<PAGE>
As filed with the Securities and Exchange Commission on July 24, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
DLJ COMMERCIAL MORTGAGE CORP.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
13-3956945
(I.R.S. employer identification number)
277 Park Avenue
New York, New York 10172
(212) 892-3000
(Address, including zip code, and telephone number, including area code, of
registrant's principle executive offices)
The Corporation Trust Company
Corporate Trust Center
1209 Orange Street
Wilmington, Delaware 19801
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------
Copies to:
William J. Cullen, Esq.
Sidley & Austin
875 Third Avenue
New York, New York 10022
(212) 906-2258
<PAGE>
Approximate date of commencement of proposed sale to the public: From time
to time on or after the effective date of this Registration Statement.
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
plans, please check the following box. [x]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==========================================================================================================
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Amount Price Offering Registration
Title of Securities Being Registered to be Registered Per Unit Price Fee
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage Pass-Through Certificates $1,000,000 100% $1,000,000 $ 303.03
==========================================================================================================
</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 which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 24, 1997.
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.
PROSPECTUS SUPPLEMENT
(To Prospectus dated _________, 199__)
$
(Approximate)
DLJ Commercial Mortgage Corp.
Mortgage Pass-Through Certificates,
Series 199__-____
The Series 199_-___ Mortgage Pass-Through Certificates (the "Certificates")
will consist of [13] classes (each, a "Class") to be designated as: [(i) the
Class S Certificates; (ii) the Class A-1A Certificates, the Class A-1B
Certificates, the Class A-2 Certificates and the Class A-3 Certificates
(collectively, the "Class A Certificates"); (iii) the Class B-1 Certificates,
the Class B-2 Certificates, the Class B-3 Certificates and the Class B-4
Certificates (collectively, the "Class B Certificates"); (iv) the Class C
Certificates (collectively with the Class S, Class A and Class B Certificates,
the "REMIC Regular Certificates"); and (v) the Class R-I Certificates, the Class
R-II Certificates and the Class R-III Certificates (collectively, the "REMIC
Residual Certificates")]. Only the Class S Certificates, the Class A
Certificates and the Class B-1 Certificates (collectively, the "Offered
Certificates") are offered hereby. The respective Classes of Offered
Certificates will be issued with the initial Class Principal Balances (or, in
the case of the Class S Certificates, the initial Class Notional Amount), and
will accrue interest at the Pass-Through Rates, set forth or otherwise described
below.
(Continued on page S-2)
<TABLE>
<CAPTION>
===================================================================================================================
Initial Class Rating
Principal Balance Pass-Through Assumed Final ([identify Rating
Class or Class Notional Amount(a) Rate Distribution Date(b) Agencies])(c)(d)
===================================================================================================================
<S> <C> <C> <C> <C>
Class S............. $ (1) %(2)
Class A-1A ......... $ %
Class A-1B.......... $ %
Class A-2........... $ %
Class A-3........... $ %
Class B-1........... $ %
===================================================================================================================
</TABLE>
(Footnotes to table on next page)
---------------------
FOR A DISCUSSION OF CERTAIN RISK FACTORS TO BE CONSIDERED IN PURCHASING
THE OFFERED CERTIFICATES, 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 Certificates will be purchased from the Depositor 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 Depositor from the sale of the
Offered Certificates, before deducting expenses payable by the Depositor
estimated to be approximately $_____________, will be ______% of the initial
aggregate Certificate Principal Balance (as defined herein) of the Offered
Certificates[, plus accrued interest on the Offered Certificates from the
Cut-off Date]. The Offered Certificates 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
Certificates 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>
The footnotes to the table on the previous page are as follows:
(a) The initial Class Principal Balance or Class Notional Amount, as
applicable, of each Class of Offered Certificates is subject to a permitted
variance of plus or minus __%. See "Description of the Certificates--Class
Principal Balances and Class Notional Amounts" herein.
(b) The "Assumed Final Distribution Date" with respect to any Class of
Certificates is the Distribution Date (as defined herein) on which the
final distribution would occur for such Class of Certificates 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
Certificates be assigned ratings by _________________ ("_____") and/or
________________________ ("________"; and together with ________, the
"Rating Agencies") no less than those set forth above. The "Rated Final
Distribution Date" for each such Class is the Distribution Date in
____________ 20__. The Class S Certificates are not being rated by _____.
See "Ratings" herein.
(d) The ratings on the Offered Certificates 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 and Yield Maintenance Premiums (each as defined herein) will be
received. Also a security rating does not represent any assessment of the
yield to maturity that investors may experience or the possibility that the
Class S Certificateholders might not fully recover their investment in the
event of rapid prepayments of the Mortgage Loans (including both voluntary
and involuntary prepayments). See "Ratings" herein.
(1) The Class S Certificates will not have a Class Principal Balance. The Class
S Certificates will accrue interest on a Class Notional Amount that is
equal to the aggregate of the Class Principal Balances of the respective
Classes of Sequential Pay Certificates (as defined herein) outstanding from
time to time.
(2) Initial Pass-Through Rate. The related Pass-Through Rate is variable and
will, in general, equal the excess, if any, of the weighted average of the
Net Mortgage Rates of the Mortgage Loans (the "Weighted Average Net
Mortgage Rate") from time to time, over the weighted average of the
Pass-Through Rates for the respective Classes of Sequential Pay
Certificates from time to time.
---------------------
(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 Prospectus for the location of meanings of capitalized terms used but not
defined herein.
There is currently no secondary market for the Offered Certificates. The
Underwriter intends to make a secondary market in the Offered Certificates, but
is not obligated to do so. There can be no assurance that a secondary market for
the Offered Certificates will develop or, if one does develop, that it will
continue. See "Risk Factors-Limited Liquidity" herein. The Offered Certificates
will not be listed on any securities exchange.
The Certificates will represent undivided interests in a trust fund (the
"Trust Fund") to be established by DLJ Commercial Mortgage Corp. (the
"Depositor"), pursuant to a Pooling and Servicing Agreement to be dated as of
____________ , 199__ (the "Pooling Agreement"), among the Depositor,
___________________, as master servicer (the "Master Servicer"),
_____________________________, as special servicer (the "Special Servicer"), and
____________________ as trustee (in such capacity, the "Trustee") and REMIC
administrator (in such capacity, the "REMIC Administrator"). The Trust Fund will
consist 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 __%.]
Distributions to holders of the Certificates ("Certificateholders") will be
made, to the extent of available funds, on the __th day of each month or, if any
such day is not a business day, on the next succeeding business day, beginning
in _________, 199_ (each, a "Distribution Date"). As more fully described
herein,
S-2
<PAGE>
distributions allocable to interest accrued on each Class of the REMIC Regular
Certificates [(the REMIC Residual Certificates will not accrue interest)] will
be made on each Distribution Date based on the Pass-Through Rate then applicable
to such Class and the Class Principal Balance or, in the case of the Class S
Certificates, the Class Notional Amount of such Class outstanding immediately
prior to such Distribution Date. As more fully described herein, distributions
allocable to principal of the respective Classes of Certificates with Class
Principal Balances (collectively, the "Sequential Pay Certificates") will be
made in the amounts and in accordance with the priorities described herein.
Neither the Class S Certificates nor any Class of REMIC Residual Certificates
will have a Class Principal Balance or entitle its holders to distributions of
principal. As more fully described herein, Prepayment Premiums and Yield
Maintenance Premiums actually collected on the Mortgage Loans will be
distributed among the respective Classes of Certificates in the amounts and in
accordance with the priorities described herein. The Trust Fund is subject to
termination, and the Certificates are subject to early retirement, at the option
of the Master Servicer or the Special Servicer under the limited circumstances
described herein. See "Description of the Certificates--Distributions" and
"--Termination" herein.
As and to the extent described herein, the Class A-2, Class A-3, Class B,
Class C and REMIC Residual Certificates (collectively, the "Subordinate
Certificates") are subordinate to the Class S, Class A-1A and Class A-1B
Certificates (collectively, the "Senior Certificates"); the Class A-3, Class B,
Class C and REMIC Residual Certificates are subordinate to the Class A-2
Certificates; the Class B, Class C and REMIC Residual Certificates are
subordinate to the Class A-3 Certificates; and the Class B-2, Class B-3, Class
B-4, Class C and REMIC Residual Certificates are subordinate to the Class B-1
Certificates. See "Description of the Certificates--Distributions" and
"--Subordination; Allocation of Realized Losses and Certain Expenses" herein.
The yield to maturity of each Class of Offered Certificates will depend on,
among other things, the rate and timing of principal payments (including by
reason of or as affected by prepayments, loan extensions, defaults and
liquidations) and losses on the Mortgage Loans that are applied or otherwise
result in reduction of the Class Principal Balance or Class Notional Amount, as
the case may be, of such Class. The yield to maturity of the Class S
Certificates will be highly sensitive to the rate and timing of principal
payments (including by reason of prepayments, defaults and liquidations) and
losses on the Mortgage Loans that are applied or otherwise result in reduction
of the Class Notional Amount of such Class, and investors in the Class S
Certificates should fully consider the associated risks, including the risk that
an extremely rapid rate of amortization and prepayment of, or other reduction
in, the Class Notional Amount of such Class could result in the failure of such
investors to recoup fully their initial investments. See "Risk Factors" and
"Yield and Maturity Considerations" herein and in the Prospectus.
As described herein, three separate "real estate mortgage investment
conduit" ("REMIC") elections will be made with respect to the Trust Fund for
federal income tax purposes (the REMICs formed thereby being herein referred to
as "REMIC I", "REMIC II" and "REMIC III", respectively). The REMIC Regular
Certificates will constitute "regular interests" in REMIC III, and each Class of
REMIC Residual Certificates will constitute the sole class of "residual
interests" in the related REMIC. See "Certain Federal Income Tax Consequences"
herein.
[inside front cover]
THE OFFERED CERTIFICATES DO NOT REPRESENT OBLIGATIONS OF THE DEPOSITOR, THE
MASTER SERVICER, THE SPECIAL SERVICER, THE TRUSTEE, THE REMIC ADMINISTRATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, TRUSTEES,
BENEFICIARIES, SHAREHOLDERS, EMPLOYEES OR AGENTS. NEITHER THE OFFERED
CERTIFICATES NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY OTHER PERSON. THE OFFERED
CERTIFICATES ARE PAYABLE SOLELY FROM THE TRUST FUND, AND PROSPECTIVE INVESTORS
SHOULD MAKE AN INVESTMENT DECISION BASED UPON AN ANALYSIS OF THE SUFFICIENCY OF
THE TRUST FUND.
THE CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT CONSTITUTE PART OF A
SEPARATE SERIES OF CERTIFICATES ISSUED BY THE DEPOSITOR AND ARE BEING OFFERED
PURSUANT TO ITS PROSPECTUS DATED _____________, 199__, 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
S-3
<PAGE>
THIS PROSPECTUS SUPPLEMENT IN FULL. SALES OF THE OFFERED CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS.
UNTIL NINETY DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE OFFERED CERTIFICATES, 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.
S-4
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
TRANSACTION OVERVIEW..................................................................... S-7
SUMMARY OF PROSPECTUS SUPPLEMENT......................................................... S-8
RISK FACTORS............................................................................. S-27
DESCRIPTION OF THE MORTGAGE POOL......................................................... S-30
General.......................................................................... S-30
Certain Payment Characteristics.................................................. S-30
The Index........................................................................ S-31
[Delinquent and Nonperforming Mortgage Loans].................................... S-31
Additional Mortgage Loan Information............................................. S-31
The Mortgage Loan Seller......................................................... S-39
Underwriting of the Mortgage Loans............................................... S-39
Representations and Warranties with respect to Mortgage Loans; Repurchases....... S-40
Changes in Mortgage Pool Characteristics......................................... S-40
SERVICING OF THE MORTGAGE LOANS.......................................................... S-40
General.......................................................................... S-40
The Master Servicer.............................................................. S-42
The Special Servicer............................................................. S-42
Sub-Servicers.................................................................... S-43
Servicing and Other Compensation and Payment of Expenses......................... S-43
Modifications, Waivers, Amendments and Consents.................................. S-45
Inspections; Collection of Operating Information................................. S-46
[Termination of [Special Servicer] [Master Servicer] Without Cause].............. S-47
DESCRIPTION OF THE CERTIFICATES.......................................................... S-47
General.......................................................................... S-47
Registration and Denominations................................................... S-47
Class Principal Balances and Class Notional Amounts.............................. S-48
Pass-Through Rates............................................................... S-49
Distributions.................................................................... S-50
Subordination; Allocation of Realized Losses and Certain Expenses................ S-55
P&I and Other Advances........................................................... S-56
[Appraisal Reductions]........................................................... S-57
Reports to Certificateholders; Certain Available Information..................... S-58
Voting Rights.................................................................... S-59
Termination...................................................................... S-59
The Trustee...................................................................... S-60
YIELD AND MATURITY CONSIDERATIONS........................................................ S-60
Yield Considerations............................................................. S-60
Weighted Average Life............................................................ S-62
Special Yield Considerations for the Class S Certificates........................ S-64
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................. S-65
General.......................................................................... S-65
Discount and Premium; Prepayment Premiums........................................ S-65
Characterization of Investments in Offered Certificates.......................... S-66
Possible Taxes on Income from Foreclosure Property and Other Taxes .............. S-66
Reporting and other Administrative Matters....................................... S-67
S-5
<PAGE>
</TABLE>
METHOD OF DISTRIBUTION...................................................S-67
LEGAL MATTERS............................................................S-68
ERISA CONSIDERATIONS.....................................................S-68
LEGAL INVESTMENT.........................................................S-71
RATINGS .................................................................S-71
S-6
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION OVERVIEW
Prospective investors in the Offered Certificates are advised to carefully
read, and should rely solely on, the detailed information appearing elsewhere in
this Prospectus Supplement and the Prospectus in making their investment
decision. The following Transaction Overview does not include all relevant
information relating to the Offered Certificates or the Mortgage Loans,
particularly with respect to the risks and special considerations involved with
an investment in the Offered Certificates, and is qualified in its entirety by
reference to the detailed information appearing elsewhere in this Prospectus
Supplement and the Prospectus. Prior to making any investment decision, a
prospective investor should carefully review this Prospectus Supplement and the
Prospectus.
$__________________
(Approximate)
DLJ Commercial Mortgage Corp.
Mortgage Pass-Through Certificates
Series 199_-____
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Initial Class Rating Pass-Through Credit
Principal Balance(1) Class ___/_____ Rate Support(2)
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ Class A-1A %
----------------------------------------------------------------------------------
$ Class A-1B % %
----------------------------------------------------------------------------------
$ Class A-2 % %
----------------------------------------------------------------------------------
Class S (___) $ Class A-3 % %
(Interest Strip off ----------------------------------------------------------------------------------
Classes A-1A $ Class B-1 % %
through C)(3) ----------------------------------------------------------------------------------
$ Class B-2(4) % %
----------------------------------------------------------------------------------
$ Class B-3(4) % %
----------------------------------------------------------------------------------
$ Class B-4(4) % %
----------------------------------------------------------------------------------
$ Class C(4) % %
- -----------------------------------------------------------------------------------------------------------------
N/A Class R-I(4) N/A
- -----------------------------------------------------------------------------------------------------------------
N/A Class R-II(4) N/A
- -----------------------------------------------------------------------------------------------------------------
N/A Class R-III(4) N/A
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Ratings: ___ and/or _____ (the Class S Certificates are rated only by
_____).
(1) [Subject to a variance of plus or minus _%].
(2) Reflects aggregate of Class Principal Balances (expressed as a percentage
of the Initial Pool Balance) of all Classes of Sequential Pay Certificates
that are subordinate to the specified Class of Certificates.
(3) The initial Pass-Through Rate for the Class S Certificates is ________% per
annum. The related Pass-Through Rate for the Class S Certificates is
variable and will, in general, equal the excess, if any, of the Weighted
Average Net Mortgage Rate from time to time, over the weighted average of
the Pass-Through Rates for the respective Classes of Sequential Pay
Certificates from time to time.
(4) Not offered hereby.
- --------------------------------------------------------------------------------
S-7
<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.
Title of Certificates and
Designation of Classes.............. Mortgage Pass-Through Certificates,
Series 199_-___ (the "Certificates"), to
be issued in [13] classes (each, a
"Class") to be designated as: [(i) the
Class S Certificates; (ii) the Class
A-1A, Class A-1B, Class A-2 and Class
A-3 Certificates (collectively, the
"Class A Certificates"); (iii) the Class
B-1, Class B-2, Class B-3 and Class B-4
Certificates (collectively, the "Class B
Certificates"); (iv) the Class C
Certificates (collectively with the
Class S, Class A and Class B
Certificates, the "REMIC Regular
Certificates"); and (v) the Class R-I,
Class R-II and Class R-III Certificates
(collectively, the "REMIC Residual
Certificates")]. Only the Class S
Certificates, the Class A Certificates
and the Class B-1 Certificates
(collectively, the "Offered
Certificates") are offered hereby.
The Class B-2, Class B-3, Class B-4 and
Class C Certificates and the REMIC
Residual Certificates (collectively, the
"Private Certificates") will not be
registered under the Securities Act of
1933, as amended (the "Securities Act")
and are not offered hereby. Accordingly,
to the extent this Prospectus Supplement
contains information regarding the terms
of the Private Certificates, such
information is provided because of its
potential relevance to a prospective
purchaser of an Offered Certificate.
Depositor............................. DLJ Commercial Mortgage Corp., a
Delaware corporation. See "The
Depositor" in the Prospectus.
Master Servicer....................... ____________________. See "Servicing of
the Mortgage Loans--The Master Servicer"
herein.
Special Servicer...................... ____________________. See "Servicing of
the Mortgage Loans--The Special
Servicer" herein.
Trustee and REMIC Administrator....... ____________________. See Description of
the Certificates--The Trustee" and
"Certain Federal Income Tax
Consequences--Reporting and Other
Administrative Matters" herein.
Mortgage Loan Seller ............... ____________________ (the "Mortgage Loan
Seller"). See "Description of the
Mortgage Pool--The Mortgage Loan Seller"
herein.
Cut-off Date.......................... ___________, 199_.
Closing Date.......................... On or about ___________, 199_.
- --------------------------------------------------------------------------------
S-8
<PAGE>
- --------------------------------------------------------------------------------
Distribution Date..................... The __th day of each month or, if any
such __th day is not a business day,
then the next succeeding business day,
commencing in ________, 199_.
Collection Period..................... As to any Distribution Date, the period
commencing immediately following the
Determination Date in the month
immediately preceding the month in which
such Distribution Date occurs (or, in
the case of the initial Distribution
Date, commencing immediately following
the Cut-off Date) and ending on and
including the related Determination
Date.
Determination Date.................... As to any Distribution Date, the _th day
of the month in which such Distribution
Date occurs, or if such _th day is not a
business day, the immediately preceding
business day.
Record Date........................... As to any Distribution Date, the last
business day of the month immediately
preceding the month in which such
Distribution Date occurs.
Book-Entry Registration............... Each Class of Offered Certificates will
initially be issued in book-entry form
through the facilities of DTC and,
accordingly, will constitute "Book-Entry
Certificates" within the meaning of the
Prospectus. No person acquiring an
interest in a Book-Entry Certificate
(any such person, a "Certificate Owner")
will be entitled to receive a fully
registered physical certificate (a
"Definitive Certificate") evidencing
such interest, except under the limited
circumstances described in the
Prospectus. See "Risk
Factors--Book-Entry Registration" in the
Prospectus and "Description of the
Certificates--Registration and
Denominations" herein and "Description
of the Certificates--Book-Entry
Registration and Definitive
Certificates" in the Prospectus.
Denominations......................... The Class A-1A and Class A-1B
Certificates will each be issued in
minimum denominations of $________
initial principal balance and in any
whole dollar in excess thereof. The
Class S Certificates will each be issued
in minimum denominations of $________
initial notional amount and in any whole
dollar in excess thereof. The Class A-2,
Class A-3 and Class B-1 Certificates
will each be issued in minimum
denominations of $________ in initial
principal balance and in any whole
dollar in excess thereof.
The Mortgage Pool..................... The Mortgage Pool will consist of _____
[describe general characteristics of
Mortgage Loans] mortgage loans (the
"Mortgage Loans") with an aggregate
Cut-off Date Balance of $________ (the
"Initial Pool Balance") [, subject to a
permitted variance of plus or minus
___%]. The "Cut-off Date Balance" of
each Mortgage Loan is the unpaid
principal balance thereof as of the
Cut-off Date, after application of all
payments due on or before such date,
whether or not received. All numerical
information provided herein with respect
to the Mortgage Loans is provided on an
approximate basis. All weighted average
information provided herein with respect
to the Mortgage
- --------------------------------------------------------------------------------
S-9
<PAGE>
- --------------------------------------------------------------------------------
Loans reflects the weighting of the
Mortgage Loans by their Cut-off Date
Balances.
Each Mortgage Loan is evidenced by a
note or bond (a "Mortgage Note") and is
secured by a [first] mortgage, deed of
trust or similar security instrument (a
"Mortgage") on the fee simple (or, in
___ cases, representing ___% of the
Initial Pool Balance, the leasehold)
interest of the related mortgagor (the
"Mortgagor") in real property used for
commercial or multifamily purposes, all
buildings and improvements thereon and
certain personal property located
thereon (each, a "Mortgaged Property")
and security interests in certain funds
and accounts and other collateral
described herein.
The Mortgage Loans are non-recourse
obligations of the related Mortgagors.
No Mortgage Loan will be insured or
guaranteed by any governmental entity or
private insurer or by any other person.
Set forth below are the number of
Mortgage Loans, and the approximate
percentage of the Initial Pool Balance
represented by such Mortgage Loans, that
are secured by Mortgaged Properties
located in the _____ states with the
highest concentrations:
Number of Percentage of
State Mortgage Loans Initial Pool Balance
----- -------------- --------------------
[Identify states representing 10% or
more of the Initial Pool Balance.]
The remaining Mortgaged Properties are
located throughout ___ other states.
Set forth below are the number of
Mortgage Loans, and the approximate
percentage of the Initial Pool Balance
represented by such Mortgage Loans, that
are secured by Mortgaged Properties
operated for each indicated purpose:
Property Number of Percentage of
Type Mortgage Loans Initial Pool Balance
-------- -------------- --------------------
[Identify particular property types
representing 10% or more of the Initial
Pool Balance.]
________ of the Mortgage Loans, which
represent _____% of the Initial Pool
Balance, 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
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S-10
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annualized rate at which interest
accrues (the "Mortgage Rate") on ____ of
the Mortgage Loans (the "ARM Loans"),
which represent _____% of the Initial
Pool Balance, is subject to adjustment
on specified Due Dates (each such date
of adjustment, an "Interest Rate
Adjustment Date") by adding a fixed
number of basis points (a "Gross
Margin") to the value of a base index
(an "Index"), subject, in ______ cases,
to lifetime maximum and/or minimum
Mortgage Rates, and in _____ cases, to
periodic maximum and/or minimum Mortgage
Rates, in each case as described herein;
and the remaining Mortgage Loans (the
"Fixed Rate Loans") bear interest at
fixed Mortgage Rates. ____ of the ARM
Loans, which represent ___% of the
Initial Pool Balance, provide for
Interest Rate Adjustment Dates that
occur monthly, while the remainder of
the ARM Loans provide for adjustments of
the Mortgage Rate to occur semi-annually
or annually. [Identify Mortgage Loan
Index].] See "Description of the
Mortgage Pool--Certain Payment
Characteristics" herein.
[If there are ARM Loans: The amount of
the Monthly Payment on all of the ARM
Loans is 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 then
applicable Mortgage Rate]. [Discuss
frequency of Payment Adjustment Dates
and possibility of negative amortization
of interest.]]
_____ of the Mortgage Loans (the
"Balloon Loans"), representing ___% of
the Initial Pool Balance, provide for
monthly payments of principal based on
amortization schedules significantly
longer than the remaining terms of such
Mortgage Loans, thereby leaving
substantial principal amounts due and
payable (each such payment, together
with the corresponding interest payment,
a "Balloon Payment") on their respective
maturity dates (each, a "Maturity
Date"), unless prepaid prior thereto.
The remaining Mortgage Loans are fully
amortizing.
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
assignment of its interests in the
Mortgage Loans to the Trustee, 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
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S-11
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warranties regarding the Mortgage Loans.
See "Description of the Mortgage
Pool--Representations and Warranties
with respect to the Mortgage Loans;
Repurchases" herein.
Prepayment............................ [All the Mortgage Loans provided at
origination for, sequentially, a period
(a "Lockout Period") during which
voluntary prepayments of principal
(each, a "Principal Prepayment") are
prohibited, then a period during which
Principal Prepayments are permitted but
are required to be accompanied by the
greater of a specified percentage of the
principal amount being prepaid (a
"Prepayment Premium") or a premium
calculated on the basis of a yield
maintenance formula (a "Yield
Maintenance Premium") and then,
commencing on a specified date prior to
maturity, a period (the related "Open
Period") during which Principal
Prepayments may be made without payment
of any Prepayment Premium or Yield
Maintenance Premium.]
Description of the
Certificates........................ The Certificates will be issued on the
Closing Date pursuant to a Pooling and
Servicing Agreement to be dated as of
the Cut-off Date (the "Pooling
Agreement") among the Depositor, the
Master Servicer, the Special Servicer,
the Trustee and the REMIC Administrator,
and will represent in the aggregate the
entire beneficial ownership interest in
a trust fund (the "Trust Fund")
consisting of the Mortgage Pool and
certain related assets. See "Description
of the Certificates--General" herein.
A. Class Principal Balances and
Class Notional Amounts......... Upon initial issuance, the respective
Classes of the Class A, Class B and
Class C Certificates (collectively, the
"Sequential Pay Certificates") will, in
each case, have the aggregate principal
balance (the "Class Principal Balance")
set forth below[, subject to a variance
of plus or minus __%]:
Approximate
Initial Class Percentage of
Class Principal Balance Initial Pool Balance
----- ----------------- --------------------
Class A-1A
Class A-1B
Class A-2
Class A-3
Class B-1
Class B-2
Class B-3
Class B-4
Class C
The Class S Certificates will not have a
Class Principal Balance. The Class S
Certificates will represent the right to
receive distributions of interest
accrued as described herein on (an
aggregate notional amount (a "Class
Notional Amount") equal to the aggregate
of the Class Principal Balances of the
respective Classes of Sequential Pay
Certificates outstanding from time to
time. The Class
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<PAGE>
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Notional Amount of the Class S
Certificates is used solely for the
purpose of determining the amount of
interest to be distributed on such Class
of Certificates and does not represent
the right to receive any distributions
of principal. The Class Notional Amount
of the Class S Certificates will
initially equal $_______[, subject to a
variance of plus or minus ___%].
The REMIC Residual Certificates will not
have principal balances or notional
amounts. See "Description of the
Certificates--Class Principal Balances
and Class Notional Amounts" herein.
B. Pass-Through Rates................. The rate per annum at which any Class of
REMIC Regular Certificates accrue
interest from time to time [(the REMIC
Residual Certificates do not accrue
interest)] is herein referred to as its
"Pass-Through Rate".
[The Pass-Through Rate applicable to
each Class of Sequential Pay
Certificates is fixed at the per annum
rate set forth below:
Class Pass-Through Rate
----- -----------------
Class A-1A
Class A-1B
Class A-2
Class A-3
Class B-1
Class B-2
Class B-3
Class B-4
Class C
The Pass-Through Rate applicable to the
Class S Certificates for the initial
Distribution Date will be approximately
____% per annum. The Pass-Through Rate
applicable to the Class S Certificates
for each subsequent Distribution Date
will equal the excess, if any, of the
Weighted Average Net Mortgage Rate for
such Distribution Date, over the
weighted average of the Pass-Through
Rates for the respective Classes of
Sequential Pay Certificates for such
Distribution Date (weighted on the basis
of the respective Class Principal
Balances of such Classes of Certificates
outstanding immediately prior to such
Distribution Date).
Because the REMIC Residual Certificates
will not accrue interest, such
Certificates will not have Pass-Through
Rates.]
With respect to any Distribution Date,
the "Weighted Average Net Mortgage Rate"
will, in general, equal the weighted
average of the Net Mortgage Rates in
effect for the Mortgage Loans as of the
commencement of the related Collection
Period, weighted on the basis of the
respective Stated Principal Balances (as
defined herein) of the Mortgage Loans
immediately prior to such Distribution
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S-13
<PAGE>
- --------------------------------------------------------------------------------
Date. The "Net Mortgage Rate" with
respect to any Mortgage Loan is, in
general, a per annum rate equal to the
related Mortgage Rate in effect from
time to time, minus ___ basis points[;
provided that if any Mortgage Loan does
not accrue interest on the basis of a
360-day year consisting of twelve 30-day
months (which is the basis on which
interest accrues in respect of the REMIC
Regular Certificates), then, solely for
purposes of calculating the Pass-Through
Rate for the Class S Certificates, the
Net Mortgage Rate of such Mortgage Loan
for any one-month period preceding a
related Due Date will be the annualized
rate at which interest would have to
accrue in respect of such loan on the
basis of a 360-day year consisting of
twelve 30-day months in order to produce
the aggregate amount of interest
actually accrued in respect of such loan
during such one-month period at the
related Mortgage Rate (net of ___ basis
points); and provided, further, that,
solely for purposes of calculating the
Pass-Through Rate for the Class S
Certificates from time to time, the Net
Mortgage Rate for any Mortgage Loan will
be determined without regard to any
post-Closing Date modifications to the
terms of the related Mortgage Note that
may affect the Mortgage Rate]. As of the
Cut-off Date, the Net Mortgage Rates for
the Mortgage Loans will range from ___%
per annum to ___% per annum, with a
weighted average Net Mortgage Rate of
___% per annum. See "Description of the
Certificates--Pass-Through Rates"
herein.]
C. Distributions--General............. Distributions will be made by or on
behalf of the [Trustee] on each
Distribution Date to the
Certificateholders of record at the
close of business on the immediately
preceding Record Date. All distributions
made with respect to any Class of
Certificates will be allocated pro rata
among the outstanding Certificates of
such Class based on the respective
Percentage Interests (as defined herein)
in such Class evidenced by such
Certificates.
D. Distributions of Interest
and Principal ...................... As more particularly described herein,
the total of all payments and other
collections (or advances in lieu
thereof) on or in respect of the
Mortgage Loans that are available for
distributions of interest and principal
to Certificateholders on any
Distribution Date is herein referred to
as the "Available Distribution Amount"
for such date. [Prepayment Premiums and
Yield Maintenance Premiums actually
collected on the Mortgage Loans will not
be applied to distributions of interest
on and principal of the Certificates,
but such items will instead be
distributed to Certificateholders
separately, in the amounts and in
accordance with the priorities described
herein.] See "Description of the
Certificates--Distributions--The
Available Distribution Amount" and
"--Distributions--Distributions of
Prepayment Premiums and Yield
Maintenance Premiums" herein.
[On each Distribution Date, except as
otherwise described under "Description
of the Certificates--Termination"
herein, the Available Distribution
Amount for such date
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S-14
<PAGE>
- --------------------------------------------------------------------------------
will be distributed among the respective
Classes of Certificateholders for the
following purposes and in the following
order of priority:
(i) to the holders of the Class S,
Class A-1A and Class A-1B
Certificates in respect of
interest, pro rata based on
entitlement, up to an amount equal
to all Distributable Certificate
Interest (as defined below) in
respect of each such Class of
Certificates for such Distribution
Date and, to the extent not
previously paid, for all prior
Distribution Dates;
(ii) to the holders of the Class A-1A
and Class A-1B Certificates in
respect of principal, allocable as
between such Classes of
Certificateholders as described
herein, up to an amount equal to
the lesser of (1) the aggregate of
the then outstanding Class
Principal Balances of the Class
A-1A and Class A-1B Certificates
and (2) the Principal Distribution
Amount (as defined below) for such
Distribution Date;
(iii) to the holders of the Class A-1A
and Class A-1B Certificates as
reimbursement, pro rata based on
entitlement, up to an amount equal
to all Realized Losses and
Additional Trust Fund Expenses
(each as defined below), if any,
previously allocated to each such
Class of Certificates and for
which no reimbursement has
previously been received;
(iv) to the holders of the Class A-2
Certificates in respect of
interest, up to an amount equal to
all Distributable Certificate
Interest in respect of such Class
of Certificates for such
Distribution Date and, to the
extent not previously paid, for
all prior Distribution Dates;
(v) after the Class Principal Balances
of the Class A-1A and Class A-1B
Certificates have been reduced to
zero, to the holders of the Class
A-2 Certificates in respect of
principal, up to an amount equal
to the lesser of (a) the then
outstanding Class Principal
Balance of the Class A-2
Certificates and (b) the excess,
if any, of the Principal
Distribution Amount for such
Distribution Date over the amounts
distributed on such Distribution
Date pursuant to clause (ii)
above;
(vi) to the holders of the Class A-2
Certificates as reimbursement, up
to an amount equal to all Realized
Losses and Additional Trust Fund
Expenses, if any, previously
allocated to such Class of
Certificates and for which no
reimbursement has previously been
received;
(vii) to the holders of the Class A-3
Certificates in respect of
interest, up to an amount equal to
all
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S-15
<PAGE>
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Distributable Certificate
Interest in respect of such Class
of Certificates for such
Distribution Date and, to the
extent not previously paid, for
all prior Distribution Dates;
(viii) after the Class Principal
Balances of the Class A-1A, Class
A-1B and Class A-2 Certificates
have been reduced to zero, to the
holders of the Class A-3
Certificates in respect of
principal, up to an amount equal
to the lesser of (a) the then
outstanding Class Principal
Balance of the Class A-3
Certificates and (b) the excess,
if any, of the Principal
Distribution Amount for such
Distribution Date over the amounts
distributed on such Distribution
Date pursuant to clauses (ii) and
(v) above;
(ix) to the holders of the Class A-3
Certificates as reimbursement, up
to an amount equal to all Realized
Losses and Additional Trust Fund
Expenses, if any, previously
allocated to such Class of
Certificates and for which no
reimbursement has previously been
received;
(x) to the holders of the Class B-1
Certificates in respect of
interest, up to an amount equal to
all Distributable Certificate
Interest in respect of such Class
of Certificates for such
Distribution Date and, to the
extent not previously paid, for
all prior Distribution Dates;
(xi) after the Class Principal Balances
of the Class A Certificates have
been reduced to zero, to the
holders of the Class B-1
Certificates in respect of
principal, up to an amount equal
to the lesser of (a) the then
outstanding Class Principal
Balance of the Class B-1
Certificates and (b) the excess,
if any, of the Principal
Distribution Amount for such
Distribution Date over the amounts
distributed on such Distribution
Date pursuant to clauses (ii), (v)
and (viii) above;
(xii) to the holders of the Class B-1
Certificates as reimbursement, up
to an amount equal to all Realized
Losses and Additional Trust Fund
Expenses, if any, previously
deemed allocated to such Class of
Certificates and for which no
reimbursement has previously been
received; and
(xiii) to the holders of the Class B-2,
Class B-3, Class B- 4, Class C and
REMIC Residual Certificates,
sequentially in that order,
amounts in respect of interest,
principal and reimbursement for
unreimbursed Realized Losses and
Additional Trust Fund Expenses, if
any, for each such Class as more
fully described under "Description
of the Certificates--
Distributions--Application of the
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S-16
<PAGE>
- --------------------------------------------------------------------------------
Available Distribution Amount"
herein; provided, however, that no
distributions of principal will be
made to any holder of any such
Class of Certificates until the
respective Class Principal
Balances of the Class A and Class
B-1 Certificates have all been
reduced to zero.]
[Except under the limited circumstances
described herein, distributions of
principal on the Class A-1A and Class
A-1B Certificates as described in clause
(ii) above will be paid, first, to the
holders of the Class A-1A Certificates,
until the Class Principal Balance of
such Class of Certificates is reduced to
zero, and thereafter, to the holders of
the Class A-1B Certificates, until the
Class Principal Balance of such Class of
Certificates is reduced to zero. See
"Description of the
Certificates--Distributions--Application
of the Available Distribution Amount"
herein.]
[The "Distributable Certificate
Interest" in respect of any Class of
REMIC Regular Certificates for any
Distribution Date will equal one month's
interest at the applicable Pass-Through
Rate accrued on the Class Principal
Balance or Class Notional Amount, as the
case may be, of such Class of
Certificates outstanding immediately
prior to such Distribution Date, reduced
(to not less than zero) by such Class of
Certificates' allocable share
(calculated as described herein) of any
Net Aggregate Prepayment Interest
Shortfall (as described below) for such
Distribution Date incurred in connection
with the voluntary prepayment of
Mortgage Loans prior to their respective
Due Dates during the related Collection
Period. Distributable Certificate
Interest will be calculated on the basis
of a 360-day year consisting of twelve
30-day months.]
[The "Principal Distribution Amount" for
any Distribution 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
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S-17
<PAGE>
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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 Distribution Date is
subsequent to the initial
Distribution Date, the excess, if
any, of (i) the Principal
Distribution Amount for the
immediately preceding Distribution
Date, over (ii) the aggregate
distributions of principal made in
respect of the Certificates on
such immediately preceding
Distribution 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.]
[E. Distributions of Prepayment
Premiums and Yield Maintenance
Premiums.............................. Any Prepayment Premium actually
collected with respect to a Mortgage
Loan during any particular Collection
Period, net of any portion thereof that
is allocable to pay a Liquidation Fee or
a Workout Fee (each as defined herein)
to the Special Servicer, will be
distributed on the related Distribution
Date as follows:
(i) if the Class Notional Amount of
the Class S Certificates
immediately prior to such
Distribution Date is greater than
zero, to the holders of the Class
S Certificates; and
(ii) if the Class Notional Amount of
the Class S Certificates has been
reduced to zero prior to such
Distribution Date, to the holders
of the Class R-I Certificates.
Any Yield Maintenance Premium actually
collected with respect to a Mortgage
Loan during any particular
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S-18
<PAGE>
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Collection Period, net of any portion
thereof that is allocable to pay a
Liquidation Fee or a Workout Fee to the
Special Servicer, will be distributed on
the related Distribution Date as
follows:
(i) if the Class Notional Amount of
the Class S Certificates
immediately prior to such
Distribution Date is greater than
zero, then (A) first, to the
holders of the Class(es) of
Sequential Pay Certificates
entitled to distributions of
principal on such Distribution
Date, pro rata based on
entitlement if there is more than
one such Class, up to the amount
of the corresponding Certificate
Yield Maintenance Amount(s) (as
defined below) for such Class(es),
and (B) thereafer, to the holders
of the Class S Certificates, in an
amount equal to the balance, if
any, of such Yield Maintenance
Premium; and
(ii) if the Class Notional Amount of
the Class S Certificates has been
reduced to zero prior to such
Distribution Date, to the holders
of the Class R-I Certificates.
The "Certificate Yield Maintenance
Amount" for any Class of Sequential Pay
Certificates in respect of any Principal
Prepayment accompanied by a Yield
Maintenance Premium will generally be
calculated in the same manner as such
Yield Maintenance Premium but based on
(i) the Pass-Through Rate for such Class
instead of the Mortgage Rate for the
related Mortgage Loan and (ii) the
portion of such Principal Prepayment
distributable on such Class rather than
the entire Principal Prepayment.
The Prepayment Premiums and Yield
Maintenance Premiums, even if collected
and distributable on any Class of
Certificates, may not be sufficient to
offset fully any loss in yield on such
Class of Certificates attributable to
the related prepayments of principal.
See "Risk Factors--Special Prepayment
and Yield Considerations" herein and
"Risk Factors--Effect of Prepayments on
Average Life of Certificates" and
"--Effect of Prepayments on Yield of
Certificates" in the Prospectus and
"Servicing of the Mortgage
Loans--Servicing and Other Compensation
and Payment of Expenses" herein. Neither
the Depositor nor the Underwriter makes
any representation or warranty as
regards the collectability of any
Prepayment Premium or Yield Maintenance
Premium or the enforceability of any
Mortgage Loan provision requiring the
payment of any such amount.]
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Subordination; Allocation of
Realized Losses and
Certain Expenses ................... [To the extent described herein, the
Class A-2, Class A-3, Class B, Class C
and REMIC Residual Certificates
(collectively, the "Subordinate
Certificates") are subordinate to the
Class S, Class A-1A and Class A-1B
Certificates (collectively, the "Senior
Certificates"); the Class A-3, Class B,
Class C and REMIC Residual Certificates
are subordinate to the Class A-2
Certificates; the Class B, Class C and
REMIC Residual Certificates are
subordinate to the Class A-3
Certificates; and the Class B-2, Class
B-3, Class B-4, Class C and REMIC
Residual Certificates are subordinate to
the Class B-1 Certificates. Such
subordination will be accomplished by
the application of the Available
Distribution Amount on each Distribution
Date in the order described above in
this Summary under "Description of the
Certificates--Distributions of Principal
and Interest". No other form of credit
support will be available for the
benefit of any Class of Offered
Certificateholders.
If, following the distributions to be
made in respect of the Certificates on
any Distribution Date, the aggregate of
the Stated Principal Balance of the
Mortgage Pool that will be outstanding
immediately following such Distribution
Date is less than the then aggregate of
the Class Principal Balances of the
respective Classes of Sequential Pay
Certificates, the Class Principal
Balances of the Class C, Class B-4,
Class B-3, Class B-2, Class B-1, Class
A-3 and Class A-2 Certificates will be
reduced, sequentially in that order, in
the case of each such Class until such
deficit (or the related Class Principal
Balance) is reduced to zero (whichever
occurs first). If any portion of such
deficit remains at such time as the
Class Principal Balances of such Classes
of Certificates are reduced to zero,
then the respective Class Principal
Balances of the Class A-1A and Class
A-1B Certificates will be reduced, pro
rata in accordance with the relative
sizes of the remaining Class Principal
Balances of such Classes of
Certificates, until such deficit (or
each such Class Principal Balance) is
reduced to zero. Any such deficit will,
in general, be the result of Realized
Losses incurred in respect of the
Mortgage Loans and/or Additional Trust
Fund Expenses. Accordingly, the
foregoing reductions in the Class
Principal Balances of the Sequential Pay
Certificates will constitute an
allocation of any such Realized Losses
and Additional Trust Fund Expenses.
As more particularly described herein,
"Realized Losses" are losses arising
from the inability of the Master
Servicer and/or the Special Servicer to
collect all amounts due and owing under
any defaulted Mortgage Loan, including
by reason of the fraud or bankruptcy of
the related mortgagor or a casualty of
any nature at the related Mortgaged
Property, to the extent not covered by
insurance.
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S-20
<PAGE>
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As more particularly described herein,
"Additional Trust Fund Expenses" are any
expenses of the Trust Fund not
specifically included in the calculation
of a "Realized Loss," that would result
in the REMIC Regular Certificateholders'
receiving less than the full amount of
principal and/or interest to which they
are entitled on any Distribution Date.]
See "Description of the
Certificates--Subordination; Allocation
of Realized Losses and Certain Expenses"
herein.
Treatment of REO Properties........... Notwithstanding that a Mortgaged
Property securing any Mortgage Loan may
be acquired on behalf of the
Certificateholders 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
Pass-Through Rates of, distributions on
and allocations of Realized Losses and
Additional Trust Fund Expenses to the
Certificates, as well as the Master
Servicing Fees, Property Servicing Fees,
Special Servicing Fees, Workout Fees and
Trustee Fees (each as defined herein)
payable under the Pooling Agreement,
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 Certificates--P&I and Other
Advances"), the Master Servicer will be
required to make P&I Advances, as
described below, in respect of such
Mortgage Loan as if such Mortgage Loan
had remained outstanding.
P&I Advances.......................... Subject to a recoverability
determination as described herein, and
further subject to the reduced advancing
obligations in respect of certain
modified Mortgage Loans and Mortgage
Loans as to which the related Mortgaged
Property has declined in value as
described herein, the Master Servicer
will be required to make advances (each,
a "P&I Advance") with respect to each
Distribution Date in an amount that is
generally equal to the aggregate of all
Scheduled Payments (other than Balloon
Payments) and any Assumed Scheduled
Payments, net of related Master
Servicing Fees and Workout Fees, due or
deemed due, as the case may be, on or in
respect of the Mortgage Loans during the
related Collection Period, in each case
to the extent that such amount was not
paid by or on behalf of the related
Mortgagor or otherwise collected as of
the close of business on the last day of
the related Collection Period.
If the Master Servicer fails to make a
required P&I Advance, the Trustee will
be required to make such P&I
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S-21
<PAGE>
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Advance. The Special Servicer shall have
no obligation to make any P&I Advance.
As more fully described herein, the
Master Servicer and the Trustee will
each be entitled to interest on any P&I
Advance made by it, and the Master
Servicer, the Special Servicer and the
Trustee will each be entitled to
interest on certain reimbursable
servicing expenses incurred by it. Such
interest will accrue from the date any
such P&I Advance is made or such
servicing expense is incurred at a rate
per annum equal to [specify applicable
rate] (the "Reimbursement Rate"), and
will be paid: first, out of Default
Interest (as defined herein) and late
payment charges collected in respect of
the related Mortgage Loan; and, second,
if such P&I Advance or servicing expense
has been reimbursed, out of general
collections on the Mortgage Pool. See
"Description of the Certificates--P&I
and Other Advances" herein.
[Compensating Interest
Payments............................ To the extent of the aggregate of all
Master 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 Distribution 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 Master
Servicing Fees and Property Servicing
Fees (as defined herein)) 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 Master
Servicing Fees and Property Servicing
Fees) 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
Distribution 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 Distribution Date. See
"Servicing of the Mortgage
Loans--Servicing and Other Compensation
and Payment of Expenses" herein.]
Optional Termination.................. The Special Servicer or the Master
Servicer, in that order, will have an
option to purchase all of the Mortgage
Loans and any REO Properties, and
thereby effect termination of the Trust
Fund and early retirement of the then
outstanding Certificates, on any
Distribution Date on which the aggregate
Stated Principal Balance of the Mortgage
Pool is
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S-22
<PAGE>
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less than __% of the Initial Pool
Balance. See "Description of the
Certificates--Termination" herein.
Certain Investment
Considerations ..................... The yield to maturity on any Offered
Certificate will be affected by the rate
and timing of prepayments and other
collections of principal on or in
respect of the Mortgage Loans and the
allocation thereof to reduce the
principal balance (the "Certificate
Principal Balance") or notional amount
(the "Certificate Notional Amount") of
such Certificate. An investor should
consider, in the case of any Offered
Certificate purchased at a discount, the
risk that a slower than anticipated rate
of prepayments could result in a lower
than anticipated yield and, in the case
of any Class S Certificate or any other
Offered Certificate purchased at a
premium, the risk that a faster than
anticipated rate of prepayments could
result in a lower than anticipated
yield. In addition, the yield to
maturity on the Class S Certificates
will be highly sensitive to the rate and
timing of principal payments on and
other liquidations of the Mortgage
Loans, and investors in the Class S
Certificates should fully consider the
associated risks, including the risk
that an extremely rapid rate of
prepayments and/or liquidations in
respect of the Mortgage Loans could
result in the failure of such investors
to recoup fully their initial
investments. See "Yield and Maturity
Considerations" herein and in the
Prospectus. The full or partial, as
applicable, allocation of Prepayment
Premiums and Yield Maintenance Premiums
actually collected on the Mortgage Loans
to the holders of the Class S
Certificates as described herein, for so
long as such Certificates are
outstanding, is intended to reduce those
risks; however, such allocation may be
insufficient to offset fully the adverse
effects on the yield of such Class of
Certificates that the related
prepayments may otherwise have.
Certain Federal Income Tax
Consequences ....................... Three separate "real estate mortgage
investment conduit" ("REMIC") elections
will be made with respect to the Trust
Fund for federal income tax purposes
with the resulting REMICs being herein
referred to as "REMIC I", "REMIC II" and
"REMIC III", respectively. The assets of
REMIC I will include the Mortgage Loans,
any REO Properties acquired on behalf of
the Certificateholders and the
Certificate Account (as defined in the
Prospectus). For federal income tax
purposes (i) the separate
non-certificated regular interests in
REMIC I will be the "regular interests"
in REMIC I and will constitute the
assets of REMIC II, (ii) the Class R-I
Certificates will evidence the sole
class of "residual interests" in REMIC
I, (iii) the separate non-certificated
regular interests in REMIC II will be
the "regular interests" in REMIC II and
will constitute the assets of REMIC III,
(iv) the Class R-II Certificates will
evidence the sole class of "residual
interests" in REMIC II, (v) the REMIC
Regular Certificates will evidence the
"regular interests" in, and generally
will be treated as debt
- --------------------------------------------------------------------------------
S-23
<PAGE>
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obligations of, REMIC III, and (vi) the
Class R-III Certificates will evidence
the sole class of "residual interests"
in REMIC III.
[The [identify Classes, if any]
Certificates will not, and the [identify
Classes, if any] Certificates will, be
treated as having been issued with
original issue discount for federal
income tax reporting purposes. The
prepayment assumption to be used for
purposes of computing the accrual of
original issue discount, market discount
and premium, if any, for federal income
tax purposes will be that the Mortgage
Loans are not voluntarily prepaid prior
to their respective Maturity Dates.
However, no representation is made that
the Mortgage Loans will not prepay or,
if they do, that they will prepay at any
particular rate.]
[Generally, except to the extent noted
below, the Certificates will be treated
as "real estate assets" within the
meaning of Section 856(c)(5)(A) of the
Internal Revenue Code of 1986 (the
"Code"). In addition, except to the
extent noted below, interest (including
original issue discount) on the
Certificates will be interest described
in Section 856(c)(3)(B) of the Code.
However, the Certificates will generally
only be considered assets described in
Section 7701(a)(19)(C) of the Code to
the extent that the Mortgage Loans are
secured by residential property and,
accordingly, an investment in the
Certificates may not be suitable for
some thrift institutions. See
"Description of the Mortgage Pool"
herein.]
For further information regarding the
Federal income tax consequences of
investing in the Offered Certificates,
see "Certain Federal Income Tax
Consequences" herein and in the
Prospectus.
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 Code
(a "Plan") should review carefully with
its legal counsel whether the purchase
or holding of Offered Certificates could
give rise to a transaction that is
prohibited or is not otherwise permitted
either under ERISA or Section 4975 of
the Code or whether there exists any
statutory or administrative exemption
applicable to an investment therein.
[The U.S. Department of Labor has issued
to the Underwriter an individual
exemption, Prohibited Transaction
Exemption _____, which generally exempts
from the application of certain of the
prohibited transaction provisions of
Section 406 of ERISA and the excise
taxes imposed on such prohibited
transactions by Section 4975(a) and (b)
of the Code, transactions relating to
the purchase, sale and holding of
pass-through certificates underwritten
or placed by the Underwriter and the
servicing and operation of related asset
pools, provided that certain conditions
are satisfied.]
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S-24
<PAGE>
- --------------------------------------------------------------------------------
[To the extent described herein, the
Depositor expects that Prohibited
Transaction Exemption _____ will
generally apply to the Senior
Certificates, but it will not apply to
the other Offered Certificates.
Accordingly, the Class A-2, Class A-3
and Class B-1 Certificates should not be
acquired by, on behalf of, or with
assets of a Plan, unless the purchase
and holding of any such Certificates or
interest therein, is exempt from the
prohibited transaction provisions of
Section 406 of ERISA and Section 4975 of
the Code under Sections I and III of
Prohibited Transaction Class Exemption
95-60, which provides an exemption from
the prohibited transaction rules for
certain transactions involving an
insurance company general account. ] See
"ERISA Considerations" herein and in the
Prospectus.
Ratings............................... It is a condition to their issuance that
the respective Classes of Offered
Certificates receive the following
credit ratings from ("________")
and/or____________________ ("_____";
together with _____, the "Rating
Agencies"):
[Rating [Rating
Class Agency] Agency]
----- ------- -------
Class S
Class A-1A
Class A-1B
Class A-2
Class A-3
Class B-1
The foregoing ratings of the Offered
Certificates address the timely payment
thereon of interest and, to the extent
applicable, the ultimate payment thereon
of principal on or before the Rated
Final Distribution Date. The foregoing
ratings of the Offered Certificates do
not address the tax attributes of the
Offered Certificates or the Trust Fund.
The rating of the Class S Certificates
by _____ does not address the
possibility that holders of the Class S
Certificates might suffer a lower than
anticipated yield due to prepayments on
and/or other liquidations of the
Mortgage Loans or that, as a consequence
of a rapid rate of prepayments and/or
liquidations of Mortgage Loans, the
holders of the Class S Certificates may
not fully recover their initial
investments. The ratings of the Offered
Certificates 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
Certificates, 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
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S-25
<PAGE>
- --------------------------------------------------------------------------------
subject to revision or withdrawal at any
time by the assigning rating agency.
Legal Investment ..................... [The Offered Certificates will not
constitute "mortgage related securities"
for purposes of the Secondary Mortgage
Market Enhancement Act of 1984
("SMMEA"). In addition, institutions
whose investment activities are subject
to review by certain regulatory
authorities may be or may become subject
to restrictions on the investment by
such institutions in certain forms of
mortgage derivative securities. Any such
restrictions enacted or adopted after
the date hereof could alter the extent
to which such an institution may
continue to hold a particular
investment. Accordingly, investors
should consult their own legal advisors
to determine whether and to what extent
the Offered Certificates may be
purchased by such investors. See "Legal
Investment" herein and in the
Prospectus.]
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S-26
<PAGE>
RISK FACTORS
Prospective purchasers of Offered Certificates 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 Certificates.]
Limited Liquidity. There is currently no secondary market for the Offered
Certificates. The Underwriter has indicated its intention to make a secondary
market in the Offered Certificates, but it is not obligated to do so. There can
be no assurance that a secondary market for the Offered Certificates will
develop or, if one does develop, that it will provide holders of Offered
Certificates with liquidity of investment or that it will continue for the life
of the Offered Certificates. The Offered Certificates will not be listed on any
securities exchange. See "Risk Factors--Limited Liquidity of Offered
Certificates" in the Prospectus.
Potential Liability to the Trust Fund Relating to a Materially Adverse
Environmental Condition. [An environmental site assessment was performed at
[each][all but ___] of the Mortgaged Properties during the _____ month period
prior to the Cut-off Date. [Note any special environmental problems.]
[Otherwise,] no such environmental assessment revealed any material adverse
environmental condition or circumstance at any Mortgaged Property[, except for
(i) those cases in which the condition or circumstance was remediated or an
escrow for such remediation has been established and (ii) those cases in which
an operations and maintenance plan or periodic monitoring of nearby properties
was recommended, which recommendations are consistent with industrywide
practices].
The Pooling Agreement requires that the Special Servicer obtain an
environmental site assessment of a Mortgaged Property securing a defaulted
Mortgage Loan prior to acquiring title thereto or assuming its operation. Such
prohibition effectively precludes enforcement of the security for the related
Mortgage Note until a satisfactory environmental site assessment is obtained (or
until any required remedial action is thereafter taken), but will decrease the
likelihood that the Trust Fund will become liable for a material adverse
environmental condition at the Mortgaged Property. However, there can be no
assurance that the requirements of the Pooling Agreement will effectively
insulate the Trust Fund from potential liability for a materially adverse
environmental condition at any Mortgaged Property. See "Description of the
Pooling Agreements-Realization Upon Defaulted Mortgage Loans", "Risk
Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans--Risk of Liability Arising from Environmental Conditions" and
"Certain Legal Aspects of Mortgage Loans--Environmental Considerations" in the
Prospectus.
Exposure of the Mortgage Pool to Adverse Economic or other Developments
Based on Geographic Concentration. ______ Mortgage Loans, which represent ____%
of the Initial Pool Balance, are secured by liens on Mortgaged Properties
located in _____________. In general, that concentration increases the exposure
of the Mortgage Pool to any adverse economic or other developments that may
occur in _________. In recent periods, _____________ (along with other regions
of the United States) has experienced a significant downturn in the market value
of real estate.
Increased Risk of Loss Associated With Concentration of Mortgage Loans and
Borrowers. Several of the Mortgage Loans have Cut-off Date Balances (as defined
herein) that are substantially higher than the average Cut-off Date Balance. In
general, concentrations in a mortgage pool of loans with larger-than-average
balances can result in losses that are 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. In addition, in several cases, multiple Mortgage Loans have
been made to the same Mortgagor or to a group of affiliated Mortgagors that are
under common control. Concentration of borrowers also poses increased risks. For
instance, if a borrower that owns several Mortgaged Properties experiences
financial difficulty at one Mortgaged Property, or at another income-producing
property that it owns, it could attempt to avert foreclosure by filing a
bankruptcy petition that might have the effect of interrupting Monthly Payments
for an indefinite period on all of the related Mortgage Loans.
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
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<PAGE>
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--Certain Factors Affecting Delinquency, Foreclosure and Loss
of the Mortgage Loans--Increased Risk of Default Associated With Balloon
Payments" in the Prospectus.
Limited Recourse. The Mortgage Loans are nonrecourse obligations of the
Mortgagors and, accordingly, in the case of default, recourse will be limited to
the related Mortgaged Property securing the defaulted Mortgage Loan.
Consequently, payment on each 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 under the related Mortgage Loan, upon the acceleration of
such maturity), upon the then market value of the related Mortgaged Property or
the ability of the related Mortgagor to refinance the Mortgaged Property.
Neither the Offered Certificates nor the Mortgage Loans are 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 with respect to Mortgage Loans;
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.
Extension Risk Associated With Modification of Mortgage Loans with Balloon
Payments. In order to maximize recoveries on defaulted Mortgage Loans, the
Pooling 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--Modifications, Waivers, Amendments and Consents" 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 distributable in respect of a Class of
Offered Certificates, 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 Certificates. See
"Yield and Maturity Considerations" herein and in the Prospectus.
Risks Particular to ______________ Properties. [Add disclosure relating to
property types with respect to which there exists a material concentration in a
particular Trust Fund.]
Risks Relating to Lack of Certificateholder Control Over Trust Fund.
Certificateholders generally do not have a right to vote, except with respect to
certain amendments to the Pooling Agreement. Furthermore, Certificateholders
will generally not have the right to make decisions with respect to the
administration of the Trust Fund. Such decisions are generally made, subject to
the express terms of the Pooling Agreement, by the Master Servicer, the Trustee,
the Special Servicer or the REMIC Administrator, as applicable. Any decision
made by one of those parties in respect of the Trust Fund, even if made in the
best interests of the Certificateholders (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 Certificates
and may negatively affect the interests of such holders.
Risks Associated With Changes in Concentrations. If and as payments in
respect of principal (including voluntary prepayments and prepayments resulting
from casualty or condemnation, defaults and liquidations and repurchases due to
breaches of representations and warranties) are received with respect to the
Mortgage Loans, the remaining Mortgage Loans as a group may exhibit increased
concentration with respect to the type of properties, property characteristics,
number of Mortgagors and affiliated Mortgagors and geographic location. [Because
unscheduled collections of principal on the Mortgage Loans are payable on the
respective Classes of Sequential Pay Certificates in sequential order, such
Classes that have a lower
S-28
<PAGE>
sequential priority are relatively more likely to be exposed to any risks
associated with changes in concentrations of loan or property characteristics.]
Special Prepayment and Yield Considerations. The yield to maturity on any
Offered Certificate will depend on, among other things, the rate and timing of
principal payments (including voluntary prepayments and prepayments resulting
from casualty or condemnation, defaults and liquidations and repurchases due to
breaches of representations and warranties) on the Mortgage Loans and the
allocation thereof to reduce the Certificate Principal Balance or Certificate
Notional Amount of such Certificate. The Class S Certificates will be especially
sensitive to the rate and timing of such principal prepayments. In addition, in
the event of any repurchase of a Mortgage Loan from the Trust Fund due to a
material breach of representation or warranty, the repurchase price paid would
be passed through to the holders of the REMIC Regular Certificates with the same
effect as if such Mortgage Loan had been prepaid in full (except that no
Prepayment Premium or Yield Maintenance Premium would be payable with respect to
any such repurchase). No representation is made as to the anticipated rate of
prepayments on the Mortgage Loans or as to the anticipated yield to maturity of
any Certificate. See "Yield and Maturity Considerations" herein and in the
Prospectus.
In general, if an Offered Certificate is purchased at a premium and
distributions in reduction of the Certificate Principal Balance or Certificate
Notional Amount thereof occur at a rate faster than anticipated at the time of
purchase, then (to the extent that the required Prepayment Premiums or Yield
Maintenance Premiums are not received or are distributable to a different Class
of Certificates) the investor's actual yield to maturity will be lower than that
assumed at the time of purchase. Conversely, if an Offered Certificate is
purchased at a discount and distributions in reduction of the Certificate
Principal Balance thereof occur at a rate slower than that assumed at the time
of purchase, the investor's actual yield to maturity will be lower than assumed
at the time of purchase.
Prepayment Premiums and Yield Maintenance Premiums, even if available and
distributable on any Class of Offered Certificates, may not be sufficient to
offset fully any loss in yield on such Class of Certificates attributable to the
related prepayments of the Mortgage Loans. Provisions requiring Prepayment
Premiums or Yield Maintenance Premiums may not be enforceable in some states and
under federal bankruptcy law, and may constitute interest for usury purposes.
Accordingly, no assurance can be given that the obligation to pay a Prepayment
Premium or Yield Maintenance Premium will be enforceable under applicable state
or federal law. In addition, even if such obligation is enforceable, no
assurance can be given that, in the event of a prepayment resulting from a
foreclosure of a Mortgage Loan, the Liquidation Proceeds will be sufficient to
make such payment.
The aggregate amount of distributions on the Offered Certificates, the
yield to maturity of the Offered Certificates, the rate of principal payments on
the Offered Certificates with Certificate Principal Balances and the weighted
average life of the Offered Certificates with Certificate Principal Balances
will be affected by the rate and the timing of delinquencies and defaults on the
Mortgage Loans. The yield to holders of the Class S Certificates and the Offered
Certificates that are Subordinate Certificates will be sensitive in varying
degrees to the rate, timing and magnitude of losses on the Mortgage Loans. If a
purchaser of an Offered Certificate 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 the amount of losses actually experienced, and such
additional losses are allocable in reduction of the Certificate Principal
Balance or Certificate Notional Amount, as the case may be, of such Certificate,
such purchaser's actual yield to maturity will be lower than that so calculated
and could, under certain extreme scenarios, be negative. In general, the earlier
a loss is borne by an investor, the greater is the effect on such investor's
yield to maturity.
Regardless of whether losses ultimately result, delinquencies and defaults
on the Mortgage Loans may significantly delay the receipt of payments by an
Offered Certificate to the extent that P&I Advances or the subordination of
another Class of Certificates does not fully offset the effects of any such
delinquency or default, and interest accrued and payable to the Master Servicer
or Special Servicer in respect of Advances made thereby in connection with such
defaults and delinquencies will reduce amounts available for distribution on one
or more Classes of Certificates and may ultimately result in the reduction of
the Class Principal Balance or Class Notional Amount, as the case may be, of any
such Class. Following a default by a Mortgagor in payment of a Mortgage Loan at
maturity, the Special Servicer may, subject to certain limitations, extend the
maturity of such Mortgage Loan [up to _____ years]. The obligation of the Master
Servicer or the Trustee, as applicable, to make P&I Advances in respect of a
Mortgage Loan that is delinquent as to its Balloon
S-29
<PAGE>
Payment is limited to the extent described under "Description of the
Certificates--P&I and Other Advances" herein.
Subordination of Subordinate Certificates. As and to the extent described
herein, the rights of the holders of the respective Classes of Offered
Certificates that are Subordinate Certificates to receive distributions of
amounts collected or advanced on or in respect of the Mortgage Loans will be
subordinated to those of the holders of each other Class of Offered
Certificates, including the Senior Certificates, with a higher priority of
payment. See "Description of the Certificates--Distributions--Application of the
Available Distribution Amount" and "--Subordination; Allocation of Realized
Losses and Certain Expenses" herein.
DESCRIPTION OF THE MORTGAGE POOL
General
The Mortgage Pool will consist primarily of ___ [describe general
characteristics of the Mortgage Loans] mortgage loans (the "Mortgage Loans")
with an aggregate Cut-off Date Balance of $__________ (the "Initial Pool
Balance")[, subject to a permitted variance of plus or minus __%]. The "Cut-off
Date Balance" of each Mortgage Loan is the unpaid principal balance thereof as
of the Cut-off Date, after application of all payments due on or before such
date, whether or not received. All numerical information provided herein with
respect to the Mortgage Loans is provided on an approximate basis. All weighted
average information provided herein with respect to the Mortgage Loans reflects
the weighting of the Mortgage Loans by their Cut-off Date Balances.
Each Mortgage Loan is evidenced by a note or bond (a "Mortgage Note") and
is secured by a [first] mortgage, deed of trust or similar security instrument
(a "Mortgage") on the fee simple (or, in ___ cases, representing ___% of the
Initial Pool Balance, the leasehold) interest of the related mortgagor (the
"Mortgagor") in real property used for commercial or multifamily purposes, all
buildings and improvements thereon and certain personal property located thereon
(each, a "Mortgaged Property") and security interests in certain funds and
accounts and other collateral described herein.
The Mortgage Loans are not insured or guaranteed by the Depositor or the
Mortgage Loan Seller, by any governmental entity or private mortgage insurer or
by any other person. All of the Mortgage Loans are nonrecourse loans as to which
recourse in the case of default will be limited to the specific property and
such other assets, if any, as were pledged to secure a Mortgage Loan.
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 Trustee for the benefit of the Certificateholders. See "--The
Mortgage Loan Seller" herein and "Description of the Pooling
Agreements--Assignment of Mortgage Assets" in the Prospectus. For purposes of
the Prospectus, the Mortgage Loan Seller constitutes a "Mortgage Asset Seller".
[The Mortgage Loans were originated during the period from ____________ to
_____________, generally in accordance with the underwriting criteria described
below under "--Underwriting of the Mortgage Loans". The Mortgage Loan Seller
originated ____ of the Mortgage Loans, which represent ___% of the Initial Pool
Balance, and acquired the remaining Mortgage Loans from the respective
originators thereof.]
Certain Payment Characteristics
___ of the Mortgage Loans, which represent ___% of the Initial Pool
Balance, have Due Dates that occur on the ___ day of each month. The remaining
Mortgage Loans have Due Dates that occur on the ______ (____% of the Mortgage
Loans), _____ (____% of the Mortgage Loans), _____ (____% of the Mortgage
Loans), and _______ (____% of the Mortgage Loans) day of each month.
[____________ of the Mortgage Loans, which represent ____% of the Initial
Pool Balance, are ARM Loans. The ARM Loans bear interest at Mortgage Rates that
are subject to adjustment on periodically occurring Interest Rate Adjustment
Dates by adding the related Gross Margin to the applicable value of the
S-30
<PAGE>
related Index, subject in ______ cases to rounding conventions and lifetime
minimum and/or maximum Mortgage Rates and, in the case of ________ Mortgage
Loans, which represent ____% of the Initial Pool Balance, to periodic minimum
and/or maximum Mortgage Rates. The remaining Mortgage Loans are Fixed Rate
Loans. None of the ARM Loans is convertible into a Fixed Rate Loan.]
[If there are ARM Loans: [Identify Mortgage Loan Index]. The adjustments to
the Mortgage Rates on the ARM Loans may in each case be based on the value of
the related Index as available a specified number of days prior to an Interest
Rate Adjustment Date, or may be based on the value of the related Index as most
recently published as of an Interest Rate Adjustment Date or as of a designated
date preceding an Interest Rate Adjustment Date. ____ of the ARM Loans, which
represent ___% of the Initial Pool Balance, provide for Interest Rate Adjustment
Dates that occur monthly; ____ of the ARM Loans, which represent ___% of the
Initial Pool Balance, provide for Interest Rate Adjustment Dates that occur
semi-annually; and the remaining ARM Loans provide for Interest Rate Adjustment
Dates that occur annually.]
[If there are ARM Loans: The Monthly Payments on each ARM Loan are subject
to adjustment on each Payment Adjustment Date to an amount [that would amortize
fully the principal balance of the Mortgage Loan over its then remaining
amortization schedule and pay interest at the then applicable Mortgage Rate].
[Discuss frequency of Payment Adjustment Dates and possibility of negative
amortization of interest.]]
_____ of the Mortgage Loans, representing ___% of the Initial Pool Balance,
are Balloon Loans that provide for monthly payments of principal based on
amortization schedules significantly longer than the remaining terms of such
Mortgage Loans. Thus, each such Mortgage Loan will have a Balloon Payment due at
its stated maturity date, unless prepaid prior thereto. The remaining Mortgage
Loans are fully amortizing.
[All the Mortgage Loans provided at origination for, sequentially, a period
(a "Lockout Period") during which voluntary prepayments of principal (each, a
"Principal Prepayment") are prohibited, then a period during which Principal
Prepayments are permitted but are required to be accompanied by the greater of a
specified percentage of the principal amount being prepaid (a "Prepayment
Premium") or a premium calculated on the basis of a yield maintenance formula (a
"Yield Maintenance Premium"), and then, commencing on a specified date prior to
maturity, a period (the related "Open Period") during which Principal
Prepayments may be made without payment of any Prepayment Premium or Yield
Maintenance Premium.]
[The Index]
[Describe Index.]
[Delinquent and Nonperforming Mortgage Loans]
[Describe those delinquent and nonperforming Mortgage Loans, if any,
included in the Trust Fund.]
Additional Mortgage Loan Information
The following tables set forth the specified characteristics of, in each
case as indicated, the ARM Loans, the Fixed Rate Loans or all the Mortgage
Loans. The sum in any column may not equal the indicated total due to rounding.
S-31
<PAGE>
Mortgage Rates as of the Cut-off Date
<TABLE>
<CAPTION>
Number of Percent by
Mortgage Aggregate Cut-off Aggregate Cut-off
Range of Mortgage Rates(%) Loans Date Balance Date Balance
-------------------------- ----- ------------ ------------
<S> <C> <C> <C>
Total.................... ----------- ---------------- -----------------
----------- ---------------- -----------------
</TABLE>
Weighted Average
Mortgage Rate (All Mortgage Loans):
______% per annum
Weighted Average
Mortgage Rate (ARM Loans): ____% per annum
Weighted Average
Mortgage Rate (Fixed Rate Loans): _____% per annum
Gross Margins for the ARM Loans
<TABLE>
<CAPTION>
Percent by
Number of Aggregate Cut-off Aggregate Cut-off
Range of Gross Margins(%) ARM Loans Date Balance Date Balance
------------------------- --------- ------------ ------------
<S> <C> <C> <C>
----------- --------------- ----------------
Total.......................
----------- --------------- ----------------
</TABLE>
Weighted Average
Gross Margin: ____%
S-32
<PAGE>
Frequency of Adjustments to Mortgage Rates and Monthly Payments
for the ARM Loans
<TABLE>
<CAPTION>
Monthly
Mortgage Rate Payment Number of Percent by
Adjustment Adjustment Mortgage Aggregate Cut-off Aggregate Cut-off
Frequency Frequency Loans Date Balance Date Balance
--------- --------- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
----------- ------------ ----------------
Total..............
----------- ------------ ----------------
</TABLE>
Maximum Lifetime Mortgage Rates for the ARM Loans
<TABLE>
<CAPTION>
Percent by
Range of Minimum Number of Aggregate Cut-off Aggregate Cut-off
Lifetime Mortgage Rates(%) ARM Loans Date Balance Date Balance
-------------------------- --------- ------------ ------------
<S> <C> <C> <C>
Total.................................
----------- --------------- ----------------
</TABLE>
Weighted Average Maximum Lifetime
Mortgage Rate (ARM Loans): _____% per annum (A)
- -----------------
(A) This calculation does not include the __________ ARM Loans without maximum
lifetime Mortgage Rates.
Minimum Lifetime Mortgage Rates for the ARM Loans
<TABLE>
<CAPTION>
Percent by
Range of Minimum Number of Aggregate Cut-off Aggregate Cut-off
Lifetime Mortgage Rates(%) ARM Loans Date Balance Date Balance
-------------------------- --------- ------------ ------------
<S> <C> <C> <C>
Total.................................
----------- --------------- ----------------
</TABLE>
Weighted Average Minimum Lifetime
Mortgage Rate (ARM Loans): _____% per annum (A)
- -----------------
(A) This calculation does not include the __________ ARM Loans without minimum
lifetime Mortgage Rates.
S-33
<PAGE>
Cut-off Date Balances
<TABLE>
<CAPTION>
Number of Percent by
Cut-off Date Mortgage Aggregate Cut-off Aggregate Cut-off
Balance Range ($) Loans Date Balance Date Balance
----------------- ----- ------------ ------------
<S> <C> <C> <C>
----------- --------------- ----------------
Total......................................
----------- --------------- ----------------
</TABLE>
Average Cut-off Date
Balance (All Mortgage
Loans): $____________
Average Cut-off Date
Balance (ARM Loans): $____________
Average Cut-off Date
Balance (Fixed Rate Loans): $____________
Types of Mortgaged Properties
<TABLE>
<CAPTION>
Number of Percent by
Mortgage Aggregate Cut-off Aggregate Cut-off
Property Type Loans Date Balance Date Balance
----------------- ----- ------------ ------------
<S> <C> <C> <C>
----------- --------------- ----------------
Total......................................
----------- --------------- ----------------
</TABLE>
S-34
<PAGE>
Geographic Distribution of the Mortgaged Properties
<TABLE>
<CAPTION>
Number of Percent by
Mortgage Aggregate Cut-off Aggregate Cut-off
State Loans Date Balance Date Balance
----------------- ----- ------------ ------------
<S> <C> <C> <C>
----------- --------------- ----------------
Total......................................
----------- --------------- ----------------
</TABLE>
S-35
<PAGE>
Original Term to Stated Maturity (in Months)
<TABLE>
<CAPTION>
Number of Percent by
Range of Original Mortgage Aggregate Cut-off Aggregate Cut-off
Terms (in Months) Loans Date Balance Date Balance
----------------- ----- ------------ ------------
<S> <C> <C> <C>
----------- --------------- ----------------
Total......................................
----------- --------------- ----------------
</TABLE>
Weighted Average Original
Term to Stated Maturity
(All Mortgage Loans): ____ months
Weighted Average Original
Term to Stated Maturity
(ARM Loans): ____ months
Weighted Average Original
Term to Stated Maturity
(Fixed Rate Loans): ____ months
Remaining Term to Stated Maturity (in Months)
as of the Cut-off Date
<TABLE>
<CAPTION>
Number of Percent by
Range of Remaining Mortgage Aggregate Cut-off Aggregate Cut-off
Terms (in Months) Loans Date Balance Date Balance
----------------- ----- ------------ ------------
<S> <C> <C> <C>
----------- --------------- ----------------
Total......................................
----------- --------------- ----------------
</TABLE>
Weighted Average Remaining
Term to Stated Maturity
(All Mortgage Loans): ___ months
Weighted Average Remaining
Term to Stated Maturity
(ARM Loans): ___ months
Weighted Average Remaining
Term to Stated Maturity
(Fixed Rate Loans): ___ months
S-36
<PAGE>
The following table sets forth a range of Debt Service Coverage Ratios for
the Mortgage Loans. The "Debt Service Coverage Ratio" set forth in the following
table for any Mortgage Loan is [the ratio of (i) Net Operating Income produced
by the related Mortgaged Property for the period (annualized if the period was
less than one year) covered by the most recent operating statement available to
the Depositor to (ii) the amount of the Monthly Payment in effect as of the
Cut-off Date multiplied by 12. "Net Operating Income" is the revenue derived
from the use and operation of a Mortgaged Property (consisting primarily of
rental income and deposit forfeitures), less operating expenses (such as
utilities, general administrative expenses, management fees, advertising,
repairs and maintenance), and further less fixed expenses (such as insurance and
real estate taxes). Net Operating Income generally does not reflect capital
expenditures. The following table was prepared using operating statements
obtained from the respective Mortgagors or the related property managers. In
each case, the information contained in such operating statements was unaudited,
and the Depositor has made no attempt to verify its accuracy. In the case of
_____ Mortgage Loans (____ ARM Loans and ____ Fixed Rate Loans), representing
__% of the Initial Pool Balance, operating statements could not be obtained, and
accordingly, Debt Service Coverage Ratios for those Mortgage Loans were not
calculated. The last day of the period (which may not correspond to the most
recently ended calendar year) covered by each operating statement from which a
Debt Service Coverage Ratio was calculated is set forth in [Annex A] with
respect to the related Mortgage Loan.]
Debt Service Coverage Ratios(A)
Range of Number of Percent by
Debt Service Mortgage Aggregate Cut-off Aggregate Cut-off
Coverage Ratios (x) Loans Date Balance Date Balance
------------------- ----- ------------ ------------
Not Calculated(B).........
----------- ------------------- ---------------
Total ..................
----------- ------------------- ---------------
Weighted Average
Debt Service Coverage
Ratio (All Mortgage
Loans): _____x(C)
Weighted Average
Debt Service Coverage
Ratio (ARM Loans): _____x(D)
Weighted Average
Debt Service Coverage
Ratio (Fixed Rate Loans): _____x(E)
- -------------------
(A) The Debt Service Coverage Ratios are based on the most recently available
operating statements obtained from the respective mortgagors or the related
property managers.
(B) The Debt Service Coverage Ratios for these Mortgage Loans were not
calculated due to a lack of available operating statements.
(C) This calculation does not include the ________ Mortgage Loans as to which
Debt Service Coverage Ratios were not calculated.
(D) This calculation does not include the ________ ARM Loans as to which Debt
Service Coverage Ratios were not calculated.
(E) This calculation does not include the ________ Fixed Rate Loans as to which
Debt Service Coverage Ratios were not calculated.
The following tables set forth the range of LTV Ratios of the Mortgage
Loans at the Cut-off Date. The "LTV Ratio" set forth in the following table for
any Mortgage Loan is [a fraction, expressed as a percentage, the numerator of
which is the Cut-off Date Balance of such Mortgage Loan, and the denominator
S-37
<PAGE>
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 it is based on the value of a Mortgaged Property
determined as of loan origination, the information set forth in the table below
is not necessarily a reliable measure of the related borrower's current equity
in each Mortgaged Property. In a declining real estate market, the fair market
value of a Mortgaged Property could have decreased from the value determined at
origination, and the current actual loan-to-value ratio of a Mortgage Loan may
be higher than its LTV Ratio as reflected in the table set forth below.]
LTV Ratios at Cut-off Date
<TABLE>
<CAPTION>
Number of Percent by
Range of LTV Ratios(%) Mortgage Aggregate Cut-off Aggregate Cut-off
as of Cut-off Date Loans Date Balance Date Balance
------------------ ----- ------------ ------------
<S> <C> <C> <C>
Total............... ----------------- --------------- ---------------
----------------- --------------- ---------------
</TABLE>
Weighted Average LTV
Ratios as of Cut-off Date
(All Mortgage Loans):
_____%
Weighted Average LTV Ratio
as of Cut-off Date (ARM
Loans): _____%
Weighted Average LTV Ratio
as of Cut-off Date (Fixed
Rate Loans): _____%
S-38
<PAGE>
Occupancy Rates
<TABLE>
<CAPTION>
Number of Percent by
Range of Mortgage Aggregate Cut-off Aggregate Cut-off
Occupancy Rates(A) Loans Date Balance Date Balance
------------------ ----- ------------ ------------
<S> <C> <C> <C>
------------- ---------------- ---------------
Total..........................
------------- ---------------- ---------------
</TABLE>
Weighted Average Occupancy Rate (All
Mortgage Loans)(A): _____%
Weighted Average Occupancy Rate
(ARM Loans)(A): _____%
Weighted Average Occupancy Rate
(Fixed Rate Loans)(A): _____%
- ---------------------------------
(A) Physical occupancy rates calculated based on rent rolls provided by the
respective Mortgagors or related property managers as of a date no more
than ___ months prior to the Cut-off Date.
Specified in [Annex A] to this Prospectus Supplement are the foregoing and
certain additional characteristics of the Mortgage Loans set forth on a
loan-by-loan basis. Certain additional information regarding the Mortgage Loans
is contained herein under "--Underwriting of the Mortgage Loans" and
"--Representations and Warranties with respect to Mortgage Loans; Repurchases"
and in the Prospectus under "Description of the Trust Funds--Mortgage Loans" and
"Certain Legal Aspects of Mortgage Loans".
[Delinquencies. As of the Cut-off Date, [no] Mortgage Loan was more than 30
days delinquent in respect of any Monthly Payment.]
The Mortgage Loan Seller
General. [The Mortgage Loan Seller [, a wholly-owned subsidiary of
__________,] is a _________________ organized in 19___ under the laws of
__________________. [Specify additional information regarding the Mortgage Loan
Seller's multifamily and commercial portfolio.]
The information set forth herein concerning the Mortgage Loan Seller and
the underwriting of the Mortgage Loans has been provided by the Mortgage Loan
Seller, and neither the Depositor nor the Underwriter makes any representation
or warranty as to the accuracy or completeness of such information.
Underwriting of the Mortgage Loans
[All of the Mortgage Loans were originated generally in accordance with the
underwriting criteria described herein.]
[Description of underwriting.]
S-39
<PAGE>
Representations and Warranties with respect to Mortgage Loans; Repurchases
In the Mortgage Loan Purchase Agreement, the Mortgage Loan Seller has
represented and warranted with respect to each Mortgage Loan, as of [the Closing
Date], or as of such other date specifically provided in the representation and
warranty, among other things, that:
[Specify significant representations and warranties.]
If the Mortgage Loan Seller has been notified of a material breach of any
of the foregoing representations and warranties as described in the Prospectus
and if the Mortgage Loan Seller cannot cure such breach within a period of ___
days following its receipt of such notice, then the Mortgage Loan Seller will be
obligated pursuant to the Mortgage Loan Purchase Agreement (the relevant rights
under which will be assigned, together with its interests in the Mortgage Loans,
by the Depositor to the Trustee) to repurchase the affected Mortgage Loan within
such __-day period at a price (the "Purchase Price") equal to [the sum of (i)
the unpaid principal balance of such Mortgage Loan, (ii) unpaid accrued interest
on such Mortgage Loan at the related Mortgage Rate from the date to which
interest was last paid to the Due Date in the Due Period in which the purchase
is to occur, and (iii) certain servicing expenses that are reimbursable to the
Master Servicer and the Special Servicer].
The foregoing repurchase obligation will constitute the sole remedy
available to the Certificateholders and the Trustee for any breach of the
Mortgage Loan Seller's representations and warranties regarding the Mortgage
Loans. The Mortgage Loan Seller will be the sole Warranting Party in respect of
the Mortgage Loans, and none of the Depositor, the Master Servicer, the Special
Servicer or any of their affiliates [(other than the Mortgage Loan Seller)] will
be obligated to repurchase any affected Mortgage Loan in connection with a
breach of the Mortgage Loan Seller's representations and warranties if the
Mortgage Loan Seller defaults on its obligation to do so. See "Description of
the Pooling Agreements--Representations and Warranties with respect to Mortgage
Assets; Repurchase and Other Remedies" in the Prospectus.
Changes in Mortgage Pool Characteristics
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as expected to be
constituted at the time the Offered Certificates are issued, as adjusted for the
scheduled principal payments due on or before the Cut-off Date. Prior to the
issuance of the Offered Certificates, 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 Certificates, 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 Certificates are issued,
although the range of Mortgage Rates and maturities and certain other
characteristics of the Mortgage Loans in the Mortgage Pool may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates on or shortly after the Closing Date and
will be filed, together with the Pooling Agreement, with the Commission within
fifteen days after the initial issuance of the Offered Certificates. In the
event Mortgage Loans are removed from or added to the Mortgage Pool as set forth
in the preceding paragraph, such removal or addition will be noted in the Form
8-K.
SERVICING OF THE MORTGAGE LOANS
General
The Master Servicer and the Special Servicer, either directly or through
sub-servicers, will be required to service and administer the Mortgage Loans,
for the benefit of the Certificateholders, in accordance with applicable law,
the terms of the Pooling Agreement and the terms of the respective Mortgage
Loans and, to the extent consistent with the foregoing, [in accordance with the
following standards (collectively, the "Servicing Standard"): (a) with the same
care, skill and diligence with which prudent institutional commercial mortgage
lenders and loan servicers service comparable mortgage loans or, if higher, with
the same care, skill and diligence with which the Master Servicer or Special
Servicer, as the case may be, generally services
S-40
<PAGE>
comparable mortgage loans owned by it; (b) with a view to the timely collection
of all scheduled payments of principal and interest under the Mortgage Loans or,
if a Mortgage Loan comes into and continues in default and no satisfactory
arrangements can be made for the collection of the delinquent payments, the
maximization of the recovery on such Mortgage Loan to Certificateholders (as a
collective whole) on a present value basis; and (c) without regard to: (i) any
relationship that it or any of its affiliates may have with the related
Mortgagor or any other party to the Pooling Agreement; (ii) its ownership (or
that of an affiliate) of any Certificate; (iii) any obligation to make Advances
(as defined below); and (iv) its right or the right of any affiliate to receive
compensation for its services or reimbursement of costs under the Pooling
Agreement or with respect to any particular transaction].
The Master Servicer initially will, except for certain limited duties, be
responsible for the master servicing and administration of the entire Mortgage
Pool. [The Special Servicer will be responsible for property level servicing and
administration of the entire Mortgage Pool, including: (i) conducting (or
retaining a third party to conduct) inspections of each Mortgaged Property at
least once every ___ years; and (ii) collecting and making certain calculations
based on annual operating statements and rent rolls with respect to each
Mortgaged Property.] The Special Servicer will also be responsible for special
servicing and administering any Mortgage Loan as to which any of the following
events (each, a "Servicing Transfer Event") occurs: [(a) the related Mortgagor
fails to make when due any Balloon Payment, which failure continues unremedied,
or the Master Servicer determines, in its reasonable good faith judgment, will
continue unremedied, for 30 days; (b) the related Mortgagor fails to make when
due any other Monthly Payment or any other payment required under the related
Mortgage Note and Mortgage, which failure continues unremedied, or the Master
Servicer determines, in its reasonable good faith judgment, will continue
unremedied, for 60 days; (c) the Master Servicer determines, in its reasonable
good faith judgment, that a default in making any Monthly Payment (including a
Balloon Payment) or any other payment required under the related Mortgage Note
and Mortgage is likely to occur within 30 days and is likely to remain
unremedied for at least 60 days or, in the case of a Balloon Payment, for at
least 30 days; (d) the Master Servicer determines, in its reasonable good faith
judgment, that a default (other than as described in clause (a) or (b) above)
has occurred that may materially impair the value of the related Mortgaged
Property as security for the Mortgage Loan and such default continues unremedied
for the applicable cure period under the terms of the Mortgage Loan (or, if no
cure period is specified, for 30 days); (e) certain events of insolvency,
readjustment of debt, marshalling of assets and liabilities, or similar
proceedings occur in respect of the related Mortgagor or the related Mortgaged
Property, or the related Mortgagor takes certain actions indicating its
insolvency or its inability to pay its obligations, or (f) the Master Servicer
receives notice of the commencement of foreclosure or similar proceedings with
respect to the related Mortgaged Property].
If a Servicing Transfer Event occurs with respect to any Mortgage Loan, the
Master Servicer is required to use reasonable efforts to effect or to cooperate
in effecting the transfer of the servicing responsibilities with respect thereto
to the Special Servicer within ____ business days. Notwithstanding such
transfer, the Master Servicer will continue to receive payments on such Mortgage
Loan (including amounts collected by the Special Servicer), to make certain
calculations with respect to such Mortgage Loan, and to make remittances to
(including, if necessary, P&I Advances) and prepare certain reports for, the
Trustee with respect to such Mortgage Loan. If title to the related Mortgaged
Property is acquired on behalf of the Certificateholders (upon acquisition, an
"REO Property"), whether through foreclosure, deed in lieu of foreclosure or
otherwise, the Special Servicer will continue to be responsible for the
operation and management thereof. Mortgage Loans serviced by the Special
Servicer are referred to herein as "Specially Serviced Mortgage Loans". The
Master Servicer will have no responsibility for the Special Servicer's
performance of its duties under the Pooling Agreement.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (and
will become a "Corrected Mortgage Loan" as to which the Master Servicer will
re-assume servicing responsibilities) at such time as no circumstance identified
in clauses (a) through (f) of the second preceding paragraph exists that would
cause the Mortgage Loan to continue to be characterized as a Specially Serviced
Mortgage Loan and such of the following as are applicable occur:
S-41
<PAGE>
(w) with respect to the circumstances described in clause (a) and (b)
of the second preceding paragraph, the related Mortgagor has made three
consecutive full and timely Monthly Payments under the terms of such
Mortgage Loan (as such terms may be changed or modified in connection with
a bankruptcy or similar proceeding involving the related Mortgagor or by
reason of a modification, waiver or amendment granted or agreed to by the
Special Servicer);
(x)with respect to the circumstances described in clauses (c) and (e)
of the second preceding paragraph, such circumstances cease to exist in the
reasonable good faith judgment of the Special Servicer;
(y)with respect to the circumstances described in clause (d) of the
second preceding paragraph, such default is cured; and
(z)with respect to the circumstances described in clause (f) of the
second preceding paragraph, such proceedings are terminated.
Set forth below is a description of certain pertinent provisions of the
Pooling Agreement relating to the servicing of the Mortgage Loans. Reference is
also made to the Prospectus, in particular to the section captioned "Description
of the Pooling Agreements", for additional important information regarding the
terms and conditions of the Pooling Agreement as such terms and conditions
relate to the rights and obligations of the Master Servicer and the Special
Servicer thereunder.
The Master Servicer
[_____________________________________________ (the "Master Servicer") will
act as Master Servicer with respect to the Mortgage Pool. The offices of the
Master Servicer that will be primarily responsible for servicing and
administering the Mortgage Pool are located at _______________. As
of_______________, 199__, the Master Servicer had a net worth of approximately
$______________ and was the servicer of a portfolio of multifamily and
commercial mortgage loans in ___ states totaling approximately $______________
in aggregate outstanding principal amount.]
The foregoing information has been provided by the Master Servicer. None of
the Depositor, the Underwriter, the Trustee, the REMIC Administrator, the
Special Servicer or any of their respective affiliates takes any responsibility
therefor or makes any representation or warranty as to the accuracy or
completeness thereof.
The Master Servicer will have no responsibility for, and makes no
representation with respect to, the origination of the Mortgage Loans, the
management of the Mortgaged Properties, the validity or sufficiency of the
security arrangements described herein with respect to the Mortgage Loans or the
collectability of amounts due under the Mortgage Loans.
The Special Servicer
[____________________________________ will act as Special Servicer with
respect to the Mortgage Pool. The principal offices of the Special Servicer are
located at ____________________________. As of _________, 199__, the Special
Servicer was responsible for the servicing of approximately _________ commercial
and multifamily loans with an aggregate principal balance of approximately
$_______, the collateral for which is located in ___ states.]
The foregoing information has been provided by the Special Servicer. None
of the Depositor, the Underwriter, the Trustee, the REMIC Administrator, the
Master Servicer or any of their respective affiliates takes any responsibility
therefor or makes any representation or warranty as to the accuracy or
completeness of such information.
The Special Servicer will have no responsibility for, and makes no
representation with respect to, the origination of the Mortgage Loans, the
management of the Mortgaged Properties, the validity or sufficiency of the
security arrangements described herein with respect to the Mortgage Loans or the
collectability of amounts due under the Mortgage Loans.
S-42
<PAGE>
Sub-Servicers
The Master Servicer and Special Servicer may each delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that the Master
Servicer or Special Servicer, as the case may be, will remain obligated under
the Pooling Agreement. Each sub-servicing agreement between the Master Servicer
or Special Servicer, as the case may be, and a Sub-Servicer (a "Sub-Servicing
Agreement") must be consistent with the Pooling Agreement and must provide,
among other things, that, if for any reason such Master Servicer or Special
Servicer is no longer acting in such capacity, the Trustee or any successor to
such Master Servicer or Special Servicer may assume such party's rights and
obligations under such Sub-Servicing Agreement. The Master Servicer and Special
Servicer will each be required to monitor the performance of Sub-Servicers
retained by it.
The Master Servicer or Special Servicer will be solely liable for all fees
owed by it to any Sub-Servicer. Each Sub-Servicer retained thereby will be
reimbursed by the Master Servicer or Special Servicer, as the case may be, for
certain expenditures which it makes, generally to the same extent the Master
Servicer or Special Servicer would be reimbursed under the Pooling Agreement.
See "Description of the Pooling Agreements--Certificate Account" in the
Prospectus and "--Servicing and Other Compensation and Payment of Expenses"
below.
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 Master Servicing Fee. The "Master Servicing
Fee" will be payable monthly on a loan-by-loan basis from amounts received in
respect of interest on each Mortgage Loan (including Specially Serviced Mortgage
Loans and Mortgage Loans as to which the related Mortgaged Property has become
an REO Property), will accrue at _______% per annum (the "Master 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 the Mortgage
Loan is computed. As additional servicing compensation, the Master Servicer will
be entitled to (x) Prepayment Interest Excesses (as defined below) actually
collected on the Mortgage Loans and (y) any Default Interest (that is, interest
in excess of interest at the related Mortgage Rate, accrued on any Mortgage Loan
by reason of a default thereunder) and late payment charges actually collected
on the Mortgage Loans, but only to the extent that such items (i) are allocable
to the period when the related Mortgage Loan did not constitute a Specially
Serviced Mortgage Loan or REO Property and (ii) are not allocable to pay any
portion of a Workout Fee or Liquidation Fee (each as defined below) payable to
the Special Servicer with respect to the related Mortgage Loan or to cover
interest payable to the Master Servicer, Special Servicer or Trustee with
respect to any Advances made in respect of the related Mortgage Loan. In
addition, the Master Servicer will be authorized to invest or direct the
investment of funds held in any accounts maintained by it that constitute part
of the Certificate Account (as defined in the Prospectus), in Permitted
Investments (as defined in the Prospectus), and the Master Servicer will be
entitled to retain any interest or other income earned on such funds, but will
be required to cover any losses from its own funds without any right to
reimbursement. See "Description of the Pooling Agreements--Certificate Account"
in the Prospectus.]
[If a Mortgagor prepays a Mortgage Loan in whole or in part prior to the
related Due Date in any Collection Period, the amount of interest (net of
related Master Servicing Fees and Property Servicing Fees) that accrues on the
amount of such Principal Prepayment will be less (such shortfall, a "Prepayment
Interest Shortfall") than the corresponding amount of interest accruing on the
REMIC Regular Certificates and fees payable to the Trustee. If such a Principal
Prepayment is made after the related Due Date in any Collection Period, the
amount of interest (net of related Master Servicing Fees and Property Servicing
Fees) that accrues on the amount of such Principal Prepayment will exceed (such
excess, a "Prepayment Interest Excess") the corresponding amount of interest
accruing on the REMIC Regular Certificates and fees payable to the Trustee. Any
Prepayment Interest Excesses collected will be paid to the Master Servicer as
additional servicing compensation. However, with respect to each Distribution
Date, the Master Servicer will be required to deposit into the Certificate
Account (such deposit, a "Compensating Interest Payment"), without any right of
reimbursement therefor, an amount equal to the lesser of (i) the aggregate
Master Servicing Fees for the related Collection Period, plus any Prepayment
Interest Excesses received during such Collection Period, and (ii) the aggregate
of any Prepayment Interest Shortfalls experienced during the related Collection
Period. The Master Servicer is not required to make Compensating Interest
Payments to cover comparable shortfalls in Mortgage Loan interest accruals that
result from any liquidation of a defaulted Mortgage Loan or an REO
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Property acquired in respect thereof. If the aggregate of any Prepayment
Interest Shortfalls experienced during any Collection Period exceed any
Compensating Interest Payment made in respect thereof, the difference will
constitute the "Net Aggregate Prepayment Interest Shortfall" for the related
Distribution Date.]
[The principal compensation to be paid to the Special Servicer in respect
of its property level servicing activities will be the Property Servicing Fee.
The "Property Servicing Fee" will accrue with respect to each Mortgage Loan
(including Specially Serviced Mortgage Loans and Mortgage Loans as to which the
related Mortgaged Property has become an REO Property) at a rate equal to _____%
per annum (the "Property 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 any such Mortgage Loan is computed. Earned but
unpaid Property Servicing Fees will be payable monthly out of general
collections on the Mortgage Loans and any REO Properties on deposit in the
Certificate Account.]
[The principal compensation to be paid to the Special Servicer in respect
of its special servicing activities will be the Special Servicing Fee, the
Workout Fee and the Liquidation Fee. Solely as to Specially Serviced Mortgage
Loans and Mortgage Loans as to which the related Mortgaged Property has become
an REO Property, and in addition to the Property Servicing Fee for such Mortgage
Loans, the Special Servicer shall be entitled to the "Special Servicing Fee"
which will accrue at a rate equal to ____% per annum (the "Special 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 any such
Mortgage Loan is computed. The Special Servicing Fee with respect to any such
Mortgage Loan will cease to accrue if such loan (or the related REO Property) is
liquidated or if, in the case of a Specially Serviced Mortgage Loan, it becomes
a Corrected Mortgage Loan. Earned but unpaid Special Servicing Fees will be
payable monthly out of general collections on the Mortgage Loans and any REO
Properties on deposit in the Certificate Account. A "Workout Fee" will generally
be payable with respect to each Corrected Mortgage Loan. As to each Corrected
Mortgage Loan, the Workout Fee will be payable out of, and will be calculated by
application of a "Workout Fee Rate" of _____% to, each collection of interest
and principal (net of related unpaid or unreimbursed Master Servicing Fees,
Property Servicing Fees, Special Servicing Fees and Advances) and each
collection of a Prepayment Premium or a Yield Maintenance Premium, received on
such Mortgage Loan for so long as it remains a Corrected Mortgage Loan. The
Workout Fee with respect to any Corrected Mortgage Loan will cease to be payable
if such loan again becomes a Specially Serviced Mortgage Loan or if the related
Mortgaged Property becomes an REO Property; provided that a new Workout Fee will
become payable if and when such Mortgage Loan again becomes a Corrected Mortgage
Loan. If the Special Servicer is terminated other than for cause, or resigns, it
shall retain the right to receive any and all Workout Fees payable in respect of
Mortgage Loans that became Corrected Mortgage Loans during the period that it
acted as Special Servicer and were still such at the time of such termination or
resignation (and the successor Special Servicer shall not be entitled to any
portion of such Workout Fees), in each case until the Workout Fee for any such
loan ceases to be payable in accordance with the preceding sentence. A
"Liquidation Fee" will be payable with respect to each Specially Serviced
Mortgage Loan or REO Property as to which the Special Servicer receives any full
or discounted payoff from the related Mortgagor or any Liquidation Proceeds,
Condemnation Proceeds or Insurance Proceeds (other than as a result of the
purchase of any such Specially Serviced Mortgage Loan or REO Property by the
Mortgage Loan Seller in connection with a material breach of representation or
warranty or any purchase thereof by the Special Servicer or the Master
Servicer). As to each such Specially Serviced Mortgage Loan or REO Property, the
Liquidation Fee shall be payable out of, and shall be calculated by application
of a "Liquidation Fee Rate" of_____% to, such full or discounted payoff,
Liquidation Proceeds, Condemnation Proceeds and/or Insurance Proceeds, in each
case net of any portion of such payment or proceeds payable or reimbursable to
the Master Servicer or the Special Servicer to cover related unpaid or
unreimbursed Master Servicing Fees, Property Servicing Fees, Special Servicing
Fees and Advances. The Liquidation Fee with respect to any such Specially
Serviced Mortgage Loan will not be payable if such Mortgage Loan becomes a
Corrected Mortgage Loan. Notwithstanding anything herein to the contrary, no
Liquidation Fee will be payable in connection with the receipt of, or out of,
Liquidation Proceeds collected as a result of the purchase of any Specially
Serviced Mortgage Loan or REO Property by the Mortgage Loan Seller in connection
with a material breach of representation or warranty or any purchase thereof by
the Special Servicer or the Master Servicer. As additional servicing
compensation, the Special Servicer will be entitled to retain all modification
fees received on or with respect to any Mortgage Loan. The Special Servicer will
also be entitled to Default Interest and late payment charges actually collected
on the Specially Serviced Mortgage Loans, but only to the extent that such items
are not allocable to pay any portion of a Workout Fee
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or Liquidation Fee payable to the Special Servicer with respect to the related
Mortgage Loan or to cover interest payable to the Master Servicer, Special
Servicer or Trustee with respect to any Advances made in respect of the related
Mortgage Loan.]
[In addition, the Special Servicer will be authorized to invest or direct
the investment of funds held in any accounts maintained by it that constitute
part of the Certificate Account, in Permitted Investments, and the Special
Servicer will be entitled to retain any interest or other income earned on such
funds, but will be required to cover any losses from its own funds without any
right to reimbursement.]
[Assumption fees and modification fees actually collected on or with
respect to the Mortgage Loans will allocated between the Master Servicer and the
Special Servicer as provided in the Pooling Agreement and will be paid to each
as additional servicing compensation.]
The Master Servicer and the Special Servicer will, in general, each be
required to pay all ordinary expenses incurred by it in connection with its
servicing activities under the Pooling Agreement, including the fees of any
Sub-Servicers retained by it, and will not be entitled to reimbursement therefor
except as expressly provided in the Pooling Agreement. In general, customary,
reasonable and necessary "out of pocket" costs and expenses required to be
incurred by the Master Servicer or Special Servicer in connection with the
servicing of a Mortgage Loan after a default, delinquency or other unanticipated
event, or in connection with the administration of any REO Property, will
constitute "Servicing Advances" (Servicing Advances and P&I Advances,
collectively, "Advances") and, in all cases, will be reimbursable from future
payments and other collections, including in the form of Insurance Proceeds,
Condemnation Proceeds and Liquidation Proceeds, on or in respect of the related
Mortgage Loan or REO Property ("Related Proceeds"). Notwithstanding the
foregoing, the Master Servicer and the Special Servicer will each be permitted
to pay, or to direct the payment of, certain servicing expenses directly out of
the Certificate Account and at times without regard to the relationship between
the expense and the funds from which it is being paid. [In addition, if the
Special Servicer is required under the Pooling Agreement to make any Servicing
Advance but does not desire to do so, the Special Servicer may, in its sole
discretion, with limited exception, request that the Master Servicer make such
Advance, such request to be made in writing and in a timely manner that does not
adversely affect the interests of any Certificateholder. The Master Servicer
will be required to make any such Servicing Advance that it is requested by the
Special Servicer to so make within _____ days of the Master Servicer's receipt
of such request. The Special Servicer will, with limited exception, be relieved
of any obligations with respect to any Servicing Advance that it so requests the
Master Servicer to make (regardless of whether or not the Master Servicer makes
that Advance).]
[If the Master Servicer or Special Servicer is required under the Pooling
Agreement to make a Servicing Advance, but neither does so within _____ days
after such Servicing Advance is required to be made, then the Trustee will, if
it has actual knowledge of such failure, be required to give the defaulting
party notice of such failure and, if such failure continues for _____ more days,
the Trustee will be required to make such Servicing Advance.]
The Master Servicer, the Special Servicer and the Trustee will each be
obligated to make Servicing Advances only to the extent that such Servicing
Advances are, in its reasonable good faith judgment, ultimately recoverable from
Related Proceeds. With respect to any Servicing Advance, the Trustee is entitled
to conclusively rely on the non-recoverability determination made by the Master
Servicer or Special Servicer.
As and to the extent described herein, the Master Servicer, the Special
Servicer and the Trustee are each entitled to receive interest on Servicing
Advances made thereby. See "Description of the Certificates--P&I and Other
Advances" herein.
Modifications, Waivers, Amendments and Consents
[The Special Servicer may, consistent with the Servicing Standard (but the
Master Servicer may not), agree to any modification, waiver or amendment of any
term of, forgive interest (including, without limitation, Default Interest and
late payment fees) on and principal of, capitalize interest on, permit the
release, addition or substitution of collateral securing, and/or permit the
release of the Mortgagor on or any guarantor of any Mortgage Loan it is required
to service and administer, without the consent of the Trustee or any
Certificateholder, subject, however, to each of the following limitations,
conditions and restrictions:
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(i) with limited exception, the Special Servicer may not agree to any
modification, waiver or amendment of any term of, or take any of the other
above referenced actions with respect to, any Mortgage Loan it is required
to service and administer that would affect the amount or timing of any
related payment of principal, interest or other amount payable thereunder
or, in the Special Servicer's reasonable good faith judgment, would
materially impair the security for such Mortgage Loan or reduce the
likelihood of timely payment of amounts due thereon, unless a material
default on such Mortgage Loan has occurred or, in the Special Servicer's
reasonable good faith judgment, a default in respect of payment on such
Mortgage Loan is reasonably foreseeable, and such modification, waiver,
amendment or other action is reasonably likely to produce a greater
recovery to Certificateholders on a present value basis than would
liquidation;
(ii) the Special Servicer may not extend the date on which any Balloon
Payment is scheduled to be due on any Balloon Loan for more than _____
years beyond its stated maturity date as set forth in the related Mortgage
Note as in effect on the Closing Date;
(iii) the Special Servicer may not make or permit any modification,
waiver or amendment of any term of, or take any of the other above
referenced actions with respect to, any Mortgage Loan that would (A) cause
any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC under
the Code or result in the imposition of any tax on "prohibited
transactions" or "contributions" after the startup date of any such REMIC
under the REMIC Regulations or (B) cause any Mortgage Loan to cease to be a
"qualified mortgage" within the meaning of Section 860G(a)(3) of the Code;
(iv) the Special Servicer may not permit any Mortgagor to add or
substitute any collateral unless the Special Servicer shall have first
determined in accordance with the Servicing Standard, based upon an
environmental assessment prepared by an independent person who regularly
conducts environmental assessments, at the expense of the Mortgagor, that
such additional or substitute collateral is in compliance with applicable
environmental laws and regulations and that there are no circumstances or
conditions present with respect to such new collateral relating to the use,
management or disposal of any hazardous materials for which investigation,
testing, monitoring, containment, clean-up or remediation would be required
under any then applicable environmental laws and/or regulations; and
(v) with limited exceptions, the Special Servicer may not release any
collateral securing an outstanding Mortgage Loan;
provided that (x) the limitations, conditions and restrictions set forth in
clauses (i) through (v) above will not apply to any modification of any term of
any Mortgage Loan that is required under the terms of such Mortgage Loan as in
effect on the Closing Date or that is solely within the control of the related
Mortgagor; and (y) notwithstanding clauses (i) through (v) above, neither the
Master Servicer nor the Special Servicer will be required to oppose the
confirmation of a plan in any bankruptcy or similar proceeding involving a
Mortgagor if in its reasonable good faith judgment such opposition would not
ultimately prevent the confirmation of such plan or one substantially similar.]
Inspections; Collection of Operating Information
[As a part of its property level servicing duties, the Special Servicer
will be required to perform a physical inspection of each Mortgaged Property at
least once per calendar year and as soon as practicable after the related
Mortgage Loan becomes a Specially Serviced Mortgage Loan. The Special Servicer
will be required to prepare a written report of each such inspection performed
by it that describes the condition of the Mortgaged Property and that specifies
(i) any sale, transfer or abandonment of the property or (ii) any change in the
property's condition, occupancy or value that the Special Servicer considers
material.
Also as part of its property level servicing duties, the Special Servicer
will be required, with respect to each Mortgage Loan, to use reasonable efforts
to collect from the related Mortgagor and review the annual operating
statements, budgets and rent rolls of the related Mortgaged Property, and the
financial statements of such Mortgagor, and the Special Servicer will be
required to cause annual operating statements, budgets and rent rolls to be
prepared for each REO Property. However, there can be no assurance that any
operating
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statements required to be delivered will in fact be delivered, nor is the
Special Servicer likely to have any practical means of compelling such
delivery.]
[Termination of [Special Servicer] [Master Servicer] Without Cause]
[Specify circumstances in which the Master Servicer or the Special Servicer
may be terminated without cause.]
DESCRIPTION OF THE CERTIFICATES
General
The Series 199_-___ Mortgage Pass-Through Certificates (the "Certificates")
will be issued on or about _________, 199_ (the "Closing Date") pursuant to a
Pooling and Servicing Agreement dated as of the Cut-off Date (the "Pooling
Agreement") among the Depositor, the Master Servicer, the Special Servicer, the
REMIC Administrator and the Trustee. The Certificates will represent in the
aggregate the entire beneficial ownership interest in a trust fund (the "Trust
Fund") consisting primarily of: (i) the Mortgage Loans and all payments and
other collections in respect of the Mortgage Loans received or due after the
Cut-off Date (exclusive of Principal Prepayments received prior to the Cut-off
Date and scheduled payments of principal and interest due on or before the
Cut-off Date); (ii) any REO Property acquired on behalf of the Trust Fund; (iii)
such funds or assets as from time to time are deposited in the Certificate
Account; and (iv) certain rights incidental to the representations and
warranties made by the Mortgage Loan Seller as described under "Description of
the Mortgage Pool--Representations and Warranties with respect to Mortgage
Loans; Repurchases" herein.
The Certificates will consist of [13] classes (each, a "Class") to be
designated as: [(i) the Class S Certificates; (ii) the Class A-1A Certificates,
the Class A-1B Certificates, the Class A-2 Certificates and the Class A-3
Certificates (collectively, the "Class A Certificates"); (iii) the Class B-1
Certificates, the Class B-2 Certificates, the Class B-3 Certificates and the
Class B-4 Certificates (collectively, the "Class B Certificates"); (iv) the
Class C Certificates (collectively with the Class S, Class A and Class B
Certificates, the "REMIC Regular Certificates"); and (v) the Class R-I
Certificates, the Class R-II Certificates and the Class R-III Certificates
(collectively, the "REMIC Residual Certificates")]. Only the Class S
Certificates, the Class A Certificates and the Class B-1 Certificates
(collectively, the "Offered Certificates") are offered hereby.
Registration and Denominations
The Class A-1A and Class A-1B Certificates will be issued in denominations
of not less than $_______ initial principal balance (initial "Certificate
Principal Balance") and in any whole dollar denomination in excess thereof. The
Class S Certificates will be issued in denominations of not less than $______
initial notional amount (initial "Certificate Notional Amount") and in any whole
dollar denomination in excess thereof. The Class A-2, Class A-3 and Class B-1
Certificates will be issued in denominations of not less than $________ initial
Certificate Principal Balance and in any whole dollar denomination in excess
thereof.
Each Class of Offered Certificates will initially be issued in book-entry
form through the facilities of The Depository Trust Company ("DTC") and,
accordingly, will constitute Book-Entry Certificates within the meaning of the
Prospectus. In connection therewith, each Class of Offered Certificates will
initially be represented by one or more fully registered physical certificates
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
Certificate (each, a "Certificate Owner") will be entitled to receive a fully
registered physical certificate (a "Definitive Certificate") representing its
interest in such Certificate, except under the limited circumstances described
under "Description of the Certificates--Book-Entry Registration and Definitive
Certificates" in the Prospectus. Unless and until Definitive Certificates are
issued in respect of the Offered Certificates, beneficial ownership interests in
each such Class of Certificates 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
Certificates will refer to actions taken by DTC upon instructions received from
the related Certificate 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
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such Class of Certificates will refer to payments, notices, reports and
statements to DTC or Cede & Co., as the registered holder thereof, for
distribution to the related Certificate 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
Certificates--Book-Entry Registration and Definitive Certificates" and "Risk
Factors--Book-Entry Registration" in the Prospectus.
The Trustee will initially serve as registrar (in such capacity, the
"Certificate Registrar") for purposes of recording and otherwise providing for
the registration of the Offered Certificates and, if and to the extent
Definitive Certificates are issued in respect thereof, of transfers and
exchanges of the Offered Certificates.
Class Principal Balances and Class Notional Amounts
Only the Class A, Class B and Class C Certificates (collectively, the
"Sequential Pay Certificates") will have Certificate Principal Balances. The
Certificate Principal Balance of any Sequential Pay Certificate, as of any date
of determination, will equal the product of the Percentage Interest evidenced by
such Certificate in the related Class, multiplied by the Class Principal Balance
of such Class then outstanding.
The "Class Principal Balance" of any Class of Sequential Pay Certificates
is the aggregate principal amount thereof outstanding from time to time and
represents the maximum amount that the holders thereof are entitled to receive
as distributions allocable to principal from the cash flow on the Mortgage Loans
and the other assets in the Trust Fund. The Class Principal Balance of each
Class of Sequential Pay Certificates will be reduced on each Distribution Date
by any distributions of principal actually made on such Class of Certificates on
such Distribution Date and, further, by any Realized Losses and Additional Trust
Fund Expenses allocated to such Class of Certificates on such Distribution Date.
See "--Distributions" and "--Subordination; Allocation of Realized Losses and
Certain Expenses" herein.
Upon initial issuance, the Sequential Pay Certificates will have the
respective Class Principal Balances set forth below[, in each case, subject to a
permitted variance of plus or minus __%]:
Approximate
Initial Class Percentage of
Class Principal Balance Initial Pool Balance
- ----- ----------------- --------------------
Class A-1A....................... $____________ _____%
Class A-1B....................... $____________ _____%
Class A-2........................ $____________ _____%
Class A-3........................ $____________ _____%
Class B-1........................ $____________ _____%
Class B-2........................ $____________ _____%
Class B-3........................ $____________ _____%
Class B-4........................ $____________ _____%
Class C.......................... $____________ _____%
The Class S Certificates will not have Certificate Principal Balances or
entitle the holders thereof to distributions of principal. Instead, each such
Certificate will accrue interest as described herein on its Certificate Notional
Amount. The Certificate Notional Amount of any Class S Certificate, as of any
date of determination, will equal the product of the Percentage Interest
evidenced by such Certificate in the related Class, multiplied by the Class
Notional Amount of such Class then outstanding.
The "Class Notional Amount" of the Class S Certificates will be an
aggregate notional amount used solely for purposes of calculating the accrual of
interest in respect of such Class of Certificates.
The Class Notional Amount of the Class S Certificates will equal the
aggregate of the Class Principal Balances of the respective Classes of
Sequential Pay Certificates outstanding from time to time. Upon initial
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issuance, the Class Notional Amount of the Class S Certificates will equal
$______ [, subject to a variance of plus or minus __%].
The REMIC Residual Certificates will not have Certificate Principal
Balances or Certificate Notional Amounts. The Class R-I Certificates will
represent the right to receive on any Distribution Date that portion, if any, of
the Available Distribution Amount for such date that remains after all required
distributions to be made therefrom on the REMIC Regular Certificates have been
so made. It is not expected that the REMIC Residual Certificates will receive
any distributions.
The "Percentage Interest" in the related Class evidenced by any Offered
Certificate will be a fraction, expressed as a percentage, the numerator of
which is the initial Certificate Principal Balance or Certificate Notional
Amount, as the case may be, of such Certificate on the Closing Date as set forth
on the face thereof, and the denominator of which is the initial Class Principal
Balance or Class Notional Amount, as the case may be, of the related Class on
the Closing Date.
Pass-Through Rates
The Pass-Through Rates applicable to the Class A-1A, Class A-1B, Class A-2,
Class A-3, Class B-1, Class B-2, Class B-3, Class B-4 and Class C Certificates
will, for each Distribution Date, equal ____%, ____%, ____%, ____%, ____%,
____%, ____%, ____% and ____% per annum, respectively. The Pass-Through Rate
applicable to the Class S Certificates for the initial Distribution Date will
equal approximately ____% per annum and for each Distribution Date thereafter
will equal the excess, if any, of the Weighted Average Net Mortgage Rate for
such Distribution Date, over the weighted average of the Pass-Through Rates for
the respective Classes of Sequential Pay Certificates (weighted on the basis of
the respective Class Principal Balances of such Classes outstanding immediately
prior to such Distribution Date). The REMIC Residual Certificates will not have
Pass-Through Rates or accrue interest.
With respect to any Distribution Date, the "Weighted Average Net Mortgage
Rate" will, in general, equal the weighted average of the Net Mortgage Rates in
effect for the Mortgage Loans as of the commencement of the related Collection
Period, weighted on the basis of the respective Stated Principal Balances of the
Mortgage Loans immediately prior to such Distribution Date.
The "Net Mortgage Rate" with respect to any Mortgage Loan is, in general, a
per annum rate equal to the related Mortgage Rate in effect from time to time,
minus _____basis points [;provided that if any Mortgage Loan does not accrue
interest on the basis of a 360-day year consisting of twelve 30-day months
(which is the basis on which interest accrues in respect of the REMIC Regular
Certificates), then, solely for purposes of calculating the Pass-Through Rate
for the Class S Certificates, the Net Mortgage Rate of such Mortgage Loan for
any one-month period preceding a related Due Date will be the annualized rate at
which interest would have to accrue in respect of such loan on the basis of a
360-day year consisting of twelve 30-day months in order to produce the
aggregate amount of interest actually accrued in respect of such loan during
such one-month period at the related Mortgage Rate (net of ____basis points);
and provided, further, that, solely for purposes of calculating the Pass-Through
Rate for the Class S Certificates from time to time, the Net Mortgage Rate for
any Mortgage Loan will be determined without regard to any post-Closing Date
modifications to the terms of the related Mortgage Note that may affect the
Mortgage Rate]. As of the Cut-off Date, the Net Mortgage Rates for the Mortgage
Loans will range from ___% per annum to ___% per annum, with a weighted average
Net Mortgage Rate of ___% per annum.
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
Distribution Date by (i) any payments or other collections (or advances in lieu
thereof) of principal of such Mortgage Loan that have been (or, if they had not
been applied to cover Additional Trust Fund Expenses, would have been)
distributed to Certificateholders 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 Distribution Date will be the
period commencing immediately following the Determination Date in the month
immediately preceding the month in which such Distribution Date occurs (or, in
the case of the initial Collection Period, commencing immediately following
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the Cut-off Date) and ending on and including the Determination Date in the
month in which such Distribution Date occurs.
The "Determination Date" with respect to any Distribution Date will be the
__th day of the month in which such Distribution Date occurs, or if such __th
day is not a business day, the immediately preceding business day.
Distributions
General. Distributions on the Certificates will be made by or on behalf of
the [Trustee], to the extent of available funds, on the ___th day of each month
or, if any such ___th day is not a business day, then on the next succeeding
business day, commencing in ____________, 199__ (each, a "Distribution Date").
Except as described below, all such distributions will be made to the persons in
whose names the Certificates are registered (the "Certificateholders") at the
close of business on the last business day of the month preceding the month in
which the related Distribution Date occurs (each, a "Record Date"). [As to each
such person, such distributions will be made by wire transfer in immediately
available funds to the account specified by the Certificateholder at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
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
Certificates with an aggregate initial Certificate Principal Balance of at least
$[5,000,000] or an aggregate initial Certificate Notional Amount of at least
$[10,000,000], or otherwise by check mailed to such Certificateholder.] Until
Definitive Certificates are issued in respect thereof, Cede & Co. will be the
registered holder of the Offered Certificates. See "--Registration and
Denominations" above. The final distribution on any Certificate (determined
without regard to any possible future reimbursement of any Realized Loss or
Additional Trust Fund Expense previously deemed allocated to such Certificate)
will be made only upon presentation and surrender of such Certificate at the
location that will be specified in a notice of the pendency of such final
distribution. [Notwithstanding anything herein to the contrary, no distributions
will be made with respect to a Certificate 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.] All
distributions made with respect to a Class of Certificates will be allocated pro
rata among the outstanding Certificates of such Class based on their respective
Percentage Interests in such Class.
The Available Distribution Amount. With respect to any Distribution Date,
distributions of interest on and principal of the Certificates will be made from
the Available Distribution Amount for such date. [The "Available Distribution
Amount" for any Distribution Date will, in general, equal (a) all amounts on
deposit in the Certificate Account (see "Description of the Pooling
Agreements--Certificate Account" 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 and Yield Maintenance Premiums (which are
separately distributable on the Certificates as hereinafter described);
(iii) amounts that are payable or reimbursable to any person other
than the Certificateholders (including amounts payable to the Master
Servicer, the Special Servicer, any Sub-Servicers or the Trustee as
compensation (including Trustee Fees, Master Servicing Fees, Property
Servicing Fees, Special Servicing Fees, Workout Fees, Liquidation 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 amounts payable in respect of
other Additional Trust Fund Expenses); and
(iv) amounts deposited in the Certificate 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 Distribution Date.]
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Application of the Available Distribution Amount. [On each Distribution
Date, except as otherwise described under "--Termination" below, the Available
Distribution Amount for such date will be distributed to the Certificateholders
for the following purposes and in the following order of priority:
(i) to the holders of the Class S, Class A-1A and Class A-1B
Certificates (collectively, the "Senior Certificates") in respect of
interest, pro rata based on entitlement, up to an amount equal to all
Distributable Certificate Interest in respect of each such Class of
Certificates for such Distribution Date and, to the extent not previously
paid, for all prior Distribution Dates;
(ii) to the holders of the Class A-1A and Class A-1B Certificates in
respect of principal, allocable as between such Classes of
Certificateholders as described below, up to an amount equal to the lesser
of (a) the aggregate of the then outstanding Class Principal Balances of
the Class A-1A and Class A-1B Certificates and (b) the Principal
Distribution Amount for such Distribution Date;
(iii) to the holders of the Class A-1A and Class A-1B Certificates as
reimbursement, pro rata based on entitlement, up to an amount equal to all
Realized Losses and Additional Trust Fund Expenses, if any, previously
allocated to each such Class of Certificates and for which no reimbursement
has previously been received;
(iv) to the holders of the Class A-2 Certificates in respect of
interest, up to an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(v) after the Class Principal Balances of the Class A-1A and Class
A-1B Certificates have been reduced to zero, to the holders of the Class
A-2 Certificates in respect of principal, up to an amount equal to the
lesser of (a) the then outstanding Class Principal Balance of the Class A-2
Certificates and (b) the excess, if any, of the Principal Distribution
Amount for such Distribution Date over the amounts distributed on such
Distribution Date pursuant to clause (ii) above;
(vi) to the holders of the Class A-2 Certificates as reimbursement, up
to an amount equal to all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(vii) to the holders of the Class A-3 Certificates in respect of
interest, up to an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(viii) after the Class Principal Balances of the Class A-1A, Class
A-1B and Class A-2 Certificates have been reduced to zero, to the holders
of the Class A-3 Certificates in respect of principal, up to an amount
equal to the lesser of (a) the then outstanding Class Principal Balance of
the Class A-3 Certificates and (b) the excess, if any, of the Principal
Distribution Amount for such Distribution Date over the amounts distributed
on such Distribution Date pursuant to clauses (ii) and (v) above;
(ix) to the holders of the Class A-3 Certificates as reimbursement, up
to an amount equal to all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(x) to the holders of the Class B-1 Certificates in respect of
interest, up to an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xi) after the Class Principal Balances of the Class A Certificates
have been reduced to zero, to the holders of the Class B-1 Certificates in
respect of principal, up to an amount equal to the lesser of (a) the then
outstanding Class Principal Balance of the Class B-1 Certificates and (b)
the excess, if any, of the Principal Distribution Amount for such
Distribution Date over the amounts distributed on such Distribution Date
pursuant to clauses (ii), (v) and (viii) above;
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(xii) to the holders of the Class B-1 Certificates as reimbursement,
up to an amount equal to all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(xiii) to the holders of the Class B-2 Certificates in respect of
interest, up to an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xiv) after the Class Principal Balances of the Class A and Class B-1
Certificates have been reduced to zero, to the holders of the Class B-2
Certificates in respect of principal, up to an amount equal to the lesser
of (a) the then outstanding Class Principal Balance of the Class B-2
Certificates and (b) the excess, if any, of the Principal Distribution
Amount for such Distribution Date over the amounts distributed on such
Distribution Date pursuant to clauses (ii), (v), (viii) and (xi) above;
(xv) to the holders of the Class B-2 Certificates as reimbursement, up
to an amount equal to all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(xvi) to the holders of the Class B-3 Certificates in respect of
interest, up to an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xvii) after the Class Principal Balances of the Class A, Class B-1
and Class B-2 Certificates have been reduced to zero, to the holders of the
Class B-3 Certificates in respect of principal, up to an amount equal to
the lesser of (a) the then outstanding Class Principal Balance of the Class
B-3 Certificates and (b) the excess, if any, of the Principal Distribution
Amount for such Distribution Date over the amounts distributed on such
Distribution Date pursuant to clauses (ii), (v), (viii), (xi) and (xiv)
above;
(xviii)to the holders of the Class B-3 Certificates as reimbursement,
up to an amount equal to all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(xix) to the holders of the Class B-4 Certificates in respect of
interest, up to an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xx) after the Class Principal Balances of the Class A, Class B-1,
Class B-2 and Class B-3 Certificates have been reduced to zero, to the
holders of the Class B-4 Certificates in respect of principal, up to an
amount equal to the lesser of (a) the then outstanding Class Principal
Balance of the Class B-4 Certificates and (b) the excess, if any, of the
Principal Distribution Amount for such Distribution Date over the amounts
distributed on such Distribution Date pursuant to clauses (ii), (v),
(viii), (xi), (xiv) and (xvii) above;
(xxi) to the holders of the Class B-4 Certificates as reimbursement,
up to an amount equal to all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(xxii) to the holders of the Class C Certificates in respect of
interest, up to an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxiii)after the Class Principal Balances of the Class A and Class B
Certificates have been reduced to zero, to the holders of the Class C
Certificates in respect of principal, up to an amount equal to the lesser
of (a) the then outstanding Class Principal Balance of the Class C
Certificates and (b) the excess, if any, of the Principal Distribution
Amount for such Distribution Date over the amounts distributed on such
Distribution Date pursuant to clauses (ii), (v), (viii), (xi), (xiv),
(xvii) and (xx) above;
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(xxiv) to the holders of the Class C Certificates as reimbursement, up
to an amount equal to all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received; and
(xxv) after the foregoing distributions, to the holders of the Class
R-I Certificates any amounts remaining.]
[On each Distribution Date prior to the earlier of (i) the Senior Principal
Distribution Cross-Over Date and (ii) the final Distribution Date in connection
with the termination of the Trust Fund, all distributions of principal on the
Class A-1A and Class A-1B Certificates will be paid, first, to the holders of
the Class A-1A Certificates, until the Class Principal Balance of such Class of
Certificates is reduced to zero, and thereafter, to the holders of the Class
A-1B Certificates, until the Class Principal Balance of such Class of
Certificates is reduced to zero. On each Distribution Date on and after the
Senior Principal Distribution Cross-Over Date, and in any event on the final
Distribution Date in connection with the termination of the Trust Fund,
distributions of principal on the Class A-1A and Class A-1B Certificates will be
paid to the holders of such two Classes of Certificates, pro rata, in accordance
with their respective Class Principal Balances outstanding immediately prior to
such Distribution Date, until the Class Principal Balance of each such Class of
Certificates is reduced to zero. The "Senior Principal Distribution Cross-Over
Date" will be the first Distribution Date as of which the aggregate Class
Principal Balance of the Class A-1A and Class A-1B Certificates 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 Distribution Date, plus (b) the lesser of (i) the Principal
Distribution Amount for such Distribution Date and (ii) the portion of the
Available Distribution Amount for such Distribution Date that will remain after
the distributions of interest to be made on the Senior Certificates on such
Distribution Date have been so made.]
Distributable Certificate Interest. [The "Distributable Certificate
Interest" in respect of each Class of REMIC Regular Certificates for each
Distribution Date represents that portion of the Accrued Certificate Interest in
respect of such Class of Certificates for such Distribution Date that is net of
such Class's allocable share (calculated as described below) of any Net
Aggregate Prepayment Interest Shortfall for such Distribution Date.]
[The "Accrued Certificate Interest" in respect of each Class of REMIC
Regular Certificates for each Distribution Date is equal to one month's interest
at the Pass-Through Rate applicable to such Class of Certificates for such
Distribution Date accrued on the related Class Principal Balance or Class
Notional Amount, as the case may be, outstanding immediately prior to such
Distribution Date. Accrued Certificate Interest will be calculated on the basis
of a 360-day year consisting of twelve 30-day months.]
[Any Net Aggregate Prepayment Interest Shortfall for any Distribution Date
will generally be allocable among the various Classes of REMIC Regular
Certificates, pro rata, in accordance with the respective amounts of Accrued
Certificate Interest for each such Class for such Distribution Date.]
Principal Distribution Amount. [The "Principal Distribution Amount" for any
Distribution 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
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(c) if such Distribution Date is subsequent to the initial
Distribution Date, the excess, if any, of (i) the Principal Distribution
Amount for the immediately preceding Distribution Date, over (ii) the
aggregate distributions of principal made in respect of the Certificates on
such immediately preceding Distribution 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.]
[Distributions of Prepayment Premiums and Yield Maintenance Premiums. Any
Prepayment Premium collected with respect to a Mortgage Loan during any
particular Collection Period, net of any portion thereof allocable to pay a
Liquidation Fee or a Workout Fee to the Special Servicer, will be distributed on
the related Distribution Date as follows:
(i) if the Class Notional Amount of the Class S Certificates
immediately prior to such Distribution Date is greater than zero, to the
holders of the Class S Certificates; and
(ii) if the Class Notional Amount of the Class S Certificates has been
reduced to zero prior to such Distribution Date, to the holders of the
Class R-I Certificates.
Any Yield Maintenance Premium collected with respect to a Mortgage Loan
during any particular Collection Period, net of any portion thereof allocable to
pay a Liquidation Fee or a Workout Fee to the Special Servicer, will be
distributed on the related Distribution Date as follows:
(i) if the Class Notional Amount of the Class S Certificates
immediately prior to such Distribution Date is greater than zero, then (A)
first, to the holders of the Class(es) of Sequential Pay Certificates
entitled to distributions of principal on such Distribution Date, pro rata
based on entitlement if there is more than one such Class, up to the amount
of the corresponding Certificate Yield Maintenance Amount(s) for such
Class(es), and (B) thereafter, to the holders of the Class S Certificates,
in an amount equal to the balance, if any, of such Yield Maintenance
Premium; and
(ii) if the Class Notional Amount of the Class S Certificates has been
reduced to zero prior to such Distribution Date, to the holders of the
Class R-I Certificates.
The "Certificate Yield Maintenance Amount" for any Class of the Sequential
Pay Certificates in respect of any Principal Prepayment accompanied by a Yield
Maintenance Premium will be calculated in the same manner as such Yield
Maintenance Premium, except that, for purposes of such calculation, (i) the
Pass-Through Rate of such Class will be used in lieu of the Mortgage Rate, and
(ii) the portion of the Principal Prepayment distributable to such Class will be
used in lieu of the total Principal Prepayment.
Any Prepayment Premiums and Yield Maintenance Premiums, to the extent
actually collected on the Mortgage Loans during any Collection Period and
distributable on the Certificates, may not be sufficient to fully compensate the
Certificateholders of any Class for any loss in yield attributable to the
related prepayments of principal. See "Risk Factors--Special Prepayment and
Yield Considerations" herein and "Risk Factors--Effect of Prepayments on Yield
of Certificates" in the Prospectus. Neither the Depositor nor the Underwriter
makes any representation or warranty as to the collectability of any Prepayment
Premium or Yield Maintenance Premium or as to the enforceability of any Mortgage
Loan provision requiring the payment of any such amount.]
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Treatment of REO Properties. Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Fund through foreclosure, deed in lieu of
foreclosure or otherwise, the related Mortgage Loan will, for purposes of, among
other things, determining Pass-Through Rates of, distributions on and
allocations of Realized Losses and Additional Trust Fund Expenses to the
Certificates, as well as the amount of Master Servicing Fees, Property Servicing
Fees, Special Servicing Fees and Trustee Fees payable under the Pooling
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 "--P&I and Other 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 "Weighted Average Net Mortgage Rate" and "Principal Distribution
Amount" are intended to include any Mortgage Loan or Mortgage Loans as to which
the related Mortgaged Property has become an REO Property.
Subordination; Allocation of Realized Losses and Certain Expenses
[The rights of holders of the Class A-2, Class A-3, Class B, Class C and
REMIC Residual Certificates (collectively, the "Subordinate Certificates") to
receive distributions of amounts collected or advanced on the Mortgage Loans
will, in the case of each Class thereof, be subordinated, to the extent
described herein, to the rights of holders of the Senior Certificates and each
other Class of Subordinate Certificates, if any, with a higher payment priority
(as reflected under "--Distributions--Application of the Available Distribution
Amount" above). This subordination is intended to enhance the likelihood of
timely receipt by the holders of the Senior Certificates of the full amount of
Distributable Certificate Interest payable in respect of such Classes of
Certificates on each Distribution Date, and the ultimate receipt by the holders
of the Class A-1A and Class A-1B Certificates of principal in an amount equal to
the entire respective Class Principal Balances of those Classes of Certificates.
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 Certificates of the full amount of Distributable Certificate Interest
payable in respect of such Classes of Certificates on each Distribution Date,
and the ultimate receipt by the holders of such Classes of Certificates of
principal equal to the entire respective Class Principal Balances thereof. This
subordination will be accomplished by the application of the Available
Distribution Amount on each Distribution Date in accordance with the order of
priority described under "--Distributions--Application of the Available
Distribution Amount" above. No other form of credit support will be available
for the benefit of any Class of Offered Certificateholders.
If, following the distributions to be made in respect of the Certificates
on any Distribution Date, the aggregate Stated Principal Balance of the Mortgage
Pool that will be outstanding immediately following such Distribution Date is
less than the then aggregate of the Class Principal Balances of the respective
Classes of Sequential Pay Certificates, the Class Principal Balances of the
Class C, Class B-4, Class B-3, Class B-2, Class B-1, Class A-3 and Class A-2
Certificates will be reduced, sequentially in that order, in the case of each
such Class until such deficit (or the related Class Principal Balance) is
reduced to zero (whichever occurs first). If any portion of such deficit remains
at such time as the Class Principal Balances of such Classes of Certificates are
reduced to zero, then the respective Class Principal Balances of the Class A-1A
and Class A-1B Certificates will be reduced, pro rata in accordance with the
relative sizes of the remaining Class Principal Balances of such Classes of
Certificates, until such deficit (or each such Class Principal Balance) is
reduced to zero. Any such deficit will, in general, be the result of Realized
Losses incurred in respect of the Mortgage Loans and/or Additional Trust Fund
Expenses. The foregoing reductions in the Class Principal Balances of the
Sequential Pay Certificates will constitute an allocation of any such Realized
Losses and Additional Trust Fund Expenses.
"Realized Losses" are losses arising from the inability of the Master
Servicer and Special Servicer to collect all amounts due and owing under any
defaulted Mortgage Loan, including by reason of fraud or bankruptcy of the
related Mortgagor or a casualty of any nature at the related Mortgaged Property,
to the extent not covered by insurance. The Realized Loss, if any, in respect of
a liquidated Mortgage Loan (or related REO Property) will generally equal the
excess, if any, of (a) the outstanding principal balance of such Mortgage Loan
as of the date of liquidation, together with all accrued and unpaid interest
thereon at the related Mortgage Rate and all related unreimbursed Servicing
Advances, over (b) the aggregate amount of Liquidation Proceeds, if any,
recovered in connection with such liquidation (net of any portion of such
Liquidation Proceeds that is payable or reimbursable in respect of related
unpaid liquidation expenses). If the Mortgage
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Rate on any Mortgage Loan is reduced or a portion of the debt due under any
Mortgage Loan is forgiven, whether in connection with a modification, waiver or
amendment granted or agreed to by the Special Servicer or in connection with a
bankruptcy or similar proceeding involving the related Mortgagor, the resulting
reduction in interest paid or the amount so forgiven, as the case may be, also
will be treated as a Realized Loss.
"Additional Trust Fund Expenses" are any expenses of the Trust Fund not
specifically included in the calculation of a "Realized Loss," that would result
in the REMIC Regular Certificateholders' receiving less than the full amount of
principal and/or interest to which they are entitled on any Distribution Date.
Additional Trust Fund Expenses include, among other things: (i) any interest
paid to the Master Servicer, Special Servicer and/or Trustee in respect of
unreimbursed Advances (to the extent not paid out of late payment charges and
Default Interest actually collected on the related Mortgage Loan); (ii) all
Special Servicing Fees, Workout Fees and Liquidation Fees payable to the Special
Servicer; (iii) any of certain unanticipated, non-Mortgage Loan specific
expenses of the Trust Fund, including, but not limited to, certain
reimbursements and indemnification to the Trustee and certain related persons
described under "Description of the Pooling Agreements--Certain Matters
Regarding the Trustee" in the Prospectus, certain reimbursements and
indemnification to the Depositor, the Master Servicer, the Special Servicer, the
REMIC Administrator and certain related persons described under "Description of
the Pooling Agreements--Certain Matters regarding the Master Servicer, the
Special Servicer, the REMIC Administrator, the Manager and the Depositor" in the
Prospectus, certain taxes payable from the assets of the Trust Fund and
described under "Servicing of Mortgage Loans--REO Properties" herein and under
"Certain Federal Income Tax Consequences--Possible Taxes on Income from
Foreclosure Property and Other Taxes" herein and "Certain Federal Income Tax
Consequences--REMICs--Prohibited Transactions Tax and Other Taxes" in the
Prospectus, the costs and expenses of any tax audits with respect to the Trust
Fund and certain other tax-related expenses and the cost of various opinions of
counsel required to be obtained in connection with the servicing of the Mortgage
Loans and administration of the Trust Fund; and (iv) any other expense of the
Trust Fund not specifically included in the calculation of "Realized Loss" for
which there is no corresponding collection from a Mortgagor.]
P&I and Other Advances
[On or about each Distribution Date, the Master Servicer will be obligated,
subject to the recoverability determination described in the next paragraph, to
make advances (each, a "P&I Advance") out of its own funds or, subject to the
replacement thereof as provided in the Pooling Agreement, from funds held in the
Certificate Account that are not required to be distributed to
Certificateholders on such Distribution Date, in an amount that is generally
equal to the aggregate of all Scheduled Payments (other than Balloon Payments)
and any Assumed Scheduled Payments, net of related Master Servicing Fees and
Workout Fees, due or deemed due, as the case may be, in respect of the Mortgage
Loans during the related Collection Period, in each case to the extent such
amount was not paid by or on behalf of the related Mortgagor or otherwise
collected as of the close of business on the related Determination Date.
Notwithstanding the foregoing, if the Monthly Payment on any Mortgage Loan has
been reduced in connection with a bankruptcy or similar proceeding or a
modification, waiver or amendment granted or agreed to by the Special Servicer,
the Master Servicer will be required in the event of subsequent delinquencies to
advance in respect of such Mortgage Loan only the amount of the reduced Monthly
Payment (net of related Master Servicing Fees and Workout Fees). In addition, if
it is determined that an Appraisal Reduction Amount exists with respect to any
Required Appraisal Loan (as defined below), then, with respect to the
Distribution Date immediately following the date of such determination and with
respect to each subsequent Distribution Date for so long as such Appraisal
Reduction Amount exists, in the event of subsequent delinquencies thereon, the
interest portion of the P&I Advance in respect of such Mortgage Loan will be
reduced (no reduction to be made in the principal portion, however) to equal to
the product of (i) the amount of the interest portion of such P&I Advance that
would otherwise be required to be made for such Distribution Date without regard
to this sentence, multiplied by (ii) a fraction (expressed as a percentage), the
numerator of which is equal to the Stated Principal Balance of such Mortgage
Loan, net of such Appraisal Reduction Amount, and the denominator of which is
equal to the Stated Principal Balance of such Mortgage Loan. See "--Appraisal
Reductions" below.
If the full amount of all P&I Advances, if any, required to be made in
respect of any Distribution Date have not been so made, then the Trustee will be
required to make the portion of such P&I Advances that was required to be, but
not, made by the Master Servicer. In the event the Trustee does not make the
portion of such P&I Advances required to be, but not, made by the Master
Servicer, then the Pooling Agreement will
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provide for such amount to be withdrawn from a custodial fund established by the
Trustee as set forth in the Pooling Agreement. See "--The Trustee" below.]
The Master Servicer and the Trustee will each be entitled to recover any
P&I Advance made out of its own funds from any Related Proceeds collected in
respect of the Mortgage Loan as to which such P&I Advance was made; provided
that neither the Master Servicer nor the Trustee will be obligated to make any
P&I Advance that it determines, in its reasonable good faith judgment, would, if
made, constitute a Nonrecoverable Advance, and the Master Servicer and the
Trustee will each be entitled to recover any P&I Advance made by it that it
later determines to be a Nonrecoverable Advance out of general funds on deposit
in the Certificate Account. With respect to any P&I Advance, the Trustee is
entitled to conclusively rely on the non-recoverability determination made by
the Master Servicer.
[The Master Servicer and the Trustee will each be entitled, with respect to
any Advance made thereby, and the Special Servicer will be entitled, with
respect to any Servicing Advance made thereby, to interest accrued on the amount
of such Advance for so long as it is outstanding at a per annum rate (the
"Reimbursement Rate") equal to [specify applicable rate]. Such interest on any
Advance will be payable to the Master Servicer, the Special Servicer or the
Trustee, as the case may be, first, out of Default Interest and late payment
charges collected in respect of the related Mortgage Loan, and second, if such
Advance has been reimbursed, out of any amounts then on deposit in the
Certificate Account. To the extent not offset by Default Interest and late
payment charges actually collected in respect of any defaulted Mortgage Loan,
interest accrued on outstanding Advances made in respect thereof will result in
a reduction in amounts payable on the Certificates.]
[In addition to the foregoing, the Trustee will be required to advance, to
the extent known to it, any amounts collected on or in respect of the Mortgage
Pool that the Master Servicer is required but fails to remit to the Trustee for
distribution to Certificateholders by a specified time on or about the related
Distribution Date. The Trustee will be entitled to interest accrued on the
amount of such advance for so long as it is outstanding at the Reimbursement
Rate.]
[Appraisal Reductions]
[Promptly (and, in any event, within 60 days) following the earliest of (i)
the date on which any Mortgage Loan becomes a Modified Mortgage Loan (as defined
below), (ii) the 60th day (or, in the case of a Modified Mortgage Loan, the 30th
day) after the occurrence of any uncured delinquency in Monthly Payments with
respect to any Mortgage Loan, (iii) the date on which a receiver is appointed
and continues in such capacity in respect of the Mortgaged Property securing any
Mortgage Loan and (iv) the date on which the Mortgaged Property securing any
Mortgage Loan becomes an REO Property (each such Mortgage Loan, a "Required
Appraisal Loan"), the Special Servicer will be required to obtain an appraisal
of the related Mortgaged Property from an independent MAI-designated appraiser,
unless such an appraisal had previously been obtained within the prior twelve
months. The cost of such appraisal will be a Servicing Advance. As a result of
any such appraisal, it may be determined that an "Appraisal Reduction Amount"
exists with respect to the related Required Appraisal Loan. The Appraisal
Reduction Amount for any Required Appraisal Loan will, in general, be an amount,
determined as of the Determination Date immediately succeeding the date on which
the related appraisal is obtained (or, if based on an earlier appraisal, as of
the Determination Date immediately succeeding the earliest of the relevant dates
described in the first sentence of this paragraph), equal to the excess, if any,
of (a) the sum of (i) the Stated Principal Balance of such Required Appraisal
Loan, (ii) to the extent not previously advanced by the Master Servicer or the
Trustee, all unpaid interest on the Required Appraisal Loan through the most
recent Due Date prior to such Determination Date at a per annum rate equal to
the sum of the related Net Mortgage Rate and the Trustee Fee Rate (as defined
below), (iii) all accrued but unpaid Master Servicing Fees, Property Servicing
Fees and Special Servicing Fees in respect of such Required Appraisal Loan, (iv)
all related unreimbursed Advances made by or on behalf of the Master Servicer,
the Special Servicer or the Trustee with respect to such Required Appraisal Loan
plus interest accrued thereon at the Reimbursement Rate and (v) all currently
due and unpaid real estate taxes and assessments, insurance premiums, and, if
applicable, ground rents in respect of the related Mortgaged Property or REO
Property (net of any escrow reserves held by the Master Servicer or the Special
Servicer with respect to any such item), over (b) 90% of the appraised value (as
is) of the related Mortgaged Property or REO Property as determined by such
appraisal (net of any mortgage liens that are prior to the lien of such Mortgage
Loan).
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With respect to each Required Appraisal Loan (unless such Mortgage Loan has
become a Corrected Mortgage Loan and has remained current for twelve consecutive
Monthly Payments, and no other Servicing Transfer Event has occurred with
respect thereto during the preceding twelve months), the Special Servicer is
required, within 30 days of each anniversary of such loan's becoming a Required
Appraisal Loan, to order an update of the prior appraisal (the cost of which
will be a Servicing Advance). Based upon such appraisal, the Special Servicer
will be required to redetermine and report to the Trustee the Appraisal
Reduction Amount, if any, with respect to such Mortgage Loan.
A "Modified Mortgage Loan" is any Mortgage Loan as to which any Servicing
Transfer Event has occurred and which has been modified by the Special Servicer
in a manner that: (A) affects the amount or timing of any payment of principal
or interest due thereon (other than, or in addition to, bringing current Monthly
Payments with respect to such Mortgage Loan); (B) except as expressly
contemplated by the related Mortgage, results in a release of the lien of the
Mortgage on any material portion of the related Mortgaged Property without a
corresponding Principal Prepayment in an amount not less than the fair market
value (as is) of the property to be released; or (C) in the reasonable good
faith judgment of the Special Servicer, otherwise materially impairs the
security for such Mortgage Loan or reduces the likelihood of timely payment of
amounts due thereon.]
Reports to Certificateholders; 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
Distribution Date to each Certificateholder a statement (the "Trustee Report")
substantially in the form of Annex ___ hereto, detailing the distributions on
such Distribution 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 Certificateholders.
Until such time as Definitive Certificates are issued in respect of the
Offered Certificates, the foregoing information will be available to the
Certificate Owners through DTC and the DTC Participants. Any Certificate Owner
of a Book-Entry Certificate 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 Certificate Owner's ownership
interest) to the Trustee at the Trustee's corporate trust office primarily
responsible for administering the Trust Fund (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 Certificate Owners of Book-Entry
Certificates, 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 REMIC Administrator and
the Depositor are required to recognize as Certificateholders only those persons
in whose names the Certificates are registered on the books and records of the
Certificate Registrar.
Other Information. [The Pooling Agreement 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 Certificate Owner
of an Offered Certificate or any person identified to the Trustee by any such
holder or Certificate Owner as a prospective transferee of an Offered
Certificate or any interest therein, subject to the discussion in the following
paragraph, originals or copies of, among other things, the following items: (a)
the Pooling Agreement and any amendments thereto, (b) all Trustee Reports and
Special Servicer Reports delivered to holders of the relevant Class of Offered
Certificates 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 Pooling Agreements--Evidence as to
Compliance" in the Prospectus, (d)
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all accountant's reports delivered to the Trustee in respect of the Master
Servicer and/or Special Servicer since the Closing Date as described under
"Description of the Pooling 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
Certificateholders, Certificate Owners and prospective purchasers of
Certificates and interests therein; provided that the Trustee may require (a) in
the case of a Certificate Owner of an Offered Certificate, 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 Certificates, is requesting the information for
use by it or another party in evaluating an investment in the Offered
Certificates and will otherwise keep such information confidential and (b) in
the case of a prospective purchaser of an Offered Certificate, 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 Certificates or an interest therein, is requesting the
information for use in evaluating a possible investment in the Offered
Certificates and will otherwise keep such information confidential.
Certificateholders, by the acceptance of their Certificates, will be deemed to
have agreed to keep such information confidential.]
Voting Rights
[At all times during the term of the Pooling Agreement, ___% of the voting
rights for the series offered hereby (the "Voting Rights") will be allocated
among the holders of the respective Classes of Sequential Pay Certificates in
proportion to the Class Principal Balances of their Certificates, __% of the
Voting Rights will be allocated to the holders of the Class S Certificates, and
all Voting Rights not otherwise allocated in the aforesaid manner will be
allocated equally by Class among the holders of the respective Classes of REMIC
Residual Certificates. Voting Rights allocated to a Class of Certificateholders
will be allocated among such Certificateholders in proportion to the Percentage
Interests in such Class evidenced by their respective Certificates.]
Termination
[The obligations created by the Pooling Agreement will terminate following
the earliest of (i) the final payment (or advance in respect thereof) or other
liquidation of the last Mortgage Loan or related REO Property remaining in the
Trust Fund, and (ii) the purchase of all of the Mortgage Loans and REO
Properties remaining in the Trust Fund by the Special Servicer or the Master
Servicer. Written notice of termination of the Pooling Agreement will be given
to each Certificateholder, and the final distribution with respect to each
Certificate will be made only upon surrender and cancellation of such
Certificate at the office of the Certificate Registrar or at such other location
specified in such notice of termination.
Any such purchase by the Special Servicer or the Master Servicer of all of
the Mortgage Loans and REO Properties remaining in the Trust Fund is required to
be made at a price generally equal to (a) the sum of (i) the aggregate Purchase
Price of all of the Mortgage Loans then included in the Trust Fund (other than
the Mortgage Loans as to which the related Mortgaged Property has become an REO
Property) and (ii) the fair market value of all REO Properties then included in
the Trust Fund, as determined by an appraiser mutually agreed upon by the Master
Servicer and the Trustee, minus (b) the aggregate of all amounts payable or
reimbursable to the party effecting the purchase under the Pooling Agreement.
Such purchase will effect early retirement of the then outstanding Certificates,
but the right of the Special Servicer or the Master Servicer to effect such
termination is subject to the requirement that the then aggregate Stated
Principal Balance of the Mortgage Pool be less than __% of the Initial Pool
Balance. The purchase price paid by the Special Servicer or the Master Servicer,
exclusive of any portion thereof payable or reimbursable (as if such amount
constituted Liquidation Proceeds) to the Trustee, the Special Servicer or the
Master Servicer, as applicable, or otherwise to cover Additional Trust Fund
Expenses, will constitute part of the Available Distribution Amount for the
final Distribution Date.
The Available Distribution Amount for the final Distribution Date will be
distributed by the Trustee generally as described herein under
"--Distributions--Application of the Available Distribution Amount",
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except that the distributions of principal on any Class of Sequential Pay
Certificates described thereunder will be made, subject to available funds, up
to an amount equal to the entire Class Principal Balance thereof remaining
outstanding. In addition, distributions of principal made on the Class A-1A and
A-1B Certificates on the final Distribution Date will be allocated between such
two Classes of Certificates, pro rata, in accordance with their respective Class
Principal Balances outstanding immediately prior to such Distribution Date.]
The Trustee
______________________________________________ will be the Trustee under
the Pooling Agreement. The Trustee is at all times to be, and will be required
to resign if it fails to be, [specify eligibility requirements for Trustee].
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 Certificates in their own names. In
addition, for purposes of meeting the legal requirements of certain local
jurisdictions, the Master Servicer and the Trustee acting jointly shall have the
power to appoint a co-trustee or separate trustees of all or any part of the
Trust Fund. 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 Pooling Agreement, 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 Pooling Agreements--The
Trustee", "--Duties of the Trustee", "--Certain Matters Regarding the Trustee"
and "--Resignation and Removal of the Trustee" in the Prospectus.
YIELD AND MATURITY CONSIDERATIONS
Yield Considerations
General. The yield on any Offered Certificate will depend on (a) the price
at which such Certificate is purchased by an investor and (b) the rate, timing
and amount of distributions on such Certificate. The rate, timing and amount of
distributions on any Offered Certificate will in turn depend on, among other
things, (i) the Pass-Through Rate for such Certificate, (ii) the rate and timing
of principal payments (including principal prepayments) and other principal
collections on the Mortgage Loans and the extent to which such amounts are to be
applied or otherwise result in reduction of the Certificate Principal Balance or
Certificate Notional Amount of such Certificate, (iii) the rate, timing and
severity of Realized Losses and Additional Trust Fund Expenses and the extent to
which such losses and shortfalls are allocable in reduction of the Certificate
Principal Balance or Certificate Notional Amount of such Certificate, and (iv)
the timing and severity of any Net Aggregate Prepayment Interest Shortfalls and
the extent to which such shortfalls are allocable in reduction of the
Distributable Certificate Interest payable on such Certificate.
Pass-Through Rates. [The Pass-Through Rate applicable to the Class S
Certificates will be variable and, with respect to any Distribution Date, will
be calculated based on the Weighted Average Net Mortgage Rate for such date.
Accordingly, the yield on such Certificates will be sensitive to changes in the
relative composition of the Mortgage Pool as a result of scheduled amortization,
voluntary prepayments and liquidations of Mortgage Loans following default. In
addition, the Pass-Through Rate for the Class S Certificates will vary with
changes in the relative sizes of the Class Principal Balances of the respective
Classes of Sequential Pay Certificates. See "Description of the
Certificates--Pass-Through Rates" and "Description of the Mortgage Pool" herein
and "--Yield Consideration--Rate and Timing of Principal Payments" below.]
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Rate and Timing of Principal Payments. The yield to holders of the Class S
Certificates will be extremely sensitive to, and the yield to holders of any
other Offered Certificates purchased at a discount or premium will be affected
by, the rate and timing of principal payments made in reduction of the
Certificate Principal Balances or Certificate Notional Amounts of such
Certificates. As described herein, the Principal Distribution Amount for each
Distribution Date will be distributable entirely in respect of the Class A-1A
and/or Class A-1B Certificates until the Class Principal Balances thereof are
reduced to zero, and will thereafter be distributable entirely in respect of the
Class A-2 Certificates, the Class A-3 Certificates, the Class B-1 Certificates,
the Class B-2 Certificates, the Class B-3 Certificates, the Class B-4
Certificates and the Class C Certificates, in that order, in each case until the
Class Principal Balance of such Class of Certificates is reduced to zero. In
addition, except under the limited circumstances described herein, holders of
the Class A-1B Certificates will not receive any distributions of principal for
so long as the Class A-1A Certificates are outstanding. Any such distributions
of principal in respect of the Sequential Pay Certificates will cause a
corresponding reduction of the Class Notional Amount of the Class S
Certificates. Consequently, the rate and timing of principal payments that are
distributed or otherwise result in reduction of the Class Principal Balance or
Class Notional Amount, as the case may be, of each Class of REMIC Regular
Certificates will be directly related to the rate and timing of principal
payments on or in respect of the Mortgage Loans, which will in turn be affected
by the amortization schedules thereof, 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 Fund). Prepayments and, assuming the respective Maturity Dates therefor
have not occurred, liquidations of the Mortgage Loans will result in
distributions on the Sequential Pay Certificates of amounts that would otherwise
be distributed over the remaining terms of the Mortgage Loans and will tend to
shorten the weighted average lives of those Certificates. 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 Sequential Pay Certificates) while work-outs are negotiated
or foreclosures are completed, and such delays will tend to lengthen the
weighted average lives of those Certificates. See "Servicing of the Mortgage
Loans--Modifications, Waivers and Amendments" herein.
The extent to which the yield to maturity of any Class of Offered
Certificates may vary from the anticipated yield will depend upon the degree to
which such Certificates are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans are in turn distributed
or otherwise result in a reduction of the Class Principal Balance or Class
Notional Amount of such Certificates. An investor should consider, in the case
of any Offered Certificate purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Mortgage Loans could result in an
actual yield to such investor that is lower than the anticipated yield and, in
the case of any Class S Certificate or any other Offered Certificate purchased
at a premium, the risk that a faster than anticipated rate of principal payments
on the Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield. In general, the earlier a payment of principal
on the Mortgage Loans is distributed or otherwise results in reduction of the
Certificate Notional Amount of a Class S Certificate or the Certificate
Principal Balance of a Sequential Pay Certificate 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 the Mortgage
Loans 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. Investors
in the Class S Certificates should fully consider the risk that an extremely
rapid rate of principal payments on the Mortgage Loans could result in the
failure of such investors to fully recoup their initial investments. 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. The
Depositor is not aware of any relevant publicly available or authoritative
statistics with respect to the historical prepayment experience of a large group
of mortgage loans comparable to the Mortgage Loans.
Losses and Shortfalls. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Losses and other
shortfalls on the Mortgage Loans will, with the exception of any Net Aggregate
Prepayment Interest Shortfalls, generally be applied to reduce the Class
Principal Balances of the Sequential Pay Certificates in the following order:
first, to the Class C Certificates until the Class Principal Balance thereof has
been reduced
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to zero; then to the respective Classes of Class B Certificates, in descending
numerical order of the numerical portions of their respective Class
designations, until the remaining Class Principal Balance of each such Class of
Certificates has been reduced to zero; then to the Class A-3 and Class A-2
Certificates, in that order, until the remaining Class Principal Balance of each
such Class of Certificates has been reduced to zero; and finally to the Class
A-1A and Class A-1B Certificates, pro rata in accordance with their respective
remaining Class Principal Balances, until the remaining Class Principal Balance
of each such Class of Certificates is reduced to zero. Any Realized Losses or
Additional Trust Fund Expenses so allocated to the Sequential Pay Certificates
will cause a corresponding reduction of the Class Notional Amount of the Class S
Certificates. As described herein, any Net Aggregate Prepayment Interest
Shortfalls will be allocated among the respective Classes of Offered Regular
Certificates pro rata based on Accrued Certificate Interest.
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/or Yield Maintenance
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.
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 or Yield
Maintenance 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.
The Depositor makes no 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 Distributable Certificate Interest. As described under "Description
of the Certificates--Distributions-- Application of the Available Distribution
Amount" herein, if the portion of the Available Distribution Amount
distributable in respect of interest on any Class of Offered Certificates on any
Distribution Date is less than the Distributable Certificate Interest then
payable for such Class, the shortfall will be distributable to holders of such
Class of Certificates on subsequent Distribution 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 Certificates
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 distribution to the
investor of each dollar distributed in reduction of principal of such security
(assuming no losses). The weighted average life of any Offered Certificate 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
Certificate may also be affected to the extent that additional distributions in
reduction of the Certificate Principal Balance of such Certificate occur as a
result of the purchase of a Mortgage Loan out of the Trust Fund or the optional
termination of the Trust Fund as described under
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"Description of the Certificates--Termination" herein. Such a purchase from the
Trust Fund will have the same effect on distributions to the holders of
Certificates as if the related Mortgage Loan(s) had prepaid in full, except that
no Yield Maintenance Premiums or Prepayment Premiums are made in respect
thereof.
[The table set forth below has been prepared on the basis of the following
assumptions (the "Modeling Assumptions") regarding the characteristics of the
Certificates and the Mortgage Loans and the performance thereof: (i) as of the
date of issuance of the Certificates, 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 the Master Servicer does not exercise its option to purchase the Mortgage
Loans and thereby cause a termination of the Trust Fund; (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 Certificates will be made on the __th day of each
month, commencing in ________ 199_; (vii) payments on the Mortgage Loans earn no
reinvestment return; (viii) there are no additional ongoing Trust Fund expenses
payable out of the Trust Fund other than the Master Servicing Fee, the Property
Servicing Fee and the Trustee Fee, and there are no Additional Trust Fund
Expenses; (ix) the respective Classes of Offered Certificates will be issued
with the initial Class Principal Balances set forth in the table on the cover
page hereof; (x) the Offered Certificates will be settled on __________, 199_
(the "Assumed Settlement Date"); and (xi) there are no Prepayment Premiums or
Yield Maintenance Premiums paid to Certificateholders.]
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 Class Principal Balances
outstanding over time and the weighted average lives of the respective Classes
of Offered Certificates.
Subject to the foregoing discussion and assumptions, the following table
indicates the weighted average life of each Class of the Offered Certificates
that are Sequential Pay Certificates, and sets forth the percentages of the
initial Class Principal Balance of each such Class that would be outstanding
after each of the Distribution Dates shown.
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Percent of Initial Class Principal Balances Outstanding
Class Class Class Class Class
Date A-1A A-1B A-2 A-3 B-1
---- ---- ---- --- --- ---
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 ____ ____ ____ ____ ____
For purposes of the foregoing table, the weighted average life of an
Offered Certificate is determined by (i) multiplying the amount of each
principal distribution thereon by the number of years from [the Assumed
Settlement Date] to the related Distribution Date, (ii) summing the results and
(iii) dividing the sum by the aggregate amount of the reductions in the
Certificate Principal Balance of such Offered Certificate.
Special Yield Considerations for the Class S Certificates
The following table indicates the approximate pre-tax yield to maturity (on
a corporate bond equivalent basis) on the Class S Certificates for the assumed
purchase prices indicated in such table. The following table is based on (i) the
Modeling Assumptions; (ii) the assumption that the initial Class Notional Amount
of the Class S Certificates is $__________; and (iii) the assumption that the
purchase price of the Class S Certificates is equal to the indicated percentage
of the initial Class Notional Amount of such Certificates[, plus accrued
interest from the Cut-off Date to but not including the Assumed Settlement
Date].
Pre-Tax Yields to Maturity for the Class S Certificates
Assumed Purchase Price Yield
---------------------- -----
____% ____%
____% ____%
____% ____%
Each pre-tax yield set forth in the preceding table was calculated by
determining the monthly discount rate which, when applied to the assumed stream
of cash flows to be paid on the Class S Certificates, would cause the discounted
present value of such assumed stream of cash flows to equal the assumed purchase
price listed in the relevant table as stated plus accrued interest. These yields
do not take into account the different interest rates at which investors may be
able to reinvest funds received by them as distributions on their Class S
Certificates, and thus do not reflect the return on any investment in such
Certificates when any reinvestment rates other than the discount rates are
considered.
There can be no assurance that the Mortgage Loans will not be prepaid or,
if prepaid, will be prepaid at any particular rate or that the yield on the
Class S Certificates will conform to any of the yields described
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herein. Investors are urged to make their investment decisions based on their
own determinations as to anticipated rates of principal payments on the Mortgage
Loans under a variety of scenarios. The yield to maturity of the Class S
Certificates will be especially sensitive to the rate and timing of principal
payments on and/or other liquidations of the Mortgage Loans. Prospective
investors in the Class S Certificates should fully consider the associated
risks, including the risk that such investors may not recover their initial
investment due to the rate and timing of prepayments on and/or other
liquidations of the Mortgage Loans. No prediction can be made as to the actual
rate and timing of principal payments and/or liquidations of the Mortgage Loans,
or how such prepayments and/or losses may affect the Class Notional Amount of
the Class S Certificates. See "Risk Factors--Special Prepayment and Yield
Considerations" and "Description of the Mortgage Pool" herein and "Risk
Factors--Effect of Prepayments on Average Life of Certificates" and "--Effects
of Prepayments on Yield of Certificates" in the Prospectus.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
Upon the issuance of the Offered Certificates, Sidley & Austin, counsel to
the Depositor, will deliver its opinion generally to the effect that, assuming
compliance with all provisions of the Pooling Agreement (and subject to certain
other assumptions set forth therein), for federal income tax purposes, the
portions of the Trust Fund designated in the Pooling Agreement as "REMIC I,
"REMIC II" and "REMIC III", respectively, will each qualify as a REMIC under the
Code. For federal income tax purposes, (a) the Class R-I Certificates will be
the sole class of "residual interests" in REMIC I, (b) the separate
non-certificated regular interests in REMIC I will be the "regular interests" in
REMIC I and will constitute the assets of "REMIC II", (c) the Class R-II
Certificates will be the sole class of "residual interests" in REMIC II, (d) the
separate non-certificated regular interests in REMIC II will be the "regular
interests" in REMIC II and will constitute the assets of "REMIC III", (e) the
REMIC Regular Certificates will evidence the "regular interests" in, and
generally will be treated as debt instruments of, REMIC III, and (f) the Class
R-III Certificates will be the sole class of "residual interests" in REMIC III.
See "Certain Federal Income Tax Consequences" in the Prospectus.
Discount and Premium; Prepayment Premiums
[For federal income tax reporting purposes, it is anticipated that the
Class S Certificates will, and the other Offered Certificates 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 "Certain Federal Income Tax Consequences--REMICs--Taxation
of Owners of REMIC Regular Certificates" 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 Certificates 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, prepayable securities such as the Offered Certificates.
Prospective purchasers of the Offered Certificates are advised to consult their
tax advisors concerning the tax treatment of such Certificates.
Certain Classes of the Offered Certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
such a Class of Certificates will be treated as holding a Certificate with
amortizable bond premium will depend on such Certificateholder's purchase price
and the distributions remaining to be made on such Certificate at the time of
its acquisition by such Certificateholder. Holders of such Classes of
Certificates should consult their own tax advisors regarding the possibility of
making an election to amortize such premium. See Certain Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates--Premium"
in the Prospectus.
Prepayment Premiums and Yield Maintenance Premiums actually collected on
the Mortgage Loans will be distributed to the holders of each Class of
Certificates entitled thereto as described herein. It is not
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entirely clear under the Code when the amount of a Prepayment Premium or Yield
Maintenance Premium should be taxed to the holder of a Class of Certificates
entitled to a Prepayment Premium or Yield Maintenance Premium. For federal
income tax reporting purposes, Prepayment Premiums or Yield Maintenance Premiums
will be treated as income to the holders of a Class of Certificates entitled to
Prepayment Premiums or Yield Maintenance Premiums, as applicable, only after the
Master Servicer's actual receipt of a Prepayment Premium or Yield Maintenance
Premium as to which such Class of Certificates is entitled under the terms of
the Pooling Agreement. It appears that Prepayment Premiums and Yield Maintenance
Premiums are to be treated as ordinary income rather than capital gain. However,
the correct characterization of such income is not entirely clear and
Certificateholders should consult their own tax advisors concerning the
treatment of Prepayment Premiums and Yield Maintenance Premiums.
Characterization of Investments in Offered Certificates
[The Offered Certificates will be "real estate assets" within the meaning
of Section 856(c)(5)(A) of the Code in the same proportion that the assets of
the Trust Fund would be so treated. In addition, interest (including original
issue discount, if any) on the Offered Certificates will be interest described
in Section 856(c)(3)(B) of the Code to the extent that such Certificates are
treated as "real estate assets" within the meaning of Section 856(c)(5)(A) of
the Code. Moreover, the Offered Certificates will be "qualified mortgages" under
Section 860G(a)(3) of the Code if transferred to another REMIC on its start-up
day in exchange for regular or residual interests therein.]
[The Offered Certificates will be treated as assets within the meaning of
Section 7701(a)(19)(C) of the Code generally only to the extent that the related
Mortgage Loans are secured by multifamily properties and health care facilities.
The percentage of such Mortgage Loans included in the initial principal balance
of the Mortgage Pool (which is subject to change due to changes in principal
balances and prepayments) is initially approximately ___%. See "Description of
the Mortgage Pool" herein and "Certain Federal Income Tax
Consequences--REMICs--Characterization of Investments in REMIC Certificates" in
the Prospectus.]
Possible Taxes on Income from Foreclosure Property and Other Taxes
In general, the Special Servicer will be obligated to operate and manage
any Mortgaged Property acquired as REO Property in a manner that would, to the
extent commercially feasible, maximize the Trust Fund's net after-tax proceeds
from such property. After the Special Servicer reviews the operation of such
property and consults with the REMIC Administrator to determine the Trust Fund's
federal income tax reporting position with respect to income it is anticipated
that the Trust Fund would derive from such property, the Special Servicer could
determine that it would not be commercially feasible to manage and operate such
property in a manner that would avoid the imposition of a tax on "net income
from foreclosure property" within the meaning of the REMIC Regulations or a tax
on "prohibited transactions" under Section 860F of the Code (either such tax
referred to herein as an "REO Tax"). To the extent that income the Trust Fund
receives from an REO Property is subject to a tax on (i) "net income from
foreclosure property", such income would be subject to federal tax at the
highest marginal corporate tax rate (currently 35%) and (ii) "prohibited
transactions", such income would be subject to federal tax at a 100% rate. The
determination as to whether income from an REO Property would be subject to an
REO Tax will depend on the specific facts and circumstances relating to the
management and operation of each REO Property. Generally, income from an REO
Property that is directly operated by the Special Servicer would be apportioned
and classified as "service" or "non-service" income. The "service" portion of
such income could be subject to federal tax either at the highest marginal
corporate tax rate or at the 100% rate on "prohibited transactions", and the
"non-service" portion of such income could be subject to federal tax at the
highest marginal corporate tax rate or, although it appears unlikely, at the
100% rate applicable to the "prohibited transactions". Any REO Tax imposed on
the Trust Fund's income from an REO Property would reduce the amount available
for distribution to Certificateholders. Certificateholders are advised to
consult their own tax advisors regarding the possible imposition of REO Taxes in
connection with the operation of commercial REO Properties by REMICs.
To the extent permitted by then applicable laws, any Prohibited
Transactions Tax, Contributions Tax (each as defined in the Prospectus) or tax
on "net income from foreclosure property" that may be imposed on REMIC I, REMIC
II or REMIC III will be borne by the REMIC Administrator, the Trustee, the
Master Servicer or the Special Servicer, in any case out of its own funds,
provided that such person has sufficient assets to do so, and provided further
that such tax arises out of a breach of such person's obligations under the
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Pooling Agreement and in respect of compliance with applicable laws and
regulations. Any such tax not borne by the REMIC Administrator, the Trustee, the
Master Servicer or the Special Servicer will be charged against the Trust Fund
resulting in a reduction in amounts available for distribution to the
Certificateholders. See "Certain Federal Income Tax
Consequences--REMICs--Prohibited Transactions Tax and Other Taxes" in the
Prospectus.
Reporting and other Administrative Matters
Reporting of interest income, including any original issue discount, if
any, with respect to REMIC Regular Certificates is required annually, and may be
required more frequently under Treasury regulations. These information reports
generally are required to be sent to individual holders of REMIC Regular
Certificates and the IRS; holders of REMIC Regular Certificates that are
corporations, trusts, securities dealers and certain other non-individuals will
be provided interest and original issue discount income information and the
information set forth in the following paragraph upon request in accordance with
the requirements of the applicable regulations. The information must be provided
by the later of 30 days after the end of the quarter for which the information
was requested, or two weeks after the receipt of the request. The REMIC must
also comply with rules requiring a REMIC Regular Certificate issued with
original issue discount to disclose on its face the amount of original issue
discount and the issue date, and requiring such information to be reported to
the IRS. [Reporting with respect to the REMIC Residual Certificates, including
income, excess inclusions, investment expenses and relevant information
regarding qualification of the REMIC's assets will be made as required under the
Treasury regulations, generally on a quarterly basis.]
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, such regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided.
The "tax matters person" for each REMIC will be the holder of REMIC
Residual Certificates evidencing the largest percentage interest in its Class of
REMIC Residual Certificates. All holders of REMIC Residual Certificates will
irrevocably designate the REMIC Administrator as agent for such "tax matters
person" in all respects.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in an Underwriting Agreement
dated _____________, 199_ (the "Underwriting Agreement") between the Depositor
and the Underwriter, the Underwriter has agreed to purchase and the Depositor
has agreed to sell to the Underwriter each Class of the Offered Certificates. It
is expected that delivery of the Offered Certificates 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 Certificates is subject to, among
other things, the receipt of certain legal opinions and to the conditions, among
others, that no stop order suspending the 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 Certificates 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
Depositor from the sale of the Offered Certificates, before deducting expenses
payable by the Depositor, will be approximately ____% of the aggregate Class
Certificate Balances of the Offered Certificates plus accrued interest thereon
from the Cut-off Date. The Underwriter may effect such transactions by selling
the Offered Certificates 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 Certificates, the Underwriter may be deemed to have received
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compensation from the Depositor in the form of underwriting compensation. The
Underwriter and any dealers that participate with such Underwriter in the
distribution of the Offered Certificates may be deemed to be underwriters and
any profit on the resale of the Offered Certificates positioned by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Underwriting Agreement provides that the Depositor will indemnify the
Underwriter, and that under limited circumstances the Underwriter will indemnify
the Depositor, against certain civil liabilities under the Securities Act or
contribute to payments required to be made in respect thereof.
The Depositor has also been advised by the Underwriter that the Underwriter
presently intends to make a market in the Offered Certificates; 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 Certificates will develop. See "Risk Factors--Limited Liquidity" herein
and "Risk Factors--Limited Liquidity of Offered Certificates" in the Prospectus.
[If and to the extent required by applicable law or regulation, this
Prospectus Supplement and the Prospectus will be used by the Underwriter in
connection with offers and sales related to market-making transactions in the
Offered Certificates with respect to which the Underwriter acts as principal.
The Underwriter may also act as agent in such transactions. Sales may be made at
negotiated prices determined at the time of sale.]
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Underwriter by ________________. Certain federal income tax matters and
other legal matters will be passed upon for the Depositor by Sidley & Austin.
ERISA CONSIDERATIONS
A fiduciary of any employee benefit plan or other retirement plan or
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 Section 4975 of the Code (each, a "Plan")
should review with its legal advisors whether the purchase or holding of Offered
Certificates could give rise to a transaction that is prohibited or is not
otherwise permitted either under ERISA or Section 4975 of the Code or whether
there exists any statutory or administrative exemption applicable thereto.
[The DOL issued an individual administrative exemption, Prohibited
Transaction Exemption ____ (the "Exemption"), to the Underwriter, which
generally exempts from the application of the prohibited transaction provisions
of Section 406 of ERISA, and the excise taxes imposed on such prohibited
transactions pursuant to Section 4975 (a) and (b) of the Code, certain
transactions, among others, relating to the servicing and operation of mortgage
pools and the purchase, sale and holding of mortgage pass-through certificates
underwritten or placed by (i) the Underwriter, (ii) any person directly or
indirectly, through one or more intermediaries, controlling, controlled by or
under common control with the Underwriter and (iii) any member of an
underwriting syndicate or selling group of which the Underwriter or a person
described in (ii) is a manager or co-manager, provided that certain conditions
set forth in the Exemption are satisfied (each such person, an
"Exemption-Favored Party").
The Exemption sets forth six general conditions which must be satisfied for
a transaction involving the purchase, sale and holding of Offered Certificates
to be eligible for exemptive relief thereunder. First, the acquisition of
Offered Certificates by a Plan must be on terms that are at least as favorable
to the Plan as they would be in an arm's-length transaction with an unrelated
party. Second, the Exemption only applies to Offered Certificates evidencing
rights and interests not subordinated to the rights and interests evidenced by
the other Certificates of the same series. Third, the Offered Certificates at
the time of acquisition by the Plan must be rated in one of the three highest
generic rating categories by Standard & Poor's Corporation ("S&P"), Duff &
Phelps Credit Rating Co. ("DCR"), Moody's Investors Service, Inc. ("Moody's") or
Fitch Investors Service, Inc. ("Fitch"). Fourth, the Trustee cannot be an
affiliate of any other member of the "Restricted Group", which (in addition to
the Trustee) consists of any Exemption-Favored Party, the Depositor, the Master
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Servicer, the Special Servicer, the Mortgage Loan Seller, any Sub-Servicer, the
provider of any credit support, any Mortgagor with respect to Mortgage Loans
constituting more than 5% of the aggregate unamortized principal balance of the
Mortgage Loans as of the date of initial issuance of the Offered Certificates,
and any affiliates of the foregoing parties. Fifth, the sum of all payments made
to and retained by the Exemption-Favored Parties in connection with the sale of
Offered Certificates must represent not more than reasonable compensation for
underwriting or placing such Certificates; the sum of all payments made to and
retained by the Depositor pursuant to the assignment of the Mortgage Loans to
the Trust Fund must represent not more than the fair market value of such
obligations; and the sum of all payments made to and retained by the Master
Servicer, the Special Servicer and any Sub-Servicer must represent not more than
reasonable compensation for such person's services under the Pooling Agreement
and reimbursement of such person's reasonable expenses in connection therewith.
Sixth, the investing Plan must be an accredited investor as defined in Rule
501(a)(1) of Regulation D of the Commission under the Securities Act.
Because the Senior Certificates are not subordinated to any other Class of
Offered Certificates, the second general condition set forth above is satisfied
with respect to such Certificates. It is a condition of their issuance that the
Class A-1A and Class A-1B Certificates be rated not lower than ____ by each of
_______ and ________ and that the Class S Certificates be rated not lower than
____ by ________. As of the Closing Date, the fourth general condition set forth
above will be satisfied with respect to the Senior Certificates. A fiduciary of
a Plan contemplating purchasing a Senior Certificate in the secondary market
must make its own determination that, at the time of such purchase, such
Certificate continues to satisfy the second, third and fourth general conditions
set forth above. In addition, a fiduciary of a Plan contemplating the purchase
of a Senior Certificate, whether in the initial issuance of such Certificate or
in the secondary market, must make its own determination that the first, fifth
and sixth general conditions set forth above will be satisfied with respect to
such Certificate.
The Exemption also requires that the Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (ii) certificates in such other
investment pools must have been rated in one of the three highest generic
categories of S&P, Moody's, DCR or Fitch for at least one year prior to the
Plan's acquisition of Senior Certificates; and (iii) certificates in such other
investment pools must have been purchased by investors other than Plans for at
least one year prior to any Plan's acquisition of Senior Certificates.
If the general conditions of the Exemption are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a) and 407(a)
of ERISA (as well as the excise taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Sections 4975(c)(1)(A) through (D) of the Code) in connection
with (i) the direct or indirect sale, exchange or transfer of Senior
Certificates acquired by a Plan upon initial issuance from the Depositor or an
Exemption-Favored Party when the Depositor, Seller, Master Servicer, Special
Servicer, Trustee, Mortgage Loan Seller, Sub-Servicer, provider of credit
support, Exemption-Favored Party or mortgagor is a Party in Interest with
respect to the investing Plan, (ii) the direct or indirect acquisition or
disposition in the secondary market of Senior Certificates by a Plan and (iii)
the holding of Senior Certificates by a Plan. However, no exemption is provided
from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for
the acquisition or holding of a Senior Certificate on behalf of an "Excluded
Plan" (as defined in the following sentence) by any person who has discretionary
authority or renders investment advice with respect to the assets of such
Excluded Plan. For purposes hereof, an Excluded Plan is a Plan sponsored by any
member of the Restricted Group.
Moreover, if the general conditions of the Exemption, as well as certain
other conditions set forth in the Exemption, are satisfied, the Exemption may
also provide an exemption from the restrictions imposed by Sections 406(b)(1)
and (b)(2) of ERISA and the taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Section 4975(c)(1)(E) of the Code in connection with (i) the
direct or indirect sale, exchange or transfer of Senior Certificates in the
initial issuance of Senior Certificates between the Depositor or an
Exemption-Favored Party and a Plan when the person who has discretionary
authority or renders investment advice with respect to the investment of Plan
assets in such Certificates is (a) a mortgagor with respect to 5% or less of the
fair market value of the Mortgage Loans or (b) an affiliate of such a person,
(ii) the direct or indirect acquisition or disposition in the secondary market
of Senior Certificates by a Plan and (iii) the holding of Senior Certificates by
a Plan.
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<PAGE>
Further, if the general conditions of the Exemption, as well as certain
other conditions set forth in the Exemption, are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a), 406(b)
and 407(a) of ERISA, and the taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Section 4975(c) of the Code for transactions in connection
with the servicing, management and operation of the Trust Fund.
Lastly, if the general conditions of the Exemption are satisfied, the
Exemption also may provide an exemption from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Section 4975(a)
and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of the Code
if such restrictions are deemed to otherwise apply merely because a person is
deemed to be a Party in Interest with respect to an investing Plan by virtue of
providing services to the Plan (or by virtue of having certain specified
relationships to such a person) solely as a result of the Plan's ownership of
Senior Certificates.
Before purchasing a Senior Certificate, a fiduciary of a Plan should itself
confirm (i) that the Senior Certificates constitute "certificates" for purposes
of the Exemption and (ii) that the general and other conditions set forth in the
Exemption and the other requirements set forth in the Exemption would be
satisfied at the time of such purchase.
In addition to making its own determination as to the availability of the
exemptive relief provided in the Exemption, the Plan fiduciary considering an
investment in Offered Certificates should consider the availability of any other
prohibited transaction exemptions. See "ERISA Considerations" in the Prospectus.
There can be no assurance that any such class exemptions will apply with respect
to any particular Plan investment in Offered Certificates or, even if it were
deemed to apply, that any exemption would apply to all prohibited transactions
that may occur in connection with such investment. A purchaser of Offered
Certificates should be aware, however, that even if the conditions specified in
one or more exemptions are satisfied, the scope of relief provided by an
exemption may not cover all acts which might be construed as prohibited
transactions.
Because the characteristics of the Class A-2, Class A-3 and Class B-1
Certificates do not meet the requirements of the Exemption, the purchase or
holding of such Certificates by a Plan may result in a prohibited transaction or
the imposition of excise taxes or civil penalties. As a result, no transfer of a
Class A-2, Class A-3 or Class B-1 Certificate or any interest therein may be
made to a Plan or to any person who is directly or indirectly purchasing such
Certificate or interest therein on behalf of, as named fiduciary of, as trustee
of, or with assets of a Plan unless the purchase and holding of such Certificate
or interest therein is exempt from the prohibited transaction provisions of
Section 406 of ERISA and Section 4975 of the Code under Sections I and III of
Prohibited Transaction Class Exemption 95-60, which provides an exemption from
the prohibited transaction rules for certain transactions involving an insurance
company general account. Any person to whom a transfer of any such Certificate
or interest therein is made shall be deemed to have represented to the
Depositor, the Underwriter, the Master Servicer, the Special Servicer and the
Trustee that either (i) it is not a Plan and is not directly or indirectly
purchasing such Certificate 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 Certificate or interest therein is so exempt on the basis of Prohibited
Transaction Class Exemption 95-60.]
Any Plan fiduciary considering whether to purchase an Offered Certificate
on behalf of a Plan should consult with its counsel regarding the applicability
of the fiduciary responsibility and prohibited transaction provisions of ERISA
and the Code to such investment.
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<PAGE>
LEGAL INVESTMENT
[The Offered Certificates will not be "mortgage related securities" for
purposes of SMMEA. As a result, the appropriate characterization of the Offered
Certificates under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase the Offered Certificates,
is subject to significant interpretive uncertainties. The Depositor makes no
representation as to the ability of particular investors to purchase the Offered
Certificates under applicable legal investment or other restrictions. 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 Certificates constitute legal investments for
them or are subject to investment, capital or other restrictions.]
All depository institutions considering an investment in the Offered
Certificates should review the Federal Financial Institutions Examination
Council's Supervisory Policy Statement on the Selection of Securities Dealers
and Unsuitable Investment Practices (to the extent adopted by their respective
regulatory authorities), setting forth, in relevant part, certain investment
practices deemed to be unsuitable for an institution's investment portfolio, as
well as guidelines for investing in certain types of mortgage related
securities.
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 and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying".
There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase Offered Certificates or to
purchase Offered Certificates representing more than a specified percentage of
the investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the Offered Certificates constitute legal
investments for such investors.
See "Legal Investment" in the Prospectus.
RATINGS
It is a condition to the issuance of the Offered Certificates that the
respective Classes thereof receive the following credit ratings from
____________________ ("______") and/or ________________ ("________"; and
together with _______, the "Rating Agencies"):
[Rating [Rating
Class Agency] Agency]
----- ------- -------
Class S
Class A-1A
Class A-1B
Class A-2
Class A-3
Class B-1
The ratings on the Offered Certificates address the likelihood of the
timely receipt by holders thereof of all payments of interest to which they are
entitled and, in the case of the Class A and Class B-1 Certificates, the
ultimate receipt by the holders thereof of all payments of principal to which
they are entitled on or before the Distribution Date in _________ 20__ (the
"Rated Final Distribution Date"). The ratings take into consideration the credit
quality of the Mortgage Pool, structural and legal aspects associated with the
Offered Certificates, 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 Certificates. The ratings on the respective
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Classes of Offered Certificates 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 and Yield Maintenance
Premiums will be received. Also a security rating does not represent any
assessment of the yield to maturity that investors may experience or the
possibility that the Class S Certificateholders might not fully recover their
investment in the event of rapid prepayments and/or other liquidations of the
Mortgage Loans. In general, the ratings address credit risk and not prepayment
risk. As described herein, the amounts payable with respect to the Class S
Certificates consist only of interest (and, to the extent described herein, may
consist of a portion of the Yield Maintenance Premiums and Prepayment Premiums
actually collected on the Mortgage Loans). If the entire pool were to prepay in
the initial month, with the result that the Class S Certificateholders receive
only a single month's interest and thus suffer a nearly complete loss of their
investment, all amounts "due" to such Certificateholders will nevertheless have
been paid, and such result is consistent with the rating received from _____ on
the Class S Certificates. The Class Notional Amount upon which interest is
calculated with respect to the Class S Certificates is subject to reduction by
the allocation of Realized Losses and prepayments, whether voluntary or
involuntary. The rating does not address the timing or magnitude of reduction of
such Class Notional Amount, but only the obligation to pay interest timely on
such Class Notional Amount as so reduced from time to time. Accordingly, the
rating of the Class S Certificates should be evaluated independently from
similar ratings on other types of securities.
There can be no assurance as to whether any rating agency not requested to
rate the Offered Certificates 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 Certificates 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 Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating organization. Each security
rating should be evaluated independently of any other security rating.
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<TABLE>
<CAPTION>
INDEX OF PRINCIPAL TERMS
<S> <C>
Accrued Certificate Interest............................................................................S-53
Additional Trust Fund Expenses....................................................................S-21, S-56
Advances................................................................................................S-45
Appraisal Reduction Amount..............................................................................S-57
ARM Loans...............................................................................................S-11
Assumed Final Distribution Date..........................................................................S-2
Assumed Scheduled Payment.........................................................................S-18, S-54
Assumed Settlement Date.................................................................................S-63
Available Distribution Amount.....................................................................S-14, S-50
Balloon Loans...........................................................................................S-11
Balloon Payment.........................................................................................S-11
Book-Entry Certificates..................................................................................S-9
Certificate Notional Amount.......................................................................S-23, S-47
Certificate Owner..................................................................................S-9, S-47
Certificate Principal Balance.....................................................................S-23, S-47
Certificate Registrar...................................................................................S-48
Certificate Yield Maintenance Amount..............................................................S-19, S-54
Certificateholders.................................................................................S-2, S-50
Certificates..................................................................................S-1, S-8, S-47
Class.........................................................................................S-1, S-8, S-47
Class A Certificates..........................................................................S-1, S-8, S-47
Class B Certificates..........................................................................S-1, S-8, S-47
Class Notional Amount.............................................................................S-12, S-48
Class Principal Balance...........................................................................S-12, S-48
Closing Date.......................................................................................S-1, S-47
Code....................................................................................................S-24
Collection Period.......................................................................................S-49
Compensating Interest Payment.....................................................................S-22, S-43
Corporate Trust Office..................................................................................S-58
Corrected Mortgage Loan.................................................................................S-41
Cut-off Date.............................................................................................S-2
Cut-off Date Balance...............................................................................S-9, S-30
DCR.....................................................................................................S-68
Debt Service Coverage Ratio.............................................................................S-37
Definitive Certificate.............................................................................S-9, S-47
Depositor................................................................................................S-2
Determination Date......................................................................................S-50
Distributable Certificate Interest................................................................S-17, S-53
Distribution Date..................................................................................S-2, S-50
DTC.....................................................................................................S-47
DTC Participants........................................................................................S-47
Due Date................................................................................................S-10
ERISA...................................................................................................S-24
Excluded Plan...........................................................................................S-69
Exemption...............................................................................................S-68
Exemption-Favored Party.................................................................................S-68
Fitch...................................................................................................S-68
Fixed Rate Loans........................................................................................S-11
Form 8-K................................................................................................S-40
Gross Margin............................................................................................S-11
Index...................................................................................................S-11
Initial Pool Balance..........................................................................S-2, S-9, S-30
Interest Rate Adjustment Date...........................................................................S-11
IRS.....................................................................................................S-65
Liquidation Fee.........................................................................................S-44
Liquidation Fee Rate....................................................................................S-44
Lockout Period ...................................................................................S-12, S-31
LTV Ratio...............................................................................................S-37
Master Servicer....................................................................................S-2, S-42
Master Servicing Fee....................................................................................S-43
Master Servicing Fee Rate...............................................................................S-43
Maturity Date...........................................................................................S-11
Modeling Assumptions....................................................................................S-63
Modified Mortgage Loan..................................................................................S-58
Monthly Payments........................................................................................S-10
Moody's.................................................................................................S-68
Mortgage..........................................................................................S-10, S-30
Mortgage Asset Seller...................................................................................S-30
Mortgage Loan Purchase Agreement..................................................................S-11, S-30
Mortgage Loan Seller.....................................................................................S-8
Mortgage Loans................................................................................S-2, S-9, S-30
Mortgage Note.....................................................................................S-10, S-30
Mortgage Pool............................................................................................S-2
Mortgage Rate...........................................................................................S-11
Mortgaged Property................................................................................S-10, S-30
Mortgagor.........................................................................................S-10, S-30
Net Aggregate Prepayment Interest Shortfall.......................................................S-22, S-44
Net Mortgage Rate.................................................................................S-14, S-49
Net Operating Income....................................................................................S-37
Offered Certificates..........................................................................S-1, S-8, S-47
OID Regulations.........................................................................................S-65
Open Period.......................................................................................S-12, S-31
P&I Advance.......................................................................................S-21, S-56
Pass-Through Rate.......................................................................................S-13
Payment Adjustment Date.................................................................................S-11
Percentage Interest.....................................................................................S-49
Plan..............................................................................................S-24, S-68
Pooling Agreement............................................................................S-2, S-12, S-47
Prepayment Interest Excess........................................................................S-22, S-43
Prepayment Interest Shortfall.....................................................................S-22, S-43
Prepayment Premium................................................................................S-12, S-31
Principal Distribution Amount.....................................................................S-17, S-53
Principal Prepayment..............................................................................S-12, S-31
Private Certificates.....................................................................................S-8
Property Servicing Fee..................................................................................S-44
Property Servicing Fee Rate.............................................................................S-44
Purchase Price .........................................................................................S-40
Rated Final Distribution Date......................................................................S-2, S-71
Rating Agencies..............................................................................S-2, S-25, S-71
Realized Losses...................................................................................S-20, S-55
Record Date.............................................................................................S-50
Reimbursement Rate................................................................................S-22, S-57
Related Proceeds........................................................................................S-45
REMIC..............................................................................................S-3, S-23
REMIC Administrator......................................................................................S-2
REMIC I......................................................................................S-3, S-23, S-65
REMIC II.....................................................................................S-3, S-23, S-65
REMIC III....................................................................................S-3, S-23, S-65
REMIC Regular Certificates....................................................................S-1, S-8, S-47
REMIC Residual Certificates...................................................................S-1, S-8, S-47
REO Property......................................................................................S-21, S-41
Required Appraisal Loan.................................................................................S-57
Restricted Group........................................................................................S-68
S&P.....................................................................................................S-68
Scheduled Payment.................................................................................S-18, S-54
Securities Act...........................................................................................S-8
Senior Certificates..........................................................................S-3, S-20, S-51
Senior Principal Distribution Cross-Over Date...........................................................S-53
Sequential Pay Certificates..................................................................S-3, S-12, S-48
Servicing Advances......................................................................................S-45
Servicing Standard......................................................................................S-40
Servicing Transfer Event................................................................................S-41
SMMEA...................................................................................................S-26
Special Servicer.........................................................................................S-2
Special Servicer Report.................................................................................S-58
Special Servicing Fee...................................................................................S-44
Special Servicing Fee Rate..............................................................................S-44
Specially Serviced Mortgage Loans.......................................................................S-41
Stated Principal Balance................................................................................S-49
Sub-Servicer............................................................................................S-43
Sub-Servicing Agreement.................................................................................S-43
Subordinate Certificates.....................................................................S-3, S-20, S-55
Trust Fund...................................................................................S-2, S-12, S-47
Trustee..................................................................................................S-2
Trustee Fee.............................................................................................S-60
Trustee Fee Rate........................................................................................S-60
Trustee Report..........................................................................................S-58
Underwriter..............................................................................................S-1
Underwriting Agreement..................................................................................S-67
Voting Rights...........................................................................................S-59
Weighted Average Net Mortgage Rate...........................................................S-2, S-13, S-49
Workout Fee.............................................................................................S-44
Workout Fee Rate........................................................................................S-44
Yield Maintenance Premium.........................................................................S-12, S-31
</TABLE>
S-73
<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 JULY 24, 1997.
DLJ COMMERCIAL MORTGAGE CORP.
Mortgage Pass-Through Certificates
The mortgage pass-through certificates offered hereby (the "Offered
Certificates") and by the supplements hereto (each, a "Prospectus Supplement")
will be offered from time to time in series (each, a "Series"). The Offered
Certificates of any Series, together with any other mortgage pass-through
certificates of such Series, are collectively referred to herein as the
"Certificates". Each Series will consist of one or more classes (each, a
"Class") of Certificates.
Each Series will represent in the aggregate the entire beneficial ownership
interest in a trust fund (with respect to any Series, the "Trust Fund") to be
formed by DLJ Commercial Mortgage Corp. (the "Depositor") and including a
segregated pool (a "Mortgage Asset Pool") of various types of multifamily and
commercial mortgage loans ("Mortgage Loans"), mortgage-backed securities ("MBS")
that evidence interests in, or that are secured by pledges of, one or more of
various types of multifamily or commercial mortgage loans, or a combination of
Mortgage Loans and MBS (collectively, "Mortgage Assets"). The Mortgage Loans in
(and the mortgage loans underlying the MBS in) any Trust Fund will be secured by
first or junior liens on, or security interests in, fee and/or leasehold estates
in one or more of the following types of real property: (i) residential
properties consisting of multiple rental or cooperatively-owned dwelling units
and mobile home parks; (ii) commercial properties consisting of office
buildings, retail shopping facilities, hotels and motels, health care-related
facilities, recreational vehicle parks, warehouse facilities, mini-warehouse
facilities, self-storage facilities, industrial facilities, parking lots and
restaurants; and (iii) mixed use properties (that is, any combination of the
foregoing) and unimproved land. If so specified in the related Prospectus
Supplement, the Trust Fund for a Series may also include letters of credit,
surety bonds, insurance policies, guarantees, reserve funds, guaranteed
investment contracts, interest rate exchange agreements, interest rate cap or
floor agreements, or other agreements designed to reduce the effects of interest
rate fluctuations on the Mortgage Assets. See "Description of the Trust Funds",
"Description of the Certificates" and "Description of Credit Support".
The yield on each Class of a Series will be affected by, among other
things, the rate of payment of principal (including prepayments) on the Mortgage
Assets in the related Trust Fund and the timing of receipt of such payments as
described herein and in the related Prospectus Supplement. See "Yield and
Maturity Considerations". A Trust Fund may be subject to early termination under
the circumstances described herein and in the related Prospectus Supplement. See
"Description of the Certificates--Termination; Retirement of the Certificates".
(cover continued on next page)
--------
PROCEEDS OF THE ASSETS IN THE RELATED TRUST FUND WILL BE THE SOLE SOURCE OF
PAYMENTS ON THE OFFERED CERTIFICATES. THE OFFERED CERTIFICATES WILL NOT
REPRESENT AN INTEREST IN OR OBLIGATION OF THE DEPOSITOR, DONALDSON, LUFKIN &
JENRETTE SECURITIES CORPORATION, THE MASTER SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE REMIC ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES,
OFFICERS, DIRECTORS, TRUSTEES, BENEFICIARIES, SHAREHOLDERS, EMPLOYEES OR AGENTS.
NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE ASSETS WILL BE GUARANTEED OR
INSURED BY THE DEPOSITOR OR ANY OF ITS AFFILIATES OR, UNLESS OTHERWISE SPECIFIED
IN THE RELATED PROSPECTUS SUPPLEMENT, BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
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. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------
Prospective investors should review the information appearing on page 18
herein under the caption "Risk Factors" and such information as may be set forth
under the caption "Risk Factors" in the related Prospectus Supplement before
purchasing any Offered Certificate.
The Offered Certificates of any Series may be offered through one or more
different methods, including offerings through underwriters, as described herein
under "Method of Distribution" and in the related Prospectus Supplement.
There will be no secondary market for the Offered Certificates of any
Series prior to the offering thereof. There can be no assurance that a secondary
market for any Offered Certificates will develop or, if one does develop, that
it will continue. Unless otherwise provided in the related Prospectus
Supplement, the Certificates will not be listed on any securities exchange.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of the Offered Certificates of any Series unless
accompanied by the Prospectus Supplement for such Series.
-----------
The date of this Prospectus is ______, 1997.
<PAGE>
(cover continued)
As described in the related Prospectus Supplement, the Certificates of each
Series, including the Offered Certificates of such Series, may consist of one or
more Classes of Certificate that: (i) provide for the accrual of interest
thereon based on a fixed, variable or adjustable interest rate; (ii) are senior
or subordinate to one or more other Classes of Certificates in entitlement to
certain distributions on the Certificates; (iii) are entitled to distributions
of principal, with disproportionate, nominal or no distributions of interest;
(iv) are entitled to distributions of interest, with disproportionate, nominal
or no distributions of principal; (v) provide for distributions of interest
thereon or principal thereof that commence only following the occurrence of
certain events, such as the retirement of one or more other Classes of
Certificates of such Series; (vi) provide for distributions of principal thereof
to be made, from time to time or for designated periods, at a rate that is
faster (and, in some cases, substantially faster) or slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund; or
(vii) provide for distributions of principal thereof to be made, subject to
available funds, based on a specified principal payment schedule or other
methodology. Distributions in respect of the Certificates of each Series will be
made on a monthly, quarterly, semi-annual, annual or other periodic basis as
specified in the related Prospectus Supplement. See "Description of the
Certificates".
If so provided in the related Prospectus Supplement, one or more elections
may be made to treat the related Trust Fund or a designated portion thereof as a
"real estate mortgage investment conduit" (each, a "REMIC") for federal income
tax purposes. If applicable, the Prospectus Supplement for the Offered
Certificates of any Series will specify which Class or Classes of Certificates
of such Series will be considered to be regular interests in the related REMIC
and which Class of Certificates of such Series or other interests will be
designated as the residual interest in the related REMIC. See "Certain Federal
Income Tax Consequences".
An Index of Principal Definitions is included at the end of this Prospectus
specifying the location of definitions of important or frequently used defined
terms.
- 2 -
<PAGE>
PROSPECTUS SUPPLEMENT
As more particularly described herein, the Prospectus Supplement relating
to the Offered Certificates of each Series will, among other things, set forth,
as and to the extent appropriate: (i) a description of the Class or Classes of
such Offered Certificates, including the payment provisions with respect to each
such Class, the aggregate principal amount, if any, of each such Class, the rate
at which interest accrues from time to time, if at all, with respect to each
such Class or the method of determining such rate, and whether interest with
respect to each such Class will accrue from time to time on its aggregate
principal amount, if any, or on a specified notional amount, if at all; (ii)
information with respect to any other Classes of Certificates of the same
Series; (iii) the respective dates on which distributions are to be made; (iv)
information as to the assets, including the Mortgage Assets, constituting the
related Trust Fund (all such assets, with respect to any Series, the "Trust
Assets"); (v) the circumstances, if any, under which the related Trust Fund may
be subject to early termination; (vi) additional information with respect to the
method of distribution of such Offered Certificates; (vii) whether one or more
REMIC elections will be made and the designation of the "regular interests" and
"residual interests" in each REMIC to be created and the identity of the person
(the "REMIC Administrator") responsible for the various tax-related duties in
respect of each REMIC to be created; (viii) information concerning the Trustee
(as defined herein) of the related Trust Fund; (ix) if the related Trust Fund
includes Mortgage Loans, information concerning the Master Servicer and any
Special Servicer (each as defined herein) of such Mortgage Loans and the
circumstances under which all or a portion, as specified, of the servicing of a
Mortgage Loan would transfer from the Master Servicer to the Special Servicer;
(x) information as to the nature and extent of subordination of any Class of
Certificates of such Series, including a Class of Offered Certificates; and (xi)
whether such Offered Certificates 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 (the "Securities Act"), with
respect to the Offered Certificates. This Prospectus and the Prospectus
Supplement relating to the Offered Certificates of each Series will 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, 500
West Madison, 14th Floor, Chicago, Illinois 60661; New York Regional Office,
Seven World Trade Center, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates and electronically
through the Commission's Electronic Data Gathering, Analysis and Retrieval
system at the Commission's Web site (http://www.sec.gov).
No dealer, salesman, or other person has been authorized to give any
information, or to make any representations, other than those contained in this
Prospectus or any related Prospectus Supplement, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Depositor or any other person. Neither the delivery of this Prospectus or
any related Prospectus Supplement nor any sale made hereunder or thereunder
shall under any circumstances create an implication that there has been no
change in the information herein since the date hereof or therein since the
date thereof. This
- 3 -
<PAGE>
Prospectus and any related Prospectus Supplement are not an offer to sell or a
solicitation of an offer to buy any security in any jurisdiction in which it is
unlawful to make such offer or solicitation.
The Master Servicer, the Trustee or another specified person will cause to
be provided to registered holders of the Offered Certificates of each Series
periodic unaudited reports concerning the related Trust Fund. If beneficial
interests in a Class or Series of Offered Certificates are being held and
transferred in book-entry format through the facilities of The Depository Trust
Company ("DTC") as described herein, then unless otherwise provided in the
related Prospectus Supplement, such reports will be sent on behalf of the
related Trust Fund to a nominee of DTC as the registered holder of the Offered
Certificates. Conveyance of notices and other communications by DTC to its
participating organizations, and directly or indirectly through such
participating organizations to the beneficial owners of the applicable Offered
Certificates, will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time. See
"Description of the Certificates--Reports to Certificateholders" and
"--Book-Entry Registration and Definitive Certificates".
The Depositor will file or cause to be filed with the Commission such
periodic reports with respect to each Trust Fund as are required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder. The Depositor intends to make a
written request to the staff of the Commission that the staff either (i) issue
an order pursuant to Section 12(h) of the Exchange Act exempting the Depositor
from certain reporting requirements under the Exchange Act with respect to each
Trust Fund or (ii) state that the staff will not recommend that the Commission
take enforcement action if the Depositor fulfills its reporting obligations as
described in its written request. If such request is granted, the Depositor will
file or cause to be filed with the Commission as to each Trust Fund the periodic
unaudited reports to holders of the Offered Certificates referenced in the
preceding paragraph; however, because of the nature of the Trust Funds, it is
unlikely that any significant additional information will be filed. In addition,
because of the limited number of Certificateholders 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 Trust Fund.
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 a Trust Fund pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of an offering of Offered Certificates evidencing interests therein. 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 Certificates, upon written or oral request of such person, 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 Certificates, other than the exhibits to such documents
(unless such exhibits are specifically incorporated by reference in such
documents). Such requests to the Depositor should be directed in writing to the
Depositor at 277 Park Avenue, 9th Floor, New York, New York 10172, Attention: N.
Dante LaRocca, or by telephone at (212) 892-3000.
- 4 -
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PROSPECTUS SUPPLEMENT.................................................................................................3
AVAILABLE INFORMATION.................................................................................................3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.....................................................................4
SUMMARY OF PROSPECTUS.................................................................................................8
RISK FACTORS.........................................................................................................18
Limited Liquidity of Offered Certificates.................................................................18
Limited Assets............................................................................................19
Credit Support Limitations................................................................................19
Effect of Prepayments on Average Life of Certificates.....................................................20
Effect of Prepayments on Yield of Certificates ...........................................................21
Limited Nature of Ratings.................................................................................21
Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans.........................22
Inclusion of Delinquent and Nonperforming Mortgage Loans in a Mortgage Asset Pool.........................27
Certain Federal Tax Considerations Regarding REMIC Residual Certificates..................................28
Book-Entry Registration...................................................................................28
Potential Conflicts of Interest...........................................................................29
Termination...............................................................................................29
DESCRIPTION OF THE TRUST FUNDS.......................................................................................29
General ................................................................................................29
Mortgage Loans............................................................................................30
MBS ................................................................................................34
Undelivered Mortgage Assets...............................................................................35
Certificate Accounts......................................................................................35
Credit Support............................................................................................36
Cash Flow Agreements......................................................................................36
YIELD AND MATURITY CONSIDERATIONS....................................................................................36
General ................................................................................................36
Pass-Through Rate.........................................................................................36
Payment Delays............................................................................................37
Certain Shortfalls in Collections of Interest.............................................................37
Yield and Prepayment Considerations.......................................................................37
Weighted Average Life and Maturity........................................................................39
Other Factors Affecting Yield, Weighted Average Life and Maturity.........................................40
THE DEPOSITOR........................................................................................................42
DESCRIPTION OF THE CERTIFICATES......................................................................................42
General ................................................................................................42
</TABLE>
- 5 -
<PAGE>
<TABLE>
<S> <C>
Distributions.............................................................................................43
Distributions of Interest on the Certificates.............................................................44
Distributions of Principal of the Certificates............................................................45
Distributions on the Certificates in Respect of Prepayment Premiums or in Respect of Equity
Participations..................................................................................46
Allocation of Losses and Shortfalls.......................................................................46
Advances in Respect of Delinquencies......................................................................46
Reports to Certificateholders.............................................................................47
Voting Rights.............................................................................................48
Termination...............................................................................................48
Book-Entry Registration and Definitive Certificates.......................................................49
DESCRIPTION OF THE POOLING AGREEMENTS................................................................................50
General ................................................................................................50
Assignment of Mortgage Assets.............................................................................51
Representations and Warranties with respect to Mortgage Assets; Repurchases and Other Remedies............52
Collection and Other Servicing Procedures with respect to Mortgage Loans..................................53
Sub-Servicers.............................................................................................55
Collection of Payments on MBS.............................................................................56
Certificate Account.......................................................................................56
Modifications, Waivers and Amendments of Mortgage Loans...................................................60
Realization Upon Defaulted Mortgage Loans.................................................................60
Hazard Insurance Policies.................................................................................62
Due-on-Sale and Due-on-Encumbrance Provisions.............................................................63
Servicing Compensation and Payment of Expenses............................................................63
Evidence as to Compliance.................................................................................64
Certain Matters Regarding the Master Servicer, the Special Servicer, the REMIC Administrator,
the Manager and the Depositor...................................................................64
Events of Default.........................................................................................66
Rights Upon Event of Default..............................................................................66
Amendment ................................................................................................67
List of Certificateholders................................................................................68
The Trustee...............................................................................................69
Duties of the Trustee.....................................................................................69
Certain Matters Regarding the Trustee.....................................................................69
Resignation and Removal of the Trustee....................................................................69
DESCRIPTION OF CREDIT SUPPORT........................................................................................70
General ................................................................................................70
Subordinate Certificates..................................................................................70
Insurance or Guarantees with Respect to Mortgage Loans....................................................71
Letter of Credit..........................................................................................71
Certificate Insurance and Surety Bonds....................................................................71
Reserve Funds.............................................................................................71
Credit Support with Respect to MBS........................................................................72
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS..............................................................................72
</TABLE>
- 6 -
<PAGE>
<TABLE>
<S> <C>
General...................................................................................................72
Types of Mortgage Instruments.............................................................................73
Leases and Rents..........................................................................................73
Personalty................................................................................................74
Foreclosure...............................................................................................74
Bankruptcy Laws...........................................................................................77
Environmental Considerations..............................................................................78
Due-on-Sale and Due-on-Encumbrance Provisions.............................................................80
Junior Liens; Rights of Holders of Senior Liens...........................................................80
Subordinate Financing.....................................................................................81
Default Interest and Limitations on Prepayments...........................................................81
Applicability of Usury Laws...............................................................................81
Certain Laws and Regulations..............................................................................82
Americans with Disabilities Act...........................................................................82
Soldiers' and Sailors' Civil Relief Act of 1940...........................................................82
Forfeitures in Drug and RICO Proceedings..................................................................83
CERTAIN FEDERAL INCOME TAX CONSEQUENCES..............................................................................83
General ................................................................................................83
REMICs ................................................................................................84
Grantor Trust Funds......................................................................................102
STATE AND OTHER TAX CONSEQUENCES....................................................................................111
ERISA CONSIDERATIONS................................................................................................112
General ...............................................................................................112
Plan Asset Regulations...................................................................................112
Prohibited Transaction Exemptions........................................................................113
Insurance Company General Accounts.......................................................................114
Consultation With Counsel................................................................................114
Tax Exempt Investors.....................................................................................115
LEGAL INVESTMENT....................................................................................................115
USE OF PROCEEDS.....................................................................................................117
METHOD OF DISTRIBUTION..............................................................................................117
LEGAL MATTERS.......................................................................................................118
FINANCIAL INFORMATION...............................................................................................118
RATING..............................................................................................................119
INDEX OF PRINCIPAL DEFINITIONS.......................................................................................120
</TABLE>
- 7 -
<PAGE>
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information 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 Certificates contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of Offered Certificates of such
Series. An Index of Principal Definitions is included at the end of this
Prospectus.
Securities Offered..................... Mortgage pass-through certificates.
Depositor.............................. DLJ Commercial Mortgage Corp., a
Delaware corporation. See "The
Depositor".
Trustee................................ The trustee (the "Trustee") for each
Series will be named in the related
Prospectus Supplement. See "Description
of the Pooling Agreements--The Trustee".
Master Servicer........................ If a Trust Fund includes Mortgage Loans,
then the master servicer (the "Master
Servicer") for the corresponding Series
will be named in the related Prospectus
Supplement. See "Description of the
Pooling Agreements--Certain Matters
Regarding the Master Servicer, the
Special Servicer, the REMIC
Administrator, the Manager and the
Depositor".
Special Servicer....................... If a Trust Fund includes Mortgage Loans,
then the special servicer (the "Special
Servicer") for the corresponding Series
will be named, or the circumstances
under which a Special Servicer may be
appointed will be described, in the
related Prospectus Supplement. See
"Description of the Pooling
Agreements--Collection and Other
Servicing Procedures with respect to
Mortgage Loans".
MBS Administrator...................... If a Trust Fund includes MBS, then the
entity responsible for administering
such MBS (the "MBS Administrator") will
be named in the related Prospectus
Supplement. If an entity other than the
Trustee or the Master Servicer is the
MBS Administrator, such entity will be
referred to herein as the "Manager".
REMIC Administrator.................... The person (the "REMIC Administrator")
responsible for the various tax-related
administration duties for a Series as to
which one or more REMIC elections have
been made will be named in the related
Prospectus Supplement. See "Certain
Federal Income Tax
Consequences--REMICs--Reporting and
Other Administrative Matters".
-8-
<PAGE>
The Mortgage Assets................... The Mortgage Assets will be the primary
assets of any Trust Fund. The Mortgage
Assets with respect to each Series will,
in general, consist of a pool of
mortgage loans ("Mortgage Loans")
secured by first or junior liens on, or
security interests in, fee and/or
leasehold estates in one or more of the
following types of real property: (i)
residential properties consisting of
multiple rental or cooperatively-owned
dwelling units in high-rise, mid-rise or
garden apartment buildings or other
residential structures, and mobile home
parks; (ii) commercial properties
consisting of office buildings, retail
shopping facilities (such as shopping
centers, malls and individual stores),
hotels and motels, health care-related
facilities (such as hospitals, skilled
nursing facilities, nursing homes,
congregate care facilities and senior
housing), recreational vehicle parks,
warehouse facilities, mini- warehouse
facilities, self-storage facilities,
industrial facilities, parking lots and
restaurants; and (iii) mixed use
properties (that is, any combination of
the foregoing) and unimproved land. The
Mortgage Loans will not be guaranteed or
insured by the Depositor or any of its
affiliates or, unless otherwise provided
in the related Prospectus Supplement, by
any governmental agency or
instrumentality or by any other person.
If so specified in the related
Prospectus Supplement, some Mortgage
Loans may be delinquent or nonperforming
as of the date the related Trust Fund is
formed.
As and to the extent described in the
related Prospectus Supplement, a
Mortgage Loan (i) may provide for no
accrual of interest or for accrual of
interest thereon at an interest rate (a
"Mortgage Rate") that is fixed over its
term or that adjusts from time to time,
or that may be converted at the
borrower's election from an adjustable
to a fixed Mortgage Rate, or from a
fixed to an adjustable Mortgage Rate,
(ii) may provide for level payments to
maturity or for payments that adjust
from time to time to accommodate changes
in the Mortgage Rate or to reflect the
occurrence of certain events, and may
permit negative amortization, (iii) may
be fully amortizing or may be partially
amortizing or nonamortizing, with a
balloon payment due on its stated
maturity date, (iv) may prohibit over
its term or for a certain period
prepayments and/or require payment of a
premium or a yield maintenance payment
in connection with certain prepayments
and (v) 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. Each Mortgage
Loan will have had an
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original term to maturity of not more
than approximately 40 years. No Mortgage
Loan will have been originated by the
Depositor. See "Description of the Trust
Funds--Mortgage Loans".
If any Mortgage Loan, or group of
related Mortgage Loans (by reason of
cross-collateralization, common borrower
or affiliation of borrowers),
constitutes a material concentration of
credit risk, financial statements or
other financial information with respect
to the related Mortgaged Property or
Mortgaged Properties will be included in
the related Prospectus Supplement. See
"Description of the Trust
Funds--Mortgage Loans-Mortgage Loan
Information in Prospectus Supplements".
If and to the extent specified in the
related Prospectus Supplement, the
Mortgage Assets with respect to a Series
may also include, or consist of,
mortgage participations, mortgage
pass-through certificates,
collateralized mortgage obligations
and/or other mortgage-backed securities
(collectively, "MBS"), that evidence an
interest in, or are secured by a pledge
of, one or more mortgage loans that
conform to the descriptions of the
Mortgage Loans contained herein and
which may or may not be issued, insured
or guaranteed by the United States or an
agency or instrumentality thereof. See
"Description of the Trust Funds--MBS".
Unless otherwise specified in the
related Prospectus Supplement, the
aggregate outstanding principal balance
of a Mortgage Asset Pool as of the date
it is formed (the "Cut-off Date") will
equal or exceed the aggregate
outstanding principal balance of the
related Series as of the date the
Certificates of such Series are
initially issued (the "Closing Date").
In the event that the Mortgage Assets
initially delivered do not have an
aggregate outstanding principal balance
as of the related Cut-off Date at least
equal to the aggregate outstanding
principal balance of the related Series
as of the related Closing Date, the
Depositor may deposit cash or Permitted
Investments (as defined herein) on an
interim basis with the Trustee for such
Series on the related Closing Date in
lieu of delivering Mortgage Assets (the
"Undelivered Mortgage Assets") with an
aggregate outstanding principal balance
as of the related Cut-off Date equal to
the shortfall amount. During the 90-day
period following the related Closing
Date, the Depositor will be entitled to
obtain a release of such cash or
Permitted Investments to the extent that
the Depositor delivers a
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corresponding amount of the Undelivered
Mortgage Assets. If and to the extent
that all the Undelivered Mortgage Assets
are not delivered during the 90-day
period following the related Closing
Date, such cash or, following
liquidation, such Permitted Investments
will be applied to pay a corresponding
amount of principal of the Certificates
of such Series to the extent set forth,
and on the dates specified, in the
related Prospectus Supplement.
The Certificates...................... Each Series will be issued in one or
more Classes of Certificates pursuant to
a pooling and servicing agreement or
other agreement specified in the related
Prospectus Supplement (in any case, a
"Pooling Agreement") and will represent
in the aggregate the entire beneficial
ownership interest in the related Trust
Fund.
As described in the related Prospectus
Supplement, the Certificates of each
Series, including the Offered
Certificates of such Series, may consist
of one or more Classes of Certificates
that, among other things: (i) are senior
(collectively, "Senior Certificates") or
subordinate (collectively, "Subordinate
Certificates") to one or more other
Classes of Certificates of the same
Series in entitlement to certain
distributions on the Certificates; (ii)
are entitled to distributions of
principal, with disproportionate,
nominal or no distributions of interest
(collectively, "Stripped Principal
Certificates"); (iii) are entitled to
distributions of interest, with
disproportionate, nominal or no
distributions of principal
(collectively, "Stripped Interest
Certificates"); (iv) provide for
distributions of interest thereon or
principal thereof that commence only
after the occurrence of certain events,
such as the retirement of one or more
other Classes of Certificates of such
Series; (v) provide for distributions of
principal thereof to be made, from time
to time or for designated periods, at a
rate that is faster (and, in some cases,
substantially faster) or slower (and, in
some cases, substantially slower) than
the rate at which payments or other
collections of principal are received on
the Mortgage Assets in the related Trust
Fund; (vi) provide for distributions of
principal thereof to be made, subject to
available funds, based on a specified
principal payment schedule or other
methodology; or (vii) provide for
distributions based on collections on
the Mortgage Assets in the related Trust
Fund attributable to prepayment
premiums, yield maintenance payments or
equity participations.
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If so specified in the related
Prospectus Supplement, a Series may
include one or more "Controlled
Amortization Classes", which will
entitle the holders thereof to receive
principal distributions according to a
specified principal payment schedule.
Although prepayment risk cannot be
eliminated entirely for any Class of
Certificates, a Controlled Amortization
Class will generally provide a
relatively stable cash flow so long as
the actual rate of prepayment on the
Mortgage Loans in the related Trust Fund
remains relatively constant at the rate,
or within the range of rates, of
prepayment used to establish the
specific principal payment schedule for
such Certificates. Prepayment risk with
respect to a given Mortgage Asset Pool
does not disappear, however, and the
stability afforded to a Controlled
Amortization Class comes at the expense
of one or more other Classes of
Certificates of the same Series, any of
which other Classes of Certificates may
also be a Class of Offered Certificates.
See "Risk Factors-Effect of Prepayments
on Average Life of Certificates" and
"--Effect of Prepayments on Yield of
Certificates".
Each Certificate, other than certain
Stripped Interest Certificates and
certain REMIC Residual Certificates (as
defined herein), will have an initial
stated principal amount (a "Certificate
Principal Balance"); and each
Certificate, other than certain Stripped
Principal Certificates and certain REMIC
Residual Certificates, will accrue
interest on its Certificate Principal
Balance or, in the case of certain
Stripped Interest Certificates, on a
notional amount (a "Certificate Notional
Amount"), based on a fixed, variable or
adjustable interest rate (a
"Pass-Through Rate"). The related
Prospectus Supplement will specify the
aggregate Certificate Principal Balance,
aggregate Certificate Notional Amount
and/or Pass-Through Rate (or, in the
case of a variable or adjustable
Pass-Through Rate, the method for
determining such rate), as applicable,
for each Class of Offered Certificates.
If so specified in the related
Prospectus Supplement, a Class of
Offered Certificates may have two or
more component parts, each having
characteristics that are otherwise
described herein as being attributable
to separate and distinct Classes.
The Certificates will not be guaranteed
or insured by the Depositor or any of
its affiliates, by any governmental
agency or instrumentality or by any
other person or entity,
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unless otherwise provided in the related
Prospectus Supplement. See "Risk
Factors--Limited Assets".
Distributions of Interest on the
Certificates........................ Interest on each Class of Offered
Certificates (other than certain Classes
of Stripped Principal Certificates and
certain Classes of REMIC Residual
Certificates) of each Series will accrue
at the applicable Pass-Through Rate on
the aggregate Certificate Principal
Balance or, in the case of certain
Classes of Stripped Interest
Certificates, the aggregate Certificate
Notional Amount thereof outstanding from
time to time and will be distributed to
Certificateholders as provided in the
related Prospectus Supplement (each of
the specified dates on which
distributions are to be made, a
"Distribution Date"). Distributions of
interest with respect to one or more
Classes of Certificates (collectively,
"Accrual Certificates") may not commence
until the occurrence of certain events,
such as the retirement of one or more
other Classes of Certificates, and
interest accrued with respect to a Class
of Accrual Certificates prior to the
occurrence of such an event will either
be added to the Certificate Principal
Balance thereof or otherwise deferred as
described in the related Prospectus
Supplement. Distributions of interest
with respect to one or more Classes of
Certificates may be reduced to the
extent of certain delinquencies, losses
and other contingencies described herein
and in the related Prospectus
Supplement. See "Risk Factors--Effect of
Prepayments on Average Life of
Certificates" and "--Effect of
Prepayments on Yield of Certificates",
"Yield and Maturity
Considerations--Certain Shortfalls in
Collections of Interest" and
"Description of the
Certificates--Distributions of Interest
on the Certificates".
Distributions of Principal of
the Certificates.................... Each Class of Certificates of each
Series (other than certain Classes of
Stripped Interest Certificates and
certain Classes of REMIC Residual
Certificates) will have an aggregate
Certificate Principal Balance. The
aggregate Certificate Principal Balance
of a Class of Certificates outstanding
from time to time will represent the
maximum amount that the holders thereof
are then entitled to receive in respect
of principal from future cash flow on
the assets in the related Trust Fund.
Unless otherwise specified in the
related Prospectus Supplement, the
initial aggregate Certificate Principal
Balance of all Classes of a Series will
not be greater than the outstanding
principal balance of the related
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<PAGE>
Mortgage Assets as of the related
Cut-off Date. As and to the extent
described in each Prospectus Supplement,
distributions of principal with respect
to the related Series will be made on
each Distribution Date to the holders of
the Class or Classes of Certificates of
such Series then entitled thereto until
the Certificate Principal Balances of
such Certificates have been reduced to
zero. Distributions of principal with
respect to one or more Classes of
Certificates: (i) may be made at a rate
that is faster (and, in some cases,
substantially faster) or slower (and, in
some cases, substantially slower) than
the rate at which payments or other
collections of principal are received on
the Mortgage Assets in the related Trust
Fund; (ii) may not commence until the
occurrence of certain events, such as
the retirement of one or more other
Classes of Certificates of the same
Series; (iii) may be made, subject to
certain limitations, based on a
specified principal payment schedule; or
(iv) may be contingent on the specified
principal payment schedule for another
Class of the same Series and the rate at
which payments and other collections of
principal on the Mortgage Assets in the
related Trust Fund are received. Unless
otherwise specified in the related
Prospectus Supplement, distributions of
principal of any Class of Offered
Certificates will be made on a pro rata
basis among all of the Certificates of
such Class. See "Description of the
Certificates--Distributions of Principal
of the Certificates".
Credit Support and
Cash Flow Agreements................ If so provided in the related Prospectus
Supplement, partial or full protection
against certain defaults and losses on
the Mortgage Assets in the related Trust
Fund may be provided to one or more
Classes of Certificates of the related
Series in the form of subordination of
one or more other Classes of
Certificates of such Series, which other
Classes may include one or more Classes
of Offered Certificates, or by one or
more other types of credit support,
which may include a letter of credit, a
surety bond, an insurance policy, a
guarantee, a reserve fund, or a
combination thereof (any such coverage
with respect to the Certificates of any
Series, "Credit Support"). If so
provided in the related Prospectus
Supplement, a Trust Fund may include:
(i) 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; or (ii) interest rate
exchange agreements, interest rate cap
or floor agreements, or other agreements
designed to reduce the effects of
interest rate fluctuations on the
Mortgage Assets
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<PAGE>
or on one or more Classes of
Certificates (any such agreement, in the
case of clause (i) or (ii), a "Cash Flow
Agreement"). Certain relevant
information regarding any Credit Support
or Cash Flow Agreement applicable to the
Offered Certificates of any Series will
be set forth in the related Prospectus
Supplement. See "Risk Factors--Credit
Support Limitations", "Description of
the Trust Funds--Credit Support" and
"--Cash Flow Agreements" and
"Description of Credit Support".
Advances.............................. If and to the extent provided in the
related Prospectus Supplement, if a
Trust Fund includes Mortgage Loans, the
Master Servicer, the Special Servicer,
the Trustee, any provider of Credit
Support and/or any other specified
person may be obligated to make, or have
the option of making, certain advances
with respect to delinquent scheduled
payments of principal and/or interest on
such Mortgage Loans. Any such advances
made with respect to a particular
Mortgage Loan will be reimbursable from
subsequent recoveries in respect of such
Mortgage Loan and otherwise to the
extent described herein and in the
related Prospectus Supplement. See
"Description of the
Certificates--Advances in Respect of
Delinquencies". If and to the extent
provided in the Prospectus Supplement
for the Offered Certificates of any
Series, any entity making such advances
may be entitled to receive interest
thereon for a specified period during
which certain or all of such advances
are outstanding, payable from amounts in
the related Trust Fund. See "Description
of the Certificates--Advances in Respect
of Delinquencies". If a Trust Fund
includes MBS, any comparable advancing
obligation of a party to the related
Pooling Agreement, or of a party to the
related MBS Agreement, will be described
in the related Prospectus Supplement.
Optional Termination.................. If so specified in the related
Prospectus Supplement, a Trust Fund may
be subject to optional early termination
through the repurchase of the Mortgage
Assets included in such Trust Fund by
the party or parties specified in such
Prospectus Supplement, under the
circumstances and in the manner set
forth therein, thereby resulting in
early retirement for the Certificates of
the related Series. If so provided in
the related Prospectus Supplement, upon
the reduction of the aggregate
Certificate Principal Balance of a
specified Class or Classes of
Certificates by a specified percentage
or amount or upon a specified date, a
party specified therein may be
authorized or required to solicit bids
for the purchase of all of the Mortgage
Assets of the
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<PAGE>
related Trust Fund, or of a sufficient
portion of such Mortgage Assets to
retire such Class or Classes, under the
circumstances and in the manner set
forth therein. See "Description of the
Certificates--Termination".
Certain Federal Income Tax
Consequences........................ The Certificates of each Series will
constitute or evidence ownership of
either (i) "regular interests" ("REMIC
Regular Certificates") and "residual
interests" ("REMIC Residual
Certificates") in a Trust Fund, or a
designated portion thereof, treated as a
REMIC under Sections 860A through 860G
of the Internal Revenue Code of 1986
(the "Code"), or (ii) interests
("Grantor Trust Certificates") in a
Trust Fund treated as a grantor trust
under applicable provisions of the Code.
Investors are advised to consult their
tax advisors concerning the specific tax
consequences to them of the purchase,
ownership and disposition of the Offered
Certificates and to review "Certain
Federal Income Tax Consequences" herein
and in the related Prospectus
Supplement.
ERISA Considerations.................. Fiduciaries of employee benefit plans
and certain other retirement plans and
arrangements, including individual
retirement accounts, annuities, Keogh
plans, and collective investment funds
and separate accounts in which such
plans, accounts, annuities or
arrangements are invested, that are
subject to the Employee Retirement
Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code,
should review with their legal advisors
whether the purchase or holding of
Offered Certificates could give rise to
a transaction that is prohibited or is
not otherwise permissible either under
ERISA or Section 4975 of the Code. See
"ERISA Considerations" herein and in the
related Prospectus Supplement.
Legal Investment...................... The Offered Certificates 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.
Investors whose investment authority is
subject to legal restrictions should
consult their legal advisors to
determine whether and to what extent the
Offered Certificates constitute legal
investments for them. See "Legal
Investment" herein and in the related
Prospectus Supplement.
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<PAGE>
Rating................................ At their respective dates of issuance,
each Class of Offered Certificates will
be rated not lower than investment grade
by one or more nationally recognized
statistical rating agencies (each, a
"Rating Agency"). See "Rating" herein
and in the related Prospectus
Supplement.
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<PAGE>
RISK FACTORS
In considering an investment in the Offered Certificates of any Series,
investors should consider, among other things, the following risk factors and
any other factors set forth under the heading "Risk Factors" in the related
Prospectus Supplement. In general, to the extent that the factors discussed
below pertain to or are influenced by the characteristics or behavior of
Mortgage Loans included in a particular Trust Fund, they would similarly pertain
to and be influenced by the characteristics or behavior of the mortgage loans
underlying any MBS included in such Trust Fund.
Limited Liquidity of Offered Certificates
General. The Offered Certificates of any Series may have limited or no
liquidity. Accordingly, an investor may be forced to bear the risk of its
investment in any Offered Certificates for an indefinite period of time.
Furthermore, except to the extent described herein and in the related Prospectus
Supplement, Certificateholders will have no redemption rights, and the Offered
Certificates of each Series are subject to early retirement only under certain
specified circumstances described herein and in the related Prospectus
Supplement. See "Description of the Certificates--Termination".
Lack of a Secondary Market. There can be no assurance that a secondary
market for the Offered Certificates of any Series will develop or, if it does
develop, that it will provide holders with liquidity of investment or that it
will continue for as long as such Certificates remain outstanding. The
Prospectus Supplement for the Offered Certificates of any Series may indicate
that an underwriter specified therein intends to establish a secondary market in
such Offered Certificates; however, no underwriter will be obligated to do so.
Any such secondary market may provide less liquidity to investors than any
comparable market for securities that evidence interests in single-family
mortgage loans. Unless otherwise provided in the related Prospectus Supplement,
the Certificates will not be listed on any securities exchange.
Limited Nature of Ongoing Information. The primary source of ongoing
information regarding the Offered Certificates of any Series, including
information regarding the status of the related Mortgage Assets and any Credit
Support for such Certificates, will be the periodic reports to
Certificateholders to be delivered pursuant to the related Pooling Agreement as
described herein under the heading "Description of the Certificates--Reports to
Certificateholders". There can be no assurance that any additional ongoing
information regarding the Offered Certificates of any Series will be available
through any other source. The limited nature of such information in respect of
the Offered Certificates of any Series may adversely affect the liquidity
thereof, even if a secondary market for such Certificates does develop.
Sensitivity to Fluctuations in Prevailing Interest Rates. Insofar as a
secondary market does develop with respect to Offered Certificates of any Series
or with respect to any Class thereof, the market value of such Certificates will
be affected by several factors, including the perceived liquidity thereof, the
anticipated cash flow thereon (which may vary widely depending upon the
prepayment and default assumptions applied in respect of the underlying Mortgage
Loans) and prevailing interest rates. The price payable at any given time in
respect of certain Classes of Offered Certificates (in particular, a Class with
a relatively long average life, a Companion Class (as defined herein) or a Class
of Stripped Interest Certificates or Stripped Principal Certificates) may be
extremely sensitive to small fluctuations in prevailing interest rates; and the
relative change in price for an Offered Certificate in response to an upward or
downward movement in prevailing interest rates may not necessarily equal the
relative change in price for such Offered Certificate in response to an equal
but opposite movement in such rates. Accordingly, the sale of Offered
Certificates by a holder in any secondary market that may develop may be at a
discount from the price paid by such holder. The
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<PAGE>
Depositor is not aware of any source through which price information about the
Offered Certificates will be generally available on an ongoing basis.
Limited Assets
Unless otherwise specified in the related Prospectus Supplement, neither
the Offered Certificates of any Series nor the Mortgage Assets in the related
Trust Fund will be guaranteed or insured by the Depositor or any of its
affiliates, by any governmental agency or instrumentality or by any other person
or entity; and no Offered Certificate of any Series will represent a claim
against or security interest in the Trust Fund for any other Series.
Accordingly, if the related Trust Fund has insufficient assets to make payments
on a Series of Offered Certificates, no other assets will be available for
payment of the deficiency, and the holders of one or more Classes of such
Offered Certificates will be required to bear the consequent loss. Furthermore,
certain amounts on deposit from time to time in certain funds or accounts
constituting part of a Trust Fund, including the Certificate Account (as defined
herein) and any accounts maintained as Credit Support, may be withdrawn under
certain conditions, if and to the extent described in the related Prospectus
Supplement, for purposes other than the payment of principal of or interest on
the Certificates of the related Series. If and to the extent so provided in the
Prospectus Supplement relating to a Series consisting of one or more Classes of
Subordinate Certificates, on any Distribution Date in respect of which losses or
shortfalls in collections on the Mortgage Assets have been incurred, all or a
portion of the amount of such losses or shortfalls will be borne first by one or
more Classes of the Subordinate Certificates, and, thereafter, by the remaining
Classes of Certificates, in the priority and manner and subject to the
limitations specified in such Prospectus Supplement.
Credit Support Limitations
Limitations Regarding Types of Losses Covered. The Prospectus Supplement
for the Offered Certificates of any Series will describe any Credit Support
provided with respect thereto. 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;
for example, Credit Support may or may not cover loss by reason of fraud or
negligence by a mortgage loan originator or other parties. Any such losses not
covered by Credit Support may, at least in part, be allocated to one or more
Classes of Offered Certificates.
Disproportionate Benefits to Certain Classes and Series. A Series may
include one or more Classes of Subordinate Certificates (which may include
Offered Certificates), if so provided in the related Prospectus Supplement.
Although subordination is intended to reduce the likelihood of temporary
shortfalls and ultimate losses to holders of Senior Certificates, the amount of
subordination will be limited and may decline under certain circumstances. In
addition, if principal payments on one or more Classes of Offered Certificates
of a Series are made in a specified order of priority, any related Credit
Support may be exhausted before the principal of the later paid Classes of
Offered Certificates of such Series has been repaid in full. As a result, the
impact of losses and shortfalls experienced with respect to the Mortgage Assets
may fall primarily upon those Classes of Offered Certificates having a later
right of payment. Moreover, if a form of Credit Support covers the Offered
Certificates of more than one Series and losses on the related Mortgage Assets
exceed the amount of such Credit Support, it is possible that the holders of
Offered Certificates of one (or more) such Series will be disproportionately
benefited by such Credit Support to the detriment of the holders of Offered
Certificates of one (or more) other such Series.
Limitations Regarding the Amount of Credit Support. The amount of any
applicable Credit Support supporting one or more Classes of Offered
Certificates, including the subordination of one or more other
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<PAGE>
Classes of Certificates, will be determined on the basis of criteria established
by each Rating Agency rating such Classes of Certificates based on an assumed
level of defaults, delinquencies and losses on the underlying Mortgage Assets
and certain other factors. There can, however, be no assurance that the loss
experience on the related Mortgage Assets will not exceed such assumed levels.
See "Description of the Certificates--Allocation of Losses and Shortfalls" and
"Description of Credit Support". If the losses on the related Mortgage Assets do
exceed such assumed levels, the holders of one or more Classes of Offered
Certificates will be required to bear such additional losses.
Effect of Prepayments on Average Life of Certificates
As a result of prepayments on the Mortgage Loans in any Trust Fund, the
amount and timing of distributions of principal and/or interest on the Offered
Certificates of the related Series may be highly unpredictable. Prepayments on
the Mortgage Loans in any Trust Fund will result in a faster rate of principal
payments on one or more Classes of Certificates of the related Series than if
payments on such Mortgage Loans were made as scheduled. Thus, the prepayment
experience on the Mortgage Loans in a Trust Fund may affect the average life of
one or more Classes of Certificates of the related Series, including a Class of
Offered Certificates. The rate of principal payments on pools of mortgage loans
varies among pools and from time to time is influenced by a variety of economic,
demographic, geographic, social, tax and legal factors. For example, if
prevailing interest rates fall significantly below the Mortgage Rates borne by
the Mortgage Loans included in a Trust Fund, then, subject to the particular
terms of the Mortgage Loans (e.g., provisions that prohibit voluntary
prepayments during specified periods or impose penalties in connection
therewith) and the ability of borrowers to obtain new financing, principal
prepayments on such Mortgage Loans 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 the Mortgage Loans included in a Trust Fund, then principal
prepayments on such Mortgage Loans are likely to be lower than if prevailing
interest rates remain at or below the Mortgage Rates borne by those Mortgage
Loans. There can be no assurance as to the actual rate of prepayment on the
Mortgage Loans in any Trust Fund or that such rate of prepayment will conform to
any model described herein or in any Prospectus Supplement. As a result,
depending on the anticipated rate of prepayment for the Mortgage Loans in any
Trust Fund, the retirement of any Class of Certificates of the related Series
could occur significantly earlier or later, and the average life thereof could
be significantly shorter or longer, than expected.
The extent to which prepayments on the Mortgage Loans in any Trust Fund
ultimately affect the average life of any Class of Certificates of the related
Series will depend on the terms and provisions of such Certificates. A Class of
Certificates, including a Class of Offered Certificates, may provide that on any
Distribution Date the holders of such Certificates are entitled to a pro rata
share of the prepayments on the Mortgage Loans in the related Trust Fund that
are distributable on such date, to a disproportionately large share (which, in
some cases, may be all) of such prepayments, or to a disproportionately small
share (which, in some cases, may be none) of such prepayments. A Class of
Certificates that entitles the holders thereof to a disproportionately large
share of the prepayments on the Mortgage Loans in the related Trust Fund
increases the likelihood of early retirement of such Class ("Call Risk") if the
rate of prepayment is relatively fast; while a Class of Certificates that
entitles the holders thereof to a disproportionately small share of the
prepayments on the Mortgage Loans in the related Trust Fund increases the
likelihood of an extended average life of such Class ("Extension Risk") if the
rate of prepayment is relatively slow. As and to the extent described in the
related Prospectus Supplement, the respective entitlements of the various
Classes of Certificateholders of any Series to receive payments (and, in
particular, prepayments) of principal of the Mortgage Loans in the related Trust
Fund may vary based on the occurrence of certain events (e.g., the retirement of
one or more Classes
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<PAGE>
of Certificates of such Series) or subject to certain contingencies (e.g.,
prepayment and default rates with respect to such Mortgage Loans).
A Series may include one or more Controlled Amortization Classes, which
will entitle the holders thereof to receive principal distributions according to
a specified principal payment schedule. Although prepayment risk cannot be
eliminated entirely for any Class of Certificates, a Controlled Amortization
Class will generally provide a relatively stable cash flow so long as the actual
rate of prepayment on the Mortgage Loans in the related Trust Fund remains
relatively constant at the rate, or within the range of rates, of prepayment
used to establish the specific principal payment schedule for such Certificates.
Prepayment risk with respect to a given Mortgage Asset Pool does not disappear,
however, and the stability afforded to a Controlled Amortization Class comes at
the expense of one or more Companion Classes of the same Series, any of which
Companion Classes may also be a Class of Offered Certificates. In general, and
as more specifically described in the related Prospectus Supplement, a Companion
Class may entitle the holders thereof to a disproportionately large share of
prepayments on the Mortgage Loans in the related Trust Fund when the rate of
prepayment is relatively fast, and/or may entitle the holders thereof to a
disproportionately small share of prepayments on the Mortgage Loans in the
related Trust Fund when the rate of prepayment is relatively slow. As and to the
extent described in the related Prospectus Supplement, a Companion Class absorbs
some (but not all) of the Call Risk and/or Extension Risk that would otherwise
belong to the related Controlled Amortization Class if all payments of principal
of the Mortgage Loans in the related Trust Fund were allocated on a pro rata
basis.
Effect of Prepayments on Yield of Certificates
A Series may include one or more Classes of Offered Certificates offered at
a premium or discount. Yields on such Classes of Certificates will be sensitive,
and in some cases extremely sensitive, to prepayments on the Mortgage Loans in
the related Trust Fund and, where the amount of interest payable with respect to
a Class is disproportionately large, as compared to the amount of principal, as
with certain Classes of Stripped Interest Certificates, a holder might fail to
recover its original investment under some prepayment scenarios. The extent to
which the yield to maturity of any Class of Offered Certificates may vary from
the anticipated yield will depend upon the degree to which such Certificates are
purchased at a discount or premium and the amount and timing of distributions
thereon. An investor should consider, in the case of any Offered Certificate
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the Mortgage Loans could result in an actual yield to such
investor that is lower than the anticipated yield and, in the case of any
Offered Certificate purchased at a premium, the risk that a faster than
anticipated rate of principal payments could result in an actual yield to such
investor that is lower than the anticipated yield. See "Yield and Maturity
Considerations".
Limited Nature of Ratings
Any rating assigned by a Rating Agency to a Class of Offered Certificates
will reflect only its assessment of the likelihood that holders of such Offered
Certificates will receive payments to which such Certificateholders are entitled
under the related Pooling Agreement. Such rating will not constitute an
assessment of the likelihood that principal prepayments 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 related Trust Fund. Furthermore, such rating will not address
the possibility that prepayment of the related Mortgage Loans at a higher or
lower rate than anticipated by an investor may cause such investor to experience
a lower than anticipated yield or that an investor that purchases an Offered
Certificate at a significant premium might fail to recover its initial
investment under certain
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prepayment scenarios. Hence, a rating assigned by a Rating Agency does not
guarantee or ensure the realization of any anticipated yield on a Class of
Offered Certificates.
The amount, type and nature of Credit Support, if any, provided with
respect to a Series will be determined on the basis of criteria established by
each Rating Agency rating one or more Classes of the Certificates of such
Series. Those criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. However, there can be no assurance
that the historical data supporting any such actuarial analysis will accurately
reflect future experience, or that the data derived from a large pool of
mortgage loans will accurately predict the delinquency, foreclosure or loss
experience of any particular pool of Mortgage Loans. In other cases, such
criteria may be based upon determinations of the values of the Mortgaged
Properties that provide security for the Mortgage Loans. However, no assurance
can be given that those values will not decline in the future. As a result, the
Credit Support required in respect of the Offered Certificates of any Series may
be insufficient to fully protect the holders thereof from losses on the related
Mortgage Asset Pool. See "Description of Credit Support" and "Rating".
Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage
Loans
General. The payment performance of the Offered Certificates of any Series
will be directly related to the payment performance of the underlying Mortgage
Loans. Set forth below is a discussion of certain factors that will affect the
full and timely payment of the Mortgage Loans in any Trust Fund. In addition, a
description of certain material considerations associated with investments in
mortgage loans is included herein under "Certain Legal Aspects of Mortgage
Loans".
The Offered Certificates will be directly or indirectly backed by mortgage
loans secured by multifamily and/or commercial properties. Mortgage loans made
on the security of multifamily or commercial property may have a greater
likelihood of delinquency and foreclosure, and a greater likelihood of loss in
the event thereof, than loans made on the security of an owner-occupied
single-family property. See "Description of the Trust Funds--Mortgage
Loans-Default and Loss Considerations with Respect to the Mortgage Loans". The
ability of a borrower to repay a loan secured by an income-producing property
typically is dependent primarily upon the successful operation of such property
rather than upon the existence of independent income or assets of the borrower;
thus, the value of an income-producing property is directly related to the net
operating income derived from such property. If the net operating income of the
property is reduced (for example, if rental or occupancy rates decline or real
estate tax rates or other operating expenses increase), the borrower's ability
to repay the loan may be impaired. A number of the Mortgage Loans may be secured
by liens on owner-occupied Mortgaged Properties or on Mortgaged Properties
leased to a single tenant or a small number of significant tenants. Accordingly,
a decline in the financial condition of the borrower or a significant 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. Furthermore, the value of any
Mortgaged Property may be adversely affected by factors generally incident to
interests in real property, including changes in general or local economic
conditions and/or specific industry segments; declines in real estate values;
declines in rental or occupancy rates; increases in interest rates, real estate
tax rates and other operating expenses; changes in governmental rules,
regulations and fiscal policies, including environmental legislation; natural
disasters and civil disturbances such as earthquakes, hurricanes, floods,
eruptions or riots; and other circumstances, conditions or events beyond the
control of a Master Servicer or a Special Servicer.
Additional considerations may be presented by the type and use of a
particular Mortgaged Property. For instance, Mortgaged Properties that operate
as hospitals, nursing homes and other health care-related
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facilities may present special risks to lenders due to the significant
governmental regulation of the ownership, operation, maintenance and financing
of health care institutions. Hotel, motel and restaurant properties are often
operated pursuant to franchise, management or operating agreements, which may be
terminable by the franchisor or operator. Moreover, the transferability of a
hotel's or restaurant's operating, liquor and other licenses upon a transfer of
the hotel or restaurant, as the case may be, whether through purchase or
foreclosure, is subject to local law requirements. If any specific type of
Mortgaged Property secures or underlies 10% or more of the Mortgage Assets
included in any Trust Fund (based on aggregate principal balance of the Mortgage
Assets in such Trust Fund at the time it is formed), the related Prospectus
Supplement will include as part of the "Risk Factors" section therein a
discussion of the risks particular to such type of property.
In addition, the concentration of default, foreclosure and loss risks in
individual Mortgage Loans in a particular Trust Fund will generally be greater
than for pools of single-family loans because Mortgage Loans in a Trust Fund
will generally consist of a smaller number of higher balance loans than would a
pool of single-family loans of comparable aggregate unpaid principal balance.
Limited Recourse Nature of the Mortgage Loans. It is anticipated that some
or all of the Mortgage Loans included in any Trust Fund will be nonrecourse
loans or loans for which recourse may be restricted or unenforceable. As to any
such Mortgage Loan, recourse in the event of borrower default will be limited to
the specific real property and other assets, if any, that were pledged to secure
the Mortgage Loan. However, even with respect to those Mortgage Loans that
provide for recourse against the borrower and its assets generally, there can be
no assurance that enforcement of such recourse provisions will be practicable,
or that the assets of the borrower will be sufficient to permit a recovery in
respect of a defaulted Mortgage Loan in excess of the liquidation value of the
related Mortgaged Property. See "Certain Legal Aspects of Mortgage
Loans-Foreclosure--Anti-Deficiency Legislation".
Dependence on Management. In general, a Mortgaged Property will be managed
by a manager (which may be the borrower or an affiliate of the borrower), which
is responsible for responding to changes in the local market for the facilities
offered at the property, planning and implementing the rental or pricing
structure, including staggering durations of leases and establishing levels of
rent payments, and causing maintenance and capital improvements to be carried
out in a timely fashion. Management errors may adversely affect the long-term
viability of a Mortgaged Property. In the case of certain Trust Funds, multiple
Mortgaged Properties may be managed by the same property manager. A
concentration of property management of Mortgaged Properties securing or
underlying the Mortgage Assets in any Trust Fund will increase the risk that the
poor performance of a single property manager will have widespread effect on the
related Mortgage Asset Pool.
Dependence on Tenants. In most cases, the Mortgaged Properties will be
subject to leases, and the related borrowers will rely on periodic lease or
rental payments from tenants to pay for maintenance and other operating expenses
of such Mortgaged Properties, to fund capital improvements at such Mortgaged
Properties and to service the related Mortgage Loans and any other outstanding
debt or obligations they may have outstanding. Generally, there will be existing
leases that expire during the term of the related Mortgage Loans. There can be
no guaranty that tenants will renew leases upon expiration or, in the case of a
commercial tenant, that it will continue operations throughout the term of its
lease. Such borrowers' income would be adversely affected if tenants were unable
to pay rent, if space were unable to be rented on favorable terms or at all, or
if a significant tenant were to become a debtor in a bankruptcy case under the
United States Bankruptcy Code. For example, if any such borrower were to relet
or renew the existing leases for a significant amount of retail or office space
at rental rates significantly lower than expected rates, then such borrower's
funds from
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operations may be adversely affected. Changes in payment patterns by tenants may
result from a variety of social, legal and economic factors, including, without
limitation, the rate of inflation and unemployment levels and may be reflected
in the rental rates offered for comparable space. In addition, upon reletting or
renewing existing leases at commercial properties, borrowers will likely be
required to pay leasing commissions and tenant improvement costs which may
adversely affect cash flow from the related Mortgaged Property. There can be no
assurances whether, or to what extent, economic, legal or social factors will
affect future rental or repayment patterns.
In the case of Mortgaged Properties used for certain commercial purposes,
the performance and liquidation value of such properties may be dependent upon
the business operated by tenants, the creditworthiness of such tenants and/or
the number of tenants. In some cases, a single tenant or a relatively small
number of tenants may account for all or a disproportionately large share of the
rentable space or rental income of a Mortgaged Property. Accordingly, a decline
in the financial condition of a significant or sole tenant, as the case may be,
or other adverse circumstances of such a tenant (such as bankruptcy or
insolvency), may have a disproportionately greater effect on the net operating
income derived from such property than would be the case if rentable space or
rental income were more evenly distributed among a greater number of tenants at
such property.
Property Location and Condition. The location and construction quality of a
particular Mortgaged Property may affect the occupancy level as well as the
rents that may be charged. The characteristics of an area or neighborhood in
which a Mortgaged Property is located may change over time or in relation to
competing facilities. The effects of poor construction quality will increase
over time in the form of increased maintenance and capital improvements. Even
good construction will deteriorate over time if the management company does not
schedule and perform adequate maintenance in a timely fashion. Although the
Master Servicer or the Special Servicer, as applicable, generally will be
required to inspect the related Mortgaged Properties (but not mortgaged
properties securing mortgage loans underlying MBS) periodically, there can be no
assurance that such inspections will detect damage or prevent a default.
Competition. Other comparable multifamily/commercial properties located in
the same areas will compete with the Mortgaged Properties to attract residents,
retail sellers, tenants, customers, patients and/or guests. The leasing of real
estate is highly competitive. The principal means of competition are price,
location and the nature and condition of the facility to be leased. A mortgagor
competes with all lessors and developers of comparable types of real estate in
the area in which the related Mortgaged Property is located. Such lessors or
developers could have lower rents, lower operating costs, more favorable
locations or better facilities. While a mortgagor may renovate, refurbish or
expand the related Mortgaged Property to maintain such Mortgaged Property and
remain competitive, such renovation, refurbishment or expansion may itself
entail significant risks. Increased competition could adversely affect income
from and the market value of the Mortgaged Properties. In addition, the business
conducted at each Mortgaged Property may face competition from other industries
and industry segments.
Changes in Laws. Increases in income, service or other taxes (other than
real estate taxes) in respect of a Mortgaged Property generally are not passed
through to tenants under leases and may adversely affect the related mortgagor's
funds from operations. Similarly, changes in laws increasing the potential
liability for environmental conditions existing on a Mortgaged Property or
increasing the restrictions on discharges or other conditions may result in
significant unanticipated expenditures, which could adversely affect the related
mortgagor's funds from operations. See "--Risks of Liability Arising From
Environmental Conditions" herein.
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Litigation. There may be legal proceedings pending and, from time to time,
threatened against certain mortgagors under the Mortgage Loans, managers of the
Mortgaged Properties and their respective affiliates arising out of the ordinary
business of such mortgagors, managers and affiliates. There can be no assurance
that such litigation may not have a material adverse effect on distributions to
Certificateholders of the related Trust Fund.
Limitations on Enforceability of Assignments of Leases and Rents. In
general, any Mortgage Loan that is secured by a Mortgaged Property subject to
leases, will be secured by an assignment of leases and rents pursuant to which
the borrower assigns to the lender its right, title and interest as landlord
under the leases of the related Mortgaged Property, and the income derived
therefrom, as further security for the related Mortgage Loan, while retaining a
license to collect rents for so long as there is no default. If the borrower
defaults, the license terminates and the lender is entitled to collect rents.
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 borrower, the lender's ability to collect
the rents may be adversely affected. See "Certain Legal Aspects of Mortgage
Loans--Leases and Rents".
Limitations on Enforceability of Cross-Collateralization. A Mortgage Asset
Pool may include groups of Mortgage Loans which are cross-collateralized and
cross-defaulted. These arrangements are designed primarily to ensure that all of
the collateral pledged to secure the respective Mortgage Loans in a
cross-collateralized group, and the cash flows generated thereby, are available
to support debt service on, and ultimate repayment of, the aggregate
indebtedness evidenced by those Mortgage Loans. These arrangements thus seek to
reduce the risk that the inability of one or more of the Mortgaged Properties
securing any such group of Mortgage Loans to generate net operating income
sufficient to pay debt service will result in defaults and ultimate losses.
There may not be complete identity of ownership of the Mortgaged Properties
securing a group of cross-collateralized Mortgage Loans. In such an instance,
creditors of one or more of the related borrowers could challenge the
cross-collateralization arrangement as a fraudulent conveyance. Generally, under
federal and state fraudulent conveyance statutes, the incurring of an obligation
or the transfer of property by a person will be subject to avoidance under
certain circumstances if the person did not receive fair consideration or
reasonably equivalent value in exchange for such obligation or transfer and was
then insolvent or was rendered insolvent by such obligation or transfer.
Accordingly, a creditor seeking to realize against a Mortgaged Property subject
to such cross-collateralization to repay such creditor's claim against the
related borrower could assert (i) that such borrower was insolvent at the time
the cross-collateralized Mortgage Loans were made and (ii) that such borrower
did not, when it allowed its property to be encumbered by a lien securing the
indebtedness represented by the other Mortgage Loans in the group of
cross-collateralized Mortgage Loans, receive fair consideration or reasonably
equivalent value for, in effect, "guaranteeing" the performance of the other
borrowers. Although the borrower making such "guarantee" will be receiving
"guarantees" from each of the other borrowers in return, there can be no
assurance that such exchanged "guarantees" would be found to constitute fair
consideration or be of reasonably equivalent value, and no unqualified legal
opinion to that effect will be obtained.
The cross-collateralized Mortgage Loans constituting any group thereof may
be secured by mortgage liens on Mortgaged Properties located in different
states. Because of various state laws governing foreclosure or the exercise of a
power of sale, and because, in general, foreclosure actions are brought in state
court, and the courts of one state cannot exercise jurisdiction over property in
another state, it may be necessary upon
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a default under any such Mortgage Loan to foreclose on the related Mortgaged
Properties in a particular order rather than simultaneously in order to ensure
that the lien of the related Mortgages is not impaired or released.
Increased Risk of Default Associated With Balloon Payments. Certain of the
Mortgage Loans included in a Trust Fund may be nonamortizing or only partially
amortizing over their terms to maturity and, thus, will require substantial
payments of principal and interest (that is, balloon payments) at their stated
maturity. Mortgage Loans of this type 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. The ability of a borrower to accomplish
either of these goals will be affected by a number of factors, including the
value of the related Mortgaged Property, the level of available mortgage rates
at the time of sale or refinancing, the borrower's equity in the related
Mortgaged Property, the financial condition and operating history of the
borrower and the related Mortgaged Property, tax laws, rent control laws (with
respect to certain residential properties), Medicaid and Medicare reimbursement
rates (with respect to hospitals and nursing homes), prevailing general economic
conditions and the availability of credit for loans secured by multifamily or
commercial, as the case may be, real properties generally. Neither the Depositor
nor any of its affiliates will be required to refinance any Mortgage Loan.
If and to the extent described herein and in the related Prospectus
Supplement, in order to maximize recoveries on defaulted Mortgage Loans, the
Master Servicer or the Special Servicer will be permitted (within prescribed
limits) to extend and modify Mortgage Loans that are in default or as to which a
payment default is imminent. See "Description of the Pooling
Agreements--Realization Upon Defaulted Mortgage Loans". While the Master
Servicer or the Special Servicer generally will be required to determine that
any such extension or modification is reasonably likely to produce a greater
recovery than liquidation, taking into account the time value of money, there
can be no assurance that any such extension or modification will in fact
increase the present value of receipts from or proceeds of the affected Mortgage
Loans.
Limitations on Enforceability of Due-on-Sale and Debt-Acceleration Clauses.
Mortgages may contain a due-on-sale clause, which permits the lender to
accelerate the maturity of the Mortgage Loan if the borrower sells, transfers or
conveys the related Mortgaged Property or its interest in the Mortgaged
Property. Mortgages also may include a debt-acceleration clause, which permits
the lender to accelerate the debt upon a monetary or nonmonetary 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.
Risk of Liability Arising From Environmental Conditions. Under the laws of
certain states, contamination of real property may give rise to a lien on the
property to assure the costs of cleanup. In several states, such a lien has
priority over an existing mortgage lien on such property. In addition, under the
laws of some states and under the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, a lender may be liable, as
an "owner" or "operator", for costs of addressing releases or threatened
releases of hazardous substances at a property, if agents or employees of the
lender have become sufficiently involved in the operations of the borrower,
regardless of whether the environmental damage or threat was caused by the
borrower or a prior owner. A lender also risks such liability on foreclosure of
the mortgage. Unless otherwise specified in the related Prospectus Supplement,
if a Trust Fund includes Mortgage Loans, then the related Pooling Agreement will
contain provisions generally to the effect that neither the Master Servicer nor
the Special Servicer may, on behalf of the Trust Fund, acquire title to a
Mortgaged
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Property or assume control of its operation unless the Special Servicer, based
upon a report prepared by a person who regularly conducts environmental site
assessments, has made the determination that it is appropriate to do so, as
described under "Description of the Pooling Agreements--Realization Upon
Defaulted Mortgage Loans". See "Certain Legal Aspects of Mortgage
Loans--Environmental Considerations".
Lack of Insurance Coverage for Certain Special Hazard Losses. Unless
otherwise specified in a Prospectus Supplement, the Master Servicer and Special
Servicer for the related Trust Fund will be required to cause the borrower on
each Mortgage Loan in such Trust Fund to maintain such insurance coverage in
respect of the related Mortgaged Property as is required under the related
Mortgage, including hazard insurance; provided that, as and to the extent
described herein and in the related Prospectus Supplement, each of the Master
Servicer and the Special Servicer may satisfy its obligation to cause hazard
insurance to be maintained with respect to any Mortgaged Property through
acquisition of a blanket policy. 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 covering the
Mortgaged Properties 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, 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 risks. Unless the related Mortgage specifically
requires the mortgagor to insure against physical damage arising from such
causes, then, to the extent any consequent losses are not covered by Credit
Support, such losses may be borne, at least in part, by the holders of one or
more Classes of Offered Certificates of the related Series. See "Description of
the Pooling Agreements--Hazard Insurance Policies".
Risks of Geographic Concentration. Certain geographic regions of the United
States from time to time will experience weaker regional economic conditions and
housing markets, and, consequently, will experience higher rates of loss and
delinquency than will be experienced on mortgage loans generally. For example, a
region's economic condition and housing market may be directly, or indirectly,
adversely affected by natural disasters or civil disturbances such as
earthquakes, hurricanes, floods, eruptions or riots. The economic impact of any
of these types of events may also be felt in areas beyond the region immediately
affected by the disaster or disturbance. The Mortgage Loans underlying certain
Series may be concentrated in these regions, and such concentration may present
risk considerations in addition to those generally present for similar
mortgage-backed securities without such concentration.
Inclusion of Delinquent and Nonperforming Mortgage Loans in a Mortgage Asset
Pool
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular Series may include Mortgage Loans that are past due or are
nonperforming. If so specified in the related Prospectus Supplement, the
servicing of such Mortgage Loans will be performed by the Special Servicer;
however, the same entity may act as both Master Servicer and Special Servicer.
Credit Support provided with respect to a particular Series 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 in the Trust
Fund may adversely affect the rate of defaults and prepayments in respect of the
subject Mortgage Asset Pool and the yield on the Offered Certificates of such
Series. See "Description of the Trust Funds--Mortgage Loans--General".
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Certain Federal Tax Considerations Regarding REMIC Residual Certificates
Holders of REMIC Residual Certificates will be required to report on their
federal income tax returns as ordinary income their pro rata share of the
taxable income of the related REMIC, regardless of the amount or timing of their
receipt of cash payments, as described under "Certain Federal Income Tax
Consequences--REMICs". Accordingly, under certain circumstances, holders of
Offered Certificates that constitute REMIC Residual Certificates may have
taxable income and tax liabilities arising from such investment during a taxable
year in excess of the cash received during such period. The requirement that
holders of REMIC Residual Certificates report their pro rata share of the
taxable income and net loss of the related REMIC will continue until the
Certificate Principal Balances of all Certificates of the related Series have
been reduced to zero, even though holders of REMIC Residual Certificates have
received full payment of their stated interest and principal. A portion (or, in
certain circumstances, all) of any such Certificateholder's share of the related
REMIC's taxable income (i) may be treated as "excess inclusion" income to such
holder, which generally will not be subject to offset by losses from other
activities, (ii) for a tax-exempt holder, will be treated as unrelated business
taxable income and (iii) for a foreign holder, will not qualify for exemption
from withholding tax. Individual holders of REMIC Residual Certificates may be
limited in their ability to deduct servicing fees and other expenses of the
related REMIC. In addition, REMIC Residual Certificates are subject to certain
restrictions on transfer. Because of the special tax treatment of REMIC Residual
Certificates, the taxable income arising in a given year on a REMIC Residual
Certificate will not be equal to the taxable income associated with investment
in a corporate bond or stripped instrument having similar cash flow
characteristics and pre-tax yield. In particular, REMIC Residual Certificates
may have "phantom income" associated with them. That is, taxable income may be
reportable with respect to a REMIC Residual Certificate early in the term of the
related REMIC with a corresponding amount of tax losses reportable in later
years of that REMIC's term. Under these circumstances, the present value of the
tax detriments with respect to the related REMIC Residual Certificate may
significantly exceed the present value of the related tax benefits accruing
later. Therefore, the after-tax yield on a REMIC Residual Certificate may be
significantly less than that of a corporate bond or stripped instrument having
similar cash flow characteristics, and certain REMIC Residual Certificates may
have a negative "value".
Book-Entry Registration
If so provided in the related Prospectus Supplement, one or more Classes of
the Offered Certificates of any Series will be issued as Book-Entry
Certificates. Each Class of Book-Entry Certificates will be initially
represented by one or more Certificates registered in the name of a nominee for
DTC. As a result, unless and until corresponding Definitive Certificates are
issued, the Certificate Owners with respect to any Class of Book-Entry
Certificates will be able to exercise the rights of Certificateholders only
indirectly through DTC and its participating organizations ("DTC Participants").
In addition, the access of Certificate Owners to information regarding the
Book-Entry Certificates in which they hold interests may be limited. Conveyance
of notices and other communications by DTC to DTC Participants, and directly and
indirectly through such DTC Participants to Certificate Owners, will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time. Furthermore, as described herein,
Certificate Owners may suffer delays in the receipt of payments on the
Book-Entry Certificates, and the ability of any Certificate Owner to pledge or
otherwise take actions with respect to its interest in the Book-Entry
Certificates may be limited due to the lack of physical certificate evidencing
such interest. See "Description of the Certificates--Book-Entry Registration and
Definitive Certificates".
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Potential Conflicts of Interest
If so specified in the related Prospectus Supplement, the Master Servicer
may also perform the duties of Special Servicer, and the Master Servicer, the
Special Servicer or the Trustee may also perform the duties of REMIC
Administrator and/or MBS Administrator, as applicable. If so specified in the
related Prospectus Supplement, an affiliate of the Depositor, or the Mortgage
Asset Seller or an affiliate thereof, may perform the functions of Master
Servicer, Special Servicer, REMIC Administrator and/or MBS Administrator, as
applicable. In addition, any party to a Pooling Agreement or any affiliate
thereof may own Certificates. Investors in the Offered Certificates should
consider that any resulting conflicts of interest could affect the performance
of duties under the related Pooling Agreement. For example, if the Master
Servicer or Special Servicer for any Trust Fund owns a significant portion of
any Class of Certificates of the related Series, then, notwithstanding the
applicable servicing standard imposed by the related Pooling Agreement, such
fact could influence servicing decisions in respect of the Mortgage Loans in
such Trust Fund. Also, if specified in the related Prospectus Supplement, the
holders of a specified Class or Classes of Subordinate Certificates may have the
ability to replace the Special Servicer or direct the Special Servicer's actions
in connection with liquidating or modifying defaulted Mortgage Loans. Investors
in such specified Class or Classes of Subordinate Certificates may have
interests when dealing with defaulted Mortgage Loans that are in conflict with
those of the holders of the Offered Certificates of the same Series.
Termination
If so provided in the related Prospectus Supplement, upon a specified date
or upon the reduction of the aggregate Certificate Principal Balance of a
specified Class or Classes of Certificates to a specified amount, a party
designated therein may be authorized or required to solicit bids for the
purchase of all the Mortgage Assets of the related Trust Fund, or of a
sufficient portion of such Mortgage Assets to retire such Class or Classes,
under the circumstances and in the manner set forth therein. The solicitation of
bids will be conducted in a commercially reasonable manner and, generally,
assets will be sold at their fair market value. In addition, if so specified in
the related Prospectus Supplement, upon the reduction of the aggregate principal
balance of some or all of the Mortgage Assets to a specified amount, a party or
parties designated therein may be authorized to purchase such Mortgage Assets,
generally at a price equal to, in the case of any Mortgage Asset, the unpaid
principal balance thereof plus accrued interest (or, in some cases, at fair
market value). However, circumstances may arise in which such fair market value
may be less than the unpaid balance of the related Mortgage Assets sold or
purchased, together with interest thereon, and therefore, as a result of such a
sale or purchase, the Certificateholders of one or more Classes of Certificates
may receive an amount less than the aggregate Certificate Principal Balance of,
and accrued unpaid interest on, their Certificates. See "Description of the
Certificates--Termination".
DESCRIPTION OF THE TRUST FUNDS
General
The primary assets of each Trust Fund will consist of (i) various types of
multifamily or commercial mortgage loans ("Mortgage Loans"), (ii) mortgage
participations, pass-through certificates, collateralized mortgage obligations
or other mortgage-backed securities ("MBS") that evidence interests in, or that
are secured by pledges of, one or more of various types of multifamily or
commercial mortgage loans or (iii) a combination of Mortgage Loans and MBS
(collectively, "Mortgage Assets"). Each Trust Fund will be established by the
Depositor. Each Mortgage Asset will be selected by the Depositor for inclusion
in a Trust
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Fund from among those purchased, either directly or indirectly, from a prior
holder thereof (a "Mortgage Asset Seller"), which prior holder may or may not be
the originator of such Mortgage Loan or the issuer of such MBS. The Mortgage
Assets will not be guaranteed or insured by the Depositor or any of its
affiliates or, unless otherwise provided in the related Prospectus Supplement,
by any governmental agency or instrumentality or by any other person. The
discussion below under the heading "--Mortgage Loans", unless otherwise noted,
applies equally to mortgage loans underlying any MBS included in a particular
Trust Fund.
Mortgage Loans
General. The Mortgage Loans will be evidenced by promissory notes (the
"Mortgage Notes") secured by mortgages, deeds of trust or similar security
instruments (the "Mortgages") that create first or junior liens on fee or
leasehold estates in properties (the "Mortgaged Properties") consisting of one
or more of the following types of real property: (i) residential properties
("Multifamily Properties") consisting of multiple rental or cooperatively-owned
dwelling units in high-rise, mid-rise or garden apartment buildings or other
residential structures, and mobile home parks; (ii) commercial properties
("Commercial Properties") consisting of office buildings, retail shopping
facilities (such as shopping centers, malls and individual stores), hotels or
motels, health care-related facilities (such as hospitals, skilled nursing
facilities, nursing homes, congregate care facilities and senior housing),
recreational vehicle parks, warehouse facilities, mini-warehouse facilities,
self-storage facilities, industrial facilities, parking lots and restaurants;
and (iii) mixed use properties (that is, any combination of the foregoing) and
unimproved land. The Multifamily Properties may include mixed commercial and
residential structures and apartment buildings owned by private cooperative
housing corporations ("Cooperatives"). Unless otherwise specified in the related
Prospectus Supplement, each Mortgage will create a first priority mortgage lien
on a fee estate in a Mortgaged Property. If a Mortgage creates a lien on a
borrower's leasehold estate in a property, then, unless otherwise specified in
the related Prospectus Supplement, the term of any such leasehold will exceed
the term of the Mortgage Note by at least ten years. Unless otherwise specified
in the related Prospectus Supplement, each Mortgage Loan will have been
originated by a person (the "Originator") other than the Depositor.
If so provided in the related Prospectus Supplement, Mortgage Assets for a
Series may include Mortgage Loans secured by junior liens, and the loans secured
by the related senior liens ("Senior Liens") may not be included in the Mortgage
Asset Pool. The primary risk to holders of Mortgage Loans secured by junior
liens is the possibility that adequate funds will not be received in connection
with a foreclosure of the related Senior Liens to satisfy fully both the Senior
Liens and the Mortgage Loan. In the event that a holder of a Senior Lien
forecloses on a Mortgaged Property, the proceeds of the foreclosure or similar
sale will be applied first to the payment of court costs and fees in connection
with the foreclosure, second to real estate taxes, third in satisfaction of all
principal, interest, prepayment or acceleration penalties, if any, and any other
sums due and owing to the holder of the Senior Liens. The claims of the holders
of the Senior Liens will be satisfied in full out of proceeds of the liquidation
of the related Mortgaged Property, if such proceeds are sufficient, before the
Trust Fund as holder of the junior lien receives any payments in respect of the
Mortgage Loan. If the Master Servicer were to foreclose on any Mortgage Loan, it
would do so subject to any related Senior Liens. In order for the debt related
to such Mortgage Loan to be paid in full at such sale, a bidder at the
foreclosure sale of such Mortgage Loan would have to bid an amount sufficient to
pay off all sums due under the Mortgage Loan and any Senior Liens or purchase
the Mortgaged Property subject to such Senior Liens. In the event that such
proceeds from a foreclosure or similar sale of the related Mortgaged Property
are insufficient to satisfy all Senior Liens and the Mortgage Loan in the
aggregate, the Trust Fund, as the holder of the junior lien, and, accordingly,
holders of one or more Classes of the Certificates of the related Series bear
(i) the risk of delay in distributions while a deficiency judgment against the
borrower is obtained and (ii) the risk of loss if the deficiency judgment is not
obtained and satisfied. Moreover, deficiency judgments may
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not be available in certain jurisdictions, or the particular Mortgage Loan may
be a nonrecourse loan, which means that, absent special facts, recourse in the
case of default will be limited to the Mortgaged Property and such other assets,
if any, that were pledged to secure repayment of the Mortgage Loan.
If so specified in the related Prospectus Supplement, the Mortgage Assets
for a particular Series may include Mortgage Loans that are delinquent or
nonperforming as of the date such Certificates are issued. In that case, the
related Prospectus Supplement will set forth, as to each such Mortgage Loan,
available information as to the period of such delinquency or nonperformance,
any forbearance arrangement then in effect, the condition of the related
Mortgaged Property and the ability of the Mortgaged Property to generate income
to service the mortgage debt.
Default and Loss Considerations with Respect to the Mortgage Loans.
Mortgage loans secured by liens on income-producing properties are substantially
different from loans made on the security of owner-occupied single-family homes.
The repayment of a loan secured by a lien on an income-producing property is
typically dependent upon the successful operation of such property (that is, its
ability to generate income). Moreover, as noted above, some or all of the
Mortgage Loans included in a particular Trust Fund may be nonrecourse loans.
Lenders typically look to the Debt Service Coverage Ratio of a loan secured
by income-producing property as an important factor in evaluating the likelihood
of default on such a loan. Unless otherwise defined in the related Prospectus
Supplement, the "Debt Service Coverage Ratio" of a Mortgage Loan at any given
time is the ratio of (i) the Net Operating Income derived from the related
Mortgaged Property for a twelve-month period to (ii) the annualized scheduled
payments of principal and/or interest on the Mortgage Loan and any other loans
senior thereto that are secured by the related Mortgaged Property. Unless
otherwise defined in the related Prospectus Supplement, "Net Operating Income"
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)
noncash items such as depreciation and amortization, (ii) capital expenditures
and (iii) debt service on the related Mortgage Loan or on any other loans that
are secured by such Mortgaged Property. The Net Operating Income of a Mortgaged
Property will generally fluctuate over time and may or may not be sufficient to
cover debt service on the related Mortgage Loan at any given time. As the
primary source of the operating revenues of a nonowner-occupied,
income-producing property, rental income (and, with respect to a Mortgage Loan
secured by a Cooperative apartment building, maintenance payments from
tenant-stockholders of a Cooperative) may be affected by the condition of the
applicable real estate market and/or area economy. In addition, properties
typically leased, occupied or used on a short-term basis, such as certain health
care-related facilities, hotels and motels, recreational vehicle parks, and
mini-warehouse and self-storage facilities, tend to be affected more rapidly by
changes in market or business conditions than do properties typically leased for
longer periods, such as warehouses, retail stores, office buildings and
industrial facilities. Commercial Properties may be owner-occupied or leased to
a small number of tenants. Thus, the Net Operating Income of such a Mortgaged
Property may depend substantially on the financial condition of the borrower or
a tenant, and Mortgage Loans secured by liens on such properties may pose a
greater likelihood of default and loss than loans secured by liens on
Multifamily Properties or on multi-tenant Commercial Properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or to changes in governmental rules, regulations and
fiscal policies, may also affect the likelihood of default on a 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
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the borrower/landlord, is responsible for payment of operating expenses ("Net
Leases"). However, the existence of such "net of expense" provisions will result
in stable Net Operating Income to the borrower/landlord only to the extent that
the lessee is able to absorb operating expense increases while continuing to
make rent payments.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a factor
in evaluating the likelihood of loss if a property must be liquidated following
a default. Unless otherwise defined in the related Prospectus Supplement, the
"Loan-to-Value Ratio" of a Mortgage Loan at any given time is the ratio
(expressed as a percentage) of (i) the then outstanding principal balance of the
Mortgage Loan and any other loans senior thereto that are secured by the related
Mortgaged Property to (ii) the Value of the related Mortgaged Property. Unless
otherwise specified in the related Prospectus Supplement, the"Value" of a
Mortgaged Property will be its fair market value as determined by an appraisal
of such property conducted by or on behalf of the Originator in connection with
the origination of such loan. The lower the Loan-to-Value Ratio, the greater the
percentage of the borrower's equity in a Mortgaged Property, and thus (a) the
greater the incentive of the borrower to perform under the terms of the related
Mortgage Loan (in order to protect such equity) and (b) the greater the cushion
provided to the lender against loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure of
the likelihood of liquidation loss in a pool of Mortgage Loans. For example, the
Value of a Mortgaged Property as of the date of initial issuance of the
Certificates of the related Series may be less than the Value determined at loan
origination, and will likely continue to fluctuate from time to time based upon
certain factors including changes in economic conditions and the real estate
market. Moreover, even when current, an appraisal is not necessarily a reliable
estimate of value. Appraised values of income-producing properties are generally
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 can present analytical difficulties. 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 and
discount rate. Where more than one of these appraisal methods are used and
provide significantly different results, an accurate determination of value and,
correspondingly, a reliable analysis of the likelihood of default and loss, is
even more difficult.
Although there may be multiple methods for determining the Value of a
Mortgaged Property, Value will in all cases be affected by property performance.
As a result, if a Mortgage Loan defaults because the income generated by the
related Mortgaged Property is insufficient to cover operating costs and expenses
and pay debt service, then the Value of the Mortgaged Property will reflect such
and a liquidation loss may occur.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there can be no
assurance that all of such factors will in fact have been prudently considered
by the Originators of the Mortgage Loans, or that, for a particular Mortgage
Loan, they are complete or relevant. See "Risk Factors--Certain Factors
Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans--General" and
"--Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage
Loans--Increased Risk of Default Associated With Balloon Payments".
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Payment Provisions of the Mortgage Loans. All of the Mortgage Loans will
(i) have had original terms to maturity of not more than approximately 40 years
and (ii) provide for scheduled payments of principal, interest or both, to be
made on specified dates ("Due Dates") that occur monthly, quarterly,
semi-annually or annually. A Mortgage Loan (i) may provide for no accrual of
interest or for accrual of interest thereon at a Mortgage Rate that is fixed
over its term or that adjusts from time to time, or that may be converted at the
borrower's election from an adjustable to a fixed Mortgage Rate, or from a fixed
to an adjustable Mortgage Rate, (ii) may provide for level payments to maturity
or for payments that adjust from time to time to accommodate changes in the
Mortgage Rate or to reflect the occurrence of certain events, and may permit
negative amortization, (iii) may be fully amortizing or may be partially
amortizing or nonamortizing, with a balloon payment due on its stated maturity
date, and (iv) may prohibit over its term or for a certain period prepayments
(the period of such prohibition, a "Lock-out Period" and its date of expiration,
a "Lock-out Date") and/or require payment of a premium or a yield maintenance
payment (a "Prepayment Premium") in connection with certain prepayments, in each
case as described in the related Prospectus Supplement. A Mortgage Loan may also
contain a provision that entitles the lender to a share of appreciation of the
related Mortgaged Property, or profits realized from the operation or
disposition of such Mortgaged Property or the benefit, if any, resulting from
the refinancing of the Mortgage Loan (any such provision, an "Equity
Participation"), as described in the related Prospectus Supplement.
Mortgage Loan Information in Prospectus Supplements. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans in
the related Trust Fund, which, to the extent then applicable, will generally
include the following: (i) the aggregate outstanding principal balance and the
largest, smallest and average outstanding principal balance of the Mortgage
Loans, (ii) the type or types of property that provide security for repayment of
the Mortgage Loans, (iii) the earliest and latest origination date and maturity
date of the Mortgage Loans, (iv) the original and remaining terms to maturity of
the Mortgage Loans, or the respective ranges thereof, and the weighted average
original and remaining terms to maturity of the Mortgage Loans, (v) the
Loan-to-Value Ratios of the Mortgage Loans (either at origination or as of a
more recent date), or the range thereof, and the weighted average of such
Loan-to-Value Ratios, (vi) the Mortgage Rates borne by the Mortgage Loans, or
the range thereof, and the weighted average Mortgage Rate borne by the Mortgage
Loans, (vii) with respect to Mortgage Loans with adjustable Mortgage Rates ("ARM
Loans"), the index or indices upon which such adjustments are based, the
adjustment dates, the range of gross margins and the weighted average gross
margin, and any limits on Mortgage Rate adjustments at the time of any
adjustment and over the life of the ARM Loan, (viii) information regarding the
payment characteristics of the Mortgage Loans, including, without limitation,
balloon payment and other amortization provisions, Lock-out Periods and
Prepayment Premiums, (ix) the Debt Service Coverage Ratios of the Mortgage Loans
(either at origination or as of a more recent date), or the range thereof, and
the weighted average of such Debt Service Coverage Ratios, and (x) the
geographic distribution of the Mortgaged Properties on a state-by-state basis.
In appropriate cases, the related Prospectus Supplement will also contain
certain information available to the Depositor that pertains to the provisions
of leases and the nature of tenants of the Mortgaged Properties. If the
Depositor is unable to provide the specific information described above at the
time Offered Certificates of a Series are initially offered, more general
information of the nature described above will be provided in the related
Prospectus Supplement, and specific information will be set forth in a report
which will be available to purchasers of those Certificates at or before the
initial issuance thereof and will be filed as part of a Current Report on Form
8-K with the Commission within fifteen days following such issuance.
If any Mortgage Loan, or group of related Mortgage Loans, constitutes a
concentration of credit risk, financial statements or other financial
information with respect to the related Mortgaged Property or Mortgaged
Properties will be included in the related Prospectus Supplement.
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If and to the extent available and relevant to an investment decision in
the Offered Certificates of the related Series, information regarding the
prepayment experience of a Master Servicer's multifamily and/or commercial
mortgage loan servicing portfolio will be included in the related Prospectus
Supplement. However, many servicers do not maintain records regarding such
matters or, at least, not in a format that can be readily aggregated. In
addition, the relevant characteristics of a Master Servicer's servicing
portfolio may be so materially different from those of the related Mortgage
Asset Pool that such prepayment experience would not be meaningful to an
investor. For example, differences in geographic dispersion, property type
and/or loan terms (e.g., mortgage rates, terms to maturity and/or prepayment
restrictions) between the two pools of loans could render the Master Servicer's
prepayment experience irrelevant. Because of the nature of the assets to be
serviced and administered by a Special Servicer, no comparable prepayment
information will be presented with respect to the Special Servicer's multifamily
and/or commercial mortgage loan servicing portfolio.
MBS
MBS may include (i) private-label (that is, not issued, insured or
guaranteed by the United States or any agency or instrumentality thereof)
mortgage participations, mortgage pass-through certificates, collateralized
mortgage obligations or other mortgage-backed securities or (ii) certificates
issued and/or insured or guaranteed by the Federal Home Loan Mortgage
Corporation ("FHLMC"; and such certificates issued and/or insured or guaranteed
thereby, "FHLMC Certificates"), the Federal National Mortgage Association
("FNMA"; and such certificates issued and/or insured or guaranteed thereby,
"FNMA Certificates"), the Governmental National Mortgage Association ("GNMA";
and such certificates issued and/or insured or guaranteed thereby, "GNMA
Certificates") or the Federal Agricultural Mortgage Corporation ("FAMC"; and
such certificates issued and/or insured or guaranteed thereby, "FAMC
Certificates"), provided that, unless otherwise specified in the related
Prospectus Supplement, each MBS will evidence an interest in, or will be secured
by a pledge of, mortgage loans that conform to the descriptions of the Mortgage
Loans contained herein.
Except in the case of a pro rata mortgage participation in a single
mortgage loan or a pool of mortgage loans, each MBS included in a Mortgage Asset
Pool: (a) either will (i) have been acquired (other than from the Depositor or
an affiliate thereof) in bona fide secondary market transactions or (ii) if so
specified in the related Prospectus Supplement, be part of the Depositor's (or
an affiliate's) unsold allotments from the Depositor's (or an affiliate's)
previous offerings; and (b) unless it was issued by the Depositor or a trust
established thereby, will either (i) have been previously registered under the
Securities Act, (ii) be exempt from such registration requirements or (iii) have
been held for at least the holding period specified in Rule 144(k) under the
Securities Act.
Any MBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, an indenture or similar agreement
(an "MBS Agreement"). The issuer of the MBS (the "MBS Issuer") and/or the
servicer of the underlying mortgage loans (the "MBS Servicer") will be parties
to the MBS Agreement, generally together with a trustee (the "MBS Trustee") or,
in the alternative, with the original purchaser or purchasers of the MBS.
The MBS may have been issued in one or more classes with characteristics
similar to the Classes of Certificates described herein. Distributions in
respect of the MBS will be made by the MBS Issuer, the MBS Servicer or the MBS
Trustee on the dates specified in the related Prospectus Supplement. The MBS
Issuer or the MBS Servicer or another person specified in the related Prospectus
Supplement may have the right or
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obligation to repurchase or substitute assets underlying the MBS after a certain
date or under other circumstances specified in the related Prospectus
Supplement.
Reserve funds, subordination or other credit support similar to that
described for the Certificates under "Description of Credit Support" may have
been provided with respect to the MBS. The type, characteristics and amount of
such credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any rating agency that may have
assigned a rating to the MBS, or by the initial purchasers of the MBS.
The Prospectus Supplement for a Series that evidence interests in MBS will
specify: (i) the aggregate approximate initial and outstanding principal
amount(s) and type of the MBS to be included in the Trust Fund, (ii) the
original and remaining term(s) to stated maturity of the MBS, if applicable,
(iii) the pass-through or bond rate(s) of the MBS or the formula for determining
such rate(s), (iv) the payment characteristics of the MBS, (v) the MBS Issuer,
MBS Servicer and MBS Trustee, as applicable, of each of the MBS, (vi) a
description of the related credit support, if any, (vii) the circumstances under
which the related underlying mortgage loans, or the MBS themselves, may be
purchased prior to their maturity, (viii) the terms on which mortgage loans may
be substituted for those originally underlying the MBS, (ix) the type of
mortgage loans underlying the MBS and, to the extent appropriate under the
circumstances, such other information in respect of the underlying mortgage
loans described under "--Mortgage Loans--Mortgage Loan Information in Prospectus
Supplements", and (x) the characteristics of any cash flow agreements that
relate to the MBS.
The Depositor will provide the same information regarding the MBS in any
Trust Fund in its reports filed under the Exchange Act with respect to such
Trust Fund as was provided by the related MBS Issuer in its own such reports if
such MBS was publicly offered or the reports the related MBS Issuer provides the
related MBS Trustee if such MBS was privately issued.
Undelivered Mortgage Assets
Unless otherwise specified in the related Prospectus Supplement, the aggregate
outstanding principal balance of a Mortgage Asset Pool as of the related Cut-off
Date will equal or exceed the aggregate Certificate Principal Balance of the
related Series as of the related Closing Date. In the event that Mortgage Assets
initially delivered do not have an aggregate outstanding principal balance as of
the related Cut-off Date at least equal to the aggregate Certificate Principal
Balance of the related Series as of the related Closing Date, the Depositor may
deposit cash or Permitted Investments on an interim basis with the Trustee for
such Series on the related Closing Date in lieu of delivering Mortgage Assets
(the "Undelivered Mortgage Assets") with an aggregate outstanding principal
balance as of the related Cut-off Date equal to the shortfall amount. During the
90-day period following the related Closing Date, the Depositor will be entitled
to obtain a release of such cash or Permitted Investments to the extent that the
Depositor delivers a corresponding amount of the Undelivered Mortgage Assets. If
and to the extent all the Undelivered Mortgage Assets are not delivered during
the 90-day period following the related Closing Date, such cash or, following
liquidation, such Permitted Investments will be applied to pay a corresponding
amount of principal of the Certificates of such Series to the extent set forth,
and on the dates specified, in the related Prospectus Supplement.
Certificate Accounts
Each Trust Fund will include one or more accounts (collectively, the
"Certificate Account") established and maintained on behalf of the
Certificateholders into which all payments and collections received or advanced
with respect to the Mortgage Assets and other assets in the Trust Fund will be
deposited to the
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extent described herein and in the related Prospectus Supplement. See
"Description of the Pooling Agreements-Certificate Account".
Credit Support
If so provided in the Prospectus Supplement for the Offered Certificates of
any Series, partial or full protection against certain defaults and losses on
the Mortgage Assets in the related Trust Fund may be provided to one or more
Classes of Certificates of such Series in the form of subordination of one or
more other Classes of Certificates of such Series or by one or more other types
of Credit Support, which may include a letter of credit, a surety bond, an
insurance policy, a guarantee, a reserve fund or any combination thereof. The
amount and types of such Credit Support, the identity of the entity providing it
(if applicable) and related information with respect to each type of Credit
Support, if any, will be set forth in the Prospectus Supplement for the Offered
Certificate of any Series. See "Risk Factors--Credit Support Limitations" and
"Description of Credit Support".
Cash Flow Agreements
If so provided in the Prospectus Supplement for the Offered Certificates of
any Series, the related Trust Fund may include guaranteed investment contracts
pursuant to which moneys held in the funds and accounts established for such
Series will be invested at a specified rate. The Trust Fund may also include
interest rate exchange agreements, interest rate cap or floor agreements, or
other agreements designed to reduce the effects of interest rate fluctuations on
the Mortgage Assets on one or more Classes of Certificates. The principal terms
of any such 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 related Prospectus
Supplement. The related Prospectus Supplement will also identify the obligor
under the Cash Flow Agreement.
YIELD AND MATURITY CONSIDERATIONS
General
The yield on any Offered Certificate will depend on the price paid by the
Certificateholder, the Pass-Through Rate of the Certificate and the amount and
timing of distributions on the Certificate. See "Risk Factors--Effect of
Prepayments on Average Life of Certificates". The following discussion
contemplates a Trust Fund that consists solely of Mortgage Loans. While the
characteristics and behavior of mortgage loans underlying an MBS can generally
be expected to have the same effect on the yield to maturity and/or weighted
average life of a Class of Certificates as will the characteristics and behavior
of comparable Mortgage Loans, the effect may differ due to the payment
characteristics of the MBS. If a Trust Fund includes MBS, the related Prospectus
Supplement will discuss the effect, if any, that the payment characteristics of
the MBS may have on the yield to maturity and weighted average lives of the
Offered Certificates of the related Series.
Pass-Through Rate
The Certificates of any Class within a Series may have a fixed, variable or
adjustable Pass-Through Rate, which may or may not be based upon the interest
rates borne by the Mortgage Loans in the related Trust Fund. The Prospectus
Supplement with respect to the Offered Certificates of any Series will specify
the Pass-Through Rate for each Class of such Offered Certificates or, in the
case of a Class of Offered Certificates with a variable or adjustable
Pass-Through Rate, the method of determining the Pass-Through Rate; the effect,
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if any, of the prepayment of any Mortgage Loan on the Pass-Through Rate of one
or more Classes of such Offered Certificates; and whether the distributions of
interest on any Class of such Offered Certificates will be dependent, in whole
or in part, on the performance of any obligor under a Cash Flow Agreement.
Payment Delays
With respect to any Series, a period of time will elapse between the date
upon which payments on the Mortgage Loans in the related Trust Fund are due and
the Distribution Date on which such payments are passed through to
Certificateholders. That delay will effectively reduce the yield that would
otherwise be produced if payments on such Mortgage Loans were distributed to
Certificateholders on the date they were due.
Certain Shortfalls in Collections of Interest
When a principal prepayment in full or in part is made on a Mortgage Loan,
the borrower is generally charged interest on the amount of such prepayment only
through the date of such prepayment, instead of through the Due Date for the
next succeeding scheduled payment. However, interest accrued on the Offered
Certificates of any Series and distributable thereon on any Distribution Date
will generally correspond to interest accrued on the Mortgage Loans to their
respective Due Dates during the related Due Period. A "Due Period" will be a
specified time period (generally corresponding in length to the period between
Distribution Dates) and all scheduled payments on the Mortgage Loans in the
related Trust Fund that are due during a given Due Period will, to the extent
received by a specified date (the "Determination Date") or otherwise advanced by
the related Master Servicer, Special Servicer or other specified person, be
distributed to the holders of the Certificates of such Series on the next
succeeding Distribution Date. Consequently, if a prepayment on any Mortgage Loan
is distributable to Certificateholders on a particular Distribution Date, but
such prepayment is not accompanied by interest thereon to the Due Date for such
Mortgage Loan in the related Due Period, then the interest charged to the
borrower (net of servicing and administrative fees) may be less (such shortfall,
a "Prepayment Interest Shortfall") than the corresponding amount of interest
accrued and otherwise payable on the Certificates of the related Series. If and
to the extent that any such shortfall is allocated to a Class of Offered
Certificates, the yield thereon will be adversely affected. The Prospectus
Supplement for the Offered Certificates of each Series will describe the manner
in which any such shortfalls will be allocated among the respective Classes of
Certificates of such Series. The related Prospectus Supplement will also
describe any amounts available to offset such shortfalls.
Yield and Prepayment Considerations
A Certificate's yield to maturity will be affected by the rate of principal
payments on the Mortgage Loans in the related Trust Fund and the allocation
thereof to reduce the Certificate Principal Balance (or the Certificate Notional
Amount, if applicable) of such Certificate. The rate of principal payments on
the Mortgage Loans in any Trust Fund will in turn be affected by the
amortization schedules thereof (which, in the case of ARM Loans, may change
periodically to accommodate adjustments to the Mortgage Rates thereon), the
dates on which any balloon payments are due, and the rate of principal
prepayments thereon (including for this purpose, voluntary prepayments by
borrowers and also prepayments resulting from liquidations of Mortgage Loans due
to defaults, casualties or condemnations affecting the related Mortgaged
Properties, or purchases of Mortgage Loans out of the related Trust Fund).
Because the rate of principal prepayments on the Mortgage Loans in any Trust
Fund will depend on future events and a variety of factors (as described below),
no assurance can be given as to such rate.
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The extent to which the yield to maturity of a Class of Offered
Certificates of any Series may vary from the anticipated yield will depend upon
the degree to which they are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans in the related Trust
Fund are in turn distributed on such Certificates (or, in the case of a Class of
Stripped Interest Certificates, result in the reduction of the aggregate
Certificate Notional Amount thereof). An investor should consider, in the case
of any Offered Certificate purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Mortgage Loans in the related
Trust Fund could result in an actual yield to such investor that is lower than
the anticipated yield and, in the case of any Offered Certificate purchased at a
premium, the risk that a faster than anticipated rate of principal payments on
such Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield. In addition, if an investor purchases an
Offered Certificate at a discount (or premium), and principal payments are made
in reduction of the Certificate Principal Balance or Certificate Notional Amount
of such investor's Offered Certificate at a rate slower (or faster) than the
rate anticipated by the investor during any particular period, any consequent
adverse effects on such investor's yield would not be fully offset by a
subsequent like increase (or decrease) in the rate of principal payments.
In general, the aggregate Certificate Notional Amount of a Class of
Stripped Interest Certificates will either (i) be based on the principal
balances of some or all of the Mortgage Assets in the related Trust Fund or (ii)
equal the aggregate Certificate Principal Balance of one or more of the other
Classes of Certificates of the same Series. Accordingly, the yield on such
Stripped Interest Certificates will be inversely related to the rate at which
payments and other collections of principal are received on such Mortgage Assets
or distributions are made in reduction of the aggregate Certificate Principal
Balance of such Class or Classes of Certificates, as the case may be.
Consistent with the foregoing, if a Class of Certificates of any Series
consists of Stripped Interest Certificates or Stripped Principal Certificates, a
lower than anticipated rate of principal prepayments on the Mortgage Loans in
the related Trust Fund will negatively affect the yield to investors in Stripped
Principal Certificates, and a higher than anticipated rate of principal
prepayments on such Mortgage Loans will negatively affect the yield to investors
in Stripped Interest Certificates. If the Offered Certificates of a Series
include any such Certificates, the related Prospectus Supplement will include a
table showing the effect of various constant assumed levels of prepayment on
yields on such Certificates. Such tables will be intended to illustrate the
sensitivity of yields to various constant assumed prepayment rates and will not
be intended to predict, or to provide information that will enable investors to
predict, yields or prepayment rates.
The extent of prepayments of principal of the Mortgage Loans in any Trust
Fund may be affected by a number of factors, including, without limitation, the
availability of mortgage credit, the relative economic vitality of the area in
which the Mortgaged Properties are located, the quality of management of the
Mortgaged Properties, the servicing of the Mortgage Loans, possible changes in
tax laws and other opportunities for investment. In general, those factors which
increase the attractiveness of selling a Mortgaged Property or refinancing a
Mortgage Loan or which enhance a borrower's ability to do so, as well as those
factors which increase the likelihood of default under a Mortgage Loan, would be
expected to cause the rate of prepayment in respect of any Mortgage Asset Pool
to accelerate. In contrast, those factors having an opposite effect would be
expected to cause the rate of prepayment of any Mortgage Asset Pool to slow.
The rate of principal payments on the Mortgage Loans in any Trust Fund may
also be affected by the existence of Lock-out Periods and requirements that
principal prepayments be accompanied by Prepayment Premiums, and by the extent
to which such provisions may be practicably enforced. To the extent enforceable,
such provisions could constitute either an absolute prohibition (in the case of
a Lock-out Period) or a
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disincentive (in the case of a Prepayment Premium) to a borrower's voluntarily
prepaying its Mortgage Loan, thereby slowing the rate of prepayments.
The rate of prepayment on a pool of mortgage loans 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 coupon, a borrower may have an increased incentive to refinance its
mortgage loan. Even in the case of ARM Loans, as prevailing market interest
rates decline, and without regard to whether the Mortgage Rates on such ARM
Loans decline in a manner consistent therewith, the related borrowers may have
an increased incentive to refinance for purposes of either (i) converting to a
fixed rate loan and thereby "locking in" such rate or (ii) taking advantage of a
different index, margin or rate cap or floor on another adjustable rate mortgage
loan. Therefore, as prevailing market interest rates decline, prepayment speeds
would be expected to accelerate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers 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. The Depositor
makes no representation as to the particular factors that will affect the
prepayment of the Mortgage Loans in any Trust Fund, as to the relative
importance of such factors, as to the percentage of the principal balance of
such Mortgage Loans that will be paid as of any date or as to the overall rate
of prepayment on such Mortgage Loans.
Weighted Average Life and Maturity
The rate at which principal payments are received on the Mortgage Loans in
any Trust Fund will affect the ultimate maturity and the weighted average life
of one or more Classes of the Certificates of the related Series. Unless
otherwise specified in the related Prospectus Supplement, weighted average life
refers to the average amount of time that will elapse from the date of issuance
of an instrument until each dollar allocable as principal of such instrument is
repaid to the investor.
The weighted average life and maturity of a Class of Certificates of any
Series will be influenced by the rate at which principal on the related Mortgage
Loans, whether in the form of scheduled amortization or prepayments (for this
purpose, the term "prepayment" includes voluntary prepayments by borrowers and
also prepayments resulting from liquidations of Mortgage Loans due to default,
casualties or condemnations affecting the related Mortgaged Properties and
purchases of Mortgage Loans out of the related Trust Fund), is paid to such
Class. Prepayment rates on loans are commonly measured relative to a prepayment
standard or model, such as the Constant Prepayment Rate ("CPR") prepayment model
or the Standard Prepayment Assumption ("SPA") prepayment model. CPR represents
an assumed constant rate of prepayment each month (expressed as an annual
percentage) relative to the then outstanding principal balance of a pool of
mortgage loans for the life of such loans. SPA represents an assumed variable
rate of prepayment each month (expressed as an annual percentage) relative to
the then outstanding principal balance of a pool of mortgage loans, with
different prepayment assumptions often expressed as percentages of SPA. For
example, a prepayment assumption of 100% of SPA assumes prepayment rates of 0.2%
per annum of the then outstanding principal balance of such loans in the first
month of the life of the loans and an additional 0.2% per annum in each month
thereafter until the thirtieth month. Beginning in the thirtieth month, and in
each month thereafter during the life of the loans, 100% of SPA assumes a
constant prepayment rate of 6% per annum each month.
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Neither CPR nor SPA 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 particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical prepayment
experience for single-family mortgage loans. Thus, it is unlikely that the
prepayment experience of the Mortgage Loans included in any Trust Fund will
conform to any particular level of CPR or SPA.
The Prospectus Supplement with respect to the Offered Certificates of any
Series will contain tables, if applicable, setting forth the projected weighted
average life of each Class of Offered Certificates of such Series with an
aggregate Certificate Principal Balance, and the percentage of the initial
aggregate Certificate Principal Balance of each such Class that would be
outstanding on specified Distribution Dates, based on the assumptions stated in
such Prospectus Supplement, including assumptions that prepayments on the
related Mortgage Loans are made at rates corresponding to various percentages of
CPR or SPA, or at such other rates specified in such Prospectus Supplement. Such
tables and assumptions will illustrate the sensitivity of the weighted average
lives of the Certificates to various assumed prepayment rates and will not be
intended to predict, or to provide information that will enable investors to
predict, the actual weighted average lives of the Certificates.
Other Factors Affecting Yield, Weighted Average Life and Maturity
Balloon Payments; Extensions of Maturity. Some or all of the Mortgage Loans
included in a particular Trust Fund may require that balloon payments be made at
maturity. 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, there is a possibility that Mortgage Loans that require
balloon payments may default at maturity, or that the maturity of such a
Mortgage Loan may be extended in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things, bankruptcy
of the borrower or adverse conditions in the market where the property is
located. In order to minimize losses on defaulted Mortgage Loans, the Master
Servicer or the Special Servicer, to the extent and under the circumstances set
forth herein and in the related Prospectus Supplement, may be authorized 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 may delay distributions of principal on a Class of
Offered Certificates and thereby extend the weighted average life of such
Certificates and, if such Certificates were purchased at a discount, reduce the
yield thereon.
Negative Amortization. The weighted average life of a Class of Certificates
can be affected by Mortgage Loans that permit negative amortization to occur
(that is, Mortgage Loans that provide for the current payment of interest
calculated at a rate lower than the rate at which interest accrues thereon, with
the unpaid portion of such interest being added to the related principal
balance). Negative amortization on one or more Mortgage Loans in any Trust Fund
may result in negative amortization on the Offered Certificates of the related
Series. The related Prospectus Supplement will describe, if applicable, the
manner in which negative amortization in respect of the Mortgage Loans in any
Trust Fund is allocated among the respective Classes of Certificates of the
related Series. The portion of any Mortgage Loan negative amortization allocated
to a Class of Certificates may result in a deferral of some or all of the
interest payable thereon, which deferred interest may be added to the aggregate
Certificate Principal Balance thereof. In addition, an ARM Loan that permits
negative amortization would be expected during a period of increasing interest
rates to amortize at a slower rate (and perhaps not at all) than if interest
rates were declining or were remaining constant. Such slower rate of Mortgage
Loan amortization would correspondingly be reflected in a slower rate of
amortization for one or more Classes of Certificates of the related Series.
Accordingly, the weighted average lives of Mortgage Loans that permit negative
amortization (and that of the Classes of Certificates to
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which any such negative amortization would be allocated or that would bear the
effects of a slower rate of amortization on such Mortgage Loans) may increase as
a result of such feature.
Negative amortization may occur in respect of an ARM Loan that (i) limits
the amount by which its scheduled payment may adjust in response to a change in
its Mortgage Rate, (ii) provides that its scheduled payment will adjust less
frequently than its Mortgage Rate or (iii) provides for constant scheduled
payments notwithstanding adjustments to its Mortgage Rate. Accordingly, during a
period of declining interest rates, the scheduled payment on such a Mortgage
Loan may exceed the amount necessary to amortize the loan fully over its
remaining amortization schedule and pay interest at the then applicable Mortgage
Rate, thereby resulting in the accelerated amortization of such Mortgage Loan.
Any such acceleration in amortization of its principal balance will shorten the
weighted average life of such Mortgage Loan and, correspondingly, the weighted
average lives of those Classes of Certificates entitled to a portion of the
principal payments on such Mortgage Loan.
The extent to which the yield on any Offered Certificate will be affected
by the inclusion in the related Trust Fund of Mortgage Loans that permit
negative amortization, will depend upon (i) whether such Offered Certificate was
purchased at a premium or a discount and (ii) the extent to which the payment
characteristics of such Mortgage Loans delay or accelerate the distributions of
principal on such Certificate (or, in the case of a Stripped Interest
Certificate, delay or accelerate the reduction of the Certificate Notional
Amount thereof). See "--Yield and Prepayment Considerations" above.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans 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 lives of those Mortgage Loans and,
accordingly, the weighted average lives of and yields on the Certificates of the
related Series. 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 or otherwise, may also
have an effect upon the payment patterns of particular Mortgage Loans and thus
the weighted average lives of and yields on the Certificates of the related
Series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders of the
Offered Certificates of any Series will directly depend on the extent to which
such holders are required to bear the effects of any losses or shortfalls in
collections arising out of defaults on the Mortgage Loans in the related Trust
Fund and the timing of such losses and shortfalls. In general, the earlier that
any such loss or shortfall occurs, the greater will be the negative effect on
yield for any Class of Certificates that is required to bear the effects
thereof.
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective Classes of Certificates of the related Series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by (i) a reduction in the entitlements to interest and/or the
aggregate Certificate Principal Balances of one or more such Classes of
Certificates and/or (ii) establishing a priority of payments among such Classes
of Certificates.
The yield to maturity on a Class of Subordinate Certificates may be
extremely sensitive to losses and shortfalls in collections on the Mortgage
Loans in the related Trust Fund.
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Additional Certificate Amortization. In addition to entitling the holders
thereof to a specified portion (which may during specified periods range from
none to all) of the principal payments received on the Mortgage Assets in the
related Trust Fund, one or more Classes of Certificates of any Series, including
one or more Classes of Offered Certificates of such Series, may provide for
distributions of principal thereof from (i) amounts attributable to interest
accrued but not currently distributable on one or more Classes of Accrual
Certificates, (ii) Excess Funds or (iii) any other amounts described in the
related Prospectus Supplement. Unless otherwise specified in the related
Prospectus Supplement, "Excess Funds" will, in general, represent that portion
of the amounts distributable in respect of the Certificates of any Series on any
Distribution Date that represent (i) interest received or advanced on the
Mortgage Assets in the related Trust Fund that is in excess of the interest
currently accrued on the Certificates of such Series, or (ii) Prepayment
Premiums, payments from Equity Participations or any other amounts received on
the Mortgage Assets in the related Trust Fund that do not constitute interest
thereon or principal thereof.
The amortization of any Class of Certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of such
Certificates and, if such Certificates were purchased at a premium, reduce the
yield thereon. The related Prospectus Supplement will discuss the relevant
factors to be considered in determining whether distributions of principal of
any Class of Certificates out of such sources is likely to have any material
effect on the rate at which such Certificates are amortized and the consequent
yield with respect thereto.
THE DEPOSITOR
The Depositor was incorporated in the State of Delaware on July 10, 1997 and is
a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette Inc., a Delaware
corporation. The Depositor was organized, among other things, for the purposes
of issuing debt securities and establishing trusts, selling beneficial interests
therein and acquiring and selling mortgage assets to such trusts. The principal
executive offices of the Depositor are located at 277 Park Avenue, New York, New
York 10172. Its telephone number is (212) 892-3000. The Depositor does not have
and is not expected to have any significant assets.
DESCRIPTION OF THE CERTIFICATES
General
Each Series will represent the entire beneficial ownership interest in the
Trust Fund created pursuant to the related Pooling Agreement. As described in
the related Prospectus Supplement, the Certificates of each Series, including
the Offered Certificates of such Series, may consist of one or more Classes of
Certificates that, among other things: (i) provide for the accrual of interest
on the aggregate Certificate Principal Balance or Certificate Notional Amount
thereof at a fixed, variable or adjustable rate; (ii) constitute Senior
Certificates or Subordinate Certificates; (iii) constitute Stripped Interest
Certificates or Stripped Principal Certificates; (iv) provide for distributions
of interest thereon or principal thereof that commence only after the occurrence
of certain events, such as the retirement of one or more other Classes of
Certificates of such Series; (v) provide for distributions of principal thereof
to be made, from time to time or for designated periods, at a rate that is
faster (and, in some cases, substantially faster) or slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund; (vi)
provide for distributions of principal thereof to be made, subject to available
funds, based on a specified principal payment schedule or other methodology; or
(vii) provide for distributions based on
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collections on the Mortgage Assets in the related Trust Fund attributable to
Prepayment Premiums and Equity Participations.
If so specified in the related Prospectus Supplement, a Class of Offered
Certificates may have two or more component parts, each having characteristics
that are otherwise described herein as being attributable to separate and
distinct Classes. For example, a Class of Offered Certificates may have an
aggregate Certificate Principal Balance on which it accrues interest at a fixed,
variable or adjustable rate. Such Class of Offered Certificates may also have
certain characteristics attributable to Stripped Interest Certificates insofar
as it may also entitle the holders thereof to distributions of interest accrued
on an aggregate Certificate Notional Amount at a different fixed, variable or
adjustable rate. In addition, a Class of Certificates may accrue interest on one
portion of its aggregate Certificate Principal Balance or Certificate Notional
Amount at one fixed, variable or adjustable rate and on another portion of its
aggregate Certificate Principal Balance or Certificate Notional Amount at a
different fixed, variable or adjustable rate.
Each Class of Offered Certificates of a Series will be issued in minimum
denominations corresponding to the Certificate Principal Balances or, in case of
certain Classes of Stripped Interest Certificates or REMIC Residual
Certificates, Certificate Notional Amounts or percentage interests, specified in
the related Prospectus Supplement. As provided in the related Prospectus
Supplement, one or more Classes of Offered Certificates of any Series may be
issued in fully registered, definitive form (such Certificates, "Definitive
Certificates") or may be offered in book-entry format (such Certificates,
"Book-Entry Certificates") through the facilities of DTC. The Offered
Certificates of each Series (if issued as Definitive Certificates) may be
transferred or exchanged, subject to any restrictions on transfer described in
the related Prospectus Supplement, at the location specified in the related
Prospectus Supplement, without the payment of any service charges, other than
any tax or other governmental charge payable in connection therewith. Interests
in a Class of Book-Entry Certificates will be transferred on the book-entry
records of DTC and its participating organizations. If so specified in the
related Prospectus Supplement, arrangements may be made for clearance and
settlement through CEDEL, S.A. or the Euroclear System, if they are participants
in DTC.
Distributions
Distributions on the Certificates of each Series will be made on each
Distribution Date from the Available Distribution Amount for such Series and
such Distribution Date. Unless otherwise provided in the related Prospectus
Supplement, the "Available Distribution Amount" for any Series and any
Distribution Date will refer to the total of all payments or other collections
(or advances in lieu thereof) on, under or in respect of the Mortgage Assets and
any other assets included in the related Trust Fund that are available for
distribution to the holders of Certificates of such Series on such date. The
particular components of the Available Distribution Amount for any Series and
Distribution Date will be more specifically described in the related Prospectus
Supplement. In general, the Distribution Date for a Series will be the 25th day
of each month (or, if any such 25th day is not a business day, the next
succeeding business day), commencing in the month immediately following the
month in which such Series is issued.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each Series (other than the final
distribution in retirement of any such Certificate) will be made to the persons
in whose names such Certificates are registered at the close of business on the
last business day of the month preceding the month in which the applicable
Distribution Date occurs (the "Record Date"), and the amount of each
distribution will be determined as of the close of business on the date (the
"Determination Date") specified in the related Prospectus Supplement. All
distributions with respect to each Class of Certificates on each Distribution
Date will be allocated pro rata among the outstanding Certificates in such
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Class in proportion to the respective Percentage Interests evidenced thereby
unless otherwise specified in the related Prospectus Supplement. Payments will
be made either by wire transfer in immediately available funds to the account of
a Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has provided the person required to make
such payments with wiring instructions no later than the related Record Date or
such other date specified in the related Prospectus Supplement (and, if so
provided in the related Prospectus Supplement, such Certificateholder holds
Certificates in the requisite amount or denomination specified therein), or by
check mailed to the address of such Certificateholder as it appears on the
Certificate Register; provided, however, that the final distribution in
retirement of any Class of Certificates (whether Definitive Certificates or
Book-Entry Certificates) will be made only upon presentation and surrender of
such Certificates at the location specified in the notice to Certificateholders
of such final distribution. The undivided percentage interest (the "Percentage
Interest") in any particular Class of Offered Certificates represented by any
Certificate of such Class will be equal to the percentage obtained by dividing
the initial Certificate Principal Balance or Certificate Notional Amount, as
applicable, of such Certificate by the initial aggregate Certificate Principal
Balance or Certificate Notional Amount, as the case may be, of such Class.
Distributions of Interest on the Certificates
Each Class of Certificates of each Series (other than certain Classes of
Stripped Principal Certificates and certain Classes of REMIC Residual
Certificates that have no Pass-Through Rate) may have a different Pass-Through
Rate, which in each case may be fixed, variable or adjustable. The related
Prospectus Supplement will specify the Pass-Through Rate or, in the case of a
variable or adjustable Pass-Through Rate, the method for determining the
Pass-Through Rate, for each Class of Offered Certificates. Unless otherwise
specified in the related Prospectus Supplement, interest on the Certificates of
each Series will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.
Distributions of interest in respect of any Class of Certificates (other
than a Class of Accrual Certificates, which will be entitled to distributions of
accrued interest commencing only on the Distribution Date, or under the
circumstances, specified in the related Prospectus Supplement, and other than
any Class of Stripped Principal Certificates or REMIC Residual Certificates that
is not entitled to any distributions of interest) will be made on each
Distribution Date based on the Accrued Certificate Interest for such Class and
such Distribution Date, subject to the sufficiency of that portion, if any, of
the Available Distribution Amount allocable to such Class on such Distribution
Date. Prior to the time interest is distributable on any Class of Accrual
Certificates, the amount of Accrued Certificate Interest otherwise distributable
on such Class will be added to the aggregate Certificate Principal Balance
thereof on each Distribution Date or otherwise deferred as described in the
related Prospectus Supplement. With respect to each Class of Certificates (other
than certain Classes of Stripped Interest Certificates and certain Classes of
REMIC Residual Certificates), the "Accrued Certificate Interest" for each
Distribution Date will be equal to interest at the applicable Pass-Through Rate
accrued for a specified period (generally the most recently ended calendar
month) on the aggregate Certificate Principal Balance of such Class of
Certificates outstanding immediately prior to such Distribution Date. Unless
otherwise provided in the related Prospectus Supplement, the Accrued Certificate
Interest for each Distribution Date with respect to a Class of Stripped Interest
Certificates will be similarly calculated except that it will accrue on an
aggregate Certificate Notional Amount that, in general, will either be (i) based
on the principal balances of some or all of the Mortgage Assets in the related
Trust Fund or (ii) equal to the aggregate Certificate Principal Balances of one
or more other Classes of Certificates of the same Series. Reference to a
Certificate Notional Amount with respect to a Stripped Interest Certificate is
solely for convenience in making certain calculations and does not represent the
right to receive any distributions of principal. If so specified in the related
Prospectus Supplement, the amount of Accrued Certificate Interest that
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is otherwise distributable on (or, in the case of Accrual Certificates, that
that may otherwise be added to the aggregate Certificate Principal Balance of)
one or more Classes of the Certificates of a Series may be reduced to the extent
that any Prepayment Interest Shortfalls, as described under "Yield and Maturity
Considerations--Certain Shortfalls in Collections of Interest", exceed the
amount of any sums that are applied to offset the amount of such shortfalls. The
particular manner in which such shortfalls will be allocated among some or all
of the Classes of Certificates 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 Certificate Interest that is otherwise
distributable on (or, in the case of Accrual Certificates, that may otherwise be
added to the aggregate Certificate Principal Balance of) a Class of Offered
Certificates may be reduced as a result of any other contingencies, including
delinquencies, losses and deferred interest on or in respect of the Mortgage
Assets in the related Trust Fund. Unless otherwise provided in the related
Prospectus Supplement, any reduction in the amount of Accrued Certificate
Interest otherwise distributable on a Class of Certificates by reason of the
allocation to such Class of a portion of any deferred interest on or in respect
of the Mortgage Assets in the related Trust Fund will result in a corresponding
increase in the aggregate Certificate Principal Balance of such Class. See "Risk
Factors--Effect of Prepayments on Average Life of Certificates" and "--Effect of
Prepayments on Yield of Certificates" and "Yield and Maturity
Considerations-Certain Shortfalls in Collections of Interest".
Distributions of Principal of the Certificates
Each Class of Certificates of each Series (other than certain Classes of
Stripped Interest Certificates and certain Classes of REMIC Residual
Certificates) will have an aggregate Certificate Principal Balance, which, at
any time, will equal the then maximum amount that the holders of Certificates of
such Class will be entitled to receive as principal out of the future cash flow
on the Mortgage Assets and other assets included in the related Trust Fund. The
aggregate outstanding Certificate Principal Balance of a Class of Certificates
will be reduced by distributions of principal made thereon from time to time
and, if and to the extent so provided in the related Prospectus Supplement,
further by any losses incurred in respect of the related Mortgage Assets
allocated thereto from time to time. In turn, the outstanding aggregate
Certificate Principal Balance of a Class of Certificates may be increased as a
result of any deferred interest on or in respect of the related Mortgage Assets
being allocated thereto from time to time, and will be increased, in the case of
a Class of Accrual Certificates prior to the Distribution Date on which
distributions of interest thereon are required to commence, by the amount of any
Accrued Certificate Interest in respect thereof (reduced as described above).
Unless otherwise specified in the related Prospectus Supplement, the initial
aggregate Certificate Principal Balance of all Classes of a Series will not be
greater than the aggregate outstanding principal balance of the related Mortgage
Assets as of the related Cut-off Date. The initial aggregate Certificate
Principal Balance of each Class of Offered Certificates will be specified in the
related Prospectus Supplement. As and to the extent described in the related
Prospectus Supplement, distributions of principal with respect to a Series will
be made on each Distribution Date to the holders of the Class or Classes of
Certificates of such Series entitled thereto until the Certificate Principal
Balances of such Certificates have been reduced to zero. Distributions of
principal with respect to one or more Classes of Certificates may be made at a
rate that is faster (and, in some cases, substantially faster) than the rate at
which payments or other collections of principal are received on the Mortgage
Assets in the related Trust Fund. Distributions of principal with respect to one
or more Classes of Certificates may not commence until the occurrence of certain
events, such as the retirement of one or more other Classes of Certificates of
the same Series, or may be made at a rate that is slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund.
Distributions of principal with respect to one or more Classes of Certificates
(each such Class, a "Controlled Amortization Class") may be made, subject to
available funds, based on a specified principal payment schedule. Distributions
of principal with
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respect to one or more other Classes of Certificates (each such Class, a
"Companion Class") may be contingent on the specified principal payment schedule
for a Controlled Amortization Class of the same Series and the rate at which
payments and other collections of principal on the Mortgage Assets in the
related Trust Fund are received. Unless otherwise specified in the related
Prospectus Supplement, distributions of principal of any Class of Offered
Certificates will be made on a pro rata basis among all of the Certificates of
such Class.
Distributions on the Certificates in Respect 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 received on or in connection with
the Mortgage Assets in any Trust Fund will be distributed on each Distribution
Date to the holders of the Class of Certificates of the related Series entitled
thereto in accordance with the provisions described in such Prospectus
Supplement. Alternatively, such items may be retained by the Depositor or any of
its affiliates or by any other specified person and/or may be excluded as Trust
Assets.
Allocation of Losses and Shortfalls
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective Classes of Certificates of the related Series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by (i) a reduction in the entitlements to interest and/or the
aggregate Certificate Principal Balances of one or more such Classes of
Certificates and/or (ii) establishing a priority of payments among such Classes
of Certificates. See "Description of Credit Support".
Advances in Respect of Delinquencies
If and to the extent provided in the related Prospectus Supplement, if a
Trust Fund includes Mortgage Loans, the Master Servicer, the Special Servicer,
the Trustee, any provider of Credit Support and/or any other specified person
may be obligated to advance, or have the option of advancing, on or before each
Distribution Date, from its or their own funds or from excess funds held in the
related Certificate Account that are not part of the Available Distribution
Amount for the related Series for such Distribution Date, an amount up to the
aggregate of any payments of principal (other than the principal portion of any
balloon payments) and interest that were due on or in respect of such Mortgage
Loans during the related Due Period and were delinquent on the related
Determination Date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the Class or Classes of Certificates entitled
thereto, rather than to guarantee or insure against losses. Accordingly, all
advances made out of a specific entity's own funds will be reimbursable out of
related recoveries on the Mortgage Loans (including amounts drawn under any fund
or instrument constituting Credit Support) with respect to which such advances
were made (as to any Mortgage Loan, "Related Proceeds") and such other specific
sources as may be identified in the related Prospectus Supplement, including, in
the case of a Series that includes one or more Classes of Subordinate
Certificates, if so identified, collections on other Mortgage Assets in the
related Trust Fund that would otherwise be distributable to the holders of one
or more Classes of such Subordinate Certificates. No advance will be required to
be made by a Master Servicer, Special Servicer or Trustee if, in the judgment of
the Master Servicer, Special Servicer or Trustee, as the case
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may be, such advance would not be recoverable from Related Proceeds or another
specifically identified source (any such advance, a "Nonrecoverable Advance");
and, if previously made by a Master Servicer, Special Servicer or Trustee, a
Nonrecoverable Advance will be reimbursable thereto from any amounts in the
related Certificate Account prior to any distributions being made to the related
Series of Certificateholders.
If advances have been made by a Master Servicer, Special Servicer, Trustee
or other entity from excess funds in a Certificate Account, such Master
Servicer, Special Servicer, Trustee or other entity, as the case may be, will be
required to replace such funds in such Certificate Account on or prior to any
future Distribution Date to the extent that funds in such Certificate Account on
such Distribution Date are less than payments required to be made to the related
Series of Certificateholders on such date. If so specified in the related
Prospectus Supplement, the obligation of a Master Servicer, Special Servicer,
Trustee or other entity to make advances may be secured by a cash advance
reserve fund or a surety bond. 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, any
entity making advances will be entitled to receive interest on certain or all of
such advances for a specified period during which such advances are outstanding
at the rate specified in such Prospectus Supplement, and such entity will be
entitled to payment of such interest periodically from general collections on
the Mortgage Loans in the related Trust Fund prior to any payment to the related
Series of Certificateholders or as otherwise provided in the related Pooling
Agreement and described in such Prospectus Supplement.
The Prospectus Supplement for the Offered Certificates of any Series
evidencing an interest in a Trust Fund that includes MBS will describe any
comparable advancing obligation of a party to the related Pooling Agreement or
of a party to the related MBS Agreement.
Reports to Certificateholders
On each Distribution Date, together with the distribution to the holders of
each Class of the Offered Certificates of a Series, a Master Servicer, Manager
or Trustee, as provided in the related Prospectus Supplement, will forward to
each such holder, a statement (a "Distribution Date Statement") substantially in
the form, or specifying the information, set forth in the related Prospectus
Supplement. In general, the Distribution Date Statement for each Distribution
Date will detail the distributions on the Certificates of the related Series on
such Distribution Date and the performance of the Mortgage Assets in the related
Trust Fund.
Within a reasonable period of time after the end of each calendar year, the
Master Servicer, Manager or Trustee, as the case may be, for a Series will be
required to furnish to each person who at any time during the calendar year was
a holder of an Offered Certificate of such Series a statement containing
information regarding the principal, interest and other distributions on the
applicable Class of Offered Certificates, aggregated for such calendar year or
the applicable portion thereof during which such person was a Certificateholder.
Such obligation will be deemed to have been satisfied to the extent that
substantially comparable information is provided pursuant to any requirements of
the Code as are from time to time in force. See, however, "--Book-Entry
Registration and Definitive Certificates" below.
If the Trust Fund for a Series includes MBS, the ability of the related
Master Servicer, Manager or Trustee, as the case may be, to include in any
Distribution Date Statement information regarding the mortgage loans underlying
such MBS will depend on the reports received with respect to such MBS. In such
cases, the related Prospectus Supplement will describe the loan-specific
information to be included in the Distribution
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Date Statements that will be forwarded to the holders of the Offered
Certificates of that Series in connection with distributions made to them.
Voting Rights
The voting rights evidenced by each Series (as to such Series, the "Voting
Rights") will be allocated among the respective Classes of Certificates of such
Series in the manner described in the related Prospectus Supplement.
Certificateholders will generally not have a right to vote, except with
respect to certain amendments to the related Pooling Agreement and as otherwise
specified in the related Prospectus Supplement. See "Description of the Pooling
Agreements--Amendment". The holders of specified amounts of Certificates of a
particular Series will have the right to act as a group to remove the related
Trustee and also upon the occurrence of certain events which if continuing would
constitute an Event of Default on the part of the related Master Servicer,
Special Servicer or REMIC Administrator. See "Description of the Pooling
Agreements--Events of Default", "--Rights Upon Event of Default" and
"--Resignation and Removal of the Trustee".
Termination
The obligations created by the Pooling Agreement for each Series will
terminate following (i) the final payment or other liquidation of the last
Mortgage Asset subject thereto or the disposition of all property acquired upon
foreclosure of any Mortgage Loan subject thereto and (ii) the payment (or
provision for payment) to the Certificateholders of that Series of all amounts
required to be paid to them pursuant to such Pooling Agreement. Written notice
of termination of a Pooling Agreement will be given to each Certificateholder of
the related Series, and the final distribution will be made only upon
presentation and surrender of the Certificates of such Series at the location to
be specified in the notice of termination.
If so specified in the related Prospectus Supplement, the Certificates of
any Series may be subject to optional early retirement through the repurchase of
the Mortgage Assets in the related Trust Fund by the party or parties specified
therein, under the circumstances and in the manner set forth therein.
In addition, if so provided in the related Prospectus Supplement, upon the
reduction of the aggregate Certificate Principal Balance of a specified Class or
Classes of Certificates by a specified percentage or amount or upon a specified
date, a party designated therein may be authorized or required to solicit bids
for the purchase of all the Mortgage Assets of the related Trust Fund, or of a
sufficient portion of such Mortgage Assets to retire such Class or Classes of
Certificates, under the circumstances and in the manner set forth therein. The
solicitation of bids will be conducted in a commercially reasonable manner and,
generally, assets will be sold at their fair market value. Circumstances may
arise in which such fair market value may be less than the unpaid balance of the
Mortgage Loans sold and therefore, as a result of such a sale, the
Certificateholders of one or more Classes of Certificates may receive an amount
less than the aggregate Certificate Principal Balance of, and accrued unpaid
interest on, their Certificates.
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Book-Entry Registration and Definitive Certificates
If so provided in the Prospectus Supplement for the Offered Certificates of
any Series, one or more Classes of such Offered Certificates will be offered in
book-entry format through the facilities of DTC, and each such Class will be
represented by one or more global Certificates registered in the name of The
Depository Trust Company ("DTC") or its nominee. If so provided in the
Prospectus Supplement, arrangements may be made for clearance and settlement
through the Euroclear System or CEDEL, S.A., if they are participants in DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking corporation" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for DTC Participants and facilitate the clearance
and settlement of securities transactions between DTC Participants through
electronic computerized book-entry changes in their accounts, thereby
eliminating the need for physical movement of securities certificates. DTC
Participants that maintain accounts with DTC include securities brokers and
dealers, banks, trust companies and clearing corporations and may include other
organizations. DTC is owned by a number of DTC Participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as banks, brokers, dealers and trust companies that
directly or indirectly clear through or maintain a custodial relationship with a
DTC Participant that maintains as account with DTC. The rules applicable to DTC
and DTC Participants are on file with the Commission.
Purchases of Book-Entry Certificates under the DTC system must be made by
or through, and will be recorded on the records of, the brokerage firm, bank,
thrift institution or other financial intermediary (each, a "Financial
Intermediary") that maintains the beneficial owner's account for such purpose.
In turn, the Financial Intermediary's ownership of such Certificates will be
recorded on the records of DTC (or of a participating firm that acts as agent
for the Financial Intermediary, whose interest will in turn be recorded on the
records of DTC, if the beneficial owner's Financial Intermediary is not a DTC
Participant). Therefore, the beneficial owner must rely on the foregoing
procedures to evidence its beneficial ownership of such Certificates. The
beneficial ownership interest of the owner of a Book-Entry Certificate (a
"Certificate Owner") may only be transferred by compliance with the rules,
regulations and procedures of such Financial Intermediaries and DTC
Participants.
DTC has no knowledge of the actual Certificate Owners; DTC's records
reflect only the identity of the DTC Participants to whose accounts such
Certificates are credited, which may or may not be the Certificate Owners. The
DTC Participants will remain responsible for keeping account of their holdings
on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC Participants
and by DTC Participants to Financial Intermediaries and Certificate Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Distributions on the Book-Entry Certificates will be made to DTC. DTC's
practice is to credit DTC Participants' accounts on the related Distribution
Date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such date.
Disbursement of such distributions by DTC Participants to Financial
Intermediaries and Certificate Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of
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customers in bearer form or registered in "street name", and will be the
responsibility of each such DTC Participant (and not of DTC, the Depositor or
any Trustee, Master Servicer, Special Servicer or Manager), subject to any
statutory or regulatory requirements as may be in effect from time to time.
Accordingly, under a book-entry system, Certificate Owners may receive payments
after the related Distribution Date.
Unless otherwise provided in the related Prospectus Supplement, the only
"Certificateholder" (as such term is used in the related Pooling Agreement) of
Book-Entry Certificates will be the nominee of DTC, and the Certificate Owners
will not be recognized as Certificateholders under the Pooling Agreement.
Certificate Owners will be permitted to exercise the rights of
Certificateholders under the related Pooling Agreement only indirectly through
the DTC Participants who in turn will exercise their rights through DTC. The
Depositor has been informed that DTC will take action permitted to be taken by a
Certificateholder under a Pooling Agreement only at the direction of one or more
DTC Participants to whose account with DTC interests in the Book-Entry
Certificates are credited. DTC may take conflicting actions with respect to the
Book-Entry Certificates to the extent that such actions are taken on behalf of
Financial Intermediaries whose holdings include such Certificates.
Because DTC can act only on behalf of DTC Participants, who in turn act on
behalf of Financial Intermediaries and certain Certificate Owners, the ability
of a Certificate Owner to pledge its interest in Book-Entry Certificates to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of its interest in Book-Entry Certificates, may be limited
due to the lack of a physical certificate evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued as Definitive
Certificates to Certificate Owners or their nominees, rather than to DTC or its
nominee, only if (i) the Depositor advises the Trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as depository
with respect to such Certificates and the Depositor is unable to locate a
qualified successor or (ii) the Depositor, at its option, elects to terminate
the book-entry system through DTC with respect to such Certificates. Upon the
occurrence of either of the events described in the preceding sentence, DTC will
be required to notify all DTC Participants of the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the certificate or
certificates representing a Class of Book-Entry Certificates, together with
instructions for registration, the Trustee for the related Series or other
designated party will be required to issue to the Certificate Owners identified
in such instructions the Definitive Certificates to which they are entitled, and
thereafter the holders of such Definitive Certificates will be recognized as
"Certificateholders" under and within the meaning of the related Pooling
Agreement.
DESCRIPTION OF THE POOLING AGREEMENTS
General
The Certificates of each Series will be issued pursuant to a Pooling
Agreement. In general, the parties to a Pooling Agreement will include the
Depositor, the Trustee, the Master Servicer, the Special Servicer and, if one or
more REMIC elections have been made with respect to the Trust Fund, the REMIC
Administrator. However, a Pooling Agreement that relates to a Trust Fund that
includes MBS may include a Manager as a party, but may not include a Master
Servicer, Special Servicer or other servicer as a party. All parties to each
Pooling Agreement under which Certificates of a Series are issued will be
identified in the related Prospectus Supplement. If so specified in the related
Prospectus Supplement, the Mortgage Asset Seller or an affiliate thereof may
perform the functions of Master Servicer, Special Servicer, Manager or REMIC
Administrator. If so specified in the related Prospectus Supplement, the Master
Servicer may also perform the duties of
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Special Servicer, and the Master Servicer, the Special Servicer or the Trustee
may also perform the duties of REMIC Administrator. Any party to a Pooling
Agreement or any affiliate thereof may own Certificates issued thereunder;
however, except in limited circumstances (including with respect to required
consents to certain amendments to a Pooling Agreement), Certificates issued
thereunder that are held by the Master Servicer or Special Servicer for the
related Series will not be allocated Voting Rights.
A form of a pooling and servicing agreement has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part. However, the
provisions of each Pooling Agreement will vary depending upon the nature of the
Certificates to be issued thereunder and the nature of the related Trust Fund.
The following summaries describe certain provisions that may appear in a Pooling
Agreement. The Prospectus Supplement for the Offered Certificates of any Series
will describe any provision of the related Pooling Agreement that materially
differs from the description thereof contained in this Prospectus. The summaries
herein 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 Pooling Agreement
for each Series and the description of such provisions in the related Prospectus
Supplement. The Depositor will provide a copy of the Pooling Agreement (without
exhibits) that relates to any Series without charge upon written request of a
holder of a Certificate of such Series addressed to it at its principal
executive offices specified herein under "The Depositor".
Assignment of Mortgage Assets
General. At the time of initial issuance of any Series, the Depositor will
assign (or cause to be assigned) to the designated Trustee the Mortgage Assets
to be included in the related Trust Fund, together with, unless otherwise
specified in the related Prospectus Supplement, all principal and interest to be
received on or with respect to such Mortgage Assets after the related Cut-off
Date, other than principal and interest due on or before the related Cut-off
Date. The Trustee will, concurrently with such assignment, deliver the
Certificates of such Series to or at the direction of the Depositor in exchange
for the Mortgage Assets and the other assets to be included in the related Trust
Fund. Each Mortgage Asset will be identified in a schedule appearing as an
exhibit to the related Pooling Agreement. Such schedule generally will include
detailed information that pertains to each Mortgage Asset included in the
related Trust Fund, which information will typically include: (i) in the case of
a Mortgage Loan, the address of the related Mortgaged Property and type of such
property, the Mortgage Rate (and, if applicable, the applicable index, gross
margin, adjustment date and any rate cap information), the original and
remaining term to maturity, the amortization term, and the original and
outstanding principal balance; and (ii) in the case of an MBS, the outstanding
principal balance and the pass-through rate or coupon rate.
Delivery of Mortgage Loans. In addition, unless otherwise specified in the
related Prospectus Supplement, the Depositor will, as to each Mortgage Loan to
be included in a Trust Fund, deliver, or cause to be delivered, to the related
Trustee (or to a custodian appointed by the Trustee as described below) the
Mortgage Note endorsed, without recourse, either in blank or to the order of
such Trustee (or its nominee), the Mortgage with evidence of recording indicated
thereon (except for any Mortgage not returned from the public recording office),
an assignment of the Mortgage in blank or to the Trustee (or its nominee) in
recordable form, together with any intervening assignments of the Mortgage with
evidence of recording thereon (except for any such assignment not returned from
the public recording office), and, if applicable, any riders or modifications to
such Mortgage Note and Mortgage, together with certain other documents at such
times as set forth in the related Pooling Agreement. Such assignments may be
blanket assignments covering Mortgages on Mortgaged Properties located in the
same county, if permitted by law. Notwithstanding the foregoing, a Trust Fund
may include Mortgage Loans where the original Mortgage Note is not delivered to
the Trustee if the Depositor delivers, or causes to be delivered, to the related
Trustee (or such custodian) a
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copy or a duplicate original of the Mortgage Note, together with an affidavit of
the Depositor or a prior holder of such Mortgage Note certifying that the
original thereof has been lost or destroyed. In addition, if the Depositor
cannot deliver, with respect to any Mortgage Loan, the Mortgage or any
intervening assignment with evidence of recording thereon concurrently with the
execution and delivery of the related Pooling Agreement because of a delay
caused by the public recording office, the Depositor will deliver, or cause to
be delivered, to the related Trustee (or such custodian) a true and correct
photocopy of such Mortgage or assignment as submitted for recording. The
Depositor will deliver, or cause to be delivered, to the related Trustee (or
such custodian) such Mortgage or assignment with evidence of recording indicated
thereon after receipt thereof from the public recording office. If the Depositor
cannot deliver, with respect to any Mortgage Loan, the Mortgage or any
intervening assignment with evidence of recording thereon concurrently with the
execution and delivery of the related Pooling Agreement because such Mortgage or
assignment has been lost, the Depositor will deliver, or cause to be delivered,
to the related Trustee (or such custodian) a true and correct photocopy of such
Mortgage or assignment with evidence of recording thereon. Unless otherwise
specified in the related Prospectus Supplement, assignments of Mortgage to the
Trustee (or its nominee) will be recorded in the appropriate public recording
office, except in states where, in the opinion of counsel acceptable to the
Trustee, such recording is not required to protect the Trustee's interests in
the Mortgage Loan against the claim of any subsequent transferee or any
successor to or creditor of the Depositor or the originator of such Mortgage
Loan.
The Trustee (or a custodian appointed by the Trustee) for a Series will be
required to review the Mortgage Loan documents delivered to it within a
specified period of days after receipt thereof, and the Trustee (or such
custodian) will hold such documents in trust for the benefit of the
Certificateholders of such Series.
The Trustee will be authorized at any time to appoint one or more
custodians pursuant to a custodial agreement to hold title to the Mortgage Loans
in any Trust Fund and to maintain possession of and, if applicable, to review
the documents relating to such Mortgage Loans, in any case as the agent of the
Trustee.
Delivery of MBS. Unless otherwise specified in the related Prospectus
Supplement, the related Pooling Agreement will provide that such steps will be
taken as will be necessary to cause the Trustee to become the registered owner
of each MBS which is included in a Trust Fund and to provide for all
distributions on each such MBS to be made either directly to the Trustee or to
an MBS Administrator other than the Trustee, if any.
Representations and Warranties with respect to Mortgage Assets; Repurchases and
Other Remedies
Unless otherwise provided in the Prospectus Supplement for the Offered
Certificates of any Series, the Depositor will, with respect to each Mortgage
Asset in the related Trust Fund, make or assign, or cause to be made or
assigned, certain representations and warranties (the person making such
representations and warranties, the "Warranting Party") covering, by way of
example: (i) the accuracy of the information set forth for such Mortgage Asset
on the schedule of Mortgage Loans appearing as an exhibit to the related Pooling
Agreement; (ii) the Warranting Party's title to the Mortgage Loan and the
authority of the Warranting Party to sell the Mortgage Loan; and (iii) in the
case of a Mortgage Loan, the enforceability of the related Mortgage Note and
Mortgage, the existence of title insurance insuring the lien priority of the
related Mortgage, the payment status of the Mortgage Loan and the delivery of
all documents required to be delivered with respect to the Mortgage Loan as
contemplated under "--Assignment of Mortgage Assets--Delivery of Mortgage Loans"
above. It is expected that in most cases the Warranting Party will be the
Mortgage Asset Seller; however, the Warranting Party may also be the Depositor,
an affiliate of the Mortgage Asset Seller or the Depositor, the Master Servicer,
the Special Servicer or another person acceptable to the Depositor. The
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Warranting Party, if other than the Mortgage Asset Seller, will be identified in
the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will provide that the Master Servicer and/or Trustee will be
required to notify promptly any Warranting Party of any breach of any
representation or warranty made by it in respect of a Mortgage Asset that
materially and adversely affects the interests of the Certificateholders of the
related Series. If such Warranting Party cannot cure such breach within a
specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the related Prospectus Supplement, it will be
obligated to repurchase such Mortgage Asset from the Trustee at a price not less
than the unpaid principal balance of such Mortgage Asset as of the date of
purchase, together with interest thereon at the related Mortgage Rate (or, in
the case of an MBS, at the related pass-through rate or coupon rate) to a date
on or about the date of purchase (in any event, the "Purchase Price"). If so
provided in the Prospectus Supplement for the Offered Certificates of any
Series, in lieu of repurchasing a Mortgage Asset as to which a breach has
occurred, a Warranting Party will have the option, exercisable upon certain
conditions and/or within a specified period after initial issuance of such
Series, to replace such Mortgage Asset with one or more other mortgage loans or
mortgage-backed securities that conform to the description of "Mortgage Asset"
herein, in accordance with standards that will be described in the Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
this repurchase or substitution obligation will constitute the sole remedy
available to holders of the Certificates of any Series or to the related Trustee
on their behalf for a breach of representation and warranty by a Warranting
Party, and no other person or entity will be obligated to purchase or replace a
Mortgage Asset if a Warranting Party defaults on its obligation to do so.
In some cases, representations and warranties will have been made in
respect of a Mortgage Asset as of a date prior to the date upon which the
related Series is initially issued, and thus may not address events that may
occur following the date as of which they were made. The date as of which the
representations and warranties regarding the Mortgage Assets in any Trust Fund
were made will be specified in the related Prospectus Supplement.
Collection and Other Servicing Procedures with respect to Mortgage Loans
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer and the Special Servicer for any Mortgage Asset Pool, directly or
through Sub-Servicers, will each be obligated under the related Pooling
Agreement to service and administer the Mortgage Loans in such Mortgage Asset
Pool for the benefit of the related Certificateholders, in accordance with
applicable law and further in accordance with the terms of such Pooling
Agreement, such Mortgage Loans and any instrument of Credit Support included in
the related Trust Fund. Subject to the foregoing, the Master Servicer and the
Special Servicer will each have full power and authority to do any and all
things in connection with such servicing and administration that it may deem
necessary and desirable.
As part of its servicing duties, each of the Master Servicer and the
Special Servicer will be required to make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans that it
services and will be obligated to follow such collection procedures as it would
follow with respect to mortgage loans that are comparable to such Mortgage Loans
and held for its own account, provided (i) such procedures are consistent with
the terms of the related Pooling Agreement and (ii) do not impair recovery under
any instrument of Credit Support included in the related Trust Fund. Consistent
with the foregoing, the Master Servicer and the Special Servicer will each be
permitted, in its discretion, unless otherwise specified
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in the related Prospectus Supplement, to waive any Prepayment Premium, late
payment charge or other charge in connection with any Mortgage Loan.
The Master Servicer and the Special Servicer for any Trust Fund, either
separately or jointly, directly or through Sub-Servicers, will also be required
to perform as to the Mortgage Loans in such Trust Fund various other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts, if required under the related Pooling Agreement, for payment
of taxes, insurance premiums, ground rents and similar items, or otherwise
monitoring the timely payment of those items; attempting to collect delinquent
payments; supervising foreclosures; negotiating modifications; conducting
property inspections on a periodic or other basis; managing (or overseeing the
management of) Mortgaged Properties acquired on behalf of such Trust Fund
through foreclosure, deed-in-lieu of foreclosure or otherwise (each, an "REO
Property"); and maintaining servicing records relating to such Mortgage Loans.
The related Prospectus Supplement will specify when and the extent to which
servicing of a Mortgage Loan is to be transferred from the Master Servicer to
the Special Servicer. In general, and subject to the discussion in the related
Prospectus Supplement, a Special Servicer will be responsible for the servicing
and administration of: (i) Mortgage Loans that are delinquent in respect of a
specified number of scheduled payments; (ii) Mortgage Loans as to which the
related borrower has entered into or consented to bankruptcy, appointment of a
receiver or conservator or similar insolvency proceeding, or the related
borrower has become the subject of a decree or order for such a proceeding which
shall have remained in force undischarged or unstayed for a specified number of
days; and (iii) REO Properties. If so specified in the related Prospectus
Supplement, a Pooling Agreement also may provide that if a default on a Mortgage
Loan has occurred or, in the judgment of the related Master Servicer, a payment
default is reasonably foreseeable, the related Master Servicer may elect to
transfer the servicing thereof, in whole or in part, to the related Special
Servicer. Unless otherwise provided in the related Prospectus Supplement, when
the circumstances no longer warrant a Special Servicer's continuing to service a
particular Mortgage Loan (e.g., the related borrower is paying in accordance
with the forbearance arrangement entered into between the Special Servicer and
such borrower), the Master Servicer will resume the servicing duties with
respect thereto. If and to the extent provided in the related Pooling Agreement
and described in the related Prospectus Supplement, a Special Servicer may
perform certain limited duties in respect of Mortgage Loans for which the Master
Servicer is primarily responsible (including, if so specified, performing
property inspections and evaluating financial statements); and a Master Servicer
may perform certain limited duties in respect of any Mortgage Loan for which the
Special Servicer is primarily responsible (including, if so specified,
continuing to receive payments on such Mortgage Loan (including amounts
collected by the Special Servicer), making certain calculations with respect to
such Mortgage Loan and making remittances and preparing certain reports to the
Trustee and/or Certificateholders with respect to such Mortgage Loan. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
will be responsible for filing and settling claims in respect of particular
Mortgage Loans under any applicable instrument of Credit Support. See
"Description of Credit Support".
A mortgagor's failure to make required Mortgage Loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a mortgagor that is unable to make Mortgage Loan payments may also be
unable to make timely payment of taxes and otherwise to maintain and insure the
related Mortgaged Property. In general, the related Special Servicer will be
required to monitor any Mortgage Loan that is in default, evaluate whether the
causes of the default can be corrected over a reasonable period without
significant impairment of the value of the related Mortgaged Property, initiate
corrective action in cooperation with the mortgagor if cure is likely, inspect
the related Mortgaged Property and take such other actions as it deems necessary
and appropriate. A significant period of time may elapse before the Special
Servicer is able to assess the success of any such corrective action or the need
for additional initiatives. The time within which
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the Special Servicer can make the initial determination of appropriate action,
evaluate the success of corrective action, develop additional initiatives,
institute foreclosure proceedings and actually foreclose (or accept a deed to a
Mortgaged Property in lieu of foreclosure) on behalf of the Certificateholders
of the related Series 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. If a mortgagor files a bankruptcy petition, the
Special Servicer may not be permitted to accelerate the maturity of the Mortgage
Loan or to foreclose on the related Mortgaged Property for a considerable period
of time. See "Certain Legal Aspects of Mortgage Loans--Bankruptcy Laws".
Mortgagors may, from time to time, request partial releases of the
Mortgaged Properties, easements, consents to alteration or demolition and other
similar matters. In general, the Master Servicer may approve such a request if
it has determined, exercising its business judgment in accordance with the
applicable servicing standard, that such approval will not adversely affect the
security for, or the timely and full collectability of, the related Mortgage
Loan. Any fee collected by the Master Servicer for processing such request will
be retained by the Master Servicer as additional servicing compensation.
In the case of Mortgage Loans secured by junior liens on the related
Mortgaged Properties, unless otherwise provided in the related Prospectus
Supplement, the Master Servicer will be required to file (or cause to be filed)
of record a request for notice of any action by a superior lienholder under the
Senior Lien for the protection of the related Trustee's interest, where
permitted by local law and whenever applicable state law does not require that a
junior lienholder be named as a party defendant in foreclosure proceedings in
order to foreclose such junior lienholder's equity of redemption. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
also will be required to notify any superior lienholder in writing of the
existence of the Mortgage Loan and request notification of any action (as
described below) to be taken against the mortgagor or the Mortgaged Property by
the superior lienholder. If the Master Servicer is notified that any superior
lienholder has accelerated or intends to accelerate the obligations secured by
the related Senior Lien, or has declared or intends to declare a default under
the mortgage or the promissory note secured thereby, or has filed or intends to
file an election to have the related Mortgaged Property sold or foreclosed,
then, unless otherwise specified in the related Prospectus Supplement, the
Master Servicer and the Special Servicer will each be required to take, on
behalf of the related Trust Fund, whatever actions are necessary to protect the
interests of the related Certificateholders and/or to preserve the security of
the related Mortgage Loan, subject to the application of the REMIC Provisions
(as defined herein). Unless otherwise specified in the related Prospectus
Supplement, the Master Servicer or Special Servicer, as applicable, will be
required to advance the necessary funds to cure the default or reinstate the
Senior Lien, if such advance is in the best interests of the related
Certificateholders and the Master Servicer or Special Servicer, as applicable,
determines such advances are recoverable out of payments on or proceeds of the
related Mortgage Loan.
Sub-Servicers
A Master Servicer or Special Servicer may delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that, unless otherwise
specified in the related Prospectus Supplement, such Master Servicer or Special
Servicer will remain obligated under the related Pooling Agreement. Unless
otherwise provided in the related Prospectus Supplement, each sub-servicing
agreement between a Master Servicer or Special Servicer, as applicable, and a
Sub-Servicer (a "Sub-Servicing Agreement") must provide for servicing of the
applicable Mortgage Loans consistent with the related Pooling Agreement. The
Master Servicer and Special Servicer in respect of any Mortgage Asset Pool will
each be required to monitor the performance of Sub-Servicers retained by it and
will
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have the right to remove a Sub-Servicer retained by it at any time it considers
such removal to be in the best interests of Certificateholders.
Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer or Special Servicer will be solely liable for all fees owed by it to
any Sub-Servicer, irrespective of whether the Master Servicer's or Special
Servicer's compensation pursuant to the related Pooling Agreement is sufficient
to pay such fees. Each Sub-Servicer will be reimbursed by the Master Servicer or
Special Servicer, as the case may be, that retained it for certain expenditures
which it makes, generally to the same extent such Master Servicer or Special
Servicer would be reimbursed under a Pooling Agreement. See "--Certificate
Account" and "--Servicing Compensation and Payment of Expenses".
Collection of Payments on MBS
Unless otherwise specified in the related Prospectus Supplement, the MBS,
if any, included in the Trust Fund for any Series will be registered in the name
of the Trustee. All distributions thereon will be made either directly to the
Trustee or to an MBS Administrator other than the Trustee, if any. Unless
otherwise specified in the related Prospectus Supplement, the related Pooling
Agreement will provide that, if the Trustee or such other MBS Administrator, as
applicable, has not received a distribution with respect to any MBS by a
specified day after the date on which such distribution was due and payable
pursuant to the terms of such MBS, the Trustee or such other MBS Administrator,
as applicable, is to request the issuer or guarantor, if any, of such MBS to
make such payment as promptly as possible and legally permitted and is to take
such legal action against such issuer or guarantor as the Trustee or such other
MBS Administrator, as applicable, deems appropriate under the circumstances,
including the prosecution of any claims in connection therewith. The reasonable
legal fees and expenses incurred by the Trustee or such other MBS Administrator,
as applicable, in connection with the prosecution of any such legal action will
be reimbursable thereto (with interest) out of the proceeds of any such action
and will be retained by the Trustee or such other MBS Administrator, as
applicable, prior to the deposit of any remaining proceeds in the Certificate
Account pending distribution thereof to Certificateholders of the affected
Series. In the event that the Trustee or such other MBS Administrator, as
applicable, has reason to believe that the proceeds of any such legal action may
be insufficient to reimburse it (with interest) for its projected legal fees and
expenses, the Trustee or such other MBS Administrator, as applicable, will
notify the Certificateholders of the affected Series that it is not obligated to
pursue any such available remedies unless adequate indemnity for its legal fees
and expenses is provided by such Certificateholders.
Certificate Account
General. The related Trustee and any related Master Servicer, the Special
Servicer and/or Manager, as applicable, will establish and maintain, or cause to
be established and maintained, in respect of each Trust Fund, one or more
accounts (collectively, the "Certificate Account"), which will be established so
as to comply with the standards of each Rating Agency that has rated any one or
more Classes of Certificates of the related Series. A Certificate Account may be
maintained as an interest-bearing or a noninterest-bearing account and the funds
held therein may be invested pending each succeeding Distribution Date in United
States government securities and other obligations that are acceptable to each
Rating Agency that has rated any one or more Classes of Certificates of the
related Series ("Permitted Investments"). Unless otherwise provided in the
related Prospectus Supplement, any interest or other income earned on funds in a
Certificate Account will be paid to the related Trustee, Master Servicer,
Special Servicer and/or Manager, as applicable, as additional compensation. A
Certificate Account may be maintained with the related Trustee, Master Servicer,
Special Servicer, Manager or Mortgage Asset Seller or with a depository
institution that is an affiliate of any
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of the foregoing or of the Depositor, provided that it complies with applicable
Rating Agency standards. If permitted by the applicable Rating Agency or
Agencies, a Certificate Account may contain funds relating to more than one
series of mortgage pass-through certificates and may contain other funds
representing payments on mortgage assets owned by the related Master Servicer or
Special Servicer or serviced by either on behalf of others.
Deposits. Unless otherwise provided in the related Pooling Agreement and
described in the related Prospectus Supplement, the following payments and
collections in respect of the Trust Assets included in any Trust Fund, that are
received or made by the Trustee, the Master Servicer, the Special Servicer, the
MBS Administrator or the Manager, as applicable, subsequent to the Cut-off Date
(other than payments due on or before the Cut-off Date), are to be deposited in
the Certificate Account for such Trust Fund within a certain period following
receipt (in the case of collections on or in respect of the Trust Assets) or
otherwise as provided in the related Pooling Agreement:
(i) if such Trust Fund includes Mortgage Loans, all payments on account of
principal, including principal prepayments, on such Mortgage Loans;
(ii) if such Trust Fund includes Mortgage Loans, all payments on account of
interest on such Mortgage Loans, including any default interest collected, in
each case net of any portion thereof retained by the Master Servicer or the
Special Servicer as its servicing compensation or as compensation to the
Trustee;
(iii) if such Trust Fund includes Mortgage Loans, all proceeds received
under any hazard, title or other insurance policy that provides coverage with
respect to a Mortgaged Property or the related Mortgage Loan or in connection
with the full or partial condemnation of a Mortgaged Property (other than
proceeds applied to the restoration of the property or released to the related
borrower) ("Insurance Proceeds" and "Condemnation Proceeds", respectively) and
all other amounts received and retained in connection with the liquidation of
defaulted Mortgage Loans or property acquired in respect thereof, by foreclosure
or otherwise (such amounts, together with those amounts listed in clause (vii)
below, "Liquidation Proceeds"), together with the net operating income (less
reasonable reserves for future expenses) derived from the operation of any
Mortgaged Properties acquired by the Trust Fund through foreclosure or
otherwise;
(iv) any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related Series;
(v) if such Trust Fund includes Mortgage Loans, any advances made with
respect to delinquent scheduled payments of principal and interest on such
Mortgage Loans;
(vi) any amounts paid under any Cash Flow Agreement for the related Series;
(vii) if such Trust Fund includes Mortgage Loans, all proceeds of the
purchase of any Mortgage Loan, or property acquired in respect thereof, by the
Depositor, any Mortgage Asset Seller or any other specified person as described
under "--Representations and Warranties with respect to Mortgage Assets;
Repurchases and Other Remedies", all proceeds of the purchase of any defaulted
Mortgage Loan as described under "--Realization Upon Defaulted Mortgage Loans",
and all proceeds of any Mortgage Loan purchased as described under "Description
of the Certificates--Termination";
(viii) if such Trust Fund includes Mortgage Loans, and to the extent that
any such item does not constitute additional servicing compensation to the
Master Servicer or the Special Servicer and is not otherwise
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retained by the Depositor or another specified person, any payments on account
of modification or assumption fees, late payment charges, Prepayment Premiums or
Equity Participations with respect to the Mortgage Loans;
(ix) if such Trust Fund includes Mortgage Loans, all payments required to
be deposited in the Certificate Account with respect to any deductible clause in
any blanket insurance policy as described under "--Hazard Insurance Policies";
(x) any amount required to be deposited by the Master Servicer, the Special
Servicer, the Manager or the Trustee in connection with losses realized on
investments for the benefit of the Master Servicer, the Special Servicer, the
Manager or the Trustee, as the case may be, of funds held in the Certificate
Account;
(xi) if such Trust Fund includes MBS, all payments on such MBS;
(xii) if such Trust Fund includes MBS, all proceeds of the purchase of any
MBS by the Depositor or any other specified person as described under
"--Representations and Warranties with respect to Mortgage Assets; Repurchases
and Other Remedies" and all proceeds of any MBS purchased as described under
"Description of the Certificates--Termination";
(xiii) any other amounts received on or in respect of the Mortgage Assets
required to be deposited in the Certificate Account as provided in the related
Pooling Agreement and described in the related Prospectus Supplement.
Withdrawals. Unless otherwise provided in the related Pooling Agreement and
described in the related Prospectus Supplement, a Trustee, Master Servicer,
Special Servicer or Manager, as applicable, in respect of any Trust Fund may
make withdrawals from the Certificate Account for such Trust Fund for any of the
following purposes:
(i) to make distributions to the Certificateholders on each Distribution
Date;
(ii) if such Trust Fund includes Mortgage Loans, then as and to the extent,
and from the sources, described in the related Prospectus Supplement, to pay the
related Master Servicer or Special Servicer any servicing fees to which it is
entitled in respect of such Mortgage Loans and that were not previously retained
thereby;
(iii) if such Trust Fund includes Mortgage Loans, to reimburse the related
Master Servicer, the related Special Servicer or any other specified person for
unreimbursed advances of delinquent scheduled payments of principal and interest
made by it, and certain unreimbursed servicing expenses incurred by it, with
respect to such Mortgage Loans and any properties acquired in respect thereof,
such reimbursement to be made out of amounts that represent late payments
collected on the particular Mortgage Loans, Liquidation Proceeds, Insurance
Proceeds and Condemnation Proceeds collected on the particular Mortgage Loans
and properties, and net operating income collected on the particular properties,
with respect to which such advances were made or such expenses were incurred or
out of amounts drawn under any form of Credit Support with respect to such
Mortgage Loans and properties, or if in the judgment of the Master Servicer, the
Special Servicer or such other person, as applicable, such advances and/or
expenses will not be recoverable from such amounts, such reimbursement to be
made from amounts collected on other Mortgage Assets in the same Trust Fund or,
if and to the extent so provided by the related Pooling Agreement and described
in the
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related Prospectus Supplement, only from that portion of amounts collected on
such other Mortgage Assets that is otherwise distributable on one or more
Classes of Subordinate Certificates of the related Series;
(iv) if and to the extent, and from the sources, described in the related
Prospectus Supplement, to pay the related Master Servicer, the related Special
Servicer or any other specified person interest accrued on the advances and
servicing expenses, if any, described in clause (iii) above made or incurred by
it while such advances and servicing expenses remain outstanding and
unreimbursed;
(v) if such Trust Fund includes Mortgage Loans, to pay any servicing
expenses not otherwise required to be advanced by the related Master Servicer,
the related Special Servicer or any other specified person, including, if
applicable, costs and expenses incurred by the Trust Fund for environmental site
assessments performed with respect to Mortgaged Properties that constitute
security for defaulted Mortgage Loans, and for any containment, clean-up or
remediation of hazardous wastes and materials present on such Mortgaged
Properties, as described under "--Realization Upon Defaulted Mortgage Loans";
(vi) to reimburse the Depositor, the related Trustee, any related Master
Servicer, Special Servicer, REMIC Administrator or Manager and/or any of their
respective directors, officers, employees and agents, as the case may be, for
certain expenses, costs and liabilities incurred thereby, as and to the extent
described under "--Certain Matters Regarding the Master Servicer, the Special
Servicer, the REMIC Administrator, the Manager and the Depositor" and "--Certain
Matters Regarding the Trustee";
(vii) if and to the extent, and from the sources, described in the related
Prospectus Supplement, to pay the fees of the related Trustee and of any related
REMIC Administrator, Manager, provider of Credit Support and obligor on a Cash
Flow Agreement;
(viii) if and to the extent, and from the sources, described in the related
Prospectus Supplement, to reimburse prior draws on any form of Credit Support in
respect of the related Series;
(ix) to pay the related Master Servicer, the related Special Servicer, the
related Manager and/or the related Trustee, as appropriate, interest and
investment income earned in respect of amounts held in the Certificate Account
as additional compensation;
(x) if one or more elections have been made to treat such Trust Fund or
designated portions thereof as a REMIC, to pay any federal, state or local taxes
imposed on the Trust Fund or its assets or transactions, as and to the extent
described under "Certain Federal Income Tax Consequences--REMICs--Prohibited
Transactions Tax and Other Taxes";
(xi) to pay for the cost of various opinions of counsel obtained pursuant
to the related Pooling Agreement for the benefit of Certificateholders or
otherwise in connection with the servicing or administration of the related
Trust Assets;
(xii) to make any other withdrawals permitted by the related Pooling
Agreement and described in the related Prospectus Supplement; and
(xiii) to clear and terminate the Certificate Account upon the termination
of the Trust Fund.
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Modifications, Waivers and Amendments of Mortgage Loans
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer and the Special Servicer may each agree to modify, waive or amend any
term of any Mortgage Loan serviced by it in a manner consistent with the
applicable servicing standard to be described in the related Prospectus
Supplement; provided that the modification, waiver or amendment (i) will not
affect the amount or timing of any scheduled payments of principal or interest
on the Mortgage Loan, and (ii) will not, in the judgment of the Master Servicer
or the Special Servicer, as the case may be, materially impair the security for
the Mortgage Loan or reduce the likelihood of timely payment of amounts due
thereon. Unless otherwise provided in the related Prospectus Supplement, the
Special Servicer also may agree to any other modification, waiver or amendment
if, in its judgment (i) a material default on the Mortgage Loan has occurred or
a payment default is imminent, (ii) such modification, waiver or amendment is
reasonably likely to produce a greater recovery with respect to the Mortgage
Loan, taking into account the time value of money, than would liquidation and
(iii) such modification, waiver or amendment will not adversely affect the
coverage under any applicable instrument of Credit Support.
Realization Upon Defaulted Mortgage Loans
If a default on a Mortgage Loan has occurred or, in the Special Servicer's
judgment, a payment default is imminent, the Special Servicer, on behalf of the
Trustee, may at any time institute foreclosure proceedings, exercise any power
of sale contained in the related Mortgage, obtain a deed in lieu of foreclosure,
or otherwise acquire title to the related Mortgaged Property, by operation of
law or otherwise. Unless otherwise specified in the related Prospectus
Supplement, the Special Servicer may not, however, acquire title to any
Mortgaged Property, have a receiver of rents appointed with respect to any
Mortgaged Property or take any other action with respect to any Mortgaged
Property that would cause the Trustee, for the benefit of the related Series of
Certificateholders, 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 received a report prepared by a
person who regularly conducts environmental audits (which report will be an
expense of the Trust Fund) and either:
(i) such report indicates that (a) the Mortgaged Property is in
compliance with applicable environmental laws and regulations and (b) there
are no circumstances or conditions present at the Mortgaged Property that
have resulted in any contamination for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under
any applicable environmental laws and regulations; or
(ii) the Special Servicer, based solely (as to environmental matters
and related costs) on the information set forth in such report, determines
that taking such actions as are necessary to bring the Mortgaged Property
into compliance with applicable environmental laws and regulations and/or
taking the actions contemplated by clause (i)(b) above, is reasonably
likely to produce a greater recovery, taking into account the time value of
money, than not taking such actions. See "Certain Legal Aspects of Mortgage
Loans--Environmental Considerations".
A Pooling Agreement may grant to the Master Servicer, the Special Servicer,
a provider of Credit Support and/or the holder or holders of certain Classes of
Certificates of the related Series a right of first refusal to purchase from the
Trust Fund, at a predetermined price (which, if less than the Purchase Price
specified herein, will be specified in the related Prospectus Supplement), any
Mortgage Loan as to which a
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specified number of scheduled payments are delinquent. In addition, unless
otherwise specified in the related Prospectus Supplement, the Special Servicer
may offer to sell any defaulted Mortgage Loan if and when the Special Servicer
determines, consistent with its normal servicing procedures, that such a sale
would produce a greater recovery, taking into account the time value of money,
than would liquidation of the related Mortgaged Property. In the absence of any
such sale, the Special Servicer will generally be required to proceed against
the related Mortgaged Property, subject to the discussion above.
Unless otherwise provided in the related Prospectus Supplement, if title to
any Mortgaged Property is acquired by a Trust Fund as to which a REMIC election
has been made, the Special Servicer, on behalf of the Trust Fund, will be
required to sell the Mortgaged Property within two years of acquisition, unless
(i) the Internal Revenue Service (the "IRS") grants an extension of time to sell
such property or (ii) the Trustee receives an opinion of independent counsel to
the effect that the holding of the property by the Trust Fund for more than two
years after its acquisition will not result in the imposition of a tax on the
Trust Fund or cause the Trust Fund (or any designated portion thereof) to fail
to qualify as a REMIC under the Code at any time that any Certificate is
outstanding. Subject to the foregoing and any other tax-related limitations, the
Special Servicer will generally be required to attempt to sell any Mortgaged
Property so acquired on the same terms and conditions it would if it were the
owner. Unless otherwise provided in the related Prospectus Supplement, if title
to any Mortgaged Property is acquired by a Trust Fund as to which a REMIC
election has been made, the Special Servicer will also be required to ensure
that the Mortgaged Property is administered so that it constitutes "foreclosure
property" within the meaning of Code Section 860G(a)(8) at all times. If the
Trust Fund acquires title to any Mortgaged Property, the Special Servicer, on
behalf of the Trust Fund, may retain an independent contractor to manage and
operate such property. The retention of an independent contractor, however, will
not relieve the Special Servicer of its obligation to manage such Mortgaged
Property as required under the related Pooling Agreement. Under certain
circumstances, the Special Servicer may be authorized to incur a tax if doing so
would, in the reasonable discretion of the Special Servicer, maximize the net
after-tax proceeds to Certificateholders.
If Liquidation Proceeds collected with respect to a defaulted Mortgage Loan
are less than the outstanding principal balance of the defaulted Mortgage Loan
plus interest accrued thereon plus the aggregate amount of reimbursable expenses
incurred by the Special Servicer and/or the Master Servicer in connection with
such Mortgage Loan, then, to the extent that such shortfall is not covered by
any instrument or fund constituting Credit Support, the Trust Fund will realize
a loss in the amount of such shortfall. The Special Servicer and/or the Master
Servicer will be entitled to reimbursement out of the Liquidation Proceeds
recovered on any defaulted Mortgage Loan, prior to the distribution of such
Liquidation Proceeds to Certificateholders, any and all amounts that represent
unpaid servicing compensation in respect of 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. In addition, if and to the extent set forth in the related Prospectus
Supplement, amounts otherwise distributable on the Certificates may be further
reduced by interest payable to the Master Servicer and/or Special Servicer on
such servicing expenses and advances.
If any Mortgaged Property suffers damage such that the proceeds, if any, of
the related hazard insurance policy are insufficient to restore fully the
damaged property, neither the Special Servicer nor the Master Servicer will be
required to expend its own funds to effect such restoration unless (and to the
extent not otherwise provided in the related Prospectus Supplement) it
determines (i) that such restoration will increase the proceeds to
Certificateholders on liquidation of the Mortgage Loan after reimbursement of
the Special Servicer or the Master Servicer, as the case may be, for its
expenses and (ii) that such expenses will
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be recoverable by it from related Insurance Proceeds, Condemnation Proceeds,
Liquidation Proceeds and/or amounts drawn on any instrument or fund constituting
Credit Support.
Hazard Insurance Policies
Unless otherwise specified in the related Prospectus Supplement, if a Trust
Fund includes Mortgage Loans, the related Pooling Agreement will require the
Master Servicer (or the Special Servicer with respect to Mortgage Loans serviced
thereby) to use reasonable efforts to cause each Mortgage Loan borrower to
maintain a hazard insurance policy that provides for such coverage as is
required under the related Mortgage or, if the Mortgage permits the holder
thereof to dictate to the borrower the insurance coverage to be maintained on
the related Mortgaged Property, such coverage as is consistent with the Master
Servicer's (or Special Servicer's) normal servicing procedures. Unless otherwise
specified in the related Prospectus Supplement, such coverage generally will be
in an amount equal to the lesser of the principal balance owing on such Mortgage
Loan and the replacement cost of the related Mortgaged Property. The ability of
a Master Servicer (or Special 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 concerning covered
losses is furnished by borrowers. All amounts collected by a Master Servicer (or
Special Servicer) under any such policy (except for amounts to be applied to the
restoration or repair of the Mortgaged Property or released to the borrower in
accordance with the Master Servicer's (or Special Servicer's) normal servicing
procedures and/or to the terms and conditions of the related Mortgage and
Mortgage Note) will be deposited in the related Certificate Account. The Master
Servicer (or Special Servicer) may satisfy its obligation to cause each borrower
to maintain such a hazard insurance policy by maintaining a blanket policy
insuring against hazard losses on the Mortgage Loans in a Trust Fund. If such
blanket policy contains a deductible clause, the Master Servicer (or Special
Servicer) will be required, in the event of a casualty covered by such blanket
policy, to deposit in the related Certificate Account all additional sums that
would have been deposited therein under an individual policy but were not
because of such deductible clause.
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 covering the Mortgaged Properties 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, 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 and domestic animals. Accordingly, a Mortgaged
Property may not be insured for losses arising from any such cause unless the
related Mortgage specifically requires, or permits the holder thereof to
require, such coverage.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an 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 clauses generally provide 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.
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Due-on-Sale and Due-on-Encumbrance Provisions
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale or
other transfer of the related Mortgaged Property made without the lender's
consent. Certain of the Mortgage Loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the Mortgage Loan
upon the creation of any other lien or encumbrance upon the Mortgaged Property.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer (or Special Servicer) will determine whether to exercise any right the
Trustee may have under any such provision in a manner consistent with the Master
Servicer's (or Special Servicer's) normal servicing procedures. Unless otherwise
specified in the related Prospectus Supplement, the Master Servicer or Special
Servicer, as applicable, will be entitled to retain as additional servicing
compensation any fee collected in connection with the permitted transfer of a
Mortgaged Property. See "Certain Legal Aspects of Mortgage Loans-Due-on-Sale and
Due-on-Encumbrance Provisions".
Servicing Compensation and Payment of Expenses
Unless otherwise specified in the related Prospectus Supplement, a Master
Servicer's primary servicing compensation with respect to a Series will come
from the periodic payment to it of a specified portion of the interest payments
on each Mortgage Loan in the related Trust Fund, including Mortgage Loans
serviced by the related Special Servicer. If and to the extent described in the
related Prospectus Supplement, a Special Servicer's primary compensation with
respect to a Series may consist of any or all of the following components: (i) a
specified portion of the interest payments on each Mortgage Loan in the related
Trust Fund, whether or not serviced by it; (ii) an additional specified portion
of the interest payments on each Mortgage Loan then currently serviced by it;
and (iii) subject to any specified limitations, a fixed percentage of some or
all of the collections and proceeds received with respect to each Mortgage Loan
which was at any time serviced by it, including Mortgage Loans for which
servicing was returned to the Master Servicer. Insofar as any portion of the
Master Servicer's or Special Servicer's compensation consists of a specified
portion of the interest payments on a Mortgage Loan, such compensation will
generally be based on a percentage of the principal balance of such Mortgage
Loan outstanding from time to time and, accordingly, will decrease with the
amortization of the Mortgage Loan. As additional compensation, a Master Servicer
or Special Servicer may be entitled to retain all or a portion of late payment
charges, Prepayment Premiums, modification fees and other fees collected from
borrowers and any interest or other income that may be earned on funds held in
the related Certificate Account. A more detailed description of each Master
Servicer's and Special Servicer's compensation will be provided in the related
Prospectus Supplement. Any Sub-Servicer will receive as its sub-servicing
compensation a portion of the servicing compensation to be paid to the Master
Servicer or Special Servicer that retained such Sub-Servicer.
In addition to amounts payable to any Sub-Servicer, a Master Servicer or
Special Servicer may be required, to the extent provided in the related
Prospectus Supplement, to pay from amounts that represent its servicing
compensation certain expenses incurred in connection with the administration of
the related Trust Fund, including, without limitation, payment of the fees and
disbursements of independent accountants, payment of fees and disbursements of
the Trustee and any custodians appointed thereby and payment of expenses
incurred in connection with distributions and reports to Certificateholders.
Certain other expenses, including certain expenses related to Mortgage Loan
defaults and liquidations and, to the extent so provided in the related
Prospectus Supplement, interest on such expenses at the rate specified therein,
may be required to be borne by the Trust Fund.
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Evidence as to Compliance
Unless otherwise specified in the related Prospectus Supplement, if a Trust
Fund includes Mortgage Loans, the related Pooling Agreement will provide that on
or before a specified date in each year, beginning the first such date that is
at least a specified number of months after the Cut-off Date, there will be
furnished to the related Trustee a report of a firm of independent certified
public accountants stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Master Servicer which
includes an assertion that the Master Servicer has complied with certain minimum
mortgage loan servicing standards (to the extent applicable to commercial and
multifamily mortgage loans), identified in the Uniform Single Attestation
Program for Mortgage Bankers established by the Mortgage Bankers Association of
America, with respect to the Master Servicer's servicing of commercial and
multifamily mortgage loans during the most recently completed calendar year and
(ii) on the basis of an examination conducted by such firm in accordance with
standards established by the American Institute of Certified Public Accountants,
such representation is fairly stated in all material respects, subject to such
exceptions and other qualifications that, in the opinion of such firm, such
standards require it to report. In rendering its report such firm may rely, as
to the matters relating to the direct servicing of commercial and multifamily
mortgage loans by Sub-Servicers, upon comparable reports of firms of independent
public accountants rendered on the basis of examinations conducted in accordance
the same standards (rendered within one year of such report) with respect to
those Sub-Servicers. The Prospectus Supplement may provide that additional
reports of independent certified public accountants relating to the servicing of
mortgage loans may be required to be delivered to the Trustee.
If a Trust Fund includes Mortgage Loans, the related Pooling Agreement will
also provide that, on or before a specified date in each year, beginning the
first such date that is at least a specified number of months after the Cut-off
Date, the Master Servicer and Special Servicer shall each deliver to the related
Trustee an annual statement signed by one or more officers of the Master
Servicer or the Special Servicer, as the case may be, to the effect that, to the
best knowledge of each such officer, the Master Servicer or the Special
Servicer, as the case may be, has fulfilled in all material respects its
obligations under the Pooling Agreement throughout the preceding year or, if
there has been a material default in the fulfillment of any such obligation,
such statement shall specify each such known default and the nature and status
thereof. Such statement may be provided as a single form making the required
statements as to more than one Pooling Agreement.
Unless otherwise specified in the related Prospectus Supplement, copies of
the annual accountants' statement and the annual statement of officers of a
Master Servicer or Special Servicer may be obtained by Certificateholders upon
written request to the Trustee.
Certain Matters Regarding the Master Servicer, the Special Servicer, the REMIC
Administrator, the Manager and the Depositor
Unless otherwise specified in the Prospectus Supplement for a Series, the
related Pooling Agreement will permit any related Master Servicer, Special
Servicer, REMIC Administrator or Manager to resign from its obligations in such
capacity thereunder only upon (a) the appointment of, and the acceptance of such
appointment by, a successor thereto and receipt by the Trustee of written
confirmation from each applicable Rating Agency that such resignation and
appointment will not have an adverse effect on the rating assigned by such
Rating Agency to any Class of Certificates of such Series or (b) a determination
that such obligations are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities carried
on by it. No such resignation will become effective until the Trustee or other
successor
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has assumed the obligations and duties of the resigning Master Servicer, Special
Servicer, REMIC Administrator or Manager, as the case may be, under the related
Pooling Agreement. Each Master Servicer, Special Servicer and, if it receives
distributions on MBS, Manager for a Trust Fund will be required to maintain a
fidelity bond and errors and omissions policy or their equivalent that provides
coverage against losses that may be sustained as a result of an officer's or
employee's misappropriation of funds or errors and omissions, subject to certain
limitations as to amount of coverage, deductible amounts, conditions, exclusions
and exceptions permitted by the related Pooling Agreement.
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will further provide that none of the Depositor, any related
Master Servicer, Special Servicer, REMIC Administrator or Manager, or any
director, officer, employee or agent of any of them will be under any liability
to the related Trust Fund or Certificateholders for any action taken, or not
taken, in good faith pursuant to such Pooling Agreement or for errors in
judgment; provided, however, that no such person or entity will be protected
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of obligations or
duties thereunder or by reason of reckless disregard of such obligations and
duties. Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will further provide that the Depositor, any related Master
Servicer, Special Servicer, REMIC Administrator and Manager, and any director,
officer, employee or agent of any of them will be entitled to indemnification by
the related Trust Fund against any loss, liability or expense incurred in
connection with any legal action that relates to such Pooling Agreement or the
related Series; provided, however, that such indemnification will not extend to
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of obligations or duties under such
Pooling Agreement, or by reason of reckless disregard of such obligations or
duties. In addition, each Pooling Agreement will provide that neither the
Depositor nor any related Master Servicer, Special Servicer, REMIC Administrator
or Manager will be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its respective responsibilities under the
Pooling Agreement and that in its opinion may involve it in any expense or
liability. However, any such party may be permitted, in the exercise of its
discretion, to undertake any such action that it may deem necessary or desirable
with respect to the enforcement and/or protection of the rights and duties of
the parties to the Pooling Agreement and the interests of the related Series of
Certificateholders 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 related Series of Certificateholders, and the Depositor, the
Master Servicer, the Special Servicer, the REMIC Administrator or the Manager,
as the case may be, will be entitled to charge the related Certificate Account
therefor.
Any person into which a Master Servicer, a Special Servicer, a REMIC
Administrator, a Manager or the Depositor may be merged or consolidated, or any
person resulting from any merger or consolidation to which a Master Servicer, a
Special Servicer, a REMIC Administrator, a Manager or the Depositor is a party,
or any person succeeding to the business of a Master Servicer, a Special
Servicer, a REMIC Administrator, a Manager or the Depositor, will be the
successor of the Master Servicer, the Special Servicer, the REMIC Administrator,
the Manager or the Depositor, as the case may be, under the related Pooling
Agreement.
Unless otherwise specified in the related Prospectus Supplement, a REMIC
Administrator will be entitled to perform any of its duties under the related
Pooling Agreement either directly or by or through agents or attorneys, and the
REMIC Administrator will not be responsible for any willful misconduct or gross
negligence on the part of any such agent or attorney appointed by it with due
care.
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Events of Default
Unless otherwise provided in the Prospectus Supplement for the Offered
Certificates of any Series, "Events of Default" under the related Pooling
Agreement will include, without limitation, (i) any failure by a Master Servicer
or a Manager to distribute or cause to be distributed to the Certificateholders
of such Series, or to remit to the related Trustee for distribution to such
Certificateholders, any amount required to be so distributed or remitted, which
failure continues unremedied for five days after written notice thereof has been
given to the Master Servicer or the Manager, as the case may be, by any other
party to the related Pooling Agreement, or to the Master Servicer or the
Manager, as the case may be, with a copy to each other party to the related
Pooling Agreement, by Certificateholders entitled to not less than 25% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such Series; (ii) any failure by a Special Servicer to remit to the
related Master Servicer or Trustee, as applicable, any amount required to be so
remitted, which failure continues unremedied for five days after written notice
thereof has been given to the Special Servicer by any other party to the related
Pooling Agreement, or to the Special Servicer, with a copy to each other party
to the related Pooling Agreement, by the Certificateholders entitled to not less
than 25% (or such other percentage specified in the related Prospectus
Supplement) of the Voting Rights of such Series; (iii) any failure by a Master
Servicer, a Special Servicer or a Manager duly to observe or perform in any
material respect any of its other covenants or obligations under the related
Pooling Agreement, which failure continues unremedied for sixty days after
written notice thereof has been given to the Master Servicer, the Special
Servicer or the Manager, as the case may be, by any other party to the related
Pooling Agreement, or to the Master Servicer, the Special Servicer or the
Manager, as the case may be, with a copy to each other party to the related
Pooling Agreement, by Certificateholders entitled to not less than 25% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such Series; (iv) any failure by a REMIC Administrator duly to
observe or perform in any material respect any of its covenants or obligations
under the related Pooling Agreement, which failure continues unremedied for
sixty days after written notice thereof has been given to the REMIC
Administrator by any other party to the related Pooling Agreement, or to the
REMIC Administrator, with a copy to each other party to the related Pooling
Agreement, by Certificateholders entitled to not less than 25% (or such other
percentage specified in the related Prospectus Supplement) of the Voting Rights
for such Series; and (v) certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings in respect of or
relating to a Master Servicer, a Special Servicer, a Manager or a REMIC
Administrator, and certain actions by or on behalf of any such party indicating
its insolvency or inability to pay its obligations. Material variations to the
foregoing Events of Default (other than to add thereto or shorten cure periods
or eliminate notice requirements) will be specified in the related Prospectus
Supplement.
Rights Upon Event of Default
If an Event of Default occurs with respect to a Master Servicer, a Special
Servicer, a Manager or a REMIC Administrator (other than the Trustee) under a
Pooling Agreement, then, in each and every such case, so long as the Event of
Default remains unremedied, and unless otherwise specified in the related
Prospectus Supplement, the Depositor or the Trustee will be authorized, and at
the direction of Certificateholders of the related Series entitled to not less
than 51% (or such other percentage specified in the related Prospectus
Supplement) of the Voting Rights for such Series, the Trustee will be required,
to terminate all of the rights and obligations of the defaulting party as Master
Servicer, Special Servicer, MBS Administrator or REMIC Administrator, as
applicable, under the Pooling Agreement, whereupon the Trustee (except under the
circumstances contemplated in the next paragraph) will succeed to all of the
responsibilities, duties and liabilities of the defaulting party as Master
Servicer, Special Servicer, Manager or REMIC Administrator, as
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applicable, under the Pooling Agreement (except that if the defaulting party is
required to make advances thereunder regarding delinquent Mortgage Loans, but
the Trustee is prohibited by law from obligating itself to make such advances,
or if the related Prospectus Supplement so specifies, the Trustee will not be
obligated to make such advances) and will be entitled to similar compensation
arrangements. Unless otherwise specified in the related Prospectus Supplement,
if the Trustee is unwilling or unable so to act, it may (or, at the written
request of Certificateholders of the related Series entitled to not less than
51% (or such other percentage specified in the related Prospectus Supplement) of
the Voting Rights for such Series, it will be required to) appoint, or petition
a court of competent jurisdiction to appoint, a loan servicing institution or
other appropriate entity that (unless otherwise provided in the related
Prospectus Supplement) is acceptable to each applicable Rating Agency to act as
successor to the Master Servicer, Special Servicer, Manager or REMIC
Administrator, as the case may be, under the Pooling Agreement. Pending such
appointment, the Trustee will be obligated to act in such capacity.
Notwithstanding the foregoing, if the same entity is acting as both Trustee
and REMIC Administrator, it may be removed in both such capacities as described
under "-Resignation and Removal of the Trustee" below.
No Certificateholder will have any right under a Pooling Agreement to
institute any proceeding with respect to such Pooling Agreement unless such
holder previously has given to the Trustee written notice of default and the
continuance thereof and unless the holders of Certificates of any Class
evidencing not less than 25% of the aggregate Percentage Interests constituting
such Class have made written request upon the Trustee to institute such
proceeding in its own name as Trustee thereunder and have offered to the Trustee
reasonable indemnity and the Trustee for sixty days after receipt of such
request and indemnity has neglected or refused to institute any such proceeding.
However, the Trustee will be under no obligation to exercise any of the trusts
or powers vested in it by the Pooling Agreement 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 Certificates covered by such Pooling
Agreement, unless such Certificateholders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby.
Amendment
Except as otherwise specified in the related Prospectus Supplement, each
Pooling Agreement may be amended by the parties thereto, without the consent of
any of the holders of Certificates covered by such Pooling Agreement: (i) to
cure any ambiguity; (ii) to correct, modify or supplement any provision therein
which may be inconsistent with any other provision therein or to correct any
error; (iii) to add any other provisions with respect to matters or questions
arising thereunder which shall not be inconsistent with the provisions thereof;
(iv) if a REMIC election has been made with respect to any portion of the
related Trust Fund, to relax or eliminate any requirement thereunder imposed by
the provisions of the Code relating to REMICs if such provisions are amended or
clarified such that any such requirement may be relaxed or eliminated; (v) to
relax or eliminate any requirement thereunder imposed by the Securities Act or
the rules thereunder if the Securities Act or such rules are amended or
clarified such that any requirement may be relaxed or eliminated; (vi) if a
REMIC election has been made with respect to any portion of the related Trust
Fund, and if such amendment, as evidenced by an opinion of counsel delivered to
the related Trustee and REMIC Administrator, is reasonably necessary to comply
with any requirements imposed by the Code or any successor or amendatory statute
or any temporary or final regulation, revenue ruling, revenue procedure or other
written official announcement or interpretation relating to federal income tax
laws or any such proposed action which, if made effective, would apply
retroactively to any REMIC created under such Pooling Agreement at least from
the effective date of such amendment, or would be necessary to avoid the
occurrence
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of a prohibited transaction or to reduce the incidence of any tax that would
arise from any actions taken with respect to the operation of any REMIC created
under such Pooling Agreement; (vii) if a REMIC election has been made with
respect to any portion of the related Trust Fund, to modify, add to or eliminate
certain transfer restrictions relating to REMIC Residual Certificates; or (viii)
for any other purpose; provided that such amendment of a Pooling Agreement
(other than any amendment for any of the specific purposes described in clause
(vi) above) may not, as evidenced by an opinion of counsel obtained by or
delivered to the Trustee, adversely affect in any material respect the interests
of any holder of Certificates of the related Series without such holder's
consent; and provided further that any amendment covered solely by clause (viii)
above may not adversely affect the then current rating assigned to any Class of
Certificates of the related Series by any Rating Agency, as evidenced by written
confirmation to such effect from each applicable Rating Agency obtained by or
delivered to the Trustee.
Except as otherwise specified in the related Prospectus Supplement, each
Pooling Agreement may also be amended by the parties thereto, with the consent
of the holders of Certificates of the respective Classes affected thereby
evidencing, in the aggregate, not less than 66-2/3% (or such other percentage
specified in the related Prospectus Supplement) of the Voting Rights allocated
to such Classes, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of such Pooling Agreement or of
modifying in any manner the rights of the holders of Certificates covered by
such Pooling Agreement, except that no such amendment of a Pooling Agreement may
(i) reduce in any manner the amount of, or delay the timing of, payments
received on the related Mortgage Assets which are required to be distributed on
a Certificate of the related Series without the consent of the holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
holders of any Class of Certificates of the related Series in a manner other
than as described in the immediately preceding clause (i) without the consent of
the holders of all Certificates of such Class or (iii) modify the provisions of
such Pooling Agreement relating to amendments thereof without the consent of the
holders of all Certificates of the related Series then outstanding.
Notwithstanding the foregoing, if a REMIC election has been made with
respect to the related Trust Fund, the Trustee will not be required to consent
to any amendment to a Pooling Agreement without having first received an opinion
of counsel to the effect that such amendment or the exercise of any power
granted to any party to such Pooling Agreement or any other specified person in
accordance with such amendment will not result in the imposition of a tax on the
related Trust Fund or cause such Trust Fund (or any designated portion thereof)
to fail to qualify as a REMIC.
List of Certificateholders
Unless otherwise specified in the related Prospectus Supplement, upon
written request of three or more Certificateholders of record made for purposes
of communicating with other holders of Certificates of the same Series with
respect to their rights under the related Pooling Agreement, the Trustee or
other specified person will afford such Certificateholders access during normal
business hours to the most recent list of Certificateholders of that Series held
by such person. If such list is as of a date more than 90 days prior to the date
of receipt of such Certificateholders' request, then such person, if not the
registrar for the Certificates of such Series, will be required to request from
such registrar a current list and to afford such requesting Certificateholders
access thereto promptly upon receipt.
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The Trustee
The Trustee under each Pooling Agreement will be named in the related
Prospectus Supplement. The commercial bank, national banking association,
banking corporation or trust company that serves as Trustee may have typical
banking relationships with the Depositor and its affiliates and with any Master
Servicer, Special Servicer or REMIC Administrator and its affiliates.
Duties of the Trustee
The Trustee for each Series will make no representation as to the validity
or sufficiency of the related Pooling Agreement, such Certificates or any
underlying Mortgage Asset or related document and will not be accountable for
the use or application by or on behalf of any other party to the related Pooling
Agreement of any funds paid to such party in respect of the Certificates or the
Mortgage Assets. If no Event of Default has occurred and is continuing, the
Trustee for each Series will be required to perform only those duties
specifically required under the related Pooling Agreement. However, upon receipt
of any of the various certificates, reports or other instruments required to be
furnished to it pursuant to the related Pooling Agreement, a Trustee will be
required to examine such documents and to determine whether they conform to the
requirements of such agreement.
Certain Matters Regarding the Trustee
As and to the extent described in the related Prospectus Supplement, the
fees and normal disbursements of any Trustee may be the expense of the related
Master Servicer or other specified person or may be required to be borne by the
related Trust Fund.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each Series will be entitled to indemnification, from amounts held
in the Certificate Account for such Series, for any loss, liability or expense
incurred by the Trustee in connection with the Trustee's acceptance or
administration of its trusts under the related Pooling Agreement; provided,
however, that such indemnification will not extend to any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
on the part of the Trustee in the performance of its obligations and duties
thereunder, or by reason of its reckless disregard of such obligations or
duties.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each Series will be entitled to execute any of its trusts or powers
under the related Pooling Agreement or perform any of this duties thereunder
either directly or by or through agents or attorneys, and the Trustee will not
be responsible for any willful misconduct or gross negligence on the part of any
such agent or attorney appointed by it with due care.
Resignation and Removal of the Trustee
The Trustee for any Series may resign at any time, in which event the
Depositor will be obligated to appoint a successor Trustee. The Depositor may
also remove the Trustee for any Series if such Trustee ceases to be eligible to
continue as such under the related Pooling Agreement or if such Trustee becomes
insolvent. Upon becoming aware of such circumstances, the Depositor will be
obligated to appoint a successor Trustee. Unless otherwise specified in the
related Prospectus Supplement, a Trustee may also be removed at any time by the
holders of Certificates of the applicable Series evidencing not less than 51%
(or such other percentage specified in the related Prospectus Supplement) of the
Voting Rights for such Series; provided that if such
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removal was without cause, the Certificateholders effecting such removal may be
responsible for any costs and expenses incurred by the terminated Trustee in
connection with its removal. Any resignation or removal of a Trustee and
appointment of a successor Trustee will not become effective until acceptance of
the appointment by the successor Trustee. Notwithstanding anything herein to the
contrary, if any entity is acting as both Trustee and REMIC Administrator for
any Series, then any resignation or removal of such entity as Trustee will also
constitute the resignation or removal of such entity as REMIC Administrator, and
the successor Trustee will also serve as the successor REMIC Administrator as
well.
DESCRIPTION OF CREDIT SUPPORT
General
Credit Support may be provided with respect to one or more Classes of the
Certificates of any Series or with respect to the related Mortgage Assets.
Credit Support may be in the form of a letter of credit, the subordination of
one or more other Classes of Certificates, the use of a surety bond, an
insurance policy or a guarantee, the establishment of one or more reserve funds,
or any combination of the foregoing. If and to the extent so provided in the
related Prospectus Supplement, any of the foregoing forms of Credit Support may
provide credit enhancement for more than one Series.
The Credit Support may not provide protection against all risks of loss and
will not guarantee payment to Certificateholders of all amounts to which they
are entitled under the related Pooling Agreement. If losses or shortfalls occur
that exceed the amount covered by the related Credit Support or that are of a
type not covered by such Credit Support, Certificateholders will bear their
allocable share of deficiencies. Moreover, if a form of Credit Support covers
the Offered Certificates of more than one Series and losses on the related
Mortgage Assets exceed the amount of such Credit Support, it is possible that
the holders of Offered Certificates of one (or more) such Series will be
disproportionately benefited by such Credit Support to the detriment of the
holders of Offered Certificates of one (or more) other such Series.
If Credit Support is provided with respect to one or more Classes of
Certificates of a Series, or with respect to the related Mortgage Assets, the
related Prospectus Supplement will include a description of (i) the nature and
amount of coverage under such Credit Support, (ii) any conditions to payment
thereunder not otherwise described herein, (iii) 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 (iv) the material
provisions relating to such Credit Support. Additionally, the related Prospectus
Supplement will set forth certain information with respect to the obligor, if
any, under any instrument of Credit Support. See "Risk Factors--Credit Support
Limitations".
Subordinate Certificates
If so specified in the related Prospectus Supplement, one or more Classes
of Certificates of a Series may be Subordinate Certificates. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Certificates to receive distributions from the Certificate Account
on any Distribution Date will be subordinated to the corresponding rights of the
holders of Senior Certificates. If so provided in the related Prospectus
Supplement, the subordination of a Class of Certificates may apply only in the
event of certain types of losses or shortfalls. The related Prospectus
Supplement will set forth information concerning the method and amount of
subordination provided by a Class or Classes of Subordinate Certificates in a
Series and the circumstances under which such subordination will be available.
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If the Mortgage Assets in any Trust Fund are divided into separate groups,
each supporting a separate Class or Classes of Certificates of the related
Series, Credit Support may be provided by cross-support provisions requiring
that distributions be made on Senior Certificates evidencing interests in one
group of Mortgage Assets prior to distributions on Subordinate Certificates
evidencing interests in a different group of Mortgage Assets within the Trust
Fund. 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 Mortgage Loans
If so provided in the related Prospectus Supplement, Mortgage Loans
included in any Trust Fund will be covered for certain default risks by
insurance policies or guarantees. The related Prospectus Supplement will
describe the nature of such default risks and the extent of such coverage.
Letter of Credit
If so provided in the Prospectus Supplement for a Series, deficiencies in
amounts otherwise payable on such Certificates or certain Classes thereof will
be covered by one or more letters of credit, issued by a bank or other financial
institution specified in such Prospectus Supplement (the "Letter of Credit
Bank"). Under a letter of credit, the Letter of Credit 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 some or all of the
related Mortgage Assets on the related Cut-off Date or of the initial aggregate
Certificate Principal Balance of one or more Classes of Certificates. If so
specified in the related Prospectus Supplement, the letter of credit may permit
draws only in the event of certain types of losses and shortfalls. The amount
available under the letter of credit will, in all cases, be reduced to the
extent of the unreimbursed payments thereunder and may otherwise be reduced as
described in the related Prospectus Supplement. The obligations of the Letter of
Credit Bank under the letter of credit for any Series will expire at the earlier
of the date specified in the related Prospectus Supplement or the termination of
the related Trust Fund.
Certificate Insurance and Surety Bonds
If so provided in the Prospectus Supplement for a Series, deficiencies in
amounts otherwise payable on such Certificates or certain Classes thereof will
be covered by insurance policies or surety bonds provided by one or more
insurance companies or sureties. Such instruments may cover, with respect to one
or more Classes of Certificates of the related Series, timely distributions of
interest or distributions of principal on the basis of a schedule of principal
distributions set forth in or determined in the manner specified in the related
Prospectus Supplement. The related Prospectus Supplement will describe any
limitations on the draws that may be made under any such instrument.
Reserve Funds
If so provided in the Prospectus Supplement for a Series, deficiencies in
amounts otherwise payable on such Certificates or certain Classes thereof will
be covered (to the extent of available funds) by one or more reserve funds in
which cash, a letter of credit, Permitted Investments, a demand note or a
combination thereof will be deposited, in the amounts specified in such
Prospectus Supplement. If so specified in the related Prospectus Supplement, the
reserve fund for a Series may also be funded over time by a specified amount of
certain collections received on the related Mortgage Assets.
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Amounts on deposit in any reserve fund for a Series will be applied for the
purposes, in the manner, and to the extent specified in the related Prospectus
Supplement. If so specified in the related Prospectus Supplement, reserve funds
may be established to provide protection only against certain types of losses
and shortfalls. Following each Distribution 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.
If so specified in the related Prospectus Supplement, amounts deposited in
any reserve fund will be invested in Permitted Investments. Unless otherwise
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 for its services. The
reserve fund, if any, for a Series will not be a part of the Trust Fund unless
otherwise specified in the related Prospectus Supplement.
Credit Support with Respect to MBS
If so provided in the Prospectus Supplement for a Series, any MBS included
in the related Trust Fund and/or the related underlying mortgage loans may be
covered by one or more of the types of Credit Support described herein. The
related Prospectus Supplement will specify, as to each such form of Credit
Support, the information indicated above with respect thereto, to the extent
such information is material and available.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of mortgage loans secured by commercial and multifamily residential
properties. Because such legal aspects are governed by applicable state law
(which laws may differ substantially), the summaries do not purport to be
complete, to reflect the laws of any particular state, or to encompass the laws
of all states in which the security for the Mortgage Loans (or mortgage loans
underlying any MBS) is situated. Accordingly, the summaries are qualified in
their entirety by reference to the applicable laws of those states. See
"Description of the Trust Funds--Mortgage Loans". If a significant percentage of
Mortgage Loans (or mortgage loans underlying MBS), by balance, are secured by
properties in a particular state, relevant state laws, to the extent they vary
materially from this discussion, will be discussed in the Prospectus Supplement.
For purposes of the following discussion, "Mortgage Loan" includes a mortgage
loan underlying an MBS.
General
Each Mortgage Loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as "mortgages". A mortgage creates a lien upon, or
grants a title interest in, the real property covered thereby, and represents
the security for the repayment of the indebtedness customarily evidenced by a
promissory note. The priority of the lien created or interest granted will
depend on the terms of the mortgage and, in some cases, on the terms of separate
subordination agreements or intercreditor agreements with others that hold
interests in the real property, the knowledge of the parties to the mortgage
and, generally, the order of recordation of the mortgage in the appropriate
public recording office. However, the lien of a recorded mortgage will generally
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be subordinate to later-arising liens for real estate taxes and assessments and
other charges imposed under governmental police powers.
Types of Mortgage Instruments
There are two parties to a mortgage: 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
borrower), a trustee to whom the real property is conveyed, and a beneficiary
(the lender) for whose benefit the conveyance is made. Under a deed of trust,
the trustor grants the property, irrevocably until the debt is paid, in trust
and generally with a power of sale, to the trustee to secure repayment of the
indebtedness evidenced by the related note. A deed to secure debt typically has
two parties, pursuant to which the borrower, or grantor, conveys title to the
real property to the grantee, or lender, generally with a power of sale, until
such time as the debt is repaid. In a case where the borrower is a land trust,
there would be an additional party because legal title to the property is held
by a land trustee under a land trust agreement for the benefit of the borrower.
At origination of a mortgage loan involving a land trust, the borrower may
execute a separate undertaking to make payments on the mortgage note. In no
event is the land trustee personally liable for the mortgage note obligation.
The mortgagee's authority under a mortgage, the trustee's authority under a deed
of trust and the grantee's authority under a deed to secure debt are governed by
the express provisions of the related instrument, the law of the state in which
the real property is located, certain federal laws and, in some deed of trust
transactions, the directions of the beneficiary.
Leases and Rents
Mortgages that encumber income-producing property often contain an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease and
the income derived therefrom, while (unless rents are to be paid directly to the
lender) retaining a revocable license to collect the rents for so long as there
is no default. If the borrower 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 Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the rates are generally pledged by the borrower
as additional security for the loan. In general, the lender must file financing
statements in order to perfect its security interest in the room rates and must
file continuation statements, generally every five years, to maintain perfection
of such security interest. In certain cases, Mortgage Loans secured by hotels or
motels may be included in a Trust Fund even if the security interest in the room
rates was not perfected or the requisite UCC filings were allowed to lapse. Even
if the lender's security interest in room rates is perfected under applicable
nonbankruptcy law, it will generally be required to commence a foreclosure
action or otherwise take possession of the property in order to enforce its
rights to collect the room rates following a default. In the bankruptcy setting,
however, the lender will be stayed from enforcing its rights to collect room
rates, but those room rates (in light of certain revisions to the Bankruptcy
Code which are effective for all bankruptcy cases commenced on or after October
22, 1994) constitute "cash collateral" and therefore cannot be used by the
bankruptcy debtor without a hearing or lender's consent and unless the lender's
interest in the room rates is given adequate protection (e.g., cash payment for
otherwise encumbered funds or a replacement lien on unencumbered property, in
either case equal in value to the amount of room rates that the debtor proposes
to use, or other similar relief). See "--Bankruptcy Laws".
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Personalty
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the borrower
and not previously pledged) may constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the UCC. Accordingly, if a borrower pledges personal
property as security for a mortgage loan, the lender generally must file UCC
financing statements in order to perfect its security interest therein, and must
file continuation statements, generally every five years, to maintain that
perfection. In certain cases, Mortgage Loans secured in part by personal
property may be included in a Trust Fund even if the security interest in such
personal property was not perfected or the requisite UCC filings were allowed to
lapse.
Foreclosure
General. Foreclosure is a legal procedure that allows the lender to recover
its mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the borrower defaults in payment or performance of its obligations
under the note or mortgage, the lender has the right to institute foreclosure
proceedings to sell the real property at public auction to satisfy the
indebtedness.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and nonjudicial foreclosure pursuant to a power of sale granted in the mortgage
instrument. Other foreclosure procedures are available in some states, but they
are either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses are raised or counterclaims are interposed, and sometimes
requires several years to complete.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action is
initiated by the service of legal pleadings upon all parties having a
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 and Other Limitations on Enforceability of Certain Provisions.
United States courts have traditionally imposed general equitable principles to
limit the remedies available to lenders in foreclosure actions. These principles
are generally designed to relieve borrowers from the effects of mortgage
defaults 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 actions to determine the cause of the
borrower's default and the likelihood that the borrower 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 borrowers who are suffering from a temporary
financial disability. In other cases, courts have limited the right of the
lender to foreclose in the case of a nonmonetary default, such as a failure to
adequately maintain the mortgaged property or an impermissible further
encumbrance of the mortgaged
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property. Finally, some courts have addressed the issue of whether federal or
state constitutional provisions reflecting due process concerns for adequate
notice require that a borrower receive notice in addition to
statutorily-prescribed minimum notice. For the most part, these cases have
upheld the reasonableness of the notice provisions or have found that a public
sale under a mortgage providing for a power of sale does not involve sufficient
state action to trigger constitutional protections.
In addition, some states may have statutory protection such as the right of
the borrower to reinstate mortgage loans after commencement of foreclosure
proceedings but prior to a foreclosure sale.
Nonjudicial Foreclosure/Power of Sale. In states permitting nonjudicial
foreclosure proceedings, foreclosure of a deed of trust is generally
accomplished by a nonjudicial trustee's sale pursuant to a power of sale
typically granted in the deed of trust. A power of sale may also be contained in
any other type of mortgage instrument if applicable law so permits. A power of
sale under a deed of trust allows a nonjudicial public sale to be conducted
generally following a request from the beneficiary/lender to the trustee to sell
the property upon default by the borrower and after notice of sale is given in
accordance with the terms of the mortgage and applicable state law. In some
states, prior to such sale, the trustee under the deed of trust must record a
notice of default and notice of sale and send a copy to the borrower and to any
other party who has recorded a request for a copy of a notice of default and
notice of sale. In addition, in some states the trustee must provide notice to
any other party having an interest of record in the real property, including
junior lienholders. A notice of sale must be posted in a public place and, in
most states, published for a specified period of time in one or more newspapers.
The borrower or junior lienholder may then have the right, during a
reinstatement period required in some states, to cure the default by paying the
entire actual amount in arrears (without regard to the acceleration of the
indebtedness), plus the lender's expenses incurred in enforcing the obligation.
In other states, the borrower or the junior lienholder is not provided a period
to reinstate the loan, but has only the right to pay off the entire debt to
prevent the foreclosure sale. Generally, state law governs the procedure for
public sale, the parties entitled to notice, the method of giving notice and the
applicable time periods.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the exact
status of title to the property (due to, among other things, redemption rights
that may exist) and because of the possibility that physical deterioration of
the property may have occurred during the foreclosure proceedings. Therefore, it
is common for the lender to purchase the mortgaged property for an amount equal
to the secured indebtedness and accrued and unpaid interest plus the expenses of
foreclosure, in which event the borrower's debt will be extinguished, or for a
lesser amount in order to preserve its right to seek a deficiency judgment if
such is available under state law and under the terms of the Mortgage Loan
documents. (The Mortgage Loans, however, may be nonrecourse. See "Risk
Factors--Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans--Limited Recourse Nature of the Mortgage Loans".) Thereafter,
subject to the borrower's right in some states to remain in possession during a
redemption period, the lender will become the owner of the property and have
both the benefits and burdens of ownership, including the obligation to pay debt
service on any senior mortgages, to pay taxes, to obtain casualty insurance and
to make such repairs as are necessary to render the property suitable for sale.
The costs of operating and maintaining a commercial or multifamily residential
property may be significant and may be greater than the income derived from that
property. The lender also will commonly obtain the services of a real estate
broker and pay the broker's commission in connection with the sale or lease of
the property. Depending upon market conditions, the ultimate proceeds of the
sale of the property may not equal the lender's investment in the property.
Moreover, because of the expenses associated with acquiring, owning and selling
a mortgaged property, a lender could realize an overall loss on a mortgage
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loan even if the mortgaged property is sold at foreclosure, or resold after it
is acquired through foreclosure, for an amount equal to the full outstanding
principal amount of the loan plus accrued interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all persons
who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption". The doctrine
of equity of redemption provides that, until the property encumbered by a
mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (nonstatutory) right which should
be distinguished from post-sale statutory rights of redemption. In some states,
after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The effect
of a statutory right of redemption is to diminish the ability of the lender to
sell the foreclosed property because the exercise of a right of redemption would
defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to 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 in the case of default will be limited
to the Mortgaged Property and such other assets, if any, that were pledged to
secure the Mortgage Loan. However, even if a mortgage loan by its terms provides
for recourse to the borrower's other assets, a lender's ability to realize upon
those assets may be limited by state law. For example, in some states a lender
cannot obtain a deficiency judgment against the borrower following foreclosure
or sale under a deed of trust. A deficiency judgment is a personal judgment
against the former borrower equal to the difference between the net amount
realized upon the public sale of the real property and the amount due to the
lender. Other statutes may require the lender to exhaust the security afforded
under a mortgage before bringing a personal action against the borrower. In
certain other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting such security;
however, in some of those states, the lender, following judgment on such
personal action, may be deemed to have elected a remedy and thus may be
precluded from foreclosing upon the security. Consequently, lenders in those
states where such an election of remedy provision exists will usually proceed
first against the security. Finally, other statutory provisions, designed to
protect borrowers from exposure to large deficiency judgments that might result
from bidding at below-market values at the foreclosure sale, limit any
deficiency judgment to the excess of the outstanding debt over the fair market
value of the property at the time of the sale.
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Leasehold Considerations. Mortgage Loans may be secured by a mortgage on
the borrower's leasehold interest in a ground lease. Leasehold mortgage loans
are subject to certain risks not associated with mortgage loans secured by a
lien on the fee estate of the borrower. The most significant of these risks is
that if the borrower's leasehold were to be terminated upon a lease default, the
leasehold mortgagee would lose its security. This risk may be lessened if the
ground lease requires the lessor to give the leasehold mortgagee notices of
lessee defaults and an opportunity to cure them, permits the leasehold estate to
be assigned to and by the leasehold mortgagee or the purchaser at a foreclosure
sale, and contains certain other protective provisions typically included in a
"mortgageable" ground lease. Certain Mortgage Loans, however, may be secured by
ground leases which do not contain these provisions.
Cooperative Shares. Mortgage Loans may be secured by a security interest on
the borrower's ownership interest in shares, and the proprietary leases
appurtenant thereto, allocable to cooperative dwelling units that may be vacant
or occupied by nonowner tenants. Such loans are subject to certain risks not
associated with mortgage loans secured by a lien on the fee estate of a borrower
in real property. Such a loan typically is subordinate to the mortgage, if any,
on the Cooperative's building which, if foreclosed, could extinguish the equity
in the building and the proprietary leases of the dwelling units derived from
ownership of the shares of the Cooperative. Further, transfer of shares in a
Cooperative are subject to various regulations as well as to restrictions under
the governing documents of the Cooperative, and the shares may be canceled in
the event that associated maintenance charges due under the related proprietary
leases are not paid. Typically, a recognition agreement between the lender and
the Cooperative provides, among other things, the lender with an opportunity to
cure a default under a proprietary lease.
Under the laws applicable in many states, "foreclosure" on Cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the UCC and the security agreement relating to the shares. Article 9 of the
UCC requires that a sale be conducted in a "commercially reasonable" manner,
which may be dependent upon, among other things, the notice given the debtor and
the method, manner, time, place and terms of the sale. Article 9 of the UCC
provides that the proceeds of the sale will be applied first to pay the costs
and expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally provides
that the lender's right to reimbursement is subject to the right of the
Cooperative to receive sums due under the proprietary leases.
Bankruptcy Laws
Operation of 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) to
collect a debt are automatically stayed upon the filing of the bankruptcy
petition and, often, 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 protective of the lender are met, the amount and terms of a mortgage
loan secured by a lien on property of the debtor may be modified under certain
circumstances. For example, the outstanding amount of the loan 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, by means of a reduction
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in the rate of interest and/or an alteration of the repayment schedule (with or
without affecting the unpaid principal balance of the loan), and/or by an
extension (or shortening) of the term to maturity. Some bankruptcy courts have
approved plans, based on the particular facts of the reorganization case, that
effected the cure of a mortgage loan default by paying arrearages over a number
of years. Also, a bankruptcy court may permit a debtor, through its
rehabilitative plan, to reinstate a mortgage loan payment schedule even if the
lender has obtained a final judgment of foreclosure prior to the filing of the
debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
affecting the ability of a secured lender to enforce the borrower's assignment
of rents and leases related to the mortgaged property. Under the Bankruptcy
Code, a lender may be stayed from enforcing the assignment, and the legal
proceedings necessary to resolve the issue could be time-consuming, with
resulting delays in the lender's receipt of the rents. Recent amendments to the
Bankruptcy code, however, may minimize the impairment of the lender's ability to
enforce the borrower's assignment of rents and leases. In addition to the
inclusion of hotel revenues within the definition of "cash collateral" as noted
previously in the section entitled "--Leases and Rents", the amendments provide
that a pre-petition security interest in rents or hotel revenues is designed to
overcome those cases holding that a security interest in rents is unperfected
under the laws of certain states until the lender has taken some further action,
such as commencing foreclosure or obtaining a receiver prior to activation of
the assignment of rents.
If a borrower's ability to make payment on a mortgage loan is dependent on
its receipt of rent payments under a lease of the related property, that ability
may be impaired by the commencement of a bankruptcy case relating to a lessee
under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee results in a stay in bankruptcy against
the commencement or continuation of any state court proceeding for past due
rent, for accelerated rent, for damages or for a summary eviction order with
respect to a default under the lease that occurred prior to the filing of the
lessee's petition. In addition, the Bankruptcy Code generally provides that a
trustee or debtor-in-possession may, subject to approval of the court, (i)
assume the lease and retain it or assign it to a third party or (ii) reject the
lease. If the lease is assumed, the trustee or debtor-in-possession (or
assignee, if applicable) must cure any defaults under the lease, compensate the
lessor for its losses and provide the lessor with "adequate assurance" of future
performance. Such remedies may be insufficient, and any assurances provided to
the lessor may, in fact, be inadequate. If the lease is rejected, the lessor
will be treated as an unsecured creditor with respect to its claim for damages
for termination of the lease. The Bankruptcy Code also limits a lessor's damages
for lease rejection to the rent reserved by the lease (without regard to
acceleration) for the greater of one year, or 15%, not to exceed three years, of
the remaining term of the lease.
Environmental Considerations
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties that
are or have been used for industrial, manufacturing, military or disposal
activity. Such environmental risks include the possible diminution of the value
of a contaminated property or, as discussed below, potential liability for
clean-up costs or other remedial actions that could exceed the value of the
property or the amount of the lender's loan. In certain circumstances, a lender
may decide to abandon a contaminated mortgaged property as collateral for its
loan rather than foreclose and risk liability for clean-up costs.
Superlien Laws. Under the laws of many states, contamination on a property
may give rise to a lien on the property for clean-up costs. In several states,
such a lien has priority over all existing liens, including those of existing
mortgages. In these states, the lien of a mortgage may lose its priority to such
a "superlien".
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CERCLA. The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. A secured lender may be liable as an "owner" or "operator" of
a contaminated mortgaged property if agents or employees of the lender have
participated in the management of such mortgaged property or the operations of
the borrower. Such liability may exist even if the lender did not cause or
contribute to the contamination and regardless of whether the lender has
actually taken possession of a mortgaged property through foreclosure, deed in
lieu of foreclosure or otherwise. Moreover, such liability is not limited to the
original or unamortized principal balance of a loan or to the value of the
property securing a loan. Excluded from CERCLA's definition of "owner" or
"operator", however, is a person "who without participating in the management of
the facility, holds indicia of ownership primarily to protect his security
interest". This is the so called "secured creditor exemption".
The Asset Conservation, Lender Liability and Deposit Insurance Act of 1996
(the "Lender Liability Act") amended, among other things, the provisions of
CERCLA with respect to lender liability and the secured creditor exemption. The
Lender Liability Act offers substantial protection to lenders by defining the
activities in which a lender can engage and still have the benefit of the
secured creditor exemption. In order for a lender to be deemed to have
participated in the management of a mortgaged property, the lender must actually
participate in the operational affairs of the property of the borrower. The
Lender Liability Act provides that "merely having the capacity to influence, or
unexercised right to control" operations does not constitute participation in
management. A lender will lose the protection of the secured creditor exemption
only if 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 operational functions of the mortgaged property.
The Lender Liability Act also provides that a lender will continue to have the
benefit of the secured creditor exemption even if it forecloses on a mortgaged
property, purchases it at a foreclosure sale or accepts a deed-in-lieu of
foreclosure provided that the lender seeks to sell the mortgaged property at the
earliest practicable commercially reasonable time on commercially reasonable
terms.
Certain Other Federal and State Laws. Many states have statutes similar to
CERCLA, and not all those statutes provide for a secured creditor exemption. In
addition, under federal law, there is potential liability relating to hazardous
wastes and underground storage tanks under the federal Resource Conservation and
Recovery Act.
In a few states, transfers of some types of properties are conditioned upon
cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law causes
of action (for example, actions based on nuisance or on toxic tort resulting in
death, personal injury or damage to property) related to hazardous environmental
conditions on a property. While it may be more difficult to hold a lender liable
in such cases, unanticipated or uninsured liabilities of the borrower may
jeopardize the borrower's ability to meet its loan obligations.
Federal, state and local environmental regulatory requirements change
often. It is possible that compliance with a new regulatory requirement could
impose significant compliance costs on a borrower. Such costs may jeopardize the
borrower's ability to meet its loan obligations.
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Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against the owner or operator who created
the environmental hazard, but that individual or entity may be without
substantial assets. Accordingly, it is possible that such costs could become a
liability of the Trust Fund and occasion a loss to the Certificateholders.
To reduce the likelihood of such a loss, unless otherwise specified in the
related Prospectus Supplement, the Pooling Agreement will provide that neither
the Master Servicer nor the Special Servicer, acting on behalf of the Trustee,
may acquire title to a Mortgaged Property or take over its operation unless the
Special Servicer, based solely (as to environmental matters) on a report
prepared by a person who regularly conducts environmental audits, has made the
determination that it is appropriate to do so, as described under "Description
of the Pooling Agreements-Realization Upon Defaulted Mortgage Loans".
If a lender forecloses on a mortgage secured by a property, the operations
on which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with those laws and regulations.
Such compliance may entail substantial expense, especially in the case of
industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental conditions
on a property to government entities and/or to prospective buyers (including
prospective buyers at a foreclosure sale or following foreclosure). Such
disclosure may decrease the amount that prospective buyers are willing to pay
for the affected property, sometimes substantially, and thereby decrease the
ability of the lender to recoup its investment in a loan upon foreclosure.
Environmental Site Assessments. In most cases, an environmental site
assessment of each Mortgaged Property will have been performed in connection
with the origination of the related Mortgage Loan or at some time prior to the
issuance of the related Certificates. Environmental site assessments, however,
vary considerably in their content, quality and cost. Even when adhering to good
professional practices, environmental consultants will sometimes not detect
significant environmental problems because to do an exhaustive environmental
assessment would be far too costly and time-consuming to be practical.
Due-on-Sale and Due-on-Encumbrance Provisions
Certain of the Mortgage Loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. However, the Garn-St Germain Depository Institutions Act of 1982
(the "Garn Act") generally preempts state laws that prohibit the enforcement of
due-on-sale clauses and permits lenders to enforce these clauses in accordance
with their terms, subject to certain limitations as set forth in the Garn Act
and the regulations promulgated thereunder. Accordingly, a Master Servicer may
nevertheless have the right to accelerate the maturity of a Mortgage Loan that
contains a "due-on-sale" provision upon transfer of an interest in the property,
without regard to the Master Servicer's ability to demonstrate that a sale
threatens its legitimate security interest.
Junior Liens; Rights of Holders of Senior Liens
If so provided in the related Prospectus Supplement, the Mortgage Assets
for a Series may include Mortgage Loans secured by junior liens, and the loans
secured by the related Senior Liens may not be included
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in the Mortgage Asset Pool. The primary risk to holders of Mortgage Loans
secured by junior liens is the possibility that adequate funds will not be
received in connection with a foreclosure of the related Senior Liens to satisfy
fully both the Senior Liens and the Mortgage Loan. In the event that a holder of
a Senior Lien forecloses on a Mortgaged Property, the proceeds of the
foreclosure or similar sale will be applied first to the payment of court costs
and fees in connection with the foreclosure, second to real estate taxes, third
in satisfaction of all principal, interest, prepayment or acceleration
penalties, if any, and any other sums due and owing to the holder of the Senior
Liens. The claims of the holders of the Senior Liens will be satisfied in full
out of proceeds of the liquidation of the related Mortgaged Property, if such
proceeds are sufficient, before the Trust Fund as holder of the junior lien
receives any payments in respect of the Mortgage Loan. In the event that such
proceeds from a foreclosure or similar sale of the related Mortgaged Property
are insufficient to satisfy all Senior Liens and the Mortgage Loan in the
aggregate, the Trust Fund, as the holder of the junior lien, and, accordingly,
holders of one or more Classes of the Certificates of the related Series bear
(i) the risk of delay in distributions while a deficiency judgment against the
borrower is obtained and (ii) the risk of loss if the deficiency judgment is not
realized upon. Moreover, deficiency judgments may not be available in certain
jurisdictions or the Mortgage Loan may be nonrecourse.
Subordinate Financing
The terms of certain of the Mortgage Loans may not restrict the ability of
the borrower to use the Mortgaged Property as security for one or more
additional loans, or such restrictions may be unenforceable. Where a borrower
encumbers a mortgaged property with one or more junior liens, the senior lender
is subjected to additional risk. First, the borrower may have difficulty
servicing and repaying multiple loans. Moreover, if the subordinate financing
permits recourse to the borrower (as is frequently the case) and the senior loan
does not, a borrower may have more incentive to repay sums due on the
subordinate 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 borrower 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 borrower is additionally burdened.
Third, if the borrower defaults on the senior loan and/or any junior loan or
loans, the existence of junior loans and actions taken by junior lenders can
impair the security available to the senior lender and can interfere with or
delay the taking of action by the senior lender. Moreover, the bankruptcy of a
junior lender may operate to stay foreclosure or similar proceedings by the
senior lender.
Default Interest and Limitations on Prepayments
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and in
some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower for
delinquent payments. Certain states also limit the amounts that a lender may
collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply to
certain types of residential (including multifamily) first
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mortgage loans originated by certain lenders after March 31, 1980. Title V
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.
No Mortgage Loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted, will (if originated after that rejection or adoption)
be eligible for inclusion in a Trust Fund 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 are to 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 borrower's
counsel has rendered an opinion that such choice of law provision would be given
effect.
Certain Laws and Regulations
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
(i.e., a nursing or convalescent home or hospital), result in a failure to
realize the full principal amount of the related Mortgage Loan.
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, 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 borrower 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 borrower as owner or landlord. Furthermore, since the "readily
achievable" standard may vary depending on the financial condition of the owner
or landlord, a foreclosing lender who is financially more capable than the
borrower of complying with the requirements of the ADA may be subject to more
stringent requirements than those to which the borrower is subject.
Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a borrower who enters military service after the
origination of such borrower's mortgage loan (including a borrower who was in
reserve status and is called to active duty after origination of the Mortgage
Loan), may not be charged interest (including fees and charges) above an annual
rate of 6% during the period of such borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the
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Relief Act applies to individuals who enter military service (including
reservists who are called to active duty) after origination of the related
mortgage loan, no information can be provided as to the number of loans with
individuals as borrowers that may be affected by the Relief Act. Application of
the Relief Act would adversely affect, for an indeterminate period of time, the
ability of a Master Servicer or Special 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 distributable to the holders of the related Series, and
would not be covered by advances or, unless otherwise specified in the related
Prospectus Supplement, any form of Credit Support provided in connection with
such Certificates. In addition, the Relief Act imposes limitations that would
impair the ability of the Master Servicer or Special Servicer to foreclose on an
affected Mortgage Loan during the borrower's period of active duty status, and,
under certain circumstances, during an additional three month period thereafter.
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.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
The following general discussion of the anticipated material federal income
tax consequences of the purchase, ownership and disposition of Offered
Certificates of any Series, to the extent it relates to matters of law or legal
conclusions with respect thereto, represents the opinion of counsel to the
Depositor with respect to that Series on the material matters associated with
such consequences, subject to any qualifications set forth herein. Unless
otherwise specified in the related Prospectus Supplement, counsel to the
Depositor for each Series will be Sidley & Austin. This discussion is directed
to Certificateholders that hold the Certificates as "capital assets" within the
meaning of Section 1221 of the Code and does not purport to discuss all federal
income tax consequences that may be applicable to the individual circumstances
of particular investors, some of which (such as banks, insurance companies and
foreign investors) may be subject to special treatment under the Code. 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 IRS with respect to any of the federal income tax
consequences discussed below, and no assurance can be given the IRS will not
take contrary positions. Taxpayers and preparers of tax returns (including those
filed by any REMIC or other issuer) should be aware that under applicable
Treasury regulations a provider of advice on specific issues of law is not
considered an income tax return preparer unless the advice (i) is given with
respect to events that have occurred at the time
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the advice is rendered and is not given with respect to the consequences of
contemplated actions, and (ii) is directly relevant to the determination of an
entry on a tax return. Accordingly, taxpayers should consult their tax advisors
and tax return preparers regarding the treatment of any item on their tax
returns, even where the anticipated tax consequences have been discussed herein.
In addition to the federal income tax consequences described herein, potential
investors are advised to consider the state and local tax consequences, if any,
of the purchase, ownership and disposition of Offered Certificates. See "State
and Other Tax Consequences". Certificateholders are advised to consult their tax
advisors concerning the federal, state, local or other tax consequences to them
of the purchase, ownership and disposition of Offered Certificates.
The following discussion addresses securities of two general types: (i)
certificates ("REMIC Certificates") representing interests in a Trust Fund, or a
portion thereof, that the REMIC Administrator will elect to have treated as a
real estate mortgage investment conduit ("REMIC") under Sections 860A through
860G (the "REMIC Provisions") of the Code, and (ii) Grantor Trust Certificates
representing interests in a Trust Fund ("Grantor Trust Fund") as to which no
such election will be made. The Prospectus Supplement for each Series will
indicate whether a REMIC election (or elections) will be made for the related
Trust Fund and, if such an election is to be made, will identify all "regular
interests" and "residual interests" in the REMIC. For purposes of this tax
discussion, references to a "Certificateholder" or a "holder" are to the
beneficial owner of a Certificate.
The following discussion is limited in applicability to Offered
Certificates. Moreover, this discussion applies only to the extent that Mortgage
Assets held by a Trust Fund consist solely of Mortgage Loans. To the extent that
other Mortgage Assets, including REMIC certificates and mortgage pass-through
certificates, are to be held by a Trust Fund, the tax consequences associated
with the inclusion of such assets will be disclosed in the related Prospectus
Supplement. In addition, if Cash Flow Agreements other than guaranteed
investment contracts are included in a Trust Fund, the anticipated material tax
consequences associated with such Cash Flow Agreements also will be discussed in
the related Prospectus Supplement. See "Description of the Trust Funds--Cash
Flow Agreements".
The following discussion is based in part upon the rules governing original
issue discount that are set forth in Sections 1271-1273 and 1275 of the Code and
in the Treasury regulations issued thereunder (the "OID Regulations"), and in
part upon the REMIC Provisions and the Treasury regulations issued thereunder
(the "REMIC Regulations"). The OID Regulations do not adequately address certain
issues relevant to, and in some instances provide that they are not applicable
to, securities such as the Certificates.
REMICs
Classification of REMICs. With respect to each Series of REMIC
Certificates, counsel to the Depositor will deliver its opinion generally to the
effect that, assuming compliance with all provisions of the related Pooling
Agreement and certain other documents (and subject to certain assumptions set
forth therein), the related Trust Fund (or each applicable portion thereof) will
qualify as a REMIC and the REMIC Certificates offered with respect thereto will
be considered to evidence ownership of REMIC Regular Certificates or REMIC
Residual Certificates in that REMIC within the meaning of the REMIC Provisions.
The following general discussion of the anticipated federal income tax
consequences of the purchase, ownership and disposition of REMIC Certificates,
to the extent it relates to matters of law or legal conclusions with respect
thereto, represents the opinion of counsel to the Depositor for the applicable
Series as specified in the related Prospectus Supplement, subject to any
qualifications set forth herein. In addition, counsel to the Depositor have
prepared or reviewed the statements in this Prospectus under the heading
"Certain Federal Income Tax Consequences--REMICs", and are of the opinion that
such statements are correct in all material
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respects. Such statements are intended as an explanatory discussion of the
possible effects of the classification of any Trust Fund (or applicable portion
thereof) as a REMIC for federal income tax purposes on investors generally and
of related tax matters affecting investors generally, but do not purport to
furnish information in the level of detail or with the attention to an
investor's specific tax circumstances that would be provided by an investor's
own tax advisor. Accordingly, each investor is advised to consult its own tax
advisors with regard to the tax consequences to it of investing in REMIC
Certificates.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity may lose its status as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation,
and the related REMIC Certificates may not be accorded the status or given the
tax treatment described below. Although the Code authorizes the Treasury
Department to issue regulations providing relief in the event of an inadvertent
termination of REMIC status, no such regulations have been issued. Any such
relief, moreover, may be accompanied by sanctions, such as the imposition of a
corporate tax on all or a portion of the Trust Fund's income for the period in
which the requirements for such status are not satisfied. The Pooling Agreement
with respect to each REMIC will include provisions designed to maintain the
Trust Fund's status as a REMIC under the REMIC Provisions. It is not anticipated
that the status of any Trust Fund as a REMIC will be inadvertently terminated.
Characterization of Investments in REMIC Certificates. In general, unless
otherwise provided in the related Prospectus Supplement, the REMIC Certificates
will be "real estate assets" within the meaning of Section 856(c)(5)(A) of the
Code and assets described in Section 7701(a)(19)(C) of the Code in the same
proportion that the assets of the REMIC underlying such Certificates would be so
treated. However, to the extent that the REMIC assets constitute mortgages on
property not used for residential or certain other prescribed purposes, the
REMIC Certificates will not be treated as assets qualifying under Section
7701(a)(19)(C). Moreover, if 95% or more of the assets of the REMIC qualify for
any of the foregoing characterizations at all times during a calendar year, the
REMIC Certificates will qualify for the corresponding status in their entirety
for that calendar year. Interest (including original issue discount) on the
REMIC Regular Certificates and income allocated to the REMIC Residual
Certificates will be interest described in Section 856(c)(3)(B) of the Code to
the extent that such Certificates are treated as "real estate assets" within the
meaning of Section 856(c)(5)(A) of the Code. In addition, the REMIC Regular
Certificates will be "qualified mortgages" within the meaning of Section
860G(a)(3) of the Code. The determination as to the percentage of the REMIC's
assets that constitute assets described in the foregoing sections of the Code
will be made with respect to each calendar quarter based on the average adjusted
basis of each category of the assets held by the REMIC during such calendar
quarter. The REMIC Administrator will report those determinations to
Certificateholders in the manner and at the times required by applicable
Treasury regulations.
The assets of the REMIC will include, in addition to Mortgage Loans,
payments on Mortgage Loans held pending distribution on the REMIC Certificates
and any property acquired by foreclosure held pending sale, and may include
amounts in reserve accounts. It is unclear whether property acquired by
foreclosure held pending sale, and amounts in reserve accounts would be
considered to be part of the Mortgage Loans, or whether such assets (to the
extent not invested in assets described in the foregoing sections of the Code)
otherwise would receive the same treatment as the Mortgage Loans for purposes of
all of the foregoing sections of the Code. In addition, in some instances
Mortgage Loans may not be treated entirely as assets described in the foregoing
sections of the Code. If so, the related Prospectus Supplement will describe the
Mortgage Loans that may not be so treated. The REMIC Regulations do provide,
however, that cash received
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from payments on Mortgage Loans held pending distribution is considered part of
the Mortgage Loans for purposes of Section and 856(c)(5)(A) of the Code.
Tiered REMIC Structures. For certain Series of REMIC Certificates, two or
more separate elections may be made to treat designated portions of the related
Trust Fund as separate REMICs ("Tiered REMICs") for federal income tax purposes.
As to each such Series of REMIC Certificates, in the opinion of counsel to the
Depositor, assuming compliance with all provisions of the related Pooling
Agreement, the Tiered REMICs will each qualify as a REMIC and the REMIC
Certificates issued by the Tiered REMICs, will be considered to evidence
ownership of REMIC Regular Certificates or REMIC Residual Certificates in the
related REMIC within the meaning of the REMIC Provisions.
Solely for purposes of determining whether the REMIC Certificates will be
"real estate assets" within the meaning of Section 856(c)(5)(A) of the Code, and
"loans secured by an interest in real property" under Section 7701(a)(19)(C) of
the Code, and whether the income on such Certificates is interest described in
Section 856(c)(3)(B) of the Code, the Tiered REMICs will be treated as one
REMIC.
Taxation of Owners of REMIC Regular Certificates.
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.
Moreover, holders of REMIC Regular Certificates that otherwise report income
under the cash method of accounting will be required to report income with
respect to REMIC Regular Certificates under the accrual method.
Original Issue Discount. Certain REMIC Regular Certificates may be issued
with "original issue discount" within the meaning of Section 1273(a) of the
Code. Any holders of REMIC Regular Certificates issued with original issue
discount generally will be required to include original issue discount in income
as it accrues, in accordance with the "constant yield" method described below,
in advance of the receipt of the cash attributable to such income. In addition,
Section 1272(a)(6) of the Code provides special rules applicable to REMIC
Regular Certificates and certain other debt instruments issued with original
issue discount; regulations, however, have not been issued under that section.
The Code requires that a reasonable prepayment assumption be used with
respect to Mortgage Loans held by a REMIC in computing the accrual of original
issue discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of such discount to
reflect differences between the actual prepayment rate and the prepayment
assumption. The prepayment assumption is to be determined in a manner prescribed
in Treasury regulations; as noted above, those regulations have not been issued.
The Conference Committee Report accompanying the Tax Reform Act of 1986 (the
"Committee Report") indicates that the regulations will provide that the
prepayment assumption used with respect to a REMIC Regular Certificate must be
the same as that used in pricing the initial offering of such REMIC Regular
Certificate. The prepayment assumption (the "Prepayment Assumption") used in
reporting original issue discount for each Series of REMIC Regular Certificates
will be consistent with this standard and will be disclosed in the related
Prospectus Supplement. However, neither the Depositor nor any other person will
make any representation that the Mortgage Loans will in fact prepay at a rate
conforming to the Prepayment Assumption or at any other rate or that such
Prepayment Assumption will not be challenged by the Internal Revenue Service
(the "IRS") on audit.
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The original issue discount, if any, on a REMIC Regular Certificate will be
the excess of its stated redemption price at maturity over its issue price. The
issue price of a particular Class of REMIC Regular Certificates will be the
first cash price at which a substantial amount of REMIC Regular Certificates of
that Class is sold (excluding sales to bond houses, brokers and underwriters).
If less than a substantial amount of a particular Class of REMIC Regular
Certificates is sold for cash on or prior to the related Closing Date, the issue
price for such Class will be the fair market value of such Class on such Closing
Date. Under the OID Regulations, the stated redemption price of a REMIC Regular
Certificate is equal to the total of all payments to be made on such Certificate
other than "qualified stated interest". "Qualified stated interest" is interest
that is unconditionally payable at least annually (during the entire term of the
instrument) at a single fixed rate, or at a "qualified floating rate", an
"objective rate", a combination of a single fixed rate and one or more
"qualified floating rates" or one "qualified inverse floating rate", or at a
combination of "qualified floating rates" that does not operate in a manner that
accelerates or defers interest payments on such REMIC Regular Certificate.
In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
such REMIC Regular Certificates. If the original issue discount rules apply to
such Certificates, the related Prospectus Supplement will describe the manner in
which such rules will be applied with respect to those Certificates in preparing
information returns to the Certificateholders and the IRS.
Certain Classes of the REMIC Regular Certificates may provide for the first
interest payment with respect to such Certificates to be made more than one
month after the date of issuance, a period which is longer than the subsequent
monthly intervals between interest payments. Assuming the "accrual period" (as
defined below) for original issue discount is each monthly period that ends on a
Distribution Date, in some cases, as a consequence of this "long first accrual
period", some or all interest payments may be required to be included in the
stated redemption price of the REMIC Regular Certificate and accounted for as
original issue discount. Because interest on REMIC Regular Certificates must in
any event be accounted for under an accrual method, applying this analysis would
result in only a slight difference in the timing of the inclusion in income of
the yield on the REMIC Regular Certificates.
In addition, if the accrued interest to be paid on the first Distribution
Date is computed with respect to a period that begins prior to the Closing Date,
a portion of the purchase price paid for a REMIC Regular Certificate will
reflect such accrued interest. In such cases, information returns provided to
the Certificateholders and the IRS will be based on the position that the
portion of the purchase price paid for the interest accrued with respect to
periods prior to the Closing Date is treated as part of the overall cost of such
REMIC Regular Certificate (and not as a separate asset the cost of which is
recovered entirely out of interest received on the next Distribution Date) and
that portion of the interest paid on the first Distribution Date in excess of
interest accrued for a number of days corresponding to the number of days from
the Closing Date to the first Distribution Date should be included in the stated
redemption price of such REMIC Regular Certificate. However, the OID Regulations
state that all or some portion of such accrued interest may be treated as a
separate asset the cost of which is recovered entirely out of interest paid on
the first Distribution Date. It is unclear how an election to do so would be
made under the OID Regulations and whether such an election could be made
unilaterally by a Certificateholder.
Notwithstanding the general definition of original issue discount, original
issue discount on a REMIC Regular Certificate will be considered to be de
minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Certificate multiplied by its weighted average maturity. For this
purpose, the weighted average maturity of the REMIC Regular Certificate is
computed as the sum of the amounts determined, as to
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each payment included in the stated redemption price of such REMIC Regular
Certificate, by multiplying (i) the number of complete years (rounding down for
partial years) from the issue date until such payment is expected to be made
(presumably taking into account the Prepayment Assumption) by (ii) a fraction,
the numerator of which is the amount of the payment, and the denominator of
which is the stated redemption price at maturity of such REMIC Regular
Certificate. Under the OID Regulations, original issue discount of only a de
minimis amount (other than de minimis original issue discount attributable to a
so-called "teaser" interest rate or an initial interest holiday) will be
included in income as each payment of stated principal is made, based on the
product of the total amount of such de minimis original issue discount and a
fraction, the numerator of which is the amount of such principal payment and the
denominator of which is the outstanding stated principal amount of the REMIC
Regular Certificate. The OID Regulations also would permit a Certificateholder
to elect to accrue de minimis original issue discount into income currently
based on a constant yield method. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" below for a description of such election under
the OID Regulations.
If original issue discount on a REMIC Regular Certificate is in excess of a
de minimis amount, the holder of such Certificate must include in ordinary gross
income the sum of the "daily portions" of original issue discount for each day
during its taxable year on which it held such REMIC Regular Certificate,
including the purchase date but excluding the disposition date. In the case of
an original holder of a REMIC Regular Certificate, the daily portions of
original issue discount will be determined as follows.
As to each "accrual period", that is, unless otherwise stated in the
related Prospectus Supplement, each period that begins on a date that
corresponds to a Distribution Date (or in the case of the first such period,
begins on the Closing Date) and ends on the day preceding the immediately
following Distribution Date, a calculation will be made of the portion of the
original issue discount that accrued during such accrual period. The portion of
original issue discount that accrues in any accrual period will equal the
excess, if any, of (i) the sum of (a) the present value, as of the end of the
accrual period, of all of the distributions remaining to be made on the REMIC
Regular Certificate, if any, in future periods and (b) the distributions made on
such REMIC Regular Certificate during the accrual period of amounts included in
the stated redemption price, over (ii) the adjusted issue price of such REMIC
Regular Certificate at the beginning of the accrual period. The present value of
the remaining distributions referred to in the preceding sentence will be
calculated (i) assuming that distributions on the REMIC Regular Certificate will
be received in future periods based on the Mortgage Loans being prepaid at a
rate equal to the Prepayment Assumption, (ii) using a discount rate equal to the
original yield to maturity of the Certificate and (iii) taking into account
events (including actual prepayments) that have occurred before the close of the
accrual period. For these purposes, the original yield to maturity of the
Certificate will be calculated based on its issue price and assuming that
distributions on the Certificate will be made in all accrual periods based on
the Mortgage Loans being prepaid at a rate equal to the Prepayment Assumption.
The adjusted issue price of a REMIC Regular Certificate at the beginning of any
accrual period will equal the issue price of such Certificate, increased by the
aggregate amount of original issue discount that accrued with respect to such
Certificate in prior accrual periods, and reduced by the amount of any
distributions made on such REMIC Regular Certificate in prior accrual periods of
amounts included in the stated redemption price. The original issue discount
accruing during any accrual period, computed as described above, will be
allocated ratably to each day during the accrual period to determine the daily
portion of original issue discount for such day.
A subsequent purchaser of a REMIC Regular Certificate that purchases such
Certificate at a cost (excluding any portion of such cost attributable to
accrued qualified stated interest) less than its remaining stated redemption
price will also be required to include in gross income the daily portions of any
original issue discount with respect to such Certificate. However, each such
daily portion will be reduced, if such cost is
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in excess of its "adjusted issue price", in proportion to the ratio such excess
bears to the aggregate original issue discount remaining to be accrued on such
REMIC Regular Certificate. The adjusted issue price of a REMIC Regular
Certificate on any given day equals the sum of (i) the adjusted issue price (or,
in the case of the first accrual period, the issue price) of such Certificate at
the beginning of the accrual period which includes such day and (ii) the daily
portions of original issue discount for all days during such accrual period
prior to such day.
Market Discount. A Certificateholder that purchases a REMIC Regular
Certificate at a market discount (other than a de minimis amount), that is, in
the case of a REMIC Regular Certificate issued without original issue discount,
at a purchase price less than its remaining stated principal amount, or in the
case of a REMIC Regular Certificate issued with original issue discount, at a
purchase price less than its adjusted issue price will recognize gain upon
receipt of each distribution representing stated redemption price. In
particular, under Section 1276 of the Code such a Certificateholder generally
will be required to allocate the portion of each such distribution representing
some of all of the stated redemption price first to accrued market discount not
previously included in income, and to recognize ordinary income to that extent.
A Certificateholder may elect to include market discount in income currently as
it accrues rather than including it on a deferred basis in accordance with the
foregoing. If made, such election will apply to all market discount bonds
acquired by such Certificateholder on or after the first day of the first
taxable year to which such election applies.
The OID Regulations also permit a Certificateholder to elect to accrue all
interest and discount (including de minimis market or original issue discount)
in income as interest, and to amortize premium, based on a constant yield
method. If such an election were made with respect to a REMIC Regular
Certificate with market discount, the Certificateholder would be deemed to have
made an election to include currently market discount in income with respect to
all other debt instruments having market discount that such Certificateholder
acquires during the taxable year of the election or thereafter, and possibly
previously acquired instruments. Similarly, a Certificateholder that made this
election for a Certificate that is acquired at a premium would be deemed to have
made an election to amortize bond premium with respect to all debt instruments
having amortizable bond premium that such Certificateholder owns or acquires.
See "--Taxation of Owners of REMIC Regular Certificates--Premium" below. Each of
the elections in this and the preceding paragraph to accrue interest, discount
and premium with respect to a Certificate on a constant yield method or as
interest would be irrevocable except with the approval of the IRS.
However, market discount with respect to a REMIC Regular Certificate will
be considered to be de minimis for purposes of Section 1276 of the Code if such
market discount is less than 0.25% of the remaining stated redemption price of
such REMIC Regular Certificate multiplied by the number of complete years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect to
market discount, presumably taking into account the Prepayment Assumption. If
market discount is treated as de minimis under this rule, it appears that the
actual discount would be treated in a manner similar to original issue discount
of a de minimis amount. See "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above. Such treatment would result in
discount being included in income at a slower rate than discount would be
required to be included in income using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. The Committee Report indicates
that in each accrual period market discount
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on REMIC Regular Certificates should accrue, at the Certificateholder's option:
(i) on the basis of a constant yield method, (ii) in the case of a REMIC Regular
Certificate issued without original issue discount, in an amount that bears the
same ratio to the total remaining market discount as the stated interest paid in
the accrual period bears to the total amount of stated interest remaining to be
paid on the REMIC Regular Certificate as of the beginning of the accrual period,
or (iii) in the case of a REMIC Regular Certificate issued with original issue
discount, in an amount that bears the same ratio to the total remaining market
discount as the original issue discount accrued in the accrual period bears to
the total original issue discount remaining on the REMIC Regular Certificate at
the beginning of the accrual period. Moreover, the Prepayment Assumption used in
calculating the accrual of original issue discount is also used in calculating
the accrual of market discount. Because the regulations referred to in this
paragraph have not been issued, it is not possible to predict what effect such
regulations might have on the tax treatment of a REMIC Regular Certificate
purchased at a discount in the secondary market.
To the extent that REMIC Regular Certificates provide for monthly or other
periodic distributions throughout their term, the effect of these rules may be
to require market discount to be includible in income at a rate that is not
significantly slower than the rate at which such discount would accrue if it
were original issue discount. Moreover, in any event a holder of a REMIC Regular
Certificate generally will be required to treat a portion of any gain on the
sale or exchange of such Certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of the foregoing
methods, less any accrued market discount previously reported as ordinary
income.
Further, under Section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule referred to above applies. Any such
deferred interest expense would not exceed the market discount that accrues
during such taxable year and is, in general, allowed as a deduction not later
than the year in which such market discount is includible in income. If such
holder, however, has elected to include market discount in income currently as
it accrues, the interest deferral rule described above would not apply.
Premium. A REMIC Regular Certificate purchased at a cost (excluding any
portion of such cost attributable to accrued qualified stated interest) greater
than its remaining stated redemption price will be considered to be purchased at
a premium. On June 27, 1996, the IRS published in the Federal Register proposed
regulations on the amortization of bond premium. Under those regulations, if a
holder elects to amortize bond premium, bond premium would be amortized on a
constant yield method and would be applied against qualified stated interest.
The proposed regulations generally would be effective for Certificates acquired
on or after the date 60 days after the date final regulations are published in
the Federal Register. Holders of each such Class of Certificates should consult
their tax advisors regarding the possibility of making an election to amortize
such premium. The OID Regulations also permit Certificateholders to elect to
include all interest, discount and premium in income based on a constant yield
method, further treating the Certificateholder as having made the election to
amortize premium generally. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" above. The Committee Report states that the same
rules that apply to accrual of market discount (which rules will require use of
a Prepayment Assumption in accruing market discount with respect to REMIC
Regular Certificates without regard to whether such Certificates have original
issue discount) will also apply in amortizing bond premium under Section 171 of
the Code.
Realized Losses. Under Section 166 of the Code, both corporate holders of
the REMIC Regular Certificates and noncorporate holders of the REMIC Regular
Certificates that acquire such Certificates in
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connection with a trade or business should be allowed to deduct, as ordinary
losses, any losses sustained during a taxable year in which their Certificates
become wholly or partially worthless as the result of one or more realized
losses on the Mortgage Loans. However, it appears that a noncorporate holder
that does not acquire a REMIC Regular Certificate in connection with a trade or
business will not be entitled to deduct a loss under Section 166 of the Code
until such holder's Certificate becomes wholly worthless (i.e., until its
Certificate Principal Balance has been reduced to zero) and that the loss will
be characterized as a short-term capital loss.
Each holder of a REMIC Regular Certificate will be required to accrue
interest and original issue discount with respect to such Certificate, without
giving effect to any reductions in distributions attributable to defaults or
delinquencies on the Mortgage Loans or the Underlying Certificates until it can
be established that any such reduction ultimately will not be recoverable. As a
result, the amount of taxable income reported in any period by the holder of a
REMIC Regular Certificate could exceed the amount of economic income actually
realized by the holder in such period. Although the holder of a REMIC Regular
Certificate eventually will recognize a loss or reduction in income attributable
to previously accrued and included income that, as the result of a realized
loss, ultimately will not be realized, the law is unclear with respect to the
timing and character of such loss or reduction in income.
Taxation of Owners of REMIC Residual Certificates.
General. Although a REMIC is a separate entity for federal income tax
purposes, a REMIC generally is not subject to entity-level taxation, except with
regard to prohibited transactions and certain other transactions. See
"--Prohibited Transactions Tax and Other Taxes" below. Rather, the taxable
income or net loss of a REMIC is generally taken into account by the holder of
the REMIC Residual Certificates. Accordingly, the REMIC Residual Certificates
will be subject to tax rules that differ significantly from those that would
apply if the REMIC Residual Certificates were treated for federal income tax
purposes as direct ownership interests in the Mortgage Loans or as debt
instruments issued by the REMIC.
A holder of a REMIC Residual Certificate generally will be required to
report its daily portion of the taxable income or, subject to the limitations
noted in this discussion, the net loss of the REMIC for each day during a
calendar quarter that such holder owned such REMIC Residual Certificate. For
this purpose, the taxable income or net loss of the REMIC will be allocated to
each day in the calendar quarter ratably using a "30 days per month/90 days per
quarter/360 days per year" convention unless otherwise disclosed in the related
Prospectus Supplement. The daily amounts so allocated will then be allocated
among the REMIC Residual Certificateholders in proportion to their respective
ownership interests on such day. Any amount included in the gross income or
allowed as a loss of any REMIC Residual Certificateholder by virtue of this
paragraph will be treated as ordinary income or loss. The taxable income of the
REMIC will be determined under the rules described below in "--Taxable Income of
the REMIC" and will be taxable to the REMIC Residual Certificateholders without
regard to the timing or amount of cash distributions by the REMIC until the
REMIC's termination. Ordinary income derived from REMIC Residual Certificates
will be "portfolio income" for purposes of the taxation of taxpayers subject to
limitations under Section 469 of the Code on the deductibility of "passive
losses".
A holder of a REMIC Residual Certificate that purchased such Certificate
from a prior holder of such Certificate also will be required to report on its
federal income tax return amounts representing its daily share of the taxable
income (or net loss) of the REMIC for each day that it holds such REMIC Residual
Certificate. Those daily amounts generally will equal the amounts of taxable
income or net loss determined as described above. The Committee Report indicates
that certain modifications of the general rules may be made, by regulations,
legislation or otherwise to reduce (or increase) the income of a REMIC Residual
Certificateholder
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that purchased such REMIC Residual Certificate from a prior holder of such
Certificate at a price greater than (or less than) the adjusted basis (as
defined below) such REMIC Residual Certificate would have had in the hands of an
original holder of such Certificate. The REMIC Regulations, however, do not
provide for any such modifications.
Any payments received by a holder of a REMIC Residual Certificate from the
seller of such Certificate in connection with the acquisition of such REMIC
Residual Certificate will be taken into account in determining the income of
such holder for federal income tax purposes. Although it appears likely that any
such payment would be includible in income immediately upon its receipt, the IRS
might assert that such payment should be included in income over time according
to an amortization schedule or according to some other method. Because of the
uncertainty concerning the treatment of such payments, holders of REMIC Residual
Certificates should consult their tax advisors concerning the treatment of such
payments for income tax purposes.
The amount of income REMIC Residual Certificateholders will be required to
report (or the tax liability associated with such income) may exceed the amount
of cash distributions received from the REMIC for the corresponding period.
Consequently, REMIC Residual Certificateholders should have other sources of
funds sufficient to pay any federal income taxes due as a result of their
ownership of REMIC Residual Certificates or unrelated deductions against which
income may be offset, subject to the rules relating to "excess inclusions",
residual interests without "significant value" and "noneconomic" residual
interests discussed below. The fact that the tax liability associated with the
income allocated to REMIC Residual Certificateholders may exceed the cash
distributions received by such REMIC Residual Certificateholders for the
corresponding period may significantly adversely affect such REMIC Residual
Certificateholders' after-tax rate of return. Such disparity between income and
distributions may not be offset by corresponding losses or reductions of income
attributable to the REMIC Residual Certificateholder until subsequent tax years
and, then, may not be completely offset due to changes in the Code, tax rates or
character of the income or loss. REMIC Residual Certificates may in some
instances have negative "value". See "Risk Factors--Certain Federal Tax
Considerations Regarding REMIC Residual Certificates".
Taxable Income of the REMIC. The taxable income of the REMIC will equal the
income from the Mortgage Loans and other assets of the REMIC plus any
cancellation of indebtedness income due to the allocation of realized losses to
REMIC Regular Certificates, less the deductions allowed to the REMIC for
interest (including original issue discount and reduced by any premium on
issuance) on the REMIC Regular Certificates (and any other Class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby),
for amortization of any premium on the Mortgage Loans, for bad debt losses with
respect to the Mortgage Loans and, except as described below, for servicing,
administrative and other expenses.
For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC Certificates (or, if a Class of REMIC Certificates is not sold
initially, their fair market values). Such aggregate basis will be allocated
among the Mortgage Loans and the other assets of the REMIC in proportion to
their respective fair market values. The issue price of any REMIC Certificates
offered hereby will be determined in the manner described above under
"--Taxation of Owners of REMIC Regular Certificates--Original Issue Discount".
The issue price of a REMIC Certificate received in exchange for an interest in
the Mortgage Loans or other property will equal the fair market value of such
interests in the Mortgage Loans or other property. Accordingly, if one or more
Classes of REMIC Certificates are retained initially rather than sold, the REMIC
Administrator may be required to estimate the fair market value of such
interests in order to determine the basis of the REMIC in the Mortgage Loans and
other property held by the REMIC.
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Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount
income with respect to Mortgage Loans that it holds will be equivalent to the
method for accruing original issue discount income for holders of REMIC Regular
Certificates (that is, under the constant yield method taking into account the
Prepayment Assumption). However, a REMIC that acquires loans at a market
discount must include such market discount in income currently, as it accrues,
on a constant yield basis. See "--Taxation of Owners of REMIC Regular
Certificates" above, which describes a method for accruing such discount income
that is analogous to that required to be used by a REMIC as to Mortgage Loans
with market discount that it holds.
A Mortgage Loan will be deemed to have been acquired with discount (or
premium) to the extent that the REMIC's basis therein, determined as described
in the preceding paragraph, is less than (or greater than) its stated redemption
price. Any such discount will be includible in the income of the REMIC as it
accrues, in advance of receipt of the cash attributable to such income, under a
method similar to the method described above for accruing original issue
discount on the REMIC Regular Certificates. It is anticipated that each REMIC
will elect under Section 171 of the Code to amortize any premium on the Mortgage
Loans. Premium on any Mortgage Loan to which such election applies may be
amortized under a constant yield method, presumably taking into account a
Prepayment Assumption.
A REMIC will be allowed deductions for interest (including original issue
discount) on the REMIC Regular Certificates (including any other Class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby)
equal to the deductions that would be allowed if the REMIC Regular Certificates
(including any other Class of REMIC Certificates constituting "regular
interests" in the REMIC not offered hereby) were indebtedness of the REMIC.
Original issue discount will be considered to accrue for this purpose as
described above under "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount", except that the de minimis rule and the
adjustments for subsequent holders of REMIC Regular Certificates (including any
other Class of REMIC Certificates constituting "regular interests" in the REMIC
not offered hereby) described therein will not apply.
If a Class of REMIC Regular Certificates is issued at a price in excess of
the stated redemption price of such Class (such excess "Issue Premium"), the net
amount of interest deductions that are allowed the REMIC in each taxable year
with respect to the REMIC Regular Certificates of such Class will be reduced by
an amount equal to the portion of the Issue Premium that is considered to be
amortized or repaid in that year. Although the matter is not entirely certain,
it is likely that Issue Premium would be amortized under a constant yield method
in a manner analogous to the method of accruing original issue discount
described above under "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount".
As a general rule, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its
taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "--Prohibited Transactions Tax and Other Taxes" below.
Further, the limitation on miscellaneous itemized deductions imposed on
individuals by Section 67 of the Code (which allows such deductions only to the
extent they exceed in the aggregate two percent of the taxpayer's adjusted gross
income) will not be applied at the REMIC level so that the REMIC will be allowed
deductions for servicing, administrative and other noninterest expenses in
determining its taxable income. All such expenses will be allocated as a
separate item to the holders of REMIC Certificates, subject to the limitation of
Section 67 of the Code. See "--Possible Pass-Through of Miscellaneous Itemized
Deductions" below. If the deductions allowed to the REMIC exceed its gross
income for a calendar quarter, such excess will be the net loss for the REMIC
for that calendar quarter.
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Basis Rules, Net Losses and Distributions. The adjusted basis of a REMIC
Residual Certificate will be equal to the amount paid for such REMIC Residual
Certificate, increased by amounts included in the income of the REMIC Residual
Certificateholder and decreased (but not below zero) by distributions made, and
by net losses allocated, to such REMIC Residual Certificateholder.
A REMIC Residual Certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent such net loss exceeds such REMIC
Residual Certificateholder's adjusted basis in its REMIC Residual Certificate as
of the close of such calendar quarter (determined without regard to such net
loss). Any loss that is not currently deductible by reason of this limitation
may be carried forward indefinitely to future calendar quarters and, subject to
the same limitation, may be used only to offset income from the REMIC Residual
Certificate. The ability of REMIC Residual Certificateholders to deduct net
losses may be subject to additional limitations under the Code, as to which
REMIC Residual Certificateholders should consult their tax advisors.
Any distribution on a REMIC Residual Certificate will be treated as a
nontaxable return of capital to the extent it does not exceed the holder's
adjusted basis in such REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated
as gain from the sale of such REMIC Residual Certificate. Holders of certain
REMIC Residual Certificates may be entitled to distributions early in the term
of the related REMIC under circumstances in which their bases in such REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as nontaxable returns of capital. Their bases in such REMIC
Residual Certificates will initially equal the amount paid for such REMIC
Residual Certificates and will be increased by their allocable shares of taxable
income of the REMIC. However, such bases increases may not occur until the end
of the calendar quarter, or perhaps the end of the calendar year, with respect
to which such REMIC taxable income is allocated to the REMIC Residual
Certificateholders. To the extent such REMIC Residual Certificateholders'
initial bases are less than the distributions to such REMIC Residual
Certificateholders, and increases in such initial bases either occur after such
distributions or (together with their initial bases) are less than the amount of
such distributions, gain will be recognized to such REMIC Residual
Certificateholders on such distributions and will be treated as gain from the
sale of their REMIC Residual Certificates.
The effect of these rules is that a REMIC Residual Certificateholder may
not amortize its basis in a REMIC Residual Certificate, but may only recover its
basis through distributions, through the deduction of any net losses of the
REMIC or upon the sale of its REMIC Residual Certificate. See "--Sales of REMIC
Certificates" below. For a discussion of possible modifications of these rules
that may require adjustments to income of a holder of a REMIC Residual
Certificate other than an original holder in order to reflect any difference
between the cost of such REMIC Residual Certificate to such REMIC Residual
Certificateholder and the adjusted basis such REMIC Residual Certificate would
have in the hands of an original holder see "--Taxation of Owners of REMIC
Residual Certificates-General" above.
Excess Inclusions. Any "excess inclusions" with respect to a REMIC Residual
Certificate will be subject to federal income tax in all events.
In general, the "excess inclusions" with respect to a REMIC Residual
Certificate for any calendar quarter will be the excess, if any, of (i) the
daily portions of REMIC taxable income allocable to such REMIC Residual
Certificate over (ii) the sum of the "daily accruals" (as defined below) for
each day during such quarter that such REMIC Residual Certificate was held by
such REMIC Residual Certificateholder. The daily accruals of a REMIC Residual
Certificateholder will be determined by allocating to each day during a calendar
quarter its ratable portion of the product of the "adjusted issue price" of the
REMIC Residual Certificate at
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the beginning of the calendar quarter and 120% of the "long-term Federal rate"
in effect on the Closing Date. For this purpose, the adjusted issue price of a
REMIC Residual Certificate as of the beginning of any calendar quarter will be
equal to the issue price of the REMIC Residual Certificate, increased by the sum
of the daily accruals for all prior quarters and decreased (but not below zero)
by any distributions made with respect to such REMIC Residual Certificate before
the beginning of such quarter. The issue price of a REMIC Residual Certificate
is the initial offering price to the public (excluding bond houses and brokers)
at which a substantial amount of the REMIC Residual Certificates were sold. The
"long-term Federal rate" is an average of current yields on Treasury securities
with a remaining term of greater than nine years, computed and published monthly
by the IRS.
Although it has not done so, the Treasury also has authority to issue
regulations that would treat the entire amount of income accruing on a REMIC
Residual Certificate as an excess inclusion if the REMIC Residual Certificates
are considered not to have "significant value". The REMIC Regulations provide
that in order to be treated as having significant value, the REMIC Residual
Certificates must have an aggregate issue price at least equal to two percent of
the aggregate issue prices of all of the related REMIC's regular and residual
interests. In addition, based on the Prepayment Assumption, the anticipated
weighted average life of the REMIC Residual Certificates must equal or exceed 20
percent of the anticipated weighted average life of the REMIC, based on the
Prepayment Assumption and on any required or permitted clean up calls or
required liquidation provided for in the REMIC's organizational documents. The
related Prospectus Supplement will disclose whether offered REMIC Residual
Certificates may be considered to have "significant value" under the REMIC
Regulations; provided, however, that any disclosure that a REMIC Residual
Certificate will have "significant value" will be based upon certain
assumptions, and the Depositor will make no representation that a REMIC Residual
Certificate will have "significant value" for purposes of the above-described
rules.
For REMIC Residual Certificateholders, an excess inclusion (i) will not be
permitted to be offset by deductions, losses or loss carryovers from other
activities, (ii) will be treated as "unrelated business taxable income" to an
otherwise tax-exempt organization and (iii) will not be eligible for any rate
reduction or exemption under any applicable tax treaty with respect to the 30%
United States withholding tax imposed on distributions to REMIC Residual
Certificateholders that are foreign investors. See, however, "--Foreign
Investors in REMIC Certificates" below.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income (within the meaning of Section 857(b)(2) of the
Code, excluding any net capital gain), will be allocated among the shareholders
of such trust in proportion to the dividends received by such shareholders from
such trust, and any amount so allocated will be treated as an excess inclusion
with respect to a REMIC Residual Certificate as if held directly by such
shareholder. Treasury regulations yet to be issued could apply a similar rule to
regulated investment companies, common trust funds and certain cooperatives; the
REMIC Regulations currently do not address this subject.
Noneconomic REMIC Residual Certificates. Under the REMIC Regulations,
transfers of "noneconomic" REMIC Residual Certificates will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was to
enable the transferor to impede the assessment or collection of tax". If such
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on such "noneconomic" REMIC
Residual Certificate. The REMIC Regulations provide that a REMIC Residual
Certificate is noneconomic unless, based on the Prepayment Assumption and on any
required or permitted clean up calls, or required liquidation provided for in
the REMIC's organizational documents, (1) the present value of the expected
future distributions (discounted using the "applicable Federal
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rate" for obligations whose term ends on the close of the last quarter in which
excess inclusions are expected to accrue with respect to the REMIC Residual
Certificate, which rate is computed and published monthly by the IRS) on the
REMIC Residual Certificate equals at least the present value of the expected tax
on the anticipated excess inclusions, and (2) the transferor reasonably expects
that the transferee will receive distributions with respect to the REMIC
Residual Certificate at or after the time the taxes accrue on the anticipated
excess inclusions in an amount sufficient to satisfy the accrued taxes.
Accordingly, all transfers of REMIC Residual Certificates that may constitute
noneconomic residual interests will be subject to certain restrictions under the
terms of the related Pooling Agreement that are intended to reduce the
possibility of any such transfer being disregarded. Such restrictions will
require each party to a transfer to provide an affidavit that no purpose of such
transfer is to impede the assessment or collection of tax, including certain
representations as to the financial condition of the prospective transferee, as
to which the transferor is also required to make a reasonable investigation to
determine such transferee's historic payment of its debts and ability to
continue to pay its debts as they come due in the future. Prior to purchasing a
REMIC Residual Certificate, prospective purchasers should consider the
possibility that a purported transfer of such REMIC Residual Certificate by such
a purchaser to another purchaser at some future date may be disregarded in
accordance with the above-described rules which would result in the retention of
tax liability by such purchaser.
The related Prospectus Supplement will disclose whether offered REMIC
Residual Certificates may be considered "noneconomic" residual interests under
the REMIC Regulations; provided, however, that any disclosure that a REMIC
Residual Certificate will not be considered "noneconomic" will be based upon
certain assumptions, and the Depositor will make no representation that a REMIC
Residual Certificate will not be considered "noneconomic" for purposes of the
above-described rules. See "--Foreign Investors in REMIC Certificates" below for
additional restrictions applicable to transfers of certain REMIC Residual
Certificates to foreign persons.
Mark-to-Market Rules. The IRS recently released regulations under Section
475 of the Code (the "Mark-to-Market Regulations") relating to the requirement
that a securities dealer mark to market securities held for sale to customers.
This mark-to-market requirement applies to all securities owned by a dealer,
except to the extent that the dealer has specifically identified a security as
held for investment. The Mark-to-Market Regulations provide that for purposes of
this mark-to-market requirement, a REMIC Residual Certificate is not treated as
a security for purposes of Section 475 of the Code, and thus is not subject to
the mark-to-market rules. Prospective purchasers of a REMIC Residual Certificate
should consult their tax advisors regarding the Mark-to-Market Regulations.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC generally will be allocated to the holders of the related
REMIC Residual Certificates. The applicable Treasury regulations indicate,
however, that in the case of a REMIC that is similar to a single class grantor
trust, all or a portion of such fees and expenses should be allocated to the
holders of the related REMIC Regular Certificates. Unless otherwise stated in
the related Prospectus Supplement, such fees and expenses will be allocated to
holders of the related REMIC Residual Certificates in their entirety and not to
the holders of the related REMIC Regular Certificates.
With respect to REMIC Residual Certificates or REMIC Regular Certificates
the holders of which receive an allocation of fees and expenses in accordance
with the preceding discussion, if any holder thereof is an individual, estate or
trust, or a "pass-through entity" beneficially owned by one or more individuals,
estates or trusts, (i) an amount equal to such individual's, estate's or trust's
share of such fees and expenses will be added to the gross income of such holder
and (ii) such individual's, estate's or trust's share of such fees
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and expenses will be treated as a miscellaneous itemized deduction allowable
subject to the limitation of Section 67 of the Code, which permits such
deductions only to the extent they exceed in the aggregate 2% of a taxpayer's
adjusted gross income. In addition, Section 68 of the Code provides that the
amount of itemized deductions otherwise allowable for an individual whose
adjusted gross income exceeds a specified amount will be reduced by the lesser
of (i) 3% of the excess of the individual's adjusted gross income over such
amount or (ii) 80% of the amount of itemized deductions otherwise allowable for
the taxable year. The amount of additional taxable income reportable by REMIC
Certificateholders that are subject to the limitations of either Section 67 or
Section 68 of the Code may be substantial. Furthermore, in determining the
alternative minimum taxable income of such a holder of a REMIC Certificate that
is an individual, estate or trust, or a "pass-through entity" beneficially owned
by one or more individuals, estates or trusts, no deduction will be allowed for
such holder's allocable portion of servicing fees and other miscellaneous
itemized deductions of the REMIC, even though an amount equal to the amount of
such fees and other deductions will be included in such holder's gross income.
Accordingly, such REMIC Certificates may not be appropriate investments for
individuals, estates, or trusts, or pass-through entities beneficially owned by
one or more individuals, estates or trusts. Such prospective investors should
consult with their tax advisors prior to making an investment in such
Certificates.
Sales of REMIC Certificates. If a REMIC Certificate is sold, the selling
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its adjusted basis in the REMIC Certificate.
The adjusted basis of a REMIC Regular Certificate generally will equal the cost
of such REMIC Regular Certificate to such Certificateholder, increased by income
reported by such Certificateholder with respect to such REMIC Regular
Certificate (including original issue discount and market discount income) and
reduced (but not below zero) by distributions on such REMIC Regular Certificate
received by such Certificateholder and by any amortized premium. The adjusted
basis of a REMIC Residual Certificate will be determined as described above
under "--Taxation of Owners of REMIC Residual Certificates-Basis Rules, Net
Losses and Distributions". Except as described below, any such gain or loss will
be capital gain or loss, provided such REMIC Certificate is held as a capital
asset (generally, property held for investment) within the meaning of Section
1221 of the Code. The Code as of the date of this Prospectus provides for a top
marginal tax rate of 39.6% for individuals and a maximum marginal rate for
long-term capital gains of individuals of 28%. No such rate differential exists
for corporations. In addition, the distinction between a capital gain or loss
and ordinary income or loss remains relevant for other purposes.
Gain from the sale of a REMIC Regular Certificate that might otherwise be a
capital gain will be treated as ordinary income to the extent such gain does not
exceed the excess, if any, of (i) the amount that would have been includible in
the seller's income with respect to such REMIC Regular Certificate assuming that
income had accrued thereon at a rate equal to 110% of the "applicable Federal
rate" (generally, a rate based on an average of current yields on Treasury
securities having a maturity comparable to that of the Certificate based on the
application of the Prepayment Assumption to such Certificate), determined as of
the date of purchase of such REMIC Regular Certificate, over (ii) the amount of
ordinary income actually includible in the seller's income prior to such sale.
In addition, gain recognized on the sale of a REMIC Regular Certificate by a
seller who purchased such REMIC Regular Certificate at a market discount will be
taxable as ordinary income in an amount not exceeding the portion of such
discount that accrued during the period such REMIC Certificate was held by such
holder, reduced by any market discount included in income under the rules
described above under "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" and "--Premium".
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REMIC Certificates will be "evidences of indebtedness" within the meaning
of Section 582(c)(1) of the Code, so that gain or loss recognized from the sale
of a REMIC Certificate by a bank or thrift institution to which such Section
applies will be ordinary income or loss.
A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that such Certificate is held as part of a "conversion transaction" within the
meaning of Section 1258 of the Code. A conversion transaction generally is one
in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in such transaction. The amount of gain so realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" at the time the taxpayer
enters into the conversion transaction, subject to appropriate reduction for
prior inclusion of interest and other ordinary income items from the
transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for the taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires such REMIC Residual
Certificate, or acquires any other residual interest in a REMIC or any similar
interest in a "taxable mortgage pool" (as defined in Section 7701(i) of the
Code) during the period beginning six months before, and ending six months
after, the date of such sale, such sale will be subject to the "wash sale" rules
of Section 1091 of the Code. In that event, any loss realized by the REMIC
Residual Certificateholder on the sale will not be deductible, but instead will
be added to such REMIC Residual Certificateholder's adjusted basis in the
newly-acquired asset.
Prohibited Transactions Tax and Other Taxes. The Code imposes a tax
on REMICs equal to 100% of the net income derived from "prohibited transactions"
(a "Prohibited Transactions Tax"). In general, subject to certain specified
exceptions a prohibited transaction means the disposition of a Mortgage Loan,
the receipt of income from a source other than a Mortgage Loan or certain other
permitted investments, the receipt of compensation for services, or gain from
the disposition of an asset purchased with the payments on the Mortgage Loans
for temporary investment pending distribution on the REMIC Certificates. It is
not anticipated that any REMIC will engage in any prohibited transactions as to
which it would be subject to a material Prohibited Transaction Tax.
In addition, certain contributions to a REMIC made after the day on which
the REMIC issues all of its interests could result in the imposition of a tax on
the REMIC equal to 100% of the value of the contributed property (a
"Contributions Tax"). Each Pooling Agreement will include provisions designed to
prevent the acceptance of any contributions that would be subject to such tax.
REMICs also are subject to federal income tax at the highest corporate rate
on "net income from foreclosure property", determined by reference to the rules
applicable to real estate investment trusts. "Net income from foreclosure
property" generally means income from foreclosure property other than qualifying
rents and other qualifying income for a real estate investment trust. Under
certain circumstances, the Special Servicer may be authorized to incur a tax if
doing so would, in the reasonable discretion of the Special Servicer, maximize
the net after-tax proceeds to Certificateholders.
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Unless otherwise disclosed in the related Prospectus Supplement, it is not
anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
Unless otherwise stated in the related Prospectus Supplement, and to the
extent permitted by then applicable laws, any Prohibited Transactions Tax,
Contributions Tax, tax on "net income from foreclosure property" or state or
local income or franchise tax that may be imposed on the REMIC will be borne by
the related REMIC Administrator, Master Servicer, Special Servicer, Manager or
Trustee, in any case out of its own funds, provided that such person has
sufficient assets to do so, and provided further that such tax arises out of a
breach of such person's obligations under the related Pooling Agreement. Any
such tax not borne by a REMIC Administrator, a Master Servicer, Special
Servicer, Manager or Trustee would be charged against the related Trust Fund
resulting in a reduction in amounts payable to holders of the related REMIC
Certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to Certain
Organizations. If a REMIC Residual Certificate is transferred to a "disqualified
organization" (as defined below), a tax would be imposed in an amount
(determined under the REMIC Regulations) equal to the product of (i) the present
value (discounted using the "applicable Federal rate" for obligations whose term
ends on the close of the last quarter in which excess inclusions are expected to
accrue with respect to the REMIC Residual Certificate) of the total anticipated
excess inclusions with respect to such REMIC Residual Certificate for periods
after the transfer and (ii) the highest marginal federal income tax rate
applicable to corporations. The anticipated excess inclusions must be determined
as of the date that the REMIC Residual Certificate is transferred and must be
based on events that have occurred up to the time of such transfer, the
Prepayment Assumption and any required or permitted clean up calls or required
liquidation provided for in the REMIC's organizational documents. Such a tax
generally would be imposed on the transferor of the REMIC Residual Certificate,
except that where such transfer is through an agent for a disqualified
organization, the tax would instead be imposed on such agent. However, a
transferor of a REMIC Residual Certificate would in no event be liable for such
tax with respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a disqualified organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. Moreover, an entity will not qualify as a REMIC unless there
are reasonable arrangements designed to ensure that (i) residual interests in
such entity are not held by disqualified organizations and (ii) information
necessary for the application of the tax described herein will be made
available. Restrictions on the transfer of REMIC Residual Certificates and
certain other provisions that are intended to meet this requirement will be
included in each Pooling Agreement, and will be discussed in any Prospectus
Supplement relating to the offering of any REMIC Residual Certificate.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a REMIC Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of (i) the amount
of excess inclusions on the REMIC Residual Certificate that are allocable to the
interest in the pass-through entity held by such disqualified organization and
(ii) the highest marginal federal income tax rate imposed on corporations. A
pass-through entity will not be subject to this tax for any period, however, if
each record holder of an interest in such pass-through entity furnishes to such
pass-through entity (i) such holder's social security number and a statement
under penalties of perjury that such social security number is that of the
record holder or (ii) a statement under penalties of perjury that such record
holder is not a disqualified organization.
For these purposes, a "disqualified organization" means (i) the United
States, any State or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of the foregoing
(but would not include instrumentalities described in Section 168(h)(2)(D) of
the Code or the
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Federal Home Loan Mortgage Corporation), (ii) any organization (other than a
cooperative described in Section 521 of the Code) that is exempt from federal
income tax, unless it 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. For
these purposes, a "pass-through entity" means any regulated investment company,
real estate investment trust, trust, partnership or certain other entities
described in Section 860E(e)(6) of the Code. In addition, a person holding an
interest in a pass-through entity as a nominee for another person will, with
respect to such interest, be treated as a pass-through entity.
Termination. A REMIC will terminate immediately after the Distribution Date
following receipt by the REMIC of the final payment in respect of the Mortgage
Loans or upon a sale of the REMIC's assets following the adoption by the REMIC
of a plan of complete liquidation. The last distribution on a REMIC Regular
Certificate will be treated as a payment in retirement of a debt instrument. In
the case of a REMIC Residual Certificate, if the last distribution on such REMIC
Residual Certificate is less than the REMIC Residual Certificateholder's
adjusted basis in such Certificate, such REMIC Residual Certificateholder should
(but may not) be treated as realizing a capital loss equal to the amount of such
difference.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a
partnership and REMIC Residual Certificateholders will be treated as partners.
Unless otherwise stated in the related Prospectus Supplement, the REMIC
Administrator, which generally will hold at least a nominal amount of REMIC
Residual Certificates, will file REMIC federal income tax returns on behalf of
the related REMIC, and will be designated as and will act as the "tax matters
person" with respect to the REMIC in all respects.
As the tax matters person, the REMIC Administrator, subject to certain
notice requirements and various restrictions and limitations, generally will
have the authority to act on behalf of the REMIC and the REMIC Residual
Certificateholders in connection with the administrative and judicial review of
items of income, deduction, gain or loss of the REMIC, as well as the REMIC's
classification. REMIC Residual Certificateholders generally will be required to
report such REMIC items consistently with their treatment on the related REMIC's
tax return and may in some circumstances be bound by a settlement agreement
between the REMIC Administrator, as tax matters person, and the IRS concerning
any such REMIC item. Adjustments made to the REMIC's tax return may require a
REMIC Residual Certificateholder to make corresponding adjustments on its
return, and an audit of the REMIC's tax return, or the adjustments resulting
from such an audit, could result in an audit of a REMIC Residual
Certificateholder's return. No REMIC will be registered as a tax shelter
pursuant to Section 6111 of the Code because it is not anticipated that any
REMIC will have a net loss for any of the first five taxable years of its
existence. Any person that holds a REMIC Residual Certificate as a nominee for
another person may be required to furnish to the related REMIC, in a manner to
be provided in Treasury regulations, the name and address of such person and
other information.
Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent to individual holders of REMIC Regular Interests and the
IRS; holders of REMIC Regular Certificates that are corporations, trusts,
securities dealers and certain other nonindividuals will be provided interest
and original issue discount income information and the information set forth in
the following paragraph upon request in accordance with the requirements of the
applicable regulations. The information must be provided by the later of 30 days
after the end of the quarter for which the information was requested, or two
weeks after the receipt of the request. The REMIC must also comply with rules
requiring a REMIC Regular Certificate issued with original issue discount to
disclose on its face the amount of original issue discount and the issue date,
and requiring such information to be reported
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to the IRS. Reporting with respect to REMIC Residual Certificates, including
income, excess inclusions, investment expenses and relevant information
regarding qualification of the REMIC's assets will be made as required under the
Treasury regulations, generally on a quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, such regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount".
Unless otherwise specified in the related Prospectus Supplement, the
responsibility for complying with the foregoing reporting rules will be borne by
the REMIC Administrator.
Backup Withholding with Respect to REMIC Certificates. Payments of interest
and principal, as well as payments of proceeds from the sale of REMIC
Certificates, may be subject to the "backup withholding tax" under Section 3406
of the Code at a rate of 31% if recipients of 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 distribution 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.
Foreign Investors in REMIC Certificates. A REMIC Regular Certificateholder
that is not a "United States Person" (as defined below) and is not subject to
federal income tax as a result of any direct or indirect connection to the
United States in addition to its ownership of a REMIC Regular Certificate will
not, unless otherwise disclosed in the related Prospectus Supplement, be subject
to United States federal income or withholding tax in respect of a distribution
on a REMIC Regular Certificate, provided that the holder complies to the extent
necessary with certain identification requirements (including delivery of a
statement, signed by the Certificateholder under penalties of perjury,
certifying that such Certificateholder is not a United States Person and
providing the name and address of such Certificateholder). For these purposes,
"United States Person" means 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, 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 as to which
(i) a court in the United States is able to exercise primary supervision over
the administration of the trust and (ii) one or more United States fiduciaries
have the right to control all substantial decisions of the trust. It is possible
that the IRS may assert that the foregoing tax exemption should not apply with
respect to a REMIC Regular Certificate held by a REMIC Residual
Certificateholder that owns directly or indirectly a 10% or greater interest in
the REMIC Residual Certificates. If the holder does not qualify for exemption,
distributions of interest, including distributions in respect of accrued
original issue discount, to such holder may be subject to a tax rate of 30%,
subject to reduction under any applicable tax treaty.
In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on such United
States shareholder's allocable portion of the interest income received by such
controlled foreign corporation.
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Further, it appears that a REMIC Regular Certificate would not be included
in the estate of a nonresident alien individual and would not be subject to
United States estate taxes. However, Certificateholders who are nonresident
alien individuals should consult their tax advisors concerning this question.
Unless otherwise stated in the related Prospectus Supplement, transfers of
REMIC Residual Certificates to investors that are not United States Persons will
be prohibited under the related Pooling Agreement.
Grantor Trust Funds
Classification of Grantor Trust Funds. With respect to each Series of
Grantor Trust Certificates, counsel to the Depositor will deliver its opinion to
the effect that, assuming compliance with all provisions of the related Pooling
Agreement, the related Grantor Trust Fund will be classified as a grantor trust
under subpart E, part I of subchapter J of the Code and not as a partnership or
an association taxable as a corporation. The following general discussion of the
anticipated federal income tax consequences of the purchase, ownership and
disposition of Grantor Trust Certificates, to the extent it relates to matters
of law or legal conclusions with respect thereto, represents the opinion of
counsel to the Depositor for the applicable Series as specified in the related
Prospectus Supplement, subject to any qualifications set forth herein. In
addition, counsel to the Depositor have prepared or reviewed the statements in
this Prospectus under the heading "Certain Federal Income Tax
Consequences--Grantor Trust Funds", and are of the opinion that such statements
are correct in all material respects. Such statements are intended as an
explanatory discussion of the possible effects of the classification of any
Grantor Trust Fund as a grantor trust for federal income tax purposes on
investors generally and of related tax matters affecting investors generally,
but do not purport to furnish information in the level of detail or with the
attention to an investor's specific tax circumstances that would be provided by
an investor's own tax advisor. Accordingly, each investor is advised to consult
its own tax advisors with regard to the tax consequences to it of investing in
Grantor Trust Certificates.
For purposes of the following discussion, a Grantor Trust Certificate
representing an undivided equitable ownership interest in the principal of the
Mortgage Loans constituting the related Grantor Trust Fund, together with
interest thereon at a pass-through rate, will be referred to as a "Grantor Trust
Fractional Interest Certificate". A Grantor Trust Certificate representing
ownership of all or a portion of the difference between interest paid on the
Mortgage Loans constituting the related Grantor Trust Fund (net of normal
administration fees) and interest paid to the holders of Grantor Trust
Fractional Interest Certificates issued with respect to such Grantor Trust Fund
will be referred to as a "Grantor Trust Strip Certificate". A Grantor Trust
Strip Certificate may also evidence a nominal ownership interest in the
principal of the Mortgage Loans constituting the related Grantor Trust Fund.
Characterization of Investments in Grantor Trust Certificates.
Grantor Trust Fractional Interest Certificates. In the case of Grantor
Trust Fractional Interest Certificates, unless otherwise disclosed in the
related Prospectus Supplement, counsel to the Depositor will deliver an opinion
that, in general, Grantor Trust Fractional Interest Certificates will represent
interests in (i) "loans . . . secured by an interest in real property" within
the meaning of Section 7701(a)(19)(C)(v) of the Code (but generally only to the
extent that the underlying Mortgage Loans have been made with respect to
property that is used for residential or certain other prescribed purposes);
(ii) "obligation[s] (including any participation or Certificate of beneficial
ownership therein) which . . .[are] principally secured by an interest in real
property" within the meaning of Section 860G(a)(3) of the Code; and (iii) "real
estate assets" within
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the meaning of Section 856(c)(5)(A) of the Code. In addition, counsel to the
Depositor will deliver an opinion that interest on Grantor Trust Fractional
Interest Certificates will to the same extent be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Section 856(c)(3)(B) of the Code.
Grantor Trust Strip Certificates. Even if Grantor Trust Strip Certificates
evidence an interest in a Grantor Trust Fund consisting of Mortgage Loans that
are "loans . . . secured by an interest in real property" within the meaning of
Section 7701(a)(19)(C)(v) of the Code and "real estate assets" within the
meaning of Section 856(c)(5)(A) of the Code, and the interest on which is
"interest on obligations secured by mortgages on real property" within the
meaning of Section 856(c)(3)(A) of the Code, it is unclear whether the Grantor
Trust Strip Certificates, and the income therefrom, will be so characterized.
Counsel to the Depositor will not deliver any opinion on these questions.
Prospective purchasers to which such characterization of an investment in
Grantor Trust Strip Certificates is material should consult their tax advisors
regarding whether the Grantor Trust Strip Certificates, and the income
therefrom, will be so characterized.
The Grantor Trust Strip Certificates will be "obligation[s] (including any
participation or Certificate of beneficial ownership therein) which . . . [are]
principally secured by an interest in real property" within the meaning of
Section 860G(a)(3)(A) of the Code.
Taxation of Owners of Grantor Trust Fractional Interest Certificates.
General. Holders of a particular Series of Grantor Trust Fractional
Interest Certificates generally will be required to report on their federal
income tax returns their shares of the entire income from the Mortgage Loans
(including amounts used to pay reasonable servicing fees and other expenses) and
will be entitled to deduct their shares of any such reasonable servicing fees
and other expenses. Because of stripped interests, market or original issue
discount, or premium, the amount includible in income on account of a Grantor
Trust Fractional Interest Certificate may differ significantly from the amount
distributable thereon representing interest on the Mortgage Loans. Under Section
67 of the Code, an individual, estate or trust holding a Grantor Trust
Fractional Interest Certificate directly or through certain pass-through
entities will be allowed a deduction for such reasonable servicing fees and
expenses only to the extent that the aggregate of such holder's miscellaneous
itemized deductions exceeds two percent of such holder's adjusted gross income.
In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of (i) 3% of the excess
of the individual's adjusted gross income over such amount or (ii) 80% of the
amount of itemized deductions otherwise allowable for the taxable year. The
amount of additional taxable income reportable by holders of Grantor Trust
Fractional Interest Certificates who are subject to the limitations of either
Section 67 or Section 68 of the Code may be substantial. Further,
Certificateholders (other than corporations) subject to the alternative minimum
tax may not deduct miscellaneous itemized deductions in determining such
holder's alternative minimum taxable income. Although it is not entirely clear,
it appears that in transactions in which multiple Classes of Grantor Trust
Certificates (including Grantor Trust Strip Certificates) are issued, such fees
and expenses should be allocated among the Classes of Grantor Trust Certificates
using a method that recognizes that each such Class benefits from the related
services. In the absence of statutory or administrative clarification as to the
method to be used, it currently is intended to base information returns or
reports to the IRS and Certificateholders on a method that allocates such
expenses among Classes of Grantor Trust Certificates with respect to each period
based on the distributions made to each such Class during that period.
The federal income tax treatment of Grantor Trust Fractional Interest
Certificates of any Series will depend on whether they are subject to the
"stripped bond" rules of Section 1286 of the Code. Grantor Trust
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Fractional Interest Certificates may be subject to those rules if (i) a Class of
Grantor Trust Strip Certificates is issued as part of the same Series or (ii)
the Depositor or any of its affiliates retains (for its own account or for
purposes of resale) a right to receive a specified portion of the interest
payable on a Mortgage Asset. Further, the IRS has ruled that an unreasonably
high servicing fee retained by a seller or servicer will be treated as a
retained ownership interest in mortgages that constitutes a stripped coupon. The
related Prospectus Supplement will include information regarding servicing fees
paid to a Master Servicer, a Special Servicer, any Sub-Servicer or their
respective affiliates.
If Stripped Bond Rules Apply. If the stripped bond rules apply, each
Grantor Trust Fractional Interest Certificate will be treated as having been
issued with "original issue discount" within the meaning of Section 1273(a) of
the Code, subject, however, to the discussion below regarding the treatment of
certain stripped bonds as market discount bonds and the discussion regarding de
minimis market discount. See "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--Market Discount" below. Under the stripped bond rules,
the holder of a Grantor Trust Fractional Interest Certificate (whether a cash or
accrual method taxpayer) will be required to report interest income from its
Grantor Trust Fractional Interest Certificate for each month in an amount equal
to the income that accrues on such Certificate in that month calculated under a
constant yield method, in accordance with the rules of the Code relating to
original issue discount.
The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of such Certificate's stated redemption price
over its issue price. The issue price of a Grantor Trust Fractional Interest
Certificate as to any purchaser will be equal to the price paid by such
purchaser of the Grantor Trust Fractional Interest Certificate. The stated
redemption price of a Grantor Trust Fractional Interest Certificate will be the
sum of all payments to be made on such Certificate, other than "qualified stated
interest", if any, as well as such Certificate's share of reasonable servicing
fees and other expenses. See "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--If Stripped Bond Rules Do Not Apply" for a definition of
"qualified stated interest". In general, the amount of such income that accrues
in any month would equal the product of such holder's adjusted basis in such
Grantor Trust Fractional Interest Certificate at the beginning of such month
(see "--Sales of Grantor Trust Certificates" below) and the yield of such
Grantor Trust Fractional Interest Certificate to such holder. Such yield would
be computed as the rate (compounded based on the regular interval between
payment dates) that, if used to discount the holder's share of future payments
on the Mortgage Loans, would cause the present value of those future payments to
equal the price at which the holder purchased such Certificate. In computing
yield under the stripped bond rules, a Certificateholder's share of future
payments on the Mortgage Loans will not include any payments made in respect of
any ownership interest in the Mortgage Loans retained by the Depositor, the
Master Servicer, the Special Servicer, any Sub-Servicer or their respective
affiliates, but will include such Certificateholder's share of any reasonable
servicing fees and other expenses.
Section 1272(a)(6) of the Code requires (i) the use of a reasonable
prepayment assumption in accruing original issue discount and (ii) adjustments
in the accrual of original issue discount when prepayments do not conform to the
prepayment assumption, with respect to certain categories of debt instruments,
and regulations could be, but have not been, adopted applying those provisions
to the Grantor Trust Fractional Interest Certificates. It is unclear whether use
of a reasonable prepayment assumption may be required or permitted without
reliance on these rules. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the Grantor Trust Fractional
Interest Certificate or, with respect to any holder, at the time of purchase of
the Grantor Trust Fractional Interest Certificate by that holder.
Certificateholders are advised to consult their tax advisors concerning
reporting original issue discount in general and, in particular, whether a
prepayment assumption
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should be used in reporting original issue discount with respect to Grantor
Trust Fractional Interest Certificates.
In the case of a Grantor Trust Fractional Interest Certificate acquired at
a price equal to the principal amount of the Mortgage Loans allocable to such
Certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Fractional Interest Certificate
acquired at a discount or premium (that is, at a price less than or greater than
such principal amount, respectively), the use of a reasonable prepayment
assumption would increase or decrease such yield, and thus accelerate or
decelerate, respectively, the reporting of income.
If a prepayment assumption is not used, then when a Mortgage Loan prepays
in full, the holder of a Grantor Trust Fractional Interest Certificate acquired
at a discount or a premium generally will recognize ordinary income or loss
equal to the difference between the portion of the prepaid principal amount of
the Mortgage Loan that is allocable to such Certificate and the portion of the
adjusted basis of such Certificate that is allocable to such Certificateholder's
interest in the Mortgage Loan. If a prepayment assumption is used, it appears
that no separate item of income or loss should be recognized upon a prepayment.
Instead, a prepayment should be treated as a partial payment of the stated
redemption price of the Grantor Trust Fractional Interest Certificate and
accounted for under a method similar to that described for taking account of
original issue discount on REMIC Regular Certificates. See "--REMICs--Taxation
of Owners of REMIC Regular Certificates--Original Issue Discount" above. It is
unclear whether any other adjustments would be required to reflect differences
between an assumed prepayment rate and the actual rate of prepayments.
In the absence of statutory or administrative clarification, it is
currently intended to base information reports or returns to the IRS and
Certificateholders in transactions subject to the stripped bond rules on a
prepayment assumption (the "Prepayment Assumption") that will be disclosed in
the related Prospectus Supplement and on a constant yield computed using a
representative initial offering price for each Class of Certificates. However,
neither the Depositor nor any other person will make any representation that the
Mortgage Loans will in fact prepay at a rate conforming to such Prepayment
Assumption or any other rate or that the Prepayment Assumption will not be
challenged by the IRS on audit. Certificateholders also should bear in mind that
the use of a representative initial offering price will mean that such
information returns or reports, even if otherwise accepted as accurate by the
IRS, will in any event be accurate only as to the initial Certificateholders of
each Series who bought at that price.
Under Treasury Regulation Section 1.1286-1T, certain stripped bonds are to
be treated as market discount bonds and, accordingly, any purchaser of such a
bond is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon (i) there is no
original issue discount (or only a de minimis amount of original issue discount)
or (ii) the annual stated rate of interest payable on the original bond is no
more than one percentage point lower than the gross interest rate payable on the
original mortgage loan (before subtracting any servicing fee or any stripped
coupon). If interest payable on a Grantor Trust Fractional Interest Certificate
is more than one percentage point lower than the gross interest rate payable on
the Mortgage Loans, the related Prospectus Supplement will disclose that fact.
If the original issue discount or market discount on a Grantor Trust Fractional
Interest Certificate determined under the stripped bond rules is less than 0.25%
of the stated redemption price multiplied by the weighted average maturity of
the Mortgage Loans, then such original issue discount or market discount will be
considered to be de minimis. Original issue discount or market discount of only
a de minimis amount will be included in income in the same manner as de minimis
original issue and
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market discount described in "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--If Stripped Bond Rules Do Not Apply" and "--Market
Discount" below.
If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, the Certificateholder will be required to
report its share of the interest income on the Mortgage Loans in accordance with
such Certificateholder's normal method of accounting. In that case, the original
issue discount rules will apply, even if the stripped bond rules do not apply,
to a Grantor Trust Fractional Interest Certificate to the extent it evidences an
interest in Mortgage Loans issued with original issue discount.
The original issue discount, if any, on the Mortgage Loans will equal the
difference between the stated redemption price of such Mortgage Loans and their
issue price. For a definition of "stated redemption price," see "--Taxation of
Owners of REMIC Regular Certificates--Original Issue Discount" above. In
general, the issue price of a Mortgage Loan will be the amount received by the
borrower from the lender under the terms of the Mortgage Loan, less any "points"
paid by the borrower, and the stated redemption price of a Mortgage Loan will
equal its principal amount, unless the Mortgage Loan provides for an initial
"teaser," or below-market interest rate. The determination as to whether
original issue discount will be considered to be de minimis will be calculated
using the same test as in the REMIC discussion. See "--Taxation of Owners of
REMIC Regular Certificates--Original Issue Discount" above.
In the case of Mortgage Loans bearing adjustable or variable interest
rates, the related Prospectus Supplement will describe the manner in which such
rules will be applied with respect to those Mortgage Loans by the Trustee or
Master Servicer, as applicable, in preparing information returns to the
Certificateholders and the IRS.
If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a Mortgage Loan will be required to be
accrued and reported in income each month, based on a constant yield. The OID
Regulations suggest that no prepayment assumption is appropriate in computing
the yield on prepayable obligations issued with original issue discount. In the
absence of statutory or administrative clarification, it currently is not
intended to base information reports or returns to the IRS and
Certificateholders on the use of a prepayment assumption in transactions not
subject to the stripped bond rules. However, Section 1272(a)(6) of the Code may
require that a prepayment assumption be made in computing yield with respect to
all mortgage-backed securities. Certificateholders are advised to consult their
own tax advisors concerning whether a prepayment assumption should be used in
reporting original issue discount with respect to Grantor Trust Fractional
Interest Certificates. Certificateholders should refer to the related Prospectus
Supplement with respect to each Series to determine whether and in what manner
the original issue discount rules will apply to Mortgage Loans in such Series.
A purchaser of a Grantor Trust Fractional Interest Certificate that
purchases such Grantor Trust Fractional Interest Certificate at a cost less than
such Certificate's allocable portion of the aggregate remaining stated
redemption price of the Mortgage Loans held in the related Trust Fund will also
be required to include in gross income such Certificate's daily portions of any
original issue discount with respect to such Mortgage Loans. However, each such
daily portion will be reduced, if the cost of such Grantor Trust Fractional
Interest Certificate to such purchaser is in excess of such Certificate's
allocable portion of the aggregate "adjusted issue prices" of the Mortgage Loans
held in the related Trust Fund, approximately in proportion to the ratio such
excess bears to such Certificate's allocable portion of the aggregate original
issue discount remaining to be accrued on such Mortgage Loans. The adjusted
issue price of a Mortgage Loan on any given day equals the sum of (i) the
adjusted issue price (or, in the case of the first accrual period, the issue
price) of such Mortgage
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Loan at the beginning of the accrual period that includes such day and (ii) the
daily portions of original issue discount for all days during such accrual
period prior to such day. The adjusted issue price of a Mortgage Loan at the
beginning of any accrual period will equal the issue price of such Mortgage
Loan, increased by the aggregate amount of original issue discount with respect
to such Mortgage Loan that accrued in prior accrual periods, and reduced by the
amount of any payments made on such Mortgage Loan in prior accrual periods of
amounts included in its stated redemption price.
Unless otherwise provided in the related Prospectus Supplement, the Trustee
or Master Servicer, as applicable, will provide to any holder of a Grantor Trust
Fractional Interest Certificate such information as such holder may reasonably
request from time to time with respect to original issue discount accruing on
Grantor Trust Fractional Interest Certificates. See "--Grantor Trust Reporting"
below.
Market Discount. If the stripped bond rules do not apply to a Grantor Trust
Fractional Interest Certificate, a Certificateholder may be subject to the
market discount rules of Sections 1276 through 1278 of the Code to the extent an
interest in a Mortgage Loan is considered to have been purchased at a "market
discount", that is, in the case of a Mortgage Loan issued without original issue
discount, at a purchase price less than its remaining stated redemption price
(as defined above), or in the case of a Mortgage Loan issued with original issue
discount, at a purchase price less than its adjusted issue price (as defined
above). If market discount is in excess of a de minimis amount (as described
below), the holder generally will be required to include in income in each month
the amount of such discount that has accrued (under the rules described in the
next paragraph) through such month that has not previously been included in
income, but limited, in the case of the portion of such discount that is
allocable to any Mortgage Loan, to the payment of stated redemption price on
such Mortgage Loan that is received by (or, in the case of accrual basis
Certificateholders, due to) the Trust Fund in that month. A Certificateholder
may elect to include market discount in income currently as it accrues (under a
constant yield method based on the yield of the Certificate to such holder)
rather than including it on a deferred basis in accordance with the foregoing
under rules similar to those described in "--Taxation of Owners of REMIC Regular
Interests-Market Discount" above.
Section 1276(b)(3) of the Code authorized the Treasury Department to issue
regulations providing for the method for accruing market discount on debt
instruments, the principal of which is payable in more than one installment.
Until such time as regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. Under those rules, in each
accrual period market discount on the Mortgage Loans should accrue, at the
holder's option: (i) on the basis of a constant yield method, (ii) in the case
of a Mortgage Loan issued without original issue discount, in an amount that
bears the same ratio to the total remaining market discount as the stated
interest paid in the accrual period bears to the total stated interest remaining
to be paid on the Mortgage Loan as of the beginning of the accrual period, or
(iii) in the case of a Mortgage Loan issued with original issue discount, in an
amount that bears the same ratio to the total remaining market discount as the
original issue discount accrued in the accrual period bears to the total
original issue discount remaining at the beginning of the accrual period. The
prepayment assumption, if any, used in calculating the accrual of original issue
discount is to be used in calculating the accrual of market discount. The effect
of using a prepayment assumption could be to accelerate the reporting of such
discount income. Because the regulations referred to in this paragraph have not
been issued, it is not possible to predict what effect such regulations might
have on the tax treatment of a Mortgage Loan purchased at a discount in the
secondary market.
Because the Mortgage Loans will provide for periodic payments of stated
redemption price, such discount may be required to be included in income at a
rate that is not significantly slower than the rate at which such discount would
be included in income if it were original issue discount.
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Market discount with respect to Mortgage Loans may be considered to be de
minimis and, if so, will be includible in income under de minimis rules similar
to those described above in "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above within the exception that it is
less likely that a prepayment assumption will be used for purposes of such rules
with respect to the Mortgage Loans.
Further, under the rules described above in "--REMICs--Taxation of Owners
of REMIC Regular Certificates--Market Discount", any discount that is not
original issue discount and exceeds a de minimis amount may require the deferral
of interest expense deductions attributable to accrued market discount not yet
includible in income, unless an election has been made to report market discount
currently as it accrues. This rule applies without regard to the origination
dates of the Mortgage Loans.
Premium. If a Certificateholder is treated as acquiring the underlying
Mortgage Loans at a premium, that is, at a price in excess of their remaining
stated redemption price, such Certificateholder may elect under Section 171 of
the Code to amortize using a constant yield method the portion of such premium
allocable to Mortgage Loans originated after September 27, 1985. Amortizable
premium is treated as an offset to interest income on the related debt
instrument, rather than as a separate interest deduction. However, premium
allocable to Mortgage Loans originated before September 28, 1985 or to Mortgage
Loans for which an amortization election is not made, should be allocated among
the payments of stated redemption price on the Mortgage Loan and be allowed as a
deduction as such payments are made (or, for a Certificateholder using the
accrual method of accounting, when such payments of stated redemption price are
due).
It is unclear whether a prepayment assumption should be used in computing
amortization of premium allowable under Section 171 of the Code. If premium is
not subject to amortization using a prepayment assumption and a Mortgage Loan
prepays in full, the holder of a Grantor Trust Fractional Interest Certificate
acquired at a premium should recognize a loss equal to the difference between
the portion of the prepaid principal amount of the Mortgage Loan that is
allocable to the Certificate and the portion of the adjusted basis of the
Certificate that is allocable to the Mortgage Loan. If a prepayment assumption
is used to amortize such premium, it appears that such a loss would be
unavailable. Instead, if a prepayment assumption is used, a prepayment should be
treated as a partial payment of the stated redemption price of the Grantor Trust
Fractional Interest Certificate and accounted for under a method similar to that
described for taking account of original issue discount on REMIC Regular
Certificates. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above. It is unclear whether any other
adjustments would be required to reflect differences between the prepayment
assumption and the actual rate of prepayments.
Taxation of Owners of Grantor Trust Strip Certificates. The "stripped
coupon" rules of Section 1286 of the Code will apply to the Grantor Trust Strip
Certificates. Except as described above in "--Taxation of Owners of Grantor
Trust Fractional Interest Certificates-If Stripped Bond Rules Apply", no
regulations or published rulings under Section 1286 of the Code have been issued
and some uncertainty exists as to how it will be applied to securities such as
the Grantor Trust Strip Certificates. Accordingly, holders of Grantor Trust
Strip Certificates should consult their tax advisors concerning the method to be
used in reporting income or loss with respect to such Certificates.
The OID Regulations do not apply to "stripped coupons", although they
provide general guidance as to how the original issue discount sections of the
Code will be applied. In addition, the discussion below is subject to the
discussion under "--Possible Application of Proposed Contingent Payment Rules"
below and assumes that the holder of a Grantor Trust Strip Certificate will not
own any Grantor Trust Fractional Interest Certificates.
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Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the Grantor Trust Strip
Certificates based on a constant yield method. In effect, each holder of Grantor
Trust Strip Certificates would include as interest income in each month an
amount equal to the product of such holder's adjusted basis in such Grantor
Trust Strip Certificate at the beginning of such month and the yield of such
Grantor Trust Strip Certificate to such holder. Such yield would be calculated
based on the price paid for that Grantor Trust Strip Certificate by its holder
and the payments remaining to be made thereon at the time of the purchase, plus
an allocable portion of the servicing fees and expenses to be paid with respect
to the Mortgage Loans. See "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--If Stripped Bond Rules Apply" above.
As noted above, Section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing the accrual of original issue discount with
respect to certain categories of debt instruments, and that adjustments be made
in the amount and rate of accrual of such discount when prepayments do not
conform to such prepayment assumption. Regulations could be, but have not been,
adopted applying those provisions to the Grantor Trust Strip Certificates. It is
unclear whether use of a prepayment assumption may be required or permitted in
the absence of such regulations. It is also uncertain, if a prepayment
assumption is used, whether the assumed prepayment rate would be determined
based on conditions at the time of the first sale of the Grantor Trust Strip
Certificate or, with respect to any subsequent holder, at the time of purchase
of the Grantor Trust Strip Certificate by that holder.
The accrual of income on the Grantor Trust Strip Certificates will be
significantly slower if a prepayment assumption is permitted to be made than if
yield is computed assuming no prepayments. In the absence of statutory or
administrative clarification, it currently is intended to base information
returns or reports to the IRS and Certificateholders on the Prepayment
Assumption disclosed in the related Prospectus Supplement and on a constant
yield computed using a representative initial offering price for each Class of
Certificates. However, neither the Depositor nor any other person will make any
representation that the Mortgage Loans will in fact prepay at a rate conforming
to the Prepayment Assumption or at any other rate or that the Prepayment
Assumption will not be challenged by the IRS on audit. Certificateholders also
should bear in mind that the use of a representative initial offering price will
mean that such information returns or reports, even if otherwise accepted as
accurate by the IRS, will in any event be accurate only as to the initial
Certificateholders of each Series who bought at that price. Prospective
purchasers of the Grantor Trust Strip Certificates should consult their tax
advisors regarding the use of the Prepayment Assumption.
It is unclear under what circumstances, if any, the prepayment of a
Mortgage Loan will give rise to a loss to the holder of a Grantor Trust Strip
Certificate. If a Grantor Trust Strip Certificate is treated as a single
instrument (rather than an interest in discrete mortgage loans) and the effect
of prepayments is taken into account in computing yield with respect to such
Grantor Trust Strip Certificate, it appears that no loss may be available as a
result of any particular prepayment unless prepayments occur at a rate faster
than the Prepayment Assumption. However, if a Grantor Trust Strip Certificate is
treated as an interest in discrete Mortgage Loans, or if the Prepayment
Assumption is not used, then when a Mortgage Loan is prepaid, the holder of a
Grantor Trust Strip Certificate should be able to recognize a loss equal to the
portion of the adjusted issue price of the Grantor Trust Strip Certificate that
is allocable to such Mortgage Loan.
Possible Application of Proposed Contingent Payment Rules. The coupon
stripping rules' general treatment of stripped coupons is to regard them as
newly issued debt instruments in the hands of each purchaser. To the extent that
payments on the Grantor Trust Strip Certificates would cease if the Mortgage
Loans were prepaid in full, the Grantor Trust Strip Certificates could be
considered to be debt instruments providing for contingent payments. Under the
OID Regulations, debt instruments providing for contingent
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payments are not subject to the same rules as debt instruments providing for
noncontingent payments. Final regulations were recently promulgated regarding
contingent payment debt instruments. As in the case of the OID Regulations, such
regulations do not specifically address securities, such as the Grantor Trust
Strip Certificates, that are subject to the stripped bond rules of Section 1286
of the Code.
If the contingent payment rules under the regulations were to apply, the
holder of a Grantor Trust Strip Certificate would be required to apply a
"noncontingent bond method". Under that method, the issuer of a Grantor Trust
Strip Certificate would determine a projected payment schedule with respect to
such Grantor Trust Strip Certificate. Holders of Grantor Trust Strip
Certificates would be bound by the issuer's projected payment schedule, which
would consist of all noncontingent payments and a projected amount for each
contingent payment based on the projected yield (as described below) of the
Grantor Trust Strip Certificate. The projected amount of each payment would be
determined so that the projected payment schedule reflected the projected yield
reasonably expected to be received by the holder of a Grantor Trust Strip
Certificate. The projected yield referred to above would be a reasonable rate,
not less than the "applicable Federal rate" that, as of the issue date,
reflected general market conditions, the credit quality of the issuer, and the
terms and conditions of the Mortgage Loans. The holder of a Grantor Trust Strip
Certificate would be required to include as interest income in each month the
adjusted issue price of the Grantor Trust Strip Certificate at the beginning of
the period multiplied by the projected yield, and would add to, or subtract
from, such income any variation between the payment actually received in such
month and the payment originally projected to be made in such month.
Certificateholders should consult their tax advisors concerning the
possible application of the contingent payment rules to the Grantor Trust Strip
Certificates.
Sales of Grantor Trust Certificates. Any gain or loss, equal to the
difference between the amount realized on the sale or exchange of a Grantor
Trust Certificate and its adjusted basis, recognized on such sale or exchange of
a Grantor Trust Certificate by an investor who holds such Grantor Trust
Certificate as a capital asset, will be capital gain or loss, except to the
extent of accrued and unrecognized market discount, which will be treated as
ordinary income, and (in the case of banks and other financial institutions)
except as provided under Section 582(c) of the Code. The adjusted basis of a
Grantor Trust Certificate generally will equal its cost, increased by any income
reported by the seller (including original issue discount and market discount
income) and reduced (but not below zero) by any previously reported losses, any
amortized premium and by any distributions with respect to such Grantor Trust
Certificate. The Code as of the date of this Prospectus provides a top marginal
tax rate of 39.6% for individuals and a maximum marginal rate for long-term
capital gains of individuals of 28%. No such rate differential exists for
corporations. In addition, the distinction between a capital gain or loss and
ordinary income or loss remains relevant for other purposes.
Gain or loss from the sale of a Grantor Trust Certificate may be partially
or wholly ordinary and not capital in certain circumstances. Gain attributable
to accrued and unrecognized market discount will be treated as ordinary income,
as will gain or loss recognized by banks and other financial institutions
subject to Section 582(c) of the Code. Furthermore, a portion of any gain that
might otherwise be capital gain may be treated as ordinary income to the extent
that the Grantor Trust Certificate is held as part of a "conversion transaction"
within the meaning of Section 1258 of the Code. A conversion transaction
generally is one in which the taxpayer has taken two or more positions in the
same or similar property that reduce or eliminate market risk, if substantially
all of the taxpayer's return is attributable to the time value of the taxpayer's
net investment in such transaction. The amount of gain realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" (which rate is computed and
published
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monthly by the IRS) at the time the taxpayer enters into the conversion
transaction, subject to appropriate reduction for prior inclusion of interest
and other ordinary income items from the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for that taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Grantor Trust Reporting. Unless otherwise provided in the related
Prospectus Supplement, the Trustee or Master Servicer, as applicable, will
furnish to each holder of a Grantor Trust Certificate with each distribution a
statement setting forth the amount of such distribution allocable to principal
on the underlying Mortgage Loans and to interest thereon at the related
Pass-Through Rate. In addition, the Trustee or Master Servicer, as applicable,
will furnish, within a reasonable time after the end of each calendar year, to
each holder of a Grantor Trust Certificate who was such a holder at any time
during such year, information regarding the amount of servicing compensation
received by the Master Servicer, the Special Servicer or any Sub-Servicer, and
such other customary factual information as the Depositor or the reporting party
deems necessary or desirable to enable holders of Grantor Trust Certificates to
prepare their tax returns and will furnish comparable information to the IRS as
and when required by law to do so. Because the rules for accruing discount and
amortizing premium with respect to the Grantor Trust Certificates are uncertain
in various respects, there is no assurance the IRS will agree with the Trustee's
or Master Servicer's, as the case may be, information reports of such items of
income and expense. Moreover, such information reports, even if otherwise
accepted as accurate by the IRS, will in any event be accurate only as to the
initial Certificateholders that bought their Certificates at the representative
initial offering price used in preparing such reports.
Backup Withholding. In general, the rules described above in
"--REMICs--Backup Withholding with Respect to REMIC Certificates" will also
apply to Grantor Trust Certificates.
Foreign Investors. In general, the discussion with respect to REMIC Regular
Certificates in "--REMICs--Foreign Investors in REMIC Certificates" above
applies to Grantor Trust Certificates except that Grantor Trust Certificates
will, unless otherwise disclosed in the related Prospectus Supplement, be
eligible for exemption from U.S. withholding tax, subject to the conditions
described in such discussion, only to the extent the related Mortgage Loans were
originated after July 18, 1984.
To the extent that interest on a Grantor Trust Certificate would be exempt
under Sections 871(h)(1) and 881(c) of the Code from United States withholding
tax, and the Grantor Trust Certificate is not held in connection with a
Certificateholder's trade or business in the United States, such Grantor Trust
Certificate will not be subject to United States estate taxes in the estate of a
nonresident alien individual.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences", potential investors should consider the state
and local tax consequences of the acquisition, ownership, and disposition of the
Offered Certificates. State tax law may differ substantially from the
corresponding federal law, and the discussion above does not purport to describe
any aspect of the tax laws of any state or other jurisdiction. Therefore,
prospective investors should consult their tax advisors with respect to the
various tax consequences of investments in the Offered Certificates.
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ERISA CONSIDERATIONS
General
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on employee benefit plans, and on
certain other retirement plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and collective investment funds and separate
accounts (and as applicable, insurance company general accounts) in which such
plans, accounts or arrangements are invested that are subject to the fiduciary
responsibility provisions of ERISA and Section 4975 of the Code ("Plans"), and
on persons who are fiduciaries with respect to such Plans, in connection with
the investment of Plan assets. Certain employee benefit plans, such as
governmental plans (as defined in ERISA Section 3(32)), and, if no election has
been made under Section 410(d) of the Code, church plans (as defined in Section
3(33) of ERISA) are not subject to ERISA requirements. Accordingly, assets of
such plans may be invested in Offered Certificates without regard to the ERISA
considerations described below, subject to the provisions of other applicable
federal and state law. Any such plan which is qualified and exempt from taxation
under Sections 401(a) and 501(a) of the Code, however, is subject to the
prohibited transaction rules set forth in Section 503 of the Code.
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. In addition, Section 406 of ERISA and Section 4975 of the
Code prohibit a broad range of transactions involving assets of a Plan and
persons ("parties in interest" within the meaning of ERISA and "disqualified
persons" within the meaning of the Code; collectively, "Parties in Interest")
who have certain specified relationships to the Plan, unless a statutory or
administrative exemption is available. The types of transactions between Plans
and Parties in Interest that are prohibited include: (a) sales, exchanges or
leases of property, (b) loans or other extensions of credit and (c) the
furnishing of goods and services. Certain Parties in Interest that participate
in a prohibited transaction may be subject to an excise tax imposed pursuant to
Section 4975 of the Code or a penalty imposed pursuant to Section 502(i) of
ERISA, unless a statutory or administrative exemption is available. In addition,
the persons involved in the prohibited transaction may have to rescind the
transaction and pay an amount to the Plan for any losses realized by the Plan or
profits realized by such persons, individual retirement accounts involved in the
transaction may be disqualified resulting in adverse tax consequences to the
owner of such account and certain other liabilities could result that would have
a significant adverse effect on such person.
Plan Asset Regulations
A Plan's investment in Offered Certificates may cause the underlying
Mortgage Assets and other assets included in a related Trust Fund to be deemed
assets of such Plan. Section 2510.3-101 of the regulations (the "Plan Asset
Regulations") of the United States Department of Labor (the "DOL") provides that
when a Plan acquires an equity interest in an entity, the Plan's assets include
both such equity interest and an undivided interest in each of the underlying
assets of the entity, unless certain exceptions apply, including that the equity
participation in the entity by "benefit plan investors" (i.e., Plans and certain
employee benefit plans not subject to ERISA) is not "significant", both as
defined therein. For this purpose, in general, equity participation by benefit
plan investors will be "significant" on any date if 25% or more of the value of
any class of equity interests in the entity is held by benefit plan investors
(determined by not including the investments of persons with discretionary
authority or control over the assets of such entity, of any person who provides
investment advice for a fee (direct or indirect) with respect to such assets,
and "affiliates" (as defined in the DOL
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regulations relating to Plan assets) of such persons). Equity participation in a
Trust Fund will be significant on any date if immediately after the most recent
acquisition of any Certificate, 25% or more of any Class of Certificates is held
by benefit plan investors (determined by not including the investments of the
Depositor, the Trustee, the Master Servicer, the Special Servicer, any other
parties with discretionary authority over the assets of a Trust Fund and their
respective affiliates).
Any person who has discretionary authority or control respecting the
management or disposition of Plan assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary of the investing
Plan. If the Mortgage Assets and other assets included in a Trust Fund
constitute Plan assets, then any party exercising management or discretionary
control regarding those assets, such as a Master Servicer, a Special Servicer,
any Sub-Servicer, a Trustee, the obligor under any related credit enhancement
mechanism, or certain affiliates thereof may be deemed to be a Plan "fiduciary"
with respect to the investing Plan and thus subject to the fiduciary
responsibility provisions of ERISA. In addition, if the underlying assets of a
Trust Fund constitute Plan assets, the Depositor, any related REMIC
Administrator, any related Manager, any mortgagor with respect to a related
Mortgage Loan or a mortgage loan underlying a related MBS, as well as each of
the parties described in the preceding sentence, may become Parties in Interest
with respect to an investing Plan (or of a Plan holding an interest in an
investing entity). Thus, if the Mortgage Assets and other assets included in a
Trust Fund constitute Plan assets, the operation of the Trust Fund, may involve
a prohibited transaction under ERISA or the Code. For example, if a person who
is a Party in Interest with respect to an investing Plan is a mortgagor with
respect to a Mortgage Loan included in a Trust Fund, the purchase of
Certificates by the Plan could constitute a prohibited loan between a Plan and a
Party in Interest.
The Plan Asset Regulations provide that where a Plan acquires a "guaranteed
governmental mortgage pool certificate", the Plan's assets include such
certificate but do not solely by reason of the Plan's holdings of such
certificate include any of the mortgages underlying such certificate. The Plan
Asset Regulations include in the definition of a "guaranteed governmental
mortgage pool certificate" certain FHLMC Certificates, GNMA Certificates and
FNMA Certificates, but do not include FAMC Certificates. Accordingly, even if
such types of MBS (other than FAMC Certificates) included in a Trust Fund were
deemed to be assets of Plan investors, the mortgages underlying such MBS (other
than FAMC Certificates) would not be treated as assets of such Plans. Thus, the
prohibited transaction described in the preceding paragraph (regarding a
prohibited loan) would not occur with respect to such types of MBS (other than
FAMC Certificates) held in a Trust Fund, even if such MBS were treated as assets
of Plans. Private label mortgage participations, mortgage pass-through
certificates, FAMC Certificates or other mortgage-backed securities are not
"guaranteed governmental mortgage pool certificates" within the meaning of the
Plan Asset Regulations.
In addition, and without regard to whether the Mortgage Assets and other
assets included in a Trust Fund constitute Plan assets, the acquisition or
holding of Offered Certificates by or on behalf of a Plan could give rise to a
prohibited transaction if the Depositor, the related Trustee or any related
Underwriter, Master Servicer, Special Servicer, Sub-Servicer, REMIC
Administrator, Manager, mortgagor or obligor under any credit enhancement
mechanism, or any of certain affiliates thereof, is or becomes a Party in
Interest with respect to an investing Plan. Accordingly, potential Plan
investors should consult their counsel and review the ERISA discussion in the
related Prospectus Supplement before purchasing any such Certificates.
Prohibited Transaction Exemptions
In considering an investment in the Offered Certificates, a Plan fiduciary
should consider the availability of prohibited transaction exemptions
promulgated by the DOL including, among others, Prohibited Transaction Class
Exemption ("PTCE") 75-1, which exempts certain transactions involving Plans and
certain
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broker-dealers, reporting dealers and banks; PTCE 90-1, which exempts certain
transactions between insurance company separate accounts and Parties in
Interest; PTCE 91-38, which exempts certain transactions between bank collective
investment funds and Parties in Interest; PTCE 84-14, which exempts certain
transactions effected on behalf of a Plan by a "qualified professional asset
manager"; PTCE 95-60, which exempts certain transactions between insurance
company general accounts and Parties in Interest; and PTCE 96-23, which exempts
certain transactions effected on behalf of a Plan by an "in-house asset
manager". There can be no assurance that any of these class exemptions will
apply with respect to any particular Plan investment in the Certificates or,
even if it were deemed to apply, that any exemption would apply to all
transactions that may occur in connection with such investment. The Prospectus
Supplement with respect to the Offered Certificates of any Series may contain
additional information regarding the availability of other exemptions with
respect to such Offered Certificates.
Insurance Company General Accounts
In addition to any exemption that may be available under PTCE 95-60 for the
purchase and holding of Offered Certificates by an insurance company general
account, the Small Business Job Protection Act of 1996 added a new Section
401(c) to ERISA, which provides certain exemptive relief from the provisions of
Part 4 of Title I of ERISA and Section 4975 of the Code, including the
prohibited transaction restrictions imposed by ERISA and the related excise
taxes imposed by the Code, for transactions involving an insurance company
general account. Pursuant to Section 401(c) of ERISA, the DOL is required to
issue final regulations ("401(c) Regulations") no later than December 31, 1997,
which are to provide guidance for the purpose of determining, in cases where
insurance policies supported by an insurer's general account are issued to or
for the benefit of a Plan on or before December 31, 1998, which general account
assets constitute Plan assets. Section 401(c) of ERISA generally provides that,
until the date which is 18 months after the 401(c) Regulations become final, no
person shall be subject to liability under Part 4 of Title I of ERISA and
Section 4975 of the Code on the basis of a claim that the assets of an insurance
company general account constitute Plan assets, unless (i) as otherwise provided
by the Secretary of Labor in the 401(c) Regulations to prevent avoidance of the
regulations or (ii) an action is brought by the Secretary of Labor for certain
breaches of fiduciary duty which would also constitute a violation of federal or
state criminal law. Any assets of an insurance company general account which
support insurance policies issued to a Plan after December 31, 1998 or issued to
Plans on or before December 31, 1998 for which the insurance company does not
comply with the 401(c) Regulations may be treated as Plan assets. In addition,
because Section 401(c) does not relate to insurance company separate accounts,
separate account assets are still treated as Plan assets of any Plan invested in
such separate account. Insurance companies contemplating the investment of
general account assets in Offered Certificates should consult with their legal
counsel with respect to the applicability of Section 401(c) of ERISA, including
the general account's ability to continue to hold such Certificates after the
date which is 18 months after the date the 401(c) Regulations become final.
Consultation With Counsel
Any Plan fiduciary which proposes to purchase Offered Certificates on
behalf of or with assets of a Plan should consider its general fiduciary
obligations under ERISA and should consult with its counsel with respect to the
potential applicability of ERISA and the Code to such investment and the
availability of any prohibited transaction exemption in connection therewith.
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Tax Exempt Investors
A Plan that is exempt from federal income taxation pursuant to Section 501
of the Code (a "Tax Exempt Investor") nonetheless will be subject to federal
income taxation to the extent that its income is "unrelated business taxable
income" ("UBTI") within the meaning of Section 512 of the Code. All "excess
inclusions" of a REMIC allocated to a REMIC Residual Certificate held by a
Tax-Exempt Investor will be considered UBTI and thus will be subject to federal
income tax. See "Certain Federal Income Tax Consequences--REMICs--Taxation of
Owners of REMIC Residual Certificates-Excess Inclusions".
LEGAL INVESTMENT
If and to the extent so specified in the related Prospectus Supplement, the
Offered Certificates of any Series will constitute "mortgage related securities"
for purposes of SMMEA. "Mortgage related securities" are legal investments to
the same extent that, under applicable law, obligations issued by or guaranteed
as to principal and interest by the United States or any agency or
instrumentality thereof constitute legal investments for persons, trusts,
corporations, partnerships, associations, business trusts and business entities
(including depository institutions, insurance companies and pension funds
created pursuant to or existing under the laws of the United States or of any
state), the authorized investments of which are subject to state regulation.
Prior to December 31, 1996, only Classes of Offered Certificates that (i)
were rated in one of the two highest rating categories by one or more Rating
Agencies and (ii) were part of a Series evidencing interests in a Trust Fund
consisting of loans directly secured by a first lien on a single parcel of real
estate upon which is located a dwelling or mixed residential and commercial
structure, and originated by the types of originators specified in SMMEA, would
be "mortgage related securities" for purposes of SMMEA. Furthermore, under SMMEA
as originally enacted, if a state enacted legislation prior to October 3, 1991
that specifically limited the legal investment authority of any the entities
referred to in the preceding paragraph with respect to "mortgage related
securities" under such definition, Offered Certificates would constitute legal
investments for entities subject to such legislation only to the extent provided
in such legislation.
Effective December 31, 1996, the definition of "mortgage related
securities" was modified to include among the types of loans to which such
securities may relate, loans secured by "one or more parcels of real estate upon
which is located one or more commercial structures". In addition, the related
legislative history states that this expanded definition includes multifamily
loans secured by more than one parcel of real estate upon which is located more
than one structure. Until September 23, 2001, any state may enact legislation
limiting the extent to which "mortgage related securities" under this expanded
definition would constitute legal investments under that state's laws.
SMMEA also amended the legal investment authority of federally chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal with "mortgage
related securities" without limitation as to the percentage of their assets
represented 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. 24 (Seventh), subject in each case to such regulations as the applicable
federal regulatory authority may prescribe. In this connection, effective
December 31, 1996, the Office of the Comptroller of the Currency (the "OCC")
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
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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 Certificates will qualify as "commercial
mortgage-related securities", and thus as "Type IV securities", for investment
by national banks. Federal credit unions should review NCUA Letter to Credit
Unions No. 96, as modified by Letter to Credit Unions No. 108, which includes
guidelines to assist federal credit unions in making investment decisions for
mortgage related securities. The NCUA has adopted rules, codified as 12 C.F.R.
Section 703.5(f)-(k), which prohibit federal credit unions from investing in
certain mortgage related securities (including securities such as certain
Classes of Offered Certificates), except under limited circumstances.
The Federal Financial Institutions Examination Council has issued a
supervisory policy statement (the "Policy Statement") applicable to all
depository institutions, setting forth guidelines for and significant
restrictions on investments in "high-risk mortgage securities". The Policy
Statement has been adopted by the Federal Reserve Board, the Office of the
Comptroller of the Currency, the FDIC and the OTS (as defined herein). The
Policy Statement generally indicates that a mortgage derivative product will be
deemed to be high risk if it exhibits greater price volatility than a standard
fixed rate thirty-year mortgage security. According to the Policy Statement,
prior to purchase, a depository institution will be required to determine
whether a mortgage derivative product that it is considering acquiring is
high-risk, and if so that the proposed acquisition would reduce the
institution's overall interest rate risk. Reliance on analysis and documentation
obtained from a securities dealer or other outside party without internal
analysis by the institution would be unacceptable. There can be no assurance as
to which Classes of Certificates, including Offered Certificates, will be
treated as high-risk under the Policy Statement.
The predecessor to the Office of Thrift Supervision (the "OTS") issued a
bulletin, entitled "Mortgage Derivative Products and Mortgage Swaps", which is
applicable to thrift institutions regulated by the OTS. The bulletin established
guidelines for the investment by savings institutions in certain "high-risk"
mortgage derivative securities and limitations on the use of such securities by
insolvent, undercapitalized or otherwise "troubled" institutions. According to
the bulletin, such "high-risk" mortgage derivative securities include securities
having certain specified characteristics, which may include certain Classes of
Offered Certificates. In addition, the National Credit Union Administration has
issued regulations governing federal credit union investments which prohibit
investment in certain specified types of securities, which may include certain
Classes of Offered Certificates. Similar policy statements have been issued by
regulators having jurisdiction over other types of depository institutions.
There may be other restrictions on the ability of certain investors either
to purchase certain Classes of Offered Certificates or to purchase any Class of
Offered Certificates representing more than a specified percentage of the
investor's assets. The Depositor makes no representations as to the proper
characterization of any Class of Offered Certificates for legal investment or
other purposes, or as to the ability of particular investors to purchase any
Class of Offered Certificates under applicable legal investment restrictions.
These uncertainties may adversely affect the liquidity of any Class of Offered
Certificates. Accordingly, 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 legal advisors in
determining
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whether and to what extent the Offered Certificates of any Class and Series
constitute legal investments or are subject to investment, capital or other
restrictions.
USE OF PROCEEDS
Unless otherwise specified in the related Prospectus Supplement, the net
proceeds to be received from the sale of the Certificates of any Series will be
applied by the Depositor to the purchase of Trust Assets or will be used by the
Depositor to cover expenses related thereto. The Depositor expects to sell the
Certificates from time to time, but the timing and amount of offerings of
Certificates will depend on a number of factors, including the volume of
Mortgage Assets acquired by the Depositor, prevailing interest rates,
availability of funds and general market conditions.
METHOD OF DISTRIBUTION
The Certificates offered hereby and by the related Prospectus Supplements
will be offered in Series through one or more of the methods described below.
The Prospectus Supplement prepared for the Offered Certificates of each Series
will describe the method of offering being utilized for such Offered
Certificates and will state the net proceeds to the Depositor from the sale of
such Offered Certificates.
The Depositor intends that Offered Certificates will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of the Offered
Certificates of a particular Series may be made through a combination of two or
more of these methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and
public offering by one or more underwriters specified in the related
Prospectus Supplement;
2. By placements by the Depositor with institutional investors through
dealers; and
3. By direct placements by the Depositor with institutional investors.
In addition, if specified in the related Prospectus Supplement, the Offered
Certificates of a Series may be offered in whole or in part to the seller of the
related Mortgage Assets that would comprise the Trust Fund for such
Certificates.
If underwriters are used in a sale of any Offered Certificates (other than
in connection with an underwriting on a best efforts basis), such Certificates
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices to be
determined at the time of sale or at the time of commitment therefor. The
managing underwriter or underwriters with respect to the offer and sale of
Offered Certificates of a particular Series will be set forth on the cover of
the Prospectus Supplement relating to such Series and the members of the
underwriting syndicate, if any, will be named in such Prospectus Supplement.
In connection with the sale of Offered Certificates, underwriters may
receive compensation from the Depositor or from purchasers of the Offered
Certificates in the form of discounts, concessions or commissions. Underwriters
and dealers participating in the distribution of the Offered Certificates may be
deemed to be
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underwriters in connection with such Certificates, and any discounts or
commissions received by them from the Depositor and any profit on the resale of
Offered Certificates by them may be deemed to be underwriting discounts and
commissions under the Securities Act.
It is anticipated that the underwriting agreement pertaining to the sale of
the Offered Certificates of any Series will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Certificates if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Depositor will indemnify the
several underwriters and the underwriters will indemnify the Depositor against
certain civil liabilities, including liabilities under the Securities Act, or
will contribute to payments required to be made in respect thereof.
The Prospectus Supplement with respect to any Series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Depositor and purchasers of
Offered Certificates of such Series.
The Depositor anticipates that the Offered Certificates will be sold
primarily to institutional investors. Purchasers of Offered Certificates,
including dealers, may, depending on the facts and circumstances of such
purchases, be deemed to be "underwriters" within the meaning of the Securities
Act in connection with reoffers and sales by them of Offered Certificates.
Holders of Offered Certificates should consult with their legal advisors in this
regard prior to any such reoffer or sale.
As to any Series, only those Classes rated in an investment grade rating
category by any Rating Agency will be offered hereby. Any unrated Class may be
initially retained by the Depositor, and may be sold by the Depositor at any
time to one or more institutional investors.
LEGAL MATTERS
Unless otherwise specified in the related Prospectus Supplement, certain
legal matters in connection with the Certificates of each Series, including
certain federal income tax consequences, will be passed upon for the Depositor
by Sidley & Austin.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each Series, and no Trust
Fund will engage in any business activities or have any assets or obligations
prior to the issuance of the related Series. Accordingly, no financial
statements with respect to any Trust Fund will be included in this Prospectus or
in the related Prospectus Supplement. The Depositor has determined that its
financial statements will not be material to the offering of any Offered
Certificates.
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RATING
It is a condition to the issuance of any Class of Offered Certificates that
they shall have been rated not lower than investment grade, that is, in one of
the four highest rating categories, by at least one Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders thereof of all collections on the underlying mortgage
assets to which such holders are entitled. These ratings address the structural,
legal and issuer-related aspects associated with such certificates, the nature
of the underlying mortgage assets and the credit quality of the guarantor, if
any. Ratings on mortgage pass-through certificates do not represent any
assessment of the likelihood of principal prepayments by borrowers or of the
degree by which such prepayments might differ from those originally anticipated.
As a result, Certificateholders might suffer a lower than anticipated yield,
and, in addition, holders of Stripped Interest Certificates might, in certain
cases fail to recoup their initial investments. Furthermore, ratings on mortgage
pass-through certificates do not address the price of such certificates or the
suitability of such certificates to the investor.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.
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INDEX OF PRINCIPAL DEFINITIONS
Accrual Certificates ..................................................... 13
Accrued Certificate Interest ............................................. 44
ARM Loans ................................................................ 33
Available Distribution Amount ............................................ 43
Book-Entry Certificates .................................................. 43
Cash Flow Agreement ...................................................... 15
CERCLA ................................................................... 79
Certificate Account ...................................................... 35,56
Certificate Notional Amount .............................................. 12
Certificate Owner ........................................................ 49
Certificate Principal Balance ............................................ 12
Certificates ............................................................. 1
Class .................................................................... 1
Closing Date ............................................................. 10
Code ..................................................................... 16
Commercial Properties .................................................... 30
Commission ............................................................... 3
Committee Report ......................................................... 86
Companion Class .......................................................... 46
Condemnation Proceeds .................................................... 57
Contributions Tax ........................................................ 98
Controlled Amortization Class ............................................ 45
Controlled Amortization Classes .......................................... 12
Cooperatives ............................................................. 30
CPR ...................................................................... 39
Credit Support ........................................................... 14
Cut-off Date ............................................................. 10,45
Debt Service Coverage Ratio .............................................. 31
Definitive Certificates .................................................. 43
Depositor ................................................................ 1
Determination Date ....................................................... 37,43
Distribution Date ........................................................ 13
Distribution Date Statement .............................................. 47
DOL ...................................................................... 112
DTC ...................................................................... 4,49
DTC Participants ......................................................... 28
Due Dates ................................................................ 33
Due Period ............................................................... 37
Equity Participation ..................................................... 33
ERISA ....................................................................16,112
Excess Funds ............................................................. 42
Exchange Act ............................................................. 4
Extension Risk ........................................................... 20
FAMC ..................................................................... 34
FAMC Certificates ........................................................ 34
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FHLMC .................................................................. 34
FHLMC Certificates ..................................................... 34
Financial Intermediary ................................................. 49
FNMA ................................................................... 34
FNMA Certificates ...................................................... 34
Garn Act ............................................................... 80
GNMA ................................................................... 34
GNMA Certificates ...................................................... 34
Grantor Trust Certificates ............................................. 16
Grantor Trust Fractional Interest Certificate .......................... 102
Grantor Trust Fund ..................................................... 84
Grantor Trust Strip Certificate ........................................ 102
Insurance Proceeds ..................................................... 57
IRS .................................................................... 61
Issue Premium .......................................................... 93
Lender Liability Act ................................................... 79
Letter of Credit Bank .................................................. 71
Liquidation Proceeds ................................................... 57
Loan-to-Value Ratio .................................................... 32
Lock-out Date .......................................................... 33
Lock-out Period ........................................................ 33
Manager ................................................................ 8
Mark-to-Market Regulations ............................................. 96
Master Servicer ........................................................ 8
MBS .................................................................... 1,10,29
MBS Administrator ...................................................... 8
MBS Agreement .......................................................... 34
MBS Issuer ............................................................. 34
MBS Servicer ........................................................... 34
MBS Trustee ............................................................ 34
Mortgage Asset Pool .................................................... 1
Mortgage Asset Seller .................................................. 30
Mortgage Assets ........................................................ 1,29
Mortgage Loans ......................................................... 1,9,29
Mortgage Notes ......................................................... 30
Mortgage Rate .......................................................... 9
Mortgaged Properties ................................................... 30
Mortgages .............................................................. 30
Multifamily Properties ................................................. 30
Net Leases ............................................................. 32
Net Operating Income ................................................... 31
Nonrecoverable Advance ................................................. 47
OCC .................................................................... 115
Offered Certificates ................................................... 1
OID Regulations ........................................................ 84
Originator ............................................................. 30
OTS .................................................................... 116
Parties in Interest .................................................... 112
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Pass-Through Rate ..................................................... 12
Percentage Interest ................................................... 44
Permitted Investments ................................................. 56
Plan Asset Regulations ................................................ 112
Plans ................................................................. 112
Policy Statement ...................................................... 116
Pooling Agreement ..................................................... 11
Prepayment Assumption ................................................. 86,105
Prepayment Interest Shortfall ......................................... 37
Prepayment Premium .................................................... 33
Prohibited Transactions Tax ........................................... 98
Prospectus Supplement ................................................. 1
PTCE .................................................................. 113
Purchase Price ........................................................ 53
Rating Agency ......................................................... 17
Record Date ........................................................... 43
Related Proceeds ...................................................... 46
Relief Act ............................................................ 82
REMIC ................................................................. 2,84
REMIC Administrator ................................................... 3,8
REMIC Certificates .................................................... 84
REMIC Provisions ...................................................... 84
REMIC Regular Certificates ............................................ 16
REMIC Regulations ..................................................... 84
REMIC Residual Certificates ........................................... 16
REO Property .......................................................... 54
RICO .................................................................. 83
Securities Act ........................................................ 3
Senior Certificates ................................................... 11
Senior Liens .......................................................... 30
Series ................................................................ 1
SMMEA ................................................................. 16
SPA ................................................................... 39
Special Servicer ...................................................... 8
Stripped Interest Certificates ........................................ 11
Stripped Principal Certificates ....................................... 11
Sub-Servicer .......................................................... 55
Sub-Servicing Agreement ............................................... 55
Subordinate Certificates .............................................. 11
Tax Exempt Investor ................................................... 115
Tiered REMICs ......................................................... 86
Title V ............................................................... 81
Trust Assets .......................................................... 3
Trust Fund ............................................................ 1
Trustee ............................................................... 8
UBTI .................................................................. 115
UCC ................................................................... 73
Undelivered Mortgage Assets ........................................... 10
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United States Person ..................................................... 101
Value .................................................................... 32
Voting Rights ............................................................ 48
Warranting Party ......................................................... 52
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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 Depositor 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
Page
Prospectus Supplement
Table of Contents.........................................................
Transaction Overview......................................................
Summary of Prospectus Supplement..........................................
Risk Factors..............................................................
Description of the Mortgage Pool..........................................
Servicing of the Mortgage Loans...........................................
Description of the Certificates...........................................
Yield and Maturity Considerations.........................................
Certain Federal Income Tax Consequences...................................
ERISA Considerations......................................................
Legal Investment..........................................................
Method of Distribution....................................................
Legal Matters.............................................................
Ratings ..................................................................
Index of Principal Definitions............................................
Prospectus
Prospectus Supplement.....................................................
Available Information.....................................................
Incorporation of Certain Information by Reference.........................
Table of Contents.........................................................
Summary of Prospectus.....................................................
Risk Factors..............................................................
Description of the Trust Funds............................................
Yield and Maturity Considerations.........................................
The Depositor.............................................................
Description of the Certificates...........................................
Description of the Pooling Agreements.....................................
Description of Credit Support.............................................
Certain Legal Aspects of Mortgage Loans...................................
Certain Federal Income Tax Consequences...................................
State and Other Tax Consequences..........................................
ERISA Considerations......................................................
Legal Investment..........................................................
Use of Proceeds...........................................................
Method of Distribution....................................................
Legal Matters.............................................................
Financial Information.....................................................
Ratings ..................................................................
Index of Principal Definitions............................................
$ (Approximate)
DLJ COMMERCIAL MORTGAGE CORP.
(Depositor)
Mortgage Pass-Through
Certificates
Series 199_-_
Class S, Class A-1A, Class A-1B,
Class A-2, Class A-3 and
Class B-1
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
[UNDERWRITER]
Dated __________, 199_
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (ITEM 14 OF FORM S-3).
The expenses expected to be incurred in connection with the issuance and
distribution of the Certificates being registered, other than underwriting
compensation, are as set forth below.
Filing Fee for Registration Statement ........................ $303.03
Legal Fees and Expenses ...................................... *
-------
Accounting Fees and Expenses ................................. *
-------
Trustee's Fees and Expenses
(including counsel fees) ....................... *
-------
Blue Sky Fees and Expenses ................................... *
-------
Printing and Engraving Fees .................................. *
-------
Rating Agency Fees ........................................... *
-------
Miscellaneous ................................................ *
-------
Total ........................................................ $303.03
- ----------------------
* To be provided by amendment.
INDEMNIFICATION OF DIRECTORS AND OFFICERS (ITEM 15 OF FORM S-3).
The Pooling Agreements will provide that no director, officer, employee or agent
of the Registrant is liable to the Trust Fund or the Certificateholders, except
for such person's own willful misfeasance, bad faith or gross negligence in the
performance of duties or reckless disregard of obligations and duties. The
Pooling Agreements will further provide that, with the exceptions stated above,
a director, officer, employee or agent of the Registrant is entitled to be
indemnified against any loss, liability or expense incurred in connection with
legal actions relating to such Pooling Agreements and related Certificates other
than such expenses related to particular Mortgage Assets.
Any purchase agreement pursuant to which the Registrant acquires Mortgage Assets
for inclusion in a Trust Fund may provide under certain circumstances that each
director of the Registrant, each officer of the Registrant that signed this
Registration Statement or any amendment hereof, and certain controlling persons
of the Registrant, are entitled to be indemnified by the seller of such Mortgage
Assets or an affiliate against certain liabilities, including liabilities under
the Securities Act of 1933, relating to such Mortgage Assets.
Any underwriters who execute an Underwriting Agreement in the form filed as
Exhibit 1.1 to this Registration Statement will agree to indemnify the
Registrant's directors and its officers who signed this Registration Statement
against certain liabilities which might arise under the Securities Act of 1933
from certain information furnished to the Registrant by or on behalf of such
indemnifying party.
It is contemplated that the Registrant will enter into an agreement with
Donaldson, Lufkin & Jenrette, Inc., a Delaware corporation, pursuant to which
Donaldson, Lufkin & Jenrette, Inc. will be obligated to indemnify the Registrant
and each officer, director or employee of the Registrant and certain others
against certain liabilities under the Securities Act of 1933 or the Securities
Exchange Act of 1934 or other laws to the extent such liabilities arise in
connection with the issuance of securities under this Registration Statement.
Subsection (a) of Section 145 of the General Corporation Law of Delaware
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, employee or agent of the corporation or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of
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the fact that such person acted in any of the capacities set forth above,
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification may be made in respect to any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the Court of Chancery or the court in which such action
or suit was brought shall determine that despite the adjudication of liability
such person is fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper.
Section 145 further provides that to the extent a director, officer, employee or
agent of a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith; that indemnification or advancement of expenses provided
for by Section 145 shall not be deemed exclusive of any other rights to which
the indemnified party may be entitled; and empowers the corporation to purchase
and maintain insurance on behalf of a director, officer, employee or agent of
the corporation against any liability asserted against him or incurred by him in
any such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145.
The By-Laws of the Registrant provide, in effect, that to the extent and under
the circumstances permitted by subsections (a) and (b) of Section 145 of the
General Corporation Law of the State of Delaware, the Registrant (i) shall
indemnify and hold harmless each person who was or is a party or is threatened
to be made a party to any action, suit or proceeding described in subsections
(a) and (b) by reason of the fact that he is or was a director or officer, or
his testator or intestate is or was a director or officer of the Registrant,
against expenses, judgments, fines and amounts paid in settlement, and (ii)
shall indemnify and hold harmless each person who was or is a party or is
threatened to be made a party to any such action, suit or proceeding if such
person is or was serving at the request of the Registrant as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
EXHIBITS (ITEM 16 OF FORM S-3).
Exhibits--
1.1 -- Form of Underwriting Agreement.
4.1 -- Form of Pooling and Servicing Agreement.
5.1 -- Opinion of Sidley & Austin with respect
to legality.
8.1 -- Opinion of Sidley & Austin with respect
to certain tax matters.
23.1 -- Consent of Sidley & Austin (included as
part of Exhibit 5.1 and Exhibit 8.1).
24.1 -- Power of Attorney (included in signature
pages to this Registration Statement).
UNDERTAKINGS (ITEM 17 OF FORM S-3).
A. UNDERTAKINGS PURSUANT TO RULE 415.
The undersigned Registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933,
(ii) 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, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
(b) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(f) To provide to the underwriter at the closing specified in the
underwriting agreements certificates in such denominations and registered
in such names as required by the underwriter to permit prompt delivery to
each purchaser.
B. UNDERTAKING IN RESPECT OF INDEMNIFICATION.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, 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 New York, State of New
York on the 24th day of July, 1997.
DLJ COMMERCIAL MORTGAGE CORP.
By: /s/ MARJORIE S. WHITE
-------------------------------------------
Name: Marjorie S. White
Title: Secretary and Treasurer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints N. Dante LaRocca, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his 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 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 might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ LEON M. POLLACK President and Director July 24, 1997
- ------------------------------- (principal executive officer)
Leon M. Pollack
/s/ STEVEN L. KANTOR Senior Vice President July 24, 1997
- ------------------------------- and Director
Steven L. Kantor
/s/ MARJORIE S. WHITE Secretary and Treasurer July 24, 1997
- -------------------------------- and Director (principal
Marjorie S. White financial and accounting
officer)
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
Page Number
-----------
1.1 -- Form of Underwriting Agreement.
4.1 -- Form of Pooling and Servicing Agreement.
5.1 -- Opinion of Sidley & Austin with respect
to legality.
8.1 -- Opinion of Sidley & Austin with respect
to certain tax matters.
23.1 -- Consent of Sidley & Austin (included as
part of Exhibit 5.1 and Exhibit 8.1).
24.1 -- Power of Attorney (included in signature pages
to this Registration Statement).
<PAGE>
DLJ COMMERCIAL MORTGAGE CORP.
Mortgage Pass-Through Certificates
Series _____
UNDERWRITING AGREEMENT
_________________, 19__
[Lead Underwriter's name and address]
Ladies and Gentlemen:
DLJ Commercial Mortgage Corp., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to sell to the
underwriters named in Schedule I hereto (the "Underwriters"; provided, however,
that if you are the only underwriter named in Schedule I, then the terms
"Underwriter" and "Underwriters" shall refer solely to you) its Mortgage
Pass-Through Certificates, Series ___ , as specified in Schedule II hereto (the
"Offered Certificates"), to be issued pursuant to a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") to be dated as of __________,
19__ (the "Cut-off Date"), among the Company, as depositor, _________________,
as master servicer (the "Master Servicer"), ____________, as special servicer
(the "Special Servicer") and ____________, as trustee (in such capacity, the
"Trustee") and REMIC administrator (in such capacity, the "REMIC
Administrator"). The Offered Certificates will be issued in classes (each, a
"Class"). The Offered Certificates will evidence undivided interests in a trust
fund (the "Trust Fund") to be established by the Company pursuant to the Pooling
and Servicing Agreement. The Trust Fund will consist primarily of a pool (the
"Pool") of [specify general characteristics of the Mortgage Loans] mortgage
loans (the "Mortgage Loans") transferred by the Company to the Trust Fund and
listed in an attachment to the Pooling and Servicing Agreement. Three real
estate mortgage investment conduit ("REMIC") elections are to be made with
respect to the Trust Fund with the resulting REMICs being referred to as "REMIC
I", "REMIC II" and "REMIC III", respectively. The Class __ Certificates and
Class ___ Certificates (collectively with the Offered Certificates, the
"Certificates") are also to be issued pursuant to the Pooling and Servicing
Agreement but do not form a part of this offering. The Offered Certificates are
described more fully in the Basic Prospectus and the Prospectus Supplement (each
of which terms is defined below) which the Company is furnishing to you.
1. Representations and Warranties. The Company represents and warrants to,
and agrees with, each Underwriter that:
<PAGE>
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement (No. 333-_____) on Form S-3 for
the registration under the Securities Act of 1933, as amended (the "Act"),
of the Offered Certificates, which registration statement has become
effective and copies of which have heretofore been delivered to you. Such
registration statement meets the requirements set forth in Rule 415(a)(1)
under the Act and complies in all other material respects with such Rule.
The Company proposes to file with the Commission pursuant to Rule 424 under
the Act a supplement, dated the date specified in Schedule II hereto, to
the prospectus, dated the date specified in Schedule II hereto, relating to
the Offered Certificates and the method of distribution thereof and has
previously advised you of all further information (financial and other)
with respect to the Offered Certificates set forth therein. Such
registration statement, including the exhibits thereto, as amended at the
date hereof is hereinafter called the "Registration Statement"; such
prospectus, in the form in which it will be filed with the Commission
pursuant to Rule 424 under the Act, is hereinafter called the "Basic
Prospectus"; such supplement to the Basic Prospectus, in the form in which
it will be filed with the Commission pursuant to Rule 424 of the Act, is
hereinafter called the "Prospectus Supplement"; and the Basic Prospectus
and the Prospectus Supplement together are hereinafter called the
"Prospectus". Any preliminary form of the Prospectus Supplement which has
heretofore been filed pursuant to Rule 402(a) or Rule 424 is hereinafter
called a "Preliminary Prospectus Supplement". The Company will not, without
your prior consent, file any other amendment to the Registration Statement
or make any change in the Basic Prospectus or the Prospectus Supplement
until after the end of the period during which a prospectus is required to
be delivered to purchasers of the Offered Certificates under the Act. The
Company, as depositor with respect to the Trust Fund, will file with the
Commission within fifteen days of the issuance of the Offered Certificates
a report on Form 8-K setting forth specific information concerning the
Offered Certificates (the "Form 8-K").
(b) As of the date hereof, when the Registration Statement became
effective, when the Prospectus Supplement is first filed pursuant to Rule
424 under the Act, when, prior to the Closing Date, any other amendment to
the Registration Statement becomes effective, when any supplement to the
Prospectus Supplement is filed with the Commission, and at the Closing
Date, (i) the Registration Statement, as amended as of any such time, and
the Prospectus, as amended or supplemented as of any such time, complied or
will comply in all material respects with the applicable requirements of
the Act and the rules thereunder and (ii) the Registration Statement, as
amended as of any such time, did not and will not contain any untrue
statement of a material fact and did not and will not omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and the Prospectus, as amended or
supplemented as of any such time, did not and will not contain an untrue
statement of a material fact and did not and will not omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties
as to (A) the information contained in or omitted from the Registration
Statement or the Prospectus or any amendment thereof or supplement thereto
in reliance upon and in conformity with written information furnished to
the Company by you, or by any Underwriter through you, specifically for
-2-
<PAGE>
use in the preparation thereof, or (B) the information contained in or
omitted from any Current Report (as defined in Section 5(b) hereof), or any
amendment thereof or supplement thereto, incorporated by reference in the
Registration Statement or the Prospectus (or any amendment thereof or
supplement thereto).
(c) The Company is a corporation, duly organized, validly existing and
in good standing under the laws of the State of Delaware with full power
and authority (corporate and other) to own its properties and conduct its
business, as described in the Prospectus, and to enter into and perform its
obligations under this Agreement and the Pooling and Servicing Agreement,
and is conducting its business so as to comply in all material respects
with all applicable statutes, ordinances, rules and regulations of the
jurisdictions in which it is conducting business.
(d) The Company is not aware of (i) any request by the Commission for
any further amendment of the Registration Statement or the Prospectus or
for any additional information, (ii) 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 or (iii)
any notification with respect to the suspension of the qualification of the
Offered Certificates for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
(e) At or prior to the Closing Date, the Company will have entered
into the Pooling and Servicing Agreement; this Agreement has been duly
authorized, executed and delivered by the Company, and the Pooling and
Servicing Agreement, when delivered by the Company, will have been duly
authorized, executed and delivered by the Company, and this Agreement and
the Pooling and Servicing Agreement will constitute valid and binding
agreements of the Company, enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, liquidation, moratorium, receivership,
reorganization or similar laws affecting the rights of creditors generally,
(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 any provisions of this Agreement
which purport to provide indemnification from securities law liabilities.
(f) The Offered Certificates and the Pooling and Servicing Agreement
conform in all material respects to the descriptions thereof contained in
the Prospectus; the Offered Certificates [are "mortgage related securities"
as such term is defined in Section 3(a)(41) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and] have been duly and validly
authorized by the Company, and will, when duly and validly executed and
authenticated by the Trustee and delivered to and paid for by the
Underwriters in accordance with this Agreement and the Pooling and
Servicing Agreement, be entitled to the benefits of the Pooling and
Servicing Agreement.
(g) As of the Closing Date, the representations and warranties of the
Company set forth in Section ___ of the Pooling and Servicing Agreement
will be true and correct.
-3-
<PAGE>
(h) Neither the issuance and sale of the Offered Certificates, nor the
consummation of any other of the transactions contemplated herein, nor the
fulfillment of any of the terms of the Pooling and Servicing Agreement or
this Agreement, will result in the breach of any term or provision of the
certificate of incorporation or by-laws of the Company or conflict with,
result in a material breach, violation or acceleration of or constitute a
default under, the terms of any indenture or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which it
is bound, or any statute, order or regulation applicable to the Company or
any of its subsidiaries of any court, regulatory body, administrative
agency or governmental body having jurisdiction over the Company or any of
its subsidiaries. Neither the Company nor any of its subsidiaries is a
party to, bound by or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it, which materially and
adversely affects the ability of the Company to perform its obligations
under this Agreement and the Pooling and Servicing Agreement.
(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 this Agreement, the Pooling and Servicing Agreement or the
Offered Certificates, (ii) seeking to prevent the issuance of the Offered
Certificates or the consummation of any of the transactions contemplated by
this Agreement or the Pooling and Servicing Agreement, (iii) which might
materially and adversely affect the performance by the Company of its
obligations under, or the validity or enforceability of, this Agreement,
the Pooling and Servicing Agreement or the Offered Certificates or (iv)
seeking to affect adversely the federal income tax attributes of the
Offered Certificates described in the Prospectus.
(j) There has not been any material adverse change in the business,
operations, financial condition, properties or assets of the Company since
the date of its latest audited financial statements which would have a
material adverse effect on the ability of the Company to perform its
obligations under the Pooling and Servicing Agreement.
(k) Any taxes, fees and other governmental charges in connection with
the execution and delivery of this Agreement and the Pooling and Servicing
Agreement and the execution, delivery and sale of the Offered Certificates
(other than any related income taxes) have been or will be paid at or prior
to the Closing Date.
2. Purchase and Sale. Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company agrees to
sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, the principal or notional amount of [each
Class of] the Offered Certificates set forth opposite each such Underwriter's
name in Schedule I hereto.
-4-
<PAGE>
The purchase price for [each Class of the Offered Certificates as a
percentage of the aggregate principal (or notional) amount thereof] as of the
Closing Date (as defined below) is set forth in Schedule II hereto. There will
be added to the purchase price of the Offered Certificates interest in respect
of [each Class of] the Offered Certificates at the interest rate applicable [to
such Class] from the Cut-off Date to but not including the Closing Date.
3. Delivery and Payment. The closing for the purchase and sale of the
Offered Certificates contemplated hereby (the "Closing"), shall be made at the
date, location and time of delivery set forth in Schedule II hereto, or such
later date as the Underwriters shall designate, which date and time may be
postponed by agreement between the Underwriters and the Company or as provided
in Section 9 hereof (such date, location and time of delivery and payment for
the Offered Certificates being herein called the "Closing Date"). Delivery of
the Offered Certificates will be made in book-entry form through the facilities
of The Depository Trust Company ("DTC"). Each class of Offered Certificates will
be represented by one or more definitive global Certificates to be deposited by
or on behalf of the Depositor with DTC. Delivery of the Offered Certificates
shall be made to the several Underwriters against payment by the several
Underwriters of the purchase price thereof to or upon the order of the Company
by wire transfer of immediately available funds or by such other method as may
be acceptable to the Company. The Offered Certificates shall be registered in
such names and in such denominations as the Underwriters may request not less
than three full business days in advance of the Closing Date.
The Company agrees to have the Offered Certificates 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. It is understood that the several Underwriters
propose to offer the Offered Certificates for sale to the public as set forth in
the Prospectus.
5. Agreements. The Company agrees with the several Underwriters that:
(a) The Company will promptly advise the Underwriters (i) when, during
any period that a prospectus relating to the Offered Certificates is
required to be delivered under the Act, any amendment to the Registration
Statement shall have become effective, (ii) of any request by the
Commission for any amendment to the Registration Statement or the
Prospectus or for any additional information affecting or in respect of the
Offered Certificates, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement affecting
the Offered Certificates or the institution or threatening of any
proceeding for that purpose and (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Offered Certificates for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company will not file
any amendment to the Registration Statement or supplement to the Prospectus
unless the Company has furnished you a copy for your review prior to filing
and will not file any such proposed amendment or supplement to which you
reasonably object until after the period in which a prospectus is required
to be
-5-
<PAGE>
delivered to purchasers of the Offered Certificates under the Act. Subject
to the foregoing sentence, the Company will cause the Prospectus Supplement
to be transmitted to the Commission for filing pursuant to Rule 424 under
the Act by means reasonably calculated to result in filing with the
Commission pursuant to said Rule. The Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain as
soon as possible the withdrawal thereof.
(b) The Company will cause any Computational Materials and Structural
Term Sheets (each as defined in Section 9 below) with respect to the
Offered Certificates that are delivered by an Underwriter to the Company
pursuant to Section 9 to be filed with the Commission on a Current Report
on Form 8-K (a "Current Report") pursuant to Rule 13a-11 under the Exchange
Act on the business day immediately following the later of (i) the day on
which such Computational Materials and ABS Term Sheets are delivered to
counsel for the Company by an Underwriter prior to 10:30 a.m. and (ii) the
date on which this Agreement is executed and delivered. The Company will
cause one Collateral Term Sheet (as defined in Section 9 below) with
respect to the Offered Certificates that is delivered by the Underwriters
to the Company in accordance with the provisions of Section 9 to be filed
with the Commission on a Current Report pursuant to Rule 13a-11 under the
Exchange Act on the business day immediately following the day on which
such Collateral Term Sheet is delivered to counsel for the Company by the
Underwriters prior to 10:30 a.m. In addition, if at any time prior to the
availability of the Prospectus Supplement, the Underwriters have delivered
to any prospective investor a subsequent Collateral Term Sheet that
reflects, in the reasonable judgment of the Underwriters and the Company, a
material change in the characteristics of the Mortgage Loans from those on
which a Collateral Term Sheet with respect to the Offered Certificates
previously filed with the Commission was based, the Company will cause any
such Collateral Term Sheet that is delivered by the Underwriters to the
Company in accordance with the provisions of Section 9 to be filed with the
Commission on a Current Report on the business day immediately following
the day on which such Collateral Term Sheet is delivered to counsel for the
Company by the Underwriters prior to 10:30 a.m. In each case, the Company
will promptly advise the Underwriters when such Current Report has been so
filed. Each such Current Report shall be incorporated by reference in the
Prospectus and the Registration Statement. Notwithstanding the five
preceding sentences, the Company shall have no obligation to file any
materials provided by the Underwriters pursuant to Section 9 which, in the
reasonable determination of the Company, are not required to be filed
pursuant to the Kidder Letters or the PSA Letter (each as defined in
Section 9 below), or contain erroneous information or contain any untrue
statement of a material fact or, when read in conjunction with the
Prospectus and Prospectus Supplement, omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; it being understood, however, that the Company shall have
no obligation to review or pass upon the accuracy or adequacy of, or to
correct, any Computational Materials or ABS Term Sheets (as defined in
Section 9 below) provided by the Underwriters to the Company pursuant to
Section 9 hereof. The Company shall give notice to the Underwriters of its
determination not to file any materials pursuant to the preceding sentence
and agrees to file such materials if the Underwriters reasonably object to
such determination within one business day after receipt of such notice.
-6-
<PAGE>
(c) If, at any time when a prospectus relating to the Offered
Certificates is required to be delivered under the Act, any event occurs as
a result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply with the Act or
the rules under the Act, the Company promptly will prepare and file with
the Commission, subject to paragraph (a) of this Section 5, an amendment or
supplement that will correct such statement or omission or an amendment
that will effect such compliance and, if such amendment or supplement is
required to be contained in a post-effective amendment to the Registration
Statement, will use its best efforts to cause such amendment of the
Registration Statement to be made effective as soon as possible; provided,
however, that the Company will not be required to file any such amendment
or supplement with respect to any Computational Materials or ABS Term
Sheets incorporated by reference in the Prospectus other than any
amendments or supplements of such Computational Materials or ABS Term
Sheets that are furnished to the Company pursuant to Section 9 hereof which
the Company determines to file in accordance therewith.
(d) The Company will furnish to the Underwriters and counsel for the
Underwriters, without charge, signed copies of the Registration Statement
(including exhibits thereto) and to each other Underwriter a copy of the
Registration Statement (without exhibits thereto) and, so long as delivery
of a prospectus by an Underwriter or dealer relating to the Offered
Certificates may be required by the Act, as many copies of the Basic
Prospectus, the Preliminary Prospectus Supplement, if any, and the
Prospectus Supplement and any amendments and supplements thereto as the
Underwriters may reasonably request.
[(e) The Company agrees that, so long as the Offered Certificates
shall be outstanding, it will cause the Trustee to deliver to the
Underwriters the annual statement[s] as to compliance and the annual
statement[s] of a firm of independent public accountants, furnished to the
Trustee by the Master Servicer [and the Special Servicer] pursuant to
Section[s] ______ of the Pooling and Servicing Agreement, as soon as such
statements are furnished to the Trustee.]
(f) The Company will furnish such information, execute such
instruments and take such action, if any, as may be required to qualify the
Offered Certificates for sale under the laws of such jurisdictions as the
Underwriters may designate and will maintain such qualification in effect
so long as required for the distribution of the Offered Certificates;
provided, however, that the Company shall not be required to qualify to do
business in any jurisdiction where it is not now so qualified or to take
any action that would subject it to general or unlimited service of process
in any jurisdiction where it is not now so subject.
[(g) The Company will pay all costs and expenses in connection with
the transactions contemplated hereby, including, but not limited to, the
fees and disbursements of its counsel; the costs and expenses of printing
(or otherwise reproducing) and delivering the Pooling and Servicing
Agreement and the Offered Certificates; accounting fees and disbursements;
the
-7-
<PAGE>
costs and expenses in connection with the qualification or exemption of the
Offered Certificates under state securities or blue sky laws, including
filing fees and reasonable fees and disbursements of counsel in connection
therewith, in connection with the preparation of any Blue Sky Survey and in
connection with any determination of the eligibility of the Offered
Certificates for investment by institutional investors and the preparation
of any Legal Investment Survey; the expenses of printing any such Blue Sky
Survey and Legal Investment Survey; the costs and expenses in connection
with the preparation, printing and filing of the Registration Statement
(including exhibits thereto), the Basic Prospectus, the Preliminary
Prospectus Supplement, if any, and the Prospectus Supplement, the
preparation and printing of this Agreement, the furnishing to the
Underwriters of such copies of each Preliminary Prospectus Supplement, if
any, and Prospectus Supplement as the Underwriters may reasonably request
and the fees of rating agencies. [Except as provided in Section 7 hereof,]
the Underwriters shall be responsible for paying all costs and expenses
incurred by them in connection with their purchase and sale of the Offered
Certificates, including the fees of counsel to any Underwriter.]
6. Conditions to the Obligations to the Underwriters. The obligations of
the Underwriters to purchase the Offered Certificates as provided in this
Agreement shall be subject to the accuracy in all material respects of the
representations and warranties on the part of the Company contained herein as of
the date hereof and the Closing Date, to the accuracy in all material respects
of the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance in all material respects by the Company of
its obligations hereunder and to the following additional conditions with
respect to the Offered Certificates:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or threatened; and the Prospectus Supplement shall
have been filed with the Commission within the time period prescribed by
the Commission.
(b) The Company shall have delivered to you a certificate, dated the
Closing Date, of any of [list applicable executives] of the Company to the
effect that the signer of such certificate has carefully examined this
Agreement and the Prospectus and that: (i) to the best of his knowledge,
(A) 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, (B) 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, and (C) 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 (ii)
nothing has come to his attention that would lead him to believe that the
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.
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<PAGE>
(c) The Underwriters shall have received from [Sidley & Austin],
counsel for the Company, a favorable opinion, dated the Closing Date and
reasonably satisfactory in form and substance to counsel for the
Underwriters, to the effect that:
(i) Each of this Agreement and the Pooling and Servicing
Agreement has been duly executed and delivered by the Company under
the law of the State of New York;
(ii) Each of this Agreement and the Pooling and Servicing
Agreement is 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 (A) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other similar
laws affecting the enforcement of the rights of creditors generally,
(B) general principles of equity, whether enforcement is sought in a
proceeding in equity or at law, and (C) in the case of this Agreement,
public policy considerations underlying the securities laws to the
extent that the same limit the enforceability of the provisions of
this Agreement that purport or are construed to provide
indemnification with respect to securities law violations;
(iii) The Offered Certificates, when duly executed, authenticated
and delivered in accordance with the Pooling and Servicing Agreement
and paid for in accordance with this Agreement, will be validly issued
and outstanding and entitled to the benefits of such Pooling and
Servicing Agreement;
(iv) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and the
trust created thereunder is not required to be registered under the
Investment Company Act of 1940, as amended;
(v) Such counsel confirms that [(based solely upon telephonic
confirmation from a representative of the Commission)] the
Registration Statement is effective under the Act and, to the best of
such counsel's knowledge, no stop order with respect thereto has been
issued, and no proceeding for that purpose has been instituted or
threatened by the Commission under the Act; such Registration
Statement (except the financial statements and schedules and other
financial and statistical data included therein and the documents
incorporated by reference therein, as to which such counsel need
express no view), at the time it became effective and the Prospectus
(except the financial statements and schedules and the other financial
and statistical data included therein and the documents incorporated
by reference therein, as to which such counsel need express no view),
as of the date of the Prospectus Supplement, appeared on their face to
be appropriately responsive in all material respects to the
requirements of the Act and the rules and regulations thereunder;
(vi) The statements set forth under the heading "Description of
the Offered Certificates" in the Prospectus, insofar as such
statements purport to summarize certain
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<PAGE>
provisions of the Pooling and Servicing Agreement and the Offered
Certificates, provide a fair summary of such provisions;
(vii) The statements set forth in the Prospectus under the
headings "Certain Federal Income Tax Consequences" (insofar as they
relate specifically to the purchase, ownership and disposition of the
Offered Certificates) and "ERISA Considerations" (insofar as they
relate specifically to the purchase, ownership and disposition of the
Offered Certificates), to the extent that they constitute matters of
law or legal conclusions, provide a fair summary of such law or
conclusions; and
(viii) assuming compliance with all provisions of the Pooling and
Servicing Agreement, for federal income tax purposes, each of REMIC I,
REMIC II and REMIC III will qualify as a REMIC pursuant to Section
860D of the Internal Revenue Code of 1986, as amended (the "Code"),
each Class of Certificates other than the Certificates identified in
the Prospectus Supplement as REMIC Residual Certificates, will
constitute a class of "regular interests" in a REMIC within the
meaning of the Code, and each Class of Certificates identified in the
Prospectus Supplement as a Class of REMIC Residual Certificates will
constitute the "residual interest" in a REMIC within the meaning of
the Code.
Such opinion (a) may express its reliance as to factual matters on
certificates of government and agency officials and the representations and
warranties made by, and on certificates or other documents furnished by
officers of, the parties to this Agreement and the Pooling and Servicing
Agreement, (b) may assume the due authorization, execution and delivery of
the instruments and documents referred to therein by the parties thereto
other than the Company, and (c) may be qualified as an opinion only on the
law of the State of New York, the federal law of the United States of
America and the General Corporation Law of the State of Delaware.
Based on such counsel's participation in conferences with officers and
other representatives of the Company and of the Master Servicer, the
Special Servicer, the Trustee, the REMIC Administrator, the Underwriters
and their respective counsel, at which the contents of the Registration
Statement and the Prospectus were discussed and, although such counsel need
not pass upon or assume responsibility for the actual accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus (except as stated in paragraphs [(vi) and
(vii)] above) and need not make an independent check or verification
thereof for the purpose of rendering this opinion, on the basis of the
foregoing, such counsel shall also confirm that nothing has come to the
attention of such counsel that would lead such counsel to believe that the
Registration Statement (which for purposes of such opinion shall not be
deemed to include any exhibits filed therewith or documents incorporated by
reference therein), at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus, as of the date of the Prospectus
Supplement and at the Closing Date,
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<PAGE>
contained or contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(other than financial statements, schedules and other numerical, financial
and statistical data and the documents incorporated therein and the
information included under the caption "Method of Distribution" contained
in the Registration Statement, any amendment thereof and the Prospectus, as
to which such counsel need express no opinion). Insofar as questions of
materiality are involved in the foregoing opinion, such counsel may as to
factual matters necessary to the determination of materiality rely upon
certificates and other information provided by officers and other
representatives to the Company and as to determinations of materiality, may
seek in the first instance and rely where such counsel concludes such
reliance is justifiable, on the view of officers and other representatives
of the Company.
(d) The Underwriters shall have received from [Sidley & Austin] 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, duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has the corporate power and authority to enter into and perform
its obligations under this Agreement and the Pooling and Servicing
Agreement and to consummate the transactions contemplated hereby and
thereby.
(ii) Neither the offer, sale and issuance of the Offered
Certificates nor the consummation of any other of the transactions
contemplated in this Agreement or the Pooling and Servicing Agreement
will conflict with or result in a breach or violation of any term or
provision of, or constitute a default (or an event which with the
passing of time or notification, or both, would constitute a default),
under 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 State of New York, State of Delaware or federal statute or
regulation applicable to the Company or, to the knowledge of such
counsel, any order of any State of New York, State of Delaware or
federal court, regulatory body, administrative agency or governmental
body having jurisdiction over the Company.
(iii) To the knowledge of such counsel, there are no material
contracts, indentures or other documents of the Company required to be
described or referred to in the Registration Statement or to be filed
as exhibits thereto other than those described or referred to therein
or filed or incorporated by reference as exhibits thereto.
(iv) There is no pending or, to the best knowledge of such
counsel, threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company of a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectus, and
there is no
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<PAGE>
franchise, contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to be filed
as an exhibit, which is not described or filed as required.
(v) No consent, approval, authorization or order of any State of
New York, State of Delaware or federal court or governmental agency or
body is required for the consummation by the Company of the
transactions contemplated by this Agreement and the Pooling and
Servicing Agreement, except (i) such as have been obtained under the
Act and (ii) such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and the offer and sale of
the Offered Certificates by any Underwriter, as to which such counsel
need express no opinion.
Such opinion (a) may express counsel's reliance as to factual matters
on certificates of government and agency officials and the representations
and warranties made by, and on certificates or other documents furnished by
officers of, the parties to this Agreement and the Pooling and Servicing
Agreement and (b) may be qualified as an opinion only on the law of the
State of New York, the General Corporate Law of the State of Delaware and
the federal law of the United States of America.
(e) The Underwriter shall have received, with respect to each of the
Master Servicer, the Special Servicer, the REMIC Administrator and the
Trustee, a favorable opinion of counsel, dated the Closing Date, addressing
the valid existence of such party under the laws of the jurisdiction of its
organization, the due authorization, execution and delivery of the Pooling
and Servicing Agreement by such party and, subject to the same limitations
as set forth in Section 6(c)(ii), the enforceability of the Pooling and
Servicing Agreement against such party. Such opinion may express its
reliance as to factual matters on representations and warranties made by,
and on certificates or other documents furnished by officers and/or
authorized representatives of parties to, this Agreement and the Pooling
and Servicing Agreement and on certificates furnished by public officials.
Such opinion may assume the due authorization, execution and delivery of
the instruments and documents referred to therein by the parties thereto
other than the party on behalf of which such opinion is being rendered.
Such opinion may be qualified as an opinion only on the General Corporation
Law of the State of Delaware (if relevant), the laws of each state in which
the writer of the opinion is admitted to practice law and the federal law
of the United States.
(f) The Underwriters shall have received from ____________, counsel
for the Underwriters, a favorable opinion, dated the Closing Date and
satisfactory in form and substance to the Underwriters.
(g) The Underwriters shall have received from ________________
certified public accountants, a letter dated the Closing Date and
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters stating in effect that [using the assumptions and methodology
used by the Company, all of which shall be described in such letter, they
have recalculated such numbers and percentages set forth in the Prospectus
as the Underwriters may
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<PAGE>
reasonably request and as are agreed to by _________________, compared the
results of their calculations to the corresponding items in the Prospectus,
and found each such number and percentage set forth in the Prospectus to be
in agreement with the results of such calculations]. [To the extent
historical financial information with respect to the Company and/or
historical financial, delinquency or related information with respect to
one or more servicers is included in the Prospectus, such letter or letters
shall also relate to such information.]
(h) The Offered Certificates listed on Schedule II hereto shall have
been rated as indicated on such Schedule by the rating agency or agencies
indicated.
(i) All proceedings in connection with the transactions contemplated
by this Agreement, and all documents incident hereto and thereto, 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 additional 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 by this
Agreement, 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 by either telegraph or
telecopier confirmed in writing.
[7. Reimbursement of Underwriters' Expenses. If the sale of any Offered
Certificates provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied
or because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or therein or comply with any provision hereof or
thereof, other than by reason of a default by any of the Underwriters, the
Company will reimburse the Underwriters severally upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of such Offered Certificates.]
8. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person who controls any Underwriter
within the meaning of the Act or the Exchange Act against claims, damages, or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act, the Exchange Act 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 any part of the Registration Statement when such part became
effective, or in the Registration Statement, any Preliminary Prospectus
Supplement, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission (in the
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<PAGE>
case of any Computational Materials or ABS Term Sheets (as defined in Section 9
below) in respect of which the Company agrees to indemnify any Underwriter or
any such controlling person, as set forth below, when such are read in
conjunction with the Prospectus) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter and each such controlling person for any legal
or other expenses reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability, or action; provided,
however, (i) that the Company shall 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
an 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 by any Underwriter directly or through another
Underwriter specifically for use in the preparation thereof or (B) in any
Current Report or any amendment or supplement thereof, except to the extent that
any untrue statement or alleged untrue statement therein or omission therefrom
results (or is alleged to have resulted) directly from an error (a "Collateral
Error") in the information concerning the characteristics of the Mortgage Loans
furnished by the Company to an Underwriter in writing or by electronic
transmission that was used in the preparation of either (x) any Computational
Materials or ABS Term Sheets (or amendments or supplements thereof) or (y) any
written or electronic materials furnished to prospective investors on which the
Computational Materials (or amendments or supplements) were based, (ii) such
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any Underwriter (or any person controlling any Underwriter) from whom
the person asserting any such loss, claim, damage or liability purchased the
Offered Certificates which are the subject thereof if such person did not
receive a copy of the Prospectus (or the Prospectus as amended or supplemented)
at or prior to the confirmation of the sale of such Certificates to such person
in any case where such delivery is required by the Act and the untrue statement
or omission of a material fact contained in such preliminary prospectus was
corrected in the Prospectus (or the Prospectus as amended or supplemented) and
(iii) such indemnity with respect to any Collateral Error shall not inure to the
benefit of any Underwriter (or any person controlling any Underwriter) from whom
the person asserting any loss, claim, damage or liability received any
Computational Materials or ABS Term Sheets (or any written or electronic
materials on which the Computational Materials or ABS Term Sheets are based)
that were prepared on the basis of such Collateral Error, if, prior to the time
of confirmation of the sale of the applicable Offered Certificates to such
person, the Company notified such Underwriter in writing of the Collateral Error
or provided in written or electronic form information superseding or correcting
such Collateral Error (in any such case, a "Corrected Collateral Error"), and
such Underwriter failed to notify such person thereof or to deliver to such
person corrected Computational Materials (or underlying written or electronic
materials) or ABS Term Sheets. This indemnity agreement will be in addition to
any liability which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, each of its directors, each of its officers who signs
the Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each
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<PAGE>
Underwriter, but only with reference to (A) written information relating to such
Underwriter furnished to the Company by an Underwriter directly or through
another Underwriter specifically for use in the preparation of the documents
referred to in the foregoing indemnity, or (B) any Computational Materials or
ABS Term Sheets (or amendments or supplements thereof) delivered to prospective
investors by such Underwriter and furnished to the Company by such Underwriter
pursuant to or as contemplated by Section 9 and incorporated by reference in the
Registration Statement or the Prospectus or any amendment or supplement thereof
(except that no such indemnity shall be available for any losses, claims,
damages or liabilities, or actions in respect thereof, resulting from any
Collateral Error, other than a Corrected Collateral Error). This indemnity
agreement will be in addition to any liability which any Underwriter may
otherwise have. The Company acknowledges that [the statements set forth in the
last paragraph of the cover page and under the heading "Method of Distribution"
in any Preliminary Prospectus Supplement or the Prospectus] 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 indemnity (other than
any Computational Materials or ABS Term Sheets furnished to the Company by any
Underwriter), and you confirm that such statements are correct. [Any
Computational Materials or ABS Term Sheets (or amendments or supplements
thereof) furnished to the Company by a particular Underwriter shall relate
exclusively to and be the several responsibility of such Underwriter and no
other Underwriter.]
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party (which may
be counsel representing the indemnifying party); provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall
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<PAGE>
not be liable for the expenses of more than one separate counsel, approved by
the Underwriters in the case of paragraph (a) of this Section 8, representing
the indemnified parties under such paragraph (a) who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that, if clause (i)
or (iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
(d) If the indemnification provided for in this Section 8 is unavailable or
insufficient to hold harmless an indemnified party under paragraph (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages, or
liabilities referred to in paragraph (a) or (b) above as follows:
(i) in the case of any losses, claims, damages and liabilities (or
actions in respect thereof) which do not arise out of or are not based upon
any untrue statement or omission of a material fact in any Computational
Materials or ABS Term Sheets (or any amendments or supplements thereof) in
such proportion so that the Underwriters are responsible for that portion
represented by the percentage that the underwriting discount bears to the
sum of such discount and the purchase price of the Offered Certificates
specified in Schedule I hereto and the Company is responsible for the
balance; provided, however, that in no case shall any Underwriter (except
as may be provided in any agreement among underwriters relating to the
offering of the Offered Certificates) be responsible under this
subparagraph (i) for any amount in excess of the underwriting discount
applicable to the Offered Certificates purchased by such Underwriter
hereunder; and
(ii) in the case of any losses, claims, damages and liabilities (or
actions in respect thereof) which arise out of or are based upon any untrue
statement or omission of a material fact in any Computational Materials or
ABS Terms Sheets (or any amendments or supplements thereof) or in any
written or electronic materials on which the Computational Materials are
based, in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and the Underwriters on the other in
connection with the statement or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as
any other relevant equitable considerations. 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 in such Computational Materials or ABS
Term Sheets (or any amendments or supplements thereof or such written or
electronic materials) results from information prepared by the Company on
the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
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<PAGE>
Notwithstanding anything to the contrary in this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 8, each person
who controls an Underwriter within the meaning of the Act shall have the same
rights to contribution as such Underwriter, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, each officer
of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the preceding sentence of this paragraph (d).
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this paragraph (d), notify such party or parties from whom contribution
may be sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this paragraph
(d).
9. Computational Materials and ABS Term Sheets. (a) Not later than 10:30
a.m., New York City time, on the date hereof, the Underwriters shall deliver to
the Company and its counsel, as provided below, five complete copies of all
materials provided by the Underwriters to prospective investors in the Offered
Certificates which constitute either (i) "Computational Materials" within the
meaning of the no-action letter dated May 20, 1994 issued by the Division of
Corporation Finance of the Commission to Kidder, Peabody Acceptance Corporation
I, Kidder, Peabody & Co. Incorporated, and Kidder Structured Asset Corporation
and the no-action letter dated May 27, 1994 issued by the Division of
Corporation Finance of the Commission to the Public Securities Association
(together, the "Kidder Letters") or (ii) "ABS Term Sheets" within the meaning of
the no-action letter dated February 17, 1995 issued by the Division of
Corporation Finance of the Commission to the Public Securities Association (the
"PSA Letter" and together with the Kidder Letters, the "No-Action Letters"), if
the filing of such materials with the Commission is a condition of the relief
granted in such letters and, in the case of any such materials that constitute
"Collateral Term Sheets" within the meaning of the PSA Letter, such Collateral
Term Sheets have not previously been delivered to the Company as contemplated by
Section 9(b)(i) below. For purposes of this Agreement, "Structural Term Sheets"
shall have the meaning set forth in the PSA Letter. Each delivery of
Computational Materials and/or ABS Term Sheets to the Company pursuant to this
paragraph (a) shall be effected by delivering four copies of such materials to
counsel for the Company on behalf of the Company at the address specified in
Section 13 hereof and one copy of such materials to the Company.
(b) Each underwriter represents and warrants to and agrees with the
Company, as of the date hereof and as of the Closing Date, as applicable, that:
(i) if such Underwriter has provided any Collateral Term Sheets to
potential investors in the Offered Certificates prior to the date hereof
and if the filing of such materials with the Commission is a condition of
the relief granted in the PSA Letter, then
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in each such case such Underwriter delivered four copies of such materials
to counsel for the Company on behalf of the Company at the address
specified in Section 13 hereof and one copy of such materials to the
Company no later than 10:30 a.m., New York City time, on the first business
day following the date on which such materials were initially provided to a
potential investor;
(ii) the Computational Materials (either in original, aggregated or
consolidated form) and ABS Term Sheets furnished to the Company pursuant to
Section 9(a) or as contemplated in Section 9(b)(i) constitute all of the
materials relating to the Offered Certificates furnished by such
Underwriter (whether in written, electronic or other format) to prospective
investors in the Offered Certificates prior to the date hereof, except for
any preliminary prospectus with respect to the Offered Certificates and any
Computational Materials and ABS Term Sheets with respect to the Offered
Certificates which are not required to be filed with the Commission in
accordance with the No-Action Letters, and all Computational Materials and
ABS Term Sheets provided by such Underwriter to potential investors in the
Offered Certificates comply with the requirements of the No-Action Letters;
(iii) on the respective dates any such Computational Materials and/or
ABS Term Sheets with respect to the Offered Certificates referred to in
Section 9(b)(ii) were last furnished by such Underwriter to each
prospective investor, on the date of delivery thereof to the Company
pursuant to or as contemplated by this Section 9 and on the Closing Date,
such Computational Materials and/or ABS Term Sheets did not and will not
include any untrue statement of a material fact, or, when read in
conjunction with the Prospectus, omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading;
(iv) at the time any Computational Materials or ABS Term Sheets with
respect to the Offered Certificates were furnished to a prospective
investor and on the date hereof, the Underwriters possessed, and on the
date of delivery of such materials to the Company pursuant to or as
contemplated by this Section 9 and on the Closing Date, the Underwriters
will possess, the capability, knowledge, expertise, resources and systems
of internal control necessary to ensure that such Computational Materials
and/or ABS Term Sheets conform to the representations and warranties of the
Underwriters contained in subparagraphs (ii) and (iii) above of this
paragraph (b);
(v) all Computational Materials and ABS Term Sheets with respect to
the Offered Certificates furnished by such Underwriter to potential
investors contained and will contain a legend, prominently displayed on the
first page thereof, to the effect that the Company has not prepared,
reviewed or participated in the preparation of such Computational Materials
or ABS Term Sheets, is not responsible for the accuracy thereof and has not
authorized the dissemination thereof;
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(vi) all Collateral Term Sheets with respect to the Offered
Certificates furnished by such Underwriter to potential investors contained
and will contain a legend, prominently displayed on the first page thereof,
indicating that the information contained therein will be superseded by the
description of the Mortgage Loans contained in the Prospectus and, except
in the case of the initial Collateral Term Sheet, that such information
supersedes the information in all prior Collateral Term Sheets; and
(vii) on and after the date hereof, such Underwriter shall not deliver
or authorize the delivery of any Computational Materials, ABS Term Sheets
or other materials relating to the Offered Certificates (whether in
written, electronic or other format) to any potential investor unless such
potential investor has received a Prospectus prior to or at the same time
as the delivery of such Computational Materials, ABS Term Sheets or other
materials.
Notwithstanding the foregoing, the Underwriters make no representation or
warranty as to whether any Computational Materials or ABS Term Sheets with
respect to the Offered Certificates included or will include any untrue
statement resulting directly from any Collateral Error (except any Corrected
Collateral Error, with respect to materials prepared after the receipt by the
Underwriters from the Company of notice of such Corrected Collateral Error or
materials superseding or correcting such Corrected Collateral Error).
(c) The Underwriters acknowledge and agree that the Company has not
authorized and will not authorize the distribution of any Computational
Materials or ABS Term Sheets with respect to the Offered Certificates to any
prospective investor, and agree that any such Computational Materials and/or ABS
Term Sheets furnished to prospective investors shall include a disclaimer in the
form set forth in paragraph (b)(v) above. The Underwriters agree that they will
not represent to potential investors that any Computational Materials and/or ABS
Term Sheets with respect to the Offered Certificates were prepared or
disseminated on behalf of the Company.
(d) If, at any time when a prospectus relating to the Offered Certificates
is required to be delivered under the Act, it shall be necessary in the opinion
of the Underwriters or their counsel to amend or supplement the Prospectus as a
result of an untrue statement of a material fact contained in any Computational
Materials or ABS Term Sheets provided by the Underwriters pursuant to or as
contemplated by this Section 9 or the omission to state a material fact
required, when considered in conjunction with the Prospectus, to be stated
therein or necessary to make the statements therein, when read in conjunction
with the Prospectus, not misleading, or if it shall be necessary to amend or
supplement any Current Report to comply with the Act or the rules thereunder,
the Underwriters, at their expense, promptly will prepare and furnish to the
Company for filing with the Commission an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance and shall distribute such amendment or supplement to each prospective
investor in the Offered Certificates that received such information being
amended or supplemented. Each Underwriter represents and
-19-
<PAGE>
warrants to the Company, as of the date of delivery of such amendment or
supplement to the Company, that such amendment or supplement will not include
any untrue statement of a material fact or, when read in conjunction with the
Prospectus, omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Company shall have
no obligation to file such amendment or supplement if the Company determines
that (i) such amendment or supplement contains any untrue statement of a
material fact or, when read in conjunction with the Prospectus, omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading (it being understood, however, that the Company shall
have no obligation to review or pass upon the accuracy or adequacy of, or to
correct, any such amendment or supplement provided by the Underwriters to the
Company pursuant to this paragraph (d)) or (ii) such filing is not required
under the Act. Notwithstanding the foregoing, none of the Underwriters make any
representation or warranty as to whether any such amendment or supplement of
Computational Materials or ABS Term Sheets with respect to the Offered
Certificates included or will include any untrue statement resulting directly
from any Collateral Error (except any Corrected Collateral Error, with respect
to materials prepared after the receipt by the Underwriters from the Company of
notice of such Corrected Collateral Error or materials superseding or correcting
such Corrected Collateral Error).
(e) If, at any time when a prospectus relating to the Offered Certificates
is required to be delivered under the Act, it shall be necessary in the opinion
of the Company or its counsel to amend or supplement the Prospectus as a result
of an untrue statement of a material fact contained in any Computational
Materials or ABS Term Sheets provided by the Underwriters pursuant to or as
contemplated by this Section 9 or the omission to state therein a material fact
required, when considered in conjunction with the Prospectus, to be stated
therein or necessary to make the statements therein, when read in conjunction
with the Prospectus, not misleading, or if it shall be necessary to amend or
supplement any Current Report to comply with the Act or the rules thereunder,
the Company promptly will notify each Underwriter of the necessity of such
amendment or supplement, and the Underwriters, at their expense (such expense to
be allocated between them based on the relative fault of the Underwriters) (or,
if such amendment or supplement is necessary due to a Collateral Error (except
any Corrected Collateral Error, with respect to materials prepared after the
receipt by the Underwriters from the Company of notice of such Corrected
Collateral Error or materials superseding or correcting such Corrected
Collateral Error), at the expense of the Company), shall prepare and furnish to
the Company for filing with the Commission an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance and shall distribute such amendment or supplement to each prospective
investor in the Offered Certificates that received such information being
amended or supplemented. Notwithstanding the foregoing, none of the Underwriters
make any representation or warranty as to whether any such amendment or
supplement of Computational Materials or ABS Term Sheets with respect to the
Offered Certificates included or will include any untrue statement resulting
directly from any Collateral Error (except any Corrected Collateral Error, with
respect to materials prepared after the receipt by the Underwriters from the
Company of notice of such Corrected Collateral Error or materials superseding or
correcting such Corrected Collateral Error).
-20-
<PAGE>
(f) The Underwriters (at their own expense) further agree to provide to the
Company any accountants' letters obtained relating to the Computational
Materials and/or ABS Term Sheets, which accountants' letters shall be addressed
to the Company or shall state that the Company may rely thereon; provided that
the Underwriters shall have no obligation to procure any such letter.
10. Substitution of Underwriters. (a) If any Underwriter shall fail to take
up and pay for the amount of the Offered Certificates agreed by such Underwriter
to be purchased under this Agreement, upon tender of such Offered Certificates
in accordance with the terms hereof, and the amount of the Offered Certificates
not purchased does not aggregate more than 10% of the total amount of the
Offered Certificates set forth in Schedule I hereof, the remaining Underwriters
shall be obligated to take up and pay for the Offered Certificates that the
withdrawing or defaulting Underwriter agreed but failed to purchase.
(b) If any Underwriter shall fail to take up and pay for the amount of the
Offered Certificates agreed by such Underwriter to be purchased under this
Agreement (such Underwriter being a "Defaulting Underwriter"), upon tender of
such Certificates in accordance with the terms hereof and thereof, and the
amount of the Offered Certificates not purchased aggregates more than 10% of the
total amount of the Offered Certificates set forth in Schedule I hereto, and
arrangements satisfactory to the remaining Underwriters and the Company for the
purchase of such Certificates by other persons are not made within 36 hours
thereafter, this Agreement shall terminate. In the event of any such termination
the Company shall not be under any liability to any Underwriter (except to the
extent provided in Section 5(g) and Section 8 hereof) nor shall any Underwriter
(other than an Underwriter who shall have failed, otherwise than for some reason
permitted under this Agreement, to purchase the amount of the Offered
Certificates such Underwriter agreed to purchase hereunder) be under any
liability to the Company (except to the extent provided in Sections 8 and 9
hereof). Nothing herein shall be deemed to relieve any Defaulting Underwriter
from any liability it may have to the Company or any other Underwriter by reason
of its failure to take up and pay for Offered Certificates as agreed by such
Defaulting Underwriter.
11. 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 Offered Certificates if prior to such time [(i)
trading in securities of the Company or any affiliate on the New York Stock
Exchange shall have been suspended or limited, or minimum prices shall have been
established on such Exchange, (ii) a banking moratorium 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 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, impractical
to market the Offered Certificates.
12. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and
-21-
<PAGE>
the Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or the Company or any of the officers, directors or controlling
persons referred to in Section 8 hereof, and will survive delivery of and
payment for the Offered Certificates. The provisions of Sections 7, 8 and 9
hereof shall survive the termination or cancellation of this Agreement.
13. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Underwriters, will be mailed, delivered or
either telegraphed or transmitted by telecopier and confirmed to them at the
addresses set forth on Schedule I hereto; or, if sent to the Company will be
mailed, delivered or either telegraphed or transmitted by telecopier and
confirmed to it at 277 Park Avenue, 9th Floor, New York, New York 10172,
Attention: [______], with a copy to Sidley & Austin, 875 Third Avenue, New York,
New York 10022, Attention: William J. Cullen.
14. 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 8 hereof, and their
successors and assigns, and no other person will have any right or obligation
hereunder.
15. Applicable Law; Counterparts. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State. 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.
-22-
<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,
DLJ COMMERCIAL MORTGAGE CORP.
By:
Name:
Title:
Accepted at New York, New York
as of the date first written
above.
[NAME OF LEAD UNDERWRITER]
By:
Name:
Title:
-23-
<PAGE>
SCHEDULE I
Principal or Notional
Amount of relevant
Underwriter Class of Offered
(and address) Class Certificates to be Purchased
- ------------- ----- ----------------------------
-24-
<PAGE>
SCHEDULE II
Registration Statement No.
Basic Prospectus dated ___________, 19__
Prospectus Supplement dated ___________, 19__
Title of Certificates: Mortgage Pass-Through
Certificates, Series ________,
Cut-off Date: __________, 19__
Closing: ___________ [A.M. P.M.] __________, 19__
at the offices of
Sidley & Austin
875 Third Avenue
New York, New York 10022
Manner of payment of Certificate Purchase Price:
Office for delivery of non-book entry Offered Certificates:
Office for payment for Offered Certificates or wire transfer information:
Office for checking non-book entry Offered Certificates:
-25-
<PAGE>
<TABLE>
<CAPTION>
Initial Aggregate Principal (or
in the case of Class __,
Class Designation Notional) Amount of Class(1) Initial Pass-Through Rate Purchase Price(2) Rating(3)
- ----------------- ----------------------------- ------------------------- ----------------- ---------
<S> <C> <C> <C> <C>
$ % %
$ % %
$ % %
$ % %
$ % %
$ % %
$ % %
$ % %
$ % %
</TABLE>
- -------------------
(1) Subject to a variance of plus or minus ___%
(2) Expressed as a percentage of the aggregate stated or notional amount, as
applicable, of the relevant class of Offered Certificates to be purchased.
The purchase price for each class of the Offered Certificates will include
accrued interest at the initial Pass-Through Rate therefor on the aggregate
stated or notional amount, as applicable, thereof to be purchased from the
Cut-off Date to but not including the Closing Date.
(3) By each of _______________________ and ____________________.
-26-
<PAGE>
================================================================================
DLJ COMMERCIAL MORTGAGE CORP.,
Depositor
and
--------------------------,
Master Servicer
and
--------------------------,
Special Servicer
and
---------------------------,
Trustee and REMIC Administrator
---------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of ______, 199__
--------------------------------------
$________________
Mortgage Pass-Through Certificates
Series 199__-_____
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Section Page
------- ----
<S> <C> <C>
ARTICLE I
DEFINITIONS; CERTAIN CALCULATIONS
IN RESPECT OF THE MORTGAGE POOL
1.01. Defined Terms...................................................................................5
1.02. Certain Calculations in Respect of the Mortgage Pool...........................................45
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS
AND WARRANTIES;ORIGINAL ISSUANCE OF CERT
2.01. Conveyance of Mortgage Loans...................................................................47
2.02. Acceptance of REMIC I by Trustee...............................................................49
2.03. Certain Repurchases of Mortgage Loans by the Mortgage Loan Seller..............................51
2.04. Representations and Warranties of the Depositor................................................52
2.05. Representations and Warranties of the Master Servicer..........................................53
2.06. Representations and Warranties of the Special Servicer.........................................55
2.07. Representations, Warranties and Covenants of the Trustee and the REMIC
Administrator..................................................................................57
2.08. [RESERVED].....................................................................................58
2.09. Execution, Authentication and Delivery of Class R-I Certificates;
Creation of REMIC I Regular Interests..........................................................58
2.10. Conveyance of REMIC I Regular Interests; Acceptance of
REMIC II by Trustee............................................................................59
2.11. Execution, Authentication and Delivery of Class R-II Certificates;
Creation of REMIC II Regular Interests.........................................................59
2.12. Conveyance of REMIC II Regular Interests; Acceptance of
REMIC III by Trustee...........................................................................59
2.13. Execution, Authentication and Delivery of REMIC III Certificates...............................60
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
3.01. Administration of the Mortgage Loans...........................................................61
3.02. Collection of Mortgage Loan Payments...........................................................62
3.03. Collection of Taxes, Assessments and Similar Items; Servicing
Accounts; Reserve Accounts.....................................................................62
3.04. Collection Account and Distribution Account....................................................64
3.05. Permitted Withdrawals From the Collection Account and the
Distribution Account...........................................................................67
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
3.06. Investment of Funds in the Collection Account and the REO Account..............................71
3.07. Maintenance of Insurance Policies; Errors and Omissions
and Fidelity Coverage..........................................................................73
3.08. Enforcement of Alienation Clauses..............................................................75
3.09. Realization Upon Defaulted Mortgage Loans......................................................75
3.10. Trustee to Cooperate; Release of Mortgage Files................................................78
3.11. Servicing Compensation; Interest on Servicing Advances;
Payment of Certain Expenses; Obligations of the Trustee
regarding Back-up Servicing Advances...........................................................80
3.12. Property Inspections; Collection of Financial Statements; Delivery of Certain
Reports........................................................................................84
3.13. Annual Statement as to Compliance..............................................................84
3.14. Reports by Independent Public Accountants......................................................85
3.15. Access to Certain Information..................................................................85
3.16. Title to REO Property; REO Account.............................................................86
3.17. Management of REO Property.....................................................................87
3.18. Sale of Mortgage Loans and REO Properties......................................................90
3.19. Additional Obligations of Master Servicer......................................................94
3.20. Modifications, Waivers, Amendments and Consents................................................95
3.21. Transfer of Servicing Between Master Servicer and Special
Servicer; Record Keeping.......................................................................98
3.22. Sub-Servicing Agreements.......................................................................99
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
4.01. Distributions.................................................................................102
4.02. Statements to Certificateholders; Certain Other Reports.......................................112
4.03. P&I Advances..................................................................................114
4.04. Allocation of Realized Losses and Additional Trust Fund Expenses..............................116
4.05. Calculations..................................................................................117
4.06. Use of Agents.................................................................................117
ARTICLE V
THE CERTIFICATES
5.01. The Certificates..............................................................................118
5.02. Registration of Transfer and Exchange of Certificates.........................................119
5.03. Book-Entry Certificates.......................................................................124
5.04. Mutilated, Destroyed, Lost or Stolen Certificates.............................................126
5.05. Persons Deemed Owners.........................................................................126
5.06 Certification by Certificate Owners...........................................................126
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER,
THE SPECIAL SERVICER AND THE REMIC ADMINISTRATOR
6.01. Liability of the Depositor, the Master Servicer, the Special Servicer
and the REMIC Administrator...................................................................128
6.02. Merger, Consolidation or Conversion of the Depositor, the Master
Servicer, the Special Servicer or the REMIC Administrator.....................................128
6.03. Limitation on Liability of the Depositor, the Master Servicer, the Special
Servicer and the REMIC Administrator..........................................................129
6.04. Master Servicer, Special Servicer and REMIC Administrator
Not to Resign.................................................................................130
6.05. Rights of the Depositor and the Trustee in Respect of the Master
Servicer, the Special Servicer and the REMIC Administrator....................................130
6.06. [RESERVED]....................................................................................131
6.07. Master Servicer or Special Servicer as Owner of a Certificate.................................131
ARTICLE VII
DEFAULT
7.01. Events of Default.............................................................................133
7.02. Trustee to Act; Appointment of Successor......................................................137
7.03. Notification to Certificateholders............................................................138
7.04. Waiver of Events of Default...................................................................138
7.05. Additional Remedies of Trustee Upon Event of Default..........................................138
7.06. Advance Collateral Fund for Trustee...........................................................139
ARTICLE VIII
CONCERNING THE TRUSTEE
8.01. Duties of Trustee.............................................................................141
8.02. Certain Matters Affecting Trustee.............................................................143
8.03. Trustee not Liable for Validity or Sufficiency of Certificates or
Mortgage Loans................................................................................144
8.04. Trustee May Own Certificates..................................................................145
8.05. Fees and Expenses of Trustee; Indemnification of Trustee and the REMIC
Administrator.................................................................................145
8.06. Eligibility Requirements for Trustee..........................................................146
8.07. Resignation and Removal of Trustee............................................................147
8.08. Successor Trustee.............................................................................148
8.09. Merger or Consolidation of Trustee............................................................148
8.10. Appointment of Co-Trustee or Separate Trustee.................................................149
8.11. Appointment of Custodians.....................................................................150
8.12. Access to Certain Information.................................................................150
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
ARTICLE IX
TERMINATION
9.01. Termination Upon Repurchase or Liquidation of All Mortgage Loans..............................152
9.02. Additional Termination Requirements...........................................................154
ARTICLE X
ADDITIONAL REMIC PROVISIONS
10.01. REMIC Administration..........................................................................155
10.02. Depositor, Master Servicer, Special Servicer and Trustee to
Cooperate with REMIC Administrator............................................................159
10.03. Indemnification by Trustee, REMIC Administrator, Master
Servicer and Special Servicer.................................................................159
10.04. Fees of the REMIC Administrator...............................................................159
10.05. Use of Agents.................................................................................160
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01. Amendment.....................................................................................161
11.02. Recordation of Agreement; Counterparts........................................................162
11.03. Limitation on Rights of Certificateholders....................................................163
11.04. Governing Law.................................................................................164
11.05. Notices.......................................................................................164
11.06. Severability of Provisions....................................................................164
11.07. Successors and Assigns; Beneficiaries.........................................................165
11.08. Article and Section Headings..................................................................165
11.09. Notices to Rating Agencies....................................................................165
11.10. Complete Agreement............................................................................166
</TABLE>
iv
<PAGE>
EXHIBITS
EXHIBIT A-1 Form of Class S Certificate
EXHIBIT A-2 Form of Class A-1A Certificate
EXHIBIT A-3 Form of Class A-1B Certificate
EXHIBIT A-4 Form of Class A-2 Certificate
EXHIBIT A-5 Form of Class A-3 Certificate
EXHIBIT A-6 Form of Class B-1 Certificate
EXHIBIT A-7 Form of Class B-2 Certificate
EXHIBIT A-8 Form of Class B-3 Certificate
EXHIBIT A-9 Form of Class B-4 Certificate
EXHIBIT A-10 Form of Class C Certificate
EXHIBIT A-11 Form of Class R-I Certificate
EXHIBIT A-12 Form of Class R-II Certificate
EXHIBIT A-13 Form of Class R-III Certificate
EXHIBIT B-1 Mortgage Loan Schedule
EXHIBIT B-2 Schedule of Exceptions to Mortgage
File Delivery
EXHIBIT C Letter of Representations among
Depositor, Trustee and initial Depositor
EXHIBIT D-1 Form of Master Servicer Request for Release
EXHIBIT D-2 Form of Special Servicer Request for Release
EXHIBIT E-1 Form of Trustee Report
EXHIBIT E-2 Form of Determination Date Report
EXHIBIT E-3 Form of Special Servicer Report
EXHIBIT E-4 Form of Operating Statement Analysis
EXHIBIT F-1A Form I of Transferor Certificate for Transfers of Definitive
Certificates
EXHIBIT F-1B Form II of Transferor Certificate for
Transfers of Definitive Certificates
EXHIBIT F-2A Form I of Transferee Certificate for Transfers
of Definitive Certificates
EXHIBIT F-2B Form II of Transferee Certificate for
Transfers of Definitive Certificates
EXHIBIT G-1 Form of Transferee Certificate in Connection with ERISA
(Definitive Certificates)
EXHIBIT G-2 Form of Transferee Certificate in Connection with ERISA (Book-
Entry Certificates)
EXHIBIT H-1 Form of Transfer Affidavit and Agreement for Transfers of
Residual Certificates
EXHIBIT H-2 Form of Transferor Certificate for Transfers of Residual
Certificates
EXHIBIT I-1 Form of Notice and Acknowledgment Concerning Replacement of
Special Servicer
EXHIBIT I-2 Form of Acknowledgment of Proposed Special Servicer
v
<PAGE>
EXHIBIT J Form of UCC-1 Financing Statement
EXHIBIT K Calculation of Net Operating Income
EXHIBIT L-1 Information Request from Certificateholder or Certificate
Owner
EXHIBIT L-2 Information Request from Prospective Investor
vi
<PAGE>
This Pooling and Servicing Agreement (this "Agreement"), is dated and
effective as of _________, 199__ (the "Cut-off Date"), among DLJ COMMERCIAL
MORTGAGE CORP., as Depositor, _______________, as Master Servicer,
_______________, as Special Servicer and _______________, as Trustee and REMIC
Administrator.
PRELIMINARY STATEMENT:
The Depositor intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder on ____________,
199__ (the "Closing Date") in multiple classes (each, a "Class"), which in the
aggregate will evidence the entire beneficial ownership interest in a trust fund
(the "Trust Fund") to be created hereunder.
As provided herein, the REMIC Administrator will elect to treat the
segregated pool of assets consisting of the Mortgage Loans (as defined herein)
and certain other related assets subject to this Agreement as a real estate
mortgage investment conduit (a "REMIC") for federal income tax purposes, and
such segregated pool of assets will be designated as REMIC I. The Class R-I
Certificates will represent the sole class of "residual interests" in REMIC I
for purposes of the REMIC Provisions (as defined herein) under federal income
tax law. With respect to each Mortgage Loan, there shall be a corresponding
"regular interest" in REMIC I (each, a "REMIC I Regular Interest"). The
designation for each such REMIC I Regular Interest shall be the loan number for
the related Mortgage Loan set forth on the schedule of Mortgage Loans attached
hereto as Exhibit B-1. The remittance rate (the "REMIC I Remittance Rate") and
the initial stated principal amount (the initial "Uncertificated Principal
Balance") of each such REMIC I Regular Interest shall equal the Net Mortgage
Rate (as defined herein) as of the Closing Date and the Cutoff Date Balance (as
defined herein), respectively, for the related Mortgage Loan. Determined solely
for purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the
"latest possible maturity date" for each such REMIC I Regular Interest shall be
the date that is the first Distribution Date (as defined herein) that follows
the Stated Maturity Date (as defined herein) for the related Mortgage Loan. None
of the REMIC I Regular Interests will be certificated.
1
<PAGE>
As provided herein, the REMIC Administrator will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as REMIC II. The Class R-II Certificates will represent the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions
under federal income tax law. The following table irrevocably sets forth the
designation, remittance rate (the "REMIC II Remittance Rate"), the
Uncertificated Principal Balance and latest possible maturity date for each of
the "regular interests" in REMIC II (the "REMIC II Regular Interests"). None of
the REMIC II Regular Interests will be certificated.
<TABLE>
<CAPTION>
Initial
Uncertificated
REMIC II Principal Latest Possible
Designation Remittance Rate Balance Maturity Date(2)(3)
----------- --------------- ------- -------------------
<S> <C> <C> <C>
A-1A Variable(1) $
A-1B Variable(1) $
A-2 Variable(1) $
A-3 Variable(1) $
B-1 Variable(1) $
B-2 Variable(1) $
B-3 Variable(1) $
B-4 Variable(1) $
C Variable(1) $
</TABLE>
- ---------------
(1) Calculated in accordance with the definition of "REMIC II Remittance Rate".
(2) Determined solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii).
(3) Calculated on the basis of the Maturity Assumptions (as defined herein).
2
<PAGE>
As provided herein, the REMIC Administrator will elect to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as REMIC III. The Class R-III Certificates will represent the sole
class of "residual interests" in REMIC III for purposes of the REMIC Provisions
under federal income tax law. The following table irrevocably sets forth the
designation, pass-through rate (the "Pass-Through Rate"), initial aggregate
stated principal amount (the initial "Class Principal Balance") and the latest
possible maturity date for each of the Classes of Certificates or Components (as
defined herein) thereof representing "regular interests" in REMIC III.
<TABLE>
<CAPTION>
Initial Class Latest Possible
Designation Pass-Through Rate Principal Balance Maturity Date(4)(5)
- ----------- ----------------- ----------------- -------------------
<S> <C> <C> <C>
Component S-A1A(1) Variable(2) N/A(3)
Component S-A1B(1) Variable(2) N/A(3)
Component S-A2(1) Variable(2) N/A(3)
Component S-A3(1) Variable(2) N/A(3)
Component S-B1(1) Variable(2) N/A(3)
Component S-B2(1) Variable(2) N/A(3)
Component S-B3(1) Variable(2) N/A(3)
Component S-B4(1) Variable(2) N/A(3)
Component S-C(1) Variable(2) N/A(3)
Class A-1A % per annum $
Class A-1B % per annum $
Class A-2 % per annum $
Class A-3 % per annum $
Class B-1 % per annum $
Class B-2 % per annum $
Class B-3 % per annum $
Class B-4 % per annum $
Class C % per annum $
</TABLE>
- ----------
(1) Constitutes a separate "regular interest" in REMIC III represented by the
Class S Certificates.
(2) Calculated in accordance with the definition of "Pass-Through Rate".
(3) Component S-A1A, Component S-A1B, Component S-A2, Component S-A3, Component
S-B1, Component S- B2, Component S-B3, Component S-B4 and Component S-C
will not have stated principal amounts. Rather, each will accrue interest
as provided herein on a hypothetical or notional amount (a "Component
Notional Amount") equal to: (i) in the case of Component S-A1A, the
Uncertificated Principal Balance of REMIC II Regular Interest A-1A
outstanding from time to time; (ii) in the case of Component S-A1B, the
Uncertificated Principal Balance of REMIC II Regular Interest A-1B
outstanding from time to time; (iii) in the case of Component S-A2, the
Uncertificated Principal Balance of REMIC II Regular Interest A-2
outstanding from time to time; (iv) in the case of Component S-A3, the
Uncertificated Principal Balance of REMIC II Regular Interest A-3
outstanding from time to time; (v) in the case of Component S-B1, the
Uncertificated Principal Balance of REMIC II Regular Interest B-1
outstanding from time to time; (vi) in the case of Component S-B2, the
Uncertificated Principal Balance of REMIC II Regular Interest B-2
outstanding from time to time; (vii) in the case of Component S-B3,
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the Uncertificated Principal Balance of REMIC II Regular Interest B-3
outstanding from time to time; (viii) in the case of Component S-B4, the
Uncertificated Principal Balance of REMIC II Regular Interest B-4
outstanding from time to time; and (ix) in the case of Component S-C, the
Uncertificated Principal Balance of REMIC II Regular Interest C outstanding
from time to time.
(4) Determined solely for purposes of satisfying Treasury regulation section
1.860G-1(a)(4)(iii).
(5) Calculated on the basis of the Maturity Assumptions.
The aggregate of the Cut-off Date Balances of the Mortgage Loans, the
initial aggregate of the Uncertificated Principal Balances of the REMIC I
Regular Interests, the initial aggregate of the Uncertificated Principal
Balances of the REMIC II Regular Interests and the initial aggregate of the
Class Principal Balances of the respective Classes of Certificates representing
"regular interests" in REMIC III will, in each such case, be $___________.
In consideration of the mutual agreements herein contained, the Depositor,
the Master Servicer, the Special Servicer, the Trustee and the REMIC
Administrator agree as follows:
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ARTICLE I
DEFINITIONS; CERTAIN CALCULATIONS IN RESPECT OF THE MORTGAGE POOL
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 Section 1.01 (subject to modification in
accordance with Section 1.03).
"Accrued Certificate Interest": With respect to any Class of Sequential Pay
Certificates, for any Distribution Date, one month's interest at the
Pass-Through Rate applicable to such Class of Certificates for such Distribution
Date, accrued on the Class Principal Balance of such Class of Certificates
outstanding immediately prior to such Distribution Date. With respect to the
Class S Certificates, for any Distribution Date, the aggregate of: (i) one
month's interest at the Pass-Through Rate applicable to Component S-A1A for such
Distribution Date, accrued on the Component Notional Amount of Component S-A1A
outstanding immediately prior to such Distribution Date; (ii) one month's
interest at the Pass-Through Rate applicable to Component S-A1B for such
Distribution Date, accrued on the Component Notional Amount of Component S-A1B
outstanding immediately prior to such Distribution Date; (iii) one month's
interest at the Pass-Through Rate applicable to Component S-A2 for such
Distribution Date, accrued on the Component Notional Amount of Component S-A2
outstanding immediately prior to such Distribution Date; (iv) one month's
interest at the Pass-Through Rate applicable to Component S-A3 for such
Distribution Date, accrued on the Component Notional Amount of Component S-A3
outstanding immediately prior to such Distribution Date; (v) one month's
interest at the Pass-Through Rate applicable to Component S-B1 for such
Distribution Date, accrued on the Component Notional Amount of Component S-B1
outstanding immediately prior to such Distribution Date; (vi) one month's
interest at the Pass-Through Rate applicable to Component S-B2 for such
Distribution Date, accrued on the Component Notional Amount of Component S-B2
outstanding immediately prior to such Distribution Date; (vii) one month's
interest at the Pass-Through Rate applicable to Component S-B3 for such
Distribution Date, accrued on the Component Notional Amount of Component S-B3
outstanding immediately prior to such Distribution Date; (viii) one month's
interest at the Pass-Through Rate applicable to Component S-B4 for such
Distribution Date, accrued on the Component Notional Amount of Component S-B4
outstanding immediately prior to such Distribution Date; and (ix) one month's
interest at the Pass-Through Rate applicable to Component S-C for such
Distribution Date, accrued on the Component Notional Amount of Component S-C
outstanding immediately prior to such Distribution Date. Accrued Certificate
Interest shall be calculated on the basis of a 360-day year consisting of
twelve 30-day months and, with respect to any Class of REMIC III Certificates
for any Distribution Date, shall be deemed to accrue during the applicable
Interest Accrual Period.
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"Acquisition Date": With respect to any REO Property, the first day on
which such REO Property is considered to be acquired by the Trust Fund within
the meaning of Treasury regulation Section 1.856-6(b)(1), which is the first day
on which the Trust Fund is treated as the owner of such REO Property for federal
income tax purposes.
"Additional Trust Fund Expense": Any expense experienced with respect to
the Trust Fund and not otherwise included in the calculation of a Realized Loss
that would result in the Certificateholders' receiving less than the full amount
of principal and/or interest to which they are entitled on any Distribution
Date.
"Advance": Any P&I Advance or Servicing Advance.
"Advance Collateral Fund": The separate account established and maintained
pursuant to the Collateral Fund Custodial Agreement and Section 7.06 hereof, in
the name of the Trustee for the benefit of the Certificateholders, which account
must be an Eligible Account.
"Advance Interest": Interest accrued on any Advance at the Reimbursement
Rate and payable to the Master Servicer, the Special Servicer or the Trustee, as
the case may be, all in accordance with Section 3.11(f) or Section 4.03(d), as
applicable.
"Adverse REMIC Event": Either (i) the endangerment of the status of any of
REMIC I, REMIC II or REMIC III as a REMIC or (ii) the imposition of a tax upon
any of REMIC I, REMIC II or REMIC III or any of their respective assets or
transactions (including, without limitation, the tax on prohibited transactions
as defined in Section 860F(a)(2) of the Code and the tax on prohibited
contributions set forth in Section 860G(d) of the Code).
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement together with all
amendments hereof and supplements hereto.
"Appraisal": With respect to any Mortgaged Property or REO Property as to
which an appraisal is required to be performed pursuant to the terms of this
Agreement, either: (i) a narrative appraisal complying with USPAP conducted by a
Qualified Appraiser in the case of Mortgage Loans and REO Loans with a Stated
Principal Balance as of the date of such appraisal of greater than $1,000,000;
or (ii) a limited appraisal and a summary report of the "market value" of the
Mortgaged Property, as defined in 12 CFR ss.225.62(g), conducted by a Qualified
Appraiser
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in the case of Mortgage Loans and REO Loans with a Stated Principal Balance as
of the date of such appraisal of $1,000,000 or less.
"Appraisal Reduction Amount": With respect to any Required Appraisal Loan,
an amount equal to the excess, if any, of (a) as calculated on the Determination
Date immediately following the date on which the most recent relevant Appraisal
was obtained by the Special Servicer pursuant to this Agreement, the sum of (i)
the Stated Principal Balance of such Required Appraisal Loan, (ii) to the extent
not previously advanced by or on behalf of the Master Servicer or the Trustee,
all accrued and unpaid interest on such Required Appraisal Loan through the most
recent Due Date prior to such Determination Date at a per annum rate equal to
the sum of the related Net Mortgage Rate and the Trustee's Fee Rate, (iii) all
accrued but unpaid Master Servicing Fees, Property Servicing Fees and Special
Servicing Fees in respect of such Required Appraisal Loan, (iv) all related
unreimbursed Advances made by or on behalf of the Master Servicer, the Special
Servicer or the Trustee in respect of such Required Appraisal Loan, together
with all unpaid Advance Interest accrued on such Advances, and (v) all currently
due but unpaid real estate taxes and assessments, insurance premiums, and if
applicable, ground rents in respect of the related Mortgaged Property or REO
Property, net of any Escrow Payments or other reserves held by the Master
Servicer or the Special Servicer with respect to any such item, over (b) 90% of
an amount equal to (i) the Appraised Value of the related Mortgaged Property or
REO Property, as applicable, as determined by such Appraisal, net of (ii) the
amount of any liens on such property (not accounted for in clause (a)(v) of this
definition) that are prior to the lien of the Required Appraisal Loan.
"Appraised Value": With respect to each Mortgaged Property or REO Property,
the appraised value thereof (as is) based upon the most recent Appraisal
obtained pursuant to this Agreement but in no event based upon an Appraisal more
than 12 months old.
"Assignment of Leases": With respect to any Mortgaged Property, any
assignment of leases, rents and profits or similar document or instrument
executed by the Mortgagor in connection with the origination of the related
Mortgage Loan.
"Assumed Scheduled Payment": With respect to any Balloon Mortgage Loan for
its Stated Maturity Date (provided that such Mortgage Loan has not been paid in
full, and no other Liquidation Event has occurred in respect thereof, on or
before such date) and for any subsequent Due Date therefor as of which such
Mortgage Loan remains outstanding and part of the Trust Fund, the scheduled
monthly payment of principal and/or interest deemed to be due in respect thereof
on such Due Date equal to the Scheduled Payment that would have been due in
respect of such Mortgage Loan on such Due Date if it had been required to
continue to pay in accordance with the amortization schedule, if any, in effect
on the Closing Date, and without regard to the occurrence of its Stated Maturity
Date. With respect to any REO Loan, for any Due Date therefor as of which the
related REO Property remains part of the Trust Fund, the scheduled monthly
payment of principal and/or interest deemed to be due in respect thereof on such
Due Date equal to the Scheduled Payment that would have been due in respect of
the predecessor Mortgage Loan
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on such Due Date had it remained outstanding (or, if the predecessor Mortgage
Loan was a Balloon Mortgage Loan and such Due Date coincides with or follows
what had been its Stated Maturity Date, the Assumed Scheduled Payment that would
have been deemed due in respect of the predecessor Mortgage Loan on such Due
Date had it remained outstanding).
"Available Distribution Amount": With respect to any Distribution Date, an
amount equal to (a) all amounts on deposit in the Distribution Account as of the
commencement of business on such Distribution Date, together with any P&I
Advances and/or Compensating Interest Payments that were made on and in respect
of such Distribution Date, net of (b) any portion of the amounts described in
clause (a) of this definition that represents one or more of the following: (i)
collected Monthly Payments that are due on a Due Date following the end of the
related Collection Period, (ii) any payments of principal (including, without
limitation, Principal Prepayments) and interest, Liquidation Proceeds and
Insurance Proceeds received after the end of the related Collection Period,
(iii) Prepayment Premiums and Yield Maintenance Premiums, (iv) any amounts
payable or reimbursable to any Person from the Distribution Account pursuant to
clauses (ii) through (iv) of Section 3.05(b), and (v) any amounts deposited in
the Distribution Account in error; provided that the Available Distribution
Amount for the Final Distribution Date shall be calculated without regard to
clauses (b)(i) and (b)(ii) of this definition.
"Balloon Mortgage Loan": Any Mortgage Loan that by its original terms or by
virtue of any modification entered into as of the Closing Date provides for an
amortization schedule extending beyond its Stated Maturity Date and as to which,
in accordance with such terms, the Scheduled Payment due on its Stated Maturity
Date is larger than the Scheduled Payment due on the Due Date next preceding its
Stated Maturity Date.
"Balloon Payment": With respect to any Balloon Mortgage Loan as of any date
of determination, the Scheduled Payment payable on the Stated Maturity Date of
such Mortgage Loan.
"Bank": ______________________.
"Bankruptcy Code": The federal Bankruptcy Code, as amended from time to
time (Title 11 of the United States Code).
"Book-Entry Certificate": Any Certificate registered in the name of the
Depository or its nominee.
"Breach": As defined in Section 2.03(a).
"Business Day": Any day other than a Saturday, a Sunday or a day on which
banking institutions in New York, New York, either of the cities in which the
Primary Servicing Offices of the Master Servicer and the Special Servicer are
located or the city in which the
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Corporate Trust Office of the Trustee is located, are authorized or obligated by
law or executive order to remain closed.
"CERCLA": The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Certificate": Any one of the Depositor's ______________ Mortgage Pass-
Through Certificates, Series 199__-____, as executed by the Trustee and
authenticated and delivered hereunder by the Certificate Registrar.
"Certificate Factor": With respect to any Class of REMIC III Regular
Certificates, as of any date of determination, a fraction, expressed as a
decimal carried to six places, the numerator of which is the then related Class
Principal Balance or Class Notional Amount, as the case may be, and the
denominator of which is the related Initial Class Principal Balance or Initial
Class Notional Amount, as the case may be.
"Certificateholder" or "Holder": The Person in whose name a Certificate is
registered in the Certificate Register, except that (i) neither a Disqualified
Organization nor a NonUnited States Person shall be a "Holder" of, or a
"Certificateholder" with respect to, a Residual Certificate for any purpose
hereof and, (ii) except where herein specifically stated otherwise, solely for
the purposes of giving any consent, approval or waiver pursuant to this
Agreement that relates to any of the Depositor, the Master Servicer, the Special
Servicer, the REMIC Administrator or the Trustee in its respective capacity as
such, any Certificate registered in the name of the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator or the Trustee, as the
case may be, or any Certificate registered in the name of any of its Affiliates,
shall be deemed not to be outstanding, and the Voting Rights to which it is
entitled shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent, approval or
waiver that relates to it has been obtained. The Certificate Registrar shall be
entitled to request and conclusively rely upon a certificate of the Depositor,
the Master Servicer or the Special Servicer in determining whether a Certificate
is registered in the name of an Affiliate of such Person. All references herein
to "Certificateholders" or "Holders" shall reflect the rights of Certificate
Owners only insofar as they may indirectly exercise such rights through the
Depository and the Depository Participants (except as otherwise specified
herein), it being herein acknowledged and agreed that the parties hereto shall
be required to recognize as a "Certificateholder" or "Holder" only the Person in
whose name a Certificate is registered in the Certificate Register.
"Certificate Notional Amount": With respect to any Class S Certificate, the
hypothetical or notional principal amount on which such Certificate accrues
interest from time to time, which, as of any date of determination, is equal to
the product of (a) the Percentage Interest evidenced by such Certificate,
multiplied by (b) the then Class Notional Amount of the Class S Certificates.
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"Certificate Owner": With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Certificate as reflected on the books of the
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.
"Certificate Principal Balance": With respect to any Sequential Pay
Certificate, as of any date of determination, the then outstanding principal
amount of such Certificate equal to the product of (a) the Percentage Interest
evidenced by such Certificate, multiplied by (b) the then Class Principal
Balance of the Class of Sequential Pay Certificates to which such Certificate
belongs.
"Certificate Register": The register maintained pursuant to Section 5.02.
"Certificate Registrar": The registrar appointed pursuant to Section 5.02.
"Certificate Yield Maintenance Amount": With respect to any Distribution
Date and any Class of Sequential Pay Certificates, the amount calculated in the
same manner as any Yield Maintenance Premium collected with respect to a
Mortgage Loan except that, for purposes of such calculation, the Pass-Through
Rate of such Class for such Distribution Date shall be used in lieu of the
related Mortgage Rate and the portion of the related prepayment of principal
distributable to such Class (calculated based upon the portion of the Principal
Distribution Amount for such Distribution Date payable in respect of such Class)
shall be used in lieu of the total prepayment.
"Class": Collectively, all of the Certificates bearing the same
alphabetical and, if applicable, numerical class designation.
"Class A Certificate": Any Class A-1A Certificate, Class A-1B Certificate,
Class A-2 Certificate or Class A-3 Certificate.
"Class A-1A Certificate": Any one of the Certificates with a "Class A-1A"
designation on the face thereof, substantially in the form of Exhibit A-2
attached hereto, and evidencing a "regular interest" in REMIC III for purposes
of the REMIC Provisions.
"Class A-1B Certificate": Any one of the Certificates with a "Class A-1B"
designation on the face thereof, substantially in the form of Exhibit A-3
attached hereto, and evidencing a "regular interest" in REMIC III for purposes
of the REMIC Provisions.
"Class A-2 Certificate": Any one of the Certificates with a "Class A-2"
designation on the face thereof, substantially in the form of Exhibit A-4
attached hereto, and evidencing a "regular interest" in REMIC III for purposes
of the REMIC Provisions.
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"Class A-3 Certificate": Any one of the Certificates with a "Class A-3"
designation on the face thereof, substantially in the form of Exhibit A-5
attached hereto, and evidencing a "regular interest" in REMIC III for purposes
of the REMIC Provisions.
"Class B Certificate": Any Class B-1 Certificate, Class B-2 Certificate,
Class B-3 Certificate or Class B-4 Certificate.
"Class B-1 Certificate": Any one of the Certificates with a "Class B-1"
designation on the face thereof, substantially in the form of Exhibit A-6
attached hereto, and evidencing a "regular interest" in REMIC III for purposes
of the REMIC Provisions.
"Class B-2 Certificate": Any one of the Certificates with a "Class B-2"
designation on the face thereof, substantially in the form of Exhibit A-7
attached hereto, and evidencing a "regular interest" in REMIC III for purposes
of the REMIC Provisions.
"Class B-3 Certificate": Any one of the Certificates with a "Class B-3"
designation on the face thereof, substantially in the form of Exhibit A-8
attached hereto, and evidencing a "regular interest" in REMIC III for purposes
of the REMIC Provisions.
"Class B-4 Certificate": Any one of the Certificates with a "Class B-4"
designation on the face thereof, substantially in the form of Exhibit A-9
attached hereto, and evidencing a "regular interest" in REMIC III for purposes
of the REMIC Provisions.
"Class C Certificate": Any one of the Certificates with a "Class C"
designation on the face thereof, substantially in the form of Exhibit A-10
attached hereto, and evidencing a "regular interest" in REMIC III for purposes
of the REMIC Provisions.
"Class Notional Amount": The aggregate hypothetical or notional principal
amount on which the Class S Certificates collectively accrue interest from time
to time, which, as of any date of determination, is equal to the aggregate of
the Component Notional Amounts for Component S-A1A, Component S-A1B, Component
S-A2, Component S-A3, Component S-B1, Component S-B2, Component S-B3, Component
S-B4 and Component S-C then outstanding (such interest accruing at potentially
different Pass-Through Rates on such Component Notional Amounts).
"Class Principal Balance": The aggregate principal amount of any Class of
Sequential Pay Certificates outstanding as of any date of determination. As of
the Closing Date, the Class Principal Balance of each such Class of Certificates
shall equal the Initial Class Principal Balance thereof. On each Distribution
Date, the Class Principal Balance of each such Class of Certificates shall be
reduced by the amount of any distributions of principal made thereon on such
Distribution Date pursuant to Section 4.01(a) and, if and to the extent
appropriate, shall be further reduced on such Distribution Date as provided in
Section 4.04(a).
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"Class R-I Certificate": Any one of the Certificates with a "Class R-I"
designation on the face thereof, substantially in the form of Exhibit A-11
attached hereto, and evidencing the sole class of "residual interests" in REMIC
I for purposes of the REMIC Provisions.
"Class R-II Certificate": Any one of the Certificates with a "Class R-II"
designation on the face thereof, substantially in the form of Exhibit A-12
attached hereto, and evidencing the sole class of "residual interests" in REMIC
II for purposes of the REMIC Provisions.
"Class R-III Certificate": Any one of the Certificates with a "Class R-III"
designation on the face thereof, substantially in the form of Exhibit A-13
attached hereto, and evidencing the sole class of "residual interests" in REMIC
III for purposes of the REMIC Provisions.
"Class S Certificate": Any one of the Certificates with a "Class S"
designation on the face thereof, substantially in the form of Exhibit A-1
attached hereto, and evidencing a "regular interest" in REMIC III for purposes
of the REMIC Provisions.
"Closing Date": _____________, 199__.
"Code": The Internal Revenue Code of 1986.
"Collateral Fund Custodial Agreement": The Collateral Fund Custodial
Agreement, dated as of ______________, 199__, among the Trustee and
_________________ as Collateral Fund Custodian, pursuant to which the Advance
Collateral Fund is established and maintained.
"Collateral Fund Custodian": _________________, a _______________ organized
under the laws of _________________, or its successor in interest.
"Collection Account": The segregated account or accounts created and
maintained by the Master Servicer pursuant to Section 3.04(a) in trust for the
Certificateholders, which shall be entitled "_________________, as Master
Servicer, in trust for the registered holders of DLJ Commercial Mortgage Corp.,
Mortgage Pass-Through Certificates, Series 199__-____".
"Collection Period": With respect to any Distribution Date, the period
commencing immediately following the prior such period (or, in the case of the
initial Collection Period, commencing immediately following the Cut-off Date)
and ending on and including the related Determination Date.
"Compensating Interest Payment": Any payment made by the Master Servicer
pursuant to Section 3.19(a) to cover Prepayment Interest Shortfalls.
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"Component": Any of the nine components of the partial beneficial ownership
interest evidenced by the Class S Certificates in the Trust Fund, designated as
"Component S-A1A," "Component S-A1B," "Component S-A2", "Component S-A3",
"Component S-B1", "Component S-B2", "Component S-B3", "Component S-B4" and
"Component S-C", respectively, each such component representing a separate
"regular interest" in REMIC III.
"Component Notional Amount": The hypothetical or notional principal amount
on which any of the Components of the Class S Certificates accrues interest from
time to time equal to: (1) in the case of Component S-A1A, the Uncertificated
Principal Balance of REMIC II Regular Interest A-1A outstanding from time to
time; (2) in the case of Component S-A1B, the Uncertificated Principal Balance
of REMIC II Regular Interest A-1B outstanding from time to time; (3) in the case
of Component S-A2, the Uncertificated Principal Balance of REMIC II Regular
Interest A-2 outstanding from time to time; (4) in the case of Component S-A3,
the Uncertificated Principal Balance of REMIC II Regular Interest A-3
outstanding from time to time; (5) in the case of Component S-B1, the
Uncertificated Principal Balance of REMIC II Regular Interest B-1 outstanding
from time to time; (6) in the case of Component S-B2, the Uncertificated
Principal Balance of REMIC II Regular Interest B-2 outstanding from time to
time; (7) in the case of Component S-B3, the Uncertificated Principal Balance of
REMIC II Regular Interest B-3 outstanding from time to time; (8) in the case of
Component S-B4, the Uncertificated Principal Balance of REMIC II Regular
Interest B-4 outstanding from time to time; and (9) in the case of Component
S-C, the Uncertificated Principal Balance of REMIC II Regular Interest S-C
outstanding from time to time.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at __________________, Attention:
_________________.
"Corrected Mortgage Loan": Any Mortgage Loan that had been a Specially
Serviced Mortgage Loan but has ceased to be such in accordance with the
definition of "Specially Serviced Mortgage Loan" (other than by reason of a
Liquidation Event occurring in respect of such Mortgage Loan or the related
Mortgaged Property becoming an REO Property).
"Custodian": A Person who is at any time appointed by the Trustee pursuant
to Section 8.11 as a document custodian for the Mortgage Files, which Person
shall not be the Depositor or an Affiliate of the Depositor.
"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, after
application of all payments of principal due on or before such date, whether or
not received.
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"Debt Service Coverage Ratio": With respect to any Mortgage Loan, as of any
date of determination, the ratio of (x) the Net Operating Income (before payment
of any debt service on such Mortgage Loan) generated by the related Mortgaged
Property during the most recently ended period of not more than twelve months
for which financial statements (whether or not audited) have been received by or
on behalf of the Mortgage Loan Seller (prior to the Closing Date) or the Master
Servicer or the Special Servicer (following the Closing Date), to (y) twelve
times the amount of the Monthly Payment in effect for such Mortgage Loan as of
such date of determination.
"Defaulted Mortgage Loan": A Mortgage Loan (i) that is delinquent in an
amount equal to at least two Monthly Payments (not including the Balloon
Payment) or is delinquent thirty days or more in respect of its Balloon Payment,
in either case such delinquency to be determined without giving effect to any
grace period permitted by the related Mortgage or Mortgage Note and without
regard to any acceleration of payments under the related Mortgage and Mortgage
Note, or (ii) as to which the Special Servicer has, by written notice to the
related Mortgagor, accelerated the maturity of the indebtedness evidenced by the
related Mortgage Note.
"Default Interest": With respect to any Mortgage Loan (or successor REO
Loan), any amounts collected thereon, other than late payment charges,
Prepayment Premiums or Yield Maintenance Premiums, that represent penalty
interest in excess of interest on the principal balance of such Mortgage Loan
(or successor REO Loan) accrued at the related Mortgage Rate.
"Definitive Certificate": As defined in Section 5.03(a).
"Depositor": DLJ Commercial Mortgage Corp., or its successor in interest.
"Depository": The Depository Trust Company, or any successor Depository
hereafter named as contemplated by Section 5.03(c). The nominee of the initial
Depository for purposes of registering those Certificates that are to be
Book-Entry Certificates, is Cede & Co. 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.
"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.
"Determination Date": With respect to any Distribution Date, the earlier of
(i) the __th day of the month in which such Distribution Date occurs, or if such
__th day is not a Business Day, the immediately preceding Business Day or (ii)
the third Business Day preceding such Distribution Date.
"Determination Date Report": As defined in Section 4.02(b).
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"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 REMIC I other than through an
Independent Contractor; provided, however, that the Special Servicer (or any
Sub-Servicer on behalf of the Special Servicer) shall not be considered to
Directly Operate an REO Property solely because the Special Servicer (or any
Sub-Servicer on behalf of the Special Servicer) 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.
"Disqualified Organization": Any of the following: (i) the United States or
a possession thereof, any State or any political subdivision thereof, or any
agency or instrumentality of any of the foregoing (other than an instrumentality
which is a corporation if all of its activities are subject to tax and, except
for FHLMC, a majority of its board of directors is not selected by any such
governmental unit), (ii) a foreign government, international organization, or
any agency or instrumentality of either of the foregoing, (iii) any organization
(except certain farmers' cooperatives 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 on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381 of the Code or (v) any other Person so
designated by the REMIC Administrator based upon an Opinion of Counsel that the
holding of an Ownership Interest in a Residual Certificate by such Person may
cause the Trust Fund or any Person having an Ownership Interest in any Class of
Certificates, other than such Person, to incur a liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the Transfer
of an Ownership Interest in a Residual Certificate to such Person. The terms
"United States", "State" and "international organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions.
"Distributable Certificate Interest": With respect to any Class of REMIC
III Regular Certificates, for any Distribution Date, the Accrued Certificate
Interest in respect of such Class of Certificates for such Distribution Date,
reduced (to not less than zero) by the product of (i) any Net Aggregate
Prepayment Interest Shortfall for such Distribution Date, multiplied by (ii) a
fraction, expressed as a decimal, the numerator of which is the Accrued
Certificate Interest in respect of such Class of Certificates for such
Distribution Date, and the denominator of which is the aggregate Accrued
Certificate Interest in respect of all the Classes of REMIC III Regular
Certificates for such Distribution Date.
"Distribution Account": The segregated account or accounts created and
maintained by the Trustee pursuant to Section 3.04(b) in trust for the
Certificateholders, which shall be entitled "_________________, as Trustee, in
trust for the registered holders of DLJ Commercial Mortgage Corp., Mortgage
Pass-Through Certificates, Series 199__-____".
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"Distribution Date": The __th day of any month, or if such __th day is not
a Business Day, the Business Day immediately following, commencing in the
calendar month following the Closing Date.
"Document Defect": As defined in Section 2.02(e).
"Due Date": With respect to any Mortgage Loan (and any successor REO Loan),
the day of the month set forth in the related Mortgage Note on which each
Monthly Payment on such Mortgage Loan is scheduled to be first due.
"Effective Pass-Through Rate": With respect to the Class S Certificates for
any Distribution Date, the rate per annum equal to the weighted average,
expressed as a percentage and rounded to six decimal places, of the respective
Pass-Through Rates for Component S-A1A, Component S-A1B, Component S-A2,
Component S-A3, Component S-B1, Component S-B2, Component S-B3, Component S-B4
and Component S-C for such Distribution Date, weighted on the basis of the
respective Component Notional Amounts of such Components of the Class S
Certificates outstanding immediately prior to such Distribution Date.
"Effective REMIC I Remittance Rate": With respect to any REMIC I Regular
Interest, for any Distribution Date, (a) if the Mortgage Note for the related
Mortgage Loan or REO Loan provides that interest accrues on such Mortgage Loan
or REO Loan, as the case may be, on the basis of a 360-day year consisting of
twelve 30-day months (a "30/360 basis"), the related REMIC I Remittance Rate in
effect for such REMIC I Regular Interest for such Distribution Date, and (b) if
the Mortgage Note for the related Mortgage Loan or REO Loan provides that
interest accrues on such Mortgage Loan or REO Loan, as the case may be, other
than on a 30/360 basis, the annualized rate at which interest would have to
accrue thereon on a 30/360 basis during the applicable Interest Accrual Period
for such REMIC I Regular Interest and such Distribution Date in order to produce
the actual amount of Uncertificated Accrued Interest in respect of such REMIC I
Regular Interest for such Distribution Date.
"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 "[AA]" (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
"[A-1]" (or the equivalent) by ____ and at least ____ (or the equivalent) by
____ (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
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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, cause a qualification, downgrading or
withdrawal of the then-current rating assigned thereby to any Class of
Certificates).
"Emergency Advance:" Any Servicing Advance that must be made within five
Business Days in order to avoid any penalty, any material harm to a Mortgaged
Property or any other material adverse consequence to the Trust Fund.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"Escrow Payment": Any payment received by the Master Servicer or the
Special Servicer for the account of any Mortgagor for application toward the
payment of real estate taxes, assessments, insurance premiums, ground rents (if
applicable) and similar items in respect of the related Mortgaged Property.
"Event of Default": One or more of the events described in Section 7.01(a).
"Exchange Act": Securities Exchange Act of 1934, as amended.
"FDIC": Federal Deposit Insurance Corporation or any successor.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor.
"Final Distribution Date": The final Distribution Date on which any
distributions are to be made on the Certificates as contemplated by Section
9.01.
"Final Recovery Determination": A determination made by the Special
Servicer, in its reasonable good faith judgment, and in any event subject to the
Servicing Standard, with respect to any defaulted Mortgage Loan or REO Property
(other than a Mortgage Loan or REO Property, as the case may be, purchased by
the Mortgage Loan Seller pursuant to the Mortgage Loan Purchase Agreement, by
the Master Servicer or the Special Servicer pursuant to Section 3.18(c) or by
the Special Servicer or the Master Servicer pursuant to Section 9.01), that
there has been a recovery of all related Insurance Proceeds, Liquidation
Proceeds and other payments or recoveries that will ultimately be recoverable.
"FNMA": Federal National Mortgage Association or any successor.
"Hazardous Materials": Any dangerous, toxic or hazardous pollutants,
chemicals, wastes, or substances, including, without limitation, those so
identified pursuant to CERCLA or any other federal, state or local environmental
related laws and regulations now existing or hereafter enacted, and specifically
including, without limitation, asbestos and asbestos-containing materials,
polychlorinated biphenyls ("PCBs"), radon gas, petroleum and petroleum products,
urea
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formaldehyde and any substances classified as being "in inventory", "usable work
in process" or similar classification which would, if classified as unusable, be
included in the foregoing definition.
"Independent": When used with respect to any specified Person, any such
Person who (i) is in fact independent of the Depositor, the Master Servicer, the
Special Servicer, the REMIC Administrator, the Trustee 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 Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator, the Trustee or any
Affiliate thereof, and (iii) is not connected with the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator, the Trustee or any
Affiliate thereof as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions; provided, however,
that a Person shall not fail to be Independent of the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator, the Trustee or any
Affiliate thereof merely because such Person is the beneficial owner of 1% or
less of any class of securities issued by the Depositor, the Master Servicer,
the Special Servicer, the REMIC Administrator, the Trustee or any Affiliate
thereof, as the case may be.
"Independent Contractor": Any Person that would be an "independent
contractor" with respect to REMIC I within the meaning of Section 856(d)(3) of
the Code if REMIC I were a real estate investment trust (except that the
ownership test set forth in that section shall be considered to be met by any
Person that owns, directly or indirectly, 35% or more of any Class of
Certificates, or such other interest in any Class of Certificates as is set
forth in an Opinion of Counsel, which shall be at no expense to the Trustee, the
REMIC Administrator or the Trust Fund, delivered to the Trustee and the REMIC
Administrator), so long as REMIC I does not receive or derive any income from
such Person and provided that the relationship between such Person and REMIC I
is at arm's length, all within the meaning of Treasury regulation Section
1.856-4(b)(5), or any other Person upon receipt by the Trustee and the REMIC
Administrator of an Opinion of Counsel, which shall be at no expense to the
Trustee, the REMIC Administrator or the Trust Fund, to the effect that the
taking of any action in respect of any REO Property by such Person, subject to
any conditions therein specified, that is otherwise herein contemplated to be
taken by an Independent Contractor will not cause such REO Property to cease to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code, or cause any income realized in respect of such REO Property to fail
to qualify as Rents from Real Property.
"Initial Class Notional Amount": The initial Class Notional Amount of the
Class S Certificates as of the Closing Date equal to $___________.
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"Initial Class Principal Balance": With respect to any Class of Sequential
Pay Certificates, the initial Class Principal Balance thereof as of the Closing
Date, in each case as set forth below: Initial Class Class Principal Balance
Initial Class
Class Principal Balance
----- -----------------
Class A-1A $
Class A-1B $
Class A-2 $
Class A-3 $
Class B-1 $
Class B-2 $
Class B-3 $
Class B-4 $
Class C $
"Insurance Policy": With respect to any Mortgage Loan or REO Property, any
hazard insurance policy, flood insurance policy, title insurance policy or other
insurance policy that is maintained from time to time in respect of such
Mortgage Loan (or the related Mortgaged Property) or such REO Property, as the
case may be.
"Insurance Proceeds": Proceeds paid under any Insurance Policy, to the
extent such proceeds are not applied to the restoration of the related Mortgaged
Property or REO Property or released to the related Mortgagor, in any case, in
accordance with the Servicing Standard.
"Interested Person": The Depositor, the Master Servicer, the Special
Servicer, the REMIC Administrator, the Mortgage Loan Seller, any
Certificateholder, or any Affiliate of any such Person.
"Investment Account": As defined in Section 3.06(a).
"Issue Price": With respect to each Class of Certificates, the "issue
price" as defined in the Code and Treasury regulations promulgated thereunder.
"Late Collections": With respect to any Mortgage Loan, all amounts received
thereon during any Collection Period, whether as payments, Insurance Proceeds,
Liquidation Proceeds or otherwise, which represent late collections of the
principal and/or interest portions of a Scheduled Payment (other than a Balloon
Payment) or an Assumed Scheduled Payment in respect of such Mortgage Loan due or
deemed due on a Due Date in a previous Collection Period, or on a Due Date
coinciding with or preceding the Cut-off Date, and not previously recovered.
With respect to any REO Loan, all amounts received in connection with the
related REO Property during any Collection Period, whether as Insurance
Proceeds, Liquidation Proceeds, REO
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Revenues or otherwise, which represent late collections of the principal and/or
interest portions of a Scheduled Payment (other than a Balloon Payment) or an
Assumed Scheduled Payment in respect of the predecessor Mortgage Loan or late
collections of the principal and/or interest portions of an Assumed Scheduled
Payment in respect of such REO Loan due or deemed due on a Due Date in a
previous Collection Period and not previously recovered.
"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 purchased by the Mortgage Loan Seller pursuant to the Mortgage Loan
Purchase Agreement; or (iv) such Mortgage Loan is purchased by the Special
Servicer or the Master Servicer pursuant to Section 3.18 or Section 9.01. With
respect to any REO Property (and the related REO Loan), any of the following
events: (i) a Final Recovery Determination is made with respect to such REO
Property; or (ii) such REO Property is purchased by the Special Servicer or the
Master Servicer pursuant to Section 9.01.
"Liquidation Fee": With respect to each Specially Serviced Mortgage Loan or
REO Property (other than any Specially Serviced Mortgage Loan or REO Property
purchased by the Special Servicer or the Master Servicer pursuant to Section
3.18 or Section 9.01 or purchased by the Mortgage Loan Seller pursuant to the
Mortgage Loan Purchase Agreement), the fee designated as such and payable to the
Special Servicer pursuant to the fourth paragraph of Section 3.11(c).
"Liquidation Fee Rate": With respect to each Specially Serviced Mortgage
Loan or REO Property as to which a Liquidation Fee is payable, ____%.
"Liquidation Proceeds": All cash amounts (other than Insurance Proceeds and
REO Revenues) received by the Master Servicer or the Special Servicer in
connection with: (i) the taking of all or a part of a Mortgaged Property by
exercise of the power of eminent domain or condemnation; (ii) the liquidation of
a Mortgaged Property or other collateral constituting security for a defaulted
Mortgage Loan, through trustee's sale, foreclosure sale, REO Disposition or
otherwise, exclusive of any portion thereof required to be released to the
related Mortgagor in accordance with applicable law and the terms and conditions
of the related Mortgage Note and Mortgage; (iii) the realization upon any
deficiency judgment obtained against a Mortgagor; (iv) the purchase of a
Defaulted Mortgage Loan by the Master Servicer or the Special Servicer pursuant
to Section 3.18(c) or any other sale thereof pursuant to Section 3.18(d); (v)
the purchase of a Mortgage Loan by the Mortgage Loan Seller pursuant to the
Mortgage Loan Purchase Agreement; or (vi) the purchase of a Mortgage Loan or REO
Property by the Special Servicer or the Master Servicer pursuant to Section
9.01.
"Loan-to-Value Ratio": With respect to any Mortgage Loan, as of any date of
determination, a fraction, expressed as a percentage, the numerator of which is
the then current principal amount of such Mortgage Loan, and the denominator of
which is the Appraised Value of the related Mortgaged Property.
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"Master Servicer": _____________________, its successor in interest, or any
successor servicer appointed as herein provided.
"Master Servicer Remittance Amount": With respect to any Master Servicer
Remittance Date, an amount equal to (a) all amounts on deposit in the Collection
Account as of the commencement of business on such Master Servicer Remittance
Date, net of (b) any portion of the amounts described in clause (a) of this
definition that represents one or more of the following: (i) collected Monthly
Payments that are due on a Due Date following the end of the related Collection
Period, (ii) any payments of principal (including, without limitation, Principal
Prepayments) and interest, Liquidation Proceeds and Insurance Proceeds received
after the end of the related Collection Period, (iii) any Prepayment Premiums
and/or Yield Maintenance Premiums received after the end of the related
Collection Period, (iv) any amounts payable or reimbursable to any Person from
the Collection Account pursuant to clauses (ii) through (xvi) of Section
3.05(a), and (v) any amounts deposited in the Collection Account in error;
provided that the Master Servicer Remittance Amount for the Master Servicer
Remittance Date that occurs in the same calendar month as the Final Distribution
Date shall be calculated without regard to clauses (b)(i), (b)(ii) and (b)(iii)
of this definition.
"Master Servicer Remittance Date": The second Business Day preceding each
Distribution Date.
"Master Servicing Fee": With respect to each Mortgage Loan and REO Loan,
the fee designated as such and payable to the Master Servicer pursuant to
Section 3.11(a).
"Master Servicing Fee Rate": With respect to each Mortgage Loan and REO
Loan, _______% per annum.
"Maturity Assumptions": The assumptions used to calculate the "latest
possible maturity date" for each REMIC II Regular Interest and each of the
Classes of Certificates or Components thereof representing "regular interests"
in REMIC III for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), which assumptions are: [to be specified].
"Modified Mortgage Loan": Any Mortgage Loan as to which any Servicing
Transfer Event has occurred and which has been modified by the Special Servicer
pursuant to Section 3.20 in a manner that:
(A) affects the amount or timing of any payment of principal or
interest due thereon (other than, or in addition to, bringing current
Monthly Payments with respect to such Mortgage Loan);
(B) except as expressly contemplated by the related Mortgage, results
in a release of the lien of the Mortgage on any material portion of the
related Mortgaged Property without a corresponding Principal Prepayment in
an amount not less than the fair
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market value (as is), as determined by an Appraisal delivered to the
Special Servicer (at the expense of the related Mortgagor and upon which
the Special Servicer may conclusively rely) of the property to be released;
or
(C) in the reasonable good faith judgment of the Special Servicer,
otherwise materially impairs the security for such Mortgage Loan or reduces
the likelihood of timely payment of amounts due thereon.
"Monthly Payment": With respect to any Mortgage Loan as of any Due Date,
the scheduled monthly payment of principal and interest or interest only on such
Mortgage Loan, including any Balloon Payment, that is actually payable by the
related Mortgagor from time to time under the terms of the related Mortgage Note
(as such terms may be changed or modified in connection with a bankruptcy or
similar proceeding involving the related Mortgagor or by reason of a
modification, waiver or amendment granted or agreed to by the Special Servicer
pursuant to Section 3.20).
"Mortgage": 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 File": With respect to any Mortgage Loan, subject to Sections
1.03 and 2.01, collectively, the following documents:
(i) the original executed Mortgage Note, endorsed "Pay to the order of
______________, as trustee for the registered holders of DLJ
Commercial Mortgage Corp., Mortgage Pass-Through Certificates, 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;
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(iv) an original executed assignment of the Mortgage, in favor of
_______________, as trustee for the registered holders of DLJ
Commercial Mortgage Corp., Mortgage Pass-Through Certificates, 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 DLJ
Commercial Mortgage Corp., Mortgage Pass-Through Certificates, 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 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 for the registered holders of
DLJ Commercial Mortgage Corp., Mortgage Pass-Through Certificates,
Series 199__-___;
provided that whenever the term "Mortgage File" is used to refer to documents
actually received by the Trustee or by a Custodian on its behalf, such term
shall not be deemed to include such documents required to be included therein
unless they are actually so received, and with respect to any receipt or
certification by the 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": Each of the mortgage loans listed on the Mortgage Loan
Schedule and from time to time held in the Trust Fund. As used herein, the term
"Mortgage Loan" includes the related Mortgage Note, Mortgage and other security
documents contained in the related Mortgage File.
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"Mortgage Loan Purchase Agreement": That certain Mortgage Loan Purchase and
Sale Agreement, dated as of ____________, 199__, between the Depositor and the
Mortgage Loan Seller and relating to the transfer of the Mortgage Loans to the
Depositor.
"Mortgage Loan Schedule": The list of Mortgage Loans transferred on the
Closing Date to the Trustee as part of REMIC I, attached hereto as Exhibit B-1.
Such list shall set forth the following information with respect to each
Mortgage Loan:
(i) the Mortgage Loan number;
(ii) the street address (including city, state and zip code) of the related
Mortgaged Property;
(iii) the Cut-off Date Balance;
(iv) the amount of the Monthly Payment due on the first Due Date following
the Closing Date;
(v) the Mortgage Rate;
(vi) the (A) remaining term to stated maturity and (B) the Stated Maturity
Date; and
(vii) in the case of a Balloon Mortgage Loan, the remaining amortization
term.
"Mortgage Loan Seller": ___________________ or its successor in interest.
"Mortgage Note": 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 Pool": Collectively, all of the Mortgage Loans and any successor
REO Loans.
"Mortgage Rate": With respect to any Mortgage Loan (and any successor REO
Loan), the fixed annualized rate at which interest is scheduled (in the absence
of a default) to accrue on such Mortgage Loan from time to time in accordance
with the related Mortgage Note and applicable law, as such rate may be modified
in accordance with Section 3.20 or in connection with a bankruptcy, insolvency
or similar proceeding involving the related Mortgagor.
"Mortgaged Property": A property subject to the lien of a Mortgage.
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"Mortgagor": 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.
"Net Aggregate Prepayment Interest Shortfall": With respect to any
Distribution Date, the amount, if any, by which (a) the aggregate of all
Prepayment Interest Shortfalls incurred in connection with the receipt of
Principal Prepayments on the Mortgage Loans during the related Collection
Period, exceeds (b) the aggregate amount deposited by the Master Servicer in the
Distribution Account for such Distribution Date pursuant to Section 3.19(a) in
connection with such Prepayment Interest Shortfalls.
"Net Investment Earnings": With respect to any Investment Account for any
Collection Period, the amount, if any, by which the aggregate of all interest
and other income realized during such Collection Period on funds held in such
Investment Account, exceeds the aggregate of all losses, if any, incurred during
such Collection Period in connection with the investment of such funds in
accordance with Section 3.06.
"Net Investment Loss": With respect to any Investment Account for any
Collection Period, the amount by which the aggregate of all losses, if any,
incurred during such Collection Period in connection with the investment of
funds held in such Investment Account in accordance with Section 3.06, exceeds
the aggregate of all interest and other income realized during such Collection
Period on such funds.
"Net Mortgage Rate": With respect to any Mortgage Loan (or successor REO
Loan), as of any date of determination, the related Mortgage Rate minus ___
basis points.
"Net Penalty Charges": With respect to any Mortgage Loan, any Penalty
Charges actually collected thereon (based on the allocations specified in
Section 1.02), net of any portion thereof allocable to pay the Special Servicer
any Liquidation Fee or Workout Fee in respect of such Mortgage Loan and further
net of any Advance Interest accrued on Advances made in respect of such Mortgage
Loan and reimbursable from such Penalty Charges in accordance with Section
3.05(a)(viii).
"Net Prepayment Premium:" With respect to any Mortgage Loan, any Prepayment
Premium actually collected thereon, net of any portion thereof allocable to pay
a Liquidation Fee or a Workout Fee.
"Net Operating Income": With respect to any Mortgaged Property, the net
operating income derived from such Mortgaged Property, calculated in accordance
with Exhibit K.
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"Net Yield Maintenance Premium:" With respect to any Mortgage Loan, any
Yield Maintenance Premium actually collected thereon, net of any portion thereof
allocable to pay a Liquidation Fee or a Workout Fee.
"Nonrecoverable Advance": Any Nonrecoverable P&I Advance or Nonrecoverable
Servicing Advance.
"Nonrecoverable P&I Advance": Any P&I Advance previously made or to be made
in respect of any Mortgage Loan or any REO Loan that, as determined by the
Master Servicer or, if applicable, the Trustee, in its reasonable good faith
judgment, and in any event subject to the Servicing Standard, will not be
ultimately recoverable from Late Collections or any other recovery on or in
respect of such Mortgage Loan or REO Loan.
"Nonrecoverable Servicing Advance": Any Servicing Advance previously made
or to be made in respect of a Mortgage Loan or REO Property that, as determined
by the Master Servicer, the Special Servicer or, if applicable, the Trustee, in
its reasonable good faith judgment, and in any event subject to the Servicing
Standard, will not be ultimately recoverable from Late Collections or any other
recovery on or in respect of such Mortgage Loan or REO Property.
"Non-United States Person": Any Person other than a United States Person.
"Officer's Certificate": A certificate signed by a Servicing Officer of the
Master Servicer or the Special Servicer or a Responsible Officer of the Trustee,
as the case may be.
"Operating Statement Analysis": As defined in Section 4.02(c).
"Opinion of Counsel": A written opinion of counsel (which counsel shall be
Independent of the Depositor, the Master Servicer, the Special Servicer, the
Trustee and the REMIC Administrator) acceptable to and delivered to the
addressee(s) thereof and which Opinion of Counsel shall not be at the expense of
the Trustee or the REMIC Administrator.
"OTS": The Office of Thrift Supervision or any successor thereto.
"Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate as the Holder thereof and any other interest
therein, whether direct or indirect, legal or beneficial, as owner or as
pledgee.
"P&I Advance": As to any Mortgage Loan or REO Loan, any advance made by the
Master Servicer or the Trustee pursuant to Section 4.03.
"P&I Advance Date": The second Business Day preceding each Distribution
Date.
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"Pass-Through Rate": With respect to:
(i) Component S-A1A, for any Distribution Date, the excess, if any, of the
REMIC II Remittance Rate for REMIC II Regular Interest A-1A for such
Distribution Date, over the fixed Pass-Through Rate for the Class A-1A
Certificates;
(ii) Component S-A1B, for any Distribution Date, the excess, if any, of the
REMIC II Remittance Rate for REMIC II Regular Interest A-1B for such
Distribution Date, over the fixed Pass-Through Rate for the Class A-1B
Certificates;
(iii) Component S-A2, for any Distribution Date, the excess, if any, of the
REMIC II Remittance Rate for REMIC II Regular Interest A-2 for such
Distribution Date, over the fixed Pass-Through Rate for the Class A-2
Certificates;
(iv) Component S-A3, for any Distribution Date, the excess, if any, of the
REMIC II Remittance Rate for REMIC II Regular Interest A-3 for such
Distribution Date, over the fixed Pass-Through Rate for the Class A-3
Certificates;
(v) Component S-B1, for any Distribution Date, the excess, if any, of the
REMIC II Remittance Rate for REMIC II Regular Interest B-1 for such
Distribution Date, over the fixed Pass-Through Rate for the Class B-1
Certificates;
(vi) Component S-B2, for any Distribution Date, the excess, if any, of the
REMIC II Remittance Rate for REMIC II Regular Interest B-2 for such
Distribution Date, over the fixed Pass-Through Rate for the Class B-2
Certificates;
(vii) Component S-B3, for any Distribution Date, the excess, if any, of the
REMIC II Remittance Rate for REMIC II Regular Interest B-3 for such
Distribution Date, over the fixed Pass-Through Rate for the Class B-3
Certificates;
(viii) Component S-B4, for any Distribution Date, the excess, if any, of
the REMIC II Remittance Rate for REMIC II Regular Interest B-4 for
such Distribution Date, over the fixed Pass-Through Rate for the Class
B-4 Certificates;
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(ix) Component S-C, for any Distribution Date, the excess, if any, of the
REMIC II Remittance Rate for REMIC II Regular Interest C for such
Distribution Date, over the fixed Pass-Through Rate for the Class C
Certificates; and
(x) any Class of Sequential Pay Certificates, for any Distribution Date,
the fixed rate per annum specified as such in respect of such Class in
the Preliminary Statement hereto.
"Payment Priority": With respect to any Class of Certificates, the priority
of the Holders thereof in respect of the Holders of the other Classes of
Certificates to receive distributions out of the Available Distribution Amount
for any Distribution Date. The Payment Priority of the respective Classes of
Certificates shall be, in descending order, as follows: first, the respective
Classes of Senior Certificates; second, the Class A-2 Certificates; third, the
Class A-3 Certificates; fourth, the Class B-1 Certificates; fifth, the Class B-2
Certificates; sixth, the Class B-3 Certificates; seventh, the Class B-4
Certificates; eighth, the Class C Certificates; and last, the respective Classes
of Residual Certificates.
"Penalty Charges": Default Interest, late payment charges and/or charges
for checks returned for insufficient funds that are paid or payable, as the
context may require, in respect of any Mortgage Loan or REO Loan.
"Percentage Interest": With respect to any REMIC III Regular Certificate,
the portion of the relevant Class evidenced by such Certificate, expressed as a
percentage, the numerator of which is the Certificate Principal Balance or
Certificate Notional Amount, as the case may be, of such Certificate as of the
Closing Date, as specified on the face thereof, and the denominator of which is
the Initial Class Principal Balance or Initial Class Notional Amount, as the
case may be, of the relevant Class. With respect to a Residual Certificate, the
percentage interest in distributions to be made with respect to the relevant
Class, as stated on the face of such Certificate.
"Permitted Investments": Any one or more of the following obligations or
securities:
(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;
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(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 Certificates 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 Certificates 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 Certificates by
such Rating Agency (as evidenced in writing by such Rating Agency); or
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(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 Certificates 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).
"Permitted Transferee": Any Transferee of a Residual Certificate other than
either a Disqualified Organization or Non-United States Person.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Phase I Environmental Assessment": A "Phase I assessment" as described in
and meeting the criteria of Chapter 5 of the FNMA Multifamily Guide, as amended
from time to time.
"Plan": As defined in Section 5.02(c).
"Plurality Residual Certificateholder": As to any taxable year of REMIC I,
REMIC II or REMIC III, the Holder of Certificates evidencing the largest
Percentage Interest in the Class of Residual Certificates constituting the sole
class of "residual interests" in such REMIC.
"Prepayment Assumption": For purposes of determining the accrual of
original issue discount, market discount and premium, if any, on the Mortgage
Loans, the REMIC I Regular Interests, the REMIC II Regular Interests and the
Certificates for federal income tax purposes, the assumption that no Mortgage
Loan is voluntarily prepaid.
"Prepayment Interest Excess": With respect to any Mortgage Loan that was
subject to a Principal Prepayment in full or in part made on or prior to the
Determination Date in any calendar month but after the first day of such month,
any payment of interest (net of related Master Servicing Fees and Property
Servicing Fees) actually collected from the related Mortgagor and intended to
cover the period from the commencement of such month to the date of prepayment
(exclusive, however, of any related Prepayment Premium or Yield Maintenance
Premium that may have been collected).
"Prepayment Interest Shortfall": With respect to any Mortgage Loan that was
subject to a Principal Prepayment in full or in part made and applied to such
Mortgage Loan after the Determination Date in any calendar month, the amount of
interest, to the extent not collected
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from the related Mortgagor (without regard to any Prepayment Premium or Yield
Maintenance Premium that may have been collected), that would have accrued at a
rate per annum equal to the Mortgage Rate for such Mortgage Loan (net of the
Master Servicing Fee Rate and Property Servicing Fee Rate) on the amount of such
Principal Prepayment during the period commencing on the date as of which such
Principal Prepayment was applied to such Mortgage Loan and ending on the last
day of such month, inclusive.
"Prepayment Premium": With respect to any Mortgage Loan, any premium,
penalty or fee paid or payable, as the context requires, by a Mortgagor in
connection with a Principal Prepayment on, or other early collection of
principal of, a Mortgage Loan or any successor REO Loan, to the extent such
premium, penalty or fee is expressed as a percentage of the principal amount
being prepaid or a specified amount.
"Primary Servicing Office": The office of the Master Servicer or the
Special Servicer, as the context may require, that is primarily responsible for
such party's servicing obligations hereunder.
"Prime Rate": The "prime rate" published in the "Money Rates" section of
The Wall Street Journal, as such "prime rate" may change from time to time. If
The Wall Street Journal ceases to publish the "prime rate," then the Trustee, in
its sole discretion, shall select an equivalent publication that publishes such
"prime rate;" and if such "prime rate" is no longer generally published or is
limited, regulated or administered by a governmental or quasi-governmental body,
then the Trustee shall select a comparable interest rate index. In either case,
such selection shall be made by the Trustee in its sole discretion and the
Trustee shall notify the Master Servicer and the Special Servicer in writing of
its selection.
"Principal Distribution Amount": With respect to any Distribution 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 Mortgage Loans for their
respective Due Dates occurring during the related Collection Period;
(b) the aggregate of all Principal Prepayments received on the
Mortgage Loans during the related Collection Period;
(c) with respect to any 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 Principal Prepayments and any
amounts described in 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
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than a Balloon Payment) due, or the principal portion of any Assumed
Scheduled Payment deemed due, in respect of such 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 Mortgage Loans during the related Collection
Period and that were identified and applied by the Master Servicer as
recoveries of principal of such 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 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, 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, 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 Mortgage Loan on a Due Date
during or prior to the related Collection Period and not previously
recovered; and
(g) if such Distribution Date is subsequent to the initial
Distribution Date, the excess, if any, of the Principal Distribution Amount
for the preceding Distribution Date, over the aggregate distributions of
principal made on the Certificates on such preceding Distribution Date
pursuant to Section 4.01(a).
"Principal Prepayment": Any payment of principal made by the Mortgagor on a
Mortgage Loan that is received in advance of its scheduled Due Date and that is
not accompanied by an amount of interest (without regard to any Prepayment
Premium or Yield Maintenance Premium that may have been collected) representing
scheduled interest due on any date or dates in any month or months subsequent to
the month of prepayment.
"Private Certificates": Unless and until registered under the Securities
Act, any Class B-2, Class B-3, Class B-4, Class C or Residual Certificate.
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"Property Servicing Fee": With respect to each Mortgage Loan and REO Loan,
the fee designated as such and payable to the Special Servicer pursuant to the
first paragraph of Section 3.11(c).
"Property Servicing Fee Rate": With respect to each Mortgage Loan and REO
Loan, _______% per annum.
"Purchase Price": With respect to any Mortgage Loan (or REO Property), a
cash price equal to the aggregate of: (a) the outstanding principal balance of
such Mortgage Loan (or the related REO Loan) as of the date of purchase, (b) all
accrued and unpaid interest on such Mortgage Loan (or the related REO Loan) at
the related Mortgage Rate to but not including the date of purchase (or, if such
purchase occurs after the Determination Date in any calendar month, through the
end of such calendar month), (c) all related and unreimbursed Servicing
Advances, and (d) solely in the case of a purchase by the Mortgage Loan Seller
pursuant to the Mortgage Loan Purchase Agreement, all accrued and unpaid Advance
Interest in respect of related Advances.
"Qualified Appraiser": In connection with the appraisal of any Mortgaged
Property or REO Property, an Independent MAI-designated appraiser with at least
five years of experience in respect of the relevant geographic location and
property type.
"Qualified Insurer": An insurance company or security or bonding company
qualified to write the related Insurance Policy in the relevant jurisdiction.
"Rating Agency": Each of _______ and _______.
"Realized Loss": With respect to: (1) each defaulted Mortgage Loan as to
which a Final Recovery Determination has been made, or with respect to any
successor REO Loan as to which a Final Recovery Determination has been made as
to the related REO Property, an amount (not less than zero) equal to (a) the
unpaid principal balance of such Mortgage Loan or REO Loan, as the case may be,
as of the commencement of the Collection Period in which the Final Recovery
Determination was made, plus (b) without taking into account the amount
described in subclause (1)(d) of this definition, all accrued but unpaid
interest on such Mortgage Loan or REO Loan, as the case may be, at the related
Mortgage Rate to but not including the related Due Date in the Collection Period
in which the Final Recovery Determination was made, plus (c) any related
unreimbursed Servicing Advances as of the commencement of the Collection Period
in which the Final Recovery Determination was made, together with any new
related Servicing Advances made during such Collection Period, minus (d) all
payments and proceeds, if any, received in respect of such Mortgage Loan or REO
Loan, as the case may be, during the Collection Period in which such Final
Recovery Determination was made; (2) each defaulted Mortgage Loan as to which
any portion of the principal or past due interest payable thereunder was
cancelled in connection with a bankruptcy or similar proceeding involving the
related Mortgagor or a modification, waiver or amendment of such Mortgage Loan
granted or agreed to
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by the Special Servicer pursuant to Section 3.20, the amount of such principal
or past due interest (other than any Default Interest) so cancelled; and (3)
each defaulted Mortgage Loan as to which the Mortgage Rate thereon has been
permanently reduced and not recaptured for any period in connection with a
bankruptcy or similar proceeding involving the related Mortgagor or a
modification, waiver or amendment of such Mortgage Loan granted or agreed to by
the Special Servicer pursuant to Section 3.20, the amount of the consequent
reduction in the interest portion of each successive Monthly Payment due thereon
(each such Realized Loss to be deemed to have been incurred on the Due Date for
each affected Monthly Payment).
"Record Date": With respect to any Distribution Date, the last Business Day
of the month immediately preceding the month in which such Distribution Date
occurs.
"Reimbursement Rate": The rate per annum applicable to the accrual of
Advance Interest, which rate per annum is equal to the Prime Rate.
"REMIC": A "real estate mortgage investment conduit" as defined in Section
860D of the Code.
"REMIC Administrator": ____________________, its successor in interest, or
any successor REMIC administrator appointed as herein provided.
"REMIC I": The segregated pool of assets subject hereto, constituting the
primary trust created hereby and to be administered hereunder, and with respect
to which a REMIC election is to be made, consisting of: (i) the Mortgage Loans
as from time to time are subject to this Agreement and all payments under and
proceeds of such Mortgage Loans received after the Closing Date, together with
all documents included in the related Mortgage Files and any Escrow Payments and
Reserve Funds; (ii) any REO Property acquired in respect of a Mortgage Loan;
(iii) such funds or assets as from time to time are deposited in the Collection
Account, the Distribution Account and, if established, the REO Account; (iv) the
rights of the Depositor under Sections ________________ of the Mortgage Loan
Purchase Agreement; and (v) the rights of the Trustee and the Certificateholders
as third party beneficiaries under the Mortgage Loan Purchase Agreement (as and
to the extent provided under Section ____ thereof).
"REMIC I Regular Interest": With respect to each Mortgage Loan (and any
successor REO Loan), the separate non-certificated beneficial ownership interest
in REMIC I issued hereunder and designated as a "regular interest" in REMIC I.
Each REMIC I Regular Interest shall accrue interest at the related REMIC I
Remittance Rate and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance (which shall equal the Cut-off Date Balance of
the related Mortgage Loan). The designation for each REMIC I Regular Interest
shall be the loan number for the related Mortgage Loan set forth in the Mortgage
Loan schedule.
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"REMIC I Remittance Rate": With respect to any REMIC I Regular Interest for
any Distribution Date, a rate per annum equal to the Net Mortgage Rate for the
related Mortgage Loan in effect as of the Closing Date.
"REMIC II": The segregated pool of assets consisting of all of the REMIC I
Regular Interests, with respect to which a separate REMIC election is to be
made.
"REMIC II Regular Interest": Any of the nine separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
"regular interest" in REMIC II. Each REMIC II Regular Interest shall accrue
interest at the related REMIC II Remittance Rate in effect from time to time,
and shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Principal Balance as set forth in the Preliminary Statement hereto. The
designations for the respective REMIC II Regular Interests are set forth in the
Preliminary Statement hereto.
"REMIC II Remittance Rate": With respect to any REMIC II Regular Interest
for any Distribution Date, the Weighted Average Effective REMIC I Remittance
Rate for such Distribution Date.
"REMIC III": The segregated pool of assets consisting of all of the REMIC
II Regular Interests, with respect to which a separate REMIC election is to be
made.
"REMIC III Certificate": Any Certificate, other than a Class R-I
Certificate or a Class R-II Certificate.
"REMIC III Regular Certificate": Any REMIC III Certificate, other than a
Class R-III Certificate.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final Treasury regulations and any published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
"Rents from Real Property": With respect to any REO Property, gross income
of the character described in Section 856(d) of the Code.
"REO Account": A segregated custodial account or accounts created and
maintained by the Special Servicer pursuant to Section 3.16(b) on behalf of the
Trustee in trust for the Certificateholders, which shall be entitled " ________,
as Special Servicer, on behalf of and in trust for registered holders of DLJ
Commercial Mortgage Corp., Mortgage Pass-Through Certificates, Series
199__-____".
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"REO Acquisition": The acquisition of any REO Property pursuant to Section
3.09.
"REO Disposition": The sale or other disposition of any REO Property
pursuant to Section 3.18(d).
"REO Extension": As defined in Section 3.16(a).
"REO Loan": The mortgage loan deemed for purposes hereof to be outstanding
with respect to each REO Property. Each REO Loan shall be deemed to provide for
monthly payments of principal and/or interest equal to its Assumed Scheduled
Payment and otherwise to have the same terms and conditions as its predecessor
Mortgage Loan (such terms and conditions to be applied without regard to the
default on such predecessor Mortgage Loan). Each REO Loan shall be deemed to
have an initial unpaid principal balance and Stated Principal Balance equal to
the unpaid principal balance and Stated Principal Balance, respectively, of its
predecessor Mortgage Loan as of the date of the related REO Acquisition. All
Scheduled Payments (other than any Balloon Payment), Assumed Scheduled Payments
(in the case of a Balloon Mortgage Loan delinquent in respect of its Balloon
Payment) and other amounts due and owing, or deemed to be due and owing, in
respect of the predecessor Mortgage Loan as of the date of the related REO
Acquisition, shall be deemed to continue to be due and owing in respect of an
REO Loan. In addition, all amounts payable or reimbursable to the Master
Servicer, the Special Servicer or the Trustee in respect of the predecessor
Mortgage Loan as of the date of the related REO Acquisition, including, without
limitation, any unpaid or unreimbursed Master Servicing Fees, Property Servicing
Fees, Special Servicing Fees and Advances (together with any related unpaid
Advance Interest), shall continue to be payable or reimbursable to the Master
Servicer, the Special Servicer or the Trustee, as the case may be, in respect of
an REO Loan.
"REO Property": A Mortgaged Property acquired by the Special Servicer on
behalf of the Trustee for the benefit of the Certificateholders through
foreclosure, acceptance of a deed in lieu of foreclosure or otherwise in
accordance with applicable law in connection with the default or imminent
default of a Mortgage Loan.
"REO Revenues": All income, rents, profits and proceeds derived from the
ownership, operation or leasing of any REO Property.
"REO Tax": As defined in Section 3.17(a)(i).
"Request for Release": A request signed by a Servicing Officer of, as
applicable, the Master Servicer in the form of Exhibit D-1 attached hereto or
the Special Servicer in the form of Exhibit D-2 attached hereto.
"Required Appraisal Loan": As defined in Section 3.19(c).
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"Reserve Account": The account or accounts created and maintained pursuant
to Section 3.03(d).
"Reserve Funds": With respect to any Mortgage Loan, any amounts delivered
by the related Mortgagor to be held in escrow by or on behalf of the mortgagee
representing: (i) reserves for repairs, replacements, capital improvements
and/or environmental testing and remediation with respect to the related
Mortgaged Property; or (ii) amounts to be applied as a Principal Prepayment on
such Mortgage Loan in the event that certain leasing criteria in respect of the
related Mortgaged Property are not met.
"Residual Certificate": Any Class R-I Certificate, Class R-II Certificate
or Class R-III Certificate.
"Responsible Officer": When used with respect to the Trustee, any Vice
President, Assistant Vice President, Trust Officer, Assistant Secretary or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement. When used with respect
to any Certificate Registrar (other than the Trustee), any officer or assistant
officer thereof.
"Scheduled Payment": With respect to any Mortgage Loan, for any Due Date
following the Cut-off Date as of which it is outstanding, the scheduled monthly
payment of principal and interest on such Mortgage Loan that is or would be, as
the case may be, payable by the related Mortgagor on such Due Date under the
terms of the related Mortgage Note as in effect on the Closing Date, without
regard to any subsequent change in or modification of such terms in connection
with a bankruptcy or similar proceeding involving the related Mortgagor or a
modification, waiver or amendment of such Mortgage Loan granted or agreed to by
the Special Servicer pursuant to Section 3.20, and assuming that each prior
Scheduled Payment has been made in a timely manner.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Certificate": Any Class S Certificate, Class A-1A Certificate or
Class A- 1B Certificate.
"Senior Principal Distribution Cross-Over Date": The first Distribution
Date as of which the aggregate of the Class Principal Balances of the Class A-1A
Certificates and the Class A-1B Certificates outstanding immediately prior
thereto exceeds the sum of (a) the aggregate Stated Principal Balance of the
Mortgage Pool that will be outstanding immediately following such Distribution
Date, plus (b) the lesser of (i) the Principal Distribution Amount for such
Distribution Date and (ii) the portion of the Available Distribution Amount for
such Distribution Date that will remain after the distributions of interest to
be made on the Senior Certificates on such Distribution Date have been so made.
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"Sequential Pay Certificate": Any Class A-1A Certificate, Class A-1B
Certificate, Class A-2 Certificate, Class A-3 Certificate, Class B-1
Certificate, Class B-2 Certificate, Class B-3 Certificate, Class B-4 Certificate
or Class C Certificate.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.03(a).
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred or to be incurred, as the context requires,
by the Master Servicer or the Special Servicer (or, if applicable, the Trustee)
in connection with the servicing of a Mortgage Loan after a default, delinquency
or other unanticipated event, or in connection with the administration of any
REO Property, including, but not limited to, the cost of (a) compliance with the
obligations of the Master Servicer and/or the Special Servicer set forth in
Sections 2.02(e), 2.03(c), 3.03(c) and 3.09, (b) the preservation, insurance,
restoration, protection and management of a Mortgaged Property, including the
cost of any "force placed" insurance policy purchased by the Master Servicer or
the Special Servicer to the extent such cost is allocable to a particular
Mortgaged Property that the Master Servicer or the Special Servicer is required
to cause to be insured pursuant to Section 3.07(a), (c) obtaining any
Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan or
REO Property, (d) any enforcement or judicial proceedings with respect to a
Mortgaged Property, including, without limitation, foreclosures, and (e) the
operation, management, maintenance and liquidation of any REO Property; provided
that notwithstanding anything to the contrary, "Servicing Advances" shall not
include allocable overhead of the Master Servicer or the Special Servicer, such
as costs for office space, office equipment, supplies and related expenses,
employee salaries and related expenses and similar internal costs and expenses,
or costs incurred by either such party in connection with its purchase of any
Mortgage Loan or REO Property pursuant to any provision of this Agreement.
"Servicing File": Any documents (other than documents required to be part
of the related Mortgage File) in the possession of the Master Servicer or the
Special Servicer and relating to the origination and servicing of any Mortgage
Loan or the administration of any REO Property.
"Servicing Officer": Any officer or employee of the Master Servicer or the
Special Servicer involved in, or responsible for, the administration and
servicing of the Mortgage Loans, whose name and specimen signature appear on a
list of servicing officers furnished by such party to the Trustee and the
Depositor on the Closing Date, as such list may be amended from time to time.
"Servicing Return Date": With respect to any Corrected Mortgage Loan, the
date that servicing thereof is returned by the Special Servicer to the Master
Servicer pursuant to Section 3.21(a).
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"Servicing Standard": To service and administer the Mortgage Loans and REO
Properties with the higher of the care, skill and diligence with which prudent
institutional commercial mortgage lenders and loan servicers service comparable
mortgage loans and the care, skill, prudence and diligence with which the Master
Servicer or Special Servicer, as the case may be, generally services comparable
mortgage loans owned by it, and in any event with a view to the timely
collection of all scheduled payments of principal and interest under the
Mortgage Loans or, if a Mortgage Loan comes into and continues in default and no
satisfactory arrangements can be made for the collection of the delinquent
payments, the maximization of the recovery on such Mortgage Loan to the
Certificateholders (as a collective whole) on a present value basis (the
relevant discounting of anticipated collections that will be distributable to
Certificateholders to be performed at the related Net Mortgage Rate), but
without regard to: (i) any relationship that the Master Servicer or the Special
Servicer, as the case may be, or any Affiliate thereof may have with the related
Mortgagor or any other party hereto; (ii) the ownership of any Certificate by
the Master Servicer or the Special Servicer, as the case may be, or by any
Affiliate thereof; (iii) the Master Servicer's obligation to make Advances; (iv)
the Special Servicer's obligation to make Servicing Advances; and (v) the right
of the Master Servicer (or any Affiliate thereof) or the Special Servicer (or
any Affiliate thereof), as the case may be, to receive compensation for its
services or reimbursement of costs hereunder or with respect to any particular
transaction.
"Servicing Transfer Event": With respect to any Mortgage Loan, the
occurrence of any of the events described in clauses (a) through (h) of the
definition of "Specially Serviced Mortgage Loan".
"Single Certificate": For purposes of Section 4.02, a hypothetical
Certificate of any Class of REMIC III Regular Certificates evidencing a $1,000
denomination or, in the case of a Class S Certificate, a 100% Percentage
Interest in the relevant Class.
"Special Servicer": ___________________, its successor in interest, or any
successor special servicer appointed as herein provided.
"Special Servicer Report": As defined in Section 4.02(c).
"Special Servicing Fee": With respect to each Specially Serviced Mortgage
Loan and each REO Loan, the fee designated as such and payable to the Special
Servicer pursuant to the second paragraph of Section 3.11(c).
"Special Servicing Fee Rate": With respect to each Specially Serviced
Mortgage Loan and each REO Loan, _______% per annum.
"Specially Serviced Mortgage Loan": Any Mortgage Loan as to which any of
the following events has occurred:
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(a) the related Mortgagor has failed to make when due any Balloon Payment,
which failure continues, or the Master Servicer determines in its
reasonable good faith judgment will continue, unremedied for 30 days;
or
(b) the related Mortgagor has failed to make when due any Monthly Payment
(other than a Balloon Payment) or any other payment required under the
related Mortgage Note or the related Mortgage, which failure continues
unremedied for 60 days; or
(c) the Master Servicer has determined, in its reasonable good faith
judgment, that a default in the making a Monthly Payment or any other
payment required under the related Mortgage Note or the related
Mortgage is likely to occur within 30 days and is likely to remain
unremedied for at least 60 days or, in the case of a Balloon Payment,
for at least 30 days; or
(d) the Master Servicer has determined, in its reasonable good faith
judgment, that a default, other than as described in clause (a) or (b)
above, has occurred that may materially impair the value of the
related Mortgaged Property as security for the Mortgage Loan, which
default has continued unremedied for the applicable cure period under
the terms of the Mortgage Loan (or, if no cure period is specified,
for 30 days); or
(e) there has been commenced in any court or agency or supervisory
authority having jurisdiction in the premises an involuntary action
against the related Mortgagor under any present or future federal or
state bankruptcy, insolvency or similar law for the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of its affairs; provided,
however, that no Workout Fee or Liquidation Fee shall be payable with
respect to a Specially Serviced Mortgage Loan that has become such
pursuant to the provisions of this subsection (e) if such involuntary
action is dismissed within 30 days of commencement of such action (or
is dismissed between 31 and 60 days after such commencement in the
absence of the Special Servicer having provided substantial services
in connection with such dismissal) and no other Servicing Transfer
Event then exists; or
(f) the related Mortgagor shall have consented 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 Mortgagor or of or relating to all or
substantially all of its property; or
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(g) the related Mortgagor shall have admitted in writing its inability to
pay its debts generally as they become due, filed a petition to take
advantage of any applicable insolvency or reorganization statute, made
an assignment for the benefit of its creditors, or voluntarily
suspended payment of its obligations; or
(h) the Master Servicer shall have received notice of the commencement of
foreclosure or similar proceedings with respect to the related
Mortgaged Property;
provided, however, that a Mortgage Loan shall cease to be a Specially Serviced
Mortgage Loan, when a Liquidation Event has occurred in respect of such Mortgage
Loan, when the related Mortgaged Property has become an REO Property or, so long
as at such time no circumstance identified in clauses (a) through (h) above
exists that would cause the Mortgage Loan to continue to be characterized as a
Specially Serviced Mortgage Loan:
(w) with respect to the circumstances described in clauses (a) and (b)
above, when the related Mortgagor has made three consecutive full and
timely Monthly Payments under the terms of such Mortgage Loan (as such
terms may be changed or modified in connection with a bankruptcy or
similar proceeding involving the related Mortgagor or by reason of a
modification, waiver or amendment granted or agreed to by the Special
Servicer pursuant to Section 3.20);
(x) with respect to the circumstances described in clauses (c), (e), (f)
and (g) above, when such circumstances cease to exist in the
reasonable good faith judgment of the Special Servicer;
(y) with respect to the circumstances described in clause (d) above, when
such default is cured; and
(z) with respect to the circumstances described in clause (h) above, when
such proceedings are terminated.
"Startup Day": With respect to each of REMIC I, REMIC II and REMIC III, the
day designated as such in Section 10.01(c).
"Stated Maturity Date": With respect to any Mortgage Loan, the Due Date
specified in the Mortgage Note (as in effect on the Closing Date) on which the
last payment of principal is due and payable under the terms of the Mortgage
Note (as in effect on the Closing Date), without regard to any change in or
modification of such terms in connection with a bankruptcy or similar proceeding
involving the related Mortgagor or a modification, waiver or
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amendment of such Mortgage Loan granted or agreed to by the Special Servicer
pursuant to Section 3.20.
"Stated Principal Balance": With respect to any Mortgage Loan (and any
successor REO Loan), the Cut-off Date Balance of such Mortgage Loan, as reduced
on each Distribution Date (to not less than zero) by (i) all payments (or P&I
Advances in lieu thereof) and other collections of principal of such Mortgage
Loan (or successor REO Loan) that are (or, if they had not been applied to cover
any Additional Trust Fund Expense, would have been) distributed to
Certificateholders on such Distribution Date, and (ii) the principal portion of
any Realized Loss incurred in respect of such Mortgage Loan (or successor or REO
Loan) during the related Collection Period. Notwithstanding the foregoing, if a
Liquidation Event occurs in respect of any Mortgage Loan or REO Property, then
the "Stated Principal Balance" of such Mortgage Loan or of the related REO Loan,
as the case may be, shall be zero commencing as of the Distribution Date in the
Collection Period next following the Collection Period in which such Liquidation
Event occurred.
"Subordinated Certificate": Any Class A-2 Certificate, Class A-3
Certificate, Class B-1 Certificate, Class B-2 Certificate, Class B-3
Certificate, Class B-4 Certificate, Class C Certificate, Class R-I Certificate,
Class R-II Certificate or Class R-III Certificate.
"Sub-Servicer": Any Person with which the Master Servicer or the Special
Servicer has entered into a Sub-Servicing Agreement.
"Substitute Collateral": As defined in Section 7.06.
"Sub-Servicing Agreement": The written contract between the Master Servicer
or the Special Servicer, on the one hand, and any Sub-Servicer, on the other
hand, relating to servicing and administration of Mortgage Loans as provided in
Section 3.22.
"Tax Matters Person": With respect to any of the REMICs created hereunder,
the Person designated as the "tax matters person" of such REMIC in the manner
provided under Treasury regulation section 1.860F-4(d) and temporary Treasury
regulation section 301.6231(a)(7)-1T, which Person shall, pursuant to Section
10.01(d), be the applicable Plurality Residual Certificateholder.
"Tax Returns": The federal income tax return on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income (REMIC) Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holder of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of each of REMIC I, REMIC II and REMIC III due to its
classification as a REMIC under the REMIC Provisions, together with any and all
other information, reports or returns that may be required to be furnished to
the Certificateholders or filed with the Internal Revenue Service under any
applicable provisions of federal tax law or any other governmental taxing
authority under applicable state or local tax laws.
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"Transfer": Any direct or indirect transfer, sale, pledge, hypothecation,
or other form of assignment of any Ownership Interest in a Certificate.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer any Ownership
Interest in a Certificate.
"Trust Fund": Collectively, all of the assets of REMIC I, REMIC II and
REMIC III.
"Trustee": ___________________, its successor in interest, or any successor
trustee appointed as herein provided.
"Trustee's Fee": With respect to the Mortgage Pool, the fee designated as
such and payable to the Trustee pursuant to Section 8.05. The Trustee shall be
entitled to withdraw earned but unpaid Trustee's Fees from the Distribution
Account on each Distribution Date, pursuant to Sections 3.05(b) and 8.05(a).
"Trustee's Fee Rate": _______% per annum.
"Trustee Report": As defined in Section 4.02(a).
"UCC": The Uniform Commercial Code in effect in the applicable
jurisdiction.
"UCC Financing Statement": A financing statement executed and filed
pursuant to the Uniform Commercial Code, as in effect in any relevant
jurisdiction.
"Uncertificated Accrued Interest": With respect to any REMIC I Regular
Interest, for any Distribution Date, one month's interest (calculated on the
basis of a 360-day year consisting of twelve 30-day months or, if the related
Mortgage Loan or REO Loan accrues interest on a different basis, on such
alternative basis) at the REMIC I Remittance Rate applicable to such REMIC I
Regular Interest for such Distribution Date, accrued on the Uncertificated
Principal Balance of such REMIC I Regular Interest outstanding immediately prior
to such Distribution Date. With respect to any REMIC II Regular Interest, for
any Distribution Date, one month's interest (calculated on the basis of a
360-day year consisting of twelve 30-day months) at the REMIC II Remittance Rate
applicable to such REMIC II Regular Interest for such Distribution Date, accrued
on the Uncertificated Principal Balance of such REMIC II Regular Interest
outstanding immediately prior to such Distribution Date.
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"Uncertificated Distributable Interest": With respect to any REMIC I
Regular Interest for any Distribution Date, the Uncertificated Accrued Interest
in respect of such REMIC I Regular Interest for such Distribution Date, reduced
(to not less than zero) by the product of (i) any Net Aggregate Prepayment
Interest Shortfall for such Distribution Date, multiplied by (ii) a fraction,
expressed as a percentage, the numerator of which is the Uncertificated Accrued
Interest in respect of such REMIC I Regular Interest for such Distribution Date,
and the denominator of which is the aggregate Uncertificated Accrued Interest in
respect of all the REMIC I Regular Interests for such Distribution Date. With
respect to any REMIC II Regular Interest for any Distribution Date, the
Uncertificated Accrued Interest in respect of such REMIC II Regular Interest for
such Distribution Date, reduced (to not less than zero) by the product of (i)
any Net Aggregate Prepayment Interest Shortfall for such Distribution Date,
multiplied by (ii) a fraction, expressed as a percentage, the numerator of which
is the Uncertificated Accrued Interest in respect of such REMIC II Regular
Interest for such Distribution Date, and the denominator of which is the
aggregate Uncertificated Accrued Interest in respect of all the REMIC II Regular
Interests for such Distribution Date.
"Uncertificated Principal Balance": The principal amount of any REMIC I
Regular Interest or REMIC II Regular Interest outstanding as of any date of
determination. As of the Closing Date, the Uncertificated Principal Balance of
each REMIC I Regular Interest shall equal the Cut-off Date Balance of the
related Mortgage Loan. On each Distribution Date, the Uncertificated Principal
Balance of each REMIC I Regular Interest shall be reduced by all distributions
of principal deemed to have been made thereon on such Distribution Date pursuant
to Section 4.01(i) and, if and to the extent appropriate, shall be further
reduced on such Distribution Date as provided in Section 4.04(c). As of the
Closing Date, the Uncertificated Principal Balance of each REMIC II Regular
Interest shall equal the amount set forth in the Preliminary Statement hereto as
its initial stated principal amount. On each Distribution Date, the
Uncertificated Principal Balance of each REMIC II Regular Interest shall be
reduced by all distributions of principal deemed to have been made thereon on
such Distribution Date pursuant to Section 4.01(h) and, if and to the extent
appropriate, shall be further reduced on such Distribution Date as provided in
Section 4.04(b).
"Underwriter": _________________________________.
"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 or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
"USPAP": The Uniform Standards of Professional Appraisal Practices.
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"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. At all times during the term
of this Agreement, _____% of the Voting Rights shall be allocated among the
Holders of the various Classes of Sequential Pay Certificates in proportion to
the respective Class Principal Balances thereof, _____% of the Voting Rights
shall be allocated to the Holders of the Class S Certificates, and any Voting
Rights not otherwise allocated in the aforesaid manner will be allocated to the
REMIC Residual 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
Certificates.
"Weighted Average Effective REMIC I Remittance Rate": With respect to any
Distribution Date, the rate per annum equal to the weighted average, expressed
as a percentage and rounded to six decimal places, of the respective Effective
REMIC I Remittance Rates in respect of the REMIC I Regular Interests for such
Distribution Date, weighted on the basis of the respective Uncertificated
Principal Balances of the REMIC I Regular Interests outstanding immediately
prior to such Distribution Date.
"Weighted Average REMIC II Remittance Rate": With respect to any
Distribution Date, the rate per annum equal to the weighted average, expressed
as a percentage and rounded to six decimal places, of the respective REMIC II
Remittance Rates in respect of the REMIC II Regular Interests for such
Distribution Date, weighted on the basis of the respective Uncertificated
Principal Balances of the REMIC II Regular Interests outstanding immediately
prior to such Distribution Date.
"Workout Fee": With respect to each Corrected Mortgage Loan, the fee
designated as such and payable to the Special Servicer pursuant to the third
paragraph of Section 3.11(c).
"Workout Fee Rate": With respect to each Corrected Mortgage Loan, ___%.
"Yield Maintenance Premium": With respect to any Mortgage Loan, any
premium, penalty or fee paid or payable, as the context requires, by a Mortgagor
in connection with a Principal Prepayment on, or other early collection of
principal of, a Mortgage Loan, other than any Prepayment Premium.
SECTION 1.02. Certain Calculations in Respect of the Mortgage Pool.
(a) All amounts collected in respect of any Mortgage Loan in the form of
payments from Mortgagors, Liquidation Proceeds or Insurance Proceeds shall be
applied to amounts due and owing under the related Mortgage Note and Mortgage
(including, without limitation, for principal and accrued and unpaid interest)
in accordance with the express provisions of the related Mortgage Note and
Mortgage and, in the absence of such express provisions, shall be applied for
purposes of this Agreement: first, as a recovery of any related and unreimbursed
Servicing Advances; second, as a recovery of accrued and unpaid interest at the
related Mortgage
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Rate on such Mortgage Loan to but not including, as appropriate, the date of
receipt (or, in the case of a full Monthly Payment from any Mortgagor, through
the related Due Date); third, as a recovery of principal of such Mortgage Loan
then due and owing, including, without limitation, by reason of acceleration of
the Mortgage Loan following a default thereunder (or, if a Liquidation Event has
occurred in respect of such Mortgage Loan, as a recovery of principal to the
extent of its entire remaining unpaid principal balance); fourth, as a recovery
of amounts to be currently applied to the payment of, or escrowed for the future
payment of, real estate taxes, assessments, insurance premiums, ground rents (if
applicable) and similar items; fifth, as a recovery of Reserve Funds to the
extent then required to be held in escrow; sixth, as a recovery of any
Prepayment Premium or Yield Maintenance Premium then due and owing under such
Mortgage Loan; seventh, as a recovery of any other amounts then due and owing
under such Mortgage Loan; and eighth, as a recovery of any remaining principal
of such Mortgage Loan to the extent of its entire remaining unpaid principal
balance.
(b) Collections in respect of each REO Property (exclusive of amounts to be
applied to the payment of the costs of operating, managing, maintaining and
disposing of such REO Property) shall be treated: first, as a recovery of any
related and unreimbursed Servicing Advances; second, as a recovery of accrued
and unpaid interest on the related REO Loan at the related Mortgage Rate to but
not including the Due Date in the Collection Period of receipt; third, as a
recovery of principal of the related REO Loan to the extent of its entire unpaid
principal balance; and fourth, as a recovery of any other amounts deemed to be
due and owing in respect of the related REO Loan.
(c) Insofar as amounts received in respect of any Mortgage Loan or REO
Property and allocable to fees and charges owing in respect of such Mortgage
Loan or the related REO Loan, as the case may be, that constitute additional
servicing compensation payable to the Master Servicer and/or Special Servicer,
are insufficient to cover the full amount of such fees and charges, such amounts
shall be allocated between such of those fees and charges as are payable to the
Master Servicer, on the one hand, and such of those fees and charges as are
payable to the Special Servicer, on the other, pro rata in accordance with their
respective entitlements.
(d) The foregoing applications of amounts received in respect of any
Mortgage Loan or REO Property shall be determined by the Master Servicer and
reflected in the appropriate monthly Determination Date Report and Trustee
Report.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery hereof,
does hereby assign to the Trustee without recourse for the benefit of the
Certificateholders all the right, title and interest of the Depositor in, to and
under (i) the Mortgage Loans, (ii) Sections ______________ of the Mortgage Loan
Purchase Agreement and (iii) all other assets included or to be included in the
Trust Fund. Such assignment includes, without limitation, all interest and
principal received or receivable on or with respect to the Mortgage Loans (other
than payments of interest and principal due and payable on the Mortgage Loans on
or before the Cutoff Date and any Principal Prepayments (together with any
related Prepayment Premiums and/or Yield Maintenance Premiums) received on or
before the Cut-off Date).
(b) The conveyance of the Mortgage Loans and the related rights and
property accomplished hereby is absolute and is intended by the parties to
constitute a sale of the Mortgage Loans and such other related rights and
property to the Trustee for the benefit of the Certificateholders. It is,
further, not intended that such conveyance be deemed a pledge of security for a
loan. If such conveyance is deemed to be a pledge of security for a loan,
however, the Depositor intends that the rights and obligations of the parties to
such loan shall be established pursuant to the terms of this Agreement. The
Depositor also intends and agrees that, in such event, (i) this Agreement shall
constitute a security agreement under applicable law, (ii) the Depositor shall
be deemed to have granted to the Trustee (in such capacity) a first priority
security interest in the Depositor's entire right, title and interest in and to
the assets constituting the Trust Fund, including, without limitation, the
Mortgage Loans, all principal and interest received or receivable with respect
to the Mortgage Loans (other than principal and interest payments due and
payable on or prior to the Cut-off Date and any Principal Prepayments received
on or prior to the Cut-off Date), all amounts held from time to time in the
Collection Account, the Distribution Account and, if established, the REO
Account and all reinvestment earnings on such amounts, and all of the
Depositor's right, title and interest in and to the proceeds of any title,
hazard or other Insurance Policies related to such Mortgage Loans, (iii) the
possession by the 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 Trustee for the purpose
of perfecting such security interest under applicable law. The Depositor shall
file or cause to be filed, as a precautionary filing, a Form UCC-1 substantially
in the form attached as Exhibit J
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hereto in all appropriate locations in the State of New York promptly following
the initial issuance of the Certificates, and the Master Servicer shall prepare
and file at each such office, and the Trustee shall execute, continuation
statements with respect thereto, in each case within six months prior to the
fifth anniversary of the immediately preceding filing. The Depositor shall
cooperate in a reasonable manner with the Trustee and the Master Servicer in
preparing and filing such continuation statements. This Section 2.01(b) shall
constitute notice to the Trustee pursuant to any of the requirements of the UCC
in effect in New York.
(c) In connection with the Depositor's assignment pursuant to Section
2.01(a) above, (i) the Depositor shall deliver to and deposit with, or cause to
be delivered to and deposited with, the Trustee or a Custodian appointed thereby
(with copies to the Master Servicer), on or before the Closing Date, the
Mortgage File for each Mortgage Loan so assigned and (ii) the Depositor shall
deliver to the Trustee on or before the Closing Date a fully executed
counterpart of the Mortgage Loan Purchase Agreement.
(d) 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 referred to in clauses (iv) and (v) of the
definition of "Mortgage File" and each UCC-2 and UCC-3 in favor of the Trustee
referred to in clause (viii) of the definition of "Mortgage File", and the
Master Servicer shall, at the Depositor'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 unfiled, as the case
may be, because of a defect therein, the Depositor 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.
(e) The Depositor 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 Depositor or the Mortgage Loan Seller that relate to
the 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 Trustee in trust for the benefit of the
Certificateholders.
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(f) On or prior to the tenth Business Day following the Closing Date, the
Depositor shall cause copies of the documents referred to in clauses (i), (ii)
(iii), (vi) (as applicable) and (vii) of the definition of "Mortgage File" for
each Mortgage Loan to be delivered to the Master Servicer and the Special
Servicer.
SECTION 2.02. Acceptance of REMIC I by Trustee.
(a) The 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 B-2, to the
provisions of Sections 1.03, 2.01, 2.02(c) and 2.02(d) and to the further review
provided for in Section 2.02(b), of (i) the Mortgage File with respect to each
Mortgage Loan (provided that with respect to the documents referred to in clause
(vi) of the definition of "Mortgage File" such acknowledgment shall apply only
to the extent such documents are actually delivered), (ii) a fully executed
counterpart of the Mortgage Loan Purchase Agreement, and (iii) all other assets
delivered to it and included in REMIC I, 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 REMIC I, in trust for the exclusive use and benefit of all
present and future Certificateholders. In addition, the Trustee hereby certifies
to each of the other parties hereto and the Mortgage Loan Seller that, as to
each Mortgage Loan listed on the Mortgage Loan Schedule, except as specifically
identified in the Schedule of Exceptions to Mortgage File Delivery attached
hereto as Exhibit B-2, (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
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 Mortgage Loan, and (iii) based on such examination and only as
to the foregoing documents, the information set forth in the Mortgage Loan
Schedule with respect to the items specified in clauses (ii), (v) and (vi)(B) of
the definition of "Mortgage Loan Schedule" accurately reflects the information
set forth in the Mortgage File.
(b) On or about the 90th day following the Closing Date (and, if any
exceptions are noted, again on or about the first anniversary of the Closing
Date), the Trustee shall, subject to Sections 2.01, 2.02(c) and 2.01(d), certify
in writing to each of the other parties hereto and the Mortgage Loan Seller
that, as to each Mortgage Loan listed on the Mortgage Loan Schedule (other than
any Mortgage Loan as to which a Liquidation Event has occurred or any 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 Mortgage Loan have been reviewed by it or by such Custodian on its behalf
and
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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 Mortgage Loan, and (iii) based on the examinations referred to
in Section 2.02(a) above and this Section 2.02(b) and only as to the foregoing
documents, the information set forth in the Mortgage Loan Schedule with respect
to the items specified in clauses (ii), (v) and (vi)(B) of the definition of
"Mortgage Loan Schedule" accurately reflects the information set forth in the
Mortgage File.
(c) None of the Trustee, the Master Servicer, the Special Servicer or 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
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.
(d) In performing any such review contemplated by subsections (a) and (b)
above, the Trustee may conclusively rely on the Depositor as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Trustee's review of the Mortgage Files is limited solely
to confirming that the documents listed in definition of Mortgage File have been
received and further confirming that any and all documents delivered pursuant to
this Section 2.02 have been executed and relate to the Mortgage Loans identified
in the Mortgage Loan Schedule. The Trustee shall have no responsibility for
determining whether any document is valid and binding, whether the text of any
assignment or endorsement is in proper or recordable form, whether the requisite
recording of any document is in accordance with the requirements of any
applicable jurisdiction, or whether a blanket assignment is permitted in any
applicable jurisdiction.
(e) 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"), such party shall
give prompt written notice thereof to the other parties thereto. Upon its
discovery or receipt of notice of any such Document Defect, the Master Servicer
shall notify the Mortgage Loan Seller. If any Document Defect is not corrected
within 90 days of such notice, and such Document Defect materially and adversely
affects the value of any Mortgage Loan or the interests of the
Certificateholders therein, the Master Servicer shall, on behalf of the Trust
Fund, exercise such rights and remedies as it may have hereunder, under the
Mortgage Loan Purchase Agreement with respect to such Document Defect in such
manner as it determines, in its reasonable good faith judgment, is in the best
interests of the Certificateholders (taken as a collective whole). 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.
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SECTION 2.03. Certain Repurchases of Mortgage Loans by the Mortgage Loan
Seller.
(a) If any party hereto or any Certificateholder discovers or receives
notice of a breach of any representation or warranty relating to any Mortgage
Loan set forth in the Mortgage Loan Purchase Agreement (a "Breach"), and such
Breach materially and adversely affects the value of such Mortgage Loan or the
interests of the Certificateholders therein, such Person shall give prompt
written notice to the parties hereto. Promptly upon becoming aware of any such
Breach, 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 notice,
cure such 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 does not
relate to whether the affected Mortgage Loan is a "qualified mortgage" within
the meaning of Section 860(a)(3) of the Code, (ii) such Breach is capable of
being cured but not within such 90- day (or other) period, (iii) the Mortgage
Loan Seller has commenced and is diligently proceeding with the cure of such
Breach within such 90-day (or other) period, and (iv) the Mortgage Loan Seller
shall have delivered to the Trustee 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 when such deposit is made. Any such purchase of a
Mortgage Loan shall be on a whole loan, servicing released basis.
(b) Upon receipt of an Officer's Certificate from the Master Servicer to
the effect that the full amount of the Purchase Price for any Mortgage Loan
repurchased by the Mortgage Loan Seller as contemplated by Section 2.03(a) has
been deposited in the Collection Account, the Trustee shall release or cause to
be released to such purchaser or its designee, as appropriate, the related
Mortgage File, and shall execute and deliver such instruments of release,
transfer and/or assignment, in each case without recourse, as shall be provided
to it and are reasonably necessary to vest in such purchaser or its designee the
ownership of the repurchased Mortgage Loan. 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) The Mortgage Loan Purchase Agreement provides the sole remedies
available to the Certificateholders, or the Trustee on behalf of the
Certificateholders, respecting any Breach. If the Mortgage Loan Seller defaults
on its obligations to repurchase any Mortgage Loan as contemplated by Section
2.03(a), the Master Servicer shall promptly notify the Trustee
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and the Certificateholders 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 Certificateholders (taken as a collective whole). 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 2.04. Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants to each of the other
parties hereto and for the benefit of the Certificateholders, as of the Closing
Date, that:
(i) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(ii) The execution and delivery of this Agreement by the Depositor,
and the performance and compliance with the terms of this Agreement by the
Depositor, will not violate the Depositor's organizational documents or
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or result in the breach of, any
material agreement or other instrument to which it is a party or by which
it is bound.
(iii) The Depositor has the full power and authority to own its
properties, to conduct its business as presently conducted by it and to
enter into and consummate all transactions contemplated by this Agreement,
has duly authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid, legal
and binding obligation of the Depositor, enforceable against the Depositor
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 Depositor 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, which
violation, in the Depositor's reasonable good faith judgment, is likely to
affect materially and adversely either
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the ability of the Depositor to perform its obligations under this
Agreement or the financial condition of the Depositor.
(vi) The transfer of the Mortgage Loans to the 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.
(vii) No litigation is pending or, to the best of the Depositor's
knowledge, threatened against the Depositor that, if determined adversely
to the Depositor, would prohibit the Depositor from entering into this
Agreement or that, in the Depositor's reasonable good faith judgment, is
likely to materially and adversely affect either the ability of the
Depositor to perform its obligations under this Agreement or the financial
condition of the Depositor.
(viii) Immediately prior to the transfer of the Mortgage Loans to the
Trustee for the benefit of the Certificateholders pursuant to this
Agreement, the Depositor had good and marketable title to, and was the sole
owner and holder of, each Mortgage Loan; and the Depositor has full right
and authority to sell, assign and transfer the Mortgage Loans.
(ix) The Depositor is transferring the Mortgage Loans to the Trustee
for the benefit of the Certificateholders free and clear of any and all
liens, pledges, charges and security interests created by or through the
Depositor.
(b) The representations and warranties of the Depositor set forth in
Section 2.04(a) 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 Trust Fund remains in existence. Upon discovery by any party
hereto of any breach of any of the foregoing representations and warranties, the
party discovering such breach shall given prompt written notice to the other
parties hereto.
SECTION 2.05. Representations and Warranties of the Master Servicer.
(a) The Master Servicer hereby represents and warrants to each of the other
parties hereto and for the benefit of the Certificateholders, as of the Closing
Date, that:
(i) The Master Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of _____________
and is, and shall remain, in compliance with the laws of each State in
which any Mortgaged Property is located to the extent necessary to perform
its obligations under this Agreement.
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(ii) The execution and delivery of this Agreement by the Master
Servicer, and the performance and compliance with the terms of this
Agreement by the Master Servicer, will not violate the Master Servicer's
organizational documents or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material agreement or other instrument to
which it is a party or by which it is bound.
(iii) The Master Servicer has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement, has
duly authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid, legal
and binding obligation of the Master Servicer, enforceable against the
Master Servicer 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 Master Servicer 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, which
violation, in the Master Servicer's reasonable good faith judgment, is
likely to affect materially and adversely either the ability of the Master
Servicer to perform its obligations under this Agreement or the financial
condition of the Master Servicer.
(vi) No litigation is pending or, to the best of the Master Servicer's
knowledge, threatened against the Master Servicer that, if determined
adversely to the Master Servicer, would prohibit the Master Servicer from
entering into this Agreement or that, in the Master Servicer's reasonable
good faith judgment, is likely to materially and adversely affect either
the ability of the Master Servicer to perform its obligations under this
Agreement or the financial condition of the Master Servicer.
(vii) Each officer, director, employee, consultant or advisor of the
Master Servicer with responsibilities concerning the servicing and
administration of any Mortgage Loan is covered by errors and omissions
insurance in the amounts and with the coverage required by Section 3.07(c).
Neither the Master Servicer nor any of its officers, directors, employees,
consultants or advisors involved in the
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servicing or administration of Mortgage Loans has been refused such
coverage or insurance.
(viii) No regulatory or governmental approval is required for the
consummation by the Master Servicer of the transactions contemplated
herein, other than any such approvals as have been obtained.
(b) The representations and warranties of the Master Servicer set forth in
Section 2.05(a) 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 Trust Fund remains in existence. Upon discovery by any party
hereto of any breach of any of the foregoing representations and warranties, the
party discovering such breach shall given prompt written notice to the other
parties hereto.
(c) Any successor Master Servicer shall be deemed to have made, as of the
date of its succession, each of the representations and warranties set forth in
Section 2.05(a), subject to such appropriate modifications to the representation
and warranty set forth in Section 2.05(a)(i) to accurately reflect such
successor's jurisdiction of organization and whether it is a corporation,
partnership, bank, association or other type of organization.
SECTION 2.06. Representations and Warranties of the Special Servicer.
(a) The Special Servicer hereby represents and warrants to each of the
other parties hereto and for the benefit of the Certificateholders, as of the
Closing Date, that:
(i) The Special Servicer is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of
____________ and is in compliance with the laws of each State in which any
Mortgaged Property is located to the extent necessary to perform its
obligations under this Agreement.
(ii) The execution and delivery of this Agreement by the Special
Servicer, and the performance and compliance with the terms of this
Agreement by the Special Servicer, will not violate the Special Servicer's
organizational documents or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material agreement or other instrument to
which it is a party or by which it is bound.
(iii) The Special Servicer has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement, has
duly authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement.
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(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid, legal
and binding obligation of the Special Servicer, enforceable against the
Special Servicer 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 Special Servicer 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, which
violation, in the Special Servicer's reasonable good faith judgment, is
likely to affect materially and adversely either the ability of the Special
Servicer to perform its obligations under this Agreement or the financial
condition of the Special Servicer.
(vi) No litigation is pending or, to the best of the Special
Servicer's knowledge, threatened against the Special Servicer that, if
determined adversely to the Special Servicer, would prohibit the Special
Servicer from entering into this Agreement or that, in the Special
Servicer's reasonable good faith judgment, is likely to materially and
adversely affect either the ability of the Special Servicer to perform its
obligations under this Agreement or the financial condition of the Special
Servicer.
(vii) Each officer, director, employee, consultant or advisor of the
Special Servicer with responsibilities concerning the servicing and
administration of any Specially Serviced Mortgage Loan or REO Property is
covered by errors and omissions insurance in the amounts and with the
coverage required by Section 3.07(c). Neither the Special Servicer nor any
of its officers, directors, employees, consultants or advisors involved in
the servicing or administration of Mortgage Loans has been refused such
coverage or insurance.
(viii) No regulatory or governmental approval is required for the
consummation by the Special Servicer of the transactions contemplated
herein, other than any such approvals as have been obtained.
(b) The representations and warranties of the Special Servicer set forth in
Section 2.06(a) 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 Trust Fund remains in existence. Upon discovery by any party
hereto of any breach of any of the foregoing representations and warranties, the
party discovering such breach shall given prompt written notice to the other
parties hereto.
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(c) Any successor Special Servicer shall be deemed to have made, as of the
date of its succession, each of the representations and warranties set forth in
Section 2.06(a), subject to such appropriate modifications to the representation
and warranty set forth in Section 2.06(a)(i) to accurately reflect such
successor's jurisdiction of organization and whether it is a corporation,
partnership, bank, association or other type of organization.
SECTION 2.07. Representations, Warranties and Covenants of the Trustee and
the REMIC Administrator.
(a) The Bank, both in its capacity as Trustee and its capacity as REMIC
Administrator, hereby represents and warrants to each of the other parties
hereto and for the benefit of the Certificateholders, as of the Closing Date,
that:
(i) The Bank is a _____________ corporation duly organized, validly
existing and in good standing under the laws of the State of _____________
and is, shall be or, if necessary, shall appoint a co-trustee that is, in
compliance with the laws of each State in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each
Mortgage Loan and to perform its obligations under this Agreement.
(ii) The execution and delivery of this Agreement by the Bank, and the
performance and compliance with the terms of this Agreement by the Bank,
will not violate the Bank's organizational documents or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in a material breach of, any
material agreement or other instrument to which it is a party or by which
it is bound.
(iii) The Bank has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and
has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid, legal
and binding obligation of the Bank, enforceable against the Bank 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 the rights of creditors of
banks, and (B) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law.
(v) The Bank 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
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arbiter, or any order or regulation of any federal, state or local
governmental or regulatory authority, which violation, in the Bank's
reasonable good faith judgment, is likely to affect materially and
adversely either the ability of the Bank to perform its obligations under
this Agreement or the financial condition of the Bank.
(vi) No litigation is pending or, to the best of the Bank's knowledge,
threatened against the Bank that, if determined adversely to the Bank,
would prohibit the Bank from entering into this Agreement or that, in the
Bank's reasonable good faith judgment, is likely to materially and
adversely affect either the ability of the Bank to perform its obligations
under this Agreement or the financial condition of the Bank.
(vii) No regulatory or governmental approval is required for the
consummation by the Bank of the transactions contemplated herein, other
than any such approvals as have been obtained.
(b) The representations, warranties and covenants of the Bank set forth in
Section 2.07(a) 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 Trust Fund remains in existence. Upon discovery by any party
hereto of any breach of any of the foregoing representations, warranties and
covenants, the party discovering such breach shall given prompt written notice
to the other parties hereto.
(c) Any successor Trustee or REMIC Administrator shall be deemed to have
made, as of the date of its succession, each of the representations, warranties
and covenants set forth in Section 2.07(a), subject to such appropriate
modifications to the representation and warranty set forth in Section 2.07(a)(i)
to accurately reflect such successor's jurisdiction of organization and whether
it is a corporation, partnership, bank, association or other type of
organization. In any such case, the term "Bank" shall be deemed to mean Trustee
or REMIC Administrator, as appropriate.
SECTION 2.08. [RESERVED]
SECTION 2.09. Execution, Authentication and Delivery of Class R-I
Certificates; Creation of REMIC I Regular Interests.
Subject to Sections 2.01 and 2.02, the Trustee hereby acknowledges the
assignment to it of the assets included in REMIC I. Concurrently with such
assignment and in exchange therefor, the Trustee, pursuant to the written
request of the Depositor executed by an officer of the Depositor, shall execute,
authenticate and deliver to or upon the order of the Depositor, the Class R-I
Certificates in authorized denominations. The interests evidenced by the Class
R-I
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Certificates, together with the REMIC I Regular Interests, constitute the entire
beneficial ownership of REMIC I. The rights of the Class R-I Certificateholders
and REMIC II (as holder of the REMIC I Regular Interests) to receive
distributions from the proceeds of REMIC I in respect of the Class R-I
Certificates and the REMIC I Regular Interests, respectively, and all ownership
interests of the Class R-I Certificateholders and REMIC II in and to such
distributions, shall be as set forth in this Agreement.
SECTION 2.10. Conveyance of REMIC I Regular Interests; Acceptance of REMIC
II by Trustee.
The Depositor, as of the Closing Date, and concurrently with the execution
and delivery of this Agreement, does hereby assign without recourse all the
right, title and interest of the Depositor in and to the REMIC I Regular
Interests to the Trustee for the benefit of the Holders of the Class R-II
Certificates and the REMIC III Certificates. The Trustee acknowledges the
assignment to it of the REMIC I Regular Interests and declares that it holds and
will hold the same in trust as REMIC II for the exclusive use and benefit of all
present and future Holders of the Class R-II Certificates and the REMIC III
Certificates.
SECTION 2.11. Execution, Authentication and Delivery of Class R-II
Certificates; Creation of REMIC II Regular Interests.
Concurrently with the assignment to it of the REMIC I Regular Interests and
in exchange therefor, the Trustee, pursuant to the written request of the
Depositor executed by an officer of the Depositor, shall execute, authenticate
and deliver to or upon the order of the Depositor, the Class R-II Certificates
in authorized denominations. The interests evidenced by the Class R-II
Certificates, together with the REMIC II Regular Interests, constitute the
entire beneficial ownership of REMIC II. The rights of the Class R-II
Certificateholders and REMIC III (as holder of the REMIC II Regular Interests)
to receive distributions from the proceeds of REMIC II in respect of the Class
R-II Certificates and the REMIC II Regular Interests, respectively, and all
ownership interests of the Class R-II Certificateholders and REMIC III in and to
such distributions, shall be as set forth in this Agreement.
SECTION 2.12. Conveyance of REMIC II Regular Interests; Acceptance of REMIC
III by Trustee.
The Depositor, as of the Closing Date, and concurrently with the execution
and delivery of this Agreement, does hereby assign without recourse all the
right, title and interest of the Depositor in and to the REMIC II Regular
Interests to the Trustee for the benefit of the Holders of the REMIC III
Certificates. The Trustee acknowledges the assignment to it of the REMIC II
Regular Interests and declares that it holds and will hold the same in trust as
REMIC III for the exclusive use and benefit of all present and future Holders of
the REMIC III Certificates.
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SECTION 2.13. Execution, Authentication and Delivery of REMIC III
Certificates.
Concurrently with the assignment to it of the REMIC II Regular Interests
and in exchange therefor, the Trustee shall execute, authenticate and deliver to
or upon the order of the Depositor, the REMIC III Certificates in authorized
denominations evidencing the entire beneficial ownership of REMIC III. The
rights of the Holders of the respective Classes of REMIC III Certificates to
receive distributions from the proceeds of REMIC III in respect of their REMIC
III Certificates, and all ownership interests of such Holders in and to such
distributions, shall be as set forth in this Agreement.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
SECTION 3.01. Administration of the Mortgage Loans.
(a) Each of the Master Servicer and the Special Servicer shall service and
administer the Mortgage Loans that it is obligated to service and administer
pursuant to this Agreement, for the benefit of the Certificateholders, in
accordance with any and all applicable laws and the terms of this Agreement, the
Insurance Policies and the respective Mortgage Loans and, to the extent
consistent with the foregoing, in accordance with the Servicing Standard.
Without limiting the foregoing, and subject to Section 3.21, (i) the Master
Servicer shall service and administer all Mortgage Loans as to which no
Servicing Transfer Event has occurred and all Corrected Mortgage Loans, and (ii)
the Special Servicer shall service and administer (x) each Mortgage Loan (other
than a Corrected Mortgage Loan) as to which a Servicing Transfer Event has
occurred, and (y) each REO Property; provided, however, that the Special
Servicer shall provide certain services with respect to Mortgage Loans that are
not Specially Serviced Mortgage Loans, as specifically provided herein, and the
Master Servicer shall continue to collect information and prepare all reports to
the Trustee required hereunder with respect to any Specially Serviced Mortgage
Loans and REO Properties (and the related REO Loans), and further to render such
incidental services with respect to any Specially Serviced Mortgage Loans and
REO Properties as are specifically provided for herein. The Master Servicer
shall not, on behalf of the Trustee, obtain title to a Mortgaged Property.
(b) Subject to Section 3.01(a), the Master Servicer and the Special
Servicer each shall have full power and authority, acting alone, to do or cause
to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, each of the Master Servicer and the Special
Servicer, in its own name, with respect to each of the Mortgage Loans it is
obligated to service hereunder, is hereby authorized and empowered by the
Trustee to execute and deliver, on behalf of the Certificateholders and the
Trustee or any of them: (i) any and all financing statements, continuation
statements and other documents or instruments necessary to maintain the lien
created by any Mortgage or other security document in the related Mortgage File
on the related Mortgaged Property and related collateral; and (ii) any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments. In addition, without limiting
the generality of the foregoing, the Special Servicer is authorized and
empowered by the Trustee to execute and deliver, in accordance with the
Servicing Standard and subject to Sections 3.08 and 3.20, any and all
modifications, waivers, amendments or consents to or with respect to any
documents contained in the related Mortgage File. Subject to Section 3.10, the
Trustee shall, at the written request of a Servicing Officer of the Master
Servicer or the Special Servicer, furnish, or cause to be so furnished, to the
Master Servicer or the Special Servicer, as appropriate, any limited powers of
attorney and other documents necessary or
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appropriate to enable it to carry out its servicing and administrative 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 or the Special
Servicer.
(c) The relationship of each of the Master Servicer and the Special
Servicer to the Trustee under this Agreement is intended by the parties to be
that of an independent contractor and not that of a joint venturer, partner or
agent.
SECTION 3.02. Collection of Mortgage Loan Payments.
Each of the Master Servicer or the Special Servicer shall undertake
reasonable efforts to collect all payments called for under the terms and
provisions of the Mortgage Loans it is obligated to service hereunder and shall,
to the extent such procedures shall be consistent with this Agreement, follow
such collection procedures as are consistent with the Servicing Standard. In
addition, if a Mortgagor becomes delinquent with respect to any Monthly Payment
(including, without limitation, a Balloon Payment), the Master Servicer shall
promptly so notify the Special Servicer, shall keep the Special Servicer
apprised of all collection and customer service matters with respect to the
related Mortgage Loan and shall furnish to the Special Servicer copies of all
written communications between the Master Servicer and such Mortgagor.
SECTION 3.03. Collection of Taxes, Assessments and Similar Items; Servicing
Accounts; Reserve Accounts.
(a) The Master Servicer shall establish and maintain one or more accounts
(the "Servicing Accounts"), into which all Escrow Payments with respect to the
Mortgage Loans shall be deposited and retained. Subject to any terms of the
related Mortgage Loan documents that specify the nature of the account in which
Escrow Payments shall be held, each Servicing Account shall be an Eligible
Account. Withdrawals of amounts so collected in respect of any Mortgage Loan
(and interest earned thereon) from a Servicing Account may be made only: (i) to
effect payment of real estate taxes, assessments, insurance premiums, ground
rents (if applicable) and comparable items in respect of the related Mortgaged
Property; (ii) to reimburse the Master Servicer, the Special Servicer or the
Trustee, as applicable, for any unreimbursed Servicing Advances made thereby to
cover any of the items described in the immediately preceding clause (i); (iii)
to refund to the related Mortgagor any sums as may be determined to be overages;
(iv) to pay interest, if required and as described below, to the related
Mortgagor on balances in the Servicing Account (or, if and to the extent not
payable to the related Mortgagor, to pay such interest to the Master Servicer);
or (v) to clear and terminate the Servicing Account at the termination of this
Agreement in accordance with Section 9.01. The Master Servicer shall pay or
cause to be paid to the Mortgagors interest earned on the investment of funds in
Servicing Accounts maintained thereby, if and to the extent required by law or
the terms of the related Mortgage Loan. If the Master Servicer shall deposit in
a Servicing Account any amount not required to be deposited therein, it may at
any time withdraw such amount from such Servicing Account, any provision herein
to the contrary notwithstanding. Promptly after any Escrow
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Payments are received by the Special Servicer from any Mortgagor, and in any
event within one Business Day after any such receipt, the Special Servicer shall
remit such Escrow Payments to the Servicing Account or Servicing Accounts
specified by the Master Servicer.
(b) Each of the Master Servicer and the Special Servicer shall, as to those
Mortgage Loans it is obligated to service hereunder, (i) maintain accurate
records with respect to the related Mortgaged Property reflecting the status of
real estate taxes, assessments and other similar items that are or may become a
lien thereon and the status of insurance premiums and any ground rents payable
in respect thereof and (ii) use reasonable efforts to obtain, from time to time,
all bills for the payment of such items (including renewal premiums) and shall
effect payment thereof prior to the applicable penalty or termination date. The
Master Servicer, for purposes of effecting any such payment for which it is
responsible, shall disburse Escrow Payments as allowed under the terms of the
related Mortgage Loan, and, for purposes of effecting any such payment for which
the Special Servicer is responsible, the Master Servicer, upon the written
request of the Special Servicer, shall apply Escrow Payments as allowed under
the terms of the related Mortgage Loan; provided, however, that if such Mortgage
Loan does not require the related Mortgagor to escrow for the payment of real
estate taxes, assessments, insurance premiums, ground rents (if applicable) and
similar items, each of the Master Servicer and the Special Servicer shall, as to
those Mortgage Loans it is obligated to service hereunder, enforce the
requirement of the related Mortgage that the Mortgagor make payments in respect
of such items at the time they first become due.
(c) In accordance with the Servicing Standard, each of the Master Servicer
and the Special Servicer shall, as to those Mortgage Loans it is obligated to
service hereunder, advance with respect to the related Mortgaged Property, all
such funds as are necessary for the purpose of effecting the payment of (i) real
estate taxes, assessments and other similar items, (ii) ground rents (if
applicable), and (iii) premiums on Insurance Policies, in each instance if and
to the extent Escrow Payments (if any) collected from the related Mortgagor are
insufficient to pay such item when due and the related Mortgagor has failed to
pay such item on a timely basis, and provided that the particular advance would
not, if made, constitute a Nonrecoverable Servicing Advance. All such advances
shall be reimbursable in the first instance from related collections from the
Mortgagors and further as provided in Section 3.05(a) and, if made by the
Special Servicer, Section 3.19(b). No costs incurred by the Master Servicer or
the Special Servicer in effecting the payment of real estate taxes, assessments
and, if applicable, ground rents on or in respect of such Mortgaged Properties
shall, for purposes hereof, including, without limitation, calculating monthly
distributions to Certificateholders, be added to the unpaid principal balances
of the related Mortgage Loans, notwithstanding that the terms of such Mortgage
Loans so permit.
(d) The Master Servicer shall establish and maintain, as applicable, one or
more accounts (the "Reserve Accounts"), into which all Reserve Funds, if any,
shall be deposited and retained. As and to the extent appropriate, withdrawals
of amounts so deposited may be made to pay for, or to reimburse the related
Mortgagor in connection with, the related repairs, replacements, capital
improvements and/or environmental testing and remediation at the related
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Mortgaged Property if such repairs, replacements, capital improvements and/or
environmental testing and remediation have been completed, and such withdrawals
are made, in accordance with the Servicing Standard and the terms of the related
Mortgage Note, Mortgage and any agreement with the related Mortgagor governing
such Reserve Funds. Subject to the terms of the related Mortgage Loan documents,
each Reserve Account shall be an Eligible Account.
(e) To the extent an operations and maintenance plan is required to be
established and executed pursuant to the terms of a Mortgage Loan, the Master
Servicer shall request from the Mortgagor written confirmation thereof within a
reasonable time after the later of the Closing Date and the date as of which
such plan is required to be established or completed. To the extent any action
or remediations are required to have been taken or completed pursuant to the
terms of the Mortgage Loan, the Master Servicer shall request from the Mortgagor
written confirmation of such action and remediations within a reasonable time
after the later of the Closing Date and the date as of which such action or
remediations are required to be or to have been taken or completed. To the
extent a Mortgagor shall fail to promptly respond to any inquiry described in
this Section 3.03(e), the Master Servicer shall determine whether the related
Mortgagor has failed to perform its obligations under the related Mortgage Loan.
SECTION 3.04. Collection Account and Distribution Account.
(a) The Master Servicer shall establish and maintain one or more accounts
(collectively, the "Collection Account"), held on behalf of the Trustee in trust
for the benefit of the Certificateholders. The Collection Account shall be an
Eligible Account. The Master Servicer shall deposit or cause to be deposited in
the Collection Account, upon receipt (in the case of payments by Mortgagors or
other collections on the Mortgage Loans) or as otherwise required hereunder, the
following payments and collections received or made by or on behalf of the
Master Servicer in respect of the Mortgage Pool subsequent to the Cut-off Date
(other than in respect of principal and interest on the Mortgage Loans due and
payable on or before the Cut-off Date, which payments shall be delivered
promptly to the Mortgage Loan Seller or its designee, with negotiable
instruments endorsed as necessary and appropriate without recourse):
(i) all payments on account of principal of the Mortgage Loans,
including, without limitation, Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans and all
late payment charges and charges for checks returned for insufficient funds
collected on the Mortgage Loans;
(iii) all Prepayment Premiums and Yield Maintenance Premiums received
in respect of any Mortgage Loan;
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(iv) all Insurance Proceeds and Liquidation Proceeds (other than
Liquidation Proceeds described in clause (vi) of the definition thereof
that are required to be deposited in the Distribution Account pursuant to
Section 9.01) received in respect of any Mortgage Loan;
(v) any amounts required to be deposited by the Master Servicer
pursuant to Section 3.06 in connection with losses incurred with respect to
Permitted Investments of funds held in the Collection Account;
(vi) any amounts required to be deposited by the Master Servicer or
the Special Servicer pursuant to Section 3.07(b) in connection with losses
resulting from a deductible clause in a blanket hazard policy;
(vii) any amounts required to be transferred from any REO Account
pursuant to Section 3.16(c); and
(viii) insofar as they do not constitute Escrow Payments, any amounts
paid by a Mortgagor specifically to cover items for which a Servicing
Advance has been made.
The foregoing requirements for deposit in the Collection Account shall be
exclusive. Without limiting the generality of the foregoing, actual payments
from Mortgagors in the nature of Escrow Payments, and amounts that the Master
Servicer and the Special Servicer are entitled to retain as additional servicing
compensation pursuant to Section 3.11(b) and Section 3.11(d), respectively, need
not be deposited by the Master Servicer in the Collection Account. If the Master
Servicer shall deposit in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding. The Master
Servicer shall promptly deliver to the Special Servicer, as additional servicing
compensation in accordance with Section 3.11(d), _____% of any assumption fees
and _____% of any modification fees collected by the Master Servicer with
respect to Mortgage Loans other than Specially Serviced Mortgage Loans and
_____% of any assumption fees, modification fees and Net Penalty Charges
received by the Master Servicer with respect to Specially Serviced Mortgage
Loans. The Collection Account shall be maintained as a segregated account,
separate and apart from trust funds created for mortgage pass-through
certificates of other series serviced and the other accounts of the Master
Servicer.
Upon receipt of any of the amounts described in clauses (i) through (iv)
above with respect to any Mortgage Loan, the Special Servicer shall promptly,
but in no event later than one Business Day after receipt, remit such amounts to
the Master Servicer for deposit into the Collection Account in accordance with
the second preceding paragraph, unless the Special Servicer determines,
consistent with the Servicing Standard, that a particular item should not be
deposited because of a restrictive endorsement or other appropriate reason. Any
such amounts received by the Special Servicer with respect to an REO Property
shall be deposited by the Special Servicer
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into the REO Account and remitted to the Master Servicer for deposit into the
Collection Account pursuant to Section 3.16(c). With respect to any such amounts
paid by check to the order of the Special Servicer, the Special Servicer shall
endorse such check to the order of the Master Servicer, without recourse or
warranty, and shall deliver promptly, but in no event later than one Business
Day after receipt, any such check to the Master Servicer by overnight courier,
unless the Special Servicer determines, consistent with the Servicing Standard,
that a particular item cannot be so endorsed and delivered because of a
restrictive endorsement or other appropriate reason.
(b) The Trustee shall establish and maintain one or more trust accounts
(collectively, the "Distribution Account") to be held in trust for the benefit
of the Certificateholders. The Distribution Account shall be an Eligible
Account. On each Master Servicer Remittance Date, the Master Servicer shall
deliver to the Trustee, for deposit in the Distribution Account, an aggregate
amount of immediately available funds equal to the Master Servicer Remittance
Amount for such Master Servicer Remittance Date.
In addition, the Master Servicer shall, as and when required hereunder,
deliver to the Trustee for deposit in the Distribution Account:
(i) any P&I Advances required to be made by the Master Servicer in
accordance with Section 4.03(a);
(ii) any Compensating Interest Payments required to be made by the
Master Servicer pursuant to Section 3.19(a); and
(iii) any Liquidation Proceeds paid by the Master Servicer or Special
Servicer in connection with the purchase of all of the Mortgage Loans and
any REO Properties pursuant to Section 9.01, exclusive of the portion of
such Liquidation Proceeds required to be deposited in the Collection
Account pursuant to Section 9.01.
Any amounts paid by any party hereto to indemnify the Trust Fund pursuant
to any provision hereof shall be delivered to the Trustee for deposit in the
Distribution Account. The Trustee shall, upon receipt, deposit in the
Distribution Account any and all amounts received or, pursuant to Section 4.03,
advanced by the Trustee that are required by the terms of this Agreement to be
deposited therein.
(c) Funds in the Collection Account may be invested in Permitted
Investments in accordance with the provisions of Section 3.06. Funds in the
Distribution Account shall remain uninvested. The Master Servicer shall give
notice to the other parties hereto of the location of the Collection Account as
of the Closing Date and of the new location of the Collection Account prior to
any change thereof. The Trustee shall give notice to the other parties hereto of
the location of the Distribution Account as of the Closing Date and of the new
location of the Distribution Account prior to any change thereof.
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SECTION 3.05. Permitted Withdrawals From the Collection Account and the
Distribution Account.
(a) The Master Servicer may, from time to time, make withdrawals from the
Collection Account for any of the following purposes (the order set forth below
not constituting an order of priority for such withdrawals):
(i) to remit to the Trustee for deposit in the Distribution Account
the Master Servicer Remittance Amount for each Master Servicer Remittance
Date and any amounts that may be applied to make P&I Advances pursuant to
Section 4.03(a);
(ii) to reimburse itself or the Trustee, as applicable, for
unreimbursed P&I Advances made thereby, the Master Servicer's and the
Trustee's respective rights to reimbursement pursuant to this clause (ii)
with respect to any P&I Advance (other than Nonrecoverable Advances, which
are reimbursable pursuant to clause (vii) below) being limited to amounts
that represent Late Collections of interest and principal received in
respect of the particular Mortgage Loan or REO Loan as to which such P&I
Advance was made (net of the related Master Servicing Fees and Workout
Fees);
(iii) to pay to itself earned and unpaid Master Servicing Fees in
respect of each Mortgage Loan and REO Loan, the Master Servicer's right to
payment pursuant to this clause (iii) with respect to any Mortgage Loan or
REO Loan being limited to amounts received on or in respect of such
Mortgage Loan (whether in the form of payments, Liquidation Proceeds or
Insurance Proceeds) or such REO Loan (whether in the form of REO Revenues,
Liquidation Proceeds or Insurance Proceeds) that are allocable as interest
thereon;
(iv) to pay to the Special Servicer, out of general collections on the
Mortgage Loans and any REO Properties, earned and unpaid Property Servicing
Fees in respect of each Mortgage Loan and REO Loan and Special Servicing
Fees in respect of each Specially Serviced Mortgage Loan and REO Loan;
(v) to pay the Special Servicer (or, if applicable, any predecessor
thereto) earned and unpaid Workout Fees and Liquidation Fees to which it is
entitled pursuant to, and from the sources contemplated by, the third and
fourth paragraphs of Section 3.11(c);
(vi) to reimburse itself, the Special Servicer or the Trustee, as
applicable, for any unreimbursed Servicing Advances made thereby, the
Master Servicer's, the Special Servicer's and the Trustee's respective
rights to reimbursement pursuant to this clause (vi) with respect to any
Servicing Advance
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being limited to (A) payments made by the related Mortgagor that are
allocable to cover the item in respect of which such Servicing Advance was
made, and (B) Liquidation Proceeds, Insurance Proceeds and, if applicable,
REO Revenues received in respect of the particular Mortgage Loan or REO
Property as to which such Servicing Advance was made;
(vii) to reimburse itself, the Special Servicer or the Trustee, as
applicable, out of general collections on the Mortgage Loans and any REO
Properties, for any unreimbursed Advances made thereby that have been
determined to be Nonrecoverable Advances;
(viii) to pay itself, the Special Servicer or the Trustee, as
applicable, any Advance Interest due and owing thereto, the Master
Servicer's, the Special Servicer's and the Trustee's respective rights to
payment pursuant to this clause (viii) being limited to Penalty Charges
collected in respect of the Mortgage Loan or REO Loan as to which the
related Advances were made thereby;
(ix) at or following such time as it reimburses itself, the Special
Servicer or the Trustee, as applicable, for any unreimbursed Advance
pursuant to clause (ii), (vi) or (vii) above or Section 3.03(c), and
insofar as payment has not already been made pursuant to clause (viii)
above, to pay itself, the Special Servicer or the Trustee, as the case may
be, out of general collections on the Mortgage Loans and any REO
Properties, any related Advance Interest accrued and payable on such
Advance;
(x) to reimburse the Trustee, out of general collections on the
Mortgage Loans and any REO Properties, for any advance made thereby
pursuant to Section 4.03(a) to cover any portion of a Master Servicer
Remittance Amount not remitted by the Master Servicer to the Trustee on or
before 10:00 a.m., New York City time, on the Business Day immediately
preceding the related Distribution Date, together with any interest accrued
and payable on such advance at the Reimbursement Rate;
(xi) to pay itself, as additional servicing compensation in accordance
with Section 3.11(b), (A) interest and investment income earned in respect
of amounts held in the Collection Account as provided in Section 3.06(b),
but only to the extent of the Net Investment Earnings with respect to the
Collection Account for any Collection Period, (B) any Prepayment Interest
Excesses collected on any of the Mortgage Loans and (C) to the extent
allocable to the period when the related Mortgage Loan did not constitute a
Specially Serviced Mortgage Loan or REO Property, any Net Penalty Charges
collected on the Mortgage Loans;
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(xii) to pay to the Special Servicer, as additional servicing
compensation in accordance with Section 3.11(b), any Net Penalty Charges
collected on the Mortgage Loans and not otherwise payable to the Master
Servicer pursuant to clause (xi) above;
(xiii) to pay itself, the Special Servicer, the REMIC Administrator,
the Depositor, or any of their respective directors, officers, employees
and agents, as the case may be, out of general collections on the Mortgage
Loans and any REO Properties, any amounts payable to any such Person
pursuant to Section 6.03;
(xiv) to pay, out of general collections on the Mortgage Loans and any
REO Properties, for (A) the advice of counsel or financial advisers
contemplated by Section 3.17(a), (B) the cost of the Opinion of Counsel
contemplated by 11.02(a), (C) the cost of recording this Agreement in
accordance with Section 11.02(a), (D) any expense incurred by the Trustee
pursuant to Section 3.23(b) in connection with obtaining information from
the Depository or Depository Participants regarding any Book-Entry
Certificate, (E) the expense of any consultant hired by the Trustee
pursuant to Section 3.18(e) and (F) any expense incurred by the Trustee in
connection with sending notices to Certificateholders and/or Certificate
Owners pursuant to Section 3.24(a);
(xv) to pay itself, the Special Servicer, the Mortgage Loan Seller or
any other Person, as the case may be, with respect to each Mortgage Loan,
if any, previously purchased by such Person pursuant to this Agreement, all
amounts received thereon subsequent to the date of purchase;
(xvi) to pay any cost or expense in respect of any Mortgage Loan or
REO Property that the Master Servicer, the Special Servicer or the Trustee,
as the case may be, has incurred pursuant to Section 3.11(h); and
(xvii) to clear and terminate the Collection Account at the
termination of this Agreement pursuant to Section 9.01.
If amounts on deposit in the Collection Account at any particular time
(after withdrawing any portion of such amounts deposited in the Collection
Account in error) are insufficient to satisfy all payments, reimbursements and
remittances to be made therefrom as set forth in clauses (ii) through (xvi)
above, then the corresponding withdrawals from the Collection Account shall be
made in the following priority and subject to the following rules: (x) if the
payment, reimbursement or remittance is to be made from a specific source of
funds, then such payment, reimbursement or remittance shall be made from that
specific source of funds on a pro rata basis with any and all other payments,
reimbursements and remittances to be made from such specific source of funds;
and (y) if the payment, reimbursement or remittance can be made from any funds
on deposit in the Collection Account, then (following any withdrawals made from
the
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Collection Account in accordance with the immediately preceding clause (x)
above) such payment, reimbursement or remittance shall be made from such general
funds remaining on a pro rata basis with any and all other payments,
reimbursements or remittances to be made from such general funds.
The Master Servicer shall keep and maintain separate accounting records, on
a loan- by-loan and property-by-property basis when appropriate, in connection
with any withdrawal from the Collection Account pursuant to any of clauses (ii)
through (xvi) above.
The Master Servicer shall pay to the Special Servicer (or to third party
contractors at the direction of the Special Servicer) from the Collection
Account amounts permitted to be paid to it (or to such third party contractors)
therefrom promptly upon receipt of a certificate of a Servicing Officer of the
Special Servicer describing the item and amount to which the Special Servicer
(or such third party contractors) is entitled. The Master Servicer may rely
conclusively on any such certificate and shall have no duty to re-calculate the
amounts stated therein. The Special Servicer shall keep and maintain separate
accounting for each Specially Serviced Mortgage Loan and REO Property, on a
loan-by-loan and property-by-property basis, for the purpose of justifying any
request for withdrawal from the Collection Account.
(b) The Trustee shall, from time to time, make withdrawals from the
Distribution Account for each of the following purposes (the order set forth
below not constituting an order of priority for such withdrawals):
(i) to make distributions to Certificateholders on each Distribution
Date pursuant to Section 4.01;
(ii) to pay itself or any of its directors, officers, employees and
agents, as the case may be, any amounts payable or reimbursable to any such
Person pursuant to Section 8.05;
(iii) to pay for the cost of the Opinions of Counsel sought by the
Trustee as contemplated by Section 11.01(a) or 11.01(c) in connection with
any amendment to this Agreement requested by the Trustee which amendment is
in furtherance of the rights and interests of Certificateholders;
(iv) to pay any and all federal, state and local taxes imposed on any
of the REMICs created hereunder or on the assets or transactions of any
such REMIC, together with all incidental costs and expenses, and any and
all expenses relating to tax audits, if and to the extent that either (A)
none of it, the Master Servicer, the Special Servicer or the REMIC
Administrator are liable therefor pursuant to Section 10.01(d) and/or
Section 10.01(h) or (B) any such Person that may be so liable has failed to
timely make the required payment; and
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(v) to clear and terminate the Distribution Account at the termination
of this Agreement pursuant to Section 9.01.
(c) The Trustee, the Depositor, the Master Servicer and the Special
Servicer shall in all cases have a right prior to the Certificateholders to any
particular funds on deposit in the Collection Account and the Distribution
Account from time to time for the reimbursement or payment of compensation,
Advances (with interest thereon at the Reimbursement Rate) and their respective
expenses hereunder (or, in the case of such expenses, to have such funds paid
directly to third party contractors from any invoices approved by the Trustee,
the Depositor, the Master Servicer or the Special Servicer, as applicable), but
only if and to the extent such compensation, Advances (with interest) and
expenses are to be reimbursed or paid from such particular funds on deposit in
the Collection Account or the Distribution Account pursuant to the express terms
of this Agreement. Any reimbursements of Advances in respect of any particular
Mortgage Loan or REO Property out of the Collection Account pursuant to any of
clauses (ii), (vi) and (vii) of Section 3.05(a), and any payments of interest
thereon out of the Collection Account pursuant to either of clauses (viii) and
(ix) of Section 3.05(a), shall be made (to the extent of their respective
entitlements to such reimbursements and/or payments): first, to the Trustee; and
second, pro rata, to the Master Servicer and Special Servicer.
SECTION 3.06. Investment of Funds in the Collection Account and the REO
Account.
(a) The Master Servicer may direct (pursuant to a standing order or
otherwise) any depository institution maintaining the Collection Account, and
the Special Servicer may direct (pursuant to a standing order or otherwise) any
depository institution maintaining the REO Account, to invest, or if it is such
depository institution, may itself invest, the funds held therein (each such
account, for purposes of this Section 3.06, an "Investment Account") in one or
more Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, no later than the Business Day immediately preceding
the next succeeding date on which such funds are required to be withdrawn from
such account pursuant to this Agreement. All such Permitted Investments shall be
held to maturity, unless payable on demand. Any investment of funds in an
Investment Account shall be made in the name of the Trustee (in its capacity as
such). The Master Servicer (with respect to Permitted Investments of amounts in
the Collection Account) and the Special Servicer (with respect to Permitted
Investments of amounts in the REO Account), on behalf of the Trustee, shall (and
the Trustee hereby designates the Master Servicer and the Special Servicer, as
applicable, as the person that shall) maintain continuous possession of any
Permitted Investment that is either (i) a "certificated security", as such term
is defined in the UCC, or (ii) other property in which a secured party may
perfect its security interest by possession under the UCC or any other
applicable law. Possession of any such Permitted Investment by the Master
Servicer or the Special Servicer shall constitute possession by a person
designated by the Trustee for purposes of Section 8-313 of the UCC and
possession by the Trustee, as secured party, for purposes of Section 9-305 of
the UCC and any other applicable law. If amounts on deposit in an Investment
Account are at any time invested in a Permitted Investment payable on demand,
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the Master Servicer (in the case of the Collection Account) or the Special
Servicer (in the case of the REO Account) shall:
(x) consistent with any notice required to be given thereunder, demand
that payment thereon be made on the last day such Permitted Investment may
otherwise mature hereunder in an amount equal to the lesser of (1) all
amounts then payable thereunder and (2) the amount required to be withdrawn
on such date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by the Master Servicer, the Trustee or the Special Servicer,
as the case may be, that such Permitted Investment would not constitute a
Permitted Investment in respect of funds thereafter on deposit in the
Investment Account.
(b) Whether or not the Master Servicer directs the investment of funds in
the Collection Account, interest and investment income realized on funds
deposited therein, to the extent of the Net Investment Earnings, if any, for
such Investment Account for each Collection Period, shall be for the sole and
exclusive benefit of the Master Servicer and shall be subject to its withdrawal
in accordance with Section 3.05(a). Whether or not the Special Servicer directs
the investment of funds in the REO Account, interest and investment income
realized on funds deposited therein, to the extent of the Net Investment
Earnings, if any, for such Investment Account for each Collection Period, shall
be for the sole and exclusive benefit of the Special Servicer and shall be
subject to its withdrawal in accordance with Section 3.16(b). If any loss shall
be incurred in respect of any Permitted Investment on deposit in either
Investment Account, the Master Servicer (in the case of the Collection Account)
and the Special Servicer (in the case of the REO Account) shall promptly deposit
therein from its own funds, without right of reimbursement, no later than the
end of the Collection Period during which such loss was incurred, the amount of
the Net Investment Loss, if any, for such Collection Period.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Master Servicer, the Special Servicer or the Trustee (if it has
determined in good faith that the Master Servicer or the Special Servicer are
not taking such action as is appropriate) may, and, subject to Section 8.02,
upon the request of Holders of Certificates entitled to not less than 25% of the
Voting Rights allocated to any Class, the Trustee shall, take such action as may
be appropriate to enforce such payment or performance, including, without
limitation, the institution and prosecution of appropriate proceedings.
(d) Amounts on deposit in the Distribution Account shall remain uninvested.
(e) Notwithstanding the investment of funds held in any Investment Account,
for purposes of the calculations hereunder, including, without limitation, the
calculation of the
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Available Distribution Amount and the Master Servicer Remittance Amount, the
amounts so invested shall be deemed to remain on deposit in such Investment
Account.
SECTION 3.07. Maintenance of Insurance Policies; Errors and Omissions and
Fidelity Coverage.
(a) The Master Servicer (with respect to Mortgage Loans other than
Specially Serviced Mortgaged Loans) and the Special Servicer (with respect to
Specially Serviced Mortgage Loans) shall cause to be maintained for each
Mortgaged Property all insurance coverage as is required under the related
Mortgage; provided that if and to the extent that any such Mortgage permits the
holder thereof any discretion (by way of consent, approval or otherwise) as to
the insurance coverage that the related Mortgagor is required to maintain, the
Master Servicer or the Special Servicer, as the case may be, shall exercise such
discretion in a manner consistent with the Servicing Standard, with a view
towards requiring insurance comparable to that required under other Mortgage
Loans with express provisions governing such matters; and provided further that,
if and to the extent that a Mortgage so permits, the related Mortgagor shall be
required to obtain the required insurance coverage from Qualified Insurers that,
in each case, have a claims-paying rating no lower than two rating categories
below the highest rated Certificates outstanding, and in any event no lower than
"[A]" (or an equivalent rating), from each of the Rating Agencies. Subject to
Section 3.17(b), the Special Servicer shall also cause to be maintained for each
REO Property no less insurance coverage than was previously required of the
Mortgagor under the related Mortgage and at a minimum, (i) hazard insurance with
a replacement cost rider, (ii) business interruption or rental loss insurance
for at least 12 months, and (iii) comprehensive general liability insurance, in
each case, in an amount customary for the type and geographic location of such
REO Property and consistent with the Servicing Standard; provided that all such
insurance shall be obtained from Qualified Insurers that, in each case, if
providing casualty insurance, shall have a claims-paying rating no lower than
two rating categories below the highest rated Certificates outstanding, and in
any event no lower than "[A]" (or an equivalent rating), from each of the Rating
Agencies. All such insurance policies shall contain (if they insure against loss
to property) a "standard" mortgagee clause, with loss payable to the Master
Servicer on behalf of the Trustee (in the case of insurance maintained in
respect of Mortgage Loans), or shall name the Trustee as the insured, with loss
payable to the Special Servicer on behalf of the Trustee (in the case of
insurance maintained in respect of REO Properties), and shall be issued by an
insurer authorized under applicable law to issue such insurance. Any amounts
collected by the Master Servicer or the Special Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the related
Mortgaged Property or REO Property or amounts to be released to the related
Mortgagor, in each case in accordance with the Servicing Standard) shall be
deposited in the Collection Account, subject to withdrawal pursuant to Section
3.05(a), in the case of amounts received in respect of a Mortgage Loan, or in
the REO Account, subject to withdrawal pursuant to Section 3.16(c), in the case
of amounts received in respect of an REO Property. Any cost incurred by the
Master Servicer or the Special Servicer in maintaining any such insurance shall
not, for purposes hereof, including, without limitation, calculating monthly
distributions to
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Certificateholders, be added to unpaid principal balance of the related Mortgage
Loan, notwithstanding that the terms of such Mortgage Loan so permit.
(b) If the Master Servicer or the Special Servicer shall obtain and
maintain, or cause to be obtained and maintained, a blanket policy insuring
against hazard losses on all of the Mortgage Loans and/or REO Properties that it
is required to service and administer, then, to the extent such policy (i) is
obtained from a Qualified Insurer having a claims-paying rating no lower than
two rating categories below the highest rated Certificates outstanding, and in
any event no lower than "[A]" (or an equivalent rating), from each of the Rating
Agencies, and (ii) provides protection equivalent to the individual policies
otherwise required, the Master Servicer or the Special Servicer, as the case may
be, shall conclusively be deemed to have satisfied its obligation to cause
hazard insurance to be maintained on the related Mortgaged Properties and/or REO
Properties. Such policy may contain a deductible clause (not in excess of a
customary amount), in which case the Master Servicer or the Special Servicer, as
appropriate, shall, if there shall not have been maintained on the related
Mortgaged Property or REO Property a hazard insurance policy complying with the
requirements of Section 3.07(a), and there shall have been one or more losses
that would have been covered by such policy, promptly deposit into the
Collection Account from its own funds the amount not otherwise payable under the
blanket policy in connection with such loss or losses because of such deductible
clause. The Master Servicer or the Special Servicer, as appropriate, shall
prepare and present, on behalf of itself, the Trustee and Certificateholders,
claims under any such blanket policy in a timely fashion in accordance with the
terms of such policy.
(c) Each of the Master Servicer and the Special Servicer shall at all times
during the term of this Agreement (or, in the case of the Special Servicer, at
all times during the term of this Agreement during which Specially Serviced
Mortgage Loans or REO Properties exist as part of the Trust Fund) keep in force
with a Qualified Insurer having a claims-paying rating no lower than two rating
categories below the highest rated Certificates outstanding, and in any event no
lower than investment grade, from each of the Rating Agencies, a fidelity bond
in such form and amount as would permit it to be a qualified FNMA
seller-servicer of multifamily mortgage loans, or in such other form and amount
as would not adversely affect any rating assigned by either Rating Agency to the
Certificates (as evidenced in writing from each such Rating Agency). Each of the
Master Servicer and the Special Servicer shall be deemed to have complied with
the foregoing provision if an Affiliate thereof has such fidelity bond coverage
and, by the terms of such fidelity bond, the coverage afforded thereunder
extends to the Master Servicer or the Special Servicer, as the case may be. Such
fidelity bond shall provide that it may not be canceled without ten days' prior
written notice to the Trustee.
Each of the Master Servicer and the Special Servicer shall at all times
during the term of this Agreement (or, in the case of the Special Servicer, at
all times during the term of this Agreement during which Specially Serviced
Mortgage Loans and/or REO Properties exist as part of the Trust Fund) also keep
in force with a Qualified Insurer having a claims-paying rating no lower than
two rating categories below the highest rated Certificates outstanding, and in
any event
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no lower than investment grade, from each of the Rating Agencies, a policy or
policies of insurance covering loss occasioned by the errors and omissions of
its officers, employees and agents in connection with its servicing obligations
hereunder, which policy or policies shall be in such form and amount as would
permit it to be a qualified FNMA seller-servicer of multifamily mortgage loans,
or in such other form and amount as would not adversely affect any rating
assigned by either Rating Agency to the Certificates (as evidenced in writing
from each such Rating Agency). Each of the Master Servicer and the Special
Servicer shall be deemed to have complied with the foregoing provisions if an
Affiliate thereof has such insurance and, by the terms of such policy or
policies, the coverage afforded thereunder extends to the Master Servicer or the
Special Servicer, as the case may be. Any such errors and omissions policy shall
provide that it may not be canceled without ten days' prior written notice to
the Trustee.
SECTION 3.08. Enforcement of Alienation Clauses.
The Master Servicer (at the direction of the Special Servicer), in the case
of Mortgage Loans other than Specially Serviced Mortgage Loans, and the Special
Servicer, in the case of Specially Serviced Mortgage Loans, on behalf of the
Trustee as the mortgagee of record, shall enforce the restrictions contained in
any Mortgage on transfers or further encumbrances of the related Mortgaged
Property and on transfers of interests in the related Mortgagor, unless the
Special Servicer has determined, in its reasonable good faith judgment, that
waiver of such restrictions would be in accordance with the Servicing Standard;
provided that the Special Servicer shall not waive, or instruct the Master
Servicer to waive, any right it has, or grant any consent, or instruct the
Master Servicer to grant any consent, it is otherwise entitled to withhold,
under any related "due-on-encumbrance" clause until it has received written
confirmation from each Rating Agency that such action would not result in the
downgrade, qualification or withdrawal of the rating then assigned by such
Rating Agency to any Class of Certificates. After having made any such
determination, the Special Servicer shall deliver to the Trustee and the Master
Servicer an Officer's Certificate setting forth the basis for such
determination. The Master Servicer shall provide the Special Servicer with all
information as it may reasonably request in order to make such determination.
SECTION 3.09. Realization Upon Defaulted Mortgage Loans.
(a) The Special Servicer shall, subject to Sections 3.09(b) through
3.09(d), exercise reasonable efforts, consistent with the Servicing Standard, to
foreclose upon or otherwise comparably convert the ownership of properties and
other collateral securing such of the Mortgage Loans as come into and continue
in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments, including, without limitation, pursuant to
Section 3.20. All costs and expenses incurred by the Special Servicer in any
such proceedings shall be Servicing Advances. Nothing contained in this Section
3.09 shall be construed so as to require the Special Servicer, on behalf of the
Trust Fund, to make a bid on any Mortgaged Property at a foreclosure sale or
similar proceeding that is in excess of the fair market value of such property,
as determined by the Special Servicer in its reasonable good faith judgment
taking into account
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the factors described in Section 3.18(e) and the results of any appraisal
obtained pursuant to the following sentence or otherwise, all such bids to be
made in a manner consistent with the Servicing Standard. If and when the Special
Servicer deems it necessary and prudent for purposes of establishing the fair
market value of any Mortgaged Property securing a defaulted Mortgage Loan,
whether for purposes of bidding at foreclosure or otherwise, the Special
Servicer is authorized to have an Appraisal completed with respect to such
property (the cost of which appraisal shall constitute a Servicing Advance).
Notwithstanding any other provision of this Agreement, no Mortgaged
Property shall be acquired by the Trust Fund in such circumstances or manner or
pursuant to any terms that would (i) cause such Mortgaged Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code (unless all such REO Property not treated as "foreclosure property"
held by REMIC I at any given time constitutes not more than a de minimis amount
of the assets of REMIC I within the meaning of Treasury regulation Section
1.860D- 1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a),
subject the Trust Fund to the imposition of any federal income taxes under the
Code.
(b) The Special Servicer shall not acquire any personal property on behalf
of the Trust Fund pursuant to this Section 3.09 unless either:
(i) such personal property is incident to real property (within the
meaning of Section 856(e)(1) of the Code) so acquired by the Special
Servicer; or
(ii) the Special Servicer shall have obtained an Opinion of Counsel
(the cost of which shall be a Servicing Advance) to the effect that the
holding of such personal property as part of the Trust Fund will not cause
the imposition of a tax on any of REMIC I, REMIC II or REMIC III under the
REMIC Provisions or cause any of REMIC I, REMIC II or REMIC III to fail to
qualify as a REMIC at any time that any Certificate is outstanding.
(c) Notwithstanding the foregoing provisions of this Section 3.09, the
Special Servicer shall not, on behalf of the Trustee, obtain title to a
Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or
take any other action with respect to any Mortgaged Property, if, as a result of
any such action, the Trustee, on behalf of the Certificateholders, could, in the
reasonable good faith judgment of the Special Servicer, exercised in accordance
with the Servicing Standard, 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 CERCLA or any comparable law, unless:
(i) the Special Servicer has previously determined in accordance with
the Servicing Standard, based on a Phase I Environmental Assessment (and
any additional environmental testing that the Special Servicer deems
necessary and prudent) of such Mortgaged Property conducted by an
Independent Person who
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regularly conducts Phase I Environmental Assessments and performed during
the twelve-month period preceding any such acquisition of title or other
action, that the Mortgaged Property is in compliance with applicable
environmental laws and regulations and there are no circumstances or
conditions present at the Mortgaged Property relating to the use,
management or disposal of Hazardous Materials for which investigation,
testing, monitoring, containment, clean-up or remediation could be required
under any applicable environmental laws and regulations; or
(ii) in the event that the determination described in clause (c)(i)
above cannot be made, the Special Servicer has previously determined in
accordance with the Servicing Standard, on the same basis as described in
clause (c)(i) above, that it would maximize the recovery to the
Certificateholders on a present value basis (the relevant discounting of
anticipated collections that will be distributable to Certificateholders to
be performed at the related Net Mortgage Rate) to acquire title to or
possession of the Mortgaged Property and to take such remedial, corrective
and/or other further actions as are necessary to bring the Mortgaged
Property into compliance with applicable environmental laws and regulations
and to appropriately address any of the circumstances and conditions
referred to in clause (c)(i) above;
Any such determination by the Special Servicer contemplated by clause (i)
or clause (ii) of the preceding paragraph shall be evidenced by an Officer's
Certificate to such effect delivered to the Trustee and the Master Servicer,
specifying all of the bases for such determination, such Officer's Certificate
to be accompanied by all related environmental reports. The cost of such Phase I
Environmental Assessment and any such additional environmental testing, as well
as the cost of any remedial, corrective or other further action contemplated by
clause (ii) of the preceding paragraph, shall be advanced by the Master Servicer
at the direction of the Special Servicer given in accordance with the Servicing
Standard; provided, however, that the Master Servicer shall not be obligated in
connection therewith to advance any funds which, if so advanced, would
constitute a Nonrecoverable Servicing Advance. Amounts so advanced shall be
subject to reimbursement as Servicing Advances in accordance with Section
3.05(a).
(d) If neither of the conditions set forth in clauses (i) and (ii) of the
first sentence of Section 3.09(c) has been satisfied with respect to any
Mortgaged Property securing a defaulted Mortgage Loan, the Special Servicer
shall take such action as is in accordance with the Servicing Standard (other
than proceeding against the Mortgaged Property) and, at such time as it deems
appropriate, may, on behalf of the Trustee, release all or a portion of such
Mortgaged Property from the lien of the related Mortgage.
(e) The Special Servicer shall report to the Trustee and the Master
Servicer monthly in writing as to any actions taken by the Special Servicer with
respect to any Mortgaged Property as to which neither of the conditions set
forth in clauses (i) and (ii) of the first sentence of Section 3.09(c) has been
satisfied, in each case until the earliest to occur of satisfaction of
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either of such conditions, release of the lien of the related Mortgage on such
Mortgaged Property and the related Mortgage Loan becoming a Corrected Mortgaged
Loan.
(f) The Special Servicer shall have the right to determine, in accordance
with the Servicing Standard, the advisability of seeking to obtain a deficiency
judgment if the state in which the Mortgaged Property is located and the terms
of the Mortgage Loan permit such an action and shall, in accordance with the
Servicing Standard, seek such deficiency judgment if it deems advisable.
(g) The Special Servicer shall prepare and file information returns with
respect to the receipt of mortgage interest received in a trade or business from
individuals, reports of foreclosures and abandonments of any Mortgaged Property
and information returns relating to cancellation of indebtedness income with
respect to any Mortgaged Property required by Sections 6050H, 6050J and 6050P of
the Code and deliver to the Trustee an Officer's Certificate stating that such
reports have been filed. Such information returns and reports shall be in form
and substance sufficient to meet the reporting requirements imposed by Sections
6050H, 6050J and 6050P of the Code. The Special Servicer shall provide to the
Master Servicer on a timely basis all information to be included in such reports
and information returns.
(h) The Special Servicer shall maintain accurate records, prepared by a
Servicing Officer, of each Final Recovery Determination in respect of any
Mortgage Loan or REO Property and the basis thereof. Each Final Recovery
Determination shall be evidenced by an Officer's Certificate delivered to the
Trustee and the Master Servicer no later than the third Business Day following
such Final Recovery Determination.
SECTION 3.10. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full shall be escrowed in a
manner customary for such purposes, the Master Servicer shall promptly so notify
the Trustee and request delivery to it of the related Mortgage File (such notice
and request to be effected by delivering to the Trustee a Request for Release in
the form of Exhibit D-1 attached hereto, which Request for Release shall be
accompanied by the form of any release or discharge to be executed by the
Trustee and shall include a statement to the effect that all amounts received or
to be received in connection with such payment which are required to be
deposited in the Collection Account pursuant to Section 3.04(a) have been or
will be so deposited). Upon receipt of such Request for Release, the Trustee
shall promptly release, or cause any related Custodian to release, the related
Mortgage File to the Master Servicer and shall deliver to the Master Servicer
such accompanying release or discharge, duly executed. No expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Collection Account or the Distribution Account.
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(b) If from time to time, and as appropriate for servicing or foreclosure
of any Mortgage Loan, the Master Servicer or the Special Servicer shall
otherwise require any Mortgage File (or any portion thereof), the Trustee, upon
request of the Master Servicer and receipt from the Master Servicer of a Request
for Release in the form of Exhibit D-1 attached hereto signed by a Servicing
Officer thereof, or upon request of the Special Servicer and receipt from the
Special Servicer of a Request for Release in the form of Exhibit D-2 attached
hereto, shall release, or cause any related Custodian to release, such Mortgage
File (or portion thereof) to the Master Servicer or the Special Servicer, as the
case may be. Upon return of such Mortgage File (or portion thereof) to the
Trustee or the related Custodian, or upon the Special Servicer's delivery to the
Trustee of an Officer's Certificate stating that (i) such Mortgage Loan was
liquidated and all amounts received or to be received in connection with such
liquidation that are required to be deposited into the Collection Account
pursuant to Section 3.04(a) have been or will be so deposited or (ii) such
Mortgage Loan has become an REO Property, a copy of the Request for Release
shall be released by the Trustee to the Master Servicer or the Special Servicer,
as applicable.
(c) Within seven Business Days of the Special Servicer's request therefor
(or, if the Special Servicer notifies the Trustee of an exigency, within such
shorter period as is reasonable under the circumstances), the Trustee shall
execute and deliver to the Special Servicer, in the form supplied to the Trustee
by the Special Servicer, any court pleadings, requests for trustee's sale or
other documents reasonably necessary to the foreclosure or trustee's sale in
respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Mortgage Note or Mortgage or otherwise available at law or in equity or to
defend any legal action or counterclaim filed against the Trust Fund, the Master
Servicer or the Special Servicer; provided that the Trustee may alternatively
execute and deliver to the Special Servicer, in the form supplied to the Trustee
by the Special Servicer, a limited power of attorney issued in favor of the
Special Servicer and empowering the Special Servicer to execute and deliver any
or all of such pleadings or documents on behalf of the Trustee. Together with
such pleadings or documents (or such power of attorney empowering the Special
Servicer to execute the same on behalf of the Trustee), the Special Servicer
shall deliver to the Trustee an Officer's Certificate requesting that such
pleadings or documents (or such power of attorney empowering the Special
Servicer to execute the same on behalf of the Trustee) be executed by the
Trustee and certifying as to the reason such pleadings or documents are required
and that the execution and delivery thereof by the Trustee (or by the Special
Servicer on behalf of the Trustee) will not invalidate or otherwise affect the
lien of the Mortgage, except for the termination of such a lien upon completion
of the foreclosure or trustee's sale.
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SECTION 3.11. Servicing Compensation; Interest on Servicing Advances;
Payment of Certain Expenses; Obligations of the Trustee
regarding Back-up Servicing Advances.
(a) As compensation for its activities hereunder, the Master Servicer shall
be entitled to receive the Servicing Fee with respect to each Mortgage Loan
(including, without limitation, each Specially Serviced Mortgage Loan) and REO
Loan. As to each such Mortgage Loan and REO Loan, the Servicing Fee shall accrue
at the Servicing Fee Rate on the basis of the same principal amount and for the
same period respecting which the related interest payment due on such Mortgage
Loan or deemed to be due on such REO Loan is computed. The Servicing Fee with
respect to any Mortgage Loan or REO Loan shall cease to accrue if a Liquidation
Event occurs in respect thereof. Earned but unpaid Master Servicing Fees shall
be payable monthly, on a loan-by-loan basis, from payments of interest on each
Mortgage Loan and REO Revenues allocable as interest on each REO Loan. The
Master Servicer shall be entitled to recover unpaid Master Servicing Fees in
respect of any Mortgage Loan or REO Loan out of Insurance Proceeds or
Liquidation Proceeds, to the extent permitted by Section 3.05(a). The right to
receive the Servicing Fee may not be transferred in whole or in part except in
connection with the transfer of all of the Master Servicer's responsibilities
and obligations under this Agreement.
(b) The Master Servicer shall also be entitled to additional servicing
compensation in the form of: (i) any Prepayment Interest Excesses; (ii) to the
extent allocable to the period when the related Mortgage Loan did not constitute
a Specially Serviced Mortgage Loan or REO Property, any Net Penalty Charges or
any similar charges collected on the Mortgage Loans; (iii) interest or other
income earned on deposits in the Collection Account, in accordance with Section
3.06(b) (but only to the extent of the Net Investment Earnings, if any, with
respect to the Collection Account for each Collection Period); and (iv) to the
extent not required to be paid to any Mortgagor under applicable law or under
the related Mortgage, any interest or other income earned on deposits in the
Servicing Accounts maintained thereby. The Master Servicer shall be required to
pay out of its own funds all expenses incurred by it in connection with its
servicing activities hereunder (including, without limitation, payment of any
amounts due and owing to any of Sub-Servicers retained by it and the premiums
for any blanket policy insuring against hazard losses pursuant to Section
3.07(b)), if and to the extent such expenses are not payable directly out of the
Collection Account, and the Master Servicer shall not be entitled to
reimbursement therefor except as expressly provided in this Agreement.
(c) As compensation for its activities hereunder, the Special Servicer
shall be entitled to receive the Property Servicing Fee with respect to each
Mortgage Loan (including, without limitation, each Specially Serviced Mortgage
Loan) and REO Loan. As to each such Mortgage Loan and REO Loan, the Property
Servicing Fee shall accrue from time to time at the Property Servicing Fee Rate
on the basis of the same principal amount and for the same period respecting
which any related interest payment due on such Mortgage Loan or deemed to be due
on such REO Loan is computed. The Property Servicing Fee with respect to any
Mortgage Loan or REO Loan shall cease to accrue if a Liquidation Event occurs in
respect thereof. Earned but
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unpaid Property Servicing Fees shall be payable monthly out of general
collections on the Mortgage Loans and any REO Properties on deposit in the
Collection Account pursuant to Section 3.05(a).
As further compensation for its activities hereunder, the Special Servicer
shall be entitled to receive the Special Servicing Fee with respect to each
Specially Serviced Mortgage Loan and each REO Loan. As to each Specially
Serviced Mortgage Loan and REO Loan, the Special Servicing Fee shall accrue from
time to time at the Special Servicing Fee Rate on the basis of the same
principal amount and for the same period respecting which any related interest
payment due on such Mortgage Loan or deemed to be due on such REO Loan is
computed. The Special Servicing Fee with respect to any Specially Serviced
Mortgage Loan or REO Loan shall cease to accrue as of the date a Liquidation
Event occurs in respect thereof or it becomes a Corrected Mortgage Loan. Earned
but unpaid Special Servicing Fees shall be payable monthly out of general
collections on the Mortgage Loans and any REO Properties on deposit in the
Collection Account pursuant to Section 3.05(a).
As further compensation for its activities hereunder, the Special Servicer
shall be entitled to receive the Workout Fee with respect to each Corrected
Loan. As to each Corrected Mortgage Loan, the Workout Fee shall be payable,
subject to the proviso to clause (e) of the definition of "Specially Serviced
Mortgage Loan",out of, and shall be calculated by application of the Workout Fee
Rate to, each collection of interest and principal (net of related unpaid or
unreimbursed Master Servicing Fees, Property Servicing Fees, Special Servicing
Fees and Advances), together with any collection of a Prepayment Premium or
Yield Maintenance Premium, received on such Mortgage Loan for so long as it
remains a Corrected Mortgage Loan. The Workout Fee with respect to any Corrected
Mortgage Loan will cease to be payable if a Servicing Transfer Event occurs with
respect thereto or if the related Mortgaged Property becomes an REO Property;
provided that a new Workout Fee would become payable if and when such Mortgage
Loan again became a Corrected Mortgage Loan. If the Special Servicer is
terminated other than for cause or resigns in accordance with Section 6.04, it
shall retain the right to receive any and all Workout Fees payable in respect of
Mortgage Loans that became Corrected Mortgage Loans during the period that it
acted as Special Servicer and were still such at the time of such termination or
resignation (and the successor Special Servicer shall not be entitled to any
portion of such Workout Fees), in each case until the Workout Fee for any such
loan ceases to be payable in accordance with the preceding sentence.
As further compensation for its activities hereunder, the Special Servicer
shall also be entitled to receive a Liquidation Fee with respect to each
Specially Serviced Mortgage Loan or REO Property as to which it receives any
full or discounted payoff from the related Mortgagor or any Liquidation Proceeds
or Insurance Proceeds (other than in connection with the purchase of any such
Specially Serviced Mortgage Loan or REO Property by the Special Servicer or the
Master Servicer pursuant to Section 3.18 or Section 9.01 or by the Mortgage Loan
Seller pursuant to the Mortgage Loan Purchase Agreement). As to each such
Specially Serviced Mortgage Loan or REO Property, the Liquidation Fee shall be
payable, subject to the proviso to clause (e) of the
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definition of "Specially Serviced Mortgage Loan", out of, and shall be
calculated by application of the Liquidation Fee Rate to, such full or
discounted payoff, Liquidation Proceeds and/or Insurance Proceeds, in each case
net of any portion of such payment or proceeds payable or reimbursable to the
Master Servicer or the Special Servicer to cover related unpaid or unreimbursed
Master Servicing Fees, Property Servicing Fees, Special Servicing Fees and/or
Advances. The Liquidation Fee with respect to any such Specially Serviced
Mortgage Loan will not be payable if such Mortgage Loan becomes a Corrected
Mortgage Loan. Notwithstanding anything herein to the contrary, no Liquidation
Fee will be payable in connection with the receipt of, or out of, Liquidation
Proceeds collected as a result of the purchase of any Specially Serviced
Mortgage Loan or REO Property described in the parenthetical to the first
sentence of this paragraph.
The Special Servicer's right to receive the Property Servicing Fees,
Special Servicing Fee, the Workout Fee and/or the Liquidation Fee may not be
transferred in whole or in part except in connection with the transfer of all of
the Special Servicer's responsibilities and obligations under this Agreement.
(d) Additional servicing compensation in the form of any modification fees
and ___% of any assumption fees received on or with respect to Mortgage Loans
other than Specially Serviced Mortgage Loans and any modification fees and
assumption fees received on or with respect to any Specially Serviced Mortgage
Loans, may be retained by the Special Servicer (to the extent collected by the
Special Servicer), or shall be promptly paid to the Special Servicer by the
Master Servicer (to the extent collected by the Master Servicer), and in any
event shall not be required to be deposited in the Collection Account pursuant
to Section 3.04(a). The Special Servicer shall also be entitled to any Net
Penalty Charges received on the Mortgage Loans that are not required to be paid
as additional servicing compensation to the Master Servicer. To the extent
collected by the Special Servicer, additional servicing compensation in the form
of any Net Penalty Charges that the Master Servicer is entitled to as additional
servicing compensation shall be paid promptly by the Special Servicer to the
Master Servicer. The Special Servicer shall be required to pay out of its own
funds all expenses incurred by it in connection with its servicing activities
hereunder (including, without limitation, payment of any amounts due and owing
to any of Sub-Servicers retained by it and the premiums for any blanket policy
obtained by it insuring against hazard losses pursuant to Section 3.07(b)), if
and to the extent such expenses are not payable directly out of the Collection
Account or the REO Account, and the Special Servicer shall not be entitled to
reimbursement except as expressly provided in this Agreement.
(e) If the Master Servicer or Special Servicer is required under this
Agreement to make a Servicing Advance, but neither does so within 15 days after
such Advance is required to be made, the Trustee shall, if it has actual
knowledge of such failure on the part of the Master Servicer or Special
Servicer, as the case may be, give notice of such failure, as applicable, to the
Master Servicer and the Special Servicer. If such Advance is not made by the
Master Servicer or the Special Servicer within three days after such notice then
(subject to Section 3.11(g) below), the Trustee shall make such Advance. Any
failure by the Master Servicer or the Special Servicer
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to make a Servicing Advance it is required to make hereunder shall constitute an
Event of Default by the Master Servicer or the Special Servicer, as the case may
be, subject to and as provided in Section 7.01(a)(iv) and Section 7.01(a)(v),
respectively.
(f) The Special Servicer and the Trustee shall each be entitled to receive
interest at the Reimbursement Rate in effect from time to time, accrued on the
amount of each Servicing Advance made thereby for so long as such Servicing
Advance is outstanding, such interest to be payable: first, out of Penalty
Charges collected on the Mortgage Loan or REO Loan as to which such Advance
relates; and then, to the extent such Penalty Charges are insufficient, and only
after such Advance has been reimbursed pursuant to this Agreement, out of
general collections on the Mortgage Loans and REO Properties on deposit in the
Collection Account. The Master Servicer shall reimburse itself, the Special
Servicer or the Trustee, as appropriate, for any Servicing Advance made thereby
as soon as practicable after funds available for such purpose are deposited in
the Collection Account.
(g) Notwithstanding anything to the contrary set forth herein, none of the
Master Servicer, the Special Servicer or the Trustee shall be required to make
any Servicing Advance that it determines in its reasonable good faith judgment
would constitute a Nonrecoverable Servicing Advance. A determination by any
Person with an obligation hereunder to make Servicing Advances that it has made
a Nonrecoverable Servicing Advance or that any proposed Servicing Advance, if
made, would constitute a Nonrecoverable Servicing Advance, shall be made by such
Person in its reasonable good faith judgment and shall be evidenced by an
Officer's Certificate delivered promptly to the Trustee, the Depositor, and each
Holder of a Class B-3 Certificate, a Class B-4 Certificate or a Class C
Certificate, setting forth the basis for such determination, together with a
copy of an Appraisal of the related Mortgaged Property or REO Property performed
within the twelve months preceding such determination, and further accompanied
by any other information, including engineers' reports, environmental surveys or
similar reports, that such Person may have obtained and that support such
determination. Notwithstanding the foregoing, the Trustee shall be entitled to
conclusively rely on any determination of nonrecoverability that may have been
made by the Master Servicer or the Special Servicer with respect to a particular
Servicing Advance, and the Master Servicer shall be entitled to conclusively
rely on any determination of nonrecoverability that may have been made by the
Special Servicer with respect to a particular Servicing Advance. A copy of any
such Officer's Certificate (and accompanying information) of the Master Servicer
shall also be delivered promptly to the Special Servicer, a copy of any such
Officer's Certificate (and accompanying information) of the Special Servicer
shall also be promptly delivered to the Master Servicer, and a copy of any such
Officer's Certificates (and accompanying information) of the Trustee shall also
be promptly delivered to the Master Servicer and the Special Servicer.
(h) Notwithstanding anything to the contrary set forth herein, the Master
Servicer, the Special Servicer or the Trustee, as applicable, may, in its sole
discretion, make any Nonrecoverable Servicing Advance if it has determined in
its reasonable good faith judgment that making such Nonrecoverable Servicing
Advance is in the best interests of the Certificateholders,
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as evidenced by an Officer's Certificates delivered promptly to the Trustee
(unless it is the Person making such Advance), the Depositor, and each Holder of
a Class B-3 Certificate, a Class B-4 Certificate or a Class C Certificate,
setting forth the basis for such determination and accompanied by any
information that such Person may have obtained that supports such determination.
A copy of any such Officer's Certificate (and accompanying information) of the
Master Servicer shall also be delivered promptly to the Special Servicer, and a
copy of any such Officer's Certificate (and accompanying information) of the
Special Servicer shall also be promptly delivered to the Master Servicer.
SECTION 3.12. Property Inspections; Collection of Financial Statements;
Delivery of Certain Reports.
(a) The Special Servicer shall at its expense perform or cause to be
performed an inspection of each Mortgaged Property at least once per calendar
year and as soon as practicable (but in any event not later than 60 days) after
the related Mortgage Loan becomes a Specially Serviced Mortgage Loan. The
Special Servicer shall prepare a written report of each such inspection
performed by it that sets forth in detail the condition of the Mortgaged
Property and that specifies the existence of: (i) any sale, transfer or
abandonment of the Mortgaged Property of which the Special Servicer is aware,
(ii) any change in the condition, occupancy, or value of the Mortgaged Property
that the Special Servicer, in its reasonable good faith judgment, considers
material, or (iii) any waste committed on the Mortgaged Property. The Special
Servicer shall deliver to the Trustee, the Depositor and the Master Servicer a
copy of each such written report prepared by it within 45 days of the related
inspection.
(b) The Special Servicer shall make reasonable efforts to collect promptly
from each related Mortgagor quarterly and annual operating statements, budgets
and rent rolls of the related Mortgaged Property, and financial statements of
such Mortgagor, whether or not delivery of such items is required pursuant to
the terms of the related Mortgage. In addition, the Special Servicer shall cause
quarterly and annual operating statements, budgets and rent rolls to be
regularly prepared in respect of each REO Property and shall collect all such
items promptly following their preparation and deliver a report summarizing such
information as described in the second paragraph of Section 4.02(c).
SECTION 3.13. Annual Statement as to Compliance.
Each of the Master Servicer and the Special Servicer shall deliver to the
Trustee, to the Depositor and, in the case of the Special Servicer, to the
Master Servicer, on or before March 31 of each year, beginning March 31, 199__,
an Officer's Certificate stating, as to the signer thereof, that (i) a review of
the activities of the Master Servicer or the Special Servicer, as the case may
be, during the preceding calendar year and of its performance under this
Agreement has been made under such officer's supervision, (ii) to the best of
such officer's knowledge, based on such review, the Master Servicer or the
Special Servicer, as the case may be, has fulfilled all of its obligations under
this Agreement in all material respects throughout such year, or, if there
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has been a default in the fulfillment of any such obligation, specifying each
such default known to such officer and the nature and status thereof and (iii)
the Master Servicer or the Special Servicer, as the case may be, has received no
notice regarding the qualification, or challenging the status, of any portion of
the Trust Fund as a REMIC from the Internal Revenue Service or any other
governmental agency or body or, if it has received any such notice, specifying
the details thereof.
SECTION 3.14. Reports by Independent Public Accountants.
On or before April 30 of each year, beginning April 30, 199__, each of the
Master Servicer and the Special Servicer at its expense shall cause a firm of
independent public accountants (which may also render other services to the
Master Servicer or the Special Servicer) with at least 250 professionals and
that is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Trustee and to the Depositor and, in the case of the
Special Servicer, to the Master Servicer to the effect that (i) it has obtained
a letter of representation regarding certain matters from the management of the
Master Servicer or the Special Servicer, as the case may be, which includes an
assertion that the Master Servicer or the Special Servicer, as the case may be,
has complied with certain minimum mortgage loan servicing standards (to the
extent applicable to commercial and multifamily mortgage loans), identified in
the Uniform Single Attestation Program for Mortgage Bankers established by the
Mortgage Bankers Association of America, with respect to the servicing of
commercial and multifamily mortgage loans during the most recently completed
calendar year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that may be
appropriate. In rendering its report such firm may rely, as to matters relating
to the direct servicing of commercial and multifamily mortgage loans by
Sub-Servicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those Sub-Servicers.
SECTION 3.15. Access to Certain Information.
Each of the Master Servicer and the Special Servicer shall afford to the
Trustee, the Depositor, the Rating Agencies, each Holder of a Class B-3, Class
B-4 or Class C Certificate and the OTS, the FDIC and any other banking or
insurance regulatory authority that may exercise authority over any
Certificateholder, access to any records regarding the Mortgage Loans and the
servicing thereof within its control, except to the extent it is prohibited from
doing so by applicable law or contract or to the extent such information is
subject to a privilege under applicable law to be asserted on behalf of the
Certificateholders. Such access shall be afforded without charge but only upon
reasonable prior written request and during normal business hours at the offices
of the Master Servicer or the Special Servicer, as the case may be, designated
by it.
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SECTION 3.16. Title to REO Property; REO Account.
(a) If title to any REO Property is acquired, the deed or certificate of
sale shall be issued to the Trustee on behalf of the Certificateholders. The
Special Servicer, on behalf of the Trust Fund, shall sell any REO Property
within two years after REMIC I acquires ownership of such REO Property for
purposes of Section 860G(a)(8) of the Code, unless the Special Servicer either
(i) applies, more than sixty days prior to the expiration of such two year
period, and is granted an extension of time (an "REO Extension") by the Internal
Revenue Service to sell such REO Property or (ii) obtains for the Trustee and
the REMIC Administrator an Opinion of Counsel, addressed to the Trustee, the
Special Servicer and the REMIC Administrator, to the effect that the holding by
REMIC I of such REO Property subsequent to the second anniversary of such
acquisition will not result in the imposition of taxes on "prohibited
transactions" (as defined in Section 860F of the Code) of any of REMIC I, REMIC
II or REMIC III or cause any of REMIC I, REMIC II or REMIC III to fail to
qualify as a REMIC at any time that any Certificates are outstanding. Regardless
of whether the Special Servicer applies for or is granted the REO Extension
contemplated by clause (i) of the immediately preceding sentence or obtains the
Opinion of Counsel referred to in clause (ii) of such sentence, the Special
Servicer shall act diligently and prudently to liquidate such REO Property on a
timely basis. If the Special Servicer is granted such REO Extension or obtains
such Opinion of Counsel, the Special Servicer shall sell such REO Property
within such period longer than two years as is permitted by such REO Extension
or contemplated by such Opinion of Counsel, as the case may be. Any expense
incurred by the Special Servicer in connection with its applying for and being
granted the REO Extension contemplated by clause (i) of the second preceding
sentence or its obtaining the Opinion of Counsel contemplated by clause (ii) of
the second preceding sentence, shall be a Servicing Advance.
(b) The Special Servicer shall segregate and hold all funds collected and
received in connection with any REO Property separate and apart from its own
funds and general assets. If an REO Acquisition shall occur, the Special
Servicer shall establish and maintain one or more accounts (collectively, the
"REO Account"), held on behalf of the Trustee in trust for the benefit of the
Certificateholders, for the retention of revenues and other proceeds derived
from each REO Property. The REO Account shall be an Eligible Account. The
Special Servicer shall deposit, or cause to be deposited, in the REO Account,
upon receipt, all REO Revenues, Insurance Proceeds and Liquidation Proceeds
received in respect of an REO Property. Funds in the REO Account may be invested
in Permitted Investments in accordance with Section 3.06. The Special Servicer
shall be entitled to make withdrawals from the REO Account to pay itself, as
additional servicing compensation in accordance with Section 3.11(d), interest
and investment income earned in respect of amounts held in the REO Account as
provided in Section 3.06(b) (but only to the extent of the Net Investment
Earnings with respect to the REO Account for any Collection Period). The Special
Servicer shall give notice to the other parties hereto of the location of the
REO Account when first established and of the new location of the REO Account
prior to any change thereof.
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(c) The Special Servicer shall withdraw from the REO Account funds
necessary for the proper operation, management, leasing, maintenance and
disposition of any REO Property, but only to the extent of amounts on deposit in
the REO Account relating to such REO Property. Within one Business Day following
the end of each Collection Period, the Special Servicer shall withdraw from the
REO Account and deposit into the Collection Account or deliver to the Master
Servicer (which shall deposit such amounts into the Collection Account) the
aggregate of all amounts received in respect of each REO Property during such
Collection Period, net of any withdrawals made out of such amounts pursuant to
the preceding sentence; provided that the Special Servicer may retain in the REO
Account such portion of such proceeds and collections as may be necessary to
maintain a reserve of sufficient funds for the proper operation, management,
leasing, maintenance and disposition of the related REO Property (including,
without limitation, the creation of a reasonable reserve for repairs,
replacements and necessary capital improvements and other related expenses),
such reserve not to exceed an amount sufficient to cover such items to be
incurred during the following twelve-month period.
(d) The Special Servicer shall keep and maintain separate records, on a
property-by-property basis, for the purpose of accounting for all deposits to,
and withdrawals from, the REO Account pursuant to Section 3.16(b) or (c).
SECTION 3.17. Management of REO Property.
(a) Prior to the acquisition of title to any Mortgaged Property securing a
defaulted Mortgage Loan, the Special Servicer shall review the operation of such
Mortgaged Property and determine the nature of the income that would be derived
from such property if it were acquired by the Trust Fund. If the Special
Servicer determines from such review that:
(i) None of the income from Directly Operating such Mortgaged
Property would be subject to tax as "net income from foreclosure property"
within the meaning of the REMIC Provisions or would be subject to the tax
imposed on "prohibited transactions" under Section 860F of the Code
(either such tax referred to herein as an "REO Tax"), such Mortgaged
Property may be Directly Operated by the Special Servicer as REO Property;
(ii) Directly Operating such Mortgaged Property as an REO Property
could result in income from such property that would be subject to an REO
Tax, but that a lease of such property to another party to operate such
property, or the performance of some services by an Independent Contractor
with respect to such property, or another method of operating such property
would not result in income subject to an REO Tax, then the Special Servicer
may (provided, that in the reasonable good faith judgment of the Special
Servicer, it is commercially feasible) so lease or otherwise operate such
REO Property; or
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(iii) It is reasonable to believe that Directly Operating such
property as REO Property could result in income subject to an REO Tax and
that no commercially feasible means exists to operate such property as REO
Property without the Trust Fund incurring or possibly incurring an REO Tax
on income from such property, the Special Servicer shall deliver to the
REMIC Administrator, in writing, a proposed plan (the "Proposed Plan") to
manage such property as REO Property. Such plan shall include potential
sources of income, and to the extent commercially feasible, estimates of
the amount of income from each such source. Within a reasonable period of
time after receipt of such plan, the REMIC Administrator shall consult with
the Special Servicer and shall advise the Special Servicer of the REMIC
Administrator's federal income tax reporting position with respect to the
various sources of income that the Trust Fund would derive under the
Proposed Plan. In addition, the REMIC Administrator shall (to the maximum
extent possible) advise the Special Servicer of the estimated amount of
taxes that the Trust Fund would be required to pay with respect to each
such source of income. After receiving the information described in the two
preceding sentences from the REMIC Administrator, the Special Servicer
shall either (A) implement the Proposed Plan (after acquiring the
respective Mortgaged Property as REO Property) or (B) manage and operate
such property in a manner that would not result in the imposition of an REO
Tax on the income derived from such property.
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 Certificateholders 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. Both the Special Servicer and the REMIC
Administrator may consult with counsel or financial advisers at the expense of
the Trust Fund in connection with determinations required under this Section
3.17(a). Neither the Special Servicer nor the REMIC Administrator shall be
liable to the Certificateholders, the Trust Fund, the other parties hereto or
each other for errors in judgment made in good faith in the exercise of their
discretion while performing their respective responsibilities under this Section
3.17(a). Nothing in this Section 3.17(a) is intended to prevent the sale of a
Defaulted Mortgage Loan or REO Property pursuant to the terms and subject to the
conditions of Section 3.18.
(b) 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
Certificateholders solely for the purpose of its disposition and sale in a
manner that does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or, except as
contemplated by Section 3.17(a), result in the receipt by REMIC I, REMIC II or
REMIC III of any "income from non-permitted assets" within the meaning of
Section
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860F(a)(2)(B) of the Code or in an Adverse REMIC Event in respect of any such
REMIC. Except as provided in Section 3.17(a), the Special Servicer shall not
enter into any lease, contract or other agreement that causes REMIC I to
receive, and (unless required to do so under any lease, contract or agreement to
which the Special Servicer or the Trust Fund may become a party or successor to
a party due to a foreclosure, deed in lieu of foreclosure or other similar
exercise of a creditor's rights or remedies with respect to a Mortgage Loan)
shall not cause or allow REMIC I to receive, any "net income from foreclosure
property" that is subject to taxation under the REMIC Provisions. 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 for the proper operation, management, maintenance and
disposition of such REO Property, including, without limitation:
(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon;
(iii) any ground rents in respect of such REO Property; and
(iv) all other costs and expenses necessary to maintain, lease, sell,
protect, manage, operate and restore such REO Property.
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 (subject to
its right to be reimbursed therefor as provided in Sections 3.05(a) and 3.19(b)
hereof) 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.
(c) 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;
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(ii) the fees of such Independent Contractor (which shall be expenses
of the Trust Fund) 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 Certificates 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 costs shall be a
Servicing Advance.
SECTION 3.18. Sale of Mortgage Loans and REO Properties.
(a) The parties hereto may sell or purchase, or permit the sale or purchase
of, a Mortgage Loan or REO Property only on the terms and subject to the
conditions set forth in this Section 3.18 or as otherwise expressly provided in
or contemplated by Sections 2.02, 2.03 and 9.01.
(b) Reserved.
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(c) If the Special Servicer has determined, in its reasonable good faith
judgment, that any Defaulted Mortgage Loan will become subject to foreclosure
proceedings, the Special Servicer shall promptly so notify in writing the
Trustee and the Master Servicer. Either the Special Servicer or, subject to the
Special Servicer's prior rights in such regard, the Master Servicer may at its
option, within 30 days after receipt of such notice, purchase such Mortgage Loan
from the Trust Fund, at a price equal to the Purchase Price. The Purchase Price
for any such Mortgage Loan purchased under this paragraph (c) shall be deposited
into the Collection Account, and the Trustee, upon receipt of an Officer's
Certificate from the Master Servicer to the effect that such deposit has been
made, shall release or cause to be released to the Master Servicer or the
Special Servicer, as applicable, the related Mortgage File, and shall execute
and deliver such instruments of transfer or assignment, in each case without
recourse, as shall be provided to it and are reasonably necessary to vest in the
Master Servicer or the Special Servicer, as applicable, the ownership of such
Mortgage Loan. In connection with any such purchase by the Master Servicer, the
Special Servicer shall deliver the related Servicing File to the Master
Servicer.
(d) The Special Servicer may offer to sell any Defaulted Mortgage Loan not
otherwise purchased pursuant to Section 3.18(c) above, if and when the Special
Servicer determines, consistent with the Servicing Standard, that such a sale
would be in the best economic interests of the Trust Fund. Such offer shall be
made in a commercially reasonable manner (which, for purposes hereof, includes
an offer to sell without representation or warranty other than customary
warranties of title and condition, if liability for breach thereof is limited to
recourse against the Trust Fund) for a period of not less than 10 days. Unless
the Special Servicer determines that acceptance of any bid would not be in the
best economic interests of the Trust Fund, the Special Servicer shall accept the
highest cash bid received from any Person that constitutes a fair price for such
Mortgage Loan. In the absence of any bid determined as provided below to be
fair, the Special Servicer shall proceed with respect to such Defaulted Mortgage
Loan in accordance with Section 3.09.
The Special Servicer shall use its best efforts to solicit bids for each
REO Property in such manner as will be reasonably likely to realize a fair price
within the time period provided for by Section 3.16(a). The Special Servicer
shall accept the first (and, if multiple bids are received contemporaneously,
highest) cash bid received from any Person that constitutes a fair price for
such REO Property. If the Special Servicer reasonably believes that it will be
unable to realize a fair price for any REO Property within the time constraints
imposed by Section 3.16(a), the Special Servicer shall dispose of such REO
Property upon such terms and conditions as the Special Servicer shall deem
necessary and desirable to maximize the recovery thereon under the circumstances
and, in connection therewith, shall accept the highest outstanding cash bid,
regardless of from whom received.
The Special Servicer shall give the Trustee and the Master Servicer not
less than five Business Days' prior written notice of its intention to sell any
Defaulted Mortgage Loan or REO Property pursuant to this Section 3.18(d). No
Interested Person shall be obligated to submit
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a bid to purchase any such Mortgage Loan or REO Property, and notwithstanding
anything to the contrary herein, neither the Trustee, in its individual
capacity, nor any of its Affiliates may bid for or purchase any Defaulted
Mortgage Loan or REO Property pursuant hereto.
(e) Whether any cash bid constitutes a fair price for any Defaulted
Mortgage Loan or REO Property, as the case may be, for purposes of Section
3.18(d), shall be determined by the Special Servicer or, if such cash bid is
from an Interested Person, by the Trustee.
In determining whether any bid received from an Interested Person
represents a fair price for any such Mortgage Loan or REO Property, the Trustee
shall be supplied with and shall be entitled to rely on the most recent
Appraisal in the related Servicing File conducted in accordance with this
Agreement within the preceding 12-month period or, in the absence of any such
Appraisal, on a new Appraisal, or if the most recent Appraisal is not more than
12 months old but there has been a material change in such Mortgaged Property or
REO Property during the prior 12 months, on an updated Appraisal, in any case to
be obtained by the Special Servicer (the cost of which shall constitute a
Servicing Advance). On making any such determination of fair price based on the
Appraisal, the Trustee shall be entitled to retain and may rely on the
determinations of professional consultants. The cost of any such consultants
shall be an expense of the Trust Fund reimbursable to the Trustee from the funds
on deposit in the Collection Account. The appraiser conducting any such new
Appraisal shall be selected by the Special Servicer if the Special Servicer is
not bidding with respect to a Defaulted Mortgage Loan or REO Property and shall
be selected by the Master Servicer if the Special Servicer is bidding and by the
Trustee if both the Master Servicer and the Special Servicer are bidding. Where
any Interested Person is among those bidding with respect to a Defaulted
Mortgage Loan or REO Property, the Special Servicer shall require that all bids
be submitted to it (and, if the Special Servicer is bidding, shall be submitted
by it to the Trustee) in writing and be accompanied by a refundable deposit of
cash in an amount equal to 5% of the bid amount.
In determining whether any bid from a Person other than an Interested
Person constitutes a fair price for any such Mortgage Loan or REO Property, the
Special Servicer shall take into account the results of any Appraisal described
above, 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 Mortgage Loan, the occupancy level
and physical condition of the Mortgaged Property or REO Property, the state of
the local economy and the obligation to dispose of any REO Property within the
time period specified in Section 3.16(a).
The Purchase Price for any such Mortgage Loan or REO Property shall in all
cases be deemed a fair price. Notwithstanding the other provisions of this
Section 3.18, no cash bid from the Special Servicer or any Affiliate thereof
shall constitute a fair price for any Defaulted Mortgage Loan or REO Property
unless such bid is the highest cash bid received and at least two independent
bids (not including the bid of the Special Servicer or any Affiliate) have been
received. In the event the bid of the Special Servicer or any Affiliate thereof
is the only bid
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received or is the higher of only two bids received, then additional bids shall
be solicited. If an additional bid or bids, as the case may be, are received and
the original bid of the Special Servicer or any Affiliate thereof is the highest
of all cash bids received, then the bid of the Special Servicer or such
Affiliate shall no longer be deemed not to constitute a fair price. A bid of the
Special Servicer shall not be accepted in the absence of a determination by the
Trustee, as provided above in this Section 3.18(e), that such bid constitutes a
fair price for any Defaulted Mortgage Loan or REO Property. Any bid by the
Special Servicer shall be unconditional and if accepted the Defaulted Mortgage
Loan or REO Property shall be transferred to the Special Servicer without
recourse, representation or warranty other than customary representations as to
title given in connection with the sale of a mortgage loan or real property.
(f) Subject to Sections 3.18(a) through 3.18(e) above, the Special Servicer
shall act on behalf of the Trustee in negotiating with independent third parties
and taking any other action necessary or appropriate in connection with the sale
of any Defaulted Mortgage Loan or REO Property, and the collection of all
amounts payable in connection therewith. In connection therewith, the Special
Servicer may charge prospective bidders, and may retain, fees that approximate
the Special Servicer's actual costs in the preparation and delivery of
information pertaining to such sales or evaluating bids without obligation to
deposit such amounts into the Collection Account. Any sale of a Defaulted
Mortgage Loan or any REO Property shall be final and without recourse to the
Trustee or the Trust Fund, and if such sale is consummated in accordance with
the terms of this Agreement, neither the Special Servicer nor the Trustee shall
have any liability to any Certificateholder with respect to the purchase price
therefor accepted by the Special Servicer or the Trustee.
(g) Any sale of a Defaulted Mortgage Loan or any REO Property shall be for
cash only (unless, except in the case of the Special Servicer, changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).
(h) Notwithstanding any of the foregoing paragraphs of this Section 3.18,
the Special Servicer shall not be obligated to accept the highest cash bid if
the Special Servicer determines, in accordance with the Servicing Standard, that
rejection of such bid would be in the best interests of the Certificateholders,
and the Special Servicer may accept a lower cash bid (from any Person other than
itself or an Affiliate) if it determines, in accordance with the Servicing
Standard, that acceptance of such bid would be in the best interests of the
Certificateholders (for example, if the prospective buyer making the lower bid
is more likely to perform its obligations or the terms offered by the
prospective buyer making the lower bid are more favorable).
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SECTION 3.19. Additional Obligations of Master Servicer.
(a) The Master Servicer shall deliver to the Trustee for deposit in the
Distribution Account on each Master Servicer Remittance Date, without any right
of reimbursement therefor, an amount equal to the lesser of (i) the aggregate
amount of Prepayment Interest Shortfalls incurred in connection with Principal
Prepayments received during the most recently ended Collection Period, and (ii)
the total amount of Master Servicing Fees received by the Master Servicer during
such Collection Period plus any Prepayment Interest Excesses received during
such Collection Period.
(b) No more frequently than once per calendar month, the Special Servicer
may require the Master Servicer, and the Master Servicer shall be obligated, to
reimburse the Special Servicer for any Servicing Advances made by but not
previously reimbursed to the Special Servicer, and to pay the Special Servicer
interest thereon at the Reimbursement Rate from the date made to, but not
including, the date of reimbursement. Such reimbursement and any accompanying
payment of interest shall be made within ten (10) days of the request therefor
by wire transfer of immediately available funds to an account designated by the
Special Servicer. Upon the Master Servicer's reimbursement to the Special
Servicer of any Servicing Advance and payment to the Special Servicer of
interest thereon, all in accordance with this Section 3.19(b), the Master
Servicer shall for all purposes of this Agreement be deemed to have made such
Servicing Advance at the same time as the Special Servicer actually made such
Advance, and accordingly, the Master Servicer shall be entitled to reimbursement
for such Advance, together with interest thereon in accordance with Sections
3.05(a) and 3.11(f), at the same time, in the same manner and to the same extent
as the Master Servicer would otherwise have been entitled if it had actually
made such Servicing Advance at the time the Special Servicer did.
Notwithstanding anything to the contrary contained in this Agreement, if
the Special Servicer is required under this Agreement to make any Servicing
Advance but does not desire to do so, the Special Servicer may, in its sole
discretion, request that the Master Servicer make such Advance, such request to
be made in writing and in a timely manner that does not adversely affect the
interests of any Certificateholder; provided, however, that the Special Servicer
shall have an obligation to make any Emergency Advance. The Master Servicer
shall have the obligation to make any such Servicing Advance (other than an
Emergency Advance) that it is requested by the Special Servicer to make within
ten days of the Master Servicer's receipt of such request. The Special Servicer
shall be relieved of any obligations with respect to an Advance that it requests
the Master Servicer to make (regardless of whether or not the Master Servicer
shall make such Advance) other than an Emergency Advance. The Master Servicer
shall be entitled to reimbursement for any Servicing Advance made by it at the
direction of the Special Servicer, together with interest thereon in accordance
with Sections 3.05(a) and 3.11(f), at the same time, in the same manner and to
the same extent as the Master Servicer is entitled with respect to any other
Servicing Advance made thereby.
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Notwithstanding the foregoing provisions of this Section 3.19(b), the
Master Servicer shall not be required to reimburse the Special Servicer for, or
to make at the Special Servicer's direction, any Servicing Advance if the Master
Servicer determines in its reasonable good faith judgment that the Servicing
Advance for which the Special Servicer is requesting reimbursement, or which the
Special Servicer is directing the Master Servicer to make, hereunder, although
not characterized by the Special Servicer as a Nonrecoverable Servicing Advance,
is in fact a Nonrecoverable Servicing Advance. The Master Servicer shall notify
the Special Servicer in writing of such determination and, if applicable, such
Nonrecoverable Servicing Advance shall be reimbursed to the Special Servicer
pursuant to Section 3.05(a).
(c) Promptly (and, in any event, within 60 days) following the earliest of
(i) the date on which any Mortgage Loan becomes a Modified Mortgage Loan, (ii)
the 60th day (or, in the case of a Modified Mortgage Loan, the 30th day) after
the occurrence of any uncured delinquency in Monthly Payments with respect to
any Mortgage Loan, (iii) the date on which a receiver is appointed and continues
in such capacity in respect of the Mortgaged Property securing any Mortgage Loan
and (iv) the date on which the Mortgaged Property securing any Mortgage Loan
becomes an REO Property (each such Mortgage Loan, a "Required Appraisal Loan"),
the Special Servicer shall obtain an Appraisal of the related Mortgaged
Property, unless an Appraisal thereof had previously been obtained within the
prior twelve months. The cost of such Appraisal shall be a Servicing Advance.
With respect to each Required Appraisal Loan (unless such Required
Appraisal Loan has become a Corrected Mortgage Loan and has remained current for
twelve consecutive Monthly Payments, and no other Servicing Transfer Event has
occurred with respect thereto during such twelve months), the Special Servicer
shall, within 30 days of each anniversary of such Required Appraisal Loan's
having become such, order an update of the prior Appraisal (the cost of which
will be a Servicing Advance). Based upon such Appraisal, the Special Servicer
shall redetermine and report to the Trustee the Appraisal Reduction Amount, if
any, with respect to such Required Appraisal Loan.
SECTION 3.20. Modifications, Waivers, Amendments and Consents.
(a) The Special Servicer may, consistent with the Servicing Standard (but
the Master Servicer may not) agree to any modification, waiver or amendment of
any term of, forgive interest (including, without limitation, Default Interest
and late payment fees) on and principal of, capitalize interest on, permit the
release, addition or substitution of collateral securing, and/or permit the
release of the Mortgagor on or any guarantor of any Mortgage Loan without the
consent of any other party hereto or any Certificateholder, subject, however, to
each of the following limitations, conditions and restrictions:
(i) other than as provided in Section 3.08 and in subsection (c)
below, the Special Servicer shall not agree to any modification, waiver or
amendment of any term of, or take any of the other acts referenced in this
Section 3.20(a) with respect to, any
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Mortgage Loan that would affect the amount or timing of any related payment
of principal, interest or other amount payable thereunder or, in the
Special Servicer's reasonable good faith judgment, would materially impair
the security for such Mortgage Loan or reduce the likelihood of timely
payment of amounts due thereon, unless a material default on such Mortgage
Loan has occurred or, in the Special Servicer's reasonable good faith
judgment, a default in respect of payment on such Mortgage Loan is
reasonably foreseeable, and such modification, waiver, amendment or other
action is reasonably likely to produce a greater recovery to
Certificateholders on a present value basis (the relevant discounting of
anticipated collections that will be distributable to Certificateholders to
be done at the related Net Mortgage Rate), than would liquidation;
(ii) the Special Servicer may not extend the date on which any Balloon
Payment is scheduled to be due on any Specially Serviced Mortgage Loan more
than three times and, in the case of any such extension, for more than one
year; and, furthermore, the Special Servicer may not grant any such
extension unless (A) the Special Servicer's recovery determination
contemplated by the immediately preceding clause (i) is supported by an
Appraisal performed within the preceding 12-month period and (B) the
Mortgagor agrees to deliver to the Special Servicer and the Trustee
quarterly operating statements with respect to the related Mortgaged
Property (the Special Servicer to request that such statements be audited,
provided that the Special Servicer may waive such condition relating to
such statements being audited, in its sole discretion);
(iii) the Special Servicer shall not make or permit any modification,
waiver or amendment of any term of, or take any of the other acts
referenced in this Section 3.20(a) with respect to, any Mortgage Loan that
would (A) cause any of REMIC I, REMIC II or REMIC III to fail to qualify as
a REMIC under the Code or result in the imposition of any tax on
"prohibited transactions" or "contributions" after the Startup Day of any
such REMIC under the REMIC Provisions or (B) cause any Mortgage Loan to
cease to be a "qualified mortgage" within the meaning of Section 860G(a)(3)
of the Code;
(iv) the Special Servicer shall not permit any Mortgagor to add or
substitute any collateral pursuant to this Section 3.20 unless the Special
Servicer shall have first determined in accordance with the Servicing
Standard, based upon a Phase I Environmental Assessment prepared by an
Independent Person who regularly conducts Phase I Environmental
Assessments, at the expense of the Mortgagor, that such additional or
substitute collateral is in compliance with applicable environmental laws
and regulations and that there are no circumstances or conditions present
with respect to such new collateral relating to the use, management or
disposal of any Hazardous Materials for which investigation, testing,
monitoring, containment, clean-up or remediation would be required under
any then applicable environmental laws and/or regulations; and
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(v) the Special Servicer shall not release or substitute any
collateral securing an outstanding Mortgage Loan except as provided in
Section 3.09(d), except where a Mortgage Loan is satisfied and except in
the case of a release where (A) the use of the collateral to be released
will not, in the Special Servicer's reasonable good faith judgment,
materially and adversely affect the Net Operating Income being generated by
or the use of the related Mortgaged Property, (B) there is a corresponding
principal paydown of such Mortgage Loan in an amount at least equal to the
appraised value of the collateral to be released (or substitute collateral
with an appraised value at least equal to that of the collateral to be
released, is delivered), (C) the remaining Mortgaged Property (together
with any substitute collateral) is, in the Special Servicer's reasonable
good faith judgment, adequate security for the remaining Mortgage Loan and
(D) such release would not result in the downgrade, qualification or
withdrawal of the rating then assigned by either Rating Agency to any Class
of Certificates (as confirmed in writing by each Rating Agency);
provided that (x) the limitations, conditions and restrictions set forth in
clauses (i) through (v) above shall not apply to any modification of any term of
any Mortgage Loan that is required under the terms of such Mortgage Loan in
effect on the Closing Date or that is solely within the control of the related
Mortgagor, and (y) notwithstanding clauses (i) through (v) above, neither the
Master Servicer nor the Special Servicer shall be required to oppose the
confirmation of a plan in any bankruptcy or similar proceeding involving a
Mortgagor if in its reasonable good faith judgment such opposition would not
ultimately prevent the confirmation of such plan or one substantially similar.
(b) The Special Servicer shall have no liability to the Trust Fund, the
Certificateholders or any other Person if the Special Servicer's analysis and
determination that the modification, waiver, amendment or other action
contemplated by Section 3.20(a) is reasonably likely to produce a greater
recovery to Certificateholders on a present value basis than would liquidation,
should prove to be wrong or incorrect, so long as the analysis and determination
were made on a reasonable basis in good faith by the Special Servicer.
(c) Any payment of interest, which is deferred pursuant to Section 3.20(a),
shall not, for purposes hereof, including, without limitation, calculating
monthly distributions to Certificateholders, be added to the unpaid principal
balance of the related Mortgage Loan, notwithstanding that the terms of such
Mortgage Loan so permit or that such interest may actually be capitalized.
(d) The Special Servicer may, as a condition to its granting any request by
a Mortgagor for consent, modification, waiver or indulgence or any other matter
or thing, the granting of which is within the Special Servicer's discretion
pursuant to the terms of the instruments evidencing or securing the related
Mortgage Loan and is permitted by the terms of this Agreement, require that such
Mortgagor pay to it, as additional servicing compensation, a reasonable or
customary fee (not to exceed ___% of the unpaid principal balance of the related
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Mortgage Loan) for the additional services performed in connection with such
request, together with any related costs and expenses incurred by it.
(e) All modifications, waivers, amendments and other actions entered into
or taken in respect of the Mortgage Loans pursuant to this Section 3.20 shall be
in writing. The Special Servicer shall notify the Master Servicer and the
Trustee, in writing, of any modification, waiver, amendment or other action
entered into or taken in respect of any Mortgage Loan pursuant to this Section
3.20 and the date thereof, and shall deliver to the Trustee or the related
Custodian for deposit in the related Mortgage File (with a copy to the other
such party), an original counterpart of the agreement relating to such
modification, waiver, amendment or other action, promptly (and in any event
within 10 Business Days) following the execution thereof. In addition, following
the execution of any modification, waiver or amendment agreed to by the Special
Servicer pursuant to Section 3.20(a) above, the Special Servicer shall deliver
to the Master Servicer and the Trustee an Officer's Certificate certifying that
all of the requirements of Section 3.20(a) have been met and setting forth in
reasonable detail the basis of the determination made by it pursuant to Section
3.20(a)(i).
SECTION 3.21. Transfer of Servicing Between Master Servicer and Special
Servicer; Record Keeping.
(a) Upon determining that a Servicing Transfer Event has occurred with
respect to any Mortgage Loan and if the Master Servicer is not also the Special
Servicer, the Master Servicer shall immediately give notice thereof, and shall
deliver the related Servicing File, to the Special Servicer and shall use its
reasonable best efforts to provide the Special Servicer with all information,
documents (or copies thereof) and records (including records stored
electronically on computer tapes, magnetic discs and the like) relating to the
Mortgage Loan and reasonably requested by the Special Servicer to enable it to
assume its functions hereunder with respect thereto without acting through a
Sub-Servicer. The Master Servicer shall use its reasonable best efforts to
effect compliance with the preceding sentence within five Business Days of the
occurrence of each related Servicing Transfer Event. The Special Servicer may,
as to any delinquent Mortgage Loan, prior to the occurrence of a Servicing
Transfer Event with respect thereto, request and obtain the foregoing documents
and information in order to perform its duties described in Section 3.02.
Upon determining that a Specially Serviced Mortgage Loan has become a
Corrected Mortgage Loan and if the Master Servicer is not also the Special
Servicer, the Special Servicer shall immediately give notice thereof, and shall
return the related Servicing File within 10 Business Days, to the Master
Servicer; and, upon giving such notice and returning such Servicing File to the
Master Servicer, the Special Servicer's obligation to service such Mortgage
Loan, and the Special Servicer's right to receive the Special Servicing Fee with
respect to such Mortgage Loan, shall terminate, and the obligations of the
Master Servicer to service and administer such Mortgage Loan shall resume.
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(b) In servicing any Specially Serviced Mortgage Loans, the Special
Servicer shall provide to the Trustee originals of documents included within the
definition of "Mortgage File" and generated while such Mortgage Loan is a
Specially Serviced Mortgage Loan for inclusion in the related Mortgage File
(with a copy of each such original to the Master Servicer), and copies of any
additional related Mortgage Loan information, including correspondence with the
related Mortgagor generated while such Mortgage Loan is a Specially Serviced
Mortgage Loan.
(c) The Master Servicer and Special Servicer shall each furnish to the
other, upon reasonable request, such reports, documents, certifications and
information in its possession, and access to such books and records maintained
thereby, as may relate to the Mortgage Loans and any REO Properties and as shall
be reasonably required by the requesting party in order to perform its duties
hereunder.
(d) Notwithstanding anything in this Agreement to the contrary, in the
event that the Master Servicer and the Special Servicer are the same Person, all
notices, certificates, information and consents required to be given by the
Master Servicer to the Special Servicer or vice versa shall be deemed to be
given without the necessity of any action on such Person's part.
(e) In connection with the performance of its obligations hereunder, each
of the Master Servicer and the Special Servicer shall be entitled to rely upon
written information provided to it by the other.
SECTION 3.22. Sub-Servicing Agreements.
(a) The Master Servicer and the Special Servicer may enter into
Sub-Servicing Agreements to provide for the performance by third parties of any
or all of their respective obligations hereunder, provided that, in each case,
the Sub-Servicing Agreement: (i) is consistent with this Agreement in all
material respects and requires the Sub-Servicer to comply with all of the
applicable conditions of this Agreement; (ii) provides that if the Master
Servicer or the Special Servicer, as the case may be, shall for any reason no
longer act in such capacity hereunder (including, without limitation, by reason
of an Event of Default), the Trustee or its designee may thereupon assume all of
the rights and, except to the extent they arose prior to the date of assumption,
obligations of the Master Servicer or the Special Servicer, as the case may be,
under such agreement or, alternatively, may terminate such subservicing
agreement without cause and without payment of any penalty or termination fee;
(iii) provides that the Trustee, for the benefit of the Certificateholders,
shall be a third party beneficiary under such agreement, but that (except to the
extent the Trustee or its designee assumes the obligations of the Master
Servicer or the Special Servicer, as the case may be, thereunder as contemplated
by the immediately preceding clause (ii)) none of the Trustee, any successor
Master Servicer or Special Servicer, as the case may be, or any
Certificateholder shall have any duties under such agreement or any liabilities
arising therefrom; (iv) permits any purchaser of a Mortgage Loan pursuant to
this Agreement to terminate such agreement with respect to such purchased
Mortgage Loan at its option and without
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penalty; (v) does not permit the Sub-Servicer to enter into or consent to any
modification, waiver or amendment or otherwise take any action on behalf of the
Master Servicer or Special Servicer, as the case may be, contemplated by Section
3.20 hereof without the consent of the Master Servicer or Special Servicer, as
the case may be; and (vi) does not permit the Sub-Servicer any rights of
indemnification that may be satisfied out of assets of the Trust Fund. In
addition, each Sub-Servicing Agreement entered into by the Master Servicer shall
provide that such agreement shall terminate with respect to any Mortgage Loan
serviced thereunder at the time such Mortgage Loan becomes a Specially Serviced
Mortgage Loan, and each Sub-Servicing Agreement entered into by the Special
Servicer shall relate only to Specially Serviced Mortgage Loans and shall
terminate with respect to any such Mortgage Loan which ceases to be a Specially
Serviced Mortgage Loan. The Master Servicer and the Special Servicer shall each
deliver to the Trustee and each Holder of a Class B-3 Certificate, a Class B-4
Certificate or a Class C Certificate copies of all Sub-Servicing Agreements, and
any amendments thereto and modifications thereof, entered into by it promptly
upon its execution and delivery of such documents. References in this Agreement
to actions taken or to be taken by the Master Servicer or the Special Servicer
include actions taken or to be taken by a Sub-Servicer on behalf of the Master
Servicer or the Special Servicer, as the case may be; and, in connection
therewith, all amounts advanced by any Sub-Servicer to satisfy the obligations
of the Master Servicer or the Special Servicer hereunder to make Advances shall
be deemed to have been advanced by the Master Servicer or the Special Servicer,
as the case may be, out of its own funds and, accordingly, such Advances shall
be recoverable by such Sub-Servicer in the same manner and out of the same funds
as if such Sub-Servicer were the Master Servicer or the Special Servicer, as the
case may be. For so long as they are outstanding, Advances shall accrue interest
in accordance with Sections 3.11(f) and/or 4.03(d), such interest to be
allocable between the Master Servicer or the Special Servicer, as the case may
be, and such Sub-Servicer as they may agree. For purposes of this Agreement, the
Master Servicer and the Special Servicer each shall be deemed to have received
any payment when a Sub-Servicer retained by it receives such payment. The Master
Servicer and the Special Servicer each shall notify the other, the Trustee and
the Depositor in writing promptly of the appointment by it of any Sub- Servicer.
(b) Each Sub-Servicer shall be authorized to transact business in the state
or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law.
(c) The Master Servicer and the Special Servicer, for the benefit of the
Trustee and the Certificateholders, shall (at no expense to the other such party
or to the Trustee, the Certificateholders or the Trust Fund) monitor the
performance and enforce the obligations of their respective Sub-Servicers under
the related Sub-Servicing Agreements. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Sub-Servicing
Agreements in accordance with their respective terms and the pursuit of other
appropriate remedies, shall be in such form and carried out to such an extent
and at such time as the Master Servicer or the Special Servicer, as applicable,
in its reasonable good faith judgment, would require were it the owner of the
Mortgage Loans. Subject to the terms of the related Servicing
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Agreement, the Master Servicer and the Special Servicer shall each have the
right to remove a Sub-Servicer retained by it at any time it considers such
removal to be in the best interests of Certificateholders.
(d) If the Master Servicer or the Special Servicer ceases to serve as such
under this Agreement for any reason (including by reason of an Event of Default)
and no successor Master Servicer or Special Servicer, as the case may be, has
succeeded to its rights and assumed its obligations hereunder or, in the case of
the Special Servicer, no replacement Special Servicer has been designated
pursuant to Section 6.06, then the Trustee or its designee shall succeed to the
rights and assume the obligations of the Master Servicer or the Special Servicer
under any Sub- Servicing Agreement, unless the Trustee elects to terminate any
such Sub-Servicing Agreement in accordance with its terms. In any event, if a
Sub-Servicing Agreement is to be assumed by the Trustee or another successor
thereto, then the Master Servicer or the Special Servicer, as applicable, at its
expense shall, upon request of the Trustee, deliver to the assuming party all
documents and records relating to such Sub-Servicing Agreement and the Mortgage
Loans then being serviced thereunder and an accounting of amounts collected and
held on behalf of it thereunder, and otherwise use its best efforts to effect
the orderly and efficient transfer of the Sub- Servicing Agreement to the
assuming party.
(e) Notwithstanding any Sub-Servicing Agreement, the Master Servicer and
the Special Servicer shall remain obligated and liable to the Trustee and the
Certificateholders for the performance of their respective obligations and
duties under this Agreement in accordance with the provisions hereof to the same
extent and under the same terms and conditions as if each alone were servicing
and administering the Mortgage Loans or REO Properties for which it is
responsible. No appointment of a Sub-Servicer shall result in any additional
expense to the Trustee, the Certificateholders or the Trust Fund.
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a) On each Distribution Date, the Trustee shall apply amounts on deposit
in the Distribution Account, in each case to the extent of the remaining portion
of the Available Distribution Amount for such Distribution Date, for the
following purposes and in the following order of priority:
(i) to distributions of interest to the Holders of the respective
Classes of Senior Certificates, in an amount equal to, and pro rata in
accordance with, all Distributable Certificate Interest in respect of each
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(ii) to distributions of principal to the Holders of the Class A-1A
Certificates and the Holders of the Class A-1B Certificates, allocable as
between the Holders of such two Classes of Certificates as provided below,
in an amount (not to exceed the aggregate of the Class Principal Balances
of the Class A-1A Certificates and the Class A-1B Certificates outstanding
immediately prior to such Distribution Date) equal to the entire Principal
Distribution Amount for such Distribution Date;
(iii) to distributions to the Holders of the Class A-1A Certificates
and the Holders of the Class A-1B Certificates in an amount equal to, in
reimbursement of and pro rata in accordance with, all Realized Losses and
Additional Trust Fund Expenses, if any, previously deemed allocated to each
such Class of Certificates and not previously reimbursed;
(iv) to distributions of interest to the Holders of the Class A-2
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(v) if the Class Principal Balances of the Class A-1A Certificates and
the Class A-1B Certificates have been reduced to zero, to distributions of
principal to the Holders of the Class A-2 Certificates, in an amount (not
to exceed the Class Principal Balance of the Class A-2 Certificates
outstanding immediately prior to such Distribution Date) equal to the
entire Principal Distribution Amount for such Distribution Date (net of any
portion thereof distributed on such Distribution Date
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to the Holders of the Class A-1A Certificates and/or Class A-1B
Certificates pursuant to clause (ii) above);
(vi) to distributions to the Holders of the Class A-2 Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously deemed allocated to such
Class of Certificates and not previously reimbursed;
(vii) to distributions of interest to the Holders of the Class A-3
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(viii) if the Class Principal Balances of the Class A-1A Certificates,
the Class A-1B Certificates and the Class A-2 Certificates have been
reduced to zero, to distributions of principal to the Holders of the Class
A-3 Certificates, in an amount (not to exceed the Class Principal Balance
of the Class A-3 Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of the Class A-1A Certificates and/or
Class A-1B Certificates pursuant to clause (ii) above or to the Holders of
the Class A-2 Certificates pursuant to clause (v) above);
(ix) to distributions to the Holders of the Class A-3 Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously deemed allocated to such
Class of Certificates and not previously reimbursed;
(x) to distributions of interest to the Holders of the Class B-1
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xi) if the Class Principal Balances of the Class A-1A Certificates,
the Class A-1B Certificates, the Class A-2 Certificates and the Class A-3
Certificates have been reduced to zero, to distributions of principal to
the Holders of the Class B-1 Certificates, in an amount (not to exceed the
Class Principal Balance of the Class B-1 Certificates outstanding
immediately prior to such Distribution Date) equal to the entire Principal
Distribution Amount for such Distribution Date (net of any portion thereof
distributed on such Distribution Date to the Holders of the Class A-1A
Certificates and/or Class A-1B Certificates pursuant to clause (ii) above,
to the Holders of the Class A-2 Certificates pursuant to clause (v) above
or to the Holders of the Class A-3 Certificates pursuant to clause (viii)
above);
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(xii) to distributions to the Holders of the Class B-1 Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust fund Expenses, if any, previously deemed allocated to such
Class of Certificates and not previously reimbursed;
(xiii) to distributions of interest to the Holders of the Class B-2
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xiv) if the Class Principal Balances of the Class A-1A Certificates,
the Class A-1B Certificates, the Class A-2 Certificates, the Class A-3
Certificates and the Class B-1 Certificates have been reduced to zero, to
distributions of principal to the Holders of the Class B-2 Certificates, in
an amount (not to exceed the Class Principal Balance of the Class B-2
Certificates outstanding immediately prior to such Distribution Date) equal
to the entire Principal Distribution Amount for such Distribution Date (net
of any portion thereof distributed on such Distribution Date to the Holders
of the Class A-1A Certificates and/or Class A-1B Certificates pursuant to
clause (ii) above, to the Holders of the Class A-2 Certificates pursuant to
clause (v) above, to the Holders of the Class A-3 Certificates pursuant to
clause (viii) above or to the Holders the Class B-1 Certificates pursuant
to clause (xi) above);
(xv) to distributions to the Holders of the Class B-2 Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously deemed allocated to such
Class of Certificates and not previously reimbursed;
(xvi) to distributions of interest to the Holders of the Class B-3
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xvii) if the Class Principal Balances of the Class A-1A Certificates,
the Class A-1B Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class B-1 Certificates and the Class B-2 Certificates
have been reduced to zero, to distributions of principal to the Holders of
the Class B-3 Certificates, in an amount (not to exceed the Class Principal
Balance of the Class B-3 Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of the Class A-1A Certificates and/or
Class A-1B Certificates pursuant to clause (ii) above, to the Holders of
the Class A-2 Certificates pursuant to clause (v) above, to the Holders of
the Class A-3
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Certificates pursuant to clause (viii) above, to the Holders of the Class
B-1 Certificates pursuant to clause (xi) above or to the Holders of the
Class B-2 Certificates pursuant to clause (xiv) above);
(xviii) to distributions to the Holders of the Class B-3 Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously deemed allocated to such
Class of Certificates and not previously reimbursed;
(xix) to distributions of interest to the Holders of the Class B-4
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xx) if the Class Principal Balances of the Class A-1A Certificates,
the Class A-1B Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class B-1 Certificates, the Class B-2 Certificates and
the Class B-3 Certificates have been reduced to zero, to distributions of
principal to the Holders of the Class B-4 Certificates, in an amount (not
to exceed the Class Principal Balance of the Class B-4 Certificates
outstanding immediately prior to such Distribution Date) equal to the
entire Principal Distribution Amount for such Distribution Date (net of any
portion thereof distributed on such Distribution Date to the Holders of the
Class A-1A Certificates and/or Class A-1B Certificates pursuant to clause
(ii) above, to the Holders of the Class A-2 Certificates pursuant to clause
(v) above, to the Holders of the Class A-3 Certificates pursuant to clause
(viii) above, to the Holders of the Class B-1 Certificates pursuant to
clause (xi) above, to the Holders of the Class B-2 Certificates pursuant to
clause (xiv) above or to the Holders of the Class B-3 Certificates pursuant
to clause (xvii) above);
(xxi) to distributions to the Holders of the Class B-4 Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously deemed allocated to such
Class of Certificates and not previously reimbursed;
(xxii) to distributions of interest to the Holders of the Class C
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxiii) if the Class Principal Balances of the Class A-1A
Certificates, the Class A-1B Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class B-1 Certificates, the Class B-2
Certificates, the Class B-3 Certificates and the Class B-4 Certificates
have been reduced to zero, to distributions of principal to the
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Holders of the Class C Certificates, in an amount (not to exceed the Class
Principal Balance of the Class C Certificates outstanding immediately prior
to such Distribution Date) equal to the entire Principal Distribution
Amount for such Distribution Date (net of any portion thereof distributed
on such Distribution Date to the Holders of the Class A-1A Certificates
and/or Class A-1B Certificates pursuant to clause (ii) above, to the
Holders of the Class A-2 Certificates pursuant to clause (v) above, to the
Holders of the Class A-3 Certificates pursuant to clause (viii) above, to
the Holders of the Class B-1 Certificates pursuant to clause (xi) above, to
the Holders of the Class B-2 Certificates pursuant to clause (xiv) above,
to the Holders of the Class B-3 Certificates pursuant to clause (xvii)
above or to the Holders of the Class B-4 Certificates pursuant to clause
(xx) above);
(xxiv) to distributions to the Holders of the Class C Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses previously deemed allocated to such Class of
Certificates and not previously reimbursed; and
(xxv) to distributions to the Holders of the Class R-I Certificates,
in an amount equal to the balance, if any, of the Available Distribution
Amount for such Distribution Date remaining after the distributions to be
made on such Distribution Date pursuant to clauses (i) through (xxiv)
above;
provided that, notwithstanding anything to the contrary herein, on the Final
Distribution Date, the distributions of principal to be made pursuant to clauses
(ii), (v), (viii), (xi), (xiv), (xvii), (xx) and (xxiii) above shall, in each
such case, subject to the then remaining portion of the Available Distribution
Amount for such date, be made to the Holders of the relevant Class or Classes of
Sequential Pay Certificates otherwise entitled to distributions of principal
pursuant to such clause in an amount equal to the entire Class Principal Balance
or Balances of such Class or Classes outstanding immediately prior to the Final
Distribution Date.
On each Distribution Date prior to the earlier of (i) the Senior Principal
Distribution Cross-Over Date and (ii) the Final Distribution Date, the Trustee
shall pay the distributions of principal made on the Class A-1A and Class A-1B
Certificates pursuant to clause (ii) above, first, to the Holders of the Class
A-1A Certificates, until the Class Principal Balance of such Class has been
reduced to zero, and thereafter, to the Holders of the Class A-1B Certificates,
until the Class Principal Balance of such Class has been reduced to zero. On any
Distribution Date coinciding with or following the Senior Principal Distribution
Cross-Over Date, and (in any event) on the Final Distribution Date, the Trustee
shall pay the distributions of principal made on the Class A- 1A and Class A-1B
Certificates pursuant to clause (ii) above to the Holders of the Class A-1A
Certificates and the Holders of the Class A-1B Certificates, pro rata in
accordance with the respective Class Principal Balances of such Classes
outstanding immediately prior to such Distribution Date, until the Class
Principal Balance of each such Class has been reduced to zero.
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All distributions of interest made in respect of the Class S Certificates
on any Distribution Date pursuant to clause (i) above, shall be deemed to have
been made in respect of Component S-A1A, Component S-A1B, Component S-A2,
Component S-A3, Component S-B1, Component S-B2, Component S-B3, Component S-B4
and Component S-C, pro rata in accordance with the respective amounts of
Distributable Certificate Interest that would be payable on such Components on
such Distribution Date if each such Component were treated as a separate Class
of REMIC III Regular Certificates.
Distributions in reimbursement of the Holders of any Class of Sequential
Pay Certificates for previously allocated Realized Losses and Additional Trust
Fund Expenses shall not constitute distributions of principal and shall not
result in reduction of the Certificate Principal Balances of such Certificates
or of the related Class Principal Balance.
(b) On each Distribution Date, the Trustee shall withdraw any amounts then
on deposit in the Distribution Account that represent Net Prepayment Premiums
collected during or prior to the related Collection Period and shall distribute
such amounts, in each case as additional interest, as follows:
(i) if the Class Notional Amount of the Class S Certificates
outstanding immediately prior to such Distribution Date is greater than
zero, all such Net Prepayment Premiums shall be distributed to the Holders
of the Class S Certificates; and
(ii) if the Class Notional Amount of the Class S Certificates has been
reduced to zero prior to such Distribution Date, all such Net Prepayment
Premiums shall be distributed to the Holders of the Class R-I Certificates.
On each Distribution Date, the Trustee shall withdraw any amounts then on
deposit in the Distribution Account that represent Net Yield Maintenance
Premiums collected during or prior to the related Collection Period and shall
distribute such amounts, in each case as additional interest, as follows:
(i) if the Class Notional Amount of the Class S Certificates
outstanding immediately prior to such Distribution Date is greater than
zero, each such Net Yield Maintenance Premium shall be distributed (A) up
to the corresponding Certificate Yield Maintenance Amount(s), to the
Holders of the Class(es) of Sequential Pay Certificates entitled to
distributions of principal on such Distribution Date, pro rata based on
entitlement if there is more than one such Class, and (B) to the extent of
the balance, if any, of such Net Yield Maintenance Premium, to the Holders
of the Class S Certificates; and
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(ii) if the Class Notional Amount of the Class S Certificates has been
reduced to zero prior to such Distribution Date, all such Net Yield
Maintenance Premiums shall be distributed to the Holders of the Class R-I
Certificates.
All distributions of additional interest (in the form of Net Prepayment
Premiums or Net Yield Maintenance Premiums) made in respect of the Class S
Certificates on any Distribution Date pursuant to this Section 4.01(b), shall be
deemed to have been made in respect of Component S-A1A, Component S-A1B,
Component S-A2, Component S-A3, Component S-B1, and Component S-B2, Component
S-B3, Component S-B4 and Component S-C, pro rata in accordance with the
respective reductions in the Component Notional Amount of each such Component as
a result of the deemed distributions of principal on the REMIC II Regular
Interests on such Distribution Date pursuant to Section 4.01(h).
(c) All distributions made with respect to each Class on each Distribution
Date shall be allocated pro rata among the outstanding Certificates in such
Class based on their respective Percentage Interests. Except as otherwise
provided below, all such distributions with respect to each Class on each
Distribution Date shall be made to the Certificateholders of the respective
Class of record at the close of business on the related Record Date and shall be
made by wire transfer of immediately available funds to the account of any such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided the 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 Distribution Dates) and is the registered owner of Certificates
the aggregate initial Certificate Principal Balance of which is at least
$[5,000,000] or initial Certificate Notional Amount of which is at least
$[10,000,000,] or otherwise by check mailed to the address of such
Certificateholder as it appears in the Certificate Register. The final
distribution on each Certificate (determined without regard to any possible
future reimbursement of previously allocated Realized Losses or Additional Trust
Fund Expenses in respect of such Certificate) will be made in like manner, but
only upon presentation and surrender of such Certificate at the offices of the
Certificate Registrar or such other location specified in the notice to
Certificateholders of such final distribution. Notwithstanding anything herein
to the contrary, no distributions will be made with respect to a Certificate
that has previously been surrendered as contemplated by the preceding sentence
or, except as otherwise provided in Section 4.01(f), that should have been
surrendered as contemplated by the preceding sentence.
(d) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the related Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the related Certificate Owners that it represents. None of
the parties hereto shall have any responsibility therefor except as
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otherwise provided by this Agreement or applicable law. The Trustee and the
Depositor shall perform their respective obligations under the Letter of
Representations among the Depositor, the Trustee and the initial Depository, a
copy of which Letter of Representations is attached hereto as Exhibit C.
(e) The rights of the Certificateholders to receive distributions from the
proceeds of the Trust Fund in respect of their Certificates, and all rights and
interests of the Certificateholders in and to such distributions, shall be as
set forth in this Agreement. Neither the Holders of any Class of Certificates
nor any party hereto shall in any way be responsible or liable to the Holders of
any other Class of Certificates in respect of amounts properly previously
distributed on the Certificates.
(f) Except as otherwise provided in Section 9.01, whenever the Trustee
expects that the final distribution with respect to any Class of Certificates
will be made on the next Distribution Date (such final distribution to be
determined without regard to any possible future reimbursement of previously
allocated Realized Losses and Additional Trust Fund Expenses in respect of such
Class), the Trustee shall, no later than five days after the related
Determination Date, mail to each Holder of record on such date of such Class of
Certificates a notice to the effect that:
(i) the Trustee expects that the final distribution with respect to
such Class of Certificates will be made on such Distribution Date but only
upon presentation and surrender of such Certificates at the office of the
Certificate Registrar or at such other location therein specified, and
(ii) no interest shall accrue on such Certificates from and after such
Distribution Date.
Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held uninvested
in trust and credited to the account or accounts of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 4.01(f) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee, directly or through an agent, shall take such steps
to contact the remaining non-tendering Certificateholders concerning the
surrender of their Certificates as it shall deem appropriate. The costs and
expenses of holding such funds in trust and of contacting such
Certificateholders following the first anniversary of the delivery of such
second notice to the non-tendering Certificateholders shall be paid out of such
funds. No interest shall accrue or be payable to any former Holder on any amount
held in trust pursuant to this paragraph. If all of the Certificates
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shall not have been surrendered for cancellation by the second anniversary of
the delivery of the second notice, the Trustee shall distribute to the Class
R-III Certificateholders all unclaimed funds and other assets which remain
subject hereto.
(g) Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount that the Trustee
reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. If the Trustee
does withhold any amount from interest or original issue discount payments or
advances thereof to any Certificateholder pursuant to federal withholding
requirements, the Trustee shall indicate the amount withheld to such
Certificateholder.
(h) All distributions made in respect of each Class of Sequential Pay
Certificates on each Distribution Date pursuant to Section 4.01(a) or 4.01(b)
shall be deemed to have first been distributed from REMIC II to REMIC III in
respect of the REMIC II Regular Interest with the same alphabetical and
numerical designation as such Class of Certificates; all distributions made in
respect of the Class S Certificates on each Distribution Date pursuant to
Section 4.01(a) or 4.01(b), and allocable to Component S-A1A, shall be deemed to
have first been distributed from REMIC II to REMIC III in respect of REMIC II
Regular Interest A-1A; all distributions made in respect of the Class S
Certificates on each Distribution Date pursuant to Section 4.01(a) or 4.01(b),
and allocable to Component S-A1B, shall be deemed to have first been distributed
from REMIC II to REMIC III in respect of REMIC II Regular Interest A-1B; all
distributions made in respect of the Class S Certificates on each Distribution
Date pursuant to Section 4.01(a) or 4.01(b), and allocable to Component S-A2,
shall be deemed to have first been distributed from REMIC II to REMIC III in
respect of REMIC II Regular Interest A-2; all distributions made in respect of
the Class S Certificates on each Distribution Date pursuant to Section 4.01(a)
or 4.01(b), and allocable to Component S-A3, shall be deemed to have first been
distributed from REMIC II to REMIC III in respect of REMIC II Regular Interest
A-3; all distributions made in respect of the Class S Certificates on each
Distribution Date pursuant to Section 4.01(a) or 4.01(b), and allocable to
Component S-B1, shall be deemed to have first been distributed from REMIC II to
REMIC III in respect of REMIC II Regular Interest B-1; all distributions made in
respect of the Class S Certificates on each Distribution Date pursuant to
Section 4.01(a) or 4.01(b), and allocable to Component S-B2, shall be deemed to
have first been distributed from REMIC II to REMIC III in respect of REMIC II
Regular Interest B-2; all distributions made in respect of the Class S
Certificates on each Distribution Date pursuant to Section 4.01(a) or 4.01(b),
and allocable to Component S-B3, shall be deemed to have first been distributed
from REMIC II to REMIC III in respect of REMIC II Regular Interest B-3; all
distributions made in respect of the Class S Certificates on each Distribution
Date pursuant to Section 4.01(a) or 4.01(b), and allocable to Component S-B4,
shall be deemed to have first been distributed from REMIC II to REMIC III in
respect of REMIC II Regular Interest B-4; and all distributions made in respect
of the Class S Certificates on each Distribution Date pursuant to Section
4.01(a) or 4.01(b), and allocable to Component S-C, shall be deemed to have
first been distributed from REMIC II to REMIC III in respect of REMIC II Regular
Interest C. In each case, if such
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distribution on any such Class of Certificates was a distribution of interest,
of principal, of additional interest (in the form or Net Prepayment Premiums or
Net Yield Maintenance Premiums) or in reimbursement of any previously allocated
Realized Losses and Additional Trust Fund Expenses in respect of such Class of
Certificates, then the corresponding distribution deemed to be made on a REMIC
II Regular Interest pursuant to the preceding sentence shall be deemed to also
be a distribution of interest, of principal, of additional interest (in the form
of Net Prepayment Premiums or Net Yield Maintenance Premiums) or in
reimbursement of any previously allocated Realized Losses and Additional Trust
Fund Expenses, as the case may be, in respect of such REMIC II Regular Interest.
The actual distributions made by the Trustee on each Distribution Date in
respect of the REMIC III Certificates pursuant to Sections 4.01(a) and 4.01(b)
shall be deemed to have been so made from the amounts deemed distributed in
respect of the REMIC II Regular Interests on such Distribution Date pursuant to
this Section 4.01(h). Notwithstanding the deemed distributions on the REMIC II
Regular Interests described in this Section 4.01(h), actual distributions of
funds from the Distribution Account shall be made only in accordance with
Section 4.01(a) or 4.01(b), as applicable.
(i) All distributions: (i) of interest deemed to have been made in respect
of the REMIC II Regular Interests on each Distribution Date pursuant to Section
4.01(h) shall be deemed to have first been distributed as interest from REMIC I
to REMIC II in respect of the various REMIC I Regular Interests, pro rata in
accordance with the respective amounts of Uncertificated Distributable Interest
described in this clause (i)(i), in an amount equal to all Uncertificated
Distributable Interest in respect of each such REMIC I Regular Interest for such
Distribution Date and, to the extent not previously deemed paid, for all prior
Distribution Dates; (ii) of principal deemed to have been made in respect of the
REMIC II Regular Interests on each Distribution Date pursuant to Section 4.01(h)
shall be deemed to have first been distributed as principal from REMIC I to
REMIC II in respect of the various REMIC I Regular Interests, pro rata in
accordance with, and to the extent of, with respect to each such REMIC I Regular
Interest, an amount equal to the excess, if any, of the Uncertificated Principal
Balance of such REMIC I Regular Interest outstanding immediately prior to such
Distribution Date, over the Stated Principal Balance of the related Mortgage
Loan or REO Loan, as the case may be, that will be outstanding immediately
following such Distribution Date; (iii) in reimbursement of any previously
allocated Realized Losses and Additional Trust Fund Expenses deemed to have been
made in respect of the REMIC II Regular Interests on each Distribution Date
pursuant to Section 4.01(h) shall be deemed to have first been distributed as a
reimbursement from REMIC I to REMIC II in respect of the REMIC I Regular
Interests, pro rata in accordance with, and to the extent of, with respect to
each such REMIC I Regular Interest, all Realized Losses and Additional Trust
Fund Expenses previously deemed allocated to such REMIC I Regular Interest and
not previously reimbursed; and (iv) of additional interest (in the form of Net
Prepayment Premiums and Net Yield Maintenance Premiums) deemed to have been made
in respect of the REMIC II Regular Interests on such Distribution Date pursuant
to Section 4.01(h) shall be deemed to have first been distributed as additional
interest from REMIC I to REMIC II, in the case of each such Net Prepayment
Premium or Net Yield Maintenance Premium, in respect of the REMIC I Regular
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Interest created with respect to the Mortgage Loan as to which such Net
Prepayment Premium or Net Yield Maintenance Premium, as the case may be, was
received.
SECTION 4.02. Statements to Certificateholders; Certain Other Reports.
(a) Based on information provided to the Trustee by the Master Servicer and
the Special Servicer pursuant to Sections 4.02(b) and 4.02(c), the Trustee shall
prepare, or cause to be prepared, and mail on each Distribution Date, or as soon
thereafter as is practicable, to the Depositor, the Rating Agencies and each
Certificateholder a statement in respect of the distribution made on such
Distribution Date setting forth to the extent applicable to such Class the
information set forth in Exhibit E-1 hereto (the "Trustee Report"). The Trustee
will make available each month, to any interested party, the Trustee Report via
the Trustee's unrestricted electronic bulletin board. In addition, the Trustee
will also make such Mortgage Loan information as may be requested by the
Depositor available each month, to any Certificateholder, Certificate Owner, the
Rating Agencies, the parties hereto or any interested party who has obtained
approval from the Depositor, which approval has been furnished to the Trustee,
certain Mortgage Loan information via the Trustee's restricted electronic
bulletin board.
(b) By 1:00 p.m. New York City time one Business Day after the last day of
each Collection Period, the Master Servicer shall deliver to the Trustee and the
Special Servicer a report substantially in the form of Exhibit E-2 (the
"Determination Date Report"), reflecting information as of the close of business
on the last day of the Collection Period, in a mutually agreeable electronic
format. The Determination Date Report and any written information supplemental
thereto shall include such information with respect to the Mortgage Loans that
is required by the Trustee for purposes of making the calculations and reports
referred to in Section 4.01, this Section 4.02, Section 4.05 and otherwise in
this Agreement, as set forth in written specifications or guidelines issued by
the Trustee from time to time. Such information may be delivered by the Master
Servicer to the Trustee by telecopy or in such electronic or other form as may
be reasonably acceptable to the Trustee. The Special Servicer shall from time to
time (and, in any event, as may be reasonably required by the Master Servicer)
provide the Master Servicer with such information in its possession regarding
the Specially Serviced Mortgage Loans and REO Properties as may be necessary for
the Master Servicer to prepare each Determination Date Report and any
supplemental information to be provided by the Master Servicer to the Trustee.
(c) By the Determination Date in each month, the Special Servicer shall
deliver to the Master Servicer and the Trustee a report substantially in the
form of Exhibit E-3 (the "Special Servicer Report") reflecting information as of
the close of business on the last day of the Collection Period. The information
contained in such Special Servicer Report shall be incorporated by the Master
Servicer into the Trustee Report to be prepared and delivered by the Master
Servicer in the following month pursuant to the next succeeding sentence hereof.
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Not later than the 30th day following the end of each calendar quarter,
commencing in __________, 199__, the Special Servicer shall deliver to the
Trustee and the Master Servicer a report in the form of Exhibit E-4 (an
"Operating Statement Analysis") with respect to all operating statements and
other financial information collected or otherwise obtained by the Special
Servicer pursuant to Section 3.12(b) during such calendar quarter (together with
copies of the operating statements and other financial information on which it
is based). The Trustee shall forward to Certificateholders copies of all
Operating Statement Analyses received by it, in each case on the Distribution
Date immediately following the receipt thereof.
(d) Within a reasonable period of time after the end of each calendar year,
the Trustee shall prepare, or cause to be prepared, and mail to each Person who
at any time during the calendar year was a Certificateholder (i) a statement
containing the aggregate information set forth on page 1 of Exhibit E-1 hereto
for such calendar year or applicable portion thereof during which such person
was a Certificateholder and (ii) such other customary information as the Trustee
deems necessary or desirable for Certificateholders to prepare their federal,
state and local income tax returns including, without limitation, the amount of
original issue discount accrued on the Certificates, if applicable, which
information described in subclause (ii) of this clause (d) shall be provided to
the Trustee by the REMIC Administrator. The obligations of the Trustee in the
immediately preceding sentence shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Trustee pursuant to any requirements of the Code. As soon as practicable
following the request of any Certificateholder in writing, the Trustee shall
furnish to such Certificateholder such information regarding the Mortgage Loans
and the Mortgaged Properties as such holder may reasonably request and, to the
extent such information would be required to be included in a report described
in subsection (a), (b) or (c), as has been furnished to the Trustee. The Master
Servicer, the Special Servicer and the Custodian shall promptly provide to the
Depositor, the REMIC Administrator and the Trustee such information regarding
the Mortgage Loans and the Mortgaged Properties as such party may request and,
to the extent such information would be required to be included in a report
described in subsection (a), (b) or (c), as has been furnished to the Master
Servicer, the Special Servicer or the Custodian.
(e) At the same time that the Trustee forwards the Trustee Report for any
Distribution Date to the Rating Agencies pursuant to Section 4.02(a), the
Trustee shall also forward to each Rating Agency a written hard copy of the
Special Servicer Report related to such Distribution Date and any Operating
Statement Analysis distributed to Certificateholders on such Distribution Date.
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SECTION 4.03. P&I Advances; Advances relating to the Master Servicer
Remittance Amount.
(a) On or before 1:00 p.m., New York City time, on each P&I Advance Date,
the Master Servicer shall, subject to Section 4.03(c) below, either (i) remit
from its own funds to the Trustee for deposit into the Distribution Account an
amount equal to the aggregate amount of P&I Advances, if any, to be made in
respect of the related Distribution Date, (ii) apply amounts held in the
Collection Account for future distribution to Certificateholders in subsequent
months in discharge of any such obligation to make P&I Advances, or (iii) make
P&I Advances in the form of any combination of (i) and (ii) aggregating the
total amount of P&I Advances to be made. Any amounts held in the Collection
Account for future distribution and so used to make P&I Advances shall be
appropriately reflected in the Master Servicer's records and replaced by the
Master Servicer by deposit in the Collection Account on or before the next
succeeding Determination Date (to the extent not previously replaced through the
deposit of Late Collections of the delinquent principal and interest in respect
of which such P&I Advances were made). If, as of 3:00 p.m., New York City time,
on any P&I Advance Date, the Master Servicer shall not have made any P&I Advance
required to be made on such date pursuant to this Section 4.03(a) (and shall not
have delivered to the Trustee the Officer's Certificate and documentation
related to a determination of nonrecoverability of a P&I Advance pursuant to
Section 4.03(c)) or shall not have remitted any portion of the Master Servicer
Remittance Amount required to be remitted on such date, then the Trustee shall
provide notice of such failure to a Servicing Officer of the Master Servicer by
facsimile transmission sent to telecopy no. ____________ (or such alternative
number provided by the Master Servicer to the Trustee in writing) and notice by
telephone to the Master Servicer at telephone no. ____________ (or such
alternative number provided by the Master Servicer to the Trustee in writing) as
soon as possible, but in any event before 4:30 p.m., New York City time, on such
P&I Advance Date. If after such notice the Trustee does not receive the full
amount of such P&I Advances and/or Master Servicer Remittance Amount by 10:00
a.m., New York City time, on the Business Day immediately preceding the related
Distribution Date, then (i) the Trustee shall make the portion of such P&I
Advances and advance the portion of such Master Servicer Remittance Amount that
was required to be, but was not, made or remitted, as the case may be, by the
Master Servicer on or prior to such Distribution Date and (ii) such failure
shall constitute an Event of Default on the part of the Master Servicer. The
Trustee shall be entitled to reimbursement of the amount of any Master Servicer
Remittance Amount advanced thereby (together with any interest accrued thereon
at the Reimbursement Rate) from general collections on the Mortgage Loans and
REO Properties on deposit in the Collection Account, and the defaulting Master
Servicer shall indemnify the Trust Fund for any such interest so paid to the
Trustee out of the Collection Account.
(b) The aggregate amount of P&I Advances to be made by the Master Servicer
in respect of any Distribution Date, subject to Section 4.03(c) below, shall
equal the aggregate of all Scheduled Payments (other than Balloon Payments) and
any Assumed Scheduled Payments, in each case net of related Master Servicing
Fees and Workout Fees, due or deemed due, as the case may be, in respect of the
Mortgage Loans (including, without limitation, Balloon Mortgage
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Loans delinquent as to their respective Balloon Payments) and any REO Loans on
their respective Due Dates during the related Collection Period, in each case to
the extent such amount was not paid by or on behalf of the related Mortgagor or
otherwise collected as of the close of business on the related Determination
Date; provided that, if the Monthly Payment on any Mortgage Loan has been
reduced in connection with a bankruptcy or similar proceeding involving the
related Mortgagor or a modification, waiver or amendment granted or agreed to by
the Special Servicer pursuant to Section 3.20, or if the final maturity on any
Mortgage Loan shall be extended in connection with a bankruptcy or similar
proceeding involving the related Mortgagor or a modification, waiver or
amendment granted or agreed to by the Special Servicer pursuant to Section 3.20,
and the Monthly Payment due and owing during the extension period is less than
the related Assumed Scheduled Payment, then the Master Servicer shall, as to
such Mortgage Loan only, advance only the amount of the Monthly Payment due and
owing after taking into account such reduction, net of related Master Servicing
Fees and Workout Fees, in the event of subsequent delinquencies thereon; and
provided further that, if an Appraisal Reduction Amount exists with respect to
any Required Appraisal Loan, then, in the event of subsequent delinquencies
thereon, the interest portion of the P&I Advance in respect of such Required
Appraisal Loan for the related Distribution Date shall be reduced (it being
herein acknowledged that there shall be no reduction in the principal portion of
such P&I Advance) to equal the product of (i) the amount of the interest portion
of such P&I Advance for such Required Appraisal Loan for such Distribution Date
without regard to this proviso, multiplied by (ii) a fraction, expressed as a
percentage, the numerator of which is equal to the Stated Principal Balance of
such Required Appraisal Loan immediately prior to such Distribution Date, net of
the related Appraisal Reduction Amount, if any, and the denominator of which is
equal to the Stated Principal Balance of such Required Appraisal Loan
immediately prior to such Distribution Date.
(c) Notwithstanding anything herein to the contrary, no P&I Advance shall
be required to be made hereunder if such P&I Advance would, if made, constitute
a Nonrecoverable P&I Advance. The determination by the Master Servicer (or, if
applicable, the Trustee) that it has made a Nonrecoverable P&I Advance or that
any proposed P&I Advance, if made, would constitute a Nonrecoverable P&I
Advance, shall be evidenced by an Officer's Certificate delivered to the
Depositor and, if made by the Master Servicer, to the Trustee on or before the
related P&I Advance Date, setting forth the basis for such determination,
together with a copy of an Appraisal of the related Mortgaged Property or REO
Property performed within the twelve months preceding such determination by a
Qualified Appraiser, and further accompanied by any other information, including
engineers' reports, environmental surveys or similar reports, that the Person
making such determination may have obtained and that support such determination.
Notwithstanding the foregoing, the Trustee shall be entitled to conclusively
rely on any nonrecoverability determination made by the Master Servicer with
respect to a particular P&I Advance.
(d) The Master Servicer and the Trustee shall each be entitled to receive
interest at the Reimbursement Rate in effect from time to time, accrued on the
amount of each P&I Advance made thereby (out of its own funds) for so long as
such P&I Advance is outstanding,
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such interest to be payable: first, out of Penalty Charges collected on the
Mortgage Loan or REO Loan as to which such Advance relates; and, then, to the
extent that such Penalty Charges are insufficient, and only after such Advance
has been reimbursed pursuant to this Agreement, out of general collections on
the Mortgage Loans and REO Properties on deposit in the Collection Account. The
Master Servicer shall reimburse itself or the Trustee, as applicable, for any
outstanding P&I Advance made thereby as soon as practicable after funds
available for such purpose are deposited in the Collection Account.
SECTION 4.04. Allocation of Realized Losses and Additional Trust Fund
Expenses.
(a) On each Distribution Date, following the distributions to be made on
such date pursuant to Sections 4.01(a) and 4.01(b), the Trustee shall determine
the amount, if any, by which (i) the then aggregate Certificate Principal
Balance of the Sequential Pay Certificates, exceeds (ii) the aggregate Stated
Principal Balance of the Mortgage Pool that will be outstanding immediately
following such Distribution Date. If such excess does exist, then the Class
Principal Balances of the respective Classes of Sequential Pay Certificates
shall be reduced sequentially, in reverse order of Payment Priority, until the
amounts described in clauses (i) and (ii) of the preceding sentence are equal.
Such reductions shall be effected such that no Class of Sequential Pay
Certificates shall have its Class Principal Balance reduced until the Class
Principal Balance of each other Class of Sequential Pay Certificates, if any,
with a lower Payment Priority is reduced to zero, and any such reductions made
to the Class Principal Balances of the Class A-1A Certificates and the Class
A-1B Certificates shall be made on a pro rata basis in accordance with relative
sizes of such Class Principal Balances. Such reductions shall be deemed to be an
allocation of the Realized Losses and Additional Trust Fund Expenses.
(b) On each Distribution Date, following the deemed distributions to be
made on such date pursuant to Section 4.01(h), the Trustee shall determine the
amount, if any, by which (i) the then aggregate Uncertificated Principal Balance
of the REMIC II Regular Interests, exceeds (ii) the aggregate Stated Principal
Balance of the Mortgage Pool that will be outstanding immediately following such
Distribution Date. If such excess does exist, then the respective Uncertificated
Principal Balances of REMIC II Regular Interest C, REMIC II Regular Interest B-
4, REMIC II Regular Interest B-3, REMIC II Regular Interest B-2, REMIC II
Regular Interest B-1, REMIC II Regular Interest A-3 and REMIC II Regular
Interest A-2 shall be reduced, sequentially in that order, in each case until
the Uncertificated Principal Balance of the particular REMIC II Regular Interest
is reduced to zero or the amounts described in clauses (i) and (ii) of the
preceding sentence are equal. If, after the foregoing reductions, the amount
described in clause (i) of the second preceding sentence still exceeds the
amount described in clause (ii) of such sentence, then the respective
Uncertificated Principal Balances of REMIC II Regular Interest A-1A and REMIC II
Regular Interest A-1B shall be reduced on a pro rata basis in accordance with
relative sizes of such Uncertificated Principal Balances. All such reductions
shall be deemed to be an allocation of Realized Losses and Additional Trust Fund
Expenses.
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(c) On each Distribution Date, following the deemed distributions to be
made in respect of the REMIC I Regular Interests pursuant to Section 4.01(i),
the Uncertificated Principal Balance of each REMIC I Regular Interest (after
taking account of such deemed distributions) shall be reduced to equal the
Stated Principal Balance of the related Mortgage Loan or REO Loan, as the case
may be, that will be outstanding immediately following such Distribution Date.
Such reductions shall be deemed to be an allocation of Realized Losses and
Additional Trust Fund Expenses.
SECTION 4.05. Calculations.
The Trustee shall, provided it receives the necessary information from the
Master Servicer, be responsible for performing all calculations necessary in
connection with the actual and deemed distributions to be made pursuant to
Section 4.01, the preparation of the reports to Certificateholders pursuant to
Section 4.02 and the actual and deemed allocations of Realized Losses and
Additional Trust Fund Expenses to be made pursuant to Section 4.04. The Trustee
shall calculate the Available Distribution Amount for each Distribution Date and
shall allocate such amount among Certificateholders in accordance with this
Agreement. Absent actual knowledge of an error therein, the Trustee shall have
no obligation to recompute, recalculate or verify any information provided to it
by the Master Servicer. The calculations by the Trustee contemplated by this
Section 4.05 shall, in the absence of manifest error, be presumptively deemed to
be correct for all purposes hereunder.
SECTION 4.06. Use of Agents.
The Master Servicer or the Trustee may at its own expense utilize agents or
attorneys-in-fact in performing any of its obligations under this Article IV
(except the obligation to make P&I Advances), but no such utilization shall
relieve the Master Servicer or the Trustee from any of such obligations, and the
Master Servicer or the Trustee, as applicable, shall remain responsible for all
acts and omissions of any such agent or attorney-in-fact. The Master Servicer or
the Trustee shall have all the limitations upon liability and all the
indemnities for the actions and omissions of any such agent or attorney-in-fact
that it has for its own actions hereunder pursuant to Article VI or Article VIII
hereof, as applicable, and any such agent or attorney-in-fact shall have the
benefit of all the limitations upon liability, if any, and all the indemnities
provided to the Master Servicer under Section 6.03 or to the Trustee under
Sections 8.01, 8.02 and 8.05, as applicable.
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates will be substantially in the respective forms attached
hereto as Exhibits A-1 through A-13; provided that any of the 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 Agreement, as may be required to
comply with any law or with rules or regulations pursuant thereto, or with the
rules of any securities market in which the Certificates are admitted to
trading, or to conform to general usage. The Certificates will be issuable in
registered form only; provided, however, that in accordance with Section 5.03
beneficial ownership interests in the Book-Entry Certificates shall initially be
held and transferred through the book-entry facilities of the Depository. The
Class S Certificates will be issuable only in denominations corresponding to
initial Certificate Notional Amounts as of the Closing Date of not less than
$[______] and in any whole dollar denomination in excess thereof. The Class A-1A
Certificates and the Class A-1B Certificates will be issuable only in
denominations corresponding to initial Certificate Principal Balances as of the
Closing Date of not less than $[_______] and in any whole dollar denomination in
excess thereof. The Class A-2 Certificates, the Class A-3 Certificates, the
Class B-1 Certificates, the Class B-2 Certificates, the Class B-3 Certificates,
the Class B-4 Certificates and the Class C Certificates will be issuable only in
denominations corresponding to initial Certificate Principal Balances as of the
Closing Date of not less than $[_______] and in any whole dollar denomination in
excess thereof. Each Class of Residual Certificates will be issuable only in
denominations representing Percentage Interests of not less than ____%.
(b) The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee in its capacity as trustee hereunder by an authorized
officer. Certificates bearing the manual or facsimile signatures of individuals
who were at any time the authorized officers of the Trustee shall be entitled to
all benefits under this Agreement, subject to the following sentence,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
however, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein executed by the
Certificate Registrar by manual signature, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
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SECTION 5.02. Registration of Transfer and Exchange of Certificates.
(a) At all times during the term of this Agreement, there shall be
maintained at the office of the Certificate Registrar a Certificate Register in
which, subject to such reasonable regulations as the Certificate Registrar may
prescribe, the Certificate Registrar shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.
The Trustee is hereby initially appointed (and hereby agrees to act in
accordance with the terms hereof) as Certificate Registrar for the purpose of
registering Certificates and transfers and exchanges of Certificates as herein
provided. The Trustee may appoint, by a written instrument delivered to the
other parties hereto, any other bank or trust company to act as Certificate
Registrar under such conditions as the Trustee may prescribe, provided that the
Trustee shall not be relieved of any of its duties or responsibilities hereunder
as Certificate Registrar by reason of such appointment. If the 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 Master Servicer, the Special Servicer and the REMIC Administrator
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. Upon written request of any Certificateholder made for purposes of
communicating with other Certificateholders with respect to their rights under
this Agreement, the Certificate Registrar shall promptly furnish such
Certificateholder with a list of the other Certificateholders of record
identified in the Certificate Register at the time of the request. Every
Certificateholder, by receiving such access, agrees with the Certificate
Registrar that the Certificate Registrar will not be held accountable in any way
by reason of the disclosure of any information as to the names and addresses of
any Certificateholder regardless of the source from which such information was
derived.
(b) No transfer, sale, pledge or other disposition of any Private
Certificate 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 Private Certificate 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 Depositor or one of its
Affiliates), then the Certificate Registrar shall refuse to register such
transfer unless it receives (and upon receipt, may conclusively rely upon)
either: (i) a certificate from the Certificateholder desiring to effect such
transfer substantially in the form attached as Exhibit F-1A hereto; or (ii) a
certificate from the Certificateholder desiring to effect such transfer
substantially in the form attached as Exhibit F-1B hereto and a certificate from
such Certificateholder's prospective Transferee substantially in the form
attached either as Exhibit F-2A hereto or as Exhibit F-2B hereto; or (iii) an
Opinion of Counsel satisfactory to the 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 Fund or of the Depositor, the
Master Servicer, the Special Servicer, the REMIC Administrator, the Trustee or
the Certificate Registrar in their respective capacities as such), together with
the written certification(s) as to the facts surrounding
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such transfer from the Certificateholder desiring to effect such transfer and/or
such Certificateholder's prospective Transferee on which such Opinion of Counsel
is based. None of the Depositor, the Trustee or the Certificate Registrar is
obligated to register or qualify any Class of Private Certificates under the
Securities Act or any other securities law or to take any action not otherwise
required under this Agreement to permit the transfer of any Private Certificate
or interest therein without registration or qualification. Any Holder of a
Private Certificate desiring to effect a transfer of such Private Certificate or
interest therein shall, and does hereby agree to, indemnify, the Depositor, the
Underwriter, the Trustee, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Certificate 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.
(c) No transfer of a Subordinated 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 Certificate or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan, unless: (i) the purchase and holding of such Certificate or
interest therein is exempt from the prohibited transaction provisions of Section
406 of ERISA and Section 4975 of the Code under Sections I and III of Prohibited
Transaction Class Exemption 95-60; or (ii) in the case of a Subordinated
Certificate that is a Definitive Certificate, the prospective Transferee
provides the Certificate Registrar with a certification of facts and an Opinion
of Counsel which establish to the satisfaction of the Trustee that such transfer
will not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or result in the imposition of an excise tax under Section 4975 of the Code
or subject the Trustee, the Master Servicer or the Special Servicer to any
obligation in addition to those undertaken in this Agreement. Each Person who
acquires any Subordinated Certificate or interest therein (unless it shall have
delivered to the Certificate Registrar the certification of facts and Opinion of
Counsel referred to in clause (ii) the preceding sentence) will be required to
deliver to the Certificate Registrar (or, in the case of an interest in a
Subordinated Certificate that constitutes a Book-Entry Certificate, to the
Certificate Owner that is transferring such interest) a certification to the
effect that: (i) it is neither a Plan nor any Person who is directly or
indirectly purchasing such Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) that the
purchase and holding of such Certificate or interest therein by such person is
exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under Sections I and III of Prohibited Transaction
Class Exemption 95- 60. It is hereby acknowledged that the forms of
certification attached hereto as Exhibit G-1 (in the case of Subordinated
Certificates that are Definitive Certificates) and G-2 (in the case of ownership
interests in Subordinated Certificates that are Book-Entry Certificates) are
acceptable for purposes of the preceding sentence.
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(d) (i) Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably authorized the Trustee under clause (ii)(A) below to deliver
payments to a Person other than such Person and to have irrevocably authorized
the Trustee under clause (ii)(B) below to negotiate the terms of any mandatory
sale and to execute all instruments of Transfer and to do all other things
necessary in connection with any such sale. The rights of each Person acquiring
any Ownership Interest in a Residual Certificate are expressly subject to the
following provisions:
(A) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the REMIC Administrator and the Trustee of any change or impending
change in its status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any Ownership Interest
in a Residual Certificate, the Certificate Registrar shall require delivery
to it, and shall not register the Transfer of any Residual Certificate
until its receipt, of an affidavit and agreement substantially in the form
attached hereto as Exhibit H-1 (a "Transfer Affidavit and Agreement"), from
the proposed Transferee, and upon which the Certificate Registrar may, in
the absence of actual knowledge by a Responsible Officer of either the
Trustee or the Certificate Registrar to the contrary, conclusively rely,
representing and warranting, among other things, that such Transferee is a
Permitted Transferee, that it is not acquiring its Ownership Interest in
the Residual Certificate that is the subject of the proposed Transfer as a
nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in a
Residual Certificate it will endeavor to remain a Permitted Transferee, and
that it has reviewed the provisions of this Section 5.02(d) and agrees to
be bound by them.
(C) Notwithstanding the delivery of a Transfer Affidavit and Agreement
by a proposed Transferee under clause (B) above, if a Responsible Officer
of either the Trustee or the Certificate Registrar has actual knowledge
that the proposed Transferee is not a Permitted Transferee, no Transfer of
an Ownership Interest in a Residual Certificate to such proposed Transferee
shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall agree (1) to require a Transfer Affidavit and
Agreement from any prospective Transferee to whom such Person attempts to
transfer its Ownership Interest in such Residual Certificate and (2) not to
transfer its Ownership Interest in such Residual Certificate unless it
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provides to the Certificate Registrar a certificate substantially in the
form attached hereto as Exhibit H-2 stating that, among other things, it
has no actual knowledge that such prospective Transferee is not a Permitted
Transferee.
(E) Each Person holding or acquiring an Ownership Interest in a
Residual Certificate, by purchasing such Ownership Interest, agrees to give
the REMIC Administrator and the Trustee written notice that it is a
"pass-through interest holder" within the meaning of temporary Treasury
regulation Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an
Ownership Interest in a Residual Certificate, if it is, or is holding an
Ownership Interest in a Residual Certificate on behalf of, a "pass-through
interest holder".
(ii) (A) If any purported Transferee shall become a Holder of a Residual
Certificate in violation of the provisions of this Section 5.02(d), then the
last preceding Holder of such Residual Certificate that was in compliance with
the provisions of this Section 5.02(d) shall be restored, to the extent
permitted by law, to all rights as Holder thereof retroactive to the date of
registration of such Transfer of such Residual Certificate. None of the Trustee,
the Master Servicer, the Special Servicer, the REMIC Administrator or the
Certificate Registrar shall be under any liability to any Person for any
registration of Transfer of a Residual Certificate that is in fact not permitted
by this Section 5.02(d) or for making any payments due on such Certificate to
the Holder thereof or for taking any other action with respect to such Holder
under the provisions of this Agreement.
(B) If any purported Transferee shall become a Holder of a Residual
Certificate in violation of the restrictions in this Section 5.02(d), then, to
the extent that the retroactive restoration of the rights of the Holder of such
Residual Certificate as described in clause (ii)(A) above shall be invalid,
illegal or unenforceable, the Trustee shall have the right but not the
obligation, to cause the transfer of such Residual Certificate to a Permitted
Transferee selected by the Trustee on such terms as the Trustee may choose, and
the Trustee shall not be liable to any Person having an Ownership Interest in a
Residual Certificate as a result of its exercise of such discretion. Such
purported Transferee shall promptly endorse and deliver such Residual
Certificate in accordance with the instructions of the Trustee. Such Permitted
Transferee may be the Trustee itself or any Affiliate of the Trustee.
(iii) The REMIC Administrator shall make available to the Internal Revenue
Service and to those Persons specified by the REMIC Provisions all information
furnished to it by the other parties hereto necessary to compute any tax imposed
(A) as a result of the Transfer of an Ownership Interest in a Residual
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Certificate to any Person who is a Disqualified Organization, including the
information described in Treasury regulations sections 1.860D-1(b)(5) and
1.860E-2(a)(5) with respect to the "excess inclusions" of such Residual
Certificate and (B) as a result of any regulated investment company, real estate
investment trust, common trust fund, partnership, trust, estate or organization
described in Section 1381 of the Code that holds an Ownership Interest in a
Residual Certificate having as among its record holders at any time any Person
which is a Disqualified Organization, and each of the other parties hereto shall
furnish to the REMIC Administrator all information in its possession necessary
for the REMIC Administrator to discharge such obligation. The Person holding
such Ownership Interest shall be responsible for the reasonable compensation of
the REMIC Administrator for providing such information.
(iv) The provisions of this Section 5.02(d) set forth prior to this clause
(iv) may be modified, added to or eliminated, provided that there shall have
been delivered to the Trustee and the REMIC Administrator the following:
(A) written confirmation from each Rating Agency to the effect that
the modification of, addition to or elimination of such provisions will not
cause such Rating Agency to qualify, downgrade or withdraw its then-current
rating of any Class of Certificates; and
(B) an Opinion of Counsel, in form and substance satisfactory to the
Trustee and the REMIC Administrator, obtained at the expense of the party
seeking such modification of, addition to or elimination of such provisions
(but in no event at the expense of the Trustee, the REMIC Administrator or
the Trust Fund), to the effect that doing so will not cause any of REMIC I,
REMIC II or REMIC III to (x) cease to qualify as a REMIC or (y) be subject
to an entity-level tax caused by the Transfer of any Residual Certificate
to a Person which is not a Permitted Transferee, or cause a Person other
than the prospective Transferee to be subject to a REMIC-related tax caused
by the Transfer of a Residual Certificate to a Person that is not a
Permitted Transferee.
(e) If a Person is acquiring any Subordinated Certificate or interest
therein as a fiduciary or agent for one or more accounts, such Person shall be
required to deliver to the Certificate Registrar (or, in the case of an interest
in a Subordinated Certificate that constitutes a Book-Entry Certificate, to the
Certificate Owner that is transferring such interest) a certification to the
effect that, and such other evidence as may be reasonably required by the
Trustee (or such Certificate 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 (b),
(c) and (d), as applicable, of this Section 5.02.
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(f) Subject to the preceding provisions of this Section 5.02, upon
surrender for registration of transfer of any Certificate at the offices of the
Certificate Registrar maintained for such purpose, the Trustee shall execute and
the Certificate Registrar shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class of a like aggregate Percentage Interest.
(g) At the option of any Holder, its Certificates may be exchanged for
other Certificates of authorized denominations of the same Class of a like
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at the offices of the Certificate Registrar maintained for such
purpose. Whenever any Certificates are so surrendered for exchange, the Trustee
shall execute and the Certificate Registrar shall authenticate and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive.
(h) Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Certificate Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing.
(i) No service charge shall be imposed for any transfer or exchange of
Certificates, but the Trustee or the Certificate 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 Certificates.
(j) All Certificates surrendered for transfer and exchange shall be
physically canceled by the Certificate Registrar, and the Certificate Registrar
shall dispose of such canceled Certificates in accordance with its standard
procedures.
(k) The Certificate Registrar or the Trustee shall provide to each of the
other parties hereto, upon reasonable written request and at the expense of the
requesting party, an updated copy of the Certificate Register.
SECTION 5.03. Book-Entry Certificates.
(a) The Class S, Class A and Class B-1 Certificates shall, in the case of
each Class thereof, initially be issued as one or more Certificates registered
in the name of the Depository or its nominee and, except as provided in Section
5.03(c), transfer of such Certificates may not be registered by the Certificate
Registrar unless such transfer is to a successor Depository that agrees to hold
such Certificates for the respective Certificate Owners with Ownership Interests
therein. Such Certificate Owners shall hold and, subject to Section 5.02(c),
transfer their respective Ownership Interests in and to such Certificates
through the book-entry facilities of the Depository and, except as provided in
Section 5.03(c) below, shall not be entitled to fully registered, physical
Certificates ("Definitive Certificates") in respect of such Ownership Interests.
All transfers by Certificate Owners of their respective Ownership Interests in
the Book-Entry
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Certificates shall be made in accordance with the procedures established by the
Depository Participant or brokerage firm representing each such Certificate
Owner. Each Depository Participant shall only transfer the Ownership Interests
in the Book-Entry Certificates of Certificate Owners it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures.
(b) The Depositor, the Master Servicer, the Special Servicer, the REMIC
Administrator, the Trustee and the Certificate Registrar may for all purposes,
including, without limitation, the making of payments due on the Book-Entry
Certificates, deal with the Depository as the authorized representative of the
Certificate Owners with respect to such Certificates for the purposes of
exercising the rights of Certificateholders hereunder. The rights of Certificate
Owners with respect to the Book-Entry Certificates shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of the Book-Entry Certificates with respect to any particular matter
shall not be deemed inconsistent if they are made with respect to different
Certificate Owners. The Trustee may establish a reasonable record date in
connection with solicitations of consents from or voting by Certificateholders
and shall give notice to the Depository of such record date.
(c) If (i)(A) the Depositor advises the Trustee and the Certificate
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
Certificates, and (B) the Depositor is unable to locate a qualified successor,
or (ii) the Depositor at its option advises the Trustee and the Certificate
Registrar in writing that it elects to terminate the book-entry system through
the Depository with respect to any Class of Book-Entry Certificates (or any
portion of any Class thereof), the Certificate Registrar shall notify all
affected Certificate Owners, through the Depository, of the occurrence of any
such event and of the availability of Definitive Certificates to such
Certificate Owners requesting the same. Upon surrender to the Certificate
Registrar of any Class of Book- Entry Certificates (or any portion of any Class
thereof) by the Depository, accompanied by registration instructions from the
Depository for registration of transfer, the Trustee shall execute, and the
Certificate Registrar shall authenticate and deliver, the Definitive
Certificates in respect of such Class (or portion thereof) to the Certificate
Owners identified in such instructions. None of the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator, the Trustee or the
Certificate Registrar shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates for purposes of
evidencing ownership of any Book-Entry Certificates, the registered holders of
such Definitive Certificates shall be recognized as Certificateholders hereunder
and, accordingly, shall be entitled directly to receive payments on, to exercise
Voting Rights with respect to, and to transfer and exchange such Definitive
Certificates.
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SECTION 5.04. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (ii) there is delivered
to the Trustee and the Certificate Registrar such security or indemnity as may
be reasonably required by them to save each of them harmless, then, in the
absence of actual notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the 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
Certificate, a new Certificate of the same Class and like Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Trustee and the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) connected therewith. Any replacement Certificate issued
pursuant to this Section shall constitute complete and indefeasible evidence of
ownership in the applicable REMIC created hereunder, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
SECTION 5.05. Persons Deemed Owners.
Prior to due presentment for registration of transfer, the Depositor, the
Master Servicer, the Special Servicer, the REMIC Administrator, the Trustee, the
Certificate Registrar and any agent of any of them may treat the person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 4.01 and for all other
purposes whatsoever, and none of the Depositor, the Master Servicer, the Special
Servicer, the REMIC Administrator, the Trustee, the Certificate Registrar or any
agent of any of them shall be affected by notice to the contrary.
SECTION 5.06 Certification by Certificate Owners.
(a) Each Certificate Owner is hereby deemed by virtue of its acquisition of
an Ownership Interest in any Book-Entry Certificates representing any Class of
Subordinated Certificates to agree to comply with the transfer requirements of
Section 5.02(c).
(b) To the extent that under the terms of this Agreement, it is necessary
to determine whether any Person is a Certificate Owner, the Trustee shall make
such determination based on a certificate of such Person which shall specify, in
reasonable detail satisfactory to the Trustee, the Class and Certificate
Principal Balance of the Book-Entry Certificate beneficially owned, the value of
such Person's interest in such Certificate and any intermediaries through which
such Person's Ownership Interest in such Book-Entry Certificate is held;
provided, however, that the Trustee shall not knowingly recognize such Person as
a Certificate Owner if such Person, to the knowledge of a Responsible Officer of
the Trustee, acquired its Ownership Interest in a Book-Entry Certificate
representing any Class of Subordinated Certificates in
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violation of Section 5.02(c), or if such Person's certification that it is a
Certificate Owner is in direct conflict with information obtained by the Trustee
from the Depository, Depository Participants, and/or indirect participating
brokerage firms for which a Depository Participant acts as agent, with respect
to the identity of a Certificate Owner. The Trustee shall exercise its
reasonable discretion in making any determination under this Section 5.06(b) and
shall afford any Person providing information with respect to its beneficial
ownership of any Certificates an opportunity to resolve any discrepancies
between the information provided and any other information available to the
Trustee.
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ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER,
THE SPECIAL SERVICER AND THE REMIC ADMINISTRATOR
SECTION 6.01. Liability of the Depositor, the Master Servicer, the Special
Servicer and the REMIC Administrator.
The Depositor, the Master Servicer, the Special Servicer and the REMIC
Administrator shall be liable in accordance herewith only to the extent of the
respective obligations specifically imposed upon and undertaken by the
Depositor, the Master Servicer, the Special Servicer and the REMIC Administrator
herein.
SECTION 6.02. Merger, Consolidation or Conversion of the Depositor, the
Master Servicer, the Special Servicer or the REMIC
Administrator.
Subject to the following paragraph, the Depositor, the Master Servicer, the
Special Servicer and the REMIC Administrator shall each keep in full effect its
existence, rights and franchises as a corporation, bank, trust company,
partnership or association under the laws of the jurisdiction wherein it was
organized, and each will obtain and preserve its qualification to do business as
a foreign corporation, bank, trust company, partnership or association in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, the Certificates or any of the
Mortgage Loans and to perform its respective duties under this Agreement.
The Depositor, the Master Servicer, the Special Servicer or the REMIC
Administrator 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 Depositor, the Master
Servicer, the Special Servicer or the REMIC Administrator shall be a party, or
any Person succeeding to the business of the Depositor, the Master Servicer, the
Special Servicer or the REMIC Administrator, shall be the successor of the
Depositor, the Master Servicer, the Special Servicer or the REMIC Administrator,
as the case may be, 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 no successor or surviving
Person shall succeed to the rights of the Master Servicer or the Special
Servicer unless such succession will not result in any withdrawal, downgrade or
qualification of the rating then assigned by either Rating Agency to any Class
of Certificates (as confirmed in writing by each Rating Agency).
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SECTION 6.03. Limitation on Liability of the Depositor, the Master
Servicer, the Special Servicer and the REMIC Administrator.
None of the Depositor, the Master Servicer, the Special Servicer or the
REMIC Administrator shall be under any liability to the Trust Fund, the Trustee
or the Certificateholders for any action taken, or not taken, in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Depositor, the Master Servicer, the Special
Servicer or the REMIC Administrator against any liability to the Trust Fund, the
Trustee or the Certificateholders for the breach of a representation, warranty
or covenant made herein, or against any expense or liability specifically
required to be borne by such party without right of reimbursement pursuant to
the terms hereof, or against any liability which would otherwise be imposed by
reason of misfeasance, bad faith or negligence in the performance of, or
reckless disregard of, obligations or duties hereunder. The Depositor, the
Master Servicer, the Special Servicer, the REMIC Administrator and any director,
officer, employee or agent of any such party 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 Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator and any director,
officer, employee or agent of any such party shall be indemnified and held
harmless by the Trust Fund against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense: (i) specifically required to be borne
thereby pursuant to the terms hereof or otherwise incidental to the performance
of obligations and duties hereunder, including, without limitation, in the case
of the Master Servicer or Special Servicer, the prosecution of an enforcement
action in respect of any specific Mortgage Loan or Mortgage Loans (except as any
such loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement); or (ii) incurred in connection with any legal action against such
party resulting from any breach of a representation, warranty or covenant made
herein, any misfeasance, bad faith or negligence in the performance of, or
reckless disregard of, obligations or duties hereunder or any violation of any
state or federal securities law. None of the Depositor, the Master Servicer, the
Special Servicer or the REMIC Administrator shall be under any obligation to
appear in, prosecute or defend any legal action unless such action is related to
its respective duties under this Agreement and, except in the case of a legal
action the costs of which it is specifically required hereunder to bear, in its
opinion does not involve it in any ultimate expense or liability; provided,
however, that the Depositor, the Master Servicer, the Special Servicer or the
REMIC Administrator may in its discretion undertake any such action which it may
reasonably deem necessary or desirable with respect to the enforcement and/or
protection of the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the legal expenses and costs of
such action, and any liability resulting therefrom, shall be expenses, costs and
liabilities of the Trust Fund, and the Depositor, the Master Servicer, the
Special Servicer and the REMIC Administrator shall be entitled to be reimbursed
therefor from the Collection Account as provided in Section 3.05(a).
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SECTION 6.04. Master Servicer, Special Servicer and REMIC Administrator
Not to Resign.
None of the Master Servicer, the Special Servicer or, subject to the last
paragraph of this Section 6.04, the REMIC Administrator shall resign from the
obligations and duties hereby imposed on it, except upon determination that its
duties hereunder are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities carried
on by it, the other activities of the Master Servicer, the Special Servicer or
the REMIC Administrator, as the case may be, so causing such a conflict being of
a type and nature carried on by the Master Servicer, the Special Servicer or the
REMIC Administrator, as the case may be, at the date of this Agreement. Any such
determination permitting the resignation of the Master Servicer, the Special
Servicer or the REMIC Administrator, as applicable, shall be evidenced by an
Opinion of Counsel to such effect which shall be delivered to the Trustee. No
such resignation shall become effective until the Trustee or other successor
shall have assumed the responsibilities and obligations of the resigning party
hereunder.
Consistent with the foregoing, none of the Master Servicer, the Special
Servicer or the REMIC Administrator shall, except as expressly provided herein,
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person or delegate to, subcontract with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed by
it hereunder. If, pursuant to any provision hereof, the duties of the Master
Servicer, the Special Servicer or the REMIC Administrator are transferred to a
successor thereto, the entire amount of compensation payable to the Master
Servicer, the Special Servicer or the REMIC Administrator, as the case may be,
that accrues pursuant hereto from and after the date of such transfer shall be
payable to such successor.
Notwithstanding the foregoing, if the same Person is acting as both REMIC
Administrator and Trustee, and such Person resigns as Trustee pursuant to
Section 8.07, then such Person shall be deemed to have also resigned as the
REMIC Administrator, and the successor Trustee shall also act as successor REMIC
Administrator or shall appoint a successor REMIC Administrator whose appointment
will not (as evidenced in writing) result in a qualification, downgrade or
withdrawal of any of the ratings then assigned by either Rating Agency to the
respective Classes of Certificates.
SECTION 6.05. Rights of the Depositor and the Trustee in Respect of the
Master Servicer, the Special Servicer and the REMIC
Administrator.
The Master Servicer, the Special Servicer and the REMIC Administrator shall
each afford the Depositor, the Trustee and each Rating Agency, upon reasonable
notice, during normal business hours access to all records maintained by it in
respect of its rights and obligations hereunder and access to such of its
officers as are responsible for such obligations. Upon reasonable request, the
Master Servicer, the Special Servicer and the REMIC Administrator shall
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each furnish the Depositor, the Trustee and each Rating Agency with its most
recent financial statements and such other information as it possesses, and
which it is not prohibited by applicable law or contract from disclosing,
regarding its business, affairs, property and condition, financial or otherwise.
The Depositor may, but is not obligated to, enforce the obligations of the
Master Servicer, the Special Servicer and the REMIC Administrator hereunder and
may, but is not obligated to, perform, or cause a designee to perform, any
defaulted obligation of the Master Servicer, the Special Servicer or the REMIC
Administrator hereunder or exercise the rights of the Master Servicer, the
Special Servicer or the REMIC Administrator hereunder; provided, however, that
none of the Master Servicer, the Special Servicer or the REMIC Administrator
shall be relieved of any of its obligations hereunder by virtue of such
performance by the Depositor or its designee. The Depositor shall not have any
responsibility or liability for any action or failure to act by the Master
Servicer, the Special Servicer or the REMIC Administrator and is not obligated
to supervise the performance of the Master Servicer, the Special Servicer or the
REMIC Administrator under this Agreement or otherwise.
SECTION 6.06. [RESERVED]
SECTION 6.07. Master Servicer or Special Servicer as Owner of a
Certificate.
The Master Servicer or an Affiliate of the Master Servicer or the Special
Servicer or an Affiliate of the Special Servicer may become the Holder of (or,
in the case of a Book-Entry Certificate, Certificate Owner with respect to) any
Certificate with the same rights it would have if it were not the Master
Servicer or the Special Servicer or an Affiliate thereof. If, at any time during
which the Master Servicer or the Special Servicer or an Affiliate of the Master
Servicer or the Special Servicer is the Holder of (or, in the case of a
Book-Entry Certificate, Certificate Owner with respect to) any Certificate, the
Master Servicer or the Special Servicer proposes to take action (including for
this purpose, omitting to take action) that (i) is not expressly prohibited by
the terms hereof and would not, in the Master Servicer's or the Special
Servicer's reasonable good faith judgment, violate the Servicing Standard, and
(ii) if taken, might nonetheless, in the Master Servicer's or the Special
Servicer's reasonable good faith judgment, be considered by other Persons to
violate the Servicing Standard, the Master Servicer or the Special Servicer may
(but need not) seek the approval of the Certificateholders to such action by
delivering to the Trustee a written notice that (a) states that it is delivered
pursuant to this Section 6.07, (b) identifies the Percentage Interest in each
Class of Certificates beneficially owned by the Master Servicer or the Special
Servicer or an Affiliate of the Master Servicer or the Special Servicer, as
applicable, and (c) describes in reasonable detail the action that the Master
Servicer or the Special Servicer, as the case may be, proposes to take. The
Trustee, upon receipt of such notice, shall forward it to the Certificateholders
(other than the Master Servicer and its Affiliates or the Special Servicer and
its Affiliates, as appropriate), together with a request for approval by the
Certificateholders of each such proposed action. If at any time
Certificateholders holding greater than 50% of the Voting Rights of all
Certificateholders (calculated without regard to the Certificates beneficially
owned by the Master Servicer or its Affiliates or the Special Servicer or its
Affiliates, as the case may
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be) shall have consented in writing to the proposal described in the written
notice, and if the Master Servicer or the Special Servicer, as the case may be,
shall act as proposed in the written notice, such action shall be deemed to
comply with the Servicing Standard. The Trustee shall be entitled to
reimbursement from the Master Servicer or the Special Servicer, as applicable,
for the reasonable expenses of the Trustee incurred pursuant to this paragraph.
It is not the intent of the foregoing provision that the Master Servicer or the
Special Servicer be permitted to invoke the procedure set forth herein with
respect to routine servicing matters arising hereunder, but rather in the case
of unusual circumstances.
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ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
(a) "Event of Default", wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer to deposit into the Collection
Account any amount required to be so deposited under this Agreement which
continues unremedied for one Business Day following the date on which such
deposit was first required to be made; or
(ii) any failure by the Special Servicer to deposit into, or to remit
to the Master Servicer for deposit into, the Collection Account any amount
required to be so deposited or remitted under this Agreement; or any
failure by the Special Servicer to deposit into the REO Account any amount
required to be so deposited under this Agreement which continues unremedied
for one Business Day following the date on which such deposit was first
required to be made; or
(iii) any failure by the Master Servicer to remit to the Trustee for
deposit into the Distribution Account, on any P&I Advance Date, the full
amount of P&I Advances required to be made on such date and/or the full
amount of the Master Servicer Remittance Amount required to be remitted on
such date, which failure continues unremedied until 10:00 a.m., New York
City time, on the Business Day immediately preceding the related
Distribution Date; or
(iv) any failure by the Master Servicer to timely make any Servicing
Advance required to be made by it pursuant to the second paragraph of
Section 3.19(b) which continues unremedied for a period of three days
following the date on which notice shall have been given to the Master
Servicer by the Trustee as provided in Section 3.11(e); or
(v) any failure by the Special Servicer to timely make any Emergency
Advance required to be made by it pursuant to the second paragraph of
Section 3.19(b) which continues unremedied for a period of three days
following the date on which notice has been given to the Special Servicer
by the Trustee as provided in Section 3.11(e); or
(vi) any failure on the part of the Master Servicer or the Special
Servicer duly to observe or perform in any material respect any other of
the covenants or agreements on the part of the Master Servicer or the
Special Servicer, as the case
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may be, contained in this Agreement which continues unremedied for a period
of 30 days (or, in the case of payment of insurance premiums, for a period
of 15 days) after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Master
Servicer or the Special Servicer, as the case may be, by any other party
hereto or to the Master Servicer or the Special Servicer, as the case may
be, (with a copy to each other party hereto) by the Holders of Certificates
entitled to at least 25% of the Voting Rights; or
(vii) any failure on the part of the REMIC Administrator duly to
observe or perform in any material respect any of the covenants or
agreements on the part of the REMIC Administrator contained in this
Agreement 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 the REMIC Administrator by any other party hereto,
or to the REMIC Administrator (with a copy to each other party hereto) by
the Holders of Certificates entitled to at least 25% of the Voting Rights;
or
(viii) any breach on the part of the Master Servicer or the Special
Servicer of any representation or warranty contained in this Agreement that
materially and adversely affects the interests of any Class of
Certificateholders 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 the Master Servicer or the Special
Servicer, as the case may be, by any other party hereto or to the Master
Servicer or the Special Servicer, as the case may be, (with a copy to each
other party hereto) by the Holders of Certificates entitled to at least 25%
of the Voting Rights; or
(ix) any breach on the part of the REMIC Administrator of any
representation or warranty contained in this Agreement that materially and
adversely affects the interests of any Class of Certificateholders 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 the REMIC Administrator by any other party hereto or to the REMIC
Administrator (with a copy to each other party hereto) by the Holders of
Certificates entitled to at least 25% of the Voting Rights; or
(x) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises in an involuntary case under any
present or future federal or state bankruptcy, insolvency or similar law
for the appointment of a conservator, receiver, liquidator, trustee or
similar official in any bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against
the Master Servicer, the Special Servicer or the REMIC
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Administrator and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or
(xi) the Master Servicer, the Special Servicer or the REMIC
Administrator shall consent to the appointment of a conservator, receiver,
liquidator, trustee or similar official in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to it or of or relating to all or substantially
all of its property; or
(xii) the Master Servicer, the Special Servicer or the REMIC
Administrator shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable bankruptcy, insolvency or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of
its obligations, or take any corporate action in furtherance of the
foregoing; or
(xiii) the Trustee shall have received written notice from either
Rating Agency that the continuation of the Master Servicer or the Special
Servicer in such capacity would result in a downgrade, qualification or
withdrawal of any rating then assigned by such Rating Agency to any Class
of Certificates.
When a single entity acts as Master Servicer, Special Servicer and REMIC
Administrator, or in any two of the foregoing capacities, an Event of Default in
one capacity shall constitute an Event of Default in each capacity.
(b) If any Event of Default with respect to the Master Servicer or the
Special Servicer (in either case, for purposes of this Section 7.01(b), the
"Defaulting Party") shall occur and be continuing, then, and in each and every
such case, so long as the Event of Default shall not have been remedied, the
Depositor and the Trustee may, and at the written direction of the Holders of
Certificates entitled to at least 25% of the Voting Rights or if the relevant
Event of Default is one described in clause (iii) or clause (xiii) of Section
7.01(a), the Trustee shall, terminate, by notice in writing to the Defaulting
Party (with a copy of such notice to each other party hereto), all of the rights
and obligations (accruing from and after such notice) of the Defaulting Party
under this Agreement and in and to the Trust Fund (other than as a Holder of any
Certificate). From and after the receipt by the Defaulting Party of such written
notice, all authority and power of the Defaulting Party under this Agreement,
whether with respect to the Certificates (other than as a Holder of any
Certificate) or the Mortgage Loans or otherwise, 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 Defaulting Party, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Each of the Master
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Servicer and the Special Servicer agrees that, if it is terminated pursuant to
this Section 7.01(b), it shall promptly (and in any event no later than ten
Business Days subsequent to its receipt of the notice of termination) provide
the Trustee with all documents and records requested thereby to enable the
Trustee to assume the Master Servicer's or Special Servicer's, as the case may
be, functions hereunder, and shall cooperate with the Trustee in effecting the
termination of the Master Servicer's or Special Servicer's, as the case may be,
responsibilities and rights hereunder, including, without limitation, the
transfer within two Business Days to the Trustee for administration by it of all
cash amounts which shall at the time be or should have been credited by the
Master Servicer to the Collection Account, the Distribution Account or any
Servicing Account (if it is the Defaulting Party) or by the Special Servicer to
the REO Account, the Collection Account or any Servicing Account (if it is the
Defaulting Party) or thereafter be received by or on behalf of it with respect
to any Mortgage Loan or REO Property (provided, however, that the Master
Servicer and the Special Servicer each shall, if terminated pursuant to this
Section 7.01(b), continue to be obligated to pay and entitled to receive all
amounts accrued or owing by or to it under this Agreement on or prior to the
date of such termination, whether in respect of Advances or otherwise, and it
and its directors, officers, employees and agents shall continue to be entitled
to the benefits of Section 6.03 notwithstanding any such termination). 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.
(c) If any Event of Default with respect to the REMIC Administrator shall
occur and be continuing, then, and in each and every such case, so long as the
Event of Default shall not have been remedied, the Depositor or the Trustee may,
and at the written direction of the Holders of Certificates entitled to at least
25% of the Voting Rights, the Trustee (or, if the Trustee is also the REMIC
Administrator, the Master Servicer) shall, terminate, by notice in writing to
the REMIC Administrator (with a copy to each of the other parties hereto), all
of the rights and obligations of the REMIC Administrator under this Agreement.
From and after the receipt by the REMIC Administrator of such written notice
(or, if the Trustee is also the REMIC Administrator, from and after such time as
another successor appointed as contemplated by Section 7.02 accepts such
appointment), all authority and power of the REMIC Administrator under this
Agreement shall pass to and be vested in the Trustee (or such other successor)
pursuant to and under this Section, and, without limitation, the Trustee (or
such other successor) is hereby authorized and empowered to execute and deliver,
on behalf of and at the expense of the REMIC Administrator, 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. The REMIC Administrator agrees promptly
(and in any event no later than ten Business Days subsequent to its receipt of
the notice of the termination) to provide the Trustee (or, if the Trustee is
also the REMIC Administrator, such other successor appointed as contemplated by
Section 7.02) with all documents and records requested thereby to enable the
Trustee (or such other successor) to assume the REMIC Administrator's functions
hereunder, and to cooperate with the Trustee (or such other successor) in
effecting the termination of the REMIC Administrator's responsibilities and
rights hereunder (provided, however, that the REMIC Administrator shall
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continue to be obligated to pay and entitled to receive all amounts accrued or
owing by or to it under this Agreement on or prior to the date of such
termination, and it and its directors, officers, employees and agents shall
continue to be entitled to the benefits of Section 6.03 notwithstanding any such
termination). Any costs or expenses in connection with any actions to be taken
by the REMIC Administrator pursuant to this paragraph shall be borne by the
REMIC Administrator.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer, the Special Servicer or the
REMIC Administrator resigns pursuant to the first paragraph of Section 6.04 or
receives a notice of termination pursuant to Section 7.01, the Trustee shall be
the successor in all respects to the Master Servicer, the Special Servicer or
(unless it had also been acting as such) the REMIC Administrator, as the case
may be, in its capacity as such 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 the
Master Servicer, the Special Servicer or the REMIC Administrator, as the case
may be, by the terms and provisions hereof, including, without limitation, if
the Master Servicer is the resigning or terminated party, the Master Servicer's
obligation to make P&I Advances; provided that any failure to perform such
duties or responsibilities caused by the Master Servicer's, the Special
Servicer's or the REMIC Administrator's, as the case may be, failure to
cooperate or to provide information or monies required by Section 7.01 shall not
be considered a default by the Trustee hereunder. Neither the Trustee nor any
other successor shall be liable for any of the representations and warranties of
the resigning or terminated party or for any losses incurred by the resigning or
terminated party pursuant to Section 3.06 hereunder nor shall the Trustee nor
any other successor be required to purchase any Mortgage Loan hereunder. As
compensation therefor, the Trustee shall be entitled to all fees and other
compensation which the resigning or terminated party would have been entitled to
for future services rendered if the resigning or terminated party 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, or is not approved as a
successor Master Servicer or Special Servicer, as the case may be, by each
Rating Agency, to so act or if the Holders of Certificates entitled to at least
51% of the Voting Rights shall request in writing to the Trustee or if the REMIC
Administrator is the resigning or terminated party and the Trustee had been
acting in such capacity, promptly appoint, or petition a court of competent
jurisdiction to appoint, any established and qualified institution as the
successor to the Master Servicer, the Special Servicer or the REMIC
Administrator, as the case may be, hereunder in the assumption of all or any
part of the responsibilities, duties or liabilities of the Master Servicer, the
Special Servicer or the REMIC Administrator, as the case may be, hereunder;
provided that such appointment does not result in the downgrading, withdrawal or
qualification of any rating then assigned by either Rating Agency to any Class
of Certificates (as evidenced by written confirmation to such effect from each
Rating Agency). No appointment of a successor to the Master Servicer, the
Special Servicer or the REMIC Administrator hereunder shall be effective until
the assumption of the successor to such party of all its responsibilities,
duties and liabilities hereunder, and pending such appointment and assumption,
the Trustee shall act in such capacity as hereinabove provided. In connection
with
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any such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on the Mortgage Loans or
otherwise as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the resigning or terminated
party hereunder. The Depositor, the Trustee, such successor and each other party
hereto shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any resignation of the Master Servicer, the Special Servicer or
the REMIC Administrator pursuant to Section 6.04, any termination of the Master
Servicer, the Special Servicer or the REMIC Administrator pursuant to Section
7.01, any appointment of a successor to the Master Servicer, the Special
Servicer or the REMIC Administrator pursuant to Section 6.04 or 7.02 or the
effectiveness of any designation of a new Special Servicer pursuant to Section
6.06, the Trustee shall give prompt written notice thereof to Certificateholders
at their respective addresses appearing in the Certificate Register.
(b) Not later than the later of (i) 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 (ii) five days after a Responsible Officer of
the Trustee has notice of the occurrence of such an event, the Trustee shall
transmit by mail to the Depositor and all Certificateholders notice of such
occurrence, unless such default shall have been cured.
SECTION 7.04. Waiver of Events of Default.
The Holders representing at least 66-2/3% of the Voting Rights allocated to
the Classes of Certificates affected by any Event of Default hereunder may waive
such Event of Default; provided, however, that an Event of Default under clause
(i), clause (ii) or clause (iii) of Section 7.01(a) may be waived only by all of
the Certificateholders of the affected Classes. 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. 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 7.04, Certificates registered in the name of the Depositor or any
Affiliate of the Depositor shall be entitled to the same Voting Rights with
respect to the matters described above as they would if registered in the name
of any other Person.
SECTION 7.05. 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 Section 7.01, shall have the right (exercisable subject to Section
8.01(a)), 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
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rights and remedies and to protect the interests, and enforce the rights and
remedies, of the Certificateholders (including the institution and prosecution
of all judicial, administrative and other proceedings and the 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.
SECTION 7.06. Advance Collateral Fund for Trustee.
(a) Pursuant to the terms of the Collateral Fund Custodial Agreement, for
so long as the Trustee's long-term unsecured debt rating by the Rating Agencies
is not in at least the second highest applicable rating category of each such
Rating Agency, the Trustee shall establish and maintain the Advance Collateral
Fund to secure the Trustee's obligations to make P&I Advances as successor
Master Servicer under the terms hereof. Pursuant to Section 3.03 of the
Collateral Fund Custodial Agreement, the Trustee shall grant a security interest
in the Advance Collateral Fund to the Advance Collateral Custodian for the
benefit of the Certificateholders.
(b) If at any time that the Trustee is the successor Master Servicer or is
otherwise obligated to make P&I Advances and the Trustee for any reason does not
make a P&I Advance required to be made by the Trustee pursuant to this
Agreement, then by 11:30 a.m., New York City time, on the Business Day
immediately preceding the related Distribution Date, pursuant to Section 2.02 of
the Collateral Fund Custodial Agreement, the Trustee shall deliver a notice to
the Collateral Fund Custodian to withdraw the necessary amount from the Advance
Collateral Fund and deposit such funds into the Distribution Account.
(c) In accordance with the provisions of the Collateral Fund Custodial
Agreement, the Trustee may, at any time, substitute a surety bond, letter of
credit, insurance policy or other security arrangement (the "Substitute
Collateral") for the Advance Collateral Fund and amounts on deposit therein or
any substitute therefor; provided that it has received written confirmation from
each Rating Agency that such action would not result in the downgrade,
qualification or withdrawal of the rating then assigned by any Rating Agency to
any Class of Certificates, and such substitution would not result in an Adverse
REMIC Event in respect of any REMIC created hereunder.
(d) If the arrangements for the Advance Collateral Fund have been
terminated because the Trustee's long-term unsecured debt rating by the Rating
Agencies was upgraded to at least the second highest applicable rating category
of each such Rating Agency and, subsequent to such termination of the Advance
Collateral Fund, the Trustee's long-term unsecured debt rating by the Rating
Agencies shall have been downgraded below the second highest applicable rating
category of each such Rating Agency, then the Trustee shall be required to enter
into an agreement similar to the Collateral Fund Custodial Agreement that is
acceptable to the Rating Agencies. If
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such substitute arrangement is not made within 60 days of such downgrade, then
such failure by the Trustee will render the Trustee ineligible under Section
8.06.
(e) The Advance Collateral Fund shall be an "outside reserve fund" within
the meaning of the REMIC Provisions and shall not be an asset of any REMIC. The
Advance Collateral Fund shall be beneficially owned by the Bank for federal
income tax purposes, and the Bank shall report all income, gain, loss or
deduction with respect thereto. Any reimbursement from the Trust Fund to the
Advance Collateral Fund shall be treated as amounts distributed by such REMIC to
the Trustee or any successor, all within the meaning of Section 1.860G-2(h) of
the Treasury Regulations.
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and after
the curing or waiver of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If an Event of Default occurs and is continuing, then
(subject to Section 8.01(c)(iv) below) the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs. Any permissive right of the
Trustee contained in this Agreement shall not be construed as a duty.
(b) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement (other than the Mortgage Files, the review of which
is specifically governed by the terms of Article II), shall examine them to
determine whether they conform to the requirements of this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, the Trustee shall make a request to the responsible party to
have the instrument corrected. The Trustee shall not be responsible for the
accuracy or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by any other party hereto, and
accepted by the Trustee in good faith, pursuant to this Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing or waiver of all Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this Agreement.
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(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Holders of Certificates entitled to at
least 25% (or, as to any particular matter, any higher percentage as may be
specifically provided for hereunder) of the Voting Rights relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement.
(iv) The Trustee shall not be required to take action with respect to,
or be deemed to have notice or knowledge of, any default or Event of
Default (except an Event of Default under Section 7.01(a)(xiii) or the
failure to deliver any monies, including, without limitation, P&I Advances,
or to provide any report, certificate or statement to the Trustee when
required pursuant to this Agreement) unless a Responsible Officer of the
Trustee shall have received written notice or otherwise have actual
knowledge thereof. In the absence of receipt of such notice and such actual
knowledge otherwise obtained, the Trustee may conclusively assume that
there is no default or Event of Default.
(v) Subject to the other provisions of this Agreement and without
limiting the generality of this Section 8.01, the Trustee shall have no
duty except in the capacity as successor Master Servicer or successor
Special Servicer (A) to see to any recording, filing, or depositing of this
Agreement or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to see to the
maintenance of any such recording or filing or depositing or to any
rerecording, refiling or redepositing of any thereof, (B) to see to any
insurance, and (C) to confirm or verify the contents of any reports or
certificates of the Master Servicer or Special Servicer delivered to the
Trustee pursuant to this Agreement reasonably believed by the Trustee to be
genuine and to have been signed or presented by the proper party or
parties.
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SECTION 8.02. Certain Matters Affecting Trustee.
Except as otherwise provided in Section 8.01:
(i) the Trustee may rely upon and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance therewith;
(iii) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the Certificateholders, pursuant to the provisions
of this Agreement, unless in the Trustee's reasonable opinion, such
Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby; the Trustee shall not be required 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; nothing contained herein shall, however, relieve
the Trustee of the obligation, upon the occurrence of an Event of Default
which has not been waived or cured, to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of care
and skill in their exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs;
(iv) the Trustee shall not be personally liable for any action
reasonably taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) prior to the occurrence of an Event of Default and after the
waiver or curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request,
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consent, order, approval, bond or other paper or document, unless requested
in writing to do so by Holders of Certificates entitled to at least 25% of
the Voting Rights; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is, in the opinion
of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or liability as a condition to
taking any such action;
(vi) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Fund created hereby or the powers
granted hereunder;
(vii) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, provided that the use of agents or attorneys shall not be deemed
to relieve the Trustee of any of its duties and obligations hereunder; and
(viii) the Trustee shall not be responsible for any act or omission of
the Master Servicer, the Special Servicer or the REMIC Administrator
(unless the Trustee is acting as Master Servicer, Special Servicer or REMIC
Administrator, as the case may be) or of the Depositor.
SECTION 8.03. Trustee not Liable for Validity or Sufficiency of
Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
statements attributed to, and the representations and warranties of, the Trustee
in Article II, and the signature of the Trustee set forth on each outstanding
Certificate) shall be taken as the statements of the Depositor, the Master
Servicer, the Special Servicer or the REMIC Administrator, as the case may be,
and the Trustee (in its capacity as such) assumes no responsibility for their
correctness. The Trustee makes no representation as to the validity or
sufficiency of this Agreement (except as regards the enforceability of this
Agreement against it) or of any Certificate (other than as to the signature of
the Trustee set forth thereon) or of any Mortgage Loan or related document. The
Trustee shall not be accountable for the use or application by the Depositor of
any of the Certificates issued to it or of the proceeds of such Certificates, or
for the use or application of any funds paid to the Depositor in respect of the
assignment of the Mortgage Loans to the Trust Fund, or any funds deposited in or
withdrawn from the Collection Account or any other account by or on behalf of
the Depositor, the Master Servicer, the Special Servicer or the REMIC
Administrator (in each case, unless the Trustee is acting in such capacity). The
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Depositor, the Master Servicer, the Special Servicer or the
REMIC Administrator (in each case, unless the Trustee is acting in such
capacity), and
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accepted by the Trustee in good faith, pursuant to this Agreement. The Trustee
shall not be responsible for the legality or validity of this Agreement (other
than insofar as it relates to the obligations of the Trustee hereunder) or the
validity, priority, perfection or sufficiency of the security for the
Certificates issued or intended to be issued hereunder. The Trustee shall not
have any responsibility for filing any financing or continuation statement in
any public office at any time or to otherwise perfect or maintain the perfection
of any security interest or lien granted to it hereunder or to record this
Agreement.
SECTION 8.04. Trustee May Own Certificates.
The Trustee (in its individual or any other capacity) or any agent of the
Trustee may become the owner or pledgee of Certificates with the same rights it
would have if it were not the Trustee or such agent.
SECTION 8.05. Fees and Expenses of Trustee; Indemnification of Trustee and
the REMIC Administrator.
(a) On each Distribution Date, the Trustee shall withdraw from the
Distribution Account, prior to any distributions to be made therefrom to
Certificateholders on such date, and pay to itself all earned but unpaid
Trustee's Fees in respect of the Mortgage Loans and any REO Loans, as
compensation for all services rendered by the Trustee in the execution of the
trusts hereby created and in the exercise and performance of any of the powers
and duties of the Trustee hereunder. As to each Mortgage Loan and REO Loan, the
Trustee's Fee shall accrue from time to time at the Trustee's Fee Rate, whether
or not interest is actually collected on each Mortgage Loan and REO Loan, on the
basis of the same principal amount and for the same period respecting which any
related interest payment due on such Mortgage Loan or deemed due on such REO
Loan is computed. The Trustee's Fees (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
shall constitute the Trustee's sole compensation for such services to be
rendered by it.
(b) The Trustee and any director, officer, employee or agent of the Trustee
shall be entitled to be indemnified for and held harmless by the Trust Fund (to
the extent of amounts on deposit in the Distribution Account from time to time)
against any loss, liability, claim or expense (including, without limitation,
costs and expenses of litigation, and of investigation, counsel fees, damages,
judgments and amounts paid in settlement) arising out of, or incurred in
connection with, this Agreement, the Certificates, the Mortgage Loans (to the
extent it does not act in the capacity of successor Master Servicer or Special
Servicer) or any act or omission of the Trustee relating to the exercise and
performance of any of the powers and duties of the Trustee hereunder if such
loss, liability, claim or expense constitutes an "unanticipated expense" within
the meaning of Treasury regulation Section 1.860G-1(b)(3)(ii); provided that
neither the Trustee nor any of the other above specified Persons shall be
entitled to indemnification pursuant to this Section 8.05(b) for (1) any expense
or liability specifically required to be borne thereby pursuant to the terms
hereof, or (2) any loss, liability, claim or expense incurred by reason of any
breach
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on the part of the Trustee of any of its representations, warranties or
covenants contained herein or any willful misfeasance, bad faith or negligence
in the performance of, or reckless disregard of, the Trustee's obligations and
duties hereunder.
(c) Each of the Master Servicer and the Special Servicer shall indemnify
the Trustee and the REMIC Administrator from and hold each of them harmless
against any loss, liability, claim or expense arising in respect of the Master
Servicer's, or Special Servicer's as the case may be, negligent acts or
omissions in connection with this Agreement including, without limitation, the
negligent use by the Master Servicer or the Special Servicer, as the case may
be, of any powers of attorney delivered to it by the Trustee pursuant to the
provisions hereof and the Mortgage Loans serviced by the Master Servicer or the
Special Servicer, as the case may be.
(d) This Section 8.05 shall survive the termination of this Agreement or
the resignation or removal of the Trustee, the REMIC Administrator, the Master
Servicer and the Special Servicer as regards rights and obligations prior to
such termination, resignation or removal.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation, bank, trust
company or association organized and doing business under the laws of the United
States of America or any State thereof or the District of Columbia, authorized
under such laws to exercise trust powers, having a combined capital and surplus
of at least $[50,000,000] and subject to supervision or examination by federal
or state authority. If such corporation, bank, trust company or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such corporation,
bank, trust company or association shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
The Trustee shall at all times maintain a long-term unsecured debt rating in one
of the two highest (or, so long as the Trustee is satisfying the requirements of
Section 7.06, one of the three highest) applicable rating categories of each
Rating Agency (or, in the case of either Rating Agency, such lower rating that
shall not result in the qualification, downgrading or withdrawal of the rating
or ratings assigned to one or more Classes of the Certificates by such Rating
Agency, as confirmed in writing by such Rating Agency). In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 8.07. The corporation or association serving as Trustee may
have normal banking and trust relationships with the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator and their respective
Affiliates.
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SECTION 8.07. Resignation and Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator and to all
Certificateholders. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor trustee acceptable to the Master Servicer by
written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee and to the successor trustee. A copy of such instrument shall
be delivered to the Master Servicer, the Special Servicer, the REMIC
Administrator and the Certificateholders by the Depositor. If no successor
trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Depositor or the Master Servicer, or if at any time the
Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, or if the continued use of the Trustee would (as evidenced in
writing from either Rating Agency) result in a qualification, downgrading or
withdrawal of the rating assigned by such Rating Agency to any Class of
Certificates, then the Depositor may remove the Trustee and appoint a successor
trustee acceptable to the Master Servicer by written instrument, in duplicate,
which instrument shall be delivered to the Trustee so removed and to the
successor trustee. A copy of such instrument shall be delivered to the Master
Servicer, the Special Servicer, the REMIC Administrator and the
Certificateholders by the Depositor.
(c) The Holders of Certificates entitled to not less than 51% of the Voting
Rights (or, if such removal is in connection with the Trustee's failure to make
any required Advance, 25% of the Voting Rights) may at any time remove the
Trustee and appoint a successor trustee by written instrument or instruments, in
triplicate, signed by such Holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Master Servicer,
one complete set to the Trustee so removed and one complete set to the successor
so appointed. A copy of such instrument shall be delivered to the Depositor, the
Special Servicer, the REMIC Administrator and the remaining Certificateholders
by the successor so appointed.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08 and written confirmation from each Rating Agency that
the appointment of such successor Trustee shall not result in the downgrade,
qualification or withdrawal of any rating then assigned thereby to any Class of
Certificates. Notwithstanding anything herein to the contrary, if any Person is
acting as both Trustee and REMIC Administrator, then any resignation or removal
of such Person as the
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Trustee shall be accompanied by the resignation or removal of such Person as
REMIC Administrator, and the successor trustee shall serve as successor to the
REMIC Administrator as well.
SECTION 8.08. Successor Trustee.
(a) Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Depositor, the Master Servicer, the
Special Servicer, the REMIC Administrator and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with the like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee all Mortgage Files
and related documents and statements held by it hereunder (other than any
Mortgage Files at the time held on its behalf by a Custodian, which Custodian
shall become the agent of the successor trustee), and the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator and the predecessor
trustee shall execute and deliver such instruments and do such other things as
may reasonably be required to more fully and certainly vest and confirm in the
successor trustee all such rights, powers, duties and obligations, and to enable
the successor trustee to perform its obligations hereunder.
(b) No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06.
(c) Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, such successor trustee shall mail notice of the succession of
such trustee hereunder to the Depositor and the Certificateholders.
SECTION 8.09. Merger or Consolidation of Trustee.
Any entity into which the Trustee may be merged or converted or with which
it may be consolidated or any entity resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any entity succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such entity shall be eligible under the provisions
of Section 8.06, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
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SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
Master Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
8.10, such powers, duties, obligations, rights and trusts as the Master Servicer
and the Trustee may consider necessary or desirable. If the Master Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request to do so, or in case an Event of Default in respect of the Master
Servicer shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 8.06 hereunder and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 8.08 hereof.
(b) In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Master Servicer, the Special Servicer or the REMIC
Administrator hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed by such
separate trustee or co-trustee at the direction of the Trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of
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its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
(e) The appointment of a co-trustee or separate trustee under this Section
8.10 shall not relieve the Trustee of its duties and responsibilities hereunder.
SECTION 8.11. Appointment of Custodians.
The Trustee may, with the consent of the Master Servicer, appoint at the
Trustee's own expense one or more Custodians to hold all or a portion of the
Mortgage Files as agent for the Trustee; provided that if the Custodian is an
Affiliate of the Trustee such consent of the Master Servicer need not be
obtained and the Trustee shall inform the Master Servicer 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 Mortgage File, shall not be the Depositor or any Affiliate of
the Depositor, and shall have in place a fidelity bond and errors and omissions
policy, each in such form and amount as customarily required of custodians
acting on behalf of FHLMC or FNMA. Each Custodian shall be subject to the same
obligations, standard of care, protection and indemnities as would be imposed
on, or would protect, the Trustee hereunder in connection with the retention of
Mortgage Files directly by the Trustee. The appointment of one or more
Custodians shall not relieve the Trustee from any of its obligations hereunder,
and the Trustee shall remain responsible for all acts and omissions of any
Custodian.
SECTION 8.12. Access to Certain Information.
(a) The Trustee shall afford to the Depositor, the Master Servicer, the
Special Servicer, each Holder of a Class B-3 Certificate, a Class B-4
Certificate or a Class C Certificate, the REMIC Administrator and each Rating
Agency and to the OTS, the FDIC and any other banking or insurance regulatory
authority that may exercise authority over any Certificateholder, access to any
documentation regarding the Mortgage Loans within its control that may be
required to be provided by this Agreement or by applicable law. Such access
shall be afforded without charge but only upon reasonable prior written request
and during normal business hours at the offices of the Trustee designated by it.
(b) The Trustee shall maintain at its office primarily responsible for
administration of the Trust Fund and, upon reasonable prior written request and
during normal business hours, shall make available for review by the Depositor,
the Rating Agencies, and, subject to the succeeding paragraph, any
Certificateholder, Certificate Owner or Person identified to the Trustee as a
prospective transferee of a Certificate or an interest therein, originals and/or
copies of the following items: (i) the prospectus and prospectus supplement
relating to the Class S, Class A and Class B-1 Certificates and any private
placement memorandum or other disclosure document relating to the Private
Certificates, in each case in the form most recently provided to the Trustee by
the Depositor or by any Person designated by the Depositor; (ii) this Agreement
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and any amendments hereto entered into pursuant to Section 11.01; (iii) all
Trustee Reports delivered to Certificateholders pursuant to Section 4.02(a)
since the Closing Date; (iv) all Officer's Certificates delivered by the Master
Servicer and the Special Servicer to the Trustee since the Closing Date pursuant
to Section 3.13; (v) all accountants' reports caused to be delivered by the
Master Servicer and the Special Servicer to the Trustee since the Closing Date
pursuant to Section 3.14; (vi) the most recent inspection report prepared by the
Master Servicer or the Special Servicer and delivered to the Trustee in respect
of each Mortgaged Property pursuant to Section 3.12(a); (vii) the most recent
quarterly and annual operating statement and rent roll of each related Mortgaged
Property and financial statements of the related Mortgagor collected by the
Master Servicer or the Special Servicer and delivered to the Trustee pursuant to
Section 3.12(b); (viii) any and all notices and reports delivered to the Trustee
with respect to any Mortgaged Property as to which the environmental testing
contemplated by Section 3.09(c) revealed that neither of the conditions set
forth in clauses (i) and (ii) of the first sentence thereof was satisfied; (ix)
all Determination Date Reports, Special Servicer Reports and Operating Statement
Analyses delivered to the Trustee since the Closing Date pursuant to Sections
4.02(b) and 4.02(c); (x) each of the Mortgage Files, including, without
limitation, any and all modifications, waivers and amendments of the terms of a
Mortgage Loan entered into or consented to by the Master Servicer or the Special
Servicer and delivered to the Trustee pursuant to Section 3.20; (xi) the most
recent Appraisal for each Mortgage Loan and REO Property that has been delivered
to the Trustee (such item to be delivered to the Trustee by the Master Servicer
or Special Servicer, as applicable, promptly following its having been obtained
or formulated); and (xii) any and all Officer's Certificates and other evidence
delivered to or by the Trustee to support its, the Master Servicer's or the
Special Servicer's, as the case may be, determination that any Advance was or,
if made, would be, a Nonrecoverable Advance. The Trustee shall provide copies of
any and all of the foregoing items upon request of any of the parties set forth
in the previous sentence; however, except in the case of the Rating Agencies,
the Trustee shall be permitted to require payment of a sum sufficient to cover
the reasonable costs and expenses of providing such copies.
In connection with providing access to or copies of the items described in
the preceding paragraph, the Trustee shall require (a) in the case of
Certificate Owners, a confirmation executed by the requesting Person
substantially in the form of Exhibit L-1 hereto generally to the effect that
such Person is a beneficial holder of Certificates, is requesting the
information solely for use in evaluating such Person's investment in the
Certificates and will otherwise keep such information confidential and (b) in
the case of a prospective purchaser, confirmation executed by the requesting
Person substantially in the form of Exhibit L-2 hereto generally to the effect
that such Person is a prospective purchaser of a Certificate or an interest
therein, is requesting the information solely for use in evaluating a possible
investment in Certificates and will otherwise keep such information
confidential. The Holders of the Certificates, by their acceptance thereof, will
be deemed to have agreed to keep such information confidential. The Trustee
shall not be liable for providing information in accordance with Section 8.12(a)
or for the dissemination of information in accordance with this Section 8.12(b).
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All Mortgage
Loans.
Subject to Section 9.02, the Trust Fund and the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer, the
Special Servicer, the Trustee and the REMIC Administrator (other than the
obligations of the Trustee to provide for and make payments to
Certificateholders as hereafter set forth) shall terminate upon payment (or
provision for payment) to the Certificateholders of all amounts held by or on
behalf of the Trustee and required hereunder to be so paid on the Distribution
Date following the earlier to occur of (i) the purchase by the Special Servicer
or the Master Servicer of all Mortgage Loans and each REO Property remaining in
REMIC I at a price equal to (A) the aggregate Purchase Price of all the Mortgage
Loans included in REMIC I, plus (B) the appraised value of each REO Property, if
any, included in REMIC I, such appraisal to be conducted by an Independent
MAI-designated appraiser selected by the Master Servicer and approved by the
Trustee, minus (C) the aggregate amount of unreimbursed Advances made by the
Master Servicer or the Special Servicer, as applicable, together with any unpaid
Advance Interest in respect of such unreimbursed Advances and any unpaid
servicing compensation owing to such party (which items shall be deemed to have
been paid or reimbursed to the Master Servicer or Special Servicer, as the case
may be, in connection with such purchase), and (ii) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan or
REO Property remaining in REMIC I; 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.
The Special Servicer or the Master Servicer may at its option elect to
purchase all of the Mortgage Loans and each REO Property remaining in REMIC I as
contemplated by clause (i) of the preceding paragraph by giving written notice
to the other parties hereto no later than 60 days prior to the anticipated date
of purchase; provided that the aggregate Stated Principal Balance of the
Mortgage Pool at the time of such election is less than ___% of the aggregate
Cut-off Date Balance of the Mortgage Pool set forth in the Preliminary
Statement; and provided further that, in the case of any such written notice
delivered by the Master Servicer, the Special Servicer does not elect in a
writing delivered to the other parties hereto, within seven days of receiving
such written notice from the Master Servicer, to effect such purchase. No
Prepayment Premiums or Yield Maintenance Premiums will be payable in connection
with such a purchase. If the Trust Fund is to be terminated in connection with
the purchase of all of the Mortgage Loans and each REO Property remaining in
REMIC I by the Special Servicer or the Master Servicer, the Special Servicer or
the Master Servicer, as applicable, shall deliver to the Trustee for deposit in
the Distribution Account not later than the Master Servicer Remittance Date
relating to the anticipated Final Distribution Date an amount in immediately
available funds equal to the above-described
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purchase price (exclusive of any portion thereof payable to any Person other
than the Certificateholders pursuant to Section 3.05(a), which portion shall be
deposited in the Collection Account). In addition, the Master Servicer shall
transfer to the Distribution Account all amounts required to be transferred
thereto on such Master Servicer Remittance Date from the Collection Account
pursuant to the first paragraph of Section 3.04(b), together with any other
amounts on deposit in the Collection Account that would otherwise be held for
future distribution. Upon confirmation that such final deposit has been made,
the Trustee shall release or cause to be released to the purchasing party the
Mortgage Files for the remaining Mortgage Loans and shall execute all
assignments, endorsements and other instruments furnished to it by the
purchasing party as shall be necessary to effectuate transfer of the Mortgage
Loans and REO Properties to the purchasing party (or its designee).
Notice of any termination shall be given promptly by the Trustee by letter
to Certificateholders mailed (x) if such notice is given in connection with the
purchase of the Mortgage Loans and each REO Property remaining in REMIC I by the
Special Servicer or the Master Servicer, not earlier than the 15th day and not
later than the 25th day of the month next preceding the month of the final
distribution on the Certificates and (y) otherwise during the month of such
final distribution on or before the Master Servicer Remittance Date in such
month, in any event specifying (i) the Distribution Date upon which the Trust
Fund will terminate and final payment of the Certificates will be made, (ii) the
amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office or agency of
the Trustee therein designated. The Trustee shall give such notice to the
Depositor, the Master Servicer, the Special Servicer and the REMIC Administrator
at the time such notice is given to Certificateholders.
Upon presentation and surrender of the Certificates by the
Certificateholders on the Final Distribution Date, the Trustee shall distribute
to each Certificateholder so presenting and surrendering its Certificates such
Certificateholder's Percentage Interest of that portion of the Available
Distribution Amount that is allocable to payments on the relevant Class in
accordance with Sections 4.01(a) and 4.01(b).
Any funds not distributed to any Holder or Holders of Certificates of any
Class on the Final Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
uninvested in trust and credited to the account or accounts of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 9.01 shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee, directly or through an agent, shall take such
reasonable steps to contact the remaining non-tendering Certificateholders
concerning the surrender of their Certificates as it shall deem
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appropriate. The costs and expenses of holding such funds in trust and of
contacting such Certificateholders following the first anniversary of the
delivery of such second notice to the non- tendering Certificateholders shall be
paid out of such funds. No interest shall accrue or be payable to any former
Holder on any amount held in trust hereunder. If by the second anniversary of
the delivery of such second notice, all of the Certificates shall not have been
surrendered for cancellation, the Class R-III Certificateholders shall be
entitled to all unclaimed funds and other assets which remain subject thereto.
SECTION 9.02. Additional Termination Requirements.
(a) If the Special Servicer or the Master Servicer purchases all of the
Mortgage Loans and each REO Property remaining in REMIC I as provided in Section
9.01, the Trust Fund (and, accordingly, REMIC I, REMIC II and REMIC III) shall
be terminated in accordance with the following additional requirements, unless
the purchasing party obtains at its own expense and delivers to the Trustee and
the REMIC Administrator an Opinion of Counsel, addressed to the Trustee and the
REMIC Administrator, to the effect that the failure of the Trust Fund to comply
with the requirements of this Section 9.02 will not result in the imposition of
taxes on "prohibited transactions" on any of REMIC I, REMIC II or REMIC III as
defined in Section 860F of the Code or cause REMIC I, REMIC II or REMIC III to
fail to qualify as a REMIC at any time that any Certificates are outstanding:
(i) the REMIC Administrator shall specify the first day in the 90-day
liquidation period in a statement attached to the final Tax Return for each
of REMIC I, REMIC II and REMIC III pursuant to Treasury regulation Section
1.860F-1 and shall satisfy all requirements of a qualified liquidation
under Section 860F of the Code and any regulations thereunder;
(ii) during such 90-day liquidation period and at or prior to the time
of making the final payment on the Certificates, the Trustee shall sell all
of the assets of REMIC I to the Special Servicer or the Master Servicer, as
the case may be, for cash; and
(iii) immediately following the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the applicable Class of Residual
Certificates all remaining cash on hand (other than cash retained to meet
claims), and each of REMIC I, REMIC II and REMIC III shall terminate at
that time.
(b) By their acceptance of Certificates, the Holders thereof hereby agree
to authorize any purchaser of the Mortgage Loans and each REO Property as
provided in Section 9.01 to prepare (and such Person shall prepare), and to
authorize the Trustee to adopt on behalf of the Trust, a plan of complete
liquidation of each of REMIC I, REMIC II and REMIC III in accordance with the
terms and conditions of this Agreement, which authorization shall be binding
upon all successor Certificateholders.
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ARTICLE X
ADDITIONAL REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The REMIC Administrator shall elect to treat each of REMIC I, REMIC II
and REMIC III as a REMIC under the Code and, if necessary, under applicable
state law. Each such election will be made on Form 1066 or other appropriate
federal tax or information return or any appropriate state Tax Returns for the
taxable year ending on the last day of the calendar year in which the
Certificates are issued.
(b) The REMIC I Regular Interests are hereby designated as "regular
interests" (within the meaning of Section 860G(a)(1) of the Code), and the Class
R-I Certificates are hereby designated as the sole class of "residual interests"
(within the meaning of Section 860G(a)(2) of the Code), in REMIC I. The REMIC II
Regular Interests are hereby designated as "regular interests" (within the
meaning of Section 860G(a)(1) of the Code), and the Class R-II Certificates are
hereby designated as the sole class of "residual interests" (within the meaning
of Section 860G(a)(2) of the Code), in REMIC II. The Class A-1A, Class A-1B,
Class A-2, Class A-3, Class B-1, Class B-2, Class B-3, Class B-4 and Class C
Certificates, together with the respective Components of the Class S
Certificates, are hereby designated as "regular interests" (within the meaning
of Section 860G(a)(1) of the Code), and the Class R-III Certificates are hereby
designated as the sole class of "residual interests" (within the meaning of
Section 860G(a)(2) of the Code), in REMIC III. None of the REMIC Administrator,
the Master Servicer, the Special Servicer or the Trustee shall, to the extent
within the control of such Person, create or permit the creation of any other
"interests" in REMIC I, REMIC II or REMIC III (within the meaning of Treasury
regulation Section 1.860D-1(b)(1)).
(c) The Closing Date is hereby designated as the "Startup Day" of each of
REMIC I, REMIC II and REMIC III within the meaning of Section 860G(a)(9) of the
Code.
(d) The applicable Plurality Residual Certificateholder is hereby
designated as the Tax Matters Person of each of REMIC I, REMIC II and REMIC III,
and shall act on behalf of the related REMIC in relation to any tax matter or
controversy, shall represent the related REMIC in any administrative or judicial
proceeding relating to an examination or audit by any governmental taxing
authority, shall request an administrative adjustment as to any taxable year of
the related REMIC, shall enter into settlement agreements with any governmental
taxing agency with respect to the related REMIC, shall extend any statute of
limitations relating to any tax item of the related REMIC and shall otherwise
act on behalf of the related REMIC in relation to any tax matter or controversy
involving such REMIC; provided that the REMIC Administrator is hereby
irrevocably appointed to act and shall act (in consultation with the Tax Matters
Person for each of REMIC I, REMIC II and REMIC III) as agent and
attorney-in-fact for the Tax Matters Person for each of REMIC I, REMIC II and
REMIC III in the performance of its duties as such.
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The legal expenses and costs of any action described in this subsection (d) and
any liability resulting therefrom shall be expenses, costs and liabilities of
the Trust Fund payable out of amounts on deposit in the Distribution Account as
provided by Section 3.05(b) unless such legal expenses and costs are incurred by
reason of a Tax Matters Person's or the REMIC Administrator's misfeasance, bad
faith or negligence in the performance of, or such Person's reckless disregard
of, its obligations or are expressly provided by this Agreement to be borne by
any party hereto.
(e) The REMIC Administrator shall prepare or cause to be prepared and file,
and the Trustee shall sign, all of the Tax Returns in respect of each of REMIC
I, REMIC II and REMIC III other than Tax Returns required to be filed by the
Master Servicer pursuant to Section 3.09(g). The expenses of preparing and
filing such returns shall be borne by the REMIC Administrator without any right
of reimbursement therefor.
(f) The REMIC Administrator shall perform on behalf of each of REMIC I,
REMIC II and REMIC III all reporting and other tax compliance duties that are
the responsibility of each such REMIC under the Code, the REMIC Provisions or
other compliance guidance issued by the Internal Revenue Service or any state or
local taxing authority. Included among such duties, the REMIC Administrator
shall provide to: (i) any Transferor of a Residual Certificate, such information
as is necessary for the application of any tax relating to the transfer of a
Residual Certificate to any Person who is not a Permitted Transferee; (ii) the
Certificateholders, such information or reports as are required by the Code or
the REMIC Provisions, including, without limitation, reports relating to
interest, original issue discount and market discount or premium (using the
Prepayment Assumption as required); and (iii) the Internal Revenue Service, the
name, title, address and telephone number of the Person who will serve as the
representative of each of REMIC I, REMIC II and REMIC III. In addition, the
Depositor shall provide or cause to be provided to the REMIC Administrator,
within (10) days after the Closing Date, all information or data that the REMIC
Administrator reasonably determines to be relevant for tax purposes as to the
valuations and issue prices of the Certificates, including without limitation,
the price, yield, Prepayment Assumption and projected cash flow of the
Certificates.
(g) The REMIC Administrator shall take such action and shall cause each of
REMIC I, REMIC II and REMIC III to take such action as shall be necessary to
create or maintain the status thereof as a REMIC under the REMIC Provisions (and
the Master Servicer shall assist it, to the extent reasonably requested by it).
The REMIC Administrator shall not take any action, cause REMIC I, REMIC II or
REMIC III to take any action or fail to take (or fail to cause to be taken) any
action that, under the REMIC Provisions, if taken or not taken, as the case may
be, could, except as provided in Section 3.17, result in an Adverse REMIC Event
in respect of REMIC I, REMIC II or REMIC III, unless the REMIC Administrator has
received an Opinion of Counsel to the effect that the contemplated action will
not result in an Adverse REMIC Event. None of the other parties hereto shall
take or fail to take any action (whether or not authorized hereunder) as to
which the REMIC Administrator has advised it in writing that it has received an
Opinion of Counsel to the effect that an Adverse REMIC Event could occur with
respect to such
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action. In addition, prior to taking any action with respect to REMIC I, REMIC
II or REMIC III or the assets of any of them, or causing REMIC I, REMIC II or
REMIC III to take any action, which is not expressly permitted under the terms
of this Agreement, each of the other parties hereto will consult with the REMIC
Administrator, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur, and no such other party shall take any such action
or cause REMIC I, REMIC II or REMIC III to take any such action as to which the
REMIC Administrator has advised it in writing that an Adverse REMIC Event could
occur. The REMIC Administrator may consult with counsel to make such written
advice, and the cost of same shall be borne by the party seeking to take the
action not permitted by this Agreement.
(h) In the event that any tax is imposed on REMIC I, REMIC II or REMIC III,
including, without limitation, "prohibited transactions" taxes as defined in
Section 860F(a)(2) of the Code, any tax on "net income from foreclosure
property" as defined in Section 860G(c) of the Code, any taxes on contributions
to REMIC I, REMIC II or REMIC III after the Startup Day pursuant to Section
860G(d) of the Code, and any other tax imposed by the Code or any applicable
provisions of state or local tax laws (other than any tax permitted to be
incurred by the Special Servicer pursuant to Section 3.17(a)(iii)), such tax,
together with all incidental costs and expenses (including, without limitation,
penalties and reasonable attorneys' fees), shall be charged to and paid by: (i)
the REMIC Administrator, if such tax arises out of or results from a breach of
any of its obligations under this Article X; (ii) the Trustee, if such tax
arises out of or results from a breach of any of its obligations under this
Article X; (iii) the Master Servicer, if such tax arises out of or results from
a breach by the Master Servicer of any of its obligations under Article III or
this Article X; (iv) the Special Servicer, if such tax arises out of or results
from a breach by the Special Servicer of any of its obligations under Article
III or this Article X; or (v) the Trust Fund in all other instances. Any tax
permitted to be incurred by the Special Servicer pursuant to Section
3.17(a)(iii) shall be charged to and paid by the Trust Fund. Any such amounts
payable by the Trust Fund in respect of taxes shall be paid by the Trustee at
the direction of the REMIC Administrator out of amounts on deposit in the
Distribution Account.
(i) The REMIC Administrator and, to the extent that records are maintained
thereby in the normal course of its business, each of the other parties hereto
shall, for federal income tax purposes, maintain books and records with respect
to each of REMIC I, REMIC II and REMIC III on a calendar year and on an accrual
basis.
(j) Following the Startup Day therefor, the Trustee shall not accept any
contributions of assets to REMIC I, REMIC II or REMIC III unless it shall have
received an Opinion of Counsel (at the expense of the party seeking to cause
such contribution) to the effect that the inclusion of such assets in such REMIC
will not cause: (i) such REMIC to fail to qualify as a REMIC at any time that
any Certificates are outstanding; or (ii) the imposition of any tax on such
REMIC under the REMIC Provisions or other applicable provisions of federal,
state and local law or ordinances.
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(k) None of the REMIC Administrator, the Master Servicer, the Special
Servicer or the Trustee shall consent to or permit: (i) the sale or disposition
of any of Mortgage Loan (except in connection with (A) a breach of any
representation or warranty regarding any Mortgage Loan set forth in the Mortgage
Loan Purchase Agreement or as otherwise contemplated by Section 2.02(e), (B) the
foreclosure, default or reasonably foreseeable material default of a Mortgage
Loan, including but not limited to, the sale or other disposition of a Mortgaged
Property acquired by deed in lieu of foreclosure, (C) the bankruptcy of REMIC I,
REMIC II or REMIC III, or (D) the termination of the Trust Fund pursuant to
Article IX of this Agreement); (ii) the sale or disposition of any investments
in the Collection Account or the REO Account for gain; or (iii) the acquisition
of any assets for the Trust Fund (other than a Mortgaged Property acquired
through foreclosure, deed in lieu of foreclosure or otherwise in respect of a
defaulted Mortgage Loan and other than Permitted Investments acquired in
connection with the investment of funds in the Collection Account or the REO
Account); in any event unless it has received an Opinion of Counsel (at the
expense of the party seeking to cause such sale, disposition, or acquisition) to
the effect that such sale, disposition, or acquisition will not cause (x) REMIC
I, REMIC II or REMIC III to fail to qualify as a REMIC at any time that any
Certificates are outstanding or (y) the imposition of any tax on REMIC I, REMIC
II or REMIC III under the REMIC Provisions or other applicable provisions of
federal, state and local law or ordinances.
(l) Except as otherwise permitted by Section 3.17(a), none of the REMIC
Administrator, the Master Servicer, the Special Servicer or the Trustee shall
enter into any arrangement by which REMIC I, REMIC II or REMIC III will receive
a fee or other compensation for services or, to the extent it is within the
control of such Person, permit REMIC I, REMIC II or REMIC III to receive any
income from assets other than "qualified mortgages" as defined in Section
860G(a)(3) of the Code or "permitted investments" as defined in Section
860G(a)(5) of the Code. At all times as may be required by the Code, the REMIC
Administrator shall ensure that substantially all of the assets of REMIC I,
REMIC II and REMIC III will consist of "qualified mortgages" as defined in
Section 860G(a)(3) of the Code and "permitted investments" as defined in Section
860G(a)(5) of the Code.
(m) Within 30 days after the Closing Date, the REMIC Administrator shall
prepare and file with the Internal Revenue Service Form 8811 "Information Return
for Real Estate Mortgage Investment Conduits (REMICs) and Issuers of
Collateralized Debt Obligations" for the Trust Fund.
(n) On or before April 15 of each calendar year, commencing April 15,
199__, unless the REMIC Administrator and the Trustee are the same Person, the
REMIC Administrator shall deliver to the Trustee an Officer's Certificate from a
Responsible Officer of the REMIC Administrator stating the REMIC Administrator's
compliance with this Article X.
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SECTION 10.02. Depositor, Master Servicer, Special Servicer and Trustee to
Cooperate with REMIC Administrator.
(a) The Depositor shall provide or cause to be provided to the REMIC
Administrator, within ten days after the Closing Date, all information or data
that the REMIC Administrator reasonably determines to be relevant for tax
purposes as to the valuations and issue prices of the Certificates, including,
without limitation, the price, yield, prepayment assumption and projected cash
flow of the Certificates.
(b) Each of the Master Servicer, the Special Servicer and the Trustee shall
furnish such reports, certifications and information in its possession, and
access to such books and records maintained thereby, as may relate to the
Certificates or the Trust Fund and as shall be reasonably requested by the REMIC
Administrator in order to enable it to perform its duties hereunder.
SECTION 10.03. Indemnification by Trustee, REMIC Administrator, Master
Servicer and Special Servicer.
(a) Each of the Trustee and the REMIC Administrator agrees severally to
indemnify the Trust Fund, the Depositor, the Master Servicer and the Special
Servicer for any taxes and costs (including, without limitation, any reasonable
attorneys' fees) imposed on or incurred by the Trust Fund, the Depositor, the
Master Servicer or the Special Servicer, as a result of a breach of the
Trustee's or the REMIC Administrator's, as the case may be, covenants set forth
in this Article X.
(b) Each of the Master Servicer and the Special Servicer agrees severally
to indemnify the Trust Fund, the Depositor, the Trustee and the REMIC
Administrator for any taxes and costs (including, without limitation, any
reasonable attorneys' fees) imposed on or incurred by the Trust Fund, the
Depositor, the Trustee or the REMIC Administrator, as a result of a breach of
the Master Servicer's or the Special Servicer's, as the case may be, covenants
set forth in this Article X or in Article III.
SECTION 10.04. Fees of the REMIC Administrator.
In the event the Trustee and the REMIC Administrator are not the same
Person, the Trustee covenants and agrees to pay to the REMIC Administrator from
time to time, and the REMIC Administrator shall be entitled to, reasonable
compensation (as set forth in a written agreement between the Trustee and the
REMIC Administrator) for all services rendered by the REMIC Administrator in the
exercise and performance of any of its obligations and duties hereunder.
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SECTION 10.05. Use of Agents.
The REMIC Administrator may execute any of its obligations and duties
hereunder either directly or by or through agents or attorneys consented to by
the Trustee which consent shall not be unreasonably withheld; provided that the
REMIC Administrator will not be relieved of its obligations hereunder by reason
of the use of such agents.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
(a) This Agreement may be amended from time to time by the mutual agreement
of the parties hereto, without the consent of any of the Certificateholders, (i)
to cure any ambiguity, (ii) to correct, modify or supplement any provision
herein which may be inconsistent with any other provision herein, (iii) to add
any other provisions with respect to matters or questions arising hereunder
which shall not be inconsistent with the provisions hereof, (iv) to relax or
eliminate any requirement hereunder imposed by the REMIC Provisions if the REMIC
Provisions are amended or clarified such that any such requirement may be
relaxed or eliminated, or by the Securities Act or the rules thereunder if the
Securities Act or such rules are amended or clarified such that any requirement
may be relaxed or eliminated; (v) if such amendment, as evidenced by an Opinion
of Counsel delivered to the Trustee and the REMIC Administrator, is reasonably
necessary to comply with any requirements imposed by the Code or any successor
or amendatory statute or any temporary or final regulation, revenue ruling,
revenue procedure or other written official announcement or interpretation
relating to federal income tax laws or any such proposed action which, if made
effective, would apply retroactively to REMIC I, REMIC II or REMIC III at least
from the effective date of such amendment, or would be necessary to avoid the
occurrence of a prohibited transaction or to reduce the incidence of any tax
that would arise from any actions taken with respect to the operation of REMIC
I, REMIC II or REMIC III; (vi) as provided in Section 5.02(d)(iv), to modify,
add to or eliminate any of the provisions of Section 5.02(d)(i), (ii) or (iii);
or (vii) for any other purpose; provided that such amendment (other than any
amendment for any of the specific purposes described in clauses (v) and (vi)
above) shall not, as evidenced by an Opinion of Counsel obtained by or delivered
to the Trustee, adversely affect in any material respect the interests of any
Certificateholder without the consent of such Certificateholder; and provided
further that any amendment covered solely by clause (vii) above shall not
adversely affect the then current rating assigned to any Class of Certificates
by either Rating Agency, as evidenced by written confirmation to such effect
from each Rating Agency obtained by or delivered to the Trustee.
(b) This Agreement may also be amended from time to time by the mutual
agreement of the parties hereto with the consent of the Holders of Certificates
entitled to at least 66 2/3% of the Voting Rights allocated to the affected
Classes 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 Certificates; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments received or advanced on Mortgage Loans and/or REO Properties which
are required to be distributed on any Certificate without the consent of the
Holder of such Certificate, [(ii) adversely affect in any material respect the
interests of the Holders of any Class of Certificates in a manner other than as
described in clause (i) above without the consent of the Holders of all
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Certificates of such Class] or [(iii) modify the provisions of this Section
11.01 without the consent of the Holders of all Certificates then outstanding].
Notwithstanding any other provision of this Agreement, for purposes of the
giving or withholding of consents pursuant to this Section 11.01, Certificates
registered in the name of the Depositor or any Affiliate of the Depositor shall
be entitled to the same Voting Rights with respect to the matters described
above as they would if registered in the name of any other Person.
(c) Notwithstanding any contrary provision of this Agreement, neither the
Trustee nor the REMIC Administrator shall consent to any amendment to this
Agreement unless it shall first have obtained or been furnished with an Opinion
of Counsel to the effect that such amendment or the exercise of any power
granted to any party hereto in accordance with such amendment will not result in
the imposition of a tax on REMIC I, REMIC II or REMIC III pursuant to the REMIC
Provisions or cause REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC
at any time that any Certificates are outstanding.
(d) Promptly after the execution of any such amendment, the Trustee shall
send a copy thereof to each Certificateholder and to each Rating Agency.
(e) It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
(f) 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.
(g) The cost of any Opinion of Counsel to be delivered pursuant to Section
11.01(a) or (c) shall be borne by the Person seeking the related amendment,
except that if the Trustee requests any amendment of this Agreement that it
reasonably believes protects or is in furtherance of the rights and interests of
Certificateholders, the cost of any Opinion of Counsel required in connection
therewith pursuant to Section 11.01(a) or (c) shall be payable out of the
Distribution Account.
SECTION 11.02. 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 Trust Fund on direction by the Trustee,
but only upon direction accompanied by an Opinion of Counsel (the cost of which
may be paid
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out of the Collection Account) to the effect that such recordation materially
and beneficially affects the interests of the Certificateholders.
(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 11.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(b) No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement or any Mortgage Loan, unless,
with respect to any suit, action or proceeding upon or under or with respect to
this Agreement, such Holder previously shall have given to the Trustee a written
notice of default hereunder, and of the continuance thereof, as hereinbefore
provided, and unless also (except in the case of a default by the Trustee) the
Holders of Certificates entitled to at least 25% of the Voting Rights shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatsoever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this
163
<PAGE>
Section, each and every Certificateholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
SECTION 11.04. Governing Law.
This Agreement and the Certificates 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
parties hereunder shall be determined in accordance with such laws.
SECTION 11.05. 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 when delivered to: (i) in the case of the Depositor, DLJ Commercial
Mortgage Corp., 277 Park Avenue, 9th Floor, New York, New York 10172, Attention:
[N. Dante LaRocca], telecopy number: [(212) 892-2003]; (ii) in the case of the
Master Servicer, ________________, _________________, Attention: ___________,
telecopy number: ____________; (iii) in the case of the Special
Servicer,________________, _________________, Attention: ___________, telecopy
number: ____________ (with copies to ________________, _________________,
Attention: ___________, telecopy number: ____________; (iv) in the case of the
Trustee, ________________, _________________, Attention: ___________, telecopy
number: ____________; (v) in the case of the REMIC Administrator,
________________, _________________, Attention: ___________, telecopy number:
____________; and (vi) in the case of the Ratings Agencies: (A)________________,
_________________, Attention: ___________, telecopy number: ____________; and
(B)________________, _________________, Attention: ___________, telecopy number:
____________; or as to each such Person such other address and/or telecopy
number as may hereafter be furnished by such Person to the parties hereto in
writing. Any communication required or permitted to be delivered to a
Certificateholder shall be deemed to have been duly given when mailed first
class, postage prepaid, to the address of such Holder as shown in the
Certificate Register.
SECTION 11.06. 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 Certificates or the rights of the Holders thereof.
164
<PAGE>
SECTION 11.07. Successors and Assigns; Beneficiaries.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective successors and assigns and the
other Persons referred to in Sections 6.03 and 8.05, and all such provisions
shall inure to the benefit of the Certificateholders. No other person,
including, without limitation, any Mortgagor, shall be entitled to any benefit
or equitable right, remedy or claim under this Agreement.
SECTION 11.08. 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 11.09. Notices to Rating Agencies.
(a) The Trustee shall promptly provide notice to each Rating Agency with
respect to each of the following of which a Responsible Officer of the Trustee
has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Event of Default that has not been cured;
(iii) the resignation or termination of the Master Servicer, the
Special Servicer or the REMIC Administrator and the appointment of a
successor;
(iv) any change in the location of the Distribution Account; and
(v) the final payment to any Class of Certificateholders.
(b) The Master Servicer shall promptly provide notice to each Rating Agency
with respect to each of the following of which it has actual knowledge:
(i) the resignation or removal of the Trustee and the appointment of a
successor; and
(ii) any change in the location of the Collection Account.
(c) Each of the Master Servicer and the Special Servicer, as the case may
be, shall furnish each Rating Agency such information with respect to the
Mortgage Loans as the Rating Agency shall reasonably request and which the
Master Servicer or the Special Servicer, as the case may be, can reasonably
provide.
165
<PAGE>
(d) Each of the Master Servicer and the Special Servicer, as the case may
be, shall promptly furnish each Rating Agency copies of the following items:
(i) each of its annual statements as to compliance described in
Section 3.13;
(ii) each of its annual independent public accountants' servicing
reports described in Section 3.14; and
(iii) each report prepared pursuant to Section 3.09(e) and Section
3.12.
(e) The Trustee shall promptly deliver to each Rating Agency a copy of each
statement to Certificateholders described in Section 4.02(a) and the reports
referred to in Section 4.02(c).
SECTION 11.10. Complete Agreement.
This Agreement embodies the complete agreement among the parties and may
not be varied or terminated except by a written agreement conforming to the
provisions of Section 11.01. All prior negotiations or representations of the
parties are merged into this Agreement and shall have no force or effect unless
expressly stated herein.
166
<PAGE>
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.
DLJ COMMERCIAL MORTGAGE CORP.
Depositor
By:
--------------------------------
Name:
Title:
[---------------------------------]
Master Servicer
By:
--------------------------------
Name:
Title:
[----------------------------------]
Special Servicer
By:
--------------------------------
Name:
Title:
[----------------------------------]
Trustee and REMIC Administrator
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 DLJ Commercial Mortgage Corp., one of the entities that
executed the within instrument, and also known to me to be the person who
executed it on behalf of such entity, and acknowledged to me that such entity
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 a
____________________ of _____________________, one of the entities that executed
the within instrument, and also known to me to be the person who executed it on
behalf of such entity, and acknowledged to me that such entity 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 this _____ day of ____________ 199__, before me, a notary public in and
for said State, personally appeared _________________________, personally known
to me to be the ______________________________ of ___________________________,
one of the entities that executed the within instrument, and also known to me to
be the person who executed it on behalf of such entity, and acknowledged to me
that such entity executed the within instrument.
IN WITNESS WHEREOF, I have hereunder 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 a
____________________ of ____________________, one of the entities that executed
the within instrument as Trustee and as REMIC Administrator, and also known to
me to be the person who executed it on behalf of such entity, and acknowledged
to me that such entity 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-1
FORM OF CLASS S CERTIFICATE
CLASS S COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
DLJ COMMERCIAL MORTGAGE CORP.
Initial Effective Pass-Through Class Notional Amount of the
Rate: ___% per annum Class S Certificates as of
the Closing Date: _________
Cut-off Date: _________, 199_ Initial Certificate Notional
Amount of this Class S
Closing Date: _________, 199_ Certificate as of the Closing
Date: $____________
First Distribution Date:
______________, 199_
Master Servicer: ______________ Aggregate Stated Principal
Balance of the Mortgage Loans
_______________________________ as of the Closing Date:
$____________
Special Servicer: _____________ Trustee and REMIC
Administrator: ___________
Certificate No. S-__ CUSIP No.
<PAGE>
- 2 -
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE 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.]
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DLJ
COMMERCIAL MORTGAGE CORP., ___________________, _____________________,
____________________. NEITHER THIS CERTIFICATE NOR ANY OF THE UNDERLYING
MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES OR ANY OTHER PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ___________, 199_. ASSUMING
THAT THE MORTGAGE LOANS ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY
PREPAYMENT, THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $______ OF OID
PER $100,000 OF INITIAL CERTIFICATE NOTIONAL AMOUNT, THE YIELD TO MATURITY IS
____% PER ANNUM, AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL
PERIOD IS NO MORE THAN $____ PER $100,000 OF INITIAL CERTIFICATE NOTIONAL
AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL NOT PREPAY OR, IF THEY DO, THAT THEY WILL PREPAY AT ANY
PARTICULAR RATE.]
REDUCTIONS OF THE CERTIFICATE NOTIONAL AMOUNT OF THIS CERTIFICATE MAY BE MADE
MONTHLY AS SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE NOTIONAL AMOUNT HEREOF AT ANY TIME MAY
BE LESS THAN THE AMOUNT SHOWN ABOVE. THIS CERTIFICATE DOES NOT HAVE A
CERTIFICATE PRINCIPAL BALANCE AND WILL NOT ENTITLE THE HOLDER HEREOF TO
DISTRIBUTIONS OF PRINCIPAL.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class S Certificate (obtained by dividing the
notional amount of this Class S Certificate (its "Certificate Notional Amount")
as of the Closing Date by the aggregate notional amount of all the Class S
Certificates (their "Class Notional Amount") as of the Closing
<PAGE>
- 3 -
Date) in that certain beneficial ownership interest evidenced by all the Class S
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as of the Cut-off Date specified above (the "Agreement"), among
DLJ Commercial Mortgage Corp. (the "Depositor", which term includes any
successor entity under the Agreement), __________________________________ (the
"Master Servicer", which term includes any successor entity under the
Agreement), _______________________________________ (the "Special Servicer",
which term includes any successor entity under the Agreement) and ___________
___________________ ____ (the "Trustee" and "REMIC Administrator", depending
upon the capacity in which it is acting, each of which terms includes any
successor entity under the Agreement), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the respective meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
__th day of each month or, if such __th day is not a Business Day, the Business
Day immediately following (each, a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to all the Holders of the
Class S Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class S
Certificates will be made by the 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 Certificateholder shall
have provided the 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 distributions) and is the
registered owner of Certificates the aggregate initial Certificate Notional
Amount of which is at least $10,000,000, or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate will
be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to the Holder hereof of such final distribution.
Notwithstanding anything herein to the contrary, no distributions will be made
with respect to a Certificate that has previously been surrendered as
contemplated by the preceding
<PAGE>
- 4 -
sentence or, with limited exception, that should have been surrendered as
contemplated by the preceding sentence.
The Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
The Class S Certificates are issuable in fully registered form only without
coupons in minimum denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Class S
Certificates are exchangeable for new Class S Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the Certificate
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Class S Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No service charge will be imposed for any registration of transfer or
exchange of Class S Certificates, but the Trustee or the Certificate 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 Class
S Certificates.
Notwithstanding the foregoing, for so long as this Certificate 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 Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
REMIC Administrator, the Certificate Registrar and any agent of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator
or the
<PAGE>
- 5 -
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator, the
Certificate Registrar or any such agent shall be affected by notice to the
contrary.
The Trust Fund and the obligations created by the Agreement shall terminate
upon distribution (or provision for distribution) to the Certificateholders of
all amounts held by or on behalf of the Trustee and required to be distributed
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Special Servicer, the Master Servicer or the Majority Certificateholder of the
Controlling Class at a price determined as provided in the Agreement of all the
Mortgage Loans and each REO Property remaining in the Trust Fund. The Agreement
permits, but does not require, the Special Servicer, the Master Servicer or the
Majority Certificateholder of the Controlling Class to purchase from the Trust
Fund all the Mortgage Loans and each REO Property remaining therein. The
exercise of such right may effect early retirement of the Class S Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Pool at the time of purchase being less than __% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Closing Date
specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator
and the Trustee and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Trustee with the consent of the Holders of Certificates
entitled to at least (66 2/3%) of the Voting Rights allocated to the affected
Classes. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, including any amendment necessary to maintain the status
of REMIC I, REMIC II or REMIC III as a REMIC, without the consent of the Holders
of any of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
- 6 -
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate 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>
- 7 -
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
____________________________
as Trustee
By:_________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class S Certificates referred to in the within-mentioned
Agreement.
Dated:
____________________________
as Certificate Registrar
By: ________________________
Authorized Officer
<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
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
_______________________________________
Signature by or on behalf of Assignor
_______________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or otherwise,
in immediately available funds, to ____________________________________________
_______________________________________________________________________________
for the account of _________________________________________.
Distributions 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
FORM OF CLASS A-1A CERTIFICATE
CLASS A-1A COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
DLJ COMMERCIAL MORTGAGE CORP.
Pass-Through Rate: ___% per Class Principal Balance of
annum the Class A-1A Certificates
as of the Closing Date:_____
________________
Cut-off Date: _________, 199_ Initial Certificate Principal
Balance of this Class A-1A
Closing Date: _________, 199_ Certificate as of the Closing
Date: $_______
First Distribution Date:
______________, 199_
Master Servicer: ______________ Aggregate Stated Principal
Balance of the Mortgage Loans
_______________________________ as of the Closing Date:
$____________
Special Servicer: _____________ Trustee and REMIC
Administrator: _____________
Certificate No. A-1A-___ CUSIP No.
<PAGE>
-2-
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE 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.]
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DLJ
COMMERCIAL MORTGAGE CORP. __________________
_________________,_______________________________________,
______________________________________________________________. NEITHER THIS
CERTIFICATE NOR ANY OF THE UNDERLYING MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY
OR INSTRUMENTALITY OF THE UNITED STATES OR ANY OTHER PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS __________, 199_. ASSUMING
THAT THE MORTGAGE LOANS ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY
PREPAYMENT, THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $______ OF OID
PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, 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 CERTIFICATE PRINCIPAL
BALANCE, 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.]
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE AGGREGATE CERTIFICATE
PRINCIPAL BALANCE OF THE CLASS A-2, CLASS A-3, CLASS B-1, CLASS B-2, CLASS B-3,
CLASS B-4 AND CLASS C CERTIFICATES OF THE SAME SERIES IS REDUCED TO ZERO, THE
CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE REDUCED BY CERTAIN
LOSSES AND EXPENSES EXPERIENCED BY THE TRUST FUND AS SET FORTH IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ABOVE.
<PAGE>
-3-
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A-1A Certificate (obtained by dividing the
principal amount of this Class A-1A Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class A-1A Certificates (their "Class Principal Balance") as of the Closing
Date) in that certain beneficial ownership interest evidenced by all the Class
A-1A Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as of the Cut-off Date specified above (the "Agreement"), among
DLJ Commercial Mortgage Corp. (the "Depositor", which term includes any
successor entity under the Agreement), _________ _______________________ (the
"Master Servicer", which term includes any successor entity under the
Agreement), __________ ____________________________ (the "Special Servicer",
which term includes any successor entity under the Agreement) and _________
______________ (the "Trustee" and "REMIC Administrator", depending upon the
capacity in which it is acting, each of which terms includes any successor
entity under the Agreement), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, capitalized
terms used herein have the respective meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
__th day of each month or, if such __th day is not a Business Day, the Business
Day immediately following (each, a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to all the Holders of the
Class A-1A Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class A-1A
Certificates will be made by the 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 Certificateholder shall
have provided the 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 distributions) and is the
registered owner of Certificates the aggregate initial Certificate Principal
Balance of which is at least $5,000,000, or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard
<PAGE>
-4-
to any possible future reimbursement of any Realized Loss or Additional Trust
Fund Expense previously allocated to this Certificate) will be made in like
manner, but only upon presentation and surrender of this Certificate at the
offices of the Certificate Registrar or such other location specified in the
notice to the Holder hereof of such final distribution. Notwithstanding anything
herein to the contrary, no distributions will be made with respect to a
Certificate 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 Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in reduction of the
Certificate Principal Balance hereof is binding on such Holder and all future
Holders of this Certificate and any Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof whether or not notation of such
distribution is made upon this Certificate.
The Class A-1A Certificates are issuable in fully registered form only
without coupons in minimum denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, Class
A-1A Certificates are exchangeable for new Class A-1A Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the Certificate
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Class A-1A Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
<PAGE>
-5-
No service charge will be imposed for any registration of transfer or
exchange of Class A-1A Certificates, but the Trustee or the Certificate
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 Class A-1A Certificates.
Notwithstanding the foregoing, for so long as this Certificate 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 Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
REMIC Administrator, the Certificate Registrar and any agent of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator
or the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator,
the Certificate Registrar or any such agent shall be affected by notice to the
contrary.
The Trust Fund and the obligations created by the Agreement shall terminate
upon distribution (or provision for distribution) to the Certificateholders of
all amounts held by or on behalf of the Trustee and required to be distributed
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Special Servicer, the Master Servicer or the Majority Certificateholder of the
Controlling Class at a price determined as provided in the Agreement of all the
Mortgage Loans and each REO Property remaining in the Trust Fund. The Agreement
permits, but does not require, the Special Servicer, the Master Servicer or the
Majority Certificateholder of the Controlling Class to purchase from the Trust
Fund all the Mortgage Loans and each REO Property remaining therein. The
exercise of such right may effect early retirement of the Class A-1A
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Pool at the time of purchase being less than
_% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator
and the Trustee and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Special Servicer, the
<PAGE>
-6-
REMIC Administrator and the Trustee with the consent of the Holders of
Certificates entitled to at least [66 2/3]% of the Voting Rights allocated to
the affected Classes. Any such consent by the Holder of this Certificate shall
be conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of REMIC I, REMIC II or REMIC III as a REMIC, without the consent of the
Holders of any of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate 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 Trustee has caused this Certificate to be duly
executed.
________________________
as Trustee
By: ________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1A Certificates referred to in the
within-mentioned Agreement.
Dated:
________________________
as Certificate Registrar
By: ________________________
Authorized Officer
<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
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
_______________________________________
Signature by or on behalf of Assignor
_______________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or otherwise,
in immediately available funds, to ___________________________________________
______________________________________________________________________________
________________________________________________________________for the account
of ___________________________________________________________________________.
Distributions 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
FORM OF CLASS A-1B CERTIFICATE
CLASS A-1B COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
DLJ COMMERCIAL MORTGAGE CORP.
Pass-Through Rate: ___% per Class Principal Balance of
annum the Class A-1B Certificates
as of the Closing Date:_____
______________
Cut-off Date: _________, 199_ Initial Certificate Principal
Balance of this Class A-1B
Closing Date: _________, 199_ Certificate as of the Closing
Date: $_______
First Distribution Date:
______________, 199_
Master Servicer: ______________ Aggregate Stated Principal
_______________________________ Balance of the Mortgage Loans
as of the Closing Date:
$___________
Special Servicer: _____________ Trustee and REMIC
Administrator: _____________
Certificate No. A-1B-_ CUSIP No.
<PAGE>
-2-
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE 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.]
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DLJ
COMMERCIAL MORTGAGE CORP. ______________________________________________
______________, ______________________________________________________________,
______________________________________________________________.
NEITHER THIS CERTIFICATE NOR ANY OF THE UNDERLYING MORTGAGE LOANS IS GUARANTEED
BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OR ANY OTHER PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS __________, 199_. ASSUMING
THAT THE MORTGAGE LOANS ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY
PREPAYMENT, THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $______ OF OID
PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, 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 CERTIFICATE PRINCIPAL
BALANCE, 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.]
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE AGGREGATE CERTIFICATE
PRINCIPAL BALANCE OF THE CLASS A-2, CLASS A-3, CLASS B-1, CLASS B-2, CLASS B-3,
CLASS B-4 AND CLASS C CERTIFICATES OF THE SAME SERIES IS REDUCED TO ZERO, THE
CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE REDUCED BY CERTAIN
LOSSES AND EXPENSES EXPERIENCED BY THE TRUST FUND AS SET FORTH IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ABOVE.
<PAGE>
-3-
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A-1B Certificate (obtained by dividing the
principal amount of this Class A-1B Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class A-1B Certificates (their "Class Principal Balance") as of the Closing
Date) in that certain beneficial ownership interest evidenced by all the Class
A-1B Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as of the Cut-off Date specified above (the "Agreement"), among
DLJ Commercial Mortgage Corp. (the "Depositor", which term includes any
successor entity under the Agreement), _________ _______________________ (the
"Master Servicer", which term includes any successor entity under the
Agreement), __________ ____________________________ (the "Special Servicer",
which term includes any successor entity under the Agreement) and _________
______________ (the "Trustee" and "REMIC Administrator", depending upon the
capacity in which it is acting, each of which terms includes any successor
entity under the Agreement), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, capitalized
terms used herein have the respective meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
__th day of each month or, if such __th day is not a Business Day, the Business
Day immediately following (each, a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to all the Holders of the
Class A-1B Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class A-1B
Certificates will be made by the 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 Certificateholder shall
have provided the 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 distributions) and is the
registered owner of Certificates the aggregate initial Certificate Principal
Balance of which is at least $5,000,000, or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard
<PAGE>
-4-
to any possible future reimbursement of any Realized Loss or Additional Trust
Fund Expense previously allocated to this Certificate) will be made in like
manner, but only upon presentation and surrender of this Certificate at the
offices of the Certificate Registrar or such other location specified in the
notice to the Holder hereof of such final distribution. Notwithstanding anything
herein to the contrary, no distributions will be made with respect to a
Certificate 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 Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in reduction of the
Certificate Principal Balance hereof is binding on such Holder and all future
Holders of this Certificate and any Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof whether or not notation of such
distribution is made upon this Certificate.
The Class A-1B Certificates are issuable in fully registered form only
without coupons in minimum denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, Class
A-1B Certificates are exchangeable for new Class A-1B Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the Certificate
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Class A-1B Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
<PAGE>
-5-
No service charge will be imposed for any registration of transfer or
exchange of Class A-1B Certificates, but the Trustee or the Certificate
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 Class A-1B Certificates.
Notwithstanding the foregoing, for so long as this Certificate 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 Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
REMIC Administrator, the Certificate Registrar and any agent of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator
or the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator,
the Certificate Registrar or any such agent shall be affected by notice to the
contrary.
The Trust Fund and the obligations created by the Agreement shall terminate
upon distribution (or provision for distribution) to the Certificateholders of
all amounts held by or on behalf of the Trustee and required to be distributed
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Special Servicer, the Master Servicer or the Majority Certificateholder of the
Controlling Class at a price determined as provided in the Agreement of all the
Mortgage Loans and each REO Property remaining in the Trust Fund. The Agreement
permits, but does not require, the Special Servicer, the Master Servicer or the
Majority Certificateholder of the Controlling Class to purchase from the Trust
Fund all the Mortgage Loans and each REO Property remaining therein. The
exercise of such right may effect early retirement of the Class A-1B
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Pool at the time of purchase being less than
_% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator
and the Trustee and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Special Servicer, the
<PAGE>
-6-
REMIC Administrator and the Trustee with the consent of the Holders of
Certificates entitled to at least [66 2/3]% of the Voting Rights allocated to
the affected Classes. Any such consent by the Holder of this Certificate shall
be conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of REMIC I, REMIC II or REMIC III as a REMIC, without the consent of the
Holders of any of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate 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>
-7-
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
________________________
as Trustee
By: _____________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1B Certificates referred to in the
within-mentioned Agreement.
Dated:
________________________
as Certificate Registrar
By: ________________________
Authorized Officer
<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
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or otherwise,
in immediately available funds, to ___________________________________________
______________________________________________________________________________
______________________________________________________ for the account of
_________________________________________________.
Distributions 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
FORM OF CLASS A-2 CERTIFICATE
CLASS A-2 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
DLJ COMMERCIAL MORTGAGE CORP.
Pass-Through Rate: ___% per Class Principal Balance of
annum the Class A-2 Certificates as
of the Closing Date:_____
______________
Cut-off Date: _________, 199_ Initial Certificate Principal
Balance of this Class A-2
Closing Date: _________, 199_ Certificate as of the Closing
Date: $_______
First Distribution Date:
______________, 199_
Master Servicer: ______________ Aggregate Stated Principal
Balance of the Mortgage Loans
_______________________________ as of the Closing Date:
$_________
Special Servicer: _____________ Trustee and REMIC
Administrator:
Certificate No. A-2-__ CUSIP No.
<PAGE>
-2-
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE 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 CERTIFICATE 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 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 SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DLJ
COMMERCIAL MORTGAGE CORP., _________________________________,
____________________________________________________________________,
____________________________________________________________________________.
NEITHER THIS CERTIFICATE NOR ANY OF THE UNDERLYING MORTGAGE LOANS IS GUARANTEED
BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1A, CLASS A-1B AND CLASS S
CERTIFICATES OF THE SAME SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS __________, 199_. ASSUMING
THAT THE MORTGAGE LOANS ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY
PREPAYMENT, THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $______ OF OID
PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, 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 CERTIFICATE PRINCIPAL
BALANCE, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL
<PAGE>
-3-
NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT ANY PARTICULAR RATE.]
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS A-1A AND CLASS A-1B
CERTIFICATES OF THE SAME SERIES IS REDUCED TO ZERO, DISTRIBUTIONS IN REDUCTION
OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS
SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. IN
ADDITION, IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS A-3, CLASS
B-1, CLASS B-2, CLASS B-3, CLASS B-4 AND CLASS C CERTIFICATES OF THE SAME SERIES
IS REDUCED TO ZERO, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE
REDUCED BY CERTAIN LOSSES AND EXPENSES EXPERIENCED BY THE TRUST FUND AS SET
FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. ACCORDINGLY,
THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ABOVE.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A-2 Certificate (obtained by dividing the
principal amount of this Class A-2 Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class A-2 Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class A-2
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as of the Cut-off Date specified above (the "Agreement"), among
DLJ Commercial Mortgage Corp. (the "Depositor", which term includes any
successor entity under the Agreement), _________ _______________________ (the
"Master Servicer", which term includes any successor entity under the
Agreement), __________ ____________________________ (the "Special Servicer",
which term includes any successor entity under the Agreement) and _________
______________ (the "Trustee" and "REMIC Administrator", depending upon the
capacity in which it is acting, each of which terms includes any successor
entity under the Agreement), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, capitalized
terms used herein have the respective meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
__th day of each month or, if such __th day is not a Business Day, the Business
Day immediately following (each, a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of
<PAGE>
-4-
such distribution (the "Record Date"), in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to all the Holders of the Class A-2 Certificates on the applicable
Distribution Date pursuant to the Agreement. All distributions made under the
Agreement on the Class A-2 Certificates will be made by the 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 Certificateholder shall have provided the 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
distributions) and is the registered owner of Certificates the aggregate initial
Certificate Principal Balance of which is at least $5,000,000, or otherwise by
check mailed to the address of such Certificateholder as it appears in the
Certificate Register. Notwithstanding the foregoing, the final distribution on
this Certificate (determined without regard to any possible future reimbursement
of any Realized Loss or Additional Trust Fund Expense previously allocated to
this Certificate) will be made in like manner, but only upon presentation and
surrender of this Certificate at the offices of the Certificate Registrar or
such other location specified in the notice to the Holder hereof of such final
distribution. Notwithstanding anything herein to the contrary, no distributions
will be made with respect to a Certificate 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 Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in reduction of the
Certificate Principal Balance hereof is binding on such Holder and all future
Holders of this Certificate and any Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof whether or not notation of such
distribution is made upon this Certificate.
The Class A-2 Certificates are issuable in fully registered form only
without coupons in minimum denominations specified in the Agreement. As provided
in the Agreement and
<PAGE>
-5-
subject to certain limitations therein set forth, Class A-2 Certificates are
exchangeable for new Class A-2 Certificates in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No transfer of a Subordinated 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 Certificate or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan, unless: (i) the purchase and holding of such Certificate or
interest therein is exempt from the prohibited transaction provisions of Section
406 of ERISA and Section 4975 of the Code under Sections I and III of Prohibited
Transaction Class Exemption 95-60; or (ii) in the case of a Subordinated
Certificate that is a Definitive Certificate, the prospective Transferee
provides the Certificate Registrar with a certification of facts and an Opinion
of Counsel which establish to the satisfaction of the Trustee that such transfer
will not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or result in the imposition of an excise tax under Section 4975 of the Code
or subject the Trustee, the Master Servicer or the Special Servicer to any
obligation in addition to those undertaken in the Agreement. Each Person who
acquires any Subordinated Certificate or interest therein (unless it shall have
delivered to the Certificate Registrar the certification of facts and Opinion of
Counsel referred to in clause (ii) the preceding sentence) will be required to
deliver to the Certificate Registrar (or, in the case of an interest in a
Subordinated Certificate that constitutes a Book-Entry Certificate, to the
Certificate Owner that is transferring such interest) a certification to the
effect that: (i) it is neither a Plan nor any Person who is directly or
indirectly purchasing such Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) that the
purchase and holding of such Certificate or interest therein by such person is
exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under Sections I and III of Prohibited Transaction
Class Exemption 95-60. It is hereby acknowledged that the forms of certification
attached to the Agreement as Exhibit G-1 (in the case of Subordinated
Certificates that are Definitive Certificates) and Exhibit G-2 (in the case of
ownership interests in Subordinated Certificates that are Book-Entry
Certificates) are acceptable for purposes of the preceding sentence.
<PAGE>
-6-
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the Certificate
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Class A-2 Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No service charge will be imposed for any registration of transfer or
exchange of Class A-2 Certificates, but the Trustee or the Certificate 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 Class
A-2 Certificates.
Notwithstanding the foregoing, for so long as this Certificate 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 Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
REMIC Administrator, the Certificate Registrar and any agent of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator
or the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator,
the Certificate Registrar or any such agent shall be affected by notice to the
contrary.
The Trust Fund and the obligations created by the Agreement shall terminate
upon distribution (or provision for distribution) to the Certificateholders of
all amounts held by or on behalf of the Trustee and required to be distributed
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Special Servicer, the Master Servicer or the Majority Certificateholder of the
Controlling Class at a price determined as provided in the Agreement of all the
Mortgage Loans and each REO Property remaining in the Trust Fund. The Agreement
permits, but does not require, the Special Servicer, the Master Servicer or the
Majority Certificateholder of the Controlling Class to purchase from the Trust
Fund all the Mortgage Loans and each REO Property remaining therein. The
exercise of such right may effect early
<PAGE>
-7-
retirement of the Class A-2 Certificates; however, such right to purchase is
subject to the aggregate Stated Principal Balance of the Mortgage Pool at the
time of purchase being less than _% of the aggregate Stated Principal Balance of
the Mortgage Loans as of the Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator
and the Trustee and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Trustee with the consent of the Holders of Certificates
entitled to at least [66 2/3]% of the Voting Rights allocated to the affected
Classes. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, including any amendment necessary to maintain the status
of REMIC I, REMIC II or REMIC III as a REMIC, without the consent of the Holders
of any of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate 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>
-8-
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
________________________
as Trustee
By: _____________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Certificates referred to in the
within-mentioned Agreement.
Dated:
________________________
as Certificate Registrar
By: ________________________
Authorized Officer
<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
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or otherwise,
in immediately available funds, to ___________________________________________
______________________________________________________________________________
______________________________________________________ for the account of
_________________________________________________.
Distributions 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
FORM OF CLASS A-3 CERTIFICATE
CLASS A-3 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
DLJ COMMERCIAL MORTGAGE CORP.
Pass-Through Rate: ___% per Class Principal Balance of
annum the Class A-3 Certificates as
of the Closing Date:_____
______________
Cut-off Date: _________, 199_ Initial Certificate Principal
Balance of this Class A-3
Closing Date: _________, 199_ Certificate as of the Closing
Date: $_______
First Distribution Date:
______________, 199_
Master Servicer: ______________ Aggregate Stated Principal
Balance of the Mortgage Loans
_______________________________ as of the Closing Date:
$_________
Special Servicer: _____________ Trustee and REMIC
Administrator: ___________
Certificate No. A-3-__ CUSIP No.
<PAGE>
-2-
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE 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 CERTIFICATE 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 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 SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DLJ
COMMERCIAL MORTGAGE CORP. _________________________________,
________________________________________________________________________,
_______________________________________________________________________________.
NEITHER THIS CERTIFICATE NOR ANY OF THE UNDERLYING MORTGAGE LOANS IS GUARANTEED
BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1A, CLASS A-1B, CLASS S AND CLASS
A-2 CERTIFICATES OF THE SAME SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS __________, 199_. ASSUMING
THAT THE MORTGAGE LOANS ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY
PREPAYMENT, THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $______ OF OID
PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, 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 CERTIFICATE PRINCIPAL
BALANCE, COMPUTED UNDER THE EXACT
<PAGE>
-3-
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.]
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS A-1A, CLASS A-1B AND
CLASS A-2 CERTIFICATES OF THE SAME SERIES IS REDUCED TO ZERO, DISTRIBUTIONS IN
REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE
MONTHLY AS SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
IN ADDITION, IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS B-1,
CLASS B-2, CLASS B-3, CLASS B-4 AND CLASS C CERTIFICATES OF THE SAME SERIES IS
REDUCED TO ZERO, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE
REDUCED BY CERTAIN LOSSES AND EXPENSES EXPERIENCED BY THE TRUST FUND AS SET
FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. ACCORDINGLY,
THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ABOVE.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A-3 Certificate (obtained by dividing the
principal amount of this Class A-3 Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class A-3 Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class A-3
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as of the Cut-off Date specified above (the "Agreement"), among
DLJ Commercial Mortgage Corp. (the "Depositor", which term includes any
successor entity under the Agreement), _________ _______________________ (the
"Master Servicer", which term includes any successor entity under the
Agreement), __________ ____________________________ (the "Special Servicer",
which term includes any successor entity under the Agreement) and
________________________ (the "Trustee" and "REMIC Administrator", depending
upon the capacity in which it is acting, each of which terms includes any
successor entity under the Agreement), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the respective meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
__th day of each month or, if such __th day is not a Business Day, the Business
Day immediately following (each, a "Distribution Date"), commencing on the first
<PAGE>
-4-
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to all the Holders of the
Class A-3 Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class A-3
Certificates will be made by the 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 Certificateholder shall
have provided the 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 distributions) and is the
registered owner of Certificates the aggregate initial Certificate Principal
Balance of which is at least $5,000,000, or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to the Holder hereof of such final distribution.
Notwithstanding anything herein to the contrary, no distributions will be made
with respect to a Certificate 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 Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in reduction of the
Certificate Principal Balance hereof is binding on such Holder and all future
Holders of this Certificate and any Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof whether or not notation of such
distribution is made upon this Certificate.
<PAGE>
-5-
The Class A-3 Certificates are issuable in fully registered form only
without coupons in minimum denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, Class A-3
Certificates are exchangeable for new Class A-3 Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No transfer of a Subordinated 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 Certificate or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan, unless: (i) the purchase and holding of such Certificate or
interest therein is exempt from the prohibited transaction provisions of Section
406 of ERISA and Section 4975 of the Code under Sections I and III of Prohibited
Transaction Class Exemption 95-60; or (ii) in the case of a Subordinated
Certificate that is a Definitive Certificate, the prospective Transferee
provides the Certificate Registrar with a certification of facts and an Opinion
of Counsel which establish to the satisfaction of the Trustee that such transfer
will not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or result in the imposition of an excise tax under Section 4975 of the Code
or subject the Trustee, the Master Servicer or the Special Servicer to any
obligation in addition to those undertaken in the Agreement. Each Person who
acquires any Subordinated Certificate or interest therein (unless it shall have
delivered to the Certificate Registrar the certification of facts and Opinion of
Counsel referred to in clause (ii) the preceding sentence) will be required to
deliver to the Certificate Registrar (or, in the case of an interest in a
Subordinated Certificate that constitutes a Book-Entry Certificate, to the
Certificate Owner that is transferring such interest) a certification to the
effect that: (i) it is neither a Plan nor any Person who is directly or
indirectly purchasing such Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) that the
purchase and holding of such Certificate or interest therein by such person is
exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under Sections I and III of Prohibited Transaction
Class Exemption 95-60. It is hereby acknowledged that the forms of certification
attached to the Agreement as Exhibit G-1 (in the case of Subordinated
Certificates that are Definitive Certificates) and Exhibit G-2 (in the case of
ownership interests
<PAGE>
-6-
in Subordinated Certificates that are Book-Entry Certificates) are acceptable
for purposes of the preceding sentence.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the Certificate
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Class A-3 Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No service charge will be imposed for any registration of transfer or
exchange of Class A-3 Certificates, but the Trustee or the Certificate 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 Class
A-3 Certificates.
Notwithstanding the foregoing, for so long as this Certificate 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 Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
REMIC Administrator, the Certificate Registrar and any agent of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator
or the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator,
the Certificate Registrar or any such agent shall be affected by notice to the
contrary.
The Trust Fund and the obligations created by the Agreement shall terminate
upon distribution (or provision for distribution) to the Certificateholders of
all amounts held by or on behalf of the Trustee and required to be distributed
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Special Servicer the Master Servicer or the Majority Certificateholder of the
Controlling Class at a price determined as provided in the Agreement of all the
Mortgage Loans and each REO Property remaining in the Trust Fund. The Agreement
permits, but does not require, the Special Servicer, the Master Servicer or the
<PAGE>
-7-
Majority Certificateholder of the Controlling Class to purchase from the Trust
Fund all the Mortgage Loans and each REO Property remaining therein. The
exercise of such right may effect early retirement of the Class A-3
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Pool at the time of purchase being less than
_% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator
and the Trustee and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Trustee with the consent of the Holders of Certificates
entitled to at least [66 2/3]% of the Voting Rights allocated to the affected
Classes. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, including any amendment necessary to maintain the status
of REMIC I, REMIC II or REMIC III as a REMIC, without the consent of the Holders
of any of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate 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>
-8-
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
________________________
as Trustee
By: _____________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-3 Certificates referred to in the
within-mentioned Agreement.
Dated:
________________________
as Certificate Registrar
By: ________________________
Authorized Officer
<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
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or otherwise,
in immediately available funds, to ___________________________________________
______________________________________________________________________________
______________________________________________________ for the account of
_________________________________________________.
Distributions 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
FORM OF CLASS B-1 CERTIFICATE
CLASS B-1 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
DLJ COMMERCIAL MORTGAGE CORP.
Pass-Through Rate: ___% per Class Principal Balance of
annum the Class B-1 Certificates as
of the Closing Date:_____
______________
Cut-off Date: _________, 199_ Initial Certificate Principal
Balance of this Class B-1
Closing Date: _________, 199_ Certificate as of the Closing
Date: $_______
First Distribution Date:
______________, 199_
Master Servicer: ______________ Aggregate Stated Principal
Balance of the Mortgage Loans
_______________________________ as of the Closing Date:
$__________
Special Servicer: _____________ Trustee and REMIC
Administrator: ___________
Certificate No. B-1-__ CUSIP No.
<PAGE>
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[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE 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 CERTIFICATE 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 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 SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DLJ
COMMERCIAL MORTGAGE CORP., _________________________________________________,
___________________________________________, _________________________________
_____________________________________________________________________________.
NEITHER THIS CERTIFICATE NOR ANY OF THE UNDERLYING MORTGAGE LOANS IS GUARANTEED
BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1A, CLASS A-1B, CLASS S AND CLASS
A-2 AND CLASS A-3 CERTIFICATES OF THE SAME SERIES TO THE EXTENT DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS __________, 199_. ASSUMING
THAT THE MORTGAGE LOANS ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY
PREPAYMENT, THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $______ OF OID
PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, 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 CERTIFICATE PRINCIPAL
BALANCE, COMPUTED UNDER THE EXACT
<PAGE>
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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.]
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS A-1A, CLASS A-1B,
CLASS A-2 AND CLASS A-3 CERTIFICATES OF THE SAME SERIES IS REDUCED TO ZERO,
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE AGGREGATE CERTIFICATE
PRINCIPAL BALANCE OF THE CLASS B-2, CLASS B-3, CLASS B-4 AND CLASS C
CERTIFICATES OF THE SAME SERIES IS REDUCED TO ZERO, THE CERTIFICATE PRINCIPAL
BALANCE OF THIS CERTIFICATE MAY BE REDUCED BY CERTAIN LOSSES AND EXPENSES
EXPERIENCED BY THE TRUST FUND AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL
BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class B-1 Certificate (obtained by dividing the
principal amount of this Class B-1 Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class B-1 Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class B-1
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as of the Cut-off Date specified above (the "Agreement"), among
DLJ Commercial Mortgage Corp. (the "Depositor", which term includes any
successor entity under the Agreement), ________________________________ (the
"Master Servicer", which term includes any successor entity under the
Agreement), __________ ____________________________ (the "Special Servicer",
which term includes any successor entity under the Agreement) and
________________________ (the "Trustee" and "REMIC Administrator", depending
upon the capacity in which it is acting, each of which terms includes any
successor entity under the Agreement), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the respective meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
__th day of each month or, if such __th day is not a Business Day, the Business
Day immediately following (each, a "Distribution Date"), commencing on the first
<PAGE>
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Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to all the Holders of the
Class B-1 Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class B-1
Certificates will be made by the 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 Certificateholder shall
have provided the 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 distributions) and is the
registered owner of Certificates the aggregate initial Certificate Principal
Balance of which is at least $5,000,000, or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to the Holder hereof of such final distribution.
Notwithstanding anything herein to the contrary, no distributions will be made
with respect to a Certificate 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 Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in reduction of the
Certificate Principal Balance hereof is binding on such Holder and all future
Holders of this Certificate and any Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof whether or not notation of such
distribution is made upon this Certificate.
<PAGE>
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The Class B-1 Certificates are issuable in fully registered form only
without coupons in minimum denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, Class B-1
Certificates are exchangeable for new Class B-1 Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No transfer of a Subordinated 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 Certificate or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan, unless: (i) the purchase and holding of such Certificate or
interest therein is exempt from the prohibited transaction provisions of Section
406 of ERISA and Section 4975 of the Code under Sections I and III of Prohibited
Transaction Class Exemption 95-60; or (ii) in the case of a Subordinated
Certificate that is a Definitive Certificate, the prospective Transferee
provides the Certificate Registrar with a certification of facts and an Opinion
of Counsel which establish to the satisfaction of the Trustee that such transfer
will not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or result in the imposition of an excise tax under Section 4975 of the Code
or subject the Trustee, the Master Servicer or the Special Servicer to any
obligation in addition to those undertaken in the Agreement. Each Person who
acquires any Subordinated Certificate or interest therein (unless it shall have
delivered to the Certificate Registrar the certification of facts and Opinion of
Counsel referred to in clause (ii) the preceding sentence) will be required to
deliver to the Certificate Registrar (or, in the case of an interest in a
Subordinated Certificate that constitutes a Book-Entry Certificate, to the
Certificate Owner that is transferring such interest) a certification to the
effect that: (i) it is neither a Plan nor any Person who is directly or
indirectly purchasing such Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) that the
purchase and holding of such Certificate or interest therein by such person is
exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under Sections I and III of Prohibited Transaction
Class Exemption 95-60. It is hereby acknowledged that the forms of certification
attached to the Agreement as Exhibit G-1 (in the case of Subordinated
Certificates that are Definitive Certificates) and G-2 (in the case of ownership
interests in
<PAGE>
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Subordinated Certificates that are Book-Entry Certificates) are acceptable for
purposes of the preceding sentence.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the Certificate
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Class B-1 Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No service charge will be imposed for any registration of transfer or
exchange of Class B-1 Certificates, but the Trustee or the Certificate 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 Class
B-1 Certificates.
Notwithstanding the foregoing, for so long as this Certificate 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 Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
REMIC Administrator, the Certificate Registrar and any agent of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator
or the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator,
the Certificate Registrar or any such agent shall be affected by notice to the
contrary.
The Trust Fund and the obligations created by the Agreement shall terminate
upon distribution (or provision for distribution) to the Certificateholders of
all amounts held by or on behalf of the Trustee and required to be distributed
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Special Servicer, the Master Servicer or the Majority Certificateholder of the
Controlling Class at a price determined as provided in the Agreement of all the
Mortgage Loans and each REO Property remaining in the Trust Fund. The Agreement
permits, but does not require, the Special Servicer, the Master Servicer or the
<PAGE>
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Majority Certificateholder of the Controlling Class to purchase from the Trust
Fund all the Mortgage Loans and each REO Property remaining therein. The
exercise of such right may effect early retirement of the Class B-1
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Pool at the time of purchase being less than
_% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator
and the Trustee and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Trustee with the consent of the Holders of Certificates
entitled to at least [662/3]% of the Voting Rights allocated to the affected
Classes. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, including any amendment necessary to maintain the status
of REMIC I, REMIC II or REMIC III as a REMIC, without the consent of the Holders
of any of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate 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 Trustee has caused this Certificate to be duly
executed.
________________________
as Trustee
By: ________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-1 Certificates referred to in the
within-mentioned Agreement.
Dated:
___________________________
as Certificate Registrar
By: ________________________
Authorized Officer
<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
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or otherwise,
in immediately available funds, to ___________________________________________
______________________________________________________________________________
______________________________________________________ for the account of
_________________________________________________________________________.
Distributions 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
FORM OF CLASS B-2 CERTIFICATE
CLASS B-2 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
DLJ COMMERCIAL MORTGAGE CORP.
Pass-Through Rate: ___% per Class Principal Balance of
annum the Class B-2 Certificates as
of the Closing Date:_____
______________
Cut-off Date: _________, 199_ Initial Certificate Principal
Balance of this Class B-1
Closing Date: _________, 199_ Certificate as of the Closing
Date: $_______
First Distribution Date:
______________, 199_
Master Servicer: ______________ Aggregate Stated Principal
Balance of the Mortgage Loans
_______________________________ as of the Closing Date:
$__________
Special Servicer: _____________ Trustee and REMIC
Administrator: ___________
Certificate No. B-2-__ CUSIP No.
<PAGE>
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[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE 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.]
THIS CERTIFICATE 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 CERTIFICATE 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 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE 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 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 SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST
IN DLJ COMMERCIAL MORTGAGE CORP., _________________________,
______________________________,_________________________________
_________________________. NEITHER THIS CERTIFICATE NOR ANY OF THE UNDERLYING
MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1A, CLASS A-1B, CLASS S, CLASS
A-2, CLASS A-3 AND CLASS B-1 CERTIFICATES OF THE SAME SERIES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
<PAGE>
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[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ___________, 199__. ASSUMING
THAT THE MORTGAGE LOANS ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY
PREPAYMENT, THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $______ OF OID
PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, 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 CERTIFICATE PRINCIPAL
BALANCE, 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.]
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS A-1A, CLASS A-1B,
CLASS A-2, CLASS A-3 AND CLASS B-1 CERTIFICATES OF THE SAME SERIES IS REDUCED TO
ZERO, DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE AGGREGATE CERTIFICATE
PRINCIPAL BALANCE OF THE CLASS B-3, CLASS B-4 AND CLASS C CERTIFICATES OF THE
SAME SERIES IS REDUCED TO ZERO, THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE REDUCED BY CERTAIN LOSSES AND EXPENSES EXPERIENCED BY THE
TRUST FUND AS SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class B-2 Certificate (obtained by dividing the
principal amount of this Class B-2 Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class B-2 Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class B-2
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as of the Cut-off Date specified above (the "Agreement"), among
DLJ Commercial Mortgage Corp. (the "Depositor", which term includes any
successor entity under the Agreement), ____________ _________________________
(the "Master Servicer", which term includes any successor entity under the
Agreement), __________ _______________ (the "Special Servicer", which term
includes any successor entity under the Agreement) and ____________________
________________________ (the "Trustee" and "REMIC Administrator", depending
upon the capacity in which it is acting, each of which terms includes any
successor entity under the Agreement), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the respective
<PAGE>
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meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
____th day of each month or, if such __th day is not a Business Day, the
Business Day immediately following (each, a "Distribution Date"), commencing on
the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to all the Holders
of the Class B-2 Certificates on the applicable Distribution Date pursuant to
the Agreement. All distributions made under the Agreement on the Class B-2
Certificates will be made by the 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 Certificateholder shall
have provided the 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 distributions) and is the
registered owner of Certificates the aggregate initial Certificate Principal
Balance of which is at least $5,000,000, or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to the Holder hereof of such final distribution.
Notwithstanding anything herein to the contrary, no distributions will be made
with respect to a Certificate 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 Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the
<PAGE>
-5-
Mortgage Loans and the payment of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in reduction of the
Certificate Principal Balance hereof is binding on such Holder and all future
Holders of this Certificate and any Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof whether or not notation of such
distribution is made upon this Certificate.
The Class B-2 Certificates are issuable in fully registered form only
without coupons in minimum denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, Class B-2
Certificates are exchangeable for new Class B-2 Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No transfer, sale, pledge or other disposition of any Private Certificate
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 Private Certificate 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 Depositor or one of its Affiliates), then the
Certificate Registrar shall refuse to register such transfer unless it receives
(and upon receipt, may conclusively rely upon) either: (i) a certificate from
the Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1A to the Agreement; or (ii) a certificate from the
Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1B to the Agreement and a certificate from such
Certificateholder's prospective Transferee substantially in the form attached
either as Exhibit F-2A or as Exhibit F-2B to the Agreement; or (iii) an Opinion
of Counsel satisfactory to the 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 Fund or of the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator, the Trustee or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective Transferee on which such Opinion of Counsel is
based. None of the Depositor, the Trustee or the Certificate Registrar is
obligated to register or qualify any Class of Private Certificates under the
Securities Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of any Private
<PAGE>
-6-
Certificate or interest therein without registration or qualification. Any
Holder of a Private Certificate desiring to effect a transfer of such Private
Certificate or interest therein shall, and does hereby agree to, indemnify, the
Depositor, the Underwriter, the Trustee, the Master Servicer, the Special
Servicer, the REMIC Administrator and the Certificate 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.
No transfer of a Subordinated 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 Certificate or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan, unless: (i) the purchase and holding of such Certificate or
interest therein is exempt from the prohibited transaction provisions of Section
406 of ERISA and Section 4975 of the Code under Sections I and III of Prohibited
Transaction Class Exemption 95-60; or (ii) in the case of a Subordinated
Certificate that is a Definitive Certificate, the prospective Transferee
provides the Certificate Registrar with a certification of facts and an Opinion
of Counsel which establish to the satisfaction of the Trustee that such transfer
will not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or result in the imposition of an excise tax under Section 4975 of the Code
or subject the Trustee, the Master Servicer or the Special Servicer to any
obligation in addition to those undertaken in the Agreement. Each Person who
acquires any Subordinated Certificate or interest therein (unless it shall have
delivered to the Certificate Registrar the certification of facts and Opinion of
Counsel referred to in clause (ii) the preceding sentence) will be required to
deliver to the Certificate Registrar (or, in the case of an interest in a
Subordinated Certificate that constitutes a Book-Entry Certificate, to the
Certificate Owner that is transferring such interest) a certification to the
effect that: (i) it is neither a Plan nor any Person who is directly or
indirectly purchasing such Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) that the
purchase and holding of such Certificate or interest therein by such person is
exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under Sections I and III of Prohibited Transaction
Class Exemption 95-60. It is hereby acknowledged that the forms of certification
attached to the Agreement as Exhibit G-1 (in the case of Subordinated
Certificates that are Definitive
<PAGE>
-7-
Certificates) and Exhibit G-2 (in the case of ownership interests in
Subordinated Certificates that are Book-Entry Certificates) are acceptable for
purposes of the preceding sentence.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the Certificate
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Class B-2 Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No service charge will be imposed for any registration of transfer or
exchange of Class B-2 Certificates, but the Trustee or the Certificate 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 Class
B-2 Certificates.
Notwithstanding the foregoing, for so long as this Certificate 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 Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
REMIC Administrator, the Certificate Registrar and any agent of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator
or the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator,
the Certificate Registrar or any such agent shall be affected by notice to the
contrary.
The Trust Fund and the obligations created by the Agreement shall terminate
upon distribution (or provision for distribution) to the Certificateholders of
all amounts held by or on behalf of the Trustee and required to be distributed
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Special Servicer, the Master Servicer or the Majority Certificateholder of the
Controlling Class at a price determined as provided in the Agreement of all the
Mortgage Loans and each REO Property remaining in the Trust Fund. The Agreement
permits, but does not
<PAGE>
-8-
require, the Special Servicer, the Master Servicer or the Majority
Certificateholder of the Controlling Class to purchase from the Trust Fund all
the Mortgage Loans and each REO Property remaining therein. The exercise of such
right may effect early retirement of the Class B-2 Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Pool at the time of purchase being less than __% of the aggregate
Stated Principal Balance of the Mortgage Loans as of the Closing Date specified
on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator
and the Trustee and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Trustee with the consent of the Holders of Certificates
entitled to at least [66 2/3]% of the Voting Rights allocated to the affected
Classes. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, including any amendment necessary to maintain the status
of REMIC I, REMIC II or REMIC III as a REMIC, without the consent of the Holders
of any of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate 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 Trustee has caused this Certificate to be duly
executed.
________________________
as Trustee
By:
________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-2 Certificates referred to in the
within-mentioned Agreement.
Dated:
__________________________
as Certificate Registrar
By: _______________________
Authorized Officer
<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
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
_____________________________________
Signature by or on behalf of Assignor
__________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or otherwise,
in immediately available funds, to
________________________________________________________________________________
________________________________________________________________________________
for the account of
________________________________________________________________________________
________.
Distributions made by check (such check to be made payable to _____________
____________________) and all applicable statements and notices should be mailed
to
______________________________________________________________________________.
<PAGE>
-11-
This information is provided by ___________________________, the
Assignee named above, or ___________________________________, as its agent.
<PAGE>
EXHIBIT A-8
FORM OF CLASS B-3 CERTIFICATE
CLASS B-3 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
DLJ COMMERCIAL MORTGAGE CORP.
Pass-Through Rate: ___% per Class Principal Balance of
annum the Class B-3 Certificates as
of the Closing Date:_____
______________
Cut-off Date: _________, 199_ Initial Certificate Principal
Balance of this Class B-3
Closing Date: _________, 199_ Certificate as of the Closing
Date: $_______
First Distribution Date:
______________, 199_
Master Servicer: ______________ Aggregate Stated Principal
Balance of the Mortgage Loans
_______________________________ as of the Closing Date:
$__________
Special Servicer: _____________ Trustee and REMIC
Administrator: ___________
Certificate No. B-3-__ CUSIP No.
<PAGE>
-2-
THIS CERTIFICATE 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 CERTIFICATE 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 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE 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 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 SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DLJ
COMMERCIAL MORTGAGE CORP., ____________________________________________________
____________________________________,__________________________________________
____________________________________,_________________________________________.
NEITHER THIS CERTIFICATE NOR ANY OF THE UNDERLYING MORTGAGE LOANS IS GUARANTEED
BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1A, CLASS A-1B, CLASS S, CLASS
A-2, CLASS A-3, CLASS B-1 AND CLASS B-2 CERTIFICATES OF THE SAME SERIES TO THE
EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ______________, 199_.
ASSUMING THAT THE MORTGAGE LOANS ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY
PREPAYMENT, THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $______ OF OID
PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, 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 CERTIFICATE PRINCIPAL
BALANCE, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL
<PAGE>
-3-
NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT ANY PARTICULAR RATE.]
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS A-1A, CLASS A-1B,
CLASS A-2, CLASS A-3, CLASS B-1 AND CLASS B-2 CERTIFICATES OF THE SAME SERIES IS
REDUCED TO ZERO, DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE AGGREGATE
CERTIFICATE PRINCIPAL BALANCE OF THE CLASS B-4 AND CLASS C CERTIFICATES OF THE
SAME SERIES IS REDUCED TO ZERO, THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE REDUCED BY CERTAIN LOSSES AND EXPENSES EXPERIENCED BY THE
TRUST FUND AS SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that __________________ is the registered owner of the
Percentage Interest evidenced by this Class B-3 Certificate (obtained by
dividing the principal amount of this Class B-3 Certificate (its "Certificate
Principal Balance") as of the Closing Date by the aggregate principal amount of
all the Class B-3 Certificates (their "Class Principal Balance") as of the
Closing Date) in that certain beneficial ownership interest evidenced by all the
Class B-3 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as of the Cut-off Date specified above (the
"Agreement"), among DLJ Commercial Mortgage Corp. (the "Depositor", which term
includes any successor entity under the Agreement), __________________________
__________________________________ (the "Master Servicer", which term includes
any successor entity under the Agreement), ___________________________________
(the "Special Servicer", which term includes any successor entity under the
Agreement) and _____________________________ (the "Trustee" and "REMIC
Administrator", depending upon the capacity in which it is acting, each of which
terms includes any successor entity under the Agreement), a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, capitalized terms used herein have the respective meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
__th day of each month or, if such __th day is not a Business Day, the Business
Day immediately following (each, a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name
<PAGE>
-4-
this Certificate is registered at the close of business on the last Business Day
of the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to all the Holders
of the Class B-3 Certificates on the applicable Distribution Date pursuant to
the Agreement. All distributions made under the Agreement on the Class B-3
Certificates will be made by the 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 Certificateholder shall
have provided the 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 distributions) and is the
registered owner of Certificates the aggregate initial Certificate Principal
Balance of which is at least $5,000,000, or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to the Holder hereof of such final distribution.
Notwithstanding anything herein to the contrary, no distributions will be made
with respect to a Certificate 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 Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in reduction of the
Certificate Principal Balance hereof is binding on such Holder and all future
Holders of this Certificate and any Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof whether or not notation of such
distribution is made upon this Certificate.
<PAGE>
-5-
The Class B-3 Certificates are issuable in fully registered form only
without coupons in minimum denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, Class B-3
Certificates are exchangeable for new Class B-3 Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No transfer, sale, pledge or other disposition of any Private Certificate
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 Private Certificate 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 Depositor or one of its Affiliates), then the
Certificate Registrar shall refuse to register such transfer unless it receives
(and upon receipt, may conclusively rely upon) either: (i) a certificate from
the Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1A to the Agreement; or (ii) a certificate from the
Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1B to the Agreement and a certificate from such
Certificateholder's prospective Transferee substantially in the form attached
either as Exhibit F-2A or as Exhibit F-2B to the Agreement; or (iii) an Opinion
of Counsel satisfactory to the 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 Fund or of the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator, the Trustee or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective Transferee on which such Opinion of Counsel is
based. None of the Depositor, the Trustee or the Certificate Registrar is
obligated to register or qualify any Class of Private Certificates under the
Securities Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of any Private Certificate
or interest therein without registration or qualification. Any Holder of a
Private Certificate desiring to effect a transfer of such Private Certificate or
interest therein shall, and does hereby agree to, indemnify, the Depositor, the
Underwriter, the Trustee, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Certificate 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.
<PAGE>
-6-
No transfer of a Subordinated 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 Certificate or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan, unless: (i) the purchase and holding of such Certificate or
interest therein is exempt from the prohibited transaction provisions of Section
406 of ERISA and Section 4975 of the Code under Sections I and III of Prohibited
Transaction Class Exemption 95-60; or (ii) in the case of a Subordinated
Certificate that is a Definitive Certificate, the prospective Transferee
provides the Certificate Registrar with a certification of facts and an Opinion
of Counsel which establish to the satisfaction of the Trustee that such transfer
will not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or result in the imposition of an excise tax under Section 4975 of the Code
or subject the Trustee, the Master Servicer or the Special Servicer to any
obligation in addition to those undertaken in the Agreement. Each Person who
acquires any Subordinated Certificate or interest therein (unless it shall have
delivered to the Certificate Registrar the certification of facts and Opinion of
Counsel referred to in clause (ii) the preceding sentence) will be required to
deliver to the Certificate Registrar (or, in the case of an interest in a
Subordinated Certificate that constitutes a Book-Entry Certificate, to the
Certificate Owner that is transferring such interest) a certification to the
effect that: (i) it is neither a Plan nor any Person who is directly or
indirectly purchasing such Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) that the
purchase and holding of such Certificate or interest therein by such person is
exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under Sections I and III of Prohibited Transaction
Class Exemption 95-60. It is hereby acknowledged that the forms of certification
attached to the Agreement as Exhibit G-1 (in the case of Subordinated
Certificates that are Definitive Certificates) and Exhibit G-2 (in the case of
ownership interests in Subordinated Certificates that are Book-Entry
Certificates) are acceptable for purposes of the preceding sentence.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the
<PAGE>
-7-
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Class B-3 Certificates in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No service charge will be imposed for any registration of transfer or
exchange of Class B-3 Certificates, but the Trustee or the Certificate 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 Class
B-3 Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
REMIC Administrator, the Certificate Registrar and any agent of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator
or the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator,
the Certificate Registrar or any such agent shall be affected by notice to the
contrary.
The Trust Fund and the obligations created by the Agreement shall terminate
upon distribution (or provision for distribution) to the Certificateholders of
all amounts held by or on behalf of the Trustee and required to be distributed
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Special Servicer, the Master Servicer or the Majority Certificateholder of the
Controlling Class at a price determined as provided in the Agreement of all the
Mortgage Loans and each REO Property remaining in the Trust Fund. The Agreement
permits, but does not require, the Special Servicer, the Master Servicer or the
Majority Certificateholder of the Controlling Class to purchase from the Trust
Fund all the Mortgage Loans and each REO Property remaining therein. The
exercise of such right may effect early retirement of the Class B-3
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Pool at the time of purchase being less than
__% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator
and the Trustee and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Special Servicer, the
<PAGE>
-8-
REMIC Administrator and the Trustee with the consent of the Holders of
Certificates entitled to at least [66 2/3]% of the Voting Rights allocated to
the affected Classes. Any such consent by the Holder of this Certificate shall
be conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of REMIC I, REMIC II or REMIC III as a REMIC, without the consent of the
Holders of any of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate 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 Trustee has caused this Certificate to be duly
executed.
___________________________
as Trustee
By:
________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-3 Certificates referred to in the
within-mentioned Agreement.
Dated:
___________________________
as Certificate Registrar
By:
________________________
Authorized Officer
<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
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
_____________________________________
Signature by or on behalf of Assignor
______________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or otherwise,
in immediately available funds, to
_______________________________________________________________________________
_______________________________________________________________________________
for the account of
_______________________________________________________________________________.
Distributions made by check (such check to be made payable to
____________________) and all applicable statements and notices should be mailed
to ____________________________________________________________________________.
<PAGE>
-11-
This information is provided by ___________________________, the Assignee
named above, or ___________________________________, as its agent.
<PAGE>
EXHIBIT A-9
FORM OF CLASS B-4 CERTIFICATE
CLASS B-4 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
DLJ COMMERCIAL MORTGAGE CORP.
Pass-Through Rate: ___% per Class Principal Balance of
annum the Class B-4 Certificates as
of the Closing Date:_____
______________
Cut-off Date: _________, 199_ Initial Certificate Principal
Balance of this Class B-4
Closing Date: _________, 199_ Certificate as of the Closing
Date: $_______
First Distribution Date:
______________, 199_
Master Servicer: ______________ Aggregate Stated Principal
Balance of the Mortgage Loans
_______________________________ as of the Closing Date:
$__________
Special Servicer: _____________ Trustee and REMIC
Administrator: ___________
Certificate No. B-4-__ CUSIP No.
<PAGE>
-2-
THIS CERTIFICATE 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 CERTIFICATE 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 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE 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 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 SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DLJ
COMMERCIAL MORTGAGE CORP., ___________________________________________________
______________________________,
________________________________________________________________,_____________
__________________________________. NEITHER THIS CERTIFICATE NOR ANY OF THE
UNDERLYING MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1A, CLASS A-1B, CLASS S, CLASS
A-2, CLASS A-3, CLASS B-1, CLASS B-2 AND CLASS B-3 CERTIFICATES OF THE SAME
SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ______________, 199_.
ASSUMING THAT THE MORTGAGE LOANS ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY
PREPAYMENT, THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $______ OF OID
PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, 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 CERTIFICATE PRINCIPAL
BALANCE, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL
<PAGE>
-3-
NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT ANY PARTICULAR RATE.]
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS A-1A, CLASS A-1B,
CLASS A-2, CLASS A-3, CLASS B-1, CLASS B-2 AND CLASS B-3 CERTIFICATES OF THE
SAME SERIES IS REDUCED TO ZERO, DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE
AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS C CERTIFICATES OF THE SAME
SERIES IS REDUCED TO ZERO, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE
MAY BE REDUCED BY CERTAIN LOSSES AND EXPENSES EXPERIENCED BY THE TRUST FUND AS
SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that DLJ Commercial Mortgage Corp. is the registered owner
of the Percentage Interest evidenced by this Class B-4 Certificate (obtained by
dividing the principal amount of this Class B-4 Certificate (its "Certificate
Principal Balance") as of the Closing Date by the aggregate principal amount of
all the Class B-4 Certificates (their "Class Principal Balance") as of the
Closing Date) in that certain beneficial ownership interest evidenced by all the
Class B-4 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as of the Cut-off Date specified above (the
"Agreement"), among DLJ Commercial Mortgage Corp. (the "Depositor", which term
includes any successor entity under the Agreement),___________________________
____________________________________(the "Master Servicer", which term includes
any successor entity under the Agreement), ___________________________________
_______________________________ (the "Special Servicer", which term includes any
successor entity under the Agreement) and ___________________________ (the
"Trustee" and "REMIC Administrator", depending upon the capacity in which it is
acting, each of which terms includes any successor entity under the Agreement),
a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, capitalized terms used herein have
the respective meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
__th day of each month or, if such __th day is not a Business Day, the Business
Day immediately following (each, a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the
<PAGE>
-4-
last Business Day of the month immediately preceding the month of such
distribution (the "Record Date"), in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to all the Holders of the Class B-4 Certificates on the applicable
Distribution Date pursuant to the Agreement. All distributions made under the
Agreement on the Class B-4 Certificates will be made by the 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 Certificateholder shall have provided the 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
distributions) and is the registered owner of Certificates the aggregate initial
Certificate Principal Balance of which is at least $5,000,000, or otherwise by
check mailed to the address of such Certificateholder as it appears in the
Certificate Register. Notwithstanding the foregoing, the final distribution on
this Certificate (determined without regard to any possible future reimbursement
of any Realized Loss or Additional Trust Fund Expense previously allocated to
this Certificate) will be made in like manner, but only upon presentation and
surrender of this Certificate at the offices of the Certificate Registrar or
such other location specified in the notice to the Holder hereof of such final
distribution. Notwithstanding anything herein to the contrary, no distributions
will be made with respect to a Certificate 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 Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in reduction of the
Certificate Principal Balance hereof is binding on such Holder and all future
Holders of this Certificate and any Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof whether or not notation of such
distribution is made upon this Certificate.
The Class B-4 Certificates are issuable in fully registered form only
without coupons in minimum denominations
<PAGE>
-5-
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Class B-4 Certificates are exchangeable for new
Class B-4 Certificates in authorized denominations evidencing the same aggregate
Percentage Interest, as requested by the Holder surrendering the same.
No transfer, sale, pledge or other disposition of any Private Certificate
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 Private Certificate 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 Depositor or one of its Affiliates), then the
Certificate Registrar shall refuse to register such transfer unless it receives
(and upon receipt, may conclusively rely upon) either: (i) a certificate from
the Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1A to the Agreement; or (ii) a certificate from the
Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1B to the Agreement and a certificate from such
Certificateholder's prospective Transferee substantially in the form attached
either as Exhibit F-2A or as Exhibit F-2B to the Agreement; or (iii) an Opinion
of Counsel satisfactory to the 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 Fund or of the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator, the Trustee or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective Transferee on which such Opinion of Counsel is
based. None of the Depositor, the Trustee or the Certificate Registrar is
obligated to register or qualify any Class of Private Certificates under the
Securities Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of any Private Certificate
or interest therein without registration or qualification. Any Holder of a
Private Certificate desiring to effect a transfer of such Private Certificate or
interest therein shall, and does hereby agree to, indemnify, the Depositor, the
Underwriter, the Trustee, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Certificate 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.
No transfer of a Subordinated Certificate or any interest therein shall be
made (A) to any employee benefit plan
<PAGE>
-6-
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 Certificate or interest therein on behalf of, as named fiduciary
of, as trustee of, or with assets of a Plan, unless: (i) the purchase and
holding of such Certificate or interest therein is exempt from the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the Code
under Sections I and III of Prohibited Transaction Class Exemption 95-60; or
(ii) in the case of a Subordinated Certificate that is a Definitive Certificate,
the prospective Transferee provides the Certificate Registrar with a
certification of facts and an Opinion of Counsel which establish to the
satisfaction of the Trustee that such transfer will not result in a violation of
Section 406 of ERISA or Section 4975 of the Code or result in the imposition of
an excise tax under Section 4975 of the Code or subject the Trustee, the Master
Servicer or the Special Servicer to any obligation in addition to those
undertaken in the Agreement. Each Person who acquires any Subordinated
Certificate or interest therein (unless it shall have delivered to the
Certificate Registrar the certification of facts and Opinion of Counsel referred
to in clause (ii) the preceding sentence) will be required to deliver to the
Certificate Registrar (or, in the case of an interest in a Subordinated
Certificate that constitutes a Book-Entry Certificate, to the Certificate Owner
that is transferring such interest) a certification to the effect that: (i) it
is neither a Plan nor any Person who is directly or indirectly purchasing such
Certificate or interest therein on behalf of, as named fiduciary of, as trustee
of, or with assets of a Plan; or (ii) that the purchase and holding of such
Certificate or interest therein by such person is exempt from the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the Code
under Sections I and III of Prohibited Transaction Class Exemption 95-60. It is
hereby acknowledged that the forms of certification attached to the Agreement as
Exhibit G-1 (in the case of Subordinated Certificates that are Definitive
Certificates) and Exhibit G-2 (in the case of ownership interests in
Subordinated Certificates that are Book-Entry Certificates) are acceptable for
purposes of the preceding sentence.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the Certificate
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more
<PAGE>
-7-
new Class B-4 Certificates in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer or
exchange of Class B-4 Certificates, but the Trustee or the Certificate 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 Class
B-4 Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
REMIC Administrator, the Certificate Registrar and any agent of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator
or the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator,
the Certificate Registrar or any such agent shall be affected by notice to the
contrary.
The Trust Fund and the obligations created by the Agreement shall terminate
upon distribution (or provision for distribution) to the Certificateholders of
all amounts held by or on behalf of the Trustee and required to be distributed
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Special Servicer, the Master Servicer or the Majority Certificateholder of the
Controlling Class at a price determined as provided in the Agreement of all the
Mortgage Loans and each REO Property remaining in the Trust Fund. The Agreement
permits, but does not require, the Special Servicer, the Master Servicer or the
Majority Certificateholder of the Controlling Class to purchase from the Trust
Fund all the Mortgage Loans and each REO Property remaining therein. The
exercise of such right may effect early retirement of the Class B-4
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Pool at the time of purchase being less than
__% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator
and the Trustee and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Trustee with the consent of the Holders of Certificates
entitled to at least [66 2/3]% of the
<PAGE>
-8-
Voting Rights allocated to the affected Classes. Any such consent by the Holder
of this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, including any amendment
necessary to maintain the status of REMIC I, REMIC II or REMIC III as a REMIC,
without the consent of the Holders of any of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate 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 Trustee has caused this Certificate to be duly
executed.
_______________________________
as Trustee
By:
____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-4 Certificates referred to in the
within-mentioned Agreement.
Dated:
_______________________________
as Certificate Registrar
By:
____________________________
Authorized Officer
<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
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or otherwise,
in immediately available funds, to
________________________________________________________________________________
________________________________________________________________________________
for the account of
_______________________________________________________________________________.
Distributions made by check (such check to be made payable to _____________
____________________) and all applicable statements and notices should be mailed
to _____________________________________________________________________________
_______________________________________________________________________________.
<PAGE>
-11-
This information is provided by ___________________________, the Assignee
named above, or ___________________________________, as its agent.
<PAGE>
EXHIBIT A-10
FORM OF CLASS C CERTIFICATE
CLASS C COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
DLJ COMMERCIAL MORTGAGE CORP.
Pass-Through Rate: ___% per Class Principal Balance of
annum the Class C Certificates as
of the Closing Date:_____
______________
Cut-off Date: _________, 199_ Initial Certificate Principal
Balance of this Class C
Closing Date: _________, 199_ Certificate as of the Closing
Date: $_______
First Distribution Date:
______________, 199_
Master Servicer: ______________ Aggregate Stated Principal
Balance of the Mortgage Loans
_______________________________ as of the Closing Date:
$__________
Special Servicer: _____________ Trustee and REMIC
Administrator: ___________
Certificate No. C- __ CUSIP No.
<PAGE>
-2-
THIS CERTIFICATE 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 CERTIFICATE 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 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE 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 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 SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DLJ
COMMERCIAL MORTGAGE CORP., ___________________________________________________
__________________________, ___________________________________,
_______________________________________. NEITHER THIS CERTIFICATE NOR ANY OF THE
UNDERLYING MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1A, CLASS A-1B, CLASS S, CLASS
A-2, CLASS A-3, CLASS B-1, CLASS B-2, CLASS B-3 AND CLASS B-4 CERTIFICATES OF
THE SAME SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ___________, 199_. ASSUMING
THAT THE MORTGAGE LOANS ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY
PREPAYMENT, THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $______ OF OID
PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, 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 CERTIFICATE PRINCIPAL
BALANCE, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL
<PAGE>
-3-
NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT ANY PARTICULAR RATE.]
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS A-1A, CLASS A-1B,
CLASS A-2, CLASS A-3, CLASS B-1, CLASS B-2, CLASS B-3 AND CLASS B-4 CERTIFICATES
OF THE SAME SERIES IS REDUCED TO ZERO, DISTRIBUTIONS IN REDUCTION OF THE
CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET
FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. IN ADDITION,
THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE REDUCED BY CERTAIN
LOSSES AND EXPENSES EXPERIENCED BY THE TRUST FUND AS SET FORTH IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ABOVE.
This certifies that __________________ is the registered owner of the
Percentage Interest evidenced by this Class C Certificate (obtained by dividing
the principal amount of this Class C Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class C Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class C
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as of the Cut-off Date specified above (the "Agreement"), among
DLJ Commercial Mortgage Corp. (the "Depositor", which term includes any
successor entity under the Agreement), ___________ _____________________________
(the "Master Servicer", which term includes any successor entity under the
Agreement), ___________ _____________________________ (the "Special Servicer",
which term includes any successor entity under the Agreement) and ________
______________________ (the "Trustee" and "REMIC Administrator", depending upon
the capacity in which it is acting, each of which terms includes any successor
entity under the Agreement), a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, capitalized
terms used herein have the respective meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
__th day of each month or, if such __th day is not a Business Day, the Business
Day immediately following (each, a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the
<PAGE>
-4-
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to all the Holders of the Class C Certificates on the
applicable Distribution Date pursuant to the Agreement. All distributions made
under the Agreement on the Class C Certificates will be made by the 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 Certificateholder shall have provided the 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 distributions) and is the registered owner of Certificates the
aggregate initial Certificate Principal Balance of which is at least $5,000,000,
or otherwise by check mailed to the address of such Certificateholder as it
appears in the Certificate Register. Notwithstanding the foregoing, the final
distribution on this Certificate (determined without regard to any possible
future reimbursement of any Realized Loss or Additional Trust Fund Expense
previously allocated to this Certificate) will be made in like manner, but only
upon presentation and surrender of this Certificate at the offices of the
Certificate Registrar or such other location specified in the notice to the
Holder hereof of such final distribution. Notwithstanding anything herein to the
contrary, no distributions will be made with respect to a Certificate 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 Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in reduction of the
Certificate Principal Balance hereof is binding on such Holder and all future
Holders of this Certificate and any Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof whether or not notation of such
distribution is made upon this Certificate.
The Class C Certificates are issuable in fully registered form only without
coupons in minimum denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Class C
<PAGE>
-5-
Certificates are exchangeable for new Class C Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No transfer, sale, pledge or other disposition of any Private Certificate
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 Private Certificate 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 Depositor or one of its Affiliates), then the
Certificate Registrar shall refuse to register such transfer unless it receives
(and upon receipt, may conclusively rely upon) either: (i) a certificate from
the Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1A to the Agreement; or (ii) a certificate from the
Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1B to the Agreement and a certificate from such
Certificateholder's prospective Transferee substantially in the form attached
either as Exhibit F-2A or as Exhibit F-2B to the Agreement; or (iii) an Opinion
of Counsel satisfactory to the 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 Fund or of the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator, the Trustee or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective Transferee on which such Opinion of Counsel is
based. None of the Depositor, the Trustee or the Certificate Registrar is
obligated to register or qualify any Class of Private Certificates under the
Securities Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of any Private Certificate
or interest therein without registration or qualification. Any Holder of a
Private Certificate desiring to effect a transfer of such Private Certificate or
interest therein shall, and does hereby agree to, indemnify, the Depositor, the
Underwriter, the Trustee, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Certificate 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.
No transfer of a Subordinated 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
<PAGE>
-6-
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 Certificate or interest therein on
behalf of, as named fiduciary of, as trustee of, or with assets of a Plan,
unless: (i) the purchase and holding of such Certificate or interest therein is
exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under Sections I and III of Prohibited Transaction
Class Exemption 95-60; or (ii) in the case of a Subordinated Certificate that is
a Definitive Certificate, the prospective Transferee provides the Certificate
Registrar with a certification of facts and an Opinion of Counsel which
establish to the satisfaction of the Trustee that such transfer will not result
in a violation of Section 406 of ERISA or Section 4975 of the Code or result in
the imposition of an excise tax under Section 4975 of the Code or subject the
Trustee, the Master Servicer or the Special Servicer to any obligation in
addition to those undertaken in the Agreement. Each Person who acquires any
Subordinated Certificate or interest therein (unless it shall have delivered to
the Certificate Registrar the certification of facts and Opinion of Counsel
referred to in clause (ii) the preceding sentence) will be required to deliver
to the Certificate Registrar (or, in the case of an interest in a Subordinated
Certificate that constitutes a Book-Entry Certificate, to the Certificate Owner
that is transferring such interest) a certification to the effect that: (i) it
is neither a Plan nor any Person who is directly or indirectly purchasing such
Certificate or interest therein on behalf of, as named fiduciary of, as trustee
of, or with assets of a Plan; or (ii) that the purchase and holding of such
Certificate or interest therein by such person is exempt from the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the Code
under Sections I and III of Prohibited Transaction Class Exemption 95-60. It is
hereby acknowledged that the forms of certification attached to the Agreement as
Exhibit G-1 (in the case of Subordinated Certificates that are Definitive
Certificates) and Exhibit G-2 (in the case of ownership interests in
Subordinated Certificates that are Book-Entry Certificates) are acceptable for
purposes of the preceding sentence.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the Certificate
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Class C Certificates in authorized
denominations evidencing
<PAGE>
-7-
the same aggregate Percentage Interest will be issued to the designated
transferee or transferees.
No service charge will be imposed for any registration of transfer or
exchange of Class C Certificates, but the Trustee or the Certificate 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 Class
C Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
REMIC Administrator, the Certificate Registrar and any agent of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator
or the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator,
the Certificate Registrar or any such agent shall be affected by notice to the
contrary.
The Trust Fund and the obligations created by the Agreement shall terminate
upon distribution (or provision for distribution) to the Certificateholders of
all amounts held by or on behalf of the Trustee and required to be distributed
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Special Servicer, the Master Servicer or the Majority Certificateholder of the
Controlling Class at a price determined as provided in the Agreement of all the
Mortgage Loans and each REO Property remaining in the Trust Fund. The Agreement
permits, but does not require, the Special Servicer, the Master Servicer or the
Majority Certificateholder of the Controlling Class to purchase from the Trust
Fund all the Mortgage Loans and each REO Property remaining therein. The
exercise of such right may effect early retirement of the Class C Certificates;
however, such right to purchase is subject to the aggregate Stated Principal
Balance of the Mortgage Pool at the time of purchase being less than __% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Closing Date
specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator
and the Trustee and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Trustee with the consent of the Holders of Certificates
entitled to at least [66 2/3]% of the Voting Rights allocated to the affected
Classes. Any such
<PAGE>
-8-
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, including any amendment necessary to maintain the status of REMIC
I, REMIC II or REMIC III as a REMIC, without the consent of the Holders of any
of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate 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 Trustee has caused this Certificate to be duly
executed.
________________________________
as Trustee
By:
____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class C Certificates referred to in the within-mentioned
Agreement.
Dated:
_______________________________
as Certificate Registrar
By:
____________________________
Authorized Officer
<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
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or otherwise,
in immediately available funds, to
________________________________________________________________________________
________________________________________________________________________________
for the account of
_______________________________________________________________________________.
Distributions made by check (such check to be made payable to _____________
____________________) and all applicable statements and notices should be mailed
to _____________________________________________________________________________
_______________________________________________________________________________.
<PAGE>
-11-
This information is provided by ___________________________, the Assignee
named above, or ___________________________________, as its agent.
<PAGE>
EXHIBIT A-11
FORM OF CLASS R-I CERTIFICATE
CLASS R-I COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
DLJ COMMERCIAL MORTGAGE CORP.
Cut-off Date: ________, 199__ Percentage Interest evidenced
by this Class R-I Certificate:
_____%
Closing Date: _________, 199_ Aggregate Stated Principal
Balance of the Mortgage Loans
as of the Closing Date:
$__________
First Distribution Date:
______________, 199_
Master Servicer: ______________ Trustee and REMIC
Administrator: ___________
_______________________________
Special Servicer: _____________
Certificate No. R-I- __
<PAGE>
-2-
THIS CERTIFICATE 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 CERTIFICATE 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 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE 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 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 SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DLJ
COMMERCIAL MORTGAGE CORP., ________________________________________________,
___________________________________________________________________________,
______________________________________________. NEITHER THIS CERTIFICATE NOR ANY
OF THE UNDERLYING MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1A, CLASS A-1B, CLASS S, CLASS
A-2, CLASS A-3, CLASS B-1, CLASS B-2, CLASS B-3, CLASS B-4 AND CLASS C
CERTIFICATES OF THE SAME SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
CONSEQUENTLY, TRANSFER OF THIS CERTIFICATE IS ALSO SUBJECT TO THE ADDITIONAL TAX
RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN. IF ANY PERSON BECOMES THE
REGISTERED HOLDER OF THIS CERTIFICATE IN VIOLATION OF SUCH TRANSFER
RESTRICTIONS, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER OR UNDER THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS, IF ANY,
ON THIS CERTIFICATE.
This certifies that __________________ is the registered owner of the Percentage
Interest evidenced by this
<PAGE>
-3-
Class R-I Certificate (as specified above) in that certain beneficial ownership
interest evidenced by all the Class R-I Certificates in the Trust Fund created
pursuant to a Pooling and Servicing Agreement, dated as of the Cut-off Date
specified above (the "Agreement"), among DLJ Commercial Mortgage Corp. (the
"Depositor", which term includes any successor entity under the Agreement),
____________________________________ (the "Master Servicer", which term includes
any successor entity under the Agreement), ________________________________ (the
"Special Servicer", which term includes any successor entity under the
Agreement) and _______________________________ (the "Trustee" and "REMIC
Administrator", depending upon the capacity in which it is acting, each of which
terms includes any successor entity under the Agreement), a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, capitalized terms used herein have the respective meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
__th day of each month or, if such __th day is not a Business Day, the Business
Day immediately following (each, a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to all the Holders of the
Class R-I Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class R-I
Certificates will be made by the Trustee to the Person entitled thereto by check
mailed to the address of such Certificateholder as it appears in the Certificate
Register. Notwithstanding the foregoing, the final distribution on this
Certificate will be made in like manner, but only upon presentation and
surrender of this Certificate at the offices of the Certificate Registrar or
such other location specified in the notice to the Holder hereof of such final
distribution. Notwithstanding anything herein to the contrary, no distributions
will be made with respect to a Certificate 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 Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the
<PAGE>
-4-
Distribution Account, the Collection Account and, if established, the REO
Account may be made from time to time for purposes other than, and, in certain
cases, prior to, distributions to Certificateholders, such purposes including
the reimbursement of advances made, or certain expenses incurred, with respect
to the Mortgage Loans and the payment of interest on such advances and expenses.
The Class R-I Certificates are issuable in fully registered form only
without coupons in minimum denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, Class R-I
Certificates are exchangeable for new Class R-I Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No transfer, sale, pledge or other disposition of any Private Certificate
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 Private Certificate 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 Depositor or one of its Affiliates), then the
Certificate Registrar shall refuse to register such transfer unless it receives
(and upon receipt, may conclusively rely upon) either: (i) a certificate from
the Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1A to the Agreement; or (ii) a certificate from the
Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1B to the Agreement and a certificate from such
Certificateholder's prospective Transferee substantially in the form attached
either as Exhibit F-2A or as Exhibit F-2B to the Agreement; or (iii) an Opinion
of Counsel satisfactory to the 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 Fund or of the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator, the Trustee or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective Transferee on which such Opinion of Counsel is
based. None of the Depositor, the Trustee or the Certificate Registrar is
obligated to register or qualify any Class of Private Certificates under the
Securities Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of any Private Certificate
or interest therein without registration or qualification. Any Holder of a
Private Certificate desiring to
<PAGE>
-5-
effect a transfer of such Private Certificate or interest therein shall, and
does hereby agree to, indemnify, the Depositor, the Underwriter, the Trustee,
the Master Servicer, the Special Servicer, the REMIC Administrator and the
Certificate 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.
No transfer of a Subordinated 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 Certificate or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan, unless: (i) the purchase and holding of such Certificate or
interest therein is exempt from the prohibited transaction provisions of Section
406 of ERISA and Section 4975 of the Code under Sections I and III of Prohibited
Transaction Class Exemption 95-60; or (ii) in the case of a Subordinated
Certificate that is a Definitive Certificate, the prospective Transferee
provides the Certificate Registrar with a certification of facts and an Opinion
of Counsel which establish to the satisfaction of the Trustee that such transfer
will not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or result in the imposition of an excise tax under Section 4975 of the Code
or subject the Trustee, the Master Servicer or the Special Servicer to any
obligation in addition to those undertaken in the Agreement. Each Person who
acquires any Subordinated Certificate or interest therein (unless it shall have
delivered to the Certificate Registrar the certification of facts and Opinion of
Counsel referred to in clause (ii) the preceding sentence) will be required to
deliver to the Certificate Registrar (or, in the case of an interest in
Subordinated Certificates that constitutes a Book-Entry Certificate, to the
Certificate Owner that is transferring such interest) a certification to the
effect that: (i) it is neither a Plan nor any Person who is directly or
indirectly purchasing such Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) that the
purchase and holding of such Certificate or interest therein by such person is
exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under Sections I and III of Prohibited Transaction
Class Exemption 95-60. It is hereby acknowledged that the forms of certification
attached to the Agreement as Exhibit G-1 (in the case of Subordinated
Certificates that are Definitive Certificates) and G-2 (in the case of ownership
interests
<PAGE>
-6-
Subordinated Certificates that are in Book-Entry Certificates) are acceptable
for purposes of the preceding sentence.
Each Person who has or who acquires any Ownership Interest in this
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the provisions of Section 5.02(d) of the
Agreement and, if any purported Transferee shall become a Holder of this
Certificate in violation of the provisions of such Section 5.02(d), to have
irrevocably authorized the Trustee under clause (ii)(A) of such Section 5.02(d)
to deliver payments to a Person other than such Person and to have irrevocably
authorized the Trustee under clause (ii)(B) of such Section 5.02(d) to negotiate
the terms of any mandatory sale and to execute all instruments of Transfer and
to do all other things necessary in connection with any such sale. Each Person
holding or acquiring any Ownership Interest in this Certificate must be a
Permitted Transferee and shall promptly notify the Trustee and the REMIC
Administrator of any change or impending change in its status as a Permitted
Transferee. In connection with any proposed Transfer of any Ownership Interest
in this Certificate, the Certificate Registrar shall require delivery to it, and
shall not register the Transfer of this Certificate until its receipt of, an
affidavit and agreement substantially in the form attached as Exhibit H-1 to the
Agreement (a "Transfer Affidavit and Agreement") from the proposed Transferee,
in form and substance satisfactory to the Certificate Registrar, representing
and warranting, among other things, that such Transferee is a Permitted
Transferee, that it is not acquiring its Ownership Interest in this Certificate
as a nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in this
Certificate, it will endeavor to remain a Permitted Transferee, and that it has
reviewed the provisions of Section 5.02(d) of the Agreement and agrees to be
bound by them. Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee, if a Responsible Officer of the Certificate
Registrar or Trustee has actual knowledge that the proposed Transferee is not a
Permitted Transferee, no Transfer of an Ownership Interest in this Certificate
to such proposed Transferee shall be effected.
Each Person holding or acquiring any Ownership Interest in this Certificate
shall agree (x) to require a Transfer Affidavit and Agreement from any other
Person to whom such Person attempts to transfer its Ownership Interest herein
and (y) not to transfer its Ownership Interest herein unless it provides to the
Certificate Registrar a certificate substantially in the form attached as
Exhibit H-2 to the Agreement stating that, among other things, it has no actual
knowledge that such other Person is not a Permitted Transferee. Each Person
holding or acquiring an Ownership Interest in this Certificate, by purchasing
such Ownership Interest herein, agrees to give the Trustee and the
<PAGE>
-7-
REMIC Administrator written notice that it is a "pass-through interest holder"
within the meaning of temporary Treasury regulation Section 1.67-3T(a)(2)(i)(A)
immediately upon acquiring such Ownership Interest, if it is, or is holding such
Ownership Interest on behalf of, a "pass-through interest holder".
The provisions of Section 5.02(d) of the Agreement may be modified, added
to or eliminated, provided that there shall have been delivered to the Trustee
and the REMIC Administrator the following: (a) written confirmation from each
Rating Agency to the effect that the modification of, addition to or elimination
of such provisions will not cause such Rating Agency to qualify, downgrade or
withdraw its then-current ratings of any Class of Certificates; and (b) an
Opinion of Counsel, in form and substance satisfactory to the Trustee and the
REMIC Administrator, to the effect that such modification of, addition to or
elimination of such provisions will not cause any of REMIC I, REMIC II or REMIC
III to (x) cease to qualify as a REMIC or (y) be subject to an entity-level tax
caused by the Transfer of any Class R-I Certificate to a Person that is not a
Permitted Transferee, or cause a Person other than the prospective Transferee to
be subject to a REMIC-related tax caused by the Transfer of a Class R-I
Certificate to a Person that is not a Permitted Transferee.
A "Permitted Transferee" is any Transferee other than a "Disqualified
Organization" and a "Non-United States Person". A "Disqualified Organization" is
any of (i) the United States, any State or political subdivision thereof, any
possession of the United States, or any agency or instrumentality of any of the
foregoing (other than an instrumentality which is a corporation if all of its
activities are subject to tax and, except for the FHLMC, a majority of its board
of directors is not selected by such governmental unit), (ii) a foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381 of the Code and (v) any other
Person so designated by the REMIC Administrator based upon an Opinion of Counsel
provided to it that the holding of an Ownership Interest in a Residual
Certificate by such Person may cause the Trust Fund or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a Residual
Certificate to such Person. The terms "United States", "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
<PAGE>
-8-
A "Non-United States Person" is any Person other than a United States
Person. A "United States Person" is a citizen or resident of the United States,
a corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the Certificate
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Class R-I Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No service charge will be imposed for any registration of transfer or
exchange of Class R-I Certificates, but the Trustee or the Certificate 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 Class
R-I Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
REMIC Administrator, the Certificate Registrar and any agent of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator
or the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator,
the Certificate Registrar or any such agent shall be affected by notice to the
contrary.
The Trust Fund and the obligations created by the Agreement shall terminate
upon distribution (or provision for distribution) to the Certificateholders of
all amounts held by or on behalf of the Trustee and required to be distributed
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Special Servicer, the Master Servicer or the Majority Certificateholder of the
Controlling Class at a price determined as provided in the Agreement of all the
Mortgage Loans and each REO Property remaining in the Trust Fund. The Agreement
permits, but does not
<PAGE>
-9-
require, the Special Servicer, the Master Servicer or the Majority
Certificateholder of the Controlling Class to purchase from the Trust Fund all
the Mortgage Loans and each REO Property remaining therein. The exercise of such
right will effect early retirement of the Class R-I Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Pool at the time of purchase being less than __% of the aggregate
Stated Principal Balance of the Mortgage Loans as of the Closing Date specified
on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator
and the Trustee and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Trustee with the consent of the Holders of Certificates
entitled to at least [66 2/3]% of the Voting Rights allocated to the affected
Classes. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, including any amendment necessary to maintain the status
of REMIC I, REMIC II or REMIC III as a REMIC, without the consent of the Holders
of any of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate 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 Trustee has caused this Certificate to be duly
executed.
_______________________________
as Trustee
By:
____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R-I Certificates referred to in the
within-mentioned Agreement.
Dated:
________________________
as Certificate Registrar
By:
____________________________
Authorized Officer
<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
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall be by check made payable to
__________________________________ and mailed to
_______________________________________________________________________________.
Applicable statements and notices should be mailed to
________________________________________________________________________________
_______________________________________________________________________________.
This information is provided by ___________________________, the Assignee
named above, or ____________________________________, as its agent.
<PAGE>
EXHIBIT A-12
FORM OF CLASS R-II CERTIFICATE
CLASS R-II COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
DLJ COMMERCIAL MORTGAGE CORP.
Cut-off Date: ________, 199__ Percentage Interest evidenced
by this Class R-II
Certificate: _____%
Closing Date: _________, 199_ Aggregate Stated Principal
Balance of the Mortgage Loans
as of the Closing Date:
$__________
First Distribution Date:
______________, 199_
Master Servicer: ______________ Trustee and REMIC
Administrator: ___________
_______________________________
Special Servicer:
Certificate No. R-II- __
<PAGE>
-2-
THIS CERTIFICATE 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 CERTIFICATE 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 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE 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 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 SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DLJ
COMMERCIAL MORTGAGE CORP., ____________________________________________________,
____________________________________,___________________________________________
____________________________________________. NEITHER THIS CERTIFICATE NOR ANY
OF THE UNDERLYING MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY
OF THE UNITED STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1A, CLASS A-1B, CLASS S, CLASS
A-2, CLASS A-3, CLASS B-1, CLASS B-2, CLASS B-3, CLASS B-4 AND CLASS C
CERTIFICATES OF THE SAME SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
CONSEQUENTLY, TRANSFER OF THIS CERTIFICATE IS ALSO SUBJECT TO THE ADDITIONAL TAX
RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN. IF ANY PERSON BECOMES THE
REGISTERED HOLDER OF THIS CERTIFICATE IN VIOLATION OF SUCH TRANSFER
RESTRICTIONS, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER OR UNDER THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS, IF ANY,
ON THIS CERTIFICATE.
This certifies that __________________ is the registered owner of the
Percentage Interest evidenced by this
<PAGE>
-3-
Class R-II Certificate (as specified above) in that certain beneficial ownership
interest evidenced by all the Class R-II Certificates in the Trust Fund created
pursuant to a Pooling and Servicing Agreement, dated as of the Cut-off Date
specified above (the "Agreement"), among DLJ Commercial Mortgage Corp. (the
"Depositor", which term includes any successor entity under the Agreement),
_______________________________________ (the "Master Servicer", which term
includes any successor entity under the Agreement),__________________________
_____________________________________ (the "Special Servicer", which term
includes any successor entity under the Agreement) and _____________________
(the "Trustee" and "REMIC Administrator", depending upon the capacity in which
it is acting, each of which terms includes any successor entity under the
Agreement), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, capitalized terms used herein
have the respective meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
__th day of each month or, if such __th day is not a Business Day, the Business
Day immediately following (each, a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to all the Holders of the
Class R-II Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class R-II
Certificates will be made by the Trustee to the Person entitled thereto by check
mailed to the address of such Certificateholder as it appears in the Certificate
Register. Notwithstanding the foregoing, the final distribution on this
Certificate will be made in like manner, but only upon presentation and
surrender of this Certificate at the offices of the Certificate Registrar or
such other location specified in the notice to the Holder hereof of such final
distribution. Notwithstanding anything herein to the contrary, no distributions
will be made with respect to a Certificate 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 Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the
<PAGE>
-4-
Distribution Account, the Collection Account and, if established, the REO
Account may be made from time to time for purposes other than, and, in certain
cases, prior to, distributions to Certificateholders, such purposes including
the reimbursement of advances made, or certain expenses incurred, with respect
to the Mortgage Loans and the payment of interest on such advances and expenses.
The Class R-II Certificates are issuable in fully registered form only
without coupons in minimum denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, Class
R-II Certificates are exchangeable for new Class R-II Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No transfer, sale, pledge or other disposition of any Private Certificate
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 Private Certificate 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 Depositor or one of its Affiliates), then the
Certificate Registrar shall refuse to register such transfer unless it receives
(and upon receipt, may conclusively rely upon) either: (i) a certificate from
the Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1A to the Agreement; or (ii) a certificate from the
Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1B to the Agreement and a certificate from such
Certificateholder's prospective Transferee substantially in the form attached
either as Exhibit F-2A or as Exhibit F-2B to the Agreement; or (iii) an Opinion
of Counsel satisfactory to the 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 Fund or of the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator, the Trustee or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective Transferee on which such Opinion of Counsel is
based. None of the Depositor, the Trustee or the Certificate Registrar is
obligated to register or qualify any Class of Private Certificates under the
Securities Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of any Private Certificate
or interest therein without registration or qualification. Any Holder of a
Private Certificate desiring to
<PAGE>
-5-
effect a transfer of such Private Certificate or interest therein shall, and
does hereby agree to, indemnify, the Depositor, the Underwriter, the Trustee,
the Master Servicer, the Special Servicer, the REMIC Administrator and the
Certificate 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.
No transfer of a Subordinated 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 Certificate or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan, unless: (i) the purchase and holding of such Certificate or
interest therein is exempt from the prohibited transaction provisions of Section
406 of ERISA and Section 4975 of the Code under Sections I and III of Prohibited
Transaction Class Exemption 95-60; or (ii) in the case of a Subordinated
Certificate that is a Definitive Certificate, the prospective Transferee
provides the Certificate Registrar with a certification of facts and an Opinion
of Counsel which establish to the satisfaction of the Trustee that such transfer
will not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or result in the imposition of an excise tax under Section 4975 of the Code
or subject the Trustee, the Master Servicer or the Special Servicer to any
obligation in addition to those undertaken in the Agreement. Each Person who
acquires any Subordinated Certificate or interest therein (unless it shall have
delivered to the Certificate Registrar the certification of facts and Opinion of
Counsel referred to in clause (ii) the preceding sentence) will be required to
deliver to the Certificate Registrar (or, in the case of an interest in
Subordinated Certificates that constitute a Book-Entry Certificate, to the
Certificate Owner that is transferring such interest) a certification to the
effect that: (i) it is neither a Plan nor any Person who is directly or
indirectly purchasing such Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) that the
purchase and holding of such Certificate or interest therein by such person is
exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under Sections I and III of Prohibited Transaction
Class Exemption 95-60. It is hereby acknowledged that the forms of certification
attached to the Agreement as Exhibit G-1 (in the case of Subordinated
Certificates that are Definitive Certificates) and G-2 (in the case of ownership
interests in
<PAGE>
-6-
Subordinated Certificates that are Book-Entry Certificates) are acceptable for
purposes of the preceding sentence.
Each Person who has or who acquires any Ownership Interest in this
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the provisions of Section 5.02(d) of the
Agreement and, if any purported Transferee shall become a Holder of this
Certificate in violation of the provisions of such Section 5.02(d), to have
irrevocably authorized the Trustee under clause (ii)(A) of such Section 5.02(d)
to deliver payments to a Person other than such Person and to have irrevocably
authorized the Trustee under clause (ii)(B) of such Section 5.02(d) to negotiate
the terms of any mandatory sale and to execute all instruments of Transfer and
to do all other things necessary in connection with any such sale. Each Person
holding or acquiring any Ownership Interest in this Certificate must be a
Permitted Transferee and shall promptly notify the Trustee and the REMIC
Administrator of any change or impending change in its status as a Permitted
Transferee. In connection with any proposed Transfer of any Ownership Interest
in this Certificate, the Certificate Registrar shall require delivery to it, and
shall not register the Transfer of this Certificate until its receipt of, an
affidavit and agreement substantially in the form attached as Exhibit H-1 to the
Agreement (a "Transfer Affidavit and Agreement") from the proposed Transferee,
in form and substance satisfactory to the Certificate Registrar, representing
and warranting, among other things, that such Transferee is a Permitted
Transferee, that it is not acquiring its Ownership Interest in this Certificate
as a nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in this
Certificate, it will endeavor to remain a Permitted Transferee, and that it has
reviewed the provisions of Section 5.02(d) of the Agreement and agrees to be
bound by them. Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee, if a Responsible Officer of the Certificate
Registrar or Trustee has actual knowledge that the proposed Transferee is not a
Permitted Transferee, no Transfer of an Ownership Interest in this Certificate
to such proposed Transferee shall be effected.
Each Person holding or acquiring any Ownership Interest in this Certificate
shall agree (x) to require a Transfer Affidavit and Agreement from any other
Person to whom such Person attempts to transfer its Ownership Interest herein
and (y) not to transfer its Ownership Interest herein unless it provides to the
Certificate Registrar a certificate substantially in the form attached as
Exhibit H-2 to the Agreement stating that, among other things, it has no actual
knowledge that such other Person is not a Permitted Transferee. Each Person
holding or acquiring an Ownership Interest in this Certificate, by purchasing
such Ownership Interest herein, agrees to give the Trustee and the
<PAGE>
-7-
REMIC Administrator written notice that it is a "pass-through interest holder"
within the meaning of temporary Treasury regulation Section 1.67-3T(a)(2)(i)(A)
immediately upon acquiring such Ownership Interest, if it is, or is holding such
Ownership Interest on behalf of, a "pass-through interest holder".
The provisions of Section 5.02(d) of the Agreement may be modified, added
to or eliminated, provided that there shall have been delivered to the Trustee
and the REMIC Administrator the following: (a) written confirmation from each
Rating Agency to the effect that the modification of, addition to or elimination
of such provisions will not cause such Rating Agency to qualify, downgrade or
withdraw its then-current ratings of any Class of Certificates; and (b) an
Opinion of Counsel, in form and substance satisfactory to the Trustee and the
REMIC Administrator, to the effect that such modification of, addition to or
elimination of such provisions will not cause any of REMIC I, REMIC II or REMIC
III to (x) cease to qualify as a REMIC or (y) be subject to an entity-level tax
caused by the Transfer of any Class R-II Certificate to a Person that is not a
Permitted Transferee, or cause a Person other than the prospective Transferee to
be subject to a REMIC-related tax caused by the Transfer of a Class R-II
Certificate to a Person that is not a Permitted Transferee.
A "Permitted Transferee" is any Transferee other than a "Disqualified
Organization" and a "Non-United States Person". A "Disqualified Organization" is
any of (i) the United States, any State or political subdivision thereof, any
possession of the United States, or any agency or instrumentality of any of the
foregoing (other than an instrumentality which is a corporation if all of its
activities are subject to tax and, except for the FHLMC, a majority of its board
of directors is not selected by such governmental unit), (ii) a foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381 of the Code and (v) any other
Person so designated by the REMIC Administrator based upon an Opinion of Counsel
provided to it that the holding of an Ownership Interest in a Residual
Certificate by such Person may cause the Trust Fund or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a Residual
Certificate to such Person. The terms "United States", "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
<PAGE>
-8-
A "Non-United States Person" is any Person other than a United States
Person. A "United States Person" is a citizen or resident of the United States,
a corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the Certificate
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Class R-II Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No service charge will be imposed for any registration of transfer or
exchange of Class R-II Certificates, but the Trustee or the Certificate
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 Class R-II Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
REMIC Administrator, the Certificate Registrar and any agent of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator
or the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator,
the Certificate Registrar or any such agent shall be affected by notice to the
contrary.
The Trust Fund and the obligations created by the Agreement shall terminate
upon distribution (or provision for distribution) to the Certificateholders of
all amounts held by or on behalf of the Trustee and required to be distributed
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Master Servicer or the Majority Certificateholder of the Controlling Class at a
price determined as provided in the Agreement of all the Mortgage Loans and each
REO Property remaining in the Trust Fund. The Agreement permits, but does not
require, the Master Servicer or
<PAGE>
-9-
the Majority Certificateholder of the Controlling Class to purchase from the
Trust Fund all the Mortgage Loans and each REO Property remaining therein. The
exercise of such right will effect early retirement of the Class R-II
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Pool at the time of purchase being less than
__% of the aggregate Stated Principal Balance of the Mortgage Loans as of the
Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator
and the Trustee and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Trustee with the consent of the Holders of Certificates
entitled to at least [66 2/3]% of the Voting Rights allocated to the affected
Classes. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, including any amendment necessary to maintain the status
of REMIC I, REMIC II or REMIC III as a REMIC, without the consent of the Holders
of any of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate 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 Trustee has caused this Certificate to be duly
executed.
_______________________________
as Trustee
By:
____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R-II Certificates referred to in the
within-mentioned Agreement.
Dated:
______________________________
as Certificate Registrar
By:
__________________________
Authorized Officer
<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
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall be by check made payable to __________________________
__________________________________ and mailed to
_______________________________________________________________________________
_______________________________________________________________________________.
Applicable statements and notices should be mailed to ____________________
_______________________________________________________________________________
________________________________________.
This information is provided by ___________________________, the Assignee
named above, or ____________________________________, as its agent.
<PAGE>
EXHIBIT A-13
FORM OF CLASS R-III CERTIFICATE
CLASS R-III COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
DLJ COMMERCIAL MORTGAGE CORP.
Cut-off Date: ________, 199__ Percentage Interest evidenced
by this Class R - III
Certificate: _____%
Closing Date: _________, 199_ Aggregate Stated Principal
Balance of the Mortgage Loans
as of the Closing Date:
$__________
First Distribution Date:
______________, 199_
Master Servicer: Trustee and REMIC
Administrator: ___________
_______________________________
Special Servicer:
Certificate No. R-III- __
<PAGE>
-2-
THIS CERTIFICATE 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 CERTIFICATE 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 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE 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 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 SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DLJ
COMMERCIAL MORTGAGE CORP., ______________________________________________,
____________________________________,______________________________________
__________________________________________. NEITHER THIS CERTIFICATE NOR ANY OF
THE UNDERLYING MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF
THE UNITED STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1A, CLASS A-1B, CLASS S, CLASS
A-2, CLASS A-3, CLASS B-1, CLASS B-2, CLASS B-3, CLASS B-4 AND CLASS C
CERTIFICATES OF THE SAME SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
CONSEQUENTLY, TRANSFER OF THIS CERTIFICATE IS ALSO SUBJECT TO THE ADDITIONAL TAX
RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN. IF ANY PERSON BECOMES THE
REGISTERED HOLDER OF THIS CERTIFICATE IN VIOLATION OF SUCH TRANSFER
RESTRICTIONS, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER OR UNDER THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS, IF ANY,
ON THIS CERTIFICATE.
This certifies that __________________ is the registered owner of the
Percentage Interest evidenced by this
<PAGE>
-3-
Class R-III Certificate (as specified above) in that certain beneficial
ownership interest evidenced by all the Class R-III Certificates in the Trust
Fund created pursuant to a Pooling and Servicing Agreement, dated as of the
Cut-off Date specified above (the "Agreement"), among DLJ Commercial Mortgage
Corp. (the "Depositor", which term includes any successor entity under the
Agreement), __________________________________ (the "Master Servicer", which
term includes any successor entity under the Agreement),______________________
____________________________________ (the "Special Servicer", which term
includes any successor entity under the Agreement) and ________________________
_________________________________ (the "Trustee" and "REMIC Administrator",
depending upon the capacity in which it is acting, each of which terms includes
any successor entity under the Agreement), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the respective meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on the
__th day of each month or, if such __th day is not a Business Day, the Business
Day immediately following (each, a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to all the Holders of the
Class R-III Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class R-III
Certificates will be made by the Trustee to the Person entitled thereto by check
mailed to the address of such Certificateholder as it appears in the Certificate
Register. Notwithstanding the foregoing, the final distribution on this
Certificate will be made in like manner, but only upon presentation and
surrender of this Certificate at the offices of the Certificate Registrar or
such other location specified in the notice to the Holder hereof of such final
distribution. Notwithstanding anything herein to the contrary, no distributions
will be made with respect to a Certificate 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 Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the
<PAGE>
-4-
Distribution Account, the Collection Account and, if established, the REO
Account may be made from time to time for purposes other than, and, in certain
cases, prior to, distributions to Certificateholders, such purposes including
the reimbursement of advances made, or certain expenses incurred, with respect
to the Mortgage Loans and the payment of interest on such advances and expenses.
The Class R-III Certificates are issuable in fully registered form only
without coupons in minimum denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, Class
R-III Certificates are exchangeable for new Class R-III Certificates in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No transfer, sale, pledge or other disposition of any Private Certificate
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 Private Certificate 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 Depositor or one of its Affiliates), then the
Certificate Registrar shall refuse to register such transfer unless it receives
(and upon receipt, may conclusively rely upon) either: (i) a certificate from
the Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1A to the Agreement; or (ii) a certificate from the
Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1B to the Agreement and a certificate from such
Certificateholder's prospective Transferee substantially in the form attached
either as Exhibit F-2A or as Exhibit F-2B to the Agreement; or (iii) an Opinion
of Counsel satisfactory to the 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 Fund or of the Depositor, the Master
Servicer, the Special Servicer, the REMIC Administrator, the Trustee or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective Transferee on which such Opinion of Counsel is
based. None of the Depositor, the Trustee or the Certificate Registrar is
obligated to register or qualify any Class of Private Certificates under the
Securities Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of any Private Certificate
or interest therein without registration or qualification. Any Holder of a
Private Certificate desiring to
<PAGE>
-5-
effect a transfer of such Private Certificate or interest therein shall, and
does hereby agree to, indemnify, the Depositor, the Underwriter, the Trustee,
the Master Servicer, the Special Servicer, the REMIC Administrator and the
Certificate 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.
No transfer of a Subordinated 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 Certificate or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan, unless: (i) the purchase and holding of such Certificate or
interest therein is exempt from the prohibited transaction provisions of Section
406 of ERISA and Section 4975 of the Code under Sections I and III of Prohibited
Transaction Class Exemption 95-60; or (ii) in the case of a Subordinated
Certificate that is a Definitive Certificate, the prospective Transferee
provides the Certificate Registrar with a certification of facts and an Opinion
of Counsel which establish to the satisfaction of the Trustee that such transfer
will not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or result in the imposition of an excise tax under Section 4975 of the Code
or subject the Trustee, the Master Servicer or the Special Servicer to any
obligation in addition to those undertaken in the Agreement. Each Person who
acquires any Subordinated Certificate or interest therein (unless it shall have
delivered to the Certificate Registrar the certification of facts and Opinion of
Counsel referred to in clause (ii) the preceding sentence) will be required to
deliver to the Certificate Registrar (or, in the case of an interest in a
Subordinated Certificate that constitute a Book-Entry Certificate, to the
Certificate Owner that is transferring such interest) a certification to the
effect that: (i) it is neither a Plan nor any Person who is directly or
indirectly purchasing such Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) that the
purchase and holding of such Certificate or interest therein by such person is
exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under Sections I and III of Prohibited Transaction
Class Exemption 95-60. It is hereby acknowledged that the forms of certification
attached to the Agreement as Exhibit G-1 (in the case of Subordinated
Certificates that are Definitive Certificates) and Exhibit G-2 (in the case of
ownership interests
<PAGE>
-6-
in Subordinated Certificates that are Book-Entry Certificates) are acceptable
for purposes of the preceding sentence.
Each Person who has or who acquires any Ownership Interest in this
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the provisions of Section 5.02(d) of the
Agreement and, if any purported Transferee shall become a Holder of this
Certificate in violation of the provisions of such Section 5.02(d), to have
irrevocably authorized the Trustee under clause (ii)(A) of such Section 5.02(d)
to deliver payments to a Person other than such Person and to have irrevocably
authorized the Trustee under clause (ii)(B) of such Section 5.02(d) to negotiate
the terms of any mandatory sale and to execute all instruments of Transfer and
to do all other things necessary in connection with any such sale. Each Person
holding or acquiring any Ownership Interest in this Certificate must be a
Permitted Transferee and shall promptly notify the Trustee and the REMIC
Administrator of any change or impending change in its status as a Permitted
Transferee. In connection with any proposed Transfer of any Ownership Interest
in this Certificate, the Certificate Registrar shall require delivery to it, and
shall not register the Transfer of this Certificate until its receipt of, an
affidavit and agreement substantially in the form attached as Exhibit H-1 to the
Agreement (a "Transfer Affidavit and Agreement") from the proposed Transferee,
in form and substance satisfactory to the Certificate Registrar, representing
and warranting, among other things, that such Transferee is a Permitted
Transferee, that it is not acquiring its Ownership Interest in this Certificate
as a nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in this
Certificate, it will endeavor to remain a Permitted Transferee, and that it has
reviewed the provisions of Section 5.02(d) of the Agreement and agrees to be
bound by them. Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee, if a Responsible Officer of the Certificate
Registrar or Trustee has actual knowledge that the proposed Transferee is not a
Permitted Transferee, no Transfer of an Ownership Interest in this Certificate
to such proposed Transferee shall be effected.
Each Person holding or acquiring any Ownership Interest in this Certificate
shall agree (x) to require a Transfer Affidavit and Agreement from any other
Person to whom such Person attempts to transfer its Ownership Interest herein
and (y) not to transfer its Ownership Interest herein unless it provides to the
Certificate Registrar a certificate substantially in the form attached as
Exhibit H-2 to the Agreement stating that, among other things, it has no actual
knowledge that such other Person is not a Permitted Transferee. Each Person
holding or acquiring an Ownership Interest in this Certificate, by purchasing
such Ownership Interest herein, agrees to give the Trustee and the
<PAGE>
-7-
REMIC Administrator written notice that it is a "pass-through interest holder"
within the meaning of temporary Treasury regulation Section 1.67-3T(a)(2)(i)(A)
immediately upon acquiring such Ownership Interest, if it is, or is holding such
Ownership Interest on behalf of, a "pass-through interest holder".
The provisions of Section 5.02(d) of the Agreement may be modified, added
to or eliminated, provided that there shall have been delivered to the Trustee
and the REMIC Administrator the following: (a) written confirmation from each
Rating Agency to the effect that the modification of, addition to or elimination
of such provisions will not cause such Rating Agency to qualify, downgrade or
withdraw its then-current ratings of any Class of Certificates; and (b) an
Opinion of Counsel, in form and substance satisfactory to the Trustee and the
REMIC Administrator, to the effect that such modification of, addition to or
elimination of such provisions will not cause any of REMIC I, REMIC II or REMIC
III to (x) cease to qualify as a REMIC or (y) be subject to an entity-level tax
caused by the Transfer of any Class R-III Certificate to a Person that is not a
Permitted Transferee, or cause a Person other than the prospective Transferee to
be subject to a REMIC-related tax caused by the Transfer of a Class R-III
Certificate to a Person that is not a Permitted Transferee.
A "Permitted Transferee" is any Transferee other than a "Disqualified
Organization" and a "Non-United States Person". A "Disqualified Organization" is
any of (i) the United States, any State or political subdivision thereof, any
possession of the United States, or any agency or instrumentality of any of the
foregoing (other than an instrumentality which is a corporation if all of its
activities are subject to tax and, except for the FHLMC, a majority of its board
of directors is not selected by such governmental unit), (ii) a foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, (iii) any organization (other than certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381 of the Code and (v) any other
Person so designated by the REMIC Administrator based upon an Opinion of Counsel
provided to it that the holding of an Ownership Interest in a Residual
Certificate by such Person may cause the Trust Fund or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a Residual
Certificate to such Person. The terms "United States", "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
<PAGE>
-8-
A "Non-United States Person" is any Person other than a United States
Person. A "United States Person" is a citizen or resident of the United States,
a corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the Certificate
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Class R-III Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No service charge will be imposed for any registration of transfer or
exchange of Class R-III Certificates, but the Trustee or the Certificate
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 Class R-III Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
REMIC Administrator, the Certificate Registrar and any agent of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator
or the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator,
the Certificate Registrar or any such agent shall be affected by notice to the
contrary.
The Trust Fund and the obligations created by the Agreement shall terminate
upon distribution (or provision for distribution) to the Certificateholders of
all amounts held by or on behalf of the Trustee and required to be distributed
to them pursuant to the Agreement following the earlier of (i) the final payment
or other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Special Servicer, the Master Servicer or the Majority Certificateholder of the
Controlling Class at a price determined as provided in the Agreement of all the
Mortgage Loans and each REO Property remaining in the Trust Fund. The Agreement
permits, but does not
<PAGE>
-9-
require, the Special Servicer, the Master Servicer or the Majority
Certificateholder of the Controlling Class to purchase from the Trust Fund all
the Mortgage Loans and each REO Property remaining therein. The exercise of such
right will effect early retirement of the Class R-III Certificates; however,
such right to purchase is subject to the aggregate Stated Principal Balance of
the Mortgage Pool at the time of purchase being less than __% of the aggregate
Stated Principal Balance of the Mortgage Loans as of the Closing Date specified
on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator
and the Trustee and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Special Servicer, the REMIC
Administrator and the Trustee with the consent of the Holders of Certificates
entitled to at least [66 2/3]% of the Voting Rights allocated to the affected
Classes. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, including any amendment necessary to maintain the status
of REMIC I, REMIC II or REMIC III as a REMIC, without the consent of the Holders
of any of the Certificates.
Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate 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 Trustee has caused this Certificate to be duly
executed.
______________________________
as Trustee
By:
____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R-III Certificates referred to in the
within-mentioned Agreement.
Dated:
_______________________________
as Certificate Registrar
By:
___________________________
Authorized Officer
<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
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall be by check made payable to __________________________
__________________________________ and mailed to
________________________________________________________________________________
___.
Applicable statements and notices should be mailed to_____________________
_______________________________________________________________________________
____________________________________.
This information is provided by ___________________________, the
Assignee named above, or ____________________________________, as its agent.
<PAGE>
EXHIBIT B-1
MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT B-2
SCHEDULE OF EXCEPTIONS TO
MORTGAGE FILE DELIVERY
<PAGE>
EXHIBIT C
LETTER OF REPRESENTATIONS
<PAGE>
EXHIBIT D-1
FORM OF MASTER SERVICER REQUEST FOR RELEASE
[Date]
__________________________
__________________________
__________________________
Attention: _______________________________________
Re: DLJ Commercial Mortgage Corp. Series 199_-___
In connection with the administration of the Mortgage Files held by or on
behalf of you as trustee under a certain Pooling and Servicing Agreement, dated
as of__________, 199_ (the "Pooling and Servicing Agreement"), among DLJ
Commercial Mortgage Corp. as depositor, the undersigned as master servicer,
______________________________________________ as special servicer, and you as
trustee (in such capacity, the "Trustee") and REMIC administrator, the
undersigned hereby requests a release of the Mortgage File (or the portion
thereof specified below) held by or on behalf of you as Trustee with respect to
the following described Mortgage Loan for the reason indicated below.
Mortgagor's Name:
Address:
Loan No.:
If only particular documents in the Mortgage File are requested, please specify
which:
Reason for requesting file (or portion thereof):
______ 1. Mortgage Loan paid in full.
The undersigned hereby certifies that all amounts received in
connection with the Mortgage Loan that are required to be
credited to the Collection Account pursuant to the Pooling and
Servicing Agreement, have been or will be so credited.
______ 2. Other. (Describe)
The undersigned acknowledges that the above Mortgage File (or requested
portion thereof) will be held by the undersigned in accordance with the
provisions of the Pooling and Servicing Agreement and will be returned to you or
your designee within ten (10) days of our receipt thereof, unless the Mortgage
<PAGE>
-2-
Loan has been paid in full, in which case the Mortgage File (or such portion
thereof) will be retained by us permanently.
<PAGE>
-3-
Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Pooling and Servicing Agreement.
------------------------
as Master Servicer
By:
Name:
Title:
<PAGE>
EXHIBIT D-2
FORM OF SPECIAL SERVICER REQUEST FOR RELEASE
[Date]
_________________________
_________________________
_________________________
Attention: _______________________________
Re: DLJ Commercial Mortgage Corp., Series 199_-___
In connection with the administration of the Mortgage Files held by or on
behalf of you as trustee under a certain Pooling and Servicing Agreement, dated
as of ____________, 199_ (the "Pooling and Servicing Agreement"), among DLJ
Commercial Mortgage Corp. as depositor, ____________________
____________________ as master servicer, the undersigned as special servicer,
and you as trustee (in such capacity, the "Trustee") and REMIC administrator,
the undersigned hereby requests a release of the Mortgage File (or the portion
thereof specified below) held by or on behalf of you as Trustee with respect to
the following described Mortgage Loan for the reason indicated below.
Mortgagor's Name:
Address:
Loan No.:
If only particular documents in the Mortgage File are requested, please specify
which:
Reason for requesting file (or portion thereof):
______ 1. The Mortgage Loan is being foreclosed.
______ 2. Other. (Describe)
The undersigned acknowledges that the above Mortgage File (or requested
portion thereof) will be held by the undersigned in accordance with the
provisions of the Pooling and Servicing Agreement and will be returned to you or
your designee within ten (10) days of our receipt thereof, unless the Mortgage
Loan is being foreclosed, in which case the Mortgage File (or such portion
thereof) will be returned when no longer required by us for such purpose.
<PAGE>
-2-
Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Pooling and Servicing Agreement.
--------------------------
as Special Servicer
By:
Name:
Title:
<PAGE>
EXHIBIT E-1
FORM OF TRUSTEE REPORT
<PAGE>
EXHIBIT E-2
FORM OF DETERMINATION DATE REPORT
Issue Identifier
Loan Number
Note Rate %
Scheduled P & I Payment
Scheduled Interest Amount
Scheduled Principal Amount
Curtailment Amount
Curtailment Adjustment
Curtailment Date (YYYYMMDD)
Payoff Amount
Payoff Date (YYYYMMDD)
Payoff Code
Ending Scheduled Balance
Paid Through Date (YYYYMMDD)
Loan Status Code
Recovered Delinquency Amount
Debt Service Coverage Ratio (DSCR)
Filler
<PAGE>
EXHIBIT E-3
FORM OF SPECIAL SERVICER REPORT
Loan Number
Property Name
Property Type
Property Address
MSA
Past Due Status
Paid-To Date
Date of Last Financial Statement
Date of Last Inspection Report
Current NOI
Number of Months of Revenue Annualized
Current Occupancy
Original Loan Balance*
Current Principal Balance
Scheduled Monthly P&I
Gross Coupon
Appraised Value at Origination and Date of Appraisal*
Current Appraised Value and Date of Appraisal
Debt Service Coverage at Origination*
Occupancy at Origination*
Current Debt Service Coverage
Modified Since Origination (Y/N)*
Comments that the Special Servicer has regarding loan status and certain factual
matters regarding servicing including modifications, foreclosures and notices
* Special Servicer's information with respect to these items is based solely
upon information, if any, in files delivered to the Special Servicer.
<PAGE>
EXHIBIT E-4
FORM OF OPERATING STATEMENT ANALYSIS
<PAGE>
EXHIBIT F-1A
FORM I OF TRANSFEROR CERTIFICATE
FOR TRANSFERS OF PRIVATE CERTIFICATES
[Date]
__________________________ as Certificate Registrar
__________________________
__________________________
Attention: _______________________________________
Re: DLJ Commercial Mortgage Corp. Commercial Mortgage Pass-Through
Certificates, Series 199_-___ (the "Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
Class ______ Certificates [having an initial aggregate Certificate Principal
Balance as of ____________, 199_ (the "Closing Date") of $__________]
[evidencing a ____% Percentage Interest in the related Class] (the "Transferred
Certificates"). The Certificates, including the Transferred Certificates, were
issued pursuant to the Pooling and Servicing Agreement, dated as of
_____________, 199_ the "Pooling and Servicing Agreement"), among DLJ Commercial
Mortgage Corp. as depositor, _____________ _______________________ as master
servicer, _________________ ______________________ as special servicer, and
_______________ _______________ as trustee and REMIC administrator. All
capitalized terms used but not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement. The
Transferor hereby certifies, represents and warrants to you as Certificate
Registrar, that:
1. The Transferor is the lawful owner of the Transferred Certificates
with the full right to transfer such Certificates 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 Private
Certificate, any interest in any Private Certificate 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 Private Certificate,
any interest in any Private Certificate or any other similar security from
any person in any manner, (c) otherwise approached or negotiated with
respect to any Private Certificate, any interest in any Private Certificate
or any other similar security with any person in any manner, (d) made any
general solicitation by means of general
<PAGE>
-2-
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 Transferred Certificate
under the Securities Act of 1933, as amended (the "Securities Act"), or
would render the disposition of any Transferred Certificate a violation of
Section 5 of the Securities Act or any state securities laws, or would
require registration or qualification of any Transferred Certificate
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
Certificate 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 Certificate 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 Certificate in
the case of a U.S. purchaser and within 18 months preceding such date
of sale for a foreign purchaser; or
<PAGE>
-3-
___ (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
<PAGE>
-4-
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 Certificates and distributions thereon, (b) the nature,
performance and servicing of the Mortgage Loans, (c) the Pooling and
Servicing Agreement and (d) any credit enhancement mechanism associated
with the Transferred Certificates, that the Transferee has requested.
Very truly yours,
_______________________________
(Transferor)
By:
____________________________
Name:
Title:
<PAGE>
EXHIBIT F-1B
FORM II OF TRANSFEROR CERTIFICATE
FOR TRANSFERS OF PRIVATE CERTIFICATES
[Date]
_______________________ as Certificate Registrar
_______________________
_______________________
Attention: _____________________________________
Re: DLJ Commercial Mortgage Corp. Commercial Mortgage Pass-Through
Certificates, Series 199_-___ (the "Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
Class ______ Certificates [having an initial aggregate Certificate Principal
Balance as of ____________, 199_ (the "Closing Date") of $__________]
[evidencing a ____% Percentage Interest in the related Class] (the "Transferred
Certificates"). The Certificates, including the Transferred Certificates, were
issued pursuant to the Pooling and Servicing Agreement, dated as of
_______________, 199_ (the "Pooling and Servicing Agreement"), among DLJ
Commercial Mortgage Corp. as depositor, _________ __________________________ as
master servicer, _________________ ________________ as special servicer, and
______________________ ___________ as trustee and REMIC administrator. All
capitalized terms used but not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement. The
Transferor hereby certifies, represents and warrants to you as Certificate
Registrar, that:
1. The Transferor is the lawful owner of the Transferred Certificates
with the full right to transfer such Certificates 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 Private
Certificate, any interest in any Private Certificate 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 Private Certificate,
any interest in any Private Certificate or any other similar security from
any person in any manner, (c) otherwise approached or negotiated with
respect to any Private Certificate, any interest in any Private Certificate
or any other similar security with any person in any manner, (d) made any
general solicitation by means of general
<PAGE>
-2-
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 Transferred Certificate
under the Securities Act of 1933, as amended (the "Securities Act"), or
would render the disposition of any Transferred Certificate a violation of
Section 5 of the Securities Act or any state securities laws, or would
require registration or qualification of any Transferred Certificate
pursuant to the Securities Act or any state securities laws.
Very truly yours,
_______________________________
(Transferor)
By:
____________________________
Name:
Title:
<PAGE>
EXHIBIT F-2A
FORM I OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF PRIVATE CERTIFICATES
[Date]
__________________________ as Certificate Registrar
__________________________
__________________________
Attention: _______________________________________
Re: DLJ Commercial Mortgage Corp., Commercial Mortgage Pass-Through
Certificates, Series 199_-___ (the "Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
Class ______ Certificates [having an initial aggregate Certificate Principal
Balance as of __________, 199_ (the "Closing Date") of $__________] [evidencing
a ____% Percentage Interest in the related Class] (the "Transferred
Certificates"). The Certificates, including the Transferred Certificates, were
issued pursuant to the Pooling and Servicing Agreement, dated as of ____________
199_ (the "Pooling and Servicing Agreement"), among DLJ Commercial Mortgage
Corp. as depositor, ____________________________ as master servicer,
________________________ as special servicer, and ____________________________
as trustee and REMIC administrator. All capitalized terms used but not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement. The Transferee hereby certifies, represents and warrants to
you as Certificate Registrar, 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 Certificates is being made in reliance on Rule 144A. The
Transferee is acquiring the Transferred Certificates for its own account or
for the account of a Qualified Institutional Buyer, and understands that
such Transferred Certificates 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.
<PAGE>
-2-
2. The Transferee has been furnished with all information regarding
(a) the Transferred Certificates and distributions thereon, (b) the nature,
performance and servicing of the Mortgage Loans, (c) the Pooling and
Servicing Agreement, and (d) any credit enhancement mechanism associated
with the Transferred Certificates, that it has requested.
Very truly yours,
_______________________________
(Transferee)
By:
____________________________
Name:
Title:
<PAGE>
ANNEX 1 TO EXHIBIT F-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 _________________________ as Certificate Registrar, with
respect to the mortgage pass-through certificates being transferred (the
"Transferred Certificates") 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").
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 Certificate 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.
___ 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>
-2-
___ 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 Certificate 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.)_______________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
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
<PAGE>
-3-
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 Certificates 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.
Yes No Will the Transferee be purchasing the Transferred
Certificates 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.
<PAGE>
-4-
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 Certificates 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.
-------------------------------
Print Name of Transferee
By:
----------------------------
Name:
Title:
Date:
<PAGE>
ANNEX 2 TO EXHIBIT F-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 Certificate Registrar] as Certificate Registrar, with
respect to the mortgage pass-through certificate being transferred (the
"Transferred Certificates") 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
<PAGE>
-2-
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.
Yes No Will the Transferee be purchasing the Transferred
Certificates 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.
<PAGE>
-3-
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 Certificates 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 F-2B
FORM II OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF PRIVATE CERTIFICATES
[Date]
________________________ as Certificate Registrar
________________________
________________________
Attention: _____________________________________
Re: DLJ Commercial Mortgage Corp., Commercial Mortgage Pass-Through
Certificates, Series 199 - (the "Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_______________________ (the "Transferor") to _______________________________
(the "Transferee") of Class ___ Certificates [having an initial aggregate
Certificate Principal Balance as of ____________, 199_ (the "Closing Date") of
$__________] [evidencing a ___% Percentage Interest in the related Class] (the
"Transferred Certificates"). The Certificates, including the Transferred
Certificates, were issued pursuant to the Pooling and Servicing Agreement, dated
as of _____________, 199_ (the "Pooling and Servicing Agreement"), among DLJ
Commercial Mortgage Corp. as depositor (the "Depositor"),_____________________
________________________________ as master servicer, _____________
_________________ as special servicer, and ________________________ as trustee
(in such capacity, the "Trustee") and REMIC administrator. All capitalized terms
used but not otherwise defined herein shall have the respective meanings set
forth in the Pooling and Servicing Agreement. The Transferee hereby certifies,
represents and warrants to you as Certificate Registrar, that:
1. The Transferee is acquiring the Transferred Certificates 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 Certificates to
which the Transferred Certificates 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 Depositor, the Trustee or
the Certificate Registrar is obligated so to register or qualify the Class
of Certificates to which the Transferred Certificates belong, and (c) no
Transferred Certificate may be resold or transferred unless it is (i)
registered pursuant to the Securities Act and registered or
<PAGE>
-2-
qualified pursuant any applicable state securities laws or (ii) sold or
transferred in transactions which are exempt from such registration and
qualification and the Certificate Registrar has received either: (A) a
certificate from the Certificateholder desiring to effect such transfer
substantially in the form attached as Exhibit F-1A to the Pooling and
Servicing Agreement; (B) a certificate from such Certificateholder
substantially in the form attached as Exhibit F-1B to the Pooling and
Servicing Agreement and a certificate from such Certificateholder's
prospective transferee substantially in the form attached either as Exhibit
F-2A or as Exhibit F-2B to the Pooling and Servicing Agreement; or (C) an
opinion of counsel satisfactory to the 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 Certificate except in compliance with the
provisions of Section 5.02 of the Pooling and Servicing Agreement, which
provisions it has carefully reviewed, and that each Transferred Certificate
will bear the following legends:
THIS CERTIFICATE 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 CERTIFICATE 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 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE 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 SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
4. Neither the Transferee nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any
Certificate, any interest in any Certificate or any
<PAGE>
-3-
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
Certificate, any interest in any Certificate or any other similar security
from any person in any manner, (c) otherwise approached or negotiated with
respect to any Certificate, any interest in any Certificate or any other
similar security with any person in any manner, (d) made any general
solicitation with respect to any Certificate, any interest in any
Certificate 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
Certificate, any interest in any Certificate 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 Certificates
under the Securities Act, would render the disposition of the Transferred
Certificates a violation of Section 5 of the Securities Act or any state
securities law or would require registration or qualification of the
Transferred Certificates 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 Certificate, any
interest in any Certificate or any other similar security.
5. The Transferee has been furnished with all information regarding
(a) the Depositor, (b) the Transferred Certificates and distributions
thereon, (c) the Pooling and Servicing Agreement and the Trust Fund created
pursuant thereto, (d) the nature, performance and servicing of the Mortgage
Loans, 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 Certificates; 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,
------------------------------
(Transferee)
By:
---------------------------
Name:
Title:
<PAGE>
EXHIBIT G-1
FORM OF TRANSFEREE CERTIFICATE
IN CONNECTION WITH ERISA (DEFINITIVE CERTIFICATES)
[Date]
____________________________ as Certificate Registrar
____________________________
____________________________
Attention: __________________________________________
Re: DLJ Commercial Mortgage Corp. Commercial Mortgage Pass-Through
Certificates, Series 199_-___ (the "Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
Class ______ Certificates [having an initial aggregate Certificate Principal
Balance as of_______, 199_ (the "Closing Date") of $__________] [evidencing a
____% Percentage Interest in the related Class] (the "Transferred
Certificates"). The Certificates, including the Transferred Certificates, were
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of ______________, 199_, among DLJ Commercial
Mortgage Corp. as depositor, ___________________________________________ as
master servicer, ___________________________________________ as special servicer
and ___________________________________________ as trustee and REMIC
administrator. All capitalized terms used but not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
The Transferee hereby certifies, represents and warrants to you as Certificate
Registrar, as follows (check the applicable paragraph):
___ The Transferee is neither (A) an employee benefit plan or other
retirement arrangement, including an individual retirement account or
annuity, a Keogh plan or a collective investment fund or separate
account in which such plans, accounts or arrangements are invested,
including, without limitation, an insurance company general account,
that is subject to ERISA or the Code (each, a "Plan"), nor (B) a
Person who is directly or indirectly purchasing the Transferred
Certificates on behalf of, as named fiduciary of, as trustee of, or
with assets of a Plan;
___ The Transferee is using funds from an insurance company general
account to acquire the Transferred Certificates, however, the purchase
and holding of such Certificates by such Person is exempt from the
prohibited transaction provisions of Section 406 of ERISA and Section
4975 of the Code under
<PAGE>
-1-
Sections I and III of Prohibited Transaction Class Exemption 95-60.
Very truly yours,
-----------------------------
(Transferee)
By:
--------------------------
Name:
Title:
<PAGE>
EXHIBIT G-2
FORM OF TRANSFEREE CERTIFICATE
IN CONNECTION WITH ERISA (BOOK-ENTRY CERTIFICATES)
[Date]
[TRANSFEROR]
Re: DLJ Commercial Mortgage Corp., Commercial Mortgage Pass-Through
Certificates, Series 199_-___ (the "Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
______________________ (the "Transferor") to _________________ (the
"Transferee") through our respective DTC Participants of the Transferor's
beneficial ownership interest (currently maintained on the books and records of
The Depository Trust Corporation ("DTC") and the Depository Participants) in
Class ___ Certificates [having an initial aggregate Certificate Principal
Balance as of __________, 199_ (the "Closing Date") of $__________] [evidencing
a ____% Percentage Interest in the related Class] (the "Transferred
Certificates"). The Certificates, including the Transferred Certificates, were
issued pursuant to the Pooling and Servicing Agreement, dated as of ___________,
199_ (the "Pooling and Servicing Agreement"), among DLJ Commercial Mortgage
Corp. as depositor, _______________ ___________________as master servicer,
____________________________ as special servicer and ___________________________
as trustee (in such capacity, the "Trustee") and REMIC administrator. All
capitalized terms used but not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement. The
Transferee hereby certifies, represents and warrants to you as follows (check
the applicable paragraph):
___ The Transferee is neither (A) an employee benefit plan or other
retirement arrangement, including an individual retirement account or
annuity, a Keogh plan or a collective investment fund or separate
account in which such plans, accounts or arrangements are invested,
including, without limitation, an insurance company general account,
that is subject to ERISA or the Code (each, a "Plan"), nor (B) a
Person who is directly or indirectly purchasing an interest in the
Transferred Certificates on behalf of, as named fiduciary of, as
trustee of, or with assets of a Plan;
___ The Transferee is using funds from an insurance company general
account to acquire an interest in the Transferred Certificates,
however, the purchase and holding of such interest by such Person is
exempt from the prohibited transaction provisions of Section 406 of
ERISA and Section
<PAGE>
-1-
4975 of the Code under Sections I and III of Prohibited Transaction
Class Exemption 95-60.
Very truly yours,
----------------------------
(Transferee)
By:
--------------------------
Name:
Title:
<PAGE>
EXHIBIT H-1
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
FOR TRANSFERS OF RESIDUAL CERTIFICATES
STATE OF )
) ss:
COUNTY OF )
____________________, being first duly sworn, deposes and says that:
1. He/She is the ____________________ of ____________________ (the
prospective transferee (the "Transferee") of DLJ Commercial Mortgage Corp.,
Commercial Mortgage Pass-Through Certificates, Series 199_-___, Class [R-I]
[R-II] [R-III], evidencing a ____% Percentage Interest in such Class (the
"Residual Certificates")), a ________________________ duly organized and validly
existing under the laws of ____________________, on behalf of which he/she makes
this affidavit. All capitalized terms used but not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement pursuant to which the Residual Certificates were issued (the "Pooling
and Servicing Agreement").
2. The Transferee (i) is, and as of the date of transfer will be, a
"Permitted Transferee" and will endeavor to remain a "Permitted Transferee" for
so long as it holds the Residual Certificates, and (ii) is acquiring the
Residual Certificates for its own account or for the account of another
prospective transferee from which it has received an affidavit in substantially
the same form as this affidavit. A "Permitted Transferee" is any Person other
than a "disqualified organization" or a possession of the United States. (For
this purpose, a "disqualified organization" means the United States, any state
or political subdivision thereof, any agency or instrumentality of any of the
foregoing (other than an instrumentality, all of the activities of which are
subject to tax and, except for the Federal Home Loan Mortgage Corporation, a
majority of whose board of directors is not selected by any such governmental
entity) or any foreign government, international organization or any agency or
instrumentality of such foreign government or organization, any rural electric
or telephone cooperative, or any organization (other than certain farmers'
cooperatives) that is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business taxable income.
3. The Transferee is aware (i) of the tax that would be imposed on
transfers of the Residual Certificates to "disqualified organizations" under the
Code that applies to all transfers of the Residual Certificates; (ii) that such
tax would be on the transferor, or, if such transfer is through an agent (which
Person includes a broker, nominee or middleman) for a non-Permitted
<PAGE>
-2-
Transferee, on the agent; (iii) that the Person otherwise liable for the tax
shall be relieved of liability for the tax if the transferee furnishes to such
Person an affidavit that the transferee is a Permitted Transferee and, at the
time of transfer, such Person does not have actual knowledge that the affidavit
is false; and (iv) that the Residual Certificates may be a "noneconomic residual
interest" within the meaning of Treasury regulation Section 1.860E-1(c) and that
the transferor of a "noneconomic residual interest" will remain liable for any
taxes due with respect to the income on such residual interest, unless no
significant purpose of the transfer is to enable the transferor to impede the
assessment or collection of tax.
4. The Transferee is aware of the tax imposed on a "pass-through entity"
holding the Residual Certificates if at any time during the taxable year of the
pass-through entity a non- Permitted Transferee is the record holder of an
interest in such entity. (For this purpose, a "pass-through entity" includes a
regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)
5. The Transferee is aware that the Certificate Registrar will not register
any transfer of the Residual Certificates by the Transferee unless the
Transferee's transferee, or such transferee's agent, delivers to the Certificate
Registrar, among other things, an affidavit and agreement in substantially the
same form as this affidavit and agreement. The Transferee expressly agrees that
it will not consummate any such transfer if it knows or believes that any
representation contained in such affidavit and agreement is false.
6. The Transferee consents to any additional restrictions or arrangements
that shall be deemed necessary upon advice of counsel to constitute a reasonable
arrangement to ensure that the Residual Certificate will only be owned, directly
or indirectly, by a Permitted Transferee.
7. The Transferee's taxpayer identification number is _________________.
8. The Transferee has reviewed the provisions of Section 5.02(d) of the
Pooling and Servicing Agreement, a description of which provisions is set forth
in the Residual Certificates (in particular, clause (ii)(A) of Section 5.02(d)
which authorizes the Trustee to deliver payments on the Residual Certificate to
a Person other than the Transferee and clause (ii)(B) of Section 5.02(d) which
authorizes the Trustee to negotiate a mandatory sale of the Residual
Certificates, in either case, in the event that the Transferee holds such
Residual Certificates in violation of Section 5.02(d)); and the Transferee
expressly agrees to be bound by and to comply with such provisions.
<PAGE>
-3-
9. No purpose of the Transferee relating to its purchase or any sale of the
Residual Certificates is or will be to impede the assessment or collection of
any tax.
10. The Transferee hereby represents to and for the benefit of the
transferor that the Transferee intends to pay any taxes associated with holding
the Residual Certificates as they become due, fully understanding that it may
incur tax liabilities in excess of any cash flows generated by the Residual
Certificates.
11. The Transferee will, in connection with any transfer that it makes of
the Residual Certificates, deliver to the Certificate Registrar a representation
letter substantially in the form of Exhibit H-2 to the Pooling and Servicing
Agreement in which it will represent and warrant, among other things, that it is
not transferring the Residual Certificates to impede the assessment or
collection of any tax and that it has at the time of such transfer conducted a
reasonable investigation of the financial condition of the proposed transferee
as contemplated by Treasury regulation Section 1.860E-1(c)(4)(i) and has
satisfied the requirements of such provision.
12. The Transferee is a citizen or resident of the United States, a
corporation, a partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
<PAGE>
-4-
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its ____________________ and its corporate seal to be hereunto attached,
attested by its [Assistant] Secretary, this day of , 199__.
[NAME OF TRANSFEREE]
By:
----------------------------
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
- ------------------------
[Assistant] Secretary
Personally appeared before me the above-named ____________________, known
or proved to me to be the same person who executed the foregoing instrument and
to be the ____________________ of the Transferee, and acknowledged to me that
he/she executed the same as his/her free act and deed and the free act and deed
of the Transferee
Subscribed and sworn before me this day of _____________________, 199__.
__________________________
NOTARY PUBLIC
COUNTY OF_________________
STATE OF__________________
My Commission expires the
_________ day of__________
___________, 19__.
<PAGE>
EXHIBIT H-2
FORM OF TRANSFEROR CERTIFICATE
FOR TRANSFERS OF RESIDUAL CERTIFICATES
[Date]
_____________________________as Certificate Registrar
_____________________________
_____________________________
Attention: _________________________________________
Re: DLJ Commercial Mortgage Corp., Commercial Mortgage Pass-Through
Certificates, Series 199_-___ (the "Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
[Class R-I] [Class R-II] [Class R-III] Certificates evidencing a ____%
Percentage Interest in the related Class (the "Residual Certificates"). The
Certificates, including the Residual Certificates, were issued pursuant to the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"), dated
as of _____________, 199_, among DLJ Commercial Mortgage Corp. as depositor,
_______________________ as master servicer, ____________________________________
as special servicer and _________________________ as trustee and REMIC
administrator. All capitalized terms used but not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
The Transferor hereby certifies, represents and warrants to you as Certificate
Registrar, that:
1. No purpose of the Transferor relating to the transfer of the Residual
Certificates by the Transferor to the Transferee is or will be to impede the
assessment or collection of any tax.
2. The Transferor understands that the Transferee has delivered to you a
Transfer Affidavit and Agreement in the form attached to the Pooling and
Servicing Agreement as Exhibit H-1. The Transferor does not know or believe that
any representation contained therein is false.
3. The Transferor has at the time of this transfer conducted a reasonable
investigation of the financial condition of the Transferee as contemplated by
Treasury regulation Section 1.860E-1(c)(4)(i) and, as a result of that
investigation, the Transferor has determined that the Transferee has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Transferee will not continue to pay its debts as
they become due in the future. The Transferor understands that
<PAGE>
the transfer of the Residual Certificates may not be respected for United States
income tax purposes (and the Transferor may continue to be liable for United
States income taxes associated therewith) unless the Transferor has conducted
such an investigation.
Very truly yours,
-------------------------------
(Transferor)
By:
----------------------------
Name:
Title:
<PAGE>
EXHIBIT I-1
FORM OF NOTICE AND ACKNOWLEDGEMENT
CONCERNING REPLACEMENT OF SPECIAL SERVICER
[Date]
[RATING AGENCIES]
Ladies and Gentlemen:
This notice is being delivered pursuant to Section 6.06 of the Pooling and
Servicing Agreement, dated as of ______________, 199_ and relating to DLJ
Commercial Mortgage Corp., Commercial Mortgage Pass-Through Certificates, Series
199_-___ (the "Agreement"). Capitalized terms used but not otherwise defined
herein shall have respective meanings assigned to them in the Agreement.
Notice is hereby given that the Holders of Certificates evidencing a
majority of the Voting Rights allocated to the Controlling Class have designated
________________ to serve as the Special Servicer under the Agreement.
The designation of __________________ as Special Servicer will become final
if certain conditions are met and each Rating Agency delivers to ______________
________________________________, the trustee under the Agreement (the
"Trustee"), written confirmation that if the person designated to become the
Special Servicer were to serve as such, such event would not result in the
qualification, downgrade or withdrawal of the rating or ratings assigned to one
or more Classes of the Certificates. Accordingly, such confirmation is hereby
requested as soon as possible.
<PAGE>
Please acknowledge receipt of this notice by signing the enclosed copy of
this notice where indicated below and returning it to the Trustee, in the
enclosed stamped self-addressed envelope.
Very truly yours,
______________________________
as Trustee
By:
__________________________
Name:
Title:
Receipt acknowledged:
______________________________
By:
___________________________
Name:
Title:
Date:
______________________________
By:
___________________________
Name:
Title:
Date:
<PAGE>
EXHIBIT I-2
FORM OF ACKNOWLEDGEMENT OF PROPOSED SPECIAL SERVICER
[Date]
[TRUSTEE]
[MASTER SERVICER]
[DEPOSITOR]
[REMIC ADMINISTRATOR]
Re: DLJ Commercial Mortgage Corp., Series 199_-___
Ladies and Gentlemen:
Pursuant to Section 6.06 of the Pooling and Servicing Agreement, dated as
of ___________, 199_, relating to DLJ Commercial Mortgage Corp., Commercial
Mortgage Pass-Through Certificates, Series 199_-___ (the "Agreement"), the
undersigned hereby agrees with all the other parties to the Agreement that the
undersigned shall serve as Special Servicer under, and as defined in, the
Agreement. The undersigned hereby acknowledges that, as of the date hereof, it
is and shall be a party to the Agreement and bound thereby to the full extent
indicated therein in the capacity of Special Servicer. The undersigned hereby
makes, as of the date hereof, the representations and warranties set forth in
Section 2.06 of the Agreement, with the following corrections with respect to
type of entity and jurisdiction of organization: ___________________________.
By:
___________________________
Name:
Title:
<PAGE>
EXHIBIT J
FORM OF UCC-1 FINANCING STATEMENT
<PAGE>
EXHIBIT 1 to EXHIBIT J
This Exhibit 1 is attached to and incorporated in a financing statement
pertaining to DLJ Commercial Mortgage Corp. as depositor (referred to as the
"Debtor" for the purpose of this financing statement only), and
_________________________ as trustee for the holders of the Series 199_-___
Certificates (referred to as the "Secured Party" for purposes of this financing
statement only), under that certain Pooling and Servicing Agreement, dated as of
____________, 199_ (the "Pooling and Servicing Agreement"), among the Debtor,
the Secured Party, _______________________________ as master servicer (the
"Master Servicer"), ____________________________ as special servicer (the
"Special Servicer") and ___________________ as REMIC administrator, relating to
the issuance of the Debtor's Commercial Mortgage Pass-Through Certificates,
Series 199_-___ (collectively, the "Series 199_-___ Certificates"). Capitalized
terms used herein and not defined shall have the respective meanings given to
them in the Pooling and Servicing Agreement. The attached financing statement
covers all of the Debtor's right (including the power to convey title thereto),
title and interest in and to the Trust Fund created pursuant to the Pooling and
Servicing Agreement, consisting of the following:
1. The mortgage notes or other evidence of indebtedness of a borrower
(the "Mortgage Notes") with respect to the mortgage loans (the
"Mortgage Loans") listed on the Mortgage Loan Schedule to the Pooling
and Servicing Agreement, which Mortgage Loan Schedule is attached
hereto as Exhibit 3;
2. The related mortgages, deeds of trust or other similar instruments
securing such Mortgage Notes (the "Mortgages");
3. With respect to each Mortgage Note and each Mortgage, each other
document in the related Mortgage File;
4. (a) the Collection Account maintained by the Master Servicer pursuant
to the Pooling and Servicing Agreement, (b) all funds from time to
time on deposit in the Collection Account, (c) the investments of any
such funds consisting of securities, instruments or other obligations
(including, without limitation, the Permitted Investments described on
Exhibit 2 hereto), and (d) the general intangibles consisting of the
contractual right to payment, including, without limitation, the right
to payments of principal and interest and the right to enforce the
related payment obligations, arising from or under any such
investments;
<PAGE>
-2-
5. All REO Property;
6. (a) the REO Account required to be maintained by the Special Servicer
pursuant to the Pooling and Servicing Agreement, (b) all funds from
time to time on deposit in the REO Account, (c) the investments of any
such funds consisting of securities, instruments or other obligations
(including, without limitation, the Permitted Investments described on
Exhibit 2 hereto), and (d) the general intangibles consisting of the
contractual right to payment, including, without limitation, the right
to payments of principal and interest and the right to enforce the
related payment obligations, arising from or under any such
investments;
7. (a) the Servicing Account(s) and Reserve Account(s) maintained by the
Master Servicer or Special Servicer pursuant to the Pooling and
Servicing Agreement, and (b) all funds from time to time on deposit in
the Servicing Account(s) and Reserve Account(s);
8. (a) the Distribution Account maintained by the Trustee pursuant to the
Pooling and Servicing Agreement, (b) all funds from time to time on
deposit in the Distribution Account, (c) the investments of any such
funds consisting of securities, instruments or other obligations
(including, without limitation, the Permitted Investments described on
Exhibit 2 hereto), and (d) the general intangibles consisting of the
contractual right to payment, including, without limitation, the right
to payments of principal and interest and the right to enforce the
related payment obligations, arising from or under any such
investments;
9. All insurance policies, including the right to payments thereunder,
with respect to the Mortgage Loans required to be maintained pursuant
to the Pooling and Servicing Agreement, transferred to the Trust Fund
and to be serviced by the Master Servicer or Special Servicer; and
11. All income, payments, products and proceeds of any of the foregoing,
together with any additions thereto or substitutions therefor.
THE DEBTOR AND THE SECURED PARTY INTEND THE TRANSACTIONS CONTEMPLATED BY THE
POOLING AND SERVICING AGREEMENT TO CONSTITUTE
<PAGE>
-3-
A SALE OF THE INTEREST IN THE MORTGAGE NOTES, THE RELATED MORTGAGES AND THE
OTHER DOCUMENTS IN THE RELATED MORTGAGE FILES EVIDENCED BY THE SERIES 199_-___
CERTIFICATES, AND THIS FILING SHOULD NOT BE CONSTRUED AS A CONCLUSION THAT A
SALE HAS NOT OCCURRED. THE REFERENCES HEREIN TO MORTGAGE NOTES SHOULD NOT BE
CONSTRUED AS A CONCLUSION THAT ANY MORTGAGE NOTE IS NOT AN INSTRUMENT WITHIN THE
MEANING OF THE UNIFORM COMMERCIAL CODE OR THAT A FILING IS NECESSARY TO PERFECT
THE OWNERSHIP OR SECURITY INTEREST OF THE SECURED PARTY IN ANY MORTGAGE NOTE,
MORTGAGE OR OTHER DOCUMENT IN A MORTGAGE FILE. IN ADDITION, THE REFERENCES
HEREIN TO SECURITIES, INSTRUMENTS AND OTHER OBLIGATIONS (INCLUDING WITHOUT
LIMITATION, PERMITTED INVESTMENTS) SHOULD NOT BE CONSTRUED AS A CONCLUSION THAT
ANY SECURITY, INSTRUMENT OR OTHER OBLIGATION (INCLUDING WITHOUT LIMITATION, ANY
PERMITTED INVESTMENT) IS NOT AN INSTRUMENT, A CERTIFICATED SECURITY OR AN
UNCERTIFICATED SECURITY WITHIN THE MEANING OF THE UNIFORM COMMERCIAL CODE, AS IN
EFFECT IN ANY APPLICABLE JURISDICTION, NOR SHOULD THIS FINANCING STATEMENT BE
CONSTRUED AS A CONCLUSION THAT A FILING IS NECESSARY TO PERFECT THE OWNERSHIP OR
SECURITY INTEREST OF THE SECURED PARTY IN THE CONTRACTUAL RIGHT TO PAYMENT,
INCLUDING, WITHOUT LIMITATION, THE RIGHT TO PAYMENTS OF PRINCIPAL AND INTEREST
AND THE RIGHT TO ENFORCE THE RELATED PAYMENT OBLIGATIONS, ARISING FROM OR UNDER
ANY SECURITY, INSTRUMENT OR OTHER OBLIGATION (INCLUDING, WITHOUT LIMITATION, ANY
PERMITTED INVESTMENT). WITH RESPECT TO THE FOREGOING, THIS FILING IS MADE ONLY
IN THE EVENT OF CONTRARY ASSERTIONS BY THIRD PARTIES.
<PAGE>
EXHIBIT 2 to EXHIBIT J
The term "Permitted Investments" shall include any of the following
instruments, securities or other obligations:
(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" highlighter 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" highlighter 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 ____
("_______") and, if rated thereby, _____ ("______" and, together with
______, 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 Certificates
by such Rating Agency (as evidenced in writing by such Rating Agency),
do not have an "r" highlighter 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
<PAGE>
-2-
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
Certificates by such Rating Agency (as evidenced in writing by such
Rating Agency), do not have an "r" highlighter 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 Certificates 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 Certificates 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).
<PAGE>
EXHIBIT 3 to EXHIBIT J
MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT K
CALCULATION OF NET OPERATING INCOME
With respect to any Mortgaged Property, "Net Operating Income" shall mean
for each fiscal year or portion thereof, (i) the related Operating Income
allocable to such period, less (ii) the related Operating Expenses allocable to
such period, and less (iii) any U/W Recurring Replacement Reserve and U/W
Leasing Commission and U/W Tenant Improvement for such Mortgaged Property as
indicated in the Prospectus Supplement dated ___________, 199_ relating to the
publicly offered classes of the DLJ Commercial Mortgage Corp., Commercial
Mortgage Pass-Through Certificates, Series 199_-___ (the amounts described in
this clause (iii) to be prorated if "Net Operating Income" is being calculated
for less than a full fiscal year).
With respect to any Mortgaged Property "Operating Income" shall mean, for
each fiscal year or portion thereof, all revenue derived by the related
Mortgagor arising from the Mortgaged Property, including, without limitation,
rental revenues (whether denominated as basic rent, additional rent, percentage
rent, escalation payments, electrical payments or otherwise) and other fees and
charges payable pursuant to leases or otherwise in connection with the Mortgaged
Property, and rent insurance proceeds. Operating Income shall not include (a)
insurance proceeds (other than proceeds of business interruption or other
similar insurance allocable to the applicable period) and condemnation awards
(other than awards arising from a temporary taking or the use and occupancy of
all or part of the applicable Mortgaged Property allocable to the applicable
period), or interest accrued on such proceeds or awards, (b) proceeds of any
financing, (c) proceeds of any sale, exchange or transfer of the Mortgaged
Property or any part thereof or interest therein, (d) capital contributions or
loans to the Mortgagor or an Affiliate of the Mortgagor, (e) any item of income
otherwise includible in Operating Income but paid directly by any tenant to a
Person other than the Mortgagor except for real estate taxes paid directly to
any taxing authority by any tenant, (f) any other extraordinary, non-recurring
revenues, (g) rent paid by or on behalf of any lessee under space lease which is
the subject of any proceeding or action relating to its bankruptcy,
reorganization or other arrangement pursuant to federal bankruptcy law or any
similar federal or state law or which has been adjudicated a bankrupt or
insolvent, unless such space lease has been affirmed by the trustee in such
proceeding or action, or (h) rent paid by or on behalf of any lessee under a
space lease the demised premises of which are not occupied either by such lessee
or by a sublessee thereof.
With respect to any Mortgaged Property "Operating Expenses" shall mean, for
each fiscal year or portion thereof, all expenses directly attributable to the
operation, repair and/or maintenance of the Mortgaged Property, including,
without limitation,
<PAGE>
-2-
impositions, insurance premiums, management fees, payments to third party
suppliers, and costs attributable to the operation, repair and maintenance of
the systems for heating, ventilating and air conditioning, and actually paid for
by the Mortgagor. Operating Expenses shall not include interest, principal and
premium, if any, due under the Mortgage Note or otherwise in connection with any
other secured indebtedness, income taxes, extraordinary capital improvements
costs, or any non-cash charge or expense such as depreciation.
<PAGE>
EXHIBIT L-1
FORM OF CERTIFICATE WITH RESPECT TO INFORMATION REQUEST BY
BENEFICIAL HOLDER
[Date]
_____________________________
_____________________________
_____________________________
Attention: ______________________________________
Re: DLJ Commercial Mortgage Corp., Series 199_-___
In accordance with Section 8.12(b) of the Pooling and Servicing Agreement,
dated as of______________, 199_ (the "Pooling and Servicing Agreement"), among
DLJ Commercial Mortgage Corp. as depositor (the "Depositor"),
________________________________ as master servicer, _________________________as
special servicer and _____________________________ as trustee (in such capacity,
the "Trustee") and REMIC administrator, with respect to the DLJ Commercial
Mortgage Corp. Commercial Mortgage Pass-Through Certificates, Series 199_-___
(the "Certificates"), the undersigned hereby certifies and agrees as follows:
1. The undersigned is a beneficial owner of the Class ____ Certificates.
2. The undersigned is requesting the information identified on the
schedule attached hereto pursuant to Section 8.12(b) of the Pooling
and Servicing Agreement (the "Information") for use in evaluating its
investment in the Class ____ Certificates.
3. In consideration of the Trustee's disclosure to the undersigned of the
Information, the undersigned will keep the Information confidential
(except from such outside persons as are assisting it in making the
evaluation described in paragraph 2), and such Information will not,
without the prior written consent of the Trustee, be disclosed by the
undersigned or by its officers, directors, partners employees, agents
or representatives (collectively, the "Representatives") in any manner
whatsoever, in whole or in part.
4. The undersigned will not use or disclose the Information in any manner
which could result in a violation of any provision of the Securities
Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended, or would require registration of any
Certificate pursuant to Section 5 of the Securities Act.
<PAGE>
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5. The undersigned shall be fully liable for any breach of this agreement
by itself or any of its Representatives and shall indemnify the
Depositor, the Trustee and the Trust Fund for any loss, liability or
expense incurred thereby with respect to any such breach by the
undersigned or any of its Representatives.
<PAGE>
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IN WITNESS WHEREOF, the undersigned has caused its name to be signed hereto
by its duly authorized officer, as of the day and year written above.
[BENEFICIAL HOLDER OF A
CERTIFICATE]
By:
____________________________
Name:
Title:
<PAGE>
EXHIBIT L-2
FORM OF CERTIFICATE WITH RESPECT TO INFORMATION REQUEST BY
PROSPECTIVE PURCHASER
[Date]
_____________________________ as Trustee
_____________________________
_____________________________
Attention: _____________________________
Re: DLJ Commercial Mortgage Corp., Series 199_-___
In accordance with Section 8.12(b) of the Pooling and Servicing Agreement,
dated as of _____________, 199_ (the "Pooling and Servicing Agreement"), among
DLJ Commercial Mortgage Corp. as depositor (the "Depositor"),__________________
____________________________ as master servicer, ______________________________
as special servicer and __________________ as trustee (in such capacity, the
"Trustee") and REMIC administrator, with respect to the DLJ Commercial Mortgage
Corp. Commercial Mortgage Pass-Through Certificates, Series 199_- ___ (the
"Certificates"), the undersigned hereby certifies and agrees as follows:
1. The undersigned is contemplating an investment in the Class ____
Certificates.
2. The undersigned is requesting the information identified on the
schedule attached hereto pursuant to Section 8.12(b) of the Pooling
and Servicing Agreement (the "Information") solely for use in
evaluating such possible investment.
3. In consideration of the Trustee's disclosure to the undersigned of the
Information, the undersigned will keep the Information confidential
(except from such outside persons as are assisting it in making the
investment decision described in paragraphs 1 and 2), and such
Information will not, without the prior written consent of the
Trustee, be disclosed by the undersigned or by its officers,
directors, partners employees, agents or representatives
(collectively, the "Representatives") in any manner whatsoever, in
whole or in part.
4. The undersigned will not use or disclose the Information in any manner
which could result in a violation of any provision of the Securities
Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended, or would require registration of any
Certificate pursuant to Section 5 of the Securities Act.
<PAGE>
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5. The undersigned shall be fully liable for any breach of this agreement
by itself or any of its Representatives and shall indemnify the
Depositor, the Trustee and the Trust Fund for any loss, liability or
expense incurred thereby with respect to any such breach by the
undersigned or any of its Representatives.
IN WITNESS WHEREOF, the undersigned has caused its name to be signed hereto
by its duly authorized officer, as of the day and year written above.
[PROSPECTIVE PURCHASER]
By:
____________________________
Name:
Title:
<PAGE>
[LETTERHEAD OF SIDLEY & AUSTIN]
July 24, 1997
DLJ Commercial Mortgage Corp.
277 Park Avenue
New York, New York 10172
Re: DLJ Commercial Mortgage Corp.
Mortgage Pass-Through Certificates
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as counsel for DLJ Commercial Mortgage Corp., a Delaware
corporation (the "Registrant"), in connection with the registration statement on
Form S-3 (the "Registration Statement") being filed by the Registrant on or
about the date hereof with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933 (the "Act") with respect to the
Registrant's Mortgage Pass-Through Certificates (the "Certificates") to be
issued from time to time. The Registration Statement relates to the registration
under the Act of Certificates that will evidence interests in trust funds as
described in the Registration Statement. The Certificates are issuable in one or
more series (each a "Series") under separate pooling and servicing agreements
(each, a "Pooling and Servicing Agreement") among the Registrant, the Master
Servicer named therein, the Special Servicer (if any) named therein, the REMIC
Administrator (if any) named therein and the Trustee named therein. The
Certificates of each Series are to be sold as described in the Registration
Statement, in any amendment thereto and in the prospectus and prospectus
supplement relating to such Series (the "Prospectus" and "Prospectus
Supplement", respectively).
In this connection, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we deemed necessary for the purposes of this opinion.
In our examination, we have assumed the following: (a) the genuineness of all
signatures; (b) the legal capacity of natural persons; (c) the authenticity of
all documents submitted to us as originals; (d) the conformity to original
documents of all
<PAGE>
DLJ Commercial Mortgage Corp.
July 24, 1997
Page 2
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such documents; and (e) the truth, accuracy and
completeness of the information, representations and warranties contained in the
records, documents, instruments and certificates that we have reviewed. As to
any facts material to the opinions expressed herein which were not known to us,
we have relied upon certificates, statements and representations of officers and
other representatives of the Registrant and others.
In rendering this opinion, we have assumed that the Pooling and Servicing
Agreement with respect to each Series of Certificates is executed and delivered
substantially in the form included as Exhibit 4.1 to the Registration Statement
and that the transactions contemplated to occur under the Registration Statement
and such Pooling and Servicing Agreement with respect to such Series of
Certificates in fact occur in accordance with the terms thereof.
Based upon and subject to the foregoing, we are of the opinion that when
(i) the issuance and principal terms of each Series of Certificates
have been duly authorized by appropriate corporate action by the
Registrant,
(ii) (a) each party to the Pooling and Servicing Agreement with
respect to such Series of Certificates has the power and authority to enter
into and perform all of such party's obligations thereunder, (b) such
Pooling and Servicing Agreement has been duly authorized by all necessary
action, executed and delivered by each party thereto and (c) such Pooling
and Servicing Agreement constitutes the valid and binding obligation of
each party thereto, enforceable against such party in accordance with its
terms, and
(iii) the Certificates of such Series have been duly executed,
authenticated and delivered in accordance with the terms and conditions of
the Pooling and Servicing Agreement relating to such Series and sold in the
manner described in the Registration Statement, in any amendment thereto
and in the Prospectus and Prospectus Supplement relating thereto,
-2-
<PAGE>
DLJ Commercial Mortgage Corp.
July 24, 1997
Page 3
the Certificates of such Series will be legally and validly issued and
outstanding, fully paid and non-assessable, and the holders of such Certificates
will be entitled to the benefits of the Pooling and Servicing Agreement relating
to such Series as provided therein.
We hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Prospectus and the Prospectus Supplement relating to each Series
of Certificates with respect to which we act as counsel to the Registrant. In
giving such consent, we do not consider that we are "experts", within the
meaning of the term as used in the Act or the rules and regulations of the
Commission issued thereunder, with respect to any part of the Registration
Statement, including this opinion as an exhibit or otherwise.
We express no opinion as to any laws other than the laws of the State of
New York and the federal laws of the United States of America, and do not
express any opinion, either implicitly or otherwise, on any issue not expressly
addressed above.
Very truly yours,
/s/ SIDLEY & AUSTIN
-3-
<PAGE>
[LETTERHEAD OF SIDLEY & AUSTIN]
July 24, 1997
DLJ Commercial Mortgage Corp.
277 Park Avenue
New York, New York 10172
Re: DLJ Commercial Mortgage Corp.
Mortgage Pass-Through Certificates
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as counsel for DLJ Commercial Mortgage Corp., a Delaware
corporation (the "Registrant"), in connection with the registration statement on
Form S-3 (the "Registration Statement") being filed by the Registrant on or
about the date hereof with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933 (the "Act") with respect to the
Registrant's Mortgage Pass-Through Certificates (the "Certificates") to be
issued from time to time. The Registration Statement relates to the registration
under the Act of Certificates that will evidence interests in trust funds as
described in the Registration Statement. The Certificates are issuable in one or
more series (each a "Series") under separate pooling and servicing agreements
among the Registrant, the Master Servicer named therein, the Special Servicer
(if any) named therein, the REMIC Administrator (if any) named therein and the
Trustee named therein. The Certificates of each Series are to be sold as
described in the Registration Statement, in any amendment thereto and in the
prospectus and prospectus supplement relating to such Series (the "Prospectus"
and "Prospectus Supplement", respectively).
In this connection, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we deemed necessary for the purposes of this opinion.
In our examination, we have assumed the following: (a) the genuineness of all
signatures; (b) the legal capacity of natural persons; (c) the authenticity of
all documents submitted to us as originals; (d) the conformity to original
documents of all documents submitted to us as certified or photostatic copies
and the authenticity of the originals of such documents; and (e) the
<PAGE>
DLJ Commercial Mortgage Corp.
July 24, 1997
Page 2
truth, accuracy and completeness of the information, representations and
warranties contained in the records, documents, instruments and certificates
that we have reviewed. As to any facts material to the opinions expressed herein
which were not known to us, we have relied upon certificates, statements and
representations of officers and other representatives of the Registrant and
others.
Based upon the foregoing, we are of the opinion that the description set
forth under the caption "Certain Federal Income Tax Consequences" in the
Prospectus included as a part of the Registration Statement correctly describes
the material aspects of the federal income tax treatment of an investment in the
Certificates to investors that are United States Persons (as defined in the
Prospectus), as of the date hereof, and, where expressly indicated therein, to
investors that are not United States Persons.
We know that we are referred to under the heading "Certain Federal Income
Tax Consequences" in the Prospectus forming a part of the Registration
Statement, and we hereby consent to such use of our name in the Registration
Statement and to the use of this opinion for filing with the Registration
Statement as Exhibit 8.1 thereto. In giving such consent, we do not consider
that we are "experts", within the meaning of the term as used in the Act or the
rules and regulations of the Commission issued thereunder, with respect to any
part of the Registration Statement, including this opinion as an exhibit or
otherwise.
We express no opinion as to any laws other than the federal laws of the
United States of America, and do not express any opinion, either implicitly or
otherwise, on any issue not expressly addressed above.
Very truly yours,
/s/ SIDLEY & AUSTIN
