository Representation Letter" shall mean the Letter of Representations
dated ______________, 199_ among the Trust, the Indenture Trustee and initial
Depository in connection with the issuance of the [Class A-1, Class A-2, Class
B, Class C and Class D Bonds].
"Eligible Trustee" shall mean a bank (within the meaning of Section 2(a)(5)
of the 1940 Act) that meets the requirements of Section 26(a)(1) of the 1940
Act, that is not an Affiliate of the Depositor or an Affiliate of any Person
involved in the organization or operation of the Depositor, that is organized
and doing business under the laws of any state or the United States of America,
that is authorized under such laws to exercise corporate trust powers and to
accept the trust conferred under this Deposit Trust Agreement, that has a
combined capital and surplus and undivided profits of at least [$100,000,000]
and that is subject to supervision or examination by federal or state authority.
If such bank publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this definition the combined capital, surplus and undivided
profits 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.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.
"Governmental Authority" shall mean any government, or any commission,
authority, board, agency, division, subdivision or any court or tribunal of the
government, of the United States of America or of any state, territory, city,
municipality, county or town thereof or of the District of Columbia, or of any
foreign jurisdiction, including the employees or agents thereof.
"Indenture" shall mean the Indenture, dated as of ___________, 199__,
between the Owner Trustee (on behalf of the Trust and the Indenture Trustee.
"Indenture Trustee" shall mean _________________________________, in its
capacity as trustee under the Indenture, or its successor in interest, or any
successor trustee appointed as provided in the Indenture.
"Indenture Trustee Fee" shall mean the monthly fee payable to the Indenture
Trustee as provided in the Indenture.
"IRS" shall mean the Internal Revenue Service.
"Lien" shall mean any lien, pledge, encumbrance or security interest on or
in any particular asset or property.
"Mortgage" shall mean a mortgage, deed of trust, deed to secure debt or
similar document that secures a Mortgage Note and creates a Lien on a Mortgaged
Property.
"Mortgage Loan" shall mean each of the mortgage loans listed on the
Mortgage Loan Schedule attached hereto as Schedule I and from time to time held
in the Trust Estate. The term "Mortgage Loan" shall include the related Mortgage
Loan Documents.
"Mortgage Loan Documents" shall mean with respect to any Mortgage Loan, the
following documents:
(i) the original executed Mortgage Note, endorsed "Pay to the order of
______________, as trustee under the Indenture, dated as of _____,
199_, for the registered holders of ICCMAC Commercial Trust [______],
Collateralized Mortgage Bonds, Series 199__-___, without recourse";
(ii) an original or copy of the Mortgage and of any intervening assignments
thereof that precede the assignment referred to in clause (iv) of this
definition, in each case (unless such document has not yet been
returned from the applicable recording office) with evidence of
recording indicated thereon;
(iii) an original or copy of any related Assignment of Leases (if such item
is a document separate from the Mortgage) and of any intervening
assignments thereof that precede the assignment referred to in clause
(v) of this definition, in each case (unless such document has not yet
been returned from the applicable recording office) with evidence of
recording indicated thereon;
(iv) an original executed assignment of the Mortgage, in favor of ________,
as trustee under the Indenture, dated as of _____, 199_, for the
registered holders of ICCMAC Commercial Trust [______], Collateralized
Mortgage Bonds, Series 199__-___, in recordable form;
(v) an original assignment of any related Assignment of Leases (if such
item is a document separate from the Mortgage), in favor of
_____________, as trustee under the Indenture, dated as of ____, 199_,
for the registered holders of ICCMAC Commercial Trust [______],
Collateralized Mortgage Bonds, Series 199__-___, in recordable form;
(vi) originals or copies of any written modification agreements in those
instances where the terms or provisions of the Mortgage or Mortgage
Note have been modified;
(vii) the original or a copy of the policy or certificate of lender's title
insurance issued on the date of the origination of such Mortgage Loan,
or, if such policy has not been issued, an irrevocable, binding
commitment to issue such title insurance policy; and
(viii) filed copies of any prior UCC Financing Statements in favor of the
originator of such Mortgage Loan or in favor of any assignee prior to
the Trustee (but only to the extent the Mortgage Loan Seller had
possession of such UCC Financing Statements prior to the Closing Date)
and, if there is an effective UCC Financing Statement in favor of the
Mortgage Loan Seller on record with the applicable public office for
UCC Financing Statements, an original UCC-2 or UCC-3, as appropriate,
in favor of _______________, as trustee under the Indenture, dated as
of ____, 199_, for the registered holders of ICCMAC Commercial Trust
[______], Collateralized Mortgage Bonds, Series 199__-___;
"Mortgage Loan Purchase Agreement" shall mean that certain Mortgage Loan
Purchase and Sale Agreement, dated as of _____, 199_, between the Depositor and
the Mortgage Loan Seller, pursuant to which the Depositor acquired the Mortgage
Loans.
"Mortgage Note" shall mean the original executed note evidencing the
indebtedness of a Mortgagor under a Mortgage Loan, together with any rider,
addendum or amendment thereto, or any renewal, substitution or replacement of
such note.
"Mortgage Loan Seller" shall mean ________________________ or its successor
in interest.
"Mortgaged Property" shall mean a property subject to the Lien of a
Mortgage.
"Mortgagor" shall mean the obligor or obligors on a Mortgage Note,
including without limitation, any Person that has acquired the related Mortgaged
Property and assumed the obligations of the original obligor under the Mortgage
Note.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1940 Act" shall mean the Investment Company Act of 1940, as amended.
"Officers' Certificate" shall mean a certificate signed on behalf of the
applicable entity by two officers, one of whom shall be any of the Chairman of
the Board, the Vice Chairman of the Board, the President, any Vice President or
Managing Director, an Assistant Vice President or any other authorized officer
(however denominated) and the other of whom shall be any of the Treasurer, the
Secretary, one of the Assistant Treasurers or Assistant Secretaries, or, in
either case, another officer customarily performing functions similar to those
performed by any of the above designated officers or, 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.
"Operative Agreements" shall mean, collectively, this Deposit Trust
Agreement, the Owner Trust Certificates, the Indenture, the Bonds, the
Administration Agreement, the Servicing Agreement, the Mortgage Loan Purchase
Agreement, the Mortgage Loans and the Depository Representation Letter, as each
of them may, from time to time, be amended or supplemented.
"Opinion of Counsel" shall mean a written opinion of counsel, who may,
without limitation, but subject to the requirements of the Indenture, be
employees or other counsel for the Depositor which are reasonably acceptable to
the Owner Trustee. The cost of such opinion shall be born by the Depositor.
"Overcollateralization Amount" shall mean, as of any date of determination,
the amount, if any, by which the then Aggregate Stated Principal Balance exceeds
the then aggregate principal amount of all the Bonds.
"Owner Trust Certificates" shall mean the Class [P], Class [XS] and Class
[R] Certificates issued hereunder.
"Owner Trustee" shall have the meaning assigned to that term in the
preliminary statement above.
"Owner Trustee Fee" shall be an amount set forth in the Fee Agreement,
dated as of _______________, 199_, between the Bank and the Depositor.
"Payment Date" shall mean the ____ day of each calendar month or, if any
such day is not a Business Day, then the next succeeding Business Day,
commencing in ____________, 199_.
"Percentage Interest" shall mean, with respect to any Owner Trust
Certificate, the percentage interest in the related Class evidenced by such
Owner Trust Certificate as specified on the face thereof.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"QIB" shall mean a qualified institutional buyer within the meaning of Rule
144A under the 1933 Act.
"QRS" shall mean a qualified REIT subsidiary within the meaning of Section
856(i) of the Code.
"Rating Agency" shall have the meaning assigned to such term in the
Indenture.
"Record Date" shall mean, with respect to any Class of Owner Trust
Certificates for any Payment Date, the _____ Business Day preceding such Payment
Date.
"REIT" shall mean a real estate investment trust within the meaning of
Section 856(a) of the Code.
"REO Loan" shall mean the mortgage loan deemed to be outstanding with
respect to each REO Property as set forth in the Servicing Agreement.
"REO Property" shall mean a Mortgaged Property acquired pursuant to the
Servicing Agreement on behalf of the Indenture Trustee for the benefit of the
Bondholders and, subject to the Lien of the Indenture, the Trust, through
foreclosure or acceptance of a deed in lieu of foreclosure or otherwise in
accordance with applicable law in connection with the default or imminent
default of Mortgage Loan.
"Responsible Officer" shall mean any officer of the Owner Trustee assigned
to the Corporate Trust Office with direct responsibility for the administration
of this Deposit Trust Agreement and also, with respect to a particular matter,
any officer of the Owner Trustee employed within the Corporate Trust Office, 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 Responsible Officer, such an
officer whose name appears on a list of corporate trust officers furnished to
the Depositor and the Indenture Trustee by the Owner Trustee, as such list may
from time to time be amended.
"Trust" shall mean the trust established under this Deposit Trust
Agreement.
"Trust Estate" shall mean the corpus of the trust created as of the Closing
Date and to be administered hereunder, consisting of: all the estate, right,
title and interest of the Depositor in, to and under (a)(i) the Mortgage Loans
as from time to time are subject to this Deposit Trust Agreement and all
payments thereon and proceeds thereof received or receivable after the Cut-off
Date (other than payments of principal and interest due and payable on the
Mortgage Loans on or prior to the Cut-off Date and any principal prepayment
received on or prior to the Cut-off Date), together with all documents, escrow
payments and reserve funds delivered or caused to be delivered hereunder with
respect to such Mortgage Loan, including, without limitation, the Mortgage Loan
Documents and the Servicing File related to each Mortgage Loan, (ii) any REO
Property acquired in respect of a Mortgage Loan, (iii) such funds or assets as
from time to time deposited in the Collection Account and any other accounts
maintained pursuant to the Servicing Agreement and all reinvestment earnings on
such amounts, and all the Depositor's right, title and interest in and to the
proceeds of any title, hazard or other insurance policies related to the
Mortgage Loans and maintained pursuant to the Mortgage Loan Documents and the
Servicing Agreement, and (iv) the rights of the Depositor under Sections _____
of the Mortgage Loan Purchase Agreement, (b) the Operative Agreements (i) to
which the Depositor is a party or (ii) of which the Depositor is a third party
beneficiary, including the right to receive all income on the Mortgage Loans,
(c) all present and future claims, demands, causes and choses in action in
respect of any or all of the foregoing and (d) all proceeds of every kind and
nature whatsoever in respect thereof, including all proceeds of the conversion,
voluntary or involuntary, into cash or other liquid property, all cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of the foregoing.
"UCC Financing Statement" shall mean a financing statement executed and
filed pursuant to the Uniform Commercial Code, as in effect in the relevant
jurisdiction.
"Underwriting Agreement" shall mean the underwriting agreement, dated
_________________, 199_, between the Underwriter(s), as purchaser(s) of the
[Class A-1, Class A- 2, Class B, Class C and Class D Bonds], and the Depositor.
"Underwriter(s)" shall mean [each of _____________________________ and]
___________________________________
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in any applicable jurisdiction.
"Voting Rights" shall mean that portion of the voting rights of all the
Owner Trust Certificates which is allocated to any particular Owner Trust
Certificate. At all times during the term of this Deposit Trust Agreement, __%
of the Voting Rights shall be allocated to the Holders of the Class [P]
Certificates, _% of the Voting Rights shall be allocated to the Holders of the
Class [XS] Certificates and _% of the Voting Rights shall be allocated to the
Holders of the Class [R] Certificates. Voting Rights allocated to a Class of
Certificateholders shall be allocated among such Certificateholders in
proportion to the Percentage Interests evidenced by their respective Owner Trust
Certificates.
<PAGE>
ARTICLE II
AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS;
DECLARATION OF BUSINESS TRUST
SECTION 2.1 Declaration of Business Trust. The Trust will be known as
"ICCMAC Commercial Trust [______]," in which name the Owner Trustee may conduct
the affairs of the Trust. The [Bank] is hereby appointed to hold and agrees to
hold the Trust Estate as Owner Trustee in trust upon the terms and conditions
and for the use and benefit of the Certificateholders as herein set forth.
It is the intention of the parties hereto that the trust created by this
Deposit Trust Agreement constitute a business trust under the Business Trust
Statute and that this Deposit Trust Agreement constitute the governing
instrument of such business trust. This Declaration of Business Trust is not
intended to create a partnership or a joint-stock association. As soon as
practicable after the date hereof, the Owner Trustee shall file the Certificate
of Trust required by Section _____ of the Business Trust Statute, in the office
of [applicable office] of the State of ___________ (the "Certificate of Trust").
Effective as of the date hereof, the Owner Trustee shall have all the rights,
powers and duties set forth herein and in the Business Trust Statute with
respect to accomplishing the purposes of the Trust. For purposes of this
Declaration of Business Trust, "Business Trust Statute" means [applicable law]
as the same may be amended from time to time.
SECTION 2.2 Transfer of Trust Estate to Owner Trustee.
(a) Effective as of the date hereof, the Depositor does hereby contribute,
sell, grant, assign, transfer, set-over and otherwise convey to, and deposit
with, the Owner Trustee, and its successors, for the benefit of the Trust, until
this Deposit Trust Agreement terminates pursuant to Section 8.1, the entire
Trust Estate (including, without limitation, each and every item thereof as set
forth in the definition of "Trust Estate"), such conveyance to be made in
exchange for [the Bonds and] the Owner Trust Certificates.
In connection with such transfer and assignment, the Depositor does hereby
deliver or cause to be delivered to, and deposit or cause to be deposited with,
the Owner Trustee (or, at the direction of the Owner Trustee on behalf of the
Trust, to and with the Indenture Trustee on behalf of the Trust pursuant to the
Indenture) each of the following documents or instruments relating to each
Mortgage Loan:
(i) the Mortgage Loan Documents;
(ii) a UCC Financing Statement covering the Trust Estate, executed by the
Depositor as debtor in favor of the Trust as secured party and the
Indenture Trustee as its assignee; and
(iii) all other items relating to the foregoing as may be reasonably
requested by or on behalf of the Owner Trustee or the Indenture
Trustee.
(b) The conveyance of the Mortgage Loans, the related rights and property
and all other assets constituting the Trust Estate by the Depositor as
contemplated hereby is absolute and is intended by the parties to constitute an
absolute contribution and transfer of the Mortgage Loans, such other related
rights and all other assets constituting the Trust Estate by the Depositor to
the Trust. It is, further, not intended that such conveyance be deemed to
constitute a pledge of security for a loan. If, however, such conveyance is
deemed to constitute a pledge of security for a loan, the Depositor intends that
the rights and obligations of the parties to such loan shall be established
pursuant to, and be governed by, the terms of this Deposit Trust Agreement. The
Depositor also intends and agrees that, in such event, (i) this Deposit Trust
Agreement shall constitute a security agreement under applicable law, (ii) the
Depositor shall be deemed to have granted to the Owner Trustee on behalf of the
Trust a first priority security interest in the Depositor's entire right, title
and interest in and to the assets constituting the Trust Estate, (iii) the
possession by the Owner Trustee on behalf of the Trust (or any subsequent
assignee, including, without limitation, the Indenture Trustee) or its agent of
the Mortgage Notes with respect to the Mortgage Loans 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" or possession by a
purchaser or Person designated by such secured party for the purpose of
perfecting such security interest under applicable law, and (iv) notifications
to, and acknowledgments, receipts or confirmations from, Persons holding such
property, shall be deemed to be notifications to, or acknowledgments, receipts
or confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Owner Trustee on behalf of the Trust (or any subsequent
assignee, including, without limitation, the Indenture Trustee) for the purpose
of perfecting such security interest under applicable law. The Depositor shall,
to the extent consistent with this Deposit Trust Agreement, take or cause to be
taken such reasonable actions, including the filing, as a precautionary filing,
UCC Financing Statements on Form UCC-1 in all appropriate locations in the State
of _____________ promptly following the issuance of the Bonds, such that, if
this Deposit Trust Agreement were deemed to create a security interest in the
Mortgage Loans and the other assets of the Trust Estate, such security interest
would be a perfected security interest of first priority under applicable law
and will be maintained as such throughout the term of this Deposit Trust
Agreement.
(c) The Owner Trustee, by its execution and delivery of this Deposit Trust
Agreement, acknowledges the receipt by it of all assets delivered to it and
included in the Trust Estate, in good faith and without notice of any adverse
claim (except to the extent of the Lien thereon contemplated by the Indenture),
and declares that it holds and will hold such assets, and all other assets
hereafter delivered to it that constitute portions of the Trust Estate, in trust
for the exclusive use and benefit of all present and future Certificateholders.
(d) Except as expressly provided in Section 8.1, neither the Depositor nor
any Certificateholder shall have any right to revoke or otherwise terminate the
Trust established hereunder. Except as contemplated by the Indenture and as
provided in Sections 4.2 and 8.1 hereof, the Owner Trustee shall not assign,
sell, dispose of or transfer any interest in (or permit or cause the assignment,
sale, disposition or transfer of any interest in), nor may the Depositor or any
Certificateholder withdraw from the Trust, any Mortgage Loan or other asset
constituting the Trust Estate. Except as contemplated by the Indenture, the
Owner Trustee shall not permit the Mortgage Loans or any other asset
constituting the Trust Estate to be subjected to any lien, claim or encumbrance
arising by, through or under the Owner Trustee or any Person claiming by,
through or under the Owner Trustee.
SECTION 2.3 Authority to Execute and Perform Various Documents. The
Depositor hereby authorizes and directs the Owner Trustee or (in the case of tax
administration matters, its agent) (i) to execute and deliver, as trustee for
and on behalf of the Certificateholders, the Operative Agreements to which the
Trust is a party and all other agreements, documents, instruments and
certificates contemplated to be executed and delivered by the Trust pursuant to
the Operative Agreements and, pursuant to the terms of the Indenture, to
execute, issue and deliver the Bonds to the Indenture Trustee (each such
Operative Agreement and the Bonds to be in the form approved by the Depositor);
(ii) to execute and deliver the Owner Trust Certificates to the Depositor; (iii)
as and to the extent provided in the Indenture, to pledge the Trust Estate as
security for repayment of the Bonds and, in connection therewith, to deliver (or
cause to be delivered) to the Indenture Trustee each of the documents and
instruments contemplated by the Granting Clause of the Indenture; (iv) to take
whatever action shall be required to be taken by the Owner Trustee by the terms
of, and exercise its rights and perform its duties under, each of the documents,
agreements, instruments and certificates referred to in clauses (i) through
(iii) above as set forth in such documents, agreements, instruments and
certificates; and (v) subject to the terms of this Deposit Trust Agreement, to
take such other action in connection with the foregoing as the
Certificateholders may from time to time direct.
SECTION 2.4 Execution and Delivery of Owner Trust Certificates.
(a) The Owner Trustee shall, on the date hereof, execute and cause to be
authenticated and delivered to and upon the order of the Depositor, the Owner
Trust Certificates in authorized denominations evidencing the entire beneficial
ownership of the Trust. The Owner Trust Certificates will consist of [three]
Classes designated as the "Class [P] Certificates", the "Class [XS]
Certificates" and the "Class [R] Certificates". The rights of the respective
Classes of Certificateholders to receive distributions from the proceeds of the
Trust in respect of their Owner Trust Certificates, and all ownership interests
of the respective Classes of Certificateholders in such distributions, shall be
as set forth in this Deposit Trust Agreement.
(b) The Owner Trust Certificates will be substantially in the respective
forms attached hereto as Exhibits A-1 through A-3; provided that any of the
Owner Trust Certificates may be issued with appropriate insertions, omissions,
substitutions and variations, and may have imprinted or otherwise reproduced
thereon such legend or legends, not inconsistent with the provisions of this
Deposit Trust 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 Owner Trust Certificates are admitted to trading, or to conform to
general usage. The Owner Trust Certificates will be issuable in registered form
only, in minimum denominations representing not less than a ____% Percentage
Interest in the relevant Class.
(c) Each Owner Trust Certificate may be printed or in typewritten or
similar form, and each Owner Trust Certificate shall, upon original issue, be
executed by the Owner Trustee and authenticated by the Certificate Registrar and
delivered to or upon the order of the Depositor. All Owner Trust Certificates
shall be executed by manual or facsimile signature on behalf of the Trust by an
authorized officer of the Owner Trustee, not individually, but solely as Owner
Trustee hereunder. Owner Trust Certificates bearing the signatures of
individuals who were at any time the proper officers of the Owner Trustee shall
bind the Owner Trustee, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the delivery of such Owner Trust
Certificates or did not hold such offices at the date of such Owner Trust
Certificates. No Owner Trust Certificates shall be entitled to any benefit under
this Deposit Trust Agreement, or be valid for any purpose, unless there appears
on such Owner Trust Certificate a certificate of authentication in the form set
forth on the signature page of the form of Owner Trust Certificates attached as
Exhibit A-1 through Exhibit A-3, executed by the Certificate Registrar by manual
signature, and such certificate of authentication upon any Owner Trust
Certificate shall be conclusive evidence, and the only evidence, that such Owner
Trust Certificate has been duly authenticated and delivered hereunder. All Owner
Trust Certificates shall be dated the date of their authentication.
SECTION 2.5 Activities of the Trust. It is the intention of the parties
hereto that the Trust shall not engage in any business or activities other than
in connection with, or relating to, the purposes specified in Section 2.3. The
operations of the Trust will be conducted in accordance with the following
standards (and the Owner Trustee and the Depositor hereby agree to use their
best reasonable efforts to cause the operations of the Trust to be conducted in
accordance herewith):
(i) The Trust will observe all procedures required by this Deposit Trust
Agreement.
(ii) Subject to Sections 5.1 and 5.4, the business and affairs of the Trust
will be managed by or under the direction of the Owner Trustee. Except
as otherwise expressly provided in this Deposit Trust Agreement, the
Depositor will have no authority to act for, or to assume any
obligation or responsibility on behalf of, the Trust.
(iii) The Trust will keep correct and complete books and records of accounts
and minutes of the meetings and other proceedings of its trustees,
separate from those of the Depositor or any subsidiary, affiliate or
separate account of the Depositor. Any such resolutions, agreements
and other instruments will be continuously maintained as official
records by the Trust.
(iv) Each of the Depositor and the Trust will provide for its own operating
expenses and liabilities from its own funds. General overhead and
administrative expenses of the Trust will not be charged or otherwise
allocated to the Depositor (except indirectly, insofar as the
Depositor owns the Owner Trust Certificates) and such expenses of the
Depositor will not be charged or otherwise allocated to the Trust.
(v) The Trust will conduct its business under names or trade names so as
not to mislead others as to the identity of the Trust. Without
limiting the generality of the foregoing, all oral and written
communications, including letters, invoices, contracts, statements,
and applications will be made solely in the name of the Trust if
related to the Trust. The Depositor and the Trust each will have
separate stationery and other business forms.
(vi) There will be no guarantees made by the Trust with respect to
obligations of the Depositor. There will not be any indebtedness
relating to borrowings or loans between the Trust and the Depositor.
(vii) The Trust will act solely in its name and through its or the Owner
Trustee's duly authorized officers or agents in the conduct of its
business. The Trust will not: (a) operate or purport to operate as an
integrated, single economic unit with respect to the Depositor or any
other affiliated or unaffiliated entity; (b) seek or obtain credit or
incur any obligation to any third party based upon the assets of the
Depositor; or (c) induce any such third party to reasonably rely on
the creditworthiness of the Depositor or any other affiliated or
unaffiliated entity.
(viii) The Trust will maintain its principal place of business in the State
of ____________________.
(ix) The Trust and the Depositor shall keep separate their respective funds
and other assets and shall not commingle such funds and other assets
with those of any other Affiliates thereof.
(x) If and to the extent applicable, the Trust shall cause the preparation
of financial statements that are separate from those of the Depositor
and any other Affiliates (although the Trust's financial statements
may be presented as part of the consolidated financial statements of
an Affiliate).
(xi) The Trust will not engage in any transaction with an Affiliate on any
terms other than would be obtained in an arm's-length transaction with
a non-Affiliate.
<PAGE>
ARTICLE III
ESTABLISHMENT OF CERTIFICATE ACCOUNT
SECTION 3.1 Establishment of Certificate Account; Deposits in Certificate
Account. The Owner Trustee, for the benefit of the Certificateholders, shall
establish and maintain one or more non-interest bearing trust accounts
(collectively, the "Certificate Account"), entitled "______________________, in
trust for the registered holders of ICCMAC Commercial Trust [______] Owner Trust
Certificates" and held in trust by the Owner Trustee for the benefit of the
Certificateholders. The Owner Trustee shall cause the following payments and
collections to be deposited directly into the Certificate Account: (1) all
distributions to the Trust as issuer of the Bonds received from the Indenture
Trustee from time to time pursuant to Section 10.01 of the Indenture; (2) any
payments (if any) received on the Mortgage Loans from time to time after the
Cutoff Date and remitted by the Master Servicer or the Special Servicer to the
Owner Trustee on behalf of the Trust pursuant to Section ___ of the Servicing
Agreement; and (3) any other amounts specifically required to be deposited in
the Certificate Account hereunder. The foregoing requirements for deposit in the
Certificate Account shall be exclusive.
SECTION 3.2 Permitted Withdrawals From the Certificate Account. The Owner
Trustee may from time to time withdraw funds from the Certificate Account for
the following purposes:
(i) to make payments on the Owner Trust Certificates in the amounts and in
the manner provided for in Section 4.2 hereunder;
(ii) to pay itself any unpaid Owner Trustee Fees, but only to the extent of
amounts on deposit in the Certificate Account representing amounts
received in respect of the Mortgage Loans;
(iii) to reimburse or indemnify the Owner Trustee for expenses and other
liabilities incurred by and reimbursable to the Owner Trustee,
pursuant to Section 7.2 hereunder, except as otherwise provided in
such section; and
(iv) to clear and terminate the Certificate Account upon the termination of
this Deposit Trust Agreement.
On each Payment Date, the Owner Trustee shall withdraw all funds from the
Certificate Account and shall use such funds withdrawn from the Certificate
Account only for the purposes described in this Section 3.2 and Section 4.2
hereunder.
<PAGE>
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME
FROM THE TRUST ESTATE
SECTION 4.1 Distribution of Payments.
(a) In the event that, following the [Cut-off Date] and prior to the Lien
on the Trust Estate under the Indenture having been discharged and released, any
payments on account of the Mortgage Loans are received directly (rather than
through the Indenture Trustee) by the Owner Trustee, the Depositor or a
Certificateholder (other than payments described in clause (2) of Section 3.1),
the Person so receiving such payment shall, promptly upon receipt, deliver such
payment over to the Indenture Trustee without deduction, set-off or adjustment
of any kind.
(b) The parties hereto acknowledge that pursuant to the terms of the
Indenture, after payment by the Indenture Trustee of all required payments on
the Bonds on each Payment Date, the remaining Available Funds in the Bond
Account are required to be remitted by the Indenture Trustee to the Trust. The
Owner Trustee may direct the Indenture Trustee to distribute such remaining
Available Funds on any such Payment Date in a manner consistent with Sections
3.2 and 4.2 (as if such remaining Available Funds were on deposit in the
Certificate Account); and, in connection therewith, such remaining Available
Funds shall be deemed to have been deposited in the Certificate Account and
subsequently withdrawn to make such distributions.
SECTION 4.2 Payments.
(a) On each Payment Date (or, if the payments from the Indenture Trustee on
such Payment Date contemplated by Section 4.1(b) shall have been received after
__________ _.m., New York City time on such Payment Date, as soon as practically
possible, but in no event more than one Business Day, following receipt), the
Owner Trustee (or its Agent) shall withdraw from the Certificate Account all
Certificateholder Funds then on deposit therein, and the Owner Trustee (or its
Agent) shall pay such Certificateholder Funds to the respective Classes of
Certificateholders for the following purposes and in the following order, in
each case to the extent of remaining available funds:
(i) to the Holders of the Class [P] Certificates and the Holders of the
Class [XS] Certificates in respect of interest, pro rata based on
entitlement, up to an amount equal to all Accrued Certificate Interest
in respect of each such Class of Owner Trust Certificates for the
related Payment Date and, to the extent not previously paid, for all
prior Payment Dates;
(ii) if all the Bonds have been retired, to the Holders of the Class [P]
Certificates in respect of principal, up to an amount equal to the
Aggregate Certificate Principal Amount of the Class [P] Certificates
immediately prior to such Payment Date; and
(iii) to the Holders of the Class [R] Certificates, in an amount equal to
the remaining portion, if any, of the Certificateholder Funds for such
Payment Date.
Payments made after the Payment Date on which they were scheduled to be made as
permitted by the parenthetical in the first sentence of this Section 4.2(a),
shall be deemed to have been made on such Payment Date.
(b) All payments made with respect to any Class of Owner Trust Certificates
on any Payment Date shall be allocated pro rata among the Certificates of such
Class based upon their respective Percentage Interests. Payments to the
Certificateholders on each Payment Date will be made to the Certificateholders
of record on the related Record Date. Payments to any Certificateholder on any
Payment Date shall be made by wire transfer of immediately available funds to
the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder shall have so
notified the Owner Trustee in writing at least five (5) Business Days prior to
the related Record Date and if such Certificateholder is the registered owner of
Owner Trust Certificates representing at least a ____% Percentage Interest in
any Class thereof, or otherwise by check mailed by first class mail to the
address of such Certificateholder appearing in the Certificate Register. Final
payment on each Owner Trust Certificate will be made in like manner, but only
upon presentment and surrender of such Owner Trust Certificate at the Corporate
Trust Office or such other location specified in the notice to
Certificateholders of such final payment.
(c) Whenever the Owner Trustee expects that the final payment with respect
to the Certificates will be made on the next Payment Date, whether in connection
with the final payment or other liquidation of the last remaining Mortgage Loan
or REO Property or upon a termination of the Trust at the direction of the
Certificateholders in accordance with Section 8.1, the Owner Trustee (or its
Agent) shall mail to each Holder on such date of the Owner Trust Certificates a
notice to the effect that:
(i) the Owner Trustee expects that the final payment with respect to the
Owner Trust Certificates will be made on such Payment Date but only
upon presentation and surrender of the Owner Trust Certificates at the
office of the Owner Trustee therein specified, and
(ii) no interest shall accrue on the Owner Trust Certificates from and
after such Payment Date.
Upon presentation and surrender of the Owner Trust Certificates by the
Certificateholders on the final Payment Date in respect of the Owner Trust
Certificates, the Owner Trustee shall distribute to the Certificateholders the
amounts otherwise distributable on such Payment Date pursuant to Section 4.2(a).
Any funds not distributed on such Payment Date because of the failure of any
Certificateholders to tender their Certificates shall be set aside and held in
trust for the account of the appropriate non-tendering Certificateholders. If
any Owner Trust Certificate, as to which notice has been given pursuant to this
Section 4.2(c) shall not have been surrendered for cancellation within six (6)
months after the time specified in such notice, the Owner Trustee shall mail a
second notice to the remaining Certificateholders, at their last addresses shown
in the Certificate Register, to surrender their Owner Trust Certificates for
cancellation in order to receive, from such funds held, the final payment with
respect thereto. If within one year after the second notice any Owner Trust
Certificate shall not have been surrendered for cancellation, the Owner Trustee
shall directly or through an agent, take reasonable steps to contact the
remaining Certificateholders concerning surrender of their Certificates. The
costs and expenses of maintaining such funds and of contacting
Certificateholders shall be paid out of the assets which remain held. If within
two years after the second notice any Owner Trust Certificates shall not have
been surrendered for cancellation, the Owner Trustee shall segregate all amounts
distributable to the Holders thereof and shall thereafter hold such amounts
uninvested for the benefit of such Holders. No interest shall accrue or be
payable to any Certificateholder on any amount held as a result of such
Certificateholder's failure to surrender its Owner Trust Certificates for final
payment thereof in accordance with this Section 4.2(c).
SECTION 4.3 Statements to Certificateholders. On each Payment Date, the
Owner Trustee (or its Agent) shall prepare, and shall forward by mail, a
statement to each Certificateholder, to the Depositor and to the Rating Agencies
setting forth:
(i) the amount of the Certificateholder Funds for such Payment Date;
(ii) the aggregate amounts of interest and principal paid to the Holders of
the Class [P] Certificates and to the Holders of the Class [XS]
Certificates on such Payment Date;
(iii) the aggregate amount of any distributions to the Holders of the Class
[R] Certificates on such Payment Date;
(iv) the Aggregate Certificate Principal Balance of the Class [P]
Certificates after giving effect to payments of principal and other
reductions in respect of the Aggregate Certificate Principal Balance
of such Owner Trust Certificates (all in accordance with the
definition of "Aggregate Certificate Principal Balance") on such
Payment Date; and
(v) the amount of the Owner Trustee Fees received by the Owner Trustee
following the preceding Payment Date and any unpaid Owner Trustee Fees
then due and owing to the Owner Trustee.
In addition, the Owner Trustee promptly (and, in any event, within five (5)
Business Days of receipt) will furnish to Certificateholders and the Depositor
copies of any notices, statements, reports or other communications received by
the Owner Trustee on behalf of the Trust as issuer of the Bonds or as owner of
the Mortgage Loans, including, without limitation, any such notices, statements,
reports or other communications relating to the Bonds, the Indenture, the
Mortgage Loans, the Servicing Agreement or the other assets of the Trust Estate.
On or before March 31st of each calendar year, beginning with calendar year
199_, the Owner Trustee (or its Agent) shall prepare, or cause to be prepared,
and deliver, or cause to be delivered, by first class mail to each Person who at
any time during the previous calendar year was a Certificateholder of record a
statement containing the information required to be contained in the regular
monthly report to Certificateholders, as set forth in clause (ii) or clause
(iii), as applicable, above aggregated for such calendar year or the applicable
portion thereof during which such Person was a Certificateholder. Such
obligation of the Owner Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the Owner
Trustee pursuant to any requirements of the Code and regulations thereunder as
from time to time are in force.
SECTION 4.4 Access to Certain Documentation and Information. The Owner
Trustee shall provide to the Certificateholders access to [all] reports,
documents and records maintained by the Owner Trustee in respect of its duties
hereunder, such access being afforded without charge but only upon reasonable
written request and during normal business hours at offices designated by the
Owner Trustee.
SECTION 4.5 Compliance with Withholding Requirements. In the event that the
Owner Trustee is required (whether on liquidation of the Trust or otherwise) to
make payments to the Depositor or the Certificateholders, notwithstanding any
other provisions of this Deposit Trust Agreement, the Owner Trustee (or its
Agent) shall comply with all federal withholding requirements with respect to
payments to the Depositor or the Certificateholders that the Owner Trustee
reasonably believes are applicable under the Code. The consent of the Depositor
or the Certificateholders, as the case may be, shall not be required for any
such withholding. The parties hereto understand and agree that the Owner Trustee
shall not be required to increase the amount of any such payments to adjust or
compensate for the amount of such withholding (or any other amounts).
<PAGE>
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.1 Notice of Certain Events; Action by the Owner Trustee.
(a) Whenever the Owner Trustee, on behalf of the Trust as issuer of the
Bonds or as owner of the Mortgage Loans, is requested or, as to any particular
matter, notified of its authority, by any Person, to take any action or to give
any consent, approval or waiver that it is entitled to take or give on behalf of
the Trust in such capacity, the Owner Trustee shall promptly notify all the
Certificateholders of such request or notice in such detail as is available to
it.
(b) Subject to the Owner Trustee's rights in this Deposit Trust Agreement
to be indemnified for its acts and omissions with respect to matters concerning
this Deposit Trust Agreement, the Operative Agreements, the Trust Estate or the
Mortgage Loans, the Owner Trustee shall take or refrain from taking such action
as Certificateholders entitled to a majority of the Voting Rights shall so
direct. The Owner Trustee may, from time to time, request in writing
instructions from the Certificateholders and shall request in writing
instructions from the Certificateholders if the Owner Trustee receives notice
that a default shall have occurred and is continuing under the Administration
Agreement or the Indenture.
(c) Notwithstanding any direction of the Certificateholders to the contrary
or any provision hereof to the contrary, the Owner Trustee shall not, without
the written consent of the Indenture Trustee, execute any direction of the
Certificateholders that might result in the Trust being terminated prior to the
satisfaction and discharge of the Lien of the Indenture on the Trust Estate or
prior to the payment in full of the principal of and accrued interest on the
Bonds.
SECTION 5.2 Distribution of Reports. The Owner Trustee shall promptly (but
not later than five (5) Business Days following receipt thereof) distribute to
the Depositor and the Certificateholders such reports, notices, statements and
written materials which it actually receives as Owner Trustee or otherwise on
behalf of the Trust hereunder or under any of the other Operative Agreements.
SECTION 5.3 Action Required Only if Owner Trustee is Indemnified. The Owner
Trustee shall not be required to take any action under Section 5.1(b) if the
Owner Trustee shall reasonably determine, or shall have been advised in writing
by counsel, that such action is likely to result in personal liability for which
the Owner Trustee has not been and will not be adequately indemnified or is
contrary to the terms hereof or of any Operative Agreement or is otherwise
contrary to applicable law.
SECTION 5.4 No Duties Except as Specified in Deposit Trust Agreement or
Instructions.
(a) The Owner Trustee shall not have any duty or obligation to manage,
control, use, make any payment in respect of, register, record, insure, inspect,
sell, dispose of or otherwise deal with the Mortgage Loans or any other part of
the Trust Estate, or to otherwise take or refrain from taking any action under
or in connection with any Operative Agreement to which the Owner Trustee is a
party, except as expressly provided by the terms of this Deposit Trust Agreement
or any such other Operative Agreement or in written instructions from the
Certificateholders received pursuant to Section 5.1(b); and no implied duties or
obligations shall be read into this Deposit Trust Agreement against the Owner
Trustee, other than the obligation of the Owner Trustee to exercise such of the
rights and powers vested in it by this Deposit Trust Agreement in good faith and
in a manner which is not grossly negligent and which does not constitute willful
misconduct. The [Bank] (and any successor trustee or co-trustee) in its
individual capacity nevertheless agrees that it will, at its own cost and
expense, promptly take all action as may be necessary to discharge any Liens on
the Trust Estate arising by, through or under the Owner Trustee (or such
successor trustee or co-trustee, as the case may be) either (i) when acting in
its individual capacity or (ii) when acting improperly in its capacity as Owner
Trustee.
(b) Without limiting the generality of the foregoing subsection (a), except
as otherwise explicitly provided in this Deposit Trust Agreement or in any other
Operative Agreement to which it is a party, neither the Owner Trustee nor the
[Bank] shall have any duty to (i) file or record any Operative Agreement or any
other document, or to maintain or continue any such filing or recording or to
refile or rerecord any such document, (ii) pay or discharge any tax or any Lien
owing with respect to or assessed or levied against any part of the Trust
Estate, other than to forward notice of such tax or Lien received by the Owner
Trustee to the Certificateholders and the Indenture Trustee, (iii) confirm,
verify, investigate or inquire into the failure of any party to receive any
reports or financial statements in connection with the Mortgage Loans, (iv)
ascertain or inquire as to the performance or observance of any Person under or
of any of the Operative Agreements, or (v) manage, control, sell, dispose of or
otherwise deal with the Mortgage Loans or any part hereof or any other part of
the Trust Estate.
<PAGE>
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.1 Acceptance of Trust and Duties. The [Bank] accepts the trust
hereby created and agrees to perform the same, but only upon the terms of this
Deposit Trust Agreement in accordance with the standard of care set forth in
Section 5.4(a). The [Bank] agrees to receive, manage and disburse all moneys
constituting part of the Trust Estate actually received by it as Owner Trustee
in accordance with the terms of this Deposit Trust Agreement. Neither the [Bank]
nor the Owner Trustee shall be answerable or accountable under any
circumstances, except for (i) its own willful misconduct or [gross] negligence,
(ii) the inaccuracy of any of its representations or warranties contained in
Section 6.2 of this Deposit Trust Agreement, (iii) its failure to perform
obligations expressly undertaken by it in this Deposit Trust Agreement in
accordance with the standard of care set forth in Section 5.4(a), (iv) taxes
based on or measured by any fees, commissions or compensation received by it for
acting as Owner Trustee in connection with any of the transactions contemplated
by this Deposit Trust Agreement or any other Operative Agreements, (v) its
failure to use due care to receive, manage and disburse moneys actually received
by it in accordance with the terms hereof, and (vi) any other claims, amounts or
taxes otherwise excluded from the Depositor's indemnity obligations pursuant to
Article VII.
SECTION 6.2 Limited Representations or Warranties of the Owner Trustee.
Neither the [Bank] nor the Owner Trustee makes (i) any representation or
warranty, either express or implied, as to the title to or value of the Mortgage
Loans, and (ii) any representation or warranty as to the validity or
enforceability of any Operative Agreement except as set forth below or as to the
accuracy of any statement made by a Person other than the [Bank] or the Owner
Trustee contained in any Operative Agreement. The [Bank] represents, warrants
and covenants to and for the benefit of the Depositor, the Indenture Trustee
(for the benefit of the Bondholders) and the Certificateholders that:
(a) The [Bank] is a banking corporation, duly organized, validly existing
and in good standing under the laws of the state of __________________;
(b) The execution and delivery by the [Bank], and the performance and
compliance by the [Bank] with the terms of, this Deposit Trust Agreement and any
and all documents to be executed or delivered by the [Bank] in its individual
capacity in connection with this Deposit Trust Agreement and to fulfill its
obligations under, and to consummate the transactions contemplated by, this
Deposit Trust Agreement and such other documents executed in connection herewith
to which the [Bank] is a party, will not violate any provisions of the [Bank's]
charter or bylaws, and no consent, approval, authorization or order of or filing
with or notice to any court or governmental agency or body is required for the
execution, delivery or performance by the [Bank] of this Deposit Trust
Agreement;
(c) The [Bank], in its individual capacity, has full power and authority
and has taken all action necessary to execute and deliver this Deposit Trust
Agreement and any and all documents to be executed or delivered by it in its
individual capacity in connection with this Deposit Trust Agreement and to
fulfill its obligations under, and to consummate the transactions contemplated
by, this Deposit Trust Agreement and such other documents executed in connection
herewith to which it is a party, and this Deposit Trust Agreement and such other
documents executed in connection herewith to which it is a party are the legal,
valid and binding obligations of the [Bank], in its individual capacity,
enforceable against the [Bank] in accordance with their respective terms, except
as such terms may be limited by bankruptcy, insolvency, receivership,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity;
(d) The consummation of the transactions hereby contemplated do not
conflict with, violate or contravene any law, rule, regulation or judicial,
governmental or administrative order applicable to the [Bank] or the Owner
Trustee or conflict with, result in a breach of or constitute a default under
any of the terms, conditions or provisions of any agreement or instrument to
which the [Bank] is a party or by which it is bound, or any order or decree
applicable to the [Bank], or result in the creation or imposition of any Lien on
any of the [Bank's] assets or property, which would materially and adversely
affect the ability of the [Bank] or Owner Trustee to carry out the transactions
contemplated by this Deposit Trust Agreement; and
(e) There is no action, suit or proceeding pending against the [Bank], in
its individual capacity or as Owner Trustee, in any court or by or before any
other governmental agency or instrumentality which would materially and
adversely affect the ability of the [Bank], in its individual capacity or as
Owner Trustee, to carry out the transactions contemplated by this Deposit Trust
Agreement.
SECTION 6.3 Trust Accounts. Moneys received by the Owner Trustee hereunder
shall be segregated in a trust account maintained with a federal or state
chartered depository institution or trust company having corporate trust powers
acting in its fiduciary capacity.
SECTION 6.4 Reliance; Advice of Counsel. Neither the [Bank] nor the Owner
Trustee shall incur any liability to any Person in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it in good faith to be signed by the proper party or parties. The
Owner Trustee may accept and rely upon a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the manner of
ascertainment of which is not specifically prescribed herein, the Owner Trustee
may for all purposes hereof rely on an Officers' Certificate of the relevant
party, as to such fact or matter, and such Officers' Certificate shall
constitute full protection to the Owner Trustee for any action taken or omitted
to be taken by it in good faith in reliance thereon. In the administration of
the Trust hereunder, the Owner Trustee may execute any of the trusts or powers
hereof and perform its powers and duties hereunder directly or through Agents
and may consult with counsel, accountants and other skilled Persons to be
selected and employed by it, and the Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
written advice or opinion of counsel, accountant or other skilled Persons, so
long as the Owner Trustee had no actual knowledge that it could not reasonably
rely on such advice or opinion or by any such Persons appointed with due care.
SECTION 6.5 Not Acting in Individual Capacity. All Persons having any claim
against the [Bank] or the Owner Trustee by reason of the transactions
contemplated by the Operative Agreements shall look only to the Trust Estate (or
a part thereof, as the case may be) for payment or satisfaction thereof, except
as specifically provided in this Deposit Trust Agreement and except to the
extent that the [Bank] or the Owner Trustee shall otherwise expressly agree in
any Operative Agreement to which it is a party.
SECTION 6.6 Books and Records; Tax Election. The Owner Trustee shall be
responsible for the keeping of all appropriate books and records relating to the
receipt and disbursement of all moneys that it may receive or be entitled to
hereunder or under any other Operative Agreement. The Owner Trustee (or its
Agent) shall file an application with the IRS for a taxpayer identification
number with respect to the Trust (and, upon receipt of such number, notify the
Indenture Trustee thereof) and prepare or cause to be prepared and sign and/or
file a tax return in connection with the transactions contemplated hereby or by
any other Operative Agreement (the "Tax Return"); provided, however, that the
Owner Trustee shall send or cause to be sent a copy of the completed Tax Return
to the Depositor, the Certificateholders and the Indenture Trustee not more than
60 nor less than 30 days prior to the due date of the Tax Return. The Depositor
and the Certificateholders shall each, upon request by the Owner Trustee (or the
Agent of the Owner Trustee), furnish the Owner Trustee (or the Agent of the
Owner Trustee) with all such information as may be reasonably required from the
Depositor or the Certificateholders in connection with the preparation of such
Tax Return. The Owner Trustee shall keep copies of the Tax Returns delivered to
or filed by it (or the Agent of the Owner Trustee).
<PAGE>
ARTICLE VII
COMPENSATION, REIMBURSEMENT AND INDEMNIFICATION
OF THE OWNER TRUSTEE
SECTION 7.1 Compensation of the Owner Trustee. The Owner Trustee shall be
entitled to receive as compensation for its services the amount of $_______ per
annum, such amount to be payable: first, as provided in the Indenture; second,
out of amounts on deposit in the Certificate Account that represent payments
received in respect of the Mortgage Loans; and, third, to the extent not paid
pursuant to either clause first or second of this sentence within 60 days of
first becoming due, by the Certificateholders, on a joint and several basis.
SECTION 7.2 Reimbursement and Indemnification of the Owner Trustee.
(a) The Owner Trustee shall be entitled to be reimbursed for its reasonable
expenses (including reasonable attorneys' fees) incurred in the performance of
its duties as Owner Trustee hereunder, and to be compensated reasonably for any
extraordinary services rendered under Section 5.1(b), except to the extent that
such expenses arise out of or result from (i) the Owner Trustee's own willful
misconduct or [gross] negligence, (ii) the inaccuracy of any of the Owner
Trustee's representations or warranties contained in Section 6.2 of this Deposit
Trust Agreement, (iii) the Owner Trustee's failure to perform obligations
expressly undertaken by it in this Deposit Trust Agreement in accordance with
the standard of care set forth in Section 5.4(a), (iv) taxes based on or
measured by any fees, commissions or compensation received by the Owner Trustee
for acting as such in connection with any of the transactions contemplated by
this Deposit Trust Agreement or any other Operative Agreements, and (v) the
Owner Trustee's failure to use due care to receive, manage and disburse moneys
actually received by it in accordance with the terms hereof.
(b) The Owner Trustee shall be entitled to be indemnified and held harmless
from and against any and all liabilities, obligations, indemnity obligations,
losses (excluding loss of anticipated profits), damages, claims, actions, suits,
judgments, out-of-pocket costs, expenses and disbursements (including legal and
consultants' fees and expenses) of any kind and nature whatsoever (collectively,
the "Liabilities") which may be imposed on, incurred by or asserted at any time
against the Owner Trustee in any way relating to or arising out of the Trust
Estate, any of the properties included therein, the administration of the Trust
Estate or any action or inaction of the Owner Trustee hereunder or under the
Operative Agreements, except to the extent that such Liabilities arise out of or
result from (i) the Owner Trustee's own willful misconduct or [gross
negligence], (ii) the inaccuracy of any of the Owner Trustee's representations
or warranties contained in Section 6.2 of this Deposit Trust Agreement, (iii)
the Owner Trustee's failure to perform obligations expressly undertaken by it in
this Deposit Trust Agreement in accordance with the standard of care set forth
in Section 5.4(a), (iv) taxes based on or measured by any fees, commissions or
compensation received by the Owner Trustee for acting as such in connection with
any of the transactions contemplated by this Deposit Trust Agreement or any
other Operative Agreements, and (v) the Owner Trustee's failure to use due care
to receive, manage and disburse moneys actually received by it in accordance
with the terms hereof. The indemnities contained in this Section 7.2(b) shall
survive the termination of this Deposit Trust Agreement and the removal or
resignation of the Owner Trustee hereunder.
(c) Any reimbursements and indemnities to the Owner Trustee pursuant to
this Section 7.2 shall be payable: first, out of amounts on deposit in the
Certificate Account; and, second, to the extent not paid pursuant to clause
first within 60 days of first being incurred, by the Certificateholders, on a
joint and several basis.
SECTION 7.3 Not Obligations of the Trust. None of the fees, expenses and
other liabilities referred to in Sections 7.1 and 7.2 shall be obligations of
the Trust or otherwise chargeable to the Trust Estate. The Owner Trustee hereby
agrees not to cause or participate in the filing of a petition in bankruptcy
against the Trust for the non-payment to the Owner Trustee of any amounts
provided by this Deposit Trust Agreement until a date that is not less than 91
days after the payment in full of all the Bonds issued under the Indenture.
<PAGE>
ARTICLE VIII
TERMINATION OF DEPOSIT TRUST AGREEMENT
SECTION 8.1 Termination. The Trust shall not be terminated under this
Section 8.1 until the Bonds have been paid in full and the Lien on the Trust
Estate created by the Indenture has been released; provided, however, that in no
event shall the trust 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.
This Deposit Trust Agreement may be terminated by all of the
Certificateholders at any time prior to the issuance of the Bonds and the pledge
of the Trust Estate pursuant to the Indenture, and at any time after the
Indenture is discharged in accordance with Article III thereof, and this Deposit
Trust Agreement shall terminate in connection with the final payment or other
liquidation of the last remaining Mortgage Loan or REO Property. With respect to
any such event, this Deposit Trust Agreement and the estate and rights thereby
granted by the Depositor to the Owner Trustee in the Trust Estate shall cease,
terminate and be void as of the date of the final distribution by the Owner
Trustee of all the assets in the Trust Estate pursuant to this Section 8.1 and
Section 4.2. After payment of all amounts then due and payable to the [Bank]
pursuant to Sections 7.1 and 7.2 hereof, all right, title and interest in the
Trust Estate still held by the Owner Trustee at the time of such termination
shall be transferred, assigned and paid over to the Certificateholders or their
designee.
The Certificateholders hereby irrevocably appoint the Owner Trustee as
their attorney-in-fact for the purposes of the terminating the Trust.
SECTION 8.2 Further Assurances by the Owner Trustee upon Termination. Upon
termination of this Trust, the Owner Trustee shall take such action as may be
requested by the Certificateholders to transfer the remaining assets of the
Trust to the Certificateholders or the Certificateholders' designee, including
the execution of instruments of transfer or assignment with respect to the
Mortgage Loans and any of the Operative Agreements to which the Owner Trustee is
a party.
SECTION 8.3 Insolvency of a Certificateholder. The insolvency or other
similar incapacity of a Certificateholder shall not (i) operate to terminate
this Deposit Trust Agreement, (ii) entitle the Certificateholder's legal
representatives to claim an accounting or to take any action in any court for a
partition or winding up of the Trust Estate or (iii) otherwise affect the
rights, obligations and liabilities of the parties hereto.
<PAGE>
ARTICLE IX
SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES
AND SEPARATE OWNER TRUSTEES
SECTION 9.1 Resignation of the Owner Trustee; Appointment of Successor.
(a) The Owner Trustee may resign at any time (and shall immediately resign
if it ceases to be an Eligible Trustee) by giving at least 60 days written
notice to the Certificateholders, the Depositor, the Indenture Trustee and the
Administrator, such resignation to be effective on the acceptance of appointment
by a successor Owner Trustee under Section 9.1(b) hereof. The Depositor shall
remove the Owner Trustee by written notice, a copy of which shall be
concurrently delivered by the Depositor to the Certificateholders, the Indenture
Trustee and the Administrator, if the Owner Trustee ceases to be an Eligible
Trustee and fails to resign immediately. The Owner Trustee otherwise may be
removed with or without cause at any time by the Certificateholders with 60
days' prior written notice, a copy of which shall be concurrently delivered by
the Certificateholders to the Depositor, the Indenture Trustee and the
Administrator. Any such removal shall be effective upon the acceptance of
appointment by a successor Owner Trustee under Section 9.1(b) hereof. In the
event of the resignation or removal of the Owner Trustee, the Certificateholders
may appoint a successor Owner Trustee by an instrument signed by the
Certificateholders. If a successor Owner Trustee shall not have been appointed
within 60 days after the giving of written notice of such resignation or the
delivery of the written instrument with respect to such removal, the Owner
Trustee, the Depositor, the Indenture Trustee, the Administrator or the
Certificateholders may apply to any court of competent jurisdiction to appoint a
successor Owner Trustee to act until such time, if any, as a successor shall
have been appointed and shall have accepted its appointment as above provided.
Any successor Owner Trustee so appointed by such court shall immediately and
without further act be superseded by any successor Owner Trustee appointed as
above provided within one year from the date of the appointment by such court.
(b) Any successor Owner Trustee, however appointed, shall execute and
deliver to the predecessor Owner Trustee and the Indenture Trustee an instrument
accepting such appointment and shall furnish a photocopy of such instrument to
the Certificateholders, and thereupon such successor Owner Trustee, without
further act, shall become vested with all the estates, properties, rights,
powers, duties and trusts of the predecessor Owner Trustee herein; but
nevertheless, upon the written request of such successor Owner Trustee such
predecessor Owner Trustee shall execute and deliver an instrument transferring
to such successor Owner Trustee, upon the trusts herein expressed, all the
estates, properties, rights, powers, duties and trusts of such predecessor Owner
Trustee and such predecessor Owner Trustee shall duly assign, transfer, deliver
and pay over to such successor Owner Trustee all moneys or other property then
held by such predecessor Owner Trustee upon the trusts herein expressed.
(c) Any successor Owner Trustee shall be an Eligible Trustee, willing, able
and legally qualified to perform the duties of the Owner Trustee hereunder.
(d) Any corporation into which the Owner 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 Owner Trustee shall be a party,
or any corporation to which substantially all the corporate trust business of
the Owner Trustee may be transferred, shall, subject to the terms of Section
9.1(c) hereof, be the Owner Trustee under this Deposit Trust Agreement without
any further act.
SECTION 9.2 Co-Trustees and Separate Trustees. Whenever the Owner Trustee
or the Indenture Trustee shall deem it necessary or prudent in order to conform
to any law of any jurisdiction in which all or any part of the Trust Estate
shall be situated or to make any claim or be a party to any suit with respect to
the Trust Estate, the Owner Trust Certificates, the Bonds or any Operative
Agreement, or the Owner Trustee or the Indenture Trustee shall be advised in
writing by counsel reasonably satisfactory to each of them that it is so
necessary or prudent, the Owner Trustee and the Certificateholders shall execute
and deliver an agreement supplemental hereto and all other instruments and
agreements, and shall take all other action, necessary or proper to constitute
one or more Persons, who need not meet the requirements of Section 9.1(c)
hereof (and the Owner Trustee may appoint one or more of its officers), either
as co-trustees or co-trustees jointly with the Owner Trustee of all or any part
of the Trust Estate, or as separate trustee or separate trustees of all or any
part of the Trust Estate, and to vest in such Persons, in such capacity, such
title to the Trust Estate or any part thereof and such rights or duties as may
be necessary or desirable, all for such period and under such terms and
conditions as are reasonably satisfactory to the Owner Trustee and the
Certificateholders. In case any co-trustee or separate trustee shall die, become
incapable of acting, resign or be removed, the title to the Trust Estate and all
rights and duties of such co-trustee or separate trustee shall, so far as
permitted by law, vest in and be exercised by the Owner Trustee, without the
appointment of a successor to such co-trustee or separate trustee.
SECTION 9.3 Notice. At all times that a successor Owner Trustee is
appointed under Section 9.1 hereof, an Owner Trustee resigns pursuant to such
Section 9.1 or a co-trustee or separate trustee is appointed pursuant to Section
9.2 hereof, the Certificateholders promptly shall give notice of such fact to
the Rating Agencies, if the Indenture has not been discharged.
<PAGE>
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
SECTION 10.1 Supplements and Amendments. Subject to Sections 10.2 and 10.3
of this Deposit Trust Agreement, at the written request of the
Certificateholders, this Deposit Trust Agreement shall be amended by a written
instrument signed by the Owner Trustee and the Certificateholders (and, if its
rights hereunder are adversely affected, the Depositor), but if in the opinion
of the Owner Trustee any instrument required to be so executed materially and
adversely affects any right, duty or liability of, or immunity or indemnity in
favor of the [Bank] or the Owner Trustee under this Deposit Trust Agreement or
any of the other Operative Agreements to which the Owner Trustee is a party, or
would cause or result in any conflict with or breach of any terms, conditions or
provisions of, or default under, the [Bank's] charter documents or bylaws or any
document contemplated hereby to which the Owner Trustee is a party, the Owner
Trustee may in its sole discretion decline to execute such instrument, unless it
shall have been provided an indemnity satisfactory to it by the
Certificateholders.
In the event that there is more than one Holder of Owner Trust Certificates
(as set forth in the Certificate Register), the consent to an amendment by
Certificateholders entitled to a majority of the Voting Rights shall be
sufficient to bind all of such Holders; provided, however, that no such
amendment shall: (i) reduce in any manner the amount of, or delay the timing of,
payments required to be made on any Owner Trust Certificate without the consent
of the affected Holder; or (ii) amend this Section 10.1, without the consent of
the Holders of all Owner Trust Certificates then outstanding.
SECTION 10.2 Limitation on Amendments. Notwithstanding Section 10.1 or
Section 10.3 hereof, the Owner Trustee shall not, without the consent of the
Indenture Trustee, amend Section 8.1 of this Deposit Trust Agreement, or execute
any amendment that might result in the Trust being terminated prior to the
satisfaction and discharge of the Lien of the Indenture on the Trust Estate or
otherwise have a material adverse effect on the Bondholders prior to the payment
in full of the principal of and interest on the Bonds. Furthermore,
notwithstanding Section 10.1 or Section 10.3 hereof, the Owner Trustee shall not
execute any amendment without obtaining written confirmation from each Rating
Agency that such amendment will not result in the qualification, downgrade or
withdrawal of any then-current rating on the Bonds.
SECTION 10.3 Additional Amendment Provisions.
(a) It shall not be necessary for the consent of the Certificateholders
under this Article X to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve the substance thereof.
The manner of obtaining such consents and of evidencing the authorization of the
execution thereof shall be subject to such reasonable regulations as the Owner
Trustee may prescribe.
(b) The Owner Trustee, at any time from time to time, without the consent
of the Certificateholders, may amend this Deposit Trust Agreement to modify,
eliminate or add to any of its provisions, to such extent as shall be necessary
to prevent or reduce the imposition on the Trust of any material federal, state
or local taxes, at all times prior to the liquidation of the Trust; provided,
however, that such action, as evidenced by an Opinion of Counsel acceptable to
the Owner Trustee is necessary or helpful to prevent the imposition on the Trust
of any such taxes.
(c) Prior to the execution of any amendment to this Deposit Trust
Agreement, the Owner Trustee shall be entitled to receive and rely upon an
Opinion of Counsel, at the expense of the party requesting such amendment (or,
if such amendment is requested by the Owner Trustee, then at the expense of the
Trust) stating that the execution of such amendment is authorized or permitted
by this Deposit Trust Agreement.
<PAGE>
ARTICLE XI
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR
SECTION 11.1 Representations and Warranties of the Depositor.
(a) The Depositor represents and warrants as follows for the benefit of the
Indenture Trustee, the Bondholders and the Certificateholders:
(i) the Depositor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, has full power
and authority, and has taken all action necessary, to execute and
deliver this Deposit Trust Agreement, and any and all other documents
to be executed or delivered by it in connection with this Deposit
Trust Agreement, and to fulfill its obligations under, and to
consummate the transactions contemplated by, this Deposit Trust
Agreement, and this Deposit Trust Agreement and such other documents
executed in connection herewith are the legal, valid and binding
obligations of the Depositor, enforceable against it in accordance
with their respective terms, except as such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general
principles of equity;
(ii) the execution and delivery of this Deposit Trust Agreement and each
other document to be executed or delivered by it in connection with
this Deposit Trust Agreement, and the performance of its obligations
hereunder and thereunder by the Depositor will not violate the
provisions of its certificate of incorporation or bylaws, conflict
with any provision of any law or regulation to which it is subject, or
conflict with, result in a breach of, or 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 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 would materially and adversely affect the ability of
the Depositor to carry out the transactions contemplated by this
Deposit Trust Agreement or such other documents executed in connection
herewith; no consent, approval, authorization or order of 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 this
Deposit Trust Agreement or such other documents; and
(iii) there is no action, suit or proceeding pending against the Depositor
in any court or by or before any other governmental agency or
instrumentality which would materially and adversely affect the
validity of the Mortgage Loans or the ability of the Depositor or the
Certificateholder to carry out the transactions contemplated by this
Deposit Trust Agreement.
(iv) The Depositor hereby represents and warrants to and for the benefit of
the Owner Trustee and the benefit of the Certificateholders and the
Bondholders, as of the Closing Date, that immediately prior to the
conveyance of the Mortgage Loans to the Owner Trustee on behalf of the
Trust, the Depositor had good and marketable title to, and was the
sole owner and holder of, with full right and authority to sell,
assign and transfer, each Mortgage Loan, free and clear of any pledge,
lien, encumbrance or security interest and such assignment validly
transfers all right, title and interest in the Mortgage Loans to the
Owner Trustee, free and clear of any pledge, lien, encumbrance or
security interest.
(v) The transfer of the Mortgage Loans to the Owner Trustee as
contemplated herein requires no regulatory or governmental approval,
other than any such approvals as have been obtained, and is not
subject to any bulk transfer or similar law in effect in any
applicable jurisdiction.
(b) It is understood and agreed that each of the foregoing representations
and warranties of the Depositor shall survive delivery of the Mortgage Loans to
the Owner Trustee on behalf of the Trust. Upon discovery or receipt of notice by
the Depositor or a Responsible Officer of the Owner Trustee of a breach of any
of the foregoing representations and warranties that materially and adversely
affects the interests of the Indenture Trustee for the benefit of the
Bondholders or the Owner Trustee for the benefit of the Certificateholders in
any Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other party hereto and to the Indenture Trustee.
SECTION 11.2 Accrued Interest, Etc. The Depositor agrees that any income,
interest, fees and other payments that it may receive in respect of the Mortgage
Loans applicable to a period on or after the Cut-off Date shall inure to the
benefit of the Trust, and the Depositor shall pay such amounts to the Owner
Trustee (to be remitted in accordance with Section 4.1) promptly upon receipt.
SECTION 11.3 Additional Covenants of the Depositor. The Depositor hereby
covenants and agrees that:
(a) The business and affairs of the Depositor will be managed by or under
the direction of its board of directors in accordance with its certificate of
incorporation and bylaws. The Depositor will keep correct and complete books and
records of accounts and minutes of the meetings and other proceedings of the
board of trustees. Any such resolutions, agreements and other instruments will
be continuously maintained as official records by the Depositor.
(b) The Depositor will at all times ensure that its capitalization is
adequate in light of its business and purposes. The Depositor will pay from its
own funds and assets (and not the Trust's) all obligations and indebtedness
incurred by it.
(c) The Depositor will not conduct its business in the name of the Trust.
(d) The Depositor will not guarantee any obligations of the Trust
(including the Bonds or the Owner Trust Certificates). The Depositor will not
operate or purport to operate as an integrated, single economic unit with
respect to the Trust or seek or obtain credit or incur any obligation to any
third party based on the assets of the Trust or induce any such third party to
reasonably rely on the creditworthiness of the Trust in connection therewith.
(e) The accounting records of the Depositor will disclose the effect of the
transactions in accordance with statutory accounting practices and relevant
pronouncements.
(f) The Depositor hereby acknowledges, and agrees for the benefit of the
Indenture Trustee, the Bondholders and the Certificateholders to perform, each
obligation imposed upon it under the Indenture.
(g) The Depositor shall not act or fail to act in a manner that would
endanger its status as a QRS.
<PAGE>
ARTICLE XII
TRANSFER OF INTEREST OF THE DEPOSITOR
SECTION 12.1 Registration of Transfer and Exchange of Owner Trust
Certificates.
(a) At all times during the term of this Deposit Trust Agreement, there
shall be maintained at the office of a registrar appointed by the Depositor (the
"Certificate Registrar") a register (the "Certificate Register") in which,
subject to such reasonable regulations as the Certificate Registrar may
prescribe, the Certificate Registrar shall provide for the registration of Owner
Trust Certificates and of transfers and exchanges of Owner Trust Certificates as
herein provided. The Owner Trustee is hereby initially appointed (and hereby
agrees to act in accordance with the terms hereof) as Certificate Registrar for
the purpose of registering Owner Trust Certificates and transfers and exchanges
of Owner Trust Certificates as herein provided. The Owner Trustee may appoint,
by a written instrument delivered to the Depositor, any other bank or trust
company to act as Certificate Registrar under such conditions as the Owner
Trustee may prescribe, provided that the Owner Trustee shall not be relieved of
any of its duties or responsibilities hereunder as Certificate Registrar by
reason of such appointment. If the Owner Trustee resigns or is removed in
accordance with the terms hereof, the successor trustee shall immediately
succeed to its predecessor's duties as Certificate Registrar. The Depositor, the
Administrator, and the Owner Trustee shall have the right to inspect the
Certificate Register or to obtain a copy thereof at all reasonable times, and to
rely conclusively upon a certificate of the Certificate Registrar as to the
information set forth in the Certificate Register.
(b) No sale, transfer or other disposition of any Owner Trust Certificate
may be made, and the Certificate Registrar shall refuse to register any such
transfer, unless the Depositor (or, if the Depositor no longer exists, 100% of
the other Certificateholders) shall consent in writing to such sale, transfer or
other disposition. The Depositor (or any such other Certificateholder(s)) shall
be entitled to request from the parties interested in effecting such sale,
transfer or other disposition, and to rely upon, a certification of facts and/or
an opinion of counsel which establishes to the satisfaction of the Depositor (or
such other Certificateholder(s)) that such sale, transfer or other disposition
is permissible under applicable law and the Operative Agreements.
(c) No transfer, sale, pledge or other disposition of any Owner Trust
Certificate or interest therein shall be made unless that transfer, sale, pledge
or the disposition is exempt from the registration and/or qualification
requirements of the 1933 Act and any applicable state securities laws, or is
otherwise made in accordance with the 1933 Act and such state securities laws.
The Trust has not been registered as an investment company under the 1940 Act,
and no transfer of an Owner Trust Certificate may be made (i) to any Person
other than a QIB or an Affiliate of the Trust or (ii) to any Person that would
require the Trust to be registered as an investment company under the 1940 Act.
No transfer of any Owner Trust Certificate or any interest therein shall be made
(A) to any employee benefit plan or other retirement arrangement, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested, including, without limitation, insurance company
general accounts, that is subject to ERISA or the Code (each, a "Plan"), or (B)
to any Person who is directly or indirectly purchasing such Owner Trust
Certificate or interest therein on behalf of, as named fiduciary of, as trustee
of, or with assets of a Plan.
(d) No sale, transfer or other disposition of any Owner Trust Certificate
may be made, and the Certificate Registrar shall refuse to register any such
transfer, if such sale, transfer or other disposition would result in the Trust
ceasing to be a QRS.
(e) For so long as the Bonds are outstanding and the Lien of the Indenture
has not been satisfied and discharged, no sale, transfer or other disposition of
any Owner Trust Certificate may be made, and the Certificate Registrar shall
refuse to register any such transfer, unless the Owner Trustee shall have
received written confirmation from each Rating Agency to the effect that such
sale, transfer or other disposition will not result in the qualification,
downgrade or withdrawal of any then current rating on the Bonds.
(f) Each Owner Trust Certificate shall bear a legend describing or
referencing the restrictions on transferability set forth in Sections 12.1(b),
(c), (d) and (e).
(g) Subject to compliance with Sections 12.1(b), (c), (d) and (e), upon
surrender for registration of transfer of any Owner Trust Certificate at the
office of the Certificate Registrar or at the office of its Agent in
______________, the Owner Trustee shall execute, and the Certificate Registrar
shall deliver and authenticate, in the name of the designated transferee or
transferees, one or more new Owner Trust Certificates of the same Class, in
authorized denominations, evidencing in the aggregate a like aggregate
Percentage Interest and dated the date of authentication by the Certificate
Registrar.
(h) At the option of any Certificateholder, Owner Trust Certificates may be
exchanged for other Owner Trust Certificates of the same Class, in authorized
denominations, evidencing in the aggregate a like aggregate Percentage Interest
upon surrender of the Owner Trust Certificates to be exchanged at the office of
the Certificate Registrar, or the office of its Agent in ___________. Whenever
any Owner Trust Certificates are so surrendered for exchange, the Owner Trustee
shall execute and the Certificate Registrar shall authenticate and deliver, the
Owner Trust Certificates which the Certificateholder is entitled to receive.
(i) If the Owner Trustee or the Certificate Registrar so requires, every
Owner Trust Certificate presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate Registrar
duly executed by, the Certificateholder thereof or such Person's attorney duly
authorized in writing.
(j) No service charge shall be made to the requesting Certificateholder for
any registration of transfer or exchange of Owner Trust Certificates, but the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any registration
of transfer or exchange of Owner Trust Certificates.
(k) The Certificate Registrar shall cancel and retain or destroy, in
accordance with the Owner Trustee's retention policy then in effect, all Owner
Trust Certificates surrendered for registration of transfer or exchange.
SECTION 12.2 Mutilated, Destroyed, Lost or Stolen Owner Trust Certificates.
If (i) any mutilated Owner Trust Certificate is surrendered to the Owner Trustee
or the Certificate Registrar, or the Owner Trustee and the Certificate Registrar
receive evidence to their satisfaction of the destruction, loss or theft of any
Owner Trust Certificate, and (ii) there is delivered to the Owner Trustee and
the Certificate Registrar such security or indemnity as may be required by them
to save each of them harmless, then, in the absence of actual knowledge by a
Responsible Officer of the Owner Trustee or the Certificate Registrar that such
Owner Trust Certificate has been acquired by a bona fide purchaser, the Owner
Trustee shall execute and the Certificate Registrar shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Owner Trust Certificate, a new Owner Trust Certificate of like Class and
tenor. Upon the issuance of any new Owner Trust Certificate under this Section
12.2, the Owner Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Certificate Registrar)
connected therewith. Any replacement Owner Trust Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership of
the corresponding interest in the Trust, as if originally issued, whether or not
the lost, stolen or destroyed Owner Trust Certificate shall be found at any time
and such original Owner Trust Certificate shall thereby be deemed canceled.
SECTION 12.3 Persons Deemed Owners. Prior to due presentation of an Owner
Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar, the Indenture Trustee and any agent of any of them may
treat the Person in whose name any Owner Trust Certificate is registered as the
owner of such Owner Trust Certificate for the purpose of receiving distributions
pursuant to Section 4.2 hereof and for all other purposes whatsoever, and
neither the Owner Trustee, the Certificate Registrar, the Indenture Trustee nor
any agent of any of them shall be affected by notice to the contrary.
SECTION 12.4 Access to Names and Addresses.
(a) If any Certificateholder (an "Applicant") applies in writing to the
Owner Trustee, and such application states that the Applicant desires to
communicate with other Certificateholders with respect to their rights under
this Deposit Trust Agreement or the Owner Trust Certificates and is accompanied
by a copy of the communication which such Applicant proposes to transmit, then
the Owner Trustee shall, at the expense of such Applicant, within ten (10)
Business Days after the receipt of such application, furnish or cause to be
furnished to such Applicant a list of the names and addresses of the
Certificateholders as set forth in the Certificate Register.
(b) Every Certificateholder consents to the disclosure to any Applicant of
its identity and status as a Certificateholder and agrees with the Owner Trustee
that the Owner Trustee and the Certificate Registrar shall not be held
accountable in 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 12.5 Actions of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Deposit Trust 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
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 Owner Trustee. Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Deposit Trust Agreement and conclusive in favor of the Owner Trustee, if
made in the manner provided in this Section 12.5.
(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 Owner
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent, waiver
or other action by a Certificateholder shall bind every transferee of every
Owner Trust Certificate issued upon the registration of transfer of such
Certificateholder's Owner Trust Certificate or in exchange therefor or in lieu
thereof, in respect of anything done, or omitted to be done, by the Owner
Trustee, in reliance thereon, whether or not notation of such action is made
upon such Owner Trust Certificate.
(d) The Owner Trustee may require such additional proof of any matter
referred to in this Section 12.5 as it shall deem necessary.
SECTION 12.6 Transferee's Agreement. No assignment, conveyance or other
transfer pursuant to this Article XII shall be effective unless the transferee
shall have executed and delivered to the Owner Trustee an instrument containing
the transferee's agreement to be bound by the terms of this Deposit Trust
Agreement.
<PAGE>
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 No Legal Title to Trust Estate in the Certificateholder. The
Certificateholders shall not have legal title to any part of the Trust Estate;
provided, however, that the Certificateholder has a beneficial interest in the
Trust Estate (and initially shall have all right, title and interest in and to
the Owner Trust Certificates). No transfer by operation of law or otherwise of
any right, title or interest of the Certificateholders in and to the Trust
Estate or hereunder shall operate to terminate this Deposit Trust Agreement or
the Trust or the trusts hereunder or entitle any successor or transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Estate.
SECTION 13.2 Action by the Owner Trustee is Binding. Any actions,
directions, approvals or consents by the Owner Trustee so long as such actions,
directions, consents or approvals are made pursuant to the terms of this Deposit
Trust Agreement shall bind the Certificateholders and shall be effective to
consent to action taken by the parties. No such party shall be required to
inquire as to the authorization, necessity, expediency or regularity of such
consent by the Owner Trustee.
SECTION 13.3 Limitation on Rights of Others. Nothing in this Deposit Trust
Agreement, whether express or implied, shall be construed to give to any Person,
other than the [Bank], the Owner Trustee, the Depositor, the Certificateholders
and the Indenture Trustee on behalf of the Bondholders, any legal or equitable
right, remedy or claim under or in respect of this Deposit Trust Agreement.
SECTION 13.4 Notices. All demands, notices and communications hereunder
shall be in writing, may be given by telecopy transmission, shall be deemed to
have been given upon receipt (except that notices being sent by first class
mail, postage prepaid, shall be deemed to be received five business days
following the mailing thereof) as follows:
If to the Owner Trustee, to:
____________________________
____________________________
Attention: _________________
If to the Depositor, to:
IMPERIAL CREDIT COMMERCIAL MORTGAGE
ACCEPTANCE CORP.
____________________________
____________________________
Attention: _________________
with copies to:
____________________________
____________________________
Attention: _________________
If to the Indenture Trustee, as set forth in the Indenture,
If to a Certificateholder, to that Person's name and address as set
forth from time to time in the Certificate Register,
or to such other address as any of them shall specify by written notice to the
other parties.
SECTION 13.5 Severability. To the extent permitted by law, any provision of
this Deposit Trust Agreement that may be determined by competent authority to be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 13.6 Limitation on the Depositor's and the Certificateholders'
Respective Liability. Neither the Depositor nor any Certificateholder shall have
any liability for the performance of this Deposit Trust Agreement except as
expressly set forth herein.
SECTION 13.7 Separate Counterparts. This Deposit Trust Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 13.8 Successors and Assigns. All covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, the [Bank], the Owner
Trustee and its successors and assigns, the Certificateholders and the Depositor
and its or their respective successors and assigns, all as herein provided. Any
request, notice, direction, consent, waiver or other instrument or action by the
Depositor shall bind the successors and assigns of the Depositor and any
request, notice, direction, consent, waiver or other instrument or action by a
Certificateholder shall bind the successors and assigns of such
Certificateholder. It is the intention of the parties hereto that the Trust
constitute a trust formed pursuant to the laws of the State of _______________
with the purpose of facilitating the transactions contemplated by the Operative
Agreements.
SECTION 13.9 Headings. The headings of the various articles and sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 13.10 Governing Law. THIS DEPOSIT TRUST AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF ___________________.
SECTION 13.11 Administration of Trust. The principal place of
administration of the Trust shall be in _____________.
SECTION 13.12 Performance by the Depositor or the Administrator. Any
obligation of the Owner Trustee hereunder or under any Operative Agreement or
other document contemplated herein may be performed by the Depositor or the
Administrator and any such performance shall not be construed as a revocation of
the trusts created hereby.
SECTION 13.13 Conflict with Indenture and Servicing Agreement. If this
Deposit Trust Agreement (or any instructions given by the Depositor or the
Certificateholders pursuant hereto) shall require that any action be taken with
respect to any matter and the Indenture or the Servicing Agreement (or any
instructions duly given in accordance with the terms thereof) shall require that
a different action be taken with respect to such matter, and such actions shall
be mutually exclusive, the provisions of the Indenture or the Servicing
Agreement, in respect thereof, shall control.
SECTION 13.14 No Implied Waiver. No term or provision of this Deposit Trust
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing entered into as provided in Section 10.1 hereof; and
any such waiver of the terms hereof shall be effective only in the specific
instance and for the specific purpose given.
SECTION 13.15 Third Party Beneficiary. The Indenture Trustee for the
benefit of the Bondholders is an intended third-party beneficiary of this
Deposit Trust Agreement from and including the date hereof to the date on which
the Lien on the Trust Estate created pursuant to the Indenture is satisfied,
discharged and released pursuant to Article IV of the Indenture.
SECTION 13.16 References. The definitions in Article I shall apply equally
to both the singular and plural forms of the terms defined. "Include",
"included", "includes" and "including" shall be deemed to be followed by
"without limitation". "Writing", "written" and comparable terms refer to
printing, typing, lithography or other means of reproducing words in a visible
form. Any agreement or instrument or any law, rule or regulation of any
Governmental Authority defined or referred to in Article I means such agreement
or instrument or such law, rule or regulation as from time to time amended,
modified or supplemented in accordance with the terms thereof, including (in the
case of agreements or instruments) by waiver or consent and (in the case of such
law, rule or regulation) by succession of any comparable successor law, rule or
regulation and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein. References to a
Person are also to its successors and permitted assigns. Any term defined above
by reference to any agreement or instrument or any law, rule or regulation of
any Governmental Authority has such meaning whether or not such agreement,
instrument or law, rule or regulation is in effect. "Deposit Trust Agreement",
"hereof", "herein", "hereto", "hereunder" and comparable terms refer to this
Deposit Trust Agreement (including all exhibits and schedules hereto) and not to
any particular article, section, clause or other subdivision hereof or
attachment hereto. References to any gender include, unless the context
otherwise requires, references to all genders, and references to the singular
include, unless the context other requires, references to the plural and vice
versa. References in this Deposit Trust Agreement to "Article", "Section",
"Clause" or another subdivision or to an attachment are, unless the context
otherwise requires, to an article, clause or subdivision of or attachment to
this Deposit Trust Agreement.
[SECTION 13.17 Streit Act. Any provisions required to be contained in this
Deposit Trust Agreement by Section 126 of Article 4-A of the New York Real
Property Law and any provisions permitted to be contained in this Deposit Trust
Agreement by Section 130-K of such Article 4-A that are necessary in order to
permit the Owner Trustee to act in the manner contemplated by this Deposit Trust
Agreement are hereby incorporated, and such provisions shall be in addition to
those conferred or imposed by this Deposit Trust Agreement; provided, however,
that to the extent that such Section 126 and/or Section 130-K shall not apply to
this Deposit Trust Agreement, said Section 126 and/or Section 130-K shall not
have any effect, and if said Section 126 and/or Section 130-K should at any time
be repealed or cease to apply to this Deposit Trust Agreement, or be construed
by judicial decision to be inapplicable, said Section 126 and/or Section 130-K
shall cease to have any further effect upon the provisions of this Deposit Trust
Agreement. In case of a conflict between the provisions of this Deposit Trust
Agreement and any mandatory provisions of Article 4-A of the New York Real
Property Law applicable to this Deposit Trust Agreement, such mandatory
provisions of said Article 4-A shall prevail, provided that if said Article 4-A
shall not apply to this Deposit Trust Agreement, should at any time be repealed,
or cease to apply to this Deposit Trust Agreement, or be construed by judicial
decision to be inapplicable, such mandatory provisions of such Article 4-A shall
cease to have any further effect upon the provisions of this Deposit Trust
Agreement.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Deposit Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the date hereof.
CREDIT COMMERCIAL MORTGAGE ACCEPTANCE CORP., as
Depositor and initial Certificateholder,
By: ___________________________________
Name:
Title:
________________________________________
not individually, but solely in its
capacity as Owner Trustee
By: ___________________________________
Name:
Title:
<PAGE>
SCHEDULE I
MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT A-1
FORM OF CLASS [P] OWNER TRUST CERTIFICATE
ICCMAC COMMERCIAL TRUST [______]
CLASS [P] OWNER TRUST CERTIFICATE
evidencing a non-assessable, fully paid ___% interest in the Class [P]
Owner Trust Certificates, which, collectively with the Class [XS] and
Class [R] Owner Trust Certificates, evidence the entire beneficial
ownership interest in ICCMAC Commercial Trust [______], a _________
business trust whose assets include various commercial mortgage loans
(the "Mortgage Loans") deposited by Imperial Credit Commercial Mortgage
Acceptance Corp. (the "Depositor")
Certificate Interest Rate: ___% per of Aggregate Certificate Principal Balance
the Class P Owner Trust Certificates annum as of the Closing Date:
$____________
Date of Deposit Trust Agreement: Percentage Interest in Related Class
__________, 199__ Evidenced by this Class [P] Owner Trust
Certificate: ___%
First Payment Date: _______, 199__ Closing Date: _________, 199__
Depositor and Initial Holder of the Owner Trustee:
Owner Trust Certificates:
Imperial Credit Commercial Mortgage
Acceptance Corp.
Owner Trust Certificate No. P-___
<PAGE>
THIS OWNER TRUST CERTIFICATE DOES NOT REPRESENT AN INTEREST IN, OR
OBLIGATION OF, THE DEPOSITOR, THE OWNER TRUSTEE, ANY OF THEIR RESPECTIVE
AFFILIATES, OR ANY OTHER PERSON. NEITHER THIS OWNER TRUST CERTIFICATE NOR THE
MORTGAGE LOANS ARE INSURED OR GUARANTEED, IN WHOLE OR IN PART, BY ANY
GOVERNMENTAL ENTITY OR INSTRUMENTALITY OR ANY PRIVATE INSURER OR GUARANTOR.
THIS OWNER TRUST CERTIFICATE IS SUBJECT TO VARIOUS TRANSFER RESTRICTIONS
DESCRIBED HEREIN.
This Owner Trust Certificate is issued pursuant to, and in accordance with,
the terms of a Deposit Trust Agreement, dated as of ___________, 199__ (the
"Deposit Trust Agreement"; terms not otherwise defined herein shall have the
meanings assigned to those terms in the Deposit Trust Agreement), between
IMPERIAL CREDIT COMMERCIAL MORTGAGE ACCEPTANCE CORP. as depositor (in such
capacity, the "Depositor") and initial Certificateholder and _______________ as
Owner Trustee (the "Owner Trustee"), a summary of certain of the pertinent
provisions of which are set forth herein. This Owner Trust Certificate is issued
under and is subject to the terms, provisions and conditions of the Deposit
Trust Agreement, to which Deposit Trust Agreement the holder of this Owner Trust
Certificate by virtue of the acceptance hereof assents and by which such
Certificateholder is bound. In the event of a conflict between the provisions of
this Owner Trust Certificate and those of the Deposit Trust Agreement, the
provisions of the Deposit Trust Agreement shall control.
This certifies that ______________________________ is the registered owner
of the beneficial interest evidenced by this Owner Trust Certificate in the
trust established pursuant to the Deposit Trust Agreement and designated as
ICCMAC Commercial Trust [______] (the "Trust"). The assets of the Trust include
various commercial mortgage loans (the "Mortgage Loans").
Except to the extent of their execution and authentication, respectively,
of the Owner Trust Certificates, the Owner Trustee and the Certificate Registrar
make no representation or warranty as to any of the statements contained herein
or the validity or sufficiency of this Owner Trust Certificate or the Mortgage
Loans. The Owner Trustee has executed this Owner Trust Certificate in its
limited capacity as Owner Trustee under the Deposit Trust Agreement, and the
Certificate Registrar has authenticated this Owner Trust Certificate in its
limited capacity as Certificate Registrar under the Deposit Trust Agreement.
Distributions on the Certificates will be made, to the extent of available
funds, on the __ day of each calendar month or, if any such day is not a
Business Day, then the next succeeding Business Day (each, a "Payment Date"),
commencing in __________, 199__. As more fully described in the Deposit Trust
Agreement, distributions allocable to interest accrued on the Class [P]
Certificates will be made on each Payment Date up to the Accrued Certificate
Interest in respect of the Class [P] Certificates for the related Payment Date
and, to the extent not previously paid, for all prior Payment Dates. As and to
the extent described in the Deposit Trust Agreement, distributions of interest
on the Class [P] Certificates will be limited to the amount available for such
purposes in the Certificate Account. Such available funds will be distributed on
each Payment Date on a pro rata basis among the Holders of the Class [P]
Certificates and the Holders of the Class [XS] Certificates in respect of
Accrued Certificate Interest.
Upon the retirement of all of the Bonds, the holders of the Class [P]
Certificates will receive payments in respect of principal on each Payment Date,
subsequent to the payments in respect of interest on the Class [P] and Class
[XS] Certificates as described in the previous paragraph, up to (subject to
available funds) an amount equal to the Aggregate Certificate Principal Amount
of the Class [P] Certificates immediately prior to such Payment Date.
Pursuant to the Deposit Trust Agreement, all payments made with respect to
any Class of Owner Trust Certificates on any Payment Date shall be allocated pro
rata among such Owner Trust Certificates based upon their respective Percentage
Interests. Payments to the Certificateholders on each Payment Date will be made
to the Certificateholders of record on the related Record Date. Payments to any
Certificateholder on any Payment Date shall be made by wire transfer of
immediately available funds to the account of such Certificateholder at a bank
or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Owner Trustee in writing at least
five (5) Business Days prior to the related Record Date and if such
Certificateholder is the registered owner of Owner Trust Certificates
representing at least a ____% Percentage Interest in any Class thereof, or
otherwise by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. Final payment on each
Owner Trust Certificate will be made in like manner, but only upon presentment
and surrender of such Owner Trust Certificate at the Corporate Trust Office or
such other location specified in the notice to Certificateholders of such final
payment.
This Owner Trust Certificate is one of a duly authorized issue of Owner
Trust Certificates designated as ICCMAC Commercial Trust [______], Owner Trust
Certificates, representing a fractional undivided beneficial interest in a Trust
Estate consisting of (a) the Mortgage Loans and all payments thereon and
proceeds thereof from and after the Cut-off Date, (b) the Operative Agreements
(i) to which the Depositor is a party or (ii) of which the Depositor is a third
party beneficiary, including the right to receive all income on the Mortgage
Loans, (iii) all present and future claims, demands, causes and choses in action
in respect of any or all of the foregoing and (iv) all proceeds of every kind
and nature whatsoever in respect thereof, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid property, all
cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds, condemnation
awards, rights to payment of any and every kind and other forms of obligations
and receivables, instruments and other property which at any time constitute all
or part of or are included in the proceeds of the foregoing, subject, to the
Lien in favor of the Indenture Trustee.
This Owner Trust Certificate does not purport to summarize the Deposit
Trust Agreement and reference is made to the Deposit Trust Agreement for the
interests, rights and limitations of rights, benefits, obligations and duties
evidenced hereby and the rights, duties and immunities of the Owner Trustee.
No sale, transfer or other disposition of any Owner Trust Certificate may
be made, and the Certificate Registrar shall refuse to register any such
transfer, unless the Depositor (or, if the Depositor no longer exists, 100% of
the other Certificateholders) shall consent in writing to such sale, transfer or
other disposition. The Depositor (or any such other Certificateholder) shall be
entitled to request from the parties interested in effecting such sale, transfer
or other disposition, and to rely upon, a certification of facts and/or an
opinion of counsel which establishes to the satisfaction of the Depositor (or
such other Certificateholders) that such sale, transfer or other disposition is
permissible under applicable law and the Operative Agreements.
No transfer, sale, pledge or other disposition of this Owner Trust
Certificate or any interest herein shall be made unless that transfer, sale,
pledge or other disposition is exempt from the registration and/or qualification
requirements of the 1933 Act and any applicable state securities laws, or is
otherwise made in accordance with the 1933 Act and such state securities laws.
The Trust has not been registered as an investment company under the 1940 Act,
and no transfer of an Owner Trust Certificate may be made (i) to any Person
other than a QIB or an Affiliate of the Trust or (ii) to any Person that would
require the Trust or any such trust fund to be registered as an investment
company under the 1940 Act. No transfer of this Owner Trust Certificate or any
interest herein shall be made (A) to any employee benefit plan or other
retirement arrangement, including individual retirement accounts and annuities,
Keogh plans and collective investment funds and separate accounts in which such
plans, accounts or arrangements are invested, including, without limitation,
insurance company general accounts, that is subject to ERISA or the Code (each,
a "Plan"), or (B) to any Person who is directly or indirectly purchasing this
Owner Trust Certificate or interest herein on behalf of, as named fiduciary of,
as trustee of, or with assets of a Plan.
No sale, transfer or other disposition of any Owner Trust Certificate may
be made, and the Certificate Registrar shall refuse to register any such
transfer, if such sale, transfer or other disposition would result in the Trust
ceasing to be a qualified REIT subsidiary within the meaning of Section 856(i)
of the Code.
For so long as the Bonds are outstanding and the Lien of the Indenture has
not been satisfied and discharged, no sale, transfer or other disposition of any
Owner Trust Certificate may be made, and the Certificate Registrar shall refuse
to register any such transfer, unless the Owner Trustee shall have received
written confirmation from each Rating Agency to the effect that such sale,
transfer or other disposition will not result in the qualification, downgrade or
withdrawal of any then current rating on the Bonds.
No assignment, conveyance or other transfer of this Owner Trust Certificate
shall be effective unless the transferee shall have executed and delivered to
the Owner Trustee an instrument containing the transferee's agreement to be
bound by the terms of the Deposit Trust Agreement.
Prior to transfer of this Owner Trust Certificate in accordance with the
foregoing and the Deposit Trust Agreement, the Owner Trustee, the Indenture
Trustee and the Certificate Registrar and any agent of any of them may treat the
person or entity in whose name this Owner Trust Certificate is registered as the
owner hereof for the purpose of receiving distributions pursuant to the Deposit
Trust Agreement, pursuant to the Indenture and for all other purposes
whatsoever, and neither the Owner Trustee, the Indenture Trustee, the
Certificate Registrar nor any agent of any of them shall be affected by notice
to the contrary.
As provided in the Deposit Trust Agreement and subject to certain
limitations herein and therein set forth, this Owner Trust Certificate is
exchangeable for other Owner Trust Certificates of the same Class in authorized
denominations representing a like aggregate Percentage Interest, as requested by
the Certificateholder surrendering the same.
No service charge will be made to a Certificateholder for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Deposit Trust Agreement permits, with certain exceptions therein
provided, the amendment of the Deposit Trust Agreement and the modification of
the rights of the Certificateholders at any time by the Owner Trustee with the
consent of Certificateholders entitled to a majority of the Voting Rights
(except as provided in the Deposit Trust Agreement). Any consent by the
Certificateholder of this Owner Trust Certificate shall be conclusive and
binding on such Certificateholder and upon all future Certificateholders issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Owner Trust Certificate.
The obligations created by the Deposit Trust Agreement shall not terminate
until the Bonds have been paid in full and the Lien on the Trust Estate created
by the Indenture has been released; provided, however, that in no event shall
the Trust 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.
Unless the Certificate of Authentication on this Owner Trust Certificate
has been executed by or on behalf of the Certificate Registrar, by manual
signature, this Owner Trust Certificate shall not be entitled to any benefit
under the Deposit Trust Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Owner Trust
Certificate to be duly executed.
______________________________________________,
not individually, but solely in its capacity as
Owner Trustee
_______________________________________________
Authorized Officer
This is one of the Owner Trust Certificates referred to in the within-referenced
Deposit Trust Agreement.
Date:
______________________________________________,
not individually, but solely in its capacity as
Certificate Registrar
_______________________________________________
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned ("Assignor(s)") hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
____________________________________________________________ [(Please print or
typewrite name(s) and address(es), including postal zip code of assignee(s)]
("Assignee(s)") that portion of the interest in the Trust represented by the
within Owner Trust Certificate set forth below and hereby authorize(s) the
transfer and registration of transfer of such interest to Assignee(s) on the
Certificate Register of the Trust.
I (we) further direct the Certificate Registrar to issue a new Owner Trust
Certificate of the same Class for that portion of the interest in the Trust
represented by the within Owner Trust Certificate set forth below to the
above-named Assignee(s) and deliver such Owner Trust Certificate to the
following address: ____________________________________________________________;
to issue a new Owner Trust Certificate of the same Class for the remainder of
the interest in the Trust represented by the within Owner Trust Certificate to
the above-named Assignor(s) and deliver such Owner Trust Certificate to
the following address: ______________________ _________________________; and to
cancel the within Owner Trust Certificate.
Date:_______________________ ________________________________________
Signature by or on behalf of Assignor(s)
Percentage Interest
Transferred:___________ ___________________________________
Taxpayer Identification Number
<PAGE>
EXHIBIT A-2
FORM OF CLASS [XS] OWNER TRUST CERTIFICATE
ICCMAC COMMERCIAL TRUST [I]
CLASS [XS] OWNER TRUST CERTIFICATE
evidencing a non-assessable, fully paid ___% interest in the Class [XS]
Owner Trust Certificates, which, collectively with the Class [P] and
Class [R] Owner Trust Certificates, evidence the entire beneficial
ownership interest in ICCMAC Commercial Trust [______], a __________
business trust whose assets include various commercial mortgage loans
(the "Mortgage Loans") deposited by Imperial Credit Commercial Mortgage
Acceptance Corp. (the "Depositor")
Date of Deposit Trust Agreement: Percentage Interest in Related Class
____________, 199_ Evidenced by this Class [XS] Owner Trust
Certificate: ___%
First Payment Date: _______, 199__ Closing Date: _________, 199__
Depositor and Initial Holder of the Owner Trustee: __________
Owner Trust Certificates:
Imperial Credit Commercial Mortgage
Acceptance Corp.
Owner Trust Certificate No. XS-___
THIS OWNER TRUST CERTIFICATE DOES NOT REPRESENT AN INTEREST IN, OR
OBLIGATION OF, THE DEPOSITOR, THE OWNER TRUSTEE, ANY OF THEIR RESPECTIVE
AFFILIATES, OR ANY OTHER PERSON. NEITHER THIS OWNER TRUST CERTIFICATE NOR THE
MORTGAGE LOANS ARE INSURED OR GUARANTEED, IN WHOLE OR IN PART, BY ANY
GOVERNMENTAL ENTITY OR INSTRUMENTALITY OR ANY PRIVATE INSURER OR GUARANTOR.
THIS OWNER TRUST CERTIFICATE IS SUBJECT TO VARIOUS TRANSFER RESTRICTIONS
DESCRIBED HEREIN.
This Owner Trust Certificate is issued pursuant to, and in accordance with,
the terms of a Deposit Trust Agreement, dated as of ___________, 199__ (the
"Deposit Trust Agreement"; terms not otherwise defined herein shall have the
meanings assigned to those terms in the Deposit Trust Agreement), between
Imperial Credit Commercial Mortgage Acceptance Corp. as depositor (in such
capacity, the "Depositor") and initial Certificateholder and _______________ as
Owner Trustee (the "Owner Trustee"), a summary of certain of the pertinent
provisions of which are set forth herein. This Owner Trust Certificate is issued
under and is subject to the terms, provisions and conditions of the Deposit
Trust Agreement, to which Deposit Trust Agreement the holder of this Owner Trust
Certificate by virtue of the acceptance hereof assents and by which such
Certificateholder is bound. In the event of a conflict between the provisions of
this Owner Trust Certificate and those of the Deposit Trust Agreement, the
provisions of the Deposit Trust Agreement shall control.
This certifies that _________________________ is the registered owner of
the beneficial interest evidenced by this Owner Trust Certificate in the trust
established pursuant to the Deposit Trust Agreement and designated as ICCMAC
Commercial Trust [______] (the "Trust"). The assets of the Trust include various
commercial mortgage loans (the "Mortgage Loans").
Except to the extent of their execution and authentication, respectively,
of the Owner Trust Certificates, the Owner Trustee and the Certificate Registrar
make no representation or warranty as to any of the statements contained herein
or the validity or sufficiency of this Owner Trust Certificate or the Mortgage
Loans. The Owner Trustee has executed this Owner Trust Certificate in its
limited capacity as Owner Trustee under the Deposit Trust Agreement, and the
Certificate Registrar has authenticated this Owner Trust Certificate in its
limited capacity as Certificate Registrar under the Deposit Trust Agreement.
Distributions on the Certificates will be made, to the extent of available
funds, on the __ day of each calendar month or, if any such day is not a
Business Day, then the next succeeding Business Day (each, a "Payment Date"),
commencing in __________, 199__. As more fully described in the Deposit Trust
Agreement, distributions allocable to interest accrued on the Class [XS]
Certificates will be made on each Payment Date up to the Accrued Certificate
Interest in respect of the Class [XS] Certificates for the related Payment Date
and, to the extent not previously paid, for all prior Payment Dates. As and to
the extent described in the Deposit Trust Agreement, distributions of interest
on the Class [XS] Certificates will be limited to the amount available for such
purposes in the Certificate Account. Such available funds will be distributed on
each Payment Date on a pro rata basis among the Holders of the Class [P]
Certificates and the Holders of the Class [XS] Certificates in respect of
Accrued Certificate Interest.
Pursuant to the Deposit Trust Agreement, all payments made with respect to
any Class of Owner Trust Certificates on any Payment Date shall be allocated pro
rata among such Owner Trust Certificates based upon their respective Percentage
Interests. Payments to the Certificateholders on each Payment Date will be made
to the Certificateholders of record on the related Record Date. Payments to any
Certificateholder on any Payment Date shall be made by wire transfer of
immediately available funds to the account of such Certificateholder at a bank
or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Owner Trustee in writing at least
five (5) Business Days prior to the related Record Date and if such
Certificateholder is the registered owner of Owner Trust Certificates
representing at least a _____ % Percentage Interest in any Class thereof, or
otherwise by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. Final payment on each
Owner Trust Certificate will be made in like manner, but only upon presentment
and surrender of such Owner Trust Certificate at the Corporate Trust Office or
such other location specified in the notice to Certificateholders of such final
payment.
This Owner Trust Certificate is one of a duly authorized issue of Owner
Trust Certificates designated as ICCMAC Commercial Trust [______], Owner Trust
Certificates, representing a fractional undivided beneficial interest in a Trust
Estate consisting of (a) the Mortgage Loans and all payments thereon and
proceeds thereof from and after the Cut-off Date, (b) the Operative Agreements
(i) to which the Depositor is a party or (ii) of which the Depositor is a third
party beneficiary, including the right to receive all income on the Mortgage
Loans, (iii) all present and future claims, demands, causes and choses in action
in respect of any or all of the foregoing and (iv) all proceeds of every kind
and nature whatsoever in respect thereof, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid property, all
cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds, condemnation
awards, rights to payment of any and every kind and other forms of obligations
and receivables, instruments and other property which at any time constitute all
or part of or are included in the proceeds of the foregoing, subject, to the
Lien in favor of the Indenture Trustee.
This Owner Trust Certificate does not purport to summarize the Deposit
Trust Agreement and reference is made to the Deposit Trust Agreement for the
interests, rights and limitations of rights, benefits, obligations and duties
evidenced hereby and the rights, duties and immunities of the Owner Trustee.
No sale, transfer or other disposition of any Owner Trust Certificate may
be made, and the Certificate Registrar shall refuse to register any such
transfer, unless the Depositor (or, if the Depositor no longer exists, 100% of
the other Certificateholders) shall consent in writing to such sale, transfer or
other disposition. The Depositor (or any such other Certificateholder) shall be
entitled to request from the parties interested in effecting such sale, transfer
or other disposition, and to rely upon, a certification of facts and/or an
opinion of counsel which establishes to the satisfaction of the Depositor (or
such other Certificateholders) that such sale, transfer or other disposition is
permissible under applicable law and the Operative Agreements.
No transfer, sale, pledge or other disposition of this Owner Trust
Certificate or any interest herein shall be made unless that transfer, sale,
pledge or other disposition is exempt from the registration and/or qualification
requirements of the 1933 Act and any applicable state securities laws, or is
otherwise made in accordance with the 1933 Act and such state securities laws.
The Trust has not been registered as an investment company under the 1940 Act,
and no transfer of an Owner Trust Certificate may be made (i) to any Person
other than a QIB or an Affiliate of the Trust or (ii) to any Person that would
require the Trust or any such trust fund to be registered as an investment
company under the 1940 Act. No transfer of this Owner Trust Certificate or any
interest herein shall be made (A) to any employee benefit plan or other
retirement arrangement, including individual retirement accounts and annuities,
Keogh plans and collective investment funds and separate accounts in which such
plans, accounts or arrangements are invested, including, without limitation,
insurance company general accounts, that is subject to ERISA or the Code (each,
a "Plan"), or (B) to any Person who is directly or indirectly purchasing this
Owner Trust Certificate or interest herein on behalf of, as named fiduciary of,
as trustee of, or with assets of a Plan.
No sale, transfer or other disposition of any Owner Trust Certificate may
be made, and the Certificate Registrar shall refuse to register any such
transfer, if such sale, transfer or other disposition would result in the Trust
ceasing to be a qualified REIT subsidiary within the meaning of Section 856(i)
of the Code.
For so long as the Bonds are outstanding and the Lien of the Indenture has
not been satisfied and discharged, no sale, transfer or other disposition of any
Owner Trust Certificate may be made, and the Certificate Registrar shall refuse
to register any such transfer, unless the Owner Trustee shall have received
written confirmation from each Rating Agency to the effect that such sale,
transfer or other disposition will not result in the qualification, downgrade or
withdrawal of any then current rating on the Bonds.
No assignment, conveyance or other transfer of this Owner Trust Certificate
shall be effective unless the transferee shall have executed and delivered to
the Owner Trustee an instrument containing the transferee's agreement to be
bound by the terms of the Deposit Trust Agreement.
Prior to transfer of this Owner Trust Certificate in accordance with the
foregoing and the Deposit Trust Agreement, the Owner Trustee, the Indenture
Trustee and the Certificate Registrar and any agent of any of them may treat the
person or entity in whose name this Owner Trust Certificate is registered as the
owner hereof for the purpose of receiving distributions pursuant to the Deposit
Trust Agreement, pursuant to the Indenture and for all other purposes
whatsoever, and neither the Owner Trustee, the Indenture Trustee, the
Certificate Registrar nor any agent of any of them shall be affected by notice
to the contrary.
As provided in the Deposit Trust Agreement and subject to certain
limitations herein and therein set forth, this Owner Trust Certificate is
exchangeable for other Owner Trust Certificates of the same Class in authorized
denominations representing a like aggregate Percentage Interest, as requested by
the Certificateholder surrendering the same.
No service charge will be made to a Certificateholder for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Deposit Trust Agreement permits, with certain exceptions therein
provided, the amendment of the Deposit Trust Agreement and the modification of
the rights of the Certificateholders at any time by the Owner Trustee with the
consent of Certificateholders entitled to a majority of the Voting Rights
(except as provided in the Deposit Trust Agreement). Any consent by the
Certificateholder of this Owner Trust Certificate shall be conclusive and
binding on such Certificateholder and upon all future Certificateholders issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Owner Trust Certificate.
The obligations created by the Deposit Trust Agreement shall not terminate
until the Bonds have been paid in full and the Lien on the Trust Estate created
by the Indenture has been released; provided, however, that in no event shall
the Trust 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.
Unless the Certificate of Authentication on this Owner Trust Certificate
has been executed by or on behalf of the Certificate Registrar, by manual
signature, this Owner Trust Certificate shall not be entitled to any benefit
under the Deposit Trust Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Owner Trust
Certificate to be duly executed.
______________________________________________,
not individually, but solely in its capacity as
Owner Trustee
_______________________________________________
Authorized Officer
This is one of the Owner Trust Certificates referred to in the within-referenced
Deposit Trust Agreement.
Date:
______________________________________________,
not individually, but solely in its capacity as
Certificate Registrar
_______________________________________________
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned ("Assignor(s)") hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
____________________________________________________________ [(Please print or
typewrite name(s) and address(es), including postal zip code of assignee(s)]
("Assignee(s)") that portion of the interest in the Trust represented by the
within Owner Trust Certificate set forth below and hereby authorize(s) the
transfer and registration of transfer of such interest to Assignee(s) on the
Certificate Register of the Trust.
I (we) further direct the Certificate Registrar to issue a new Owner Trust
Certificate of the same Class for that portion of the interest in the Trust
represented by the within Owner Trust Certificate set forth below to the
above-named Assignee(s) and deliver such Owner Trust Certificate to the
following address: ____________________________________________________________;
to issue a new Owner Trust Certificate of the same Class for the remainder of
the interest in the Trust represented by the within Owner Trust Certificate to
the above-named Assignor(s) and deliver such Owner Trust Certificate to
the following address: ______________________ _________________________; and to
cancel the within Owner Trust Certificate.
Date:_______________________ ________________________________________
Signature by or on behalf of Assignor(s)
Percentage Interest
Transferred:___________ ___________________________________
Taxpayer Identification Number
<PAGE>
EXHIBIT A-3
FORM OF CLASS [R] OWNER TRUST CERTIFICATE
ICCMAC COMMERCIAL TRUST [I]
CLASS [R] OWNER TRUST CERTIFICATE
evidencing a non-assessable, fully paid ___% interest in the Class [R]
Owner Trust Certificates, which, collectively with the Class [P] and
Class [XS] Owner Trust Certificates, evidence the entire beneficial
ownership interest in ICCMAC Commercial Trust [______], a ___________
business trust whose assets include various commercial mortgage loans
(the "Mortgage Loans") deposited by Imperial Credit Commercial Mortgage
Acceptance Corp. (the "Depositor")
Date of Deposit Trust Agreement: Percentage Interest in Related Class
____________, 199_ Evidenced by this Class [XS] Owner Trust
Certificate: ___%
First Payment Date: _______, 199__ Closing Date: _________, 199__
Depositor and Initial Holder of the Owner Trustee: __________
Owner Trust Certificates:
Imperial Credit Commercial Mortgage
Acceptance Corp.
Owner Trust Certificate No. R-___
THIS OWNER TRUST CERTIFICATE DOES NOT REPRESENT AN INTEREST IN, OR
OBLIGATION OF, THE DEPOSITOR, THE OWNER TRUSTEE, ANY OF THEIR RESPECTIVE
AFFILIATES, OR ANY OTHER PERSON. NEITHER THIS OWNER TRUST CERTIFICATE NOR THE
MORTGAGE LOANS ARE INSURED OR GUARANTEED, IN WHOLE OR IN PART, BY ANY
GOVERNMENTAL ENTITY OR INSTRUMENTALITY OR ANY PRIVATE INSURER OR GUARANTOR.
THIS OWNER TRUST CERTIFICATE IS SUBJECT TO VARIOUS TRANSFER RESTRICTIONS
DESCRIBED HEREIN.
This Owner Trust Certificate is issued pursuant to, and in accordance with,
the terms of a Deposit Trust Agreement, dated as of ___________, 199__ (the
"Deposit Trust Agreement"; terms not otherwise defined herein shall have the
meanings assigned to those terms in the Deposit Trust Agreement), between
Imperial Credit Commercial Mortgage Acceptance Corp. as depositor (in such
capacity, the "Depositor") and initial Certificateholder and _________________
as Owner Trustee (the "Owner Trustee"), a summary of certain of the pertinent
provisions of which are set forth herein. This Owner Trust Certificate is issued
under and is subject to the terms, provisions and conditions of the Deposit
Trust Agreement, to which Deposit Trust Agreement the holder of this Owner Trust
Certificate by virtue of the acceptance hereof assents and by which such
Certificateholder is bound. In the event of a conflict between the provisions of
this Owner Trust Certificate and those of the Deposit Trust Agreement, the
provisions of the Deposit Trust Agreement shall control.
This certifies that ___________________ is the registered owner of the
beneficial interest evidenced by this Owner Trust Certificate in the trust
established pursuant to the Deposit Trust Agreement and designated as ICCMAC
Commercial Trust [______], (the "Trust"). The assets of the Trust include
various commercial Mortgage Loans (the "Mortgage Loans").
Except to the extent of their execution and authentication, respectively,
of the Owner Trust Certificates, the Owner Trustee and the Certificate Registrar
make no representation or warranty as to any of the statements contained herein
or the validity or sufficiency of this Owner Trust Certificate or the Mortgage
Loans. The Owner Trustee has executed this Owner Trust Certificate in its
limited capacity as Owner Trustee under the Deposit Trust Agreement, and the
Certificate Registrar has authenticated this Owner Trust Certificate in its
limited capacity as Certificate Registrar under the Deposit Trust Agreement.
Distributions on the Certificates will be made, to the extent of available
funds, on the __ day of each calendar month or, if any such day is not a
Business Day, then the next succeeding Business Day (each, a "Payment Date"),
commencing in __________ 199__. As more fully described in the Deposit Trust
Agreement, distributions on the Class [R] Certificates will be in an amount
equal to the remaining portion, if any, of the Certificateholder Funds for each
Payment Date after making all payments on the Class [XS] and Class [P]
Certificates.
Pursuant to the Deposit Trust Agreement, all payments made with respect to
any Class of Owner Trust Certificates on any Payment Date shall be allocated pro
rata among such Owner Trust Certificates based upon their respective Percentage
Interests. Payments to the Certificateholders on each Payment Date will be made
to the Certificateholders of record on the related Record Date. Payments to any
Certificateholder on any Payment Date shall be made by wire transfer of
immediately available funds to the account of such Certificateholder at a bank
or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Owner Trustee in writing at least
five (5) Business Days prior to the related Record Date and if such
Certificateholder is the registered owner of Owner Trust Certificates
representing at least a ____ % Percentage Interest in any Class thereof, or
otherwise by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. Final payment on each
Owner Trust Certificate will be made in like manner, but only upon presentment
and surrender of such Owner Trust Certificate at the Corporate Trust Office or
such other location specified in the notice to Certificateholders of such final
payment.
This Owner Trust Certificate is one of a duly authorized issue of Owner
Trust Certificates designated as ICCMAC Commercial Trust [______], Owner Trust
Certificates, representing a fractional undivided beneficial interest in a Trust
Estate consisting of (a) the Mortgage Loans and all payments thereon and
proceeds thereof from and after the Cut-off Date, (b) the Operative Agreements
(i) to which the Depositor is a party or (ii) of which the Depositor is a third
party beneficiary, including the right to receive all income on the Mortgage
Loans, (iii) all present and future claims, demands, causes and choses in action
in respect of any or all of the foregoing and (iv) all proceeds of every kind
and nature whatsoever in respect thereof, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid property, all
cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds, condemnation
awards, rights to payment of any and every kind and other forms of obligations
and receivables, instruments and other property which at any time constitute all
or part of or are included in the proceeds of the foregoing, subject, to the
Lien in favor of the Indenture Trustee.
This Owner Trust Certificate does not purport to summarize the Deposit
Trust Agreement and reference is made to the Deposit Trust Agreement for the
interests, rights and limitations of rights, benefits, obligations and duties
evidenced hereby and the rights, duties and immunities of the Owner Trustee.
No sale, transfer or other disposition of any Owner Trust Certificate may
be made, and the Certificate Registrar shall refuse to register any such
transfer, unless the Depositor (or, if the Depositor no longer exists, 100% of
the other Certificateholders) shall consent in writing to such sale, transfer or
other disposition. The Depositor (or any such other Certificateholder) shall be
entitled to request from the parties interested in effecting such sale, transfer
or other disposition, and to rely upon, a certification of facts and/or an
opinion of counsel which establishes to the satisfaction of the Depositor (or
such other Certificateholders) that such sale, transfer or other disposition is
permissible under applicable law and the Operative Agreements.
No transfer, sale, pledge or other disposition of this Owner Trust
Certificate or any interest herein shall be made unless that transfer, sale,
pledge or other disposition is exempt from the registration and/or qualification
requirements of the 1933 Act and any applicable state securities laws, or is
otherwise made in accordance with the 1933 Act and such state securities laws.
The Trust has not been registered as an investment company under the 1940 Act,
and no transfer of an Owner Trust Certificate may be made (i) to any Person
other than a QIB or an Affiliate of the Trust or (ii) to any Person that would
require the Trust or any such trust fund to be registered as an investment
company under the 1940 Act. No transfer of this Owner Trust Certificate or any
interest herein shall be made (A) to any employee benefit plan or other
retirement arrangement, including individual retirement accounts and annuities,
Keogh plans and collective investment funds and separate accounts in which such
plans, accounts or arrangements are invested, including, without limitation,
insurance company general accounts, that is subject to ERISA or the Code (each,
a "Plan"), or (B) to any Person who is directly or indirectly purchasing this
Owner Trust Certificate or interest herein on behalf of, as named fiduciary of,
as trustee of, or with assets of a Plan.
No sale, transfer or other disposition of any Owner Trust Certificate may
be made, and the Certificate Registrar shall refuse to register any such
transfer, if such sale, transfer or other disposition would result in the Trust
ceasing to be a qualified REIT subsidiary within the meaning of Section 856(i)
of the Code.
For so long as the Bonds are outstanding and the Lien of the Indenture has
not been satisfied and discharged, no sale, transfer or other disposition of any
Owner Trust Certificate may be made, and the Certificate Registrar shall refuse
to register any such transfer, unless the Owner Trustee shall have received
written confirmation from each Rating Agency to the effect that such sale,
transfer or other disposition will not result in the qualification, downgrade or
withdrawal of any then current rating on the Bonds.
No assignment, conveyance or other transfer of this Owner Trust Certificate
shall be effective unless the transferee shall have executed and delivered to
the Owner Trustee an instrument containing the transferee's agreement to be
bound by the terms of the Deposit Trust Agreement.
Prior to transfer of this Owner Trust Certificate in accordance with the
foregoing and the Deposit Trust Agreement, the Owner Trustee, the Indenture
Trustee and the Certificate Registrar and any agent of any of them may treat the
person or entity in whose name this Owner Trust Certificate is registered as the
owner hereof for the purpose of receiving distributions pursuant to the Deposit
Trust Agreement, pursuant to the Indenture and for all other purposes
whatsoever, and neither the Owner Trustee, the Indenture Trustee, the
Certificate Registrar nor any agent of any of them shall be affected by notice
to the contrary.
As provided in the Deposit Trust Agreement and subject to certain
limitations herein and therein set forth, this Owner Trust Certificate is
exchangeable for other Owner Trust Certificates of the same Class in authorized
denominations representing a like aggregate Percentage Interest, as requested by
the Certificateholder surrendering the same.
No service charge will be made to a Certificateholder for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Deposit Trust Agreement permits, with certain exceptions therein
provided, the amendment of the Deposit Trust Agreement and the modification of
the rights of the Certificateholders at any time by the Owner Trustee with the
consent of Certificateholders entitled to a majority of the Voting Rights
(except as provided in the Deposit Trust Agreement). Any consent by the
Certificateholder of this Owner Trust Certificate shall be conclusive and
binding on such Certificateholder and upon all future Certificateholders issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Owner Trust Certificate.
The obligations created by the Deposit Trust Agreement shall not terminate
until the Bonds have been paid in full and the Lien on the Trust Estate created
by the Indenture has been released; provided, however, that in no event shall
the Trust 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.
Unless the Certificate of Authentication on this Owner Trust Certificate
has been executed by or on behalf of the Certificate Registrar, by manual
signature, this Owner Trust Certificate shall not be entitled to any benefit
under the Deposit Trust Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Owner Trust
Certificate to be duly executed.
_____________________________________________,
not individually, but solely in its capacity as
Owner Trustee
______________________________________________
Authorized Officer
This is one of the Owner Trust Certificates referred to in the within-referenced
Deposit Trust Agreement.
Date:
______________________________________________,
not individually, but solely in its capacity as
Certificate Registrar
_______________________________________________
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned ("Assignor(s)") hereby sell(s), assign(s)
and transfer(s) unto ___________________________________________________________
________________________________________________________________________________
____________________________________________________________ [(Please print or
typewrite name(s) and address(es), including postal zip code of assignee(s)]
("Assignee(s)") that portion of the interest in the Trust represented by the
within Owner Trust Certificate set forth below and hereby authorize(s) the
transfer and registration of transfer of such interest to Assignee(s) on the
Certificate Register of the Trust.
I (we) further direct the Certificate Registrar to issue a new Owner Trust
Certificate of the same Class for that portion of the interest in the Trust
represented by the within Owner Trust Certificate set forth below to the
above-named Assignee(s) and deliver such Owner Trust Certificate to the
following address: ____________________________________________________________;
to issue a new Owner Trust Certificate of the same Class for the remainder of
the interest in the Trust represented by the within Owner Trust Certificate to
the above-named Assignor(s) and deliver such Owner Trust Certificate to
the following address: ______________________ _________________________; and to
cancel the within Owner Trust Certificate.
Date:_______________________ ____________________________________
Signature by or on behalf of Assignor(s)
Percentage Interest
Transferred:___________ ___________________________________
Taxpayer Identification Number
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT, dated as of ____________ (this
"Agreement"), among _______________________, as owner trustee (the "Owner
Trustee"), and on behalf of ICCMAC Commercial Trust [______] (the "Trust"), a
business trust created under the laws of the State of [Delaware] pursuant to the
Deposit Trust Agreement referred to below and acting through ___________, not in
its individual capacity but solely as owner-trustee under such Deposit Trust
Agreement (the "Owner-Trustee", which term includes any successor entity
hereunder and thereunder) and _________________________, a _____________, as
administrator (the "Administrator").
W I T N E S S E T H :
WHEREAS, the Trust was established pursuant to a Deposit Trust
Agreement, dated as of ______________ (the "Deposit Trust Agreement"), between
Imperial Credit Commercial Mortgage Acceptance Corp., as depositor (in such
capacity, the "Depositor") and initial holder of the Owner Trust Certificates
issued thereunder, and the Owner Trustee.
WHEREAS, the Trust is issuing certain bonds (the "Bonds") pursuant to
an Indenture, dated as of _______________ (the "Indenture"), between the Owner
Trustee, on behalf of the Trust, and ______________ as indenture trustee (the
"Indenture Trustee") for the benefit of holders of the Bonds.
WHEREAS, pursuant to the Indenture, the Trust is required to perform
certain duties in connection with the Bonds and the collateral therefor pledged
pursuant to the Indenture (the "Collateral").
WHEREAS, the Trust desires to have the Administrator perform certain
duties of the Trust referred to in the Indenture and to provide such additional
services consistent with the terms of this Agreement as the Trust may from time
to time request.
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Trust and the
Owner Trustee on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. Definitions. Capitalized terms used but not otherwise defined
herein shall have the respective meanings assigned thereto in the Deposit
Trust Agreement as in effect on the date hereof or, if not defined therein, in
the Indenture as in effect on the date hereof.
2. Duties of the Administrator.
(a) Duties with Respect to the Indenture.
The Administrator agrees to perform all its duties as Administrator and
certain of the duties of the Trust under the Indenture. The Administrator shall
monitor the performance by the Trust of its duties under the Indenture and shall
advise the Owner Trustee when action is necessary to comply with the Trust's
duties under the Indenture. The Administrator shall prepare or cause to be
prepared for execution by the Owner Trustee on behalf of the Trust, all such
documents, reports, filings, instruments, certificates and opinions that the
Trust is required to prepare, file or deliver pursuant to the Indenture and the
Deposit Trust Agreement. In furtherance of the foregoing, the Administrator
shall take all appropriate action that the Trust is required to take pursuant to
the Indenture (including, without limitation, [(i) Section 2.12(c) of the
Indenture, (ii) Section 3.07 of the Indenture, (iii) Sections 6.09(c), (g) and
(h) of the Indenture, (iv) Section 7.04(a) of the Indenture, (v) Section 9.01 of
the Indenture, (vi) Section 9.02 of the Indenture, (vii) Section 3.02 of the
Indenture, (viii) Section 12.01 of the Indenture and (ix) Section 14.15 of the
Indenture [add references to other appropriate sections]),] except any such
duties that (a) constitute non-ministerial matters (as defined and described in
Section 2(c) below), (b) are expressly required to be performed by the Owner
Trustee on behalf of the Issuer or (c) constitute payment obligations of the
Issuer (it being understood and agreed that the Administrator in its individual
capacity shall not be responsible for any payment obligations of the Issuer).
(b) Performance of Duties.
(i) In carrying out the duties of the Trust under the Indenture
and any of its other obligations under this Agreement, the Administrator
may enter into transactions or otherwise deal with any of its affiliates;
provided, however, that the terms of any such transactions or dealings shall
be in accordance with any directions received from the Trust and shall be on
terms and conditions that are, in the Administrator's judgment, no less
favorable to the Trust than would be available from unaffiliated parties.
(ii) In carrying out any of its obligations under this Agreement,
the Administrator may act either directly or through agents, attorneys,
accountants, independent contractors and auditors and enter into agreements with
any of them.
(c) Non-Ministerial Matters.
(i) With respect to matters that in the reasonable judgment of
the Administrator are non-ministerial, the Administrator shall not be under any
obligation to take any action, and in any event shall not take any action unless
the Administrator shall have received instructions from the Owner Trustee or
from Certificateholders entitled to a majority of the Voting Rights under the
Deposit Trust Agreement. For the purpose of the preceding sentence,
"non-ministerial matters" shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Trust and the
compromise or settlement of any action, claim or lawsuit
brought by or against the Trust;
(C) the involvement in any lawsuit or other legal
action against the Indenture Trustee, including, without
limitation, consenting to the settlement of any third party
claim by the Indenture Trustee;
(D) [exercising discretion with respect to any action or
proposed action in connection with the Pledged Mortgage
Loans to the extent the Issuer has the right to exercise
such discretion under the terms of Section ___ of the
Servicing and Administration Agreement];
(E) the appointment of successor Indenture Trustees pursuant
to the Indenture;
(F) the removal of the Owner Trustee;
(G) the removal of the Indenture Trustee; and
(H) any action that the Issuer is entitled but not obligated to
take under the Indenture;
provided that, notwithstanding the foregoing, the Administrator may, with the
consent of the Owner Trustee or Certificateholders entitled to a majority of the
Voting Rights under the Deposit Trust Agreement, take any action with respect to
non-ministerial matters that the Administrator, in its good faith judgment,
deems to be the best interests of the Trust. The Administrator shall be entitled
to be reimbursed by the Trust for any expenses or liabilities incurred without
willful misconduct, bad faith or [gross] negligence in connection with
non-ministerial matters.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and shall not, take any
action that the Trust directs the Administrator not to take on its behalf.
3. Records. The Administrator shall maintain appropriate books of
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Trust, the
Depositor and the Certificateholders at any time during normal business hours.
4. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement, the Administrator shall be
entitled to: (i) a fee payable as provided under the Indenture equal to
_______________; [and (ii) interest and investment income earned on funds held
on deposit in the Bond Account from time to time, which interest and income
shall be payable as provided under the Indenture. The Administrator may, subject
to and in accordance with the terms of the Indenture, direct the Indenture
Trustee to invest funds on deposit in the Bond Account from time to time and
shall, in accordance with the Indenture, deposit into the Bond Account an amount
sufficient to cover any losses in respect of the funds so invested promptly
following the occurrence of each such loss, if any.]
5. Independence of the Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Trust, the Owner Trustee or the Indenture
Trustee with respect to the manner in which it performs its obligations
hereunder. Except to the extent expressly set forth herein or otherwise
authorized by the Trust, the Administrator shall not have any authority to act
for or represent the Trust, the Owner Trustee or the Indenture Trustee in any
way and shall not otherwise be deemed an agent of the Trust or the Indenture
Trustee.
6. No Joint Venture. Nothing contained in this Agreement (i) shall
constitute the Administrator and the Trust, the Owner Trustee, the Indenture
Trustee or the Depositor as members of any partnership, joint venture,
association, syndicate, unincorporated business or other separate entity, (ii)
shall be construed to impose on any of them liability as such a member or (iii)
shall be deemed to confer on any of them any express, implied or apparent
authority to incur any obligation or liability on behalf of the others.
7. Other Activities of the Administrator. Nothing herein shall
prohibit the Administrator or its Affiliates from (in its or their sole
discretion) engaging in other businesses or from acting in a similar capacity as
a general administrator or manager for any other person or entity, even though
such person or entity may engage in business activities similar to those of the
Trust, the Owner Trustee or the Indenture Trustee.
8. Term of Agreement; Resignation and Removal of Administrator.
(a) This Agreement shall continue in force until the dissolution,
liquidation or other termination of the Trust, upon which event this Agreement
shall automatically terminate.
(b) The Administrator shall not be permitted to resign from the
obligations and duties hereby imposed on it, except upon the determination that
such obligations and 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. Any such determination permitting the resignation
of the Administrator shall be evidenced by an opinion of counsel to such effect
delivered to the Owner Trustee on behalf of the Trust.
(c) Subject to Section 8(e) of this Agreement, the Trust may remove
the Administrator without cause by providing the Administrator with at least 60
days' prior written notice.
(d) Subject to Section 8(e) of this Agreement, at the sole option of
the Trust, the Administrator may be removed immediately upon written notice of
termination from the Trust to the Administrator if any of the following events
shall occur:
(i) the Administrator shall default in the performance of any
of its duties under this Agreement and, after notice of such default, shall not
cure such default within ten days (or, if such default cannot be cured in such
time, shall not give within ten days such assurance of cure as shall be
reasonably satisfactory to the Owner Trustee on behalf of the Trust);
(ii) a court having jurisdiction in the premises shall enter a
decree or order for relief, and such decree or order shall not have been
vacated within 60 days, in respect of the Administrator in any involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect or appoint a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for the Administrator or any
substantial part of its property or order the winding-up or liquidation of its
affairs; or
(iii) the Administrator shall commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, shall consent to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator or similar official
for the Administrator or any substantial part of its property, shall consent
to the taking of possession by any such official of any substantial part
of its property, shall make any general assignment for the benefit of
creditors or shall fail generally to pay its debts generally as they become due.
The Administrator agrees that if any of the events specified in clauses (ii) or
(iii) of this Section shall occur, it shall give written notice thereof to the
Trust, the Owner Trustee and the Indenture Trustee within seven days following
the occurrence of such event.
(e) No resignation or removal of the Administrator pursuant to this
Section shall be effective unless and until (i) a successor Administrator shall
have been appointed by the Depositor (with the consent of the Owner Trustee,
which consent shall not be unreasonably withheld) and (ii) such successor
Administrator shall have agreed in writing to be bound by the terms of this
Agreement in the same manner as the predecessor Administrator is bound
hereunder.
(f) The appointment of any successor Administrator shall be effective
only after each Rating Agency, after having been given ten days prior notice of
such proposed appointment, shall have confirmed in writing that such appointment
will not result in a qualification, downgrade or withdrawal of the rating then
assigned by such Rating Agency to any Class of the Bonds.
9. Action upon Termination, Resignation or Removal. Promptly upon the
effective date of any termination of this Agreement pursuant to Section 8(a) of
this Agreement or the resignation or removal of the Administrator pursuant to
Section 8(b), 8(c) or 8(d) of this Agreement, respectively, the Administrator
shall be entitled to be paid all fees and reimbursable expenses accruing to it
to the date of such termination, resignation or removal. The Administrator shall
forthwith upon such termination pursuant to Section 8(a) of this Agreement
deliver to the Trust all property and documents of or relating to the Bonds or
the Collateral then in the custody of the Administrator. In the event of the
resignation or removal of the Administrator pursuant to Section 8(b), 8(c) or
8(d) of this Agreement, respectively, the Administrator shall cooperate with the
Trust and take all reasonable steps requested to assist the Trust in making an
orderly transfer of the duties of the Administrator.
10. Notices. Any notice, report or other communication given hereunder
shall be in writing and addressed as follows:
(a) if to the Trust or Owner Trustee, to:
ICCMAC Commercial Trust [______]
c/o ____________________________
________________________________
________________________________
Attention: ICCMAC Commercial Trust [______],
Series 199__-__
(b) If to the Administrator, to:
________________________________
________________________________
________________________________
Facsimile number: ______________
Attention: ____________________
with a copy to:
________________________________
________________________________
Attention: ____________________
(c) If to the Indenture Trustee, to:
________________________________
________________________________
________________________________
Facsimile number: ______________
Attention: ____________________
or to such other address as any such party shall have provided to the other
parties in writing. Any notice required to be in writing hereunder shall be
deemed given if such notice is mailed by certified mail, postage prepaid, or
hand-delivered to the address of such party as provided above.
11. Amendments.
(a) This Agreement may be amended from time to time by the parties
hereto as specified in this Section, provided that any amendment be accompanied
by the written consent of the Indenture Trustee and an opinion of counsel shall
be furnished to the Indenture Trustee stating that such amendment complies with
the provisions of this Section.
(b) If the purpose of the amendment is to prevent the imposition of
any federal or state taxes at any time that any Bonds are outstanding (i.e.
technical in nature), it shall not be necessary to obtain the consent of any
Bondholder to such amendment, but the Indenture Trustee shall be furnished with
an opinion of counsel that such amendment is necessary or helpful to prevent the
imposition of such taxes and is not materially adverse to any Bondholder.
(c) If the purpose of the amendment is to add or eliminate or change
any provision of this Agreement other than as contemplated in clause (b) above,
it shall not be necessary to obtain the consent of any Bondholder to such
amendment, but such amendment shall not be effective unless the Indenture
Trustee shall have been furnished with a letter from each Rating Agency
confirming that such amendment will not result in the qualification, downgrading
or withdrawal of the rating then assigned by such Rating Agency to any Class of
the Bonds.
12. Successors and Assigns. This Agreement shall not be assigned by the
Administrator unless (i) such assignment is previously consented to in writing
by the Trust [and the Indenture Trustee], (ii) each Rating Agency, after having
been given 10 days' prior written notice of such assignment, shall have
confirmed in writing confirming that such assignment will not result in a
qualification, downgrade or withdrawal of the rating then assigned by such
Rating Agency to any Class of the Bonds and (iii) the assignee shall have agree
in writing to be bound by the terms of this Agreement in the same manner as the
predecessor Administrator is bound hereunder. Notwithstanding the preceding
sentence, the Administrator may be merged with 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 the
Administrator shall be a party, or any Person succeeding to the business of the
Administrator, shall be the successor of the Administrator hereunder, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto [; provided, however, that no such successor or resulting
Person shall succeed to the rights or duties of the Administrator hereunder
unless each Rating Agency shall have confirmed in writing that such succession
will not result in the qualification, downgrading or withdrawal of the rating
then assigned by such Rating Agency to any Class of the Bonds]. Subject to the
foregoing, this Agreement shall bind any successors or assigns of the parties
hereto.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF [NEW YORK], WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
14. Headings. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
15. Counterparts. This Agreement may be executed in counterparts,
each of which when so executed shall together constitute but one and the same
agreement.
16. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
17. Limitation of Liability of Owner Trustee. Notwithstanding
anything contained herein to the contrary, this instrument has been executed
by __________________ not in its individual capacity but solely in its capacity
as Owner Trustee of the Trust and in no event shall ________________ in
its individual capacity have any liability for the representations, warranties,
covenants, agreements or other obligations of the Trust hereunder, as to all of
which recourse shall be had solely to the assets of the Trust.
18. Third-Party Beneficiary. The Indenture Trustee on behalf of the
Bondholders is a third-party beneficiary to this Agreement and is entitled to
the rights and benefits hereunder and may enforce the provisions hereof as if it
were a party hereto.
* * * * * * * *
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
ICCMAC COMMERCIAL TRUST [________]
By: ____________________, not in its individual
capacity but solely as Owner Trustee
By: _________________________
Name:
Title:
_________________________________,
as Administrator
By: ____________________________,
its general partner
By: _________________________
Name:
Title:
Exhibit 5.1
August 12, 1998
Imperial Credit Commercial Mortgage
Acceptance Corp.
11601 Wilshire Boulevard No. 2080
Los Angeles, California 90025
Re: Collateralized Mortgage Bonds
-----------------------------
Gentlemen:
We have acted as special counsel to Imperial Credit Commercial Mortgage
Acceptance Corp. (the "Depositor") in connection with the Registration Statement
on Form S-3 (the "Registration Statement"), which Registration Statement is
being filed with the Securities and Exchange Commission (the "Commission"),
pursuant to the Securities Act of 1933, as amended (the "Act"). The Prospectus
describes Collateralized Mortgage Bonds ("Bonds") to be sold by the Depositor in
one or more series (each, a "Series") of Bonds. Each Series of Bonds will be
issued under a separate indenture (each, an "Indenture") between the Depositor
or a trust formed by the Depositor (in either case, the "Issuer"), an indenture
trustee (an "Indenture Trustee") and, if applicable, such other parties to be
identified in the Prospectus Supplement for such Series. The form of Indenture
(an "Indenture") is filed as an exhibit to Depositor's Registration Statement.
Capitalized terms used and not otherwise defined herein have the respective
meanings given to such terms in the Registration Statement.
In rendering the opinions set forth below, we have examined and relied upon
the following: (1) the Registration Statement, the Prospectus and the form of
Prospectus Supplement constituting a part thereof, each substantially in the
form filed with the Commission; (2) the Indenture and (3) such other documents,
materials and authorities as we have deemed necessary in order to enable us to
render our opinion set forth below. We express no opinion with respect to any
Series of Bonds for which we do not act as counsel to the Depositor.
Based on the foregoing, we are of the opinion that:
1. When an Indenture for a Series of Bonds has been duly and validly
authorized, executed and delivered by the Depositor, an Indenture Trustee
and any other party thereto, such Indenture will constitute a valid and
legally binding agreement of the Issuer, enforceable against the Issuer in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, receivership or other
laws relating to creditors' rights generally, and to general principles of
equity including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity), and except that the enforcement of rights with
respect to indemnification and contribution obligations may be limited by
applicable law.
2. When an Indenture for a Series of Bonds has been duly and validly
authorized, executed and delivered by the Issuer, an Indenture Trustee and
any other party thereto, and the Bonds of such Series have been duly
executed, authenticated, delivered and sold as contemplated in the
Registration Statement, such Bonds will be legally and validly issued,
fully paid and nonassessable obligations of the Issuer, enforceable against
the Issuer in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, receivership
or other laws relating to creditors' rights generally, and to general
principles of equity including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in
a proceeding at law or in equity), and will be validly issued and
outstanding and entitled to the benefits provided by the Indenture.
3. The description of federal income tax consequences appearing under
the heading "Federal Income Tax Consequences" in the Prospectus accurately
describes the material federal income tax consequences to holders of
Offered Bonds under existing law and subject to the qualifications and
assumptions stated therein.
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 headings
"Legal Matters" and "Federal Income Tax Consequences" in the Prospectus, which
is a part of the Registration Statement. 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,
/s/ Cadwalader, Wickersham & Taft
